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Apr 11 -- The U.S. Department of Energy (“DOE”) proposes to revise its regulations regarding procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (or “EVs”) for use in the Corporate Average Fuel Economy (CAFE) program administered by the Department of Transportation (DOT). This Notice of proposed rulemaking (“NOPR”) also grants a petition for rulemaking submitted by the Natural Resources Defense Council (NRDC) and Sierra Club and responds to comments submitted on that petition. DOE will accept comments regarding this NOPR on or before June 12, 2023.

Section 18 of the Chrysler Corporation Loan Guarantee Act of 1979 amended the Electric and Hybrid Vehicle Research, Development and Demonstration Act of 1976 by adding a new paragraph (3) to section 13(c) that directed the Secretary of Energy, in consultation with the Secretary of Transportation and the Administrator of the Environmental Protection Agency, to conduct a seven-year evaluation program of the inclusion of electric vehicles in the calculation of average fuel economy. In May 1980, as required by section 503(a)(3) of the Motor Vehicle Act, DOE proposed a method of calculating the petroleum-equivalent fuel economy of electric vehicles utilizing a “petroleum equivalency factor” or “PEF” in a new 10 CFR part 474 on May 21, 1980. 45 FR 34008. The rule was finalized on April 21, 1981, and effective May 21, 1981. 46 FR 22747. The seven-year evaluation program was completed in 1987, and the calculation of the annual petroleum equivalency factors was not extended past 1987.

DOE published a proposed rule for a permanent PEF for use in calculating petroleum-equivalent fuel economy values of electric vehicles on February 4, 1994 (59 FR 5336) and obtained oral and written comments from interested parties. Following consideration of comments, DOE's own internal re-examination of the assumptions underlying the proposed rule, and existing regulations for other classes of alternative fuel vehicles, DOE decided to modify the PEF calculation approach proposed in 1994. The 1994 proposed rule was withdrawn, and DOE proposed a modified approach in a July 14, 1999, notice of proposed rulemaking (1999 NOPR). 64 FR 37905. DOE published a final rule on June 12, 2000, amending 10 CFR part 474 (June 2000 Final Rule). 65 FR 36985. The PEF adopted by DOE in the 2000 Final Rule is based, in part, on the existing regulatory approach at 49 U.S.C. 32905, which provides procedures determining the petroleum-equivalent fuel economy of non-EV alternative fueled vehicles.

The calculation procedure converts the measured electrical energy consumption of an electric vehicle into a raw gasoline-equivalent fuel economy value, and then divides this value by 0.15 to arrive at a final petroleum-equivalent fuel economy value which may then be included in the calculation of the manufacturer's corporate average fuel economy. 65 FR 36985, 36987. DOE also included a provision for DOE to review part 474 five years after the date of publication of the June 2000 Final Rule to determine whether any updates and/or revisions are necessary. See 10 CFR 474.5. DOE has not updated part 474 since the June 2000 Final Rule.

On October 22, 2021, DOE received a petition for rulemaking from the Natural Resources Defense Council (NRDC) and Sierra Club (Petitioners) requesting that DOE update its regulations at 10 CFR part 474. In their petition, the Petitioners propose that DOE should update its 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 requested that DOE review the PEF calculation and approach and work with NHTSA to ensure PEF regulations support the goals of the CAFE program (as described by the Petitioners). DOE published notice of receipt of the petition on December 29, 2021 and solicited comment on the petition and whether DOE should proceed with a rulemaking. 86 FR 73992. DOE received 10 comments on the petition from interested stakeholders.

In light of the petition and supporting comments, and for reasons discussed later in this document, DOE grants the petition from NRDC and Sierra Club and is undertaking this proposed rulemaking to update part 474. DOE agrees with the Petitioners that the inputs upon which the calculations and PEF values in current part 474 are based are outdated, and the technology and market penetration of electric vehicles has significantly changed since part 474 was last updated in the 2000 Final Rule. As discussed further in section II of this document, DOE is proposing to update part 474 and the PEF values to reflect these changes in accordance with the statutory factors in 49 U.S.C. 32904(a)(2)(B).

In reviewing the PEF value, DOE must consider four factors, as enumerated in 49 U.S.C. 32904:

a. Energy efficiency of the electric vehicle,
b. National average electricity generation and transmission efficiency,
c. The need of the United States to conserve all forms of energy and the relative scarcity and value to the United States of all fuel used to generate electricity, and,
d. Driving patterns of electric vehicles compared to those of gasoline vehicles.

DOE reviewed the methodology used to develop the current PEF value and its approach in light of these factors and has tentatively concluded that some inputs should be updated to reflect more recent data, and that some components of the derived PEF value are not relevant to today's vehicles. DOE addresses its consideration of the statutory factors and DOE's conclusions in the following sections. . . .

FRN: https://www.federalregister.gov/d/2023-06869 [16 pages]

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