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Dec 29 -- The Office of Energy Efficiency and Renewable Energy, Department of Energy (DOE), invites public comment by February 28, 2022 on a petition for rulemaking received by DOE on October 22, 2021, from the Natural Resources Defense Council (NRDC) and Sierra Club requesting that DOE update its regulations concerning procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (EVs) for use in the Corporate Average Fuel Economy (CAFE) program administered by the Department of Transportation (DOT).  
In their petition, the petitioners propose that DOE should update regulations for calculating the PEF for electric vehicles. Petitioners assert that the data underlying the current regulation are outdated, resulting in higher imputed values of fuel economy for electric vehicles. The petitioners assert that with this higher imputed value, a smaller number of EVs enable fleetwide compliance at lower real-world average fuel economy across an automaker's overall fleet. The petitioners assert that the PEF should be based upon statutory factors at 49 U.S.C 32904, rather than the existing regulatory approach based upon 49 U.S.C. 32905. The petitioners request that DOE review the PEF calculation and approach and work with the National Highway Traffic Safety Administration to ensure PEF regulations support the goals of the CAFE program.

Excerpts from petition:
Natural Resources Defense Council and Sierra Club submit this petition under 5 U.S.C. 553(e) for the Department of Energy (DOE) to update its regulations at 10 CFR part 474 concerning procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (EVs) for use in the Corporate Average Fuel Economy program administered by the Department of Transportation (DOT). The existing DOE regulations were promulgated via the final rule Electric and Hybrid Vehicle Research, Development, and Demonstration Program; Petroleum-Equivalent Fuel Economy Calculation, 65 FR 36986 (Jun. 12, 2000). As explained below, DOE is required to review these regulations annually and determine appropriate petroleum equivalent fuel economy values for EVs based on enumerated statutory factors. DOE has not revised these regulations in more than twenty years and the current values are based on outdated data and circumstances. The regulations are also based on an outdated application of the statutory factors, with the result that existing regulations undermine the CAFE program they are supposed to support. DOE should grant this petition and update the regulations.
DOE's regulations for calculating CAFE program fuel economy values for EVs are long overdue to be updated. Statute requires the agency to “review those values each year and determine and propose necessary revisions” based on the enumerated statutory factors.[ The regulations have not been updated in more than twenty years and the data underlying the extant regulations are materially—and increasingly—inaccurate. Further, the statute requires that the equivalency values be “based on” the statutory factors. The extant EV equivalency values are instead based on other statutory provisions applicable to gaseous fueled vehicles, with the consequence that EV CAFE values are driven by the seven-fold multiplier of the “fuel content factor” rather than the statutory factors applicable to EVs. The effect is that EV CAFE values are significantly inflated beyond what the relevant statutory factors contemplate.

The consequences of outdated regulations are not academic. Because NHTSA is prohibited from considering the fuel economy of EVs when determining the maximum feasible CAFE standards for a given model year, but must include EVs when calculating compliance with those standards excessively high imputed fuel economy values for EVs means that a relatively small number of EVs will mathematically guarantee compliance without meaningful improvements in the real-world average fuel economy of automakers' overall fleets. . . .
DOE should holistically review its approach to calculating the PEF to ensure its regulations comport with the relevant statutory language. For example, the statute provides that DOE should account for “the need of the United States to conserve all forms of energy.” But current PEF regulations do not appear to meaningfully address the need for national scale energy conservation, with DOE only citing this consideration in passing as a justification for including the “accessory factor” in the PEF equation. It is not plausible that Congress intended the sweeping direction to consider “the need of the United States to conserve all forms of energy” to be satisfied merely by minor PEF adjustments for the “minority of electric vehicles . . . in colder climates” that “may be equipped” with petroleum-powered cabin heaters. Particularly given the ongoing and increasing threat from fossil-fuel-driven climate change, DOE's regulations should more meaningfully address the need to conserve all forms of energy.

DOE should also work with NHTSA to ensure PEF regulations further the goals of the CAFE program. By way of illustration, DOE historically suggested that EV CAFE values should be high to help with “early commercialization” of EVs. But that idea originates from now obsolete language in the 1979 Chrysler Corporation Loan Guarantee Act that directed DOE to evaluate whether including EVs in CAFE would have such an effect. The agency reported to Congress that the EV CAFE provision was not effective at incentivizing early commercialization, and when Congress consolidated the CAFE program in title 49 in 1994, it did not include that language from the Chrysler Loan Act. In any event, any consideration of extra-textual incentives must not undermine the CAFE program's “overarching goal of fuel conservation” for all light-duty vehicles.

The early commercialization of EVs has already occurred and EVs comprise a significant and increasing share of new motor vehicle sales each model year. DOE should account for these changed circumstances, and work with NHTSA to ensure that the fuel economy imputed to EVs pursuant to 49 U.S.C. 32904 is not set at a level that undermines the overarching statutory goals of energy and fuel conservation. To be sure, Petitioners believe that producing significant and increasing numbers of EVs should be an available means for automakers to comply with increasingly stringent CAFE standards. But the relative energy efficiency of EVs compared to internal combustion engine vehicles (ICEVs), coupled with the ongoing shift to increasingly efficient electricity generation from renewable sources, should ensure that baseline EV CAFE values will compare favorably to leading ICEVs. The statute further provides DOE additional discretion—through consideration of factors “subject to less precise quantification” such as “the need of the United States to conserve all forms of energy,” and “the relative scarcity and value to the Nation of all fuel used to generate electricity”—to adjust that baseline value to a level that will optimize the overall real-world reduction in fuel consumption and achieve the core purpose of EPCA's fuel-economy chapter.  
FR notice inviting public comment on petition: https://www.federalregister.gov/documents/2021/12/29/2021-27624/petroleum-equivalence-factor-notification-of-petition-for-rulemaking
Alan Jenn, Inez L. Azevedo, and Jeremy J. Michalek, "Alternative-fuel-vehicle policy interactions increase U.S. greenhouse gas emissions," Transportation Research, June 2019 https://www.sciencedirect.com/science/article/abs/pii/S0965856417311436

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