DOE TEST LIMITS WITH AFV PROPOSAL

May 8, 1995
Now is no time for an agency of the U.S. government to test the limits of its power. Voters and the courts are hot on the scent of misappropriated authority. Yet some agencies act as though they haven't got the message.

Now is no time for an agency of the U.S. government to test the limits of its power. Voters and the courts are hot on the scent of misappropriated authority. Yet some agencies act as though they haven't got the message.

In general elections last November, voters reasserted their desire for a government subject to limits. And courts have been busy making those limits clear. Last month, the District of Columbia Circuit Court of Appeals overturned two decisions by the Environmental Protection Agency on grounds the agency overstepped its authority. One decision was EPA's ethanol mandate for reformulated fuels. The other was the agency's ban on MMT, a gasoline octane booster.

AGGRESSIVE IMPLEMENTATION

From EPA's tough April in court, the Department of Energy might learn much. DOE proposes aggressive implementation of a congressional mandate for purchases of alternative-fuel vehicles (AFVs). The Energy Policy Act of 1992 requires that providers of alternative fuel and large oil producers buy AFVs for growing percentages of their vehicle fleets beginning in model year 1996. DOE proposes to apply the AFV mandate to vehicle fleet operators that produce or manufacture any substance deemed by the law to be an alternative fuel, whether or not the substance is targeted for fuel markets.

This could mean, for example, that refiners not other-wise covered by the mandate must add AFVs to their fleets if they produce propane, methanol, or hydrogen. Producers of natural gas - an alternative fuel under the law - must do the same.

Industry groups are challenging DOE's proposal, and properly so. The department seems to have interpreted the AFV mandate so as to embrace as many fleet operators as possible. This view places gas producers and independent refiners in essentially the same business as retailers of compressed natural gas and fuel for propane-powered forklifts. That's quite a stretch.

Maybe DOE will take heed of industry's concerns, not to mention the political mood, and moderate the regulation. If not, there are always the courts, where aggressive regulation hasn't fared well lately.

But the real problem here isn't DOE or what courts may or may not decide about its interpretation of the Energy Policy Act. The problem is the law itself.

In the Energy Policy Act, Congress stumbled back into a fire that has burned it before: fuel choice by fiat. Markets either don't exist for fuels that lawmakers prefer to petroleum, or they are too small to suit the progressive congressional mind. So Congress tries to cultivate them by decree. That means telling people to buy things, such as AFVS, and material, such as alternative fuels, that they would not buy if free to choose on their own.

AGAINST THE TIDE

Such efforts always come to grief. They breed disputes, such as those just beginning with DOE's implementation proposal, over who is and who is not subject to mandates and how those mandates should be applied. They sabotage economic growth with inefficiency. Worse, they deprive fuel and vehicle buyers of the freedom to make economic decisions, handing those choices instead to government officials. Nothing could push harder against the political tide made manifest last November.

Industry groups resisting DOE's broad interpretation of the AFV purchase mandate are on the right track, but they shouldn't confine the effort to implementing regulations. The law itself should be changed. DOE's proposal would just make the worst of a mandate that shouldn't exist in the first place.

Copyright 1995 Oil & Gas Journal. All Rights Reserved.