State of Alaska Petition for Exemption From Diesel Fuel Sulfur
Requirement
Related Material
[Federal Register: September 16, 1998 (Volume 63, Number 179)]
[Rules and Regulations]
[Page 49459-49465]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16se98-15]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 69 and 80
[FRL-6159-1]
State of Alaska Petition for Exemption From Diesel Fuel Sulfur
Requirement
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: On December 12, 1995, the Governor of Alaska petitioned EPA to
permanently exempt the areas of Alaska served by the Federal Aid
Highway System from the requirements of EPA's low-sulfur diesel fuel
program for motor vehicles. On August 19, 1996, EPA extended the
existing temporary exemption until October 1, 1998, and on April 28,
1998, EPA proposed to grant a permanent exemption (63 FR 23241). EPA
has received significant public comments and new information concerning
EPA's proposal and needs additional time to further evaluate the issues
concerning a permanent exemption. Consequently, EPA is
[[Page 49460]]
granting a temporary exemption to Alaska for a period of nine months
(i.e., until July 1, 1999) so that EPA and the State of Alaska have
ample time to consider and evaluate the public comments and new
information before EPA makes a final decision on the petition.
This decision is not expected to have a significant impact on the
ability of Alaska's communities to attain the National Ambient Air
Quality Standards for carbon monoxide and particulate matter, due to
the limited contribution of emissions from diesel motor vehicles in
those areas and the sulfur level currently found in motor vehicle
diesel fuel used in Alaska.
DATES: This final rule is effective on October 1, 1998.
ADDRESSES: Copies of information relevant to this final rule are
available for inspection in public docket A-96-26 at the Air Docket of
the EPA, first floor, Waterside Mall, room M-1500, 401 M Street SW,
Washington, DC 20460, (202) 260-7548, between the hours of 8 a.m. to
5:30 p.m. Monday through Friday. A duplicate public docket has been
established at EPA Alaska Operations Office-Anchorage, Federal
Building, Room 537, 222 W. Seventh Avenue, #19, Anchorage, AK 99513-
7588, and is available from 8 a.m. to 5 p.m. Monday through Friday. A
reasonable fee may be charged for copying docket materials.
FOR FURTHER INFORMATION CONTACT: Mr. Richard Babst, Environmental
Engineer, Fuels Implementation Group, Fuels and Energy Division (6406-
J), 401 M Street SW, Washington, DC 20460, Telephone (202) 564-9473,
Telefax 202-565-2085, Internet address babst.richard@epa.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Regulated Entities
II. Electronic Copies of Rulemaking Documents
III. Statutory Background
IV. Petition for Exemption
V. Decision for Temporary Exemption
VI. Judicial Review
VII. Public Participation
VIII. Statutory Authority
IX. Administrative Requirements
A. Executive Order 12866: Administrative Designation and
Regulatory Analysis
B. Regulatory Flexibility Act
C. Paperwork Reduction Act
D. Congressional Review Act
E. Unfunded Mandates Act
F. Executive Order 12875: Enhancing Intergovernmental
Partnerships
G. Executive Order 13084: Consultation and Coordination with
Indian Tribal Governments
H. Executive Order 13045: Children's Health Protection
I. National Technology Transfer and Advancement Act of 1995
(NTTAA)
I. Regulated Entities
Entities potentially regulated by this action are refiners,
marketers, distributors, retailers and wholesale purchaser-consumers of
diesel fuel for use in the state of Alaska. Regulated categories and
entities include:
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Examples of regulated
Category entities
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Industry.................................. Petroleum distributors,
marketers, retailers
(service station owners and
operators), wholesale
purchaser consumers (fleet
managers who operate a
refueling facility to
refuel motor vehicles).
Individuals............................... Any owner or operator of a
diesel motor vehicle.
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This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your facility is regulated by this action, you should carefully examine
the criteria contained in Sec. 69.51, Sec. 80.29, and Sec. 80.30 of
title 40 of the Code of Federal Regulations as modified by today's
action. If you have questions regarding the applicability of this
action to a particular entity, consult one of the persons listed in the
preceding FOR FURTHER INFORMATION CONTACT section.
II. Electronic Copies of Rulemaking Documents
The preamble and regulatory language are also available
electronically from the Government Printing Office Web sites. This
service is free of charge, except for any cost you already incur for
Internet connectivity. The electronic Federal Register version is made
available on the day of publication on the Web site listed below.
http://www.access.gpo.gov/nara/cfr/
(either select desired date or use Search feature)
Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc. may occur.
III. Statutory Background
Section 211(i)(1) of the Act prohibits the manufacture, sale,
supply, offering for sale or supply, dispensing, transport, or
introduction into commerce of motor vehicle diesel fuel which contains
a concentration of sulfur in excess of 0.05 percent by weight, or which
fails to meet a cetane index minimum of 40 beginning October 1, 1993.
Section 211(i)(2) requires the Administrator to promulgate regulations
to implement and enforce the requirements of paragraph (1), and
authorizes the Administrator to require that diesel fuel not intended
for motor vehicles be dyed in order to segregate that fuel from motor
vehicle diesel fuel. Section 211(i)(4) provides that the States of
Alaska and Hawaii may seek an exemption from the requirements of
subsection 211(i) in the same manner as provided in section 325
<SUP>1</SUP> of the Act, and requires the Administrator to take final
action on any petition filed under this subsection, which seeks
exemption from the requirements of section 211(i), within 12 months of
the date of such petition.
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\1\ Section 211(i)(4) mistakenly refers to exemptions under
Sec. 324 of the Act (``Vapor Recovery for Small Business Marketers
of Petroleum Products''). The proper reference is to Sec. 325, and
Congress clearly intended to refer to Sec. 325, as shown by the
language used in Sec. 211(i)(4), and the United States Code citation
used in Sec. 806 of the Clean Air Act Amendments of 1990, Public Law
No. 101-549. Section 806 of the Amendments, which added paragraph
(i) to Sec. 211 of the Act, used 42 U.S.C. 7625-1 as the United
States Code designation, the proper designation for Sec. 325 of the
Act. Also see 136 Cong. Rec. S17236 (daily ed. October 26, 1990)
(statement of Sen. Murkowski).
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Section 325 of the Act provides that upon application by the
Governor of Guam, American Samoa, the Virgin Islands, or the
Commonwealth of the Northern Mariana Islands, the Administrator may
exempt any person or source, or class of persons or sources, in such
territory from any requirement of the Act, with some specific
exceptions. Such exemption may be granted if the Administrator finds
that compliance with such requirement is not feasible or is
unreasonable due to unique geographical, meteorological, or economic
factors of such territory, or such other local factors as the
Administrator deems significant.
IV. Petition for Exemption
On February 12, 1993, the Honorable Walter J. Hickel, then Governor
of the State of Alaska, submitted a petition to exempt motor vehicle
diesel fuel in Alaska from subsections (1) and (2) of section 211(i),
except the minimum cetane index requirement of 40. Paragraph (1)
prohibits motor vehicle diesel fuel from having a sulfur concentration
greater than 0.05 percent by weight, or failing to meet a minimum
cetane index of 40. Paragraph (2) requires the Administrator to
promulgate regulations to implement
[[Page 49461]]
and enforce the requirements of paragraph (1), and authorizes the
Administrator to require that diesel fuel not intended for motor
vehicles be dyed in order to segregate that diesel fuel from motor
vehicle diesel fuel. The petition requested that the Environmental
Protection Agency (EPA) temporarily exempt motor vehicle diesel fuel
manufactured for sale, sold, supplied, or transported within the
Federal Aid Highway System from meeting the sulfur content requirement
specified in section 211(i) until October 1, 1996. The petition also
requested a permanent exemption from such requirements for those areas
of Alaska not reachable by the Federal Aid Highway System. The petition
was based on geographical, meteorological, air quality, and economic
factors unique to the State of Alaska.
EPA's decision on the petition was published on March 22, 1994 (59
FR 13610), and applied to all persons in Alaska subject to section
211(i) and related provisions in section 211(g) of the Act and EPA's
low-sulfur requirement for motor vehicle diesel fuel in 40 CFR 80.29.
Persons in communities served by the Federal Aid Highway System were
exempted from compliance with the diesel fuel sulfur content
requirement until October 1, 1996. Persons in communities that are not
served by the Federal Aid Highway System were permanently exempted from
compliance with the diesel fuel sulfur content requirement. Both the
permanent and temporary exemptions apply to all persons who
manufacture, sell, supply, offer for sale or supply, dispense,
transport, or introduce into commerce, in the State of Alaska, motor
vehicle diesel fuel. Alaska's exemptions do not apply to the minimum
cetane requirement for motor vehicle diesel fuel.
On December 12, 1995, the Honorable Governor Tony Knowles, Governor
of the State of Alaska, petitioned the Administrator for a permanent
exemption (Petition) for all areas of the state served by the Federal
Aid Highway System, that is, those areas covered only by the temporary
exemption. On August 19, 1996, EPA published an extension to the
temporary exemption until October 1, 1998 (61 FR 42812), to give ample
time for the agency to consider comments to that petition that were
subsequently submitted. On April 28, 1998 (63 FR 23241) EPA published a
proposal to grant the petition for a permanent exemption for all areas
of the state served by the Federal Aid Highway System. Substantial
public comments and substantive new information was submitted in
response to the proposal.
V. Decision for Temporary Exemption
In this document, the Agency is granting a temporary exemption for
nine months (until July 1, 1999) from the diesel fuel sulfur content
requirement of 0.05 percent by weight to those areas in Alaska served
by the Federal Aid Highway System. For the same reasons, the Agency
also is granting a temporary exemption for nine months from those
provisions of section 211(g)(2) <SUP>2</SUP> of the Act that prohibit
the fueling of motor vehicles with high-sulfur diesel fuel. Sections
211(g) and 211(i) both restrict the use of high-sulfur motor vehicle
diesel fuel.
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\2\ This subsection makes it unlawful for any person to
introduce or cause or allow the introduction into any motor vehicle
of diesel fuel which they know or should know contains a
concentration of sulfur in excess of 0.05 percent (by weight). It
would clearly be impossible to hold persons liable for misfueling
with diesel fuel with a sulfur content higher than 0.05 percent by
weight, when such fuel is permitted to be sold or dispensed for use
in motor vehicles. The proposed exemptions would include exemptions
from this prohibition, but not include the prohibitions in
Sec. 211(g)(2) relating to the minimum cetane index or alternative
aromatic levels.
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Further, consistent with the March 22, 1994 Notice of Final
Decision (59 FR 13610), dyeing diesel fuel to be used in nonroad
applications will be unnecessary in Alaska during the temporary
exemption as long as the diesel fuel has a minimum cetane index of 40.
The motor vehicle diesel fuel regulations, codified at 40 CFR 80.29,
provide that any diesel fuel which does not show visible evidence of
the dye solvent red 164 shall be considered to be available for use in
motor vehicles and subject to the sulfur and cetane index requirements.
The Alaska Department of Environmental Conservation and various
refiners in Alaska have indicated to EPA that all diesel fuel
manufactured for sale and marketed in Alaska for use in both motor
vehicle and nonroad applications meets the minimum cetane requirement
for motor vehicle diesel fuel.
Justification for Temporary Exemption
Section 325 of the Clean Air Act Amendments of 1990 provide that an
exemption may be granted due to ``such other local factors as the
Administrator deems significant.'' Alaska has operated under temporary
exemptions for the past several years. EPA has indicated to Alaska that
EPA would make a final decision on whether to grant a permanent
exemption from the low sulfur diesel fuel requirements. EPA will not
have made a final decision on a permanent exemption prior to the
expiration of the current temporary exemption. EPA believes that
requiring compliance in Alaska with diesel fuel sulfur requirements
during the nine months before such a final decision is published is
unreasonable, given the unique circumstances associated with this prior
history of exemptions, and EPA's need for additional time to make a
final decision on Alaska's request for a permanent exemption. These
significant local factors are the basis for granting Alaska this
extension to the current temporary exemption.
In response to the February 12, 1993 petition for a temporary
exemption from diesel fuel sulfur requirements for areas served by the
FAHS, EPA granted Alaska the temporary exemption until October 1, 1996.
Because the state of Alaska planned to establish a Task Force (in which
an EPA representative participated) to evaluate the need for an
exemption, EPA provided Alaska with ``adequate time to prepare and
submit another exemption request'' (59 FR 13613, March 22, 1994). ``If
a new exemption request is submitted, EPA will publish another notice
in the Federal Register and re-examine the issue of an exemption.'' Id.
In response to the December 12, 1995, petition for a permanent
exemption from the diesel sulfur requirements for the areas served by
the FAHS, EPA ``reserv[ed] the decision on the state's request for a
permanent exemption, so the agency may consider possible alternatives
for a longer period'' than the two years granted (61 FR 42814, August
19, 1996). EPA extended for another period of 24 months ``or until such
time as a decision is made on the permanent exemption, whichever is
shorter'' (61 FR 42816, August 19, 1996). EPA also stated that ``areas
in Alaska served by the Federal Aid Highway System are also exempt from
the related 211(g)(2) provisions until such time as a decision has been
made on the state's petition for a permanent exemption.'' Id. The
Agency stated it would propose a decision on Alaska's request for a
permanent waiver. Id.
EPA did not intend that Alaska would be required to comply with the
low-sulfur diesel requirements before reaching a final decision.
Unfortunately, a decision will not be reached before the current
temporary exemption expires. EPA proposed to permanently exempt Alaska
(63 FR 23241, April 28, 1998), and received significant comments on
several issues and new information during this notice and comment
period critical to the question of whether Alaska should be granted an
exemption to the low-sulfur diesel fuel requirements.
One issue that will require additional time for EPA to evaluate
involves the
[[Page 49462]]
use of high-sulfur diesel fuel in engines manufactured to meet future
more stringent emissions standards. In their comments to the proposal,
the Engine Manufacturers Association (EMA) asserted in part, that the
use of high-sulfur diesel fuel in advanced technology engines,
especially those engines that will be in the marketplace to meet 2004
emission standards, will result in excessive engine wear, poor
durability, substantially increased maintenance costs, substandard
performance, and in some cases, engine failure. EMA indicated that
these advanced technologies are expected to be introduced before 2004,
and are only feasible if operated on low-sulfur fuel. EPA believes some
manufacturers may implement these advanced technologies as early as
2002.
The technology of most concern is the cooled exhaust gas
recirculation (EGR) system. In an EGR system, exhaust gas is
recirculated back into the cylinders to reduce the amount of fresh
charge air or oxygen that is available for combustion during certain
operating conditions. Combustion temperatures, and thus nitrogen oxides
(NOX) formation, are reduced. In order to maximize the
effectiveness of the EGR system, the exhaust gas is cooled before it
enters the fresh air stream. According to the EMA, when the engine is
operated on high-sulfur diesel fuel, sulfur in the exhaust gas stream
is condensed by the EGR cooler and forms sulfuric acid deposits in the
cooler and any surfaces through which the cooled exhaust gas passes.
Thus, the combination of high-sulfur and cooled EGR systems will
promote corrosion in the EGR cooler and control valve, power cylinder
and induction system, will cause wear and tear on the power cylinder,
and will result in the formation of deposits on the EGR cooler and
induction system. The EMA indicates that while more frequent
replacement of the EGR and air intake components may reduce the
sulfuric acid damage to the EGR system, it is not possible to eliminate
the damage.
EPA has determined that an additional nine months is necessary to
evaluate the information to determine whether Alaska should be granted
a permanent exemption to the low-sulfur diesel fuel requirements. EPA
believes that requiring Alaska to incur the cost and burden associated
with compliance until EPA reaches a final decision is unreasonable,
given the expectation that EPA will make a final decision in the next
several months, and the possibility that EPA may then decide to grant
the exemption. In addition, EPA believes that in this situation lead-
time considerations are also a significant local factor as provided
under section 325. Requiring Alaska to comply with low-sulfur diesel
fuel requirements as of October 1998 is unreasonable due to lead-time
considerations. Because of the temporary status of the previous and
current exemptions, EPA did not intend that Alaska would be required to
comply prior to a final decision on a permanent exemption. Therefore,
the affected parties in Alaska are not in a position to reasonably
comply prior to such a final decision. Alaska has recently indicated to
EPA that at least three years would be needed to implement any new
requirements once a final decision has been reached by EPA. Requiring
compliance by refiners and distributors and consumers of diesel fuel by
October 1998 would not be reasonable under these circumstances.
Further, any expiration of the low-sulfur exemption has
implications under the Internal Revenue Code. Section 4081 of the
Internal Revenue Code (26 U.S.C. 4081) imposes a tax on the removal of
diesel fuel from a terminal at the terminal rack. However, a tax is not
imposed if, among other conditions, the diesel fuel is indelibly dyed
in accordance with Treasury regulations. Dyed diesel fuel can be used
legally (for tax purposes) in nontaxable uses such as for heating oil,
fuel in stationary engines, or fuel in non-highway vehicles. A
substantial penalty applies if dyed diesel fuel is used for taxable
purposes such as in registered highway vehicles.
In 1996, Congress enacted an exception to the dyeing requirement so
that undyed diesel fuel could be removed from a terminal tax free if,
among other requirements, the fuel is removed for ultimate sale or use
in an area of Alaska during the period the area is exempt from EPA's
sulfur content and fuel dyeing requirements under section 211(i)(4) of
the Clean Air Act. Treasury regulations (26 CFR 46.4082-5) generally
establish a system for collecting the federal diesel fuel tax at the
wholesale level in Alaska. This system is similar to the system used by
the state of Alaska for state fuel tax. The person liable for the
federal tax generally is the person who is licensed by Alaska as a
qualified dealer or a retailer that has been registered by the Internal
Revenue Service (IRS).
If EPA's temporary exemption for the FAHS areas of Alaska were to
expire, then under Treasury regulations, the federal fuel tax would be
imposed on all undyed diesel fuel that is removed from any terminal in
the FAHS areas, regardless of the use that is later made of the fuel.
Removals from these terminals would be exempt from the tax only if the
fuel contains a dye of a prescribed color and composition.
Consequently, Alaska would be required by the Treasury regulations to
either dye the non-road tax-exempt fuel or pay the on-road tax at the
current rate of 24.4 cents per gallon.
According to an attachment to the comments submitted by the
Trustees for Alaska, Alaska used approximately 600 million gallons of
distillate each year (excluding fuel used for aviation) for the fiscal
years ending June 30, 1996 and June 30, 1997. If none of that fuel were
dyed and the sulfur exemption were to expire, the tax liability for
Alaska (at 24.4 cents per gallon) would be approximately $146.4 million
per year, compared to only $19.4 million per year if only that fuel
used for highway purposes were taxed. The taxed parties could later
file for refunds for the fuel they could show was not used in motor
vehicles. Alternatively, Alaska could comply with the Treasury
regulations by dyeing the approximately 86 percent of that fuel
intended for non-highway use. However, to do so would be a significant
and unreasonable burden for refiners, distributors and consumers of
diesel fuel, especially if the lapse in the EPA exemption were only for
a few months. Comments received in response to the proposal indicated
that each additional storage tank needed to segregate the dyed and
undyed fuels with supporting infrastructure may cost $600,000, and
there are over 80 tank farms in Alaska that would require additional
tankage. Similarly each additional tanker truck required to avoid
cross-contamination of dyed and undyed fuels costs approximately
$250,000. Finally, those comments indicated that significant lead-time
would be needed.
Based on these significant local factors, it is unreasonable to
mandate that low-sulfur motor vehicle diesel fuel be available for use
in Alaska for areas served by the Federal Aid Highway System after the
current temporary exemption expires on October 1, while EPA considers a
final decision on the Petition.
Clarification of Exemption
Since today's rule exempts diesel fuel in Alaska from the sulfur
requirement for nine months (i.e., until July 1, 1999), dyeing diesel
fuel to be used in nonroad applications will be unnecessary in Alaska
for those nine months. However, in the event high-sulfur diesel fuel is
shipped from Alaska to the lower-48 states, it would be necessary for
the producer or shipping facility to add dye to the noncomplying fuel
before it is
[[Page 49463]]
introduced into commerce in the lower-48 states. In addition,
supporting documentation (e.g., product transfer documents) must
clearly indicate the fuel may not comply with the sulfur standard for
motor vehicle diesel fuel and is not to be used as a motor vehicle
fuel. Conversely, EPA will not require high-sulfur diesel fuel to be
dyed if it is being shipped from the lower-48 states to Alaska, but
supporting documentation must substantiate that the fuel is only for
shipment to Alaska and that it may not comply with the sulfur standard
for motor vehicle diesel fuel.
EPA will assume that all diesel fuel found in any state, except in
the state of Alaska, is intended for sale in any state and subject to
the diesel fuel standards, unless the supporting documentation clearly
specifies the fuel is to be shipped only to Alaska. The documentation
should further clearly state that the fuel may not comply with the
Federal diesel fuel standards. If such product enters the market of any
state, other than Alaska, (e.g., is on route to or at a dispensing
facility in a state other than Alaska) and is found to exceed the
applicable sulfur content standard, all parties will be presumed
liable, as set forth in the regulations. However, EPA will consider the
evidence in determining whether a party caused the violation.
With regard to the storage of diesel fuel in any state other than
Alaska, a refiner or transporter will not be held liable for diesel
fuel that does not comply with the applicable sulfur content standard
and dye requirement if it can show that the diesel fuel is truly being
stored and is not being sold, offered for sale, supplied, offered for
supply, transported or dispensed. However, once diesel fuel leaves a
refinery or transporter facility, a party can no longer escape
liability by claiming that the diesel fuel was simply in storage.
Although diesel fuel may temporarily come to rest at some point after
leaving a refinery or transporter facility, the intent of the
regulations is to cover all diesel fuel being distributed in the
marketplace. Once diesel fuel leaves a refinery or shipping facility it
is in the marketplace and as such is in the process of being sold,
supplied, offered for sale or supply, or transported.
Engine Warranty, Recall and Tampering
EPA previously addressed the impact of an exemption from the low-
sulfur diesel fuel requirements on engine recall liability, warranty
and tampering issues in the American Samoa decision <SUP>3</SUP>, Guam
decision <SUP>4</SUP>, and Alaska decision.<SUP>5</SUP> For this final
rule, EPA is addressing the recall liability and warranty issues in a
manner consistent with those earlier decisions. The tampering issue is
treated in a somewhat different manner.
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\3\ The Agency granted American Samoa's petition for an
exemption from the diesel sulfur requirements on July 20, 1992, 57
FR 32010.
\4\ The Agency granted Guam's petition for an exemption from the
diesel sulfur requirements on September 21, 1993, 58 FR 48968.
\5\ The Agency granted the State of Alaska's petition for a
temporary exemption from the diesel sulfur requirements on March 22,
1994, 59 FR 13610.
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Recall Liability. If EPA determines that a substantial number of
heavy-duty engines do not comply with the federal emission
requirements, the engine manufacturer is responsible for recalling and
repairing the engines. EPA typically determines whether engines comply
with applicable federal emission standards when properly used and
maintained based on testing of in-use engines. If an engine fueled with
noncomplying diesel fuel were included in such testing, EPA will
determine, on a case-by-case basis, if the noncompliance is the result
of the use of noncomplying fuel. If it is determined that the
noncomplying diesel fuel is the cause of the engine's failure to meet
the applicable emission standards, EPA would take that into
consideration before seeking a recall of the class.
For Alaska, as in the Guam and American Samoa decisions, the Agency
does not intend to use test results (emissions levels) from engines
that utilize high-sulfur diesel fuel (over 0.05% by weight) to show
noncompliance by those engines for the purpose of recalling an engine
class. However, in cases in which it is determined that the overall
class is subject to recall for reasons other than noncomplying fuel in
Alaska, individual engines will not be excluded from repair on the
basis of the fuel used. Manufacturers are responsible for repairing any
engine in the recalled class regardless of its history of tampering or
improper maintenance.
Manufacturers Emission Warranty. The Agency acknowledges that
engines that were certified to meet the federal emission standards
using low-sulfur diesel fuel may in some cases be unable to meet those
federal emissions standards if they use high-sulfur diesel fuel.
However, EPA believes an exemption from the general warranty provisions
of section 207 is unnecessary to protect manufacturers from
unreasonable warranty recoveries by purchasers. The emission defect
warranty requirements under section 207(a) of the Act require an engine
manufacturer to warrant that the engine shall conform at the time of
sale to applicable emission regulations and that the engine is free
from defects that cause the engine to fail to conform with applicable
regulations for its useful life. In practice, this warranty is
applicable to a specific list of emissions and emissions-related engine
components.
It has been consistent EPA policy that misuse or improper
maintenance of a vehicle or engine by the purchaser, including
misfueling, may create a reasonable basis for denying warranty coverage
for the specific emissions and emissions-related engine components
affected by the misuse. In Alaska, while use of fuel exempted from the
sulfur content limitation cannot be considered ``misfueling,'' it will
have the same adverse effect on emissions control components. Thus, EPA
believes that where the use of noncomplying diesel fuel in fact has an
adverse impact on the emissions durability of specific engine parts or
systems, such as a catalyst, the manufacturer has a reasonable basis
for denying warranty coverage on that part or other related parts. As
has consistently been EPA's policy, those components not adversely
affected by the use of noncomplying diesel fuel should continue to
receive full emissions warranty coverage.
Tampering Liability. Subsequent to the 1995 petition for a
permanent exemption from the diesel fuel sulfur requirements, the
Engine Manufacturers Association (EMA) requested enforcement discretion
regarding the removal of catalytic converters because of an indicated
plugging problem caused by the high-sulfur diesel fuel in Alaska.
However, information subsequently collected by EPA from several heavy-
duty engine manufacturers demonstrates that catalyst plugging is mainly
a cold weather problem and not a high-sulfur fuel issue. EPA is also
aware that the majority of the plugged catalysts have been eliminated.
In a letter to EPA of September 19, 1997, the EMA indicated that the
immediate problems that led to EMA's earlier request have been
resolved. Accordingly, EPA sees no need for an exemption that allows
the removal of catalysts in the field, or that permits manufacturers to
introduce into commerce catalyzed-engines without catalysts.
VI. Judicial Review
Under section 307(b)(1) of the Clean Air Act, EPA hereby finds that
these regulations are of local or regional applicability. Accordingly,
judicial
[[Page 49464]]
review of this action is available only in the United States Court of
Appeals for the circuit applicable to Alaska within 60 days of
publication.
VII. Public Participation
The Agency received Alaska's request for a permanent exemption for
the Federal Aid Highway System areas in December of 1995. Soon
afterwards, the Agency has received comments on the petition from the
Alaska Center for the Environment, the Alaska Clean Air Coalition, and
the Engine Manufacturers of America. EPA believed the issues raised by
those comments and possible tightening of heavy-duty motor vehicle
engine standards in 2004 necessitated further consideration before the
Agency made a decision on Alaska's request for a permanent waiver.
The Agency published a proposed rule for a permanent exemption to
allow interested parties an additional opportunity to request a hearing
or to submit comments. EPA subsequently received a request for a public
hearing, but that request was soon withdrawn. EPA extended the comment
period until June 12, 1998, and received comments before and after that
date.
EPA's decision to extend the exemption until July 1, 1999 is not a
decision based on the merits of those comments. Instead, EPA's decision
is based on the unreasonableness of imposing the low-sulfur diesel fuel
requirement during the time period needed by EPA to make a final
decision on the merits of the comments submitted. The significant local
factors supporting this decision are described herein.
VIII. Statutory Authority
Authority for the action in this proposed rule is in sections 211
(42 U.S.C. 7545) and 325(a)(1) (42 U.S.C. 7625-1(a)(1)) of the Clean
Air Act, as amended.
IX. Administrative Requirements
A. Executive Order 12866: Administrative Designation and Regulatory
Analysis
Under Executive Order 12866,<SUP>6</SUP> the Agency must determine
whether a regulation is ``significant'' and therefore subject to OMB
review and the requirements of the Executive Order. The Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
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\6\ 58 FR 51736 (October 4, 1993).
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(1) 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 of communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.<SUP>7</SUP>
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\7\ Id. at section 3(f)(1)-(4).
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It has been determined that this rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and is
therefore not subject to OMB review.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small not-for-profit enterprises, and small governmental
jurisdictions.
This final rule will not have a significant impact on a substantial
number of small entities because today's action to extend the temporary
exemption of the low-sulfur diesel fuel requirements in the State of
Alaska, will not result in any additional economic burden on any of the
affected parties, including small entities involved in the oil
industry, the automotive industry and the automotive service industry.
EPA is not imposing any new requirements on regulated entities, but
instead is continuing an exemption from a requirement, which makes it
less restrictive and less burdensome. Therefore, EPA has determined
that this action will not have a significant economic impact on a
substantial number of small entities.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1980, 544 U.S.C. 3501 et seq., and
implementing regulations, 5 CFR part 1320, do not apply to this action
as it does not involve the collection of information as defined
therein.
D. Congressional Review Act
The Congressional Review Act, 5 U.S.C. 801 et seq., as amended 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. A Major rule
cannot take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective October 1, 1998.
E. Unfunded Mandates Act
Under section 202 of the Unfunded Mandates Reform Act of 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a federal mandate with estimated costs to the
private sector of $100 million or more, or to state, local, or tribal
governments of $100 million or more in the aggregate. Under section
205, EPA must select the most cost-effective and least burdensome
alternative that achieves the objectives of the rule and is consistent
with statutory requirements. Section 203 requires EPA to establish a
plan for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that this final rule imposes no new federal
requirements and does not include any federal mandate with costs to the
private sector or to state, local, or tribal governments. Therefore,
the Administrator certifies that this rule does not require a budgetary
impact statement.
F. Executive Order 12875: Enhancing Intergovernmental Partnerships
Under Executive Order 12875, EPA may not issue a regulation that is
not required by statute and that creates a mandate upon a State, local
or tribal government, unless the Federal government provides the funds
necessary to pay the direct compliance costs incurred by those
governments. If the mandate is unfunded, EPA must provide to the Office
of Management and Budget a description of the extent of EPA's prior
consultation with representatives of affected State, local and tribal
governments, the nature of their concerns, copies of any written
communications from the governments, and a statement supporting the
need to issue the regulation. In addition, Executive Order 12875
requires EPA to
[[Page 49465]]
develop an effective process permitting elected officials and other
representatives of State, local and tribal governments ``to provide
meaningful and timely input in the development of regulatory proposals
containing significant unfunded mandates.''
Today's rule does not create a mandate on State, local or tribal
governments. The rule does not impose any enforceable duties on these
entities. Accordingly, the requirements of section 1(a) of Executive
Order 12875 do not apply to this rule.
G. 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. If the mandate if unfunded,
EPA must provide to the Office of Management and Budget, 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 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. EPA has determined that this
final rule imposes no new federal requirements, but rather extends an
existing temporary exemption of the low-sulfur diesel fuel requirements
in the State of Alaska. Accordingly, the requirements of section 3(b)
of Executive Order 13084 do not apply to this rule.
H. 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 E.O. 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, the Agency must 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 not subject to E.O. 13045 because it is not an
economically significant rule as defined by E.O. 12866, and because it
does not involve decisions based on environmental health or safety
risks.
I. National Technology Transfer and Advancement Act of 1995 (NTTAA)
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Pub. L. 104-113, Sec. 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so 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) that are 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 action does not involve technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.
List of Subjects
40 CFR Part 69
Environmental protection, Air pollution control, Alaska.
40 CFR Part 80
Environmental protection, Air pollution control, Diesel fuel, Motor
vehicle pollution.
Dated: September 3, 1998.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble title 40 chapter I of the
Code of Federal Regulations is amended as follows:
PART 69--[AMENDED]
1. The authority citation for part 69 is revised to read as
follows:
Authority: 42 U.S.C. 7545(1) and (g), 7625-1.
2. Subpart E consisting of Sec. 69.51 is added to read as follows:
Subpart E--Alaska
Sec. 69.51 Exemptions.
(a) Persons in the state of Alaska, including but not limited to,
refiners, importers, distributors, resellers, carriers, retailers or
wholesale purchaser-consumers may manufacture, introduce into commerce,
sell, offer for sale, supply, dispense, offer for supply, or transport
diesel fuel, which fails to meet the sulfur concentration or dye
requirements of 40 CFR 80.29, in the state of Alaska if the fuel is
used only in the state of Alaska.
(b) Persons outside the state of Alaska, including but not limited
to, refiners, importers, distributors, resellers, carriers, retailers
or wholesale purchaser-consumers may manufacture, introduce into
commerce, sell, offer for sale, supply, offer for supply, or transport
diesel fuel, which fails to meet the sulfur concentration or dye
requirements of Sec. 80.29, outside the state of Alaska if the fuel is:
(1) Used only in the state of Alaska; and
(2) Accompanied by supporting documentation that clearly
substantiates the fuel is for use only in the state of Alaska and does
not comply with the Federal sulfur standard applicable to motor vehicle
diesel fuel.
(c) Beginning July 1, 1999, the exemptions provided in paragraphs
(a) and (b) of this section are applicable only to fuel used in those
areas of Alaska that are not served by the Federal Aid Highway System.
PART 80--[AMENDED]
3. The authority citation for part 80 continues to read as follows:
Authority: Sec. 114, 211, and 301(a) of the Clean Air Act, as
amended (42 U.S.C. 7414, 7545 and 7601(a)).
4. Section 80.29 is amended by revising paragraph (a)(1)
introductory text to read as follows:
Sec. 80.29 Controls and prohibitions on diesel fuel quality.
(a) Prohibited activities. (1) Beginning October 1, 1993, 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, dispense, offer for supply or transport any diesel fuel
for use in motor vehicles, except as provided in 40 CFR 69.51, unless
the diesel fuel:
* * * * *
[FR Doc. 98-24734 Filed 9-15-98; 8:45 am]
BILLING CODE 6560-50-P
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