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Alternative fuel is governed by federal and state laws, which vary by state. Alternative fuels are typically not based on petroleum and are desirable because they help provide energy security and environmental benefits.
The following is an example of one state's definition of alerternative fuel
"Alternative fuel" means:
(i) Is used in an engine that is certified to meet at a minimum the
United States environmental protection agency low emission vehicle standard
pursuant to 40 Code of Federal Regulations section 88.104-94 or 88.105-94.
(ii) Is used in an engine that is certified by the engine modifier to meet the addendum to memorandum 1-A of the United States environmental protection agency as printed in the federal register, volume 62, number 207, October 27, 1997, pages 55635 through 55637.
(iii) Is used in an engine that is the subject of a waiver for that specific engine application from the United States environmental protection agency's memorandum 1-A addendum requirements and that waiver is documented to the reasonable satisfaction of the director of the department of environmental quality.