issue-1996-03-14•Federal Register final rules — 1996-03-14
Federal Register final rules — 1996-03-14
issue-1996-03-14Federal Register final rules — 1996-03-14Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. X96-20314 Threatened Fish and Wildlife
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Page 10477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X96-20314]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 227
Threatened Fish and Wildlife
Correction
In title 50 of the Code of Federal Regulations, parts 200 to 599,
revised as of October 1, 1995, page 147, Sec. 227.72 is corrected by
moving paragraphs (B) and (C) in the first column to page 146 to appear
after paragraph (e)(2)(iii)(A). The corrected text for paragraph
(e)(2)(iii) reads as follows:
Sec. 227.72 Exceptions to prohibitions.
* * * * *
(e)* * *
(2)* * *
(iii) Gear requirement--summer flounder trawlers--(A) TED
requirement. Except as provided in paragraph (e)(2)(iii)(B) of this
section, any summer flounder trawler in the summer flounder fishery-sea
turtle protection area must have an approved TED (as defined in
Sec. 217.12 of this subchapter) installed in each net that is rigged
for fishing. A net is rigged for fishing if it is in the water, or if
it is shackled, tied, or otherwise connected to any trawl door or
board, or to any tow rope, cable, pole or extension, either on board or
attached in any manner to the summer flounder trawler.
(B) Monitoring. Summer flounder trawlers must carry onboard a NMFS-
approved observer if requested upon written notification from the
Director Southeast Region, NMFS, or the Director, Northeast Region,
NMFS, sent to the address specified for the vessel in either the NMFS
or state fishing permit application, or to the address specified for
registration or documentation purposes, or upon written notification
otherwise served on the owner or operator of the vessel. Owners and
operators must comply with the terms and conditions specified in such
written notification. All NMFS-approved observers will report any
violations of this section, or other applicable regulations and laws;
such information may be used for enforcement purposes.
(C) Additional sea turtle conservation measures. The Assistant
Administrator may impose other such restrictions upon summer flounder
trawlers as he or she deems necessary or appropriate to protect sea
turtles and ensure compliance, pursuant to the procedures of paragraph
(e)(6) of this section. Such measures may include, but are not limited
to, a requirement to use TEDs in areas other than summer flounder
fishery-sea turtle protection area, a requirement to use limited tow-
times, and closure of the fishery.
BILLING CODE 1505-01-D
Complete official Federal Register PDF
FR Doc. X96-10314 Fertilizer Manufacturing Point Source Category
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Page 10468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X96-10314]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 418
Fertilizer Manufacturing Point Source Category
CFR Correction
In title 40 of the Code of Federal Regulations, parts 400 to 424,
revised as of July 1, 1995, on page 336, in Sec. 418.12 paragraphs (a),
(b), and (c) introductory text were inadvertently removed and the
source note appearing under the first table should be removed. The
omitted text should precede the table and read as follows:
Sec. 418.12 Effluent limitations and guidelines representing the
degree of effluent reduction attainable by the application of the best
practicable control technology currently available.
* * * * *
(a) Subject to the provisions of paragraphs (b) and (c) of this
section, the following limitations establish the quantity or quality of
pollutants or pollutant properties, controlled by this section, which
may be discharged by a point source subject to the provisions of this
subpart after application of the best practicable control technology
currently available: There shall be no discharge of process wastewater
pollutants to navigable waters.
(b) Process wastewater pollutants from a calcium sulfate storage
pile runoff facility operated separately or in combination with a water
recirculation system designed, constructed and operated to maintain a
surge capacity equal to the runoff from the 10-year, 24-hour rainfall
event may be discharged, after treatment to the standards set forth in
paragraph (c) of this section, whenever chronic or catastrophic
precipitation events cause the water level to rise into the surge
capacity. Process wastewater must be treated and discharged whenever
the water level equals or exceeds the mid point of the surge capacity.
(c) The concentration of pollutants discharged in process
wastewater pursuant to the limitations of paragraph (b) shall not
exceed the values listed in the following table:
* * * * *
BILLING CODE 1505-01-D
Complete official Federal Register PDF
FR Doc. 96-6157 Removal of 72 Colregs Text From CFR and Revision of Subchapter D Note
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Page 10466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6157]
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DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Subchapter D and Part 81
[CGD 95-053]
RIN 2115-AF16
Removal of 72 Colregs Text From CFR and Revision of Subchapter D
Note
AGENCY: Coast Guard, DOT.
ACTION: Direct Final rule; confirmation of effective date.
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SUMMARY: On January 2, 1996, the Coast Guard published a direct final
rule (61 FR 8) which notified the public of the Coast Guard's intent to
remove the text of the International Regulations for Preventing
Collisions at Sea, 1972 (72 COLREGS) from the CFR, which merely
duplicates text found in the United States Code. This rule also updates
the note containing a list of U.S. territories and possessions where
the 72 COLREGS apply. The Coast Guard has not received any adverse
comments or any notice of an intent to submit adverse comments
objecting to this rule as written. Therefore, this rule will go into
effective as scheduled.
DATES: The effective date of the direct final rule is confirmed as
April 1, 1996.
FOR FURTHER INFORMATION CONTACT:
Diane Schneider-Appleby, Vessel Traffic Management Division (G-MVO), at
202-267-0352.
Dated: March 7, 1996.
G.N. Naccara,
Acting Chief, Office of Marine Safety, Security and Environmental
Protection.
[FR Doc. 96-6157 Filed 3-13-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-6151 Consolidated GroupsIntercompany Transactions and Related Rules
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10447-10450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6151]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 8660]
RIN 1545-AT51
Consolidated Groups--Intercompany Transactions and Related Rules
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations disallowing losses
and excluding gain for certain dispositions and other transactions
involving stock of the common parent of a consolidated group.
DATES: These regulations are effective March 14, 1996.
For dates of applicability, see the effective date provision of
these regulations.
FOR FURTHER INFORMATION CONTACT: Victor Penico or Richard Osborne of
the Office of Assistant Chief Counsel (Corporate), (202) 622-7750 or
(202) 622-7770 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information contained in these final regulations
have been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under
control number 1545-1433. Responses to these collections of information
are required to obtain a benefit, the avoidance of a possible gain
because of basis adjustments relating to built-in loss.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
The estimated average annual burden per respondent is 15 minutes.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer, T:FP, Washington,
DC 20224, and to the Office of Management and Budget, Attn: Desk
Officer for the Department of the Treasury, Office of Information and
[[Page 10448]]
Regulatory Affairs, Washington, D.C. 20503.
Books or records relating to this collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
On July 12, 1995, the IRS and Treasury issued proposed and
temporary regulations disallowing loss incurred by a member (M) of a
consolidated group with respect to the stock of the common parent (P
stock). The regulations also eliminate gain in certain transactions by
M with respect to P stock. The regulations are effective for
transactions occurring on or after July 12, 1995.
The IRS received comments on the proposed regulations and held a
public hearing on December 11, 1995. After consideration of the
comments and the statements made at the hearing, the IRS and Treasury
adopt the proposed regulations with revisions in this Treasury
decision. The significant comments and changes are discussed below.
Explanation of Provisions
Scope of the regulations
The proposed regulations disallow all losses on P stock and
eliminate gain in specified circumstances. Some commentators suggested
that the regulations should treat gain and loss more symmetrically.
Some suggested the regulations should achieve this goal by eliminating
gain in all circumstances. Others suggested the regulations should
disallow loss only in ``abusive'' circumstances.
Eliminating gain in all circumstances would effectively require
complete single entity treatment of P stock. Implementing such a system
would significantly increase the complexity of the consolidated return
regulations. Notice 94-49 (1994-1 C.B. 358), included a detailed
discussion of issues relating to the single entity treatment of P
stock.
Limiting the loss disallowance rule to ``abusive situations'' would
allow consolidated groups to rely on the separate-entity treatment of
stock to claim losses and single-entity treatment to avoid gains. For
example, taxpayers might plan to take advantage of separate entity
treatment by having M purchase P stock. If the value of the stock has
gone down at a time when the group wants to issue equity, M will sell
its P stock at a loss (and claim the loss). If the value of the stock
has gone up, the group can take advantage of single entity treatment by
having P sell the stock, and no gain would be recognized under section
1032. The same would hold true if instead P had acquired M already
owning P stock. Commentators did not suggest any generally applicable
method of distinguishing between transactions in which loss should be
allowed and those in which loss should not be allowed.
The IRS and Treasury have therefore concluded that the final
regulations should retain the general approach of the proposed
regulations.
Built-in Losses
Some commentators suggested that if M joins the group at a time
when it holds P stock with a built-in loss the loss should be allowed
because it accrued outside the group. The final regulations do not
allow this loss because doing so without ensuring that the built-in
gain is taxed would allow the same selectivity and inconsistencies that
the regulation is designed to prevent. In addition, allowing the loss
would require tracing, which is inconsistent with the approaches to
similar issues in Secs. 1.1502-20 and 1.1502-32.
Commentators further suggested that interactions between the
proposed regulations and Sec. 1.1502-32 could cause the group to
recognize an artificial gain from the purchase of a corporation owning
depreciated P stock. If M joins the group at a time when it holds P
stock with a built-in loss and M subsequently sells the stock, P will
have a downward basis adjustment in its M stock because of the
disallowed loss. See Sec. 1.1502-32(b)(3)(iii)(A). The commentators
asserted that this basis adjustment would be inappropriate if the group
has a cost basis in M stock because the basis of M will reflect the
value of the P stock at the time of acquisition (rather than M's basis
in the P stock). To address this problem, the final regulations allow
the built-in loss to be waived immediately before M joins the group.
The loss waiver is modeled after a similar provision in Sec. 1.1502-
32(b)(4). The election, however, is limited to direct acquisitions of a
corporation holding P stock in a cost basis transaction.
Gain Relief
Commentators suggested that the gain relief should be broadened.
Some suggested that the requirement that M receive the P stock in a
capital contribution or section 351(a) transaction be eliminated.
Others suggested elimination of the requirement that M dispose of the P
stock immediately. Commentators also suggested that the gain relief
should apply to options and warrants in P stock, and not merely to P
stock.
The final regulations retain the requirements for gain relief but
extend the relief to positions in P stock. Any further expansion of the
gain relief would require additional limitations and complexities.
For instance, if M were not required to dispose of the P stock
immediately, the regulations would have to require that M have no
minority shareholders. If M had minority shareholders, the gain relief
mechanism (treating cash as contributed to M followed by a purchase of
the stock by M) would allow P a full basis adjustment in M stock for
post-contribution appreciation rather than a pro rata adjustment as
required by Sec. 1.1502-32 in the case of minority shareholders.
Amending the mechanism to allow only pro rata adjustments (for example,
through a direct basis adjustment rather than a cash transaction) would
create further complexities, such as the interaction with Sec. 1.1502-
20.
Expanding gain relief would require further adjustments if M stock
were sold to another member of the group. For example, if B purchases
the stock of M from another member, B's basis in M will reflect the
value of any P stock held by M. Thus, an increase to B's basis in the
stock of M when M disposes of P stock would be unwarranted. Additional
special rules would be needed if M were permitted to acquire P stock by
purchase rather than through a capital contribution. Moreover, the IRS
and Treasury believe that in many cases gain on P stock is avoidable
without further expansion of the regulations. See, e.g., Sec. 1.1032-
2(b) (no gain or loss on M's use of certain P stock in triangular
reorganizations). Therefore, the final regulations retain the
requirements of the proposed regulations for gain relief.
In addition, commentators claimed that the relief when M is newly
formed was unclear. The final regulations clarify that M can be newly
formed as part of the plan to dispose of P stock.
Dealers in P Stock
Some commentators suggested that if a subsidiary is a dealer in P
stock, it should be allowed to recognize losses from its dealing
activity. They argued that dealing in P stock increases the liquidity
of the stock and that the proposed regulations would curtail this
activity by forcing the recognition of gain but disallowing loss with
respect to P stock.
[[Page 10449]]
In response to these comments, the final regulations include an
exception for dealers in P stock or positions in P stock. Under the
final regulations, a dealer in P stock or positions recognizes both
gain and loss on shares of the stock to the extent taken into account
because of section 475(a) (or 1256(a) in the case of dealer equity
options). To be eligible for this exception, M must regularly trade in
P stock (of the same class) in the ordinary course of its business as a
dealer. In addition, the gain or loss on a share is eligible only to
the extent it is taken into account under section 475(a) (or in the
case of dealer equity options, section 1256(a) to the extent that it
would be taken into account under the principles of section 475), and
the basis of the share of stock must not be adjusted by reference to
the basis of any other property (for example, under Sec. 1.302-2) or by
reference to income, gain, deduction or loss from other property. For
example, loss that is suspended under section 475(b)(3) and that is
recognized under section 1001 as the result of a disposition of the
security is not eligible for the relief, but loss taken into account
under section 475(a) immediately before a taxpayer ceases to be the
owner of the security is eligible for relief. Finally, relief is not
available if either M or any other member of the group has structured
or engaged in any transaction while a member (or in anticipation of
becoming a member) during the taxable year or in any year within the
preceding five taxable years that is open for assessment under section
6501 with a principal purpose of avoiding gain or creating loss on P
stock subject to section 475(a).
Positions in P Stock
In response to comments, the final regulations clarify that the
scope of loss disallowance is coextensive with the scope of section
1032. For example, cash-settled options are within the scope of loss
disallowance. See Rev. Rul. 88-31 (1988-1 C.B. 302). No inference is
intended as to the extent to which section 1032 and these regulations
apply to derivative positions in P stock other than options.
One commentator argued that the loss disallowance rule should not
apply to options in P stock because the selectivity available for stock
is not present with respect to options. The final regulations do not
adopt this approach. If M purchases an option to acquire P stock and
the option expires when it is worthless, M has a loss. If the option is
in the money, M can purchase the P stock and hold it indefinitely.
Thus, the group would have the ability to recognize losses while
avoiding gains.
Effective Dates
The final regulations apply to gain or loss taken into account on
or after July 12, 1995, and to transactions (such as a member leaving
the group) occurring on or after July 12, 1995. Thus, the regulations
are intended to cover the same gain, loss and transactions covered by
the rules published in 1995--32 I.R.B. 47. If, however, a taxpayer
takes a gain or loss into account, or engages in a transaction, on or
after July 12, 1995, during a tax year ending prior to December 31,
1995, the taxpayer may treat the gain, loss or transaction under the
rules of the temporary rules published in 1995--32 I.R.B. 47 instead of
under the rules of the final regulations.
Special Analysis
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It is hereby certified that
these regulations do not have a significant economic impact on a
substantial number of small entities. This certification is based on
the fact that these regulations will primarily affect affiliated groups
of corporations that have elected to file consolidated returns, which
tend to be larger businesses. The regulations do not significantly
alter the reporting or recordkeeping duties of small entities.
Therefore, a Regulatory Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to
section 7805(f) of the Internal Revenue Code, the notice of proposed
rulemaking preceding these regulations was submitted to the Small
Business Administration for comment on its impact on small business.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by
revising the entry for Sec. 1.1502-13 to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.1502-13 also issued under 26 U.S.C. 1502. * * *
Par. 2. In Sec. 1.267(f)-1(k), the first sentence is amended by
removing the reference ``1.1502-13T(f)(6)'' and adding ``1.1502-
13(f)(6)'' in its place.
Par. 3. Section 1.1502-13(f)(6) is added to read as follows:
Sec. 1.1502-13 Intercompany transactions.
* * * * *
(f) * * *
(6) Stock of common parent. In addition to the general rules of
this section, this paragraph (f)(6) applies to parent stock (P stock)
and positions in P stock held or entered into by another member. For
this purpose, P stock is any stock of the common parent held by another
member or any stock of a member (the issuer) that was the common parent
if the stock was held by another member while the issuer was the common
parent.
(i) Loss stock--(A) Recognized loss. Any loss recognized, directly
or indirectly, by a member with respect to P stock is permanently
disallowed and does not reduce earnings and profits. See Sec. 1.1502-
32(b)(3)(iii)(A) for a corresponding reduction in the basis of the
member's stock.
(B) Other cases. If a member, M, owns P stock, the stock is
subsequently owned by a nonmember, and, immediately before the stock is
owned by the nonmember, M's basis in the share exceeds its fair market
value, then, to the extent paragraph (f)(6)(i)(A) of this section does
not apply, M's basis in the share is reduced to the share's fair market
value immediately before the share is held by the nonmember. For
example, if M owns shares of P stock with a $100x basis and M becomes a
nonmember at a time when the P shares have a value of $60x, M's basis
in the P shares is reduced to $60x immediately before M becomes a
nonmember. Similarly, if M contributes the P stock to a nonmember in a
transaction subject to section 351, M's basis in the shares is reduced
to $60x immediately before the contribution. See Sec. 1.1502-
32(b)(3)(iii)(B) for a corresponding reduction in the basis of M's
stock.
(C) Waiver of built-in loss on P stock--(1) In general. If a
nonmember that owns P stock with a basis in excess of its fair market
value becomes a member of the P consolidated group in a qualifying cost
basis transaction, the group may make an irrevocable election to reduce
the basis of the P stock to its fair market value immediately before
the nonmember becomes a member of the P group. If the nonmember was a
member of another consolidated group immediately before becoming a
member of the P group, the reduction in basis is treated as occurring
immediately after it ceases to be a member of the prior group. A
qualifying cost basis transaction is the purchase (i.e., a transaction
in which basis is determined
[[Page 10450]]
under section 1012) by members of the P consolidated group (while they
are members) in a 12-month period of an amount of the nonmember's stock
satisfying the requirements of section 1504(a)(2).
(2) Election. The election described in this paragraph (6)(i)(C)
must be made in a separate statement entitled ``ELECTION TO REDUCE
BASIS OF P STOCK UNDER Sec. 1.1502-13(f)(6).'' The statement must be
filed with the P consolidated group's return for the year in which the
nonmember becomes a member, and it must be signed by both P and the
nonmember. The statement must identify the fair market value of, and
the amount of the basis reduction in, the P stock.
(ii) Gain stock. If a member, M, would otherwise recognize gain on
a qualified disposition of P stock, then immediately before the
qualified disposition, M is treated as purchasing the P stock from P
for fair market value with cash contributed to M by P (or, if
necessary, through any intermediate members). A disposition is a
qualified disposition only if--
(A) The member acquires the P stock directly from the common parent
(P) through a contribution to capital or a transaction qualifying under
section 351(a) (or, if necessary, through a series of such transactions
involving only members);
(B) Pursuant to a plan, the member transfers the stock immediately
to a nonmember that is not related, within the meaning of section
267(b) or 707(b), to any member of the group;
(C) No nonmember receives a substituted basis in the stock within
the meaning of section 7701(a)(42);
(D) The P stock is not exchanged for P stock;
(E) P neither becomes nor ceases to be the common parent as part
of, or in contemplation of, the disposition or plan; and
(F) M is neither a nonmember that becomes a member nor a member
that becomes a nonmember as part of, or in contemplation of, the
disposition or plan.
(iii) Mark-to-market of P stock. Paragraphs (f)(6)(i) and (ii) of
this section shall not apply to any gain or loss from a share of P
stock held by a member, M, if--
(A) M regularly trades in P stock (of the same class) with
customers in the ordinary course of its business as a dealer;
(B) The gain or loss on the share is taken into account by M
pursuant to section 475(a);
(C) M's basis in the share is not adjusted by reference to the
basis of any other property or by reference to income, gain, deduction,
or loss from other property; and
(D) Neither M nor any other member of the group has structured or
engaged in any transaction while a member (or in anticipation of
becoming a member), during the taxable year or in any year within the
preceding five taxable years that is open for assessment under section
6501, with a principal purpose of avoiding gain or creating loss on P
stock subject to section 475(a).
(iv) Options, warrants, and other positions--(A) In general. This
paragraph (f)(6) applies with appropriate adjustments to positions in P
stock to the extent that P's gain or loss from an equivalent position
would not be recognized under section 1032. Thus, if M purchases an
option to buy or sell P stock and sells the option at a loss, the loss
is permanently disallowed under paragraph (f)(6)(i)(A) of this section.
Similarly, if M is the grantor of such an option and becomes a
nonmember, then the principles of paragraph (f)(6)(i)(B) of this
section apply to the extent that M would recognize loss from cash
settlement of the option at its fair market value immediately before M
becomes a nonmember, and proper adjustments must be made in the amount
of any gain or loss subsequently realized from the position by M. If P
grants M an option to acquire P stock in a transaction meeting the
requirements of paragraph (f)(6)(ii) of this section, M is treated as
having purchased the option from P for fair market value with cash
contributed to M by P.
(B) Mark-to-market of positions in P stock. For purposes of
paragraph (f)(6)(iii) of this section, gain or loss with respect to a
position taken into account under section 1256(a) is treated as taken
into account under section 475(a) to the extent that the gain or loss
would be taken into account under the principles of section 475. -
(v) Effective date. This paragraph (f)(6) applies to gain or loss
taken into account on or after July 12, 1995, and to transactions
occurring on or after July 12, 1995. For example, if S sells P stock to
B at a loss prior to July 12, 1995, and B sells the P stock to a
nonmember after July 12, 1995, S's loss is disallowed because it is
taken into account after July 12, 1995. If a taxpayer takes a gain or
loss into account or engages in a transaction on or after July 12,
1995, during a tax year ending prior to December 31, 1995, the taxpayer
may treat the gain or loss or the transaction under the rules published
in 1995-32 I.R.B. 47, instead of under the rules of this paragraph
(f)(6).
* * * * *
Par. 4. In Sec. 1.1502-13(g)(2)(i)(B), the last sentence is amended
by removing the language ``paragraph (f)(4) of this section and
Sec. 1.1502-13T(f)(6)'' and adding ``paragraphs (f)(4) and (6) of this
section.''
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved: March 8, 1996.
Leslie Samuels,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 96-6151 Filed 3-13-96; 8:45 am]
BILLING CODE 4830-01-P
Complete official Federal Register PDF
FR Doc. 96-6145 Open Video Systems
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10475-10476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6145]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 63
[CS Docket No. 96-46; FCC 96-99]
Open Video Systems
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Report and Order eliminates the Commission's video
dialtone, cross-ownership, and section 214 authorization rules. This
order eliminates or modifies our rules in accordance with the
Telecommunications Act of 1996. This order fulfills the mandate of the
Telecommunications Act of 1996.
EFFECTIVE DATE: March 11, 1996.
FOR FURTHER INFORMATION, CONTACT: Rick Chessen or Larry Walke, Cable
Services Bureau, (202) 416-0800.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order in CS Docket No. 96-46, FCC No. 96-99, adopted March
11, 1996 and released March 11, 1996. The full text of this decision is
available for inspection and copying during normal business hours in
the FCC Reference Center (room 239), 1919 M Street, NW, Washington,
D.C. 20554, and may be purchased from the Commission's copy contractor,
International Transcription Service, (202) 857-3800, 1919 M Street, NW,
Washington, D.C. 20554.
Report and Order--Repeal of Video Dialtone Rules, Cross Ownership
Rules, and Section 214 Requirements
1. Statutory Provisions
1. Subsection 302(b)(1) of the 1996 Act provides: ``Subsection (b)
of section 613 (47 U.S.C. 533(b)) [i.e., the telephone company-cable
cross-ownership restriction] is repealed.'' In addition, subsection
302(a) of the 1996 Act adds new subsection 651(c) of the Communications
Act, which provides that a common carrier shall no longer be required
to obtain a certificate under Section 214 to establish or operate a
system for the delivery of video programming. Finally, subsection
302(b)(3) of the 1996 Act states: ``The Commission's regulations and
policies with respect to video dialtone requirements issued in CC
Docket No. 87-266 shall cease to be effective on the date of enactment
of this Act.'' This provision also states: ``This paragraph shall not
be construed to require the termination of any video-dialtone system
that the Commission has approved before the date of enactment of this
Act.'' The conference report further provides that ``[r]epeal of the
Commission's video dialtone regulations is not intended to alter the
status of any video dialtone service offered before the regulations
required by this section become effective.''
2. Discussion
2. In this order we modify our rules to conform to sections
302(b)(1) and 302(b)(3) of the 1996 Act, which repealed the telephone-
cable cross-ownership restriction and eliminated our video dialtone
rules and policies upon enactment. We also hereby terminate the docket
in which our video dialtone rules and policies were promulgated (CC
Docket No. 87-266). Further, we hereby revoke: (1) The Common Carrier
Bureau's Memorandum Opinion and Order adopting subsidiary
[[Page 10476]]
accounting and reporting requirements for video dialtone; and (2)
Responsible Accounting Officer Letter 25 (``RAO Letter 25''), which
sets forth specific guidelines for accounting classifications,
subsidiary records, and amendments to cost allocation manuals for video
dialtone. Finally, consistent with subsection 302(b)(3) of the 1996
Act, we do not require currently approved video dialtone systems to
cease operations.
3. In addition, in order to conform our rules to new section 651(c)
of the Communications Act, we modify our rules to the extent they
relate to any requirement that a common carrier obtain a certificate
under Section 214 to establish or operate a video programming delivery
system. Pursuant to subsection 651(c), we will no longer require that a
common carrier obtain Section 214 authorization to establish or operate
a video programming delivery system, even a video programming delivery
system provided on a common carrier basis pursuant to Title II of the
Communications Act.
Final Regulatory Flexibility Analysis
4. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.
601-612, the Commission's Flexibility Analysis with respect to the
Report and Order is as follows:
5. Need and purpose of this action: The Commission issues this
Report and Order to enact or revise rules governing telephone
companies' provision of video programming in response to the 1996 Act.
6. Significant Alternatives considered: Not applicable.
7. Federal rules that overlap, duplicate or conflict with these
rules: None.
Paperwork Reduction Act
8. Paperwork Reduction Act Statement: The proposal contained herein
has been analyzed with respect to the Paperwork Reduction Act of 1995.
None of the modifications made to the rules in this proceeding should
increase the information collection requirements on the public.
Effective Date
9. The elimination of the rules concerning video dialtone, cross-
ownership and Section 214 authorization for the delivery of video
adopted in the Report and Order were effective upon enactment of the
1996 Act, and we amend these rules to conform to those statutory
changes.
Ordering Clauses
10. It is ordered that the Commission's regulations and policies
with respect to video dialtone requirements issued in CC Docket No. 87-
266 are hereby removed.
11. It is further ordered that CC Docket No. 87-266 is hereby
terminated.
12. It is further ordered that the Commission's regulations are
hereby amended as set forth below.
13. It is further ordered that the Common Carrier Bureau's
Memorandum Opinion and Order adopting subsidiary accounting and
reporting requirements for video dialtone, and RAO Letter 25 (except
with respect to the ATM equipment issue, as noted above) are hereby
revoked.
14. It is further ordered that in light of the 1996 Act's
termination of the Commission's rules and policies concerning video
dialtone, we find for good cause that notice and comment on the actions
taken herein would be impracticable, unnecessary and contrary to the
public interest. See 5 U.S.C. 553(b)(B).
15. It is further ordered that the Secretary shall send a copy of
this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration in accordance with paragraph 603(a) of
the Regulatory Flexibility Act, Public Law No. 96-354, 94 Stat. 1164, 5
U.S.C. 601, et seq. (1981)
16. For additional information regarding this proceeding, contact
Rick Chessen or Larry Walke, Policy & Rules Division, Cable Services
Bureau (202) 416-0800.
List of Subjects in 47 CFR Part 63
Cable television, Communications common carriers, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 63 of title 47 of the Code of Federal Regulations is amended
as follows:
PART 63--EXTENSION OF LINES AND DISCONTINUANCE, REDUCTION, OUTAGE
AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF
RECOGNIZED PRIVATE OPERATING AGENCY STATUS
1. The authority citation for part 63 continues to read as follows:
Authority: Sections 1, 4(i), 4(j), 201-205, 218 and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i),
154(j), 201-205, 218 and 403, unless otherwise noted.
2. Section 63.08 is amended by adding a colon after ``are'' before
paragraph (a)(i), removing paragraph (a)(i), redesignating (a)(ii) and
(a)(iii) as paragraphs (a)(1) and (a)(2), respectively, removing the
second sentence of newly redesignated paragraph (a)(2), revising the
second sentence of paragraph (b), revising paragraph (c), and adding
paragraph (e) to read as follows:
Sec. 63.08 Lines outside of a carrier's exchange telephone service
area.
* * * * *
(b) * * * ``Nondominant'' is defined as in Sec. 61.15(a) of this
chapter.
(c) A common carrier or its affiliate is not required to file for
authority pursuant to 47 U.S.C. 214 and Sec. 63.01 to discontinue,
reduce, or impair other non-common carrier service.
* * * * *
(e) As used above, the term ``affiliate'' bars any financial or
business relationship whatsoever by contract or otherwise, directly or
indirectly between the carrier and the customer, except only the
carrier-user relationship.
Note to Paragraph (e): Examples of situations in which a carrier
and its customer will be deemed to be controlled or having a
relationship include the following, among others: Where one is the
debtor or creditor of the other (except with respect to charges for
communication services); where they have a common officer, director, or
other employee at the management level; where there is any element of
ownership or other financial interest by one in the other; and where
any part has a financial interest in both.
Sec. 63.09 [Removed]
3. Section 63.09 is removed.
Sec. 63.16 [Removed]
4. Section 63.16 is removed.
Sec. 63.52 [Amended]
5. Section 63.52(b) is amended by removing the reference to
``63.54,''.
Secs. 63.54-63.58 [Removed]
6. Sections 63.54 through 63.58 and the undesignated center heading
preceding them are removed.
[FR Doc. 96-6145 Filed 3-11-96; 3:40 pm]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-6084 Changes in Flood Elevation Determinations
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10468-10472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6084]
=======================================================================
-----------------------------------------------------------------------
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 65
Changes in Flood Elevation Determinations
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Modified base (1% annual chance) flood elevations are
finalized for the communities listed below. These modified elevations
will be used to calculate flood insurance premium rates for new
buildings and their contents.
EFFECTIVE DATES: The effective dates for these modified base flood
elevations are indicated on the following table and revise the Flood
Insurance Rate Map(s) in effect for each listed community prior to this
date.
ADDRESSES: The modified base flood elevations for each community are
available for inspection at the office of the Chief Executive Officer
of each community. The respective addresses are listed in the following
table.
FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief,
Hazard Identification Branch, Mitigation Directorate, 500 C Street, SW,
Washington, DC 20472, (202) 646-2756.
SUPPLEMENTARY INFORMATION: The Federal Emergency Management Agency
makes the final determinations listed below of the final determinations
of modified base flood elevations for each community listed. These
modified elevations have been published in newspapers of local
circulation and ninety (90) days have elapsed since that publication.
The Associate Director has resolved any appeals resulting from this
notification.
The modified base flood elevations are not listed for each
community in this notice. However, this rule includes the address of
the Chief Executive Officer of the community where the modified base
flood elevation determinations are available for inspection.
The modifications are made pursuant to Section 206 of the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance
with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq.,
and with 44 CFR Part 65.
For rating purposes, the currently effective community number is
shown and must be used for all new policies and renewals.
The modified base flood elevations are the basis for the floodplain
management measures that the community is required to either adopt or
to show evidence of being already in effect in order to qualify or to
remain qualified for participation in the National Flood Insurance
Program (NFIP).
These modified elevations, together with the floodplain management
criteria required by 44 CFR 60.3, are the minimum that are required.
They should not be construed to mean that the community must change any
existing ordinances that are more stringent in their floodplain
management requirements. The community may at any time enact
[[Page 10469]]
stricter requirements of its own, or pursuant to policies established
by other Federal, State, or regional entities.
These modified elevations are used to meet the floodplain
management requirements of the NFIP and are also used to calculate the
appropriate flood insurance premium rates for new buildings built after
these elevations are made final, and for the contents in these
buildings.
The changes in base flood elevations are in accordance with 44 CFR
65.4.
National Environmental Policy Act
This rule is categorically excluded from the requirements of 44 CFR
Part 10, Environmental Consideration. No environmental impact
assessment has been prepared.
Regulatory Flexibility Act
The Associate Director, Mitigation Directorate, certifies that this
rule is exempt from the requirements of the Regulatory Flexibility Act
because modified base flood elevations are required by the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4105, and are required to
maintain community eligibility in the NFIP. No regulatory flexibility
analysis has been prepared.
Regulatory Classification
This final rule is not a significant regulatory action under the
criteria of Section 3(f) of Executive Order 12866 of September 30,
1993, Regulatory Planning and Review, 58 FR 51735.
Executive Order 12612, Federalism
This rule involves no policies that have federalism implications
under Executive Order 12612, Federalism, dated October 26, 1987.
Executive Order 12778, Civil Justice Reform
This rule meets the applicable standards of Section 2(b)(2) of
Executive Order 12778.
List of Subjects in 44 CFR Part 65
Flood insurance, Floodplains, Reporting and recordkeeping
requirements.
Accordingly, 44 CFR Part 65 is amended to read as follows:
PART 65--[AMENDED]
1. The authority citation for Part 65 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376.
Sec. 65.4 [Amended]
2. The tables published under the authority of Sec. 65.4 are
amended as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chief executive
State and county Location Dates and name of newspaper officer of Effective date of Community
where notice was published community modification No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona:
Coconino (FEMA Docket City of Flagstaff........... Sept. 21, 1995, Sept. 28, 1995, The Honorable Aug. 16, 1995............... 040020
No. 7160). Arizona Daily Sun. Christopher J.
Bavasi, Mayor,
City of
Flagstaff, 211
West Aspen
Avenue,
Flagstaff,
Arizona 86001.
Coconino (FEMA Docket City of Flagstaff........... Sept. 22, 1995, Sept. 29, 1995, The Honorable Aug. 17, 1995............... 040020
No. 7160). Arizona Daily Sun. Christopher J.
Bavasi, Mayor,
City of
Flagstaff, 211
West Aspen
Avenue,
Flagstaff,
Arizona 86001.
Maricopa (FEMA Docket City of Glendale............ Aug. 31, 1995, Sept. 7, 1995, The Honorable Aug. 7, 1995................ 040045
No. 7160). Arizona Republic. Elaine
Scruggs,
Mayor, City of
Glendale, 5850
West Glendale
Avenue,
Glendale,
Arizona 85301.
Maricopa (FEMA Docket Unincorporated Areas........ Aug. 31, 1995, Sept. 7, 1995, The Honorable Aug. 7, 1995................ 040037
No. 7160). Arizona Republic. Tom Rawles,
Chairperson,
Maricopa
County Board
of
Supervisors,
301 West
Jefferson,
Phoenix,
Arizona 85003.
Pima (FEMA Docket No. Town of Oro Valley.......... July 27, 1995, Aug. 3, 1995, The Honorable June 27, 1995............... 040109
7156). Daily Territorial. Cheryl
Skalsky,
Mayor, Town of
Oro Valley,
11000 North La
Canada Drive,
Oro Valley,
Arizona 85737.
Maricopa (FEMA Docket City of Peoria.............. Aug. 31, 1995, Sept. 7, 1995, The Honorable Aug. 7, 1995................ 040050
No. 7160). Arizona Republic. Ken C. Forgia,
Mayor City of
Peoria, 8401
West Monroe,
Peoria,
Arizona 85345.
[[Page 10470]]
Pima (FEMA Docket No. Unincorporated Areas........ July 27, 1995, Aug. 3, 1995, The Honorable June 27, 1995............... 040073
7156). Daily Territorial. Paul Marsh,
Chairman, Pima
County Board
of
Supervisors,
130 West
Congress
Street, Fifth
Floor, Tuscon,
Arizona 85701.
Pima (FEMA Docket No. City of Tucson.............. July 13, 1995, July 20, 1995, The Honorable June 26, 1995............... 040076
7152). Arizona Daily Star. George Miller,
Mayor, City of
Tucson, P.O.
Box 27210,
Tucson,
Arizona 85710-
7210.
California:
Contra Costa (FEMA Unincorporated Areas........ Aug. 18, 1995, Aug. 25, 1995, The Honorable July 17, 1995............... 060025
Docket No. 7156). West County Times. Gayle Bishop,
Chairperson,
Contra Costa
County Board
of
Supervisors,
18 Crow Canyon
Court, Suite
120, San
Ramon,
California
94583.
Santa Clara (FEMA Docket City of Gilroy.............. Sept. 22, 1995, Sept. 29, 1995, The Honorable Aug. 31, 1995............... 060340
No. 7160). Dispatch. Don F. Gage,
Mayor, City of
Gilroy, 7351
Rosanna
Street,
Gilroy,
California
95020.
Contra Costa (FEMA City of Richmond............ Aug. 18, 1995, Aug. 25, 1995, The Honorable July 17, 1995............... 060035
Docket No. 7156). West County Times. Rosmary
Corbin, Mayor,
City of
Richmond, 2600
Barrett
Avenue,
Richmond,
California
94804.
Riverside (FEMA Docket City of Riverside........... July 28, 1995, Aug. 4, 1995, The Honorable July 7, 1995................ 060260
No. 7156). Press Enterprise. Ron Loveridge,
Mayor, City of
Riverside,
3900 Main
Street,
Riverside,
California
92522.
Sacramento (FEMA Docket Unincorporated Areas........ Aug. 4, 1995, Aug. 11, 1995, Mr. Douglas M. July 3, 1995................ 060262
No. 7156). Sacramento Bee. Fraleigh,
Administrator,
Sacramento
County Public
Works Agency,
827 Seventh
Street, Room
304,
Sacramento,
California
95814.
Contra Costa (FEMA City of San Ramon........... July 27, 1995, Aug. 3, 1995, The Honorable July 5, 1995................ 060710
Docket No. 7156). Valley Times. Greg Carr,
Mayor, City of
San Ramon,
2222 Camino
Ramon, San
Ramon,
California
94583.
Santa Barbara (FEMA Unincorporated Areas........ July 28, 1995, Aug. 4, 1995, The Honorable June 30, 1995............... 060331
Docket No. 7156). Santa Barbara News-Press. Timothy J.
Staffel,
Chairperson,
Santa Barbara
County Board
of
Supervisors,
105 East
Anapamu
Street, Fourth
Floor, Santa
Barbara,
California
93101.
[[Page 10471]]
Santa Clara (FEMA Docket Unincorporated Areas........ Sept. 22, 1995, Sept. 29, 1995, The Honorable Aug. 31, 1995............... 060337
No. 7160). San Jose Mercury News. Mike M. Honda,
Chairman,
Santa Clara
County Board
of
Supervisors,
County
Government
Center, 70
West Hedding
Street, East
Wing, Tenth
Floor, San
Jose,
California
95110.
Solano (FEMA Docket No. City of Vacaville........... Aug. 24, 1995, Aug. 31, 1995, The Honorable July 28, 1995............... 060373
7156). Reporter. David A.
Fleming,
Mayor, City of
Vacaville, 650
Merchant
Street,
Vacaville,
California
95688.
Colorado:
Adams, Boulder and City of Broomfield.......... Aug. 31, 1995, Sept. 7, 1995, The Honorable Aug. 2, 1995................ 085073
Jefferson (FEMA Docket Daily Camera. Bill Berens,
No. 7160). Mayor, City of
Broomfield,
P.O. Box 1415,
Broomfield,
Colorado 80038-
1415.
El Paso (FEMA Docket No. City of Colorado Springs.... Aug. 4, 1995, Aug. 11, 1995, The Honorable July 14, 1995............... 080060
7156). Gazette Telegraph. Robert Isaac,
Mayor, City of
Colorado
Springs, P.O.
Box 1575,
Colorado
Springs,
Colorado 80901.
Adams (FEMA Docket No. City of Thornton............ Aug. 25, 1995, Sept. 1, 1995, The Honorable July 25, 1995............... 080007
7156). Denver Post. Margaret
Carpenter,
Mayor, City of
Thornton, P.O.
Box 291220,
Thornton,
Colorado 80229-
1220.
Iowa:
Johnson (FEMA Docket No. City of Coralville.......... July 28, 1995, Aug. 4, 1995, The Honorable July 10, 1995............... 190169
7156). Iowa City Press Citizen. Allan Axeen,
Mayor, City of
Coralville,
1512 Seventh
Street,
Coralville,
Iowa 52241.
Polk (FEMA Docket No. City of Grimes.............. Aug. 18, 1995, Aug. 25, 1995, The Honorable July 19, 1995............... 190228
7156). Des Moines Register. Brad Long,
Mayor, City of
Grimes, P.O.
Box 460,
Grimes, Iowa
50111.
Johnson (FEMA Docket No. City of Iowa City........... July 28, 1995, Aug. 4, 1995, The Honorable July 10, 1995............... 190171
7156). Iowa City Press Citizen. Susan
Horowitz,
Mayor, City of
Iowa City, 410
East
Washington
Street, Iowa
City, Iowa
52240.
Polk (FEMA Docket No. Unincorporated Areas........ Sept. 22, 1995, Sept. 29, 1995, The Honorable Aug. 14, 1995............... 190901
7160). The Des Moines Register. Jack Bishop,
Chairman, Polk
County Board
of
Supervisors,
111 Court
Avenue, Room
300, Des
Moines, Iowa
50309.
Oregon:
Marion and Polk (FEMA City of Salem............... Aug. 24, 1995, Aug. 31, 1995, The Honorable July 20, 1995............... 410167
Docket No. 7156). Statesman-Journal. Roger
Gertenrich,
Mayor, City of
Salem, City
Hall, 555
Liberty
Street,
Southeast,
Salem, Oregon
97301-3503.
South Dakota:
[[Page 10472]]
Pennington (FEMA Docket City of Rapid City.......... Aug. 21, 1995, Aug. 28, 1995, The Honorable July 20, 1995............... 465420
No. 7156). Rapid City Journal. Edward
McLaughlin,
Mayor, City of
Rapid City,
300 Sixth
Street, Rapid
City, South
Dakota 57701-
2724.
Texas:
Tarrant (FEMA Docket No. City of Forest Hill......... Aug. 31, 1995, Sept. 7, 1995, The Honorable July 28, 1995............... 480595
7160). Forest Hill News. Esterlene
Griffin,
Mayor, City of
Forest Hill,
6800 Forest
Hill Drive,
Forest Hill,
Texas 76140-
1299.
Lubbock (FEMA Docket No. City of Lubbock............. July 20, 1995, July 27, 1995, The Honorable June 29, 1995............... 480452
7152). Lubbock Avalanche-Journal. David
Langston,
Mayor, City of
Lubbock, P.O.
Box 2000,
Lubbock, Texas
79457.
Tarrant (FEMA Docket No. City of Richland Hills...... Sept. 21, 1995, Sept. 28, 1995, The Honorable Aug. 17, 1995............... 480607
7160). Mid-Cities News. Tommy Brown,
Mayor, City of
North Richland
Hills, P.O.
Box 820609,
North Richland
Hills, Texas
76182-0609.
Bexar (FEMA Docket No. City of San Antonio......... Sept. 19, 1995, Sept. 26, 1995, The Honorable Aug. 14, 1995............... 480045
7160). San Antonio Express News. William B.
Thornton,
Mayor, City of
San Antonio,
P.O. Box
839966, San
Antonio, Texas
78283-3966.
Bexar, Comal, and City of Selma............... Aug. 3, 1995, Aug. 10, 1995, San The Honorable July 12, 1995............... 480046
Guadalupe (FEMA Docket Antonio Express News. Harold
No. 7156). Friesenhahn,
Mayor, City of
Salem, 9375
Corporate
Drive, Selma,
Texas 78154.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance.'')
Dated: March 7, 1996.
Richard W. Krimm,
Acting Associate Director for Mitigation.
[FR Doc. 96-6084 Filed 3-13-96; 8:45 am]
BILLING CODE 6718-04-P
Complete official Federal Register PDF
FR Doc. 96-6083 Changes in Flood Elevation Determinations
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10472-10474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6083]
-----------------------------------------------------------------------
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 65
[Docket No. FEMA-7171]
Changes in Flood Elevation Determinations
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Interim rule.
-----------------------------------------------------------------------
SUMMARY: This interim rule lists communities where modification of the
base (1% annual chance) flood elevations is appropriate because of new
scientific or technical data. New flood insurance premium rates will be
calculated from the modified base flood elevations for new buildings
and their contents.
DATES: These modified base flood elevations are currently in effect on
the dates listed in the table and revise the Flood Insurance Rate
Map(s) in effect prior to this determination for each listed community.
From the date of the second publication of these changes in a
newspaper of local circulation, any person has ninety (90) days in
which to request through the community that the Associate Director,
Mitigation Directorate, reconsider the changes. The modified elevations
may be changed during the 90-day period.
ADDRESSES: The modified base flood elevations for each community are
available for inspection at the office of the Chief Executive Officer
of each community. The respective addresses are listed in the following
table.
FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief,
Hazard Identification Branch, Mitigation Directorate, 500 C Street, SW,
Washington, DC 20472, (202) 646-2756.
SUPPLEMENTARY INFORMATION: The modified base flood elevations are not
listed for each community in this interim rule. However, the address of
the Chief Executive Officer of the community where the modified base
flood elevation determinations are available for inspection is
provided.
Any request for reconsideration must be based upon knowledge of
changed conditions, or upon new scientific or technical data.
The modifications are made pursuant to Section 201 of the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance
with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq.,
and with 44 CFR Part 65.
For rating purposes, the currently effective community number is
shown and must be used for all new policies and renewals.
The modified base flood elevations are the basis for the floodplain
management measures that the community is required to either adopt or
to show evidence of being already in effect in order to qualify or to
remain qualified for participation in the National Flood Insurance
Program (NFIP).
[[Page 10473]]
These modified elevations, together with the floodplain management
criteria required by 44 CFR 60.3, are the minimum that are required.
They should not be construed to mean that the community must change any
existing ordinances that are more stringent in their floodplain
management requirements. The community may at any time enact stricter
requirements of its own, or pursuant to policies established by other
Federal, State, or regional entities.
The changes in base flood elevations are in accordance with 44 CFR
65.4.
National Environmental Policy Act
This rule is categorically excluded from the requirements of 44 CFR
Part 10, Environmental Consideration. No environmental impact
assessment has been prepared.
Regulatory Flexibility Act
The Associate Director, Mitigation Directorate, certifies that this
rule is exempt from the requirements of the Regulatory Flexibility Act
because modified base flood elevations are required by the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4105, and are required to
maintain community eligibility in the NFIP. No regulatory flexibility
analysis has been prepared.
Regulatory Classification
This interim rule is not a significant regulatory action under the
criteria of Section 3(f) of Executive Order 12866 of September 30,
1993, Regulatory Planning and Review, 58 FR 51735.
Executive Order 12612, Federalism
This rule involves no policies that have federalism implications
under Executive Order 12612, Federalism, dated October 26, 1987.
Executive Order 12778, Civil Justice Reform
This rule meets the applicable standards of Section 2(b)(2) of
Executive Order 12778.
List of Subjects in 44 CFR Part 65
Flood insurance, Floodplains, Reporting and recordkeeping
requirements.
Accordingly, 44 CFR Part 65 is amended to read as follows:
PART 65--[AMENDED]
1. The authority citation for Part 65 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376.
Sec. 65.4 [Amended]
2. The tables published under the authority of Sec. 65.4 are
amended as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chief executive
State and county Location Dates and name of newspaper officer of Effective date of Community
where notice was published community modification No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arkansas:
Benton.................. Unincorporated Areas........ Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 3, 1995................ 050419
Benton County Daily Record. Bruce
Rutherford,
Benton County
Judge, P.O.
Box 278,
Bentonville,
Arkansas 72712.
Benton.................. City of Rogers.............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 3, 1995................ 050013
Benton County Daily Record. John W.
Sampier, Jr.,
Mayor, City of
Rogers, 300
West Poplar,
Rogers,
Arkansas 72756.
Hawaii: Honolulu............ City and County of Honolulu. Dec. 7, 1995, Dec. 14, 1995, The Honorable Nov. 13, 1995............... 150001
Honolulu Advertiser. Jeremy Harris,
Mayor, City
and County of
Honolulu, 530
South King
Street, Room
300, Honolulu,
Hawaii 96813.
Texas:
Tarrant................. City of Arlington........... Dec. 1, 1995, Dec. 8, 1995, Fort The Honorable Nov. 10, 1995............... 485454
Worth Star Telegram. Richard
Greene, Mahor,
City of
Arlington,
P.O. Box 231,
Arlington,
Texas 76004-
0231.
Dallas.................. City of Coppell............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 10, 1995............... 480170
Citizen's Advocate. Tom Morton,
Mayor, City of
Coppell, P.O.
Box 478,
Coppell, Texas
75019.
Dallas.................. City of Dallas.............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 10, 1995............... 480171
Dallas Morning News. Ron Kirk,
Mayor, City of
Dallas, 1500
Marilla
Street, Room
5E North,
Dallas, Texas
75201.
Dallas, Ellis, and City of Grand Prairie....... Feb. 15, 1996, Feb. 22, The Honorable Nov. 10, 1995............... 485472
Tarrant. 1996,Grand Prairie Daily News. Charles
England,
Mayor, City of
Grand Prairie,
317 College
Street, Grand
Prairie, Texas
75053.
[[Page 10474]]
Harris.................. Unincorporated Areas........ Dec. 6, 1995, Dec. 13, 1995 The Honorable Nov. 8, 1995................ 480287
Houston Chronicle. Jon Lindsay,
Harris County
Judge, 1001
Preston
Street,
Houston, Texas
77002.
Dallas.................. City of Irving.............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 10, 1995............... 480180
Citizen's Advocate. Bobby Joe
Raper, Mayor,
City of
Irving, P.O.
Box 152288,
Irving, Texas
75015-2288.
Harrison................ City of Marshall............ Dec. 8, 1995, Dec. 15, 1995, The Honorable Nov. 13, 1995............... 480319
Marshall News Messenger. Audrey Kriel,
Mayor, City of
Marshall, P.O.
Box 698,
Marshall,
Texas 75671.
Collin.................. City of Murphy.............. Dec. 20, 1995, Dec. 27, 1995, The Honorable Nov. 30, 1995............... 480137
Wylie News. Greg
Singleton,
Mayor, City of
Murphy, 205
North Murphy
road, Murphy,
Texas 75094.
Collin.................. City of Plano............... Dec. 20, 1995, Dec. 27, 1995, The Honorable Nov. 30, 1995............... 480140
Plano Star Courier. James N. Muns,
Mayor, City of
Plano, P.O.
Box 860358,
Plano, Texas
75086.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance.'')
Dated: March 7, 1996.
Richard W. Krimm,
Acting Associate Director for Mitigation.
[FR Doc. 96-6083 Filed 3-13-96; 8:45 am]
BILLING CODE 6718-04-P
Complete official Federal Register PDF
FR Doc. 96-6082 Final Flood Elevation Determinations
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10474-10475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6082]
-----------------------------------------------------------------------
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 67
Final Flood Elevation Determinations
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Base (1% annual chance) flood elevations and modified base
flood elevations are made final for the communities listed below. The
base flood elevations and modified base flood elevations are the basis
for the floodplain management measures that each community is required
either to adopt or to show evidence of being already in effect in order
to qualify or remain qualified for participation in the National Flood
Insurance Program (NFIP).
EFFECTIVE DATE: The date of issuance of the Flood Insurance Rate Map
(FIRM) showing base flood elevations and modified base flood elevations
for each community. This date may be obtained by contacting the office
where the FIRM is available for inspection as indicated in the table
below.
ADDRESSES: The final base flood elevations for each community are
available for inspection at the office of the Chief Executive Officer
of each community. The respective addresses are listed in the table
below.
FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief,
Hazard Identification Branch, Mitigation Directorate, 500 C Street, SW,
Washington, DC 20472, (202) 646-2756.
SUPPLEMENTARY INFORMATION: The Federal Emergency Management Agency
makes final determinations listed below of base flood elevations and
modified base flood elevations for each community listed. The proposed
base flood elevations and proposed modified base flood elevations were
published in newspapers of local circulation and an opportunity for the
community or individuals to appeal the proposed determinations to or
through the community was provided for a period of ninety (90) days.
The proposed base flood elevations and proposed modified base flood
elevations were also published in the Federal Register.
This final rule is issued in accordance with Section 110 of the
Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR Part
67. FEMA has developed criteria for floodplain management in floodprone
areas in accordance with 44 CFR Part 60.
Interested lessees and owners of real property are encouraged to
review the proof Flood Insurance Study and FIRM available at the
address cited below for each community.
The base flood elevations and modified base flood elevations are
made final in the communities listed below. Elevations at selected
locations in each community are shown.
National Environmental Policy Act
This rule is categorically excluded from the requirements of 44 CFR
Part 10, Environmental Consideration. No environmental impact
assessment has been prepared.
Regulatory Flexibility Act
The Associate Director for Mitigation certifies that this rule is
exempt from the requirements of the Regulatory Flexibility Act because
final or modified base flood elevations are required by the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4104, and are required to
establish and maintain community eligibility in the NFIP. No regulatory
flexibility analysis has been prepared.
Regulatory Classification
This final rule is not a significant regulatory action under the
criteria of Section 3(f) of Executive Order 12866 of September 30,
1993, Regulatory Planning and Review, 58 FR 51735.
Executive Order 12612, Federalism
This rule involves no policies that have federalism implications
under Executive Order 12612, Federalism, dated October 26, 1987.
[[Page 10475]]
Executive Order 12778, Civil Justice Reform.
This rule meets the applicable standards of Section 2(b)(2) of
Executive Order 12778.
List of Subjects in 44 CFR Part 67
Administrative practice and procedure, Flood insurance, Reporting
and recordkeeping requirements.
Accordingly, 44 CFR Part 67 is amended to read as follows:
PART 67--[AMENDED]
1. The authority citation for Part 67 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376.
Sec. 67.11 [Amended]
2. The tables published under the authority of Sec. 67.11 are
amended as follows:
------------------------------------------------------------------------
# Depth in
feet above
ground.
Source of flooding and location *Elevation
in feet
(NGVD)
------------------------------------------------------------------------
OKLAHOMA
-------------------------------------------------------------
Stillwater (city), Payne County (FEMA Docket No. 7122)
Stillwater Creek:
Approximately 400 feet upstream of South Main Street (U.S.
Highway 177)............................................. *863
Approximately 300 feet downstream of South Western Road... *870
Approximately 300 feet downstream of East Bound Lane State
Highway 51............................................... *875
Approximately 600 feet downstream of North Stillwater Road *881
Maps are available for inspection at the City Engineer's
Office, City of Stillwater, 723 South Lewis, Stillwater,
Oklahoma.
------
Stillwater (city), Payne County (FEMA Docket No. 7153)
Boomer Creek:
At confluence with Stillwater Creek....................... *858
Just upstream of East 19th Avenue (corporate limits)...... *859
Approximately 500 feet upstream of East 12th Avenue....... *863
Approximately 950 feet downstream of South Perkins Road... *865
At confluence of East and West Boomer Creeks.............. *866
East Boomer Creek:
At confluence with Boomer Creek........................... *866
Approximately 100 feet upstream of Virginia Avenue........ *872
Approximately 100 feet upstream of Hall of Fame Avenue.... *877
Approximately 300 feet downstream of East McElroy Road.... *880
West Boomer Creek:
At confluence with Boomer Creek........................... *866
Approximately 100 feet upstream of Virginia Avenue........ *876
Approximately 200 feet upstream of South Husband Street... *885
Approximately 200 feet downstream of Knoblock Street...... *892
Just downstream of Moore Avenue........................... *904
Approximately 700 feet upstream of Washington Street...... *906
Approximately 50 feet upstream of Lakeview Road........... *915
Maps are available for inspection at the Public Works
Department, City of Stillwater, 723 South Lewis Street,
Stillwater, Oklahoma.
------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance.'')
Dated: March 7, 1996.
Richard W. Krimm,
Acting Associate Director for Mitigation.
[FR Doc. 96-6082 Filed 3-13-96; 8:45 am]
BILLING CODE 6718-04-P
Complete official Federal Register PDF
FR Doc. 96-6067 Control of Drug Use and Alcohol Misuse in Natural Gas, Liquefied Natural Gas, and Hazardous Liquid Pipeline Operations; Alcohol Misuse Prevention Program
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10476-10477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6067]
=======================================================================
-----------------------------------------------------------------------
[[Page 10477]]
DEPARTMENT OF TRANSPORTATION
Research and Special Programs Administration
49 CFR Part 199
[Docket No. PS-102, Notice No. 5]
Control of Drug Use and Alcohol Misuse in Natural Gas, Liquefied
Natural Gas, and Hazardous Liquid Pipeline Operations; Alcohol Misuse
Prevention Program
AGENCY: Research and Special Programs Administration, DOT.
ACTION: Correction of notice number.
-----------------------------------------------------------------------
SUMMARY: This document corrects the notice number of document 96-3305
published in the Federal Register on Wednesday, February 14, 1996 (61
FR 5722). In the document heading on page 5722, the notice number
``Notice No. 1'' is changed to read ``Notice No. 5.'' The notice states
the availability of guidelines and interpretations for the Alcohol
Misuse Prevention Program.
FOR FURTHER INFORMATION CONTACT: Ms. Catrina Pavlik, Drug/Alcohol
Program Analyst, Office of Pipeline Safety, Research and Special
Programs Administration, Department of Transportation, Room 2335, 400
Seventh Street SW., Washington, DC 20590-0001; (202) 366-6199.
Issued in Washington, DC on March 1, 1996.
Richard B. Felder,
Associate Administrator, Office of Pipeline Safety.
[FR Doc. 96-6067 Filed 3-13-96; 8:45 am]
BILLING CODE 4910-60-P
Complete official Federal Register PDF
FR Doc. 96-6055 Drawbridge Operation Regulations; Buffalo River, NY
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10466-10468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6055]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
33 CFR Part 117
[CGD09-95-022]
RIN 2115-AE47
Drawbridge Operation Regulations; Buffalo River, NY
AGENCY: Coast Guard, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is changing regulations governing the
operation of the Michigan Avenue bridge, mile 1.3, Ohio Street bridge,
mile 2.1, South Park Avenue bridge, mile 5.3, and the Conrail railroad
bridges at miles 4.02 and 4.39 across the Buffalo River, all at
Buffalo, NY, by not requiring drawtenders to be in constant attendance
at these bridges. This action will relieve the bridge owners of the
burden of having drawtenders in constant attendance at their bridges
and still provide for the reasonable needs of navigation.
EFFECTIVE DATE: This rule becomes effective on March 22, 1996.
ADDRESSES: Documents concerning this regulation are available for
inspection and copying at 1240 East Ninth Street, Room 2083D,
Cleveland, OH 44199-2060 between 6:30 a.m. and 3 p.m., Monday through
Friday, except Federal holidays. The telephone number is (216) 522-
3993.
FOR FURTHER INFORMATION CONTACT:
Mr. Scot M. Striffler, Project Manager, Bridge Branch at (216) 522-
3993.
SUPPLEMENTARY INFORMATION: In accordance with 5 U.S.C. 553, good cause
exists for making this final rule effective less than 30 days after
publication in the Federal Register. A delay in effective date is
impracticable and contrary to the public interest because the schedule
changes set forth in this rule will be implemented by the City of
Buffalo on March 22, 1996. A delay is also unnecessary because a notice
of proposed rulemaking was published and the Coast Guard queried the
affected navigation interests prior to this action and received no
objections.
Regulatory History
On October 26, 1995, the Coast Guard published a notice of proposed
rulemaking entitled ``Drawbridge Operation Regulations; Buffalo River,
NY'' in the Federal Register (60 FR 54823). No comments were received.
A public hearing was not requested and therefore, was not held.
Background and Purpose
The City of Buffalo requested and received approval to remove
drawtenders from its bridges during the
[[Page 10467]]
winter months on an annual basis in accordance with 33 CFR 117.45.
The City requested that it not be required to keep a drawtender in
constant attendance at the Ohio Street bridge and that the drawtender
from the Michigan Avenue bridge be used as a roving drawtender to open
the Ohio Street bridge for the passage of vessels. Additionally, the
city requested that the South Park Avenue bridge, and two Conrail
railroad bridges, be allowed to remove drawtenders throughout the year
with a requirement to open on signal only when notice is received at
least four hours in advance of a vessel's time of intended passage
through the draws.
The Coast Guard determined that the removal of drawtenders from
these bridges, the advance notice requirement, and the establishment of
a roving drawtender at Michigan Avenue bridge would not seriously
impact navigation or business on the Buffalo River.
Discussion of Comments and Changes
No comments were received in response to the notice of proposed
rulemaking. The Coast Guard queried navigation interests prior to this
action and received no objections. Language to amend Appendix A of Part
117 (Drawbridges equipped with radiotelephones) did not appear in the
NPRM but has been added to this final rule to facilitate efficient
communication between vessels and the Michigan Avenue drawtender, and
to enhance safety. In order to clarify radiotelephone procedures,
paragraph (f) in the NPRM was revised and moved to paragraph (b)(3) in
the final rule.
Regulatory Evaluation
This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866 and does not require an assessment of
potential costs and benefits under section 6(a)(3) of that order. It
has been exempted from review by the Office of Management and Budget
under that order. It is not significant under the regulatory policies
and procedures of the Department of Transportation (DOT) (44 FR 11040;
February 26, 1979).
The Coast Guard expects the economic impact of this rule to be so
minimal that a full Regulatory Evaluation under paragraph 10e of the
regulatory policies and procedures of DOT is unnecessary. We conclude
this because the impact on navigation is minimal and all marine
interests in the area agreed to the change during preliminary
discussions. Also, the requirement to maintain a marine radiotelephone
will enable the roving drawtender to keep in communication with a
transiting vessel, which will allow the vessel to begin approaching the
draw in a more timely manner.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider whether this rule will have a significant
economic impact on a substantial number of small entities. Small
entities include independently owned and operated small businesses that
are not dominant in their field and otherwise qualify as ``small
business concerns'' under section 3 of the Small Business Act (15
U.S.C. 632). Since the final rule allows the owners of the highway and
railroad bridges to remove bridgetenders from the bridges where there
is not significant vessel traffic on the Buffalo River, and because
those vessels that would transit the river during these times can do so
by giving notice in advance of their time of intended passage through
the draw, the Coast Guard certifies under 5 U.S.C. 605(b) that this
final rule will not have a significant impact on a substantial number
of small entities.
Collection of Information
This rule contains no collection of information requirements under
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Federalism
The Coast Guard has analyzed this rule under the principles and
criteria contained in Executive Order 12612 and has determined that
this rule does not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
Environment
The Coast Guard considered the environmental impact of this rule
and concluded that, under section 2.B.2.e.(32)(e) of Commandant
Instruction M16475.1B, promulgation of operating requirements or
procedures for drawbridges is categorically excluded from further
environmental documentation.
List of Subjects in 33 CFR Part 117
Bridges.
For reasons set out in the preamble, 33 CFR Part 117 is revised as
follows:
PART 117--DRAWBRIDGE OPERATION REGULATIONS
1. The authority citation for Part 117 continues to read as
follows.
Authority: 33 U.S.C. 499; 49 CFR 1.46; 33 CFR 1.05-1(g); section
117.255 also issued under the authority of Pub. L. 102-587, 106
Stat. 5039.
2. Sec. 117.773 is revised to read as follows:
Sec. 117.773 Buffalo River.
(a) The draw of the Michigan Avenue bridge, mile 1.3, at Buffalo,
shall operate as follows:
(1) From March 22 through December 15, the draw shall open within
20 minutes of signal. However, the draw need not open from 7:30 a.m. to
9 a.m., and from 4 p.m. to 5:45 p.m., Monday through Saturday.
(2) From December 16 through March 21, the draw shall open on
signal if notice is given at least 4 hours in advance of a vessel's
time of intended passage through the draw.
(b) The draw of the Ohio Street bridge, mile 2.1, at Buffalo, shall
operate as follows:
(1) From March 22 through December 15, the draw shall open on
signal within 20 minutes after a request is made to the Michigan Avenue
drawtender. However, the draw need not open from 7:30 a.m. to 9 a.m.,
and from 4 p.m. to 5:45 p.m., Monday through Saturday.
(2) From December 16 through March 21, the draw shall open on
signal if notice is given at least 4 hours in advance of a vessel's
time of intended passage through the draw.
(3) In addition to the standard signals required for requesting the
bridge to open, the owners of this bridge shall maintain and monitor a
marine radiotelephone for use by the Michigan Avenue drawtender for
receiving requests for opening the Ohio Street bridge. The drawtender
shall maintain communications with any transiting vessel until the
vessel has cleared both the Ohio Street and Michigan Avenue draws.
(c) The draws of the Conrail railroad bridges, miles 4.02 and 4.39,
both at Buffalo, shall open on signal if notice is given at least 4
hours in advance of a vessel's time of intended passage through the
draws.
(d) The South Park Avenue bridge, mile 5.3, at Buffalo, shall open
on signal if notice is given at least 4 hours in advance of a vessel's
time of intended passage through the draw. However, the draw need not
open from 7 a.m. to 8:30 a.m., and from 4:30 p.m. to 6 p.m., Monday
through Saturday.
(e) The periods when the bridges need not open on signal prescribed
in paragraphs (a)(1), (b)(1), and (d) in this section shall not be
effective on Sundays, and on New Year's Day, Memorial Day, Fourth of
July, Labor Day, Thanksgiving Day, Christmas Day,
[[Page 10468]]
or days observed in lieu of any of these under State law.
3. Appendix A to Part 117 is amended by adding the Buffalo River
under the State of New York subheading to read as follows:
Appendix A to Part 117.--Drawbridges Equipped With Radiotelephones
--------------------------------------------------------------------------------------------------------------------------------------------------------
Calling Working
Waterway Mile Location Bridge name and owner Call sign channel channel
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
New York:
* * * * * * *
Buffalo River.................. 1.3 Buffalo............... Michigan Ave., Buffalo City WXY 998 16 13
* * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dated: February 15, 1996.
G.F. Woolever,
Rear Admiral, U.S. Coast Guard, Commander, Ninth Coast Guard District.
[FR Doc. 96-6055 Filed 3-13-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-5859 Repeal of Department of State Guidelines on Protection of Foreign Missions in the United States
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Page 10447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5859]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 61, No. 51 / Thursday, March 14, 1996 /
Rules and Regulations
[[Page 10447]]
DEPARTMENT OF STATE
22 CFR Part 2a
[Public Notice 2305]
Repeal of Department of State Guidelines on Protection of Foreign
Missions in the United States
AGENCY: Bureau of Diplomatic Security, State.
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of State is repealing 22 CFR part 2a, relating
to its protective security program for the protection of foreign
missions in the United States because these regulations are outdated
and unnecessary.
DATES: This direct final rule is effective May 13, 1996, unless the
State Department receives adverse or critical comments by April 15,
1996. If the effective date is delayed, timely notice will be published
in the Federal Register.
ADDRESSES: Interested persons are invited to submit comments in
duplicate to the Assistant Legal Adviser for Legislation and General
Management, Office of the Legal Adviser, Department of State,
Washington, DC 20520.
FOR FURTHER INFORMATION CONTACT:
Mary Beth West, Assistant Legal Adviser for Legislation and General
Management, (202) 647-5154.
SUPPLEMENTARY INFORMATION: This rule repeals 22 CFR part 2a, relating
to the Department of State's protective security program for the
protection of foreign missions in the United States. The Department is
not changing the program itself, which provides, among other things,
for the reimbursement of certain local government agencies for certain
protective services. Rather, the Department is eliminating the
regulations because they have become outdated and unnecessary in light
of the Cooperative Agreements, setting forth the program's operative
procedures, into which the local government agencies that participate
in the program all enter with the Department of State.
To ensure the proper administration of this program, the Department
of State is expanding its internal regulation in its Foreign Affairs
Manual on this subject. The rule does not directly affect the public.
Accordingly, this rule is unlikely to engender public comment.
The implementation of this rule as a direct final rule, with
provision for post-promulgation comment, is based upon the ``good
cause'' exception found at 5 U.S.C. 553(d)(3). Because this rule does
not change the program or its administration, it is not expected to
have a significant impact on a substantial number of small entities
under the criteria of the Regulatory Flexibility Act. Neither the
regulations which would be eliminated, nor the absence of such
regulations, constitute a Federal intergovernmental mandate under the
Unfunded Mandates Act (Public Law 104-4) since local government
agencies voluntarily participate in the Federal assistance program. In
addition, this rule does not impose information collection requirements
under the provisions of the Paperwork Reduction Act of 1980. This rule
has been reviewed as required by Executive Order 12778 and certified to
be in compliance therewith. This rule is exempt from review under
Executive Order 12866, but has been reviewed internally by the
Department to ensure consistency with the objectives thereof.
List of Subjects in 22 CFR Part 2a
Foreign officials, Intergovernmental relations, Security measures.
Accordingly, under the Authority 22 U.S.C. 2651a(4), 22 CFR part 2a
is removed.
Dated: December 12, 1995.
Anthony C.E. Quainton,
Assistant Secretary for Diplomatic Security.
[FR Doc. 96-5859 Filed 3-13-96; 8:45 am]
BILLING CODE 4710-08-M
Complete official Federal Register PDF
FR Doc. 96-5702 Alternative Fuel Transportation Program
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10622-10661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5702]
[[Page 10621]]
_______________________________________________________________________
Part II
Department of Energy
_______________________________________________________________________
Office of Energy Efficiency and Renewable Energy
_______________________________________________________________________
10 CFR Part 490
Alternative Fuel Transportation Program; Final Rule
Federal Register / Vol. 61, No. 51 / Thursday, March 14, 1996 / Rules
and Regulations
[[Page 10622]]
DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 490
[Docket No. EE-RM-95-110]
RIN 1904-AA64
Alternative Fuel Transportation Program
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Energy is today publishing a final rule
required by the Energy Policy Act of 1992 to implement statutorily-
imposed alternative fueled vehicle acquisition requirements that apply
to certain alternative fuel providers and some State government vehicle
fleets. The rule principally covers: interpretations necessary for
affected entities to determine whether and to what extent the statutory
requirements apply; procedures for exemptions and administrative
remedies; and a program of marketable credits to reward those who
voluntarily acquire vehicles in excess of mandated requirements or
before the requirements take effect, and to allow use of such credits
in order to demonstrate compliance with those requirements.
EFFECTIVE DATE: This rule is effective April 15, 1996.
FOR FURTHER INFORMATION CONTACT: Kenneth R. Katz, Program Manager,
Office of Energy Efficiency and Renewable Energy (EE-33), U.S.
Department of Energy, 1000 Independence Avenue SW., Washington, DC
20585, (202) 586-6116.
SUPPLEMENTARY INFORMATION:
I. Introduction
II. Provision of Lead Time to States and Covered Fuel Providers
III. Section-by-Section Discussion of Comments and Rule Provisions
A. Subpart A--General Subpart
B. Subpart B--[Reserved]
C. Subpart C--Mandatory State Fleet Program
D. Subpart D--Alternative Fuel Provider Acquisition Mandate
E. Subpart E--[Reserved]
F. Subpart F--Alternative Fueled Vehicle Credit Program
G. Subpart G--Investigations and Enforcement
IV. Review Under Executive Order 12612
V. Review Under Executive Order 12778
VI. Review Under Executive Order 12866
VII. Review Under the Regulatory Flexibility Act
VIII. Review Under the Paperwork Reduction Act
IX. Review Under the National Environmental Policy Act
X. Impact on State Governments
I. Introduction
This notice of final rulemaking concludes a regulatory action that
is mandated under the Energy Policy Act of 1992 (the Act), Pub. L. 102-
486. That Act provides for a comprehensive national energy policy for
strengthening U.S. energy security by reducing dependence on imported
oil. Titles III, IV, V, and VI of the Act contain regulatory
requirements and authorities, as well as various financial incentives
aimed at displacing substantial quantities of oil consumed by motor
vehicles. This rulemaking implements alternative fueled vehicle (AFV)
acquisition requirements imposed by Congress in sections 501 and 507(o)
of the Act on certain alternative fuel providers and some State
government fleets. 42 U.S.C. 13251, 13257(o).
On February 28, 1995, the Department of Energy (DOE) published a
notice of proposed rulemaking under sections 501 and 507(o) of the Act.
60 FR 10970. Public hearings were held in three cities with the 60-day
public comment period closing on May 1, 1995. DOE received
approximately 200 comments on the notice of proposed rulemaking.
DOE's notice of proposed rulemaking incorporated the statutory
acquisition schedules for alternative fuel providers and State fleets.
It further stated that, as provided in the Act, those schedules would
take effect at the beginning of model year 1996. 60 F.R. 10971. Many
commenters argued that DOE could not require compliance with the Act's
acquisition schedules in model year (``MY'') 1996 because it had failed
to promulgate final regulations by certain deadlines set forth in the
Act. They stated that imposing the requirements in MY 1996 would
deprive them of lead time that Congress intended them to have to
prepare to comply with the AFV acquisition requirements. After
considering these comments, DOE published a notice in the Federal
Register on June 12, 1995, reopening the rulemaking record for receipt
of comment on various options DOE was considering to give States and
covered fuel providers lead time to prepare to comply with the vehicle
acquisition requirements. 60 FR 30795. DOE received approximately 80
comments on this issue.
On July 31, 1995, DOE published a second notice of limited
reopening of the comment period. The principal purpose of this notice
was to invite public comment on options for defining the term
``substantial portion,'' which is used in section 501(a) of the Act to
determine coverage for certain petroleum producers and importers, and
on options for modifying the proposed definition of ``alternative
fuel'' with respect to alcohol fuels and biodiesel. Notice of limited
reopening, 60 FR 38974, corrected 60 FR 40539 (August 9, 1995). In
response to this reopening of the comment period, DOE received
approximately 20 additional comments.
In response to comments from members of the public and State
officials, and consistent with the Act, DOE has modified the proposed
rule in a variety of ways. The principal modifications, which are
explained in detail later in this Supplementary Information, are: (1) A
one-year shift in the statutory alternative fueled vehicle acquisition
schedules; (2) an automatic exemption to allow time for a State to
apply for and obtain approval of an Alternative State Plan for State
fleets; (3) a revised definition of the statutory term ``substantial
portion'' that omits small refiners from acquisition requirements and
includes large, integrated producers and importers; (4) the addition of
neat biodiesel to the list of ``alternative fuels''; and (5) a
provision for the allocation of credits to State government fleets and
covered fuel providers for newly acquired medium and heavy duty
alternative fueled vehicles.
A. Background
A primary goal of the Energy Policy Act of 1992 is to enact a
comprehensive national energy policy that strengthens U.S. energy
security by reducing dependence on imported oil. Currently, the United
States consumes seven million barrels of oil more per day than it
produces. Section 502 of the Act (42 U.S.C. 13252) provides goals of a
10 percent displacement in U.S. motor fuel consumption by the year 2000
and a 30 percent displacement in U.S. motor fuel consumption by the
year 2010 through the production and increased use of replacement
fuels. Section 504 of the Act (42 U.S.C. 13254) allows the Secretary to
revise these goals downward. According to the latest projections by the
Energy Information Administration, the transportation sector will
consume 13.1 million barrels per day of petroleum in 2010. Of this
total, about 7.4 million barrels per day of petroleum are projected to
be used by light duty vehicles. The Energy Information Administration
also estimates that 65 percent of our total
[[Page 10623]]
petroleum demand will be imported in 2010.
The greatest gains in displacing petroleum motor fuel consumption
by the year 2010 are expected to occur by replacing gasoline with
alternative fuels such as electricity, ethanol, hydrogen, methanol,
natural gas and propane, in a portion of the U.S. car and truck
population, which is projected to be in excess of 200 million vehicles
in the year 2010. Currently, alternative fueled vehicles comprise a
small fraction of the total U.S. vehicle stock. According to the Energy
Information Administration, of the 180 million light duty vehicles
registered in 1992, 250,000 were alternative fueled vehicles. Of this
total, about 221,000 were fueled by liquified petroleum gas (propane),
about 24,000 were fueled by compressed natural gas, and about 3,400
were fueled by methanol or ethanol. The remaining quantity of vehicles
was comprised of electric vehicles and vehicles fueled by liquified
natural gas. In 1994, it was expected that 300,000 alternative fueled
vehicles will be registered in the U.S. and that the proportion of
vehicles operating on each fuel will be approximately the same.
(Alternatives to Traditional Transportation Fuels: An Overview, DOE/
EIA-0585/O, 1994)
To enable the Act's displacement goals to be met, alternative fuels
must be readily accessible and motor vehicles that operate on these
alternative fuels must be available for purchase. Thus, two important
elements of reducing petroleum motor fuel consumption are: a nationwide
alternative fuels infrastructure and the availability of alternative
fueled vehicles for purchase at a reasonable cost by the general public
in a wide variety of vehicle types and fueling options.
B. Description of the Energy Policy Act Alternative Fuel Transportation
Program's Basic Provisions
1. General Structure
Titles III, IV, V, and VI of the Act contain the basic provisions
for regulatory mandates and authorities, as well as various financial
incentives, all of which are aimed at displacing substantial quantities
of oil consumed by motor vehicles. Title III contains general
definitions which set forth legislatively mandated policy essential to
understanding: (1) What constitutes an alternative fueled vehicle; (2)
who must comply with regulatory mandates to acquire such vehicles; and
(3) the extent to which a regulated entity's inventory of vehicles is
subject to mandates to acquire alternative fueled vehicles. Title III
also sets forth mandatory requirements for Federal fleet acquisitions
of alternative fueled vehicles, which began in fiscal year 1993.
Title IV includes a financial incentive program for States, a
public information program, and a program for certifying alternative
fuel technician training programs.
Title V provides for separate regulatory mandates for the purchase
of alternative fueled vehicles which apply to: (1) Alternative fuel
providers; (2) State government fleets; and (3) private and municipal
fleets. These mandates set forth annual percentages of new light duty
motor vehicle acquisitions which must be alternative fueled vehicles.
The minimum acquisition requirements are phased-in, escalating from
year to year until reaching a fixed percentage. The acquisition
schedules for alternative fuel providers and State governments were to
take effect at the beginning of model year 1996. The acquisition
schedule for private and municipal fleets in section 507(a) is a
tentative schedule which may only take effect if confirmed in a DOE
rulemaking. Such a rulemaking could conclude that imposition of a
vehicle acquisition mandate on private and municipal fleets is not
appropriate. Title V also allows for credits for alternative fueled
motor vehicles acquired beyond what is legally required. These credits
may be sold and used by other persons or fleets subject to a vehicle
acquisition mandate. Finally, title V contains investigative and
enforcement authorities including provisions for civil penalties and,
in certain circumstances, criminal fines for noncompliance with the
statutory mandates and implementing regulations.
Title VI of the Act contains a variety of authorities to promote
development and utilization of electric motor vehicles. More
specifically, subtitle A provides for a commercial demonstration
program, and subtitle B provides for an infrastructure and support
systems development program.
This notice of final rulemaking principally implements the title V
vehicle acquisition mandates applicable to alternative fuel providers
and to State governments.
2. Comparison to Environmental Protection Agency (EPA) Fleet
Requirement Program
The Clean Air Act, 42 U.S.C. 7401 et. seq., established a fleet
vehicle acquisition program that is somewhat similar to those in the
Energy Policy Act of 1992. Section 246 of the Clean Air Act requires
each State in which there is located all or part of an ozone non-
attainment area classified as extreme, severe, or serious under the
Clean Air Act, or a carbon monoxide non-attainment area with a design
value at or above 16.0 parts per million, to submit a State
implementation plan revision establishing a clean fuel vehicle program
providing that, beginning in model year 1998, certain percentages of
covered fleet vehicles must be clean fuel vehicles operating on clean
alternative fuels. 42 U.S.C. Sec. 7586. Section 241 of the Clean Air
Act contains definitions for the terms ``clean alternative fuel,''
``covered fleet,'' and ``covered fleet vehicle'' that contain some
phrases later used in the definitions in section 301 of the Energy
Policy Act of 1992.
While there are these similarities in statutory text that should
not be ignored by DOE in formulating its regulations, there are
critical differences between the two pieces of legislation: (1) The
primary goal of the EPA program is to significantly improve air quality
through reduced emissions of pollutants, and the primary goal of the
DOE program is to strengthen national energy security by reducing
dependence on imported oil; (2) the lists of fuels enumerated in the
definitions of ``clean alternative fuel'' under section 241 of the
Clean Air Act and of ``alternative fuel'' under section 301 of the
Energy Policy Act of 1992 are not identical, and the Department's
rulemaking discretion to add to the section 301 list is limited by
stringent statutory standards; (3) the EPA program applies to fleets as
small as 10 vehicles while 20 is the minimum number of vehicles for a
fleet as defined by section 301; (4) the EPA program applies to light
duty motor vehicles (up to 8,500 gross vehicle weight rating) and heavy
duty motor vehicles (up to 26,000 gross vehicle weight rating) while
the DOE program applies only to light duty motor vehicles; (5) the
States will administer the EPA program while DOE will directly
administer the Energy Policy Act program; and (6) the EPA program
applies only to fleets in certain ozone or carbon monoxide non-
attainment areas while the DOE program applies nationwide.
DOE has attempted in this rule to minimize the compliance burden on
fleet owners and operators who are subject to both the EPA and the DOE
fleet acquisition requirements. In particular, DOE has adopted many of
the definitions and interpretations of similar terms that EPA published
on December 9, 1993 (58 FR 64679). However, the different statutory
provisions and goals of the Energy Policy Act have prevented DOE from
adopting EPA's provisions in every instance. The most notable instance
of
[[Page 10624]]
divergence from EPA's regulations is the definition of the terms
``centrally fueled'' and ``capable of being centrally fueled'' in
Subpart A. Those definitions are explained in the section-by-section
discussion in this Supplementary Information.
With regard to burden of compliance, it is important to note that
the overlap between this final rule and EPA regulations is limited. The
EPA program applies only in certain nonattainment areas. In a final
program rule published on September 30, 1994, EPA identified 22
nonattainment areas covered by the Clean Fuel Fleet Program. 59 FR
50043. EPA officials have reported to DOE that California and Texas,
which contain 9 of the 22 areas, have submitted applications to ``opt
out'' of the Clean Fuel Fleet Program. In addition, EPA expects the
eastern States that are members of the Ozone Transport Commission to
opt out of the program in order to participate in a 49-State Low
Emission Vehicle Program that is being developed.
Thus, while irreconcilable differences in the Clean Air Act and the
Energy Policy Act prevent total congruence in implementing regulations,
the few different provisions in this final rule are not expected to
significantly impact many affected fleets.
II. Provision of Lead Time to States and Covered Fuel Providers
The Act required DOE to issue regulations implementing the
alternative fuel provider acquisition requirements in section 501(a) by
January 1, 1994, 20 months before the start of MY 1996 (beginning on
September 1, 1995). In addition, the Act required DOE to promulgate a
rule to implement the requirements for State government fleets in
section 507(o) by April 24, 1994, 16 months before the acquisition
requirements became effective in MY 1996. DOE was unable to meet the
statutory deadlines for promulgation of rules to implement sections 501
and 507(o) of the Act. The Act, which was enacted on October 24, 1992,
contained a multitude of new responsibilities, including the
alternative fueled vehicle acquisition mandates in title V. DOE was
forced to prioritize its implementation of these responsibilities, and
it periodically reported to Congress on the status of its
implementation progress. See, for example, U.S. Department of Energy,
Energy Policy Act of 1992: Implementation Status Report (Oct. 24,
1994). Although implementation of the alternative fueled vehicle
acquisition requirements was given a high priority for action, the
Administration's request for additional funds in fiscal year 1993 for
this purpose was not approved.
Many public comments on the notice of proposed rulemaking stated
that lead time was needed between promulgation of final rules by DOE
and compliance with the vehicle acquisition requirements. On June 12,
1995, DOE reopened the rulemaking record for receipt of comment on
various options it was considering for providing lead time to covered
fuel providers and States, which would allow sufficient time for them
to prepare to comply with the vehicle acquisition requirements. These
options included amending the statutory vehicle acquisition schedule,
staying enforcement, or some combination of amending the schedule and
staying enforcement. The notice specifically requested comment on the
statutory authority of DOE to amend or stay enforcement of the
acquisition schedules. See 60 F.R. 30796.
A. Summary of the Lead Time Provisions in the Final Rule
The final rule provisions related to providing lead time to States
and covered persons are summarized as follows:
Model Year 1996. To provide lead time for States and covered fuel
providers to prepare to comply with the vehicle acquisition
requirements, the acquisition schedules in Sec. 409.201 (for State
government fleets) and Sec. 490.302 (for alternative fuel providers)
have been revised to begin in MY 1997. The AFV acquisition requirements
for MY 1997, which starts on September 1, 1996, must be met by August
31, 1997 (the end of the model year).
Model Year 1997. Except for States that choose to comply with an
alternative plan under Sec. 490.203, DOE may provide lead time to
States and covered fuel providers in MY 1997, on a case-by-case basis,
using the exemption procedures set forth in Sec. 490.204 (for States)
and Sec. 490.308 (for fuel providers). Exemptions will be granted to
any State or covered person able to demonstrate that it cannot comply
with the MY 1997 vehicle acquisition requirements because of DOE's
failure to promulgate regulations by the statutory deadlines. An
automatic exemption is provided in Sec. 490.203(h) to allow time for a
State government fleet to apply for and obtain approval of a Light Duty
Alternative Fueled Vehicle Plan.
Acquisition Level in MY 1997. DOE has reduced the required
acquisition percentages in the alternative fueled vehicle acquisition
schedules in Sec. 490.201 and Sec. 490.302 by one model year. Thus,
States and covered persons are required to acquire vehicles in MY 1997
at the statutory percentage for MY 1996; in MY 1998 at the MY 1997
statutory percentage; and so on.
Credits for MY 1996 Acquisitions. DOE has revised Sec. 490.503(b)
and (c) to provide that credits will be allocated for alternative
fueled vehicles acquired on or after October 24, 1992, and before
September 1, 1996, the beginning of MY 1997. Those purchases are early-
acquired vehicles.
B. Discussion of Lead Time
1. Comments Against Providing Lead Time
Many commenters, principally producers and suppliers of alternative
fuel and alternative fueled vehicles and related equipment, argued that
because the Act's requirements are relatively straightforward and have
been known since October 24, 1992, DOE need not provide lead time to
entities subject to the vehicle acquisition requirements, except as a
matter of equity in particular instances. Other commenters stated that
Congress expressly contemplated the need for delaying or reducing the
acquisition requirements when it enacted section 501(b). They argued
that because section 501(b) authorizes DOE to delay or modify the
requirements only for MY 1997 and later, DOE may not delay or reduce
the acquisition requirements for MY 1996. In addition, they stated that
because section 507(o) does not contain any provision allowing DOE to
delay or modify State purchase obligations, DOE may not delay or reduce
the State fleet acquisition requirements.
Some commenters stated that a delay of the vehicle acquisition
mandates would jeopardize investments they have made in the production
of alternative fueled vehicles or elements of alternative fuels
infrastructure.
2. Comments for Providing Lead Time
Many commenters, principally covered fuel providers and fleet
operators, argued that they are entitled to at least the amount of lead
time provided in sections 501(a) and 507(o) for fuel providers and
States, respectively. Some commenters made the additional argument that
Congress intended the acquisition requirements to take effect at the
beginning of a model year. In their view, DOE is required to delay the
statutory vehicle acquisition requirements until MY 1998 to provide
regulated entities the amount of time the Act provides between
promulgation of rules and compliance. Some commenters stated that
section 507(l) of the Act (42 U.S.C. 13257(l)), which
[[Page 10625]]
includes lead time requirements among various factors DOE shall take
into consideration in carrying out section 507, constitutes express
authority for DOE to delay the vehicle acquisition requirements for
State fleets and covered fuel providers.
One commenter also argued that DOE can and should grant fuel
providers a general exemption from the MY 1996 requirements, under
section 501(a)(5) of the Act, because alternative fueled vehicles
meeting the normal requirements and practices of covered entities will
not be reasonably available by MY 1996. In essence, this commenter
argued that because limited types or models of alternative fueled
vehicles will be available to satisfy fleet needs, all covered persons
should be relieved of the MY 1996 acquisition requirements.
Most of the comments favoring delay of the acquisition mandates
contained only general statements about the need for lead time.
However, commenters stated that many State government fleets and
covered persons cannot acquire alternative fueled vehicles in MY 1996
because their vehicle acquisition processes are too far advanced.
Commenters also stated that lead time was needed to discuss costs and
options with affected fleet managers, obtain vehicle and fueling
facility cost estimates, prepare budgets, identify funding mechanisms,
obtain approval of budgets, prepare specifications for vehicles and
fueling facilities, issue solicitations for bids, and provide training
for persons engaged in the fueling, operation, and repair of the
alternative fueled vehicles.
3. DOE Response to Public Comments on Lead Time
DOE does not agree with comments stating that DOE is not required
to, and should not, provide any lead time to allow States and covered
fuel providers to prepare to comply with the vehicle acquisition
mandates. Although regulated entities have had notice of the Act's
basic requirements since enactment in 1992, the Act provides for DOE to
promulgate rules filling in essential substantive, procedural, and
interpretive details before the statutory vehicle acquisition
requirements take effect. It is true that there is no express link in
the Act between the deadline dates for promulgation of rules and the
dates that the vehicle acquisition schedules take effect. Nevertheless,
the structure of the Act, including a hiatus between these dates,
indicates Congress's intent that regulated entities would have some
lead time between promulgation of final regulations and the effective
date of the vehicle acquisition requirements to comprehend the
programmatic requirements as fully defined by DOE, to apply for
applicable exemptions if appropriate, and otherwise plan and execute
pre-compliance activities.
DOE recognizes that section 501(b), which allows DOE to reduce or
delay the acquisition requirements for fuel providers (but not States)
in MY 1997 and thereafter, can be read as an implicit limitation on DOE
discretion to modify the statutory acquisition schedule for alternative
fuel providers because it is silent with respect to MY 1996. Similarly,
DOE recognizes that the silence in section 507(o) with regard to
modifying the schedule for State fleets can be interpreted as a lack of
authority to provide relief for MY 1996 or to provide limited exemption
to accommodate the right of a State to apply for approval of an
alternative compliance plan. However, both section 501 and 507(o) are
premised upon timely promulgation of regulations, and neither of these
provisions address what DOE should do in the event that it proved
impossible to promulgate on time. In order to make the necessary
adjustments, DOE is choosing to read section 501 and 507(o) without
drawing negative implications of lack of authority to deal with
problems caused by late promulgation that Congress could have
anticipated but omitted to address.1
\1\ At the same time, it is noted that DOE does not interpret
section 507(1), 42 U.S.C. 13257(1), as express authority to delay
the acquisition requirements for States and covered fuel providers.
Section 507(1), which applies only to decisions under that section,
has no applicability to the fuel provider mandate in section 501 of
the Act. As applied to the State program, section 507(1) directs DOE
to consider a variety of factors when it has discretion to consider
them. DOE has heeded this provision in preparing this final rule.
---------------------------------------------------------------------------
DOE is not persuaded by the comments that it is required by the Act
to provide lead time to States and covered fuel providers in the amount
of the exact number of months in the Act between the deadline for
promulgation of final regulations and the date the statutory
acquisition schedules take effect. As pointed out above, the text of
the Act does not expressly link these dates. Moreover, the statutory
provisions making up the structure of the Act indicate that Congress
was not wedded to any fixed period of lead time. For example, the Act
provides different amounts of lead time for States (16 months) and
covered fuel providers (20 months). It also allows States to submit
alternative compliance plans at the end of the 12 month period provided
for submitting such a plan. In such a case, a State would only have a
few months lead time at most between DOE approval of plans and
compliance with the MY 1996 acquisition requirements (beginning
September 1, 1995). It is unlikely that the drafters of the Act thought
that States, some of which have biennial budgets, would need
significantly less time than fuel providers to prepare to comply with
the MY 1996 vehicle acquisition requirements. Moreover, the small
amount of lead time that a State with an alternative compliance plan
might have suggests that Congress did not think that 16 months, let
alone 20 months, of lead time is a necessity. It also is significant
that the statutory provision on alternative compliance plans for
States, section 507(o)(2), expressly provides for a 12 month period
beginning on the date of the promulgation of final regulations under
section 507(o). That language shows that Congress used very precise
words when it wanted to create a fixed lead time period. The omission
of similar expressed language in section 501 and 507(o)(2) implies that
Congress did not intend to establish an absolute amount of lead time
prior to State and fuel provider compliance with the vehicle
acquisition requirements.
Because MY 1996 has already begun, it is not possible for DOE to
both provide adequate lead time and require compliance with the
statutory MY 1996 acquisition requirements. DOE must, as a matter of
administrative necessity, relieve regulated entities from the MY 1996
requirements and determine a lead time period that is appropriate in
this situation. For the reasons stated hereafter, DOE has concluded
that it will best effectuate the Act's vehicle acquisition mandates
with an unconditional one-model year delay, combined with an automatic
exemption to allow a State to apply for and obtain approval of an
alternative compliance plan, and the case-by-case provision of lead
time through the exemption processes in the rule.
With some exemptions, such as States opting to develop alternative
compliance plans, States and fuel providers should be able to acquire
alternative fueled vehicles through their normal procurement processes.
States with annual budgets commonly will approve their fiscal year 1997
budgets in the summer of 1996. Model year 1997 begins on September 1,
1996, and States have until August 31, 1997 to meet their MY 1997
vehicle acquisition requirements. Assuming that State contracts for new
vehicles are awarded by the end of 1996, State agencies will have
several months to select and place orders for new vehicles in MY 1997.
As
[[Page 10626]]
explained in the discussion of Sec. 490.204, States that have biennial
budget cycles and cannot comply using their normal procurement
procedures will be granted exemptions from the requirements.
The record shows that covered fuel providers have a shorter and
more flexible procurement process than States.2 The record is
devoid of specific information showing that fuel providers generally
cannot comply by the end of MY 1997 through their normal procurement
processes. The commenters' desire for more time than most fuel
providers are likely to need is more than outweighed by the potential
damage to the interests of automakers and others who in reliance on the
Act have invested in alternative fueled vehicle production capacity or
other aspects of alternative fuel infrastructure, and who commented
critically on the policy options for providing lead time.
\2\ The Western States Petroleum Association, referring to a
National Association of Fleet Administrators study, stated that most
fleets make acquisition plans in July and August for October
delivery. (Comment No. 35, p. 9). The American Petroleum Institute
indicated that typically orders must be placed in August or early
September to obtain delivery in October. (Comment No. 147, p. 26).
---------------------------------------------------------------------------
The rulemaking record also shows that alternative fueled vehicles
and alternative fuels will be widely available in MY 1997.
Manufacturers of alternative fueled vehicles and conversion kits and
alternative fuel equipment manufacturers and suppliers stated in their
comments that they have been preparing to meet the increased demand for
their products and services flowing from the vehicle acquisition
mandates. Although limited types of OEM vehicles will be available in
MY 1996, information supplied by automobile manufacturers shows a
growing capacity and a desire to meet demand for alternative fueled
vehicles in MY 1997. See, e.g., production plans described in the
second notice of limited reopening, 60 FR 38974, at 38977. DOE also
received comments from companies in the after-market conversion
business which stated that they are anticipating demand for their
products and services.
Although alternative fuels and alternative fueled vehicles will be
widely available in MY 1997, comprehensive information does not exist
on the precise quantities that will be available and whether they will
match fleets' needs. Undoubtedly, some fleets will not be able to
acquire alternative fueled vehicles in MY 1997 that meet their normal
requirements and practices. For example, the record shows that
currently few Original Equipment Manufacturer (OEM) alternative fueled
vehicles are offered in the compact size range. In addition, most OEM
alternative fueled vehicles are only available in one alternative fuel
configuration. Similarly, although alternative fueling sites exist and
are growing in number in many urban markets, alternative fueling
infrastructure is lacking in other areas.
However, the fact that some covered persons and fleets will not be
able to acquire alternative fueled vehicles or alternative fuels that
meet their needs in MY 1997 does not justify a longer unconditional
delay of the vehicle acquisition requirements. Congress was aware that,
initially, alternative fueled vehicles and alternative fuels would not
be available in sufficient amounts and types to satisfy the needs of
every covered person and fleet. Anticipating the possibility of uneven
availability of vehicles and fuel, Congress provided that exemptions
must be granted to both covered fuel providers (section 501(a)(5)) and
State fleets (section 507(i)) if alternative fuels or alternative
fueled vehicles that meet their normal requirements and practices are
not available. States also are eligible for an exemption if compliance
would produce an unreasonable financial hardship. DOE will use these
exemption processes, included as Sec. 490.204 and Sec. 490.308, to
provide additional lead time to covered fuel providers and States that
are unable to comply with the acquisition requirements in MY 1997
because of DOE's delay in promulgating a final rule.
DOE expects the criteria for granting exemptions will be flexible
enough to respond to exemption requests received in MY 1997 based on
inadequate lead time. For example, DOE would likely find unreasonable
financial hardship justifying an exemption for any State that cannot
meet the MY 1997 requirements by following its regular budget and
procurement processes (e.g., a State with a biennial budget). A whole
or partial exemption also would likely be granted under Sec. 490.204
if, despite a good faith effort, a State was unable to complete an
alternative compliance plan in time to comply in MY 1997. DOE also will
apply the criteria and documentation requirements in Sec. 490.308
flexibly in reviewing requests by covered fuel providers who show they
need additional lead time to comply.
C. Discussion of Adjustments to Vehicle Acquisition Levels
DOE invited public comment on the question of whether, at the end
of the lead time period, States and covered persons should be required
to acquire vehicles at the percentage levels set forth in the statutory
schedules for MY 1997 and after, or whether DOE should defer each step
of the statutory schedules by the lead time period.
1. Comments
Most commenters favoring a delay of the acquisition requirements
also favored lowering the acquisition percentages at the end of the
lead time period, with the effect of deferring each step of the
acquisition schedule by the period of the postponement of the initial
requirement. These commenters argued that if DOE required compliance
with the applicable statutory model year percentage at the end of the
lead time period, it would upset the Act's scheme for the gradual
``ramping up'' of alternative fueled vehicle purchases and the orderly
development of the alternative fuel infrastructure.
Many of the commenters opposing delay urged DOE to require
compliance with the MY 1997 statutory percentage in MY 1997. These
commenters also argued that if DOE delayed compliance for one year, it
should require States and covered fuel providers to make up the MY 1996
requirements in subsequent years. In this way, they argued, DOE could
satisfy the congressional intent that there be some lead time for
covered persons, while at the same time keeping the programs on track
with respect to overall vehicle acquisitions.
2. Response to Comments
DOE agrees with the commenters who argued that the Act's gradual
``ramping up'' scheme would be upset if DOE enforced the statutory MY
1997 vehicle acquisition percentages in MY 1997, after having delayed
the start of compliance by one year in order to provide lead time to
covered fuel providers and States. The statutory percentages for the
first year of compliance, MY 1996, are 10 percent for States and 30
percent for covered fuel providers. The MY 1997 alternative fueled
vehicle acquisition percentages are 15 percent for States and 50
percent for covered fuel providers.
DOE believes that the difference between the first and second year
requirements under the statutory schedules is significant and that it
would be inconsistent with the statutory framework to require covered
fuel providers and States to comply with the MY 1997 acquisition
levels, which Congress established for the second year of the
acquisition mandates, in what has become the first year of the program.
Further, having decided to require
[[Page 10627]]
compliance in MY 1997 at the MY 1996 statutory percentages, DOE
concludes that it is necessary to reduce future year percentages by one
model year in order to preserve the statutory scheme of gradually
increasing the acquisition requirements over a period of years.
Some comments pointed out that although section 501(b) permits DOE
to reduce the acquisition percentage requirements for covered fuel
providers for MY 1997 and thereafter, there is no comparable provision
in section 507(o) that permits DOE to lower the percentages for State
government fleets. There is no legislative history that explains the
different treatment of fuel providers and States, but some commenters
speculated that Congress did not include a provision permitting DOE to
lower the percentages for State fleets because the percentages in
section 507(o) are much lower than for fuel providers in the early
years of the program. In any event, DOE does not interpret the Act's
provisions to prevent it from making adjustments that are consistent
with Congress' evident intent to provide lead time to covered fuel
providers and States before requiring compliance with the mandates.
D. Discussion of Giving Credits for Alternative Fueled Vehicle
Acquisitions in MY 1996.
Several commenters stated that covered persons and fleets that have
made plans to comply with the acquisition requirements in MY 1996 would
be penalized if DOE delayed the compliance schedule and did not award
them credits for alternative fueled vehicle acquisitions in MY 1996.
DOE agrees. The final rule provides that the acquisition of alternative
fueled vehicles by covered persons and State fleets will be treated as
early-acquired vehicles, which are eligible for one credit for each
year they are acquired before they are required to be acquired.
Awarding credits for MY 1996 vehicle acquisitions will avoid any
disadvantage that otherwise would be experienced by State government
fleets and covered persons. It also creates an incentive for covered
persons and fleets to acquire alternative fueled vehicles in MY 1996,
which will further the petroleum displacement and air quality goals of
the Act.
III. Section-By-Section Discussion of Comments and Rule Provisions
This section of the Supplementary Information responds to
significant comments on specific rule provisions. It also contains
explanatory material for some rule provisions that were not the subject
of public comment in order to provide interpretive guidance (mostly
drawn from the preamble to the notice of proposed rulemaking) to States
and persons that must comply with this part. Most changes from the
notice of proposed rulemaking are explained in this section. However,
some nonsubstantive changes, such as the renumbering of paragraphs and
changes to clarify the meaning of rule provisions, are not discussed.
A. Subpart A--General Subpart
Definition of ``Fleet,'' ``Centrally Fueled,'' and ``Capable of Being
Centrally Fueled''
To promote easier understanding, DOE has divided the statutory
definition of ``fleet'' into two parts. The main paragraph in the
statutory definition appears in Sec. 490.2 under the word ``fleet.''
This regulatory definition of ``fleet'' cross references Sec. 490.3,
which describes the categories of vehicles excluded by statute from the
definition.
Section 301(9) of the Act limits the term ``fleet'' to vehicles
used primarily in a metropolitan statistical area (MSA) or consolidated
metropolitan statistical area (CMSA) with a 1980 population of more
than 250,000. Consistent with the Act, the definition of ``fleet'' in
Sec. 490.2 cross references Appendix A to subpart A, which sets forth a
list of MSAs and CMSAs with 1980 Bureau of the Census population of
250,000 or more. Appendix A was generated from information in ``The
Statistical Abstract of the United States, 1993,'' which lists all of
the MSAs and CMSAs, as defined by the Office of Management and Budget
(OMB) as of December 31, 1992, with a Bureau of Census population of
250,000 or more as of 1991. This document also gives the 1980 Census
populations for these areas. The MSAs and CMSAs included in Appendix A
are those statistical areas, as defined by OMB at the end of 1992, that
have 1980 Census populations of 250,000 or more.
One commenter objected to the inclusion of a city in Appendix A
because its 1980 population was less than 250,000. The city and
surrounding area were subsequently classified as an MSA, prior to
October 24, 1992, based on census data. DOE has not removed the MSA
from the list because, as shown in the Bureau of the Census' 1993
statistical abstract, the area now classified as an MSA had a 1980
population greater than 250,000.
The statutory definition of ``fleet'' does not specify whether the
list must be updated in light of changes in the geographic areas
designated by the Bureau of the Census as MSAs and CMSAs which meet the
1980 population requirement of the Act. Comments were received as to
whether DOE should update the Appendix A list to add new MSAs/CMSAs
that had a 1980 population of 250,000. The majority of these comments
were against adding areas to the list because of the uncertainty that
updating might cause. DOE does not interpret section 301(9) of the Act
to require it to update the list of MSA/CMSAs, and in light of these
comments, has decided not to update the Appendix A list in the future.
A few comments urged DOE to remove areas from the list in Appendix
A if their populations have fallen below 250,000 since 1980. DOE has
not adopted this recommendation because the language of section 301(9)
of the Act, 42 U.S.C. 13211(9), is unambiguous in including all areas
having a 1980 population of 250,000, as determined by the Bureau of the
Census, in the definition of ``fleet.''
Consistent with the statutory language, the definition of ``fleet''
requires that there be a minimum of 20 light duty motor vehicles ``used
primarily'' in a relevant statistical area. As discussed below under
``Other Definitions,'' DOE interprets ``used primarily'' to mean that
the majority (i.e., over 50 percent) of each vehicle's total annual
miles are accumulated within a covered statistical area.
The statutory and regulatory definitions of ``fleet'' also provide
that the vehicles be ``centrally fueled or capable of being centrally
fueled.'' As discussed more fully below, Sec. 490.2 defines the term
``centrally fueled'' to mean that a vehicle is fueled at least 75
percent of the time at a location that is owned, operated, or
controlled by a fleet or covered person, or is under contract with the
fleet or covered person for refueling purposes. Vehicles that do not
meet the 75% centrally fueled criterion are excluded from the vehicles
counted to determine whether a ``fleet'' exists, and they are excluded
from the base used to calculate a covered fuel provider's or State
fleet's alternative fueled vehicle acquisition requirements. The Act
does not make the centrally fueled criterion applicable to the actual
operation of fleet vehicles. As explained elsewhere in this
Supplementary Information, section 501(a)(4) of the Act requires
alternative fueled vehicles acquired by covered fuel providers to be
operated solely on alternative fuels, except when operating in areas
where alternative fuel is not available. The Act does not establish
operational requirements for State government fleets subject to the
acquisition requirements.
It should be noted that the statutory requirement covers those
vehicles that
[[Page 10628]]
are centrally fueled or are capable of being centrally fueled. It is
possible that a vehicle that is not currently centrally fueled could be
centrally fueled. Therefore, an organization which has determined that
its vehicles are not centrally fueled must still determine if the
vehicles are capable of being centrally fueled. If the vehicles are so
capable, then the total vehicles either centrally fueled or capable of
being centrally fueled may result in a ``fleet'' or ``covered person''
that is subject to the acquisition requirements of the Act.
In determining whether 20 or more light duty motor vehicles within
a MSA or CMSA are centrally fueled or capable of being centrally
fueled, the organization must also consider situations where vehicles
that are centrally fueled or capable of being centrally fueled are
present in more than one location within the MSA or CMSA. The number of
vehicles at all locations that are centrally fueled or capable of being
centrally fueled must be totaled. For example, if a fleet or covered
person has 12 vehicles at location A that are centrally fueled or
capable of being centrally fueled and 10 vehicles at location B that
are also centrally fueled or capable of being centrally fueled, the
organization has 22 vehicles in a MSA or CMSA that are centrally fueled
or capable of being centrally fueled.
Relying upon EPA's determination that ``contract fueling'' is one
method of establishing whether fleet vehicles are centrally fueled, DOE
noted in the notice of proposed rulemaking that retail credit card
purchases by themselves are not considered to be a contractual
refueling agreement. However, the notice concluded, as did EPA, that
commercial fleet credit cards are considered to be a contractual
refueling agreement, since they are intended as a special fuel
arrangement for fleet purchases alone. The intent of DOE's proposed
definition was to ensure that only those fleet-based agreements which
provide special fleet refueling benefits at a particular facility or
group of facilities would qualify as central fueling.
Several commenters brought to DOE's attention that EPA had modified
its determination regarding the role that fleet payment methods play in
establishing whether fleet vehicles are centrally fueled or capable of
being centrally fueled. In a September 30, 1994, Federal Register
notice (59 FR 50068), EPA states that it ``will no longer recommend
that States look to the payment method as a key indicator of the
presence or absence of central fueling.'' In its place EPA recommends
that ``States look at the actual refueling patterns used by fleet
operators.'' DOE has deleted the reference to credit card agreements
from its definitions of ``centrally fueled'' and ``capable of being
centrally fueled'' to be consistent with EPA.
Section 490.2 defines the terms ``centrally fueled'' and ``capable
of being centrally fueled'' to mean a vehicle is or can be refueled at
least 75 percent of its time at a location, that is owned, operated, or
controlled by the fleet or covered person, or is under contract with
the fleet or covered person for refueling purposes. The method that DOE
is requiring for determining central fueling capability is whether 75
percent of a vehicle's total annual miles traveled are derived from
trips that are less than the operational range of the vehicle. As
defined by EPA, in its December 9, 1993, Federal Register notice (58 FR
64684) on the final rule for the definitions and general provisions for
the Clean Fuel Fleet Program, the operational range is the distance a
vehicle is able to travel on a round trip with a single refueling.
The DOE definitions differ from the EPA definitions of ``centrally
fueled'' and ``capable of being centrally fueled,'' at 40 CFR 88.302-
94, because the DOE definitions do not require that vehicles covered
must be capable of being centrally fueled 100 percent of the time. DOE
received comments, principally from representatives of natural gas and
propane producers and marketers that supported the 75 percent central
fueling standard in DOE's proposed definitions of ``centrally fueled''
and ``capable of being centrally fueled.'' Some of these commenters
stated that a 100 percent standard would allow fleets to easily avoid
the requirements by redefining vehicle missions and operating zones.
Other commenters, principally representatives of covered fuel providers
and fleet administrators, recommended that DOE adopt a 100 percent
central fueling definition. Most of these commenters argued that DOE
should adopt the EPA definition to minimize confusion and regulatory
burdens on fleets required to comply with both programs.
After considering the comments, DOE decided to retain the 75
percent central fueling standard in the final rule. DOE's decision to
not adopt EPA's definition of ``centrally fueled'' is rooted in
statutory differences between the Clean Fuel Fleet Program,
administered by EPA, and the Department's Alternative Fuel
Transportation Program.
EPA's program applies in certain non-attainment areas with the goal
of improving the air quality in those areas. EPA's explanation of its
final rule shows that EPA did not look favorably on the inclusion of
dual-fueled vehicles in the Clean Fuel Fleet Program. EPA concluded
that the purchase of flexible-fuel or dual-fueled vehicles would
achieve significantly less emissions reduction than dedicated
alternative fueled vehicles, which operate on a single type of fuel. 60
FR 64681. EPA expressly acknowledged that, by adopting a 100 percent
refueling standard, fewer vehicles would be covered by its program.
By contrast, DOE's Alternative Fuel Transportation Program applies
throughout the Nation, and its primary goal is to reduce the nation's
dependence on petroleum as a transportation fuel. DOE's program, as it
applies to covered fuel providers, is not limited to fleets operating
in large metropolitan statistical areas. ``Alternative fueled vehicle''
is defined in section 301(2) of the Act to include a dual fueled
vehicle. This shows that Congress anticipated that alternative fuels
would not be available to all covered vehicles all of the time. This is
also reflected in section 501(a)(4), which requires alternative fueled
vehicles acquired by covered fuel providers to operate solely on
alternative fuels except when operating in an area where the
appropriate alternative fuel is unavailable. 42 U.S.C.
Sec. 13251(a)(4).
DOE believes that allowing the use of all types of alternative
fueled vehicles, not just dedicated vehicles, provides flexibility to
fleet operators in acquiring vehicles that meet their normal
requirements and practices. This is especially important during the
initial years of the program, when the fueling infrastructure for
alternative fueled vehicles will not be fully developed.
In addition, vehicles acquired under DOE's program are required to
operate on fuels that are ``substantially not petroleum.'' See section
301(2) of the Act (definition of ``alternative fuel''). By contrast,
EPA's Clean Fuel Fleet Program may include vehicles that use
reformulated gasoline and clean diesel fuel. The greater availability
of reformulated gasoline and clean diesel makes the 100 percent
refueling standard more reasonable in the EPA program.
In summary, DOE believes a 100 percent standard for the definition
of ``centrally fueled'' and ``capable of being centrally fueled'' would
unduly compromise the Energy Policy Act's goals of displacing petroleum
and fostering development of an alternative fuels infrastructure.
The statutory definition of ``fleet'' requires that a minimum of 20
vehicles
[[Page 10629]]
be ``owned, operated, leased, or otherwise controlled by a governmental
entity or other person.'' 42 U.S.C. 13211(9). Section 490.2 contains a
definition of ``lease'' that excludes vehicles under rental agreements
of less than 120 days. This provision is consistent with the EPA
regulations. As EPA explained, a person does not have the same level of
control over a vehicle lease for a short period of time, and the 120-
day period takes into account short term variations in fleet operations
and the number of fleet vehicles that ought not to trigger the vehicle
acquisition mandates. 58 FR at 64687.
The statutory definition of ``fleet'' uses the concept of
``control'' to establish the guidelines for attributing vehicles to a
fleet for the purposes of determining whether the 50-vehicle minimum is
satisfied. There is similar language in the definition of ``covered
fleet'' which applies to the EPA fleet program requirement. EPA has
promulgated a definition of ``control'' (40 CFR Sec. 88.302-94), which
DOE has adopted with slight modifications to omit language not relevant
to DOE's program.
Other Definitions
Acquire. The Department was asked to define the term ``acquire'' by
a few commenters. They were uncertain as to whether the term referred
to ordering a vehicle, paying for a vehicle, or taking possession of a
vehicle. In Sec. 490.2, the Department defines ``acquire'' to mean
taking into possession or control, which is a dictionary definition.
Thus, a vehicle is acquired when it is taken into possession or
control.
After-Market Converted Vehicle. Section 490.2 defines the term
``after-market converted vehicle'' as a new or used conventional fuel
Original Equipment Manufacturer vehicle that has been converted to
operate on alternative fuel by an after-market converter. This
converter must be in compliance with all Federal, State, and local laws
at the time of conversion. After-market converted vehicles differ from
Original Equipment Manufacturer converted vehicles with respect to
which company warrants the conversion and its components. In the case
of an Original Equipment Manufacturer converted vehicle, the vehicle is
converted prior to first sale by a manufacturer or conversion company
under contract to the manufacturer to convert Original Equipment
Manufacturer vehicles, and is then offered by the Original Equipment
Manufacturer, with warranty coverage through the Original Equipment
Manufacturer, for sale to the general public. In the case of an after-
market converted vehicle, the conversion is performed by an after-
market converter, who provides the warranty for the vehicle conversion
and the conversion kit.
Alternative Fuel. Section 490.2 defines the term ``alternative
fuel'' consistent with the definition of that term in section 301 of
the Act.
Several commenters requested that propane (liquefied petroleum gas)
be removed from the list of fuels in the definition of ``alternative
fuel'' in Sec. 490.2. The definition of this term tracks section 301(2)
of the Act, which lists fuels that are alternative fuels and grants the
Secretary the authority to add fuels to the definition of ``alternative
fuel'', by rule, if they meet certain conditions. However, section
301(2) does not authorize the Secretary to delete any fuel listed in
the statutory definition. Thus, the Department has not removed
liquefied petroleum gas (or propane) from the definition of
``alternative fuel.''
Many commenters requested that biodiesel, and biodiesel blends, be
included in the Department's regulatory definition of ``alternative
fuel'' because biodiesel is a fuel ``(other than alcohol) derived from
biological materials.'' As described in the comments, biodiesel is
produced from vegetable oils, such as soybean oil, which are biological
materials. The commenters also stated that biodiesel offers significant
reduction in harmful tailpipe emissions of hydrocarbons, carbon
monoxide and particulate matter; is essentially free of sulfur and
harmful aromatics; and is non-toxic and biodegradable. These commenters
also submitted information to show that biodiesel can be made wholly
from domestic products, and that it has a positive energy balance in
its production process.
After carefully reviewing all of the comments on this issue, the
Department included in its July 31, 1995 Federal Register notice its
tentative conclusion that neat (or 100 percent) biodiesel meets the
criteria in section 301(2) for an alternative fuel; namely, that it is
a fuel, other than alcohol, that is derived from biological materials.
Several comments were received in support of this designation. No
comments were received in opposition to this position. For the reasons
set forth in the July 31 notice, the Department has revised the
definition of ``alternative fuel'' in section 490.2 to include neat
biodiesel. It is noted, however, that a DOE interpretation of
``alternative fuel'' to include neat biodiesel does not relieve
biodiesel manufacturers from any Federal, State, local government, or
automobile manufacturer requirements that may apply to the production
and use of biodiesel for motor fuel.
In its July 31, 1995 notice, DOE stated that it did not intend to
include mixtures or blends of biodiesel in the definition of
``alternative fuel'' in this rulemaking. DOE stated that more study is
required before a determination on biodiesel blends can be made. After
reviewing all of the comments on this issue, DOE has concluded than an
additional rulemaking proceeding is required to develop the information
needed to reach a conclusion on which, if any, mixtures or blends of
biodiesel should be included in the definition of ``alternative fuel.''
One commenter stated that neat biodiesel may not be the only
biologically derived fuel that can be classified as an ``alternative
fuel,'' and requested clarification that the inclusion of neat
biodiesel in the definition would not preclude other biologically
derived fuels from receiving this designation. The Department is not
currently aware of any other biologically derived fuels that are not
already included in the definition of ``alternative fuel.'' However, if
DOE were asked to designate another biologically derived fuel as an
alternative fuel, the fuel would be evaluated on its merits to
determine if it meets the criteria for an alternative fuel.
In its July 31, 1995, Federal Register notice, the Department
invited interested persons to submit data, reports and analyses in
support of previous requests that DOE revise the definition of
``alternative fuel'' to include alcohol blends containing no less than
70 percent alcohol by volume. In response, the Department received two
submissions containing information relevant to this issue. These
submissions show that decreasing the level of alcohol can improve the
cold start ability of alcohol fueled vehicles. The data shows that by
decreasing the level of alcohol to 70%, some vehicles are able to start
in weather 11 degrees F colder than they were previously able. But the
data and reports of field operation of these vehicles also show that
vehicles operating on 85% blends of ethanol or methanol can start in
winter conditions if certain procedures are followed and certain
precautions taken. These precautions and procedures are recommended for
cold-start of vehicles irrespective of what fuels they operate on. In
addition, it appears that several different combinations of non-alcohol
components with varying Reid Vapor Pressures are capable of providing
cold
[[Page 10630]]
start performance at the automakers' target temperature.
After carefully analyzing the information that has been submitted,
the Department has concluded that it needs additional information
before it can determine that 70 percent alcohol blends are required for
the cold-start of alcohol fueled vehicles. Therefore, the definition of
``alternative fuel'' in this rule retains the statutory 85 percent
standard for alcohol fuels. A separate rulemaking, initiated by DOE or
following a petition filed pursuant to Sec. 490.6 of this part, will
permit the issues related to lowering the alcohol percentage to be
fully explored.
DOE received many comments arguing that reformulated gasoline
should be added to the list of fuels included in the definition of ``
alternative fuel'' in Sec. 490.2. Commenters stated that use of
reformulated gasoline contributes to reduction of air pollutants and,
because of its increased oxygen content, displaces petroleum. Some of
these commenters argued that reformulated gasoline meets the statutory
test of being ``substantially not petroleum.'' Some commenters argued
that including reformulated gasoline in the definition of ``alternative
fuel'' would be consistent with Congress' allowance of reformulated
gasoline under EPA's clean fuel fleet program. One commenter argued
that use of reformulated gasoline should be permitted in air quality
non-attainment areas, but not elsewhere, in order to reduce the
regulatory burden on fleets in those areas. Other commenters stated
that allowing reformulated gasoline in the DOE program would help
industry recoup its investment in the production and marketing of
reformulated gasoline to meet air quality goals. Some commenters
recommended that DOE should seek amendment of the Energy Policy Act to
correct the omission of reformulated gasoline from the list of fuels
included in the statutory definition of ``alternative fuel.''
DOE also received many comments opposed to including reformulated
gasoline in the definition of ``alternative fuel'' in Sec. 490.2. These
commenters argued that reformulated gasoline is substantially petroleum
in composition, and that recognizing it as an alternative fuel would
not contribute to development of non-petroleum fueling and vehicle
technologies. Commenters stated that although reformulated gasoline is
a low-cost way to reduce hydrocarbon emissions, its use will not
significantly further the Act's petroleum displacement goals.
The Department adheres to its view that reformulated gasoline does
not meet the Act's criteria for designation as an ``alternative fuel.''
The percentage of petroleum in reformulated gasoline is too large to
warrant finding that it is ``substantially not petroleum,'' which is
required for classifying a fuel as an ``alternative fuel'' under
section 301(2) of the Act. The notice of proposed rulemaking stated
that reformulated gasoline is comprised of over 90 percent petroleum. A
commenter who represents the petroleum industry disputed this figure,
and stated that reformulated gasoline only contains 83 percent
petroleum. Even assuming that the commenter's figure of 83 percent is
correct, that percent petroleum volume is still too large to warrant a
determination that reformulated gasoline is ``substantially not
petroleum.''
Several comments were received requesting that low-sulphur diesel
and clean diesel be included as alternative fuels. The Department has
not adopted these recommendations because low-sulphur diesel and clean
diesel are fuels comprised almost totally of petroleum, and thus,
cannot be considered to be substantially not petroleum.
Covered Person. Section 490.2 defines the term ``covered person''
consistent with the definition of that term in section 301 of the Act.
Dealer Demonstration Vehicles. No comments were received on the
definition of ``dealer demonstration vehicle.'' Section 490.2 follows
the EPA definition of the term ``dealer demonstration vehicle'' found
at 40 CFR Sec. 88.302-94. EPA defines ``dealer demonstration vehicle''
as any vehicle that is operated by a motor vehicle dealer solely for
the purpose of promoting motor vehicle sales, either on the sales lot
or through other marketing or sales promotions, or for permitting
potential purchasers to drive the vehicle for pre-purchase or pre-lease
evaluation. Vehicles held by dealers for their own business purposes,
such as shuttle buses, loaner vehicles, or other repair or business-
related vehicles are not exempt, unless they are also offered for
retail sale as part of the dealer stock or are rotated through the
fleet back to the dealer stock.
Dedicated Vehicle. The notice of proposed rulemaking included the
statutory definition of ``dedicated vehicle'' in section 301(6) of the
Act, 42 U.S.C. 13211(6). Section 301(6) provides that a dedicated
vehicle is either: (i) a ``dedicated automobile'' as defined in section
513(h)(1)(C) of the Motor Vehicle Information and Cost Savings Act,
codified at 49 U.S.C. 32901(a)(7), or (ii) a motor vehicle, other than
an automobile, that operates solely on alternative fuel.
DOE received no public comments on the proposed definition of
``dedicated vehicle.'' Nevertheless, in the final rule DOE has revised
the portion of the definition relating to a ``dedicated automobile'' to
include the language of the cross-referenced statute, as a convenience
for regulated entities. As defined in the Motor Vehicle Information and
Cost Savings Act, a ``dedicated automobile'' means ``an automobile that
operates only on alternative fuel.'' 49 U.S.C. 32901(a)(7) (emphasis
added). DOE interprets the word ``automobile,'' as used in the
definition of ``dedicated automobile'' and incorporated by reference in
section 301(6), to mean an ``automobile,'' as that term is defined in
section 501(1) of the Motor Vehicle Information and Cost Savings Act,
codified at 49 U.S.C. 32901(a)(3). DOE has added a definition of
``automobile'' to Sec. 490.2, which is adapted from and is intended to
have the same meaning as ``automobile'' defined in section 501(1) of
the Motor Vehicle Information and Cost Savings Act.
Dual Fueled Vehicle. Section 301(8) of the Act, 42 U.S.C. 13211(8)
defines ``dual fueled vehicle'' as: (i) a dual fueled automobile, as
such term is defined in section 513(h)(1)(D) of the Motor Vehicle
Information and Cost Savings Act, or (ii) a motor vehicle, other than
an automobile, that is capable of operating on alternative fuel and is
capable of operating on gasoline or diesel fuel. DOE included the
statutory definition in the proposed rule, with slight modifications to
make clear that term includes all vehicles that are capable of
operating on an alternative fuel and on gasoline or diesel fuel,
including those commonly referred to as ``bi-fuel,'' flexible fuel,''
and ``dual fuel'' vehicles.
DOE received public comment on the proposed definition of ``dual
fueled'' vehicle. One commenter urged DOE to adopt definitions of
``dual fuel vehicle'' and ``flexible fuel vehicle'' in regulations
published by EPA for its Clean Fuel Fleet Program (59 FR 50042, Sept.
30, 1994). DOE cannot adopt this recommendation in its entirety because
of differences in the underlying statutes. The Clean Air Act
establishes clean alternative fuel standards for flexible fuel vehicles
and dual fuel vehicles, 42 U.S.C. 7581. EPA has, in implementing
regulations, defined the term ``dual fuel vehicle'' to mean a ``bi-fuel
vehicle'' (i.e., one that is engineered and designed to be operated on
two fuels, but not a mixture of two or more different fuels) and the
term ``flexible
[[Page 10631]]
fuel vehicle'' to mean a vehicle that is engineered and designed to be
operated on any mixture of two or more different fuels. 59 FR 50045. By
contrast, section 301(3) of the Act defines an ``alternative fueled
vehicle'' to mean a ``dedicated vehicle'' or a ``dual fueled vehicle.''
Thus, if DOE were to adopt EPA's definition of ``dual fuel vehicle,''
flexible fuel vehicles would be excluded from the definition of
``alternative fueled vehicle,'' and the acquisition of such vehicles
would not count for compliance purposes under the Act. There is nothing
in the text of the Act or its legislative history that indicates an
intent to exclude flexible fuel vehicles from DOE's Alternative Fuel
Transportation Program. A flexible fuel vehicle, authorized by the
manufacturer to operate on an alternative fuel and on gasoline or
diesel, clearly fits within the definition of ``dual fueled vehicle''
in section 301(8).
In response to the comments, DOE has made several changes in the
regulatory text to clarify that the statutory term ``dual fueled
vehicle'' includes flexible fuel vehicles. The definition of ``dual
fueled vehicle'' in Sec. 490.2 has been revised to expressly include
flexible fuel vehicles. A definition of ``flexible fuel vehicle'' has
been added to Sec. 490.2. The term is defined as ``any motor vehicle
engineered and designed to operate on any mixture of two or more
different fuels.'' This definition is taken from EPA's regulation on
clean-fuel vehicles, 40 CFR 88.102-94. The definition of ``alternative
fueled vehicle'' in Sec. 490.2 also has been revised to clarify that
flexible fuel vehicles are included.
Several commenters asked the Department to clarify whether vehicles
that are capable of operating on neat biodiesel and diesel can be
considered dual-fueled vehicles. A bi-fuel vehicle that is authorized
by the vehicle manufacturer to be operated on neat biodiesel or diesel
would meet the definition of a dual-fueled vehicle. A flexible fuel
vehicle that is authorized by the vehicle manufacturer to be operated
on neat biodiesel or diesel also would meet the definition of a dual-
fueled vehicle. These vehicles would meet this definition principally
because they are capable of operating on an ``alternative fuel'' as
defined by section 301(2) of the Act, in addition to being operated on
a petroleum-based fuel. As explained earlier in the discussion of the
definition of ``alternative fuel,'' DOE has concluded that an
additional rulemaking is needed to reach a conclusion on which, if any,
mixtures of biodiesel should be included in the definition of
``alternative fuel.'' Consequently, until such a rulemaking designates
a mixture of biodiesel and diesel as an alternative fuel, a vehicle
powered by such a mixture or conventional diesel would not qualify as a
``dual fueled vehicle.''
Emergency Motor Vehicles. Section 490.2 adopts EPA's definition for
the term ``emergency vehicle'' in 40 CFR Sec. 88.302-94. EPA defines
``emergency vehicle'' to mean any vehicle that is legally authorized by
a governmental authority to exceed the speed limit to transport people
and equipment to and from situations in which speed is required to save
lives or property, such as a rescue vehicle, fire truck or ambulance.
These vehicles normally have red and/or blue flashing lights and
sirens. DOE is relying on the speed limit criterion because this is the
way that many States define ``emergency vehicles.''
The Department received comments from utilities asking DOE to
determine that vehicles used for emergency restoration of utility
service are covered by the definition of ``emergency motor vehicles.''
These vehicles are not normally considered emergency motor vehicles
because their primary function does not include exceeding the speed
limit to transport people and equipment to and from situations in which
speed is required to save lives or property. For this reason, they are
not usually equipped with red and/or blue flashing lights and sirens.
Emergency power restoration vehicles are not excluded from the
definition of ``fleet'' unless, on a vehicle-by-vehicle basis, they are
specifically and legally authorized by a governmental authority to
exceed speed limits when responding to emergencies.
Law Enforcement Motor Vehicles. Section 490.2 adopts EPA's
definition of the term ``law enforcement vehicle'' found at 40 CFR
Sec. 88.302-94. EPA defines ``law enforcement vehicle'' to mean any
vehicle which is primarily operated by a civilian or military police
officer or sheriff, or by personnel of the Federal Bureau of
Investigation, the Drug Enforcement Administration, or other law
enforcement agencies of the Federal Government, or by State highway
patrols, municipal law enforcement, or other similar law enforcement
agencies, and which is used for the purpose of law enforcement
activities including, but not limited to, chase, apprehension,
surveillance, or patrol of people engaged in or potentially engaged in
unlawful activities.
This definition is intended to clarify the difference between law
enforcement motor vehicles and vehicles used for other security
purposes. Under this definition, a vehicle is considered to be a law
enforcement motor vehicle by virtue of its use for official law
enforcement purposes, as authorized by local, State or Federal
government authority. Private security vehicles are not excluded from
the definition of ``fleet'' unless, through a contract or other
arrangement, they are used by a law enforcement agency for the purposes
described above.
One commenter inquired whether vehicles operated by a State
corrections department
FR Doc. 96-5702 Alternative Fuel Transportation Program
and used for transport of prisoners or for
administrative duties would be considered a ``law enforcement motor
vehicle.'' DOE concludes that these vehicles are law enforcement motor
vehicles because State corrections departments are engaged in law
enforcement activities.
Lease. No comments critical of the definition of ``lease'' were
received. Section 490.2 defines the term ``lease'' to mean use of a
vehicle for transportation purposes pursuant to a rental contract or
similar arrangement, and the term of such contract or similar
arrangement is for a period of 120 days or more. This definition
closely tracks EPA's definition of ``owned or operated, leased or
otherwise controlled by such person,'' found at 40 CFR Sec. 88.302-94.
Light Duty Vehicle. One commenter inquired whether a vehicle's
gross vehicle weight rating is to be determined before or after
conversion to operate on alternative fuel. DOE has determined that the
gross vehicle weight rating applies to newly acquired vehicles prior to
conversion and has amended the definition of the term ``light duty
motor vehicle'' to reflect this determination.
Model Year. No comments critical of the definition of ``model
year'' were received. Section 490.2 defines the term ``model year'' for
the purposes of vehicle acquisition requirements as September 1 of the
previous calendar year through August 31. This definition closely
tracks EPA's definition of ``model year,'' found at 40 CFR Sec. 88.302-
94. The model year, thus defined, coincides with the period in which
most automobile manufacturers introduce their new annual models, which
should facilitate compliance since covered persons and State fleets can
make their acquisition plans regarding alternative fueled vehicles when
they make plans for acquiring new model year vehicles. For compliance
purposes, the definition of model year is important to ensure that all
fleets and covered persons acquire vehicles based on the same annual
period. Thus, any new vehicles that are acquired by a fleet or covered
person between September 1 and August 31 of
[[Page 10632]]
the next year are counted and used as the basis for determining the
acquisition requirement of the same year.
Motor Vehicle. The notice of proposed rulemaking included the
definition of ``motor vehicle'' in section 301(13) of the Act, 42
U.S.C. 13211(13), which incorporates the definition of ``motor
vehicle'' in section 216(2) of the Clean Air Act, 42 U.S.C. 7550(2). In
this rule, DOE has included the text of section 216(2) so that
regulated entities will not have to consult another source for the
meaning of this term. A comment was received that requested that non-
road vehicles be expressly excluded from the definition of ``motor
vehicle.'' The Department has amended the definition of ``motor
vehicle'' to make clear that non-road vehicles are excluded. A
definition of ``non-road vehicle,'' which is drawn from section 412(b)
of the Act, has been added to this section.
Non-road Vehicle. This term is defined to mean a vehicle not
licensed for on-road use, including vehicles used principally for
industrial, farming or commercial use, for rail transportation, at an
airport, for marine purposes and other vehicles.
Original Equipment Manufacturer Vehicle. Section 490.2 defines the
term ``Original Equipment Manufacturer Vehicle'' to mean a vehicle
engineered, designed, produced and warranted by an Original Equipment
Manufacturer. This term applies to conventionally fueled Original
Equipment Manufacturer vehicles as well as to alternative fueled
vehicles. Included in this definition are vehicles that were
conventionally fueled Original Equipment Manufacturer vehicles, but
were converted prior to sale by the Original Equipment Manufacturer,
through a contract with a conversion company, to operate on an
alternative fuel and which are covered under the Original Equipment
Manufacturer warranty. The proposed definition did not reference
Original Equipment Manufacturer warranties. This omission was pointed
out by a commenter, and it is corrected in this rule.
Used Primarily. The definitions of the terms ``fleet'' and
``covered person'' include the requirement that a vehicle must be
``used primarily'' within a metropolitan statistical area to be
included in a ``fleet.'' In response to comments requesting
clarification the Department has defined ``used primarily'' to mean
that a majority (i.e., over 50 percent) of a vehicle's total annual
miles are accumulated within a covered metropolitan statistical or
consolidated metropolitan statistical area.
Section 490.3 Excluded Vehicles
Section 490.3 sets forth the categories of vehicles that are not
counted in determining the existence of a ``fleet'' as defined in
Sec. 490.2. Some of the exclusions are discrete categories defined in
Sec. 490.2, including ``dealer demonstration vehicle,'' ``emergency
vehicle,'' and ``law enforcement vehicle.''
The statutory definition of ``fleet'' also excludes motor vehicles
held for lease or rental to the general public; motor vehicles used for
motor vehicle manufacturer product evaluations or tests; motor vehicles
which under normal operations are garaged at personal residences at
night; and motor vehicles that the Secretary of Defense certifies must
be exempt for national security reasons. This latter category was not
subject to public comment and is self-explanatory. The other
categories, however, either were subject to comment or require some
explanation.
DOE has adopted EPA's interpretation of ``motor vehicles held for
lease or rental to the general public.'' EPA interprets the phrase to
mean a vehicle that is owned or controlled primarily for the purpose of
short-term rental or extended-term leasing, without a driver, pursuant
to a contract. 40 CFR Sec. 88.302-94. Under this definition, a firm
will not be found to ``lease'' its vehicles to its employees unless the
vehicles are owned primarily for leasing them to the general public and
they are leased pursuant to formal contracts which give control of the
vehicle to the lessee. No critical comments were received on this
interpretation.
DOE also has adopted EPA's interpretation of ``motor vehicles used
for motor vehicle manufacturer product evaluations and tests,'' which
are excluded from the definition of ``fleet.'' Section 490.3 follows
EPA's definition of the phrase ``vehicle used for motor vehicle
manufacturer product evaluations and tests'' at 40 CFR Sec. 88.302-94.
It is the intent of this provision to exclude vehicles which are used
by an Original Equipment Manufacturer for production control or quality
control reasons. No critical comments were received on this
interpretation.
DOE has only partially adopted EPA's definition of ``motor vehicles
which under normal operations are garaged at personal residences at
night.'' The notice of proposed rulemaking included this statutory
language in Sec. 490.2. A number of commenters criticized DOE for not
adopting all of EPA's definitions, and one commenter specifically urged
DOE to adopt EPA's definition of this phrase. EPA defined the nearly
identical statutory language to mean ``a vehicle that, when it is not
in use, is normally parked at the personal residence of the individual
who usually operates it, rather than at a central refueling,
maintenance, and/or business location.'' 40 CFR Sec. 88.302-94. EPA
concluded that the words ``at night'' in section 241(6) of the Clean
Air Act did not preclude extending the exclusion to persons who work at
night. 58 FR 64679, 64690. DOE believes that this is a reasonable
interpretation of the statutory phrase and, in light of the comments
urging consistency in definitions, has decided to adopt the EPA
language in Sec. 490.2.
A few commenters also pointed out that some vehicles that are
garaged at personal residences of employees overnight are in fact
centrally fueled, and they urged DOE not to exclude such vehicles from
a ``fleet.'' EPA, in its definition, did not exclude a vehicle that was
in fact centrally fueled, because the relevant Clean Air Act provision
refers only to a vehicle which ``is capable of being centrally
fueled.'' 58 FR 64679, 64690. By contrast, the definition of ``fleet''
in section 301(9) of the Act excludes a vehicle garaged at a personal
residence from the definition, regardless of whether it is centrally
fueled or capable of being centrally fueled. Therefore, DOE has not
adopted that portion of EPA's definition.
Fleet operators and covered persons should subtract vehicles in
these excluded categories from the total number of new light duty
vehicles to be acquired in a model year to determine the basis for
calculating the number of alternative fueled vehicles they are required
to acquire in the model year.
Example: A covered person is going to acquire 105 new light duty
vehicles in model year 1997. Of these 105 vehicles, five are
vehicles in excluded categories. To determine how many alternative
fueled vehicles must be acquired the covered person shall make the
following calculation: [(Number of new light duty vehicles to be
acquired)--(Number of new light duty vehicles in excluded
categories)] x (Acquisition percentage for that model year). In
this example, the covered person is required to acquire 30
alternative fueled vehicles in model year 1997 {[(105)-(5)] x
(.30) = 30}.
Section 490.5 Requests for an Interpretive Ruling
Section 490.5 establishes a process for States and covered persons
to obtain DOE interpretive rulings as to how the Department intends to
construe and apply its regulations to particular factual situations,
and for whom other procedures such as petitions for
[[Page 10633]]
exemption are irrelevant. One commenter objected to this provision,
stating that it will lead to inconsistencies in implementation. DOE
does not agree with this comment. Publicly available interpretive
rulings should promote uniformity in implementation, even though any
interpretive ruling that the Department issues would apply only to the
person who requested it.
Section 490.7 Relationship to Other Law
Section 490.7 makes a declaratory statement to avoid arguments that
provisions of part 490, by implication, authorize acquisition of
vehicles, conversion of vehicles, or use of fuels as motor fuel in a
manner that does not comply with other Federal, State, or local laws.
B. Subpart B--[Reserved]
C. Subpart C--Mandatory State Fleet Program
Section 490.201 Alternative Fueled Vehicle Acquisition Mandate
Schedule
Section 490.201 sets forth the requirements, subject to some
exemptions, for the percentage of new light duty motor vehicles that
must be alternative fueled vehicles when acquired for State fleets
under the Mandatory State Fleet Program.
In response to comments that inquired about what would happen if a
State agency grew in size or moved its vehicle operations to one of the
MSAs listed in Appendix A to subpart A, the Department has added
paragraph (d). Paragraph (d) states that if, in the future, a State
agency becomes subject to this subpart because it owns, operates or
controls a fleet, the State agency shall start acquiring alternative
fueled vehicles according to the schedule percentage in effect for the
next model year. For example, if a State agency first owns, operates or
controls a fleet in model year 1998, then for model year 1999, 25
percent of the State agency's new light duty motor vehicles acquired
for its fleet should be alternative fueled vehicles. However, paragraph
(d) also recognizes that, in some cases, State agencies that are newly
required to acquire alternative fueled vehicles may qualify under
section 490.204 for an exemption or reduction of the acquisition
percentage. One commenter questioned the rounding convention in the
proposed rule for calculating acquisition requirements. After
reconsidering this issue, DOE has revised paragraph (c) to provide for
rounding up or down to the next whole number, depending on whether the
fraction is equal to or greater than one half or is less than one half.
Section 490.202 Acquisitions Satisfying the Mandate
Section 490.202 provides in substance that an acquisition of an
alternative fueled vehicle, regardless of the year of manufacture,
counts toward satisfaction of the vehicle acquisition mandate. Such a
vehicle would be new to the fleet operator. Credits acquired under
subpart F also count toward satisfaction of the mandate.
DOE received many comments opposed to the proposed rule's
requirement that new vehicles must be converted before they are placed
into service in a fleet. The Department has revised Sec. 490.202(a) to
allow States and State agencies to convert newly acquired Original
Equipment Manufacturer vehicles within four months after vehicle
acquisition. The basis for the 4-month period for conversion of newly
acquired vehicles is explained in the discussion of Sec. 490.305 in
this Supplementary Information section. Section 490.305 applies to
covered fuel providers, but its provisions are the same as those in
Sec. 490.202. Many fuel providers also objected to the proposal to
require vehicles to be converted prior to being placed into service in
a fleet and, to avoid redundancy, DOE addresses all of the comments on
this issue in the discussion of Sec. 490.305.
The Department would prefer that these vehicles be converted in the
same model year that they are acquired, but realizes that this is not
always possible. Thus, a vehicle acquired in MY 1997 could be converted
during MY 1998 (beginning on September 1, 1997), and count towards
compliance in MY 1997, if the conversion occurred within four months of
the vehicle's acquisition. However, those conversions could not be
counted for compliance with the MY 1998 requirements.
A few comments pointed out that the proposed rule did not include
any statement about a State not being required to acquire converted
vehicles, as provided in section 507(j) of the Act. The Department has
not revised the rule in response to these comments because it sees no
need to restate the statutory provision in this final rule.
Many commenters requested that the Department allow the conversion
of vehicles already in service in a fleet to count towards compliance
once the rule goes into effect. The proposed rule would not have
allowed the conversion of existing fleet vehicles to count. Upon
further analysis, the Department has decided that is was correct in not
allowing these vehicles to count towards compliance. Section 507(o)
specifically refers to ``* * * percentages of new light duty motor
vehicles acquired annually * * *'' 42 U.S.C. 13257(o) (emphasis added).
The Act's focus on vehicles new to the regulated entity indicates a
congressional intent to regulate inventory turnover and stimulate
production of new alternative fueled vehicles. Conversion of existing
fleet vehicles could seriously undermine those goals.
Although conversion of an existing fleet vehicle does not qualify
as an acquisition under the Act, DOE (as explained in the discussion of
Sec. 490.502 in Subpart F) will allocate credits for motor vehicles
that were purchased or leased by regulated entities on or after October
24, 1992, and converted to alternative fueled vehicles before the
effective date of the applicable acquisition requirements. For purposes
of calculating credits, DOE will not apply the four-month time limit to
conversions that occurred before the effective date of this rule.
Section 490.203 Light Duty Alternative Fueled Vehicle Plan
The Act provides an alternative means of compliance for States. In
lieu of a State meeting the acquisition requirements of Sec. 490.201
solely through State acquisitions, a State may comply with a Light Duty
Alternative Fueled Vehicle Plan submitted by the State and approved by
DOE. Under such an alternative compliance plan, a State may satisfy its
acquisition requirements with the voluntary participation of non-
covered State, municipal, and private fleets. However, section
507(o)(2)(A) of the Act states that any State plan must provide for the
acquisition of light duty motor vehicles by State, local and private
fleets, which in aggregate meet or exceed the applicable vehicle
percentage for any given model year.
Section 490.203(3) provides that any acquisition of light duty
alternative fueled vehicles for a State may be part of the Plan,
irrespective of whether the vehicles are in the categories of vehicles
excluded from the definition of ``fleet,'' as enumerated in Sec. 490.3.
This allows for law enforcement vehicles, or other vehicles excluded
from the definition of ``fleet'' to be part of a Light Duty Alternative
Fueled Vehicle Plan.
Unless covered by an exemption, a State is subject to the
requirements in Sec. 490.201. A State also may be required to comply
with the requirements of Sec. 490.201 if a State plan participant (such
as a municipality) fails to fulfill its commitments under the Plan.
However, if the State is able to find a
[[Page 10634]]
substitute participant, then the State may submit to DOE for approval
an amendment to the Plan.
Paragraph (b) of this section requires States to monitor and verify
on an ongoing basis the implementation of its Plan. This is to ensure
that all participants in the Plan are indeed in compliance, and that at
the end of the model year, all requirements will have been met. If for
whatever reasons a participant is unable to fulfill its commitments,
the State is obligated to find a substitute participant before the end
of the year.
Paragraph (c) establishes a general requirement that a State must
submit to DOE, for approval, its Light Duty Alternative Fueled Vehicle
Plan no later than the June 1 prior to the model year(s) covered by the
Plan. However, because section 507(o)(2)(A) of the Act specifies that
States may submit their Plan to the Department within 12 months after
final rule promulgation, DOE will not require States to submit a Plan
for model year 1996, and a plan for model year 1997 may be submitted by
March 14, 1997. After MY 1997, the Department believes that a State
should know by June 1 the number and type of light duty motor vehicles
it plans to acquire during the upcoming model year and should have
begun the procurement process for these vehicles.
A few commenters requested that States opting to comply through
these alternative compliance plans be allowed to use gallons of
petroleum displaced, instead of alternative fueled vehicles acquired,
as the measure of compliance. DOE has not adopted this recommendation
because section 507(o)(2)(A) requires each State alternative compliance
plan to provide for the acquisition of light duty motor vehicles ``in
numbers greater than or equal to the number of State alternative fueled
vehicles required pursuant to [the acquisition schedule in section
507(o)(1)].'' Thus, DOE may not adopt a petroleum displacement
standard, in lieu of requiring alternative fueled vehicle acquisitions,
for compliance under State alternative compliance plans.
Other comments asked DOE to clarify the meaning of ``voluntary''
acquisition. DOE has determined that ``voluntary'' acquisition occurs
when an entity, that is not required by the Act to acquire alternative
fueled vehicles, acquires alternative fueled vehicles. Because
municipalities and private companies, other than those determined to be
covered persons subject to the requirements under section 501, are not
currently required to acquire alternative fueled vehicles, any
acquisition of alternative fueled vehicles by these entities would be
voluntary. In addition, the acquisition of alternative fueled vehicles
by a State agency that is not an operator of a ``fleet,'' because it
does not operate at least 20 vehicles in any of the MSAs/CMSAs found in
Appendix A to subpart A, would be voluntary. The acquisition of
vehicles in categories of excluded vehicles under Sec. 490.3 also would
be voluntary.
A few comments raised the possibility of double counting of
vehicles by private and local government fleets, when and if they are
required to acquire alternative fueled vehicles under a future
rulemaking under section 507 (b) or (g) of the Act. The possibility of
the future allocation of credits for acquisitions by municipal and
private fleets depends upon a DOE finding, by rule, that a municipal or
private fleet program is necessary to meet the Act's fuel replacement
goals. 42 U.S.C. 13257 (b), (e), (f). DOE has not begun a rulemaking to
determine whether to make such a finding. Initiation of such a program
is not a foregone conclusion. Therefore, participation in a State
alternative compliance plan will not conflict with any present, and
possibly future, compliance obligations under the Act.
Section 490.204 Process for Granting Exemptions
Section 507(i)(1) of the Act provides that a State may seek
exemptions in whole or in part from the annual acquisition percentages
in three situations. As interpreted in this final rule, a State may
seek exemption if it can demonstrate that--
(1) Alternative fuels that meet the normal requirements and
practices of the principal business of the State fleet are not
available from fueling sites that will allow the fleet to be centrally
fueled in the area where the vehicles are to be operated; or
(2) Alternative fueled vehicles that meet the normal requirements
and practices of the principal business of the State fleet are not
available for sale or lease commercially on reasonable terms and
conditions within the State; or
(3) The application of such requirements would pose an unreasonable
financial hardship.
Categories 1 and 2 basically track section 507(i)(1) (A) and (B) of
the Act. DOE is aware that all domestic Original Equipment
Manufacturers sell or lease vehicles to fleets exclusively through
their dealerships, the only exception being fleet sales to the Federal
government. Other Original Equipment Manufacturers, such as vehicle
manufacturers that do not belong to the American Automobile
Manufacturers Association, sell or lease their vehicles directly to the
customer without the benefit of a motor vehicle dealer network.
Thus, to receive an exemption based on vehicle unavailability, a
State must show that no Original Equipment Manufacturer can deliver
alternative fueled vehicles to a State fleet on reasonable terms and
conditions that meet the normal requirements and practices of the
principal business of the fleet. An applicant for an exemption must
establish vehicle unavailability by submitting documentation from
vehicle manufacturers or from motor vehicle dealers, as appropriate to
its situation. Documentation requirements are explained in the
discussion of Sec. 490.308 in this Supplementary Information section.
Comments received from State and local governments and fleet
managers regarding the process for granting exemptions because of the
unavailability of alternative fueled vehicles or alternative fuels are
addressed in the discussion of Sec. 490.308, which deals with
exemptions for covered alternative fuel providers. The same statutory
criteria apply to granting exemptions to State government fleets (under
Sec. 490.204) and to covered fuel providers (under Sec. 490.308) when
alternative fueled vehicles or alternative fuels are not available.
Therefore, there is no need to duplicate the discussion of the comments
and the approach that DOE will take in granting exemptions in these
situations.
Regarding category 3, section 507(i)(1)(C) allows States to request
an exemption based on unreasonable financial hardship. Some commenters
requested clarification as to what qualifies as unreasonable financial
hardship. Many of these same commenters suggested the circumstances
that should qualify as a financial hardship. Some commenters
recommended using a life-cycle cost analysis to determine financial
hardship and provided the cost premium and payback period that should
be used. One State provided a formula and specific examples of how to
use the formula in different circumstances. Some commenters recommended
that a financial hardship exemption be granted if an alternative fueled
vehicle's initial cost was some factor greater than the cost of a
conventionally fueled vehicle. A commenter recommended tying a
financial hardship exemption to the national inflation rate. Other
commenters suggested that financial hardship should be recognized if
the
[[Page 10635]]
requirements cause more than a specified percentage increase in the
total fleet's annual budget. Another commenter suggested that if a
State is required to build a fueling facility, a financial hardship
exemption should be granted.
The Department has carefully reviewed all of the comments on this
issue and has concluded that ``unreasonable financial hardship,'' as
used in section 507(i)(1)(C) of the Act, must be determined on a case-
by-case basis. The relevant conditions in States, such as the
availability and cost of alternative fuel, will vary at any point in
time. Therefore, it is not possible to determine now, by rule, that all
States will experience unreasonable financial hardship at some time in
the future if, for example, the cost of alternative fueled vehicles is
a certain percentage or amount above the cost of conventionally-fueled
vehicles.
DOE will evaluate financial hardship exemption requests in light of
the budget constraints in the applicant State. For example, some States
have multi-year budgets, and funding for the acquisition of alternative
fueled vehicles may be insufficient in some model year. That is a
situation in which DOE would likely grant at least a partial exemption
from the requirements based on financial hardship.
DOE received comments requesting confirmation that partial
exemptions may be granted and how they might affect future vehicle
purchases. In response, the Department added paragraph (d) which states
that exemptions may be granted in whole or in part to a State. When
granting an exemption in part, DOE may, depending upon the
circumstances, completely relieve a State from a portion of the vehicle
acquisition requirements for a model year or require a State to acquire
all or some of the exempted vehicles in future years.
Paragraph (g) provides that the Assistant Secretary for Energy
Efficiency and Renewable Energy shall grant or deny a request for
exemption within 45 days. In order to keep the procedures simple, the
Assistant Secretary may act finally for the Department, and there is no
requirement to obtain the specific approval of the Secretary. If the
Assistant Secretary denies the request for exemption, paragraph (h)
further provides that a State may appeal to the Department's Office of
Hearings and Appeals, whose decision would be final for the purpose of
judicial review. Further discussion on the exemption process is found
in section-by-section analysis for the Alternative Fuel Provider
Vehicle Acquisition Mandate.
Section 490.205 Reporting Requirements
Section 490.205 requires each State that is subject to the vehicle
acquisition mandate to submit an annual report to DOE. This report will
assist DOE to determine if a State has met the requirements of this
subpart as well as how successfully the goals and requirements of this
subpart are being met. One commenter suggested that DOE should require
States and fuel providers to report whether a vehicle is dedicated or
dual-fueled and the type of fuel the vehicle is capable of operating
on. The Department has adopted this recommendation, in new
subparagraphs (b)(5) (iv) and (v), because it agrees that this
information is needed to assist DOE in carrying out its
responsibilities under title V.
DOE received several comments regarding the definition of a State
fleet. Some of these comments suggested specific agencies' fleets that
should be included in a State fleet. The most common suggestion was
that State university and college fleets should be included. Other
comments suggested characteristics of agencies for the purpose of
determining whether the fleets of these agencies should be classified
as a State fleet. A few of the comments suggested that the
determination of which agencies are to be included in a State fleet be
left up to each individual State.
Based on these comments, DOE has decided to allow each State to
determine for itself which agencies operate or control a State fleet
for reporting purposes. However, DOE will expect States to follow the
common understanding of what constitutes a ``State agency.'' State
agencies are usually authorized and funded by the State legislature,
receive funding from the State budget, or are situated on State
property. Examples of agencies that DOE expects to be classified as
State agencies are departments, offices and divisions of State
government, State colleges and universities, port authorities, and
other State entities.
In addition to allowing States to determine initially which
agencies are State agencies, DOE is giving States some leeway in how
they report the alternative fueled vehicle acquisitions of the State
agencies. Although DOE would prefer one report from each State that
aggregates the State's alternative fueled vehicle acquisitions, it is
aware that some States may have difficulty aggregating these numbers
due to the unique structure of each State. In place of one aggregate
report for a State, a State may assign a limited number of State
agencies the task of preparing the individual reports for many other
State agencies. For example, a State division of general services might
prepare and submit the report for its fleet along with reports from the
State universities and the State port authority. The State would then
submit these separate reports to DOE as its annual report. DOE believes
these reporting options will lessen the burden on the States.
For further discussion on reporting requirements, see section
490.309.
D. Subpart D--Alternative Fuel Provider Vehicle Acquisition Mandate
1. Which Alternative Fuel Providers Must Comply With the Alternative
Fueled Vehicle Acquisition Mandate
The Energy Policy Act of 1992 defines the class of alternative fuel
providers potentially subject to the alternative fueled vehicle
acquisition requirements to include persons who qualify as a ``covered
person'' under section 301(5) of the Act, 42 U.S.C. 13211(5), and fall
within one of the categories of covered alternative fuel providers in
section 501(a)(2). 42 U.S.C. 13251(a)(2). The term ``covered person''
is defined in section 301(5) to mean a person that owns, operates,
leases, or otherwise controls a ``fleet'' (defined at Sec. 490.2) and a
total of at least 50 motor vehicles within the United States. Paragraph
(a)(2) of section 501 describes the categories of covered persons
subject to the requirements as follows:
(A) A covered person, whose principal business is producing,
storing, refining, processing, transporting, distributing, importing,
or selling at wholesale or retail any alternative fuel other than
electricity;
(B) A non-Federal covered person whose principal business is
generating, transmitting, importing, or selling at wholesale or retail
electricity; or
(C) A covered person--
(i) Who produces, imports, or produces and imports in combination,
an average of 50,000 barrels per day or more of petroleum; and
(ii) A substantial portion of whose business is producing
alternative fuels.
42 U.S.C. 13251(a)(2). The final rule interprets the phrase ``principal
business'' at Sec. 490.301.
As illustrated in the Appendix to this Supplementary Information,
even if an entity meets all of the qualifications for a covered
alternative fuel provider under section 501(a)(2), it nevertheless may
be excepted from the vehicle acquisition requirements under section
501(a)(3) or exempted by DOE under section 501(a)(5). Under section
501(a)(3)(A), the vehicle acquisition
[[Page 10636]]
requirements only apply to an affiliate, division or business unit of a
covered person that is substantially engaged in the alternative fuels
business. See Sec. 490.304 (see also Sec. 490.301 for definition of
``substantially engaged''). Moreover, under section 501(a)(3)(B), the
vehicle acquisition requirements do not apply to any entity whose
principal business is transforming alternative fuel into a product
other than alternative fuel or consuming such fuel to manufacture a
product that is not an alternative fuel. Under section 501(a)(5), DOE
may exempt alternative fuel providers from the vehicle acquisition
requirements if they can show either that (1) alternative fuels that
meet their normal business requirements and practices are not
available; or (2) that alternative fueled vehicles that meet their
normal business requirements and practices are not offered for purchase
or lease on reasonable terms and conditions. See Sec. 490.308.
The term ``substantial portion'' in section 501(a)(2)(C) is a key
statutory determinant of whether a covered person that produces or
imports petroleum is an alternative fuel provider required to acquire
alternative fueled vehicles. Section 490.301 defines the term
``substantial portion'' to mean that at least 30 percent of a covered
person's annual gross revenue is derived from the sale of alternative
fuels. This definition is different from the one included in DOE's
notice of proposed rulemaking.
In its notice of proposed rulemaking, DOE defined the term
``substantial portion'' to mean that at least two percent of a covered
person's refinery yield of petroleum products is composed of
alternative fuels. DOE explained that it chose the two percent of
refinery yield threshold because it represented the average yield for
the production of alternative fuels by petroleum refiners, as reported
by the Energy Information Administration. 60 FR 10978. DOE received
many comments that criticized the proposed definition of ``substantial
portion.'' They argued that the two percent of refinery yield was too
low a threshold for classifying an entity as a ``covered person.'' Some
commenters stated that the two percent refinery yield of petroleum
products would impose vehicle acquisition requirements on many
refineries that only produce alternative fuels as incidental by-
products of the refining process, and that the alternative fuel so
produced is not sold as motor fuel. A few of the comments recommended
that DOE adopt a percentage of gross revenue derived from the sale of
alternative fuels as the basis for the definition of ``substantial
portion.'' They pointed out that gross revenue is the measure used for
determining whether other alternative fuel providers are ``covered
persons'' because their principal business is in alternative fuels. In
their view, if gross revenue is used to determine whether an entity's
principal business involves alternative fuels, it also should be used
for determining whether a petroleum producer or importer has a
substantial portion of its business in the production of alternative
fuels.
After reviewing these comments, DOE published a notice on July 31,
1995, reopening the comment period to receive public comments on
alternative definitions of the term ``substantial portion.'' 60 F.R.
38974 (corrected 60 FR 40539, Aug. 9, 1995). DOE stated that it was
persuaded by the comments that a percentage of gross revenue derived
from the sale of alternative fuels may be a better measure of an
entity's involvement in the alternative fuels business than is a
percentage of refinery yield of petroleum products. As pointed out by
some commenters, a gross revenue measure can be applied to all
producers and importers of petroleum, unlike the percent of refinery
yield measure which focuses solely on refining operations.
DOE also invited public comment specifically on the alternative of
defining ``substantial portion'' to mean that at least 30 percent of
the annual gross revenue of a covered person is derived from the sale
of alternative fuels. DOE stated that this percentage of gross revenue
appeared to be an appropriate gross revenue threshold for two reasons.
First, available information shows that major U.S. energy producing
companies historically derive at least 30 percent of their annual gross
revenue from the sale of alternative fuels. Major energy producers are
typically consolidated or integrated companies that are involved in oil
and gas exploration, oil and gas production or importing, petroleum
refining and marketing, transportation of products, other energy
operations (coal, nuclear and other energy) and non-energy businesses
(primarily chemicals). Second, this definition would exclude from the
class of covered persons subject to the vehicle acquisition
requirements those refiners involved only in petroleum refining and
marketing operations and that produce alternative fuels as an
incidental by-product of the refining process. DOE specifically
requested interested persons to submit data or analysis relevant to
this issue.
DOE received approximately 20 comments on the notice inviting
comment on possible alternative definitions of ``substantial portion.''
Two commenters argued strenuously that DOE should adhere to the 2% of
refinery yield threshold for determining which companies are covered
persons. In their view, the 30% gross revenue threshold will exempt too
many refineries and, thus, compromise the Act's goal of reducing the
nation's dependency on foreign oil. Several petroleum refiners and
marketers expressed support for the 30% gross revenue threshold. They
stated that the 30% gross revenue test properly describes the class of
producers and importers of petroleum that Congress intended to be
covered alternative fuel providers.
Several other commenters stated that a 30% of gross revenue
threshold is still too expansive. Their principal argument is that
Congress intended the alternative fueled vehicle mandates to apply only
to entities that deal directly in alternative fuels that are intended
for use as motor fuel. One commenter, for example, argued that any
definition of ``substantial portion'' must exclude materials that are
not sold directly as transportation fuel, such as non-compressed
natural gas or other materials that must be chemically or physically
altered to be used as transportation fuel. Another commenter stated
that the sale of a commodity such as natural gas does not constitute
the sale of an ``alternative fuel'' for transportation purposes. This
commenter further stated that because even compressed natural gas has
several uses, only the sale of compressed natural gas for use in the
storage compartment of a motor vehicle would constitute the sale of
``alternative fuel'' under the Act.
After reviewing the comments on this issue and having analyzed the
statutory text and its legislative history, DOE has concluded for a
variety of reasons that the Act may not be interpreted to limit the
alternative fueled vehicle acquisition mandate to entities that deal
directly in alternative fuel which is intended for use as motor fuel.
First, section 301 defines ``alternative fuel'' to include various
materials, including natural gas and electricity, but it does not limit
the term to fuel produced or handled for transportation purposes. In
this regard, it is significant that ``natural gas,'' rather than
``compressed natural gas'' is included in the definition of
``alternative fuel.'' Second, section 501(a), which imposes the
alternative fueled vehicle acquisition requirements on fuel providers,
does not expressly
[[Page 10637]]
limit coverage to entities that deal in alternative fuel for
transportation purposes. Third, the exemptions provided in section
501(a)(3)(B) necessarily imply that Congress did not intend to limit
the vehicle acquisition requirements to entities that directly deal in
motor fuels. That section exempts entities whose principal business is
``transforming alternative fuels into a product that is not an
alternative fuel'' or ``consuming alternative fuels as a feedstock or
fuel in the manufacture of a product that is not an alternative fuel.''
These exemptions show that Congress expressly addressed the question of
whether there should be an exemption based upon the use of an
``alternative fuel.'' The specification of the two particular
exemptions based upon use in a section that elaborately details
exceptions implies that Congress did not intend to create, or authorize
DOE to create, an exception for all uses of alternative fuels other
than transportation purposes.
In addition, the legislative history of the Act is contrary to the
interpretation recommended by the petroleum company commenters. The
most authoritative source regarding Congress' intent in enacting
section 501 is the Conference Report on the Act. That report's only
discussion of title V of the Act, the alternative fuels title, deals
with precisely this issue:
``The intent of section 501(a)(1) is not to cover all affiliates or
divisions of the many large energy companies which have some, but not
all, of their corporate units engaged in alternative fuels operations.
``For example, the oil and gas production affiliate or division of
a major energy company described in 501(a)(1)(C) would be covered; so
might a propane pipeline unit or a natural gas processing division, if
the 'substantially engaged' test is met.
``But an oil tanker division, a gasoline marketing affiliate, or a
petrochemical unit whose major operations are the production of
plastics, for example, would not be covered.
``The Secretary has broad discretion to define the coverage of this
provision. For example, he may in his discretion exempt some crude oil-
related operations of an oil and gas production affiliate (but not the
gas-related operations), or the petrochemical operations of a covered
methanol unit (but not the methanol-related business).''
H.R. Rep. 102-1018, 102d Cong., 2d Sess. 387 (1992).
There is no relevant Senate report language. However, the House
report on H.R. 776 contains the following explanation of the fuel
provider alternative fueled vehicle acquisition mandate, which sheds
additional light on the question of whether Congress intended to limit
the terms ``substantial portion'' and ``alternative fuel'' to fuels
only used for transportation purposes:
``The program applies to firms owning, for example, natural gas
pipelines or methanol plants. Their ready access to alternative fuel
supplies and their profit motive for developing a growing AFV market
makes them an excellent starting point for a successful transition to
alternative fuels.''
H.R. Rep. 102-474, 102d Cong., 2d Sess. 187 (1992).
Thus, the relevant conference and committee reports clearly show
that Congress foresaw coverage of some oil and gas production
affiliates, propane pipeline units, and natural gas processing
divisions.
The commenters arguing for a limiting interpretation of
``substantial portion'' or ``alternative fuel'' neither relied on any
phrase in the statutory text, nor cited any parts of the above-
referenced legislative reports, to support their narrow interpretation
of these terms. They relied almost entirely upon floor statements of
individual Members of Congress, quoted out of context, which only show
that those Members expected the Act to stimulate the development of an
alternative fueled vehicle market by various incentives and mandates
designed to encourage the replacement of gasoline with alternative
transportation fuels. None of the floor statements show an intent to
limit the term ``alternative fuel'' to transportation fuel, or
``substantial portion'' to fuel providers exclusively in the
alternative transportation fuel business. In comparison to the above-
discussed statutory text and report language, the relevance of these
floor statements to this question is marginal at best.
A few commenters argued that besides limiting ``covered persons''
to entities that directly deal in motor fuel, DOE should adopt a
percentage of gross revenue that is higher than 30 percent. One
commenter argued that if 30 percent of gross revenue represents the
lowest expected alternative fuel activity of major energy producers,
then the gross revenue percentage included in the definition of
``substantial portion'' should be raised to exceed the average of all
major energy producers. However, none of the comments provided
information that contradicts DOE's conclusion that major energy
companies historically derive at least 30 percent of their gross
revenue from the sale of alternative fuels. For the reasons given in
its July 31, 1995 notice (60 FR 38974), DOE concludes that 30 percent
of annual gross revenue derived from the sale of alternative fuels
satisfies the ``substantial portion'' test contained in section
501(a)(2)(C)(ii) of the Act.
A few commenters objected to a percentage of gross revenue measure
to determine ``substantial portion'' on the ground that it would be
more complicated to implement than other measures. One of their main
concerns was that DOE may require covered companies to disclose
confidential information or institute new accounting systems. DOE does
not foresee such a result; instead, it believes coverage can be
determined from existing public documents. As several commenters
requested, this determination will normally be made using information
found in an annual report or an annual Form 10-K report filed with the
Securities and Exchange Commission by covered persons.
2. Section-by-Section Discussion
This section discusses comments on specific provisions of subpart
D. DOE has also included explanations of some provisions that were not
the subject of comment where it believes explanations will assist
regulated entities to comply with this subpart. Some nonsubstantive
changes from the notice of proposed rulemaking, such as renumbering of
rule provisions and nonsubstantive language changes, are not discussed.
Section 490.301 Definitions
Affiliate, Business Unit, and Division. Section 490.301 provides
definitions for the terms ``affiliate,'' ``division,'' and ``business
unit'' which are used in section 501 of the Act. The first two are
dictionary definitions. ``Business unit'' is defined to make clear the
grouping of business activities must be similar in autonomy to
affiliates and divisions. Based on comments, language has been added to
the definitions of ``business unit'' and ``division'' to include the
concept of control. One commenter argued that ``affiliate'' should be
defined as an entity below the covered person in a corporate structure.
DOE has not changed the definition to adopt this narrow interpretation
of the meaning of ``affiliate'' because there is no reason to believe
that Congress intended DOE to define ``affiliate'' at variance with
normal usage.
Alternative Fuels Business. Section 490.301 contains a definition
of the term ``alternative fuels business'' which tracks the language of
section 501(a)(2). No comments specifically critical of this definition
were received.
Normal Requirements and Practices. Section 490.301 defines the term
[[Page 10638]]
``normal requirements and practices'' to mean the operating business
practices and required conditions under which the principal business of
the covered person operates. Several comments were received on this
definition. They are addressed in the discussion of section 490.308,
which deals with exemptions based on the unavailability of alternative
fuel or alternative fueled vehicles.
Principal Business. No comments specifically critical of this
definition were received. Section 490.301 defines the term ``principal
business'' to mean the largest sales-related gross revenue producing
activity. If an organization derives a plurality of gross revenue from
sales-related alternative fuels activity, then the organization's
principal business is alternative fuels. Sales-related in this context
means that the gross revenue does not come from investments such as
corporate stocks. As it is used above, plurality does not require that
over 50 percent of an organization's sales-related gross revenue be
based on activities related to alternative fuels. For example, if an
organization derives 35 percent of its sales-related gross revenue from
alternative fuels and the next largest single source of sales-related
gross revenue comprises 25 percent of the organization's gross revenue,
the organization's principal business is alternative fuels.
Substantially Engaged. Section 490.301 defines the term
``substantially engaged'' to mean that a covered person, or affiliate,
division, or other business unit thereof, regularly derives sales-
related gross revenue from an alternative fuels business. To determine
whether a covered person or affiliate, division, or other business unit
thereof is ``substantially engaged'' in the alternative fuels business,
it is important to look at the involvement the covered person,
affiliate, division, or other business unit has with the alternative
fuels business. Thus, only that affiliate, division, or business unit
that meets the substantially engaged criteria is subject to the
acquisition requirements of this program. A comment was received that
asked DOE not to include business units engaged in alternative fuel
production activities that are incidental to a company's principal
business in this definition. An example given was of a covered fuel
provider whose principal business is manufacturing denatured ethanol,
but which also operates a chain of camping stores that regularly sells
one-liter bottles of propane for use with camping stoves. The
Department would not consider that division to be substantially engaged
in the alternative fuels business if the sale of propane contributes
only an incidental or insignificant amount of the gross revenue of the
chain of stores. DOE does not think this type of situation is likely to
arise. Business units of covered persons that already have been
determined to be in the alternative fuels business, and which regularly
derive revenue from an alternative fuel business, will normally be
substantially engaged in alternative fuels. If rare situations arise in
which that is not the case, DOE can address them through case-by-case
interpretations. Nonetheless, in light of the comment, DOE has revised
the definition of ``substantially engaged'' to clarify that a business
unit will not be subject to acquisition requirements if it only derives
a negligible amount of revenue from alternative fuels.
The covered person is responsible for clearly defining the specific
affiliate, division, or other business unit that is substantially
engaged and is therefore subject to the acquisition requirements of
this rule. If this designation is not made or is not made clearly, DOE
will assume that the entire organization is subject to the acquisition
requirements of this rule and will enforce it as such.
Section 490.302 Vehicle Acquisition Mandate Schedule
Section 490.302 sets forth the schedule for the acquisition of
light duty motor vehicles which alternative fuel providers must comply
with if they are classified as covered persons subject to the
requirements.
One commenter argued that calendar years should be used instead of
model years in the schedule in paragraph (a). Section 501 specifically
requires acquisition on a model year basis. The Department has not
changed the time frame for vehicle acquisition.
Paragraph (b) states that, except as provided by section 490.304,
these requirements apply to all new light duty vehicles acquired by
those business units of covered persons that are substantially engaged
in the alternative fuels business, not just those vehicles acquired for
the fleets which initially qualified the alternative fuel provider as a
subject ``covered person.'' These requirements also apply regardless of
where the new vehicles are to be located. For example, if an
alternative fuel provider, that is a covered person, is acquiring new
light duty motor vehicles for locations that are not within MSAs or
CMSAs, these vehicles must be added to those to be acquired for the
subject MSA/CMSAs before applying the applicable percentage in
paragraph (a) to determine how many of these vehicles must be
alternative fueled vehicles.
DOE received many requests to narrow the acquisition requirements
to only vehicles acquired for use by fleets in the MSA/CMSAs listed in
Appendix A to subpart A. Some commenters stated that DOE has
misinterpreted the Act's requirements for ``covered persons'' by
concluding that all new light duty vehicles acquired by covered fuel
providers must be included in the base for determining the number of
alternative fueled vehicles to be acquired in a model year, regardless
of whether the vehicles will be operated in fleets in MSAs/CMSAs. These
commenters argued that because Congress defined ``covered person'' as a
person that owns or otherwise controls a ``fleet,'' which in turn is
defined to include only vehicles operated in an MSA or CMSA, Congress
intended the MSA/CMSA to be the basic defining criteria for the
acquisition requirements. These commenters also discerned no reason why
Congress would impose a greater burden on fuel providers than on
States. ``Covered person,'' in their view, is simply used in the Act as
a convenient way of referring to covered fuel providers.
Electric utilities argued that the acquisition requirements should
be limited, as a matter of policy, to fleets operated in MSAs/CMSAs.
These commenters stated that forcing covered utilities to purchase
alternative fueled vehicles in rural areas, where the alternative fuels
infrastructure does not exist, is impractical and likely to undermine
development of alternative fueled fleets in urban areas. They stated
that there are not likely to be enough electric vehicles to supply both
areas, and electric vehicles are not suited for operation in many rural
areas because of climate, terrain, and vehicle operational
requirements.
DOE does not agree with comments arguing that it has misconstrued
the provisions of the Act. Section 501(a) states unambiguously that the
acquisition schedules apply to ``the new light duty motor vehicles
acquired by a covered person.'' By contrast, the phrase ``for a fleet''
is used throughout section 507 in reference to the vehicle acquisition
mandates for State, local, and private fleets. The phrase ``for a
fleet'' is not found in section 501. DOE also disagrees with commenters
who stated that Congress could not have intended to impose different
acquisition requirements on States and alternative fuel providers. The
legislative history shows that Congress included a fuel provider
mandate because of fuel
[[Page 10639]]
providers' ``ready access to alternative fuel supplies.'' See Report on
H.R. 776, The Comprehensive National Energy Policy Act, H.R. Rep. 102-
474, 102 Cong. 2d Sess. 197 (1992).
DOE has not, therefore, revised paragraph (b) of Sec. 490.302 as
requested by these commenters. Nevertheless, DOE recognizes the
legitimate concerns of covered persons about acquisition of alternative
fueled vehicles in areas outside of the MSAs/CMSAs listed in Appendix A
of subpart A. DOE believes the Act and the final rule provide adequate
means of providing relief from the requirements when it is justified.
As discussed in connection with Sec. 490.308, section 501(a)(5) of the
Act prescribes a ``simple and reasonable'' process for granting an
exemption from the acquisition requirements if either alternative
fueled vehicles or alternative fuels that meet ``the normal
requirements and practices of the principal business of [the covered
person]'' are not available in the area in which the vehicles are to be
operated. 42 U.S.C. 13251(a)(5). In revising Sec. 490.308, DOE has
added a central fueling criterion and simplified the process for
obtaining an exemption for any covered person whose vehicles are
located outside of MSAs/CMSAs. An exemption will be granted if the
covered person can show that central fueling does not meet the normal
requirements and practices of that person's principal business. In
areas outside of MSAs/CMSAs, the covered person is not required to map
the location of vehicles operational areas and alternative fuel sites
if facts can otherwise be presented to establish that central fueling
is incompatible with its normal requirements and practices.
One commenter questioned the rounding convention in the proposed
rule for calculating acquisition requirements. After reconsidering this
issue, DOE has revised paragraph (c) to provide for rounding up or down
to the next whole number, depending on whether the fraction is greater
or equal to one half or is less than one half.
In response to comments that inquired about what would happen if an
alternative fuel provider grew in size or moved its vehicle operations
to one of the MSAs listed in Appendix A to subpart A, the Department
has added paragraph (e). Paragraph (e) states that if, in the future,
an alternative fuel provider first becomes a covered person subject to
the requirements, the fuel provider shall start acquiring alternative
fueled vehicles the next model year according to the schedule
percentage in effect for that model year. If an alternative fuel
provider is newly classified as a covered person in model year 1997,
then for model year 1998, 50 percent of the covered person's new light
duty motor vehicles must be alternative fueled vehicles. However, DOE
expects that some newly classified covered persons will qualify for at
least a partial exemption under Sec. 490.308 during the start-up
period.
Section 490.303 Who Must Comply
This section tracks section 501(a)(2) of the Act. The criteria for
determining which fuel providers are ``covered persons'' subject to the
vehicle acquisition mandate are discussed at the beginning of the
discussion of subpart F in this Supplementary Information section.
As stated in the notice of proposed rulemaking, municipal gas and
electric utilities possessing the required fleet size, fueling
characteristics, and located within the specified geographical areas
are classified as covered persons under section 501(a)(2)(B).
Therefore, they are expected to comply with the requirements of the
mandate under Sec. 490.302; they will not be subject to any future
municipal fleet mandate imposed by rule under section 507 of the Act.
No public comments critical of this interpretation were received.
The Department received comments seeking clarification regarding
the coverage of holding companies and their subsidiaries and
affiliates. For the purposes of compliance the Department considers the
holding company to be the ``covered person'' and the individual
companies that it owns to be its affiliates. However, once DOE
determines that a holding company is a covered person subject to the
vehicle acquisition mandate, DOE will permit the holding company to
choose to comply with its acquisition requirements either: (1) By
assuming sole responsibility for the holding company's compliance; or
(2) by choosing to have its affiliates which are substantially engaged
in the alternative fuels business assume the responsibility and report
their alternative fueled vehicle acquisitions as separate ``covered
persons.'' Holding companies may prefer one option over the other, and
DOE does not want to inhibit these holding companies in choosing among
options.
Paragraph (b) of Sec. 490.303 describes those covered persons who
are excluded by section 501(a)(3)(B) of the Act from having to comply
with this subpart. Two categories of covered persons are excluded from
the requirements of this regulation: (1) Those who transform
alternative fuels into a product that is not an alternative fuel; and
(2) those who consume alternative fuels as a feedstock or fuel in the
manufacture of a product that is not an alternative fuel.
An example of an excluded person described in paragraph (b)(1)
would be a manufacturer of windshield washer fluid. The manufacturer
would be classified as an excluded person because it blends an
alternative fuel, methanol, in producing windshield washer fluid, which
is not an alternative fuel. An example of an excluded person described
in paragraph (b)(2) would be a company that burns natural gas to
provide a heat source for a manufacturing operation. An example of an
excluded person under both paragraphs (b)(1) and (b) (2) would be an
entity whose principal business is the production of alcoholic
beverages.
Section 490.304 Which New Light Duty Motor Vehicles Are Covered
Under section 501(a)(3)(A) of the Act, if a covered person has more
than one affiliate, division, or other business unit, only an
affiliate, division, or business unit that is ``substantially engaged
in the alternative fuels business'' is subject to the vehicle
acquisition mandate. Section 490.304 reflects the provisions of section
501(a)(3)(A), and should be read in conjunction with the definitions of
``affiliate,'' ``division,'' and ``business unit'' in Sec. 490.301.
Comments which opposed the application of the acquisition schedule
to all new light duty motor vehicles acquired by a covered person are
discussed in the analysis of section 490.302.
Section 490.305 Acquisitions Satisfying the Mandate
Section 490.305 defines the four categories of alternative fueled
vehicle acquisitions that will count toward compliance with section
490.302, including the application of alternative fueled vehicle
credits under Subpart F. These categories provide flexibility for
organizations in acquiring vehicles to meet this regulation. An
alternative fueled light duty motor vehicle shall be considered to be
new, regardless of the model year it was manufactured, if:
(1) The vehicle is an Original Equipment Manufacturer vehicle
capable of operating on alternative fuels and was not previously under
the control of the covered person; or
(2) The vehicle is an after-market converted vehicle and was not
previously under the control of the covered person; or
(3) The vehicle is an Original Equipment Manufacturer vehicle that
has been converted to operate on alternative fuels within four months
[[Page 10640]]
after it comes under the control of the covered person.
A vehicle that meets the description of paragraph (1) is one that
is manufactured by an Original Equipment Manufacturer to be capable of
operating on alternative fuels. For example, if a covered person
acquires a 1994 model year flex-fuel light duty motor vehicle during
model year 1997, this vehicle is classified as being a new acquisition
for that organization. A vehicle that meets the description of
paragraph (2) is one that has been converted to be capable of operating
on alternative fuels before it is acquired by a covered person.
DOE received many comments, from both covered persons subject to
this subpart and States, on its proposal that an Original Equipment
Manufacturer vehicle must be converted prior to its first use in
service in order to be counted for compliance. The majority of these
commenters felt that this requirement was too burdensome on fleet
owners and would result in many vehicles sitting idle while awaiting
conversion. The comments also stated that because delivery schedules
for both vehicles and conversion equipment are unpredictable, it may be
difficult to schedule vehicle conversions to occur when the fleets
would require them. Other comments stated that many fleet operators
break-in a vehicle for up to 1,000 miles in order to determine whether
the vehicle has reliability problems, and that they would engage in the
same break-in period before converting a vehicle to alternative fuel
use. It also was stated that some fleet managers take delivery of
vehicles before deciding which specific vehicles to convert.
Most of the comments received on this issue recommended a specific
time-frame within which the vehicles should be allowed to be converted.
The time-frames recommended ranged from 60 days to 2 years. Various
reasons were provided in support of the specific time-frames, including
that time was needed for conversion equipment to be certified,
scheduling and completing vehicle conversion, and vehicle inspection.
Various time-frames were attributed to each activity (1 to 2 months for
some activities) as well as estimates of the compound effect a possible
delay would have on the total time needed to convert a vehicle.
After analyzing all these comments, DOE has determined that a four
month time period after vehicle acquisition should provide sufficient
time for a fleet to convert a vehicle to operate on alternative fuels.
None of the comments contained information showing that four months is
not an adequate time period for a general requirement. In addition, the
Department's experience with Federal fleet vehicle conversions shows
that a four month time period is more than sufficient to allow for the
conversion of vehicles. All Federal vehicles that were converted in
this program had their conversions completed within a three month time
period.
Many commenters requested the Department to allow the conversion of
vehicles already in service in fleets to count towards compliance once
the rule goes into effect. The notice of proposed rulemaking would not
have allowed the conversion of existing vehicles to count and, after
analyzing the comments, DOE has concluded that conversion of existing
fleet vehicles is not permitted by the Act. Section 501 of the Act
specifically refers to ``* * * new light duty motor vehicles acquired
by a covered person * * *'' 42 U.S.C. 13254(a). As explained in the
discussion of Sec. 490.202 of this Supplementary Information section,
the Department has interpreted this section to mean that vehicles,
regardless of the date of manufacture, must be newly acquired by the
covered person or State in order to count as acquisitions.
A few comments pointed out that the proposed rule did not include
any statement about a fleet operator not being required to acquire
converted vehicles, as provided in section 507(j) of the Act. The
Department has not revised the rule in response to these comments
because it sees no need to restate the statutory provision in this
final rule.
Section 490.306 Vehicle Operation Requirements
Section 490.306 tracks section 501(a)(4) of the Act, which requires
that all alternative fueled vehicles acquired pursuant to section 501
be operated solely on alternative fuels, except when these vehicles are
operating in an area where alternative fuel is not available. DOE
received several comments requesting clarification of whether electric-
hybrid vehicles would be considered to be operating solely on
alternative fuels. In Sec. 490.2, an electric-hybrid vehicle is defined
as ``a vehicle primarily powered by an electric motor that draws
current from rechargeable storage batteries, fuel cells or other
sources of electric current and also relies on a non-electric source of
power.'' DOE also notes that the definition of an electric motor
vehicle in section 601 of the Act may include an electric-hybrid
vehicle. Thus, by definition, an electric-hybrid vehicle is considered
to be an electric vehicle. Many electric-hybrid vehicles are designed
with a non-electric power source which operates on an alternative fuel,
such as a natural gas turbine or a hydrogen fuel cell. DOE recognizes
that some electric-hybrid vehicles may be designed to operate on
gasoline or diesel engines, but in almost all cases these engines
provide supplementary power to the vehicle, while the electricity
generator provides the vast majority of the power to the vehicle's
electric drivetrain. Therefore, the use of these vehicles in a covered
person's fleet meets the requirement for operating solely on
alternative fuels.
The Department also received comments seeking clarification as to
whether fuel providers that operate dual-fueled vehicles will comply
with this section. Inclusion of dual-fueled vehicles in the definition
of ``alternative fueled vehicle'' in section 301 and the qualifying
phrase in section 501(a)(4) of the Act, show that Congress recognized
that some fuel providers may operate in areas where alternative fuels
are not available and that if dual-fueled vehicles are used in these
territories, they may have to refuel on a petroleum-based fuel. It is
clear that, under the Act, the operation of a vehicle on petroleum-
based fuel is allowable as long as the dual-fueled vehicle refuels on
alternative fuel when it travels in an area where alternative fuel is
available.
Section 490.307 Option for Electric Utilities
Section 490.307 deals with the statutory option available to
electric utilities. Paragraph (a) tracks the provisions of section
501(c) of the Act, which provides that a covered person whose principal
business is generating, transmitting, importing, or selling, at
wholesale or retail, electricity has the option of delaying the
alternative fuel vehicle acquisition schedule in section 501(a) of the
Act until January 1, 1998, if that covered person intends to comply
with this regulation by acquiring electric motor vehicles.
DOE received several inquiries as to whether a combination utility,
i.e., a utility that provides both natural gas and electricity, would
be allowed to comply as two separate entities, thereby allowing the
electric side of the utility to apply for the electric utility option.
These comments stated that many combination utilities support both
electric vehicle and natural gas vehicle market development and wish to
comply with the acquisition requirements by acquiring both kinds of
vehicles. The comments stated that the proposed rule appeared to
require combination utilities to choose one type of vehicle only to
comply with their
[[Page 10641]]
acquisition requirements, even though it may be contrary to the
strategic plans of that utility.
The Department has decided to allow the electric affiliate,
division or business unit of a combination utility to apply for a delay
in the implementation of its vehicle acquisition schedule until January
1, 1998. Section 490.307 has been revised to reflect this change by
adding the words ``or its affiliate, division or business unit'' in
paragraphs (a)-(c) and by including these words in new paragraph (d).
In such circumstances, a schedule delay would be granted to that
portion of the utility whose business is the production, generation,
distribution or transmission of electricity.
Paragraph (b) contains the acquisition schedule that an electric
utility, or its affiliate, division or other business unit must comply
with if the Secretary is notified by the required date.
Many commenters argued that if an electric utility, having chosen
the electric utility option, is unable despite a good faith effort to
acquire suitable or sufficient numbers of electric vehicles to meet its
requirements, DOE should grant that utility a full or partial exemption
for the applicable model year. These commenters supported a case-by-
case exemption process that requires utilities to make a showing of
``good faith'' efforts to comply. Some commenters stated that it would
be appropriate to ``roll over'' compliance obligations to succeeding
model years in certain situations (e.g., the inability of automobile
manufacturers to produce sufficient numbers of electric vehicles.)
However, they stated that rolling over requirements would not be
appropriate in other situations (e.g., vehicles that meet the normal
business requirements of the fleet operator are not available).
DOE has added paragraph (c) to clarify that electric utilities that
choose the electric utility option may apply for an exemption under
Sec. 490.308 if alternative fueled vehicles or alternative fuels that
meet their normal requirements and practices are not available.
Many of the electric utility commenters also urged DOE to
categorically provide that an electric utility that chooses to comply
with electric vehicles will never be required to purchase another type
of alternative fueled vehicle to satisfy the acquisition mandate. They
argued that Congress intended that the fuel of choice for covered fuel
providers should be the fuel that fuel provider deals in or sells. They
stated that inclusion of the electric utility option shows that
Congress intended to allow electric utilities to comply with electric
vehicles only. They argued that if an electric utility is ultimately
unable to meet the acquisition schedule, it would be inequitable and
contrary to the Act for DOE to require the utility to acquire some
other type of alternative fueled vehicle. Not only would this force
electric utilities to create a market for a competitor's fuel, it would
require them to divert investment capital away from development of an
electric vehicle market.
DOE is generally sympathetic to these arguments, but the utility
commenters did not identify any statutory text or legislative history
to support their suggestion for a categorical exemption. Nevertheless,
in DOE's view, these arguments may be relevant to requests for
exemptions under Sec. 490.308 from the acquisition requirements on the
basis that non-electric alternative fueled vehicles do not meet the
``normal requirements and practices'' of their principal business. If
utilities can successfully argue that this is generally true, then DOE
is prepared to issue an appropriate interpretive rule.
Comment was received inquiring what would happen to the acquisition
schedule of an electric utility, or its affiliate, division or other
business unit if it chooses to rescind its election of the electric
utility option. In response, DOE has added paragraph (d), which
provides t
FR Doc. 96-5702 Alternative Fuel Transportation Program
hat an electric utility, or its affiliate, division or other
business unit will have to comply with the acquisition schedule in
Sec. 490.302, unless otherwise exempt, if it rescinds its election of
the option.
Section 490.308 Process for Granting Exemptions
Section 490.308 implements the requirements of section 501(a)(5) of
the Act, which provides for a simple and reasonable exemption process
for those covered persons seeking exemptions either because alternative
fuel is not available or alternative fueled vehicles are not reasonably
available. Paragraph (a) describes the procedure that a covered person
needs to complete to receive an exemption.
Paragraph (b) contains the criteria for exemption, as interpreted
by DOE. The first category of exemption is if any covered person
demonstrates to the satisfaction of DOE that alternative fuels that
meet the normal requirements and practices of the principal business of
the covered person's fleet are not available from fueling sites that
will allow the fleet to maintain its centrally fueled character in the
area where the vehicles are to be operated. The second category of
exemption is if any covered person demonstrates to the satisfaction of
DOE that alternative fueled vehicles that meet the normal requirements
and practices of the principal business of that person are not
available for sale or lease on reasonable terms and conditions in any
State included in a MSA/CMSA in which the fleet operates.
These exemptions would be granted for one model year only. To
receive exemptions for additional model years, alternative fuel
providers must reapply to the Department each year. Exemption decisions
will be based on documentation that relates to the criteria for
determining the availability of alternative fuels and alternative
fueled vehicles.
DOE received many comments on the process for obtaining an
exemption when either alternative fuels or alternative fueled vehicles
that meet the normal requirements and practices of the principal
business are not available. Because the statutory criteria for granting
exemptions on these grounds are identical for State government fleets
and covered persons, DOE consolidates here its summary of the comments
of both States and covered fuel providers.
a. Discussion of alternative fuel availability. Most of the
comments on unavailability of fuel focused on the explanation of
Sec. 490.204(a)(1) and Sec. 490.308(a)(1) in the preamble of the notice
of proposed rulemaking, rather than on the text of the proposed rule
provisions. In the notice of proposed rulemaking, DOE explained the
process for determining fuel availability as follows:
[A]n alternative fuel provider must map out the operating area
and base of operations for its fleet of vehicles. Next, it must
locate on the map the alternative fueling facilities within its MSA
or CMSA. Then, for each vehicle, it must determine whether any
location providing alternative fuel is in the area in which the
vehicle is operated. If there is any location providing alternative
fuel within the vehicle's operating area, alternative fuel is
available. If there are no locations providing alternative fuel, for
any alternative fuel that meets the normal requirements and
practices of the covered person's principal business, within the
vehicle's operating area, then alternative fuel is ``not
available.'' 60 F.R. 10980.
Many commenters argued that this explanation of the fuel
availability exemption did not take into account other factors that
must be considered in determining fuel availability. For example,
commenters argued that alternative fuel should not be considered to be
available if--
(1) it is not readily deliverable to motor vehicles because it is
not of the proper composition for motor fuel, or there are no
dispensers of the fuel;
[[Page 10642]]
(2) it is not available at convenient locations and times, or the
fueling facility does not provide the same range of services; or
(3) fueling at an alternative fueling facility significantly
increases the fueling time.
DOE believes these are factors that are properly considered in
determining whether fuel is available that meets ``the normal
requirements and practices'' of the principal business of the covered
person or fleet. DOE will consider factors such as these when
determining whether to grant or deny a request for an exemption because
alternative fuel is not available.
DOE will, to the extent consistent with its statutory
responsibilities, defer to reasonable fleet operators' judgments about
the alternative fueled vehicles and alternative fuels that best meet
their needs. DOE offers the following example to illustrate this:
A State government fleet operator reasonably determines that
vans are the only available vehicles that meet its normal business
requirements and practices. In searching for alternative fueled
vans, the State fleet operator determines that only CNG-powered vans
are available, but CNG is not available in the fleet's operating
area. However, ethanol fueling facilities are available in the
fleet's operating area. Because the State fleet operator has
determined that no ethanol vans are available, it can apply for an
exemption. DOE is likely to grant an exemption under paragraph
(b)(1) for this situation.
Numerous commenters, including many electric utilities, stated that
the proposed exemption requirements would force them to operate
alternative fueled vehicles in rural areas that lack the refueling
infrastructure or are otherwise unsuited to alternative fueled vehicle
use because of terrain, climate, and other factors. Some commenters
argued that an alternative fuel site located near the far edge of a
vehicle's operating range is not a suitable refueling location for the
fleet. Several commenters stated that the requirement of mapping
operating areas and fueling sites is burdensome and impractical. One
commenter argued that if an alternative fuel facility is not available
that allows the fleet to maintain its centrally fueled characteristics,
an exemption should be granted. Other commenters recommended that DOE
revise the rule to specify a distance in miles, beyond which
alternative fuel would be deemed ``unavailable.''
In response to these comments, DOE has revised Sec. 490.308 to
state, in paragraph (b)(1), that alternative fuel is not available if
it cannot be obtained from fueling sites that permit central fueling of
the covered person's fleet. Paragraph (c)(2) provides that a covered
person that operates light duty vehicles outside of the MSAs/CMSAs
listed in Appendix A of Subpart A is not required to map the vehicle
operation zones and alternative fuel site locations if it can otherwise
show that central fueling does not meet the normal requirements and
practices of its principal business.
DOE notes that some of the comments which criticized the proposed
exemption provision reflect a misunderstanding of Sec. 490.306, which
incorporates the Act's requirement that alternative fueled vehicles
owned or controlled by covered persons must operate solely on
alternative fuels. As explained in the discussion of Sec. 490.306, that
requirement does not apply when vehicles are operating in areas where
the appropriate alternative fuel is not available.
b. Discussion of alternative fueled vehicle availability. To
receive an exemption based on the criteria in subparagraph (b)(2), the
covered person (or State fleet operator under Sec. 490.204) must show
that alternative fueled vehicles that meet the normal practices and
requirements of its principal business are not available for commercial
acquisition on reasonable terms and conditions for each MSA/CMSA that
they operate a fleet in, within any of the States a MSA/CMSA comprises.
For example, a covered person operating a fleet in the Louisville MSA
(KY-IN) would have to show that no alternative fueled vehicle that
meets the needs of its fleet are available in Kentucky or Indiana on
reasonable terms and conditions.
Covered fuel providers having vehicles outside of MSAs/CMSAs, which
are centrally fueled or capable of central fueling, must show that
alternative fueled vehicles that meet the normal requirements and
practices of their principal business are not commercially available on
reasonable terms within the States those vehicles operate in.
Many commenters asked for clarification of the factors that DOE
will take into account when determining whether vehicles are
commercially available on reasonable terms and conditions. Some
commenters pointed out that fleets procure vehicles in regular cycles,
and in the case of States, sometimes multi-year cycles. In addition,
the availability of alternative fueled vehicles produced by automobile
manufacturers is limited, and delivery dates are sometimes uncertain.
As a result, States and covered persons claim they may be unable to
acquire alternative fueled vehicles during the model year in which they
are required, even if they have acted in good faith and taken
reasonable steps to meet their requirements. Many electric utilities
submitted comments expressing concern about the consequences of being
unable, despite a good faith effort, to obtain electric vehicles to
satisfy their requirements. See discussion of Sec. 490.307.
DOE will examine each request, and supporting documentation, to
determine whether the State fleet or covered person has acted in good
faith and taken reasonable steps to acquire vehicles for the model year
in question. DOE will take into account the terms and conditions of any
contracts or agreements a State fleet or covered person has entered
into to obtain alternative fueled vehicles, as well as purchase orders
placed by States and covered persons. For this determination, terms and
conditions refer to stipulations, provisions, limitations, and
prerequisites that are included in the contracts or agreements that
enable the covered person to acquire motor vehicles.
If a fleet operator has ordered alternative fueled vehicles during
a model year with a reasonable expectation that they would be delivered
by the end of the model year, DOE will grant an exemption for that
model year if the vehicles are not delivered in time to satisfy the
requirement. Those vehicles would not then count as acquisitions in the
model year in which they were delivered. On the other hand, DOE may not
grant an exemption if it determines that a fleet or covered person has
not made a good faith effort to acquire alternative fueled vehicles for
a model year.
In the case of fuel providers, including utilities choosing the
electric utility option under Sec. 490.307, DOE will take into account
steps the covered person has taken to help develop a market for
alternative fueled vehicles that use the fuel that they provide.
Some commenters stated that requiring a State or covered person to
inquire about alternative fueled vehicle availability from every dealer
in a State is onerous. These commenters stated that the paperwork
burden and the time involved in this process would be excessive. The
Department does not wish to impose an undue paperwork burden on those
States and fuel providers that are required to acquire alternative
fueled vehicles under this program. To lessen the burden, DOE will only
require a State or fuel provider to submit documentation from Original
Equipment Manufacturers showing that
[[Page 10643]]
alternative fueled vehicles meeting its normal requirement and
practices will not be available directly or through any dealer in a
particular State. Returning to the above example of a covered person
operating a fleet in the Louisville MSA, the covered person needs to
provide documentation that shows that Original Equipment Manufacturers
will not provide alternative fueled vehicles that meet its normal
requirements and practices either directly or through a dealer in
Kentucky or Indiana. Thus, the final rule only requires a covered
person to submit documentation from a limited number of sources showing
vehicle unavailability, as opposed to documentation from every dealer
in a State. The Department believes that this will greatly simplify the
process for States and covered persons in determining the availability
of alternative fueled vehicles that meet their normal requirements and
practices.
DOE has added paragraph (e) to clarify that an exemption may be
granted in whole or in part. One situation in which a partial waiver
(e.g., exempting a fleet from model year requirements, but requiring
some or all of the vehicles to be acquired in the next model year) may
be appropriate is when a fleet or covered person cannot acquire
vehicles in time to satisfy a model year's requirements.
Some commenters sought clarification or offered recommendations
concerning the meaning of ``normal requirements and practices'' when
used in determining whether alternative fueled vehicles are available.
Several commenters argued that the range, safety, performance
characteristics, maintainability, cost, cargo capacity and passenger
capacity should be factors included in making that determination. One
commenter stated, for example, that a utility which normally purchases
subcompact cars for reading meters should not be required to purchase
luxury class vehicles if subcompacts are not available. DOE agrees that
all of these factors may be considered in determining whether
alternative fueled vehicles are available that meet the normal
requirements and practices of a State fleet's or covered person's
business.
If a covered person normally acquires vehicles from one automobile
dealer or from one automobile manufacturer, but is unable to acquire
alternative fueled vehicles of the model type needed from these same
sources, this is not sufficient to qualify for an exemption under
subparagraph (b)(2), if appropriate alternative fueled vehicles are
available from other dealers or manufacturers. Having to use another
dealer or manufacturer will not be considered to be outside the normal
requirements and practices of the covered person. The same procedures
that are currently being employed by the covered person to obtain these
vehicles can be used to obtain them from different sources.
Paragraph (b) sets forth the types of documentation in support of
exemption requests that should be provided to DOE.
Section 490.309 Annual Reporting Requirements
Section 490.309 sets forth annual reporting requirements. An annual
report to verify regulation compliance is required of all covered
alternative fuel providers. Paragraph (a) sets forth where and by when
annual reports should be sent.
Paragraph (b) describes the information that must be included in
this annual report. One commenter suggested that DOE should require
States and fuel providers to report whether a vehicle is dedicated or
dual-fueled and the type of fuel the vehicle is capable of operating
on. The Department has determined that this information is necessary
for administering title V of the Act, including monitoring compliance
with the vehicle acquisition requirements. Thus, section 490.309(b)(5)
(iv) and (v) have been added.
Subparagraph (b)(2) requires covered persons to report the number
of new light duty alternative fueled vehicles that they are required to
acquire by section 490.302 or 490.307. To determine this number, a
covered person would multiply the number entered for subparagraph
(b)(1), by the acquisition percentage from section 490.302 or 490.307,
whichever applies for that model year. For example, if the number of
new light duty motor vehicles acquired by a covered person in MY 1998
is 50, the number of new light duty vehicles that are required to be
acquired is 50 percent of 50, or 25 (50 x .5=25). The number of new
light duty alternative fueled vehicles acquired, added to the number of
alternative fueled vehicle credits applied, from subparagraph (b)(4),
should be equal to or greater than the number calculated for
subparagraph (b)(2).
Paragraph (c) sets forth the procedure that a covered person must
follow if it is applying alternative fueled vehicle credits against its
acquisition requirements.
Consistent with the requirements of 5 CFR Part 1320.6(f), paragraph
(d) would require that records related to this reporting requirement be
maintained and retained for a period of three years.
E. Subpart E--Reserved
F. Subpart F--Alternative Fueled Vehicle Credit Program
Background
Section 508 of the Act requires DOE to establish an alternative
fueled vehicle credit program that will allocate alternative fueled
vehicle credits to a fleet or covered person that is required to
acquire alternative fueled vehicles under title V of the Act. Credits
are to be given to a fleet or covered person that acquires alternative
fueled vehicles in excess of the number that fleet or covered person is
required to acquire, or that acquires alternative fueled vehicles prior
to the date that fleet or covered person is required to acquire
alternative fueled vehicles. An alternative fueled vehicle credit may
be used to comply with alternative fuel provider or fleet program
requirements in a later year, or it may be traded to another fleet or
covered person who is required to acquire alternative fueled vehicles
by Part 490.
The purpose of establishing a credit program is to provide
purchasing flexibility for the regulated fleet operators without
sacrificing the program's energy security goals. The general concept is
that some fleet operators may, at times, find it attractive to buy more
alternative fueled vehicles than required, if in doing so they can get
credit against future acquisition requirements, or can sell or transfer
the credits to another party. If the credit program is properly
implemented and managed, there will be no decrease in energy security
compared to a program based strictly on compliance through
acquisitions.
Subject to a restriction on fuel use that must accompany a credit
transferred to a covered fuel provider, alternative fueled vehicle
credits can be traded freely among any of the organizations in the
United States that are required to acquire alternative fueled vehicles.
Because a major goal of the Act is the reduction of our Nation's
dependency on foreign oil, it makes little difference where in the
United States this reduction takes place. This distinguishes the DOE
credit program from credit trading under EPA's Clean Fuel Vehicle
program, which limits trading to transfers within the ``non-
attainment'' areas.
The one restriction on trading is based upon the last sentence of
section 508(d) of the Act, which provides that vehicles generating
credits which are transferred to alternative fuel providers must
[[Page 10644]]
operate solely on alternative fuel, except when operating in an area
where the appropriate alternative fuel is unavailable. 42 U.S.C.
13258(d). This requirement is explained in the discussion of
Sec. 490.506 in this Supplementary Information.
Section 490.502 Creditable Actions
Section 490.502 describes the actions for which DOE will allocate
alternative fueled vehicle credits pursuant to section 508 of the Act.
Section 508(a) of the Act authorizes the allocation of credits to
fleets or covered persons that acquire alternative fueled vehicles in
excess of the number they are required to acquire, or that acquire
alternative fueled vehicles in advance of the date they are required to
be acquired. However, after the Act's alternative fueled vehicle
acquisition requirements become effective under this part, the only way
a fleet or covered person can generate credits is by acquiring
alternative fueled vehicles exceeding the number of vehicles required
to be acquired, calculated as applicable under Sec. 490.201 or
Sec. 490.302. Credits can no longer be allocated for early
acquisitions. For example, an alternative fueled vehicle acquired in
excess of the number required in model year 1997 cannot be claimed to
be an early acquired alternative fueled vehicle for model year 1999.
The excess alternative fueled vehicle will generate 1 alternative
fueled vehicle credit only, not 2 credits because it was acquired 2
years in advance.
Under this provision, the acquisition of alternative fueled
vehicles excluded from acquisition determinations by Sec. 490.3, such
as motor vehicles held for lease or rental to the general public,
emergency vehicles and law enforcement vehicles, will generate credits
that can be used to satisfy the State fleet and alternative fuel
provider acquisition requirements. Similarly, acquisition of
alternative fueled vehicles exceeding 8,500 pounds gross vehicle weight
(i.e., medium and heavy duty vehicles) also will generate credits.
Section 508(b) of the Act provides the statutory basis for this policy
because it refers to the allocation of credits for the excess or early
acquisition of alternative fueled vehicles in excess of the number of
vehicles a fleet or covered person is required to acquire. Credits are
not limited to alternative fueled vehicles that qualify as acquisitions
under the vehicle acquisition mandates for States and fuel providers.
The allowance of credits for the acquisition of medium and heavy
duty alternative fueled vehicles reflects a change from the notice of
proposed rulemaking. In the notice of proposed rulemaking, DOE
discussed whether to allow the acquisition of medium duty and heavy
duty alternative fueled vehicles to generate credits. DOE stated that
many medium duty and heavy duty vehicles are predominantly urban use
vehicles, such as transit buses and delivery trucks, and could take
advantage of the anticipated fueling infrastructure within these urban
areas. DOE also stated that these vehicles possess larger capacity
engines, which consume significantly more fuel than light duty vehicles
and result in increased displacement of petroleum-based fuel and
greater energy security. However, while recognizing these potential
benefits from giving credit for such acquisitions, DOE stated that the
Act prevented allocating credits for the acquisition of medium and
heavy duty vehicles because section 508(b) provides that a credit shall
be allocated for the same ``type'' vehicle as the excess vehicle or
earlier acquired vehicle. The term ``type'' is not defined in the Act,
and nothing in the legislative history of the Act explains it. In the
notice, DOE proposed the interpretation that because the only type of
vehicles that are required to be acquired by title V are light duty
vehicles, credits could not be given for the acquisition of medium and
heavy duty alternative fueled vehicles. See 60 F.R. at 10982.
a. Comments critical of the Department's proposed interpretation.
The Department's proposed interpretation of section 508(b) of the Act,
as applied to allocating credits for the acquisition of medium and
heavy duty vehicles, was the subject of much criticism in public
comments. Commenters argued that the proposed interpretation was not
required by the text of the Act, and that other interpretations would
better further the goals of the Act.
Several commenters pointed out that ``alternative fueled vehicle,''
as defined in section 301(3) of the Act, is not limited to motor
vehicles weighing 8,500 or fewer pounds gross vehicle weight.
Commenters also stated that the term ``class,'' not ``type,'' is
commonly used to distinguish vehicles by weight. Therefore, if Congress
had intended to restrict credits to acquisition of light duty vehicles,
it would not have used the term ``type'' to impose such a restriction.
In support of this argument, commenters noted that the term ``type'' is
used in section 302(a) of the Act to distinguish dedicated and dual
fueled vehicles. Some commenters argued that the statutory language
would have been a peculiarly indirect way for Congress to limit
allocation of credits to acquisition of light duty vehicles. Congress
could have provided that credits shall only be allocated for the
acquisition of light duty alternative fueled vehicles. Or, as one
commenter pointed out, Congress could simply have stated that DOE shall
only allocate credits for early or excess acquisitions. Instead,
section 508(b) states that ``credits shall be allocated for the same
type vehicle as the excess vehicle or earlier acquired vehicle.''
Commenters also argued that although Congress decided not to
require the acquisition of medium and heavy duty vehicles as part of
the mandates, the concerns that influenced that decision are not
present when a State or covered person voluntarily acquires an
alternative fueled medium or heavy duty vehicle. Engine manufacturers
stated that medium and heavy duty vehicles were exempted from the Act's
alternative fueled vehicle acquisition requirements because most heavy
duty engines are not capable of operating on flexible fueling, and the
alternative fueling infrastructure is not developed widely enough to
meet the needs of such dedicated fuel vehicles. Another commenter
suggested that the study of heavy duty vehicles acquired by Federal
government fleets, mandated by section 302(a)(4) of the Act, indicates
that Congress favored including heavy duty vehicles but thought that
more information was needed before requiring States and covered persons
to acquire heavy duty vehicles. Thus, in their view, there is no
inconsistency in limiting the acquisition mandates to light duty
vehicles and allocating credits for the voluntary acquisition of medium
and heavy duty vehicles.
Commenters also argued that interpreting the term ``type'' to
foreclose allocation of credits to acquisition of medium and heavy duty
vehicles would be contrary to the Act's petroleum displacement and air
quality goals. Commenters supplied additional information and reasons
to show that allocating credits for the acquisition of medium and heavy
duty vehicles will promote the goals of the Act. These commenters
stated that allowing credit for the acquisition of medium and heavy
duty alternative fueled vehicles will increase the availability of
alternative fueled vehicles, allow fleets increased flexibility in
acquiring vehicles, and advance the state of alternative fueled vehicle
technology. The California Energy Commission commented that its
extensive experience in alternative fuel infrastructure development
shows that it is critical to have a high volume of alternative fuel
available immediately to achieve the economies of scale needed for
alternative fuels to compete with
[[Page 10645]]
conventional fuels. Another commenter stated that high alternative fuel
usage is needed to permit fleets to offset the higher initial cost of
alternative fueled vehicles. It was argued that allowing credits for
the acquisition of medium and heavy duty vehicles, which use much more
fuel than light duty vehicles, will promote development of the fueling
infrastructure that is essential for covered persons and fleets. Other
commenters stated that the use of alternative fuels in medium and heavy
duty vehicles will contribute to the air quality goals in section 502
of the Act because heavy duty vehicles emit high levels of pollution
when operating on petroleum-based fuels.
b. Response to comments and explanation of the final rule. DOE
agrees with the commenters who argued that interpreting the word
``type'' to restrict allocation of credits to acquisition of light duty
vehicles produces a result that does less to further the Acts's
petroleum displacement and other goals than would allowing credits for
the acquisition of medium and heavy duty vehicles. DOE also is
persuaded that allocating credits for medium and heavy duty vehicle
acquisitions would not be inconsistent with Congress' decision to
exclude medium and heavy duty vehicles from the alternative fueled
vehicle acquisition mandates.
However, DOE is obligated to give effect to the statutory text, and
section 508(b) states that a ``credit shall be allocated for the same
type vehicle as the excess or earlier acquired vehicle.'' Although
commenters suggested various alternative interpretations of this
statutory language, DOE has concluded that none of the commenters'
proposed interpretations is satisfactory. Some commenters suggested
that ``type'' could refer to the Act's requirement that covered
alternative fuel providers must operate vehicles solely on alternative
fuel, except when operating in areas where such fuel is not available.
They suggested that DOE could interpret the type of vehicle restriction
to require that a vehicle which generated a credit must be operated
solely on alternative fuel after the credit's transfer. This
interpretation is unsatisfactory because section 508(d) already
expressly attaches the alternative fuel operation requirement to
credits generated by fuel provider acquisitions. Other commenters
suggested that ``type'' could refer to the type of alternative fuel
used by the vehicle. However, this distinction makes no sense in the
context of the State and alternative fuel provider mandates because
sections 501 and 507(o) are ``fuel neutral,'' i.e., they contain no
distinctions based on type of alternative fuels. Some commenters argued
that the type of vehicle restriction could be interpreted to permit
allocating more credits for alternative fueled vehicles that consume a
large amount of alternative fuel. However, section 508(b) expressly
provides that one credit shall be allocated for the acquisition of
alternative fueled vehicles; thus, multiple credits for vehicles that
consume a large amount of alternative fuel is not permitted.
The statutory text allows one plausible interpretation of the type
of vehicle restriction, which could be applied to address a situation
that might arise under title V of the Act. Unlike sections 501 and
507(o) of the Act, which set forth light duty vehicle acquisition
requirements for States and covered fuel providers, section 507(k)(2)
of the Act authorizes DOE, by rule, to require inclusion of new urban
buses in a private or municipal fleet vehicle acquisition program
established under section established under section 507 (a) or (g). The
type of vehicle restriction in section 508 could apply to prevent a
covered private or municipal fleet operator from satisfying a
requirement to acquire an urban bus with a credit that was generated by
the acquisition of a light duty vehicle. The allocation of a credit for
the acquisition of a light duty vehicle in that situation would
undermine the petroleum displacement and air quality goals of the Act.
If DOE proposes a private and municipal fleet program in the future,
DOE may propose amendments to subpart F in order to reflect the
``type'' of vehicle restriction. Experience under the Alternative Fuel
Transportation Program may reveal other possible applications of the
type of vehicle restriction in section 508(b). In that event, DOE will
give effect to this language through case-by-case application of the
statutory provision or by proposing an amendment of these regulations.
In summary, it is not clear what Congress intended by including the
type of vehicle restriction in section 508. However, after
reconsidering this issue, DOE has concluded that whatever that
statutory language means, it cannot be interpreted to mean that credits
may not be allocated for the acquisition of medium and heavy duty
vehicles under this part. Therefore, Sec. 490.502 has been revised to
treat the acquisition of new medium and heavy duty vehicles the same as
vehicles excluded under the section 490.3. Both involve the acquisition
of an alternative fueled vehicle in addition to the number of
alternative fueled vehicles that a fleet is required to acquire. Thus,
both should generate credit.
The Department received comments requesting that credits be
allocated for conversions of fleet vehicles to alternative fueled
vehicles before the effective date of the acquisition requirements.
These commenters argued that they had been converting vehicles since
1992, believing that they would receive credits for these conversions
pursuant to section 508 of the Act.
DOE can accommodate these comments to a limited extent because its
discretion to allocate credits for conversions that occur prior to the
effective date of the acquisition requirements is limited by the terms
of the Act. Section 508(a) provides, in relevant part, that DOE shall
allocate a credit to a fleet or covered person that ``acquires an
alternative fueled vehicle * * * before the date that fleet or covered
person is required to acquire an alternative fueled vehicle under
[title V].'' 42 U.S.C. 13258(a). It is clear from this statutory text
that an alternative fueled vehicle must be acquired by a fleet or
covered person subject to the Act's acquisition requirements in order
for a credit to be allocated for that vehicle. The conversion of a
vehicle already in service in a fleet on October 24, 1992, the
effective date of the Act, would not satisfy this acquisition
requirement. In addition, there is no statutory provision authorizing
DOE to allocate credits for the acquisition of alternative fueled
vehicles prior to the effective date of the Act.
Thus, DOE will allocate credits to a State fleet or covered person
subject to the acquisition requirements only if it purchased or leased
a motor vehicle on or after October 24, 1992, and converted it to an
alternative fueled vehicle before the effective date of the applicable
acquisition requirements. For purposes of calculating credits for early
acquisition of these vehicles, DOE will consider the date of the
conversion to be the acquisition date. Paragraph (c) of Sec. 490.502
has been added to make clear that the four-month time limit on
conversions, established by Sec. 490.202(a)(3) and Sec. 490.305(a)(3)
of this rule, shall not be applied retroactively to any conversion that
occurred before the date this rule takes effect.
Some commenters recommended that DOE should award credits based on
the amount of petroleum displaced, rather than for the early or excess
acquisition of an alternative fueled vehicle. These commenters argued
that awarding credits based on the amount of petroleum displaced will
encourage the use of more alternative fuel than the
[[Page 10646]]
current proposal. Again, section 508 of the Act does not allow DOE to
adopt this recommendation. Section 508 states that credits shall be
awarded for the acquisition of alternative fueled vehicles by fleets
and covered persons that are required to acquire alternative fueled
vehicles. By implication, therefore, DOE may not award credits based on
the amount of petroleum displaced.
Several commenters requested that DOE award credits to fleets not
currently subject to acquisition mandates, such as fuel provider,
private, municipal and State agency fleets that, although not required
to obtain vehicles, voluntarily have chosen to acquire alternative
fueled vehicles. These commenters argue that awarding credits to these
fleets would increase acquisitions of alternative fueled vehicles,
which will boost petroleum displacement and aid in the development of a
market for alternative fuels and alternative fueled vehicles. The
Department agrees that the voluntary acquisition of alternative fueled
vehicles by these fleets would result in increased petroleum
displacement and bolster the alternative fuels market. However, section
508(a) states unambiguously that ``the Secretary shall allocate a
credit to a fleet or covered person that is required to acquire an
alternative fueled vehicle * * *'' 42 U.S.C. 13258(a) (emphasis added).
Thus, a fleet or covered person must be required by the Act to acquire
alternative fueled vehicles before credits can be allocated to them.
Non-mandated fleets are not eligible to earn credits.
Section 490.503 Credit Allocation
Section 490.503 deals with alternative fueled vehicle credit
allocation. Paragraphs (a) and (b) are consistent with the language of
section 508(a) of the Act, which describes how credits are to be
allocated. Before alternative fueled vehicle credits are allocated a
covered person or fleet must apply for them using the procedure
described in Sec. 490.507.
Paragraph (a) provides for the allocation of one credit for each
alternative fueled vehicle a fleet or covered person acquires that
exceeds the number of light duty alternative fueled vehicles that fleet
or person is required to acquire. Thus, if a fleet or covered person is
required to acquire 10 light duty alternative fueled vehicles in a
model year and it acquires 15 alternative fueled vehicles, it can apply
for allocation of five alternative fueled vehicle credits.
Paragraph (b) provides for the allocation of one credit for each
year an alternative fueled vehicle is acquired in advance of the date
the fleet or covered person is required to acquire alternative fueled
vehicles. For State fleets and covered persons, excluding States that
elect to submit an alternative plan under Sec. 490.203 and those
covered persons that choose the electric utility option provided by
Sec. 490.307, the requirements shall take effect on September 1, 1996,
the beginning of MY 1997. States that comply through alternative plans
approved by DOE may be exempt from MY 1997 requirements, in which case
the acquisition requirements will take effect for them on September 1,
1997, the beginning of MY 1998. For those covered persons that have
taken the electric utility option provided by Sec. 490.307, the
effective date is January 1, 1998. Credits will be awarded for the
acquisition of light, medium, and heavy duty alternative fueled
vehicles, and for alternative fueled vehicles excluded by Sec. 490.3,
prior to these dates.
Private and municipal fleets are not required by this rule to
acquire alternative fueled vehicles. If DOE later establishes a private
and municipal fleet program through rulemaking under section 507 (b) or
(g) of the Act, all alternative fueled motor vehicles newly acquired
between October 24, 1992 and the start date of the private and local
fleet mandate would be eligible for credit allocation at the rate of
one credit for each year an alternative fueled vehicle is acquired in
advance of the effective dates of those mandates.
Several commenters suggested that dedicated vehicles should receive
double the credits of dual-fuel or flexible-fuel vehicles. DOE does not
have the statutory authority to allocate credits in this manner.
Section 508(b) of the Act provides for the allocation of credits for
``alternative fueled vehicles'' acquired by fleets and covered persons
subject to the Act's requirements, and it does not differentiate
between dedicated and dual-fuel vehicles. This is consistent with the
definition of ``alternative fueled vehicle'' in section 301(3), which
includes both dedicated and dual-fuel vehicles.
Credit allocation is best explained by the following examples.
Example 1. A covered person acquires 10 alternative fueled
vehicles in MY 1994 and 15 alternative fueled vehicles in MY 1995.
The covered person acquires no alternative fueled vehicles in MY
1996. Because the covered person is not required to acquire
alternative fueled vehicles until MY 1997, each alternative fueled
vehicle acquired in MY 1994 will generate 3 credits and each
alternative fueled vehicle acquired in MY 1995 will generate 2
credits. Thus, the covered person generates 60 credits
[(10 x 3)+(15 x 2)=60], which can be used against that person's
future alternative fueled vehicle acquisition requirements or can be
traded to other covered persons or fleets.
Example 2. An electric utility that has chosen the option
provided by Sec. 490.507 acquires 10 electric vehicles in each of
calendar years 1993 through 1997. Since the electric utility is not
required to acquire alternative fueled vehicles until January 1,
1998, credits are generated on a calendar year basis for the early
acquisition of alternative fueled vehicles. Thus each electric
vehicle acquired in calendar year 1993 will earn 5 credits because
it was acquired 5 years early. Similar logic ensues for acquisitions
in subsequent years. Thus, the electric utility generates 150
credits [(10 x 5)+(10 x 4)+(10 x 3)+(10 x 2)+(10 x 1)=150] for the
acquisition of 50 electric vehicles from 1993 to 1997. These credits
can be used against the utility's future alternative fueled vehicle
acquisition requirements or can be traded.
Example 3. A State fleet acquires 20 alternative fueled vehicles
in model years 1995 and 1996. Thus, the State has earned 60 credits
prior to the start of the program [(20 x 2)+(20 x 1)]=60. The State
fleet also plans to acquire 20 alternative fueled vehicles in model
years 1997 and 1998. The State fleet regularly acquires 100 new
light duty vehicles each year. For model years 1997 and 1998 the
State fleet's acquisition requirements are 10 and 15 alternative
fueled vehicles, respectively. If the State actually acquires 20
alternative fueled vehicles in model years 1997 and 1998, it will
have acquired 10 vehicles in excess of its requirement for model
year 1997 and 5 vehicles in excess of its requirement for model year
1998. These excess acquisitions would earn the State fleet 10 and 5
credits, respectively. Thus, the State fleet has earned credits for
both early and excess acquisitions of alternative fueled vehicles.
The total number of credits the State fleet will have earned for
model years 1995 through 1998 is 75 (60+10+5)=75. These credits can
be used against the State fleet's future alternative fueled vehicle
acquisition requirements or can be traded.
DOE will establish a computer database that will serve as a record
of credit allocations, trades and credit balances.
Section 490.504 Use of Alternative Fueled Vehicle Credit
No comments specifically critical of this section were received.
However, the Office of Management and Budget requested that
Sec. 490.504 be revised to clarify that one credit represents the
acquisition of one alternative fueled vehicle in a model year for which
a fleet or covered person is required to acquire alternative fueled
vehicles. Each alternative fueled vehicle credit will represent one
alternative fueled vehicle and can be applied against the alternative
fueled vehicle acquisition requirements for one model year only, as
designated by the fleet or covered person. Section 490.504 has been
revised accordingly.
[[Page 10647]]
Section 490.505 Credit Accounts
Section 490.505 deals with Alternative Fueled Vehicle Credit
accounts. Paragraph (a) states that DOE will establish a credit account
for each fleet or covered person who obtains an alternative fueled
vehicle credit. Paragraph (b) states that each fleet or covered person
will receive an annual credit account balance statement after the
receipt and recording of its annual activity report.
In the proposed rule, DOE indicated that it was considering
providing updated credit account balance statements to fleets and
covered persons upon request during the year. These updated credit
account balance statements would constitute proof of a fleet or covered
person's credit account balance as of the date they were printed. These
statements may be required of a credit seller by a credit purchaser
before proceeding with the credit transfer. DOE asked for comment on
whether credit account balance statements should be provided for a
charge. Several comments were received on this issue, all opposing a
fee for these statements. DOE has decided to provide these statements
at no cost to the requestor, but it may in the future decide to limit
the number of reports that will be provided free of charge. DOE will
provide notice, by publication in the Federal Register, and directly to
affected State fleets and covered persons, if it later finds that it is
necessary to limit the number of statements that it will provide free
of charge.
Section 490.506 Alternative Fuel Vehicle Credit Transfers
No comments specifically critical of this section were received.
Section 490.506 deals with the transfer of alternative fueled vehicle
credits. Paragraph (a) states that any fleet or covered person may
transfer an alternative fueled vehicle credit to any fleet required to
acquire alternative fueled vehicles, or to a covered person if the
transferor certifies to the covered person that the vehicle which
generated the credit will operate solely on alternative fuel, except
when the vehicle is operated in an area where the appropriate
alternative fuel is unavailable. This restriction on the transfer of
credits to a covered person is required by section 508(d) of the Act.
42 U.S.C. 13258(d).
Paragraph (b) states that proof of credit transfer should be
provided to DOE within thirty days of the transfer date, and provides
for the use of a DOE form, or other written documentation containing
the dated signatures of the transferor and transferee. This is a change
from a proposed requirement to report credit transfers within seven
days. Seven days was criticized as being insufficient time by
commenters.
Section 490.507 Credit Activity Reporting Requirements
Section 490.507 describes the credit program's activity reporting
requirements. An annual report is required of all fleets or covered
persons who have generated or traded alternative fueled vehicle credits
to record and track their credit activity. One commenter urged DOE to
drop the reporting requirement, and only require the retention of
credit activity records. DOE has not adopted this recommendation
because the credit reports are essential for monitoring compliance with
the vehicle acquisition requirements. Reporting will also aid the
development of an alternative fueled vehicle credit market.
Paragraph (a) sets forth where and by when annual reports should be
sent. Paragraph (b) describes the required information that would be
included in this annual report. Subparagraph (b)(1) allows a fleet or
covered person to report either the number of alternative fueled
vehicles acquired in excess of acquisition requirements for the model
year or the number of alternative fueled vehicles acquired in advance
of the start date of the acquisition requirements. Except for covered
persons that choose that electric utility option or States that elect
to submit an alternative compliance plan, States and covered persons
subject to section 501 of the Act can no longer earn credits for early
acquisition of alternative fueled vehicles after September 1, 1996, the
beginning of model year 1997.
G. Subpart G--Investigations and Enforcement
This subpart elicited few public comments. The only specific
recommendation received was a request that DOE add a provision that
would give States 90 days advance notice of its intent to bring an
action to enforce compliance with the Act's alternative fueled vehicle
acquisition requirements. DOE agrees that such advance notice would
generally be desirable for both States and covered persons. However,
there may be some situations where it would not be appropriate, such as
the repeated, willful refusal to comply with the acquisition
requirements. Thus, DOE has added a sentence to Sec. 490.605, Statement
of Enforcement Policy, which states that DOE normally will not commence
an enforcement action against a person subject to the acquisition
requirements without giving that person notice of its intent 90 days
before the beginning of an enforcement proceeding.
IV. Review Under Executive Order 12612
Executive Order 12612, 52 FR 41685 (October 30, 1987), requires
that regulations, rules, legislation, and any other policy actions be
reviewed for any substantial direct effect on States, on the
relationship between the National Government and the States, or in the
distribution of power and responsibilities among various levels of
government. If there are substantial effects, then the Executive Order
requires a preparation of a Federalism assessment to be used in all
decisions involved in promulgating and implementing policy action.
This rule implements the alternative fueled vehicle acquisition
requirements in section 507(o) of the Act, which apply to State
government fleets. It also establishes an Alternative Fueled Vehicle
Credit Program under which States may generate credits if they obtain
alternative fueled vehicles in excess of their required quantity or if
they obtain alternative fueled vehicles prior to the date when they are
required to acquire alternative fueled vehicles. The allocation of
credits is based on the measurable actions of obtaining alternative
fueled vehicles and is available to fleets, that meet the requirements,
throughout the United States.
The granting of credits to States will be handled in the same
manner as the granting of credits to any other covered fleet operator.
The enforcement of the State fleet mandate will be handled in the same
manner as other mandate programs. States can also apply for a hardship
exemption which would exempt them from acquiring alternative fueled
vehicles in any given year.
The Department has determined that since States are treated the
same as any other fleet operator in the allocation of credits and in
the administration and enforcement of the fleet mandate, the final rule
will not have a substantial direct effect on the institutional
interests or traditional functions of States. In addition, the
provision for hardship exemptions included in the State fleet mandate
precludes any impermissible expansion of the authority that the Federal
government has over States.
Section X of this Supplementary Information addresses the potential
costs to States of this final rule.
[[Page 10648]]
V. Review Under Executive Order 12778
Section 2 of Executive Order 12778 instructs each agency to adhere
to certain requirements in promulgating new regulations. These
requirements, set forth in sections 2(a) and (b)(2), include
eliminating drafting errors and needless ambiguity, drafting the
regulations to minimize litigation by providing clear and certain legal
standards for affected legal conduct, and promoting simplification and
burden reduction. Agencies are also instructed to make every reasonable
effort to ensure that the regulation describes any administrative
proceeding to be available prior to judicial review and any provisions
for the exhaustion of administrative remedies. DOE certifies that this
rule meets the requirements of sections 2(a) and (b)(2) of Executive
Order 12778.
VI. Review Under Executive Order 12866
Today's regulatory action was subject to review under Executive
Order 12866, Regulatory Planning and Review (October 4, 1993) by the
Office of Information and Regulatory Affairs (OIRA). Although DOE
concluded that the final rule would not result in (1) an annual effect
on the economy of $100 million or more or (2) have significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of the United States-based enterprises to
compete in domestic export markets, OIRA nevertheless determined this
rulemaking to be a significant regulatory action under the Executive
Order and requested that DOE prepare a cost analysis. A copy of that
cost analysis is in the administrative record on file in DOE's Freedom
of Information Reading Room.
The cost analysis that was performed for the proposed rule spans,
the 25-year time frame from 1995 to 2020 , and it includes the
incremental vehicle purchase cost and the cost differential between
alternative fuels and gasoline under five different scenarios. The
analysis examines the effects the rule will have on the acquisition of
alternative fueled vehicles by fuel providers and State fleets,
exclusive of the effects of non-mandated acquisition of vehicles by
these and other fleets. In doing so it assumes that no alternative
fueled vehicles will be acquired by these fleets prior to model year
1996. In actuality, these fleets currently are acquiring alternative
fueled vehicles--either because of economics, State laws or business
strategies--and will probably continue to do so in the future.
Assumptions about the number of vehicles acquired, the operating
characteristics of those vehicles, fleet vehicle replacement rates,
current and future alternative fueled vehicle incremental costs, and
current and future retail fuel costs were based on previous analyses
undertaken by the Department. The analysis did not include estimates of
the effects of any Federal and State tax incentives for the acquisition
of alternative fueled vehicles.
The cost analysis of the proposed rule shows that the costs to fuel
providers and State fleets in complying with the rule varies depending
upon vehicle type, fuel type and fuel consumption, but in no case would
the estimated annual costs exceed $61 million per year. More typically,
under the various scenarios, the estimated annual costs are
approximately $25 million, decreasing to $10 million per year in later
years.
The Department sought comments on all aspects of its analysis. In
particular, the Department requested comment on the following elements
of the analysis: the retail and net-of-excise-tax future price
projections for gasoline and alternative fuels; the assumption that
alternative fueled vehicle purchases, that would result in apparent
life-cycle cost savings, would not occur in the absence of this rule;
and the assumption that the cost per gallon of gasoline displaced falls
as the amount of gasoline displaced increases and data that would aid
in estimating the extra refueling costs for covered persons whose
fleets use fuels other than the one they themselves provide.
Several comments were received on the Department's cost analysis.
The comments were centered on the estimated fuel and vehicle costs that
were included in the analysis. Commenters claimed that the estimated
prices for gasoline were high while the estimated prices for
alternative fuel were low. These commenters also stated that the
incremental alternative fueled vehicle prices included in the cost
analysis were low. Another commenter stated that the projected cost of
gasoline was understated in DOE's cost analysis because it did not
include energy security and environmental costs. A few commenters
stated that DOE did not consider the additional costs of operating
alternative fueled vehicles, such as the time and labor required for
travel to refueling sites and the extra cost of more frequent
refueling.
One commenter submitted an especially detailed critique of the
Department's cost analysis. This commenter's main criticism was that
DOE did not conduct a sensitivity analysis using a range of plausible
fuel and vehicle cost assumptions. This commenter performed a
sensitivity analysis of DOE's ``gaseous fuel vehicle dominant
scenario'' by analyzing additional cases that used increased fuel and
vehicle cost assumptions. This analysis utilized EIA fuel cost data for
some of these cases. Based on the sensitivity analysis, this commenter
argued that the net present value of the overall costs of the proposed
rule is likely to exceed $100 million annually, for a few years, using
moderate price assumptions. Thus, the commenter concluded that DOE is
required to perform a full-scale economic impact analysis under
Executive Order 12866.
DOE found this comment to be generally helpful for evaluating the
costs of the proposed rule, although it disagrees that compliance with
the rule will impose costs on States and fuel providers that exceed
$100 million annually. First, the comment that the rule requires a full
assessment of costs and benefits was based on calculations of cost
using undiscounted values. Applying a discount rate is a standard
aspect of commonly accepted cost impact analyses. Had this commenter
used any reasonable discount rate, its cost analysis would have shown
the costs to be less than $100 million dollars in any one year. Second,
this commenter also calculated the costs for one of the most costly
scenarios included in the DOE cost analysis, the gaseous fueled vehicle
dominant scenario. This scenario assumes that natural gas vehicles will
represent 75 percent of the new alternative fueled vehicles, LPG
(propane) will represent 15 percent, and methanol flexible fuel
vehicles will represent 10 percent of vehicles required to be acquired
annually under the rule. Scenarios included in DOE's analysis that
project dominant use of flexible fueled vehicles, which are believed
more likely for State government fleets, result in much lower costs.
While plausible estimates of the future costs of fuel and
alternative fueled vehicles may differ, the greatest uncertainty about
the future costs of the rule stems from the difficulty of predicting
the choices of vehicles and fuels that will be made by covered States
and fuel providers. In reconsidering the cost analysis in light of the
comments, DOE has conducted (and placed in the record of the
rulemaking) a supplemental cost analysis that estimates the costs that
would result if fleets chose to meet their requirements by acquiring
vehicles that operate exclusively one fuel. Although
[[Page 10649]]
some fleets are not expected to acquire vehicles that operate
exclusively on one fuel, the analysis is useful for estimating the
range of possible costs. Analyses were performed for acquisitions
comprised exclusively of methanol, ethanol, natural gas or propane
vehicles. The supplemental cost analysis uses EIA fuel cost estimates
and current wholesale fuel prices, together with the most current
information in DOE's possession on fleet size, incremental vehicle
cost, vehicle turnover and fuel consumption. In conducting the
supplemental analysis, DOE did not consider the additional costs of
operating alternative fueled vehicles (e.g., the time and labor
required for travel to refueling sites and the extra cost of more
frequent refueling). DOE acknowledges that there may be additional
operational costs associated with the operation of some types of
alternative fueled vehicles. However, it is not feasible, at a
reasonable cost, to quantify such costs because of the uniqueness of
each fleet's operational characteristics (e.g., geographic location,
fuel cost, labor rate, etc.)
The results of DOE's supplemental analysis show that over the first
5 years of the program, the costs to State and fuel provider fleets
together could range from a low of $5 million per year if alcohol
fueled AFVs are acquired, up to a maximum total cost of $75 million per
year if AFVs using gaseous fuels are acquired (occurring during the
fifth year of the program when acquisition requirements reach their
highest level). After the first five years of the program, DOE expects
that economies of scale will result in steadily decreasing alternative
fueled vehicle incremental costs.
VII. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, was
enacted by Congress to ensure that small entities do not face
significant negative economic impact as a result of Government
regulations. In instances where significant impacts are possible on a
substantial number of entities, agencies are required to perform a
regulatory flexibility analysis.
DOE has determined that this rule will not have a significant
negative impact on a substantial number of small entities. To be
covered by this rulemaking, an organization must own, operate or
control at least 50 light duty motor vehicles, of which at least 20
light duty motor vehicles used primarily within a single MSA or CMSA
must be capable of being centrally fueled. An organization that fits
this description is usually not a small organization.
VIII. Review Under the Paperwork Reduction Act
New information collection requirements subject to the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq., and recordkeeping requirements
are included by this rulemaking. Accordingly, this notice has been
submitted to the Office of Management and Budget for review and
approval of paperwork requirements. The information DOE will collect
through the reporting requirements in the rule is necessary to
determine whether an organization is in compliance with the regulation
and whether they are eligible for the allocation of alternative fueled
vehicle credits. The frequency of the information collection is
annually and is due four months after the end of the compliance period
(the model year). It is estimated the number of organizations
submitting reports will be approximately 1000 for the years 1997
through 1999. The estimated number of organizations who will be
submitting reports after that date has not been determined.
The public reporting burden is estimated to average 12 hours per
response, including time for reviewing instructions, searching existing
data sources, gathering and maintaining the data needed, and completing
and retrieving the collection of information. The collection of
information contained in this rule is considered the least burdensome
for the Department of Energy functions to comply with the legal
requirements and achieve program objectives.
IX. Review Under the National Environmental Policy Act
This rule establishes procedures for the implementation of an
Alternative Fuel Transportation Program, which are required to assist
in and monitor the progress of State fleet and certain alternative fuel
providers compliance activity. The rule provides for reporting
procedures to demonstrate compliance with the alternative fueled
vehicle acquisition mandates as specified by title V of the Energy
Policy Act of 1992, and it includes procedures for interpretive
rulings, exemption, appeals, and the approval process for State plans.
The rule also establishes and defines the parameters for who must
comply, the parts of a vehicle inventory which are affected by the
acquisition mandates, the allocation of credits for voluntary
acquisitions, the investigation and enforcement in the assessment of
civil penalties, and the contents of a State's light duty alternative
fueled vehicle plan. Because of the foregoing non-procedural parts of
the rule, the Department has prepared an Environmental Assessment (EA).
The EA assesses the environmental effects of the alternative fueled
vehicle acquisitions required by this rule and compares these effects
to that of a no action alternative, whereby fleets would continue to
purchase conventionally fueled vehicles. The EA finds that the
alternative fueled vehicle acquisitions required by the rule would
decrease State and alternative fuel provider fleet emissions of non-
methane organic gases, carbon monoxide, nitrogen oxides, particulate
matter and carbon dioxide for all scenarios examined. The reduction of
these pollutants on a vehicle-by-vehicle comparison is sizeable.
However, because the number of alternative fueled vehicles compared to
the country's total population is small, the magnitude of these
beneficial environmental effects are small. A less than 3% decrease in
cumulative emissions from all highway vehicles in the U.S. is estimated
at the end of the 25-year study period in 2020. However, the vehicles
acquired due to this program and the associated emissions improvements
would be concentrated in metropolitan areas.
For each of the pollutant-scenario combinations, the results show a
reduction in the emission levels. When the emissions from year 2020 are
compared with 1993 National Mobile Source Emissions, the reductions
range from 0.001% for NOX in the Gaseous Fuel Dominant Scenario to
0.15% for CO in the Gaseous Fuel Dominant with EVs Scenario and the New
Technology Dominant Scenario. When the emissions from the entire 25-
year study period are compared with 1993 National Mobile Source
Emissions, the reductions range from 0.02% for NOX in the Gaseous
Fuel Dominant Scenario to 2.53% for CO in the Gaseous Fuel Dominant
with EVs Scenario.
Based on the analysis in the Environmental Assessment, the
Department has determined that the implementation of the Alternative
Transportation Program does not constitute a major Federal action
significantly affecting the quality of the human environment, within
the meaning of the NEPA. Therefore, the preparation of an Environmental
Impact Statement is not required and the Department today is publishing
a Finding of No Significant Impact elsewhere in this issue.
[[Page 10650]]
X. Impact on State Governments
Section 1(b)(9) of Executive Order 12866 (``Regulatory Planning and
Review''), 58 FR 51735 (September 30, 1993) established the following
principle for agencies to follow in rulemakings: ``Wherever feasible,
agencies shall seek views of appropriate State, local, and tribal
officials before imposing regulatory requirements that might
significantly or uniquely affect those governmental entities. Each
agency shall assess the effects of Federal regulations on State, local,
and tribal governments, including specifically the availability of
resources to carry out those mandates, and seek to minimize those
burdens that uniquely or significantly affect such governmental
entities, consistent with achieving regulatory objectives. In addition,
agencies shall seek to harmonize Federal regulatory actions with
regulated State, local and tribal regulatory and other governmental
functions.'' Executive Order 12875 (``Enhancing Intergovernmental
Partnership''), 58 FR 58093 (October 26, 1993) provides for reduction
or mitigation, to the extent allowed by law, of the burden on State,
local, and tribal governments of unfunded Federal mandates not required
by statute.
Title II of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-
4, requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and tribal governments and 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. The
Department estimates that, in the aggregate, the costs to States in
model year 1997 will be between $3.3 million and $7.4 million. The
annual aggregate costs to the States should never exceed $13 million in
FY 1995 dollars. The annual aggregate costs to State, local, and tribal
governments and the private sector should never exceed $100 million in
FY 1995 dollars. Therefore, preparation of a formal unfunded mandate
analysis is not required. Because the rule does not contain a
significant intergovernmental mandate, the procedural requirements in
section 204 also do not apply to this rulemaking. However, DOE invited
written comments and held three public hearings on the proposed rule.
DOE received numerous comments and oral testimony from State elected
officials and representatives of State executive offices and agencies
with an interest in the subject of this rulemaking.
Section 507(o) of the Act explicitly prescribes the alternative
fueled vehicle acquisition mandate for States which is reflected in
subpart C of the regulation. Although the Act does not specifically
authorize appropriation of funds to fully defray the costs of
compliance, the costs and impact of the mandate are mitigated in a
number of respects.
First, section 507(o) authorizes approval of acceptable alternative
State plans to comply with the acquisition mandate by enlisting
voluntary commitments from other fleet operators with fleets that are
not subject to vehicle acquisition requirements under the Energy Policy
Act of 1992. This gives States flexibility in developing a strategy for
meeting the Act's vehicle acquisition percentages.
Second, section 507(i) authorizes the Department to grant
exemptions from vehicle acquisition requirements for States in cases of
financial hardship, in addition to exemptions when alternative fuel and
alternative fueled vehicles are not available.
Third, Congress has authorized DOE to provide financial assistance
to States for alternative fuel transportation programs. Section 409 of
the Act specifically authorizes DOE to provide technical and financial
assistance to States for this purpose. No funds have been appropriated
yet for the section 409 program. However, DOE is currently developing a
program to provide funds to States, some of which could be used to
offset the incremental cost of obtaining alternative fueled vehicles
required by this rule.
In developing this rule, the Department consulted with a focus
group of State officials from the National Association of State Energy
Officials which represents energy offices in 53 States, territories and
the District of Columbia. The principal concern expressed by some of
these officials was the potential for conflict between the DOE program
and similar programs operating under EPA or State regulations. With
respect to EPA, DOE has attempted to avoid unnecessary differences
between its regulations and those already promulgated by EPA.
It is important that the overlap between the regulations and the
EPA regulations is limited because the DOE program would apply in MSAs
and CMSAs with a 1980 Bureau of Census population of 250,000 or more,
and the EPA program applies only in non-attainment areas. Of the 22
non-attainment areas identified by EPA (59 FR 50043), nine areas in
California and Texas are included in applications those States have
filed with EPA to opt out of the EPA Clean Fuel Fleet Program. Those
applications were pending as of the date of publication of this notice.
In addition, DOE has been advised that EPA expects those areas within
the Ozone Transport Commission (located in the Eastern United States)
to be included in State requests to opt out of the program upon
inception of the 49-State Low Emission Vehicle Program.
List of Subjects in 10 CFR Part 490
Appeal procedures, Energy, Energy conservation, Fuel, Gasoline,
Motor vehicles, Oil imports, Petroleum, Recordkeeping and Reporting
requirements, and Utilities.
Issued in Washington, DC on March 5, 1996.
Brian T. Castelli,
Chief-of-Staff, Energy Efficiency and Renewable Energy.
BILLING CODE 6450-01-P
[[Page 10651]]
[GRAPHIC] [TIFF OMITTED] TR14MR96.000
[[Page 10652]]
[GRAPHIC] [TIFF OMITTED] TR14MR96.001
BILLING CODE 6450-01-C
[[Page 10653]]
For the reasons set forth in the Preamble, Title 10, Chapter II,
Subchapter D, of the Code of Federal Regulations is amended by adding a
new Part 490 as set forth below:
PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM
Subpart A--General Provisions
Sec.
490.1 Purpose and scope.
490.2 Definitions.
490.3 Excluded vehicles.
490.4 General information inquiries.
490.5 Requests for an interpretive ruling.
490.6 Petitions for generally applicable rulemaking.
490.7 Relationship to other law.
Appendix A to Subpart A of Part 490--Metropolitan Statistical Areas/
Consolidated Metropolitan Statistical Areas with 1980 Populations of
250,000 or More
Subpart B--[Reserved]
Subpart C--Mandatory State Fleet Program
490.200 Purpose and scope.
490.201 Alternative fueled vehicle acquisition mandate schedule.
490.202 Acquisitions satisfying the mandate.
490.203 Light Duty Alternative Fueled Vehicle plan.
490.204 Process for granting exemptions.
490.205 Reporting requirements.
490.206 Violations.
Subpart D--Alternative Fuel Provider Vehicle Acquisition Mandate
490.300 Purpose and scope.
490.301 Definitions.
490.302 Vehicle acquisition mandate schedule.
490.303 Who must comply.
490.304 Which new light duty motor vehicles are covered.
490.305 Acquisitions satisfying the mandate.
490.306 Vehicle operation requirements.
490.307 Option for electric utilities.
490.308 Process for granting exemptions.
490.309 Annual reporting requirements.
490.310 Violations.
Subpart E--[Reserved]
Subpart F--Alternative Fueled Vehicle Credit Program
490.500 Purpose and scope.
490.501 Applicability.
490.502 Creditable actions.
490.503 Credit allocation.
490.504 Use of alternative fueled vehicle credits.
490.505 Credit accounts.
490.506 Alternative fueled vehicle credit transfers.
490.507 Credit activity reporting requirements.
Subpart G--Investigations and Enforcement
490.600 Purpose and scope.
490.601 Powers of the Secretary.
490.602 Special orders.
490.603 Prohibited acts.
490.604 Penalties and fines.
490.605 Statement of enforcement policy.
490.606 Proposed assessments and orders.
490.607 Appeals.
Authority: 42 U.S.C. 7191, 13211, 13235, 13251, 13257, 13258,
13260-3.
Subpart A--General Provisions
Sec. 490.1 Purpose and Scope.
(a) The provisions of this part implement the alternative fuel
transportation program under titles III, IV, V, and VI of the Energy
Policy Act of 1992. (Pub. L. 102-486)
(b) The provisions of this subpart cover the definitions applicable
throughout this part and procedures to obtain an interpretive ruling
and to petition for a generally applicable rule to amend this part.
Sec. 490.2 Definitions.
The following definitions apply to this part--
Acquire means to take into possession or control.
Act means the Energy Policy Act of 1992 (Pub. L. 102-486) and any
amendments thereof.
After-Market Converted Vehicle means an Original Equipment
Manufacturer vehicle that is reconfigured by a conversion company,
which is not under contract to the Original Equipment Manufa
FR Doc. 96-5702 Alternative Fuel Transportation Program
cturer, to
operate on an alternative fuel and whose conversion kit components are
under warranty of the conversion company.
Alternative Fuel means methanol, denatured ethanol, and other
alcohols; mixtures containing 85 percent or more by volume of methanol,
denatured ethanol, and other alcohols with gasoline or other fuels;
natural gas; liquefied petroleum gas; hydrogen; coal-derived liquid
fuels; fuels (other than alcohol) derived from biological materials
(including neat biodiesel); and electricity (including electricity from
solar energy).
Alternative Fueled Vehicle means a dedicated vehicle or a dual
fueled vehicle (including a flexible fuel vehicle as defined by this
section).
Assistant Secretary means the Assistant Secretary for Energy
Efficiency and Renewable Energy or any other DOE official to whom the
Assistant Secretary's duties under this part may be redelegated by the
Secretary.
Automobile means a 4-wheeled vehicle propelled by conventional
fuel, or by alternative fuel, manufactured primarily for use on public
streets, roads, and highways (except a vehicle operated only on a rail
line), and rated at
(1) Not more than 6,000 pounds gross vehicle weight; or
(2) More than 6,000, but less than 10,000 pounds gross vehicle
weight, if the Secretary of Transportation has decided, by rule, that
the vehicle meets the criteria in section 501(1) of the Motor Vehicle
Information and Cost Savings Act, as amended, 49 U.S.C. 32901(a)(3).
Capable of Being Centrally Fueled means a vehicle can be refueled
at least 75 percent of its time at the location that is owned,
operated, or controlled by the fleet or covered person, or is under
contract with the fleet or covered person for refueling purposes.
Centrally Fueled means that a vehicle is fueled at least 75 percent
of the time at a location that is owned, operated, or controlled by the
fleet or covered person, or is under contract with the fleet or covered
person for refueling purposes.
Control--
(1) When it is used to determine whether one person controls
another or whether two persons are under common control, means any one
or a combination of the following:
(i) A third person or firm has equity ownership of 51 percent or
more in each of two firms; or
(ii) Two or more firms have common corporate officers, in whole or
in substantial part, who are responsible for the day-to-day operation
of the companies; or
(iii) One person or firm leases, operates, or supervises 51 percent
or more of the equipment and/or facilities of another person or firm;
owns 51 percent or more of the equipment and/or facilities of another
person or firm; or has equity ownership of 51 percent or more of
another person or firm.
(2) When it is used to refer to the management of vehicles, means a
person has the authority to decide who can operate a particular
vehicle, and the purposes for which the vehicle can be operated.
Covered Person means a person that owns, operates, leases, or
otherwise controls--
(1) A fleet, as defined by this section, that contains at least 20
light duty motor vehicles that are centrally fueled or capable of being
centrally fueled, and are used primarily within a metropolitan
statistical area or a consolidated metropolitan statistical area, as
established by the Bureau of the Census, with a 1980 population of
250,000 or more (as set forth in Appendix A to this subpart) or in a
Federal Register notice; and
(2) at least 50 light duty motor vehicles within the United States.
Dealer Demonstration Vehicle means any vehicle that is operated by
a motor
[[Page 10654]]
vehicle dealer solely for the purpose of promoting motor vehicle sales,
either on the sales lot or through other marketing or sales promotions,
or for permitting potential purchasers to drive the vehicle for pre-
purchase or pre-lease evaluation.
Dedicated Vehicle means--
(1) An automobile that operates solely on alternative fuel; or
(2) A motor vehicle, other than an automobile, that operates solely
on alternative fuel.
DOE means the Department of Energy.
Dual Fueled Vehicle means--
(1) An automobile that meets the criteria for a dual fueled
automobile as that term is defined in section 513(h)(1)(C) of the Motor
Vehicle Information and Cost Savings Act, 49 U.S.C. 32901(a)(8); or
(2) A motor vehicle, other than an automobile, that is capable of
operating on alternative fuel and on gasoline or diesel fuel; or
(3) A flexible fuel vehicle.
Electric-hybrid Vehicle means a vehicle primarily powered by an
electric motor that draws current from rechargeable storage batteries,
fuel cells or other sources of electric current and also relies on a
non-electric source of power.
Electric Motor Vehicle means a motor vehicle primarily powered by
an electric motor that draws current from rechargeable storage
batteries, fuel cells, photovoltaic arrays, or other sources of
electric current and may include an electric-hybrid vehicle.
Emergency Motor Vehicle means any vehicle that is legally
authorized by a government authority to exceed the speed limit to
transport people and equipment to and from situations in which speed is
required to save lives or property, such as a rescue vehicle, fire
truck or ambulance.
Fleet means a group of 20 or more light duty motor vehicles,
excluding certain categories of vehicles as provided by section 490.3,
used primarily in a metropolitan statistical area or consolidated
metropolitan statistical area, as established by the Bureau of the
Census as of December 31, 1992, with a 1980 Census population of more
than 250,000 (listed in Appendix A to this Subpart), that are centrally
fueled or capable of being centrally fueled, and are owned, operated,
leased, or otherwise controlled--
(1) By a person who owns, operates, leases, or otherwise controls
50 or more light duty motor vehicles within the United States and its
possessions and territories;
(2) By any person who controls such person;
(3) By any person controlled by such person; and
(4) By any person under common control with such person.
Flexible Fuel Vehicle means any motor vehicle engineered and
designed to be operated on any mixture of two or more different fuels.
Law Enforcement Motor Vehicle means any vehicle which is primarily
operated by a civilian or military police officer or sheriff, or by
personnel of the Federal Bureau of Investigation, the Drug Enforcement
Administration, or other enforcement agencies of the Federal
government, or by State highway patrols, municipal law enforcement, or
other similar enforcement agencies, and which is used for the purpose
of law enforcement activities including, but not limited to, chase,
apprehension, and surveillance of people engaged in or potentially
engaged in unlawful activities.
Lease means the use and control of a motor vehicle for
transportation purposes pursuant to a rental contract or similar
arrangement with a term of 120 days or more.
Light Duty Motor Vehicle means a light duty truck or light duty
vehicle, as such terms are defined under section 216(7) of the Clean
Air Act (42 U.S.C. Sec. 7550(7)), having a gross vehicle weight rating
of 8,500 pounds or less, before any after-market conversion to
alternative fuel operation.
Model Year means the period from September 1 of the previous
calendar year through August 31.
Motor Vehicle means a self-propelled vehicle, other than a non-road
vehicle, designed for transporting persons or property on a street or
highway.
Non-road Vehicle means a vehicle not licensed for on-road use,
including such vehicles used principally for industrial, farming or
commercial use, for rail transportation, at an airport, or for marine
purposes.
Original Equipment Manufacturer means a manufacturer that provides
the original design and materials for assembly and manufacture of its
product.
Original Equipment Manufacturer Vehicle means a vehicle engineered,
designed, produced and warranted by an Original Equipment Manufacturer.
Person means any individual, partnership, corporation, voluntary
association, joint stock company, business trust, Governmental entity,
or other legal entity in the United States except United States
Government entities.
State means any of the 50 States, the District of Columbia, the
Commonwealth of Puerto Rico, and any other territory or possession of
the United States.
Used Primarily, as utilized in the definition of ``fleet,'' means
that a majority of a vehicle's total annual miles are accumulated
within a covered metropolitan or consolidated metropolitan statistical
area.
Sec. 490.3 Excluded vehicles.
When counting light duty motor vehicles to determine under this
part whether a person has a fleet or to calculate alternative fueled
vehicle acquisition requirements, the following vehicles are excluded--
(a) Motor vehicles held for lease or rental to the general public,
including vehicles that are owned or controlled primarily for the
purpose of short-term rental or extended-term leasing, without a
driver, pursuant to a contract;
(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, including but not limited to, light duty motor
vehicles owned or held by a university research department, independent
testing laboratory, or other such evaluation facility, solely for the
purpose of evaluating the performance of such vehicle for engineering,
research and development or quality control reasons;
(d) Law enforcement vehicles;
(e) Emergency motor vehicles;
(f) Motor vehicles acquired and used for purposes that the
Secretary of Defense has certified to DOE must be exempt for national
security reasons;
(g) Nonroad vehicles; and
(h) Motor vehicles which, when not in use, are normally parked at
the personal residences of the individuals that usually operate them,
rather than at a central refueling, maintenance, or business location.
Sec. 490.4 General information inquiries.
DOE responses to inquiries with regard to the provisions of this
part that are not filed in compliance with Secs. 490.5 or 490.6 of this
part constitute general information and the responses provided shall
not be binding on DOE.
Sec. 490.5 Requests for an interpretive ruling.
(a) Right to file. Any person who is or may be subject to this part
shall have the right to file a request for an interpretive ruling on a
question with regard to how the regulations apply to particular facts
and circumstances.
(b) How to file. A request for an interpretive ruling shall be
filed--
(1) With the Assistant Secretary;
[[Page 10655]]
(2) In an envelope labeled ``Request for Interpretive Ruling under
10 CFR Part 490;'' and
(3) By messenger or mail at the Office of Energy Efficiency and
Renewable Energy, EE-33, U.S. Department of Energy, 1000 Independence
Avenue, S.W., Washington, D.C. 20585 or at such other address as DOE
may provide by notice in the Federal Register.
(c) Content of request for interpretive ruling. At a minimum, a
request under this section shall--
(1) Be in writing;
(2) Be labeled ``Request for Interpretive Ruling Under 10 CFR Part
490;''
(3) Identify the name, address, telephone number, and any
designated representative of the person requesting the interpretive
ruling;
(4) State the facts and circumstances relevant to the request;
(5) Be accompanied by copies of relevant supporting documents, if
any;
(6) Specifically identify the pertinent regulations and the related
question on which an interpretive ruling is sought with regard to the
relevant facts and circumstances; and
(7) Contain any arguments in support of the terms of an
interpretation the requester is seeking.
(d) Public comment. DOE may give public notice of any request for
an interpretive ruling and invite public comment.
(e) Opportunity to respond to public comment. DOE may provide an
opportunity for any person who requested an interpretive ruling to
respond to public comments.
(f) Other sources of information. DOE may--
(1) Conduct an investigation of any statement in a request;
(2) Consider any other source of information in evaluating a
request for an interpretive ruling; and
(3) Rely on previously issued interpretive rulings dealing with the
same or a related issue.
(g) Informal conference. DOE, on its own initiative, may convene an
informal conference with the person requesting an interpretive ruling.
(h) Effect of an interpretive ruling. The authority of an
interpretive ruling shall be limited to the person requesting such
ruling and shall depend on the accuracy and completeness of the facts
and circumstances on which the interpretive ruling is based. An
interpretive ruling by the Assistant Secretary shall be final for DOE.
(i) Reliance on an interpretive ruling. No person who obtains an
interpretive ruling under this section shall be subject to an
enforcement action for civil penalties or criminal fines for actions
reasonably taken in reliance thereon, but a person may not act in
reliance on an interpretive ruling that is administratively rescinded
or modified, judicially invalidated, or its prospective effect is
overruled by statute or regulation.
(j) Denials of requests for an interpretive ruling. DOE shall deny
a request for an interpretive ruling if DOE determines that--
(1) There is insufficient information upon which to base an
interpretive ruling;
(2) The questions posed should be treated in a general notice of
proposed rulemaking under 42 U.S.C. 7191 and 5 U.S.C. 553;
(3) There is an adequate procedure elsewhere in this part for
addressing the question posed such as a petition for exemption; or
(4) For other good cause.
(k) Public file. DOE may file a copy of an interpretive ruling in a
public file labeled ``Interpretive Rulings Under 10 CFR Part 490''
which shall be available during normal business hours for public
inspection at the DOE Freedom of Information Reading Room at 1000
Independence Avenue, SW, Washington, DC 20585, or at such other
addresses as DOE may announce in a Federal Register notice.
Sec. 490.6 Petitions for generally applicable rulemaking.
(a) Right to file. Pursuant to 42 U.S.C. 7191 and 5 U.S.C. 553(e),
any person may file a petition for generally applicable rulemaking
under titles III, IV, and V of the Act with the DOE General Counsel.
(b) How to file. A petition for generally applicable rulemaking
under this section shall be filed by mail or messenger in an envelope
addressed to the Office of General Counsel, GC-1, U.S. Department of
Energy, 1000 Independence Avenue, S.W., Washington, D.C. 20585.
(c) Content of rulemaking petitions. A petition under this section
must--
(1) Be labeled ``Petition for Rulemaking Under 10 CFR Part 490'';
(2) Describe with particularity the terms of the rule being sought;
(3) Identify the provisions of law that direct, authorize, or
affect the issuance of the rules being sought; and
(4) Explain why DOE should not choose to make policy by precedent
through interpretive rulings, petitions for exemption, or other
adjudications.
(d) Determination upon rulemaking petitions. After considering the
petition and other information deemed to be appropriate, DOE may grant
the petition and issue an appropriate rulemaking notice, or deny the
petition because the rule being sought--
(1) Would be inconsistent with statutory law;
(2) Would establish a generally applicable policy in an area that
should be left to case-by-case determinations;
(3) Would establish a policy inconsistent with the underlying
statutory purposes; or
(4) For other good cause.
Sec. 490.7 Relationship to other law.
(a) Nothing in this part shall be construed to require or authorize
sale of, or conversion to, light duty alternative fueled motor vehicles
in violation of applicable regulations of any Federal, State or local
government agency.
(b) Nothing in this part shall be construed to require or authorize
the use of a motor fuel in violation of applicable regulations of any
Federal, State, or local government agency.
Appendix A To Subpart A of Part 490
Metropolitan Statistical Areas/Consolidated Metropolitan
Statistical Areas With 1980 Populations of 250,000 or more
Albany-Schenectady-Troy MSA NY
Albuquerque MSA NM
Allentown-Bethlehem-Easton MSA PA
Appleton-Oshkosh-Neenah MSA WI
Atlanta MSA GA
Augusta-Aiken MSA GA-SC
Austin-San Marcos MSA TX
Bakersfield MSA CA
Baton Rouge MSA LA
Beaumont-Port Arthur MSA TX
Binghamton MSA NY
Birmingham MSA AL
Boise City MSA ID
Boston-Worcester-Lawrence CMSA MA-NH-ME-CT
Buffalo-Niagara Falls MSA NY
Canton-Massillon MSA OH
Charleston MSA SC
Charleston MSA WV
Charlotte-Gastonia-Rock Hill MSA NC-SC
Chattanooga MSA TN-GA
Chicago-Gary-Kenosha CMSA IL-IN-WI
Cincinnati-Hamilton CMSA OH-KY-IN
Cleveland-Akron CMSA OH
Colorado Springs MSA CO
Columbia MSA SC
Columbus MSA OH
Columbus MSA GA-AL
Corpus Christi MSA TX
Dallas-Fort Worth CMSA TX
Davenport-Moline-Rock Island MSA IA-IL
Dayton-Springfield MSA OH
Daytona Beach MSA FL
Denver-Boulder-Greeley CMSA CO
Des Moines MSA IA
Detroit-Ann Arbor-Flint CMSA MI
Duluth MSA MN-WI
El Paso MSA TX
Erie MSA PA
Eugene-Springfield MSA OR
Evansville-Henderson MSA IN-KY
Fort Wayne MSA IN
Fresno MSA CA
[[Page 10656]]
Grand Rapids-Muskegon-Holland MSA MI
Greensboro-Winston Salem-High Point MSA NC
Greenville-Spartanburg-Anderson MSA SC
Harrisburg-Lebanon-Carlisle MSA PA
Hartford MSA CT
Hickory-Morganton MSA NC
Honolulu MSA HI
Houston-Galveston-Brazoria CMSA TX
Huntington-Ashland MSA WV-KY-OH
Indianapolis MSA IN
Jackson MSA MS
Jacksonville MSA FL
Johnson City-Kingsport-Bristol MSA TN-VA
Johnstown MSA PA
Kalamazoo-Battle Creek MSA MI
Kansas City MSA MO-KS
Knoxville MSA TN
Lakeland-Winter Haven MSA FL
Lancaster MSA PA
Lansing-East Lansing MSA MI
Las Vegas MSA NV-AZ
Lexington MSA KY
Little Rock-N. Little Rock MSA AR
Los Angeles-Riverside-Orange County CMSA CA
Louisville MSA KY-IN
Macon MSA GA
Madison MSA WI
McAllen-Edinburg-Mission MSA TX
Melbourne-Titusville-Palm Bay MSA FL
Memphis MSA TN-AR-MS
Miami-Fort Lauderdale CMSA FL
Milwaukee-Racine CMSA WI
Minneapolis-St. Paul MSA MN-WI
Mobile MSA AL
Modesto MSA CA
Montgomery MSA AL
Nashville MSA TN
New London-Norwich MSA CT-RI
New Orleans MSA LA
New York-N. New Jersey-Long Island CMSA NY-NJ-CT-PA
Norfolk-Virginia Beach-Newport News MSA VA-NC
Oklahoma City MSA OK
Omaha MSA NE-IA
Orlando MSA FL
Pensacola MSA FL
Peoria-Pekin MSA IL
Philadelphia-Wilmington-Atlantic City CMSA PA-NJ DE-MD
Phoenix-Mesa MSA AZ
Pittsburgh MSA PA
Portland-Salem CMSA OR-WA
Providence-Fall River-Warwick MSA RI-MA
Raleigh-Durham-Chapel Hill MSA NC
Reading MSA PA
Richmond-Petersburg MSA VA
Rochester MSA NY
Rockford MSA IL
Sacramento-Yolo CMSA CA
Saginaw-Bay City-Midland MSA MI
St. Louis MSA MO-IL
Salinas MSA CA
Salt Lake City-Ogden MSA UT
San Antonio MSA TX
San Diego MSA CA
San Francisco-Oakland-San Jose CMSA CA
San Juan MSA PR
Santa Barbara-Santa Maria-Lompoc MSA CA
Scranton-Wilkes Barre-Hazleton MSA PA
Seattle-Tacoma-Bremerton CMSA WA
Shreveport-Bossier City MSA LA
Spokane MSA WA
Springfield MSA MA
Stockton-Lodi MSA CA
Syracuse MSA NY
Tampa-St. Petersburg-Clearwater MSA FL
Toledo MSA OH
Tucson MSA AZ
Tulsa MSA OK
Utica-Rome MSA NY
Washington-Baltimore CMSA DC-MD-VA-WV
West Palm Beach-Boca Raton MSA FL
Wichita MSA KS
York MSA PA
Youngstown-Warren MSA OH
Subpart B--[Reserved]
Subpart C--Mandatory State Fleet Program
Sec. 490.200 Purpose and scope.
This subpart sets forth rules implementing the provisions of
Section 507(o) of the Act which requires, subject to some exemptions,
that certain percentages of new light duty motor vehicles acquired for
State fleets be alternative fueled vehicles.
Sec. 490.201 Alternative fueled vehicle acquisition mandate schedule.
(a) Except as otherwise provided in this part, of the new light
duty motor vehicles acquired annually for State government fleets,
including agencies thereof but excluding municipal fleets, the
following percentages shall be alternative fueled vehicles for the
following model years;
(1) 10 percent for model year 1997;
(2) 15 percent for model year 1998;
(3) 25 percent for model year 1999;
(4) 50 percent for model year 2000; and
(5) 75 percent for model year 2001 and thereafter.
(b) Each State shall calculate its alternative fueled vehicle
acquisition requirements for the State government fleets, including
agencies thereof, by applying the alternative fueled vehicle
acquisition percentages for each model year to the total number of new
light duty motor vehicles to be acquired during that model year for
those fleets.
(c) If the calculation performed under paragraph (b) of this
section produces a number that requires the acquisition of a partial
vehicle, an adjustment to the acquisition number will be made by
rounding the number of vehicles down the next whole number if the
fraction is less than one half and by rounding the number of vehicles
up to the next whole number if the fraction is equal to or greater than
one half.
(d) A State fleet that first becomes subject to this part after
model year 1997 shall acquire alternative fueled vehicles in the next
model year at the percentage applicable to that model year according to
the schedule in paragraph (a) of this section, unless the State is
granted an exemption or reduction of the acquisition percentage
pursuant to the procedures and criteria in section 490.204.
Sec. 490.202 Acquisitions satisfying the mandate.
The following actions within a model year qualify as acquisitions
for the purpose of compliance with the requirements of section 490.201
of this part:
(a) The purchase or lease of an Original Equipment Manufacturer
light duty vehicle (regardless of the model year of manufacture),
capable of operating on alternative fuels that was not previously under
control of the State or State agency;
(b) The purchase or lease of an after-market converted light duty
vehicle (regardless of model year of manufacture), that was not
previously under control of the State or State agency;
(c) The conversion of a newly purchased or leased light duty
vehicle to operate on alternative fuels within four months after the
vehicle is acquired for a State fleet; and
(d) The application of alternative fueled vehicle credits allocated
under subpart F of this part.
Sec. 490.203 Light Duty Alternative Fueled Vehicle Plan.
(a) General Provisions. (1) In lieu of meeting its requirements
under section 490.201 exclusively with acquisitions for State fleets, a
State may follow a Light Duty Alternative Fueled Vehicle Plan that has
been approved by DOE under this section.
(2) Any Light Duty Alternative Fueled Vehicle Plan must provide for
voluntary acquisitions or conversions, or combinations thereof, by
State, local, and private fleets that equal or exceed the State's
alternative fuel vehicle acquisition requirement under section 490.201.
(3) Any acquisitions of light duty alternative fueled vehicles by
participants in the State plan may be included for purposes of
compliance, irrespective of whether the vehicles are in excluded
categories set forth in section 490.3 of this part.
(4) Except as provided in paragraph (h) of this section or except
for a fleet exempt under section 490.204, a State that does not have an
approved plan in effect under this section is subject to the State
fleet acquisition percentage requirements of section 490.201.
(5) If a significant commitment under an approved plan is not met
by a participant of a plan, the State shall
[[Page 10657]]
meet its percentage requirements under section 490.201 or submit to DOE
an amendment to the plan for DOE approval.
(b) Required elements of a plan. Each plan must include the
following elements:
(1) Certification by the Governor, or the Governor's designee, that
the plan meets the requirements of this subpart;
(2) Identification of State, local and private fleets that will
participate in the plan;
(3) Number of new alternative fueled vehicles to be acquired by
each plan participant;
(4) A written statement from each plan participant to assure
commitment;
(5) A statement of contingency measures by the State to offset any
failure to fulfill significant commitments by plan participants, in
order to meet the requirements of section 490.201;
(6) A provision by the State to monitor and verify implementation
of the plan;
(7) A provision certifying that all acquisitions and conversions
under the plan are voluntary and will meet the requirements of Sec. 247
of the Clean Air Act, as amended (42 U.S.C. 7587) and all applicable
safety requirements.
(c) When to submit plan. (1) For model year 1997, a State shall
submit its plan on or before March 14, 1997.
(2) Beginning with model year 1998, a State shall submit its plan
to DOE no later than June 1 prior to the first model year covered by
such plan.
(d) Review and approval. DOE shall review and approve a plan which
meets the requirements of this subpart within 60 days of the date of
receipt of the plan by DOE at the address in paragraph (g)(1) of this
section.
(e) Disapproval of plans. If DOE disapproves or requests a State to
submit additional information, the State may revise and resubmit the
plan to DOE within a reasonable time.
(f) How a State may modify an approved plan. If a State determines
that it cannot successfully implement its plan, it may submit to DOE
for approval, at any time, the proposed modifications with adequate
justifications.
(g) Where to submit plans. (1) A State shall submit to DOE an
original and two copies of the plan and shall be addressed to the U.S.
Department of Energy, Office of Energy Efficiency and Renewable Energy,
EE-33, 1000 Independence Ave., SW., Washington, DC 20585, or to such
other address as DOE may announce in a Federal Register notice.
(2) Any requests for modifications shall also be sent to the
address in paragraph (g)(1) of this section.
(h) MY 1997 Exemption. (1) On or after September 1, 1996, a State
shall be deemed automatically exempt from section 490.201 (a)(1) until
DOE makes a final determination on a timely application to approve a
plan for model year 1997 under this section if the State:
(i) Has submitted the application; or
(ii) Has sent a written notice to the Assistant Secretary, at the
address under paragraph (g)(1) of this section, that it will file such
an application on or before March 14, 1997.
(2) During the period of an automatic exemption under this
paragraph, a State may procure light duty motor vehicles in accordance
with its normal procurement policies.
Sec. 490.204 Process for granting exemptions.
(a) To obtain an exemption, in whole or in part, from the vehicle
acquisition mandate in section 490.201 of this part, a State shall
submit to DOE a written request for exemption, along with supporting
documentation which must demonstrate that--
(1) Alternative fuels that meet the normal requirements and
practices of the principal business of the State fleet are not
available from fueling sites that would permit central fueling of fleet
vehicles in the area in which the vehicles are to be operated; or
(2) Alternative fueled vehicles that meet the normal requirements
and practices of the principal business of the State fleet are not
available for purchase or lease commercially on reasonable terms and
conditions in the State; or
(3) The application of such requirements would pose an unreasonable
financial hardship.
(b) Requests for exemption may be submitted at any time and must be
accompanied with supporting documentation.
(c) Exemptions are granted for one model year only, and they may be
renewed annually, if supporting documentation is provided.
(d) Exemptions may be granted in whole or in part. When granting an
exemption in part, DOE may, depending upon the circumstances,
completely relieve a State from complying with a portion of the vehicle
acquisition requirements for a model year, or it may require a State to
acquire all or some of the exempted vehicles in future model years.
(e) If a State is seeking an exemption under--
(1) Paragraph (a)(1) of this section, the types of documentation
that are to accompany the request must include, but are not limited to,
maps of vehicle operation zones and maps of locations providing
alternative fuel; or
(2) Paragraph (a)(2) of this section, the types of documentation
that are to accompany the request must include, but are not limited to,
alternative fueled vehicle purchase or lease requests, a listing of
vehicles that meet the normal practices and requirements of the State
fleet, and any other documentation that exhibits good faith efforts to
acquire alternative fueled vehicles; or
(3) Paragraph (a)(3) of this section, it must submit a statement
identifying what portion of the alternative fueled vehicle acquisition
requirement should be subject to the exemption and describing the
specific nature of the financial hardship that precludes compliance.
(f) Requests for exemption shall be addressed to the U.S.
Department of Energy, Office of Energy Efficiency and Renewable Energy,
EE-33, 1000 Independence Ave., SW., Washington, DC 20585, or to such
other address as DOE may announce in a Federal Register notice.
(g) The Assistant Secretary shall provide to the State, within 45
days of receipt of a request that complies with this section, a written
determination as to whether the State's request has been granted or
denied.
(h) If the Assistant Secretary denies an exemption, in whole or in
part, and the State wishes to exhaust administrative remedies, the
State 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. The Assistant Secretary's determination shall be
stayed during the pendency of an appeal under this paragraph.
Sec. 490.205 Reporting requirements.
(a) Any State subject to the requirements of this subpart must file
an annual report for each State fleet on or before the December 31
after the close of the model year, beginning with model year 1997. The
State annual report may consist of a single State report or separately
prepared State agency reports.
(b) The report shall include the following information:
(1) Number of new light duty motor vehicles acquired for the fleet
by a State during the model year;
(2) Number of new light duty alternative fueled vehicles that are
required to be acquired during the model year;
[[Page 10658]]
(3) Number of new light duty alternative fueled vehicle
acquisitions by the State during the model year;
(4) Number of alternative fueled vehicle credits applied against
acquisition requirements;
(5) For each new light duty alternative fueled vehicle
acquisition--
(i) Vehicle make and model;
(ii) Model year;
(iii) Vehicle identification number;
(iv) Dedicated or dual-fueled (including flexible fuel); and
(v) Type of alternative fuel the vehicle is capable of operating
on; and
(6) Number of light duty alternative fueled vehicles acquired by
municipal and private fleets during the model year under an approved
Light Duty Alternative Fueled Vehicle Plan (if applicable).
(c) If credits are applied against vehicle acquisition
requirements, then a credit activity report, as described in subpart F
of this part, must be submitted with the report under this section to
DOE.
(d) Records shall be maintained and retained for a period of three
years.
(e) All reports, marked ``Annual Report,'' shall be sent to the
Office of Energy Efficiency and Renewable Energy, U.S. Department of
Energy, EE-33, 1000 Independence Ave., SW, Washington, DC, 20585, or
such other address as DOE may provide by notice in the Federal
Register.
Sec. 490.206 Violations.
Violations of this subpart are subject to investigation and
enforcement under subpart G of this part.
Subpart D--Alternative Fuel Provider Vehicle Acquisition Mandate
Sec. 490.300 Purpose and Scope.
This subpart implements section 501 of the Act, which requires,
subject to some exemptions, that certain annual percentages of new
light duty motor vehicles acquired by alternative fuel providers must
be alternative fueled vehicles.
Sec. 490.301 Definitions.
In addition to the definitions found in section 490.2, the
following definitions apply to this subpart--
Affiliate means a person that, directly or indirectly, controls, is
controlled by, or is under common ownership or control of a person
subject to vehicle acquisition requirements in this part.
Alternative Fuels Business means activities undertaken to derive
revenue from--
(1) Producing, storing, refining, processing, transporting,
distributing, importing, or selling at wholesale or retail any
alternative fuel other than electricity; or
(2) Generating, transmitting, importing, or selling at wholesale or
retail electricity.
Business Unit means a semi-autonomous major grouping of activities
for administrative purposes and organizational structure within a
business entity and that is controlled by or under control of a person
subject to vehicle acquisition requirements in this part.
Division means a major administrative unit of an enterprise
comprising at least several enterprise units or constituting a complete
integrated unit for a specific purpose and that is controlled by or
under control of a person subject to vehicle acquisition requirements
in this part.
Normal Requirements and Practices means the operating business
practices and required conditions under which the principal business of
a person subject to vehicle acquisition requirements in this part
operates.
Principal Business means the sales-related activity that produces
the greatest gross revenue.
Substantial Portion means that at least 30 percent of the annual
gross revenue of a covered person is derived from the sale of
alternative fuels.
Substantially Engaged means that a covered person, or affiliate,
division, or other business unit thereof, regularly derives more than a
negligible amount of sales-related gross revenue from an alternative
fuels business.
Sec. 490.302 Vehicle acquisition mandate schedule.
(a) Except as provided in section 490.304 of this part, of the
light duty motor vehicles newly acquired by a covered person described
in section 490.303 of this part, the following percentages shall be
alternative fueled vehicles for the following model years:
(1) 30 percent for model year 1997.
(2) 50 percent for model year 1998.
(3) 70 percent for model year 1999.
(4) 90 percent for model year 2000 and thereafter.
(b) Except as provided in section 490.304 of this part, this
acquisition schedule applies to all light duty motor vehicles that a
covered person newly acquires for use within the United States.
(c) If, when the mandated acquisition percentage of alternative
fuel vehicles is applied to the number of new light duty motor vehicles
to be acquired by a covered person subject to this subpart, a number
results that requires the acquisition of a partial vehicle, an
adjustment will be made to the required acquisition number by rounding
down to the next whole number if the fraction is less than one half and
by rounding up the number of vehicles to the next whole number if the
fraction is equal to or greater than one half.
(d) Only acquisitions satisfying the mandate, as defined by section
490.305, count toward compliance with the acquisition schedule in
paragraph (a) of this section.
(e) A covered person that is first subject to the acquisition
requirements of this part after model year 1997 shall acquire
alternative fueled vehicles in the next model year at the percentage
applicable to that model year, according to the schedule in paragraph
(a) of this section, unless the covered person is granted an exemption
or reduction of the acquisition percentage pursuant to the procedures
and criteria in section 490.308.
Sec. 490.303 Who must comply.
(a) Except as provided by paragraph (b) of this section, a covered
person must comply with the requirements of this subpart if that person
is--
(1) A covered person whose principal business is producing,
storing, refining, processing, transporting, distributing, importing or
selling at wholesale or retail any alternative fuel other than
electricity; or
(2) A covered person whose principal business is generating,
transmitting, importing, or selling, at wholesale or retail,
electricity; or
(3) A covered person--
(i) Who produces, imports, or produces and imports in combination,
an average of 50,000 barrels per day or more of petroleum; and
(ii) A substantial portion of whose business is producing
alternative fuels.
(b) This subpart does not apply to a covered person or affiliate,
division, or other business unit of such person whose principal
business is--
(1) transforming alternative fuels into a product that is not an
alternative fuel; or
(2) consuming alternative fuels as a feedstock or fuel in the
manufacture of a product that is not an alternative fuel.
Sec. 490.304 Which new light duty motor vehicles are covered.
(a) General rule. Except as provided in paragraph (b) of this
section, the vehicle acquisition mandate schedule in section 490.302 of
this part applies to all light duty motor vehicles newly acquired for
use within the United States by a covered person described in section
490.303 of this part.
(b) Exception. If a covered person has more than one affiliate,
division, or
[[Page 10659]]
other business unit, then section 490.302 of this part only applies to
light duty motor vehicles newly acquired by an affiliate, division, or
other such business unit which is substantially engaged in the
alternative fuels business.
Sec. 490.305 Acquisitions satisfying the mandate.
The following actions within the model year qualify as acquisitions
for the purpose of compliance with the requirements of section 490.302
of this part--
(a) The purchase or lease of an Original Equipment Manufacturer
light duty vehicle (regardless of the model year of manufacture),
capable of operating on alternative fuels that was not previously under
the control of the covered person;
(b) The purchase or lease of an after-market converted light duty
vehicle (regardless of the model year of manufacture), that was not
previously under the control of the covered person; and
(c) The conversion of a newly purchased or leased light duty
vehicle to operate on alternative fuels within four months after the
vehicle is acquired by a covered person; and
(d) The application of alternative fueled vehicle credits allocated
under subpart F of this part.
Sec. 490.306 Vehicle operation requirements.
The alternative fueled vehicles acquired pursuant to section
490.302 of this part shall be operated solely on alternative fuels,
except when these vehicles are operating in an area where the
appropriate alternative fuel is unavailable.
Sec. 490.307 Option for Electric Utilities.
(a) A covered person or its affiliate, division, or business unit,
whose principal business is generating, transmitting, importing, or
selling, at wholesale or retail, electricity has the option of delaying
the vehicle acquisition mandate schedule in section 490.302 until
January 1, 1998, if the covered person intends to comply with this
regulation by acquiring electric motor vehicles.
(b) If a covered person or its affiliate, division, or business
unit, whose principal business is generating, transmitting, importing,
or selling at wholesale or retail electricity has notified the
Department as required by the Act, of its intent to acquire electric
motor vehicles, the following percentages of new light duty motor
vehicles acquired shall be alternative fueled vehicles for the
following time periods:
(1) 30 percent from January 1, 1998 to August 31, 1998.
(2) 50 percent for model year 1999.
(3) 70 percent for model year 2000.
(4) 90 percent for model year 2001 and thereafter.
(c) Any covered person or its affiliate, division, or business
unit, that chooses the option provided by this section may apply for an
exemption from the vehicle acquisition mandate in accordance with
section 490.308 of this regulation.
(d) Any covered person or its affiliate, division, or business
unit, that chooses to rescind its election of the option provided in
this section shall be required, unless otherwise exempt, to acquire
alternative fueled vehicles in accordance with the vehicle acquisition
schedule in section 490.302.
Sec. 490.308 Process for granting exemptions.
(a) To obtain an exemption from the vehicle acquisition mandate in
this subpart, a covered person, or its affiliate, division, or business
unit which is subject to section 490.302 of this part, shall submit a
written request for exemption to the Office of Energy Efficiency and
Renewable Energy, U.S. Department of Energy, EE-33, 1000 Independence
Ave., SW., Washington, DC 20585, or such other address as DOE may
publish in the Federal Register, along with the supporting
documentation required by this section.
(b) A covered person requesting an exemption must demonstrate
that--
(1) Alternative fuels that meet the normal requirements and
practices of the principal business of the covered person are not
available from fueling sites that would permit central fueling of that
person's vehicles in the area in which the vehicles are to be operated;
or
(2) Alternative fueled vehicles that meet the normal requirements
and practices of the principal business of the covered person are not
available for purchase or lease commercially on reasonable terms and
conditions in any State included in a MSA/CMSA that the vehicles are
operated in.
(c) Documentation. (1) Except as provided in paragraph (c) (2) of
this section, if a covered person is seeking an exemption under
paragraph (b)(1) of this section, the types of documentation that are
to accompany the request include, but are not limited to, maps of
vehicle operation zones and maps of locations providing alternative
fuel.
(2) If a covered person seeking an exemption under paragraph (b)(1)
of this section operates light duty vehicles outside of the areas
listed in Appendix A of subpart A, and central fueling of those
vehicles does not meet the normal requirements and practices of that
person's business, then that covered person shall only be required to
justify in a written request why central fueling is incompatible with
its business.
(3) If a covered person is seeking an exemption under paragraph
(b)(2) of this section, the types of documentation that are to
accompany the request include, but are not limited to, alternative
fueled vehicle purchase or lease requests, a listing of vehicles that
meet the normal practices and requirements of the covered person and
any other documentation that exhibits good faith efforts to acquire
alternative fueled vehicles.
(d) Exemptions are granted for one model year only and may be
renewed annually, if supporting documentation is provided.
(e) Exemptions may be granted in whole or in part. When granting an
exemption in part, DOE may, depending upon the circumstances,
completely relieve a covered person from complying with a portion of
the vehicle acquisition requirements for a model year, or it may
require a covered person to acquire all or some of the exempted
vehicles in future model years.
(f) The Assistant Secretary shall provide to the covered person
within 45 days after receipt of a request that complies with this
section, a written determination as to whether the State's request has
been granted or denied.
(g) If a covered person is denied an exemption, that covered person
may file an appeal within 30 days of the date of determination,
pursuant to 10 CFR part 1003, subpart C, with the Office of Hearings
and Appeals, U.S. Department of Energy, 1000 Independence Ave, SW,
Washington, DC 20585. The Assistant Secretary's determination shall be
stayed during the pendency of an appeal under this paragraph.
Sec. 490.309 Annual reporting requirements.
(a) If a person is required to comply with the vehicle acquisition
schedule in section 490.302 or section 490.307, that person shall file
an annual report under this section, on a form obtainable from DOE,
with the Office of Energy Efficiency and Renewable Energy, U.S.
Department of Energy, EE-33, 1000 Independence Ave., SW., Washington,
DC 20585, or such other address as DOE may publish in the Federal
Register, on or before the December 31 after the close of the
applicable model year.
(b) This report shall include the following information--
(1) Number of new light duty motor vehicles acquired by the covered
person
[[Page 10660]]
in the United States during the model year;
(2) Number of new light duty alternative fueled vehicles that are
required to be acquired during the model year;
(3) Number of new light duty alternative fueled vehicle
acquisitions in the United States during the model year;
(4) Number of alternative fueled vehicle credits applied against
acquisition requirements;
(5) For each new light duty alternative fueled vehicle
acquisition--
(i) Vehicle make and model;
(ii) Model year;
(iii) Vehicle Identification Number;
(iv) Dedicated or dual-fueled (including flexible fuel); and
(v) Type of alternative fuel the vehicle is capable of operating
on.
(c) If credits are applied against alternative fueled vehicle
acquisition requirements, then a credit activity report, as described
in subpart F, must be submitted with the report under this section to
DOE.
(d) Records shall be maintained and retained for a period of three
years.
Sec. 490.310 Violations.
Violations of this subpart are subject to investigation and
enforcement under subpart G of this part.
Subpart E--[Reserved]
Subpart F--Alternative Fueled Vehicle Credit Program
Sec. 490.500 Purpose and Scope.
This subpart implements the statutory requirements of section 508
of the Act, which provides for the allocation of credits to fleets or
covered persons who acquire alternative fueled vehicles in excess of
the number they are required or obtain alternative fueled vehicles
before the model year when they are first required to do so under this
part.
Sec. 490.501 Applicability.
This subpart applies to all fleets and covered persons who are
required to acquire alternative fueled vehicles by this part.
Sec. 490.502 Creditable actions.
A fleet or covered person becomes entitled to alternative fueled
vehicle credits by--
(a) Acquiring alternative fueled vehicles, including those in
excluded categories under section 490.3 of this part and those
exceeding 8,500 gross vehicle weight rating, in excess of the number of
alternative fueled vehicles that fleet or covered person is required to
acquire in a model year when acquisition requirements apply; or
(b) Acquiring alternative fueled vehicles, including those in
excluded categories under section 490.3 of this part and those
exceeding 8,500 gross vehicle weight rating, in model years before the
model year when that fleet or covered person is first required to
acquire alternative fueled vehicles.
(c) For purposes of this subpart, a fleet or covered person that
acquired a motor vehicle on or after October 24, 1992, and converted it
to an alternative fueled vehicle before April 15, 1996, shall be
entitled to a credit for that vehicle notwithstanding the time limit on
conversions established by sections 490.202(a)(3) and 490.305(a)(3) of
this part.
Sec. 490.503 Credit allocation.
(a) Based on annual credit activity report information, as
described in section 490.507 of this part, DOE shall allocate one
credit for each alternative fueled vehicle a fleet or covered person
acquires that exceeds the number of alternative fueled vehicles that
fleet or person is required to acquire in a model year when acquisition
requirements apply.
(b) If an alternative fueled vehicle is acquired by a fleet or
covered person in a model year before the first model year that fleet
or person is required to acquire alternative fueled vehicles by this
part, as reported in the annual credit activity report, DOE shall
allocate one credit per alternative fueled vehicle for each year the
alternative fueled vehicle is acquired before the model year when
acquisition requirements apply.
(c) DOE shall allocate credits to fleets and covered persons under
paragraph (b) of this section only for alternative fueled vehicles
acquired on or after October 24, 1992.
Sec. 490.504 Use of alternative fueled vehicle credits.
At the request of a fleet or covered person in an annual report
under this part, DOE shall treat each credit as the acquisition of an
alternative fueled vehicle that the fleet or covered person is required
to acquire under this part. Each credit shall count as the acquisition
of one alternative fueled vehicle in the model year for which the fleet
or covered person requests the credit to be applied.
Sec. 490.505 Credit accounts.
(a) DOE shall establish a credit account for each fleet or covered
person who obtains an alternative fueled vehicle credit.
(b) DOE shall send to each fleet and covered person an annual
credit account balance statement after the receipt of its credit
activity report under section 490.507.
Sec. 490.506 Alternative fueled vehicle credit transfers.
(a) Any fleet or covered person that is required to acquire
alternative fueled vehicles may transfer an alternative fueled vehicle
credit to--
(1) A fleet that is required to acquire alternative fueled
vehicles; or
(2) A covered person subject to the requirements of this part, if
the transferor provides certification to the covered person that the
credit represents a vehicle that operates solely on alternative fuel.
(b) Proof of credit transfer may be on a form provided by DOE, or
otherwise in writing, and must include dated signatures of the
transferor and transferee. The proof should be received by DOE within
30 days of the transfer date to the Office of Energy Efficiency and
Renewable Energy, U.S. Department of Energy, EE-33, 1000 Independence
Ave., SW, Washington, DC 20585 or such other address as DOE publishes
in the Federal Register.
Sec. 490.507 Credit activity reporting requirements.
(a) A covered person or fleet applying for allocation of
alternative fueled vehicle credits must submit a credit activity report
by the December 31 after the close of a model year to the Office of
Energy Efficiency and Renewable Energy, U.S. Department of Energy, EE-
33, 1000 Independence Ave, SW, Washington, DC 20585 or other such
address as DOE may publish in the Federal Register.
(b) This report must include the following information:
(1) Number of alternative fueled vehicle credits requested for:
(i) alternative fueled vehicles acquired in excess of required
acquisition number; and
(ii) alternative fueled vehicles acquired in model years before the
first model year the fleet or covered person is required to acquire
vehicles by this part.
(2) Purchase of alternative fueled vehicle credits:
(i) Credit source; and
(ii) Date of purchase;
(3) Sale of alternative fueled vehicle credits:
(i) Credit purchaser; and
(ii) Date of sale.
Subpart G--Investigations and Enforcement
Sec. 490.600 Purpose and scope.
This subpart sets forth the rules applicable to investigations
under titles
[[Page 10661]]
III, IV, V, and VI of the Act and to enforcement of section 501,
503(b), 507 or 508 of the Act, or any regulation issued under such
sections.
Sec. 490.601 Powers of the Secretary.
For the purpose of carrying out titles III, IV, V, and VI of the
Act, DOE may hold such hearings, take such testimony, sit and act at
such times and places, administer such oaths, and require by subpena
the attendance and testimony of such witnesses and the production of
such books, papers, correspondence, memoranda, contracts, agreements,
or other records as the Secretary of Transportation is authorized to do
under section 505(b)(1) of the Motor Vehicle Information and Cost
Savings Act (15 U.S.C. 2005(b)(1)).
Sec. 490.602 Special orders.
(a) DOE may require by general or special orders that any person--
(1) File, in such form as DOE may prescribe, reports or answers in
writing to specific questions relating to any function of DOE under
this part; and
(2) Provide DOE access to (and for the purpose of examination, the
right to copy) any documentary evidence of such person which is
relevant to any function of DOE under this part.
(b) File under oath any reports and answers provided under this
section or as otherwise prescribed by DOE, and file such reports and
answers with DOE within such reasonable time and at such place as DOE
may prescribe.
Sec. 490.603 Prohibited acts.
It is unlawful for any person to violate any provision of section
501, 503(b), or 507 of the Act, or any regulations issued under such
sections.
Sec. 490.604 Penalties and Fines.
(a) Civil penalties. Whoever violates section 490.603 of this part
shall be subject to a civil penalty of not more than $5,000 for each
violation.
(b) Willful violations. Whoever willfully violates section 490.603
of this part shall pay a criminal fine of not more than $10,000 for
each violation.
(c) Repeated violations. Any person who knowingly and willfully
violates section 490.603 of this part, after having been subjected to a
civil penalty for a prior violation of section 490.603 shall pay a
criminal fine of not more than $50,000 for each violation.
Sec. 490.605 Statement of enforcement policy.
DOE may agree not to commence an enforcement proceeding, or may
agree to settle an enforcement proceeding, if the person agrees to come
into compliance in a manner satisfactory to DOE. DOE normally will not
commence an enforcement action against a person subject to the
acquisition requirements of this part without giving that person notice
of its intent to enforce 90 days before the beginning of an enforcement
proceeding.
Sec. 490.606 Proposed assessments and orders.
DOE may issue a proposed assessment of, and order to pay, a civil
penalty in a written statement setting forth supporting findings of
violation of the Act or a relevant regulation of this part. The
proposed assessment and order shall be served on the person named
therein by certified mail, return-receipt requested, and shall become
final for DOE if not timely appealed pursuant to section 490.607 of
this part.
Sec. 490.607 Appeals.
(a) In order to exhaust administrative remedies, on or before 30
days from the date of issuance of a proposed assessment and order to
pay, a person must appeal a proposed assessment and order to the Office
of Hearings and Appeals, U.S. Department of Energy, 1000 Independence
Avenue, SW., Washington, DC 20585.
(b) Proceedings in the Office of Hearings and Appeals shall be
subject to subpart F of 10 CFR part 1003 except that--
(1) Appellant shall have the ultimate burden of persuasion;
(2) Appellant shall have right to a trial-type hearing on contested
issues of fact only if the hearing officer concludes that cross
examination will materially assist in determining facts in addition to
evidence available in documentary form; and
(3) The Office of Hearings and Appeals may issue such orders as it
may deem appropriate on all other procedural matters.
(c) The determination of the Office of Hearings and Appeals shall
be final for DOE.
[FR Doc. 96-5702 Filed 3-13-96; 8:45 am]
BILLING CODE 6450-01-P
Complete official Federal Register PDF
FR Doc. 96-5586 Gasoline and Diesel Fuel Excise Tax; Registration Requirements
[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Rules and Regulations]
[Pages 10450-10466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5586]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
26 CFR Parts 40, 42, 48, and 602
[TD 8659]
RIN 1545-AR92
Gasoline and Diesel Fuel Excise Tax; Registration Requirements
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to the taxes
on gasoline and diesel fuel. This document also removes obsolete excise
tax regulations. The regulations reflect and implement certain changes
made by the Omnibus Budget Reconciliation Act of 1990 and the Omnibus
Budget Reconciliation Act of 1993 (the 1993 Act). The regulations
affect certain blenders, enterers, industrial users, refiners, terminal
operators, and throughputters. The regulations also affect certain
persons that sell, buy, or use diesel fuel for a nontaxable use.
EFFECTIVE DATE: These regulations are effective March 14, 1996.
FOR FURTHER INFORMATION CONTACT: Frank Boland (202) 622-3130 (not a
toll-free call).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information contained in these final regulations
have been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under
control number 1545-1418. Responses to this collection of information
are mandatory and are required to obtain certain credits or payments.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information
[[Page 10451]]
unless the collection of information displays a valid control number.
The estimated average annual reporting burden per respondent is .1
hour.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer, PC:FP,
Washington, DC 20224, and to the Office of Management and Budget, Attn:
Desk Officer for the Department of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC 20503.
Books and records relating to this collection of information must
be retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
The Diesel Fuel Regulations
Before 1994, the diesel fuel tax applied to sales of diesel fuel by
importers or producers (including registered wholesale distributors).
Because of concerns that this system fostered considerable tax evasion,
Congress made significant changes to the tax in the 1993 Act. Effective
January 1, 1994, tax is imposed on diesel fuel when it is removed at
the terminal rack, and diesel fuel may be removed tax free only if the
fuel contains a prescribed type and amount of dye. These changes made
the taxing point readily identifiable, required untaxed fuel to be
physically identified (that is, dyed), and reduced the number of
taxpayers.
Temporary regulations (TD 8496) relating to these changes (the
diesel fuel regulations) were published in the Federal Register on
November 30, 1993 (58 FR 63069), along with a notice of proposed
rulemaking (PS-52-93) cross-referencing the temporary regulations (58
FR 63131). Amendments to these temporary regulations (TD 8512) relating
to dye color and concentration were published in the Federal Register
on December 27, 1993 (58 FR 68304), along with a notice of proposed
rulemaking (PS-76-93) cross-referencing those amendments (58 FR 68338).
Written comments responding to the proposed diesel fuel regulations
were received and a public hearing was held on March 22, 1994. Final
regulations (TD 8550) relating to dye color and concentration were
published in the Federal Register on June 30, 1994 (59 FR 33656).
The Conforming Regulations
On October 19, 1994, the IRS published in the Federal Register (59
FR 52735) proposed regulations (PS-66-93) that generally consolidate
the rules relating to the gasoline tax and the diesel fuel tax into a
single set of rules applicable to both fuels (the conforming
regulations). The conforming regulations also proposed rules relating
to gasohol and compressed natural gas.
Written comments regarding the proposed conforming regulations were
received and a public hearing was held on January 11, 1995.
Final regulations (TD 8609) relating to gasohol and compressed
natural gas were published in the Federal Register on August 7, 1995
(60 FR 40079).
The Final Regulations
After consideration of written comments and comments made at the
public hearings, the proposed diesel fuel regulations and the proposed
conforming regulations are adopted as revised by this Treasury
decision. Comments and revisions are discussed below.
Significant Issues Raised in Comments and Changes Made in the Final
Regulations
Treatment of Kerosene
The temporary diesel fuel regulations provide that kerosene would
not be treated as diesel fuel before July 1, 1994, and invited comments
on the treatment of kerosene after June 30, 1994. Notice 94-72 (1994-2
C.B. 553) informed taxpayers that the IRS was reviewing this issue and
would not change the treatment of kerosene until the issuance of
further guidance. The IRS is continuing its review of this issue.
Accordingly, the final regulations do not treat kerosene as diesel
fuel.
Because kerosene is not treated as diesel fuel, a person that adds
kerosene to diesel fuel outside of the bulk transfer/terminal system
generally must pay tax on the added kerosene and must be registered by
the IRS.
Removal From Certain Refineries
The temporary diesel fuel regulations provide that tax is not
imposed on the removal of undyed diesel fuel from an approved refinery
for delivery to an approved terminal if the fuel is removed by rail
car, the refinery and the terminal are operated by the same taxable
fuel registrant, and the refinery is not served by pipeline or vessel.
One commentator noted that one of its refineries is not serviced by
pipeline, vessel, or rail. In response to this comment, the final
regulations expand this rule so that diesel fuel also may be removed
tax free from an approved refinery that is not served by pipeline,
vessel, or rail if the removal is by a trailer or semi-trailer and
additional prescribed conditions are met.
Notice Relating to Sales and Removals of Dyed Diesel Fuel
The temporary diesel fuel regulations provide that terminal
operators and others who sell dyed diesel fuel are responsible for
informing their customers that the dyed fuel cannot be used for a
taxable purpose and that a penalty may be imposed for taxable use (the
notice requirement). Any person that fails to comply with the notice
requirement is, for purposes of the penalty for misuse of dyed fuel
imposed by section 6714, presumed to know that the dyed diesel fuel
will not be used for a nontaxable use.
Under the final regulations, only terminal operators and certain
retail sellers will be subject to the notice requirement. A terminal
operator must comply with the notice requirement as one of the terms
and conditions of its registration.
Visual Inspection Devices
The temporary diesel fuel regulations do not require the use of
visual inspection devices and the final regulations continue this
policy. The IRS will continue to evaluate the need for regulations
addressing this issue. However, the use of visual inspection devices is
encouraged so that the buyers and sellers of diesel fuel may readily
determine whether the fuel may be used for a taxable use.
Back-Up Tax; Trains
A tax is imposed on the delivery of dyed diesel fuel into the fuel
supply tank of a diesel-powered train. Under the temporary diesel fuel
regulations, the operator of the train into which dyed fuel is
delivered is liable for the tax.
Several commentators noted that a prevalent practice in the
railroad industry is for one railroad's locomotives to be used to pull
freight on another's track and to be fueled by the railroad that owns
the track. In these situations, the identity of the operator is
unclear.
In response to these comments, the final regulations provide that
the person that delivers dyed diesel fuel into the fuel supply tank of
a train is liable for the tax under certain prescribed conditions.
[[Page 10452]]
Credits and Payments
Information To Be Submitted With Claims
If undyed diesel fuel is used in a nontaxable use, a credit or
payment is allowable to either (1) the ultimate purchaser or (2) in the
case of diesel fuel used on a farm for farming purposes or by a State
or local government, the registered ultimate vendor of the fuel. The
temporary diesel fuel regulations prescribe the information that must
be submitted to the IRS to support claims for these credits or
payments.
Several commentators asserted that the information requirements in
the diesel fuel temporary regulations are too burdensome. In response
to these comments, the final regulations reduce the paperwork
requirements for claimants by eliminating certain items from the list
of required submissions. However, the paperwork requirements may be
changed in the future if the IRS determines that additional information
is necessary for effective enforcement of the tax.
Notice 94-61
Notice 94-61 (1994-1 C.B. 371) announced that the temporary diesel
fuel regulations would be revised to clarify that (1) a registered
ultimate vendor is the only person allowed a credit or payment with
respect to diesel fuel used on a farm for farming purposes or by State
or local governments, and (2) a credit or payment generally is allowed
to a registered ultimate vendor who sells undyed diesel fuel to a
custom harvester for use on a farm for farming purposes. The final
regulations contain these revisions.
Undyed Diesel Fuel Mixed With Dyed Diesel Fuel
One condition for the allowance of a credit or payment under
section 6427 is that tax must have been imposed on the diesel fuel to
which the claim relates. Because untaxed diesel fuel is dyed, the
temporary diesel fuel regulations require each claim to be accompanied
by a statement that the diesel fuel covered by a claim did not contain
visible evidence of dye.
On rare occasions, however, an amount of taxed diesel fuel may
contain visible evidence of dye. This may occur, for example, when dyed
diesel fuel and undyed diesel fuel are mixed together by a fuel
marketer or user who accidentally delivers one type of fuel into a
storage tank that already contains the other type of fuel.
The final regulations provide that each claim must be accompanied
by a statement that tax has been imposed on the diesel fuel covered by
a claim. Generally, this requirement will be met by a claimant's
statement that the diesel fuel did not contain visible evidence of dye.
However, for claims involving taxed fuel that has been mixed with dyed
fuel, the claimant (that is, the ultimate purchaser or the registered
ultimate vendor) cannot make such a statement. For these claims, the
claimant must submit other evidence showing that the diesel fuel
covered by the claim has been subject to tax. This evidence might
include a statement from the person that produced the undyed/dyed fuel
mixture explaining how the mixing occurred or a statement from the
claimant (if the claimant did not produce the mixture) that explains
when and from whom the claimant acquired the mixture. As with all
claims, these claims are subject to review by the IRS before they are
allowed.
Section 6714--Penalty
Section 6714(a)(3) provides that if any person willfully alters, or
attempts to alter, the strength or composition of any dye or marking
done pursuant to section 4082 in any dyed fuel, then such person shall
pay a penalty in addition to the tax (if any).
Notice 94-21 (1994-1 C.B. 339) describes three situations in which
the section 6714(a)(3) penalty does not apply. The final regulations
incorporate the substance of the Notice. In addition, the final
regulations provide that the section 6714(a)(3) penalty does not apply
if dyed diesel fuel is blended with undyed diesel fuel and the blending
occurs as part of an exempt or partially exempt (that is, bus or train)
use. Thus, for example, the section 6714(a)(3) penalty does not apply
if dyed and undyed diesel fuel are blended together in the fuel supply
tank of a nonhighway vehicle such as a bulldozer or farm tractor.
Dye Injection Systems and Markers
The final regulations do not require the use of dye injection
systems or markers. These topics will be addressed in a future notice
of proposed rulemaking.
Effect on Other Documents
The following publications are obsolete as of March 14, 1996:
Rev. Rul. 72-213, 1972-1 C.B. 328.
Rev. Proc. 73-21, 1973-2 C.B. 471.
Notice 88-26, 1988-1 C.B. 495.
Notice 89-17, 1989-1 C.B. 647.
Notice 94-18, 1994-1 C.B. 338.
Notice 94-21, 1994-1 C.B. 339.
Notice 94-61, 1994-1 C.B. 371.
Notice 94-72, 1994-2 C.B. 553.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It also has been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to
these regulations, and, therefore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f) of the Internal Revenue Code,
the notices of proposed rulemaking preceding these regulations were
submitted to the Small Business Administration for comment on their
impact on small business.
Drafting Information. The principal author of these regulations
is Frank Boland, Office of Assistant Chief Counsel (Passthroughs and
Special Industries). However, other personnel from the IRS and
Treasury Department participated in their development.
List of Subjects
26 CFR Parts 40, 42, and 48
Excise taxes, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, under the authority of 26 U.S.C. 7805, chapter I is
amended as follows:
PART 40--EXCISE TAX PROCEDURAL REGULATIONS
Paragraph 1. The authority citation for part 40 is amended by
removing the entry for sections 40.6011(a)-1, 40.6011(a)-2, and
40.6011(a)-3T and adding entries in numerical order to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
Section 40.6011(a)-1 also issued under 26 U.S.C. 6011(a).
Section 40.6011(a)-2 also issued under 26 U.S.C. 6011(a). * * *
Par. 2. Section 40.6011(a)-1(b) is amended by:
1. Redesignating the text of paragraph (b) following the heading as
paragraph (b)(1) and adding a heading for newly designated paragraph
(b)(1).
2. Adding paragraph (b)(2).
The additions read as follows:
Sec. 40.6011(a)-1 Returns.
* * * * *
(b) * * * (1) In general. * * *
[[Page 10453]]
(2) Certain persons liable for tax on taxable fuel. Effective
January 1, 1994, the district director may require a person to make a
return of tax for a monthly or semimonthly period in the manner
prescribed in paragraph (b)(1) of this section if the person--
(i) Is a bonded registrant (as defined in Sec. 48.4101-1(b) of this
chapter) at any time during the period;
(ii) Has been registered under section 4101 for less than one year
at the beginning of the period;
(iii) Meets the acceptable risk test of Sec. 48.4101-1(f)(3) of
this chapter by reason of Sec. 48.4101-1(f)(3)(i)(B) of this chapter at
any time during the period;
(iv) Has failed to comply with the applicable provisions of
Sec. 48.4101-1(h) of this chapter (relating to the terms and conditions
of registration);
(v) Is liable for tax under Sec. 48.4082-4(a) of this chapter
(relating to the back-up tax on diesel fuel) at any time during the
period; or
(vi) Is liable for tax under section 4081 (relating to the tax on
taxable fuel) at any time during the period and is not a taxable fuel
registrant at that time.
* * * * *
Sec. 40.6011(a)-3T [Removed]
Par. 3. Section 40.6011(a)-3T is removed.
PART 42--[REMOVED]
Par. 4. Part 42 is removed.
PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES
Par. 5. The authority citation for part 48 is amended by removing
the entries for sections 48.4081-4, 48.4082-1 and 48.4082-2T, 48.4101-
3T, 48.4101-4T, 48.6427-8T and 48.6427-9T, and adding entries in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 48.4081-4 also issued under 26 U.S.C. 4083(a)(2). * * *
Section 48.4082-1 also issued under 26 U.S.C. 4082.
Section 48.4082-2 also issued under 26 U.S.C. 4082.
Section 48.4101-1 also issued under 26 U.S.C. 4101(a).
Section 48.4101-2 also issued under 26 U.S.C. 4101(d). * * *
Section 48.6427-8 also issued under 26 U.S.C. 6427(n).
Section 48.6427-9 also issued under 26 U.S.C. 6427(n).
Par. 6. Section 48.0-1 is amended by removing from the fourth
sentence the language ``gasoline, diesel and aviation fuel,'' and
adding ``taxable fuel, aviation fuel,'' in its place.
Sec. 48.4041-0T [Removed]
Par. 7. Section 48.4041-0T is removed.
Par. 8. Section 48.4041-0 is added to read as follows:
Sec. 48.4041-0 Applicability of regulations relating to diesel fuel
after December 31, 1993.
Sections 48.4041-3 through 48.4041-17 do not apply to sales or uses
of diesel fuel after December 31, 1993. For rules relating to the
diesel fuel tax imposed by section 4041 after that date, see
Sec. 48.4082-4.
Secs. 48.4041-1 and 48.4041-2 [Removed]
Par. 9. Sections 48.4041-1 and 48.4041-2 are removed.
Sec. 48.4041-2T [Removed]
Par. 10. Section 48.4041-2T is removed.
Sec. 48.4041-21 [Amended]
Secs. 48.4041-15 through 48.4041-21 [Transferred]
Par. 11. Sections 48.4041-15 through 48.4041-21 are transferred
from subpart G to subpart F.
Sec. 48.4041-21 [Amended]
Par. 12. In the first sentence of Sec. 48.4041-21(c)(1), the
language ``Sec. 48.4082-4T(c)(1) through (5)(A) or (c) (6) through
(11)'' is removed and ``Sec. 48.4082-4(c)(1) through (c)(4)(i) or
(c)(5) through (c)(10)'' is added in its place.
Par. 13. The heading for subpart G is revised to read as follows:
Subpart G--Fuel Used on Inland Waterways
Par. 14. Section 48.4042-1 is amended as follows:
1. Paragraphs (b) and (e) are revised.
2. In the introductory text of paragraph (f)(1), the language
``(26)'' is removed and ``(27)'' is added in its place.
3. Paragraphs (g)(25) and (g)(26) are redesignated as paragraphs
(g)(26) and (g)(27), respectively, and a new paragraph (g)(25) is
added.
The revisions and additions read as follows:
Sec. 48.4042-1 Tax on fuel used in commercial waterway transportation.
* * * * *
(b) Amount of tax. For the amount of tax, see section 4042(b).
* * * * *
(e) Liquid fuel. For purposes of the tax imposed under this
section, liquid fuel means any liquid fuel including gasoline, diesel
fuel, special motor fuel, or Bunker C residual fuel oil.
* * * * *
(g) * * *
(25) Tennessee-Tombigbee Waterway: From its confluence with the
Tennessee River to the Warrior River at Demopolis, Alabama.
* * * * *
Par. 15. The heading for subpart H is revised to read as follows:
Subpart H--Motor Vehicles, Tires, Tubes, Tread Rubber, and Taxable
Fuel
Par. 16. Section 48.4064-1(e)(2) is amended by removing the
language ``Form 843'' and adding ``Form 8849 (or on such other form as
the Commissioner may designate)'' in its place.
Par. 17. The undesignated center heading preceding Sec. 48.4081-1
is revised to read as follows:
Taxable Fuel
Par. 18. Sections 48.4081-1, 48.4081-2 and 48.4081-3 are revised to
read as follows:
Sec. 48.4081-1 Taxable fuel; definitions.
(a) Overview. This section provides definitions for purposes of the
tax on taxable fuel imposed by section 4081.
(b) Definitions.
Approved terminal or refinery means a terminal or refinery that is
operated, respectively, by a taxable fuel registrant that is a terminal
operator, or by a taxable fuel registrant that is a refiner.
Blender means any person that produces blended taxable fuel.
Bulk transfer means any transfer of taxable fuel by pipeline or
vessel.
Bulk transfer/terminal system means the taxable fuel distribution
system consisting of refineries, pipelines, vessels, and terminals.
Thus, taxable fuel in a refinery, pipeline, vessel, or terminal is in
the bulk transfer/terminal system. Taxable fuel in the fuel supply tank
of any engine, or in any tank car, rail car, trailer, truck, or other
equipment suitable for ground transportation is not in the bulk
transfer/terminal system.
Bus means automobile bus.
Diesel-powered boat means any waterborne vessel of any size or
configuration that is propelled, in whole or in part, by a diesel-
powered engine.
Diesel-powered bus means any bus that is propelled by a diesel-
powered engine.
Diesel-powered highway vehicle means a highway vehicle, as defined
in Sec. 48.4041-8(b), that is propelled by a diesel-powered engine.
Diesel-powered train means any diesel-powered equipment or
machinery that rides on rails. Thus, for example, the term includes a
locomotive, work train, switching engine, and track maintenance
machine.
[[Page 10454]]
Enterer generally means the importer of record (under customs law)
with respect to the taxable fuel. However, if the importer of record is
acting as an agent (for example, the importer of record is a customs
broker engaged by the owner of the taxable fuel), the person for whom
the agent is acting is the enterer. If there is no importer of record
for taxable fuel entered into the United States, the owner of the
taxable fuel at the time it is brought into the United States is the
enterer.
Entry of taxable fuel into the United States occurs when--
(1) The taxable fuel is brought into the United States and
applicable customs law requires that the taxable fuel be entered into
the United States for consumption, use, or warehousing; or
(2) The taxable fuel is brought into the United States from Puerto
Rico and applicable customs law would require that the taxable fuel be
entered into the United States for consumption, use, or warehousing if
the taxable fuel were brought into the United States from somewhere
other than Puerto Rico.
Finished gasoline means all products (including gasohol (as defined
in Sec. 48.4081-6(b)(2))) that are commonly or commercially known or
sold as gasoline and are suitable for use as a motor fuel, other than
products that have an ASTM octane number of less than 75 as determined
by the motor method.
Gasoline means finished gasoline and gasoline blendstocks.
Industrial user means any person that receives gasoline blendstocks
by bulk transfer for its own use in the manufacture of any product
other than finished gasoline.
Position holder means, with respect to taxable fuel in a terminal,
the person that holds the inventory position in the taxable fuel, as
reflected on the records of the terminal operator. A person holds the
inventory position in taxable fuel when that person has a contractual
agreement with the terminal operator for the use of storage facilities
and terminaling services at a terminal with respect to the taxable
fuel. The term also includes a terminal operator that owns taxable fuel
in its terminal.
Rack means a mechanism for delivering taxable fuel from a refinery
or terminal into a truck, trailer, railroad car, or other means of
nonbulk transfer.
Refiner means any person that owns, operates, or otherwise controls
a refinery.
Refinery means a facility used to produce taxable fuel from crude
oil, unfinished oils, natural gas liquids, or other hydrocarbons and
from which taxable fuel may be removed by pipeline, by vessel, or at a
rack. However, the term does not include a facility where only blended
fuel or gasohol (as defined in Sec. 48.4081-6(b)(2)), and no other type
of taxable fuel, is produced. For this purpose blended fuel is any
mixture that, if produced outside the bulk transfer/terminal system,
would be blended taxable fuel.
Removal means any physical transfer of taxable fuel, and any use of
taxable fuel other than as a material in the production of taxable fuel
or special fuels (as defined in Sec. 48.4041-8(f)). However, taxable
fuel is not removed when it evaporates or is otherwise lost or
destroyed.
Sale means--
(1) The transfer of title to, or substantial incidents of ownership
in, taxable fuel (other than taxable fuel in a terminal) to the buyer
for a consideration, which may consist of money, services, or other
property; or
(2) The transfer of the inventory position in the taxable fuel in a
terminal if the transferee becomes the position holder with respect to
the taxable fuel.
State includes any State, any political subdivision of a State, the
District of Columbia, the American Red Cross, and, subject to the
limitations of section 7871, any Indian tribal government.
Taxable fuel means gasoline and diesel fuel.
Taxable fuel registrant means an enterer, industrial user, refiner,
terminal operator, or throughputter that is registered under section
4101.
Terminal means a taxable fuel storage and distribution facility
that is supplied by pipeline or vessel, and from which taxable fuel may
be removed at a rack. However, the term does not include any facility
at which gasoline blendstocks are used in the manufacture of products
other than finished gasoline and from which no gasoline is removed.
Terminal operator means any person that owns, operates, or
otherwise controls a terminal.
Throughputter means any person that--
(1) Owns taxable fuel within the bulk transfer/terminal system
(other than in a terminal); or
(2) Is a position holder.
Vessel means a waterborne taxable fuel transporting vessel.
(c) Blended taxable fuel, diesel fuel, and gasoline blendstocks;
definitions--(1) Blended taxable fuel--(i) In general. Except as
provided in paragraphs (c)(1)(ii) and (c)(iii) of this section, blended
taxable fuel means any mixture that is produced outside the bulk
transfer/terminal system and that consists of--
(A) Taxable fuel with respect to which tax has been imposed under
section 4041(a)(1) or 4081(a); and
(B) Any other liquid on which tax has not been imposed under
section 4081.
(ii) Exclusion; minor blending. A mixture described in paragraph
(c)(1)(i) of this section is not blended taxable fuel if, during the
calendar quarter in which the blender removes or sells the mixture, all
such mixtures removed or sold by the blender contain, in the aggregate,
less than 400 gallons of liquid described in paragraph (c)(1)(i)(B) of
this section.
(iii) Exclusion; gasohol. Blended taxable fuel does not include any
gasohol (as defined in Sec. 48.4081-6(b)(2)) if, disregarding the
alcohol, the gasohol is not blended taxable fuel and contains, in
addition to permitted amounts of liquids described in paragraph
(c)(1)(i)(B) of this section, only gasoline with respect to which--
(A) Tax was imposed under section 4081(a) at a rate described in
Sec. 48.4081-6(e) (relating to the gasohol production tax rate and the
gasohol tax rate); or
(B) A valid claim is made under section 6427(f).
(2) Diesel fuel. (i) Effective April 1, 1996, diesel fuel means any
liquid (other than gasoline) that, without further processing or
blending, is suitable for use as a fuel in a diesel-powered highway
vehicle, diesel-powered train, or diesel-powered boat. However, diesel
fuel does not include kerosene, No. 5 and No. 6 fuel oils (as described
in ASTM Specification D 396, which may be obtained from the American
Society for Testing and Materials, 100 Barr Harbor Drive, West
Conshohocken, PA 19428), or F-76 (Fuel Naval Distillate MIL-F-16884,
which may be obtained from Standardization Document Order Desk,
Building 4, Section D, 700 Robbins Avenue, Philadelphia, PA 19111).
(ii) Before April 1, 1996, diesel fuel means any liquid (other than
kerosene) that is commonly or commercially known or sold as a fuel that
is suitable for use in a diesel-powered highway vehicle, diesel-powered
train, or diesel-powered boat. A liquid meets this requirement if,
without further processing or blending, the liquid has practical and
commercial fitness for use in the propulsion engine of the highway
vehicle, train, or boat. A liquid may possess this practical and
commercial fitness even though the specified use is not the liquid's
predominant use. However, a liquid does not possess this practical and
commercial fitness solely by reason of its possible or rare use as a
fuel in the propulsion engine of a highway vehicle, train, or boat.
[[Page 10455]]
(iii) Cross reference. For the tax on blended taxable fuel, see
Sec. 48.4081-3(g). For the back-up tax on certain uses of liquids other
than diesel fuel, see Sec. 48.4082-4.
(3) Gasoline blendstocks--(i) In general. Except as provided in
paragraph (c)(3)(ii) of this section, gasoline blendstocks means--
(A) Alkylate;
(B) Butane;
(C) Butene;
(D) Catalytically cracked gasoline;
(E) Coker gasoline;
(F) Ethyl tertiary butyl ether (ETBE);
(G) Hexane;
(H) Hydrocrackate;
(I) Isomerate;
(J) Methyl tertiary butyl ether (MTBE);
(K) Mixed xylene (not including any separated isomer of xylene);
(L) Natural gasoline;
(M) Pentane;
(N) Pentane mixture;
(O) Polymer gasoline;
(P) Raffinate;
(Q) Reformate;
(R) Straight-run gasoline;
(S) Straight-run naphtha;
(T) Tertiary amyl methyl ether (TAME);
(U) Tertiary butyl alcohol (gasoline grade) (TBA);
(V) Thermally cracked gasoline;
(W) Toluene; and
(X) Transmix containing gasoline.
(ii) Exclusion. Gasoline blendstocks does not include any product
that cannot, without further processing, be used in the production of
finished gasoline. For example, a mixed hydrocarbon stream that is
produced in a natural gas processing plant is not a gasoline blendstock
if the stream cannot be used to produce finished gasoline without
further processing.
(d) Effective date. This section is effective January 1, 1994.
Sec. 48.4081-2 Taxable fuel; tax on removal at a terminal rack.
(a) Overview. This section provides the general rule that all
removals of taxable fuel at a terminal rack are subject to tax and the
position holder with respect to the fuel is liable for the tax.
(b) Imposition of tax. Except as provided in Sec. 48.4081-4
(relating to gasoline blendstocks) and Sec. 48.4082-1 (relating to dyed
diesel fuel), tax is imposed on the removal of taxable fuel from a
terminal if the taxable fuel is removed at the rack.
(c) Liability for tax--(1) In general. The position holder with
respect to the taxable fuel is liable for the tax imposed under
paragraph (b) of this section.
(2) Joint and several liability of terminal operator; unregistered
position holder--(i) In general. The terminal operator is jointly and
severally liable for the tax imposed under paragraph (b) of this
section if--
(A) The position holder with respect to the taxable fuel is a
person other than the terminal operator and is not a taxable fuel
registrant; and
(B) The terminal operator has not met the conditions of paragraph
(c)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. A terminal operator is
not liable for tax under this paragraph (c)(2) if, at the time of the
removal, the terminal operator--
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (as described in
Sec. 48.4081-5) from the position holder; and
(C) Has no reason to believe that any information in the
notification certificate is false.
(3) Joint and several liability of terminal operator; incorrect
information provided. The terminal operator is jointly and severally
liable for the tax imposed under paragraph (b) of this section if, in
connection with the removal of diesel fuel that is not dyed and marked
in accordance with Sec. 48.4082-1, the terminal operator provides any
person (including the position holder with respect to the fuel) with
any bill of lading, shipping paper, record, or similar document
indicating that the diesel fuel is dyed and marked in accordance with
Sec. 48.4082-1.
(4) Example. The following example illustrates this paragraph (c)
and Sec. 48.4082-1:
Example. (i) TO is a terminal operator and PH is the position
holder with respect to, and owner of, 8,000 gallons of diesel fuel
stored in TO's terminal. TO and PH are taxable fuel registrants.
When the fuel is removed from the terminal at the rack, the fuel is
not dyed and marked in accordance with Sec. 48.4082-1, and TO does
not provide any person with any paperwork indicating that the fuel
is dyed and marked. After the removal from the terminal, PH sells
the fuel to individuals for use as heating oil, a nontaxable use.
(ii) Because PH is the position holder of the fuel at the time
of the removal from the terminal, PH is liable for the tax imposed
by section 4081. The removal is subject to tax because the fuel is
not dyed and marked in accordance with Sec. 48.4082-1, and later use
of the fuel in a nontaxable use does not make the removal from the
terminal exempt from tax.
(iii) Because PH is a taxable fuel registrant and TO did not
provide any person with any paperwork indicating that the fuel is
dyed and marked, TO is not jointly and severally liable for tax
under paragraph (c) (2) or (3) of this section.
(d) Rate of tax. For the rate of tax generally, see section
4081(a). For the rate of tax on gasohol and on gasoline removed for
gasohol production, see Sec. 48.4081-6.
(e) Effective date. This section is effective January 1, 1994.
Sec. 48.4081-3 Taxable fuel; taxable events other than removal at the
terminal rack.
(a) Overview. Although tax is imposed when taxable fuel is removed
from the terminal at the rack, tax also is imposed in certain other
situations described in this section. For the back-up tax on the use of
dyed diesel fuel, see Sec. 48.4082-4.
(b) Tax on removal from a refinery--(1) Imposition of tax. Except
as provided in paragraph (b)(2) of this section (relating to an
exemption for certain refineries), Sec. 48.4081-4 (relating to gasoline
blendstocks), and Sec. 48.4082-1 (relating to dyed diesel fuel), tax is
imposed on the following removals from a refinery:
(i) A removal by bulk transfer if the refiner or the owner of the
taxable fuel immediately before the removal is not a taxable fuel
registrant.
(ii) A removal at the rack.
(iii) After September 30, 1995, a removal of a batch of gasohol
from an approved refinery by bulk transfer if the refiner treats itself
with respect to the removal as a person that is not registered under
section 4101. See Sec. 48.4101-1(a). For the rule providing that no
deposit is required in the case of the tax imposed under this paragraph
(b)(1)(iii), see Sec. 40.6302(c)-1(e)(4) of this chapter. For the rule
allowing inspections of facilities where gasohol is produced, see
section 4083.
(2) Exception for certain refineries. The tax imposed under
paragraph (b)(1)(ii) of this section does not apply to a removal of
taxable fuel if--
(i) The taxable fuel is removed from an approved refinery that is
not served by pipeline (other than a pipeline for the receipt of crude
oil) or vessel;
(ii) The taxable fuel is received at a facility that is operated by
a taxable fuel registrant and is located within the bulk transfer/
terminal system;
(iii) The removal from the refinery is by--
(A) Rail car; or
(B) In the case of diesel fuel, a trailer or semi-trailer that is
used exclusively for the transport service described in paragraphs
(b)(2)(i) and (b)(2)(ii) of this section;
(iv) In the case of taxable fuel removed by rail car, the facility
at which the fuel is received is operated by the same person that
operates the refinery from which the fuel was removed; and
(v) In the case of diesel fuel removed by a trailer or semi-
trailer, the facility at which the fuel is received is less than
[[Page 10456]]
20 miles from the refinery from which the diesel fuel was removed.
(3) Liability for tax. The refiner is liable for the tax imposed
under paragraph (b)(1) of this section.
(c) Tax on entry into the United States--(1)Imposition of tax.
Except as provided in Sec. 48.4081-4 (relating to gasoline blendstocks)
and Sec. 48.4082-1 (relating to dyed diesel fuel), a tax is imposed on
the entry of taxable fuel into the United States if--
(i) The entry is by bulk transfer and the enterer is not a taxable
fuel registrant; or
(ii) The entry is not by bulk transfer.
(2) Liability for tax. The enterer is liable for the tax imposed
under paragraph (c)(1) of this section.
(d) Tax on bulk transfers from a terminal by an unregistered
position holder--(1) Imposition of tax. A tax is imposed on the removal
by bulk transfer of taxable fuel from a terminal if the position holder
with respect to the taxable fuel is not a taxable fuel registrant.
(2) Liability for tax--(i) In general. The position holder with
respect to the taxable fuel is liable for the tax imposed under
paragraph (d)(1) of this section.
(ii) Joint and several liability of terminal operator. The terminal
operator is jointly and severally liable for the tax imposed under
paragraph (d)(1) of this section if--
(A) The position holder with respect to the taxable fuel is a
person other than the terminal operator; and
(B) The terminal operator has not met the conditions of paragraph
(d)(2)(iii) of this section.
(iii) Conditions for avoidance of liability. A terminal operator is
not liable for tax under this paragraph (d)(2) if, at the time of the
bulk transfer, the terminal operator--
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in
Sec. 48.4081-5) from the position holder; and
(C) Has no reason to believe that any information in the
notification certificate is false.
(e) Tax on bulk transfers not received at an approved terminal or
refinery--(1) Imposition of tax. Except as provided in Sec. 48.4081-4
(relating to gasoline blendstocks) and Sec. 48.4082-1 (relating to dyed
diesel fuel), a tax on taxable fuel is imposed if--
(i) Taxable fuel is removed by bulk transfer from a refinery or
terminal, or entered by bulk transfer into the United States;
(ii) No tax was imposed on such removal or entry under paragraph
(b), (c), or (d) of this section; and
(iii) Upon removal from the pipeline or vessel, the taxable fuel is
not received at an approved terminal or refinery (or at another
pipeline or vessel).
(2) Liability for tax--(i) In general. The owner of the taxable
fuel when it is removed from the pipeline or vessel is liable for the
tax imposed under paragraph (e)(1) of this section if the owner has not
met the conditions of paragraph (e)(2)(ii) of this section.
(ii) Conditions for avoidance of liability. An owner of taxable
fuel is not liable for tax under paragraph (e)(2)(i) of this section
if, at the time the taxable fuel is removed from the pipeline or
vessel, the owner of the taxable fuel--
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in
Sec. 48.4081-5) from the operator of the terminal or refinery where the
taxable fuel is received; and
(C) Has no reason to believe that any information in the
notification certificate is false.
(iii) Liability of the operator of the facility where the taxable
fuel is received. The operator of the facility where the taxable fuel
is received is liable for the tax imposed under paragraph (e)(1) of
this section if the owner of the taxable fuel has met the conditions of
paragraph (e)(2)(ii) of this section and is jointly and severally
liable for the tax if the owner has not met such conditions.
(f) Tax on sales within the bulk transfer/terminal system--(1)
Imposition of tax. Except as provided in paragraph (f)(2) of this
section and Sec. 48.4082-1 (relating to dyed diesel fuel), a tax is
imposed on the sale of taxable fuel located within the bulk transfer/
terminal system if the sale is to a person that is not a taxable fuel
registrant and tax has not been imposed on such taxable fuel under
Sec. 48.4081-2, or paragraph (b), (c), (d), or (e) of this section.
(2) Exception for certain sales of taxable fuel for export. The tax
imposed under paragraph (f)(1) of this section does not apply to a sale
of taxable fuel if--
(i) The buyer's principal place of business is not within the
United States;
(ii) The sale of the fuel occurs as the fuel is delivered into a
transport vessel;
(iii) The vessel has a capacity of at least 20,000 barrels of fuel;
(iv) The seller is a taxable fuel registrant and the exporter of
record of the fuel; and
(v) The fuel was exported in due course.
(3) Liability for tax--(i) In general. The seller of the taxable
fuel is liable for the tax imposed under paragraph (f)(1) of this
section if the seller has not met the conditions of paragraph
(f)(3)(ii) of this section.
(ii) Conditions for avoidance of liability. A seller is not liable
for tax under paragraph (f)(3)(i) of this section if, at the time of
the sale, the seller--
(A) Is a taxable fuel registrant;
(B) Has an unexpired notification certificate (described in
Sec. 48.4081-5) from the buyer; and
(C) Has no reason to believe that any information in the
certificate is false.
(iii) Liability of the buyer. The buyer of the taxable fuel is
liable for the tax imposed under paragraph (f)(1) of this section if
the seller of the taxable fuel has met the conditions of paragraph
(f)(3)(ii) of this section and is jointly and severally liable for the
tax if the seller has not met such conditions.
(4) Example. The following example illustrates this paragraph (f)
and the definition of the term sale in Sec. 48.4081-1:
Example. PH owns one million gallons of untaxed gasoline that is
stored in TO's terminal. PH also is the position holder with respect
to the gasoline. While the gasoline remains stored in the terminal,
PH transfers title to 200,000 gallons of the gasoline to A, a person
that is not a taxable fuel registrant. PH continues to hold the
inventory position on TO's records with respect to the one million
gallons. Because PH continues as the position holder with respect to
the gasoline, the transfer of title to the gasoline from PH to A is
not a sale of gasoline. Because this transfer of title from PH to A
is not a sale of gasoline, the tax imposed under paragraph (f) of
this section does not apply to the transfer.
(g) Tax on removal or sale of blended taxable fuel by the blender--
(1) Imposition of tax. A tax is imposed on the removal or sale of
blended taxable fuel by the blender thereof. Tax is computed on the
difference between the total number of gallons of blended taxable fuel
removed or sold and the number of gallons of previously taxed taxable
fuel used to produce the blended taxable fuel. For this purpose, the
alcohol in gasohol is treated as previously taxed taxable fuel.
(2) Liability for tax. The blender is liable for the tax imposed
under paragraph (g)(1) of this section.
(3) Example. The following example illustrates the provisions of
this paragraph (g) and the definition of the term blended taxable fuel
in Sec. 48.4081-1(c):
Example. (i) X, a gasoline wholesale distributor, buys 9,500
gallons of gasoline at a terminal rack. The gasoline is delivered
into a tank trailer. The position holder is liable for tax under
Sec. 48.4081-2 when the gasoline is removed at the rack. X then goes
to another location where 500 gallons of alcohol (a substance not
subject to tax under section 4081) are delivered into the tank
[[Page 10457]]
trailer already containing the 9,500 gallons of gasoline. The
gasoline and alcohol are splash blended as X drives to X's retail
service station where X pumps the blended gasoline into a storage
tank for sale to consumers.
(ii) X is a blender within the meaning of Sec. 48.4081-1 because
X has produced blended taxable fuel, as defined in Sec. 48.4081-1,
by mixing the 9,500 gallons of gasoline on which tax has been
imposed under Sec. 48.4081-2(b) with 500 gallons of alcohol, a
substance not subject to tax under section 4081. The 10,000 gallon
mixture is not gasohol because it does not satisfy the alcohol-
content requirement described in Sec. 48.4081-6(b)(2). X, the
blender, is liable for the tax imposed under this paragraph (g) on
the blended gasoline. The tax is imposed when the blended gasoline
is removed from the tank trailer at the retail station. Tax on the
blended mixture is computed on 500 gallons, the number of gallons
not previously subject to tax under section 4081.
(h) Rate of tax. For the rate of tax generally imposed under this
section, see section 4081(a). For the rate of tax on gasohol and on
gasoline removed or entered for gasohol production, see Sec. 48.4081-6.
(i) Effective date. This section is effective January 1, 1994.
Par. 19. Section 48.4081-4 is amended as follows:
1. The heading for Sec. 48.4081-4 is revised.
2. In paragraph (a), the language ``to produce gasoline'' is
removed and ``to produce finished gasoline'' is added in its place.
3. In paragraph (b)(1)(i), the language ``gasoline registrant'' is
removed and ``taxable fuel registrant'' is added in its place.
4. In paragraph (b)(1)(ii), the language ``gasoline (as defined in
Sec. 48.4081-1(i)(1))'' is removed and ``finished gasoline'' is added
in its place.
5. In paragraphs (b)(2)(i) and (c)(1), the language ``gasoline
registrant'' is removed each place it appears and ``taxable fuel
registrant'' is added in its place.
6. The language ``and'' is added following the semicolon at the end
of paragraph (c)(2).
7. Paragraph (c)(3) is revised.
8. Paragraph (c)(4) is removed.
9. In paragraph (d), the language ``gasoline registrant'' is
removed and ``taxable fuel registrant'' is added in its place.
10. In paragraphs (e)(2) and (e)(3), the language ``production of
gasoline'' is removed each place it appears and ``production of
finished gasoline'' is added in its place.
11. In paragraph (e)(3), the language ``to produce gasoline'' is
removed each place it appears, and ``to produce finished gasoline'' is
added in its place.
12. In paragraph (f), the language ``1993'' is removed and ``1994''
is added in its place.
The revisions read as follows:
Sec. 48.4081-4 Gasoline; special rules for gasoline blendstocks.
* * * * *
(c) * * *
(3) Has no reason to believe that any information in the
certificate is false.
* * * * *
Par. 20. Section 48.4081-5 is amended as follows:
1. The heading for Sec. 48.4081-5 is revised to read as follows:
Sec. 48.4081-5 Taxable fuel; notification certificate of taxable fuel
registrant.
2. In paragraph (a), the first sentence in paragraph (b)(1)
introductory text, and paragraph (b)(2), the language ``gasoline'' is
removed each place it appears and ``taxable fuel'' is added in its
place.
3. In paragraph (b)(3), the language ``or letter of registration''
is added after ``Form 637'' in the heading and after ``(Form 637)'' in
the text.
4. In paragraph (c), the language ``1993'' is removed and ``1994''
is added in its place.
Par. 21. The heading for Sec. 48.4081-6 is revised to read as
follows:
Sec. 48.4081-6 Gasoline; gasohol.
Sec. 40.4081-7 [Amended]
Par. 22. Section 48.4081-7 is amended as follows:
1. In paragraph (c)(2), two new listings are added at the end of
the listings in line 5 of the taxpayer's report:
``__________ Removal at the terminal rack __________ Removal or
sale by the blender''
2. In paragraph (c)(4)(i)(A) and the first sentence of paragraph
(c)(4)(iii), the language ``Sec. 48.4081-1(r))'' is removed and
``Sec. 48.4081-1))'' is added in its place.
Par. 23. Section 48.4081-8 is revised to read as follows:
Sec. 48.4081-8 Taxable fuel; measurement.
(a) In general. For purposes of the tax imposed by section 4081,
gallons of taxable fuel may be measured on the basis of--
(1) Actual volumetric gallons;
(2) Gallons adjusted to 60 degrees Fahrenheit; or
(3) Any other temperature adjustment method approved by the
Commissioner.
(b) Effective date. This section is effective January 1, 1994.
Secs. 48.4081-10T, 48.4081-11T, and 48.4081-12T [Removed]
Par. 24. Sections 48.4081-10T through 48.4081-12T are removed.
Par. 25. Section 48.4082-1 is revised to read as follows:
Sec. 48.4082-1 Diesel fuel tax; exemption.
(a) Exemption. Tax is not imposed by section 4081 on the removal,
entry, or sale of any diesel fuel if--
(1) The person otherwise liable for tax is a taxable fuel
registrant;
(2) In the case of a removal from a terminal, the terminal is an
approved terminal; and
(3) The diesel fuel satisfies the dyeing and marking requirements
of paragraphs (b), (c), and (d) of this section.
(b) Dyeing requirements. Diesel fuel satisfies the dyeing
requirement of this paragraph (b) only if it contains--
(1) The dye Solvent Red 164 (and no other dye) at a concentration
spectrally equivalent to at least 3.9 pounds of the solid dye standard
Solvent Red 26 per thousand barrels of diesel fuel; or
(2) Any dye of a type and in a concentration that has been approved
by the Commissioner.
(c) Marking requirements. [Reserved]
(d) Time for adding the dye and marker. [Reserved]
(e) Effective date. This section is effective March 14, 1996.
Secs. 48.4082-2T, 48.4082-3T, 48.4082-4T and 48.4083 [Removed]
Par. 26. Sections 48.4082-2T, 48.4082-3T, 48.4082-4T, and 48.4083
are removed.
Par. 27. Sections 48.4082-2, 48.4082-3, 48.4082-4, and 48.4083-1
are added to read as follows:
Sec. 48.4082-2 Diesel fuel tax; notice required with respect to dyed
diesel fuel.
(a) In general. A legible and conspicuous notice stating: DYED
DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be
posted by a seller on any retail pump or other delivery facility where
it sells dyed diesel fuel for use by its buyer. Any seller that fails
to post the required notice on any retail pump or other delivery
facility where it sells dyed diesel fuel is, for purposes of the
penalty imposed by section 6714, presumed to know that the fuel will
not be used for a nontaxable use.
(b) Cross reference; terminal operators. For the requirement that
terminal operators provide a notice with respect to dyed diesel fuel,
see Sec. 48.4101-1(h)(3) (relating to terms and conditions of
registration for terminal operators).
(c) Effective date. This section is effective January 1, 1994.
[[Page 10458]]
Sec. 48.4082-3 Diesel fuel; visual inspection devices. [Reserved]
Sec. 48.4082-4 Diesel fuel; back-up tax.
(a) Imposition of tax--(1) In general. Tax is imposed by section
4041 on the delivery into the fuel supply tank of the propulsion engine
of a diesel-powered highway vehicle (other than a diesel-powered bus)
or diesel-powered boat of--
(i) Any diesel fuel on which tax has not been imposed by section
4081;
(ii) Any diesel fuel on which a credit or payment has been allowed
under section 6427; or
(iii) Any liquid other than gasoline or diesel fuel.
(2) Liability for tax--(i) In general. The operator of the highway
vehicle or boat into which the fuel is delivered is liable for the tax
imposed under paragraph (a)(1) of this section.
(ii) Joint and several liability of the seller. The seller of the
fuel is jointly and severally liable for the tax imposed under
paragraph (a)(1) of this section if the seller knows or has reason to
know that the fuel will not be used in a nontaxable use.
(3) Rate of tax. The rate of tax is the rate imposed on diesel fuel
by section 4081(a).
(b) Tax on diesel fuel; buses and trains--(1) In general.Tax is
imposed by section 4041 on the delivery into the fuel supply tank of
the propulsion engine of a diesel-powered bus or a diesel-powered train
of--
(i) Any diesel fuel on which tax has not been imposed by section
4081;
(ii) Any diesel fuel on which a credit or payment has been allowed
under section 6427; or
(iii) Any liquid other than gasoline or diesel fuel.
(2) Liability for tax--(i) In general. Except as provided in
paragraph (b)(2)(ii) of this section, the operator of the bus or train
into which the fuel is delivered is liable for the tax imposed under
paragraph (b)(1) of this section.
(ii) Special rule for certain train operators. The person that
delivers the fuel into the fuel supply tank of a train, rather than the
train operator, is liable for the tax imposed under paragraph (b)(1) of
this section if, at the time of the delivery--
(A) The deliverer of the fuel and the operator of the train are
both registered as train operators under Sec. 48.4101-1; and
(B) A written agreement between the deliverer of the fuel and the
operator requires the deliverer to pay the tax imposed under paragraph
(b)(1) of this section.
(3) Rate of tax--(i) Buses--(A) In general. The rate of tax under
paragraph (b)(1) of this section is the sum of the rates described in
sections 4041(a)(1)(C)(iii)(I) and 4041(d)(1) (the bus rate) if the bus
is used to furnish (for compensation) passenger land transportation
available to the general public and either such transportation is
scheduled and along regular routes or the seating capacity of the bus
is at least 20 adults (not including the driver). A bus is available to
the general public if the bus is available for hire to more than a
limited number of persons, groups, or organizations.
(B) Other uses. The rate of tax under paragraph (b)(1) of this
section is the rate of tax imposed on diesel fuel by section 4081(a) if
the bus is used for a purpose other than that described in paragraph
(b)(3)(i)(A) of this section.
(ii) Trains. The rate of tax under paragraph (b)(1) of this section
is the rate prescribed in section 4041 for diesel fuel sold for use in
a train (the train rate).
(4) Cross reference. For the registration requirement relating to
certain bus and train operators, see Sec. 48.4101-1(c)(2).
(c) Exemptions. The taxes imposed under paragraphs (a) and (b) of
this section do not apply to a delivery of any liquid for--
(1) Use on a farm for farming purposes as that term and related
terms are defined in Sec. 48.6420-4 (a) through (g);
(2) The exclusive use of a State;
(3) Use described in section 4041(h) (relating to use in a vehicle
owned by an aircraft museum);
(4) Use in a boat employed in--
(i) The business of commercial fishing;
(ii) The business of transporting persons or property for
compensation or hire; or
(iii) Any other trade or business, unless the boat is used in any
activity of a type generally considered to constitute entertainment,
amusement, or recreation (within the meaning of section 274(a)(1)(A)
and the regulations under that section);
(5) Use in a bus while the bus is engaged in the transportation of
students and employees of schools (as defined in the last sentence of
section 4221(d)(7)(C));
(6) Use in a qualified local bus (as defined in section
6427(b)(2)(D)) while the bus is engaged in furnishing (for
compensation) intracity passenger land transportation that is available
to the general public and is scheduled and along regular routes;
(7) Use in a highway vehicle that--
(i) Is not registered (and is not required to be registered) for
highway use under the laws of any State or foreign country; and
(ii) Is used in the operator's trade or business or in an activity
of the operator described in section 212 (relating to the production of
income);
(8) The exclusive use of a nonprofit educational organization, as
defined in Sec. 48.4221-6(b);
(9) Use in a highway vehicle that is owned by the United States and
is not used on the highway; or
(10) Use in any boat operated by the United States for the
exclusive use of the United States or any vessel of war of any foreign
nation, as described in Sec. 48.4221-4(b)(5).
(d) Effective date. This section is effective January 1, 1994.
Sec. 48.4083-1 Taxable fuel; administrative authority.
(a) In general--(1) Authority to inspect. Officers or employees of
the IRS designated by the Commissioner, upon presenting appropriate
credentials and a written notice to the owner, operator, or agent in
charge, are authorized to enter any place and to conduct inspections in
accordance with paragraphs (a) through (c) of this section.
(2) Reasonableness. Inspections will be performed in a reasonable
manner and at times that are reasonable under the circumstances, taking
into consideration the normal business hours of the place to be
entered.
(b) Place of inspection--(1) In general. Inspections may be at any
place at which taxable fuel is (or may be) produced or stored or at any
inspection site where evidence of activities described in section
6714(a) may be discovered. These places may include, but are not
limited to--
(i) Any terminal;
(ii) Any fuel storage facility that is not a terminal;
(iii) Any retail fuel facility; or
(iv) Any designated inspection site.
(2) Designated inspection sites. A designated inspection site is
any State highway inspection station, weigh station, agricultural
inspection station, mobile station, or other location designated by the
Commissioner to be used as a fuel inspection site. A designated
inspection site will be identified as a fuel inspection site.
(c) Scope of inspection--(1) Inspection. Officers or employees may
physically inspect, examine or otherwise search any tank, reservoir, or
other container that can or may be used for the production, storage, or
transportation of fuel, fuel dyes, or fuel markers. Inspection may also
be made of any equipment used for, or in connection with, production,
storage, or
[[Page 10459]]
transportation of fuel, fuel dyes, or fuel markers. This includes any
equipment used for the dyeing or marking of fuel. This also includes
books and records, if any, that are maintained at the place of
inspection and are kept to determine excise tax liability under section
4081.
(2) Detainment. Officers or employees may detain any vehicle,
train, or boat for the purpose of inspecting its fuel tanks and storage
tanks. Detainment will be either on the premises under inspection or at
a designated inspection site. Detainment may continue for such
reasonable period of time as is necessary to determine the amount and
composition of the fuel.
(3) Removal of samples. Officers or employees may take and remove
samples of fuel in such quantities as are reasonably necessary to
determine the composition of the fuel.
(d) Refusal to submit to inspection--(1) Imposition of penalty. Any
person that refuses to allow an inspection will be fined $1,000 for
each refusal. This penalty is in addition to any other penalty or tax
that may be imposed upon that person or any other person liable for tax
under section 4081 or penalty under section 6714.
(2) Assessment of penalty. This penalty is an assessable penalty
and is assessed in accordance with section 6671.
(e) Effective date. This section is effective January 1, 1994.
Par. 28. The undesignated center heading preceding Sec. 48.4101-1
is removed.
Par. 29. Section 48.4101-1 is revised to read as follows:
Sec. 48.4101-1 Registration.
(a) In general. (1) This section provides rules relating to
registration under section 4101 for purposes of the federal excise tax
on taxable fuel imposed by sections 4041(a)(1) and 4081 and the credit
or payment allowed to registered ultimate vendors of diesel fuel under
section 6427.
(2) A person is registered under section 4101 only if the district
director has issued a registration letter to the person and the
registration has not been revoked or suspended.
(3) A refiner that is registered under section 4101 may, with
respect to the bulk removal of any batch of gasohol from its refinery,
treat itself as a person that is not registered. See Sec. 48.4081-
3(b)(1)(iii).
(4) Each business unit that has, or is required to have, a separate
employer identification number is treated as a separate person. Thus,
two business units (for example, a parent corporation and a subsidiary
corporation, or a proprietorship and a related partnership), each of
which has a different employer identification number, are two persons.
(5) A registration in effect on December 31, 1993, with respect to
the tax on gasoline or diesel fuel is subject to the district
director's review, and to revocation or suspension, under the standards
set forth in this section, but remains in effect until the earlier of--
(i) The effective date of a registration issued under paragraph
(g)(3) of this section; or
(ii) The effective date of the revocation or suspension of the
registration under paragraph (i) of this section.
(b) Definitions--(1) Applicant. An applicant is a person that has
applied for registration under paragraph (e) of this section.
(2) Bonded registrant. A bonded registrant is a person that has
given a bond to the district director under paragraph (j) of this
section as a condition of registration.
(3) Gasohol bonding amount. The gasohol bonding amount is the
product of--
(i) The rate of tax applicable to later separation, as described in
Sec. 48.4081-6(f)(1)(iii); and
(ii) The total number of gallons of gasoline expected to be bought
at the gasohol production tax rate by the gasohol blender during a
representative 6-month period (as determined by the district director).
(4) Penalized for a wrongful act. A person has been penalized for a
wrongful act if the person has--
(i) Been assessed any penalty under chapter 68 of the Internal
Revenue Code (or similar provision of the law of any State) for
fraudulently failing to file any return or pay any tax, and the penalty
has not been wholly abated, refunded, or credited;
(ii) Been assessed any penalty under chapter 68 of the Internal
Revenue Code, such penalty has not been wholly abated, refunded, or
credited, and the district director determines that the conduct
resulting in the penalty is part of a consistent pattern of failing to
deposit, pay, or pay over a substantial amount of tax;
(iii) Been convicted of a crime under chapter 75 of the Internal
Revenue Code (or similar provision of the law of any State), or of
conspiracy to commit such a crime, and the conviction has not been
wholly reversed by a court of competent jurisdiction;
(iv) Been convicted, under the laws of the United States or any
State, of a felony for which an element of the offense is theft, fraud,
or the making of false statements, and the conviction has not been
wholly reversed by a court of competent jurisdiction;
(v) Been assessed any tax under section 4103 and the tax has not
been wholly abated, refunded, or credited; or
(vi) Had its registration under section 4101 or 4222 revoked.
(5) Related person. A related person is a person that--
(i) Directly or indirectly exercises control over an activity of
the applicant if the activity is described in paragraph (c)(1) or (d)
of this section;
(ii) Owns, directly or indirectly, five percent or more of the
applicant;
(iii) Is under a duty to assure the payment of a tax for which the
applicant is responsible;
(iv) Is a member, with the applicant, of a group of organizations
(as defined in Sec. 1.52-1(b) of this chapter) that would be treated as
a group of trades or businesses under common control for purposes of
Sec. 1.52-1 of this chapter; or
(v) Distributed or transferred assets to the applicant in a
transaction in which the applicant's basis in the assets is determined
by reference to the basis of the assets in the hands of the distributor
or transferor.
(6) Registrant. A registrant is a person that the district director
has, in accordance with paragraph (g)(3) of this section, registered
under section 4101 and whose registration has not been revoked or
suspended.
(c) Persons required to be registered--(1) In general. A person is
required to be registered under section 4101 if the person is a--
(i) Blender;
(ii) Enterer;
(iii) Refiner;
(iv) Terminal operator; or
(v) Position holder.
(2) Bus and train operators. Every operator of a bus or train is
required to be registered under section 4101 at any time it incurs any
liability for tax under section 4041 at the bus rate (as described in
Sec. 48.4082-4(b)(3)(i)) or the train rate (as described in
Sec. 48.4082-4(b)(3)(ii)).
(3) Consequences of failing to register. For the criminal penalty
imposed for failure to register, see section 7232. For the civil
penalty imposed for failure to register, see section 7272.
(d) Persons that may, but are not required to, be registered. A
person may, but is not required to, be registered under section 4101 if
the person is a--
(1) Gasohol blender;
(2) Industrial user;
(3) Throughputter that is not a position holder; or
(4) Ultimate vendor of diesel fuel.
[[Page 10460]]
(e) Application instructions. Application for registration under
section 4101 must be made in accordance with the instructions for Form
637 (or such other form as the Commissioner may designate).
(f) Registration tests--(1) In general--(i) Persons other than
ultimate vendors. Except as provided in paragraph (f)(1)(ii) of this
section, the district director will register an applicant only if the
district director determines that the applicant meets the following
three tests (collectively, the registration tests):
(A) The activity test of paragraph (f)(2) of this section.
(B) The acceptable risk test of paragraph (f)(3) of this section.
(C) The adequate security test of paragraph (f)(4) of this section.
(ii) Ultimate vendors. The district director will register an
applicant as an ultimate vendor of diesel fuel only if the district
director--
(A) Determines that the applicant meets the activity test of
paragraph (f)(2) of this section; and
(B) Is satisfied with the filing, deposit, payment, and claim
history for all federal taxes of the applicant and any related person.
(2) The activity test. An applicant meets the activity test of this
paragraph (f)(2) only if the district director determines that the
applicant--
(i) Is, in the course of its trade or business, regularly engaged
as an operator of a bus or train or in the characteristic activity of a
person described in paragraph (c)(1) or (d) of this section; or
(ii) Is likely to be (because of such factors as the applicant's
business experience, financial standing, or trade connections), in the
course of its trade or business, regularly engaged as an operator of a
bus or train or in the characteristic activity of a person described in
paragraph (c)(1) or (d) of this section within a reasonable time after
becoming registered under section 4101.
(3) Acceptable risk test--(i) In general. An applicant meets the
acceptable risk test of this paragraph (f)(3) only if--
(A) Neither the applicant nor a related person has been penalized
for a wrongful act; or
(B) Even though the applicant or a related person has been
penalized for a wrongful act, the district director determines, after
review of evidence offered by the applicant, that the registration of
the applicant does not create a significant risk of nonpayment or late
payment of the tax imposed by sections 4041(a)(1) and 4081.
(ii) Significant risk of nonpayment or late payment of tax. In
making the determination described in paragraph (f)(3)(i)(B) of this
section, the district director may consider factors such as the
following:
(A) The time elapsed since the applicant or related person was
penalized for a wrongful act.
(B) The present relationship between the applicant and any related
person that was penalized for any wrongful act.
(C) The degree of rehabilitation of the person penalized for any
wrongful act.
(D) The amount of bond given by the applicant. In this regard, the
district director may accept a bond under paragraph
(j) of this section, without regard to the limits on the amount of
the bond set by paragraph (j)(2) of this section.
(4) Adequate security test--(i) In general. An applicant meets the
adequate security test of this paragraph (f)(4) only if the district
director determines that the applicant has both adequate financial
resources and a satisfactory tax history, or the applicant gives the
district director a bond (under the provisions of paragraph (j) of this
section).
(ii) Adequate financial resources--(A) In general. An applicant has
adequate financial resources only if the district director determines
that the applicant is financially capable of paying--
(1) Its expected tax liability under sections 4041(a)(1) and 4081
for a representative 6-month period (as determined by the district
director);
(2) In the case of a terminal operator, the expected tax liability
under section 4081 of persons other than the terminal operator with
respect to taxable fuel removed at the racks of its terminals during a
representative 1-month period (as determined by the district director);
and
(3) In the case of a gasohol blender, the gasohol bonding amount.
(B) Basis for determination. The determination under this paragraph
(f)(4)(ii) must be based on financial information such as the
applicant's income statement, balance sheet or bond ratings, or other
information related to the applicant's financial status.
(iii) Satisfactory tax history. An applicant has a satisfactory tax
history only if the district director is satisfied with the filing,
deposit, and payment history for all federal taxes of the applicant and
any related person.
(g) Action on the application by the district director--(1) Review
of application. The district director may investigate the accuracy and
completeness of any representations made by an applicant, request any
additional relevant information from the applicant, and inspect the
applicant's premises during normal business hours without advance
notice.
(2) Denial. If the district director determines that an applicant
does not meet all of the applicable registration tests described in
paragraph (f) of this section, the district director must notify the
applicant, in writing, that its application for registration is denied
and state the basis for the denial.
(3) Approval. If the district director determines that an applicant
meets all of the applicable registration tests described in paragraph
(f) of this section, the district director must register the applicant
under section 4101 and issue the applicant a letter of registration
containing the effective date of the registration. The effective date
of the registration must be no earlier than the date on which the
district director signs the letter of registration. A copy of an
application for registration (Form 637) is not a letter of
registration.
(h) Terms and conditions of registration--(1) Affirmative duties.
Each registrant must--
(i) Make deposits, file returns, and pay taxes required by the
Internal Revenue Code and the regulations;
(ii) Keep records sufficient to show the registrant's tax liability
under sections 4041(a)(1) and 4081 and payments or deposits of such
liability;
(iii) Make all information reports required under section 4101(d)
and Sec. 48.4101-2;
(iv) Make available for inspection on demand by the Internal
Revenue Service during normal business hours records relevant to a
determination of tax liability under sections 4041(a)(1) and 4081; and
(v) Notify the district director of any change (such as a change in
ownership) in the information the registrant submitted in connection
with its application for registration, or previously submitted under
this paragraph (h)(1)(v), within 10 days after the change occurs.
(2) Prohibited actions. A registrant may not--
(i) Sell, lease or otherwise allow another person to use its
registration;
(ii) Make any false statement to the district director in
connection with a submission under paragraph (h)(1) or (h)(3) of this
section;
(iii) Make any false statement on, or violate the terms of--
(A) A notification certificate of a taxable fuel registrant (as
described in Sec. 48.4081-5(b)); or
(B) A certificate of a registered gasohol blender (as described in
Sec. 48.4081-6(c)(2)).
(3) Additional terms and conditions for terminal operators--(i)
Notice
[[Page 10461]]
required with respect to dyed diesel fuel. A legible and conspicuous
notice stating: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR
TAXABLE USE must be provided by each terminal operator to any person
that receives dyed diesel fuel at a terminal rack of that operator.
This notice must be provided by the time of the removal and must appear
on all shipping papers, bills of lading, and similar documents that are
provided by the terminal operator to accompany the removal of the fuel.
(ii) Records to be maintained relating to removals of diesel fuel.
Each terminal operator must keep the following information with respect
to each rack removal of diesel fuel at each terminal it operates:
(A) The bill of lading or other shipping document.
FR Doc. 96-5586 Gasoline and Diesel Fuel Excise Tax; Registration Requirements
(B) The record of whether the fuel was dyed and marked in
accordance with Sec. 48.4082-1.
(C) The volume and date of the removal.
(D) The identity of the person, such as a common carrier, that
physically received the fuel.
(E) Any other information required by the Commissioner.
(iii) Records to be maintained relating to dye. With respect to
each of its terminals, a terminal operator must keep records relating
to dye inventories and usage.
(iv) Retention of information. In addition to any other requirement
relating to the retention of records, the terminal operator must--
(A) Maintain the information described in paragraph (h)(3)(ii) of
this section at the terminal from which the removal occurred for at
least 3 months after the removal to which it relates; and
(B) Maintain the information described in paragraph (h)(3)(iii) of
this section at the terminal where the dye was received for at least 3
months after the receipt.
(v) Prohibition on providing incorrect information. In connection
with the removal of diesel fuel that is not dyed and marked in
accordance with Sec. 48.4082-1, a terminal operator may not provide any
person (including the position holder with respect to the fuel) with
any bill of lading, shipping paper, or similar document indicating that
the diesel fuel is dyed and marked in accordance with Sec. 48.4082-1.
(i) Adverse actions by the district director against a registrant--
(1) Mandatory revocation or suspension. The district director must
revoke or suspend the registration of any registrant if the district
director determines that the registrant, at any time--
(i) Does not meet one or more of the applicable registration tests
under paragraph (f) of this section and has not corrected the
deficiency within a reasonable period of time after notification by the
district director;
(ii) Has used its registration to evade, or attempt to evade, the
payment of any tax imposed by section 4041(a)(1) or 4081, or to
postpone or in any manner to interfere with the collection of any such
tax, or to make a fraudulent claim for a credit or payment;
(iii) Has aided or abetted another person in evading, or attempting
to evade, payment of any tax imposed by section 4041(a)(1) or 4081, or
in making a fraudulent claim for a credit or payment; or
(iv) Has sold, leased, or otherwise allowed another person to use
its registration.
(2) Remedial action permitted in other cases. If the district
director determines that a registrant has, at any time, failed to
comply with the terms and conditions of registration under paragraph
(h) of this section, made a false statement to the district director in
connection with its application for registration or retention of
registration, or otherwise used its registration in a manner that
creates a significant risk of nonpayment or late payment of tax, then
the district director may--
(i) Revoke or suspend the registrant's registration;
(ii) In the case of a registrant other than an ultimate vendor,
require the registrant to give a bond under the provisions of paragraph
(j) of this section as a condition of retaining its registration; and
(iii) In the case of a registrant other than an ultimate vendor,
require the registrant to file monthly or semimonthly returns under
Sec. 40.6011(a)-1(b) of this chapter as a condition of retaining its
registration.
(3) Action by the district director to revoke or suspend a
registration. If the district director revokes or suspends a
registration, the district director must so notify the registrant in
writing and state the basis for the revocation or suspension. The
effective date of the revocation or suspension may not be earlier than
the date on which the district director notifies the registrant.
(j) Bonds--(1) Form. Each bond given to the district director as a
condition of registration under paragraph (f)(4)(i) or (i)(2)(ii) of
this section must be executed in the form prescribed by the district
director. Each bond must be--
(i) A public debt obligation of the United States Government;
(ii) An obligation the principal and interest of which are
unconditionally guaranteed by the United States Government;
(iii) A bond executed by a surety company listed in Department of
the Treasury Circular 570 as an acceptable surety or reinsurer of
federal bonds (a surety bond); or
(iv) Any other bond with security (including liens under section
4101(b)(1)(B)) considered acceptable by the district director.
(2) Amount of bond. A bond given under this paragraph (j) must be
in an amount that the district director determines will ensure timely
collection of the taxes imposed by sections 4041(a)(1) and 4081, taking
into account the applicant's financial capabilities, tax history, and
expected liability under sections 4041(a)(1) and 4081. The district
director may increase or decrease the amount of the required bond to
take into account changes in the applicant's financial capabilities,
tax history, and expected liability under sections 4041(a)(1) and 4081.
However, in no case may the amount of the bond be greater than the
amount that the district director determines is equal to--
(i) The applicant's expected tax liability under sections
4041(a)(1) and 4081 for a representative 6-month period (as determined
by the district director);
(ii) In the case of a terminal operator, the expected tax liability
of persons other than the terminal operator under section 4081 with
respect to taxable fuel removed at the racks of its terminals
(determined as if all removals of taxable fuel were taxable) during a
representative 1-month period (as determined by the district director);
and
(iii) In the case of a gasohol blender, the gasohol bonding amount.
(3) Collection of taxes from a bond. If a bonded registrant does
not pay the amount of tax it incurs under section 4041(a)(1) or 4081 by
the time prescribed in section 6151 for paying that tax, the district
director may collect the amount of the unpaid tax (including penalties
and interest with respect to that tax) from the bonded registrant's
bond.
(4) Termination of bonds--(i) Surety bonds. A surety on a bond may
give written notice to the district director and the bonded registrant
that the surety desires to be relieved of liability under the bond
after a certain date, which date must be at least 60 days after the
receipt of the notice by the district director. The surety will be
relieved of any liability that the bonded registrant incurs after the
date named in the notice. However, the surety remains liable for the
amount
[[Page 10462]]
of tax that the bonded registrant incurred under sections 4041(a)(1)
and 4081 during the term of the bond and for penalties and interest
with respect to that tax.
(ii) Other bonds. A bond (other than a surety bond) given to the
district director may be returned to the bonded registrant only after
the earlier of--
(A) The district director's determination that the bonded
registrant has paid all taxes that the bonded registrant incurred under
sections 4041(a)(1) and 4081 during the period covered by the bond and
any penalties and interest with respect to the taxes;
(B) The expiration of the period for assessment of the taxes that
the bonded registrant incurred under sections 4041(a)(1) and 4081 taxes
during the period covered by the bond, as determined under the
provisions of subchapter A of chapter 66 of the Internal Revenue Code;
or
(C) The date that the district director receives from the
registrant a substitute bond given under this paragraph (j).
(5) Determination that bond is no longer required. If the district
director determines that the bonded registrant meets the adequate
security test of paragraph (f)(4) of this section without a bond, the
registrant is to be released from the obligation to give a bond as a
condition of registration under section 4101.
(k) Cross references. For a rule relating to the filing of monthly
and semimonthly returns by certain persons that are registered under
section 4101, see Sec. 40.6011(a)-1(b)(2) of this chapter. For rules
relating to the tax on taxable fuel, see Secs. 48.4081-1 through
48.4083-1. For rules relating to claims by registered ultimate vendors,
see Sec. 48.6427-9.
(l) Effective dates. (1) Except as otherwise provided in this
paragraph (l), this section is applicable as of January 1, 1994.
(2) Paragraph (c)(1) of this section (relating to persons required
to be registered) is applicable as of January 1, 1995.
(3) Paragraph (h)(3)(iii) of this section (relating to certain
recordkeeping requirements) is applicable as of July 1, 1996.
Par. 30. Section 48.4101-2 is added to read as follows:
Sec. 48.4101-2 Information reporting.
(a) In general--(1) Taxable fuel registrants. Each taxable fuel
registrant must make a return showing--
(i) The name and registration number (if any) of each person that
is a position holder at each terminal it operates;
(ii) The amount of taxable fuel received at each terminal it
operates;
(iii) The identity of each position holder with respect to--
(A) All rack removals of taxable fuel from each terminal it
operates, and the volume and dates of the removals; and
(B) In the case of rack removals of diesel fuel, whether the fuel
was dyed and marked at the operator's terminal in accordance with
Sec. 48.4082-1;
(iv) The amount of taxable fuel stored at each terminal it
operates;
(v) The destination (by state) of all taxable fuel removed at a
terminal rack of each terminal it operates, to the extent such
information has been provided to the registrant;
(vi) The name and registration number (if any) of the operator of
each terminal at which it is a position holder;
(vii) The volume and date of the removal with respect to all rack
removals of taxable fuel for which it is the position holder;
(viii) In the case of nonbulk removals and entries of gasoline
blendstocks for which it would be liable for tax but for the special
rule in Sec. 48.4081-4(c), the name and registration number of each
operator of each refinery and terminal where the gasoline blendstocks
are received;
(ix) The name and registration number (if any) of each person to
which it sells (within the meaning of Sec. 48.4081-1) taxable fuel
located in the bulk transfer/terminal system;
(x) The name and registration number of each person from which it
receives a certificate described in Sec. 48.4081-6(c) (relating to
certificate of registered gasohol blender);
(xi) With respect to any liability incurred under Sec. 48.4081-3(e)
(relating to tax on bulk transfers not received at an approved terminal
or refinery)--
(A) The date on which the removal of the taxable fuel from a
pipeline or vessel gave rise to the liability; and
(B) The location of the taxable fuel at the time of the removal;
and
(xii) Any other information required by the Commissioner.
(2) Gasohol blenders. Each registered gasohol blender must make a
return showing, with respect to each batch of gasohol it produced from
gasoline it bought at the gasohol production tax rate--
(i) The name and registration number of the person that sold it the
gasoline;
(ii) The date and location of the purchase of the gasoline;
(iii) The volume of the gasoline;
(iv) The name, address, and employer identification number of the
person that sold it the alcohol;
(v) The date and location of the purchase of the alcohol;
(vi) The volume and type of the alcohol; and
(vii) Any other information required by the Commissioner.
(3) Pipeline and vessel operators. Each operator of a pipeline or
vessel that makes a bulk transfer of taxable fuel to a terminal or
refinery must make a return showing--
(i) The location of the terminal or refinery where the taxable fuel
was delivered;
(ii) The date of the delivery; and
(iii) Any other information required by the Commissioner.
(b) Form and time of return. Each return required under this
section must be made at the time and in the form required by the
Commissioner.
(c) Consequences for failure to make a return. For the consequences
for failing to make an information return required by this section, see
Sec. 48.4101-1(i) (relating to adverse actions against a registrant)
and section 6721 (relating to a penalty for failure to file an
information return).
(d) Effective date. This section is applicable as of April 1, 1996.
Secs. 48.4101-2T, 48.4101-3, 48.4101-3T, and 48.4101-4T [Removed]
Par. 31. Sections 48.4101-2T, 48.4101-3, 48.4101-3T, and 48.4101-4T
are removed.
Par. 32. Section 48.4102-1 is amended as follows:
1. Paragraph (a) is revised.
2. Paragraph (b)(1) is amended by removing the language ``on the
sale or use of gasoline or lubricating oil, respectively,''.
3. Paragraph (b)(2) is amended by removing ``gasoline or
lubricating oil'' each place it appears and adding ``taxable fuel or
aviation fuel'' in its place.
The revision reads as follows:
Sec. 48.4102-1 Inspection of records by State or local tax officers.
(a) Inspection of records maintained by taxpayer. The records that
a taxpayer is required to keep with respect to the taxes imposed by
section 4081 or 4091 must be open to inspection by any officer of any
State or political subdivision thereof, or of the District of Columbia,
who is charged with the enforcement or collection of any tax on taxable
fuel or aviation fuel.
* * * * *
Sec. 48.4221 [Removed]
Par. 33. Section 48.4221 is removed.
Par. 34. Section 48.4221-1 is amended as follows:
1. Paragraph (a) is revised.
2. Paragraph (b)(2)(iv) is amended by adding ``and'' at the end.
3. Paragraph (b)(2)(v) is revised.
[[Page 10463]]
4. Paragraphs (b)(2)(vi) through (b)(2)(xii) are removed.
5. Paragraph (b)(3) is removed and paragraphs (b)(4) and (b)(5) are
redesignated as paragraphs (b)(3) and (b)(4), respectively.
The revised provisions read as follows:
Sec. 48.4221-1 Tax-free sales; general rule.
(a) Application of regulations under section 4221--(1) In general.
The regulations under section 4221 provide rules under which the
manufacturer, producer, or importer of an article subject to tax under
chapter 32 (or the retailer of an article subject to tax under
subchapter A or C of chapter 31) may sell the article tax free under
section 4221.
(2) Limitations. The following restrictions must be taken into
account in applying the regulations under section 4221:
(i) The exemptions under section 4221 (a)(4) and (a)(5) do not
apply to the tax imposed by section 4064 (gas guzzler tax).
(ii) The exemptions under section 4221 do not apply to the tax
imposed by section 4081 (gasoline and diesel fuel tax).
(iii) The exemptions under section 4221 do not apply to the tax
imposed by section 4091 (aviation fuel tax). For rules relating to tax-
free sales of aviation fuel, see section 4092 and the regulations
thereunder.
(iv) The exemptions under section 4221 do not apply to the tax
imposed by section 4121 (coal tax).
(v) The exemptions under section 4221 (a)(3) through (a)(5) do not
apply to the tax imposed by section 4131 (vaccine tax). In addition,
the exemption under section 4221(a)(2) applies to the vaccine tax only
to the extent provided in Sec. 48.4221-3(e) (relating to tax-free sales
of vaccine for export).
(vi) The exemptions under section 4221(a) apply only in those cases
where the exportation or use referred to is to occur before any other
use.
(b) * * *
(2) * * *
(v) Section 4221(e)(3) relating to the sale of tires used on
intercity, local, or school buses (see Sec. 48.4221-8).
* * * * *
Par. 35. Section 48.4221-2 is amended by:
1. Removing from the first sentence of paragraph (a)(1) the
language ``(other than a tire or inner tube taxable under section 4071,
which are given special treatment under sections 4221(e) (2) and (4),
and Secs. 48.4221-7 and 48.4221-8)'' and adding ``(other than a tire
taxable under section 4071, which is given special treatment under
section 4221(e)(2) and Sec. 48.4221-7)'' in its place.
2. Removing paragraph (a)(2) and redesignating paragraph (a)(3) as
paragraph (a)(2).
3. Revising paragraph (b).
The revision reads as follows:
Sec. 48.4221-2 Tax-free sale of articles to be used for, or resold
for, further manufacture.
* * * * *
(b) Circumstances under which an article is considered to have been
sold for use in further manufacture. (1) An article shall be treated as
sold for use in further manufacture if the article is sold for use by
the buyer as material in the manufacture or production of, or as a
component part of, another article taxable under chapter 32 of the
Internal Revenue Code.
(2) An article is used as material in the manufacture or production
of, or as a component of, another article if it is incorporated in, or
is a part or accessory of, the other article when the other article is
sold by the manufacturer. In addition, an article is considered to be
used as material in the manufacture of another article if it is
consumed in whole or in part in testing such other article. However, an
article that is consumed in the manufacturing process other than in
testing, so that it is not a physical part of the manufactured article,
is not considered to have been used as material in the manufacture of,
or as a component part of, another article.
* * * * *
Par. 36. Section 48.4221-5 is amended as follows:
1. Paragraph (c)(1) is amended by:
a. Removing the first sentence.
b. Removing the language ``If a State or local government is not
registered, the'' and adding ``The'' in its place in the new first
sentence.
2. In paragraph (d), the first sentence is amended by:
a. Removing the language ``(whether on the basis of a registration
number or an exemption certificate)''.
b. Removing the language ``(such as gasoline that is'' and adding
``(such as tires that are'' in its place.
Secs. 48.4221-8, 48.4221-9, 48.4221-10 [Removed]
Par. 37. Sections 48.4221-8, 48.4221-9, and 48.4221-10 are removed.
Sec. 48.4221-11 [Redesignated as Sec. 48.4221-8]
Par. 38. Section 48.4221-11 is redesignated as Sec. 48.4221-8.
Sec. 48.4221-12 [Removed]
Par. 39. Section 48.4221-12 is removed.
Par. 40. In Sec. 48.4222(a)-1, paragraphs (a) and (b) are revised
to read as follows:
Sec. 48.4222(a)-1 Registration.
(a) General rule. Except as provided in Sec. 48.4222(b)-1, tax-free
sales under section 4221 may be made only if the manufacturer, first
purchaser, and second purchaser, as the case may be, have been
registered by the Internal Revenue Service.
(b) Application instructions. Application for registration under
section 4222 must be made in accordance with instructions for Form 637
(or such other form as the Commissioner may designate).
* * * * *
Par. 41. In Sec. 48.4222(b)-1, paragraph (a) is revised to read as
follows:
Sec. 48.4222(b)-1 Exceptions to the requirement for registration.
(a) State and local governments. The Internal Revenue Service will
not register State or local governments under section 4222. To
establish the right to sell articles tax free to a State or local
government, the manufacturer must obtain the information described in
Sec. 48.4221-5(c).
* * * * *
Sec. 48.4222(d)-1 [Amended]
Par. 42. Section 48.4222(d)-1 is amended by:
1. Removing paragraphs (a), (b), and (c).
2. Redesignating paragraph (d) as paragraph (a).
3. Removing paragraphs (e) and (f).
4. Redesignating paragraph (g) as paragraph (b).
Sec. 48.6206-1 [Removed]
Par. 43. Section 48.6206-1 is removed.
Sec. 48.6416(b)(2)-2 [Amended]
Par. 44. In Sec. 48.6416(b)(2)-2, paragraphs (g) through (k) are
removed.
Sec. 48.6416(g)-1 [Removed]
Par. 45. Section 48.6416(g)-1 is removed.
Sec. 48.6421-3 [Amended]
Par. 46. In Sec. 48.6421-3, paragraph (d)(2) is amended by removing
from the first sentence the language ``Form 843'' and adding ``Form
8849 (or on such other form as the Commissioner may designate)'' in its
place.
Secs. 6424-0 through 48.6424-6 [Removed]
Par. 47. Sections 48.6424-0 through 48.6424-6 are removed.
[[Page 10464]]
Sec. 48.6427-3 [Amended]
Par. 48. In Sec. 48.6427-3, paragraph (d)(2) is amended by removing
from the first sentence the language ``Form 843'' and adding ``Form
8849 (or on such other form as the Commissioner may designate)'' in its
place.
Sec. 48.6427-7 [Amended]
Par. 49. In Sec. 48.6427-7, paragraph (g)(4) is amended by removing
the language ``Form 843 (Claim)'' and adding ``Form 8849 (or such other
form as the Commissioner may designate)'' in its place.
Par. 50. Sections 48.6427-8 and 48.6427-9 are added to read as
follows:
Sec. 48.6427-8 Claims by ultimate purchasers with respect to diesel
fuel taxed after December 31, 1993.
(a) Overview. This section provides the rules for obtaining a
credit or payment with respect to undyed diesel fuel that was taxed
after December 31, 1993, and that was used in a nontaxable use (other
than on a farm for farming purposes or by a State). A credit or payment
for undyed diesel fuel used on a farm for farming purposes or by a
State is allowable only to a registered ultimate vendor under the rules
of Sec. 48.6427-9.
(b) Conditions to allowance of credit or payment--(1) In general.
Except as provided in section 6427(l)(5), a claim for credit or payment
with respect to diesel fuel is allowable under section 6427(l) only
if--
(i) Tax was imposed by section 4081 on the diesel fuel to which the
claim relates;
(ii) The claimant produced or bought the fuel and did not resell it
in the United States;
(iii) The claimant has filed a timely claim for a credit or payment
that contains the information required under paragraph (d) of this
section;
(iv) The fuel was not bought under a certificate described in
Sec. 48.6427-9(e)(2) (relating to certificate of farmer or State to
support claim of ultimate vendor);
(v) The fuel was not used on a farm for farming purposes (as
defined in Sec. 48.6420-4) or by a State; and
(vi) The fuel was either--
(A) Used in a use described in Sec. 48.4082-4 (c)(3) through
(c)(10);
(B) Exported;
(C) Used other than as a fuel in a propulsion engine of a diesel-
powered highway vehicle or diesel-powered boat;
(D) Used as a fuel in a propulsion engine of a diesel-powered
train; or
(E) Used as a fuel in the propulsion engine of a diesel-powered bus
if the bus was used in a use described in section 6427(b)(1) (after the
application of section 6427(b)(3)).
(2) Examples. The following examples illustrate this paragraph (b).
Example 1. (i) In September 1996, F bought 250 gallons of undyed
diesel fuel. In October 1996, F used 200 gallons of the fuel in a
farm tractor. This use qualifies as use on a farm for farming
purposes (as defined in Sec. 48.6420-4). The farm tractor is not a
diesel-powered highway vehicle (as defined in Sec. 48.4081-1(h)). F
used the remaining 50 gallons to heat F's residence. F filed a
complete and timely claim for a credit relating to the 250 gallons.
(ii) A credit or payment is not allowable to F with respect to
the 200 gallons of diesel fuel used in the farm tractor. Even though
this fuel was used other than as a fuel in a propulsion engine of a
diesel-powered highway vehicle (thus meeting the condition in
paragraph (b)(1)(vi)(C) of this section), the condition in paragraph
(b)(1)(v) of this section is not satisfied because the fuel was used
on a farm for farming purposes.
(iii) A credit is allowable to F with respect to the 50 gallons
F used for heating purposes because the conditions in paragraph
(b)(1) of this section have been met. F used this fuel other than as
a fuel in a propulsion engine of a diesel-powered highway vehicle
and the use of the fuel for residential heating is not use on a farm
for farming purposes.
Example 2. (i) In September 1996, W, a wholesale distributor,
sold 3,500 gallons of diesel fuel on which tax has been imposed to
C, a construction company located in the United States. W's selling
price to C did not include an amount equal to the federal excise tax
on the fuel. C used the fuel other than as a fuel in a propulsion
engine of a diesel-powered highway vehicle or diesel-powered boat.
Both W and C file a complete and timely claim for a credit relating
to the fuel.
(ii) Because W resold the fuel in the United States, the
condition of paragraph (b)(1)(ii) of this section is not met. Thus,
W is not allowed a credit or payment with respect to the fuel.
(iii) C is eligible for a credit or payment with respect to the
fuel because the conditions to allowance in paragraph (b)(1) of this
section have been met. The conditions to allowance do not include a
requirement that C buy the fuel at a price that includes the amount
of the tax.
(c) Form of claim. Each claim for an income tax credit under this
section must be made on Form 4136 (or on such other form as the
Commissioner may designate) in accordance with the instructions for
that form. Each claim for a payment under this section must be made on
Form 8849 (or on such other form as the Commissioner may designate) in
accordance with the instructions for that form.
(d) Content of claim. Each claim for a credit or payment under this
section must contain the following information with respect to all the
diesel fuel covered by the claim:
(1) The total number of gallons covered by the claim.
(2) A statement by the claimant that tax has been imposed on the
diesel fuel covered by the claim.
(3) The use made of the diesel fuel covered by the claim described
by reference to specific categories listed in paragraph (b)(1)(vi) of
this section (such as use in a boat employed in commercial fishing or
the exclusive use of a nonprofit educational organization).
(4) If the diesel fuel covered by the claim was exported, a
declaration that the claimant has proof of exportation (as described in
Sec. 48.4221-3(d)(1)).
(5) A declaration that the claimant has in its possession the name
and address of the person(s) that sold the diesel fuel to the claimant
and the date(s) of the purchase(s).
(e) Time and place for filing claim. For rules relating to the time
for filing a claim under section 6427, see section 6427(i). A claim
under this section is not filed unless it contains all the information
required by paragraph (d) of this section and is filed at the place
required by the form.
(f) Effective date. This section is effective January 1, 1994,
except for paragraph (b)(1)(v) of this section, which is effective for
diesel fuel bought by ultimate purchasers after June 30, 1994.
Sec. 48.6427-9 Claims by registered ultimate vendors with respect to
diesel fuel taxed after December 31, 1993.
(a) Overview. This section provides the rules for obtaining a
credit or payment with respect to undyed diesel fuel that was taxed
after December 31, 1993, and that was used on a farm for farming
purposes or by a State.
(b) Definitions. (1) An ultimate vendor, as used in this section,
is a person that sells undyed diesel fuel to--
(i) The owner, tenant, or operator of a farm for use by such person
on a farm for farming purposes (as defined in Sec. 48.6420-4);
(ii) A person other than the owner, tenant, or operator of a farm
for use by such person for any of the purposes described in
Sec. 48.6420-4(d) (relating to cultivating, raising, or harvesting); or
(iii) Any State for its exclusive use.
(2) A registered ultimate vendor is--
(i) An ultimate vendor that is registered under section 4101 as an
ultimate vendor; or
(ii) With respect to a claim filed before January 1, 1995, an
ultimate vendor that is registered as a producer of diesel fuel on
December 31, 1993, if the registration has not been revoked or
suspended.
(c) Conditions to allowance of credit or payment. A claim for a
credit or payment with respect to diesel fuel is
[[Page 10465]]
allowable under section 6427(l)(5) only if--
(1) Tax was imposed by section 4081 on the diesel fuel to which the
claim relates;
(2) The claimant sold the diesel fuel to--
(i) The owner, tenant, or operator of a farm for use by such person
on a farm for farming purposes (as defined in Sec. 48.6420-4);
(ii) A person other than the owner, tenant, or operator of a farm
for use by such person for any of the purposes described in
Sec. 48.6420-4(d) (relating to cultivating, raising, or harvesting); or
(iii) Any State for its exclusive use;
(3) The claimant is a registered ultimate vendor; and
(4) The claimant has filed a timely claim for a credit or payment
that contains the information required under paragraph (e) of this
section.
(d) Form of claim. Each claim for an income tax credit under this
section must be made on Form 4136 (or on such other form as the
Commissioner may designate) in accordance with the instructions for
that form. Each claim for a payment under this section must be made on
Form 8849 (or on such other form as the Commissioner may designate) in
accordance with the instructions for that form.
(e) Content of claim--(1) In general. Each claim for credit or
payment under this section must contain the following information with
respect to all the diesel fuel covered by the claim:
(i) The total number of gallons covered by the claim.
(ii) A statement by the claimant that tax has been imposed on the
diesel fuel covered by the claim.
(iii) The claimant's registration number.
(iv) The name and taxpayer identification number of each person
that bought diesel fuel from the claimant in a transaction described in
paragraph (c)(2) of this section and the number of gallons that the
claimant sold to that person.
(v) A statement that the claimant--
(A) Has not included the amount of the tax in its sales price of
the diesel fuel and has not collected the amount of tax from its buyer;
(B) Has repaid the amount of the tax to the ultimate purchaser of
the fuel; or
(C) Has obtained the written consent of its buyer to the allowance
of the claim.
(vi) For claims relating to sales by the claimant after March 31,
1994, a statement that the claimant has in its possession an unexpired
certificate described in paragraph (e)(2) of this section and the
claimant has no reason to believe any information in the certificate is
false.
(vii) For claims relating to sales by the claimant before April 1,
1994, either the statement described in paragraph (e)(1)(vi) of this
section or a statement that--
(A) The claimant has in its possession an unexpired exemption
certificate relating to tax-free sales of diesel fuel for use on a farm
for farming purposes or for the exclusive use of a State;
(B) The certificate was received from the buyer before January 1,
1994; and
(C) The claimant has no reason to believe any information in the
certificate is false.
(2) Certificate--(i) In general. The certificate to be provided to
the ultimate vendor consists of a statement that is signed under
penalties of perjury by a person with authority to bind the buyer, is
in substantially the same form as the model certificate provided in
paragraph (e)(2)(ii) of this section, and contains all information
necessary to complete such model certificate. A new certificate must be
given if any information in the current certificate changes. The
certificate may be included as part of any business records normally
used to document a sale. The certificate expires on the earlier of the
following dates:
(A) The date one year after the effective date of the certificate.
(B) The date a new certificate is provided to the seller.
(ii) Model certificate.
Certificate of Farming Use or State Use
(To support vendor's claim for a credit or payment under section
6427 of the Internal Revenue Code.)
----------------------------------------------------------------------
----------------------------------------------------------------------
Name, address, and employer identification number of vendor
The undersigned buyer (``Buyer'') hereby certifies the following
under penalties of perjury:
Buyer will use the diesel fuel to which this certificate
relates--(check one)
______ On a farm for farming purposes (as defined in Sec. 48.6420-
4(c) of the Manufacturers and Retailers Excise Tax Regulations) and
Buyer is the owner, tenant, or operator of the farm on which the
fuel will be used;
______ On a farm (as defined in Sec. 48.6420-4(c)) for any of the
purposes described in paragraph (d) of that section (relating to
cultivating, raising, or harvesting) and Buyer is a person that is
not the owner, tenant, or operator of the farm on which the fuel
will be used; or
______ For the exclusive use of a State or local government, or the
District of Columbia.
This certificate applies to the following (complete as
applicable):
If this is a single purchase certificate, check here ______ and
enter:
1. Invoice or delivery ticket number ______
2. ______ (number of gallons)
If this is a certificate covering all purchases under a
specified account or order number, check here ______ and enter:
1. Effective date ______
2. Expiration date ______ (period not to exceed 1 year after the
effective date)
3. Buyer account or order number ______
Buyer will provide a new certificate to the vendor if any
information in this certificate changes.
If Buyer uses the diesel fuel to which this certificate relates
for a purpose other than stated in the certificate Buyer will be
liable for tax.
Buyer understands that the fraudulent use of this certificate
may subject Buyer and all parties making such fraudulent use of this
certificate to a fine or imprisonment, or both, together with the
costs of prosecution.
----------------------------------------------------------------------
Printed or typed name of person signing
----------------------------------------------------------------------
Title of person signing
----------------------------------------------------------------------
Name of Buyer
----------------------------------------------------------------------
Employer identification number
----------------------------------------------------------------------
Address of Buyer
----------------------------------------------------------------------
Signature and date signed
(f) Time and place for filing claim. For rules relating to the time
for filing a claim under section 6427, see section 6427(i). A claim
under this section is not filed unless it contains all the information
required by paragraph (e) of this section and is filed at the place
required by the form.
(g) Effective date. This section is effective January 1, 1994.
Secs. 48.6427-8T and 48.6427-9T [Removed]
Par. 51. Sections 48.6427-8T and 48.6427-9T are removed.
Sec. 48.6675-1 [Removed]
Par. 52. Section 48.6675-1 is removed.
Par. 53. Section 48.6714-1 is added to read as follows:
Sec. 48.6714-1 Penalty for misuse of dyed diesel fuel.
(a) In general. If any person willfully alters, or attempts to
alter, the strength or composition of any dye or marking done pursuant
to Sec. 48.4082-1 in any dyed fuel, then section 6714(a)(3) provides
that such person shall pay a penalty in addition to any tax. The
penalty imposed by section 6714(a)(3) will not apply in the following
cases:
(1) Diesel fuel that satisfies the dyeing and marking requirements
of Sec. 48.4082-1 (b) and (c) is blended with any undyed liquid and the
resulting product satisfies the dyeing and marking requirements of
Sec. 48.4082-1 (b) and (c).
[[Page 10466]]
(2) Diesel fuel that satisfies the dyeing and marking requirements
of Sec. 48.4082-1 (b) and (c) is blended with any other liquid (other
than diesel fuel) that contains the type and amount of dye and marker
required for diesel fuel dyed and marked in accordance with
Sec. 48.4082-1 (b) and (c).
(3) Diesel fuel that is dyed one color in accordance with
Sec. 48.4082-1(b) is blended with diesel fuel that is dyed another
color in accordance with Sec. 48.4082-1(b).
(4) Diesel fuel that does not satisfy the dyeing and marking
requirements of Sec. 48.4082-1 (b) and (c) is blended with diesel fuel
that satisfies the dyeing and marking requirements of Sec. 48.4082-1
(b) and (c) and the blending occurs as part of a use described in
Sec. 48.4082-4(c) or Sec. 48.6427-8(b)(vi) (C), (D), or (E).
(b) Effective date. This section is effective January 1, 1994.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Par. 54. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
Par. 55. In Sec. 602.101, paragraph (c) is amended as follows:
1. Removing the following entries from the table:
Sec. 602.101 OMB Control numbers.
* * * * *
(c) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control
number
------------------------------------------------------------------------
* * * * *
42.5(b)................................................. 1545-1206
* * * * *
48.4041-2T.............................................. 1545-0143
* * * * *
48.4082-2T.............................................. 1545-1418
48.4101-1............................................... 1545-0023
1545-0725
1545-0014
48.4101-2T.............................................. 1545-0725
48.4101-3T.............................................. 1545-1418
48.4101-4T.............................................. 1545-1418
* * * * *
48.6427-8T.............................................. 1545-1418
48.6427-9T.............................................. 1545-1418
* * * * *
------------------------------------------------------------------------
2. Adding entries in numerical order to the table to read as
follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(c) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control
number
------------------------------------------------------------------------
* * * * *
48.4082-2............................................... 1545-1418
48.4101-1............................................... 1545-1418
48.4101-2............................................... 1545-1418
* * * * *
48.6427-8............................................... 1545-1418
48.6427-9............................................... 1545-1418
* * * * *
------------------------------------------------------------------------
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved: December 18, 1995.
Leslie Samuels.
Assistant Secretary of the Treasury.
[FR Doc. 96-5586 Filed 3-13-96; 8:45 am]
BILLING CODE 4830-01-P
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