Understanding New Fuel Standards

By Kinnon W. Williams, Esq. and Curtis Chambers, Esq. 

Starting June 1, 2018, unless unpractical to do so, all local governments will be required to satisfy one hundred percent of their fuel usage for operating their vehicles from electricity or biofuel (requirement).[1] However, if a fire district follows certain notice procedures, it can exempt itself from the requirement. This article is meant to help you understand what the requirement means, explain what you must do if you decide to exempt your district from the requirement, and suggest ways to comply with this requirement into the future.

Practicable

The operative phrase in the requirement is “to the extent practicable.” The state legislature commissioned the State Department of Commerce (Commerce) to define what “to the extent practicable” means, and how to determine whether local governments are complying with the requirement. On August 3, 2016, Commerce issued its final rules on the definition in Chapter 194-29 WAC (the Code).[2]

First, it is important to know what is not considered practicable. The Code explicitly states the rules do not require engine retrofits that would void warranties, or the replacement of vehicles before the end of their useful lives. This means fire districts are not required to convert all vehicles to battery power starting June 1, 2018 to comply with the statute. However, fire districts should start analyzing today whether it is practicable to procure vehicles or use fuels that brings it into compliance with the requirement. Second, in the Code, practicable means

the extent to which alternative fuels and vehicle technologies can be used to displace gasoline and diesel fuel in vehicles, as determined by multiple dynamic factors including cost and availability of fuels and vehicles, changes in fueling infrastructure, operations, maintenance, technical feasibility, implementation costs, and other factors.

Commerce makes it clear that local governments are responsible for determining the most effective means of displacing their gasoline and diesel consumption through vehicle electrification and biofuel use, but also states that procurement decisions should be guided primarily through a comparison of alternatives on a lifecycle cost basis. While not available yet, Commerce is to provide an analytical tool to assist in assessing lifecycle costs. Local governments are free to use an alternate means of determining lifecycle costs, so long as all of the variables in Commerce’s analytical tool are also taken into consideration once they become known. The essence of the requirement is that so long as there is a non-diesel or non-gas vehicle that is comparable to a diesel or gas vehicle and it will cost about the same over the life of the vehicle, then it is practicable to purchase the non-diesel or non-gas vehicle. The same is true for alternative fuels.

WAC 194-29-070 lays out specific criteria a local government must consider when it determines whether it has, to the extent practicable, satisfied one hundred percent of fuel usage for operating vehicles from electricity or biofuel. These criteria include what is considered practicable when deciding whether to procure (1) electric or hybrid electric vehicles, (2) vehicles fueled in whole or in part by natural gas or propane, (3) vehicles fueled in whole or in part by renewable natural gas or propane, and (4) vehicles with diesel engines. While districts should understand all of the factors to take into consideration when deciding procurement (or in the conversion to natural gas vehicles and propane vehicles), for the sake of brevity this article only discusses procurement of diesel vehicles.

The rules state that when making procurement decisions involving vehicles with diesel engines, it is considered practicable for local governments to select vehicles with engine warranties that provide for the highest level of biodiesel use. This means that, all else being equal, the local government must purchase the vehicle with the better biodiesel warranty.

The rules also lay out when it is practicable to purchase biodiesel, [3] renewable diesel, ethanol, renewable natural gas, and renewable propane. For example, it is practicable for local governments to

Use a minimum five percent biodiesel-blended fuel (B5) or renewable diesel-blended fuel (R5) in all applications when the fuel is available at retail or for delivery to on-site storage tanks at a price no more than one percent higher than #2 ultra-low sulfur diesel.

and

use fuel blends up to twenty percent biodiesel (B20) or renewable diesel-blended fuel (R20) in all applications unless restricted by warranty or air quality regulations when the fuel is available for delivery to on-site storage tanks at a price no more than one percent higher than #2 ultra-low sulfur diesel, including the cost of any additives necessary to ensure reliable storage and performance.

Again, you should read WAC 194-29-070 in its entirety to learn all of what Commerce has determined to be practicable.

Exemption

The state legislature allows for local governments to exempt fire and other emergency response vehicles from the requirement. This exemption will apply to all vehicles owned by a fire district. If a district decides to exempt itself from the requirement, it must first notify Commerce of its intention. The notice must include the rationale for the exemption and an explanation of how the exemption is consistent with the rules adopted by Commerce. Unity of fleet, and the importance of using proven and reliable technology are two possible reasons a district may want to exempt itself from the requirements. If a local government uses 200,000 or more gallons of gasoline and/or diesel to fuel their vehicles, then it must provide Commerce with notice of its exemption, with the rational for the exemption and an explanation of how the exemption is consistent with the rules adopted by Commerce, by July 1 of each year.

Compliance

All local governments that use 200,000 or more gallons of gasoline and/or diesel to fuel their vehicles must report to Commerce by July 1 of each year, documenting how it is complying with the goal of satisfying one hundred percent of fuel usage for operating vehicles from electricity or biofuel by June 1, 2018, based on the criteria in WAC 194-29-070, including any reasons for noncompliance and plans for future compliance. Commerce will provide the form for the reporting, but has not yet done so. Note that this reporting requirement will begin on July 1, 2017.

Compliance with the requirement will require each local government to consider whether it is practicable to procure an electric or alternative fuel vehicle rather than a gasoline or diesel vehicle until the local government has succeeded in having all of its vehicles run on something other than gasoline or diesel. Because of this duration, local governments need to take the requirement into consideration in its strategic planning. For example, while it may not be practicable for a local government to replace F-150 pickups and large SUV’s with electric vehicles now, it likely will be practicable in the somewhat near future. Thus, when planning to build a new firehouse or mechanical facility, it will be critical to envision where on that new property (or in the new building) the charging stations will be located. Another major consideration in fleet replacement will be ensuring that the electric vehicles and/or the alternative fuel vehicles have compatible charging or filling nozzles. If they do not, then the local government will end up with a hodgepodge of fueling stations, leading to inefficiency.

Conclusion

Ultimately, it will be up to each local government to determine how it can best comply with these new energy standards, taking into consideration all of the variables laid out by Commerce.  While this may seem like a daunting task, ultimately all local governments will comply with the one hundred percent non-diesel and non-gasoline requirement. Getting there as cost effectively and painlessly as possible, while providing top quality service to the citizens, will take long term planning and constant analysis when making vehicle and capital replacement decisions. Regardless of whether a district decides to exempt itself, it is important that each district analyze how best to comply with the requirements, and proactively move toward meeting the requirements of RCW 43.19.648.

Kinnon W. Williams, Esq. is a Partner at the law firm Inslee Best Doezie & Ryder located in Bellevue, Washington. Curtis Chambers, Esq. is an Associate with the firm.  For more information both can be reached through www.insleebest.com.