Energy Policy Act of 1992 – Fleet Program

The Energy Policy Act (EPAct) of 1992, Pub. L. No. 102-486, established aggressive goals for replacing petroleum motor fuels with alternative and replacement fuels, calling for 10 percent and 30 percent replacement with such fuels by 2000 and 2010, respectively. The alternative fuel transportation sections of EPAct 1992 are largely contained in titles III – VI, see 42 USC 13211 et. seq. To stimulate demand for alternative fuels, the law requires that fleets operated by the federal government, states, and fuel providers acquire AFVs. The acquisition requirements were phased in over time so that an increasingly larger percentage of new light-duty acquisitions must be alternatively fueled. An amendment by Congress in 1998 allows fleets to satisfy up to 50 percent of their requirements by using biodiesel blends. The fleet provisions extend to light-duty fleet vehicles located in the largest metropolitan areas and exclude emergency, law enforcement and take home vehicles. EPAct also provided the Department of Energy (DOE) with discretionary rulemaking authority with respect to private and local government fleets. However, DOE in 2004 determined that a fleet requirement for these fleets was not warranted under EPAct.

The EPAct fleet programs have proved important in increasing the number of AFVs sold each year. Total demand for AFVs under these programs has averaged about 20,000 new AFVs annually. In recent years, however, demand for AFVs has declined due to the increased use of biodiesel blends and lack of some AFV types. In addition, it was revealed that not all federal agencies were meeting their acquisition requirements. A successful lawsuit challenging the government’s compliance with its AFV acquisitions is expected to bolster future AFV acquisitions. All federal agencies are now required to publish their annual acquisition reports to increase accountability. Another drawback to the fleet programs has been a lack of fuel use by covered fleets. Fuel providers and federal fleets are required to operate their AFVs on alternative fuels; state fleets are not. Despite Congressional efforts, federal fleet use of alternative fuels has fallen short of EPAct’s requirement. The Energy Policy Act of 2005 includes a number of measures intended to improve on the success of the EPAct fleet programs by providing a number of changes highlighted below.

In addition to the fleet provisions, EPAct also provided authority for a number of other initiatives that are important to the NGV industry. It authorized funding for natural gas engine research, early school bus demonstration programs (now implemented by EPA), educational and training programs, and the Clean Cities Program. These other programs are discussed elsewhere on the website.

Federal Fleet Program
The first fleets federally required to acquire AFVs were those operated by the federal government. Starting in 1993, EPAct required that federal government to acquire a specific number of AFVs, then over time required the government to annually phase-in an increasingly larger percentage of AFVs. The purchase requirements are set out below:

1993 – 5,000 light duty AFVs
1994 – 7,500 light duty AFVs
1995 – 10,000 light duty AFVs
1996 – 25 percent AFV acquisitions
1997 – 33 percent AFV acquisitions
1998 – 50 percent AFV acquisitions
1999 & thereafter – 75 percent AFV acquisitions

The purchase requirements above apply to federal agencies located in large metropolitan statistical areas and that operate at least 20 or more light duty vehicles. These vehicles must be centrally fueled or capable of central fueling in order to be covered. There are exemptions or exclusions for various classes of vehicles, such as emergency, law enforcement, and non-road vehicles.

As a result of these requirements, the federal government now operates a fleet of more than 85,000 AFVs. According to the last annual report available from DOE, the federal government currently operates slightly more than 12,000 NGVs. However, federal fleet purchases in 2005 included only 180 NGVs. Ninety-nine percent of the AFVs acquired in 2005 by the federal government were flexible fueled vehicles.

Over the years a number of Executive Orders have been issued providing guidance and additional requirements for federal agencies with respect to AFV acquisitions. EO 13031 (1996) modified the federal fleet AFV acquisition requirements to allow fleets to earn multiple credits for medium- and heavy-duty AFVs, as well as zero emission AFVs. EO 13149 (2000) established a 20 percent petroleum reduction goal for federal agency fleets of 20 or more vehicles and requires the acquisition of more fuel efficient vehicles. EO 13149 included additional reporting requirements and managerial responsibilities in an effort to hold government agencies more accountable with respect to their AFV obligations.

The DOE is responsibility for coordinating implementation of the federal fleet requirements under EPAct. To learn more about the government’s efforts to implement these requirements, click here. On that site you will also find compliance information for the government as a whole, as well as individual agencies.

State and Fuel
Provider (S&FP) Program EPAct also established AFV acquisition requirements for companies in the business of providing alternative fuels and state government fleets. These provisions are set out in section 501 and 507(o) of EPAct 1992. Because of the similarities of the requirements for these two types of fleets, DOE combined them in one program under the Alternative Fuel Transportation Program, 10 CFR Part 490. The requirements apply to fleets that own or operate more than 20 light duty vehicles that are centrally fueled or capable of being centrally fueled. In addition, only those fleets that operate a total of 50 light duty vehicles are covered. The requirements do not extend to the certain excluded vehicles, including vehicles that are garaged at a personal residence when not in use.

The purchase requirements for S&FP fleets were phased-in beginning in model year 1997. The purchase requirements currently require that 75 percent of newly acquired state government light duty vehicles must be AFVs and 90 percent of newly acquired fuel provider vehicles must be AFVs. Combined, state and fuel provider fleets have acquired more than 90,000 AFVs under this program. Nearly 20,000 NGVs have been acquired under this program. To learn more about this program, click here.

DOE is in the process of implementing a number of changes to its fleet programs as a result of EPAct 2005 amendments. The S&FP Program has released guidance concerning new exclusions for electric utility emergency vehicles and has issued a proposed rule concerning an alternative compliance program. The alternative compliance program allows covered fleets to pursue petroleum reduction strategies instead of simply acquiring AFVs. The final regulations for this program will be issued this fall. NGVAmerica submitted comments on the proposed rule. The guidance for electric utility emergency vehicles is available on the DOE’s website.

Private & Local Government Fleets
DOE’s regulations currently do not regulate private or local government fleets. Section 507 of EPAct 1992 provided DOE with discretionary authority to require private and local government fleets to acquire AFVs. However, this authority was conditioned on various findings concerning the role such fleets would play in contributing to the achievement of the petroleum replacement fuel goals contained in EPAct 1992 (i.e., 10% replacement in 2000, and 30% replacement in 2010).

In 2004, DOE published a final rule announcing its decision not to implement regulations for private and local government fleets. DOE reasoned that such a rule is not “necessary” within the meaning provided in EPAct because it would only contribute minimally to increased replacement fuel use and therefore would not aid in achievement of the replacement fuel goals contained in EPAct. DOE was subsequently sued and lost a lawsuit brought by the Center for Biological Diversity and Friends of the Earth. The lawsuit challenged the legality of DOE’s decision not to implement a fleet mandate, as well as DOE’s failure to revise the petroleum replacement fuel goals.

As a result of the litigation, the final rule was vacated on March 6, 2006. The U.S District Court for the Northern District of California subsequently ordered DOE to reconsider the matter, giving it 23-months to complete the task. Pursuant to the Court’s order, a proposed rule is scheduled for issuance in September 2006. The September 2006 proposed rule will focus only on the task of revising the current petroleum replacement fuel goal. A later rulemaking will propose whether to go forward with a new mandate for private and local government fleets. Given DOE’s past treatment of this issue, it is unlikely that it will adopt such a mandate. DOE, however, will have to provide a strong justification for not going forward with the program if it wants to avoid further litigation. For more information on this issue, click here.