High Sulfur NRLM Credit 

Calculation Guidance 
High Sulfur NRLM Credit 


Calculation Guidance 


Assessment and Standards Division 

Office of Transportation and Air Quality 

U.S. Environmental Protection Agency 

EPA420-B-07-001 

January 2007 
Q: Please provide some guidance on generating high sulfur NRLM credits, especially on

how refiners and importers are to apply the provisions and equations of section 80.535. 

A: Per §80.535(a) of the regulations, refiners and importers may generate “high sulfur” 

NRLM credits from June 1, 2006 through May 31, 2007. These credits may be used to produce 

high sulfur NRLM diesel fuel after June 1, 2007. 

To generate such credits, a batch of diesel fuel must be designated as “NRLM” and must meet 

the 500 ppm sulfur standard when it is transferred to the next entity (per §80.535(a)(5)). To 

begin generating credits, a refiner or importer must submit to EPA a notice of intent to generate 

credits; the notification must be received by EPA at least 30 days prior to the date that it begins 

generating credits. Credits may not be “double-counted” (i.e., a refiner/importer may not 

generate highway diesel fuel credits, under §80.531, and high sulfur NRLM credits for the same

volume of fuel). However, a refiner may generate high sulfur NRLM credits and also either 

generate or use highway credits (to meet their highway ULSD production requirements) during 

the same compliance period. 

Credits may be generated one of two ways: 

1. The diesel fuel must be dyed, and thus designated as NRLM, per the provisions of 

§80.520; or, 

2. For undyed (or dyed) fuel, apply the equation of §80.535(a)(2)(ii): 

HSC = V510 + V520 - BMV

Where: 

V510 = the total volume of NRLM diesel fuel (15 ppm + 500 ppm) produced or imported 

during the annual compliance period 

V520 = the total volume of highway diesel fuel (15 ppm + 500 ppm) produced or 

imported during the annual compliance period 

BMV = the refiner or importer’s highway baseline (per §80.533, baseline applications 

were due for high sulfur credit generation on February 28, 2006) 

In order to generate high sulfur NRLM credits using the baseline approach in method 2, the 

refiner’s total production of 15 ppm and 500 ppm diesel fuel must be greater than their highway 

baseline volume. This restriction was intended to ensure that credits were not generated simply 

by shifting 500 ppm diesel fuel from the highway market to the nonroad market. The value of 

HSC as calculated from the equation is also limited by §80.535(a)(5), which states that the fuel 

must have been designated as “NRLM” when it was transferred to the next entity. 

Here are some examples to illustrate how to calculate high sulfur NRLM credits using the 

baseline approach in method 2:

(Note- for all of the following examples, the refiner has a highway baseline volume of 100 

gallons; 1 credit = 1 gallon) 

B

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(1) A refiner produces 100 gallons of 500 ppm diesel fuel. All of the 500 ppm diesel fuel is 

designated as NRLM diesel fuel. 

HSC = V510 + V520 - BMV 

= 100 + 0 – 100 

 = 0 

The refiner did not produce more total diesel fuel than its highway baseline, therefore the 

refiner cannot generate any high sulfur NRLM credits. 

(2) A refiner produces 120 gallons of 500 ppm diesel fuel. 50 gallons of the 500 ppm diesel 

fuel is designated as NRLM, and 70 gallons is designated as highway diesel fuel. 

HSC = V510 + V520 - BMV

= 50 + 70 – 100 

 = 20 

The refiner can generate 20 high sulfur NRLM credits. Also, the refiner must obtain a 

number of highway diesel sulfur credits equal to 80% of its 500 ppm highway diesel fuel 

production (or 0.80 x 70 = 56 highway credits). 

(3) A refiner produces 100 gallons of 15 ppm diesel fuel and 100 gallons of 500 ppm diesel 

fuel. All of the 500 ppm diesel fuel is designated as NRLM diesel fuel, and all of the 15 

ppm diesel fuel is designated as highway diesel fuel. 

HSC = V510 + V520 - BMV

= 100 + 100 – 100 

= 100 

The refiner can generate 100 high sulfur NRLM credits. Also, the refiner can generate 

highway diesel sulfur credits equal to 20% of its 15 ppm highway diesel fuel production, 

or 0.20 x 100 = 20 highway credits. 

(4) A refiner produces 200 gallons of 15 ppm diesel fuel, all of which is designated as 

highway diesel fuel. 

HSC = V510 + V520 - BMV 

= 0 + 200 – 100 

= 100 

While HSC = 100, the refiner did not designate any of the fuel as NRLM diesel fuel. 

Therefore, the refiner cannot generate any high sulfur NRLM credits. The refiner can 

generate highway diesel sulfur credits equal to 20% of its 15 ppm highway diesel fuel 

production, or 0.20 x 200 = 40 highway credits. 

The same result of zero HSC occurs in this example if the 200 gallons of production were 

500 ppm highway diesel fuel as opposed to 15 ppm highway diesel fuel. However, in 

this instance, the refiner would need to purchase 40 highway credits rather than 

generating 40 highway credits. 

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(5) A refiner produces 200 gallons of 15 ppm diesel fuel and 100 gallons of 500 ppm diesel 

fuel. All of the 500 ppm diesel fuel is designated as NRLM diesel fuel and all of the 15 

ppm diesel fuel is designated as highway diesel fuel. 

HSC = V510 + V520 - BMV 

= 100 + 200 – 100 

= 200 

While HSC = 200, the refiner only designated 100 gallons of 500 ppm diesel fuel as 

NRLM diesel fuel. Therefore, the refiner can only generate 100 high sulfur NRLM 

credits. Also, the refiner can generate highway diesel sulfur credits equal to 20% of their 

15 ppm highway diesel fuel production, or 0.20 x 200 = 40 highway credits. 

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