[[pp. 5101-5150]] Control of Air Pollution from New Motor Vehicles: Heavy-Duty
[Federal Register: January 18, 2001 (Volume 66, Number 12)]
[Rules and Regulations]
[Page 5101-5150]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja01-18]
[[pp. 5101-5150]] Control of Air Pollution from New Motor Vehicles: Heavy-Duty
Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control
Requirements
[[Continued from page 5100]]
[[Page 5101]]
As can be seen from the figure, the annual costs start out at less
than 1.0 billion dollars in year 2006 and increase during the initial
years to about $3.6 billion in 2010. Thereafter, total annualized costs
are projected to continue increasing due to the effects of projected
growth in engine sales and fuel consumption. The RIA provides further
detail regarding these cost projections.
Future consumption of 15 ppm diesel fuel may be influenced by a
potential influx of diesel-powered cars and light trucks into the
light-duty fleet. At the present time, virtually all cars and light
trucks being sold are gasoline fueled. However, the possibility exists
that diesels will become more prevalent in the car and light-duty truck
fleet, since automotive companies have announced their desire to
increase their sales of diesel cars and light trucks. For the Tier 2
rulemaking, the Agency performed a sensitivity analysis using
A.D.Little's ``most likely'' increased growth scenario of diesel
penetration into the light-duty vehicle fleet which culminated in a 9
percent and 24 percent penetration of diesel vehicles in the LDV and
LDT markets, respectively, in 2015 (see Tier 2 RIA, Table III.A.-13).
Were this scenario to play out, the increased number of diesel-powered
cars and light-duty trucks would increase the societal costs (those
costs, in total, paid by consumers) for the higher priced diesel fuel
because more diesel fuel would be consumed. However, were more diesel
vehicles to penetrate the light-duty fleet, less gasoline would be
consumed than was estimated in our Tier 2 cost analysis. Also, diesel
vehicles tend to get higher fuel economy. As a result, the effect of
increased dieselization of the light-duty fleet will likely have little
or no impact on the aggregate costs estimated for the standards being
finalized in today's action.
E. Cost Effectiveness
One tool that can be used to assess the value of new standards for
heavy-duty vehicles and engines is cost effectiveness, in which the
costs incurred to reach the standards are compared to the mass of
emission reductions. This analysis results in the calculation of a $/
ton value, the purpose of which is to show that the reductions from the
engine and fuel controls being finalized today are cost effective, in
comparison to alternative means of control. This analysis involves a
comparison of our program not only to past measures, but also to other
potential future measures that could be implemented. Both EPA and
States have already adopted numerous control measures, and remaining
measures tend to be more expensive than those previously employed. As
we and States tend to employ the most cost effective available measures
first, more expensive ones must be adopted to achieve further emission
reductions.
Comments we received in response to our Notice of Proposed
Rulemaking on the subject of our cost effectiveness analysis are
addressed in the Response to Comments Document.
1. What Is the Cost Effectiveness of This Program?
We have calculated the cost-effectiveness of our diesel engine/
gasoline vehicle/diesel sulfur standards based on two different
approaches. The first considers the net present value of all costs
incurred and emission reductions generated over the life of a single
vehicle meeting our standards. This per-vehicle approach focuses on the
cost-effectiveness of the program from the point of view of the
vehicles and engines which will be used to meet the new requirements.
However, the per-vehicle approach does not capture all of the costs or
emission reductions from our diesel engine/gasoline vehicle/diesel
sulfur program since it does not account for the use of 15 ppm diesel
fuel in current diesel engines. Therefore, we have also calculated a
30-year net present value cost-effectiveness using the net present
value of costs and emission reductions for all in-use vehicles over a
30-year time frame. The baseline or point of comparison for this
evaluation is the previous set of engine, vehicle, and diesel sulfur
standards (in other words, the applicable 2006 model year standards).
As described earlier in the discussion of the cost of this program,
the cost of complying with the new standards will decline over time as
manufacturing costs are reduced and amortized capital investments are
recovered. To show the effect of declining cost in the per-vehicle
cost-effectiveness analysis, we have developed both near term and long
term cost-effectiveness values. More specifically, these correspond to
vehicles sold in years one and six of the vehicle and fuel programs.
Chapter VI of the RIA contains a full description of this analysis, and
you should look in that document for more details of the results
summarized here.
The 30-year net present value approach to calculating the cost-
effectiveness of our program involves the net present value of all
nationwide emission reductions and costs for a 30 year period beginning
with the start of the diesel fuel sulfur program and introduction of
model year 2007 vehicles and engines in year 2006. This 30-year
timeframe captures both the early period of the program when very few
vehicles that meet our standards will be in the fleet, and the later
period when essentially all vehicles in the fleet will meet the new
standards. We have calculated the 30-year net present value cost-
effectiveness using the net present value of the nationwide emission
reductions and costs for each calender year. These emission reductions
and costs are given for every calendar year in the RIA, in addition to
details of the methodology we used to calculated the 30-year net
present value cost-effectiveness.
Our per-vehicle and 30-year net present value cost-effectiveness
values are given in Tables V.E-1 and V.E-2. Table V.E-1 summarizes the
per-vehicle, net present value cost-effectiveness results for our
diesel engine/gasoline vehicle/diesel sulfur standards using sales
weighted averages of the costs (both near term and long term) and
emission reductions of the various vehicle and engine classes affected.
Table V.E-2 provides the same information from the program 30-year net
present value perspective. It is based on the net present value of the
30 year stream of vehicle and fuel costs and NMHC+ NOX and
PM emission reductions, resulting in the 30-year net present value
cost-effectiveness. Diesel fuel costs applicable to diesel engines have
been divided equally between the adsorber and trap, since 15 ppm diesel
fuel is intended to enable all technologies to meet our standards. In
addition, since the trap produces reductions in PM and also operates as
an enabling device for the NOX adsorber, we have divided the
total trap costs equally between compliance with the PM standard and
compliance with the NOX and NMHC standards.
Tables V.E-1 and V.E-2 also display cost-effectiveness values based
on two approaches to account for the reductions in SO2
emissions associated with the reduction in diesel fuel sulfur. While
these reductions are not central to the program and are therefore not
displayed with their own cost-effectiveness, they do represent real
emission reductions due to our program. The first set of cost-
effectiveness numbers in the tables simply ignores these reductions and
bases the cost-effectiveness on only the NOX, NMHC, and PM
emission reductions from our program. The second set accounts for these
ancillary reductions by crediting some of the cost of the program to
SO2. The amount of cost allocated to SO2 is based
on the cost-effectiveness of SO2
[[Page 5102]]
emission reductions that could be obtained from alternative, potential
future EPA programs. The SO2 credit was applied only to the
PM calculation, since SO2 reductions are primarily a means
to reduce ambient PM concentrations.
Table V.E-1.--Per-Engine a Cost Effectiveness of the Standards for 2007
and Later MY Vehicles
------------------------------------------------------------------------
Discounted
Discounted lifetime cost
Pollutants lifetime cost effectiveness
effectiveness per ton with
per ton SO2 credit b
------------------------------------------------------------------------
Near-term costs:
NOX+NMHC................................ $2,125 $2,125
PM...................................... 14,237 7,599
Long-term costs:
NOX+NMHC................................ 1,621 1,621
PM...................................... 11,340 4,701
------------------------------------------------------------------------
a As described above, per-engine cost effectiveness does not include any
costs or benefits from the existing, pre-control, fleet of vehicles
that would use the 15 ppm diesel fuel.
b $446 credited to SO2 (at $4800/ton) for PM cost effectiveness.
Table V.E-2.--30-Year Net Present Value a Cost Effectiveness of the
Standards
------------------------------------------------------------------------
30-year
30-year n.p.v. cost
n.p.v. cost effectiveness
effectiveness per ton with
per ton SO2 credit b
------------------------------------------------------------------------
NOX+NMHC.................................. $2,149 $2,149
PM........................................ 13,607 4,195
------------------------------------------------------------------------
a This cost effectiveness methodology reflects the total fuel costs
incurred in the early years of the program when the fleet is
transitioning from pre-control to post-control diesel vehicles. In
2007 10% of highway diesel fuel is anticipated to be consumed by 2007
MY vehicles. By 2012 this increases to >50% for 2007 and later MY
vehicles.
b $7.1 billion credited to SO2 (at $4800/ton).
2. Comparison With Other Means of Reducing Emissions
In comparison with other mobile source control programs, we believe
that our program represents a cost effective strategy for generating
substantial NOX, NMHC, and PM reductions. This can be seen
by comparing the cost effectiveness of today's program with a number of
mobile source standards that EPA has adopted in the past. Table V.E-3
summarizes the cost effectiveness of several past EPA actions for
NOX+ NMHC. Table V.E-4 summarizes the cost effectiveness of
several past EPA actions for PM.
Table V.E-3.--Cost Effectiveness of Previous Mobile Source Programs for
NOX+NMHC
------------------------------------------------------------------------
Program $/ton
------------------------------------------------------------------------
Tier 2 vehicle/gasoline sulfur......................... 1,340-2,260
2004 Highway HD diesel................................. 212-414
Off-highway diesel engine.............................. 425-675
Tier 1 vehicle......................................... 2,054-2,792
NLEV................................................... 1,930
Marine SI engines...................................... 1,171-1,846
On-board diagnostics................................... 2,313
Marine CI engines...................................... 24-176
------------------------------------------------------------------------
Note: Costs adjusted to 1999 dollars.
Table V.E-4.--Cost Effectiveness of Previous Mobile Source Programs for
PM
------------------------------------------------------------------------
Program $/ton
------------------------------------------------------------------------
Marine CI engines.................................... 5222-3881
1996 urban bus....................................... 12,264-19,622
Urban bus retrofit/rebuild........................... 30,251
1994 highway HD diesel............................... 20,900-24,467
------------------------------------------------------------------------
Note: Costs adjusted to 1999 dollars.
We can see from these tables that the cost effectiveness of our
diesel engine/gasoline vehicle/diesel sulfur standards falls within the
range of these other programs for both NOX+NMHC and PM. Our
program overlaps the range of the recently promulgated standards for
Tier 2 light-duty vehicles and gasoline sulfur shown in Table V.E-3.
Our program also overlaps the cost-effectiveness of past programs for
PM. It is true that some previous programs have been more cost
efficient than the program we are finalizing today. However, it should
be expected that the next generation of standards will be more
expensive than the last, since the least costly means for reducing
emissions is generally pursued first.
In evaluating the cost effectiveness of our diesel engine/gasoline
vehicle/diesel sulfur program, we also considered whether the new
standards are cost effective in comparison with possible stationary
source controls. In the context of the Agency's rulemaking which would
have revised the ozone and PM NAAQS,191 the Agency compiled
a list of additional known technologies that could be considered in
devising new emission reductions strategies.192 Through this
broad review, over 50 technologies were identified that could reduce
NOX, VOC, or PM. The cost effectiveness of these
technologies averaged approximately $5,000/ton for VOC, $13,000/ton for
NOX, and $40,000/ton for PM. Although a $10,000/ton limit
was actually used in the air quality analysis presented in the NAAQS
revisions rule, these values clearly indicate that, not only are future
emission control strategies likely to be more expensive (less cost
effective) than past strategies, but the cost effectiveness of our
program falls well below the average of those choices, and is near the
lower end of the range of potential future strategies.
---------------------------------------------------------------------------
\191\ This rulemaking was remanded to EPA by the D.C. Circuit
Court on May 14, 1999. However, the analyses completed in support of
that rulemaking are still relevant, since they were designed to
investigate the cost effectiveness of a wide variety of potential
future emission control strategies. An appeal is currently pending
before the U.S. Supreme Court.
\192\ Regulatory Impact Analyses for the Particulate Matter and
Ozone National Ambient Air Quality Standards and Proposed Regional
Haze Rule,'' Appendix B, ``Summary of control measures in the PM,
regional haze, and ozone partial attainment analyses,'' Innovative
Strategies and Economics Group, Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, NC, July 17, 1997.
---------------------------------------------------------------------------
In summary, we believe that the weight of the evidence from
alternative means of providing substantial NOX + NMHC and PM
emission reductions indicates that our diesel engine/gasoline vehicle/
diesel sulfur program is cost effective relative to other means of
achieving air quality improvements. We believe this is true from the
perspective of other mobile source control programs and from the
perspective of other stationary source technologies that might be
considered.
F. Does the Value of the Benefits Outweigh the Cost of the Standards?
While EPA uses relative cost-effectiveness as the principal
economic policy criterion for these standards, further insight
regarding the merits of the standards can be provided by benefit-cost
analysis. The purpose of this section is to summarize the methods we
used and results we obtained in conducting an analysis of the economic
benefits of the HD Engine/Diesel Fuel program, and to compare these
economic benefits with the estimated costs of the rule. In summary, the
results of our analysis indicate that the economic benefits of the HD
Engine/Diesel Fuel standards will exceed the costs of meeting the
standards. The annual estimated benefits we were able to quantify were
$70.4 billion (1999$).
1. What Was Our Overall Approach to the Benefit-Cost Analysis?
The basic question we sought to answer in the benefit-cost analysis
was, ``What are the net yearly economic benefits to society of the
reduction in mobile source emissions likely to be
[[Page 5103]]
achieved by the final HD Engine/Diesel Fuel program?'' In designing an
analysis to address this question, we selected a future year for
analysis (2030) that is representative of full-implementation of the
program (i.e., when the US heavy-duty truck fleet is composed of
virtually only compliant heavy-duty vehicles). We also adopted an
analytical structure and sequence similar to that used in the ``section
812 studies'' to estimate the total benefits and costs of the full
Clean Air Act.193 Moreover, we used many of the same models
and assumptions used in the section 812 studies as well as other
Regulatory Impact Analyses (RIAs) prepared by the Office of Air and
Radiation. One difference from previous RIAs, however, is that for
particulate matter air quality modeling we used the Regulatory Modeling
System for Aerosols and Deposition (REMSAD) model. This model was used
in the most recent section 812 study to model air quality in the West.
By adopting the major design elements, models, and assumptions
developed for the section 812 studies and other RIAs, we have largely
relied on methods which have already received extensive review by the
independent Science Advisory Board (SAB), by the public, and by other
federal agencies.
---------------------------------------------------------------------------
\193\ The section 812 studies include: (1) US EPA, Report to
Congress: The Benefits and Costs of the Clean Air Act, 1970 to 1990,
October 1997 (also known as the ``Section 812 Retrospective
Report''); and (2) the first in the ongoing series of prospective
studies estimating the total costs and benefits of the Clean Air Act
(see EPA report number: EPA-410-R-99-001, November 1999).
---------------------------------------------------------------------------
2. What Are the Significant Limitations of the Benefit-Cost Analysis?
Every benefit-cost analysis examining the potential effects of a
change in environmental protection requirements is limited to some
extent by data gaps, limitations in model capabilities (such as
geographic coverage), and uncertainties in the underlying scientific
and economic studies used to configure the benefit and cost models.
Deficiencies in the scientific literature often result in the inability
to estimate changes in health and environmental effects, such as
potential increases in premature mortality associated with increased
exposure to carbon monoxide. Deficiencies in the economics literature
often result in the inability to assign economic values even to those
health and environmental outcomes which can be quantified. While these
general uncertainties in the underlying scientific and economics
literatures are discussed in detail in the RIA and its supporting
documents and references, the key uncertainties which have a bearing on
the results of the benefit-cost analysis of today's action are the
following:
The exclusion of potentially significant benefit
categories (e.g., health and ecological benefits of reduction in
hazardous air pollutants emissions);
Errors in measurement and projection for variables such as
population growth;
Uncertainties in the estimation of future year emissions
inventories and air quality;
Uncertainties associated with the extrapolation of air
quality monitoring data to some unmonitored areas required to better
capture the effects of the standards on the affected population;
Variability in the estimated relationships of health and
welfare effects to changes in pollutant concentrations; and
Uncertainties associated with the effect of potential
future actions to limit emissions.
Despite these uncertainties, we believe the benefit-cost analysis
provides a reasonable indication of the expected economic benefits of
the HD Engine/Diesel Fuel program in 2030 under a set of assumptions.
For the final HD Engine/Diesel Fuel benefit analysis, we adopt an
approach similar to the Tier 2/Gasoline Sulfur RIA and the section 812
study. We first present an estimate for a primary set of benefit
endpoints followed by a presentation of alternative calculations of key
health and welfare endpoints to characterize uncertainty in this
primary set.
One key area of uncertainty is the value of a statistical life
(VSL) for risk reductions in mortality. The adoption of a value for the
projected reduction in the risk of premature mortality is the subject
of continuing discussion within the economic and public policy analysis
community. There is general agreement that the value to an individual
of a reduction in mortality risk tends to vary based on several
factors, including the age of the individual, the type of risk, the
level of control the individual has over the risk, the individual's
attitude toward risk, and the health status of the individual. Age in
particular may be an important difference between populations affected
by air pollution mortality risks and populations affected by workplace
risks. Premature mortality risks from air pollution tend to affect the
very old more than the working age population. As such, any adjustments
to VSL for age differences may have a large impact on total benefits.
However, EPA prefers not to draw distinctions in the monetary value
assigned to the lives saved even if they differ in age, health status,
socioeconomic status, gender or other characteristic of the adult
population.
In the recent Tier 2/Gasoline Sulfur benefits analysis, we employed
a value of statistical life years (VSLY) approach developed for the
Section 812 studies in exploring the impact of age on VSL. However,
since these earlier analyses were completed, the SAB Environmental
Economics Advisory Committee (EEAC) issued a new advisory report which
identifies significant additional limitations in this method.
Specifically, the SAB EEAC notes that ``inferring the value of a
statistical life year, however, requires assumptions about the discount
rate and about the time path of expected utility of consumption'' (EPA-
SAB-EEAC-00-013). They also note that ``the theoretically appropriate
method is to calculate [willingness to pay (WTP)] for individuals whose
ages correspond to those of the affected population, and that it is
preferable to base these calculations on empirical estimates of WTP by
age.''
SAB advised that the EPA ``continue to use a wage-risk-based VSL as
its primary estimate, including appropriate sensitivity analyses to
reflect the uncertainty of these estimates,'' and that ``the only risk
characteristic for which adjustments to the VSL can be made is the
timing of the risk'' (EPA-SAB-EEAC-00-013). In developing our primary
estimate of the benefits of premature mortality reductions, we have
appropriately discounted over the lag period between exposure and
premature mortality. However, an empirical basis that meets the SAB's
standards of reliability for adjusting the current $6 million VSL for
many of these factors does not yet exist. A discussion of these factors
is contained in the RIA and supporting documents. EPA recognizes the
need for additional research by the scientific community to develop
additional empirical support for adjustments to VSL for the factors
mentioned above.
In accordance with the SAB advice, we use the VSL in our primary
estimate and present alternative calculations of adjustment for age and
other factors. Specifically, several studies conducted by Jones-Lee, et
al. (1985, 1989, 1993) found a significant effect of age on the value
of mortality risk reductions expressed by citizens in the United
Kingdom. The results are supported by a recent analysis which asked
samples of Canadian residents their values for reductions in mortality
risk (Krupnick et al., 2000). As alternative calculations, we apply the
ratios based on the Jones-
[[Page 5104]]
Lee, et al. (1989, 1993) studies to the estimated premature mortalities
within the appropriate age groups to provide alternative age-adjusted
estimates of the value of avoided premature mortalities.
In the same way, the presentation of the other alternative
calculations for certain endpoints seeks to demonstrate how much the
overall benefit estimate might vary based on the value EPA has given to
a parameter (which has uncertainty associated with it) underlying the
estimates for human health and environmental effect incidence and the
economic valuation of those effects. These alternative calculations
represent conditions that might occur; however, EPA has selected the
best values supported by current scientific literature for use in the
primary estimate. The alternate calculations include the following:
Estimating PM-related premature mortality benefits based
on different concentration-response (C-R) function estimates;
Value of avoided premature mortality incidences based on
VSLY;
Consideration of reversals in chronic bronchitis treated
as lowest severity cases;
Estimate of ozone-related chronic asthma;194
---------------------------------------------------------------------------
\194\ McDonnell, W.F., D.E. Abbey, N.Nishino, M.D. Lebowitz.
Long-term Ambient Ozone Concentration and the Incidence of Asthma in
Nonsmoking Adults: The Ahsmog Study. Environmental Research. A:80,
110-121. 1999.
---------------------------------------------------------------------------
Value of visibility changes in all Federal Class I areas;
Value of visibility changes in US residential areas;
Value of reduced household soiling damage;
Alternative sensitivities of crops to ozone exposure from
National Crop Loss Assessment Network estimates; and
Avoided costs of reducing nitrogen loadings in three case
study eastern estuaries and nine other eastern estuaries.
Unfortunately, it is not possible to combine all of the assumptions
used in the alternate calculations to arrive at different total benefit
estimates because, it is highly unlikely that the selected combination
of alternative values would all occur simultaneously. Therefore, it is
better to consider each alternative calculation individually to assess
the sensitivity of total benefits to individual assumptions. For
instance, estimating PM-related premature mortality benefits based on
different concentration-response functions may be an important
uncertainty. Specifically, the Harvard Six Cities study by Dockery et
al. (1993) of the relationship between PM concentration and premature
mortality is a plausible alternative to the American Cancer Society
(ACS)/Krewski et al. (2000) study used for the primary estimate of
benefits. The SAB has noted that ``the study had better monitoring with
less measurement error than did most other studies'' (EPA-SAB-COUNCIL-
ADV-99-012, 1999). However, the Dockery et al. study had a more limited
geographic scope (and a smaller study population) than the ACS/Krewski
et al. study and the ACS/Krewski et al. study appears more likely to
mitigate a key source of potential confounding. The Dockery et al.
study did cover a broader age category (25 and older compared to 30 and
older in the ACS study) and followed the cohort for a longer period (15
years compared to 8 years in the ACS study). For these reasons, the
Dockery et al. study is considered to be a plausible alternative
estimate of the avoided premature mortality incidences associated with
this final rule. The alternative estimate for mortality can be
substituted for the valuation component in our primary estimate of
mortality benefits to observe how the net benefits of the program may
be influenced by this assumption.
In addition to the estimate for the primary set of endpoints and
alternative calculations of benefits, our RIA also presents an appendix
with supplemental benefit estimates and sensitivity analyses of other
key parameters in the benefits analysis that have greater uncertainty
surrounding them due to limitations in the scientific literature. The
following sensitivity analyses include alternative income elasticities
of willingness to pay;195 alternative discount
rates;196 alternative PM exposure lags preceding mortality;
threshold analysis for PM mortality;197 and other analyses.
---------------------------------------------------------------------------
\195\ Income elasticity of WTP characterizes the relationship
between changes in real income and changes in the WTP for a
particular commodity. Income elasticity of WTP is measured as the
percentage change in WTP for a one percent change in real income.
For example, an income elasticity of 0.5 implies that a 10 percent
increase in real income would lead to a 5 percent increase in WTP.
\196\ The choice of a discount rate, and its associated
conceptual basis, is a topic of ongoing discussion within the
federal government. EPA adopted a 3 percent discount rate for its
primary analysis in this case to reflect reliance on a ``social rate
of time preference'' discounting concept. We have also calculated
benefits and costs using a 7 percent rate consistent with an
``opportunity cost of capital'' concept to reflect the time value of
resources directed to meet regulatory requirements. In this case,
the benefit and cost estimates were not significantly affected by
the choice of discount rate. Further discussion of this topic
appears in EPA's Guidelines for Preparing Economic Analyses (in
press).
\197\ The SAB has advised EPA that there is no current
scientific basis for selecting a threshold for PM-related health
effects considered in this analysis (EPA-SAB-Council-ADV-99-012,
1999).
---------------------------------------------------------------------------
Even with our efforts to fully disclose the uncertainty in our
estimate, this uncertainty presentation method does not provide a
definitive or complete picture of the true range of monetized benefits
estimates. The set of alternative calculations is only representative
of those benefits that we were able to quantify and monetize.
3. How Has the Benefit-Cost Analysis Changed From Proposal?
No quantitative benefits analysis was conducted for the proposal,
although we outlined the methodology to be used for the final rule
analysis. We summarized and responded to public comment regarding the
methods in the Summary and Analysis of Comment document. Moreover, we
have improved the methods that were presented at proposal. For the
benefits assessment for the final rule, EPA updated the C-R functions
for health endpoints (e.g., Krewski et al., 2000), updated the
emissions inventory, and presented air quality information regarding
urban and residential visibility. For the air quality inputs to the
benefits analysis, we used the REMSAD model which offers improved
chemistry, resolution, and other capabilities over the Source-Receptor
Matrix discussed in the proposal. The model's performance, including
uncertainties, are discussed elsewhere in the RIA and technical support
documents. In addition, we also updated our presentations of monetary
benefits of the reduced premature mortality based on advice from the
SAB.198 All of the changes made since the proposal serve to
improve the analysis.
---------------------------------------------------------------------------
\198\ Full documentation of the SAB advice can be found at their
website (www.epa.gov/sab) or in the docket under the following
reference: EPA-SAB-EEAC-00-013, July 27, 2000. An SAB Report on
EPA's White Paper Valuing the Benefits of Fatal Cancer Risk
Reduction.
---------------------------------------------------------------------------
4. What Are the Benefits in the Years Leading up to 2030?
The HD Engine/Diesel Fuel program has various cost and emission
related components, as described earlier in this section. These
components would begin at various times and in some cases would phase
in over time. This means that during the early years of the program
there would not be a consistent match between cost and benefits. This
is especially true for the vehicle control portions of the program,
where the full vehicle cost would be incurred at the time of vehicle
purchase, while the fuel cost along with the emission reductions and
benefits resulting from all these costs would occur throughout the
lifetime of the vehicle. Because of this
[[Page 5105]]
inconsistency and our desire to more appropriately match the costs and
emission reductions of our program, our analysis uses a future year
when the fleet is nearly fully turned over (2030).
In the years before 2030, the benefits from the HD Engine/Diesel
Fuel program will be less than those estimated here, because the
compliant heavy-duty fleet will not be fully phased in. Annualized
costs, on the other hand, reach nearly their full value within a few
years of program initiation (once all phase-ins are completed). This
can be seen by comparing the anticipated emission reductions described
earlier in section II.D with the aggregate costs of section V.E. Thus,
a benefit-cost ratio computed for the earlier years of the program
would be expected to be lower than a ratio based on our 2030 analysis.
On the other hand, since the estimated benefits are more than ten times
the costs in 2030, the emission reduction and cost trends suggest that
it is likely that annual benefits would exceed costs from a time early
in the life of the program.199
---------------------------------------------------------------------------
\199\ While emission reduction trends give a general indication
of the likely trends in the benefits, there are sufficient non-
linearities and interactions among pollutants in the atmospheric
chemistry used in our modeling that it is not possible to attempt a
quantitative estimate of the benefits simply from changes in the
inventories in years that were not fully modeled.
---------------------------------------------------------------------------
Furthermore, to the extent that a lower ratio of benefits to costs
early in the program is the result of the mismatch of costs and
benefits in time, a simple analysis of an individual year would be
misleading. A more appropriate means of capturing the impacts of timing
differences in benefits and costs would be to produce a net present
value comparison of the costs and benefits over some period of years
(an approach analogous to the aggregate cost effectiveness presented in
section V.F). Unfortunately, while this is relatively straight-forward
for the costs, it is currently not feasible to do a multi-year analysis
of the benefits as this would require a significant amount of air
quality modeling to capture each year.
5. What Were the Results of the Benefit-Cost Analysis?
The benefit-cost analysis for the HD Engine/Diesel Fuel program
reflects a single year ``snapshot'' of the yearly benefits and costs
expected to be realized once the standards have been fully implemented
and non-compliant vehicles have all been retired. As discussed in
section V.F-4, the benefit-cost ratio would be expected to be lower
than the results calculated here in the early years of the program.
Table V.F-1 presents EPA's primary estimate of the benefits of the
rule, both the estimated reductions in incidences and the estimated
economic value of those incidence reductions. In interpreting the
results, it is important to keep in mind the limited set of effects we
are able to monetize. Specifically, the table lists the avoided
incidences of individual health and environmental effects, the
pollutant associated with each of these endpoints, and the estimated
economic value of those avoided incidences. For several environmental
effects such as visibility, the concept of incidences or cases does not
apply as it does for health effects; thus, for these categories
economic values are applied directly to air quality conditions. As the
table indicates, we estimate that the HD Engine/Diesel Fuel program
will produce about 5,500 fewer cases of chronic bronchitis, and we also
see significant improvements in minor restricted activity days (with an
estimated 9,838,500 fewer cases). Our estimate also incorporates
significant reductions in impacts on children's health, showing
reductions of 17,600 cases of acute bronchitis, 192,900 fewer cases of
lower respiratory symptoms, and 193,400 fewer cases of upper
respiratory symptoms in asthmatic children each year. In addition,
today's rule is estimated to reduce 361,400 incidents of asthma attacks
each year in asthmatics of all ages from reduced exposure to ozone and
particles. Asthma is the most prevalent chronic disease among children
and currently affects over seven percent of children under 18 years of
age.
Total monetized benefits, however, are driven primarily by the
estimated 8,300 fewer premature fatalities each year, which account for
almost 89 percent of total benefits. We assume for this analysis that
some of the incidences of premature mortality related to PM exposures
occur in a distributed fashion over the five years following exposure.
To take this into account in the valuation of reductions in premature
mortality, we apply an annual three percent discount rate to the value
of premature mortality occurring in years after our analysis year.
Table V.F-1.--EPA Primary Estimate of the Annual Quantified and Monetized Benefits Associated With Improved Air
Quality Resulting From the HD Engine/Diesel Fuel Rule in 2030 A
----------------------------------------------------------------------------------------------------------------
Avoided incidence Monetary benefits
Endpoint Pollutant A C (cases/year) A D (millions
1999$)
----------------------------------------------------------------------------------------------------------------
Premature mortality B (adults, ages 30 and PM B....................... 8,300 $62,580
over).
Chronic bronchitis......................... PM......................... 5,500 $2,430
Hospital Admissions from Respiratory Causes Ozone and PM............... 4,100 $60
Hospital Admissions from Cardiovascular Ozone and PM............... 3,000 $50
Causes.
Emergency Room Visits for Asthma........... Ozone and PM............... 2,400 $5
Acute bronchitis (children, ages 8-12)..... PM......................... 17,600 $5
Upper respiratory symptoms (asthmatic PM......................... 193,400 $10
children, ages 9-11).
Lower respiratory symptoms (children, ages PM......................... 192,900 $5
7-14).
Asthma attacks (asthmatics, all ages) E.... Ozone and PM............... 361,400 Ba
Work loss days (adults, ages 18-65)........ PM......................... 1,539,400 $160
Minor restricted activity days (adults, Ozone and PM............... 9,838,500 $530
ages 18-65).
(adjusted to exclude asthma attacks).......
Other health effects E..................... Ozone, PM, CO, NMHC........ U1+U2+U3+U4 B1+B2+B3+B4
Decreased worker productivity.............. Ozone...................... .................. $140
Recreational visibility (86 Class I Areas). PM......................... .................. $3,260
Residential visibility..................... PM......................... .................. B5
Household soiling damage................... PM......................... .................. B6
Materials damage........................... PM......................... .................. B7
Nitrogen Deposition to Estuaries........... Nitrogen................... .................. B8
Premature mortality B (adults, ages 30 and PM B....................... 8,300 $62,580
over).
[[Page 5106]]
Chronic bronchitis......................... PM......................... 5,500 $2,430
Hospital Admissions from Respiratory Causes Ozone and PM............... 4,100 $60
Hospital Admissions from Cardiovascular Ozone and PM............... 3,000 $50
Causes.
Emergency Room Visits for Asthma........... Ozone and PM............... 2,400 $5
Acute bronchitis (children, ages 8-12)..... PM......................... 17,600 $5
Upper respiratory symptoms (asthmatic PM......................... 193,400 $10
children, ages 9-11).
Lower respiratory symptoms (children, ages PM......................... 192,900 $5
7-14).
Asthma attacks (asthmatics, all ages) E.... Ozone and PM............... 361,400 Ba
Work loss days (adults, ages 18-65)........ PM......................... 1,539,400 $160
Minor restricted activity days (adults, Ozone and PM............... 9,838,500 $530
ages 18-65).
(adjusted to exclude asthma attacks)....... ........................... .................. ..................
Other health effects E..................... Ozone and PM............... U1+U2+U3+U4 B1+B2+B3+B4
CO, NMHC................... .................. ..................
Decreased worker productivity.............. Ozone...................... .................. $140
Agricultural crop damage (6 crops)......... Ozone...................... .................. $1,120
Commercial forest damage, (6 species in Ozone...................... .................. B9
Eastern US).
Commercial forest damage, other............ Ozone...................... .................. B10
Other welfare effects E.................... Ozone, PM.................. .................. B11+B12+B 13+B14
CO, NMHC................... .................. ..................
--------------------------------------------------------------------
Monetized Total F...................... ........................... .................. $70,360+B
----------------------------------------------------------------------------------------------------------------
Notes:
A Ozone-related benefits are only calculated for the Eastern US due to unavailability of reliable modeled ozone
concentrations in the Western US, thus underestimating national ozone-related benefits. See RIA and technical
support documents for details.
B Premature mortality associated with ozone is not separately included in this analysis. It is assumed that the
ACS/Krewski, et al. (2000) C-R function for premature mortality captures both PM mortality benefits and any
mortality benefits associated with other air pollutants. Also note that the valuation assumes the 5 year
distributed lag structure described earlier and a 3 percent discount rate over that lag period.
C Incidences are rounded to the nearest 100.
D Dollar values are rounded to the nearest 10 million. Monetary benefits account for growth in real GDP per
capita between 1990 and 2030.
E The Ui are the incidences and the Bi are the values for the unquantified category i. For some categories such
as asthma attacks, we were able to quantify the reduction in incidence, but we present the monetization as an
alternative calculation. A detailed listing of unquantified PM, ozone, CO, and NMHC related health and welfare
effects is provided in Table V.F-2. NMHC shown here are also hazardous air pollutants listed in the Clean Air
Act.
F B is equal to the sum of all unmonetized categories, i.e. Ba+B1+B2+...+Bn.
This table also indicates with a ``B'' those additional health and
environmental benefits which could not be expressed in quantitative
incidence and/or economic value terms. A full listing of the benefit
categories that could not be quantified or monetized in our estimate
are provided in Table V.F-2. For instance, visibility is expected to
improve in all areas of the country, with the largest improvements
occurring in heavily populated residential areas (e.g., half of the
urban areas show an improvement of 0.5 deciviews or more). However, due
to limitations on sources to value these effects, we include a ``B'' in
the primary estimate table for this category. Likewise, the HD Engine/
Diesel Fuel rule will also provide progress for some estuaries to meet
their goals for reducing nitrogen deposition (e.g., nitrogen loadings
for the Albemarle/Pamlico Sound are reduced by 24 percent of their
reductions goal), however, this endpoint is also displayed with a ``B''
in the table. A full appreciation of the overall economic consequences
of the HD Engine/Diesel Fuel standards requires consideration of all
benefits and costs expected to result from the new standards, not just
those benefits and costs which could be expressed here in dollar terms.
In summary, EPA's primary estimate of the benefits of the HD
Engine/Diesel Fuel rule is $70.4 billion in 2030. This estimate
accounts for growth in real gross domestic product (GDP) per capita
between 1990 and 2030.
Table V.F-2.--Additional, Non-monetized Benefits of the HD Engine/Diesel Fuel Standards
----------------------------------------------------------------------------------------------------------------
Pollutant Unquantified effects
----------------------------------------------------------------------------------------------------------------
Ozone Health........................................ Premature mortality; A Increased airway responsiveness to
stimuli; Inflammation in the lung; Chronic respiratory
damage; Premature aging of the lungs; Acute inflammation
and respiratory cell damage; Increased susceptibility to
respiratory infection; and Non-asthma respiratory
emergency room visits.
Ozone Welfare....................................... Decreased yields for commercial forests; Decreased yields
for fruits and vegetables; Decreased yields for non-
commercial crops; Damage to urban ornamental plants;
Impacts on recreational demand from damaged forest
aesthetics; and Damage to ecosystem functions.
PM Health........................................... Infant mortality; Low birth weight; Changes in pulmonary
function; Chronic respiratory diseases other than chronic
bronchitis; and Morphological changes.
PM Welfare.......................................... Visibility in non-class I areas; Soiling and materials
damage; and Damage to ecosystem functions.
Nitrogen and Sulfate Deposition Welfare............. Impacts of acidic sulfate and nitrate deposition on
commercial forests; Impacts of acidic deposition to
commercial freshwater fishing; Impacts of acidic
deposition to recreation in terrestrial ecosystems;
Reduced existence values for currently healthy
ecosystems; Impacts of nitrogen deposition on commercial
fishing, agriculture, and forests; Impacts of nitrogen
deposition on recreation in estuarine ecosystems; and
Damage to ecosystem functions.
[[Page 5107]]
CO Health........................................... Premature mortality; A Behavioral effects; Hospital
admissions--respiratory, cardiovascular, and other; Other
cardiovascular effects; Developmental effects; Decreased
time to onset of angina; and Non-asthma respiratory ER
visits.
NMHC Health......................................... Cancer (benzene, 1,3-butadiene, formaldehyde,
acetaldehyde); B Anemia (benzene); Disruption of
production of blood components (benzene); Reduction in
the number of blood platelets (benzene); Excessive bone
marrow formation (benzene); Depression of lymphocyte
counts (benzene); Reproductive and developmental effects
(1,3-butadiene); Irritation of eyes and mucus membranes
(formaldehyde); Respiratory irritation (formaldehyde);
Asthma attacks in asthmatics (formaldehyde); Asthma-like
symptoms in non-asthmatics (formaldehyde); Irritation of
the eyes, skin, and respiratory tract (acetaldehyde); and
Upper respiratory tract irritation and congestion
(acrolein).
NMHC Welfare........................................ Direct toxic effects to animals; Bioaccumlation in the
food chain; and Damage to ecosystem function.
----------------------------------------------------------------------------------------------------------------
A Premature mortality associated with ozone and carbon monoxide is not separately included in this analysis. In
this analysis, we assume that the ACS/Krewski, et al. C-R function for premature mortality captures both PM
mortality benefits and any mortality benefits associated with other air pollutants.
B Non-methane hydrocarbons related to this rule are also hazardous air pollutants listed in the Clean Air Act.
In addition, in analyzing the present rule, we recognized that the
benefits estimates were subject to a number of uncertainties with other
parameters. In Table V.F-3 we present key alternatives to assumptions
regarding individual elements of the benefits analysis and their effect
on the primary estimate of benefits. This table also displays some
assumptions that can be made to value some of the categories that are
indicated with a ``B'' in the primary estimate. For example, this table
can be used to answer questions like, ``What would total benefits be if
we were to use the ACS/Krewski, et al. regionally adjusted
PM2.5 C-R function to estimate avoided premature
mortality?'' This table is not meant to be comprehensive but to
identify the impact of key issues identified by EPA or in public
comment as affecting the total benefits estimation.
Table V.F--3. Key Alternative Benefits Calculations for the HD Engine/Diesel Fuel Rule in 2030A
----------------------------------------------------------------------------------------------------------------
Impact on primary
benefits estimate
Description of alternative Avoided adjusted for growth in
incidences real income (million
1999$)
----------------------------------------------------------------------------------------------------------------
Alternative Concentration-Response Functions for PM-related Premature Mortality
----------------------------------------------------------------------------------------------------------------
1. Krewski/ACS Study Regional Adjustment Model B........ .............. 9,400 +$7,370 (+10.5%)
2. Pope/ACS Study C..................................... .............. 9,900 +12,780 (+18.2%)
3. Krewski/Harvard Six-city Study D..................... .............. 24,200 +$118,500 (+168.4%)
----------------------------------------------------------------------------------------------------------------
Alternative Methods for Valuing Reductions in Incidences of PM-related Premature Mortality
----------------------------------------------------------------------------------------------------------------
Value of avoided premature mortality incidences based on Jones-Lee 8,300 -$28,510 (-40.5%)
age-specific VSL....................................... (1989) E
Jones-Lee 8,300 -$6,820 (-10.0%)
(1993) F
----------------------------------------------------------------------------------------------------------------
A Section VII-.F of the RIA provides complete information about the estimates in this table.
B This C-R function is included as a reasonable specification to explore the impact of adjustments for broad
regional correlations, which have been identified as important factors in correctly specifying the PM
mortality C-R function.
C The Pope et al. C-R function was used to estimate reductions in premature mortality for the Tier 2/Gasoline
Sulfur benefits analysis. It is included here to provide a comparable estimate for the HD Engine/Diesel Fuel
rule.
D The Krewski et al. ``Harvard Six-cities Study'' estimate is included because the Harvard Six-cities Study
featured improved exposure estimates, a slightly broader study population (adults aged 25 and older), and a
follow-up period nearly twice as long as that of Pope, et al. and as such provides a reasonable alternative to
the primary estimate.
E Jones-Lee (1989) provides an estimate of age-adjusted VSL based on a finding that older people place a much
lower value on mortality risk reductions than middle-age or younger people.
F Jones-Lee (1993) provides an estimate of age-adjusted VSL based on a finding that older people value mortality
risk reductions only somewhat less than middle-aged or younger people.
The estimated annualized 2030 cost for businesses to implement the
final HD Engine/Diesel Fuel program from Table V.D-1 of the RIA is $4.3
billion (1999$). When considered in a broader social cost context of
the cost to society of the resources used, which is the right metric
for cost-benefit analysis, the annualized cost is $4.2 billion. The
monetized benefits are approximately $70.4 billion and EPA believes
there is considerable value to the public of the benefits it could not
monetize. The net benefit that can be monetized is $66.2 billion.
Therefore, implementation of the HD Engine/Diesel Fuel program is
expected to provide society with a net gain in social welfare based on
economic efficiency criteria. Tables V.F-4 summarizes the costs,
benefits, and net benefits.
[[Page 5108]]
Table V.F-4.--2030 Annual Monetized Costs, Benefits, and Net Benefits
for the Final HD Engine/Diesel Fuel Rule a
------------------------------------------------------------------------
Billions of 1999$
------------------------------------------------------------------------
Annual compliance costs............................. $4.2
Monetized PM-related benefits b................. $69.0 + BPM
Monetized Ozone-related benefitsb, c............ $1.4 + B Ozone
NMHC-related benefits........................... not monetized
(BNMHC)
CO-related benefits............................. not monetized
(BCO)
Total annual benefits............................... $70.4 +BPM + B
Ozone + BNMHC +
BCO
Monetized net benefitsd............................. $66.2 + B
------------------------------------------------------------------------
\a\ For this section, all costs and benefits are rounded to the nearest
100 million. Thus, figures presented in this chapter may not exactly
equal benefit and cost numbers presented in earlier sections of the
chapter.
\b\ Not all possible benefits or disbenefits are quantified and
monetized in this analysis. Potential benefit categories that have not
been quantified and monetized are listed in Table VII-1. Unmonetized
PM- and ozone-related benefits are indicated by BPM and BOzone,
respectively.
\c\ Ozone-related benefits are only calculated for the Eastern U.S. due
to unavailability of reliable modeled ozone concentrations in the
Western U.S. This results in an underestimate of national ozone-
related benefits. See US EPA (2000a) for a detailed discussion of the
UAM-V ozone model and model performance issues.
\d\ B is equal to the sum of all unmonetized benefits, including those
associated with PM, ozone, CO, and NMHC.
VI. Requirements for Engine and Vehicle Manufacturers
A. Compliance with Standards and Enforcement
We are making some changes to the compliance-related requirements
that will apply to vehicles and engines certified to the new standards.
These changes are described below. Changes related to the supplemental
emission requirements are discussed in Section III.C, along with the
discussion of revised standards for those requirements. In general,
however, existing compliance provisions will continue to apply to the
vehicles and engines subject to today's standards.
1. Allowable Maintenance
Our existing regulations contain provisions (40 CFR Sec. 86.004-25)
that would affect scheduled maintenance of NOX adsorbers, PM
traps, and other devices that may be used to comply with the new
standards. These provisions limit the amount of maintenance to
emission-related components that the manufacturer is allowed to conduct
during durability testing (or specify in the maintenance instructions
that it gives to operators). We believe that the continuation of these
requirements is appropriate because we expect that, with very low fuel
sulfur levels, these technologies will be very durable in use and will
last the full useful life with little or no scheduled maintenance other
than cleaning. However, we are modifying these provisions slightly. The
existing regulations would have allowed a manufacturer to specify
something as drastic as replacement of the adsorber catalyst bed or the
trap filter after as little as 100,000-150,000 miles if there was a
``reasonable likelihood'' that the maintenance would get done. To
ensure that no manufacturer underdesigns their adsorbers or traps
(compared to the level of durability that is achievable), we are
requiring that these technologies be designed to last for the full
useful life of the engine. More specifically, the final regulations
state that scheduled replacement of the PM filter element,
NOX adsorber, or other catalyst module bed is not allowed
during the useful life, unless the manufacturer can show that the
replacement will in fact occur and pays for the replacement. Otherwise,
only cleaning and adjustment will be allowed as scheduled maintenance.
It is important to note that this restriction only applies to the
manufacturer's specified maintenance. Owners and operators are, of
course, allowed to perform additional maintenance.
2. Emission Data Waivers
Today's action includes PM standards for all heavy-duty engines.
However, because gasoline engines have inherently low PM emissions, it
will be appropriate in some cases to waive the requirement to measure
PM emissions for certification. Therefore, the final regulations give
us the flexibility to allow manufacturers to certify gasoline engines
and vehicles without measuring PM emissions, provided they can
demonstrate compliance in some other way such as with previous data,
analyses, or other information. The flexibility is the same as that
allowed for PM emissions from light-duty gasoline vehicles and for CO
emissions from heavy-duty diesel engines. We are also allowing the same
type of analysis to be used with respect to formaldehyde emissions from
all petroleum-fueled heavy-duty vehicles.
3. Crankcase Emissions
Section III describes a new requirement for manufacturers to
control crankcase emissions from turbocharged diesel engines.
Historically, control of crankcase emissions has meant sealing the
crankcase and routing the crankcase gases into the air intake system so
they can be combusted. However, some manufacturers have expressed a
reasonable concern that this would be unnecessarily restrictive, and
suggested that we should allow for alternative controls. Therefore, we
are making some revisions from the proposed regulations. First, we are
clarifying that this closed crankcase provision does not require that
crankcase gases be routed into the engine intake. We will also allow
manufacturers to route crankcase gases into the exhaust system,
including upstream of the exhaust emission controls. Furthermore, we
are also changing the regulations to allow manufacturers to instead
measure crankcase emissions and add them to the measured exhaust
emissions (or to measure them together). Manufacturers choosing to use
this allowance rather than to seal the crankcase will need to modify
their exhaust deterioration factors or to develop separate
deterioration factors to account for increases in crankcase emissions
as the engine ages. Manufacturers would also be responsible for
ensuring that crankcase emissions would be readily measurable in use.
[[Page 5109]]
4. Non-Conformance Penalties
We are not establishing non-conformance penalties (NCPs) for the
new standards at this time. NCPs are monetary penalties that
manufacturers can pay instead of complying with an emission standard.
In order for us to establish NCPs for a specific standard, we would
have to find that: (1) Substantial work will be required to meet the
standard for which the NCP is offered; and (2) there is likely to be a
``technological laggard'' (i.e., a manufacturer that cannot meet the
standard because of technological (not economic) difficulties and,
without NCPs, might be forced from the marketplace). According to the
CAA (Section 206(g)), such NCPs ``shall remove any competitive
disadvantage to manufacturers whose engines or vehicles achieve the
required degree of emission reduction.'' We also must determine
compliance costs so that appropriate penalties can be established.
While we have established NCPs in past rulemakings, their use has been
rare since the implementation of our averaging, banking and trading
program.
We requested comment on the need for NCPs in this rulemaking.
However, after reviewing the comments, we cannot conclude that NCPs
will be needed. While we believe that substantial work will be required
to meet the 2007 standards, we currently have no information indicating
that a technological laggard is likely to exist. Recognizing that it
may have been difficult for manufacturers to comment on these criteria
at this early stage of development, when implementation of these
standards is still more than six years away, it may be appropriate to
reconsider NCPs in a future action.
5. Idle CO Standards
We are also eliminating the idle CO emission standards for heavy-
duty vehicles and engines below 14,000 pounds beginning in the 2004
model year, provided they are certified to the OBD requirements of our
Phase 1 rule. (See 65 FR 59896, October 6, 2000.) The certified OBD
systems on those vehicles will likely serve as the basis for future
inspection and maintenance tests in areas testing vehicles in that
weight class. Certification data show that heavy-duty engines and
vehicles are certifying with idle CO levels well below the standard. We
believe that the existing standard is not the forcing function for
these low idle CO levels, but instead it is the electronic computer-
controlled engines of today. In effect, we believe that the idle CO
standard places an unnecessary testing burden on manufacturers whose
vehicles are certified to the OBD requirements. We also eliminated the
idle CO standard for light-duty trucks in our Tier 2 rule. (See 65 FR
6698, February 10, 2000.) Note that we are considering a future rule
that would implement OBD on engines over 14,000 pounds. We would
consider eliminating the idle CO requirement for those engines in the
event that OBD requirements are put into place.
B. Compliance With Phase-in Schedules
In Section III we described the phase-in options for diesel engine
manufacturers. These options are based on percentages of a
manufacturer's production. We recognize, however, that manufacturers
need to plan for compliance well in advance of the start of production,
and that actual production volumes for any one model year may differ
from their projections. This is a bigger concern for the diesel engines
than for gasoline engines because of the three-year phase-in of the new
diesel NOX standards. On the other hand, we believe that it
would be inappropriate to base compliance solely on a manufacturer's
projections. That could encourage manufacturers to overestimate their
production of the low-emission engines, and could result in
significantly lower emission benefits during the phase-in. Given these
conflicting factors, we are finalizing a compromise approach. We will
initially only require diesel manufacturers to project compliance with
the phase-in based on their projected production volumes, provided that
they made up any deficits (in terms of percent of production) the
following year. Thus, a manufacturer that projected 50 percent of its
production in 2007 would be low-NOX (i.e., meet the 0.20 g/
bhp-hr NOX standard), but that was only able to actually
produce 45 percent of its production as low-NOX, could
achieve compliance by producing at least 55 percent of its production
as low-NOX in 2008. However,since production volumes differ
from year to year, deficits would be calculated and made up based on
numbers of engines or vehicles, rather than percent of production. This
is similar to the approach that we used in phasing-in the Tier 2
emission standards.
Since we expect that a manufacturer making a good-faith projection
of sales would not be very far off of the actual production volumes, we
are limiting the size of the deficit that could be excused. In all
cases, the manufacturer will be required to produce at least 25 percent
of its production as low-NOX engines in model years 2007,
2008, and 2009. Another important restriction is that manufacturers
will not be allowed to have a deficit in the third year of the phase-in
(2009). This restriction is being finalized to ensure that
manufacturers are able to make up the deficit. Since they could not
produce more than 100 percent low-NOX engines in 2010, it
would not be possible to make up a deficit from 2009.
C. Averaging, Banking, and Trading
We are continuing the basic structure of the existing ABT program
for heavy-duty engines. This program allows manufacturers to certify
their engine families at various specified emissions levels above or
below the standard, as long as they comply with the applicable
standards when averaged across their various engine families. More
specifically, manufacturers are allowed to certify their engine
families with various family emission limits (FELs), provided that in
each model year the average of the FELs does not exceed the standard
when weighted by the numbers of engines produced in each family for
that model year. To do this, they generate certification emission
credits by producing engine families that are certified below the
applicable standard. These credits can then be used to offset the
production of engine families that are certified to have emissions in
excess of the applicable standards. Manufacturers are also allowed to
bank these credits for later use or trade them to other manufacturers.
We are adopting some restrictions to ensure that the environmental
benefits of the program are not jeopardized as described in the
Response to Comments document. These restrictions are described below
along with other changes made in response to comments. We are
continuing this ABT program because we believe that it will provide the
manufacturers significant compliance flexibility. This compliance
flexibility could be a significant factor in the manufacturers' ability
to comply with the standards in 2007 and will help to allow
implementation of the new, more stringent standards as soon as
permissible under the CAA.
We proposed two separate averaging sets during the diesel phase-in
period. In one set, engines would be certified to the 2.4 g/bhp-hr
NOX+NMHC standard (which applies for model years 2004-2006),
and would be subject to the restrictions and allowances established for
those model years. In the other set, engines would be certified to the
0.20 g/bhp-hr NOX standard, and would be subject to the
restrictions and allowances in the proposed program.
[[Page 5110]]
While we proposed to not allow averaging between these two sets, based
on the comments we received, the final regulations allow manufacturers
to transfer credits across these averaging sets, with some
restrictions. Manufacturers could use credits generated during the
phase-out of engines subject to the 2.4 g/bhp-hr NOX+NMHC
standard to comply with the 0.20 g/bhp-hr NOX standard, but
these credits will be subject to a 20 percent discount. (Each gram of
NOX+NMHC credits from the phase-out engines would be worth
0.8 grams of NOX credits in the new ABT program.) This
discount reflects the fact that the change from our proposed ABT
program provides manufacturers with substantial flexibility in meeting
the final standards and also accounts for the NMHC component of the
credit. In the first year of the phase-in, this flexibility will allow
manufacturers to reduce fleetwide emissions more than would have been
possible with the proposed program. Manufacturers will be able to
reduce emissions for a substantial percentage of their production,
reflecting the use of low-NOX technologies, without being
required to produce a full 50 percent of their production with
NOX emissions near or below 0.20 g/bhp-hr in the initial
year of the phase-in. This generation and use of credits will give
manufacturers a greater opportunity to gain experience with the low-
NOX technologies before they are required to meet the final
standards across their full production. As part of the averaging
program during the phase-in period (model years 2007-2009), we will
allow diesel engine credits to be averaged across service class using a
modified form of the ABT program. These credit exchanges would occur in
the same manner as other credit exchanges, except that the credits
generated from one service class would need to be calculated using the
useful life and horsepower values of the engine family using credits.
This would make the credit exchanges equivalent to the vehicle count
phase-in provisions. This allowance is restricted to averaging. Banked
or traded credits cannot be used across service class.
We are also adopting a restriction on the use of banked
NOX+NMHC credits generated from diesel engines certified to
the 2.4 g/bhp-hr NOX+NMHC standard. While we proposed to
prohibit any such use, the final regulations will allow manufacturers
to use banked credits to show compliance with the 0.20 g/bhp-hr
standard, but the credits will be discounted by 20 percent when they
are used for this purpose.200 This is consistent with the
cross-averaging set discount described above. In addition, we are
setting an upper bound on the number of engines for which a
manufacturer could use such banked credits during any one model year.
The upper limit is ten percent of the manufacturer's annual U.S.-
directed production of heavy-duty highway diesel engines, and would
apply only for engines certified to FELs higher than 0.50 g/bhp-hr. We
believe that this limit is necessary to prevent manufacturers from
delaying the introduction of the low-NOX technologies by
using a large number of banked credits. This kind of delay would be
contrary to the goals of the phase-in, which in large part is intended
for manufacturers to gain some initial experience with the low-
NOX technologies for a limited portion of their production.
Although it does not appear likely (based on manufacturer expectations)
that such credits will exist in large numbers, this limit appears
prudent to ensure that such a problem does not occur.
---------------------------------------------------------------------------
\200\ It should be noted that the existing regulations already
contain provisions that would discount diesel NOX+NMHC
credits in some cases when they are banked or traded. The reason for
this discount is an interest in encouraging engine designs that are
significantly cleaner than the 2.4 g/bhp-hr standard while that
standard is in effect. There are also similar provisions for
gasoline engines and vehicles. While the new regulations do not
change these existing provisions, they do account for the previous
discount by capping the total discount at 20 percent.
---------------------------------------------------------------------------
We are making similar changes to the ABT programs for heavy-duty
gasoline engines and vehicles. We will allow exchange of credits from
the chassis-certified vehicles to engines (and vice versa) on a credit
for credit face-value basis, subject to a 20 percent
discount.201 The discount is necessary to account for the
uncertainty in converting between g/mi standards and g/bhp-hr
standards. We will also allow NOX+NMHC credits from gasoline
engines certified to the combined standards (including banked credits)
to be used in the new NOX-only ABT program, also subject to
the 20 percent discount, for reasons discussed above and in the
Response to Comments document. This discount would not apply for banked
or averaged gasoline vehicle credits used within the vehicle ABT
program, since the existing program is already a NOX-only
program. In connection to this option, we believe that it would be
appropriate to allow gasoline engine manufacturers to voluntarily
participate in an NMHC ABT program, instead of forcing them to convert
their NOX+NMHC credits into NOX credits when the
new standards take effect. While we believe that manufacturers will
generally prefer to use these credits as NOX credits, NMHC
credits may be of some value to manufacturers since gasoline engine
emission controls often have a NOX-NMHC emission tradeoff
much like the NOX-PM tradeoff for diesel engines. Therefore,
we are extending the ABT programs for gasoline engines and vehicles to
include NMHC, beginning with the 2007 model year. These NOX
and NMHC ABT programs parallel the NOX and PM ABT programs
for diesels. In the NMHC ABT programs, the NMHC credits would be
subject to the same allowances, restrictions, and discounts as the
NOX credits. In addition, we are adopting a provision to
allow vehicle manufacturers to bank NMHC credits before 2008 for
complete vehicles that are certified to the 2008 standards early.
(Engine manufacturers are already allowed to bank NOX+NMHC
credits for model year 2004 and later engines.)
---------------------------------------------------------------------------
\201\ See preceding footnote.
---------------------------------------------------------------------------
It is worth noting three other aspects of this new banking program.
First we recognize that NOX+NMHC credits are not the same as
NOX-only credits. However, both NMHC reductions and
NOX reductions have environmental value, although they are
not necessarily equivalent. Thus, given the 20 percent discount that
would be applied to the NOX+NMHC credits if they are
transferred into the new NOX ABT program, we believe that it
is appropriate to allow those credits to be used in the new
NOX program. This is especially true for diesels, which are
expected to have low NMHC levels for model years 2004-2006 (probably
about one-tenth of the expected NOX levels). Second, the
final program does not include the proposed provisions for banking
undiscounted credits by meeting all of the new diesel standards early,
because we believe that the early compliance option described in
Section III would accomplish essentially the same flexibility. Finally,
we are not finalizing any new discounts or restrictions for banked PM
credits. Considering the simple 100 percent phase-in of the PM
standards in 2007, we believe that such restrictions are not necessary
to achieve the goals of this program for PM, especially given the 0.02
g/bhp-hr PM FEL cap, which is described below.
The existing ABT program includes limits on how high the emissions
from credit-using engines can be. These limits are referred to as FEL
caps. No engine family may be certified above these caps using credits.
These limits provide the manufacturers compliance flexibility while
protecting against the
[[Page 5111]]
introduction of unnecessarily high-emitting engines. In the past, we
have generally set the FEL caps at the emission levels allowed by the
previous standard, unless there was some specific reason to do
otherwise. However, we proposed much lower FEL caps, because the
proposed standard levels were so much lower than the previous levels
and because we wanted to ensure that manufacturers did not continue to
produce old-technology high-emitting engines under the new program. In
today's FRM, for model year 2007 and later diesel engines, we are
adopting a more flexible cap for NOX emissions during the
first three years of the program than was proposed, but are adopting
the proposed FEL cap for PM emissions. We believe that this approach
for NOX is more consistent with the rest of the ABT program
(as is described above) than applying the proposed FEL cap during this
interim period. Specifically, model year 2007 through 2009 diesel
engines subject to the 0.20 g/bhp-hr standard will not be allowed to
have NOX emissions higher than 2.0 g/bhp-hr, or PM emissions
higher than 0.02 g/bhp-hr. The NOX level represents a
conservative estimate of the emission level that is expected under the
combined NOX+NMHC standards that will apply beginning in
model year 2004. The proposed NOX FEL cap of 0.50 g/bhp-hr
would not apply until model year 2010. We believe that the higher FEL
cap is appropriate during the transition to the much lower standards,
to allow some meaningful use of averaging. However, since the 2.0 g/
bhp-hr cap is ten times the level of the new standard, it would not be
appropriate as a long-term cap.
The PM cap is also lower than the previous standard of 0.10 g/bhp-
hr. As noted above, this is being done in connection with the absence
of the kind of restrictions on the use of PM credits that are being set
for NOX credits. The NOX credits restrictions are
designed to better coordinate the NOX ABT program with the
NOX standard phase-in; and the PM standard is not phased-in.
Without those types of restrictions, we believe that it is appropriate
to adopt the proposed lower FEL cap to prevent the possibility of PM
credits being used to delay the implementation of the program and its
benefits.
The FEL caps for gasoline vehicles and engines are being set at the
previous standards, and the approximate NOX and NMHC levels
inherent in the NOX+NMHC standards that will apply for model
year 2004-2007 engines. Since engine manufacturers will have the option
of certifying their engines to a 1.5 g/bhp-hr NOX+NMHC
standard for model years 2004-2007 (instead of the 2005 standard of 1.0
g/bhp-hr), those manufacturers choosing that option, will also be
allowed higher FEL caps for model years 2008-2010. All of these FEL
caps are shown in Table VI.D-1 and are discussed in more detail in the
Response to Comments document. These new FEL caps do not apply for the
phase-out engines and vehicles.
Table VI.D-1.--New FEL Caps for Averaging Banking and Trading
------------------------------------------------------------------------
NOX FEL cap PM/NMHC FEL cap
------------------------------------------------------------------------
HDDE........................ 0.50 g/bhp-hr a..... 0.02 g/bhp-hr PM.
HDGE........................ 0.50 g/bhp-hr b..... 0.30 g/bhp-hr b
NMHC.
Complete HDGV less than or 0.9 gpm............. 0.28 gpm NMHC.
equal to 10,000 pounds GVWR.
Complete HDGV over 10,000 1.0 gpm............. 0.33 gpm NMHC.
pounds GVWR.
------------------------------------------------------------------------
a The NOX FEL cap is 2.0 for model years 2007-2009 diesel engines.
b The NOX and NMHC FEL caps are 0.80 and 0.40 g/bhp-hr, respectively,
for model years 2008-2010 gasoline engines for manufacturers choosing
to certify to the 1.5 g/bhp-hr NOX+NMHC level in 2004.
D. FTP Changes to Accommodate Regeneration of Exhaust Emission Controls
It is expected that some of the exhaust emission control devices
used to meet today's standards will have discrete regeneration events
that could affect emission characteristics. For example, NOX
adsorbers incorporate discrete regenerations. The NOX
adsorber stores NOX under normal conditions until the
NOX storage capacity is nearly full, at which point the
regeneration event is triggered to purge the stored NOX and
reduce it across a catalyst. We expect that these regeneration events
would be controlled by the engine computer, and would thus be generally
predictable. Even passively regenerating catalytic PM trap designs can
have discrete regeneration events that can be predictable.
Discrete regeneration events can be important because it is
possible for exhaust emissions to increase during the regeneration
process. The regeneration of a NOX adsorber for instance,
could result in increased particulates, NMHC and NOX due to
the rich exhaust gas required to purge and reduce the NOX.
We expect that in most cases, the regeneration events will be
sufficiently frequent to be included in the measured emissions. Our
feasibility analysis projects very frequent regeneration of the
NOX adsorbers, and continuously regenerating PM traps.
Nevertheless, this issue becomes a regulatory concern because it is
also conceivable that these emission storage devices could be designed
in such a way that a regeneration event would not necessarily occur
over the course of a single heavy-duty FTP cycle, and thus be
unmeasured by the current test procedure. In addition, desulfation of
NOX adsorbers is clearly not likely to occur frequently
enough to reliably be caught in the FTP. Since these regeneration
events could produce increased emissions during the regeneration
process, it will be important to make sure that regeneration is
captured or accounted for as part of the certification testing.
In order to ensure control of emissions during regeneration
(including desulfation), we will require manufacturers to determine and
use a mathematical adjustment of measured emissions to account for
increased emissions during infrequent regeneration events that do not
occur during the testing. Conversely, we will also require
manufacturers to provide us with a consistent reverse adjustment factor
for tests in which the regeneration does occur. For example, if a
system requires a desulfation after every 20 FTP transient cycles, and
PM emissions increase by 0.01 g/bhp-hr during an FTP transient cycle
with a desulfation, we
[[Page 5112]]
will require measured emissions to be adjusted upward by 0.0005 g/bhp-
hr (0.01 g/bhp-hr divided by 20 cycles) for all tests in which that
regeneration does not occur. The equivalent reverse adjustment
(downward) for tests in which the regeneration does occur would be
0.0095 g/bhp-hr (0.01 g/bhp-hr multiplied by 19/20). The reason that
the adjustment downward would be so much larger than the adjustment
upward is that it is correcting for a significant emission increase
over a single emission test, while the adjustment downward would be
correcting for that same emission increase over the other 19 tests. No
adjustment will be made for events that are so frequent that they
always occur during FTP testing. In designs for which these activities
are not commanded at regular intervals, such as those based on changes
in backpressure or NOX levels, the manufacturer would be
required to determine an average frequency of the regeneration (during
repeat FTP transient tests). In all cases, manufacturers would need to
provide information to allow testers to know when an infrequent
regeneration has occurred during the test, such as by identifying the
controller command signal for this event. If this information is not
available, manufacturers would be required to meet the standards during
all tests, without regard to whether a regeneration occurs.
E. Improvements to the Test Procedures
In response to manufacturer comments, we are finalizing changes to
the test procedures to improve the precision of emission measurements.
The changes fully address the manufacturers concerns about the
potential effect of measurement precision on the feasibility of the
standards. It is important to note that these changes are not intended
to make measurements higher or lower, but only to improve the
repeatability of the measurements. Based on our experience with these
modified test procedures, and our discussions with manufacturers about
their experiences, we are confident that these changes will not affect
the stringency of the standards. These changes are summarized briefly
here. A more complete description can be found in a memorandum to the
docket.202
---------------------------------------------------------------------------
\202\ Memorandum from Matthew Spears to Docket A-99-06, dated
December 6, 2000.
---------------------------------------------------------------------------
Most of the changes being finalized are in three general areas.
Many of the changes are to the PM sampling procedure. These include
changes to the type of PM filters that are used, and improvements in
how PM filters are weighed before and after emission measurements,
including requirements for more precise microbalances. Another area
includes changes to the dilution air specifications to allow for lower
dilution ratios. The final area of change is the NOX
calibration procedure. The new calibration procedures will result in
more precise continuous measurement of very low concentrations of
NOX.
Other changes are being made to the regulations to allow for other
measurement options. In some cases, manufacturers will be allowed to
use their current procedures, even though EPA will adopt the changes
for our own testing. The reason for this is that some of these changes
may not be convenient or cost-effective in the short term, and
manufacturers may be willing to live with some slightly higher
measurement variability in order to lower testing costs. We believe
that manufacturers should be able to individually optimize their test
facilities in this manner. However, it is important for manufacturers
to understand that we will conduct our confirmatory testing in the
accurate and precise manner specified in these regulations.
We are including a new regulatory provision that specifies the
steps that someone needs to go through to demonstrate that their own
alternate measurement procedure is as good as or better than the
procedure specified by our regulations. This provision is found in 40
CFR Sec. 86.1306-07. It is also worth noting that, although we
requested comment on changes to the NOX humidity correction
factors used for FTP testing, we did not receive any such comments.
Thus we will continue to use the existing NOX humidity
correction factors for FTP testing.
F. Certification Fuel
It is well established that measured emissions are affected by the
properties of the fuel used during the test. For this reason, we have
historically specified allowable ranges for test fuel properties such
as cetane and sulfur content. These specifications are intended to
represent most typical fuels that are commercially available in use.
Because today's action is lowering the upper limit for sulfur content
in the field, we are also establishing a new range of allowable sulfur
content for testing that is 7 to 15 ppm (by weight). We believe that
this range best represents the fuel that diesel vehicles will
potentially see in use. Beginning in the 2007 model year, these
specifications will apply to emission testing conducted for
Certification and Selective Enforcement Audits, as well as any other
laboratory engine testing for compliance purposes. Because the same in-
use fuel is used for light- and heavy-duty highway diesel vehicles, we
are also changing the specifications for light-duty diesel vehicle
testing.
It is important to note that while these specifications include the
maximum sulfur level allowed for in-use fuel, we believe that it is
generally appropriate to test using the most typical fuels. We expect
that refineries will typically produce diesel fuel with about 7 ppm
sulfur, and that the fuel could have slightly higher sulfur levels
after distribution. Thus, we expect that we would use fuel having a
sulfur content between 7 and 10 ppm sulfur for our emission testing.
Should we determine that the typical in-use fuel has significantly more
sulfur than this, we would adjust this target upward.
We are including a regulatory change to the heavy-duty gasoline
test fuel specifications to make them the same as the recently
established Tier 2 fuel specifications for light-duty vehicles. We are
also extending to heavy-duty engines and vehicles the Tier 2 allowance
for manufacturers to use California test gasoline for certification. As
is the case with Tier 2, this allowance does not affect our authority
to conduct our own testing using federal fuel. Also consistent with our
approach under Tier 2, we will consider requests, prior to manufacturer
or EPA in-use testing, to permit preconditioning procedures designed
solely to remove the effects of high sulfur gasoline on vehicles
produced through the 2007 model year.
We are also allowing as an option the use of the new diesel test
fuel beginning in the 2004 model year for vehicles employing sulfur-
sensitive technology that are certifying to the Tier 2 standards. This
allowance to use the new fuel in model years 2004-2006 will only be
available for vehicles for which the manufacturer recommends to the
owner that the vehicle be operated on fuel with 15 ppm sulfur or less,
where available. Any testing that we perform on these vehicles would
also use fuel meeting this lower sulfur specification. This optional
certification fuel provision is targeted at encouraging the
introduction of low-emission light-duty diesel technologies under the
new Tier 2 standards that will be taking effect at that time. The
provision accounts for the fact that these vehicles will use the lower
sulfur fuel during most, perhaps all, of their operating life, given
the clear manufacturer recommendation for use of low-sulfur fuel in
these vehicles, combined with prospects for early availability of this
fuel under the
[[Page 5113]]
incentive provisions discussed in Section IV, and the assured
availability of this fuel by mid-2006. Furthermore, we will allow
manufacturers choosing to exercise this option in certifying vehicles
for sale in both California and the other 49 states to use a fuel that,
on a specification by specification basis, meets the requirements of
either the federal or the California fuel specifications. This option
is appropriate for light-duty vehicles and trucks since they would
otherwise face a very complicated transition period, in which they
would need to retest and potentially recalibrate vehicles for as many
as four different test fuels during a three-year period.
G. Misfueling Concerns for Light- and Heavy-Duty Diesel Vehicles
As explained in Section III, the emissions standards contained in
these regulations will make it necessary for manufacturers to employ
exhaust emission control devices that require low-sulfur fuel to ensure
proper operation. This action therefore restricts the sulfur content of
highway diesel fuel sold in the U.S. There are, however, some
situations in which vehicles requiring low-sulfur fuel may be
accidentally or purposely misfueled with higher-sulfur fuel. Vehicles
operated within the continental U.S. may cross into Canada and Mexico,
countries that may not adopt the same low sulfur requirements on the
same schedule. High-sulfur nonroad fuel may illegally be used by some
operators to fuel highway vehicles. Any of these misfueling events
could seriously degrade the emission performance of sulfur-sensitive
exhaust emission control devices, or perhaps destroy their
functionality altogether.
There are, however, some factors that help to mitigate concerns
about misfueling. Most operators are very conscious of the need to
ensure proper fueling and maintenance of their vehicles. The fear of
large repair and downtime costs may often outweigh the temptation to
save money through misfueling. The likelihood of misfueling in Canada
and Mexico is lessened by current cross-border shipment practices and
prospects for eventual harmonization of standards. Canada has recently
expressed its intent to harmonize its fuel regulations with U.S. fuels
standards.\203\ This would offer vehicle owners the option of refueling
with low-sulfur fuel there. Even if Canada were to lag behind the U.S.
in mandating low-sulfur fuels, these fuels would likely become
available along major through routes to serve the needs of U.S.
commercial traffic that have the need to purchase it. In addition,
there is less potential for U.S. commercial vehicles needing low-sulfur
fuel to refuel in Canada because Canadian fuel is currently more costly
than U.S. fuel. As a result, most vehicle owners will prefer to
purchase fuel in the U.S., prior to entering Canada, whenever possible.
This is facilitated by large tractor-trailer trucks that can have long
driving ranges--up to 2,000 miles per tankful or so--and the fact that
most of the Canadian population lives within 100 miles of the United
States/Canada border.
---------------------------------------------------------------------------
\203\ ``Process Begins to Develop Long Term Agenda to Reduce Air
Pollution from Vehicles and Fuels'', Environment Canada press
release, May 26, 2000.
---------------------------------------------------------------------------
In Mexico, the entrance of trucks beyond the border commercial zone
has been prohibited since before the conclusion of the North American
Free Trade Agreement in 1994. This prohibition applies in the U.S. as
well, as entrance of trucks into the U.S. beyond the border commerce
zone is also not allowed. Since these prohibitions are contrary to the
intent of the Free Trade Agreement, a timetable was established to
eliminate them.\204\ However, these prohibitions remain in force at
this time.
---------------------------------------------------------------------------
\204\ See NAFTA, Volume II, Annex I, Reservations for Existing
Measures and Liberalization Commitments, Pages I-M-69 and 70, and
Pages I-U-19 and 20.
---------------------------------------------------------------------------
The NAFTA negotiations included creation of a ``corridor'' where
commercial truck travel occurs, and where Mexico is obligated to
provide ``low-sulfur'' fuel. At the time of the NAFTA negotiations,
``low-sulfur'' fuel was considered 500 ppm, which was the level needed
to address the needs of engines meeting the 1994 emission standards.
The travel prohibition currently in place may be lifted at some point.
At that time, the issue of assuring, for U.S. vehicles, the
availability of fuel with a sulfur level needed by the new technology
may need to be addressed.
Even considering these mitigating factors, we believe it is
reasonable to adopt additional measures with very minor costs to
manufacturers, fuel distributors, and consumers. First, we are
requiring that highway diesel fuel pumps and co-located nonroad diesel
fuel pumps be prominently labeled, as described in Section VII.
We are also adopting a requirement that heavy-duty vehicle
manufacturers notify each purchaser of a model year 2007 or later
diesel-fueled vehicle that the vehicle must be fueled only with the
low-sulfur diesel fuel meeting the regulations being adopted in this
FRM. We believe this requirement is necessary to alert vehicle owners
to avoid higher sulfur fuel in the U.S. and to seek out low-sulfur fuel
when operating in areas such as Canada and Mexico where it may not be
widely available. We are also requiring that model year 2007 and later
heavy-duty diesel vehicles must be equipped by the manufacturer with
labels on the dashboard and near the refueling inlet that say: ``Use
Low Sulfur Diesel Fuel Only'' or ``Low Sulfur Diesel Fuel Only''. For
non-integrated manufacturers, the engine manufacturer will be required
to provide such a label to the vehicle manufacturer, which the vehicle
manufacturer will be required to install. Optionally, if a vehicle
manufacturer chooses to install its own label, the engine manufacturer
will not be required to provide the label.
We believe that these measures will help vehicle owners find and
use the correct fuel and will be sufficient to address misfueling
concerns. Thus, more costly provisions, such as vehicles fuel inlet
restrictors, will not be necessary.
We are also requiring that the labeling and purchaser notification
requirements described above for heavy-duty vehicles also be applied to
the light-duty diesel vehicles certified to the final Tier 2 standards
using certification test fuel with 15 ppm or less sulfur. These
vehicles are expected to also need the low-sulfur fuel and be equally
susceptible to misfueling damage.
H. In-Use Compliance Levels During the Transition Years to New
Technologies
The Phase 2 standards will be challenging for diesel and gasoline
engine manufacturers to achieve, and will require manufacturers to
develop new technologies for their engines. Not only will manufacturers
be responsible for ensuring that these technologies will allow engines
to meet the standards at the time of certification, they will also have
to ensure that these technologies continue to be highly effective in a
wide range of in-use environments so that their engines would comply
in-use when tested by EPA. However, in the early years of a program
that introduces new technology, there are risks of in-use compliance
problems that may not appear in the certification process or during
developmental testing. Thus, we believe that it is appropriate to
adjust the compliance levels for assessing in-use compliance for low
emission engines (i.e., diesel engines equipped with the new exhaust
emission control devices expected for Phase 2 diesel engines, and
gasoline engines
[[Page 5114]]
employing Tier 2/Phase 2 level technology). This will provide assurance
to the manufacturers that they will not face recall if they exceed
standards by a small amount during this transition to clean
technologies. This approach is very similar to that taken in the Tier 2
final rule, which involves a similar introduction of new technologies
(65 FR 6796, February 10, 2000).
Table VI.H-1 shows the in-use adjustments that we will apply to
diesel and gasoline engines. These adjustments will be added to the
appropriate FELs (or for engines certified to the standards without the
use of credits, to the standards themselves) in determining the in-use
compliance level for a given in-use mileage. For example, a light HD
diesel engine with a useful life of 110,000 miles and a NOX
FEL of 0.20 g/bhp-hr would have an in-use compliance level of 0.30 g/
bhp-hr (0.20 + 0.10) throughout its useful life. A heavy HD diesel
engine, having a useful life of 435,000 miles and a NOX FEL
of 0.20 g/bhp would have an in-use compliance level of 0.30 g/bhp-hr
through 110,000 miles, 0.35 g/bhp-hr from there through 185,000 miles,
and 0.40 g/bhp-hr through the remainder of its useful life. The
adjustment levels were chosen to be roughly equivalent to the temporary
in-use standard adjustments adopted for low-emitting vehicles in the
Tier 2 program, accounting for the higher mileage requirements
reflected in the useful lives of the larger heavy-duty engines. Note
too in the table footnotes the limiting of these adjustments to engine
certified to levels below certain threshold levels. This is similar to
the approach taken in the Tier 2 rule which applied the in-use
standards only to vehicles in certain low-emitting bins.
Table VI.H-1.--Add-on Levels used in Determining In-use Standards for
Diesel & Gasoline Engines
------------------------------------------------------------------------
Diesel \a\
and Diesel PM Gasoline\c\
gasoline Add-on NMHC Add-on
Engine mileage (miles) \b\ NOX Add- level to level to
on level to FEL (g/bhp- FEL (g/bhp-
FEL (g/bhp- hr) hr)
hr)
------------------------------------------------------------------------
110,000.......................... 0.10 0.01 0.10
110,000 to 185,000............... 0.15 0.01 \d\ N/A
185,000 to 435,000............... 0.20 0.01 \d\ N/A
------------------------------------------------------------------------
\a\ Applicable to those diesel engines with FELs at or below 1.3 g/bhp-
hr NOX through 2011.
\b\ Applicable to those gasoline engines with NOX FELs at or below 0.5 g/
bhp-hr through 2011.
\c\ Applicable to those gasoline engines with NMHC FELs at or below 0.3
g/bhp-hr through 2011.
\d\ Note that the useful life for gasoline engines is 110,000 miles, so
these add-on levels have significance only to that mileage for
gasoline engines.
Similar examples apply for diesel engine PM, with the exception
that the PM in-use add-on level is a constant 0.01 regardless of
mileage. Likewise for gasoline NMHC where the add-on level is a
constant 0.10 g/bhp-hr through the 110,000 mile useful life.
These same in-use add-on levels will be applied to the
certification SET and NTE levels after applying the SET and NTE
multipliers for the purpose of determining the corresponding in-use
standards. In other words, for heavy HD diesel engine with a
NOX FEL of 0.20 g/bhp-hr, the in-use SET standard would be
0.30, 0.35, and 0.40 g/bhp-hr in each respective mileage range
(remember that the SET multiplier is 1.0 x the FTP standard or FEL).
The in-use NTE standard, with a multiplier of 1.5 x the FTP standard
or FEL, would be 0.40, 0.45, and 0.50 g/bhp-hr in each of the
respective mileage ranges (0.20 x 1.5 = 0.30; + 0.1 = 0.40; + 0.15 =
0.45; + 0.20 = 0.50).
Note that these in-use add-on levels apply only to engines
certified through the 2011 model year and having FELs below the
specified levels. These levels are very low and represent levels we
believe will require significant effort by manufacturers to reach. The
in-use add-ons are available through 2011 because some diesel engine
models may not incorporate the emission control technology until 2010
as a result of the final phase-in schedule. Engine models incorporating
these technologies for the first time in 2010 may account for as many
as 50 percent of all diesel engines sold in that year. We believe these
engine models should be provided the in-use adjustment for at least the
first two years of their market introduction. In the case of gasoline
engines, the phase-in ends in the 2009 model year. However, we have
decided to allow the in-use adjustments through model year 2011,
consistent with the diesel provision.
For HD complete gasoline vehicles, and any complete diesel vehicles
choosing the chassis certification option, we will have a flat in-use
adjustment of 0.1 g/mile NOX, 0.100 g/mile NMHC (gasoline
vehicles only), and 0.01 PM for all weight classes. These in-use
adjustments will apply only to those vehicles certified with FELs at or
below the applicable Phase 2 standards. Further, they will apply for
vehicles certified through 2010 so that those vehicle models newly
certified to the Phase 2 standards in 2009 are given two years of
certification experience prior to elimination of the in-use
adjustments. Table VI.H-2 shows the adjustments that will apply to HD
chassis certified vehicles.
Table VI.H-2.--In-Use Adjustments for Chassis Certified Vehicles
----------------------------------------------------------------------------------------------------------------
Durability
Weight range (GVWR) period (miles) NOX \a\ (g/mi) NMHC \a\ (g/ PM (g/mi)
----------------------------------------------------------------------------------------mi)---------------------
8,500 to 10,000 lbs............................. 120,000 0.1 0.100 0.01
10,000 to 14,000 lbs............................ 120,000 0.1 0.100 0.01
----------------------------------------------------------------------------------------------------------------
\a\ Applicable to those vehicles with NOX and/or NMHC FELs at or below the appropriate Phase 2 standards through
2010.
During the certification demonstration, manufacturers will still be
required to demonstrate compliance with the unadjusted Phase 2
certification standards using deteriorated emission rates. Therefore,
[[Page 5115]]
the manufacturer will not be able to use these in-use standards as the
design targets for the engine or vehicle. They will need to project
that most engines would meet the standards in-use without adjustment.
The in-use adjustments will merely provide some assurance that they
would not be forced to recall engines or vehicles because of some small
miscalculation of the expected deterioration rates. Furthermore, given
that a new diesel fuel will be in place and it will be sold alongside
higher sulfur diesel fuel being marketed to the existing fleet, there
is a small likelihood of accidental misfueling during the phase-in
years as users become familiar with the importance of using the lower
sulfur fuel. As discussed in detail in sections III.E and III.F, sulfur
has adverse impacts on exhaust emission control devices.
VII. Highway Diesel Fuel Program: Compliance, Enforcement and
Downstream Provisions
For the highway diesel fuel sulfur program that we are adopting
today to be successful in achieving its large emission reduction goals,
it is vital for all parties that are affected by the program to
thoroughly understand what is expected of them to comply, what
compliance options may apply to them, and how their compliance will be
assessed and enforced. If you believe that you are or may be subject to
the program, the most important information is found in the regulatory
language following this preamble. There, readers will find the detailed
legal requirements of the program for each party and how we will assess
and enforce compliance with the program requirements.
A key purpose of this preamble is to supplement the regulatory
language by providing a context for and an explanation of the
requirements of the program. Section IV above discusses in some detail
most of the requirements under the highway diesel fuel sulfur program
adopted today. In addition, this section (Section VII) builds on the
Section IV discussions by addressing specific compliance and
enforcement provisions we have adopted in today's rule to ensure that
highway diesel fuel standards are met at all points in the distribution
system--from the refiner or importer that introduces the fuel into the
distribution system, through all the parties that may distribute the
fuel, to the retailers and other parties that provide the fuel to its
ultimate user. This section also explains certain requirements of the
program in more detail.
After touching on a few general aspects of the highway diesel fuel
program, this section discusses the compliance and enforcement
provisions that apply to refiners and importers and those that apply to
the downstream parties that handle diesel fuel. This section also
discusses diesel fuel sampling and testing for sulfur, reporting and
recordkeeping requirements, limited exemptions from the program, and
how liability for any noncompliance would be handled.
A. General Provisions
1. Definition of Diesel Fuel Covered by This Program
In this preamble, we refer to the fuel covered by the program
adopted today as ``highway diesel fuel.'' For technical and legal
consistency with the Clean Air Act and existing fuels regulations, the
regulatory language associated with today's rule uses the term ``motor
vehicle diesel fuel'' in order to assure consistency with the language
in existing laws and regulations. ``Nonroad diesel fuel'' refers to
diesel fuel intended for use in nonroad vehicles or equipment, and is
not covered by the highway diesel fuel sulfur requirements of the
program. However, any fuel that is available for highway vehicles and
engines, whether or not it is also available for nonroad vehicles and
engines or for other purposes, is treated as highway diesel fuel under
today's program.
2. Relationship to Highway Diesel Standards
As discussed in Section IV above, today's final rule reduces the
sulfur cap standard for highway diesel fuel from 500 ppm to 15 ppm
nationally \205\ effective in 2006. (Implementation dates are discussed
further in Section VII.C.2. below.) The existing standards for cetane
and aromatics will remain in effect and are not being changed by
today's action (40 CFR Sec. 80.29(a)). The highway diesel fuel sulfur,
cetane, and aromatics standards will be enforced through sampling and
testing at all points in the distribution system, combined with
inspection of fuel delivery records and other commercial documents. The
general compliance requirements of this rule are very similar to those
in the current diesel fuel rule, except that the sulfur standard is
substantially more stringent (see 40 CFR 80.29 and 80.30). Prior to the
implementation dates for today's rule, all the requirements and
prohibitions of the current diesel fuel rule will remain in effect,
with limited modifications concerning sulfur sampling methods.
---------------------------------------------------------------------------
\205\ Except as noted elsewhere in the preamble and final rule,
today's rule applies to all states, including the State of
California. See Section IV.F for unique implementation provisions
for Alaska and exemptions for diesel fuel in certain U.S.
territories.
---------------------------------------------------------------------------
B. What Are the Requirements for Refiners and Importers?
1. General Requirements
As discussed earlier in this preamble, the sulfur sensitivity of
emission controls that will be used on model year 2007 and later motor
vehicles requires that the sulfur content of highway diesel fuel
dispensed into 2007 and later heavy-duty vehicles not exceed 15 ppm. To
ensure that highway diesel fuel meets this standard as it leaves the
refinery or import facility, today's final rule adopts the proposed
approach that if the sulfur content of highway diesel fuel at a
refinery or import facility exceeds 15 ppm by any amount, the fuel is
in violation of the sulfur standard. The determination of compliance
with the sulfur standard for highway diesel fuel at the refinery level
is not subject to a test tolerance.\206\
---------------------------------------------------------------------------
\206\ However, test variability is taken into account in
determination of compliance for diesel fuel at locations downstream
of the refinery or import facility. See Section VII.C.1.
---------------------------------------------------------------------------
Consistent with the proposal, today's final rule does not require
that refiners or importers engage in mandatory sampling and testing of
every batch of highway diesel fuel they produce or import.\207\ This is
because the highway diesel fuel sulfur standard is a national cap
standard and compliance can be monitored at any point in the
distribution system by taking samples of fuel for testing. However,
under the presumptive liability scheme, any refiner producing
noncomplying product would face liability for fuel in violation of the
standard, regardless where the violation is discovered. (See Sections
VII.G. and VII.H. for a discussion of liability and penalties.)
Consequently, we expect that refiners and importers will voluntarily
test every batch of highway diesel fuel produced or imported for their
own purposes, including the need to demonstrate compliance with
pipeline specifications.
---------------------------------------------------------------------------
\207\ However, any refiner producing highway diesel fuel
complying with the 500 ppm standard for use in pre-model year 2007
motor vehicles, under any of the several refiner flexibility
options, would have to maintain records designating each batch as
complying with the 15 ppm standard or the 500 ppm standard.
---------------------------------------------------------------------------
Today's program requires all refiners that on January 1, 2000
produced--or by June 1, 2006 expect to produce--highway diesel fuel for
U.S. sale to
[[Page 5116]]
register with EPA. Similarly, all importers that on January 1, 2000
imported--or by June 1, 2006 expect to import--highway diesel fuel into
the U.S. also need to register with EPA. This registration process will
provide an essentially complete and up-to-date picture of the universe
of highway diesel suppliers that exist at the beginning of this
program. Refiners and importer must register by December 31, 2001. See
Section VII.E. below for more details about registration requirements.
2. Refiner and Importer Temporary Compliance Option Provisions and the
Credit Trading Program
As described in Section IV.A.2 above, today's final rule adopts a
program that allows refiners and importers to transition in the
production and importation of 15 ppm sulfur content diesel fuel. The
temporary compliance option is available to all refiners and importers
and includes a credit averaging, banking, and trading program. This
temporary compliance option allows a refiner or importer to designate
and sell a certain percentage of its highway diesel fuel as fuel
subject to a 500 ppm sulfur standard, for use in pre-2007 model year
heavy-duty vehicles.
Section IV.A.2 above describes most of the compliance requirements
associated with the temporary compliance option. The paragraphs below
supplement the earlier information.
a. Early Credits Program
As discussed in Section IV.A.2.a, today's regulation allows
refiners and importers to generate early credits (prior to June 1,
2006) under limited circumstances. Most of the compliance requirements
associated with the early credits program are described in that
section. The following paragraphs add certain supplemental information.
The early credits program has two sets of provisions: (1) credits
generated after May 31, 2005 but before June 1, 2006, and (2) credits
generated after June 1, 2001 but before May 31, 2005. For a refiner or
importer to generate early credits after May 31, 2005, it must
demonstrate that the 15 ppm fuel produced early was segregated in the
distribution system and not commingled with current 500 ppm sulfur
fuel. Only that volume the refiner could verify was actually sold as 15
ppm fuel at retail or to centrally-fueled fleets would be eligible for
early credits. Prior to generating credits, the refiner or importer
must submit a notification to EPA and demonstrate how it will ensure
segregation of the fuel from other highway diesel fuel and that the
fuel will be sold as 15 ppm fuel (e.g., through voluntary pump labeling
and/or through information provided in PTDs).
The program also specifies that early credits can be generated
prior to June 1, 2005. In this case, however, the refiner or importer
must demonstrate that the 15 ppm fuel will be used in vehicles
certified to meet the 2007 particulate matter standard being adopted
today for heavy-duty engines (0.01 g/bhp-hr) or in vehicles with
retrofit technologies that achieve emission levels equivalent to the
2007 NOX or PM standard verified as part of a retrofit
program administered by EPA or a state. (See Section VIII for further
discussion of the credit program for heavy-duty engines.) To meet this
condition, the refiner or importer must notify EPA, and in its
notification it must demonstrate that any early credits that it claims
are only for the volume of 15 ppm fuel that is dispensed into vehicles
meeting the emission standards as described above (e.g., into
designated fleet vehicles).
All early credits generated, banked, transferred, obtained or used
must be identified as early credits in records and in reports. The
refiner's annual pre-compliance reports must provide the volume of
early credit fuel produced, credits generated, credits transferred, and
continued demonstration that the early credit fuel is sold
appropriately (i.e., as 15 ppm fuel after May 31, 2005, or into
vehicles meeting the 2007 standards up to May 31, 2005).
b. Credit Use in a Credit Deficit Situation
Today's rule allows a refinery or importer to have a credit deficit
in any given year (as long as the deficit does not exceed five percent
of its annual highway diesel fuel production) so long as the refinery
or importer makes up for that credit deficit the next year. In other
words, the year following the deficit the refiner or importer must have
enough credits (or actual production volume of 15 ppm fuel) to cover
the previous year's deficit and to cover the current year's compliance.
A refinery or importer (by PADD) must use credits to cover its own
compliance before it can transfer credits to another refinery or
importer, and although a refinery is allowed to be in deficit for a
given year, it cannot lawfully transfer credits in the deficit year.
c. Resolving Issues of Invalid Credits
We recognize that there is potential for credits to be generated by
one party and subsequently purchased and used in good faith by another
party, yet the credits are later found to have been calculated or
created improperly, or otherwise found to be invalid. As with the RFG
rule and the Tier 2/Gasoline Sulfur rule, invalid credits purchased in
good faith cannot be legally used. To allow such use would not be
consistent with the environmental goals of the regulation. Further,
both the seller and purchaser of invalid credits would have to adjust
their credit calculations to reflect the proper credits and either
party (or both) could be deemed in violation if the adjusted
calculations demonstrated noncompliance.
Nevertheless, our strong preference is to hold the credit seller
liable for the violation, rather than the credit purchaser. As a
general matter we would expect to enforce a shortfall in credit
compliance calculations against the credit seller, and we would expect
to enforce a compliance shortfall (caused by the good faith purchase of
invalid credits) against a good faith purchaser only in cases where we
are unable to recover sufficient valid credits from the seller to cover
the shortfall. Moreover, in settlement of such cases we would strongly
encourage the seller to purchase credits to cover the good faith
purchaser's credit shortfall. EPA will consider the covering of a
credit deficit through the purchase of valid credits a very important
factor in mitigation of any case against a good faith purchaser,
whether the purchase of valid credits is made by the seller or by the
purchaser.
d. Compliance Provisions
Today's rule includes compliance provisions under the temporary
compliance option to allow the determination of the volumes of each of
the two grades of highway diesel fuel produced or imported by each
participating refinery or importer. For parties participating in the
credit program, the rule includes provisions to ensure compliance with
the credit generation, banking and trading provisions. The requirements
include the designation of each batch of highway diesel fuel as meeting
either the 500 ppm sulfur standard or the 15 ppm highway diesel sulfur
standard; maintenance of records concerning the volumes of each grade
of highway diesel fuel produced (and for foreign refiners and
importers, volumes by PADD of import); and maintenance of records
concerning the generation, use, transfer and purchase of credits, if
applicable (by PADD in the case of foreign refiners and importers).
Beginning in 2007, annual compliance reports demonstrating compliance
with the applicable provisions are required. These recordkeeping and
reporting
[[Page 5117]]
requirements are discussed more fully in Section VII.E below.
The rule also includes enforcement and compliance provisions to
assure that highway diesel fuel subject to the 15 ppm sulfur standard
is not caused to exceed the standard by being contaminated with highway
diesel fuel subject to the 500 ppm sulfur standard (or other high
sulfur products such as nonroad diesel fuel), and to assure that 500
ppm diesel fuel is not introduced into model year 2007 and later motor
vehicles. Participating refiners and importers are required to provide
identifying information on product transfer documents for highway
diesel fuel subject to the 500 ppm standard to help prevent
contamination of 15 ppm product. (As discussed more fully below,
transfers of 15 ppm highway diesel fuel must also be accompanied by
product transfer documents identifying such fuel.)
e. Additional Provisions for Importers of Diesel Fuel and for Foreign
Refiners Subject to the Temporary Compliance Option and Hardship
Provisions
Since today's final rule includes several compliance options that
can be used by diesel fuel importers and foreign refiners, we are also
including specific compliance and enforcement provisions to ensure
compliance for imported highway diesel fuel. These special foreign
refiner provisions are similar to those under the conventional gasoline
regulations and the gasoline sulfur regulations (see 40 CFR 80.94 and
80.410).
Under today's rule, standards for highway diesel fuel produced by
foreign refineries must be met by the importer, unless the foreign
refiner has been approved to produce highway diesel fuel under the
temporary compliance option or hardship provisions of today's rule. If
the foreign refiner is so approved, the volume requirements are to be
met by the foreign refinery and the foreign refinery would be the
entity generating, using, banking or trading credits for the highway
diesel fuel produced and imported into the U.S.
Any foreign refiner that applies for and obtains approval to
produce highway diesel fuel subject to the temporary compliance option
or hardship provisions will be subject to the same requirements as
domestic refiners operating under the same provisions. Additionally,
foreign refiners are subject to provisions similar to the provisions at
40 CFR 80.94 and 80.410, which include:
--Segregating highway diesel fuel produced at the foreign refinery
until it reaches the U.S. and separately tracking volumes imported into
each PADD;
--Controls on product designation;
--Load port and port of entry testing;
--Attest requirements; and
--Requirements regarding bonds and sovereign immunity.
These provisions aid the Agency in tracking highway diesel fuel
from the foreign refinery to its point of import into this country. We
believe these provisions are necessary and sufficient to ensure that
foreign refiners' compliance can be monitored and that the requirements
of today's rule can be enforced against foreign refiners. (For more
discussion of the rationale for these enforcement provisions, see
preamble to the final RFG/CG foreign refineries rule (see 62 FR 45533
(August 28, 1997) and the gasoline sulfur rule, 40 CFR 80.410).)
3. Refiner Hardship Provisions
a. General Refiner Hardship Provisions
Section IV.C. above describes two types of hardship provisions for
which any refiner may petition. We will consider such petitions in
cases of extreme unforseen circumstances and of extreme hardship
circumstances. Petitions for extreme unforseen circumstances may be
submitted at any time; petitions for extreme hardship circumstances
must be submitted to EPA by June 1, 2002. If any relief granted
includes allowing the refiner to produce 500 ppm highway diesel fuel
(or additional 500 ppm highway diesel fuel beyond that allowed under
the temporary compliance option) for use in pre-2007 heavy-duty
vehicles and engines, we would apply enforcement provisions at least as
stringent as those that apply for the temporary compliance option.
Any application for hardship relief later found to be based on
false or inaccurate information will be void ab initio.
b. Small Refiner Hardship Provisions
Section IV.C.1 above describes three small refiner relief
provisions. Section IV.C.1.b defines ``small refiner,'' Section
IV.C.1.c describes the special provisions that approved small refiners
are eligible for, and Section IV.C.1.d describes how a refiner applies
for status as a small refiner. Section VII.E below describes the
additional information that small refiners need to include in their
application for small refiner status, in their pre-compliance reports,
and in their annual compliance reports (these requirements vary
depending on which small refiner provision they choose). Any
application for small refiner status will be void ab initio if approval
is based on false or inaccurate information.
For an approved small refiner to use the Diesel/Gasoline Compliance
Date Option (described in Section IV.C. above) at one or more
refineries, it must fulfill two main conditions: (1) 100 percent of the
highway diesel volume it produces during each annual compliance period
starting June 1, 2006 must meet the 15 ppm standard, and (2) the actual
volume of highway diesel fuel it produces during each annual compliance
period through 2010 must be at least 85 percent of its 1998-1999
baseline highway diesel fuel volume (i.e., through the end date of the
extended small refiner interim gasoline program). If a refiner at some
point did not fulfill one or both of these conditions, it would forfeit
the entire three year extension (or any remaining portion of the
extension) of its Tier 2/Gasoline Sulfur small refiner standards and
would thus need to comply with the 30/80 ppm sulfur standards by
January 1, 2008. During the period when the national gasoline sulfur
standard would otherwise be in effect for a small refiner (2008-2010),
if the refiner fails to meet the two conditions above, it would be
subject to the 30/80 gasoline sulfur standard for that year and future
years.
However, a small refiner may elect to petition EPA to permanently
opt out of this Diesel/Gasoline Compliance Date Option and opt into
another small refiner option or into the temporary compliance option,
so long as it does so for the full year that the change in program
options takes place. Once it makes that election, it must thereafter
meet the 30/80 gasoline sulfur standard.
c. Relief for Refiners Supplying Gasoline to the Tier 2 Geographic
Phase-In Area (GPA)
As discussed in Section IV.B, refiners or importers supplying
gasoline to the Geographic Phase-In Area (GPA) established in the Tier
2/Gasoline Sulfur program may apply for an additional two years to meet
interim Tier 2 GPA gasoline sulfur standards (through December 31,
2008). Similar to the criteria for small refiners under the Diesel/
Gasoline Compliance Date Option above, a refiner wishing to receive
this extension of the Tier 2 GPA standards must meet two main
conditions: (1) 100 percent of the highway diesel volume it produces
during each annual compliance period starting June 1, 2006 must meet
the 15 ppm standard, and (2) the actual volume of highway diesel fuel
it produces during each annual compliance period through 2008 must be
at least 85 percent
[[Page 5118]]
of its 1998-1999 baseline highway diesel fuel volume (i.e., through the
end date of the extended GPA gasoline program). Refiners may not
participate both in this option and the temporary compliance option.
To be eligible for this option, a refiner must apply to EPA in
writing by December 31, 2001, at the same time that it registers as a
highway diesel fuel producer with EPA. As with applications by refiners
for ``small refiner'' status, a refiner's application must submit its
average annual highway diesel volume baseline for 1998 and 1999 for
each of its refineries it expects to be covered by the GPA provisions
under today's program.
If a refiner did not fulfill one or both of the conditions above,
it would forfeit the entire two-year extension of the GPA standards, or
any remaining extension, and would thus need to comply with the 30/80
ppm sulfur standards by January 1 of the following year.
However, a refiner may elect to petition EPA to permanently opt out
of this GPA program and opt into the temporary compliance option, so
long as it does so for the full year that the change in program options
takes place. Once it makes that election, it must thereafter meet the
30/80 gasoline sulfur standard.
C. What Requirements Apply Downstream of the Refinery or Import
Facility?
1. Downstream Enforcement of the Standards
In the NPRM, we proposed an industry-wide 15 ppm cap on sulfur
content for highway diesel fuel. In the proposal we stated our belief
that refiners would likely have to produce diesel fuel meeting a 7-8
ppm average sulfur content in order to ensure compliance downstream. We
received comments to the NPRM indicating that enforcing the 15 ppm
sulfur cap at all levels of the distribution system downstream of the
refinery or import facility would effectively require refiners to
produce diesel fuel having a maximum sulfur content of 7 ppm due to
variability in sulfur content test results that may occur between
laboratories when testing the same sample of diesel fuel for sulfur
content. Commenters stated that at test reproducibility level of +/-4
ppm,\208\ refiners would have no assurance of downstream compliance
with the 15 ppm cap if they produced any fuel with a sulfur content
greater than 7 ppm. Consequently, commenters suggested either that we
adopt a less stringent downstream sulfur standard, based on test
variability, as was done in the Tier 2/Gasoline Sulfur rule (40 CFR
80.210), or that we state a downstream test tolerance, based on test
variability.
---------------------------------------------------------------------------
\208\ The NPRM preamble suggested a possible reproducibility
level of 4 ppm.
---------------------------------------------------------------------------
After considering the comments, we agree that it is appropriate to
recognize test variability in determination of compliance with the
sulfur standard downstream of the refinery or import facility. However,
we anticipate that the reproducibility of sulfur test methods is likely
to improve to two ppm or even less by the time the rule goes into
effect. Thus, today's rule provides that for all 15 ppm sulfur highway
diesel fuel at locations downstream of the refinery or import facility,
sulfur test results can be adjusted by subtracting 2 ppm to account for
the expected reproducibility of sulfur test methods. The sole purpose
of this downstream compliance provision is to address test variability
concerns. With this change, we anticipate that refiners will be able to
produce diesel fuel at an average level of approximately 7-8 ppm, as
was intended by the proposal, without fear of causing a downstream
violation due solely to test variability. As test methods improve in
the future, we may reevaluate whether two ppm is the appropriate
allowance for purposes of this compliance provision.
This change is not expected to undermine the environmental goals of
the regulation since it should not result in diesel fuel exceeding the
15 ppm sulfur standard at any point in the distribution system. All
highway diesel fuel subject to the 15 ppm standard is still required to
meet the 15 ppm standard at the refinery gate, without allowance for
test variability.\209\ The purpose of taking testing variability into
account in compliance determinations for fuel sampled downstream of the
refinery or import facility is merely to ensure that fuel actually
meeting the 15 ppm cap is not rejected by pipelines or otherwise
treated as noncompliant due to concerns about testing variability. It
is not expected to result in any increase in the actual sulfur content
of highway diesel fuel above 15 ppm at any point in the distribution
system.
---------------------------------------------------------------------------
\209\ Once motor vehicle diesel fuel is moved from the tank in
which it was blended at the refinery (and which the refiner's
designation of the fuel as meeting the 15 ppm standard was based),
the two ppm adjustment applies.
---------------------------------------------------------------------------
2. Other Provisions
a. Implementation Dates
As discussed in Section IV.A, today's rule staggers the
implementation dates for highway diesel fuel for use in 2007 and later
vehicles to comply with the 15 ppm sulfur standard, based on a
facility's position in the distribution system. Refiners and importers
must meet the 15 ppm sulfur standard by June 1, 2006. Fuel in the
distribution system downstream of the refinery or import facility,
including fuel at truck loading terminals,but not including fuel at
retail outlets or wholesale purchaser-consumers, must be in compliance
by July 15, 2006. Highway diesel fuel at retailers' and wholesale
purchaser-consumers' storage tanks must be in compliance by September
1, 2006, and pump labeling requirements (see Section VII.C.2.c below)
also must be in place by that date. We believe the dates finalized in
today's rule will allow sufficient time for downstream parties to
transition tanks from 500 ppm sulfur levels to 15 ppm sulfur levels.
The date by which all highway diesel fuel produced by refiners must
meet the 15 ppm sulfur standard is June 1, 2010.\210\ The final
compliance date for all highway diesel fuel in the distribution system
to meet the 15 ppm standard, other than at retail outlets and wholesale
purchaser-consumer facilities, is October 1, 2010. The final compliance
date for all highway diesel fuel at retail and wholesale purchaser-
consumer facilities to meet the 15 ppm sulfur standard is December 1,
2010.
---------------------------------------------------------------------------
\24\ Under the temporary compliance option, for the period from
January 1, 2010 through May 31, 2010, refiners can produce 500 ppm
fuel only through the use of credits.
---------------------------------------------------------------------------
b. Product Segregation and Contamination
Under today's diesel sulfur program, it is imperative that
distribution systems segregate highway diesel fuel from high sulfur
distillate products such as home heating oil and nonroad diesel fuel.
The sulfur content of those products is frequently as high as 3,000
ppm. We are also concerned about potential misfueling at retail outlets
and wholesale purchaser-consumer facilities, even if segregation of the
different grades of diesel fuel has been maintained in the distribution
system. Thus, certain downstream compliance and enforcement provisions
of the rule are aimed at both preventing contamination of highway
diesel fuels with fuels containing higher levels of sulfur, and
preventing misfueling of motor vehicles with high sulfur fuels.
Similarly, it is imperative that all parties in the distribution
system avoid contamination of 15 ppm highway diesel fuel with 500 ppm
highway diesel fuel. Thus, the final rule has adopted a requirement for
product
[[Page 5119]]
transfer documents accompanying deliveries of motor vehicle diesel fuel
diesel fuel to identify the sulfur standard it meets and its allowed
use. All parties in the distribution system face liability if highway
diesel fuel is contaminated such that it fails to meet the applicable
standard.
We are also adopting provisions designed to discourage the
downgrading of 15 ppm diesel to 500 ppm diesel in the distribution
system during the initial years of the program when the optional
compliance provision is in effect. Our concern is that if 15 ppm diesel
is routinely downgraded and sold as 500 ppm fuel, this practice could
lead to availability problems (i.e., risk of 15 ppm not being widely
available across the country). We fully recognize that some amount of
15 ppm downgrading will be necessary where the 15 ppm fuel becomes
contaminated in the distribution system (e.g., pipeline interfaces). In
fact, one advantage of the temporary compliance option is that if 15
ppm fuel becomes contaminated, it can still be sold as highway fuel
(downgraded to 500 ppm fuel), rather than downgrading it to off-highway
fuel. However, we also recognize that there is the potential for
parties in the distribution system to intentionally mix 15 ppm product
with 500 ppm fuel, and still sell the product as 500 ppm fuel. While we
don't expect this practice to be widespread, it could occur, especially
where there is only a small price differential between the two fuels.
Therefore, we are restricting the volume of 15 ppm fuel that can be
downgraded to 500 ppm highway diesel fuel at each point in the
distribution system (downstream of the refinery gate) to not more than
20 percent on an annual basis. Each party in the distribution system
subject to this provision will be required to meet this requirement
separately, based on the amount of 15 ppm fuel it receives and
transfers/sells to the next party (or end user, in the case of
retailers and wholesale purchaser-consumers) on an annual basis. We
believe that this limit will be more than sufficient to allow for some
downgrading for any contamination that may occur, while still being
restrictive enough to discourage downgrading and commingling of 15 ppm
fuel with 500 ppm fuel. These provisions will be in effect through May
31, 2010.
We recognize that, in some parts of the country, highway-grade
diesel fuel is commonly sold into off-highway markets, due to
limitations in the distribution system for carrying one grade of
diesel. We do not want to preclude this practice in the future; thus,
we are not preventing 15 ppm diesel from being downgraded to off-
highway fuel. The downgrading restriction applies only to 15 ppm
downgraded to 500 ppm highway diesel fuel. We do not anticipate
increased instances of downgrading to off-highway diesel fuel relative
to today, given the increase in the price differential between highway
diesel and off-highway diesel fuel that will likely result from this
program. Therefore, we do not believe it is necessary to impose a
regulatory restriction on downgrading of 15 ppm highway diesel to off-
highway diesel.
All parties in the distribution system downstream of the refinery
gate are subject to this provision, except for those retailers that
offer for sale and wholesale purchaser-consumers that use 15 ppm fuel
(either as the only grade of diesel or in addition to 500 ppm diesel).
In other words, the only retailers and wholesale purchaser-consumers
that are subject to this requirement are those that offer for sale or
use only 500 ppm diesel (but not 15 ppm diesel).
Since all parties in the distribution system are required by other
provisions in this final rule to maintain product transfer documents,
which will indicate whether the diesel fuel meets the 15 ppm or 500 ppm
standard as well as the volume of such fuel, we are not requiring new
recordkeeping requirements beyond these to demonstrate compliance with
these provisions. The parties will merely have to ensure that at the
end of each year during the period the temporary compliance option is
in effect that they comply with the 20 percent requirement based on the
incoming and outgoing PTD records described in Section VII.E.5 below.
c. Diesel Fuel Pump Labeling
As discussed in Section IV.A.2 above and in the Chapter IV of the
RIA, we believe that clear information about the proper fuel to use and
the consequences of misfueling will minimize the potential for
misfueling of new-technology vehicles. Under our final fuel program
approximately 75% of the fuel in each PADD will meet the 15 ppm
standard during the first few years. We believe that this will ensure
that the fuel will be widely available in every part of the United
States. Moreover, within four years all highway diesel fuel will meet
this standard. Under these circumstances we believe the potential for
misfueling will be limited. Nevertheless, we did receive considerable
comment expressing concerns over the potential for misfueling.
In addition to the required labels on diesel fuel pumps described
below, we believe that the use of unique nozzles, color-coded
scuffguards, or dyes to distinguish the grades of diesel fuel may be
useful in preventing accidental misfueling. While we are not finalizing
any requirements today, we will plan to work with the vehicle
manufacturers and representatives of the fuel industry and other
interested stakeholders over the next several years to develop workable
solutions that are consistent with current industry practices and other
regulatory requirements.
For any multiple-fuel program like the temporary compliance option
adopted today, clearly labeling diesel fuel pumps is vital for end
users to distinguish between the two grades of fuel. We received
comments on the NPRM that concurred with our assessment in the proposal
that pump labels, in conjunction with vehicle labels, would also have
the effect of helping to help prevent misfueling of motor vehicles with
high sulfur diesel fuel. Section VI.G. above describes the labels that
manufactures will place on vehicle and information that will be
provided to vehicle owners. Today's rule also adopts pump labeling
requirements for retailers and wholesale purchaser-consumers similar to
those we proposed, but with modifications to account for the
availability of diesel fuel subject to the 500 ppm sulfur standard for
use in pre-2007 motor vehicles. The text of the labels appears below;
the specific requirements for label size and appearance are found in
the regulatory language for this rule.
For pumps dispensing 15 ppm diesel fuel, the label will read as
follows:
LOW-SULFUR DIESEL FUEL
Recommended for use in all diesel highway vehicles.
Required for model year 2007 and later highway vehicles.
For pumps dispensing 500 ppm diesel fuel the label will reads as
follows:
HIGH-SULFUR DIESEL FUEL--WARNING
May damage model year 2007 and later highway vehicles.
Federal Law prohibits use in these vehicles.
Finally, for pumps dispensing nonroad diesel fuel that are located
at the same retail outlet as highway diesel fuel pumps, the label will
read as follows:
NONROAD DIESEL FUEL--WARNING
May damage highway vehicles.
Federal Law prohibits use in any highway vehicle.
[[Page 5120]]
3. Use of Used Motor Oil in New Diesel Vehicles
We understand that used motor oil is sometimes disposed of by
blending it with diesel fuel for use as fuel in diesel vehicles. Such
practices range from blending used motor oil directly into the vehicle
fuel tank, to blending it into the fuel storage tanks, to blending
small amounts of motor oil from the vehicle crank case into the fuel
system as the vehicle is being operated. To the extent such practices
could cause vehicles to exceed their emissions standards, the person
blending the oil, or causing or permitting such blending, could be
considered to be rendering emission controls inoperative in violation
of Section 203 of the CAA and potentially liable for a civil penalty
(Section 203(a)(3) of the Act, 42 U.S.C. 7522(a)(3)).
Since current formulations of motor oil contain very high levels of
sulfur, the addition of used oil to highway diesel fuel could
substantially impair the sulfur-sensitive emissions control equipment
expected to be used by engine manufacturers to meet the emissions
standards in today's rule. Depending on how the oil is blended, it
could increase the sulfur content of the fuel burned in the vehicle by
as much as 200 ppm. As a result, we believe blending used oil into
highway diesel fuel could render inoperative the emission control
technology on the vehicle and potentially cause driveability problems.
Therefore, today's rule prohibits any person from introducing or
causing or allowing the introduction of used motor oil, or diesel fuel
containing used motor oil, into the fuel delivery systems of vehicles
manufactured in model year 2007 and later. The only exception to this
is where the engine is explicitly certified to the emission standard
with oil added and the oil is added in a manner consistent with the
certification. Please refer to the Response to Comments document for a
discussion of concerns raised by commenters on this issue.
4. Use of Kerosene in Diesel Fuel
As we discussed in the NPRM, kerosene is commonly added to highway
diesel fuel to reduce fuel viscosity in cold weather. Today's rule will
not limit this practice. Consistent with the proposal, under today's
rule, kerosene that is used, intended for use, or made available for
use as or for blending with 15 ppm sulfur highway diesel fuel is itself
required to be classified as ``motor vehicle diesel fuel'' and meet the
15 ppm standard, as well as the standards for aromatics and cetane (see
Section 80.2(y) of the regulatory language following this preamble).
This classification for highway fuel use may be made by the fuel's
refiner or may be made by a downstream party at the point when that
party chooses to use the kerosene in its possession for highway fuel
use.
To help ensure that only distillates that comply with the 15 ppm
highway diesel fuel standard are blended into 15 ppm highway diesel
fuel, today's rule has adopted the proposed requirement that kerosene
meeting the 15 ppm standard and distributed by the transferring party
for use in motor vehicles, must be accompanied by PTDs accurately
stating that the product meets the 15 ppm sulfur standard (See Section
VII.E.5. below).
As a general matter, any party who blends kerosene, or any
blendstock, into motor vehicle diesel fuel, or who produces motor
vehicle diesel fuel by mixing blendstocks, is a refiner and would be
subject the requirements and prohibitions applicable to refiners under
the rule. However, under today's rule, in deference to the longstanding
and widespread practice of blending kerosene into diesel fuel at
downstream locations, downstream parties who only blend kerosene into
motor vehicle diesel fuel will not be subject to the requirements
applicable to refiners, provided that they do not alter the fuel in any
other way. Further, downstream parties choosing to blend kerosene into
15 ppm highway diesel fuel will be entitled to the 2 ppm adjustment
factor for both the kerosene and the diesel fuel into which it is
blended at downstream locations, provided that the kerosene had been
transferred to the party with a PTD indicating compliance with that
standard. Sulfur test results from downstream locations of parties who
do not have such a PTD for their kerosene will not be subject to this
adjustment factor, either for the kerosene itself, or for the highway
diesel fuel into which it is blended.
In order to ensure the continued compliance of 15 ppm fuel with the
15 ppm standard, downstream parties choosing to blend kerosene into 15
ppm highway diesel fuel are required by the final rule to either have a
PTD for that kerosene indicating compliance with the 15 ppm standard,
or to have test results for the kerosene establishing such compliance.
Any party who causes the sulfur level of 15 ppm highway diesel fuel
to exceed 15 ppm by blending kerosene into highway diesel fuel, or by
using high sulfur kerosene as highway diesel fuel, would be subject to
liability for violating the sulfur standard. Similarly, parties who
cause the sulfur level of 500 ppm highway diesel fuel to exceed that
standard by blending kerosene into the fuel, would also be subject to
liability.
The rule does not require refiners or importers of kerosene to
produce or import kerosene meeting the 15 ppm sulfur standard. However,
we believe that refiners will produce low sulfur kerosene in the same
refinery processes that they use to produce low sulfur highway diesel
fuel, and that the market will drive supply of low sulfur kerosene for
those areas where, and during those seasons when, the product is needed
for blending with highway diesel fuel. Comments to the NPRM regarding
this provision generally supported this approach.
5. Use of Diesel Fuel Additives
Diesel fuel additives include corrosion inhibitors, cold-
operability improvers, and static dissipaters. Use of such additives is
distinguished from the use of kerosene by the low concentrations at
which they are used and their relatively more complex chemistry.\211\
We proposed that diesel fuel additives used in highway diesel fuel meet
the same cap on sulfur content required for the fuel itself. Additive
manufacturers commented \212\ that there was no need to impose a 15 ppm
sulfur cap on such additives in order to effectively limit the sulfur
content of finished diesel fuel. They asserted that imposing such a cap
would result in unjustified costs and disruptions to the producers and
users of diesel additives. Additive manufacturers also stated that for
certain additives, such as static dissipaters needed to prevent
explosion hazards at terminal facilities, there are currently no
effective alternatives that comply with a 15 ppm cap on sulfur content.
---------------------------------------------------------------------------
\211\ Diesel fuel additives are used at concentrations commonly
expressed in parts per million. Diesel fuel additives can include
specially-formulated polymers and other complex chemical components.
Kerosene is used at much higher concentrations, expressed in volume
percent. Unlike diesel fuel additives, kerosene is a narrow
distillation fraction of the range of hydrocarbons normally
contained in diesel fuel. See Section VII.C.4 above regarding the
requirements associated with the addition of kerosene to diesel
fuel.
\212\ See comments of the American Chemistry Council, Docket
Item IV-D-183 in Docket A-99-06 associated with this rule.
---------------------------------------------------------------------------
Additive manufacturers suggested an approach whereby shipments of
additives that have a sulfur content above 15 ppm would be accompanied
by a product transfer document (PTD) that includes information on
additive sulfur content, maximum recommended treatment rate, and the
potential impact
[[Page 5121]]
on the sulfur content of the fuel when the additive is used at the
maximum recommended treatment rate. Under such an approach, they
suggested that the use of diesel additives should be permitted to
result in an increase in the sulfur content of the finished fuel of
less than 0.5 ppm, such that fuel would effectively be required to meet
a sulfur cap of 15.5 ppm.
In response to these comments, we are allowing the use of diesel
fuel additives with a sulfur content greater than 15 ppm. However, we
believe that this can be accomplished without allowing the 15 ppm cap
on fuel sulfur content to be exceeded. The 15 ppm cap is based on our
understanding of the level that is necessary to ensure the durability
and proper operation of the emissions control hardware that will be
used to comply with the emissions standards in today's rule. We believe
that it is most appropriate for the market to determine how best to
accommodate increases in the fuel sulfur content from the refinery gate
to the end user, while maintaining the 15 ppm cap, and whether such
increases result from contamination in the distribution system or
diesel additive use. By providing this flexibility, we anticipate that
market forces will encourage an optimal balance between the competing
demands of manufacturing fuel lower than the 15 ppm sulfur cap,
limiting contamination in the distribution system, and limiting the
additive contribution to fuel sulfur content.
Our review of data submitted by additive and fuel manufacturers to
comply with EPA's Fuel and Fuel Additive Registration requirements (40
CFR Part 79) indicates that additives to meet every purpose (including
static dissipation) are currently in common use which meet a 15 ppm cap
on sulfur content (see Chapter IV.D. of the RIA for more information on
additives). Since such low-sulfur additives are currently in use side-
by-side with high-sulfur additives, it is reasonable to conclude that
there is not a significant difference in their cost. Even if not yet
available for certain purposes, we believe that it is reasonable to
assume that low-sulfur additives will become available before this rule
is implemented in 2006. The ability of industry to provide low-sulfur
additives is supported by the fact that diesel fuel meeting a 10 ppm
cap on sulfur content has been marketed in Sweden for some time, and
ARCO Petroleum recently began marketing fuel meeting a 15 ppm sulfur
cap in California.
The unusually high sulfur content of a few additives may discourage
their use in diesel fuel that meets a 15 ppm sulfur cap. However, it
will generally continue to be possible for additive manufacturers to
market additives that contain greater than 15 ppm sulfur for use in
highway diesel fuel. Such additives can also continue to be used in
nonroad diesel fuel. Additive manufacturers that market such additives
and blenders that use them in highway diesel fuel will have additional
requirements to ensure that the 15 ppm sulfur cap on highway diesel
fuel is not exceeded. Although today's rule may encourage the gradual
retirement of additives that do not meet a 15 ppm sulfur cap for use in
highway diesel fuel, we do not anticipate that this will result in
disruption to additive users and producers or a significant increase in
cost. Additive manufactures commonly reformulate their additives on a
periodic basis as a result of competitive pressures. We anticipate that
any reformulation that might need to occur to meet a 15 ppm sulfur cap
will be substantially accommodated within this normal cycle.
Today's rule limits the continued use in highway diesel fuel of
diesel fuel additives that exceed 15 ppm sulfur to additives that are
used at concentrations of less than one volume percent. We believe that
this limitation is appropriate and will not cause any undue burden
because the diesel fuel additives for which this flexibility was
included are always used today at concentrations well below one volume
percent. Further, one volume percent is the threshold above which the
blender of an additive becomes subject to all the requirements
applicable to a refiner (40 CFR 79.2(d)(1).
The specific requirements in today's rule regarding the use of
diesel fuel additives are as follows:
--Additives that have a sulfur content at or below 15 ppm must be
accompanied by a PTD that states: ``The sulfur content of this additive
does not exceed 15 ppm.''
--Additives that exceed 15 ppm sulfur may continue to be used in
highway diesel fuel provided that they are used at a concentration of
less than one volume percent and their transfer is accompanied by a PTD
that lists the following:
(1) The additive's maximum sulfur concentration
(2) The maximum recommended concentration for use of the additive
in diesel fuel, and
(3) The contribution to the sulfur level of the fuel that would
result if the additive is used at the maximum recommended
concentration.
Blenders of additives that exceed 15 ppm in sulfur content will be
held liable if their actions cause the sulfur content of the finished
fuel to exceed 15 ppm. In some cases, blenders may not find it feasible
to conduct testing, or otherwise obtain information on the sulfur
content of the fuel either before or after additive blending, without
incurring substantial cost. We anticipate that blenders will manage the
risk associated with the use of additives above 15 ppm in sulfur
content under such circumstances with actions such as the following:
--Selecting an additive with minimal sulfur content above 15 ppm that
is used at a low concentration, and
--Working with their upstream suppliers to provide fuel of sufficiently
low sulfur content to accommodate the small increase in sulfur content
which results from the use of the additive.
This is similar to the way distributors will manage contamination
from their distribution hardware (tank trucks, etc.). Distributors will
not necessarily test for fuel sulfur content after each opportunity for
contamination, but rather will rely on mechanisms set up to minimize
the contamination, and to obtain fuel sufficiently below the standard
to accommodate the increase in sulfur content from the contamination.
The recordkeeping, reporting, and PTD provisions associated with
these requirements are discussed in Section VII.E below. The liability
provisions are discussed in Section VII.G below.
D. What Are the Testing and Sampling Methods and Requirements?
1. Diesel Fuel Testing Requirements and Test Methods
As part of the diesel fuel sulfur program adopted today, EPA is
designating the test method that we will use in determining compliance
for samples collected at all points in the distribution system. This
designated method is called ``Test Method for Total Sulfur in Liquid
Aromatic Hydrocarbons and Their Derivatives by Oxidative Combustion and
Electrochemical Detection,'' or ASTM D 6428-99.
In the notice of proposed rulemaking, we proposed to designate ASTM
D 2622-98 with minor modifications as the designated test method for
quantifying the sulfur content of diesel fuel. This designated test
method would be the one that EPA would utilize in its own laboratory in
order to determine whether a given sample taken at any point in the
distribution system is in compliance with the appropriate diesel sulfur
standard or not. We proposed to apply this designated test method not
[[Page 5122]]
just to this final rule, which will be effective in 2006, but also to
the existing diesel sulfur requirements, which are currently in effect.
The modifications were designed to ensure appropriate precision at low
sulfur levels below 15 ppm. Specifically, the modifications consisted
of substitution of a measurement blank that more closely resembles the
boiling point range and density of diesel fuel and a change to the
calibration line to ensure that it goes through zero.\213\
---------------------------------------------------------------------------
\213\ For a detailed description of the proposed modifications
to ASTM D 2622-98, see 65 FR 35530-35531 (June 2, 2000).
---------------------------------------------------------------------------
We received several comments related to the proposed test method.
Some parties suggested further modifications to ASTM D 2622-98 and
others recommended that we select ASTM D 5453-00 entitled, ``Standard
Test Method for Determination of Total Sulfur in Light Hydrocarbons,
Motor Fuels and Oils by Ultraviolet Fluorescence'' as the designated
test method in the regulation. We have considered the comments
carefully and agree that it is desirable to choose an accepted ASTM
method as our designated test method. However, we do not believe that
ASTM D 5453 is capable of measuring all sulfur containing compounds.
Specifically, we do not believe that it will measure sulfonates, which
are found in certain diesel additives typically added at terminals.
Because of the stringent 15 ppm sulfur standard adopted today, the
sulfonate compounds in these additives may become significant
contributors to the overall sulfur level of the fuel.
Under this final rule, there is no requirement for every-batch
testing for refiners or importers. However, because the diesel sulfur
standard will be enforced at all points in the fuel distribution
system, we believe that refiners and importers will engage in such
testing, because satisfactory test results may be used to form the
basis for an affirmative defense in the event of a violation.
Downstream fuel suppliers such as truck loading terminals that blend
additives to highway diesel fuel may not find it practical to engage in
testing every time they blend additives into diesel fuel. As described
in the previous section, manufacturers of fuel additives will be
required to provide appropriate information about how to blend the
additive properly (the treatment rate) and will be required to retain
samples of additive batches for the prescribed time period in order to
demonstrate compliance with this regulation, as discussed in the
previous section.
We believe that there is more than one test method that may be used
to determine the sulfur content of diesel fuel at low levels and
believe that it is appropriate to allow alternative analytical test
methods as long as they are correlated to the designated test method to
be used by EPA. The ASTM methods that are allowed as alternative test
methods under this rule are ASTM D 3120-96, ``Standard Test Method for
Trace Quantities of Sulfur in Light Liquid Petroleum Hydrocarbons by
Oxidative Microcoulometry.'' and ASTM D 4045-99, ``Standard Test Method
for Sulfur in Petroleum Products by Hydrogenolysis and Rateometric
Colorimetry.'' Furthermore, we will allow the use of the modified form
of ASTM D 2622, which was proposed to be the designated test method, as
an alternative test method. As stated above, results from the use of
all alternative analytical test methods must be correlated to the
designated test method.
We believe that choosing an appropriate ASTM method as our
designated test method for enforcement testing purposes and allowing
the use of these alternative test methods furthers the purposes of the
``National Technology Transfer and Advancement Act of 1995'' (NTTAA),
section 12(d) of Public Law 104-113, and Office of Management and
Budget (OMB) Circular A-119. Both of these documents are designed to
encourage the adoption of standards developed by ``voluntary consensus
bodies'' and to reduce reliance on government-unique standards where
such consensus standards would suffice. In the future, we plan to adopt
a performance based test method approach that would address the use of
these alternative methods, including ``in-house'' test methods
developed by individual refiners and importers. We also intend to
continue working with the industry and ASTM in the future to develop
and improve sulfur test methods, and will consider modifications to
today's rule as developments warrant.
We also received comments indicating that there would not be any
field test equipment for 15 ppm diesel fuel available by 2006. With
regard to field testing, we believe that the technology that will
enable the development of appropriate equipment or modifications to
existing equipment exists or will be developed in response to the
requirements of this rule.
In the NPRM, we discussed a comment received in response to the
ANPRM that ASTM D 2622-98 may not be suitable for determining the
sulfur content of biodiesel fuel, or mixtures of biodiesel and
conventional diesel fuel. In response to the NPRM, we received comment
indicating that significant modifications would be required to ASTM D
2622-98 in order to adapt it for use with biodiesel and biodiesel
blends. We believe the selected method, ASTM D 6428-99, is appropriate
for use with biodiesel and biodiesel blends. However, depending on the
product, any of the test methods allowed by this rule may require some
adaptation by the operator.
The test method for determination of sulfur in motor oil is ASTM D
4297-96, entitled, ``Standard Test Methods for Elemental Analysis of
Lubricant and Additive Components--Barium, Calcium, Phosphorus, Sulfur,
and Zinc by Wavelength-Dispersive Fluorescence Spectroscopy.'' This
method uses the same apparatus as ASTM D 2622-98, but includes specific
methodology to compensate for interferences caused by additives present
in motor oil. Consistent with the goals of the NTTAA and OMB Circular
A-119, and in order to provide greater flexibility for regulated
parties, we recognize that ASTM D 5453-00 may be selected by regulated
parties as an appropriate alternative analytical test method for the
purpose of measuring sulfur in motor oil.
2. Diesel Fuel Sampling Methods
The final rule adopts the proposed sampling methods. There were no
negative comments regarding these technical changes. The requirement to
use these methods is effective June 1, 2001. These same methods were
adopted for use in the Tier 2/Gasoline Sulfur rule.31\214\ These
sampling methods are ASTM D 4057-95 (manual sampling) and D 4177-95
(automatic sampling from pipelines/in-line blending). We are requiring
the use of these ASTM methods instead of the methods currently provided
in 40 CFR part 80, Appendix G, for determining compliance under both
the new 15 ppm sulfur standard, and the 500 ppm standard currently in
place. That is because these methods have been updated by ASTM, and the
updates have provided clarification and have eliminated certain
requirements that are not necessary for sampling petroleum products
such as diesel fuel.
---------------------------------------------------------------------------
\214\ 65 FR 6833-34 (Feb. 10, 2000). These methods are also
proposed for use under the RFG and CG rules. See 62 FR 37337 et seq.
(July 11, 1997).
---------------------------------------------------------------------------
[[Page 5123]]
E. What Are the Recordkeeping, Reporting and Product Transfer Document
Requirements?
1. Registration of Refiners and Importers
a. All Refiners and Importers
By December 31, 2001, refiners and importers that may produce or
supply highway diesel fuel by 2006 must register with EPA.
Specifically, refiners and importers that are either currently
producing or supplying highway diesel fuel, or that expect to do so by
June 1, 2006, must register. The registration must include the
following information:
--Corporate name and address of the refiner or importer and any parent
companies and a contact person
--Name and address of all refineries or import facilities (including,
for importers, the port of entry and PADD)
--A contact person.
--Location of records
--Business activity (refiner or importer)
--Capacity of each refinery in barrels of crude oil per calendar day
b. Prospective Small Refiners
In addition to the basic registration requirements above, a refiner
seeking status as a small refiner needs to apply for this status as a
part of their registration and provide the average number of employees
for all pay periods from January 1, 1999 to January 1, 2000, for the
company, all parent companies, and all subsidiaries or joint ventures.
The application also must include which small refiner option the
refiner expects to use at each of its refineries.
c. Refiners Seeking an Extension of the GPA Gasoline Sulfur Standards
In addition to the basic registration requirements above, a refiner
or importer seeking an extension of the special GPA gasoline sulfur
standards (see Section IV.B above) must apply for such an extension in
their registration.
2. Pre-Compliance Reports
a. All Refiners
As discussed in Section IV above, by June 1, 2003, all refiners and
importers must report to EPA on their progress toward compliance with
the highway diesel fuel sulfur standards adopted today. Subsequently,
these pre-compliance reports are also due on June 1 of 2004 and 2005.
EPA will maintain the confidentiality of information submitted in pre-
compliance reports. We will present generalized data from the reports
on a PADD basis in annual reports following the receipt of each year's
pre-compliance reports. These reports are for information purposes only
and, while refiners must truthfully report on their projected plans in
order for this provision to have any value, we will not hold refiners
liable if their actual actions deviate from these reports. We fully
expect that refiners' plans may change, which is why we are requiring
these reports to be updated annually through 2005.
In their pre-compliance reports, refiners and importers need to
include the following information:
--Any changes in their basic corporate or facility information since
registration.
--Estimates of the volumes (in gallons) of 15 ppm fuel and, if
applicable, 500 ppm fuel to be produced from crude oil in each
refinery, as well as the volumes of each grade of highway diesel fuel
produced from other sources.
--For entities expecting to participate in the credit program,
estimates of numbers of credits to be earned and/or used.
--Information regarding engineering plans (e.g., design and
construction), the status of obtaining any necessary permits, and
capital commitments for making the necessary modifications to produce
low sulfur highway diesel fuel, and actual construction progress. The
pre-compliance reports due in 2004 an 2005 must provide an update of
the progress in each of these areas.
b. Small Refiners
In addition to the information required for all refiners above,
small refiners must provide additional information in their pre-
compliance reports. The information required varies according to which
small refiner option the refiner plans to use, as discussed in Section
IV.C above. The following paragraphs summarize the supplementary
information required for each small refiner option.
500 ppm Option
The pre-compliance report for a refiner planning use the 500 ppm
Option must make a showing that sufficient sources of 15 ppm fuel will
likely exist in the area. If after 2003 the sources of 15 ppm fuel
decrease, the pre-compliance reports for 2004 and/or 2005 must identify
this change and must include a supplementary showing that the sources
of 15 ppm fuel are still sufficient.
Small Refiner Credit Option
Pre-compliance reporting for small refiners choosing this Small
Refiner Credit option is identical to that for the 500 ppm option (that
is, if the small refiner is also producing 500 ppm highway diesel
fuel), with the additional requirement that the refiner also report on
any credits it expects to generate and sell.
Diesel/Gasoline Compliance Date Option
Pre-compliance reports from any small refiners expecting to use the
Diesel/Gasoline Compliance Date Option must provide information showing
that diesel desulfurization plans are on track. In addition to the
information about the expansion of desulfurization capacity required
above for all refiners, the pre-compliance reports for small refiners
expecting to use this option need to reasonably show that the refiner
will be in a position by June 1, 2006 to produce of 100 percent of the
refiners highway diesel fuel at 15 ppm sulfur at a volume at least 85
percent of its baseline highway diesel volume.
c. GPA Refiners
As with small refiners expecting to use the Diesel/Gasoline
Compliance Option above, pre-compliance report from any refiners or
importers expecting to use the extension of the GPA gasoline sulfur
standards must provide information showing that diesel desulfurization
plans are on track. In addition to the information about the expansion
of desulfurization capacity required above for all refiners, the pre-
compliance reports for prospective GPA refiners need to reasonably show
that the refiner will be in a position by June 1, 2006 to produce of
100 percent of the refiners highway diesel fuel at 15 ppm sulfur at a
volume at least 85 percent of its baseline highway diesel volume.
3. Annual Compliance Reports
a. All Refiners
After the highway diesel sulfur requirements begin June 1, 2006,
refiners and importers will be required to submit annual compliance
reports that demonstrate compliance with the requirements of this final
rule. The first annual compliance report will be due by the end of
February 2007 (for the period of June 1, 2006 through December 31,
2006) and would be required annually through February 2011. A refiner's
annual compliance reports must include the following information, for
each refinery:
--The volumes of 15 ppm and 500 ppm sulfur highway diesel fuel produced
from crude oil during the compliance period, as well as the volumes of
each grade of highway diesel fuel produced from other sources.
[[Page 5124]]
--The number of credits, if any, used to demonstrate compliance with
the 80 percent requirement for 15 ppm sulfur fuel, and their source(s).
--The number of credits, if any generated.
b. Small Refiners
As with pre-compliance reports, small refiners must supply
additional information related to the small refiner option they are
using in their annual compliance reports.
500 ppm Option and Small Refiner Credit Option
In their annual compliance reports, small refiners choosing the 500
ppm Option or the Small Refiner Credit Option need to show that the
volume they produce of highway diesel fuel meeting the 500 ppm sulfur
standard meets the lesser of the following values: (1) 105 percent of
the average highway diesel volume it produced in calendar years 1998
and 1999 or (2) the average highway diesel volume it produced from
crude oil in calendar years 2004 and 2005.
Diesel/Gasoline Compliance Date Option
A small refiner using this option needs to confirm in each annual
compliance report that it continues to produce 100 percent of its
highway diesel fuel at 15 ppm sulfur and that its highway diesel volume
continues to be at least 85 percent of its baseline volume.
4. Initial Confirmation of 15 ppm Fuel Production
Small refiners using the Diesel/Gasoline Compliance Date Option and
refiners using the extension of the GPA gasoline sulfur standard must
confirm to EPA by July 1, 2006 that they began on June 1, 2006
producing 100 percent of their highway diesel fuel at 15 ppm sulfur.
5. Product Transfer Documents (PTDs)
a. Diesel Fuel
We are adopting the proposed requirements that refiners and
importers provide information on commercial PTDs that identifies diesel
fuel distributed for use in motor vehicles and that states the fuel
complies with the 15 ppm sulfur standard. Since today's rule adopts
provisions for production and sale of diesel fuel having a sulfur
content of 500 ppm for use in pre-2007 model year vehicles, the rule
also adopts provisions requiring PTDs to identify such fuel and state
that its use in motor vehicles is limited to pre-2007 motor
vehicles.\215\ We believe this additional information on commercial
PTDs is necessary because of the importance of preventing commingling
of highway diesel fuel with high sulfur distillate products, avoiding
contamination of 15 ppm highway diesel fuel with 500 ppm highway diesel
fuel, and preventing misfueling of model year 2007 and later vehicles
with any fuel having a sulfur content greater than 15 ppm. In addition,
we are requiring that each PTD include the volume of fuel delivered
(for each grade, 15 ppm and 500 ppm), that is necessary to demonstrate
compliance with the fuel downgrading restrictions discussed in Section
VII.C.2.b above.
---------------------------------------------------------------------------
\215\ Such fuel can also be used in nonroad vehicles, whose fuel
is currently unregulated.
---------------------------------------------------------------------------
Except for transfers to truck carriers, retailers and wholesale
purchaser-consumers, product codes may be used to convey the
information. More explicit language on PTDs to these parties is
necessary since employees of such parties are less likely to be aware
of the meaning of product codes. PTDs are not required for transfers of
product into motor vehicles at retail outlets or wholesale purchaser-
consumer facilities.
To assure that downstream parties can determine whether kerosene,
or other distillates, distributed for use for blending into highway
diesel fuel to reduce viscosity in cold weather meets the 15 ppm sulfur
standard, today's rule adopts the proposed requirement for PTD
identification of distillates distributed for such use as meeting the
15 ppm standard.
Today's rule adopts the proposal to retain the current diesel
rule's PTD requirement regarding the identification of dyed, tax-exempt
highway diesel fuel. This provision is useful for wholesale purchaser-
consumers that need to know that the diesel fuel they purchase is
appropriate for tax exempt motor vehicle use despite the presence of
red dye.\216\
---------------------------------------------------------------------------
\216\ The federal tax code requires the use of red dye in both
off-highway distillate fuels and in highway diesel fuel sold for tax
exempt use.
---------------------------------------------------------------------------
b. Additives
The NPRM proposed that PTDs for additives for use in highway diesel
fuel would be required to state that the additive complies with the 15
ppm sulfur standard. Today's rule has been modified to allow the sale
of additives, for use by fuel terminals or other parties in the diesel
fuel distribution system, that have a sulfur content greater than 15
ppm under specified conditions. As a result, under today's rule the PTD
provisions for such additives are modified as follows:
For additives that have a sulfur content not exceeding 15 ppm, the
PTD must state: ``The sulfur content of this additive does not exceed
15 ppm.''
For additives that may have a sulfur content exceeding 15 ppm, the
additive manufacturer's PTD, and PTDs accompanying all subsequent
transfers, must provide: a warning that the additive's sulfur content
exceeds 15 ppm; the maximum sulfur content of the additive; the
appropriate amount of additive to blend to highway diesel fuel, stated
as gallon of additive per gallon of diesel fuel; and the increase in
sulfur concentration of the fuel the additive will cause when used at
the specified concentration.
The proposed provisions for consumer additives for use in diesel
motor vehicles are slightly modified in the final rule due to concerns
that additives designed for nonroad engines could accidentally be
introduced into motor vehicle engines if they have no label stating
appropriate use. Under today's rule consumer additives for use in any
diesel engines must be accompanied by information that states that the
additive either: complies with the sulfur content requirements for
diesel motor vehicles; or that it has a sulfur content exceeding 15 ppm
and is not for use in model year 2007 or later motor vehicles. This
information is necessary for consumers to determine if an additive is
appropriate for diesel motor vehicle use.
6. Recordkeeping Requirements
Refiners that produce (or importers that import) both 500 ppm
highway diesel fuel and 15 ppm highway diesel fuel under the temporary
compliance option or any hardship program, or that produce only 15 ppm
sulfur content diesel fuel and that wish to generate credits (including
early credits), must maintain records for each batch of highway diesel
fuel produced, of the batch designations and the batch volumes. The
refiner must maintain records regarding credit generation, use,
transfer, purchase, or termination.
In general, refiners and importers participating in the temporary
compliance option or any hardship program must keep records of the
following information, as applicable for each refinery (and in the case
of foreign refiners, separately by refinery and by PADD of import), or
for importers, for each PADD:
--The total volume of highway diesel fuel produced or imported;
[[Page 5125]]
--The total volume of highway diesel fuel produced or imported meeting
the 500 ppm; sulfur standard;
--The total volume of highway diesel fuel produced or imported meeting
the 15 ppm sulfur standard;
--For small refiners or GPA refiners using the gasoline sulfur program
extensions, a statement of the baseline volume and whether the volume
of 15 ppm produced or imported fuel is at least equal to 85 percent of
the baseline volume;
--The percentage of highway diesel fuel produced or imported meeting
the 15 ppm sulfur standard before inclusion of credits;
--The volume of 15 ppm highway diesel fuel represented by credits;
--The percentage of 15 ppm highway diesel fuel produced or imported
that is represented by credits;
--The number of credits in the refinery's or importer's possession at
the beginning of the compliance period, separately by early credits and
all other credits;
--The number of credits generated during the compliance period;
--The number of credits used, separately by early credits and all other
credits;
--If any credits were obtained from or transferred to other parties,
for each other party, its name, its EPA refiner or importer
registration number, and the number of credits obtained from or
transferred to the other party, provided separately for early credits
and all other credits;
--The percentage of compliance with the 15 ppm motor vehicle diesel 80
percent volume requirement by use of credits (provided separately for
early credits and all other credits);
--The number of credits that will carry over to the next averaging
period, provided separately for early credits and all other credits;
--Records regarding test results, including mandatory quality assurance
tests; and
--Contracts or other commercial documents that establish each transfer
of credits.
Refiners approved for temporary hardship relief due to extreme
unforseen circumstances or extreme financial hardship must include
certain information in their application for relief. The required
information, and the factors we will consider in determining what
relief, if any, is appropriate, are discussed in Section IV.B.3. Such
refiners will also have reasonable recordkeeping and reporting
requirements, which will be fashioned on a case-by-case basis depending
on the nature of any temporary waiver approved.
7. Record Retention
Today's rule adopts the NPRM proposal that the retention period for
all records required to be kept by the rule is 5 years. This is the
same period of time required in other fuels rules, and it coincides
with the applicable statute of limitations. We believe that for other
reasons, most parties in the distribution system would maintain some or
all of these records for this length of time even without the
requirement.
This retention period applies to PTDs, records of any test results
performed by any regulated party for quality assurance purposes or
otherwise, along with supporting documentation such as date of sampling
and testing, batch number, tank number, and volume of product. Business
records regarding actions taken in response to any violations
discovered are also required to be maintained for 5 years.
All records required to be maintained by refiners participating in
the temporary compliance option or hardship options (or by importers of
diesel fuel produced by a foreign refiner approved for the temporary
compliance option or a hardship option), including small refiner and
farmer cooperative and GPA options, are also covered by the retention
requirement.
F. Are There Any Exemptions From the Highway Diesel Fuel Requirements?
1. Research and Development
Today's rule exempts from the sulfur standards diesel fuel used for
research, development and testing purposes (R & D), as was proposed in
the NPRM. We recognize that there may be legitimate research programs
that require the use of highway diesel fuel with higher sulfur levels
than allowed under today's proposed rule. As a result, today's rule
contains provisions for obtaining an exemption from the prohibitions
for persons distributing, transporting, storing, selling, or dispensing
highway diesel fuel that exceeds the standards, where such diesel fuel
is necessary to conduct a research, development, or testing program.
Under the rule, parties seeking an R&D exemption are required to
submit to EPA an application for exemption that describes the purpose
and scope of the program and the reasons that the use of the higher-
sulfur diesel fuel is necessary. Upon presentation of the required
information, an exemption may be granted at the discretion of the
Administrator, with the condition that EPA may withdraw the exemption
ab initio in the event the Agency determines the exemption is not
justified. Fuel subject to this exemption is exempt from the other
provisions of today's rule, provided certain requirements are met.
These requirements include the segregation of the exempt fuel from non-
exempt highway diesel fuel, identification of the exempt fuel on
product transfer documents, pump labeling, and where appropriate, the
replacement, repair, or removal from service of emission systems
damaged by the use of the high sulfur fuel.
2. Racing Vehicles
Today's rule adopts the NPRM proposal to provide no exemption from
the sulfur content standard and other requirements of today's rule for
diesel fuel used in racing vehicles. In the NPRM, we requested comment
on whether such an exemption is needed and we received no comments
supporting the need for such exemption. As we stated in the NPRM, we
see no advantage for racing vehicles to use fuel having higher sulfur
levels (or lower cetane or higher aromatic levels) than are required by
today's rule, and we are concerned about the potential for misfueling
of motor vehicles that could result from having a high sulfur (e.g.,
3,000 ppm) automotive fuel available in the marketplace. Consequently,
the rule does not provide an exemption from the highway diesel fuel
requirements for vehicles used in racing.
3. Military Fuel
Based on EPA's existing definition of diesel fuel, we previously
concluded that JP-8 military fuel is not subject to EPA's existing
requirements for diesel fuel. Today's rule revises the definition of
diesel fuel so that JP-5 and JP-8 military fuel that is used or
intended for use in highway diesel motor vehicles will be subject to
all of the requirements applicable to diesel fuel under today's
rule.\217\ However, today's rule also exempts JP-5 and JP-8 fuels from
EPA's diesel fuel requirements if it is used in tactical military
vehicles that have a national security exemption or if it is used in
tactical military vehicles that are not covered by a national security
exemption but for national security reasons, such as the need to be
ready for immediate deployment overseas, need to be fueled on the same
fuel as motor
[[Page 5126]]
vehicles with a national security exemption. Use of JP-5 and JP-8 fuel
not meeting the highway diesel fuel standards in a motor vehicle other
than the tactical military vehicles described above is prohibited under
today's rule.
---------------------------------------------------------------------------
\217\ Any JP-5, JP-8, or other distillate product that is not
designated by the refiner or importer as motor vehicle diesel fuel,
and that does not otherwise meet the definition of motor vehicle
diesel fuel, would not be included by the refiner or importer in any
computation of motor vehicle diesel fuel volume for baseline or
other purposes.
---------------------------------------------------------------------------
Due to national security considerations, EPA's existing regulations
allow the military to request and receive national security exemptions
(NSE) for their motor vehicles from emissions regulations if the
operational requirements for such vehicles warrant such an exemption.
These provisions have worked successfully in the past to enable us to
meet both our national air quality and security goals simultaneously.
Today's rule does not change these provisions.
In discussions with the Department of Defense (DOD), DOD stated
that certain tactical military vehicles must be ready to be shipped
overseas quickly in response to an emergency and must be ready to be
fueled on whatever fuel is available under tactical conditions
(typically JP-8). To avoid problems experienced in the past when
switching between fuel types in tactical vehicles, JP-8 has been
selected as the common tactical fuel for use by the military in the
U.S. and overseas. Thus, the use of the high sulfur fuel, which is
normally supplied overseas under tactical situations, is expected to
continue after the implementation of this rule. However, use of the
high sulfur fuel in these engines equipped with the aftertreatment
technology, necessary to meet the emissions requirements of today's
rule could result in engine failure, driveability problems, and
permanently destroy the emission control system.
Therefore, it appears that requiring tactical military vehicles
that may be used outside of the U.S. to comply with the emissions
requirements in today's rule is not compatible with the operational
requirements for such vehicles. In their comments on the proposed rule,
DOD stated that it would be appropriate for EPA to cover the tactical
military vehicles that would otherwise be subject to the emissions
regulations in today's rule under a national security exemption. We
recognize the national security concerns raised by DOD, and will
address this issue using the Agency procedures established for this
purpose.\218\ These guidelines are contained in EPA's ``Guidelines for
National Security Exemptions of Motor Vehicles and Motor Vehicle
Engines--Guidelines for Tactical Vehicles/Engines.''
---------------------------------------------------------------------------
\218\ These guidelines are contained in EPA's ``Guidelines for
National Security Exemptions of Motor Vehicles and Motor Vehicle
Engines--Guidelines for Tactical Vehicles/Engines''
---------------------------------------------------------------------------
We also recognize that there are tactical military vehicles
manufactured before the requirements of today's rule become effective
that for national security purposes need to continue to be operated on
JP-5 or JP-8 fuel while in the U.S. to facilitate their readiness to be
fueled on whatever fuel is available overseas. Consistent with an
exemption for certain military vehicles, EPA is also exempting diesel
fuel from the sulfur standard in this rule, where the fuel is used in
vehicles exempted from the emissions standards in this rule (pursuant
to 40 CFR 85.1708) or in tactical motor vehicles that are not covered
by a national security exemption but for national security reasons need
to be fueled on the same fuel as motor vehicles with a national
security exemption. To more clearly identify the tactical motor
vehicles to be covered by the diesel fuel exemption the Department of
Defense will submit a notification to EPA describing the rationale and
supporting data for the request and a description of the covered
tactical motor vehicles. The one-time notification should be sent to
EPA by December 15, 2003 in order to provide sufficient time for EPA to
review the information as well as lead time to the Department of
Defense for logistics planning purposes. EPA will then respond to DOD
identifying all vehicles that are covered by the fuel exemption. Based
on data provided by the Department of Defense to date, EPA believes
that providing an exemption for JP-5 and JP-8 fuel used in tactical
motor vehicles does not have any significant environmental impact.
G. Liability and Penalty Provisions for Noncompliance
1. General
The liability and penalty provisions of the diesel sulfur rule are
similar to the liability and penalty provisions found in the gasoline
sulfur rule, RFG rule and other EPA fuels regulations.\219\ Regulated
parties are subject to prohibitions which are typical in EPA fuels
regulations, such as selling or distributing fuel that does not comply
with the standard, and causing others to commit prohibited acts.
Liability also arises under the diesel rule for prohibited acts
specific to the diesel sulfur control program, such as introducing
diesel fuel not meeting the 15 ppm sulfur standard into diesel motor
vehicles of model year 2007 and later. In addition, parties will be
liable for a failure to meet certain requirements, such as the
recordkeeping, reporting, or PTD requirements, or causing others to
fail to meet such requirements.
---------------------------------------------------------------------------
\219\ See section 80.5 (penalties for fuels violations); section
80.23 (liability for lead violations); section 80.28 (liability for
volatility violations); section 80.30 (liability for diesel
violations); section 80.79 (liability for violation of RFG
prohibited acts); section 80.80 (penalties for RFG/CG violations);
section 80.395 (liability for gasoline sulfur violations); section
80.405 (penalties for gasoline sulfur regulations).
---------------------------------------------------------------------------
Under today's rule, the party in the diesel fuel's distribution
system that controls the facility where the violation occurred, and
other parties in that fuel's distribution system (such as the refiner,
reseller, and distributor), are presumed to be liable for the
violation.\220\ As in the Tier 2 gasoline sulfur rule (``Tier 2 sulfur
rule''), today's diesel sulfur rule explicitly prohibits causing
another person to commit a prohibited act or causing non-conforming
diesel fuel to be in the distribution system. Non-conforming means: (1)
Diesel fuel with sulfur content above 15 ppm incorrectly designated as
appropriate for model year 2007 and above motor vehicles or (2) diesel
fuel with sulfur content above 500 ppm incorrectly designated as
appropriate for any model year motor vehicle. Parties outside the
diesel fuel distribution system, such as diesel additive manufacturers
and distributors, would also be subject to liability for those diesel
rule violations which could have been caused by their conduct.
---------------------------------------------------------------------------
\220\ An additional type of liability, vicarious liability, is
also imposed on branded refiners under these fuels programs.
---------------------------------------------------------------------------
Affirmative defenses are provided for each party deemed
presumptively liable for a violation, and all presumptions of liability
are rebuttable. In general, in order to rebut the presumption of
liability, parties are required to establish that: (1) The party did
not cause the violation; (2) PTD(s) exist which establish that the fuel
or diesel additive was in compliance while under the party's control;
and (3) the party conducted a quality assurance sampling and testing
program. Diesel fuel refiners, diesel fuel additive manufacturers, and
blenders of high sulfur additives into diesel fuel, would also be
required to provide test results establishing the conformity of the
product prior to leaving that party's control.\221\ Branded
[[Page 5127]]
refiners have additional affirmative defense elements to establish. The
defenses under the diesel sulfur rule are similar to those available to
parties for violations of the RFG, volatility, and the Tier 2 sulfur
regulations. Today's final rule also clarifies that parent corporations
are liable for violations of subsidiaries, in a manner consistent with
the Tier 2 sulfur rule. Finally, the final diesel sulfur rule mirrors
the Tier 2 sulfur rule by clarifying that each partner to a joint
venture will be jointly and severally liable for the violations at the
joint venture facility or by the joint venture operation.
---------------------------------------------------------------------------
\221\ The requirement of conforming test results was not
included in the NPRM as an affirmative defense element for the fuel
refiner. However, under both the NPRM and today's final rule,
refiners need to establish that they didn't cause the violation. As
a practical matter, refiners generally establish their lack of
causation using such test results. The Agency believes that it is
nonetheless important to require these test results as an
affirmative defense element for refiners because under today's final
rule, refiners are given the ability to produce high sulfur highway
diesel fuel as well as low sulfur product. This makes the
possibility of refiner causation of violations much more likely, and
the production of conforming test results--the one most convincing
piece of evidence which would establish the refiner's lack of
causation--much more essential. Further, conducting such testing
should not be a significant burden for refiners to comply with.
Refiners typically already test their batches to assure component
quality for commercial reasons, and refiners are usually the party
in the distribution system with the most resources--both financial
and analytical--to conduct quality testing. In any case, refiners
may choose not to conduct this testing, since it is merely an
affirmative defense element, and the tests would only become
relevant once a violation is discovered.
---------------------------------------------------------------------------
As is the case with the other EPA fuels regulations, today's final
diesel sulfur rule applies the provisions of section 211(d)(1) of the
Clean Air Act (Act) for the collection of penalties. These penalty
provisions subject any person that violates any requirement or
prohibition of the diesel sulfur rule to a civil penalty of up to
$27,500 for every day of each such violation and the amount of economic
benefit or savings resulting from the violation. A violation of a
diesel sulfur cap standard constitutes a separate day of violation for
each day the diesel fuel giving rise to the violation remains in the
fuel's distribution system. Under the regulation, the length of time
the diesel fuel in question remains in the distribution system is
deemed to be twenty-five days unless there is evidence that the fuel
remained in its distribution system a lesser or greater amount of
time--the same time presumption that is incorporated in the RFG and
Tier 2 sulfur rules. The penalty provisions are similar to the penalty
provisions for violations of the RFG and the Tier 2 sulfur regulations.
EPA has included in today's rule two prohibitions for ``causing''
violations: (1) Causing another to commit a violation; and (2) causing
non-complying diesel fuel to be in the distribution system. These
causation prohibitions are like similar prohibitions included in the
Tier 2 gasoline sulfur regulations, and, as discussed in the preamble
to that rule, EPA believes they are consistent with EPA's
implementation of prior motor vehicle fuel regulations. See the
liability discussion in the preamble to the Tier 2 final rule, at 65 FR
6812 et seq.
The prohibition against causing another to commit a violation would
apply where one party's violation is caused by the actions of another
party. For example, EPA may conduct an inspection of a terminal and
discover that the terminal is offering for sale highway diesel fuel
designated as complying with the 15 ppm sulfur standard, while it, in
fact, had an actual sulfur content greater than the standard.\222\ In
this scenario, parties in the fuel's distribution system, as well as
parties in the distribution system of any diesel additive that had been
blended into the fuel, would be presumed liable for causing the
terminal to be in violation. Each party, of course, would have the
right to present an affirmative defense to rebut this presumption.
---------------------------------------------------------------------------
\222\ The violation would occur if EPA's test result showed a
sulfur content of greater than 17 ppm, which takes into account the
two ppm adjustment factor for testing reproducibility for downstream
parties.
---------------------------------------------------------------------------
The prohibition against causing non-complying diesel fuel to be in
the distribution system would apply, for example, if a refiner
transfers non-complying diesel fuel to a pipeline. This prohibition
could encompass situations where evidence shows high sulfur diesel fuel
was transferred from an upstream party in the distribution system, but
EPA may not have test results to establish that parties downstream also
committed violations with this fuel.
The Agency intends to enforce the liability scheme of the diesel
sulfur rule in the same manner that we have enforced the similar
liability schemes in our prior fuels regulations. As in other fuels
programs, we will attempt to identify the party most responsible for
causing the violation in determining that party that should primarily
be liable for penalties for the violation.
2. What Is the Liability That Additive Manufacturers and Distributors,
and Parties That Blend Additives Into Diesel Fuel, Are Subject To?
a. General
In the NPRM, the Agency did not propose that additive manufacturers
or distributors would be presumed liable for any violations of the
diesel regulation. Only parties that were in the diesel fuel
distribution system were to be presumed liable for diesel fuel
violations. Parties in the additive distribution system would only be
subject to liability for fuels violations where the Agency established
that they caused others (such as fuel distributors or retailers) to be
in violation. This approach was followed because the NPRM prohibited
the downstream blending into highway diesel fuel of any additive whose
sulfur content exceeded the 15 ppm standard. This limitation reduced
the potential that the additive could be the cause of sulfur non-
compliance in fuel within the diesel distribution system.
Various additive manufacturers provided comments regarding the need
for certain diesel fuel additives that may exceed the 15 ppm sulfur
standard. Today's final rule, therefore, permits the blending of diesel
additives with sulfur content in excess of 15 ppm into 15 ppm highway
diesel fuel under limited circumstances, in response to those comments.
As more fully discussed in section VII(C)(5) of this preamble, today's
rule permits downstream parties to blend into 15 ppm highway diesel
fuel additives having a sulfur content exceeding 15 ppm, provided that:
(1) The blending of the additive does not cause the diesel fuel's
sulfur content to exceed the 15 ppm sulfur standard; (2) the additive
is added in an amount no greater than one volume percent of the blended
product; and (3) the downstream party obtained from its additive
supplier a product transfer document (``PTD'') with the additive's
sulfur content and the recommended treatment rate, and that it complied
with such treatment rate, as appropriate.
Since the final rule permits the limited use in highway diesel fuel
of additives with high sulfur content, the Agency believes it is now
more likely that a diesel fuel sulfur violation could be caused by the
use of high sulfur additives. This could result from the additive
manufacturer's misrepresentation or inaccurate statement of the
additive's sulfur content or recommended treat rate on the additive's
PTD, or an additive distributor's contamination of low sulfur additives
with high sulfur additives during transportation. The increased
probability that parties in the additive distribution system could
cause a violation of the sulfur standard warrants the imposition by the
Agency of increased liability for such parties under the final rule. As
one example of this, the final rule explicitly makes parties in the
additive distribution system liable for the sale of nonconforming
diesel fuel additives, even if such additives have not yet been blended
into diesel fuel. In addition, the
[[Page 5128]]
final rule imposes presumptive liability on parties in the additive
distribution system if diesel fuel into which the additive has been
blended is determined to have a sulfur level in excess of its permitted
concentration. This presumptive liability differs depending on whether
the blended additive was designated as meeting the 15 ppm sulfur
standard (a ``15 ppm additive'') or designated as a greater than 15 ppm
sulfur additive (a ``high sulfur additive''), as discussed below.
b. Liability When the Additive Is Designated as Complying With the 15
ppm Sulfur Standard
With the sole exception of diesel additives blended into highway
diesel fuel at a concentration no greater than one percent by volume of
the blended fuel, any additive blended into diesel fuel downstream of
the refinery must have a sulfur content no greater than 15 ppm, and
must be accompanied by PTD(s) accurately identifying them as complying
with the 15 ppm sulfur standard.
All parties in the fuel and additive distribution systems are
subject to presumptive liability if the blended fuel exceeds the sulfur
standard (with the two ppm downstream adjustment applied when EPA tests
the fuel subject to the 15 ppm sulfur standard). Low sulfur additives
present a less significant threat to diesel fuel sulfur compliance than
would occur with the use of additives designated as possibly exceeding
15 ppm sulfur. Thus, parties in the additive distribution system of the
low sulfur additive will be permitted to rebut the presumption of
liability by showing the following: (1) Additive distributors will only
be required to produce PTDs asserting that the additive complies with
the 15 ppm sulfur standard (2) additive manufacturers will also be
required to produce PTDs complying in an accurate manner with the
regulatory requirements, as well as producing test results (or retained
samples on which tests could be run) establishing the additive's
compliance with the 15 ppm sulfur standard prior to leaving the
manufacturer's control. Once their presumptive liability would be
refuted by producing such documentation in a convincing manner, these
additive system parties would only be held responsible for the diesel
fuel non-conformity in situations in which EPA can establish that the
party actually caused the violation.
Under today's final rule, parties in the diesel fuel distribution
system will have the typical presumptive liability defenses as
proposed. For parties blending an additive into their diesel fuel, the
requirement of producing PTDs showing that the product complied with
the regulatory standards will necessarily include PTDs for the additive
that was used, affirming the additive's compliance as well as the
fuel's.
c. Liability When the Additive Is Designated as Having a Possible
Sulfur Content Greater Than 15 ppm
Under today's rule, if an additive manufacturer produces an
additive for use in 15 ppm highway diesel fuel at a concentration no
greater than one volume percent of the blended fuel, then the additive
is permitted to have a maximum sulfur content above 15 ppm. However, if
highway diesel fuel containing that additive is found by EPA to have
high sulfur content, then all the parties in both the additive's and
the fuel's distribution chain will be presumed liable for causing the
diesel fuel violation. Since this type of high sulfur additive presents
a much greater probability of causing diesel fuel non-compliance,
parties in the additive's distribution system will have to satisfy an
additional element to establish an affirmative defense. In addition to
the elements of an affirmative defense described above, parties in the
distribution system for such a high sulfur additive must also establish
that they did not cause the violation, an element of an affirmative
defense that is typically required in EPA fuel programs to rebut
presumptive liability.
Parties in the diesel fuel's distribution system will essentially
have to establish the same affirmative elements as proposed, with one
addition. Blenders of high sulfur additives into 15 ppm sulfur diesel
fuel, by the act of blending such an additive into that fuel, subject
themselves to the need for establishing a more rigorous quality control
program than would exist without the addition of such a high sulfur
addition. The Agency believes that parties blending high sulfur
additives into their 15 ppm sulfur diesel fuel should be required to
produce test results establishing that the blended fuel was in
compliance with the 15 ppm sulfur standards after being blended with
the high sulfur additive. This additional defense element is required
as an added safeguard to ensure diesel fuel compliance, since the
blender has voluntarily chosen to use an additive which increases the
risk of diesel fuel non-compliance.
H. How Will Compliance With the Sulfur Standards Be Determined?
In the NPRM, EPA proposed that compliance with the diesel sulfur
standards would be determined based on the sulfur level of the diesel
fuel, as measured using the regulatory testing methodology. We further
proposed that any evidence from any source or location could be used to
establish the diesel fuel sulfur level, provided that such evidence is
relevant to whether the level would have been in compliance if the
regulatory sampling and testing methodology had been correctly
performed. In today's action, consistent with the approach taken under
the Tier 2 sulfur rule, EPA is adopting the proposed regulatory
provisions.
The final regulations provide that the primary determinant of
compliance with the standards will be the specified regulatory test
method.\223\ Additionally, other information may be used under the
rule, including test results using non-designated test methods, if the
evidence is relevant to determining whether the sulfur level would meet
applicable standards had compliance been determined using the specified
test methodology. Moreover, since evidence other than regulatory test
results must be relevant to compliance using the regulation test
method, EPA believes that the rule enables parties to rely with
confidence on the proper use of the regulatory method.
---------------------------------------------------------------------------
\223\ Under today's final rule, several specified alternative
test methods are also permitted, provided they have been properly
correlated with the regulatory method.
---------------------------------------------------------------------------
For example, the Agency might not have sulfur results derived from
the regulatory test method for diesel fuel sold by a terminal, yet the
terminal's own test results, based on testing using methods other than
those specified and approved in the regulations, could reliably show an
exceedence of the sulfur standard. Under today's rule, evidence from
the non-regulatory test method could be used to establish the diesel
fuel's sulfur level that would have resulted if the regulatory test
method had been conducted. This type of evidence is available for use
by either the EPA or the regulated party, and could be used to show
either compliance or noncompliance. Similarly, absent the existence of
sulfur test results using the regulation method, commercial documents
asserting the sulfur level of diesel fuel or additive could be used as
some evidence of that sulfur level if the product would have been
tested using the regulatory method.\224\
---------------------------------------------------------------------------
\224\ The ability to use such evidence is in addition to the
presumption established under the final rule, that when a mandated
product transfer document asserts that diesel fuel complies with the
500 ppm sulfur standard, the fuel accompanied by that transfer
document will be presumed to comply with the 500 standard and not to
comply with the 15 ppm standard, unless the party can establish
otherwise.
---------------------------------------------------------------------------
[[Page 5129]]
The Agency believes that the same statutory authority for EPA to
adopt the Tier 2 sulfur rule's evidentiary provisions (Clean Air Act
section 211(c)), provides appropriate authority for our adoption of the
evidentiary provisions of today's diesel rule. For a fuller explanation
of this statutory authority, see Section VI(I) of the Tier 2 final rule
preamble, 65 FR 6815, February 10, 2000.
VIII. Standards and Fuel For Nonroad Diesel Engines
Although this program covers only highway diesel engines and
highway diesel fuel, our potential plans for nonroad diesel engines,
and especially the sulfur content of nonroad diesel, fuel are clearly
related. For example, depending on whether and how nonroad diesel fuel
is regulated, factors including the costs, leadtime, environmental
impacts, and impacts on competitive relationships in the marketplace
associated with this program could be affected. We would need to
address these factors in any future regulatory action on nonroad diesel
fuel.
Because of these factors, various stakeholders inquired during the
public comment period about the potential requirements that could apply
to nonroad diesel fuel. Several states, environmental organizations,
and other commenters urged us to take action on nonroad because of the
nonroad contribution to air quality problems. The remainder of this
section summarizes the background behind this issue and our current
thinking about the future regulation of nonroad diesel engines and
fuel.
After establishing an initial set of emission standards for nonroad
diesel engines in 1994, we proposed in 1997, and finalized in 1998, a
comprehensive program of emission standards for most diesel engines
designed for nonroad use.\225\ This program established NMHC +
NOX and PM standards that are phasing in over the 1999-2006
time frame, with engines of different horsepower ranges coming into the
program in different years. At the same time, we set long-term (``Tier
3'') NMHC + NOX standards, but not PM standards, for medium
and high horsepower engines, to begin in 2006. This rule also included
a plan to reassess the Tier 3 NMHC + NOX standards and to
establish a PM test cycle and associated standards in the 2001 time
frame. In addition, the 1998 rule anticipated an EPA reassessment of
the NMHC + NOX standards for the smaller engines (less than
50 horsepower), which are to be phased in beginning in 2004 (referred
to as nonroad ``Tier 2'' standards).
---------------------------------------------------------------------------
\225\ See the final rule, 63 FR 56968, October 23, 1998 for more
about the history of these regulations.
---------------------------------------------------------------------------
We did not include regulations on nonroad diesel fuel in the first
diesel fuel sulfur control program which was established in 1993 for
highway diesel fuel. We estimate that the average sulfur content for
nonroad diesel fuel is currently around 3000 ppm, \226\ as compared to
the cap for highway diesel fuel of 500 ppm.\227\
---------------------------------------------------------------------------
\226\ National Institute for Petroleum and Energy Research
(NIPER) report, Diesel Fuel Oils, 1996.
\227\ Information from recent national fuel surveys by NIPER and
the Alliance of Automobile Manufacturers.
---------------------------------------------------------------------------
We believe that any specific new requirements for nonroad diesel
fuel would need to be carefully considered in the context of a proposal
for further nonroad diesel engine emission standards. For the nonroad
program, we expect to use the same systems-based approach as we used
for the Tier 2/Gasoline Sulfur program and today's highway diesel fuel
and heavy-duty engine standards program. This is because of the close
interrelationship between fuels and engines--the best emission control
solutions may not come through either fuel changes or engine
improvements alone, but perhaps through an appropriate balance between
the two. This is especially significant given that engine manufacturers
and diesel fuel refiners would need to address potential challenges
such as capital cost, leadtime, and engineering and construction
resources, of simultaneously meeting the highway standards under this
program with the nonroad standards that may be implemented. Thus we
need to address issues in both the fuel and engine arenas together.
The many issues connected with any rulemaking for nonroad engines
and fuel warrant serious attention, and we believe it would be
premature today for us to attempt to raise potential resolutions to
them. We plan to initiate action in the future to formulate thoughtful
proposals covering both nonroad diesel fuel and engines.
IX. Public Participation
A wide variety of interested parties participated in the rulemaking
process that culminates with this final rule. The formal comment period
and five public hearings associated with the NPRM provided additional
opportunities for public input. EPA also met with a variety of
stakeholders, including environmental and public health organizations,
oil company representatives, auto company representatives, emission
control equipment manufacturers, and states at various points in the
process.
We prepared a detailed Response to Comments document that describes
the comments received on the NPRM and presents our response to each of
these comments. The Response to Comments document is available in the
docket for this rule and on the Office of Transportation and Air
Quality internet home page. Comments and our responses are also
included throughout this preamble for several key issues.
X. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency is required to determine whether this regulatory action will be
``significant'' and therefore subject to review by the Office of
Management and Budget (OMB) and the requirements of the Executive
Order. The order defines a ``significant regulatory action'' as any
regulatory action that is likely to result in a rule that may:
Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or,
Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, EPA has determined
that this rule is a ``significant regulatory action'' because the
engine standards, diesel fuel sulfur standards, and other regulatory
provisions will have an annual effect on the economy in excess of $100
million. Accordingly, we have prepared a Final Regulatory Impact
Analysis (RIA) which is available in the docket for this rulemaking and
at the internet address listed under ADDRESSES above. This action was
submitted to the Office of Management and Budget (OMB) for review as
required by Executive Order 12866. Written comments from OMB on today's
action
[[Page 5130]]
and responses from EPA to OMB comments are in the public docket for
this rulemaking.
B. Regulatory Flexibility Analysis
EPA has decided to prepare a Final Regulatory Flexibility Analysis
in connection with this final rule. For purposes of assessing the
impact of today's rule on small entities, small entities are defined as
described under section X.B.3 below.
In accordance with section 603 of the RFA, EPA prepared an initial
regulatory flexibility analysis (IRFA) for the proposed rule and
convened a Small Business Advocacy Review Panel to obtain advice and
recommendations of representatives of the regulated small entities in
accordance with section 609(b) of the RFA (see 65 FR 35541, June 2,
2000). A detailed discussion of the Panel's advice and recommendations
is found in the Panel Report contained in the docket for this
rulemaking. A summary of the Panel's recommendations is presented at 65
FR 35541.
We have also prepared a final regulatory flexibility analysis
(FRFA) for today's final rule. The FRFA addresses the issues raised by
public comments on the IRFA, which was part of the proposal of this
rule. The FRFA is available for review in the docket and is summarized
below.\228\ The key elements of the FRFA include:
---------------------------------------------------------------------------
\228\ The Final RFA is contained in Chapter VIII of the RIA.
--The need for, and objectives of, the rule;
--The significant issues raised by public comments on the Initial RFA,
a summary of the Agency's assessment of those issues, and a statement
of any changes made to the proposed rule as a result of those comments;
--The types and number of small entities to which the rule will apply;
--The reporting, recordkeeping, and other compliance requirements of
the rule, including the classes of small entities that will be affected
and the type of professional skills necessary to prepare the report or
record;
--The steps taken to minimize the significant impact on small entities
consistent with the stated objectives of the applicable statute,
including a statement of the factual, policy and legal reasons why the
Agency selected the alternatives we did, and why other significant
alternatives to the rule which affect the impact on small entities were
rejected.
We summarize the key elements of the FRFA below. A fuller
discussion of each of these elements can be found in the FRFA (Chapter
VIII of the RIA).
1. Need for and Objectives of the Rule
Section I of this preamble provides a summary of the need for and
objectives of this rule. As discussed in detail in Section II of this
preamble, emissions from heavy-duty vehicles contribute greatly to a
number of serious air pollution problems, and would have continued to
do so into the future absent further controls to reduce these
emissions. Although the air quality problems caused by diesel heavy-
duty vehicles are challenging, we believe they can be resolved through
the application of high-efficiency emissions control technologies.
Based on the Clean Air Act requirements discussed in Section I.B.3, we
are setting stringent new emission standards that will result in the
use of these diesel exhaust emission control devices (see Section III).
We are also finalizing changes to diesel fuel sulfur standards in order
to enable these high-efficiency technologies (Section IV). In
consideration of the impacts that sulfur has on the efficiency,
reliability, and fuel economy impact of diesel engine exhaust emission
control devices, we believe that controlling the sulfur content of
highway diesel fuel to the 15 ppm level is necessary, feasible and cost
effective. The standards will result in substantial benefits to public
health and welfare and the environment through significant reductions
in emissions of nitrogen oxides, particulate matter, nonmethane
hydrocarbons, carbon monoxide, sulfur oxides, and air toxics.
2. Summary of Significant Public Comments on the IRFA
EPA received many comments from small refiners and others
pertaining to the options for hardship relief described in the NPRM. In
general, many small refiners commented on the financial difficulty
their refinery would face in complying with the proposed diesel sulfur
program, and encouraged EPA to provide hardship relief. Many small
refiners acknowledged that there was not one single hardship relief
option to best suit the needs of all small refiners, and thus supported
a menu of options. Section IV.C of the preamble discusses the three
hardship relief options available to small refiners under today's
program. These three options are based on concepts which were
considered by the SBAR Panel and on which we requested and received
comment in the proposal. A summary of the comments pertaining to
regulatory alternatives for small refiners, and our response to them,
is contained in the Response to Comments document contained in the
docket.
3. Types and Number of Small Entities
Today's program, which establishes new emission standards for
heavy-duty engines and new standards for the sulfur content of highway
diesel fuel, will directly affect manufacturers of heavy-duty engines
and petroleum refiners that produce highway diesel fuel, respectively.
In addition, but to a lesser extent, the program will directly affect
diesel distributors and marketers.
We have not identified any manufacturers of heavy-duty engines that
meet SBA's definition of a small business. However, we have identified
several petroleum refiners that produce highway diesel fuel and meet
the SBA's definitions for a small business for the industry category.
According to the SBA's definition of a small business for a petroleum
refining company (Standard Industrial Classification (SIC) 2911), which
we have used for purposes of assessing the impact of today's rule on
small entities, a company must have 1500 or fewer employees to qualify
as an SBA small business. Of the approximately 158 refineries in the
U.S. today, we estimate that approximately 24 refiners (owning 27
refineries) would meet the SBA definition and produce highway diesel
fuel. We estimate that these 24 refiners produce approximately five
percent of highway diesel fuel nationwide.
EPA also has identified several thousand businesses in the diesel
distribution and marketing industry that meet SBA's definitions of
small business. More information about these industries is contained in
the Final RFA. The low sulfur diesel fuel rule contains certain
downstream compliance and enforcement provisions, for all parties in
the diesel fuel distribution system downstream of the refinery gate, to
prevent (1) contamination of highway diesel fuels with fuels containing
higher levels of sulfur and (2) misfueling of motor vehicles with high
sulfur fuels.
Under this rule, distributors and retailers may choose to handle
500 ppm diesel fuel, 15 ppm diesel fuel, or both (as permitted under
the temporary compliance option and small refiner hardship provisions
described in the preamble). However, distributors and marketers will
have to segregate low sulfur diesel fuel from other distillates just as
they do today with 500 ppm diesel fuel. Retailers and wholesale
purchaser-consumers will be responsible for ensuring that only low
sulfur diesel fuel is sold for use in model year 2007 and later heavy-
duty
[[Page 5131]]
vehicles. Under the temporary compliance option for refiners and small
refiner hardship provisions (described in Section IV), where two grades
of highway diesel fuel are allowed for the initial years of the
program, some distributors and marketers may voluntarily decide
(presumably based on economics) to add tankage or make additional
modifications to accommodate two grades of highway diesel fuel. We have
taken such costs into account in our diesel fuel cost analysis
(described in more detail in Chapter V of the RIA).
The low sulfur diesel fuel rule also includes a product downgrading
restriction that is designed to discourage the intentional downgrading
of 15 ppm diesel fuel to 500 ppm diesel fuel in the distribution system
during the initial years of the program when the optional compliance
provision is in effect. This provision and its impacts on affected
entities is discussed more in Section VII of this preamble and in the
FRFA. This provision does not require any new recordkeeping or
reporting requirements beyond those required of the rest of the
program.
4. Reporting, Recordkeeping and Other Compliance Requirements
As with all refiners complying with the highway diesel fuel
program, small refiners will be subject to registration, pre-compliance
reporting, annual compliance reporting, and product transfer document
requirements. In addition, the low sulfur diesel fuel program contains
several hardship options to assist small refiners in producing low
sulfur diesel fuel. Under these options, small refiners may be subject
to additional reporting and recordkeeping requirements to help ensure
compliance with the options and the integrity of the low sulfur diesel
fuel as it moves from the refinery gate to the retail outlet. For
example, all refiners producing diesel fuel are required to provide us
with basic data on their progress toward compliance in 2003-2005 under
the pre-compliance reporting requirements described in Section IV.A. As
a part of their pre-compliance reports, small refiners must provide a
limited amount of additional information specific to the option they
choose. However, we believe the benefits of these hardship options will
far outweigh any burdens imposed by their associated recordkeeping and
reporting requirements.
The low sulfur diesel fuel program does not impose any new
reporting requirements for small diesel marketers or distributors.
However, this program does impose new record keeping requirements for
such parties, specifically product transfer documents that track
transfers of diesel fuel. Such transfer records are currently
maintained by most parties for business and/or tax reasons. In
addition, the record keeping requirements for downstream parties are
fairly consistent with those in place today under other EPA fuel
programs, including the current highway diesel fuel program. Therefore,
we expect that the new record keeping requirements for downstream
parties will not impose a significant burden.
These recordkeeping, reporting and compliance requirements are
discussed in more detail in Sections IV and VII of this preamble and in
the FRFA.
5. Regulatory Alternatives To Minimize Impact on Small Entities
The Small Business Advocacy Review Panel was convened by EPA on
November 12, 1999. The Panel consisted of representatives of the Small
Business Administration (SBA), the Office of Management and Budget
(OMB) and EPA. During the development of the proposal to this rule, EPA
and the Panel were in contact with representatives from the small
businesses that will be subject to the provisions in today's rule. In
addition to verbal comments from industry noted by the Panel at
meetings and teleconferences, written comments were received from each
of the affected industry segments or their representatives. The Panel
report contains a summary of these comments and the Panel's
recommendations on options that could mitigate the adverse impacts on
small businesses.
The Panel considered a range of options and regulatory alternatives
for providing small businesses with flexibility in complying with new
sulfur standards for highway diesel fuel. As part of the process, the
Panel requested and received comment on several ideas for flexibility
that were suggested by small entity representatives (SERs) and Panel
members. The Panel's recommendations are discussed in detail in the
Panel Report, contained in the docket. In the NPRM, EPA sought public
comment on several ideas that stemmed from the Panel's recommendations,
as well as on the Panel's recommendations. Taking into consideration
the comments received on these ideas, as well as additional business
and technical information gathered about potentially affected small
entities, we are finalizing certain of those options today, as
discussed in detail in Section IV above.
In addition to our participation in the SBREFA process, we
conducted our own outreach, fact-finding, and analysis of the potential
impacts of our regulations on small businesses. Some of the small
refiners with whom we and the Panel met indicated their belief that
their businesses may close due to the substantial costs, capital and
other impacts of meeting the 15 ppm diesel fuel standard without either
additional time or flexibility with respect to gasoline sulfur
compliance. Based on these discussions and analyses, the Panel and we
agree that small refiners would likely experience a significant and
disproportionate financial hardship in reaching the objectives of our
diesel fuel sulfur program. However, the Panel also noted that the
burden imposed upon the small refiners by our sulfur requirements
varied from refiner to refiner and could not be alleviated with a
single provision. We agree with the Panel and are offering qualifying
small refiners three options to choose from in moving toward compliance
with the low sulfur diesel fuel requirements.
For today's action, we have structured a selection of temporary
flexibilities for qualifying small refiners, both domestic and foreign,
based on the factors described below. Generally, we structured these
provisions to address small refiner hardship while expeditiously
achieving air quality benefits and ensuring that the low sulfur diesel
fuel coincides with the introduction of 2007 model year diesel
vehicles. First, the compliance deadlines in the program, combined with
flexibility for small refiners, will quickly achieve the air quality
benefits of the program, while helping to ensure that small refiners
will have adequate time to raise capital for new or revamped equipment.
Second, we believe that allowing time for refinery sulfur-reduction
technologies to be proven out by larger refiners before small refiners
have to put them in place will likely allow for lower costs of these
improvements in desulfurization technology (e.g., better catalyst
technology or lower-pressure hydrotreater technology). Third, providing
small refiners more time to comply will increase the availability of
engineering and construction resources. Since most large and small
refiners must install additional processing equipment to meet the
sulfur requirements, there will be a tremendous amount of competition
for technology services, engineering manpower, and construction
management and labor. Finally, because the gasoline and diesel sulfur
requirements will occur in approximately the same time frame, small
refiners that produce both fuels
[[Page 5132]]
will have a greater difficulty than most other refiners in securing the
necessary financing. Hence, any effort that increases small refiners'
ability to stagger investments for low sulfur gasoline and diesel will
facilitate compliance with the two programs. These factors are
discussed further in Section IV.C.
Providing these options to assist small refiners experiencing
hardship circumstances enables us to go forward with the 15 ppm sulfur
standard beginning in 2006. Without this flexibility, the benefits of
the 15 ppm standard would possibly not be achieved as quickly. By
providing temporary relief to those refiners that need additional time,
we are able to adopt a program that expeditiously reduces diesel sulfur
levels in feasible manner for the industry as a whole. In addition, we
believe the volume of diesel that will be affected by this hardship
provision is marginal. We estimate that small refiners contribute
approximately five percent of all domestic highway diesel fuel
production.
The Final RFA evaluates the financial impacts of today's program on
small entities. EPA believes that the regulatory alternatives finalized
in this rule will provide substantial relief to qualifying small
businesses from the potential adverse economic impacts of complying
with today's rule. The three hardship options available to small
refiners under today's rule are summarized below, and are discussed in
more detail in Section IV.C and the FRFA.
500 ppm Option. A small refiner may continue to produce and sell diesel
fuel meeting the current 500 ppm sulfur standard for four additional
years, until May 31, 2010, provided that it reasonably ensures the
existence of sufficient volumes of 15 ppm fuel in the marketing area(s)
that it serves.
Small Refiner Credit Option. A small refiner that chooses to produce 15
ppm fuel prior to June 1, 2010 may generate and sell credits under the
broader temporary compliance option. Since a small refiner has no
requirement to produce 15 ppm fuel under this option, any fuel it
produces at or below 15 ppm sulfur will qualify for generating credits.
Diesel/Gasoline Compliance Date Option. For small refiners that are
also subject to the Tier 2/Gasoline sulfur program (40 CFR Part 80),
the refiner may choose to extend by three years the duration of its
applicable interim gasoline standards, provided that it also produces
all its highway diesel fuel at 15 ppm sulfur beginning June 1, 2006.
One alternative for which we sought public comment, but are not
finalizing today, is an option of allowing small refiners to produce
highway diesel fuel meeting a less stringent sulfur standard (e.g., 50
ppm). Some small refiners, and other refiners, commented that the costs
of meeting a 50 ppm sulfur cap would be significantly less than those
to meet a 15 ppm cap. However, we are not adopting less stringent
sulfur standards for small refiners today, because the new diesel
exhaust emissions control devices require diesel fuel with a sulfur
content capped at 15 ppm in order to be viable and capable to meeting
the 2007 emission standards. The need for 15 ppm sulfur diesel fuel is
discussed in detail in Section III. Additional discussion of this issue
can be found in the Response to Comments document. Additional
information on the factual, policy, and legal reasons for the selection
of alternatives considered for small refiners, and on any rejected
alternatives, can be found in the FRFA, as well as in appropriate
sections of the Preamble, RIA, and RTC.
As required by Section 212 of SBREFA, EPA also is preparing a small
entity compliance guide to help small entities comply with this rule.
Once available, small businesses will be able to obtain a copy through
our web site at http://www.epa.gov/otaq.
C. Paperwork Reduction Act
This action establishes a standard for low sulfur diesel fuel that
will become effective in 2006 and that involves the collection of
information under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
An Agency may not conduct or sponsor, and a person is not required to
respond to a collection of information, unless it displays a currently
valid OMB control number. The OMB control numbers for our regulations
are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
For 500 ppm diesel fuel standards currently in effect, the existing
ICR is ``Regulations of Fuel and Fuel Additives; Fuel Quality
Regulations for Highway Diesel Sold in 1993 and Later Calendar Years;
Recordkeeping Requirements,'' OMB Control Number 2060-0308, EPA ICR
Number 1718.12 (expires July 31, 2001). Copies of this ICR may be
obtained from Delores Evans, Office of Policy, Regulatory Information
Division, U.S. Environmental Protection Agency (Mail Code 2137), 1200
Pennsylvania Avenue, NW., Washington, DC 20460. Please mark requests,
``Attention: Desk Officer for EPA'' and include the ICR in any
correspondence.
The Paperwork Reduction Act stipulates that ICR documents estimate
the burden of activities that will be required of regulated parties
within a three year time period. Burden means the total time, effort,
or financial resources expended by persons to generate, maintain,
retain, or disclose or provide information to or for a Federal agency.
This includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to be able to respond to
a collection of information; search data sources; complete and review
the collection of information; and transmit or otherwise disclose the
information.
The information collection requirements (ICR) for this rule as it
relates to low sulfur (15 ppm) diesel fuel will undergo any required
public notice and comment and be submitted for approval to OMB under
the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. prior to any
required information collection.
D. Intergovernmental Relations
1. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments, and the private sector. Under Section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``federal mandates'' that
may result in expenditures to state, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more for
any single year. Before promulgating a rule, for which a written
statement is needed, Section 205 of the UMRA generally requires EPA to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, most cost effective, or least burdensome
alternative that achieves the objectives of the rule. The provisions of
Section 205 do not apply when they are inconsistent with applicable
law. Moreover, Section 205 allows EPA to adopt an alternative that is
not the least costly, most cost effective, or least burdensome
[[Page 5133]]
alternative if EPA provides an explanation in the final rule of why
such an alternative was adopted.
Before we establish any regulatory requirement that may
significantly or uniquely affect small governments, including tribal
governments, we must develop a small government plan pursuant to
Section 203 of the UMRA. Such a plan must provide for notifying
potentially affected small governments, and enabling officials of
affected small governments to have meaningful and timely input in the
development of our regulations with significant federal
intergovernmental mandates. The plan must also provide for informing,
educating, and advising small governments on compliance with the
regulatory requirements.
This rule contains no federal mandates for state, local, or tribal
governments as defined by the provisions of Title II of the UMRA. The
rule imposes no enforceable duties on any of these governmental
entities. Nothing in this rule will significantly or uniquely affect
small governments.
EPA has determined that this rule contains federal mandates that
may result in expenditures of more than $100 million to the private
sector in any single year. EPA considered and evaluated a wide range of
regulatory alternatives before arriving at the program finalized today.
EPA believes that today's final rule represents the least costly, most
cost effective approach to achieve the air quality goals of the rule.
The cost-benefit analysis required by the UMRA is discussed in Section
V above and in the RIA. See the ``Administrative Designation and
Regulatory Analysis'' Section (XI.A.) in today's preamble for further
information regarding these analyses.
2. Executive Order 13084: Consultation and Coordination With Indian
Tribal Governments
Under Executive Order 13084, EPA may not issue a regulation that is
not required by statute, that significantly or uniquely affects the
communities of Indian Tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the federal
government provides the funds necessary to pay the direct compliance
costs incurred by the tribal governments, or EPA consults with those
governments. If EPA complies by consulting, Executive Order 13084
requires EPA to provide to the OMB, in a separately identified section
of the preamble to the rule, a description of the extent of EPA's prior
consultation with representatives of affected tribal governments, a
summary of the nature of their concerns, and a statement supporting the
need to issue the regulation. In addition, Executive Order 13084
requires EPA to develop an effective process permitting elected
officials and other representatives of Indian tribal governments ``to
provide meaningful and timely input in the development of regulatory
policies on matters that significantly or uniquely affect their
communities.''
Today's rule does not significantly or uniquely affect the
communities of Indian Tribal governments. The engine emissions, diesel
fuel, and other related requirements for private businesses in today's
rule will have national applicability, and thus will not uniquely
affect the communities of Indian Tribal Governments. Further, no
circumstances specific to such communities exist that will cause an
impact on these communities beyond those discussed in the other
sections of this rule. Thus, EPA's conclusions regarding the impacts
from the implementation of today's rule discussed in the other sections
of this preamble are equally applicable to the communities of Indian
Tribal governments. Accordingly, the requirements of Section 3(b) of
Executive Order 13084 do not apply to this rule.
E. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Section 12(d) of Public Law 104-113, directs EPA
to use voluntary consensus standards in its regulatory activities
unless it would be inconsistent with applicable law or otherwise
impractical. Voluntary consensus standards are technical standards
(e.g., materials specifications, test methods, sampling procedures, and
business practices) developed or adopted by voluntary consensus
standards bodies. The NTTAA directs EPA to provide Congress, through
OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards.
This rule references technical standards adopted by the Agency
through previous rulemakings. No new technical standards are
established in today's rule. The standards referenced in today's rule
involve the measurement of diesel fuel parameters and engine emissions.
The measurement standards for diesel fuel parameters referenced in
today's rule are all voluntary consensus standards. The engine
emissions measurement standards referenced in today's rule are
government-unique standards that were developed by the Agency through
previous rulemakings. These standards have served the Agency's
emissions control goals well since their implementation and have been
well accepted by industry. EPA is not aware of any voluntary consensus
standards for the measurement of engine emissions. Therefore, the
Agency is using the existing EPA-developed standards found in 40 CFR
Part 86 for the measurement of engine emissions.
F. Executive Order 13045: Children's Health Protection
Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, Section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
This rule is subject to the Executive Order because it is an
economically significant regulatory action as defined by Executive
Order 12866 and it concerns in part an environmental health or safety
risk that EPA has reason to believe may have a disproportionate effect
on children.
This rulemaking will achieve significant reductions of various
emissions from heavy-duty engines, including NOX, PM, VOCs
and air toxics. These pollutants raise concerns regarding environmental
health or safety risks that EPA has reason to believe may have a
disproportionate effect on children, such as impacts from ozone, PM and
certain toxic air pollutants. See Section II and the RIA for a further
discussion of these issues.
The effects of ozone and PM on children's health were addressed in
detail in EPA's rulemaking to establish the NAAQS for these pollutants,
and EPA is not revisiting those issues here. The emission reductions
from the strategies in this rulemaking will further reduce air toxics
and the related adverse impacts on children's health. In a separate
rulemaking under Section 202(l) of the Act, EPA addresses the emissions
of hazardous air pollutants from motor vehicles and fuels, and the
appropriate level of control of HAPs from these sources. It is
important to note that the air toxics reductions that the Agency
expects to achieve based on
[[Page 5134]]
today's action are an integral part of the Agency's comprehensive
strategy to address air toxics from motor vehicles under section
202(l).
In this rule, EPA has evaluated several regulatory strategies for
reductions in emissions from heavy-duty engines. (See Section III of
this rule as well as the RIA.) For the reasons described there, EPA
believes that the strategies are preferable under the CAA to other
potentially effective and reasonably feasible alternatives considered
by the Agency, for purposes of reducing emissions from these sources as
a way of helping areas achieve and maintain the NAAQS for ozone and PM.
Moreover, EPA believes that it has selected for this rule the most
stringent and effective control reasonably feasible at this time, in
light of the technology and cost requirements of the Act.
G. Executive Order 13132: Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
Under Section 6 of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the regulation. EPA also may not issue a regulation that has
federalism implications and that preempts State law, unless the Agency
consults with State and local officials early in the process of
developing the regulation.
Section 4 of the Executive Order contains additional requirements
for rules that preempt State or local law, even if those rules do not
have federalism implications (i.e., the rules will not have substantial
direct effects on the States, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government). Those
requirements include providing all affected State and local officials
notice and an opportunity for appropriate participation in the
development of the regulation. If the preemption is not based on
express or implied statutory authority, EPA also must consult, to the
extent practicable, with appropriate State and local officials
regarding the conflict between State law and Federally protected
interests within the agency's area of regulatory responsibility.
This rule does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. Section 211(d)(4)(A) of the CAA
prohibits states from prescribing or attempting to enforce controls or
prohibitions respecting any fuel characteristic or component if EPA has
prescribed a control or prohibition applicable to such fuel
characteristic or component under Section 211(c)(1) of the Act. This
rule merely modifies existing EPA diesel fuel and heavy-duty vehicle
standards and therefore will merely continue an existing preemption of
State and local law as discussed in Section VI. Thus, Executive Order
13132 does not apply to this rule.
Although Section 6 of Executive Order 13132 does not apply to this
rule, EPA did consult with representatives of various State and local
governments in developing this rule. In particular EPA consulted with
the State of Alaska in the design of the program as it applies to them,
as discussed in Section IV. EPA also talked to representatives from the
State of California as well as representatives from STAPPA/ALAPCO,
which represents state and local air pollution officials.
H. Congressional Review Act
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. This rule is a
``major rule'' as defined by 5 U.S.C. 804(2).
XI. Statutory Provisions and Legal Authority
Statutory authority for the engine controls finalized in this
document can be found in Sections 202, 203, 206, 207, 208, and 301 of
the CAA, as amended, 42 U.S.C. 7521, 7522, 7525, 7541, 7542, and 7601.
Statutory authority for the fuel controls finalized in this notice
comes from Section 211(c) and 211(i) of the CAA, which allows EPA to
regulate fuels that either contribute to air pollution which endangers
public health or welfare or which impair emission control equipment
which is in general use or has been in general use. Additional support
for the procedural and enforcement-related aspects of the fuel's
controls in today's rule, including the record keeping requirements,
comes from Sections 114(a) and 301(a) of the CAA.
List of Subjects
40 CFR Part 69
Environmental protection, Air pollution control.
40 CFR Part 80
Environmental protection, Fuel additives, Gasoline, Imports,
Incorporation by reference, Labeling, Motor vehicle pollution,
Penalties, Reporting and recordkeeping requirements.
40 CFR Part 86
Environmental protection, Administrative practice and procedure,
Confidential business information, Incorporation by reference,
Labeling, Motor vehicle pollution, Reporting and recordkeeping
requirements.
Dated: December 21, 2000.
Carol M. Browner,
Administrator.
For the reasons set forth in the preamble, we amend parts 69, 80
and 86 of title 40 of the Code of Federal Regulations to read as
follows:
PART 69--SPECIAL EXEMPTIONS FROM THE REQUIREMENTS OF THE CLEAN AIR
ACT
1. The authority citation for part 69 is revised to read as
follows:
Authority: 42 U.S.C. 7545(c), (g) and (i), and 7625-1.
Subpart E--Alaska
2. Section 69.51 of subpart E is revised to read as follows:
Sec. 69.51 Motor vehicle diesel fuel.
(a) Diesel fuel that is designated for use only in Alaska and is
used only in
[[Page 5135]]
Alaska, is exempt from the sulfur standard of 40 CFR 80.29(a)(1) and
the dye provisions of 40 CFR 80.29(a)(3) and 40 CFR 80.29(b) until the
implementation dates of 40 CFR 80.500, provided that:
(1) The fuel is segregated from non-exempt diesel fuel from the
point of such designation; and
(2) On each occasion that any person transfers custody or title to
the fuel, except when it is dispensed at a retail outlet or wholesale
purchaser-consumer facility, the transferor must provide to the
transferee a product transfer document stating:
This diesel fuel is for use only in Alaska. It is exempt from
the federal low sulfur standards applicable to highway diesel fuel
and red dye requirements applicable to non-highway diesel fuel only
if it is used in Alaska.
(b) Beginning on the implementation dates in 40 CFR 80.500, diesel
fuel that is designated for use in Alaska or is used in Alaska, is
subject to the applicable provisions of 40 CFR Part 80, Subpart I,
except as provided under paragraph (c) of this section. The Governor of
Alaska may submit for EPA approval, by April 1, 2002, a plan for
implementing the sulfur standard in Alaska as an alternative to the
temporary compliance option provided under Secs. 80.530-80.532. If EPA
approves an alternative plan, the provisions as approved by EPA under
that plan shall apply to the diesel fuel subject to this paragraph (b).
(c) If such diesel fuel is designated as fuel that does not comply
with the standards and requirements for motor vehicle diesel fuel under
40 CFR Part 80, Subpart I, it is exempt from the dye presumption of 40
CFR 80.520(b)(2) provided that:
(1) The fuel is segregated from all motor vehicle diesel fuel.
(2) On each occasion that any person transfers custody or title to
the fuel, except when it is dispensed at a retail outlet or wholesale
purchaser-consumer facility, the transferor must provide to the
transferee a product transfer document complying with the requirements
of 40 CFR 80.590(a) through (d) and (g), and stating:
This diesel fuel is for use only in Alaska and is not for use in
highway vehicles. It is exempt from the red dye requirement
applicable to non-highway diesel fuel only if it is used in Alaska.
(3) Any pump dispensing the fuel must comply with the labeling
requirements in 40 CFR 80.570(c).
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
3. The authority citation for part 80 is revised to read as
follows:
Authority: 42 U.S.C. 7414, 7545, and 7601(a).
4. Section 80.2 is amended by revising paragraphs (x) and (y) and
adding paragraphs (bb), (nn), and (xx) to read as follows:
Sec. 80.2 Definitions.
* * * * *
(x) Diesel fuel means any fuel sold in any state or Territory of
the United States and suitable for use in diesel motor vehicles, diesel
motor vehicle engines or diesel nonroad engines, and which is commonly
or commercially known or sold as diesel fuel.
(y) Motor vehicle diesel fuel means any diesel fuel, or any
distillate product, that is used, intended for use, or made available
for use, as a fuel in diesel motor vehicles or diesel motor vehicle
engines.
* * * * *
(bb) Sulfur percentage is the percentage of sulfur in diesel fuel
by weight, as determined using the applicable sampling and testing
methodologies set forth in Sec. 80.580.
* * * * *
(nn) Batch of motor vehicle diesel fuel means a quantity of diesel
fuel which is homogeneous with regard to those properties that are
specified for motor vehicle diesel fuel under subpart I of this part.
* * * * *
(xx) Motor vehicle diesel fuel additive means any substance not
composed solely of carbon and/or hydrogen, or of diesel blendstocks,
that is added, intended for adding, used, or offered for use in motor
vehicle diesel fuel subsequent to the production of diesel fuel by
processing crude oil from refinery processing units, or in diesel motor
vehicle fuel systems.
* * * * *
5. Section 80.29 is amended by revising paragraphs (a) and (b), to
read as follows:
Sec. 80.29 Controls and prohibitions on diesel fuel quality.
(a) Prohibited activities. Beginning October 1, 1993 and continuing
until the implementation dates for subpart I of part 80 as specified in
Sec. 80.500, except as provided in 40 CFR 69.51, no person, including
but not limited to, refiners, importers, distributors, resellers,
carriers, retailers or wholesale purchaser-consumers, shall
manufacture, introduce into commerce, sell, offer for sale, supply,
store, dispense, offer for supply or transport any diesel fuel for use
in motor vehicles, unless the diesel fuel:
(1) Has a sulfur percentage, by weight, no greater than 0.05
percent;
(2)(i) Has a cetane index of at least 40; or
(ii) Has a maximum aromatic content of 35 volume percent; and
(3) Is free of visible evidence of the dye solvent red 164; unless
it is used in a manner that is tax-exempt as defined under section 4082
of the Internal Revenue Code (26 U.S.C. 4082).
(b) Determination of compliance. (1) Any diesel fuel which does not
show visible evidence of being dyed with dye solvent red 164 (which has
a characteristic red color in diesel fuel) shall be considered to be
available for use in diesel motor vehicles and motor vehicle engines,
and shall be subject to the prohibitions of paragraph (a) of this
section.
(2) Compliance with the sulfur, cetane, and aromatics standards in
paragraph (a) of this section shall be determined based on the level of
the applicable component or parameter, using the sampling methodologies
specified in Sec. 80.330(b), as applicable, and the appropriate testing
methodologies specified in Sec. 80.580(a) for sulfur, Sec. 80.2(w) for
cetane index, and Sec. 80.2(z) for aromatic content. Any evidence or
information, including the exclusive use of such evidence or
information, may be used to establish the level of the applicable
component or parameter in the diesel fuel, if the evidence or
information is relevant to whether that level would have been in
compliance with the standard if the appropriate sampling and testing
methodology had been correctly performed. Such evidence may be obtained
from any source or location and may include, but is not limited to,
test results using methods other than the compliance methods in this
paragraph (b), business records, and commercial documents.
(3) Determination of compliance with the requirements of this
section other than the standards described in paragraph (a) of this
section, and determination of liability for any violation of this
section, may be based on information obtained from any source or
location. Such information may include, but is not limited to, business
records and commercial documents.
* * * * *
6. Section 80.30 is amended by revising paragraphs (g)(2)(ii) and
(g)(4)(i), and adding paragraph (h), to read as follows;
[[Page 5136]]
Sec. 80.30 Liability for violations of diesel fuel controls and
prohibitions.
* * * * *
(g) Defenses. * * *
* * * * *
(2) * * *
(ii) Test results, performed in accordance with the applicable
sampling and testing methodologies set forth in Secs. 80.2(w), 80.2(z),
80.2(bb), and 80.580, which evidence that the diesel fuel determined to
be in violation was in compliance with the diesel fuel standards of
Sec. 80.29(a) when it was delivered to the next party in the
distribution system;
* * * * *
(4) * * *
(i) Test results, performed in accordance with the applicable
sampling and testing methodologies set forth in Secs. 80.2(w), 80.2(z),
80.2(bb), and 80.580, which evidence that the diesel fuel determined to
be in violation was in compliance with the diesel fuel standards of
Sec. 80.29(a) when it was delivered to the next party in the
distribution system;
* * * * *
(h) Detection of violations. In paragraphs (a) through (f) of this
section, the term ``is detected at'' means that the violation existed
at the facility in question, and the existence of the violation at that
facility may be established through evidence obtained or created at
that facility, at any other location, and by any party.
7. Section 80.215 is amended by revising paragraph (b) to read as
follows:
Sec. 80.215 What is the scope of the geographic phase-in program?
* * * * *
(b) Duration of the program. (1) The geographic phase-in program
applies to the 2004, 2005, and 2006 annual averaging periods, except as
provided in paragraph (b)(2) of this section.
(2) Subject to the provisions of Sec. 80.540, the geographic phase-
in program shall also apply to the 2007 and 2008 annual averaging
period for refiners approved for GPA standards in 2007 and 2008 under
Sec. 80.540.
* * * * *
8. Section 80.220 is amended by adding paragraph (c) to read as
follows:
Sec. 80.220 What are the downstream standards for GPA gasoline?
* * * * *
(c) Notwithstanding paragraph (a) of this section, the sulfur
content standard of 326 ppm at any downstream location may be extended
as provided under Sec. 80.540(m).
9. Section 80.240 is amended by adding paragraph (e), to read as
follows:
Sec. 80.240 What are the small refiner gasoline sulfur standards?
* * * * *
(e) Notwithstanding paragraph (a) of this section, the temporary
sulfur standards for small refiners may be extended as provided under
Sec. 80.553.
10. Subpart I is added to part 80 to read as follows:
Subpart I--Motor Vehicle Diesel Fuel
General Information
Sec.
80.500 What are the implementation dates for the diesel fuel sulfur
control program?
80.501 What diesel fuel is subject to the provisions of this
subpart?
80.502-80.519 [Reserved]
Motor Vehicle Diesel Fuel Standards and Requirements
80.520 What are the standards and dye requirements for motor
vehicle diesel fuel?
80.521 What are the standards and identification requirements for
motor vehicle diesel fuel additives?
80.522 May used motor oil be dispensed into diesel motor vehicles?
80.523 What diesel fuel designation requirements apply to refiners
and importers?
80.524 What sulfur content standard applies to motor vehicle diesel
fuel downstream of the refinery or importer?
80.525 What requirements apply to kerosene blenders?
80.526 [Reserved]
80.527 Under what conditions may motor vehicle diesel fuel subject
to the 15 ppm sulfur standard be downgraded as motor vehicle diesel
fuel subject to the 500 ppm sulfur standard?
80.528--80.529 [Reserved]
Temporary Compliance Option
80.530 Under what conditions can 500 ppm motor vehicle diesel fuel
be produced or imported?
80.531 How are motor vehicle diesel fuel credits generated?
80.532 How are credits used and transferred?
80.533-80.539 [Reserved]
Geographic Phase-In Provisions
80.540 How may a refiner be approved to produce gasoline under the
GPA gasoline sulfur standards in 2007 and 2008?
80.541-80.549 [Reserved]
Small Refiner Hardship Provisions
80.550 What is the definition of a small refiner under this
subpart?
80.551 How does a refiner obtain approval as a small refiner under
this subpart?
80.552 What compliance options are available to small refiners?
80.553 Under what conditions may the small refiner gasoline sulfur
standards be extended for a small refiner of motor vehicle diesel
fuel?
80.554-80.559 [Reserved]
Other Hardship Provisions
80.560 How can a refiner seek temporary relief from the
requirements of this subpart in case of extreme hardship
circumstances?
80.561 How can a refiner or importer seek temporary relief from the
requirements of this subpart in case of extreme unforseen
circumstances?
80.562-80.569 [Reserved]
Labeling Requirements
80.570 What labeling requirements apply to retailers and wholesale
purchaser-consumers of motor vehicle diesel fuel?
80.571-80.579 [Reserved]
Sampling and Testing
80.580 What are the sampling and testing methods for sulfur?
80.581-80.589 [Reserved]
Recordkeeping and Reporting Requirements
80.590 What are the product transfer document requirements for
motor vehicle diesel fuel?
80.591 What are the product transfer document requirements for
additives to be used in motor vehicle diesel fuel?
80.592 What records must be kept?
80.593 What are the reporting and registration requirements for
refiners and importers of motor vehicle diesel fuel subject to
temporary refiner relief standards?
80.594 What are the pre-compliance reporting requirements?
80.595 How does a refiner apply for a motor vehicle diesel fuel
volume baseline?
80.596 How is a refinery motor vehicle diesel fuel volume baseline
calculated?
80.597 What are the registration requirements?
80.598-80.599 [Reserved]
Exemptions
80.600 What are the requirements for obtaining an exemption for
motor vehicle diesel fuel used for research, development or testing
purposes?
80.601 What requirements apply to motor vehicle diesel fuel for use
in the Territories?
80.602 What exemption applies to diesel fuel used in vehicles
having a national security exemption from motor vehicle emissions
standards?
80.603-80.609 [Reserved]
Violation Provisions
80.610 What acts are prohibited under the diesel fuel sulfur
program?
80.611 What evidence may be used to determine compliance with the
prohibitions and requirements of this subpart and liability for
violations of this subpart?
80.612 Who is liable for violations of this subpart?
80.613 What defenses apply to persons deemed liable for a violation
of a prohibited act?
80.614 What penalties apply under this subpart?
[[Page 5137]]
80.615-80.619 [Reserved]
Provisions for Foreign Refiners and Importers for Motor Vehicle
Diesel Fuel Subject to a Temporary Compliance Option or Hardship
Provision
80.620 What are the additional requirements for motor vehicle diesel
fuel produced by foreign refineries subject to a temporary refiner
compliance option or hardship provisions?
Subpart I--Motor Vehicle Diesel Fuel
General Information
Sec. 80.500 What are the implementation dates for the diesel fuel
sulfur control program?
The implementation dates for standards for motor vehicle diesel
fuel and diesel fuel additives, and for other provisions of this
subpart, are as follows:
(a) Implementation date for standards applicable to production or
importation of motor vehicle diesel fuel, and to motor vehicle diesel
fuel additives. Except as provided in paragraph (d) of this section,
beginning June 1, 2006:
(1) The standards and requirements under Sec. 80.520(a) and (b)
shall apply to any motor vehicle diesel fuel produced or imported by
any refiner or importer; and
(2) The standards and requirements under Sec. 80.521 shall apply to
any motor vehicle diesel fuel additive.
(b) Implementation date for standards applicable to motor vehicle
diesel fuel downstream of the refinery or importer. Except as provided
in paragraphs (c) and (d) of this section, beginning July 15, 2006, the
standards and requirements under Sec. 80.520(a) and (b) shall apply to
any motor vehicle diesel fuel at any downstream location.
(c) Implementation date for standards applicable to motor vehicle
diesel fuel at retail outlets and wholesale purchaser-consumer
facilities. Except as provided in paragraph (d) of this section,
beginning September 1, 2006, the standards and requirements under
Sec. 80.520(a) and (b) shall apply to any motor vehicle diesel fuel at
any retail outlet or wholesale purchaser-consumer facility.
(d) Implementation date for motor vehicle diesel fuel subject to
the 500 ppm sulfur content standard in Sec. 80.520(c). (1) Beginning
June 1, 2006, the sulfur content standard of Sec. 80.520(c) shall apply
to motor vehicle diesel fuel, but only where authorized under, and
subject to, an applicable provision of this Subpart.
(2) Beginning June 1, 2010, the sulfur content standard of
Sec. 80.520(c) shall no longer apply to any motor vehicle diesel fuel
produced or imported by any refiner or importer.
(3) Beginning October 1, 2010, the sulfur content standard of
Sec. 80.520(c) shall no longer apply to any motor vehicle diesel fuel
at any downstream location other than a retail or wholesale purchaser-
consumer facility.
(4) Beginning December 1, 2010, the sulfur content standard of
Sec. 80.520(c) shall no longer apply to any motor vehicle diesel fuel.
(e) Other provisions. All other provisions of this subpart apply
beginning June 1, 2006, unless another date is specified.
(f) For purposes of this subpart, the term ``downstream location''
shall mean any point in the diesel fuel distribution system downstream
from refineries and import facilities, including diesel fuel at
facilities of distributors, carriers, retailers, kerosene blenders, and
wholesale purchaser-consumers.
Sec. 80.501 What diesel fuel is subject to the provisions of this
subpart?
(a) Included fuel and additives. The provisions of this subpart
apply to motor vehicle diesel fuel as defined in Sec. 80.2(y), motor
vehicle diesel fuel additives as defined in Sec. 80.2(xx), and motor
oil that is used as or intended for use as fuel in diesel motor
vehicles or is blended with diesel fuel for use in diesel motor
vehicles at any downstream location, as provided in Sec. 80.500(f).
(b) Excluded fuel. The provisions of this subpart do not apply to
motor vehicle diesel fuel that is designated for export outside the
United States, and identified for export by a transfer document as
required under Sec. 80.590.
Secs. 80.502-80.519 [Reserved]
Motor Vehicle Diesel Fuel Standards and Requirements
Sec. 80.520 What are the standards and dye requirements for motor
vehicle diesel fuel?
(a) Standards. All motor vehicle diesel fuel is subject to the
following per-gallon standards:
(1) Sulfur content. 15 parts per million (ppm) maximum, except as
provided in paragraph (c) of this section;
(2) Cetane index and aromatic content. (i) A minimum cetane index
of 40; or
(ii) A maximum aromatic content of 35 volume percent.
(b) Dye requirements. (1) All motor vehicle diesel fuel shall be
free of visible evidence of dye solvent red 164 (which has a
characteristic red color in diesel fuel), except for motor vehicle
diesel fuel that is used in a manner that is tax exempt under section
4082 of the Internal Revenue Code.
(2) Any diesel fuel that does not show visible evidence of dye
solvent red 164 shall be considered to be motor vehicle diesel fuel and
subject to all the requirements of this subpart for motor vehicle
diesel fuel, except for diesel fuel designated or classified for use
only in:
(i) The State of Alaska as provided under 40 CFR 69.51; or
(ii) Jet aircraft, a research and development testing program
exempted under 80.600, or motor vehicles covered by an exemption under
Sec. 80.602.
(c) Pursuant and subject to the provisions of Secs. 80.530-80.532,
80.552(a), 80.560-80.561, and 80.620, only motor vehicle diesel fuel
produced or imported in full compliance with the requirements of those
provisions is subject to the following per-gallon standard for sulfur
content: 500 ppm maximum.
(d) Kerosene and any other distillate product, that meets the
definition of motor vehicle diesel fuel, is subject to the standards
and requirements under this section.
Sec. 80.521 What are the standards and identification requirements for
motor vehicle diesel fuel additives?
(a) Except as provided in paragraph (b) of this section, any motor
vehicle diesel fuel additive that is added, intended for adding, used,
or offered for use in motor vehicle diesel fuel subject to the 15 ppm
sulfur content standard, at any downstream location must:
(1) Have a sulfur content not exceeding 15 ppm; and
(2) Be accompanied a product transfer document pursuant to
Sec. 80.591 indicating that the additive complies with the 15 ppm
standard for motor vehicle diesel fuel, except for those diesel fuel
additives which are only sold in containers for use by the ultimate
consumer of motor vehicle diesel fuel and which are subject to the
requirements of Sec. 80.591(d).
(b) Any motor vehicle diesel fuel additive that is added, intended
for adding, used, or offered for use in motor vehicle diesel fuel
subject to the 15 ppm sulfur content standard may have a sulfur content
exceeding 15 ppm provided that:
(1) The additive is added or used in the motor vehicle diesel fuel
in a quantity less than 1% by volume of the resultant additive/diesel
fuel mixture;
(2) The product transfer document pursuant to Sec. 80.591 indicates
that the additive may exceed the 15 ppm sulfur standard, that improper
use of the additive may result in non-complying fuel, and that the
additive complies
[[Page 5138]]
with the sulfur information requirements of Sec. 80.591(b)(3); and
(3) The additive is not used or intended for use by an ultimate
consumer in diesel motor vehicles.
Sec. 80.522 May used motor oil be dispensed into diesel motor
vehicles?
No person may introduce used motor oil, or used motor oil blended
with diesel fuel, into the fuel system of model year 2007 or later
diesel motor vehicles, unless both of the following requirements have
been met:
(a) The vehicle or engine manufacturer has received a Certificate
of Conformity under 40 CFR Part 86 and the certification of the vehicle
or engine configuration is explicitly based on emissions data with the
addition of motor oil; and
(b) The oil is added in a manner and rate consistent with the
conditions of the Certificate of Conformity.
Sec. 80.523 What diesel fuel designation requirements apply to
refiners and importers?
Any refiner or importer shall accurately and clearly designate all
fuel it produces or imports for use in diesel motor vehicles as either
motor vehicle diesel fuel meeting the 15 ppm sulfur standard under
Sec. 80.520(a)(1) or as motor vehicle diesel fuel meeting the 500 ppm
sulfur standard under Sec. 80.520(c).
Sec. 80.524 What sulfur content standard applies to motor vehicle
diesel fuel downstream of the refinery or importer?
(a) Except as provided in paragraph (b) of this section or
otherwise in the provisions of this Subpart I, the 15 ppm sulfur
content standard of Sec. 80.520(a) shall apply to all motor vehicle
diesel fuel at any downstream location.
(b) Prior to the October 1, 2010 and December 1, 2010 dates
specified in Sec. 80.500(d)(3) and (4), the 500 ppm sulfur content
standard of Sec. 80.520(c) shall apply to motor vehicle diesel fuel at
any downstream location, provided the following conditions are met:
(1) The product transfer documents comply with the requirements of
Sec. 80.590, including indicating that the fuel complies with the 500
ppm sulfur standard for motor vehicle diesel fuel and is for use only
in model year 2006 and older diesel motor vehicles, or the fuel is
downgraded pursuant to the provision of Sec. 80.527 to motor vehicle
diesel fuel subject to the 500 ppm sulfur standard;
(2) The motor vehicle diesel fuel is not represented or intended
for sale or use as subject to the 15 ppm sulfur content standard, and
is not dispensed, or intended to be dispensed, into model year 2007 and
later motor vehicles by a retailer or wholesale purchaser-consumer; and
(3) For retailers or wholesale purchaser-consumers, the pump
labeling requirements of Sec. 80.570(a) are satisfied.
Sec. 80.525 What requirements apply to kerosene blenders?
(a) For purposes of this subpart, a kerosene blender means any
refiner who produces motor vehicle diesel fuel by adding kerosene to
motor vehicle diesel fuel downstream of the refinery that produced the
motor vehicle diesel fuel or of the import facility where the motor
vehicle diesel fuel was imported, without altering the quality or
quantity of the motor vehicle diesel fuel in any other manner.
(b) Kerosene blenders are not subject to the requirements of this
subpart applicable to refiners of motor vehicle diesel fuel, but are
subject to the requirements and prohibitions applicable to downstream
parties.
(c) For purposes of compliance with Sec. 80.524(b)(1), the product
transfer documents must indicate that the fuel to which kerosene is
added complies with the 500 ppm sulfur standard for motor vehicle
diesel fuel and is for use only in model year 2006 and older diesel
motor vehicles, or the fuel is properly downgraded pursuant to the
provisions of Sec. 80.527 to motor vehicle diesel fuel subject to the
500 ppm sulfur standard.
(d) Kerosene that a kerosene blender adds or intends to add to
motor vehicle diesel fuel subject to the 15 ppm sulfur content standard
must meet the 15 ppm sulfur content standard, and the following
requirements:
(1) The product transfer document received by the kerosene blender
indicates that the kerosene is motor vehicle diesel fuel that complies
with the 15 ppm sulfur content standard; or
(2) The kerosene blender has test results indicating the kerosene
complies with the 15 ppm sulfur standard.
Sec. 80.526 [Reserved]
Sec. 80.527 Under what conditions may motor vehicle diesel fuel
subject to the 15 ppm sulfur standard be downgraded as motor vehicle
diesel fuel subject to the 500 ppm sulfur standard?
(a) Definition. As used in this section, downgrade means changing
the classification of motor vehicle diesel fuel subject to the 15 ppm
sulfur standard under Sec. 80.520(a)(1) to motor vehicle diesel fuel
subject to the 500 ppm sulfur standard under Sec. 80.520(c). A
downgrade occurs when the change in classification takes place.
Changing the classification of motor vehicle diesel fuel subject to the
15 ppm sulfur standard under Sec. 80.520(a)(1) to any fuel that is not
motor vehicle diesel fuel is not a downgrade for purposes of this
section and is not limited by the provisions of this section.
(b) Who may downgrade. Any person in the motor vehicle diesel fuel
distribution system who has custody or title to motor vehicle diesel
fuel may downgrade it.
(c) Downgrading limitation. (1) Except as provided in paragraphs
(d) and (e) of this section, a person described in paragraph (c)(4) of
this section may not downgrade a total of more than 20% of the motor
vehicle diesel fuel (by volume) that is subject to the 15 ppm sulfur
standard of Sec. 80.520(a)(1) while such person has title to or custody
of such fuel. In addition, a refiner or importer may only downgrade
(subject to the 20% limit) motor vehicle diesel fuel designated under
Sec. 80.523 as subject to 15 ppm sulfur standard under
Sec. 80.520(a)(1) after it has been so designated and after it has been
moved from the refinery's, or import facility's, storage tank or other
vessel where the diesel fuel batch was designated as subject to the
sulfur standard of Sec. 80.520(a) under Sec. 80.523.
(2) The limitation of paragraph (c)(1) of this section applies
separately to each person who has custody or title of the fuel when it
is downgraded.
(3) Compliance with the limitation of paragraph (c)(1) of this
section shall be on an annual, calendar year basis (except in 2006
compliance shall be for the period June 1, 2006 through December 31,
2006, and in 2010 compliance shall be for the period January 1 through
May 31).
(4) The limitation of this section applies to persons who sell,
offer for sale, dispense, supply, store or transport diesel fuel. The
limitation does not apply to persons who are transferred custody or
title to motor vehicle diesel fuel when it is dispensed into motor
vehicles at retail outlets.
(d) Diesel fuel in violation of the 15 ppm standard. Where motor
vehicle diesel fuel subject to the sulfur standard of Sec. 80.520(a)(1)
is found to be in violation of any standard under Sec. 80.520(a) and is
consequently downgraded, the person, or persons, having custody and
title to the fuel at the time it is found to be in violation must
include the volume of such fuel toward its 20% volume limitation under
paragraph (c)(1) of this section, unless the person, or persons,
demonstrates that it did not cause the violation.
(e) Special provisions for retail outlets and wholesale purchaser-
consumer facilities. Notwithstanding the
[[Page 5139]]
provisions of paragraph (c)(1) of this section, retailers and wholesale
purchaser-consumers shall comply with the downgrading limitation as
follows:
(1) Retailers and wholesale purchaser-consumers who sell, offer for
sale, or dispense motor vehicle diesel fuel that is subject to the 15
ppm sulfur standard under Sec. 80.520(a)(1) are exempt from the volume
limitations of paragraph (c)(1) of this section.
(2) A retailer or wholesale purchaser-consumer who does not sell,
offer for sale, or dispense motor vehicle diesel fuel subject to the 15
ppm sulfur standard under Sec. 80.520(a)(1) may not downgrade a volume
of motor vehicle diesel fuel classified as subject to the 15 ppm sulfur
standard greater than 20% of the total volume of motor vehicle diesel
fuel that it sells, offers for sale, or dispenses annually.
(f) Product transfer documents. If the custody or title to any
motor vehicle diesel fuel that is downgraded under this section is
transferred, the product transfer documents under Sec. 80.590 for such
fuel must reflect the change in classification to motor vehicle diesel
fuel subject to the 500 ppm sulfur standard.
(g) Recordkeeping requirement. Any person subject to the provisions
of this section, as described in paragraph (c)(4) of this section, who
downgrades any motor vehicle diesel fuel previously classified as
subject to the 15 ppm sulfur standard under Sec. 80.520(a)(1) during
any calendar year, must make and maintain records sufficient to show
compliance with the requirements and limitations of this section.
(h) Termination of downgrading limitations. The provisions of this
section shall not apply after May 31, 2010.
Secs. 80.528-80.529 [Reserved.]
Temporary Compliance Option
Sec. 80.530 Under what conditions can 500 ppm motor vehicle diesel
fuel be produced or imported?
(a) Beginning June 1, 2006, a refiner or importer may produce or
import motor vehicle diesel fuel subject to the 500 ppm sulfur content
standard of Sec. 80.520(c) if all of the following requirements are
met:
(1) Each batch of motor vehicle diesel fuel subject to the 500 ppm
sulfur content standard must be designated by the refiner or importer
as subject to such standard, pursuant to Sec. 80.523.
(2) The refiner or importer must meet the requirements for product
transfer documents in Sec. 80.590 for each batch subject to the 500 ppm
sulfur content standard.
(3)(i) The volume V500 of diesel fuel that is produced
or imported during a compliance period, as provided in paragraph (a)(5)
of this section, may not exceed the following volume limit:
(A) For compliance periods prior to 2010, 20% of the volume
Vt of diesel fuel that is produced or imported during a
compliance period plus an additional volume of motor vehicle diesel
fuel represented by credits properly generated and used pursuant to the
requirements of Secs. 80.531 and 80.532.
(B) For the compliance period of January 1, 2010 through May 31,
2010, the volume of motor vehicle diesel fuel represented by credits
properly generated and used pursuant to the requirements of
Secs. 80.531 and 80.532.
(ii) The terms V500 and Vt have the meaning
specified in Sec. 80.531(a)(2).
(4) Compliance with the volume limit in paragraph (a)(3) of this
section must be determined separately for each refinery. For an
importer, such compliance must be determined separately for each Credit
Trading Area (as defined in Sec. 80.531) into which motor vehicle
diesel fuel is imported. If a party is both a refiner and an importer,
such compliance shall be determined separately for the refining and
importation activities.
(5) Compliance with the volume limit in paragraph (a)(3) of this
section shall be determined on a calendar year basis, where the
calendar year period is from January 1st through December 31st. For the
year 2006, compliance shall be determined for the period June 1, 2006
through December 31, 2006. For the year 2010, compliance shall be
determined for the period of January 1, 2010 through May 31, 2010.
(6) Any motor vehicle diesel fuel produced or imported above the
volume limit in paragraph (a)(3) of this section shall be subject to
the 15 ppm sulfur content standard. However, for any compliance period
prior to and including 2009, a refiner or importer may exceed the
volume limit in paragraph (a)(3) of this section by no more than 5
percent of the volume Vt of diesel fuel produced or imported
during the compliance period, provided that for the immediately
following calendar year:
(i) The refiner or importer complies with the volume limit in
paragraph (a)(3) of this section; and
(ii) The refiner or importer produces or imports a volume of motor
vehicle diesel fuel subject to the 15 ppm sulfur standard, or obtains
credits properly generated and used pursuant to the requirements of
Secs. 80.531 and 80.532 that represent a volume of motor vehicle diesel
fuel, equal to the volume of the exceedence for the prior compliance
period.
(b) After May 31, 2010, no refiner or importer may produce or
import motor vehicle diesel fuel subject to the 500 ppm sulfur content
standard pursuant to this section.
Sec. 80.531 How are motor vehicle diesel fuel credits generated?
(a) Generation of credits from June 1, 2006 through December 31,
2009. (1) A refiner or importer may generate credits during the period
June 1, 2006 through December 31, 2009, for motor vehicle diesel fuel
produced or imported that is designated as subject to the 15 ppm sulfur
content standard under Sec. 80.520(a)(1). Credits may be generated only
if the volume of motor vehicle diesel fuel designated under Sec. 80.523
as subject to the 15 ppm sulfur standard of Sec. 80.520(a) exceeds 80%
of the total volume of diesel fuel produced or imported as described in
paragraph (a)(2) of this section.
(2) The number of credits generated shall be calculated for each
compliance period (as specified in Sec. 80.530(a)(5)) as follows:
C = V15 - (0.80 x Vt)
Where:
C = the positive number of credits generated, in gallons.
V15 = the total volume in gallons of motor vehicle diesel
fuel produced or imported that is designated under Sec. 80.523 as
subject to the standards of Sec. 80.520(a) during the compliance
period.
V500 = the total volume in gallons of motor vehicle
diesel fuel produced or imported that is designated under
Sec. 80.523 as subject to the 500 ppm sulfur standard under
Sec. 80.520(c) plus the total volume of any other diesel fuel (not
including V15, or diesel fuel that is dyed in accordance
with Sec. 80.520(b) at the refinery or import facility where the
diesel fuel is produced or imported) represented as having a sulfur
content not exceeding 500 ppm.
Vt = V15 + V500.
(3) Credits shall be generated and designated as follows:
(i) Credits shall be generated separately for each refinery of a
refiner.
(ii) Credits shall be generated separately for each credit trading
area (CTA), as defined in paragraph (a)(5) of this section, into which
motor vehicle diesel fuel is imported by an importer.
(iii) Credits shall be designated separately by year of generation
and by CTA of generation. In the case of a refiner, credits shall also
be designated by refinery, and in the case of an importer, credits
shall also be designated by port of import.
(iv) Credits may not be generated by both a foreign refiner and by
an importer for the same motor vehicle diesel fuel.
[[Page 5140]]
(4) Credits shall be generated by a foreign refiner as provided in
Sec. 80.620(c) and this section.
(5) For purposes of this subpart, the CTAs are:
(i) PADDs 1, 2, 3 and 4, as described in Sec. 80.41(r), except as
provided in paragraph (a)(5)(iv) of this section. The CTAs shall be
designated as CTA 1, 2, 3, and 4, respectively, and correspond to PADD
1, 2, 3, and 4, respectively;
(ii) CTA 5 shall correspond to PADD 5, as described in
Sec. 80.41(r), except as provided in paragraphs (a)(5)(iii) and (iv) of
this section;
(iii) The states of Hawaii and Alaska shall each be treated as a
separate CTA and not a part of CTA 5. Alaska shall be CTA 6. Hawaii
shall be CTA 7;
(iv) If any state (through a waiver of federal preemption under
Section 211(c)(4) of the Clean Air Act, 42 U.S.C. 7545(c)(4))
implements a law or regulation that requires a greater volume of motor
vehicle diesel fuel to meet a sulfur standard of less than or equal to
15 ppm than the volume that is required under this subpart, no motor
vehicle diesel fuel produced in that state or imported directly into
that state may generate credits under this subpart, effective on the
implementation date of the sulfur program under the state statute or
regulation that implements the more stringent state requirements.
(6) No credits may be generated under this paragraph (a) after
December 31, 2009.
(7) No refinery may generate credits under both this paragraph (a)
and under paragraph (e) of this section.
(b) Generation of early credits from June 1, 2001 through May 31,
2005. (1) Beginning June 1, 2001, a refiner or importer may generate
one credit for each gallon of motor vehicle diesel fuel meeting the
sulfur content standard in Sec. 80.520(a)(1) that is used in vehicles
with engines that are certified to meet the model year 2007 heavy duty
engine PM standard under 40 CFR 86.007-11, or vehicles with retrofit
technologies that achieve emission levels equivalent to the 2007
NOX or PM emission standard verified as part of a retrofit
program administered by EPA or a state. Such refiners and importers
must comply with the requirements of paragraphs (b) and (d) of this
section.
(2)(i) Any refiner or importer planning to generate credits under
this paragraph must provide notice of intent to generate early credits
at least 120 calendar days prior to the date it begins generating
credits under this paragraph by submitting such notice to Attn: Early
Diesel Credits Notice, at the address in Sec. 80.595.
(ii) The notice shall include a detailed plan that demonstrates
that the motor vehicle diesel fuel meeting the 15 ppm sulfur standard
of Sec. 80.520(a)(1) for which credits are generated under this
paragraph will be used in vehicles with engines that are certified to
meet the model year 2007 heavy duty engine PM standard under 40 CFR
86.007-11 or in vehicles with retrofit technologies that achieve
emission levels equivalent to the 2007 NOX or PM emission
standard verified as part of a retrofit program administered by EPA or
a state. The notice must include the refiner's or importer's detailed
plan for ensuring that all motor vehicle diesel fuel that generates
early credits under this paragraph will be segregated from all other
motor vehicle diesel fuel not meeting the sulfur standard under
Sec. 80.520(a)(1), from the refinery or import facility to its ultimate
use in motor vehicles.
(3) No credits may be generated under this paragraph (b) after May
31, 2005.
(4) A refiner or importer may generate credits under this paragraph
and also generate credits under paragraph (a) of this section, and a
small refiner, as defined under Sec. 80.550, may generate credits under
this paragraph (b) and paragraph (e) of this section.
(c) Generation of early credits from June 1, 2005 through May 31,
2006. (1) Beginning June 1, 2005, a refiner or importer may generate
one credit for each gallon of motor vehicle diesel fuel that is
dispensed at retail outlets or at wholesale-purchaser consumer
facilities exclusively as motor vehicle diesel fuel meeting the 15 ppm
sulfur standard in Sec. 80.520(a)(1). Such refiners and importers must
comply with the requirements of this paragraph (c) and paragraph (d) of
this section.
(2)(i) Any refiner or importer planning to generate credits under
this paragraph must provide notice of intent to generate early credits
at least 120 calendar days prior to the date it begins generating
credits under this paragraph (c).
(ii) The notice shall include a detailed plan that demonstrates
that the motor vehicle diesel fuel meeting the sulfur standard under
Sec. 80.520(a)(1) will be dispensed exclusively at retail outlets or at
wholesale-purchaser consumer facilities as 15 ppm sulfur content motor
vehicle diesel fuel. The plan must demonstrate that the refiner or
importer will assure that all motor vehicle diesel fuel that generates
early credits under this paragraph (c) will be segregated from all
other motor vehicle diesel fuel from the refinery or import facility to
its ultimate use in motor vehicles.
(3) No credits may be generated under this paragraph after May 31,
2006.
(4) A refiner or importer may generate credits under this paragraph
(c) and also generate credits under paragraph (a) of this section, and
a small refiner, as defined under Sec. 80.550, may generate credits
under this paragraph (c) and paragraph (e) of this section.
(d) Additional requirements for early credits. Early credits
generated under paragraphs (b) and (c) of this section are subject to
the following additional requirements:
(1) The designation requirements of Sec. 80.523, and all
recordkeeping and annual reporting requirements of Secs. 80.592, 80.593
and 80.594.
(2) Credits generated under paragraphs (b) and (c) of this section
shall be generated separately by CTA as defined in paragraph (a)(5) of
this section and must be designated by CTA of generation, and by the
refiner and refinery, or by importer and port of import, as applicable.
(3) Credits may not be generated for the same fuel by both a
foreign refiner and an importer.
(4) The plan under paragraph (b)(2)(ii) or (c)(2)(ii) of this
section must include provisions to include information on product
transfer documents and on pump stands dispensing the fuel identifying
the fuel as 15 ppm sulfur content motor vehicle diesel fuel. The plan
must also identify the specific retail outlets or wholesale purchaser-
consumer facilities that the fuel will be provided to. The
Administrator may require a refiner or importer to submit additional
information, as needed.
(5) In addition to the reporting requirements under paragraph
(d)(1) of this section, the refiner or importer must submit a report to
the Administrator no later than the last day of February for the prior
calendar year period (or for the period June 1, 2001 through December
31, 2001, the period June 1, 2005 through December 31, 2005, or the
period January 1, 2006 through May 31, 2006, as applicable)
demonstrating that all the motor vehicle diesel fuel produced or
imported for which credits were generated met the applicable
requirements of paragraph (b), (c), or (d)(4) of this section. If the
Administrator finds that such credits did not in fact meet the
requirements of paragraphs (b)(1) and (c)(1) of this section, as
applicable, or if the Administrator determines that there is
insufficient information to determine the validity of such credits, the
Administrator may deny the credits submitted in whole or in part.
(e) Credits generated by small refiners. (1) Notwithstanding the
provisions of paragraph (a) of this section, a small refiner that is
approved by the EPA as
[[Page 5141]]
a small refiner under Sec. 80.551(g) may generate credits under
Sec. 80.552(b). Such a small refiner may generate one credit for each
gallon of motor vehicle diesel fuel produced that is designated under
Sec. 80.523 as subject to the 15 ppm sulfur standard under
Sec. 80.520(a)(1).
(2)(i) Credits may be generated under this paragraph (e) and
Sec. 80.552(b) only during the compliance periods beginning June 1,
2006 and ending on May 31, 2010. Credits shall be designated separately
by refinery, separately by CTA of generation, and separately by annual
compliance period. The annual compliance period for 2006 shall be June
1, 2006 through December 31, 2006. The annual compliance period for
2010 shall be January 1, 2010 through May 31, 2010.
(ii) The small refiner must meet the requirements of paragraphs
(d)(1), (d)(2) and (d)(3) of this section, and the recordkeeping and
reporting requirements of Secs. 80.592, 80.593 and 80.594.
(iii) In addition, a foreign refiner that is approved by the
Administrator to generate credits under Sec. 80.552(b) shall comply
with the requirements of Sec. 80.620.
Sec. 80.532 How are credits used and transferred?
(a) Credit use. Credits generated under Sec. 80.531 may be used to
meet the volume limit of Sec. 80.530(a)(3) provided that:
(1) The credits were generated and reported according to the
requirements of this subpart; and
(2) The requirements of paragraphs (b), (c), (d), and (e) of this
section are met.
(b) Credits generated under Sec. 80.531 may be used by a refinery
or by an importer to comply with section 80.530 by applying one credit
for every gallon of motor vehicle diesel fuel needed to meet compliance
with the volume limit of Sec. 80.530(a)(3).
(c) Credits generated may be banked for use or transfer in a later
compliance period or may be transferred to another refinery or importer
for use as provided in paragraph (d) of this section.
(d) Credit transfers. (1) Credits obtained from another refinery or
from another importer, including early credits and small refiner
credits as described in Sec. 80.531 (b), (c) (d), and (e), may be used
to satisfy the volume limit of Sec. 80.530(a)(3) if all the following
conditions are met:
(i) The credits were generated in the same CTA as the CTA in which
credits are used to achieve compliance;
(ii) The credits are used in compliance with the time period
limitations for credit use in this subpart;
(iii) Any credit transfer takes place no later than the last day of
February following the compliance period when the credits are used;
(iv) No credit may be transferred more than twice, as follows: The
first transfer by the refiner or importer who generated the credit may
only be made to a refiner or importer who intends to use the credit; if
the transferee cannot use the credit, it may make a second and final
transfer only to a refiner or importer who intends to use the credit.
In no case may a credit be transferred more than twice before being
used or terminated;
(v) The credit transferor must apply any credits necessary to meet
the transferor's annual compliance requirements before transferring
credits to any other refinery or importer;
(vi) No credits may be transferred that would result in the
transferor having a negative credit balance; and
(vii) Each transferor must supply to the transferee records
indicating the year the credits were generated, the identity of the
refiner (and refinery) or importer who generated the credits, the CTA
of credit generation, and the identity of the transferring party, if it
is not the same party who generated the credits.
(2) In the case of credits that have been calculated or created
improperly, or are otherwise determined to be invalid, the following
provisions apply:
(i) Invalid credits cannot be used to achieve compliance with the
transferee's volume requirements regardless of the transferee's good
faith belief that the credits were valid.
(ii) The refiner or importer who used the credits, and any
transferor of the credits, must adjust their credit records, reports
and compliance calculations as necessary to reflect the proper credits.
(iii) Any properly created credits existing in the transferor's
credit balance after correcting the credit balance, and after the
transferor applies credits as needed to meet the compliance
requirements at the end of the compliance period, must first be applied
to correct the invalid transfers before the transferor trades or banks
the credits.
(e) Limitations on credit use. (1) Credits may not be used to
achieve compliance with any requirements of this subpart other than the
volume limit of Sec. 80.530(a)(3), unless specifically approved by the
Administrator pursuant to a hardship relief petition under Sec. 80.560
or Sec. 80.561.
(2) A refiner or importer possessing credits must use all credits
in its possession prior to applying the credit deficit provisions of
Sec. 80.530(a)(6).
(3) No credits may be used to meet compliance with this subpart
subsequent to the compliance period ending May 31, 2010.
Secs. 80.533-80.539 [Reserved]
Geographic Phase-In Provisions
Sec. 80.540 How may a refiner be approved to produce gasoline under
the GPA gasoline sulfur standards in 2007 and 2008?
(a) A refiner that has been approved by EPA under Sec. 80.217 for
the geographic phase-in area (GPA) gasoline sulfur content standards
under Sec. 80.216 may apply to EPA for approval to produce gasoline
subject to the GPA standards in 2007 and 2008. Such application shall
be submitted to EPA, at the address provided in Sec. 80.595(b), by
December 31, 2001. A foreign refiner must apply under the provisions of
paragraph (n) of this section.
(b) The refiner must submit an application in accordance with the
provisions of Secs. 80.595 and 80.596. The application must also
include information, as provided in Sec. 80.594(c), demonstrating that
starting no later than June 1, 2006, all motor vehicle diesel fuel
produced by the refinery for United States use will comply with the 15
ppm sulfur content standard under Sec. 80.520(a)(1), and that the
volume of motor vehicle diesel fuel produced will comply with the
volume requirements of paragraph (e) of this section.
(c) The Administrator may approve a refiner's application to
produce gasoline subject to the GPA gasoline sulfur content standards
in 2007 and 2008 if the provisions of paragraph (b) of this section are
satisfied. In approving an application, the Administrator shall
establish a motor vehicle diesel fuel volume baseline under
Secs. 80.595 and 80.596.
(d) Starting June 1, 2006, and continuing through December 31,
2008, all motor vehicle diesel fuel produced by a refiner that has been
approved under paragraph (c) of this section to produce gasoline
subject to the GPA gasoline sulfur content standards in 2007 and 2008,
must be accurately designated under Sec. 80.523 as meeting the 15 ppm
sulfur content standard of Sec. 80.520(a)(1).
(e) The total volume of motor vehicle diesel fuel produced for use
in the United States and designated as meeting the 15 ppm sulfur
content standard under paragraph (d) of this section must meet or
exceed 85% of the baseline volume established under paragraph (c) of
this section, except that for the year
[[Page 5142]]
2006, the total volume must meet or exceed 50% of the baseline volume.
(f) Compliance with the volume requirements in paragraph (e) of
this section shall be determined on a calendar year basis, except that
for the year 2006 compliance shall be determined for the period June 1,
2006 through December 31, 2006.
(g) If a refiner fails to comply with the requirements of paragraph
(d) of this section, or if the approval of the application, including
the baseline, was based on false or inaccurate information, the
approval to produce gasoline subject to the GPA gasoline sulfur content
standards under this section during the years 2007 and 2008 shall be
void ab initio, and gasoline produced for use in the GPA must meet the
gasoline sulfur content standards of subpart H of this Part as if there
had been no approval to produce gasoline subject to the GPA gasoline
sulfur content standards in 2007 and 2008.
(h) If for any compliance period a refiner fails to meet the volume
requirements in paragraph (e) of this section, the approval to produce
gasoline subject to the GPA gasoline sulfur content standards shall be
void for that compliance period and for all succeeding compliance
periods, and gasoline produced for use in the GPA must meet the
gasoline sulfur standards under subpart H of this subpart as if there
had been no approval to produce gasoline subject to the GPA gasoline
sulfur content standards under this section in 2007 and 2008.
(i) A refiner that is approved for production of gasoline subject
to the GPA gasoline sulfur standards under this section in 2007 and
2008 must meet all applicable recordkeeping and reporting requirements
of Secs. 80.592, 80.593, and 80.594, and shall meet all the
recordkeeping and reporting requirements under Secs. 80.219, 80.365 and
80.370.
(j) A refiner approved to produce gasoline subject to the GPA
gasoline sulfur standards under this section in 2007 and 2008 may not
generate or use credits under Sec. 80.531(a) or (e), or Sec. 80.532
unless the approval is vacated as provided in paragraph (k) of this
section.
(k) A refiner may petition the Administrator to vacate approval to
produce gasoline subject to the GPA gasoline sulfur content standards
in 2007 and 2008. EPA may grant such a petition, effective January 1 of
the compliance period following EPA's receipt of such petition (or
effective June 1, in 2006, if applicable). Upon such effective date and
thereafter, gasoline produced for use in the GPA must meet the gasoline
sulfur content standards under subpart H of this Part as if there had
been no approval to produce gasoline subject to the GPA gasoline sulfur
content standards under this section in 2007 and 2008. Upon such
effective date, the refiner shall not be subject to the requirements of
this section.
(l) The provisions of this section shall apply separately for each
refinery of a refiner.
(m) If any refinery is approved for production of gasoline subject
to GPA gasoline sulfur content standards under this section in 2007 and
2008, the GPA downstream gasoline sulfur standard under
Sec. 80.220(a)(2) shall apply as follows:
(1) During the period of February 1, 2005 through January 31, 2009,
the sulfur content of GPA gasoline at any downstream location other
than at a retail outlet or wholesale purchaser-consumer facility shall
not exceed 326 ppm.
(2) During the period of March 1, 2005 through February 28, 2009,
the sulfur content of GPA gasoline at any downstream location shall not
exceed 326 ppm.
(n) A foreign refiner may apply to the Administrator to produce
gasoline that is subject to the gasoline sulfur standards for GPA
gasoline under Sec. 80.216 for the compliance years 2007 and 2008. Such
application must be submitted to the EPA, at the address in
Sec. 80.595(b), by December 31, 2001.
(1) The Administrator may approve such interim GPA gasoline sulfur
standards for the foreign refiner provided that the foreign refiner
applies for a gasoline sulfur baseline under paragraph (n)(2) of this
section and complies with:
(i) The requirements of paragraphs (b) through (l) of this section;
(ii) The requirements for the import of motor vehicle diesel fuel
under Sec. 80.620; and
(iii) All applicable gasoline requirements for refiners under
subpart H of this Part, including the foreign refiner requirements
under Sec. 80.410, the attest requirements of Sec. 80.415, the
recordkeeping and reporting requirements of Secs. 80.365 and 80.370,
the designation and product transfer document requirements of
Sec. 80.219, the sampling and testing requirements of Sec. 80.330, and
the sample retention requirements of Sec. 80.335.
(2) The refiner must submit an application for a gasoline sulfur
baseline under the provisions of Secs. 80.216(a), 80.295, and
80.410(b).
(3) After review of the foreign refiner's individual refinery
gasoline sulfur baseline, its individual refinery motor vehicle diesel
fuel baseline, and other information submitted with the application,
the Administrator may approve such baselines and the application for
GPA gasoline sulfur standards for 2007 and 2008.
(o) An importer is not eligible for approval to import gasoline
subject to the GPA standards in 2007 or 2008 under this section.
Secs. 80.541--80.549 [Reserved]
Small Refiner Hardship Provisions
Sec. 80.550 What is the definition of a small refiner under this
subpart?
(a) A small refiner is defined as any person, as defined by 42
U.S.C. 7602(e), who:
(1) Produces diesel fuel at a refinery by processing crude oil
through refinery processing units;
(2) Employed an average of no more than 1,500 people, based on the
average number of employees for all pay periods from January 1, 1999,
to January 1, 2000; and
(3) Had an average crude capacity less than or equal to 155,000
barrels per calendar day (bpcd) for 1999.
(b) For the purpose of determining the number of employees and
crude capacity under paragraph (a) of this section, the refiner shall
include the employees and crude capacity of any subsidiary companies,
any parent company and subsidiaries of the parent company in which the
parent has 50% or greater ownership, and any joint venture partners.
(c) The definition under paragraph (a) of this section applies to
domestic and foreign refiners. For any refiner owned by a governmental
entity, the number of employees as specified in paragraph (a) of this
section shall include all employees and total crude capacity of the
government of which the governmental entity is a part.
(d) Notwithstanding the provisions of paragraph (a) of this
section, a refiner that acquires a refinery after January 1, 2000, or
reactivates a refinery that was shutdown or was non-operational between
January 1, 1999, and January 1, 2000, may apply for small refiner
status in accordance with the provisions of Sec. 80.551(c)(1)(ii).
(e) Ineligible parties. The following are ineligible for the small
refiner provisions:
(1) Refiners or refineries built or started up after January 1,
2000;
(2) Persons who exceed the employee or crude oil capacity criteria
under this section on January 1, 2000, but who meet these criteria
after that date, regardless of whether the reduction in
[[Page 5143]]
employees or crude oil capacity is due to operational changes at the
refinery or a company sale or reorganization;
(3) Importers; and
(4) Refiners who produce motor vehicle diesel fuel other than by
processing crude oil through refinery processing units.
(f)(1) Refiners who qualify as small refiners under this section
and who subsequently employ more than 1500 people as a result of merger
with or acquisition of another entity, are disqualified as small
refiners. If this occurs, the refiner shall notify EPA in writing no
later than 20 days following this disqualifying event.
(2) Any refiner whose status changes under this paragraph shall
comply with the sulfur standard of Sec. 80.520(a)(1) beginning January
1 of the calendar year following the disqualifying event in paragraph
(f)(1) of this section.
(g) Notwithstanding the criteria in paragraph (a) of this section,
any small refiner that has been approved by EPA as a small refiner
under Sec. 80.235 and meets the criteria of paragraph (a)(1) of this
section, will be considered a small refiner under this section as well,
for as long as they are a small refiner under Sec. 80.225. The
provisions of paragraph (f) of this section apply to any such refiner.
Sec. 80.551 How does a refiner obtain approval as a small refiner
under this subpart?
(a)(1) Applications for small refiner status must be submitted to
EPA by December 31, 2001 as part of the refiner's registration under
Sec. 80.597.
(2) In the case of a refiner who acquires a refinery after January
1, 2000, or reactivates a refinery that was shutdown between January 1,
1999, and January 1, 2000, the application for small refiner status
must be submitted to EPA by June 1, 2003.
(b) Applications for small refiner status must be sent via
certified mail with return receipt or express mail with return receipt
to: U.S. EPA-Attn: Diesel Small Refiner Status (6406J), 1200
Pennsylvania Avenue, NW (6406J), Washington, DC 20460 (certified mail/
return receipt) or Attn: Diesel Small Refiner Status, Transportation
and Regional Programs Division,501 3rd Street, NW (6406J), Washington,
DC 20001 (express mail/return receipt).
(c) The small refiner status application must contain the following
information for the company seeking small refiner status, plus any
subsidiary companies, any parent company and subsidiaries of the parent
company in which the parent has 50% or greater ownership, and any joint
venture partners:
(1)(i) A listing of the name and address of each location where any
employee worked during the 12 months preceding January 1, 2000; the
average number of employees at each location based upon the number of
employees for each pay period for the 12 months preceding January 1,
2000; and the type of business activities carried out at each location;
or
(ii) In the case of a refiner who acquires a refinery after January
1, 2000, or reactivates a refinery that was shutdown between January 1,
1999, and January 1, 2000, a listing of the name and address of each
location where any employee of the refiner worked since the refiner
acquired or reactivated the refinery; the average number of employees
at any such acquired or reactivated refinery during each calendar year
since the refiner acquired or reactivated the refinery; and the type of
business activities carried out at each location.
(2) The total corporate crude capacity of each refinery as reported
to the Energy Information Administration (EIA) of the U.S. Department
of Energy (DOE) for the most recent 12 months of operation. The
information submitted to EIA is presumed to be correct. In cases where
a company disagrees with this information, the company may petition EPA
with appropriate data to correct the record when the company submits
its application for small refiner status. EPA may accept such alternate
data at its discretion.
(3) An indication of whether the refiner, for each refinery, is
applying for:
(i) The ability to produce motor vehicle diesel fuel subject to the
500 ppm sulfur content standard under Sec. 80.520(c) or generate
credits under Sec. 80.531, pursuant to the provisions of Sec. 80.552(a)
or (b); or
(ii) An extension of the duration of its small refiner gasoline
sulfur standard under Sec. 80.553, pursuant to the provisions of
Sec. 80.552(c).
(4) A letter signed by the president, chief operating or chief
executive officer of the company, or his/her designee, stating that the
information contained in the application is true to the best of his/her
knowledge.
(5) Name, address, phone number, facsimile number and e-mail
address (if available) of a corporate contact person.
(d) For joint ventures, the total number of employees includes the
combined employee count of all corporate entities in the venture.
(e) For government-owned refiners, the total employee count
includes all government employees.
(f) Approval of small refiner status for refiners who apply under
Sec. 80.550(d) will be based on all information submitted under
paragraph (c) of this section, except as provided in Sec. 80.550(d).
(g) EPA will notify a refiner of approval or disapproval of small
refiner status by letter. If disapproved, the refiner must comply with
the sulfur standard in Sec. 80.520, except as otherwise provided in
this subpart.
(h) If EPA finds that a refiner provided false or inaccurate
information on its application for small refiner status, upon notice
from EPA the refiner's small refiner status will be void ab initio.
(i) Upon notification to EPA, an approved small refiner may
withdraw its status as a small refiner. Effective on January 1 of the
year following such notification, the small refiner will become subject
to the sulfur standard of Sec. 80.520 unless one of the hardship
provisions of this subpart apply.
Sec. 80.552 What compliance options are available to small refiners?
(a) A refiner that has been approved by EPA as a small refiner
under Sec. 80.551(g) may produce motor vehicle diesel fuel subject to
the 500 ppm sulfur content standard pursuant to the provisions of
Sec. 80.530, except that the volume limits of Sec. 80.530(a)(3) shall
only apply to that volume V\500\ of diesel fuel that is produced or
imported during a calendar year that exceeds 105% of the baseline
volume established under Sec. 80.595. The calendar year period shall be
from January 1st through December 31st. For the period June 1, 2006
through December 31, 2006, the volume limits shall only apply to that
volume VV\500\ that exceeds 60% of the baseline volume.
(b) A refiner that has been approved by EPA as a small refiner
under Sec. 80.551(g) may generate motor vehicle diesel fuel credits
pursuant to the provisions of Sec. 80.531, except that for purposes of
Sec. 80.531(a) the term Credit shall equal VV\15\, without further
adjustment.
(c) A refiner that has been approved by EPA as a small refiner
under Sec. 80.551(g) may apply for an extension of the duration of its
small refiner gasoline sulfur standards pursuant to Sec. 80.553.
(d) A refiner that produces motor vehicle diesel fuel under the
provisions of paragraph (a) of this section or generates credits under
the provisions of paragraph (b) of this section may not receive an
extension of its small refiner gasoline sulfur standard under the
provisions of paragraph (c) of this section. A refiner that receives an
extension of its small refiner gasoline
[[Page 5144]]
sulfur standard under the provisions of paragraph (c) of this section
may not produce motor vehicle diesel fuel under the provisions of
paragraph (a) of this section and may not generate credits under the
provisions of paragraph (b) of this section.
(e) The provisions of this section shall apply separately for each
refinery owned or operated by a small refiner.
Sec. 80.553 Under what conditions may the small refiner gasoline
sulfur standards be extended for a small refiner of motor vehicle
diesel fuel?
(a) A refiner that has been approved by EPA for small refiner
gasoline sulfur standards under Sec. 80.240 may apply, under
Sec. 80.551, for an extension of the duration of its small refiner
gasoline sulfur standards through the calendar year 2010 annual
averaging period.
(b) As part of its application, the refiner must submit an
application for a motor vehicle diesel fuel baseline in accordance with
the provisions of Secs. 80.595 and 80.596. The application must also
include information, as provided in Sec. 80.594, demonstrating that
starting no later than June 1, 2006, all motor vehicle diesel fuel
produced by the refiner will comply with the 15 ppm sulfur content
standard under Sec. 80.520(a)(1), and that the volume of motor vehicle
diesel fuel produced will comply with the volume requirements of
paragraph (e) of this section.
(c) The Administrator may approve an application for extension of
the small refiner gasoline sulfur standards if the provisions of
paragraph (b) of this section and Secs. 80.595 and 80.596 are
satisfied. In approving an application for extension, the Administrator
shall establish a motor vehicle diesel fuel volume baseline under
Secs. 80.595 and 80.596.
(d) Beginning June 1, 2006, and continuing through December 31,
2010, all motor vehicle diesel fuel produced by a refiner that has
received an extension of its small refiner gasoline sulfur standards
under this section must be accurately designated under Sec. 80.523 as
meeting the 15 ppm sulfur content standard under Sec. 80.520(a)(1).
(e) The total volume of motor vehicle diesel fuel produced for use
in the United States and designated as meeting the 15 ppm sulfur
content standard under paragraph (d) of this section must meet or
exceed 85% of the baseline volume established under paragraph (c) of
this section, except that for the year 2006, the total volume must meet
or exceed 50% of the baseline volume.
(f) Compliance with the volume requirements in paragraph (e) of
this section shall be determined on a calendar year basis, except that
for the year 2006 compliance shall be determined for the period June 1,
2006 through December 31, 2006.
(g) If a refiner fails to comply with the requirements of paragraph
(d) of this section, or if approval of the application, including the
baseline, was based on false or inaccurate information, the extension
of the applicable small refiner gasoline sulfur standards under this
section shall be void ab initio, and all gasoline produced by the
refinery must meet the gasoline sulfur standards under subpart H of
this Part as if there had been no extension of the small refiner
gasoline sulfur standards.
(h) If for any compliance period a refiner fails to meet the volume
requirements in paragraph (e) of this section, the extension of the
small refiner gasoline sulfur standards shall be void for that
compliance period and for all succeeding compliance periods and all
gasoline produced by the refinery must meet the gasoline sulfur
standards under subpart H of this part as if there had been no
extension of the small refiner gasoline sulfur standards under this
section for such compliance periods.
(i) A refiner that is approved for an extension of the interim
small refiner gasoline sulfur standards under this section must meet
all applicable recordkeeping and reporting requirements of
Secs. 80.592, 80.593, and 80.594, and shall meet all the recordkeeping
and reporting requirements under Secs. 80.210, 80.365 and 80.370. Any
foreign refiner shall meet all additional requirements under
Secs. 80.620 and 80.410.
(j) A refiner approved for the small refiner gasoline sulfur
standards extension under this section may not generate or use credits
under Sec. 80.531(a) or (e), or Sec. 80.532.
(k) A refiner may petition the Administrator to vacate an extension
of the small refiner gasoline sulfur content standards. EPA may grant
such a petition, effective January 1 of the compliance period following
receipt of such petition (or effective June 1, 2006, if applicable).
Upon such effective date, all gasoline produced by the refiner must
meet the gasoline sulfur content standards under subpart H of this Part
as if there had been no extension of the small refiner gasoline sulfur
content standards under this section. Upon such effective date, the
refiner shall not be subject to the requirements of this section.
(l) The provisions of this section shall apply separately for each
refinery of a refiner.
Secs. 80.554-80.559 [Reserved]
Other Hardship Provisions
Sec. 80.560 How can a refiner seek temporary relief from the
requirements of this subpart in case of extreme hardship circumstances?
(a) EPA may, at its discretion, grant a refiner, for one or more of
its refineries, temporary relief from some or all of the provisions of
this subpart. Such relief shall be no less stringent than the small
refiner compliance options specified in Sec. 80.552. EPA may grant such
relief provided that the refiner demonstrates that:
(1) Unusual circumstances exist that impose extreme hardship and
significantly affect the refiner's ability to comply by the applicable
date; and
(2) It has made best efforts to comply with the requirements of
this subpart.
(b) Applications must be submitted to EPA by June 1 2002 to the
following address: Applications for small refiner status must be sent
via certified mail with return receipt or express mail with return
receipt to: U.S. EPA-Attn: Diesel Hardship (6406J), 1200 Pennsylvania
Avenue, NW (6406J), Washington, DC 20460 (certified mail/return
receipt) or Attn: Diesel Hardship, Transportation and Regional Programs
Division, 501 3rd Street, NW (6406J), Washington, DC 20001 (express
mail/return receipt). EPA reserves the right to deny applications for
appropriate reasons, including unacceptable environmental impact.
Approval to distribute motor vehicle diesel fuel not subject to the 15
ppm sulfur standard may be granted for such time period as EPA
determines is appropriate, but shall not extend beyond May 31, 2010.
(c) Applications must include a plan demonstrating how the refiner
will comply with the requirements of this subpart as expeditiously as
possible. The plan shall include a showing that contracts are or will
be in place for engineering and construction of desulfurization
equipment a plan for applying for and obtaining any permits necessary
for construction or operation, projected timeline for beginning and
completing construction, and for beginning actual operation of such
equipment, and a description of plans to obtain necessary capital, and
a detailed estimate of when the requirements of this subpart will be
met.
(d) Applicants must provide, at a minimum, the following
information:
(1) Detailed description of efforts to obtain capital for refinery
investments and efforts made to obtain credits for compliance under
Sec. 80.531;
(2) Bond rating of entity that owns the refinery (in the case of
joint ventures,
[[Page 5145]]
include the bond rating of the joint venture entity and the bond
ratings of all partners; in the case of corporations, include the bond
ratings of any parent or subsidiary corporations); and
(3) Estimated capital investment needed to comply with the
requirements of this subpart by the applicable date.
(e) In addition to the application requirements of paragraph (b) of
this section, a refiner's application for temporary relief under this
paragraph must also include a compliance plan. Such compliance plan
shall demonstrate how the refiner will engage in a quality assurance
testing program to ensure that its motor vehicle diesel fuel subject
solely to the sulfur standards under Sec. 80.520(c) has not caused
motor vehicle diesel fuel subject to the 15 ppm standard
Sec. 80.520(a)(1) to fail to comply with that standard. The quality
assurance program must at least include periodic sampling and testing
at the party's own facilities and at downstream facilities in the
refiner's or importer's diesel fuel distribution system, to determine
compliance with the applicable sulfur standards for both categories of
motor vehicle diesel fuel; examination at the party's own facilities
and at applicable downstream facilities, of product transfer documents
to confirm appropriate transfers and deliveries of both products; and
inspection of retailer and wholesale purchaser-consumer pump stands for
the presence of the labels and warning signs required under this
section. Any violations that are discovered shall be reported to EPA
within 48 hours of discovery.
(f) Applications under this section must be accompanied by:
(1) A letter signed by the president, chief operating or chief
executive officer of the company, or his/her designee, stating that the
information contained in the application is true to the best of his/her
knowledge.
(2) The name, address, phone number, facsimile number and e-mail
address of a corporate contact person.
(g) Applicants must also provide any other relevant information
requested by EPA.
(h) Refiners who are granted a hardship relief standard for any
refinery, and importers of fuel subject to temporary refiner relief
standards, may not distribute the diesel fuel subject to the sulfur
standard under Sec. 80.520(c) for use in model year 2007 and later
vehicles and must comply with all applicable provisions of this
subpart, including the provisions of this subpart.
(i) EPA may impose any reasonable conditions on waivers under this
section, including limitations on the refinery's volume of motor
vehicle diesel fuel subject to a temporary refiner relief standards.
(j) The provisions of this section are available only to refineries
that produce diesel fuel from crude.
(k) The individual refinery sulfur standard and the compliance plan
will be approved or disapproved by the Administrator, and approval will
be effective when the refiner (or importer, as applicable, in the case
of compliance plans) receives an approval letter from EPA. If
disapproved, the refiner or importer must comply with the motor vehicle
diesel fuel standard under Sec. 80.520(a)(1) by the appropriate
compliance date specified in Sec. 80.500.
(l) If EPA finds that a refiner provided false or inaccurate
information on its application for small refiner status, upon notice
from EPA the refiner's small refiner status will be void ab initio.
Sec. 80.561 How can a refiner or importer seek temporary relief from
the requirements of this subpart in case of extreme unforseen
circumstances?
In appropriate extreme, unusual, and unforseen circumstances (e.g.,
natural disaster or refinery fire) which are clearly outside the
control of the refiner or importer and which could not have been
avoided by the exercise of prudence, diligence and due care, EPA may
permit a refiner or importer, for a brief period, to distribute motor
vehicle diesel fuel which does not meet the requirements of this
subpart if:
(a) It is in the public interest to do so (e.g., distribution of
the nonconforming diesel fuel is necessary to meet projected shortfalls
which cannot otherwise be compensated for);
(b) The refiner or importer exercised prudent planning and was not
able to avoid the violation and has taken all reasonable steps to
minimize the extent of the nonconformity;
(c) The refiner or importer can show how the requirements for motor
vehicle diesel fuel will be expeditiously achieved;
(d) The refiner or importer agrees to make up any air quality
detriment associated with the nonconforming motor vehicle diesel fuel,
where practicable;
(e) The refiner or importer pays to the U.S. Treasury an amount
equal to the economic benefit of the nonconformity minus the amount
expended pursuant to paragraph (d) of this section, in making up the
air quality detriment; and
(f) In the case of motor vehicle diesel fuel distributed under this
section that does not meet the 15 ppm sulfur standard under
Sec. 80.520(a)(1), such diesel fuel shall not be distributed for use in
model year 2007 or later motor vehicles, and must meet all the
requirements and prohibitions of this subpart applicable to diesel fuel
meeting the sulfur standard under Sec. 80.520(c), or to diesel fuel
that is not motor vehicle diesel fuel, as applicable.
Secs. 80.562-80.569 [Reserved]
Labeling Requirements
Sec. 80.570 What labeling requirements apply to retailers and
wholesale purchaser-consumers of motor vehicle diesel fuel?
(a) Any retailer or wholesale purchaser-consumer who sells,
dispenses, or offers for sale or dispensing, motor vehicle diesel fuel
subject to the 500 ppm sulfur standard of Sec. 80.520(c), must
prominently and conspicuously display in the immediate area of each
pump stand from which motor vehicle fuel subject to the 500 ppm
standard is offered for sale or dispensing, the following legible
label, in block letters of no less than 36-point bold type, printed in
a color contrasting with the background:
HIGH-SULFUR DIESEL FUEL--WARNING
May damage model year 2007 and later highway vehicles.
Federal Law prohibits use in these vehicles.
(b) Any retailer or wholesale purchaser-consumer who sells,
dispenses, or offers for sale or dispensing, motor vehicle diesel fuel
subject to the 15 ppm sulfur standard of Sec. 80.520(a)(1), must affix
the following conspicuous and legible label, in block letters of no
less than 36-point bold type, and printed in a color contrasting with
the background, to each pump stand:
LOW-SULFUR DIESEL FUEL
Recommended for use in all diesel vehicles.
Required for model year 2007 and later vehicles.
(c) Any retailer or wholesale purchaser-consumer who sells,
dispenses, or offers for sale or dispensing, diesel fuel for nonroad
equipment that does not meet the standards for motor vehicle diesel
fuel, must affix the following conspicuous and legible label, in block
letters of no less than 36-point bold type, and printed in a color
contrasting with the background, to each pump stand:
NONROAD DIESEL FUEL--WARNING
May damage or destroy highway engines and their emission controls.
Federal Law prohibits use in any highway vehicle.
[[Page 5146]]
(d) The labels required by paragraphs (a) through (c) of this
section must be placed on the vertical surface of each pump housing and
on each side with gallonage and price meters. The labels shall be on
the upper two-thirds of the pump, in a location where they are clearly
readable by the public.
Secs. 80.571-80.579 [Reserved]
Sampling and Testing
Sec. 80.580 What are the sampling and testing methods for sulfur?
(a) Diesel fuel and diesel fuel additives. For purposes of
Secs. 80.520 and 80.521, the sulfur content of diesel and diesel fuel
additives is to be determined in accordance with this section.
(1) Sampling method. The applicable sampling methodology provided
in Sec. 80.330(b).
(2) Test method for sulfur. (i) For diesel fuel and diesel fuel
additives subject to the 15 ppm sulfur standard of Sec. 80.520(a)(1),
the American Society for Testing and Materials (ASTM) standard method D
6428-99, entitled ``Test Method for Total Sulfur in Liquid Aromatic
Hydrocarbons and Their Derivatives by Oxidative Combustion and
Electrochemical Detection.''
(ii) For diesel fuel and diesel fuel additives subject to the 500
ppm sulfur standard of 80.520(c), ASTM standard method D 2622-98,
``Standard Test Method for Sulfur in Petroleum Products by X-Ray
Spectrometry.''
(3) Alternative test methods for sulfur. (i) For diesel fuel and
diesel fuel additives subject to the 15 ppm standard of
Sec. 80.520(a)(1), sulfur content may be determined using ASTM D 5453-
99, entitled ``Standard Test Method for Determination of Total Sulfur
in Light Hydrocarbons, Motor Fuels and Oils by Ultraviolet
Fluorescence,'' or ASTM D 3120-96, entitled ``Standard Test Method for
Trace Quantities of Sulfur in Light Liquid Petroleum Hydrocarbons by
Oxidative Microcoulometry,'' provided that the refiner or importer test
result is correlated with the appropriate method specified in paragraph
(a)(2) of this section.
(ii) For diesel fuel and diesel fuel additives subject to the 500
ppm standard of Sec. 80.520(c), sulfur content may be determined using
ASTM D 5453-99, ``Standard Test Method for Determination of Total
Sulfur in Light Hydrocarbons, Motor Fuels and Oils by Ultraviolet
Fluorescence,'' or ASTM D 6428-00, entitled ``Test Method for Total
Sulfur in Liquid Aromatic Hydrocarbons and Their Derivatives by
Oxidative Combustion and Electrochemical Detection,'' provided that the
refiner or importer test result is correlated with the appropriate
method specified in paragraph (a)(2) of this section.
(4) Adjustment Factor for downstream test results. An adjustment
factor of negative 2 ppm shall be applied to the test results, to
account for test variability, but only for testing of motor vehicle
diesel fuel identified as subject to the 15 ppm sulfur standard of
Sec. 80.520(a)(1), at a downstream location as defined in
Sec. 80.500(f).
(b) Incorporation by reference. ASTM Standard Methods D 2622-98,
``Standard Test Method for Sulfur in Petroleum Products by Wavelength
Dispersive X-ray Fluorescence Spectrometry,'' D 3120-96, ``Standard
Test Method for Trace Quantities of Sulfur in Light Liquid Petroleum
Hydrocarbons by Oxidative Microcoulometry,'' D 6428-99, ``Test Method
for Total Sulfur in Liquid Aromatic Hydrocarbons and Their Derivatives
by Oxidative Combustion and Electrochemical Detection,'' and D 5453-00,
``Standard Test Method for Determination of Total Sulfur in Light
Hydrocarbons, Motor Fuels and Oils by Ultraviolet Fluorescence,'' are
incorporated by reference. This incorporation by reference was approved
by the Director of the Federal Register in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. Copies may be obtained from the American
Society for Testing and Materials, 100 Barr Harbor Dr., West
Conshohocken, PA 19428-2959. Copies may be inspected at the Air Docket
Section (LE-131), Room M-1500, U.S. Environmental Protection Agency,
Docket No. A-99-06, 401 M Street, SW, Washington, DC 20460, or at the
Office of the Federal Register, 800 North Capitol Street, NW, Suite
700, Washington, DC.
Secs. 80.581-80.589 [Reserved]
Recordkeeping and Reporting Requirements
Sec. 80.590 What are the product transfer document requirements for
motor vehicle diesel fuel?
On each occasion that any person transfers custody or title to
motor vehicle diesel fuel, including distillates used or intended to be
used as motor vehicle diesel fuel, except when such fuel is dispensed
into motor vehicles at a retail outlet or wholesale purchaser-facility,
the transferor must provide to the transferee documents identifying the
fuel as motor vehicle diesel fuel, and which include the following
information:
(a) The name and address of the transferor and transferee.
(b) The volume of motor vehicle diesel fuel which is being
transferred.
(c) The location of the motor vehicle diesel fuel at the time of
the transfer.
(d) The date of the transfer.
(e) Except as provided in 40 CFR 69.51, an accurate statement, as
applicable, that:
(1) ``This fuel complies with the 15 ppm low sulfur standard for
motor vehicle diesel fuel.'';
(2) ``This fuel complies with the 500 ppm high sulfur standard for
motor vehicle diesel fuel and is for use only in MY 2006 and older
diesel motor vehicles.'';
(3) ``This is high sulfur motor vehicle diesel fuel for use only in
Guam, American Samoa, or the Northern Mariana Islands.'';
(4) ``This diesel fuel is for export use only.'';
(5) ``This diesel fuel is for research, development, or testing
purposes only.'';
(6) ``This diesel fuel is for use in diesel vehicles having an EPA-
approved national security exemption only.''.
(f) For motor vehicle diesel fuel that contains visible evidence of
the dye solvent red 164, and is intended to be used in a manner that is
tax-exempt as defined under section 4082 of the Internal Revenue Code,
the following statement:
This fuel is motor vehicle diesel fuel for tax-exempt use only,
in accordance with Section 4082 of the Internal Revenue Code.
(g) Except for transfers to truck carriers, retailers or wholesale
purchaser-consumers, product codes may be used to convey the
information required under this section if such codes are clearly
understood by each transferee. Codes used to convey the statement in
paragraph (e)(1) of this section must contain the number ``15'', and
codes used to convey the statement in paragraph (e)(2) of this section
must contain the number ``500''.
(h) Beginning June 1, 2001 and ending May 31, 2005, any transfer
subject to this section, which is also subject to the early credit
provisions of Sec. 80.531(b), must comply with all applicable
requirements of this section except those in paragraph (e) of this
section.
(i) Beginning June 1, 2005 and ending May 31, 2006, any transfer
subject to this section, which is also subject to the early credit
requirements of Sec. 80.531(c), must comply with all applicable
requirements of this section.
Sec. 80.591 What are the product transfer document requirements for
additives to be used in diesel fuel?
(a) Except as provided in paragraphs (b) and (d) of this section,
on each
[[Page 5147]]
occasion that any person transfers custody or title to a motor vehicle
diesel fuel additive to a party in the additive distribution system or
in the motor vehicle diesel fuel distribution system for use downstream
of the diesel fuel refiner, the transferor must provide to the
transferee documents which identify the additive, and:
(1) Identify the name and address of the transferor and transferee;
the date of transfer; the location at which the transfer took place;
the volume of additive transferred; and
(2) Indicates compliance with the 15 ppm sulfur standard by
inclusion of the following statement:
The sulfur content of this diesel fuel additive does not exceed
15 ppm.
(b) On each occasion that any person transfers custody or title to
a motor vehicle diesel fuel additive subject to the requirements of
Sec. 80.521(b), to a party in the additive distribution system or in
the motor vehicle diesel fuel distribution system for use in diesel
fuel downstream of the diesel fuel refiner, the transferor must provide
to the transferee documents which identify the additive, and:
(1) Identify the name and address of the transferor and transferee;
the date of transfer; the location at which the transfer took place;
the volume of additive transferred.
(2) Indicate the high sulfur potential of the additive by inclusion
of the following statement:
This motor vehicle diesel fuel additive may exceed the federal
15 ppm sulfur standard. Improper use of this additive may result in
non-complying diesel fuel.
(3) Includes the following information:
(i) The additive's maximum sulfur concentration;
(ii) The maximum recommended concentration in volume percent for
use of the additive in diesel fuel; and
(iii) The contribution to the sulfur level of the fuel, in ppm,
that would result if the additive is used at the maximum recommended
concentration.
(c) Except for transfers of motor vehicle diesel fuel additives to
truck carriers, retailers or wholesale purchaser-consumers, product
codes may be used to convey the information required under paragraphs
(a) and (b) of this section, if such codes are clearly understood by
each transferee. Codes used to convey the statement in paragraph (a)(2)
of this section must contain the number ``15'' and codes used to convey
the statement in paragraph (b)(2) of this section may not contain such
number.
(d) For those motor vehicle diesel fuel additives which are sold in
containers for use by the ultimate consumer of diesel fuel, each
transferor must have displayed on the additive container, in a legible
and conspicuous manner, either of the following statements, as
applicable:
(1) ``This diesel fuel additive complies with the federal low
sulfur content requirements for use in diesel motor vehicles.''; or
(2) For those additives sold in containers for use by the ultimate
consumer, with a sulfur content in excess of 15 ppm: ``This diesel fuel
additive does not comply with federal low sulfur content requirements
for use in model year 2007 and newer diesel motor vehicles.''.
Sec. 80.592 What records must be kept?
(a) Records that must be kept by parties in the motor vehicle
diesel fuel and motor vehicle diesel fuel additive distribution
systems. Beginning June 1, 2006, or for a refiner the first compliance
period in which the refiner is generating early credits under
Sec. 80.531(b) or (c), whichever is earlier, any person who produces,
imports, sells, offers for sale, dispenses, distributes, supplies,
offers for supply, stores, or transports motor vehicle diesel fuel
subject to the provisions of this subpart, must keep the following
records:
(1) The applicable product transfer documents required under
Secs. 80.590 and 80.591;
(2) For any sampling and testing for sulfur content, cetane index
or aromatics content of motor vehicle diesel fuel or motor vehicle
diesel fuel additives, conducted as part of a quality assurance program
or otherwise:
(i) The location, date, time and storage tank or truck
identification for each sample collected;
(ii) The name and title of the person who collected the sample and
the person who performed the testing; and
(iii) The results of the tests for sulfur content (including where
applicable the test results with and without application of the
adjustment factor under Sec. 80.580(a)(4)) or other standard content,
and the volume of product in the storage tank or container from which
the sample was taken;
(3) The actions the party has taken, if any, to stop the sale or
distribution of any motor vehicle diesel fuel found not to be in
compliance with the sulfur standards specified in this subpart, and the
actions the party has taken, if any, to identify the cause of any
noncompliance and prevent future instances of noncompliance.
(b) Additional records to be kept by refiners and importers of
motor vehicle diesel fuel subject to temporary refiner relief
standards, small refiner standards, and early credit provisions.
Beginning June 1, 2006, or for a refiner the first compliance period in
which the refiner is generating early credits under Sec. 80.531(b) or
(c), whichever is earlier, any refiner producing motor vehicle diesel
fuel subject to the sulfur standard under Sec. 80.520(a)(1), for each
of its refineries, and any importer importing such motor vehicle diesel
fuel, shall keep records that include the following information for
each batch of motor vehicle diesel fuel produced or imported:
(1) The batch volume.
(2) The batch number, assigned under the batch numbering procedures
under Sec. 80.65(d)(3).
(3) The date of production or import.
(4) A record designating the batch as meeting the 500 ppm sulfur
standard or the 15 ppm sulfur standard.
(5) For foreign refiners, the designations and other records
required to be kept under Sec. 80.620.
(6) In the case of importers, the designations and other records
required under Sec. 80.620(o).
(7) Information regarding credits, kept separately for each
calendar year compliance period, kept separately for each refinery and
in the case of importers, kept separately for imports into each CTA, as
follows:
(i) The number of credits in the refiner's or importer's possession
at the beginning of the calendar year;
(ii) The number of credits generated;
(iii) The number of credits used;
(iv) If any were obtained from or transferred to other parties, for
each such other party, its name, its EPA refiner or importer
registration number consistent with Sec. 80.593(d), in the case of
credits generated by an importer the port and CTA of import of the
diesel fuel that generated the credits, and the number obtained from,
or transferred to, the other party;
(v) The number in the refiner's or importer's possession that will
carry over into the subsequent calendar year compliance period; and
(vi) Commercial documents that establish each transfer of credits
from the transferor to the transferee.
(8) The calculations used to determine compliance with the volume
requirements of this subpart.
(9) The calculations used to determine the number of credits
generated.
(10) A copy of reports submitted to EPA under Sec. 80.593.
(c) Additional records importers must keep. Any importer shall keep
records
[[Page 5148]]
that identify and verify the source of each batch of certified diesel
fuel program foreign refiner (DFR)-Diesel and non-certified DFR-Diesel
imported and demonstrate compliance with the requirements under
Sec. 80.620.
(d) Length of time records must be kept. The records required in
this section shall be kept for five years from the date they were
created, except that records relating to credit transfers shall be kept
by the transferor for 5 years from the date the credits were
transferred, and shall be kept by the transferee for 5 years from the
date the credits were transferred, used or terminated, whichever is
later.
(e) Make records available to EPA. On request by EPA the records
required in paragraphs (a), (b) and (c) of this section must be made
available to the Administrator or the Administrator's authorized
representative. For records that are electronically generated or
maintained the equipment and software necessary to read the records
shall be made available, or if requested by EPA, electronic records
shall be converted to paper documents which shall be provided to the
Administrator's authorized representative.
Sec. 80.593 What are the reporting and registration requirements for
refiners and importers of motor vehicle diesel fuel subject to
temporary refiner relief standards?
Beginning with 2006, or the first compliance period during which
credits are generated under Sec. 80.531(b) or (c), whichever is
earlier, any refiner or importer who produces or importes motor vehicle
diesel fuel subject to the 500 ppm sulfur standard under
Sec. 80.520(c), or any refiner or importer who generates, uses, obtains
or transfers credits under Secs. 80.530 through 80.532, and continuing
for each year thereafter, must submit to EPA annual reports that
contain the information required in this section, and such other
information as EPA may require:
(a) Refiners and importers. Refiners and importers must report the
following information separately for each refinery or CTA, in the case
of importers, subject to a phase-in sulfur standard, small refiner
standard or temporary refiner relief sulfur standard, or who generates,
uses or transfers credits under Secs. 80.530 through 80.532:
(1) The refiner's name and the EPA refinery registration number.
(2) For all motor vehicle diesel fuel produced for use in the
United States during the compliance period:
(i) The total volume of motor vehicle diesel fuel produced;
(ii) The volume, in gallons, that complied with a sulfur content
standard of 500 ppm; and
(iii) The volume, in gallons, that complied with the 15 ppm sulfur
content standard.
(3) The percentage of the volume motor vehicle diesel fuel produced
during the calendar year that met the 15 ppm sulfur standard and the
percentage that met the 500 ppm sulfur standard prior to the
application of any volume credits.
(4) The percentage of volume of motor vehicle diesel fuel produced
meeting the 15 ppm sulfur standard after the inclusion of any credits.
(5) Information regarding credits, separately for each refinery and
for credits or debits related to imported motor diesel fuel, separately
by importer and separately by CTA of import as follows:
(i) The CTA of the refiner's refinery or the importer's or the
foreign refiner's CTA and port of importation;
(ii) The number of credits at the beginning of the compliance
period;
(iii) The number of credits generated;
(iv) The number of credits used;
(v) If any credits were obtained from or transferred to other
refineries or import ports, for each other refinery or importer, its
name, address (or Port) and CTA, EPA refinery or importer registration
number, and the number of credits obtained from or transferred to the
other refinery or importer (by import CTA);
(vi) The number of credits, if any, that will carry over to the
subsequent compliance period; and
(vii) The number of credits in deficit that must be made up for the
following year;
(6) The reporting requirements under Sec. 80.620, if applicable.
(7) For each batch of motor vehicle diesel fuel produced or
imported during the compliance period:
(i) The batch number assigned using the batch numbering conventions
under Sec. 80.65(d)(3) and the appropriate designation under
Sec. 80.523;
(ii) The date the batch was produced; and
(iii) The volume of the batch, in gallons.
(8) When submitting reports under this paragraph (a), any importer
shall exclude certified DFR-Diesel.
(b) Additional reporting requirements for importers. Importers of
motor vehicle diesel fuel subject to the 500 ppm sulfur standard must
report the following information:
(1) The importer's name and EPA registration number.
(2) For each foreign refinery from which motor vehicle diesel fuel
is imported that is subject to a sulfur standard under Sec. 80.520(c),
the importer must report, for each batch of diesel fuel imported, the
information required to be reported under Sec. 80.620(o).
(c) Report submission. Any annual report required by this section
shall be:
(1) Signed and certified as meeting all the applicable requirements
of this subpart by the owner or a responsible corporate officer of the
refiner or importer; and
(2) Submitted to EPA no later than the last day of February for the
prior calendar year period.
Sec. 80.594 What are the pre-compliance reporting requirements?
(a) Beginning on June 1, 2003, and on June 1, 2004 and June 1,
2005, all refiners and importers planning to produce or import motor
vehicle diesel fuel subject to the provisions of this subpart, shall
submit the following information to EPA:
(1) Any changes to the information submitted for the company
registration;
(2) Any changes to the information submitted for any refinery or
import facility registration;
(3) An estimate of the annual production or importation, in
gallons, after June 1, 2006, for each refinery and import facility, of
15 ppm motor vehicle diesel fuel produced from crude oil and, if
applicable, 500 ppm motor vehicle diesel fuel produced from crude oil,
and the volumes of each grade of motor vehicle diesel fuel produced
from other sources;
(4) If expecting to participate in the temporary compliance options
provisions and the credit trading program, estimates of the number of
credits to be generated and/or used each year the program is
applicable;
(5) Information regarding engineering plans (e.g., design and
construction), the status of obtaining any necessary permits, and
capital commitments for making the necessary modifications to produce
low sulfur motor vehicle fuel, and actual construction progress. The
pre-compliance reports due 2004 and 2005 must provide an update of the
progress in each of these areas.
(b) Beginning on June 1, 2003, all approved small refiners shall
submit the following additional information to EPA, as applicable:
(1) In the case of a refinery with an approved application under
Sec. 80.552(a):
(i) A showing that sufficient sources of 15 ppm motor vehicle
diesel fuel will likely be available in its marketing area after June
1, 2006 and through 2010;
(ii) If after 2003 the sources of 15 ppm motor vehicle diesel fuel
decrease, the pre-compliance reports for 2004 and/or
[[Page 5149]]
2005 must identify this change and must include a supplementary showing
that the sources of 15 ppm motor vehicle diesel fuel are still
sufficient.
(2) In case of a refinery with an approved application under
Sec. 80.552(c), a demonstration that by June 1, 2006 its motor vehicle
diesel fuel will be at 15 ppm sulfur at a volume at least 85% of its
baseline motor vehicle diesel fuel volume.
(c) For each refiner and importer approved under Sec. 80.540, a
demonstration that by June 1, 2006 all of its motor vehicle diesel fuel
will be at 15 ppm sulfur at a volume of at least 85% of its baseline
motor vehicle diesel fuel volume.
(d) By July 1, 2006, each refiner and importer of motor vehicle
diesel fuel shall submit a report to EPA stating that the production or
importation of 15 ppm sulfur motor vehicle diesel fuel commenced by
June 1, 2006.
Sec. 80.595 How does a refiner apply for a motor vehicle diesel fuel
volume baseline?
(a) Any small refiner applying for extension of the duration of its
small refiner gasoline sulfur standards of Sec. 80.240, under
Secs. 80.552(c) and 80.553, or any refiner applying for an extension of
the duration of the GPA standards under Sec. 80.540 must apply for a
motor vehicle diesel fuel volume baseline by December 31, 2001. A
separate volume baseline must be sought for each refinery for which
application of the provisions of Sec. 80.553 or Sec. 80.540 is sought.
(b) The volume baseline must be sent via certified mail with return
receipt or express mail with return receipt to: U.S. EPA-Attn: Diesel
Baseline (6406J), 1200 Pennsylvania Avenue, NW (6406J), Washington, DC
20460 (certified mail/return receipt) or Attn: Diesel Baseline,
Transportation and Regional Programs Division, 501 3rd Street, NW
(6406J), Washington, DC 20001 (express mail/return receipt).
(c) The motor vehicle diesel fuel volume baseline application must
include the following information:
(1) A listing of the names and addresses of all refineries owned by
the refiner for which the refiner is applying for a motor vehicle
diesel fuel volume baseline.
(2) The average annual volume (in gallons) of motor vehicle diesel
fuel produced for U.S. use in 1998 and 1999, for each refinery for
which the refiner is applying for such baseline, calculated in
accordance with Sec. 80.596. The refiner shall follow the procedures,
applicable to volume baselines and using motor vehicle diesel fuel
instead of gasoline, specified in Secs. 80.91 through 80.93 to
establish the volume of motor vehicle diesel fuel that was produced for
U.S. use in 1998 and 1999 for purposes of establishing a volume
baseline under this section.
(3) A letter signed by the president, chief operating, or chief
executive officer of the company, or his/her delegate, stating that the
information contained in the volume baseline determination is true to
the best of his/her knowledge.
(4) Name, address, phone number, facsimile number, and e-mail
address (if availabale) of a corporate contact person.
(5) The following information for each batch of motor vehicle
diesel fuel produced for U.S. use in 1998 and 1999:
(i) Batch number assigned to the batch under procedures such as
those in Sec. 80.65(d) or Sec. 80.101(i), or, if unavailable, such
other identifying information as is available; and
(ii) Volume of the batch, in gallons.
(6) For a refinery that was not in operation during part or all of
the period 1998 and 1999, the information required under this paragraph
(c) for the motor vehicle diesel fuel produced for U.S. use during the
most recent calendar year that the refinery was in operation after the
refinery was reactivated.
(d) Within 120 days of receipt of an application under this
section, EPA will notify the refiner of an approval of the refinery's
baseline, or of any deficiencies in the application.
(e) If at any time the baseline submitted in accordance with the
requirements of this section is determined to be incorrect, EPA will
notify the refiner of the corrected baseline. The corrected baseline
shall apply to all applicable compliance calculations under this
subpart.
(f)(1) If insufficient information is available for the
Administrator to establish a baseline under the provisions of paragraph
(c) of this section and Sec. 80.596(a), the refiner shall submit
additional information sufficient for the Administrator to establish a
baseline.
(2) To satisfy the requirements of paragraph (f)(1) of this
section, the Administrator may require, and consider, any information
pertinent to establish a baseline, including:
(i) Motor vehicle diesel fuel production volumes for other years;
(ii) Crude capacity of the refinery;
(iii) The ratio, or the typical ratio, for other similarly sized or
configured refineries, between motor vehicle diesel fuel production and
gasoline production.
Sec. 80.596 How is a refinery motor vehicle diesel fuel volume
baseline calculated?
(a) For purposes of this subpart, a refinery's motor vehicle diesel
fuel volume baseline is calculated using the following equation:
[GRAPHIC] [TIFF OMITTED] TR18JA01.007
Where:
VBase = Volume baseline value.
Vi = Volume of motor vehicle diesel fuel batch i.
n = Total number of batches of motor vehicle diesel fuel produced
for U.S. use during January 1, 1998 through December 31, 1999 (or
the total number of batches of motor vehicle diesel fuel produced
during the most recent calendar year the refinery was in operation
after being reactivated pursuant to Sec. 80.595(c)(6)); or, for a
foreign refinery, the total number of batches of motor vehicle
diesel fuel produced and imported into the U.S. during January 1,
1998 through December 31, 1999 (or the total number of batches of
motor vehicle diesel fuel produced and imported into the U.S. during
the most recent calendar year the refinery was in operation after
being reactivated pursuant to Sec. 80.595(c)(6)).
i = Individual batch of motor vehicle diesel fuel produced during
January 1, 1998 through December 31, 1999 (or individual batch of
motor vehicle diesel fuel produced during the most recent calendar
year the refinery was in operation after being reactivated pursuant
to Sec. 80.595(c)(6)); or, for a foreign refinery, individual batch
of motor vehicle diesel fuel produced and imported into the U.S.
during January 1, 1998 through December 31, 1999 (or individual
batch of motor vehicle diesel fuel produced and imported into the
U.S. during the most recent calendar year the refinery was in
operation after being reactivated pursuant to Sec. 80.595(c)(6)).
m = Number of months in the baseline period (24 except in the case
of a startup or reactivation).
(b) If insufficient information is available for the Administrator
to establish a baseline under paragraph (a) of this section, the
baseline may be determined under the provisions of Sec. 80.595(f).
Sec. 80.597 What are the registration requirements?
Refiners having any refinery that is subject to a sulfur standard
under Sec. 80.520(c), and importers importing such diesel fuel, must
provide EPA the information under Sec. 80.76 no later than December 31,
2001, if such information has not been provided under the provisions of
this part. In addition, for each import facility, the same identifying
information as required for each refinery under Sec. 80.76(c) must be
provided.
[[Page 5150]]
Secs. 80.598-80.599 [Reserved]
Exemptions
Sec. 80.600 What are the requirements for obtaining an exemption for
motor vehicle diesel fuel used for research, development or testing
purposes?
(a) Written request for R&D exemption. Any person may receive an
exemption from the provisions of this subpart for motor vehicle diesel
fuel used for research, development, or testing (``R&D'') purposes by
submitting the information listed in paragraph (c) of this section to:
(1) Director (6406J), Transportation and Regional Programs
Division, U.S. Environmental Protection Agency, Ariel Rios Building,
1200 Pennsylvania Avenue, NW., Washington, DC 20460 (postal mail); or
(2) Director (6406J), Transportation and Regional Programs
Division, U.S. Environmental Protection Agency, 501 3rd Street, NW.,
Washington, DC 20001 (express mail/courier); and
(3) Director (2242A), Air Enforcement Division, U.S. Environmental
Protection Agency, Ariel Rios Building, 1200 Pennsylvania Avenue, NW.,
Washington, DC 20460.
(b) Criteria for an R&D exemption. For an R&D exemption to be
granted, the person requesting an exemption must:
(1) Demonstrate a purpose that constitutes an appropriate basis for
exemption;
(2) Demonstrate that an exemption is necessary;
(3) Design an R&D program to be reasonable in scope; and
(4) Exercise a degree of control consistent with the purpose of the
program and EPA's monitoring requirements.
(c) Information required to be submitted. To demonstrate each of
the elements in paragraphs (b)(1) through (4) of this section, the
person requesting an exemption must include the following information
in the written request required under paragraph (a) of this section:
(1) A concise statement of the purpose of the program demonstrating
that the program has an appropriate R&D purpose.
(2) An explanation of why the stated purpose of the program cannot
be achieved in a practicable manner without performing one or more of
the prohibited acts under this subpart.
(3) To demonstrate the reasonableness of the scope of the program:
(i) An estimate of the program's duration in time and, if
appropriate, mileage;
(ii) An estimate of the maximum number of vehicles or engines
involved in the program;
(iii) The manner in which the information on vehicles and engines
used in the program will be recorded and made available to the
Administrator upon request; and
(iv) The quantity of diesel fuel which does not comply with the
requirements of Secs. 80.520 through 80.525.
(4) With regard to control, a demonstration that the program
affords EPA a monitoring capability, including:
(i) The site(s) of the program (including facility name, street
address, city, county, state, and zip code);
(ii) The manner in which information on vehicles and engines used
in the program will be recorded and made available to the Administrator
upon request;
(iii) The manner in which information on the diesel fuel used in
the program (including quantity, fuel properties, name, address,
telephone number and contact person of the supplier, and the date
received from the supplier), will be recorded and made available to the
Administrator upon request;
(iv) The manner in which the party will ensure that the R&D fuel
will be segregated from motor vehicle diesel fuel and fuel pumps will
be labeled to ensure proper use of the R&D diesel fuel;
(v) The name, address, telephone number and title of the person(s)
in the organization requesting an exemption from whom further
information on the application may be obtained; and
(vi) The name, address, telephone number and title of the person(s)
in the organization requesting an exemption who is responsible for
recording and making available the information specified in this
paragraph (c), and the location where such information will be
maintained.
(d) Additional requirements. (1) The product transfer documents
associated with R&D motor vehicle diesel fuel must comply with
requirements of Sec. 80.590(b)(5).
(2) The R&D diesel fuel must be designated by the refiner or
supplier, as applicable, as R&D diesel fuel.
(3) The R&D diesel fuel must be kept segregated from non-exempt
motor vehicle diesel fuel at all points in the distribution system.
(4) The R&D diesel fuel must not be sold, distributed, offered for
sale or distribution, dispensed, supplied, offered for supply,
transported to or from, or stored by a diesel fuel retail outlet, or by
a wholesale purchaser-consumer facility, unless the wholesale
purchaser-consumer facility is associated with the R&D program that
uses the diesel fuel.
(5) At the completion of the program, any emission control systems
or elements of design which are damaged or rendered inoperative shall
be replaced on vehicles remaining in service, or the responsible person
will be liable for a violation of the Clean Air Act Section 203(a)(3)
unless sufficient evidence is supplied that the emission controls or
elements of design were not damaged.
(e) Mechanism for granting of an exemption. A request for an R&D
exemption will be deemed approved by the earlier of sixty (60) days
from the date on which EPA receives the request for exemption,
(provided that EPA has not notified the applicant of potential
disapproval by that time), or the date on which the applicant receives
a written approval letter from EPA.
(1) The volume of diesel fuel subject to the approval shall not
exceed the estimated amount in paragraph (c)(3)(iv) of this section,
unless EPA grants a greater amount in writing.
(2) Any exemption granted under this section will expire at the
completion of the test program or three years from the date of
approval, whichever occurs first, and may only be extended upon re-
application consistent will all requirements of this section.
(3) The passage of sixty (60) days will not signify the acceptance
by EPA of the validity of the information in the request for an
exemption. EPA may elect at any time to review the information
contained in the request, and where appropriate may notify the
responsible person of disapproval of the exemption.
(4) In granting an exemption the Administrator may include terms
and conditions, including replacement of emission control devices or
elements of design, that the Administrator determines are necessary for
monitoring the exemption and for assuring that the purposes of this
subpart are met.
(5) Any violation of a term or condition of the exemption, or of
any requirement of this section, will cause the exemption to be void ab
initio.
(6) If any information required under paragraph (c) of this section
should change after approval of the exemption, the responsible person
must notify EPA in writing immediately. Failure to do so may result in
disapproval of the exemption or may make it void ab initio, and may
make the party liable for a violation of this subpart.
(f) Effects of exemption. Motor vehicle diesel fuel that is subject
to an R&D exemption under this section is exempt from other provisions
of this subpart provided that the fuel is used in a manner that
complies with the purpose of the program under paragraph (c) of
[[Continued on page 5151]]
![[logo] US EPA](https://webarchive.library.unt.edu/eot2008/20090509213108im_/http://www.epa.gov/epafiles/images/logo_epaseal.gif){kind=logo}