Jeff Ronning, PE
Rocky Mountain Institute
1739 Snowmass Creek Road
Snowmass, CO 81654-9199
Dear Mr. Ronning:
This responds to your inquiry to the National Highway Traffic Safety Administration (NHTSA) of November 27, 2006. I apologize for the delay in responding. In your letter, you asked for our interpretation of 49 CFR Part 538 as it would apply to a plug-in electric hybrid design for a postal delivery vehicle. You ask for confirmation that your basic vehicle design will qualify as a dual-fuel vehicle so that the United States Postal Service (USPS) can be assured [you] are on the right course. You explained that if the vehicle is fully charged, it would be able to operate completely on electricity for most carriers where the average carrier route is only 15 miles, and that the gasoline engine would be used only for rare long-range travel and peripherals such as heating and all-wheel drive function. On January 9, 2007, you further asked by email whether a flex-fuel engine (i.e., one able to use either petroleum-based gasoline or ethanol E85 fuel) instead of a plain gas engine for the same hybrid vehicle would qualify as a dual-fuel vehicle under Part 538. Based on the information that you provided, either design would qualify as a dual-fuel vehicle for purposes of the dual-fuel CAFE incentive.
49 CFR Part 538, Manufacturing Incentives for Alternative Fuel Vehicles, is likely not directly relevant to the vehicle you described. Part 538 has three basic purposes. First, it establishes minimum driving range criteria to aid in identifying passenger automobiles that qualify as dual-fueled automobiles. Second, it establishes gallon-equivalent measurements for gaseous fuels other than natural gas. And finally, it extends the dual-fuel incentive program through model year 2008.
The minimum driving range criteria contained in 538.5 and 538.6 apply only to passenger automobiles. In the context of the CAFE program, passenger automobiles are defined as any automobile (other than an automobile capable of off-highway
operation) manufactured primarily for use in the transportation of not more than 10 individuals. Although NHTSA leaves it to automobile manufacturers to classify their vehicles in the first instance for CAFE purposes, we would likely consider a postal delivery vehicle to be a non-passenger automobile (commonly referred to as a light truck), since it is manufactured primarily for carrying cargo, and not for transporting passengers. Thus, the minimum driving range criteria of Part 538 would likely not apply to your vehicle.
The other two aspects of Part 538, gallon-equivalent measurements for gaseous fuels other than natural gas, and the extension of the incentive program through MY 2008, also would not apply to your vehicle. Since you described your vehicle as a plug-in hybrid, gallon-equivalent measurements for gaseous fuels would be irrelevant. Further, Part 538s extension of the incentive program has been superseded by the Energy Independence and Security Act (EISA) of 2007, which extended the program by statute through model year 2018. Thus, Part 538 would likely not apply to your vehicle.
However, your vehicle may still qualify for the dual-fuel incentive under 49 U.S.C. 32905(b), whether or not 49 CFR Part 538 applies to it. A dual fueled automobile is defined (in relevant part) in 49 U.S.C. 32901(a)(8) as an automobile that:
(A) is capable of operating on alternative fuel and on gasoline or diesel fuel; [and]
(B) provides equal or superior energy efficiency, as calculated for the applicable model year during fuel economy testing for the United States Government, when operating on alternative fuel as when operating on gasoline or diesel fuel.
Alternative fuel, in turn, is defined at 49 U.S.C. 32901(a)(1) as including:
(J) electricity (including electricity from solar energy); and
(K) any other fuel the Secretary of Transportation prescribes by regulation that is not substantially petroleum and that would yield substantial energy security and environmental benefits.
Based on this statutory language, NHTSA interprets electricity as an alternative fuel only if it is not substantially petroleum. The electricity on which the alternative fuel vehicle operates must come from some source other than petroleum-based gasoline pumped into the vehicle; for example, from the grid, as in a plug-in hybrid, or from solar energy as the statute mentions. Thus, we would likely consider a plug-in hybrid like your proposed design, whether it contained a gasoline engine or an engine that could also run on E85, to be a dual fueled automobile under 49 U.S.C. 32901(a)(8).
If you have any further questions, please feel free to contact Rebecca Yoon of my staff at (202) 366-2992.
Stephen P. Wood
Acting Chief Counsel
 49 CFR 523.4, see also 49 U.S.C. 32901(a)(18).
 Nevertheless, we note that it is possible that, in the course of examining your vehicle, NHTSA could conclude that in actuality it would be appropriately classified as a passenger automobile. In that situation, in order to qualify for the dual fuel incentive, your vehicle would be required to conform with Part 538 and 49 U.S.C. 32901(c), which specify that the vehicle must drive a nominal distance of 7.5 miles on its stored capacity of electricity when operated on the EPA urban test cycle and 10.2 miles when operated on the EPA highway test cycle.
 Pub. L. 110-140, Sec. 109 (Dec. 19, 2007).
 In contrast, in a regular hybrid electric vehicle, any electricity used to run the vehicle comes from stored regenerative braking force, which is derived from the operation of the gasoline engine.