Energy Policy Act of 1992

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Energy Policy Act of 1992

Legislation

Date: 1992.

Source: U.S. Congress. "Energy Policy Act of 1992." Washington, D.C.: 1992.

About the Author: The U.S. Congress is the nation's primary law-making body. In important areas such as energy conservation, Congress regularly revisits previous legislation in order to bring it up to date and to ensure that it is meeting its objectives.

INTRODUCTION

The U.S. government plays a central role in determining the amount of energy the nation uses. By raising fuel taxes, the government can potentially reduce the amount of fuel used and encourage citizens to make more efficient choices. By offering tax credits for solar or wind power, the government can encourage homeowners to install solar water heaters or wind generators.

One of the most direct ways the government influences energy usage is by establishing fuel efficiency standards for U.S. automobiles. Following the Arab oil embargo of 1973–74, Congress enacted the Corporate Average Fuel Economy (CAFE) standards for passenger cars and light trucks. These standards set a minimum average fuel efficiency level for any company selling cars in North America. If a company's "fleet" of vehicles fail to meet the required level, the Environment Protection Agency (EPA) levies a fine against the automaker.

While EPA fuel standards have improved automobile mileage significantly since 1975, progress has slowed in recent years, due largely to an increase in sales of light trucks, which have lower mileage standards than cars. Revised rules proposed in 2005 are expected to improve light truck mileage beginning in 2008.

In 1992, Congress passed the Energy Policy Act. This act was intended to create a unified energy policy which would help make the United States less dependent on foreign sources of energy. The Act also set standards for energy production, nuclear waste disposal, and a variety of other administrative matters related to energy production and distribution.

One of the act's major initiatives encouraged efforts to make the United States less dependent on traditional fuel sources. This portion of the Act, labeled Title V, instructed the Secretary of Transportation to create standards similar to CAFE which would require set percentages of vehicles purchased by public and private fleet operators (such as city bus services) to be so-called "dual fuel" vehicles, able to run on ethanol (made from corn), bio-diesel (made partly from soy oil), natural gas, or regular gasoline. These requirements followed a gradually increasing scale as the law was phased in over several years.

PRIMARY SOURCE

TITLE V-AVAILABILITY AND USE OF REPLACEMENT FUELS, ALTERNATIVE FUELS, AND ALTERNATIVE FUELED PRIVATE VEHICLES

SEC. 501. MANDATE FOR ALTERNATIVE FUEL PROVIDERS. 42 USC 13251.

(a) In general

(1) The Secretary shall, before January 1, 1994, issue regulations requiring that of the new light duty motor vehicles acquired by a covered person described in paragraph (2), the following percentages shall be alternative fueled vehicles for the following model years:

(A) 30 percent for model year 1996.
(B) 50 percent for model year 1997.
(C) 70 percent for model year 1998.
(D) 90 percent for model year 1999 and thereafter.

(2) For purposes of this section, a person referred to in paragraph (1) is—

(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.

(3)

(A) In the case of a covered person described in paragraph (2) with more than one affiliate, division, or other business unit, only an affiliate, division, or business unit which is substantially engaged in the alternative fuels business (as determined by the Secretary by rule) shall be subject to this subsection.
(B) No covered person or affiliate, division, or other business unit of such person whose principal business is - (i) transforming alternative fuels into a product that is not an alternative fuel; or (ii) consuming alternative fuels as a feedstock or fuel in the manufacture of a product that is not an alternative fuel, shall be subject to this subsection.

(4) The vehicles purchased pursuant to this section shall be operated solely on alternative fuels except when operating in an area where the appropriate alternative fuel is unavailable.

(5) Regulations issued under paragraph (1) shall provide for the prompt exemption by the Secretary, through a simple and reasonable process, from the requirements of paragraph (1) of any covered person, in whole or in part, if such person demonstrates to the satisfaction of the Secretary that—

(A) alternative fueled vehicles that meet the normal requirements and practices of the principal business of that person are not reasonably available for acquisition; or
(B) alternative fuels that meet the normal requirements and practices of the principal business of that person are not available in the area in which the vehicles are to be operated.

(b) Revisions and extensions With respect to model years 1997 and thereafter, the Secretary may—

revise the percentage requirements under subsection (a)(1) of this section downward, except that under no circumstances shall the percentage requirement for a model year be less than 20 percent; and
extend the time under subsection (a)(1) of this section for up to 2 model years.

(c) Option for electric utilities The Secretary shall, within 1 year after October 24, 1992, issue regulations requiring that, in the case of a covered person whose principal business is generating, transmitting, importing, or selling at wholesale or retail electricity, the requirements of subsection (a)(1) of this section shall not apply until after December 31, 1997, with respect to electric motor vehicles. Any covered person described in this subsection which plans to acquire electric motor vehicles to comply with the requirements of this section shall so notify the Secretary before January 1, 1996.

(d) Report to Congress The Secretary shall, before January 1, 1998, submit a report to the Congress providing detailed information on actions taken to carry out this section, and the progress made and problems encountered there under.

SIGNIFICANCE

While the Energy Policy Act of 1992 had far-reaching effects in many areas, its net impact on gasoline usage was almost nonexistent. In 2001, testimony before the Senate Finance Committee, Jim Wells, the Director of Natural Resources and the Environment, noted extremely limited progress in increasing the number of alternative fuel vehicles in use. As of 2000, the number was around 1 million, or about 0.2 percent of total vehicles in service. The report cited the low price of oil, lack of alternative fuel infrastructure (such as fueling stations), and the generally high purchase price of alternative fuel vehicles.

In the years since 1992, a variety of tax incentives have been offered to encourage alternative fuel use. Many new automobiles are able to burn E85, an ethanol/gasoline mixture, without modification. However, E85 use remains low despite this capability.