38958 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 9, 69, 80, 86, 89, 94, 1039, 

1048, 1051, 1065, and 1068

[OAR–2003–0012; FRL–7662–4] 

RIN 2060–AK27

Control of Emissions of Air Pollution 

From Nonroad Diesel Engines and Fuel

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Final rule.

SUMMARY: Nonroad diesel engines 

contribute considerably to our nation’s 

air pollution. These engines, used 

primarily in construction, agricultural, 

and industrial applications, are 

projected to continue to contribute large 

amounts of particulate matter, nitrogen 

oxides, and sulfur oxides, all of which 

contribute to serious public health 

problems in the United States. These 

problems include premature mortality, 

aggravation of respiratory and 

cardiovascular disease, aggravation of 

existing asthma, acute respiratory 

symptoms, chronic bronchitis, and 

decreased lung function. We believe 

that diesel exhaust is likely to be 

carcinogenic to humans by inhalation. 

Today, EPA is adopting new emission 

standards for nonroad diesel engines 

and sulfur reductions in nonroad diesel 

fuel that will dramatically reduce 

harmful emissions and will directly 

help States and local areas recently 

designated as 8-hour ozone 

nonattainment areas to improve their air 

quality. This comprehensive national 

program regulates nonroad diesel 

engines and diesel fuel as a system. New 

engine standards will begin to take 

effect in the 2008 model year, phasing 

in over a number of years. These 

standards are based on the use of 

advanced exhaust emission control 

devices. We estimate particulate matter 

reductions of 95 percent, nitrogen 

oxides reductions of 90 percent, and the 

virtual elimination of sulfur oxides from 

nonroad engines meeting the new 

standards. Nonroad diesel fuel sulfur 

reductions of more than 99 percent from 

existing levels will provide significant 

health benefits as well as facilitate the 

introduction of high-efficiency catalytic 

exhaust emission control devices as 

these devices are damaged by sulfur. 

These fuel controls will be phased-in 

starting in mid-2007. Today’s nonroad 

final rule is largely based on the 

Environmental Protection Agency’s 

2007 highway diesel program.

To better ensure the benefits of the 

standards are realized in-use and 

throughout the useful life of these 

engines, we are also adopting new test 

procedures, including not-to-exceed 

requirements, and related certification 

requirements. The rule also includes 

provisions to facilitate the transition to 

the new engine and fuel standards and 

to encourage the early introduction of 

clean technologies and clean nonroad 

diesel fuel. We have also developed 

provisions for both the engine and fuel 

programs designed to address small 

business considerations. 

The requirements in this rule will 

result in substantial benefits to public 

health and welfare through significant 

reductions in emissions of nitrogen 

oxides and particulate matter, as well as 

nonmethane hydrocarbons, carbon 

monoxide, sulfur oxides, and air toxics. 

We are now projecting that by 2030, this 

program will reduce annual emissions 

of nitrogen oxides and particulate 

matter by 738,000 and 129,000 tons, 

respectively. These emission reductions 

will prevent 12,000 premature deaths, 

over 8,900 hospitalizations, and almost 

a million work days lost, and will 

achieve other quantifiable benefits every 

year. The total benefits of this rule will 

be approximately $80 billion annually 

by 2030. The substantial health and 

welfare benefits we are projecting for 

this final action exceed those we 

anticipated at the time of this proposal. 

Costs for both the engine and fuel 

requirements will be many times less, at 

approximately $2 billion annually.

DATES: This final rule is effective on 

August 30, 2004. 

The incorporation by reference of 

certain publications listed in this 

regulation is approved by the Director of 

the Federal Register as of August 30, 

2004.

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

Nos. OAR–2003–0012 and A–2001–28. 

All documents in the docket are listed 

in the EDOCKET index at http://

www.epa.gov/edocket. Although listed 

in the index, some information is not 

publicly available, i.e., CBI or other 

information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

is not placed on the Internet and will be 

publicly available only in hard copy 

form. Publicly available docket 

materials are available either 

electronically in EDOCKET or in hard 

copy at the Air Docket in the EPA 

Docket Center, EPA/DC, EPA West, 

Room B102, 1301 Constitution Ave., 

NW, Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Air Docket is (202) 566–

1742.

FOR FURTHER INFORMATION CONTACT:

Carol Connell, Assessment and 

Standards Division, Office of 

Transportation and Air Quality, 

Environmental Protection Agency, 2000 

Traverwood Drive, Ann Arbor, MI 

48105; telephone number: (734) 214–

4349; fax number: (734) 214–4050; email address: connell.carol@epa.gov, or 

Assessment and Standards Division 

Hotline; telephone number: (734) 214–

4636; e-mail address: asdinfo@epa.gov.

SUPPLEMENTARY INFORMATION: 

Does This Action Apply To Me? 

This action may affect you if you 

produce or import new diesel engines 

which are intended for use in nonroad 

vehicles or equipment, such as 

agricultural and construction 

equipment, or if you produce or import 

such nonroad vehicles or equipment. It 

may also affect you if you convert 

nonroad vehicles or equipment, or the 

engines used in them, to use alternative 

fuels. It may also affect you if you 

produce, import, distribute, or sell 

nonroad diesel fuel. 

The following table gives some 

examples of entities that may have to 

follow the regulations. But because 

these are only examples, you should 

carefully examine the regulations in 40 

CFR parts 80, 89, 1039, 1065, and 1068. 

If you have questions, call the person 

listed in the FOR FURTHER INFORMATION

CONTACT section of this preamble:

Category NAICS 

codesa

SIC 

codesb Examples of potentially regulated entities 

Industry ............................................. 333618 3519 Manufacturers of new nonroad diesel engines. 

Industry ............................................. 333111 3523 Manufacturers of farm machinery and equipment. 

Industry ............................................. 333112 3524 Manufacturers of lawn and garden tractors (home). 

Industry ............................................. 333924 3537 Manufacturers of industrial trucks. 

Industry ............................................. 333120 3531 Manufacturers of construction machinery. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38959

Category NAICS 

codesa

SIC 

codesb Examples of potentially regulated entities 

Industry ............................................. 333131 3532 Manufacturers of mining machinery and equipment. 

Industry ............................................. 333132 3533 Manufacturers of oil and gas field machinery and equipment. 

Industry ............................................. 811112 7533 Commercial importers of vehicles and vehicle components. 

811198 7549

Industry ............................................. 324110 2911 Petroleum refiners. 

Industry ............................................. 422710 5171 Diesel fuel marketers and distributors. 

422720 5172

Industry ............................................. 484220 4212 Diesel fuel carriers. 

484230 4213

Notes:

a North American Industry Classification System (NAICS). 

bStandard Industrial Classification (SIC) system code.

How Can I Get Copies of This 

Document and Other Related 

Information? 

Docket. EPA has established an 

official public docket for this action 

under Docket ID No. OAR–2003–0012 at 

http://www.epa.gov/edocket. The 

official public docket consists of the 

documents specifically referenced in 

this action, any public comments 

received, and other information related 

to this action. Although a part of the 

official docket, the public docket does 

not include Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

The official public docket is the 

collection of materials that is available 

for public viewing at the Air Docket in 

the EPA Docket Center, (EPA/DC) EPA 

West, Room B102, 1301 Constitution 

Ave., NW, Washington, DC. The EPA 

Docket Center Public Reading Room is 

open from 8:30 a.m. to 4:30 p.m., 

Monday through Friday, excluding legal 

holidays. The telephone number for the 

Reading Room is (202) 566–1742, and 

the telephone number for the Air Docket 

is (202) 566–1742. 

Electronic Access. You may access 

this Federal Register document 

electronically through the EPA Internet 

under the ‘‘Federal Register’’ listings at 

http://www.epa.gov/fedrgstr/.

An electronic version of the public 

docket is available through EPA’s 

electronic public docket and comment 

system, EPA Dockets. You may use EPA 

Dockets at http://www.epa.gov/edocket/

to view public comments, access the 

index listing of the contents of the 

official public docket, and to access 

those documents in the public docket 

that are available electronically. 

Although not all docket materials may 

be available electronically, you may still 

access any of the publicly available 

docket materials through the docket 

facility identified above. Once in the 

system, select ‘‘search,’’ then key in the 

appropriate docket identification 

number.

Outline of This Preamble 

I. Overview 

A. What Is EPA Finalizing? 

B. Why Is EPA Taking This Action? 

II. Nonroad Engine Standards 

A. What Are the New Engine Standards? 

B. Are the New Standards Feasible? 

C. Why Do We Need 15ppm Sulfur Diesel 

Fuel? 

III. Requirements for Engine and Equipment 

Manufacturers 

A. Averaging, Banking, and Trading 

B. Transition Provisions for Equipment 

Manufacturers 

C. Engine and Equipment Small Business 

Provisions (SBREFA) 

D. Certification Fuel 

E. Temporary In-Use Compliance Margins 

F. Test Cycles 

G. Other Test Procedure Issues 

H. Engine Power 

I. Auxiliary Emission Control Devices and 

Defeat Devices 

J. Not-To-Exceed Requirements 

K. Investigating and Reporting EmissionRelated Defects 

L. Compliance With the Phase-In 

Provisions 

M. Incentive Program for Early or Very 

Low Emission Engines 

N. Labeling and Notification Requirements 

O. General Compliance 

P. Other Issues 

Q. Highway Engines 

R. Changes That Affect Other Engine 

Categories 

IV. Our Program for Controlling Nonroad, 

Locomotive and Marine Diesel Fuel 

Sulfur 

A. Nonroad, Locomotive and Marine Diesel 

Fuel Quality Standards 

B. Hardship Relief Provisions for 

Qualifying Refiners 

C. Special Provisions for Alaska and the 

Territories 

D. NRLM Diesel Fuel Program Design 

E. How Are State Diesel Fuel Programs 

Affected by the Sulfur Diesel Program? 

F. Technological Feasibility of the 500 and 

15 ppm Sulfur Diesel Fuel Program 

G. What Are the Potential Impacts of the 

15 ppm Sulfur Diesel Program on 

Lubricity and Other Fuel Properties? 

H. Refinery Air Permitting 

V. Nonroad, Locomotive and Marine Diesel 

Fuel Program: Details of the Compliance 

and Enforcement Provisions 

A. Special Fuel Provisions and Exemptions 

B. Additional Requirements for Refiners 

and Importers 

C. Requirements for Parties Downstream of 

the Refinery or Import Facility 

D. Diesel Fuel Sulfur Sampling and Testing 

Requirements 

E. Selection of the Marker for Heating Oil 

F. Fuel Marker Test Method 

G. Requirements for Record-keeping, 

Reporting, and PTDs 

H. Liability and Penalty Provisions for 

Noncompliance 

I. How Will Compliance With the Sulfur 

Standards Be Determined? 

VI. Program Costs and Benefits 

A. Refining and Distribution Costs 

B. Cost Savings to the Existing Fleet From 

the Use of Low Sulfur Fuel 

C. Engine and Equipment Cost Impacts 

D. Annual Costs and Cost Per Ton 

E. Do the Benefits Outweigh the Costs of 

the Standards?

F. Economic Impact Analysis 

VII. Alternative Program Options Considered 

A. Summary of Alternatives 

B. Introduction of 15 ppm Nonroad Diesel 

Sulfur Fuel in One Step 

C. Applying the 15 ppm Sulfur Cap to 

Locomotive and Marine Diesel Fuel 

D. Other Alternatives 

VIII. Future Plans 

A. Technology Review 

B. Test Procedure Issues 

C. In-use Testing 

D. Engine Diagnostics 

E. Future NOX Standards for Engines in 

Mobile Machinery Over 750 hp 

F. Emission Standards for Locomotive and 

Marine Diesel Engines 

G. Retrofit Programs 

H. Reassess the Marker Specified for 

Heating Oil 

IX. Public Participation 

X. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act (RFA), as 

amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (SBREFA), 5 U.S.C. 601 et. seq 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children from Environmental Health and 

Safety Risks 

38960 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer 

Advancement Act 

J. Congressional Review Act 

XI. Statutory Provisions and Legal Authority

I. Overview 

EPA today is completing the third 

recent major program to reduce 

emissions from the nation’s mobile 

sources. Today’s final rule establishes 

standards for nonroad diesel engines 

and fuel and builds on the recently 

adopted Tier 2 program for cars and 

light trucks and the 2007 highway diesel 

program for on-highway diesel engines. 

These three programs have in common 

large reductions in sulfur levels in fuel 

that will not only achieve public health 

benefits but also facilitate the 

introduction of advanced emissions 

control technologies. In 1996, emissions 

from land-based nonroad, marine, and 

locomotive diesel engines were 

estimated to be about 40 percent of the 

total mobile source inventory of PM2.5

(particulate matter less than 2.5 microns 

in diameter) and 25 percent of the NOX

(nitrogen oxides) inventory. Without 

today’s final rule, these contributions 

would be expected to grow to 44 percent 

and 47 percent by 2030 for PM2.5 and 

NOX, respectively. By themselves, landbased nonroad diesel engines are a very 

large part of the diesel mobile source 

PM2.5 inventory, contributing about 47 

percent in 1996, and growing to 70 

percent of this inventory by 2020 

without today’s final rule. In order to 

meet the Clean Air Act’s goal of 

cleaning up the nation’s air, emissions 

reductions from the nonroad sector are 

necessary. 

This program begins to get important 

emission reductions in 2008, and by 

2030 we estimate that this program will 

reduce over 129,000 tons PM2.5 and 

738,000 tons of NOX annually. These 

emission reductions will be directly 

helpful to the 474 counties nationwide 

that have been recently designated as 

nonattainment areas for the 8-hour 

ozone standard and for counties that 

will be designated as nonattainment for 

PM2.5 later this year. The resulting 

ambient PM2.5 and NOX reductions 

correspond to public health 

improvements in 2030 including 

approximately 12,000 fewer premature 

mortalities, 15,000 fewer heart attacks, 1 

million fewer lost days of work due to 

adults with respiratory symptoms, 5.9 

million fewer days when adults have to 

restrict their activities due to respiratory 

symptoms, and almost 6,000 emergency 

room visits for asthma attacks in 

children. Our projections in this final 

rule for public health and welfare 

improvements are greater than 

estimated at proposal. 

This final rule sets out emission 

standards for nonroad diesel engines—

engines used mainly in construction, 

agricultural, industrial and mining 

operations—that will achieve reductions 

in PM and NOX emissions levels in 

excess of 95 percent and 90 percent 

respectively. This action also regulates 

nonroad diesel fuel for the first time by 

reducing sulfur levels in this fuel more 

than 99 percent to 15 parts per million 

(ppm). These provisions mirror those 

already in place for highway diesel 

engines, which will lead to the 

introduction of 15 ppm sulfur diesel 

fuel, followed by stringent engine 

standards in that sector beginning in 

2007 based on advanced aftertreatment 

technologies. We believe it is highly 

appropriate to bring the same types of 

expected advanced aftertreatment 

technologies to the nonroad market as 

soon as possible and we believe today’s 

nonroad fuel and engine program 

represents the next step in a feasible 

progression in the application of clean 

technologies to nonroad diesel engines 

and the associated diesel fuel. 

As we did with the proposed nonroad 

rulemaking, we followed specific 

principles when developing this final 

rule. First, the program achieves 

reductions in NOX, sulfur oxides (SOX), 

and PM emissions as early as possible. 

Second, it does so by implementing the 

fuel program as soon as possible while 

at the same time not interfering with the 

implementation and expected benefits 

of introducing ultra low sulfur fuel 

(diesel fuel containing no greater than 

15 ppm sulfur) in the highway market 

as required by the 2007 highway diesel 

rule. Next, we are generally treating 

vehicles and fuels as a system, that is 

promulgating engine and fuel standards 

in tandem in order to cost-effectively 

achieve the greatest emission 

reductions. Lastly, the program provides 

sufficient lead time to allow the 

migration of advanced emissions control 

technologies from the highway sector to 

nonroad diesel engines as well as the 

expansion of ultra low sulfur diesel fuel 

production to the nonroad market. 

The May 2003 proposed rulemaking 

culminated a multi-year effort to 

develop control strategies for nonroad 

engines. EPA worked collaboratively 

with stakeholders from industry, state 

and local government, and public health 

organizations in putting together its 

comprehensive (and widely praised) 

new engine standards and sulfur fuel 

controls. We received about 150,000 

comments on the proposal, almost all of 

them in support. We held three public 

hearings on the proposal and have 

participated in scores of meetings with 

commenters in developing the 

provisions of today’s final rule. An 

important aspect of this collaborative 

development effort has been EPA’s 

coordination with other governments in 

helping to further world harmonization 

of nonroad engine controls and fuel 

sulfur levels. Information gathered in 

these comments and discussions, taken 

in context with the principles described 

above, has been the basis for our action 

today. 

In summary, this rule sets out engine 

standards and emission test procedures 

(including not-to-exceed requirements) 

for new nonroad diesel engines, and 

sulfur control requirements for diesel 

fuel used in land-based nonroad, 

locomotive, and marine engines (NRLM 

fuel). Beginning in 2008, the new Tier 

4 engine standards for five power 

categories for engines from under 25 

horsepower (hp) to above 750 

horsepower will be phased in. New 

engine emissions test procedures will be 

phased in along with these new 

standards to better ensure emissions 

control over real-world engine operation 

and to help provide for effective 

compliance determination. The sulfur 

reductions to land-based nonroad diesel 

fuel will be accomplished in two steps, 

with an interim step from currently 

uncontrolled levels to a 500 ppm cap 

starting in June, 2007 and the final step 

to 15 ppm in June, 2010. This change in 

fuel quality will directly lead to 

important health and welfare benefits 

associated with the reduced generation 

of sulfate PM and SOX. Even more 

important, introduction of 15 ppm 

sulfur nonroad diesel fuel facilitates the 

introduction of advanced aftertreatment 

devices for nonroad engines.

Although we did not propose to 

control locomotive and marine diesel 

fuel sulfur levels to 15 ppm in the 

NPRM, recognizing the important 

environmental and public welfare 

benefits that such a program could 

enable, we have decided to finalize this 

second step to 15 ppm sulfur fuel 

control program for locomotive and 

marine diesel fuel beginning in 2012. 

Locomotive and marine diesel fuel will 

first be reduced from current 

uncontrolled levels to a 500 ppm cap 

starting in June 2007 and the second 

step down to a 15 ppm cap will take 

place in June, 2012. While we have 

chosen to reduce sulfur levels in 

locomotive and marine diesel fuel to 15 

ppm in this rulemaking without 

adopting corresponding engine controls, 

we note that the Agency has already 

begun work to promulgate appropriate 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38961

1EPA is issuing an Advanced Notice of Proposed 

Rulemaking for locomotive and marine engine 

standards as part of this effort.

new standards for these engines.1 The 

monetized health and welfare benefits 

associated with further sulfur reduction 

to 15 ppm outweigh the costs of the 

sulfur reductions. Also, doing so now 

allows for the promulgation of a single 

integrated fuel program and provides 

the refining industry with long term 

predictability for sulfur control.

The requirements in this rule will 

result in substantial benefits to public 

health and welfare and the environment 

through significant reductions in NOX

and PM as well as nonmethane 

hydrocarbons (NMHC), carbon 

monoxide (CO), SOX, and air toxics. As 

noted, by 2030 this program will reduce 

annual emissions of NOX and PM by 

738,000 and 129,000 tons, respectively. 

We estimate these annual emission 

reductions will prevent 12,000 

premature deaths, over 8,900 

hospitalizations, 15,000 nonfatal heart 

attacks, and approximately 1 million 

days that people miss work because of 

respiratory symptoms, among 

quantifiable benefits. The overall 

quantifiable benefits will total $83 

billion annually by 2030 using a 3 

percent discount rate and $78 billion 

using a 7 percent discount rate at a cost 

of approximately $2 billion, with a 30-

year net present value for the benefits of 

$805 billion at 3 percent discounting 

and $352 billion at 7 percent 

discounting at a net present value cost 

of $27 billion at 3 percent discounting 

and $14 billion at 7 percent discounting. 

Clearly the benefits of this program 

dramatically outweigh its cost at a ratio 

of approximately 40:1 in 2030. 

A. What Is EPA Finalizing? 

As part of the proposed rulemaking, 

we set out very detailed provisions for 

new engine exhaust emission controls, 

sulfur limitations in nonroad and 

locomotive/marine diesel fuels, test 

procedures, compliance requirements, 

and other information. We also looked 

at a number of alternative program 

options, such as requiring refiners to 

reduce sulfur from uncontrolled levels 

to 15 ppm in one step in 2008. We 

continue to believe that the main 

program options set out in the proposal 

are feasible and the most cost-effective 

requirements, taking into account other 

factors such as lead time and interaction 

with the highway diesel program, so we 

are generally adopting the engine and 

fuel provisions which we proposed. 

1. Nonroad Diesel Engine Emission 

Standards 

Today’s action adopts Tier 4 

standards for nonroad diesel engines of 

all horsepower ratings. These standards 

are technology-neutral in the sense that 

manufacturers are the responsible party 

in determining which emission control 

technologies will be needed to meet the 

requirements. Applicable emissions 

standards are determined by model year 

for each of five engine power band 

categories. For engines less than 25 hp, 

we are adopting a new engine standard 

for PM of 0.30 g/bhp-hr (grams per 

brake-horsepower-hour) beginning in 

2008, and leaving the previously-set 5.6 

g/bhp-hr combined standard for 

NMHC+NOX in place. For engines of 25 

to 75 hp, we are adopting standards 

reflecting approximately 50 percent 

reductions in PM control from today’s 

engines, again applicable beginning in 

2008. Then, starting in 2013, standards 

of 0.02 g/bhp-hr for PM and 3.5 g/bhphr for NMHC+NOX will apply for this 

power category. For engines of 75 to 175 

hp, the standards will be 0.01 g/bhp-hr 

for PM, 0.30 g/bhp-hr for NOX and 0.14 

g/bhp-hr for NMHC starting in 2012, 

with the NOX and NMHC standards 

phased in over a period of three to four 

years in order to address lead time, 

workload, and feasibility 

considerations. These same standards 

will apply to engines of 175 to 750 hp 

as well starting in 2011, with a similar 

phase-in. These PM, NOX, and NMHC 

standards and phase-in schedules are 

similar in stringency to the 2007 

highway diesel standards and are 

expected to require the use of highefficiency aftertreatment systems to 

ensure compliance.

For engines above 750 hp, we are 

requiring PM and NMHC control to 

0.075 g/bhp-hr and 0.30 g/bhp-hr, 

respectively, starting in 2011. More 

stringent standards take effect in 2015 

with PM standards of 0.02 g/bhp-hr (for 

engines used in generator sets) and 0.03 

g/bhp-hr (for non-generator set engines), 

and an NMHC standard of 0.14 g/bhphr. The NOX standard in 2011 will be 

0.50 g/bhp-hr for generator set engines 

above 1200 hp, and 2.6 g/bhp-hr for all 

other engines in the above 750 hp 

category. This application of advanced 

NOX emission control technologies to 

generator set engines above 1200 hp will 

provide substantial NOX reductions and 

will occur earlier than we had proposed 

in the NPRM. In 2015, the 750–1200 hp 

generator set engines will be added to 

the stringent 0.50 g/bhp-hr NOX

requirement as well. The long-term NOX

standard for engines not used in 

generator sets (mobile machinery) will 

be addressed in a future action (we are 

currently considering such an action in 

the 2007 time frame). 

We are also continuing the averaging, 

banking, and trading provisions engine 

manufacturers can use to demonstrate 

compliance with the standards. We also 

are continuing provisions providing 

flexibilities which equipment 

manufacturers may use to facilitate 

transition to compliance with the new 

standards. In addition, we are including 

turbocharged diesels in the existing 

regulation of crankcase emissions, 

effective in the same year that the new 

standards first apply in each power 

category. 

As discussed at length in the 

proposal, new test procedures and 

compliance provisions, especially the 

not-to-exceed and transient tests, are 

necessary to ensure the benefits of the 

standards being adopted today are 

achieved when the aftertreatment-based 

standards go into place. We are 

therefore adopting the proposed test 

procedures and compliance provisions, 

with slight modifications designed to 

better implement the provisions, in 

today’s rule. We continue to believe the 

new transient test, cold start transient 

test, and not-to-exceed test procedures 

and standards will all help achieve our 

goal of emissions reductions being 

achieved in actual engine operation. 

As noted, the final rule also 

continues, and in some cases modifies, 

existing provisions that will facilitate 

the transition to the new engine and fuel 

standards. Many of these provisions will 

help small business engine and 

equipment manufacturers meet the 

requirements. They will also aid 

manufacturers in managing their 

development of engines and equipment 

that will meet our new standards. 

2. Nonroad, Locomotive, and Marine 

Diesel Fuel Quality Standards 

The fuel program requirements are 

very similar to those included in the 

proposal, with two notable exceptions. 

The first involves the standards 

themselves with the inclusion of 

locomotive and marine diesel fuel in the 

15 ppm standard. The second addresses 

the compliance provisions designed to 

ensure the effectiveness of the program. 

We are adopting the two-step 

approach to sulfur control, with all 

land-based nonroad, locomotive, and 

marine diesel fuel going from 

uncontrolled sulfur levels of 

approximately 3,000 ppm sulfur to 500 

ppm in June, 2007. The interim step 

will by itself achieve significant PM and 

SOX emission reductions with 

associated important health benefits as 

early as is practicable. Then, in June 

38962 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

2010, the sulfur cap for land-based 

nonroad engine diesel fuel will be 

reduced to the final standard of 15 ppm. 

Two years later, in 2012, the 15 ppm 

cap for locomotive and marine engine 

diesel fuel will go into effect. The 

reduction to 15 ppm sulfur provides 

additional direct control of PM and SOX

emissions and is an enabling technology 

for the application of advanced catalystbased emission control technologies. 

Although we did not propose to 

control locomotive and marine diesel 

fuel to 15 ppm in the NPRM, after 

careful consideration and reviewing 

substantial comments from 

stakeholders, we have decided to 

include fuel used in locomotive and 

marine applications in the final step to 

15 ppm beginning in 2012. The 

incremental PM health and welfare 

benefits associated with this standard 

outweigh the costs. The locomotive and 

marine diesel fuel program provides a 

near-term positive impact on public 

health and welfare. Also, the 15 ppm 

sulfur diesel fuel provides an 

opportunity that may enable the 

application of advanced catalyst-based 

emission control technologies to 

locomotive and marine diesel engines. 

We are issuing an Advance Notice of 

Proposed Rulemaking for locomotive 

and marine diesel engines that 

investigates this potential. Recognizing 

the value that a locomotive and marine 

fuel program could have for public 

health and welfare, State and local 

authorities and public health advocacy 

organizations provided a large number 

of comments encouraging us to take 

action in this rulemaking to address 

emissions from this category. 

Including locomotive and marine fuel 

in the 15 ppm sulfur diesel fuel pool 

also simplifies the overall design of the 

fuel program and will simplify the 

distribution of diesel fuel. At the same 

time, we have finalized this standard 

with flexibilities designed specifically 

to address fuel program implementation 

issues raised in the comments. 

Noting that sulfur levels in highway 

diesel fuel will generally be at or below 

15 ppm starting in 2006 and not 

wanting to reduce the benefits of 

introducing this clean fuel, we spent 

considerable time developing a 

compliance assurance scheme for 

introducing our nonroad diesel sulfur 

program to mesh with the highway 

program requirements. We initially 

thought that a ‘‘baseline’’ approach 

essentially requiring refiners to 

maintain a constraint on sulfur levels of 

various distillate fuels, based on 

historical production volumes, was the 

most appropriate mechanism. 

Subsequently we learned that the other 

mechanism we discussed in the 

proposal, a ‘‘designate and track’’ type 

approach, is better suited to address our 

priorities and commitments for the 

nonroad diesel sulfur control program. 

This approach allows refiners to 

designate volumes of nonroad fuel into 

various categories and these 

designations would follow the fuel 

throughout the distribution system. We 

have successfully worked through our 

enforceability and other concerns with 

this approach and are now including it 

as our compliance mechanism for the 

fuel standards of today’s program.

B. Why Is EPA Taking This Action? 

As we have discussed extensively in 

both the proposal and today’s action, 

EPA strongly believes it is appropriate 

to take steps now to reduce future 

emissions from nonroad, locomotive, 

and marine diesel engines. Emissions 

from these engines contribute greatly to 

a number of serious air pollution 

problems and would continue to do so 

in the future absent further reduction 

measures. Such emissions lead to 

adverse health and welfare effects 

associated with ozone, PM, NOX, SOX, 

and volatile organic compounds, 

including toxic compounds. In addition, 

diesel exhaust is of specific concern 

because it is likely to be carcinogenic to 

humans by inhalation as well as posing 

a hazard from noncancer respiratory 

effects. Ozone, NOX, and PM also cause 

significant public welfare harm such as 

damage to crops, eutrophication, 

regional haze, and soiling of building 

materials. 

Millions of Americans continue to 

live in areas with unhealthy air quality 

that may endanger public health and 

welfare. As discussed in more detail 

below, there are approximately 159 

million people living in areas that either 

do not meet the 8-hour ozone National 

Ambient Air Quality Standards 

(NAAQS) or contribute to violations in 

other counties as noted in EPA’s recent 

nonattainment designations for part or 

all of 474 counties. In addition, 

approximately 65 million people live in 

counties where air quality 

measurements violate the PM2.5

NAAQS. These numbers do not include 

the tens of millions of people living in 

areas where there is a significant future 

risk of failing to maintain or achieve the 

ozone or PM2.5 NAAQS. Federal, state, 

and local governments are working to 

bring ozone and PM levels into 

compliance with the NAAQS attainment 

and maintenance plans and the 

reductions included in today’s rule will 

play a critical part in these actions. 

Reducing regional emissions of SOX is 

critical to this strategy for attaining the 

PM NAAQS and meeting regional haze 

goals in our treasured national parks. 

SOX levels can themselves pose a 

respiratory hazard. 

Although controlling air pollution 

from nonroad diesel exhaust is 

challenging, we strongly believe it can 

be accomplished through the 

application of high-efficiency emissions 

control technologies. As discussed in 

much greater detail in section II, very 

large emission reductions (in excess of 

90 percent) are possible, especially 

through the use of catalytic emission 

control devices installed in the nonroad 

equipment’s exhaust system and 

integrated with the engine controls. To 

meet the standards being adopted today, 

application of such technologies for 

both PM and NOX control will be 

needed for most engines. Highefficiency PM exhaust emission control 

technology has been available for 

several years, and it is the same 

technology we expect to be applied to 

meet the PM standards for highway 

diesel engines in 2007. For NOX, we 

expect the same high-efficiency 

technologies being developed for the 

2007 highway diesel engine program 

will be used to meet our new nonroad 

requirements. All of these technologies 

are dependent on the 15 ppm maximum 

sulfur levels for nonroad diesel fuel 

being adopted today. The fuel control 

program being adopted today also yields 

significant and important reductions in 

SOX from these sources.

1. Basis for Action Under the Clean Air 

Act 

Section 213 of the Clean Air Act (‘‘the 

Act’’ or CAA) gives us the authority to 

establish emissions standards for 

nonroad engines and vehicles. Section 

213(a)(3) authorizes the Administrator 

to set standards for NOX, volatile 

organic compounds (VOCs), and CO 

which ‘‘standards shall achieve the 

greatest degree of emission reduction 

achievable through the application of 

technology which the Administrator 

determines will be available for the 

engines or vehicles.’’ As part of this 

determination, the Administrator must 

give appropriate consideration to cost, 

lead time, noise, energy, and safety 

factors associated with the application 

of such technology. The standards 

adopted today for NOX implement this 

provision. Section 213(a)(4) authorizes 

the Administrator to establish standards 

to control emissions of pollutants (other 

than those covered by section 213(a)(3)) 

which ‘‘may reasonably be anticipated 

to endanger public health and welfare.’’

Here, the Administrator may promulgate 

regulations that are deemed appropriate 

for new nonroad vehicles and engines 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38963

2See Clean Air Act section 213(b).

which cause or contribute to such air 

pollution, taking into account costs, 

noise, safety, and energy factors. EPA 

believes the new controls for PM in 

today’s rule are an appropriate exercise 

of EPA’s discretion under the authority 

of section 213(a)(4). 

We believe the evidence provided in 

section II of this preamble and in the 

Regulatory Impact Analysis (RIA) 

indicates that the stringent emission 

standards adopted today are feasible 

and reflect the greatest degree of 

emission reduction achievable in the 

model years to which they apply. We 

have given appropriate consideration to 

costs in promulgating these standards. 

Our review of the costs and costeffectiveness of these standards indicate 

that they will be reasonable and 

comparable to the cost-effectiveness of 

other emission reduction strategies for 

the same pollutants that have been 

required or could be required in the 

future. We have also reviewed and given 

appropriate consideration to the energy 

factors of this rule in terms of fuel 

efficiency and effects on diesel fuel 

supply, production, and distribution, as 

discussed below, as well as any safety 

factors associated with these new 

standards. 

The information in this section and 

chapters 2 and 3 of the RIA regarding air 

quality and the contribution of nonroad, 

locomotive, and marine diesel engines 

to air pollution provides strong 

evidence that emissions from such 

engines significantly and adversely 

impact public health or welfare. First, as 

noted earlier, there is a significant risk 

that several areas will fail to attain or 

maintain compliance with the NAAQS 

for 8-hour ozone concentrations or the 

NAAQS for PM2.5 during the period that 

these new vehicle and engine standards 

will be phased into the vehicle 

population, and that nonroad, 

locomotive, and marine diesel engines 

contribute to such concentrations, as 

well as to concentrations of other 

criteria pollutants. This risk will be 

significantly reduced by the standards 

adopted today, as also noted above. 

However, the evidence indicates that 

some risk remains even after the 

reductions achieved by these new 

controls on nonroad diesel engines and 

nonroad, locomotive, and marine diesel 

fuel. Second, EPA believes that diesel 

exhaust is likely to be carcinogenic to 

humans. The risk associated with 

exposure to diesel exhaust includes the 

particulate and gaseous components 

among which are benzene, 

formaldehyde, acetaldehyde, acrolein, 

and 1,3–butadiene, all of which are 

known or suspected human or animal 

carcinogens, or have noncancer health 

effects. Moreover, these compounds 

have the potential to cause health effects 

at environmental levels of exposure. 

Third, emissions from nonroad diesel 

engines (including locomotive and 

marine diesel engines) contribute to 

regional haze and impaired visibility 

across the nation, as well as to odor, 

acid deposition, polycyclic organic 

matter (POM) deposition, 

eutrophication and nitrification, all of 

which are serious environmental 

welfare problems. 

EPA has already found in previous 

rules that emissions from new nonroad 

diesel engines contribute to ozone and 

CO concentrations in more than one 

area which has failed to attain the ozone 

and CO NAAQS (59 FR 31306, June 17, 

1994). EPA has also previously 

determined that it is appropriate to 

establish standards for PM from new 

nonroad diesel engines under section 

213(a)(4), and the additional 

information on diesel exhaust 

carcinogenicity noted above reinforces 

this finding. In addition, we have 

already found that emissions from 

nonroad engines significantly contribute 

to air pollution that may reasonably be 

anticipated to endanger public welfare 

due to regional haze and visibility 

impairment (67 FR 68242–68243, Nov. 

8, 2002). We find here, based on the 

information in this section of the 

preamble and chapters 2 and 3 of the 

RIA, that emissions from the new 

nonroad diesel engines covered by this 

final action likewise contribute to 

regional haze and to visibility 

impairment that may reasonably be 

anticipated to endanger public welfare. 

Taken together, these findings indicate 

the appropriateness of the nonroad 

diesel engine standards adopted today 

for purposes of section 213(a)(3) and (4) 

of the Act. These findings were 

unchallenged by commenters.

These standards must take effect at 

‘‘the earliest possible date considering 

the lead time necessary to permit 

development and application of the 

requisite technology,’’ giving 

‘‘appropriate consideration’’ to cost, 

energy, and safety.2 The compliance 

dates we are adopting reflect careful 

consideration of these factors. The 

averaging, banking, and trading (ABT), 

equipment manufacturer flexibilities, 

and phase-in provisions for NOX are 

elements in our determination that we 

have selected appropriate lead times for 

the standards.

Section 211(c) of the CAA allows us 

to regulate fuels where emission 

products of the fuel either: (1) Cause or 

contribute to air pollution that 

reasonably may be anticipated to 

endanger public health or welfare, or (2) 

will impair to a significant degree the 

performance of any emission control 

device or system which is in general 

use, or which the Administrator finds 

has been developed to a point where in 

a reasonable time it will be in general 

use were such a regulation to be 

promulgated. This rule meets both of 

these criteria. Sulfur dioxide (SO2)and 

sulfate PM emissions from nonroad, 

locomotive, marine and diesel vehicles 

are due to sulfur in diesel fuel. As 

discussed above, emissions of these 

pollutants cause or contribute to 

ambient levels of air pollution that 

endanger public health and welfare. 

Control of sulfur to 15 ppm for this fuel 

through a two-step program would lead 

to significant, cost-effective reductions 

in emissions of these pollutants. Control 

of sulfur to 15 ppm in nonroad diesel 

fuel will also enable emissions control 

technology that will achieve significant, 

cost-effective reduction in emissions of 

these pollutants, as discussed in section 

I.B.2 below. The substantial adverse 

effect of high sulfur levels on the 

performance of diesel emission control 

devices or systems that would be 

expected to be used to meet the nonroad 

standards is discussed in detail in 

section II. Control of sulfur to 15 ppm 

for locomotive and marine diesel fuel, 

as with nonroad diesel fuel, will 

provide meaningful additional benefits 

that outweigh the costs. In addition, our 

authority under section 211(c) is 

discussed in more detail in Appendix A 

to chapter 5 of the RIA. 

2. What Is the Air Quality Impact of 

This Final Rule? 

a. Public Health and Environmental 

Impacts 

With this rulemaking, we are acting to 

extend advanced emission controls to 

another major source of diesel engine 

emissions: Nonroad land-based diesel 

engines. This final rule sets out 

emission standards for nonroad landbased diesel engines—engines used 

mainly in construction, agricultural, 

industrial and mining operations—that 

will achieve reductions in PM and NOX

standards in excess of 95 percent and 90 

percent, respectively for this class of 

vehicles. This action also regulates 

nonroad diesel fuel for the first time by 

reducing sulfur levels in this fuel more 

than 99 percent to 15 ppm. The diesel 

fuel sulfur requirements will decrease 

PM and SO2 emissions for land-based 

diesel engines, as well as for three other 

nonroad source categories: Commercial 

marine diesel vessels, locomotives, and 

recreational marine diesel engines. 

38964 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

3Note this analysis does not include the effects 

of the proposed Rule to Reduce Interstate Transport 

of Fine Particulate Matter and Ozone (Interstate Air 

Quality Rule). 69 FR 4566 (January 30, 2004). See

http://www.epa.gov/interstateairquality/rule.html.

These sources are significant 

contributors to atmospheric pollution of 

(among other pollutants) PM, ozone and 

a variety of toxic air pollutants. In 1996, 

emissions from these four source 

categories were estimated to be 40 

percent of the mobile source inventory 

for PM2.5 and 25 percent for NOX, and 

10 percent and 13 percent of overall 

emissions for these potential health 

hazards, respectively. Without further 

controls beyond those we have already 

adopted, these sources will emit 44 

percent of PM2.5 from mobile sources 

and 47 percent of NOX emissions from 

mobile sources by the year 2030. 

Nonroad engines, and most 

importantly nonroad diesel engines, 

contribute significantly to ambient 

PM2.5 levels, largely through direct 

emissions of carbonaceous and sulfate 

particles in the fine (and even ultrafine) 

size range. Nonroad diesels also 

currently emit high levels of NOX which 

react in the atmosphere to form 

secondary PM2.5 (namely ammonium 

nitrate) as well as ozone. Nonroad 

diesels also emit SO2 and hydrocarbons 

which react in the atmosphere to form 

secondary PM2.5 (namely sulfates and 

organic carbonaceous PM2.5). This 

section summarizes key points 

regarding the nonroad diesel engine 

contribution to these pollutants and 

their impacts on human health and the 

environment. EPA notes that we are 

relying not only on the information 

presented in this preamble, but also on 

the more detailed information in 

chapters 2 and 3 of the RIA and 

technical support documents, as well as 

information in the preamble, RIA, and 

support documents for the proposed 

rule. 

When fully implemented, this final 

rule will reduce nonroad (equipment 

such as construction, agricultural, and 

industrial), diesel PM2.5 and NOX

emissions by 95 percent and 90 percent, 

respectively. It will also virtually 

eliminate nonroad diesel SO2 emissions, 

which amounted to approximately 

234,000 tons in 1996, and would 

otherwise grow to approximately 

326,000 tons by 2020. These dramatic 

reductions in nonroad emissions are a 

critical part of the effort by federal, state 

and local governments to reduce the 

health related impacts of air pollution 

and to reach attainment of the NAAQS 

for PM and ozone, as well as to improve 

other environmental effects such as 

atmospheric visibility. Based on the 

most recent data available for this rule, 

such problems are widespread in the 

United States. There are almost 65 

million people living in 120 counties 

with monitored PM2.5 levels (2000–

2002) exceeding the PM2.5 NAAQS, and 

159 million people living in areas 

recently designated as exceeding 8-hour 

ozone NAAQS. Figure I–1 illustrates the 

widespread nature of these problems. 

Shown in this figure are counties 

exceeding the PM2.5 NAAQS or 

designated for nonattainment with the 

8-hour ozone NAAQS plus mandatory 

Federal Class I areas, which have 

particular needs for reductions in 

atmospheric haze. 

Our air quality modeling also 

indicates that similar conditions are 

likely to continue to persist in the future 

in the absence of additional controls 

and that the emission reductions would 

assist areas with attainment and future 

maintenance of the PM and ozone 

NAAQS.3 For example, in 2020, based 

on emission controls currently adopted, 

we project that 66 million people will 

live in 79 counties with average PM2.5

levels above 15 micrograms per cubic 

meter (ug/m3). In 2030, the number of 

people projected to live in areas 

exceeding the PM2.5 standard is 

expected to increase to 85 million in 

107 counties. An additional 24 million 

people are projected to live in counties 

within 10 percent of the standard in 

2020, which will increase to 64 million 

people in 2030. Furthermore, for ozone, 

in 2020, based on emission controls 

currently adopted, the number of 

counties violating the 8-hour ozone 

standard is expected to decrease to 30 

counties where 43 million people are 

projected to live. Thereafter, exposure to 

unhealthy levels of ozone is expected to 

begin to increase again. In 2030 the 

number of counties violating the 8-hour 

ozone NAAQS is projected to increase 

to 32 counties where 47 million people 

are projected to live. In addition, in 

2030, 82 counties where 44 million 

people are projected to live will be 

within 10 percent of violating the ozone 

8-hour NAAQS.

BILLING CODE 6560–50–P

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38965

4The following are sample comments from states 

and state associations on the proposed rule, which 

corroborate that this rule is a critical element in 

States’ NAAQS attainment efforts. Fuller 

information can be found in the Summary and 

Analysis of Comments. 

—‘‘Unless emissions from nonroad diesels are 

sharply reduced, it is very likely that many areas 

of the country will be unable to attain and maintain 

health-based NAAQS for ozone and PM.’’

(STAPPA/ALAPCO) 

—‘‘Adoption of the proposed regulation * * * is 

necessary for the protection of public health in 

California and to comply with air quality standards 

* * * The need for 15 ppm sulfur diesel fuel 

cannot be overstated.’’ (California Air Resources 

Board) 

—‘‘The EPA’s proposed regulation is necessary if 

the West is to make reasonable progress towards 

improving visibility in our nation’s Class I areas.’’

(Western Regional Air Partnership (WRAP)) 

—‘‘Attainment of the NAAQS for ozone and PM2.5

is of immediate concern to the states in the 

northeast region.* * * Thus, programs * * * such 

as the proposed rule for nonroad diesel engines are 

essential.’’ (NESCAUM)

EPA is still developing the 

implementation process for bringing the 

nation’s air into attainment with the 

PM2.5 and 8-hour ozone NAAQS. Based 

on section 172(a) provisions in the Act, 

designated areas will need to attain the 

PM2.5 NAAQS in the 2010 (based on 

2007–2009 air quality data) to 2015 

(based on 2012 to 2014 air quality data) 

time frame, and then be required to 

maintain the NAAQS thereafter. 

Similarly, we expect that most areas 

covered under subpart 1 and 2 will 

attain the ozone standard in the 2007 to 

2014 time frame, depending on an area’s 

classification and other factors, and then 

be required to maintain the NAAQS 

thereafter. 

Since the emission reductions 

expected from this final rule would 

begin in this same time frame, the 

projected reductions in nonroad 

emissions would be used by states in 

meeting the PM2.5 and ozone NAAQS. In 

their comments on the proposal, states 

told EPA that they need nonroad diesel 

engine reductions in order to be able to 

meet and maintain the PM2.5 and ozone 

NAAQS as well as to make progress 

toward visibility requirements.4

Furthermore, this action would ensure 

that nonroad diesel emissions will 

continue to decrease as the fleet turns 

over in the years beyond 2014; these 

reductions will be important for 

maintenance of the NAAQS following 

attainment.

Scientific studies show ambient PM is 

associated with a series of adverse 

health effects. These health effects are 

discussed in detail in the EPA Criteria 

Document for PM as well as the draft 

updates of this document released in the 


ER29JN04.000</GPH>
38966 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

5U.S. EPA (1996.) Air Quality Criteria for 

Particulate Matter—Volumes I, II, and III, EPA, 

Office of Research and Development. Report No. 

EPA/600/P–95/001a–cF. This material is available 

electronically at http://www.epa.gov/ttn/oarpg/

ticd.html.

6U.S. EPA (2003). Air Quality Criteria for 

Particulate Matter—Volumes I and II (Fourth 

External Review Draft) This material is available 

electronically at http://cfpub.epa.gov/ncea/cfm/

partmatt.cfm.

7U.S. EPA (2002). Health Assessment Document 

for Diesel Engine Exhaust. EPA/600/8–90/057F 

Office of Research and Development, Washington, 

DC. This document is available electronically at 

http://cfpub.epa.gov/ncea/cfm/

recordisplay.cfm?deid=29060.

8 Dockery, DW; Pope, CA, III; Xu, X; et al. (1993) 

An association between air pollution and mortality 

in six U.S. cities. N Engl J Med 329:1753–1759.

9Pope, CA, III; Burnett, RT; Calle, EE; et al. (2002) 

Lung cancer, cardiopulmonary mortality, and longterm exposure to fine particulate air pollution. 

JAMA 287: 1132–1141.

10 Janssen, NA; Schwartz J; Zanobetti A; et al.

(2002) Air conditioning and source-specific 

particles as modifiers of the effect of PM10 on 

hospital admissions for heart and lung disease. 

Environ Health Perspect 110(1):43–49.

11Hoek, G; Brunekreef, B; Goldbohm, S; et al.

(2002) Association between mortality and 

indicators of traffic-related air pollution in the 

Netherlands: a cohort study. Lancet 

360(9341):1203–1209.

12Brunekreef, B; Janssen NA; de Hartog, J; et al.

(1997) Air pollution from traffic and lung function 

in children living near motor ways. Epidemiology 

(8): 298–303.

13 Delfino RJ. (2002) Epidemiologic evidence for 

asthma and exposure to air toxics: linkages between 

occupational, indoor, and community air pollution 

research. Env Health Perspect Suppl 110(4): 573–

589.

14 Yifang Zhu, William C. Hinds, Seongheon Kim, 

Si Shen and Constantinos Sioutas Zhu Y; Hinds 

WC; Kim S; et al. (2002) Study of ultrafine particles 

near a major highway with heavy-duty diesel traffic. 

Atmos Environ 36(27): 4323–4335.

15U.S. EPA (2002). National-Scale Air Toxics 

Assessment. This material is available 

electronically at http://www.epa.gov/ttn/atw/nata/.

16U.S. EPA (2002). Health Assessment Document 

for Diesel Engine Exhaust. EPA/600/8–90/057F 

Office of Research and Development, Washington 

DC. This document is available electronically at 

http://cfpub.epa.gov/ncea/cfm/

recordisplay.cfm?deid=29060.

past year.5, 6 EPA’s ‘‘Health Assessment 

Document for Diesel Engine Exhaust,’’

(the ‘‘Diesel HAD’’) also reviews health 

effects information related to diesel 

exhaust as a whole including diesel PM, 

which is one component of ambient 

PM.7 In the Diesel HAD, we note that 

the particulate characteristics in the 

zone around nonroad diesel engines are 

likely to be substantially the same as 

published air quality measurements 

made along busy roadways. This 

conclusion supports the relevance of 

health effects associated with highway 

diesel engine-generated PM to nonroad 

applications.

As described in these documents, 

health effects associated with short-term 

variation in ambient PM have been 

indicated by epidemiologic studies 

showing associations between exposure 

and increased hospital admissions for 

ischemic heart disease, heart failure, 

respiratory disease, including chronic 

obstructive pulmonary disease (COPD) 

and pneumonia. Short-term elevations 

in ambient PM have also been 

associated with increased cough, lower 

respiratory symptoms, and decrements 

in lung function. Additional studies 

have associated changes in heart rate 

and/or heart rhythm in addition to 

changes in blood characteristics with 

exposure to ambient PM. Short-term 

variations in ambient PM have also been 

associated with increases in total and 

cardiorespiratory mortality. Studies 

examining populations exposed to 

different levels of air pollution over a 

number of years, including the Harvard 

Six Cities Study and the American 

Cancer Society Study, suggest an 

association between long-term exposure 

to ambient PM2.5 and premature 

mortality, including deaths attributed to 

lung cancer.8, 9 Two studies further 

analyzing the Harvard Six Cities Study’s 

air quality data have also established a 

specific influence of mobile sourcerelated PM2.5 on daily mortality and a 

concentration-response function for 

mobile source-associated PM2.5 and 

daily mortality. Another recent study in 

14 U.S. cities examining the effect of 

PM10 (particulate matter less than 10 

microns in diameter) on daily hospital 

admissions for cardiovascular disease 

found that the effect of PM10 was 

significantly greater in areas with a 

larger proportion of PM10 coming from 

motor vehicles, indicating that PM10

from these sources may have a greater 

effect on the toxicity of ambient PM10

when compared with other sources.10

Of particular relevance to this rule is 

a recent cohort study which examined 

the association between mortality and 

residential proximity to major roads in 

the Netherlands. Examining a cohort of 

55 to 69 year-olds from 1986 to 1994, 

the study indicated that long-term 

residence near major roads, an index of 

exposure to primary mobile source 

emissions (including diesel exhaust), 

was significantly associated with 

increased cardiopulmonary mortality.11

Other studies have shown children 

living near roads with high truck traffic 

density have decreased lung function 

and greater prevalence of lower 

respiratory symptoms compared to 

children living on other roads.12 A 

recent review of epidemiologic studies 

examining associations between asthma 

and roadway proximity concluded that 

some coherence was evident in the 

literature, indicating that asthma, lung 

function decrement, respiratory 

symptoms, and other respiratory 

problems appear to occur more 

frequently in people living near busy 

roads.13 As discussed later, nonroad 

diesel engine emissions, especially 

particulate, are similar in composition 

to those from highway diesel vehicles. 

Although difficult to associate directly 

with PM2.5, these studies indicate that 

direct emissions from mobile sources, 

and diesel engines specifically, may 

explain a portion of respiratory health 

effects observed in larger-scale 

epidemiologic studies. Recent studies 

conducted in Los Angeles have 

illustrated that a substantial increase in 

the concentration of ultrafine particles 

is evident in locations near roadways, 

indicating substantial differences in the 

nature of PM immediately near mobile 

source emissions.14 For additional 

information on health effects, see the 

RIA.

In addition to its contribution to 

ambient PM concentrations, diesel 

exhaust is of specific concern because it 

has been judged to pose a lung cancer 

hazard for humans as well as a hazard 

from noncancer respiratory effects. In 

this context, diesel exhaust PM is 

generally used as a surrogate measure 

for diesel exhaust. Further, nonroad 

diesel engine emissions also contain 

several substances known or suspected 

as human or animal carcinogens, or that 

have noncancer health effects as 

described in the Diesel HAD. Moreover, 

these compounds have the potential to 

cause health effects at environmental 

levels of exposure. These other 

compounds include benzene, 1,3-

butadiene, formaldehyde, acetaldehyde, 

acrolein, dioxin, and POM. For some of 

these pollutants, nonroad diesel engine 

emissions are believed to account for a 

significant proportion of total nationwide emissions. All of these compounds 

were identified as national or regional 

‘‘risk drivers’’ in the 1996 NATA.15 That 

is, these compounds pose a significant 

portion of the total inhalation cancer 

risk to a significant portion of the 

population. Mobile sources contribute 

significantly to total emissions of these 

air toxics. As discussed in more detail 

in the RIA, this final rulemaking will 

result in significant reductions of these 

emissions.

In EPA’s Diesel HAD.16 diesel exhaust 

was classified as likely to be 

carcinogenic to humans by inhalation at 

environmental exposures, in accordance 

with the revised draft 1996/1999 EPA 

cancer guidelines. A number of other 

agencies (National Institute for 

Occupational Safety and Health, the 

International Agency for Research on 

Cancer, the World Health Organization, 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38967

17U.S. EPA (1996). Air Quality Criteria for Ozone 

and Related Photochemical Oxidants, EPA/600/P–

93/004aF. Docket No. A–99–06. Document Nos. II–

A–15 to 17. 

18U.S. EPA (1996). Review of National Ambient 

Air Quality Standards for Ozone, Assessment of 

Scientific and Technical Information, OAQPS Staff 

Paper, EPA–452/R–96–007. Docket No. A–99–06. 

Document No. II–A–22.

19U.S. EPA (1996). Air Quality Criteria for Ozone 

and Related Photochemical Oxidants, EPA/600/P–

93/004aF. Docket No. A–99–06. Document Nos. II–

A–15 to 17. 

20U.S. EPA (1996). Review of National Ambient 

Air Quality Standards for Ozone, Assessment of 

Scientific and Technical Information, OAQPS Staff 

Paper, EPA–452/R–96–007. Docket No. A–99–06. 

Document No. II–A–22.

21New Ozone Health and Environmental Effects 

References, Published Since Completion of the 

Previous Ozone AQCD, National Center for 

Environmental Assessment, Office of Research and 

Development, U.S. Environmental Protection 

Agency, Research Triangle Park, NC 27711 (7/2002) 

Docket No. A–2001–28, Document II–A–79.

California EPA, and the U.S. 

Department of Health and Human 

Services) have made similar 

classifications.

EPA generally derives cancer unit risk 

estimates to calculate population risk 

more precisely from exposure to 

carcinogens. In the simplest terms, the 

cancer unit risk is the increased risk 

associated with average lifetime 

exposure of 1 ug/m3. EPA concluded in 

the Diesel HAD that it is not possible 

currently to calculate a cancer unit risk 

for diesel exhaust due to a variety of 

factors that limit the current studies, 

such as lack of an adequate doseresponse relationship between exposure 

and cancer incidence. 

However, in the absence of a cancer 

unit risk, the EPA Diesel HAD sought to 

provide additional insight into the 

significance of the cancer hazard by 

estimating possible ranges of risk that 

might be present in the population. The 

possible risk range analysis was 

developed by comparing a typical 

environmental exposure level for 

highway diesel sources to a selected 

range of occupational exposure levels 

and then proportionally scaling the 

occupationally observed risks according 

to the exposure ratios to obtain an 

estimate of the possible environmental 

risk. A number of calculations are 

needed to accomplish this, and these 

can be seen in the EPA Diesel HAD. The 

outcome was that environmental risks 

from diesel exhaust exposure could 

range from a low of 10¥4 to 10¥5 or be 

as high as 10¥3 this being a reflection 

of the range of occupational exposures 

that could be associated with the 

relative and absolute risk levels 

observed in the occupational studies. 

Because of uncertainties, the analysis 

acknowledged that the risks could be 

lower than 10¥4 or 10¥5 and a zero risk 

from diesel exhaust exposure was not 

ruled out. Although the above risk range 

is based on environmental exposure 

levels for highway mobile sources only, 

the 1996 NATA estimated exposure for 

nonroad diesel sources as well. Thus, 

the exposure estimates were somewhat 

higher than those used in the risk range 

analysis described above. The EPA 

Diesel HAD, therefore, stated that the 

NATA exposure estimates result in a 

similar risk perspective.

The ozone precursor reductions 

expected as a result of this rule are also 

important because of health and welfare 

effects associated with ozone, as 

described in the Air Quality Criteria 

Document for Ozone and Other 

Photochemical Oxidants. Ozone can 

irritate the respiratory system, causing 

coughing, throat irritation, and/or 

uncomfortable sensation in the 

chest.17, 18 Ozone can reduce lung 

function and make it more difficult to 

breathe deeply, and breathing may 

become more rapid and shallow than 

normal, thereby limiting a person’s 

normal activity. Ozone also can 

aggravate asthma, leading to more 

asthma attacks that require a doctor’s 

attention and/or the use of additional 

medication. In addition, ozone can 

inflame and damage the lining of the 

lungs, which may lead to permanent 

changes in lung tissue, irreversible 

reductions in lung function, and a lower 

quality of life if the inflammation occurs 

repeatedly over a long time period 

(months, years, a lifetime). People who 

are of particular concern with respect to 

ozone exposures include children and 

adults who are active outdoors. Those 

people particularly susceptible to ozone 

effects are people with respiratory 

disease, such as asthma, and people 

with unusual sensitivity to ozone, and 

children. Beyond its human health 

effects, ozone has been shown to injure 

plants, which has the effect of reducing 

crop yields and reducing productivity in 

forest ecosystems.19, 20

New research suggests additional 

serious health effects beyond those that 

were known when the 8-hour ozone 

health standard was set. Since 1997, 

over 1,700 new health and welfare 

studies relating to ozone have been 

published in peer-reviewed journals.21

Many of these studies investigate the 

impact of ozone exposure on such 

health effects as changes in lung 

structure and biochemistry, 

inflammation of the lungs, exacerbation 

and causation of asthma, respiratory 

illness-related school absence, hospital 

and emergency room visits for asthma 

and other respiratory causes, and 

premature mortality. EPA is currently 

evaluating these and other studies as 

part of the ongoing review of the air 

quality criteria and NAAQS for ozone. 

A revised Air Quality Criteria Document 

for Ozone and Other Photochemical 

Oxidants will be prepared in 

consultation with EPA’s Clean Air 

Science Advisory Committee (CASAC). 

Key new health information falls into 

four general areas: Development of newonset asthma, hospital admissions for 

young children, school absence rate, 

and premature mortality. In all, the new 

studies that have become available since 

the 8-hour ozone standard was adopted 

in 1997 continue to demonstrate the 

harmful effects of ozone on public 

health and the need for areas with high 

ozone levels to attain and maintain the 

NAAQS.

Finally, nonroad diesel emissions 

contribute to nine categories of nonhealth impacts: visibility impairment, 

soiling and material damage, acid 

deposition, eutrophication of water 

bodies, plant and ecosystem damage 

from ozone, water pollution resulting 

from deposition of toxic air pollutants 

with resulting effects on fish and 

wildlife, and odor. In particular, EPA 

determined that nonroad engines 

contribute significantly to unacceptable 

visibility conditions where people live, 

work and recreate, including 

contributing to visibility impairment in 

Federally mandated Class I areas that 

are given special emphasis in the Clean 

Air Act (67 FR 68242, November 8, 

2002). Visibility is impaired by fine PM 

and precursor emissions from nonroad 

diesel engines subject to this final rule. 

Reductions in emissions from this final 

rule will improve visibility as well as 

other environmental outcomes as 

described in the RIA.

As supplementary information, we 

have made estimates using air quality 

modeling to illustrate the types of 

change in future PM2.5 and ozone levels 

that we would expect to result from a 

final rule like this as described in 

chapter 2 of the RIA. That modeling 

shows that control of nonroad emissions 

would produce nationwide air quality 

improvements in PM2.5 and ozone levels 

as well as visibility improvements. On 

a population-weighted basis, the average 

modeled change in future-year PM2.5

annual averages is projected to decrease 

by 0.42 μg/m3 (3.3%) in 2020, and 0.59 

μg/m3 (0.6%) in 2030. In addition, the 

population-weighted average modeled 

change in future year design values for 

ozone would decrease by 1.8 parts per 

billion (ppb) in 2020, and 2.5 ppb in 

2030. Within areas predicted to violate 

the ozone NAAQS in the projected base 

case, the average decrease would be 

somewhat higher: 1.9 ppb in 2020 and 

3.0 ppb in 2030. 

38968 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

22We are also adopting a few minor adjustments 

of a technical nature to current CO standards. 

Emissions effects from these standards are 

discussed in the RIA.

23The estimates of baseline emissions and 

emissions reductions from the final rule reported 

here for nonroad land-based, recreational marine, 

locomotive, and commercial marine vessel diesel 

engines are based on 50 state emissions inventory 

estimates. A 48 state inventory was used for air 

quality modeling that EPA conducted for this rule, 

of which Alaska and Hawaii are not a part. In cases 

where land-based nonroad diesel engine emissions 

are compared with non-mobile source portions of 

the inventory, we use a 48 state emissions 

inventory, to match the 48 state nature of those 

other inventories.

24Please see the Summary and Analyses of 

Comments document for discussions of issues 

raised about the emission inventory estimates 

during the comment period for the NPRM.

The PM air quality improvements 

expected from this final rule are 

anticipated to produce major benefits to 

human health and welfare, with a 

combined value in excess of half a 

trillion dollars between 2007 and 2030. 

For example, in 2030, we estimate that 

this program will reduce approximately 

129,000 tons PM2.5 and 738,000 tons of 

NOX. The resulting ambient PM 

reductions correspond to public health 

improvements in 2030, including 12,000 

fewer premature mortalities, 15,000 

fewer heart attacks, 200,000 fewer 

asthma exacerbations in children, and 1 

million fewer days when adults miss 

work due to their respiratory symptoms, 

and 5.9 million fewer days when adults 

have to restrict their activities due to 

respiratory symptoms. The reductions 

will also improve visibility and reduce 

diesel odor. For further details on the 

economic benefits of this rule, please 

refer to the benefit-cost discussion in 

section VI of this preamble and chapter 

9 of the RIA. 

b. Emissions From Nonroad Diesel 

Engines 

The engine and fuel standards in this 

final rule will affect emissions of direct 

PM2.5, SO2, NOX, VOCs, and air toxics 

for land-based nonroad diesel 

engines. 22 For locomotive, commercial 

marine vessel (CMV), and recreational 

marine vessel (RMV) engines, the final 

fuel standards will affect direct PM2.5

and SO2 emissions. Each sub-section 

below discusses one of these 

pollutants,23 including expected 

emission reductions associated with the 

final standards.24 Table I.B–1 

summarizes the impacts of this rule for 

2020 and 2030. Further details on our 

inventory estimates, including results 

for other years, are available in chapter 

3 of the RIA.

TABLE I.B–1.—ESTIMATED NATIONAL (50 STATE) REDUCTIONS IN EMISSIONS FROM NONROAD LAND-BASED, 

LOCOMOTIVE, COMMERCIAL MARINE, AND RECREATIONAL MARINE DIESEL ENGINES

Pollutant [short tons] 2020 2030

Direct PM2.5: 

PM2.5 Emissions Without Rule ................................................................................................................................. 167,000 181,000

PM2.5 Emissions With 500 ppm Sulfur in 2007 and No Other Controls .................................................................. 144,000 155,000

PM2.5 Emissions With 15 ppm Sulfur in 2012 and No Other Controls .................................................................... 141,000 152,000

PM2.5 Emissions With Entire Rule ............................................................................................................................ 81,000 52,000

PM2.5 Reductions Resulting from this Rule .............................................................................................................. 86,000 129,000

SO2: 

SO2 Emissions Without Rule .................................................................................................................................... 326,000 379,000

SO2 Emisions With 500 ppm Sulfur in 2007 ............................................................................................................ 37,000 43,000

SO2 Emissions With Entire Rule (15 ppm Sulfur in 2012) ...................................................................................... 3,000 3,000

SO2 Reductions Resulting from this Rule ................................................................................................................ 323,000 376,000

NOX—Land-Based Nonroad Engines Onlya: 

NOX Emissions Without Rule ................................................................................................................................... 1,125,000 1,199,000

NOX Emissions With Rule ........................................................................................................................................ 681,000 461,000

NOX Reductions Resulting from this Rule ............................................................................................................... 444,000 738,000

VOC—Land-Based Nonroad Engines Onlya: 

VOC Emissions Without Rule .................................................................................................................................. 98,000 97,000

VOC Emissions With Rule ....................................................................................................................................... 75,000 63,000

VOC Reductions Resulting from this Rule ............................................................................................................... 23,000 34,000

Notes:

a NOX and VOC numbers only include emissions for land-based nonroad diesel engines because the Tier 4 controls will not be applied to locomotive, commercial marine, and recreational marine engines; and no NOX and VOC emission reductions are generated through the lowering of 

fuel sulfur levels. 

i. Direct PM2.5

As described earlier, the Agency 

believes that reductions of diesel PM2.5

emissions are needed as part of the 

nation’s progress toward clean air. 

Direct PM2.5 emissions from land-based 

nonroad diesel engines amount to 

increasingly large percentages of total 

man-made diesel PM2.5. Between 1996 

and 2030, we estimate that the 

percentage of total man-made diesel 

PM2.5 emissions coming from landbased nonroad diesel engines will 

increase from about 46 percent to 72 

percent (based on a 48 state inventory). 

Emissions of direct PM2.5 from landbased nonroad diesel engines based on 

a 50 state inventory are shown in table 

I.B–1, along with our estimates of the 

reductions in 2020 and 2030 we expect 

would result from our final rule for a 

PM2.5 exhaust emission standard and 

from changes in the sulfur level in landbased nonroad, locomotive, and marine 

diesel fuel. Land-based nonroad, 

locomotive, and marine diesel fuel 

sulfur levels will be lowered to about 

340 ppm in-use (500 ppm maximum) in 

2007. Land-based nonroad diesel fuel 

sulfur will be lowered further to about 

11 ppm in-use (15 ppm maximum) in 

2010 and locomotive and marine diesel 

fuel sulfur will be lowered to the same 

level in 2012. In addition to PM2.5

emissions estimates with the final rule, 

emissions estimates based on lowering 

diesel fuel sulfur without any other 

controls are shown in table I.B–1 for 

2020 and 2030. 

Figure I.B–1a shows our estimate of 

PM2.5 emissions between 2000 and 2030 

both without and with the final 

standards and fuel sulfur requirements 

of this rule. We estimate that PM2.5

emissions from this source would be 

reduced by 71 percent in 2030. 

ii. SO2

We estimate that land-based nonroad, 

CMV, RMV, and locomotive diesel 

engines emitted about 234,000 tons of 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38969

25Highway fuel is currently used in a significant 

fraction of land based nonroad equipment, 

locomotives, and marine vessels, reducing the inuse average sulfur level from about 3,000 ppm for 

uncontrolled high-sulfur fuel to 2,300 or 2,400 ppm.

SO2 in 1996, accounting for about 33 

percent of the SO2 from mobile sources 

(based on a 48 state inventory). With no 

reduction in diesel fuel sulfur levels, we 

estimate that these emissions will 

continue to increase, accounting for 

about 44 percent of mobile source SO2

emissions by 2030. 

As part of this final rule, sulfur levels 

in fuel will be significantly reduced, 

leading to large reductions in nonroad, 

locomotive, and marine diesel SO2

emissions. By 2007, the sulfur in diesel 

fuel used by all land-based nonroad, 

locomotive, and marine diesel engines 

will be reduced from the current average 

in-use level of between 2,300 to 2,400 

ppm 25 to an average in-use level of 

about 340 ppm, with a maximum level 

of 500 ppm. By 2010, the sulfur in 

diesel fuel used by land-based nonroad 

engines will be reduced to an average 

in-use level of 11 ppm with a maximum 

level of 15 ppm. Sulfur in diesel fuel 

used by locomotive and marine engines 

will be reduced to the same level by 

2012. Table II.B–1 and figure II.B–1b 

show the estimated reductions from 

these sulfur changes.

iii. NOX

Table I.B–1 shows the 50 state 

estimated tonnage of NOX emissions for 

2020 and 2030 without the final rule 

and the estimated tonnage of emissions 

eliminated with the final rule in place. 

These results are shown graphically in 

Figure I.E–1c at the end of this section. 

We estimate that NOX emissions from 

these engines will be reduced by 62 

percent in 2030. 

We note that the magnitude of NOX

reductions determined in the final rule 

analysis is somewhat less than what was 

reported in the proposal’s preamble and 

RIA, especially in the later years when 

the fleet has mostly turned over to Tier 

4 designs. The greater part of this is due 

to the fact that we have deferred setting 

a long-term NOX standard for mobile 

machinery over 750 horsepower to a 

later action. When this future action is 

completed, we would expect roughly 

equivalent reductions between the 

proposal and the overall final program, 

though there are some other effects 

reflected in the differing NOX

reductions as well, due to updated 

modeling assumptions and the adjusted 

NOX standards levels for engines over 

750 horsepower. Section II.A.4 of this 

preamble contains a detailed discussion 

of the NOX standards we are adopting 

for engines over 750 horsepower as well 

as the basis for those standards.

iv. VOCs and Air Toxics 

Based on a 48 state emissions 

inventory, we estimate that land-based 

nonroad diesel engines emitted over 221 

thousand tons of VOC in 1996. Between 

1996 and 2030, we estimate that landbased nonroad diesel engines will 

contribute about 2 to 3 percent of 

mobile source VOC emissions. Without 

further controls, land-based nonroad 

diesel engines will emit about 97 

thousand tons/year of VOC in 2020 and 

2030 nationally. 

Table I.B–1 shows our projection of 

the reductions in 2020 and 2030 for 

VOC emissions that we expect from 

implementing the final NMHC 

standards. This estimate is based on a 

50 state emissions inventory. By 2030, 

VOC emissions from this category 

would be reduced by 35 percent from 

baseline levels. 

While we are not adopting any 

specific gaseous air toxics standards in 

today’s rule, air toxics emissions would 

nonetheless be significantly reduced 

through the NMHC standards included 

in the final rule. By 2030, we estimate 

that emissions of air toxics pollutants, 

such as benzene, formaldehyde, 

acetaldehyde, 1,3-butadiene, and 

acrolein, would be reduced by 35 

percent from land-based nonroad diesel 

engines. Diesel PM reductions were 

discussed above. For specific air toxics 

reduction estimates, see chapter 3 of the 

RIA.

38970 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

II. Nonroad Engine Standards 

In this section we describe the 

emission standards for nonroad diesel 

engines that we are setting to address 

the serious air quality problems 

discussed in section I. These Tier 4 

standards, which take effect starting in 

2008, are very similar to those proposed, 

and obtain very similar emissions 

reductions. The long-term PM filterbased standards that apply to all engines 

over 25 hp, combined with the fuel 

change and new requirements to ensure 

robust control in the field, will yield PM 

reductions of over 95% from the in-use 

levels of today’s cleanest Tier 2 engines. 

Likewise, the long-term NOX standards 

we are adopting for nearly all engines 

above 75 hp will yield NOX reductions 

of about 90% from the NOX levels 

expected from even the low-emitting 

Tier 3 engines due to first reach the 

market in 2006 or later. The Tier 4 

standards will bring about large 


ER29JN04.001</GPH>
Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38971

26Consistent with past EPA rulemakings for 

nonroad diesel engines, our regulations express 

standards, power ratings, and other quantities in 

international SI (metric) units—kilowatts, gram per 

kilowatt-hour, etc. This aids in achieving 

harmonization with standards-setting bodies 

outside the U.S., and in laboratory operations in 

which these units are the norm. However, in this 

preamble and in other rulemaking documents for 

the general reader, we have chosen to use terms 

more common in general usage in the U.S. Hence 

standards are expressed in units of grams per brake 

horsepower-hour, power ratings in horsepower, etc. 

In any compliance questions that might arise from 

differences in these due to, for example, rounding 

conventions, the regulations themselves establish 

the applicable requirements.

reductions in toxic hydrocarbon 

emissions as well. 

In this final rule we are largely 

adopting the standards and timing we 

proposed, with the exception of those 

that apply to engines over 750 hp. We 

restructured and modified the standards 

and timing for these engines to address 

technical concerns and to focus on 

achieving comparable emission 

reductions through the introduction of 

advanced technology as early as feasible 

from specific applications within this 

power category. See section II.A.4 for a 

detailed discussion. We also are not 

adopting the proposed minor 

adjustments to the CO standard levels 

for some engines under 75 hp, as 

explained in section II.A.6. In addition, 

there are minor changes from the 

proposal in the phase-in approach we 

are adopting for NOX and NMHC 

standards, as detailed in this section. 

In this section we discuss: 

• The Tier 4 engine standards, and 

the schedule for implementing them; 

• The feasibility of the Tier 4 

standards (in conjunction with the lowsulfur nonroad diesel fuel requirement 

discussed in section IV); and 

• How diesel fuel sulfur affects an 

engine’s ability to meet the new 

standards. 

Additional provisions for engine and 

equipment manufacturers are discussed 

in detail in section III. These include: 

• The averaging, banking, and trading 

(ABT) program. 

• The transition program for 

equipment manufacturers. 

• The addition of a ‘‘not-to-exceed’’

program to ensure in-use emissions 

control. This program includes new 

emission standards and related test 

procedures to supplement the standards 

discussed in this section. 

• The test procedures and other 

compliance requirements associated 

with the emission standards. 

• Special provisions to aid small 

businesses in implementing our 

requirements. 

• An incentive program to encourage 

innovative technologies and the early 

introduction of new technologies.

A. What Are the New Engine Standards? 

The Tier 4 exhaust emissions 

standards for PM, NOX, and NMHC are 

summarized in tables II.A–1, 2, and 4.26

Crankcase emissions control 

requirements are discussed in section 

II.A.7. Previously adopted CO emission 

standards continue to apply as well. All 

of these standards apply to covered 

nonroad engines over the useful life 

periods specified in our regulations, 

except where temporary in-use 

compliance margins apply as discussed 

in section III.E. To help ensure that 

these emission reductions will be 

achieved in use, we have adopted test 

procedures for measuring compliance 

with these standards tailored to both 

steady-state and transient nonroad 

engine operating characteristics. These 

test procedures are discussed in several 

subsections of section III. Another 

component of our program to ensure 

control of emissions in-use is the new 

‘‘not-to-exceed’’ (NTE) emission 

standards and associated test 

procedures, discussed in section III.J.

TABLE II.A–1.—TIER 4 PM STANDARDS (G/BHP-HR) AND SCHEDULE

Engine power 

Model year 

2008 2009 2010 2011 2012 2013 

hp < 25 (kW < 19) ................................................................................... a 0.30 ................ ................ ................ ................ ................

25 ≤ hp < 75 (19 ≤ kW < 56) ................................................................... b 0.22 ................ ................ ................ ................ 0.02 

75 ≤ hp < 175 (56 ≤ kW < 130) ............................................................... ................ ................ ................ ................ 0.01 ................

175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ........................................................... ................ ................ ................ 0.01 ................ ................

hp 750 (kW > 560) ................................................................................... See table II.A–4 

Notes:

aFor air-cooled, hand-startable, direct injection engines under 11 hp, a manufacturer may instead delay implementation until 2010 and demonstrate compliance with a less stringent PM standard of 0.45 g/bhp-hr, subject also to additional provisions discussed in section II.A.3.a. bA manufacturer has the option of skipping the 0.22 g/bhp-hr PM standard for all 50–75 hp engines. The 0.02 g/bhp-hr PM standard would 

then take effect one year earlier for all 50–75 hp engines, in 2012. 

TABLE II.A–2.—TIER 4 NOX AND NMHC STANDARDS AND SCHEDULE

Engine power 

Standard

(g/bhp-hr) 

Phase-in schedule

(model year)

(percent) 

NOX NMHC 2011 2012 2013 2014 

25 ≤ hp < 75 (19 ≤ kW < 56) ................................................................... 3.5 NMHC+NOXa ................ ................ 100% ................

75 ≤ hp < 175 (56 ≤ kW < 130) ............................................................... 0.30 0.14 b50 b50 b100 

175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ........................................................... 0.30 0.14 50 50 50 100 

hp > 750 (kW > 560) ............................................................................... See table II.A–4 

Notes: Percentages indicate production required to comply with the Tier 4 standards in the indicated model year. aThis is the existing Tier 3 combined NMHC+NOX standard level for the 50–75 hp engines in this category. In 2013 it applies to the 25–50 hp 

engines as well. b Manufacturers may use banked Tier 2 NMHC+NOX credits from engines at or above 50 hp to demonstrate compliance with the 75–175 hp 

engine NOX standard in this model year. Alternatively, manufacturers may forego this special banked credit option and instead meet an alternative phase-in requirement of 25/25/25% in 2012, 2013, and 2014 through December 30, with 100% compliance required beginning December 

31, 2014. See sections III.A and II.A.2.b. 

38972 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

27Note that we are grouping all standards in this 

rule, including those that take effect in 2008, under 

the general designation of ‘‘Tier 4 standards.’’ As a 

result, there are no ‘‘Tier 3’’ standards in the multitier nonroad program for engines below 50 hp or 

above 750 hp.

28 ‘‘Nonroad Diesel Emissions Standards Staff 

Technical Paper,’’ EPA420–R–01–052, October 

2001.

The long-term 0.01 and 0.02 g/bhp-hr 

Tier 4 PM standards for 75–750 hp and 

25–75 hp engines, respectively, 

combined with the fuel change and new 

requirements to ensure robust control in 

the field, represent a reduction of over 

95% from in-use levels expected with 

Tier 2/Tier 3 engines.27 The 0.30 g/bhphr Tier 4 NOX standard for 75–750 hp 

engines represents a NOX reduction of 

about 90% from in-use levels expected 

with Tier 3 engines. Emissions 

reductions from engines over 750 hp are 

discussed in section II.A.4.

In general, there was widespread 

support in the comments for the 

proposed Tier 4 engine standards and 

for the timing we proposed for them. 

Some commenters raised categoryspecific concerns, especially for the 

smaller and the very large engine 

categories. These comments are 

discussed below. 

1. Standards Timing 

a. 2008 Standards 

The timing of the Tier 4 engine 

standards is closely tied to the timing of 

fuel quality changes discussed in 

section IV, in keeping with the systems 

approach we are taking for this program. 

The earliest Tier 4 engine standards take 

effect in model year 2008, in 

conjunction with the introduction of 

500 ppm maximum sulfur nonroad 

diesel fuel in mid-2007. This fuel 

change serves a dual environmental 

purpose. First, it provides a large 

immediate reduction in PM and SOX

emissions for the existing fleet of 

engines in the field. Second, its 

widespread availability by the end of 

2007 aids engine designers in 

employing emissions controls capable of 

achieving the Tier 4 standards for model 

year 2008 and later engines; this is 

because the performance and durability 

of such technologies as exhaust gas 

recirculation (EGR) and diesel oxidation 

catalysts is improved by lower sulfur 

fuel.28 The reduction of sulfur in 

nonroad diesel fuel will also provide 

sizeable economic benefits to machine 

operators as it will reduce wear and 

corrosion and will allow them to extend 

oil change intervals (see section VI.B). 

These economic benefits will occur for 

all diesel engines using the new fuel, 

not just for those built in 2008 or later.

As we proposed, these 2008 Tier 4 

engine standards apply only to engines 

below 75 hp. We are not setting Tier 4 

standards taking effect in 2008 for larger 

engines. The reasons for this differ 

depending on the engines’ hp rating. 

Setting Tier 4 2008 standards for 

engines at or above 100 hp would 

provide an insufficient period of 

stability (an element of lead time) 

between Tier 2⁄3 and Tier 4, and so 

would not be appropriate. This is 

because these engines become subject to 

existing Tier 2 or 3 NMHC+NOX

standards in 2006 or 2007. Setting new 

2008 standards for them thus would 

provide only one or two years of Tier 2/

Tier 3 stability before another round of 

design changes would have to be made 

in 2008 for Tier 4. 

It is also inappropriate to establish 

2008 Tier 4 standards for engines of 75–

100 hp. The stability issue just noted for 

larger engines is not present for these 

engines, because these engines are 

subject to Tier 3 NMHC+NOX standards 

starting in 2008, so that our setting a 

Tier 4 PM standard for them in the same 

year would not create the situation in 

which engines have to be redesigned 

twice to comply with new standards 

within a space of one or two years. 

However, EPA believes the more 

significant concern for these engines is 

meeting the stringent aftertreatmentbased standards for PM and NOX in 

2012. We are concerned that adopting 

interim 2008 standards for these engines 

would divert resources needed to 

achieve these 2012 standards and 

indeed jeopardize attaining them. Thus, 

although early emission reductions from 

these engines in 2008 would of course 

be desirable, we felt that the focus we 

are putting on obtaining much larger 

reductions from them in 2012, together 

with the fact that we already have a Tier 

3 NMHC+NOX standard taking effect for 

75–100 hp engines in 2008, warrants 

our not adding additional control 

requirements for these engines during 

this interim period. 

We note that the 50–75 hp engines 

also have a Tier 3 NMHC+NOX standard 

taking effect in 2008 and, as noted 

above, we are setting a new Tier 4 2008 

PM standard for them. Unlike the larger 

75–100 hp engines, however, the 50–75 

hp engines have one additional year, 

until 2013, before filter-based PM 

standards take effect, and also have no 

additional NOX control requirement 

being set beyond the 2008 Tier 3 

standard. These differences justify 

including the interim Tier 4 PM 

standard for these engines. We note too 

that achieving the 2008 PM standard is 

enabled in part by the large reduction in 

certification fuel sulfur that applies in 

2008 (see section III.D). Fuel sulfur has 

a known correlation to PM generation, 

even for engines without aftertreatment. 

Moreover, for any manufacturers who 

believe that accomplishing this PM pullahead will hamper their Tier 3 

compliance efforts for these engines, 

there is an alternative Tier 4 compliance 

option. Instead of meeting new Tier 4 

PM standards in both 2008 and 2013, 

manufacturers may skip the Tier 4 2008 

PM standard, and instead focus design 

efforts on introducing PM filters for 

these engines one year earlier, by 

complying with the aftertreatment-based 

standard for PM in 2012. These options 

are discussed in more detail in section 

II.A.3.b. 

We view the 2008 portion of the Tier 

4 program as highly important because 

it provides substantial PM and SOX

emissions reductions during the several 

years prior to 2011. Initiating Tier 4 in 

2008 also fits well with the lead time 

(including stability), cost, and 

technology availability considerations of 

the overall program. Initiating the Tier 

4 engine standards in 2008 provides 

three to four years of stability after the 

start of Tier 2 for engines under 50 hp. 

As mentioned above, it also coincides 

with the start date of Tier 3 NMHC+NOX

standards for 50–75 hp engines and so 

introduces no stability issues for these 

engines (as redesign for both PM and 

NOX occurs at the same time). The 2008 

start date provides almost 4 years of 

lead time to accomplish redesign and 

testing. The evolutionary character of 

the 2008 standards, based as they are on 

proven technologies, and the fact that 

some certified engines already meet 

these standards as discussed in section 

II.B, leads us to conclude that the 

standards are appropriate within the 

meaning of section 213(a)(4) of the 

Clean Air Act and that we are providing 

adequate lead time to achieve those 

standards.

Engine and equipment manufacturers 

argued in their comments that the PM 

pull-ahead option for 50–75 hp engines 

is inappropriate because it constitutes a 

re-opening of the Tier 3 rule, involving 

as it does a Tier 4 PM standard in 2008, 

the same year that the Tier 3 

NMHC+NOX takes effect. They further 

argued that the non-pull-ahead option is 

not a real option because PM 

aftertreatment cannot be implemented 

for these engines in 2012. 

We disagree with both contentions. 

We determined, as part of our feasibility 

analysis for Tier 4, that it is feasible to 

design engines to meet the 2008 PM 

standard in the same year that a Tier 3 

NMHC+NOX standard takes effect. See 

section II.B and RIA sections 4.1.4 and 

4.1.5. One reason is that a substantial 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38973

part of the 2008 PM emission reductions 

do not result from engine redesign, but 

rather are due to the reduction in 

certification test fuel maximum sulfur 

levels from 2000 to 500 ppm that results 

from the fuel change in the field. This 

reduction in sulfur levels also aids 

engine designers in employing emission 

control technologies that are 

detrimentally affected by sulfur, not 

only for PM control, but also for NMHC 

and NOX control. Examples of these 

sulfur-sensitive technologies are 

oxidation catalysts, which can 

substantially reduce PM and NMHC, 

and EGR, which is effective at reducing 

NOX. We note further that designing 

engines to meet the 2008 PM standard 

is also made less difficult by our not 

requiring engine designers to consider 

the transient test, cold start, and not-toexceed requirements that are otherwise 

part of the Tier 4 program. These 

requirements do not take effect for these 

engines until the 0.02 g/bhp-hr standard 

is implemented in 2012 or 2013. See 

section III.F for details. 

We also believe that the second 

option (compliance with the 

aftertreatment-based PM standard in 

2012, with no interim 2008 standard) is 

viable, and may be an attractive choice 

especially for engine families on the 

higher side of the 50–75 hp range that 

share a design platform with larger 

engines being equipped with PM filters 

to meet the Tier 4 standard for 75–175 

hp engines in 2012. We believe 75 hp 

is the appropriate cutpoint for setting 

and timing emissions standards (see 

section II.A.5), but it obviously is not a 

hard-and-fast separator between engine 

platforms for all manufacturers in all 

product lines. Even for many 50–75 hp 

engines that do not share a design 

platform with larger engines, we believe 

that a 2012 implementation date for PM 

filter technology may be practical, 

considering the 4-year lead time it 

affords after Tier 3 begins for these 

engines (in 2008), 8-year lead time after 

the last PM standard change (in 2004), 

and 5-year lead time after full-scale PM 

filter technology implementation on 

highway engines (in 2007). 

Engine manufacturers also 

commented that the two-options 

approach would cause their customers 

to switch engine suppliers in 2012 to get 

the least expensive engines possible in 

every year, thus compromising the 

environmental objectives and creating 

market disruptions. We have addressed 

these concerns as discussed in section 

II.A.3.b. 

b. 2011 and Later Standards 

The second fuel change for nonroad 

diesel fuel, to 15 ppm maximum sulfur 

in mid-2010, and the related engine 

standards for PM, NOX, and NMHC that 

begin to phase-in in the 2011 model 

year, provide most of the environmental 

benefits of the program. Like the 2008 

standards, these standards are timed to 

provide adequate lead time for engine 

and equipment manufacturers. They 

also are phased in over time to allow for 

the orderly transfer of technology from 

the highway sector, and to spread the 

overall workload for engine and 

equipment manufacturers engaged in 

redesigning a large number and variety 

of products for Tier 4. 

As we explained at proposal, we 

believe that the high-efficiency exhaust 

emission control technologies being 

developed to meet our 2007 emission 

standards for heavy-duty highway diesel 

engines can be adapted to most nonroad 

diesel applications. The engines for 

which we believe this adaptation from 

highway applications will be most 

straightforward are those in the 175–750 

hp power range, and thus these engines 

are subject to new standards requiring 

high-efficiency exhaust emission 

controls as soon as the 15 ppm sulfur 

diesel fuel is widely available, that is, in 

the 2011 model year. Engines of 75–175 

hp are subject to the new standards in 

the following model year, 2012, 

reflecting the need to spread the 

redesign workload and, to some extent, 

the greater effort that may be involved 

in adapting highway technologies to 

these engines. Engines between 25 and 

75 hp are subject to new standards for 

PM based on high-efficiency exhaust 

emission controls in 2013, reflecting 

again the need to spread the workload 

and the challenge of adapting this 

technology to these engines which 

typically do not have highway 

counterparts. Engines over 750 hp 

involve a number of special 

considerations, necessitating an 

implementation approach unique to 

these engines as explained in section 

II.A.4. Lastly , there are additional 

provisions discussed in sections III.B.2 

and III.M to encourage early technology 

introduction and to further draw from 

the highway technology experience. 

This approach of implementing Tier 4 

standards by power category over 2011–

2013 provides for the orderly migration 

of technology and distribution of 

redesign workload over three model 

years, as EPA provided in Tier 3. 

Overall, this approach provides 4 to 6 

years of real world experience with the 

new technology in the highway sector, 

involving millions of engines (in 

addition to the several additional years 

provided by demonstration fleets on the 

road in earlier years), before the new 

standards take effect. We consider the 

implementation of Tier 4 standard start 

dates over 2011–2013 as described 

above to be responsive to the technology 

migration and workload distribution 

concerns. 

2. Phase-In of NOX and NMHC 

Standards for 75–750 hp Engines

a. Percent-of-Production Phase-In for 

NOX and NMHC 

We are finalizing the percent-ofproduction phase-in for NOX and 

NMHC that we proposed for 75–750 hp 

engines. Because Tier 4 NOX emissions 

control technology is expected to be 

derived from technology first 

introduced in highway heavy-duty 

diesels, we proposed to adopt the 

implementation pattern for the Tier 4 

NOX standard which we adopted for the 

heavy-duty highway diesel program. 

This will help to ensure a focused, 

orderly development of robust highefficiency NOX control in the nonroad 

sector and will also help to ensure that 

manufacturers are able to take 

maximum advantage of the highway 

engine development program, with 

resulting cost savings. 

The heavy-duty highway rule allows 

for a gradual phase-in of the NOX and 

NMHC requirements over multiple 

model years: 50% of each 

manufacturer’s U.S.-directed production 

volume must meet the new standard in 

2007–2009, and 100% must do so by 

2010. Through the use of emissions 

averaging, this phase-in approach also 

provides the flexibility for highway 

engine manufacturers to meet that 

program’s environmental goals by 

allowing somewhat less-efficient NOX

controls on more than 50% of their 

production during the 2007–2009 

phase-in years. 

We follow the same pattern in this 

rule. As proposed, we are phasing in the 

NOX standards for nonroad diesels over 

2011–2013 as indicated in table II.A–2, 

based on compliance with the Tier 4 

standards for 50% of a manufacturer’s 

U.S.-directed production in each power 

category between 75 and 750 hp in each 

phase-in model year. The phase-in of 

standards for engines over 750 hp is 

discussed in section II.A.4. With a NOX

phase-in, all manufacturers are able to 

introduce their new technologies on a 

limited number of engines, thereby 

gaining valuable experience with the 

technology prior to implementing it on 

their entire product line. In tandem with 

the equipment manufacturer transition 

program discussed in section III.B, the 

phase-in ensures timely progress to the 

Tier 4 standard levels while providing 

a great degree of implementation 

flexibility for the industry. 

38974 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

29Note exceptions to the percent phase-in 

requirements during the phase-in model years 

discussed in sections III.L and III.M. These deal 

with differences between a manufacturer’s actual 

and projected production levels, and with 

incentives for early or very low emission engine 

introductions.

This ‘‘percent of production phase-in’’

is intended to take maximum advantage 

of the highway program technology 

development. It adds a new dimension 

of implementation flexibility to the 

staggered ‘‘phase-in by power category’’

used in the nonroad program for Tiers 

1–3 (and also in this Tier 4) which, 

though structured to facilitate 

technology development and transfer, is 

more aimed at spreading the redesign 

workload. Because the Tier 4 program 

involves challenges in addressing both 

technology development and redesign 

workload, we believe that incorporating 

both of these phase-in mechanisms into 

the program is warranted, resulting in 

the coordinated phase-in plan shown in 

table II.A–2, which we are finalizing 

essentially as proposed. Note that this 

results in the new NOX requirements for 

75–175 hp engines taking effect starting 

in the second year of the 2011–2013 

general phase-in, in effect creating a 50–

50% phase-in in 2012–2013 for this 

category. This then staggers the Tier 4 

start years by power category as in past 

tiers: 2011 for engines at or above 175 

hp, 2012 for 75–175 hp engines, and 

2013 for 25–75 hp engines (for which no 

NOX adsorber-based standard and thus 

no percentage phase-in is being 

adopted), while still providing a 

production-based phase-in for advanced 

NOX control technologies. 

Comments from the States and 

environmental organizations argued for 

the completion of the phase-in by the 

end of 2012, contending that technology 

progress for NOX control in the highway 

sector has been good to date and would 

support an accelerated phase-in in the 

nonroad sector. However, our 

assessment continues to show unique 

(though surmountable) challenges in 

adapting advanced technologies to 

nonroad engines, especially for engines 

least like highway diesels, and it is 

these engines that would be most 

affected by a truncated phase-in 

schedule. Furthermore, even if we were 

to conclude that advanced technologies 

will be ready earlier than expected, we 

would not be able to move up the start 

of phase-in dates because these dates 

also depend on low-sulfur fuel 

availability. Thus an end-of-2012 phasein completion date would result in 

phase-ins as short as one year, thus 

degrading the industry’s opportunity to 

distribute the redesign workload and 

departing from the pattern set by the 

highway program. Both of these are 

critical factors in our assessment that 

the proposed engine standards are 

feasible, and so a change to shorter 

phase-ins would jeopardize 

achievement of our environmental 

objectives for nonroad diesels. Therefore 

we are not adopting the suggested 

earlier completion of the phase-in.

As proposed, we are phasing in the 

Tier 4 NMHC standard for 75–750 hp 

engines with the NOX standard, as is 

being done in the highway program. 

Engines certified to the new NOX

requirement would be expected to 

certify to the NMHC standard as well. 

The ‘‘phase-out’’ engines (those not 

certified to the new Tier 4 NOX and 

NMHC standards) would continue to be 

certified to the applicable Tier 3 

NMHC+NOX standard. As discussed in 

section II.B, we believe that the NMHC 

standard is readily achievable through 

the application of PM traps to meet the 

PM standard, which does not involve 

such a phase-in. However, in the 

highway program we chose to phase in 

the NMHC standard with the NOX

standard to simplify the phase-in under 

the percent-of-production approach 

taken there, thus avoiding subjecting the 

‘‘phase-out’’ engines to separate 

standards for NMHC and NMHC+NOX

(which could lead to increased 

administrative costs with essentially no 

different environmental result). The 

same reasoning applies here because, as 

in the highway program, the previoustier standards are combined 

NMHC+NOX standards. No commenters 

objected to this approach. 

Because of the tremendous variety of 

engine sizes represented in the nonroad 

diesel sector, we are finalizing our 

proposed requirement that the phase-in 

requirement be met separately in both of 

the power categories with a phase-in 

(75–175 hp and 175–750 hp).29 For 

example, a manufacturer that produces 

1000 engines for the 2011 U.S. market 

in the 175 to 750 hp range would have 

to demonstrate compliance with the 

NOX and NMHC standards on at least 

500 of these engines, regardless of how 

many complying engines the 

manufacturer produces in the 75–175 

hp category. (Note however that we are 

allowing averaging of emissions 

between these engine categories through 

the use of power-weighted ABT program 

credits.) We believe that this restriction 

reflects the availability of emissions 

control technology, and is needed to 

avoid erosion of environmental benefits 

that might occur if a manufacturer with 

a diverse product offering were to meet 

the phase-in with relatively low cost 

smaller engines, thereby delaying 

compliance on larger engines with 

much higher lifetime emissions 

potential. Even so, the horsepower 

ranges for these power categories are 

fairly broad, so this restriction allows 

ample freedom to manufacturers to 

structure compliance plans in the most 

cost-effective manner. There were no 

adverse comments on this approach.

b. Special Considerations for the 75–175 

hp Category 

As discussed in the proposal, the 75–

175 hp category of engines and 

equipment may involve added workload 

challenges for the industry to develop 

and transfer technology. Though 

spanning only 100 hp, this category 

represents a great diversity of 

applications, and comprises a 

disproportionate number of the total 

nonroad engine and machine models. 

Some of these engines, though having 

characteristics comparable to many 

highway engines such as turbocharging 

and electronic fuel control, are not 

directly derived from highway engine 

platforms and so are likely to require 

more development work than larger 

engines to transfer emission control 

technology from the highway sector. 

Furthermore, the engine and equipment 

manufacturers have greatly varying 

market profiles in this category, from 

focused one- or two-product offerings to 

very diverse product lines with a great 

many models. 

Therefore, in addition to the 

flexibility provided through the phasein mechanism, we proposed two 

optional measures to provide added 

flexibility in implementing the Tier 4 

NOX standards, while keeping a priority 

on bringing PM emissions control into 

this diverse power category as quickly 

as possible. First, we proposed to allow 

manufacturers to use NMHC+NOX

credits generated by any Tier 2 engines 

over 50 hp (in addition to any other 

allowable credits) to demonstrate 

compliance with the Tier 4 requirement 

for 75–175 hp engines in 2012, 2013, 

and 2014 only. Second, we proposed 

allowing a manufacturer to instead 

demonstrate compliance with a reduced 

phase-in requirement of 25% for NOX

and NMHC in each of 2012, 2013, and 

the first 9 months of 2014. Full 

compliance (100% phase-in) with the 

Tier 4 standards would have needed to 

be demonstrated beginning October 1, 

2014. 

Engine manufacturers reinforced the 

points we made in the proposal 

regarding added workload challenges 

for this diverse category of engines and 

machines. However, they suggested that 

the first of the proposed options to 

address these challenges (allowing use 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38975

30See the recently published ‘‘Highway Diesel 

Progress Review Report 2,’’ EPA420–R–04–004, 

available at http://www.epa.gov/otaq/

diesel.htm#progreport2.

of Tier 2 credits) is not likely to be used 

due to a lack of available Tier 2 credits, 

and therefore should be dropped, and 

that the second option (allowing a 

slower phase-in) provided too short a 

stability period, and should be modified 

to delay final compliance by an 

additional 3 months, to December 31, 

2014 or January 1, 2015. In addition to 

describing the very large redesign 

workload, they pointed out that engines 

and machines in this category typically 

do not have a model year that differs 

from the calendar year, and so the 

substantial changes required for Tier 4 

compliance in October 2014 could force 

the need to change the product for all 

of 2014, effectively shortening the 

phase-in to two years. One manufacturer 

argued that the compliance date for the 

75–100 hp engines in this category 

should be delayed an additional year, to 

2016, and that the start of the phase-in 

for these engines should be likewise 

delayed from 2012 to 2013.

We do not feel that the first option 

(allowing use of Tier 2 credits) should 

be dropped, as it provides an alternative 

flexibility mechanism for a power 

category in which flexibility is clearly 

important, and is environmentally 

helpful as it provides an option for 

manufacturers to achieve NOX emission 

reductions earlier than under the second 

option. By providing an opportunity to 

use Tier 2 credits in the 75–175 hp 

category, it coordinates well with the 

Tier 2 credit use opportunity we are 

providing for the 50–75 hp engines 

meeting the 2008 PM standard (see 

section III.A), and allows for 

coordinated redesign and credit use 

planning by a manufacturer over this 

wide power range over many years. 

Nonetheless, recognizing that the 

second option may be more attractive to 

manufacturers, and considering the 

comments they provided on it, we have 

concluded that a three month phase-in 

extension until the end of 2014 is 

warranted to address the workload 

burden and to align product cycle dates. 

Thus we are adopting the December 31, 

2014 implementation date suggested in 

comments for completion of the 75–175 

hp engine phase-in. 

We do not agree that an additional 

year of delay is appropriate for the 75–

100 hp engines in this category. The 

comment expressing interest in our 

doing so did not provide any basis for 

it in technological feasibility or in 

workload burden, and we do not see any 

basis for it ourselves. 

Therefore, we are adopting both of the 

proposed optional measures for the 75–

175 hp engine phase-in, except that in 

the second option, full compliance 

(100% phase-in) with the Tier 4 

standards will need to be demonstrated 

beginning December 31, 2014. As 

proposed, manufacturers using this 

reduced phase-in option will not be 

allowed to generate NOX credits from 

engines in this power category in 2012, 

2013, and 2014, except for use in 

averaging within the 75–175 hp category 

(that is, no banking or trading, or 

averaging with engines in other power 

categories). We believe that this 

restriction on credit use is appropriate, 

considering that larger engine categories 

will be required to demonstrate a 

substantially greater degree of 

compliance with the 0.30 g/bhp-hr NOX

standard several years earlier than 

engines built under this option. As the 

purpose of this option is to aid 

manufacturers in implementing Tier 4 

NOX standards for this challenging 

power category, we do not want any 

manufacturers who might be capable of 

building substantially greater numbers 

of cleaner engines to use this option as 

an easy and copious source of credits 

(owing to its slower phase-in of 

stringent standards) that in turn can be 

used to delay building clean engines in 

other categories or model years. 

c. Alternative Phase-In Standards 

To ensure that Tier 4 engine 

development is able to take maximum 

advantage of highway diesel technology 

advances, we proposed to adopt 

nonroad diesel provisions in the 

averaging, banking, and trading program 

that would parallel the heavy-duty 

highway engine program’s ‘‘split family 

provisions’’ (see 68 FR 28470, May 23, 

2003). In essence, these allow a 

manufacturer to declare an engine 

family during the phase-in years that is 

certified at NOX levels roughly midway 

between the phase-out standard and 

phase-in standard, without the 

complication of tracking credit 

generation and use. Because they 

constitute a calculational simplification 

of the emissions averaging provisions, 

these split family provisions do not 

result in a loss in environmental 

benefits compared to what the phase-in 

can achieve. 

The nonroad proposal also included 

specific emission levels for these split 

families, rather than just describing how 

they are calculated. Commenters 

suggested that we go one step further 

still and express these levels as 

alternative standards. They argued that 

this would facilitate attempts at 

harmonizing standards globally, 

especially for standards-setting bodies 

such as the European Commission that 

do not have emissions averaging 

programs. We are also aware that most 

manufacturers of highway diesel 

engines are now planning to comply 

with our 2007 standards using this 

emissions averaging approach, 

increasing the significance of comments 

on the topic from nonroad engine 

manufacturers, many of whom also 

make highway engines.30

After carefully considering the issues 

involved, we agree that the proposed 

approach lends itself to expression in 

terms outside of the averaging, banking, 

and trading program and that it makes 

sense to do so. We are creating such an 

alternative in the final regulations 

accordingly. These alternative standards 

do not substantively change our Tier 4 

program from what we proposed, but 

rather respond to manufacturers’

suggestions for administrative 

simplifications to what is essentially an 

averaging-based flexibility option in 

demonstrating compliance with the 

percent-of-production NOX phase-in. 

The alternative NOX phase-in standards 

are shown in table II.A–3. They apply 

only during the NOX phase-in years. 

Manufacturers may use both approaches 

within a power category if desired, 

certifying some engines to the 

alternative standards, with the rest 

subject to the phase-in percentage 

requirement. Note that engines under 75 

hp subject to Tier 4 NOX standards do 

not have an alternative standard because 

they do not have a NOX phase-in, and 

engines over 750 hp do not have an 

alternative standard because of the 

separate standards we are adopting for 

these engines (explained in section 

II.A.4).

TABLE II.A–3.—TIER 4 ALTERNATIVE

NOX PHASE-IN STANDARDS (G/BHPHR) 

Engine power NOX standard

(g/bhp-hr) 

75 ≤ hp < 175 (56 ≤ kW < 

130) ................................. a 1.7 

175 ≤ hp ≤ 750 (130 ≤ kW 

≤ 560) .............................. 1.5 

Notes: a Under the option identified in footnote b of table II.A–2, by which manufacturers 

may meet an alternative phase-in requirement 

of 25/25/25% in 2012, 2013, and 2014 through 

December 30, the corresponding alternative 

NOX standard is 2.5 g/bhp-hr. 

The engines certified under these 

standards will of course also need to 

meet the Tier 4 PM and crankcase 

control requirements that take effect for 

all engines in the first phase-in year. 

They will also need to comply with all 

Tier 4 provisions that would apply to 

38976 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

phase-in engines, including the 0.14 g/

bhp-hr NMHC standard and the NTE 

and transient test requirements for all 

pollutants. We recognize that this differs 

from what is required under the phasein approach, in which these 

requirements would not apply to the 

50% of engines categorized as ‘‘phaseout’’ engines. However, under the 

alternative standards approach, what 

would have been two different engine 

families (one meeting phase-in 

requirements and one meeting phaseout requirements, with NOX and PM 

emissions averaging allowed between 

them under the ABT provisions) are 

replaced by a single engine family 

meeting the one set of alternative 

standards. Therefore all of the engines 

in this family must by default meet the 

phase-in requirements for provisions 

that lack any sort of averaging 

mechanism (NMHC standard, NTE, etc). 

As a result, any manufacturer choosing 

to design to the alternative standards 

rather than using the phase-in approach 

provides some additional environmental 

benefit as an indirect result of choosing 

this approach. 

We also believe that this alternative 

standards provision makes appropriate a 

further adjustment to the NOX phase-in 

scheme to better preserve both the 

advanced technology phase-in 

approach, for those manufacturers 

choosing that compliance path, and the 

alternative standards approach, for 

those choosing that path. Under the 

proposal, the provision for certifying a 

split engine family at a pre-designated 

NOX level would not allow credit 

generation by or credit use on engines 

in the split family (other than for 

averaging within the family). This was 

consistent with our goal of providing a 

simple, single average NOX standard 

level for the family, equivalent to 

arbitrarily designating a portion of the 

engines in the family as ‘‘phase-out’’

engines (credit generators) and the rest 

as ‘‘phase-in’’ engines (credit users) 

with a net credit balance of zero, while 

avoiding the burden of actually 

calculating and tracking credits. This 

was also consistent with our approach 

under the 2007 highway engine program 

from which this concept is derived. 

However, because this split family 

provision has evolved into a set of 

alternative standards, there is no longer 

a need to prohibit the generation and 

use of ABT credits for these engines to 

preserve a de facto net zero credit 

balance, and so, considering that it is 

also not environmentally detrimental, 

we believe it is appropriate to allow 

credit use and generation for these 

engines as for other engines. A 

consequence of doing so, consistent 

with all of our ABT programs, is the 

adoption of NOX FEL caps for these 

engines. To maintain the character of 

this compliance path as producing 

engines during the phase-in years that 

emit at NOX levels which are roughly 

averaged between Tier 3 and final Tier 

4 levels, we are setting NOX FEL caps 

for these engines at levels reasonably 

close to the alternative standards. (See 

section III.A for details.) Because we are 

also maintaining the original phase-in/

phase-out compliance path, a 

manufacturer wishing to build engines 

with NOX levels higher than these FEL 

caps, at or approaching the Tier 3 levels, 

could still do so; in fact these would in 

actuality fit the description of a phaseout engine. This manufacturer would 

also, of course, have to produce a 

corresponding number of phase-in 

engines meeting the aftertreatmentbased Tier 4 NOX standards. 

We also observe that the creation of 

alternative standards provides the 

opportunity to adjust the phase-in/

phase-out provisions so as to reinforce 

their focus on introducing highefficiency NOX aftertreatment 

technology during the phase-in years, 

which is, of course, their aim. We are 

doing this by setting NOX family 

emission limit (FEL) caps for phase-in 

engines at the same low levels as for 

Tier 4 engines produced in the postphase-in years. (Again, see section III.A 

for details.) Although the engine 

manufacturers indicated in their 

comments that they did not believe it 

likely that anyone would choose this 

phase-in/phase-out compliance path, we 

believe that preserving it and focusing it 

on encouraging very low-NOX engines 

as early as possible provides a 

potentially useful and environmentally 

desirable alternative path. Thus these 

two concepts have been developed to 

provide complementary compliance 

paths obtaining equivalent overall NOX

reductions, one focused on phasing in 

high-efficiency NOX aftertreatment and 

the other on achieving NOX control for 

all subject engines during the phase-in 

years at an average level between the 

Tier 3 and final Tier 4 standards levels.

3. Standards for Smaller Engines 

a. Engines Under 25 hp 

We are finalizing the Tier 4 program 

we proposed for engines under 25 hp. 

In the proposal we presented our view 

that standards based on the use of PM 

filters should not be set at this time for 

the very small diesel engines below 25 

hp. We also discussed our plan to 

reassess the appropriate long-term 

standards in a technology review. 

However, for the nearer-term, we 

concluded that other proven PMreducing technologies such as diesel 

oxidation catalysts and engine 

optimization could be applied to 

engines under 25 hp. Accordingly, we 

proposed Tier 4 PM standards to take 

effect beginning in 2008 for these 

engines based on use of these 

technologies. 

In contrast to our proposals for other 

engine categories, the proposed Tier 4 

standards for this category elicited very 

little comment from the engine 

manufacturers other than an expression 

of support for deferring consideration of 

any more stringent standards pending 

results of a future technology review. 

The States and environmental 

organizations expressed disappointment 

that EPA had not proposed more 

stringent standards for these engines, 

given the very large number of these 

engines in the field and the significant 

risk they pose due to individuals’

exposure to diesel PM and air toxics. 

They urged more stringent 2008 PM 

standards and the adoption of standards 

obtaining emission reductions of 90% or 

more by the end of 2012. Emissions 

control manufacturers argued that more 

stringent 2008 standards based on the 

use of more efficient oxidation catalysts 

are feasible. 

As discussed in section II.B.4, we 

continue to believe that the standards 

we proposed for engines under 25 hp 

are feasible, and commenters in the 

nonroad diesel industry provided no 

comments to the contrary. Our reasons 

for not proposing more stringent Tier 4 

standards for these engines based on the 

use of PM filters and NOX aftertreatment 

were mainly focused on the cost of 

equipping these relatively low cost 

engines with such devices, especially 

considering the prerequisite need for 

electronic fuel control systems to 

facilitate regeneration. The comments 

supporting more stringent standards 

were not convincing, as they did not 

address these cost issues. However, we 

do agree that these small engines likely 

have a large impact on human health, 

and, as discussed in section VIII.A, we 

are reaffirming the plan we described in 

the proposal to reassess the appropriate 

long-term standards for these engines in 

a technology review to take place in 

2007. We will set more stringent 

standards for these engines at that time, 

if appropriate. 

We also disagree with comments 

supporting more stringent 2008 

standards that would require the use of 

diesel oxidation catalysts on all small 

engines. Although we agree that these 

catalysts can be applied so as to achieve 

emission reductions on some small 

engines, the emissions performance data 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38977

31 ‘‘Nonroad Diesel Emissions Standards Staff 

Technical Paper,’’ EPA420–R–01–052, October 

2001.

we have analyzed do not support our 

setting a more stringent standard. 

Section 4.1.5 of the RIA summarizes 

such data showing a very wide range of 

engine-out PM emissions in this power 

category. Applying oxidation catalyst 

technology to these engines, though 

capable of some PM reduction if 

properly designed and matched to the 

application, is limited by sulfur in the 

diesel fuel. Specifically, precious-metal 

oxidation catalysts (which have the 

greatest potential for reducing PM) can 

oxidize the sulfur in the fuel and form 

particulate sulfates. Even with the 500 

ppm maximum sulfur fuel available 

after 2007, the sulfate production 

potential is large enough to limit what 

can be done to set more stringent 2008 

PM standards through the use of these 

catalysts. The 15 ppm maximum sulfur 

fuel available after 2010 will greatly 

improve the potential for use of 

oxidation catalysts, but as we discussed 

above, we believe that the much larger 

potential reduction afforded by PM filter 

technology warrants our waiting until 

the technology review in 2007 to 

evaluate the appropriate long-term 

standards for these engines. See section 

II.B.5 and RIA section 4.1.5 for further 

discussion. 

When implemented, the Tier 4 PM 

standard and related provisions we are 

adopting today for engines under 25 hp 

will yield an in-use PM reduction of 

over 50% for these engines, and large 

reductions in toxic hydrocarbons as 

well. Achieving these emission 

reductions is very important, 

considering the fact that many of these 

smaller engines operate in populated 

areas and in equipment without closed 

cabs—in mowers, portable electric 

power generators, small skid steer 

loaders, and the like.

We are also adopting the alternative 

compliance option that we proposed for 

air-cooled, direct injection engines 

under 11 hp that are startable by hand, 

such as with a crank or recoil starter. As 

we explained in the proposal, the 

alternative is justified due (among other 

things) to these engines’ need for loose 

design fit tolerances, their small 

cylinder displacement and bore sizes, 

and the difficulty in obtaining 

components for them with tight enough 

tolerances (68 FR 28363, May 23, 2003). 

This alternative allows manufacturers of 

these engines to delay Tier 4 

compliance until 2010, and in that year 

to certify them to a PM standard of 0.45 

g/bhp-hr, rather than to the 0.30 g/bhphr PM standard applicable beginning in 

2008 to the other engines in this power 

category. As proposed, engines certified 

under this alternative compliance 

requirement will not be allowed to 

generate credits as part of the ABT 

program, although credit use by these 

engines will still be allowed. 

We received no adverse comments on 

this proposed alternative for qualifying 

engines under 11 hp. Euromot 

commented that there are hand-startable 

engines in the 11–25 hp range, and that 

we should extend the alternative 

compliance option to these engines as 

well. However, hand-startability is not 

the sole defining feature of engines for 

which we established this alternative. 

Rather, the alternative is for a class of 

engines typified by a combination of 

characteristics (very small, air-cooled, 

direct injection, hand-startable), which 

give rise to the potential technical 

difficulties noted above. To extend the 

alternative to other engines simply 

because they have a hand-start is not 

justified, because they do not share 

these technical difficulties (or do not 

share them to the same degree). Such an 

extension could also potentially 

encourage manufacturers of the many 

models of these larger engines to market 

a hand-start option simply to avoid 

more stringent standards. 

b. Standards for 25–75 hp Engines 

We proposed a 0.22 g/bhp-hr PM 

standard for 25–75 hp engines, to take 

effect in 2008. We also proposed a filterbased 0.02 g/bhp-hr PM standard for 

these engines, to take effect in 2013, the 

year in which filter-based technology for 

these engines is expected to be 

applicable on a widespread basis (see 

section II.A.1). Also in 2013, the 25–50 

hp engines would be subject to the 3.5 

g/bhp-hr NMHC+NOX standard already 

adopted for 50–75 hp engines (taking 

effect in 2008 as part of Tier 3). We are 

adopting all of these proposed standards 

in this final rule. 

The 2008 PM standard for these 

engines should maximize reduction of 

PM emissions using technology 

available in that year. We believe that 

the 2008 PM standard is feasible for 

these engines, based on the same engine 

or oxidation catalyst technologies 

feasible for engines under 25 hp in 

2008, following the introduction of 

nonroad diesel fuel with sulfur levels 

reduced below 500 ppm. We expect inuse PM reductions for these engines of 

over 50% (and large reductions in toxic 

hydrocarbons as well) over the five 

model years this standard would be in 

effect (2008–2012). These engines will 

constitute a large portion of the in-use 

population of nonroad diesel engines for 

many years after 2008. Although we are 

finalizing the 2013 standards for 25–75 

hp engines today, we are also 

reaffirming our commitment to 

conducting a technology review for 

these standards in 2007. This planned 

review is discussed in section VIII.A. 

Additional discussion of our feasibility 

assessment for the 2008 and 2013 

standards can be found in section II.B.4 

and RIA section 4.1.4. 

In comments, emissions controls 

manufacturers argued that more 

stringent 2008 standards for PM and 

NMHC based on the use of more 

efficient oxidation catalysts are feasible 

and should be adopted. Environmental 

organizations argued that PM and NOX

standards for 2008 should be set at more 

stringent levels, based on the use of 

oxidation catalysts and improved engine 

optimization. The California Air 

Resources Board argued for more 

stringent 2008 standards for HC+NOX, 

PM and toxics, based on the use of 

oxidation catalysts. 

We disagree with the comments 

calling for more stringent 2008 

standards than proposed for 25–75 hp 

engines, based on the use of diesel 

oxidation catalysts. The standards we 

proposed and are adopting for these 

engines pull ahead sizeable PM 

reductions starting three years ahead of 

the earliest PM filter-based standards for 

any engine size. The pull-ahead 

standard level balances early reductions 

with the need to ensure that the PM 

filter-based standards and Tier 3 

NMHC+NOX standards are not 

jeopardized by an overemphasis on 

early reductions. Although we agree that 

oxidation catalysts can be applied to 

these engines, the emissions 

performance data we have analyzed do 

not support our setting a more stringent 

standard, for the same reasons described 

above in section II.A.3.a for engines 

under 25 hp. Refer to section II.B.4 and 

to section 4.1.4 of the RIA for additional 

discussion. For a discussion of 

comments opposed to new standards in 

2008, see sections II.A.1 and II.B of this 

preamble. 

We also do not agree that more 

stringent NOX requirements based on 

improved engine optimization are 

appropriate for these engines in 2008. In 

2001 we reviewed and confirmed the 

previously set NMHC+NOX emission 

standards that will be in effect for these 

engines during the time frame in 

question.31 Because of the focus we are 

putting on achieving large PM 

reductions from these engines as early 

as possible, we felt that it was important 

to strike a balance between PM and NOX

control. As a result, we did not propose 

more stringent NOX standards for 50–75 

hp engines, and we proposed to apply 

38978 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

32The 2011 production is not included in the 

percentage calculation to avoid the need for post2011 confirmation of production volumes which, as 

it would occur in 2012, would be too late to easily 

re-focus 2012 production if the confirmed volumes 

differ from projections. It is not likely that 

manufacturers would abuse the program by 

switching engine suppliers for this one year of 

production.

33That is: [200/(1000–500)] = 40%; subtracting 

the 5% margin then yields 35%.

the 3.5 g/bhp-hr NMHC+NOX standard 

to 25–50 hp engines in 2013 because 

this is the year in which the PM filterbased standard is being implemented. 

Requiring new NOX controls for these 

engines earlier than 2013 would add a 

third redesign step to those already 

called for in 2008 and 2013. This would 

add a potentially unacceptable amount 

of redesign workload, to a point that it 

could jeopardize our objective of 

bringing stringent PM control to these 

engines as early as possible.

Consistent with the proposal, we are 

not setting more stringent NOX

standards for engines below 75 hp at 

this time based on the use of NOX

aftertreatment. As discussed in section 

4.1.2.3 of the RIA, a high degree of 

complexity and engine/aftertreatment 

integration will be involved in applying 

NOX adsorber technology to nonroad 

diesel engines. The similarity of larger 

nonroad engines (above 75 hp) to 

highway diesel engines, which will 

provide the initial experience base for 

this integration process, is key to our 

assessment that NOX adsorbers are 

feasible for these engines. On the other 

hand, although engines under 75 hp are 

gradually increasing in sophistication 

over time, the accumulation of 

experience with designing and 

operating these engines with more 

advanced technology clearly lags 

significantly behind the sizeable 

experience base already developed for 

larger engines. At this point, we are 

unable to forecast how quickly adequate 

experience may accrue. Because this 

experience is crucial to ensuring the 

successful integration of the engines 

with NOX adsorber technology, we are 

not adopting NOX adsorber-based 

standards for engines under 75 hp in 

this final rule. Rather, as discussed in 

section VIII.A, we plan to undertake a 

technology assessment in the 2007 time 

frame which would evaluate the status 

of engine and emission control 

technologies, including NOX controls, 

for engines less than 75 hp. 

As described in section II.A.1.a, we 

are providing two PM standard 

compliance options to engine 

manufacturers for 50–75 hp engines. As 

part of this, we also proposed a measure 

to ensure that it would not be abused by 

equipment manufacturers who use 

engines that do not meet the PM pullahead standard in 2008–2011, but who 

then switch engine suppliers to avoid 

PM filter-equipped engines in 2012 as 

well (68 FR 28360, May 23, 2003). We 

proposed that an equipment 

manufacturer making a product with 

engines not meeting the pull-ahead 

standard in any of the years 2008–2011 

must use engines in that product in 

2012 meeting the 0.02 g/bhp-hr PM 

standard; that is, the equipment 

manufacturer would have to use an 

engine from the same engine 

manufacturer or from another engine 

manufacturer choosing the same 

compliance option. We also solicited 

comment on possible alternative 

solutions using a numerical basis, 

describing an example that would 

require the percentage of 50–75 hp 

machines equipped with PM filters in 

2012 to be no less than the same 

percentage of 50–75 hp machines 

produced with non-pull-ahead engines 

in 2008–2011. 

The Engine Manufacturers 

Association (EMA) and Deere 

commented on the unenforceability of 

the proposed ‘‘no switch’’ measure as 

part of a broader objection to our 

proposal for 50–75 hp engines. They 

pointed out that changing equipment 

model designations could easily allow 

an equipment manufacturer seeking to 

avoid PM filter-equipped engines in 

2012 to declare a product in this model 

year a ‘‘new product,’’ not the same as 

the 2008–2011 product. We have 

concluded that there is indeed potential 

for this abuse to occur and, although no 

one commented specifically on the 

alternative approach, we believe it 

clearly addresses this problem because 

it does not depend on product 

designations.

Therefore, we are adopting a 

provision to discourage engine 

switching based on this alternative 

approach. An equipment manufacturer 

who uses 50–75 hp engines will have 

three options:

(1) The manufacturer may exclusively use 

engines certified to the 0.22 g/bhp-hr PM 

standard (including through use of ABT 

credits) over the 2008–2011 period. This 

manufacturer is then free to use any number 

of 50–75 hp engines not certified to the 0.02 

g/bhp-hr standards in 2012. 

(2) The manufacturer may exclusively use 

engines not certified to the 0.22 g/bhp-hr PM 

standard over the 2008–2011 period. This 

manufacturer must then use only 50–75 hp 

engines that are certified to the 0.02 g/bhphr standards in 2012 (including through use 

of ABT credits). 

(3) The manufacturer may use a mix of 

engines in 2008–2011. In this case, the 

manufacturer must calculate the percentage 

of 50–75 hp engines used (in U.S.-directed 

equipment) over the 2008–2010 period that 

are not certified to the 0.22 g/bhp-hr PM pullahead standard. Then the percentage of 50–

75 hp engines this manufacturer uses in 2012 

that are certified to the 0.02 g/bhp-hr PM 

standard must be no less than this 2008–2010 

non-pull-ahead percentage figure minus a 5% 

margin.32

As an example of this third option, 

consider an equipment manufacturer 

who does not use the transition 

flexibility provisions (described in 

section III.B), and over the 2008–2010 

period makes 1000 50–75 hp machines 

for use in the U.S., 200 (20%) of which 

use engines not certified to the 0.22 g/

bhp-hr standard. In 2012, that 

manufacturer must make at least 15% of 

his 50–75 hp machines for use in the 

U.S. using engines certified to the 0.02 

g/bhp-hr standard. We feel that the 5% 

margin is needed to allow for some 

reasonable sales shifts within the 

manufacturer’s product offering over 

time, but is small enough to ensure that 

any possible advantage gained from 

selling higher-emissions products 

remains minimal. Equipment 

manufacturers must keep production 

records sufficient to prove compliance. 

This restriction and the percentage 

calculation will not apply to any 2008–

2012 engines at issue that are being 

produced under the equipment 

manufacturer transition flexibility 

provisions discussed in section III.B. 

For example, if in addition to the 200 

engines in 2008–2010 not certified to 

the 0.22 g/bhp-hr standard in the above 

example, this manufacturer also used 

500 previous-tier engines in 2008–2010 

under the flexibility allowance program, 

his percentage target for PM filterequipped engines in 2012 would be 

35% of all the engines used in 2012 that 

are not previous-tier engines under the 

flexibility allowance program. 33

4. Standards for Engines Above 750 hp 

We are adopting different Tier 4 

standards for over 750 hp engines from 

those we proposed, and we are also 

adopting different implementation dates 

for these engine standards, though both 

the proposed and final programs have as 

their primary focus the implementation 

of high-efficiency exhaust emission 

controls as quickly as possible. The 

approach being adopted reflects our 

careful review of the technical issues 

presented by these engines. For some of 

these engines, we are accelerating 

standards based on the use of 

aftertreatment controls. For others, we 

are deferring a decision on such 

aftertreatment-based standards. This 

approach represents a feasible and 

efficient approach to redesigning 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38979

engines and installing aftertreatment in 

a coordinated, orderly manner over a 

decade or more, and will achieve major 

reductions in PM and NOX from these 

large diesel engines. 

Under the proposal, all engines above 

750 hp were treated the same, with a 

phase-in of PM and NOX aftertreatment 

technology that started in 2011 and 

finished in 2014. The final standards are 

based on our evaluation of the differing 

technical issues presented by the two 

primary kinds of equipment in this 

category, mobile power generation 

equipment (generator sets) and mobile 

machinery. For both generator sets and 

mobile machinery, PM aftertreatmentbased standards will start in 2015, with 

no prior phase-in. EPA is replacing the 

proposed phase-in with a PM standard 

starting in 2011 that is comparable to 

the overall level of control that the 

proposed phase-in would achieve. 

Differences within these applications, 

however, call for different approaches to 

the implementation of NOX

aftertreatment technology. For generator 

sets above 1200 hp, an aftertreatmentbased NOX standard will start in 2011, 

three years earlier than the date we 

proposed for full implementation of 

such standards. For generator sets below 

1200 hp, the same aftertreatment-based 

NOX standard will start in 2015. As with 

the PM standard, there is no phase-in. 

For engines used in mobile machinery, 

which is assumed to include all 

equipment that is not a generator set, 

EPA is deferring a decision on setting 

aftertreatment-based NOX standards to 

allow additional time to evaluate the 

technical issues involved in adapting 

NOX adsorber technology to these 

applications and engines. However, EPA 

is adopting a NOX standard for these 

engines starting in 2011 that will 

achieve large NOX reductions by relying 

on engine-based emissions control 

technology. Consistent with the 

different approaches we are taking to 

setting standards for engines above and 

below 750 hp, we are also adopting 

restrictions on ABT credit use between 

these power categories, as described in 

section III.A. 

Consistent with the approach we took 

in previous standard-setting for these 

engines, we proposed that nonroad 

diesels above 750 hp be given more lead 

time than engines in other power 

categories to fully implement Tier 4 

standards, due primarily to the 

relatively long product design cycles 

typical of these high-cost, low-sales 

volume engines and machines. 

Specifically, we proposed that this 

category of engines move directly from 

Tier 2 to Tier 4, and that the Tier 4 PM 

standard be phased in for these engines 

on the same 50–50–50–100% schedule 

as the NOX and NMHC phase-in 

schedule, over the 2011–2014 model 

years. This would provide engine 

manufacturers with up to 8 years of 

design stability to address concerns 

specific to this category. Although we 

expressed our belief that these proposed 

provisions would enable the 

manufacturers to meet proposed Tier 4 

engine standards, we also acknowledged 

concerns the manufacturers had 

expressed to us, and asked for comment 

on whether this category, or some subset 

of it defined by hp or application, 

should have a later phase-in start date, 

a later phase-in end date, adjusted 

standards, additional equipment 

manufacturer transition flexibility 

provisions, or some combination of 

these (68 FR 28364, May 23, 2003).

Comments from manufacturers of 

engines and equipment in this power 

category expressed their widespread 

view that the proposed standards were 

inappropriate in critical respects. In 

addition to reiterating the need for extra 

lead time due to long product design 

cycles, they pointed to difficulties with 

aftertreatment placement, with 

fabrication of the large filters that would 

be needed for these engines, with 

potential failures caused by uneven soot 

loading and regeneration in large filters, 

with stresses due to thermal gradients 

across large filters, and with mechanical 

stresses in mining applications with 

high shock loads. The manufacturers 

noted that aftertreatment-based 

standards for NOX and PM were feasible 

for engines used in large mobile power 

generators. However, manufacturers did 

not believe aftertreatment-based NOX

standards could be implemented in the 

time frame proposed for engines used in 

large mobile machinery such as 

bulldozers and mine haul trucks. States, 

environmental organizations, and 

manufacturers of emissions controls, on 

the other hand, expressed support for 

the standards we proposed for these 

engines. 

After evaluating these issues, EPA is 

adopting an approach that tailors the 

standards to the circumstances 

presented by the different kinds of 

engines in this power category. The 

NOX standards we are adopting will 

achieve effective NOX control by 

accelerating the proposed schedule for 

final NOX standards based on highefficiency NOX aftertreatment for the 

largest generator sets, and by requiring 

engines in other generator sets to also 

meet aftertreatment-based NOX

standards, although we are delaying the 

implementation date for these standards 

compared to the implementation 

schedule we proposed. We believe that 

NOX adsorber technology will be 

feasible for these generator set engines. 

We also believe that they may be an 

especially attractive application for 

Selective Catalytic Reduction (SCR) 

technology, which relies on the 

injection of urea into the exhaust 

stream. There are many stationary diesel 

generator sets using SCR today. Large 

mobile generator sets, though moved 

from location to location, operate much 

like stationary units once in place, with 

fuel (and potentially urea) delivered and 

replenished periodically. See section 

II.B.3 for further discussion. 

For equipment other than generator 

sets, we are deferring a decision on 

setting aftertreatment-based NOX

standards to allow additional time to 

evaluate the technical issues involved in 

adapting NOX control technology to 

these applications and engines. We are 

still evaluating the issues involved for 

these engines to achieve a more 

stringent NOX standard, and believe that 

these issues are resolvable. We intend to 

continue evaluating the appropriate 

long-term NOX standard for mobile 

machinery over 750 hp and expect to 

announce further plans regarding these 

issues (we are currently considering 

such an action in the 2007 time frame). 

The basis for the 0.50 g/bhp-hr NOX

standard we are adopting for generator 

sets over 750 hp is discussed in section 

II.B.3. We are also modifying the PM 

and NMHC standards we proposed (as 

well as certain implementation dates for 

these provisions), and modifying our 

proposed approach to ensuring transient 

emissions control for these engines 

(discussed in section III.F). The Tier 4 

standards for engines over 750 hp are 

shown in table II.A–4.

38980 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

TABLE II.A–4.—TIER 4 STANDARDS FOR ENGINES OVER 750 HP (G/BHP-HR) 

2011 2015 

PM NOX NMHC PM NOX NMHC 

Engines used in: 

generator sets ≤1200 hp ........................................ 0.075 2.6 0.30 0.02 0.50 0.14 

generator sets >1200 hp ........................................ 0.075 0.50 0.30 0.02 No new standard 0.14 

all other equipment ................................................. 0.075 2.6 0.30 0.03 No new standard 0.14 

Unlike NOX control technology, we 

believe that the more advanced state of 

PM filter technology development today 

makes their availability for these 

engines by 2015, with over ten years of 

development lead time, more certain, 

and so we are setting PM standards for 

both mobile machinery and generator 

sets based on use of this technology. We 

note in section II.B.3 that achieving 

durable PM filter designs for these large 

applications will likely require the use 

of wire mesh filter technology rather 

than the somewhat more efficient wall 

flow ceramic-based technology 

applicable to smaller engines, justifying 

the somewhat higher level for the 2015 

PM standards shown in table II.A–4 

(0.03 or 0.02 g/bhp-hr compared to 0.01 

g/bhp-hr). Section II.B.3 also contains 

discussion of our bases for the other 

Tier 4 standard levels in this category. 

We believe that the 2015 

implementation year (versus the 

proposed 2014 date for the fully phasedin standard) is necessary to allow 

development of the requisite 

technologies for these large engines, and 

to deal with the redesign workload Tier 

4 will create for the many engine and 

equipment models in this category 

which, as noted, typically have very low 

production volumes and long product 

cycles. 

For the purpose of determining which 

nonroad engines are subject to the 

generator set standards, we are defining 

a generator set engine as: ‘‘An engine 

used primarily to operate an electrical 

generator or alternator to produce 

electric power for other applications.’’

This definition makes it clear that 

generator set engines do not include 

engines used in machines such as mine 

trucks that do mechanical work but that 

employ engine-powered electric motors 

to propel the machine, but they do 

include engines in nonroad equipment 

for which the primary purpose is to 

generate electric power, even if the 

machine is also self-propelled. 

Similar to other power categories, we 

proposed a 50% phase-in to the final 

Tier 4 PM, NOX and NMHC standards, 

with opportunity to average PM and 

NOX between phase-in and phase-out 

engines in the 2011–2013 phase-in years 

via the ABT program. Because in this 

rule we are no longer phasing in to a 

final NOX standard for some engines 

over 750 hp, it no longer makes sense 

to express the 2011 standards for these 

engines in this manner. Instead we are 

setting brake-specific emission 

standards effective in 2011. 

Furthermore, to avoid further 

complicating an already complex 

standards structure, we are adopting 

this pattern for the entire category, even 

with engines such as those used in 

generator sets for which the standards 

could still be expressed as a percent 

phase-in to final standards. Except for 

the pull-ahead of the long-term NOX

standard for large generator sets (which 

will increase the environmental benefit 

compared to the proposal), these 2011 

PM and NOX standards essentially 

correspond to averaged standards under 

a 50% phase-in to aftertreatment-based 

standards, hence our conclusion that the 

Tier 4 program will provide a level of 

control in 2011 that is substantially 

equivalent to that of the proposal. In 

addition, PM and NOX emissions 

averaging through the ABT program will 

allow a manufacturer to comply by 

phasing in aftertreatment technologies 

as in the proposed program, should they 

desire to do so. Although there is no 

such averaging program for NMHC, the 

2011 NMHC standard can be achieved 

without the use of advanced 

aftertreatment (as explained in section 

II.B.3), thus helping to enable a 

manufacturer to pursue this compliance 

strategy if desired. 

This approach involving separate 

2011 and 2015 standards is comparable 

to the proposed percent phase-in 

approach with emissions averaging. We 

believe that it enables manufacturers to 

redesign engines and equipment in a 

coordinated, orderly manner over a 

decade or more, and effectively gives 

targeted additional flexibility to the 

industry. Given the continuing 

availability of emissions averaging, we 

do not view this change as the creation 

of an additional, separate tier of 

standards compared to the proposal’s 

phase-in of the Tier 4 standards. 

5. Establishment of New Power 

Categories 

We are finalizing our proposal to 

regroup the nine power categories 

established for previous tiers into the 

five Tier 4 power categories shown in 

table II.A–1. As we explained in the 

proposal, this regrouping will more 

closely match the degree of challenge 

involved in transferring advanced 

emissions control technology from 

highway engines to nonroad engines. 

The proposed choice of 75 hp as the 

appropriate cutpoint for applying 

aftertreatment-based NOX control drew 

particular attention. In the proposal, we 

recognized that there is not an abrupt 

power cutpoint above and below which 

the highway-derived nonroad engine 

families do and do not exist, but noted 

further that 75 hp is a more appropriate 

cutpoint to generally identify nonroad 

engines in Tier 4 that will most likely 

be using highway-like engine 

technology than either of the closest 

previously-adopted power category 

cutpoints of 50 or 100 hp. Nonroad 

diesels produced today with rated 

power above 75 hp (up to several 

hundred hp) are mostly variants of 

nonroad engine platforms with four or 

more cylinders and per-cylinder 

displacements of one liter or more. 

These in turn are largely derived from 

or are similar to heavy-duty highway 

engine platforms. Even where nonroad 

engine models above 75 hp are not so 

directly derived from highway models, 

they typically share many common 

characteristics such as displacements of 

one liter per cylinder or more, direct 

injection fueling, turbocharging, and, 

increasingly, electronic fuel injection. 

These common features provide key 

building blocks in transferring highefficiency exhaust emission control 

technology from highway to similar 

nonroad diesel engines. We therefore 

proposed to regroup power ratings using 

the 75 hp cutpoint. 

The Engine Manufacturers 

Association and Euromot, which 

together represent the companies that 

make all but a tiny fraction of nonroad 

diesel engines sold in the U.S., 

expressed their support for the 75 hp 

cutpoint, as did every individual engine 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38981

manufacturer who commented on this 

subject. These companies generally 

endorsed EPA’s reasoning that the 75 hp 

level is appropriate to ‘‘delineate those 

engines (and applications) for which the 

application of on-highway like NOX

aftertreatment technologies is not likely 

to be feasible or practical’’ (EMA 

Comments p.10).

However, the Association of 

Equipment Manufacturers (AEM) and 

the equipment manufacturer IngersollRand commented that 100 hp is the 

more appropriate cutpoint for 

application of advanced NOX control 

technology. They based this view on 

their observations that 75–100 hp 

engines do not share many of the 

characteristics of highway diesels, thus 

making technology transfer from the 

highway sector very costly, and 

customers will be negatively affected 

due to the relatively large cost impacts 

of NOX aftertreatment on these smaller 

engines. They also argued that the 75 hp 

cutpoint would create significant 

misalignment in the global marketplace 

because European regulations do not 

use this cutpoint. 

We agree with the equipment 

manufacturers’ observation that there 

are engines above 75 hp without 

turbocharging or electronic controls. 

However, EPA did not choose the 75 hp 

cutpoint with the expectation that all 

engines above it had the same 

technology characteristics. There is a 

continuum in the degree to which key 

technology characteristics exist on 

engines throughout the power spectrum, 

and the 75 hp cutpoint was based on 

information from the current fleet of 

engines and on manufacturers’ and 

EPA’s expectations for future design 

trends, showing there is a marked 

difference in the prevalence of these and 

other key engine design characteristics 

for engines above and below 75 hp, and 

that, over time, 75–100 hp engines 

increasingly share advanced technology 

characteristics common in larger 

engines. Clear evidence of this trend 

over recent model years is documented 

in the RIA, section 4.1.4. As discussed 

in section II.B.2, the kind of engine 

technology generally employed by 

engines in the 75–100 hp range, 

combined with the lead time and phasein provided for the Tier 4 NOX

standards, leads us to conclude that 

highway-like NOX aftertreatment can be 

transferred to these engines. In addition, 

since our proposal, the Council of the 

European Union (EU) has issued a 

revised final version of new nonroad 

diesel emission standards that 

essentially aligns their power cutpoints 

with our own, including adoption of the 

75 hp cutpoint for advanced technology 

NOX control. EPA does not believe that 

the costs of meeting the NOX standard 

for engines in the 75–100 hp range are 

unreasonable, and we refer the reader to 

section VI for a detailed discussion of 

our cost analysis for engines and 

equipment meeting Tier 4 standards in 

this power range. Moreover, EPA firmly 

believes such standards are 

technologically feasible for 75–100 hp 

engines. (See section II.B.2.) 

Ingersoll-Rand also expressed concern 

that the proposed consolidation of 3 

previous power categories into a single 

175–750 hp category creates significant 

hardship by requiring the introduction 

of aftertreatment technologies in a single 

year, contrasting this with the Tier 2 

standards, which phased in over 2001–

2003 for these engines. In response, we 

note that the Tier 3 standards, which 

were set in the same rule that 

established the Tier 2 standards, will be 

introduced in a single year for these 

engines (2006), and that the Tier 2 

phase-in over 3 years was established in 

response to particular issues and 

opportunities that were identified, 

specific to that time frame (see 62 FR 

50181, September 24, 1997). In addition 

to the gradual phase-in of Tier 4 

standards over several years, we are 

adopting significant flexibility 

provisions specifically to provide 

adequate lead time for equipment 

manufacturers to make the transition to 

the new standards, including some 

provisions that provide additional 

flexibility from what we proposed, as 

explained in section III.B. 

6. CO Standards 

We proposed minor changes in CO 

standards for some engines solely for 

the purpose of helping to consolidate 

power categories. We stated in the 

proposal that we were not exercising 

our authority to revise the CO standard 

for the purpose of improving air quality, 

but rather for purposes of administrative 

efficiency. However, manufacturers 

objected to these proposed changes, 

citing technological feasibility concerns, 

and a lack of parity with highway diesel 

and nonroad spark-ignition engines, 

given that existing CO standards levels 

for nonroad engines are already five 

times lower than the standard level for 

highway engines. 

Because we proposed the CO standard 

changes for the sake of simplifying and 

consolidating power categories and not 

because of any technical considerations 

relating to emission reductions, we do 

not believe it productive to take issue 

with the views expressed that these 

proposed changes raise serious 

feasibility concerns. We instead are 

withdrawing this aspect of the proposal, 

the result being that the existing CO 

standards remain in place. In doing so, 

we are not considering or reexamining 

(and at proposal did not consider or 

reexamine) the substantive basis for 

those standards. Having multiple CO 

standards within a power category will, 

at worst, create minor inconveniences in 

certification and compliance efforts. As 

a result, in the less than 25 hp category, 

Tier 4 engines below 11 hp will 

continue to be subject to a different CO 

standard than 11–25 hp engines, 

identical to Tier 2. Likewise, different 

CO standards will continue to apply in 

Tier 4 to engines above and below 50 hp 

in the 25–75 hp category. 

We do note, however, that we are 

applying new certification tests to all 

pollutants covered by the rule, the result 

being that Tier 4 engines will have to 

certify to CO standards measured by the 

transient test (NRTC) (which includes a 

cold start test), and the NTE. Our intent 

in adopting these new certification 

requirements is not to alter the level of 

stringency of the standard but rather to 

ensure robust control of emissions to 

this standard in use. The CO standards 

remain readily achievable using these 

tests, and we anticipate that no 

additional engine adjustments are 

necessary for the standards to be 

achievable (so there are no significant 

associated costs). We also explain there 

that the CO standards can be achieved 

without jeopardizing the ability to 

achieve all of the other engine 

standards. 

7. Crankcase Emissions Control 

We currently require the control of 

crankcase emissions from naturallyaspiriated nonroad diesel engines. We 

proposed to extend this requirement to 

turbocharged nonroad diesel engines as 

well, starting in the same model year 

that Tier 4 exhaust emission standards 

first apply in each power category.

EMA opposed the proposed 

extension, reiterating concerns 

expressed in comments on a similar 

proposed provision in the 2007 heavyduty highway rule, including concerns 

over the impact that recirculating 

crankcase emissions may have on the 

feasibility of engine standards over the 

full useful life. These concerns are 

addressed in the Summary and Analysis 

of Comments document for that rule, 

which is included in the docket for 

today’s rule. Besides the feasibility 

issues raised by EMA for nonroad 

diesels that are addressed in the 

highway rule, two nonroad-specific 

issues were raised as well: (1) The need 

to design crankcase emission control 

systems that operate at the high 

angularity experienced by some 

38982 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

34Council of the European Union, ‘‘Directive of 

the European Parliament and of the Council 

amending Directive 97/68/EC’’, March 15, 2004.

nonroad machines on uneven ground, 

and (2) the concern that this 

requirement adds to the large number of 

‘‘first time’’ requirements being adopted 

for Tier 4. We agree that high angularity 

operation may add new design 

considerations for these controls, but do 

not see how it would pose a serious 

barrier that could not be overcome in 

time. The grouping of new EPA 

requirements in a specific model year is 

an important objective of our program 

aimed at providing stability to the 

design process, a goal much supported 

by the engine manufacturers. We have 

accounted for this in assessing 

feasibility, costs, and flexibility needs 

for the program. One flexibility we are 

providing is the three-path opportunity 

to satisfy our crankcase control 

requirement, as described below. In fact, 

in its written comments EMA 

recommended that, if EPA were to 

proceed with crankcase emission 

control requirements for Tier 4, it adopt 

all three options for demonstrating 

compliance. This is indeed what we are 

doing. 

Thus, as proposed, in addition to 

allowing for compliance through the 

routing of crankcase emissions to the 

engine air intake system, we are also 

allowing manufacturers to instead meet 

the requirement by routing the 

crankcase gases into the exhaust stream, 

provided they keep the combined total 

of the crankcase emissions and the 

exhaust emissions below the applicable 

exhaust emission standards. Also as 

proposed, we are allowing 

manufacturers to instead meet the 

requirement by measuring crankcase 

emissions instead of completely 

eliminating them, provided 

manufacturers add these measured 

emissions to exhaust emissions in 

assessing compliance with exhaust 

emissions standards. Manufacturers 

using this option must also modify their 

exhaust deterioration factors or develop 

separate deterioration factors to account 

for increases in crankcase emissions as 

the engine ages, and must ensure that 

crankcase emissions can be readily 

measured in use. We see no reason to 

treat naturally-aspirated engines 

differently than turbocharged engines, 

and so are allowing these options for all 

Tier 4 engines subject to the crankcase 

control requirement, both turbocharged 

and naturally-aspirated. The wording of 

the proposed regulations limiting the 

options to turbocharged engines was 

inadvertent. 

8. Prospects for International 

Harmonization 

We received numerous comments, 

especially from engine and equipment 

manufacturers, stressing the need for 

EPA to work with other governmental 

standards-setting bodies to harmonize 

standards. We recognize the importance 

of harmonization of international 

standards and have worked diligently 

with our colleagues in Europe and Japan 

to achieve that objective. Harmonization 

of these standards will allow 

manufacturers continued access to 

world markets and lower the required 

research and development and tooling 

costs needed to meet different 

standards. We will continue to work 

with standards-setting governmental 

entities and with foreign and domestic 

manufacturers. 

In October 2003, the Council and 

Parliament of the European Union 

reached agreement on revisions to a 

proposal developed by the European 

Commission that would amend 

Directive 97/68/EC to include nonroad 

diesel emissions standards similar to 

those in our Tier 4 program, and, as in 

the U.S., coordinated with low sulfur 

diesel fuel requirements in Europe. This 

revised proposal has since been 

finalized.34 This revised Directive aligns 

well with our program in the Tier 4 time 

frame, even more so than did the 

original Commission proposal. It also 

closely aligns with our Tier 3 standards 

in the Tier 3 time frame.

For engines of 50–750 hp, the 

Directive’s standards are very closely 

aligned with our own Tier 4 standards, 

including emissions levels, 

implementation dates, the defined 

power categories, and the lower hp limit 

of NOX control based on high-efficiency 

exhaust emission controls (75 hp). 

Exceptions are noted below:

• The 2008 PM standard level for 50–

75 hp engines (the equivalent of 0.3 g/

bhp-hr vs our 0.22 g/bhp-hr level). Note, 

however, that we do allow certification 

to the 0.3 g/bhp-hr level as an option, 

provided the manufacturer must then 

meet our 0.02 g/bhp-hr standard in 

2012, one year earlier than otherwise. 

• The 2013 PM standard level for 50–

75 hp engines (the equivalent of 0.01 g/

bhp-hr vs our 0.02 g/bhp-hr level). 

• An October 1, 2014 start for the 

final 75–175 hp NOX standard (the same 

as our proposed date), compared to the 

December 31, 2014 date we are adopting 

in this final rule. 

• For constant speed engines: no Tier 

4-equivalent standards. Also, the EU’s 

Tier 3-equivalent standards are not 

implemented on these engines until 

2011–2012. 

As the EU program does not provide 

for emissions averaging, the alternative 

NOX standards we are setting for 75–750 

hp engines are the NOX levels at which 

the EU standards are generally aligned 

during our NOX phase-in years. The EU 

Directive also includes transition 

flexibility provisions for equipment 

manufacturers similar to those in our 

program, discussed in section III.B. 

The EU program for nonroad diesels 

has not adopted or proposed any current 

or future standards for engines above 

750 hp or below 25 hp, and its revised 

Directive for 25–50 hp engines does not 

subject them to any future standards 

beyond those entering into force in 2007 

(equivalent to 0.45 g/bhp-hr PM and 5.6 

g/bhp-hr hydrocarbon+NOX), in contrast 

to our 2013 standards based the use of 

PM filters and more advanced enginebased control technologies (0.02 g/bhphr PM and 3.5 g/bhp-hr NMHC+NOX). 

However, as discussed further in section 

VIII.A, the EU Directive includes plans 

to conduct a future technology review of 

appropriate standards for engines below 

50 hp and above 750 hp. The year that 

this is planned for is 2007, the same 

year in which we are planning a 

technology review for engines below 75 

hp. Considering progress to date, and 

announced plans for reviews in 2007, 

we believe that prospects for 

harmonized standards are excellent. 

9. Exclusion of Marine Engines 

For reasons outlined in the proposal, 

we are not applying Tier 4 standards to 

the marine diesel engines under 50 hp 

that are covered under our Tier 1 and 

2 standards. We believe it is more 

appropriate to consider more stringent 

standards for a range of marine diesel 

engines, including these, in a future 

action. It should be noted that the 

existing Tier 2 standards will continue 

to apply to marine diesel engines under 

50 hp until that future action is 

completed. We did not receive any 

adverse comments on this proposed 

approach. 

B. Are the New Standards Feasible? 

Today we are finalizing a program of 

stringent new standards for a broad 

category of nonroad diesel engines 

coupled with a new nonroad diesel fuel 

standard that dramatically lowers the 

sulfur level in nonroad diesel fuel 

ultimately to 15 ppm. We believe these 

standards are technically feasible in the 

leadtime provided given the availability 

of 15 ppm sulfur fuel and the rapid 

progress to develop the needed emission 

control technologies. We acknowledge, 

as pointed out by a number of 

commenters, that these standards will 

be challenging for industry to meet, in 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38983

35Regulatory Impact Analysis: Heavy-Duty 

Engine and Vehicle Standards and Highway Diesel 

Fuel Sulfur Control Requirements, United States 

Environmental Protection Agency, December 2000, 

EPA420–R–00–026. Copy Available in EPA Air 

Docket A–2001–28 Item II–A–01.

36Regulatory Impact Analysis: Control of 

Emissions of Air Pollution from Highway HeavyDuty Engines, United States Environmental 

Protection Agency, June 2000, EPA420–R–00–010. 

Copy available in EPA Air Docket A–2001–28 Item 

II–A–02.

37Highway Diesel Progress Review, United States 

Environmental Protection Agency, June 2002, EPA 

420–R–02–016. Copy available in EPA Air Docket 

A–2001–28 Item II–A–52.

38Highway Diesel Progress Review Report 2, 

United States Environmental Protection Agency, 

March 2004, EPA420–R–04–004. Copy available in 

Docket OAR–2003–0012–0918.

part due to differences in operating 

conditions and duty cycles for nonroad 

equipment and the diesel engines used 

in that equipment. Also, we recognize 

that transferring and effectively 

applying these technologies, which have 

largely been developed for highway 

engines, will require additional time 

after the application of the technology to 

on-highway engines. Diesel engine 

industry commenters and 

environmental stakeholder commenters 

on our proposal consistently agreed 

with our position that for most engine 

horsepower categories the technologies 

to meet the standards exist and that the 

transfer of these technologies to nonroad 

is possible. The biggest difference of 

opinions in the range of comments 

received by the Agency concerns the 

timing of the emission standards and 

the flexibility provisions (i.e., the 

leadtime necessary to transfer the 

technology). One of the most important 

tasks for a feasibility analysis is to 

determine the appropriate amount of 

development time needed to 

successfully bring new technologies to 

market. We have carefully weighed the 

desire to have clean engines sooner, 

with the challenges yet to be overcome 

in applying the technologies to nonroad 

engines and equipment, in determining 

the appropriate timing and emission 

levels for the standards finalized today.

The RIA associated with today’s 

action contains a detailed description 

and analysis of diesel emission control 

technologies, issues specific to applying 

these technologies to nonroad engines, 

and why we believe the new emission 

standards are feasible. Additional indepth discussion of these technologies 

can be found in the final RIA for the 

HD2007 emission standards, the final 

RIA for the HD2004 emission standards, 

the 2002 Highway Diesel Progress 

Review and the recently released 

Highway Diesel Progress Review Report 

2.35 36 37 38 The following sections 

summarize the challenges to applying 

these technologies to nonroad engines 

and why we believe the emission 

standards finalized today are technically 

feasible in the leadtime provided.

1. Can Advanced Diesel Emission 

Control Technologies Be Applied to 

Nonroad Engines and Equipment? 

The emission standards and the 

introduction dates for those standards, 

as described earlier in this section, are 

premised on the transfer of diesel 

engine technologies being or already 

developed to meet light-duty and heavyduty vehicle standards that begin in 

2007. The advanced technology 

standards that we are finalizing today 

for engines over 25 horsepower will 

begin to go into effect four years later. 

This time lag between equivalent 

highway and nonroad diesel engine 

standards is necessary in order to allow 

time for engine and equipment 

manufacturers to further develop these 

highway technologies for nonroad 

engines and to align this program with 

nonroad Tier 3 emission standards that 

begin to go into effect in 2006. 

This section summarizes the 

engineering challenges to applying 

advanced emission control technologies 

to nonroad engines and equipment, and 

why we believe that technologies 

developed for highway diesel engines 

can be further refined to address these 

issues in a timely manner for nonroad 

engines consistent with the emission 

standards finalized today. 

a. Nonroad Operating Conditions and 

Exhaust Temperatures 

Nonroad equipment is highly diverse 

in design, application, and typical 

operating conditions. This variety of 

operating conditions affects emission 

control systems through the resulting 

variety in the torque and speed 

demands (i.e., power demands). In our 

proposal, we highlighted the challenge 

for design and implementation of 

advanced emission control technologies 

posed by this wide range in what 

constitutes typical nonroad operation. 

Some commenters emphasized their 

concerns regarding this issue as well, 

and their belief that these issues make 

the application of the technology to 

nonroad infeasible. While we recognize 

and agree with the commenters 

regarding the nature of the challenges, 

we disagree with their conclusion 

regarding feasibility because, as 

described in the following section, we 

see a clear path to overcome the 

challenges. 

The primary concern for catalystbased emission control technologies is 

exhaust temperature. In general, exhaust 

temperature increases with engine 

power and can vary dramatically as 

engine power demands vary. For 

catalyzed diesel particulate filters 

(CDPFs), exhaust temperature 

determines the rate of filter 

regeneration, and if too low, causes a 

need for supplemental means to ensure 

proper filter regeneration. In the case of 

the CDPF, it is the aggregate soot 

regeneration rate that is important, not 

the regeneration rate at any particular 

moment in time. A CDPF controls PM 

emissions under all conditions and can 

function properly (i.e., not plug) even 

when exhaust temperatures are low for 

an extended time and the regeneration 

rate is lower than the soot accumulation 

rate, provided that occasionally exhaust 

temperatures and thus the soot 

regeneration rate are increased enough 

to regenerate the CDPF. Similarly, there 

is a minimum temperature (e.g., 200 °C) 

for NOX adsorbers below which NOX

regeneration is not readily possible and 

a maximum temperature (e.g., 500 °C) 

above which NOX adsorbers are unable 

to effectively store NOX. Therefore, 

there is a need to match diesel exhaust 

temperatures to conditions for effective 

catalyst operation under the various 

operating conditions of nonroad 

engines. 

Although the range of products for 

highway vehicles is not as diverse as for 

nonroad equipment, the need to match 

exhaust temperatures to catalyst 

characteristics is still present. This is an 

important concern for highway engine 

manufacturers and has been a focus of 

our ongoing 2007 diesel engine progress 

review. There we have learned that 

substantial progress is being made to 

broaden the operating temperature 

window of catalyst technologies while 

at the same time to design engine 

systems to better control average 

exhaust temperatures (for ongoing 

catalyst performance) and to attain 

periodically higher temperatures (to 

control PM filter regeneration and NOX

adsorber desulfation). Highway diesel 

engine manufacturers are working to 

address this need through modifications 

to engine design, modifications to 

engine control strategies, and 

modifications to exhaust system 

designs. New engine control strategies 

designed to take advantage of engine 

and exhaust system modifications can 

be used to manage exhaust temperatures 

across a broad range of engine 

operation. The technology solutions 

being developed for highway engines to 

better manage exhaust temperature are 

built upon the same emission control 

technologies (i.e., advanced air handling 

systems and electronic fuel injection 

systems) that we expect nonroad engine 

38984 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

39Sasaki, S., Ito, T., and Iguchi, S., ‘‘Smoke-less 

Rich Combustion by Low Temperature Oxidation in 

Diesel Engines,’’ 9th Aachener Kolloquim 

Fahrzeug—und Motorentechnik 2000. Copy 

available in EPA Air Docket A–2001–28 Item II–A–

56.

40 Jeuland, N., et al., ‘‘Performances and 

Durability of DPF (Diesel Particulate Filter) Tested 

on a Fleet of Peugeot 607 Taxis First and Second 

Test Phases Results,’’ October 2002, SAE 2002–01–

2790.

41We do not have Tier 3 emission standards for 

engines in the horsepower category from 25–50 hp. 

However, we expect that similar Tier 3 emission 

control technologies will form part of the emission 

control technology package used for compliance 

with the Tier 4 standards for these engines in 2013. 

Our cost analysis reflects the additional cost to 

apply these technologies for NOX and PM control.

manufacturers to use in order to comply 

with the existing Tier 3 emission 

standards.

Matching the emission control 

technology and the operating 

temperature window of the broad range 

of nonroad equipment may be 

somewhat more challenging for nonroad 

engines than for many highway diesel 

engines simply because of the diversity 

in equipment design and equipment 

use. Nonetheless, the problem has been 

successfully solved in highway 

applications facing low exhaust 

temperature performance situations as 

difficult to address as any encountered 

by nonroad applications. The most 

challenging temperature regime for 

highway engines are encountered at 

very light-loads as typified by congested 

urban driving with periods of extended 

idle operation. Under congested urban 

driving conditions, exhaust 

temperatures may be too low for 

effective NOX reduction with a NOX

adsorber catalyst. Similarly, exhaust 

temperatures may be too low to ensure 

passive CDPF regeneration. To address 

these concerns, light-duty diesel engine 

manufacturers have developed active 

temperature management strategies that 

provide effective emissions control even 

under these difficult light-load 

conditions. Toyota has shown with their 

prototype diesel particulate NOX

reduction (DPNR) vehicles that changes 

to EGR and fuel injection strategies can 

realize an increase in exhaust 

temperatures of more than 100 °F under 

even very light-load conditions allowing 

the NOX adsorber catalyst to function 

under these normally cold exhaust 

conditions.39 Similarly, PSA Peugeot 

Citroen (PSA) has demonstrated 

effective CDPF regeneration under 

demanding light-load taxi cab 

conditions with current production 

technologies. 40 Both of these are 

examples of technology paths available 

to nonroad engine manufacturers to 

increase temperatures under light-load 

conditions.

While a number of commenters 

expressed concerns about low 

temperature operation for nonroad 

equipment, no commenters provided 

data showing that nonroad equipment 

in-use operating cycles would be more 

demanding of low temperature 

performance than passenger car urban 

driving. Both the Toyota and PSA 

systems are designed to function even 

with extended idle operation as would 

be typified by a taxi waiting to pick up 

a fare. 

It is our conclusion that by actively 

managing exhaust temperatures, for 

example through engine management to 

increase exhaust temperatures, engine 

manufacturers can ensure highly 

effective catalyst-based emission control 

performance (i.e., compliance with the 

emission standards across the 

applicable tests) and reliable filter 

regeneration across a wide range of 

engine operation as would be typified 

by the broad range of in-use nonroad 

duty cycles. Active methods of 

regenerating PM filters have been shown 

to be reliable under all operating 

conditions and can be applied to 

nonroad diesel engines in the time 

frame required by these regulations. The 

additional cost for active regeneration, 

beyond the cost for the PM filter alone, 

has been accounted for in the cost 

analysis summarized in section VI of 

this preamble. 

We have conducted an analysis of 

various nonroad equipment operating 

cycles and various nonroad engine 

power density levels to better 

understand the matching of nonroad 

engine exhaust temperatures, catalyst 

installation locations and catalyst 

technologies. This analysis, documented 

in the RIA, shows that for many engine 

power density levels and equipment 

operating cycles, exhaust temperatures 

are quite well matched to catalyst 

temperature window characteristics. In 

particular, the nonroad transient cycle 

(NRTC), the cycle we are finalizing to 

use for certification for most engines 

with rated power less than 750 hp, was 

shown to be well matched to the NOX

adsorber characteristics with estimated 

performance in excess of 90 percent for 

a turbocharged diesel engine tested 

under a range of power density levels. 

The analysis also indicated that the 

exhaust temperatures experienced over 

the NRTC are better matched to the NOX

adsorber catalyst temperature window 

than the temperatures that would be 

expected over the highway FTP test 

cycle. This suggests (when coupled with 

the fact that PM filters function with 

equal effectiveness at essentially all 

conditions) that compliance based on 

testing with the nonroad Tier 4 

standards on the NRTC will be 

somewhat easier, using similar 

technology, than complying with the 

highway 2007 emission standards on 

the highway transient test cycle. 

In sum, we believe based on our 

analysis of nonroad engines and 

equipment operating characteristics, 

that, in use, some nonroad engines will 

experience conditions that require the 

use of temperature management 

strategies (e.g., active regeneration) in 

order to effectively use the NOX

adsorber and CDPF systems. We have 

assumed in our cost analysis that all 

nonroad engines complying with a PM 

standard of 0.03 g/bhp-hr or lower will 

have an active means to control 

temperature (i.e. we have costed a 

backup regeneration system, although 

some applications likely may not need 

one). We have made this assumption 

believing, as indicated by a number of 

commenters, that manufacturers will 

not be able to accurately predict in-use 

conditions for every piece of equipment 

and will thus choose to provide the 

technologies on a back-up basis. As 

explained earlier, the technologies 

necessary to accomplish this 

temperature management are 

enhancements of both the Tier 3 

emission control technologies that will 

form the starting point for Tier 4 engines 

larger than 50 hp, and the control 

strategies being developed for highway 

diesel engines.41 Based on our analyses, 

we believe that there are no nonroad 

engine applications above 25 

horsepower for which these highway 

engine approaches for temperature 

management will not work. However, 

we agree with commenters that given 

the diversity in nonroad equipment 

design and application, additional time 

will be needed in order to match the 

engine performance characteristics to 

the full range of nonroad equipment.

We have concluded that, given the 

timing of the emissions standards 

finalized today, and the availability and 

continuing development of technologies 

to address temperature management for 

highway engines which technologies are 

transferrable to all nonroad engines with 

greater than 25 hp power rating, 

nonroad engines can be designed to 

meet the new standards in the lead time 

provided, and can be provided to 

equipment makers in a timely manner 

within that lead time. 

b. Nonroad Operating Conditions and 

Durability 

Nonroad equipment is designed to be 

used in a wide range of tasks, from 

mining equipment to crop cultivation 

and harvesting to excavation and 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38985

42 ‘‘Summary of Conference Call between U.S. 

EPA and Deutz Corporation on September 19, 2002 

regarding Deutz Diesel Particulate Filter System’’, 

EPA Memorandum to Air Docket A–2001–28 Item 

II–B–31.

43The hottest surface on a diesel engine is 

typically the exhaust manifold which connects the 

engines exhaust ports to the inlet of the 

turbocharger. The hot exhaust gases leave the 

engine at a very high temperature (800 °C at high 

power conditions) and then pass through the 

turbocharger where the gases expand driving the 

turbocharger providing work. The process of 

extracting work from the hot gases cools the exhaust 

gases. The exhaust leaving the turbocharger and 

entering the catalyst and the remaining pieces of the 

exhaust system is cooler (as much as 200 °C at very 

high loads) than in the exhaust manifold.

loading, and operated in harsh 

environments. In the normal course of 

equipment operation the engine and its 

associated hardware will experience 

levels of vibration, impacts, and dust 

that may exceed conditions typical of 

highway diesel vehicles. For this reason, 

some commenters said that the PM filter 

technology was infeasible for nonroad 

equipment. We disagree with this 

assertion and continue to believe that 

PM filter technologies can be applied to 

a wide range of nonroad equipment. 

Specific efforts to design for the 

nonroad operating conditions will be 

required in order to ensure that the 

benefits of these new emission control 

technologies are realized for the life of 

nonroad equipment. Much of the 

engineering knowledge and experience 

to address these issues already exists 

with the nonroad equipment 

manufacturers. Vibration and impact 

issues are fundamentally mechanical 

durability concerns (rather than issues 

of technical feasibility of achieving 

emissions reductions) for any 

component mounted on a piece of 

equipment (e.g., an engine coolant 

overflow tank). Equipment 

manufacturers must design mounting 

hardware such as flanges, brackets, and 

bolts to support the new component 

without failure. Further, the catalyst 

substrate material itself must be able to 

withstand the conditions encountered 

on nonroad equipment without itself 

cracking or failing. There is a large body 

of real world testing with retrofit 

emission control technologies on 

engines up to 750 hp that demonstrate 

the durability of the catalyst 

components themselves even in the 

harshest of nonroad equipment 

applications. The evidence for even 

larger engines (i.e., those above 750 hp) 

is less conclusive because of the limited 

number of applications. 

Deutz, a nonroad engine 

manufacturer, sold approximately 2,000 

diesel particulate filter systems for 

nonroad equipment in the period from 

1994 through 2000. The very largest of 

these systems were limited to engine 

sizes below 850 hp. The majority of 

these systems were sold into 

significantly smaller applications. Many 

of these systems were sold for use in 

mining equipment. Mining equipment is 

exposed to extraordinarily high levels of 

vibration, experiences impacts with the 

mine walls and face, and encounters 

high levels of dust. Yet in meetings with 

the Agency, Deutz shared their 

experience that no system had failed 

due to mechanical failure of the catalyst 

or catalyst housing.42 The Deutz system 

utilized a conventional cordierite PM 

filter substrate as is commonly used for 

heavy-duty highway truck CDPF 

systems. The canning and mounting of 

the system was a Deutz design. Deutz 

was able to design the catalyst housing 

and mounting in such a way as to 

protect the catalyst from the harsh 

environment as evidenced by its 

excellent record of reliable function.

A number of commenters asserted 

that it was not possible to apply 

conventional CDPF technologies (i.e., 

ceramic wall-flow filter media) to the 

largest diesel engines with power 

ratings above 750 hp. In the draft RIA 

for the proposal, we described our 

expectation that these highway-based 

systems could be assembled into larger 

systems to work well for these largest 

diesel engines. While we continue to 

believe that it may be possible in the 

time frame of this rulemaking for these 

conventional CDPFs to be applied to 

engines with more than 750 hp, based 

on the evidence provided by the 

commenters, we now agree that too 

much uncertainty remains for us to 

reach that conclusion today. We cannot 

clearly today describe a method to 

monitor the soot loading of individual 

filter elements in a parallel system made 

up of a significant number of smaller 

components. This is because for parallel 

systems the pressure drop (the best 

current method to monitor filter 

condition) across all of the parallel 

components is exactly the same. If a 

single filter begins to plug and needs to 

be regenerated it may not be detected in 

such a system. Therefore, we believe 

that instead of a massively parallel filter 

system, an alternate PM filtering media 

may be more appropriate in order to 

address issues of scalability, durability 

and packaging for these largest engines. 

Fortunately, there are other filter media 

technologies (e.g., wire or fiber mesh 

depth filters) that can be successfully 

scaled to any size and which we have 

confidence in projecting today will be a 

more appropriate solution for the bulk 

of the engines in this size category. 

Because these depth filtration 

technologies are not quite as efficient at 

filtering PM as the ceramic systems that 

are the dominant solution for the 

smaller highway diesel engines, we are 

finalizing a set of PM filter-based 

standards for engines greater than 750 

hp which are slightly higher than the 

proposed PM standards for these 

engines. Those standards are discussed 

in sections II.A and II.B.3 below. Our 

cost estimates summarized in section VI 

for engines greater than 750 hp are 

consistent with the use of either silicon 

carbide or wire mesh PM filter 

technologies.

Certain nonroad applications, 

including some forms of harvesting 

equipment, consumer lawn and garden 

equipment, and mining equipment, may 

have specific limits on maximum 

surface temperature for equipment 

components in order to ensure that the 

components do not serve as ignition 

sources for flammable dust particles 

(e.g., coal dust or fine crop/lawn dust). 

Some commenters have raised concerns 

that these design constraints might limit 

the equipment manufacturers ability to 

install advanced diesel catalyst 

technologies such as NOX adsorbers and 

CDPFs. This concern seems to be largely 

based upon anecdotal experience with 

gasoline catalyst technologies where 

under certain circumstances catalyst 

temperatures can exceed 1,000 °C and 

without appropriate design 

considerations could conceivably serve 

as an ignition source. We do not believe 

that these concerns are justified in the 

case of either the NOX adsorber catalyst 

or the CDPF technology. Catalyst 

temperatures for NOX adsorbers and 

CDPFs should not exceed the maximum 

exhaust manifold temperatures already 

commonly experienced by diesel 

engines (i.e., catalyst temperatures are 

expected to be below 800 °C).43 CDPF 

temperatures are not expected to exceed 

approximately 700 °C in normal use and 

are expected to only reach the 650 °C 

temperature during periods of active 

regeneration. Similarly, NOX adsorber 

catalyst temperatures are not expected 

to exceed 700 °C and again only during 

periods of active sulfur regeneration as 

described in section III.C below. Under 

conditions where diesel exhaust 

temperatures are naturally as high as 

650 °C, no supplemental heat addition 

from the emission control system will 

be necessary for regeneration and 

therefore exhaust temperatures will not 

exceed their natural level. When natural 

exhaust temperatures are too low for 

effective emission system regeneration 

38986 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

44 ‘‘Engine Technology and Application Aspects 

for Earthmoving Machines and Mobile Cranes,’’ Dr. 

E. Brucker, Liebherr Machines Bulle, SA, AVL 

International Commercial Powertrain Conference, 

October 2001. Copy available in EPA Air Docket A–

2001–28, Docket Item # II–A–12.

45Phone conversation between Byron Bunker, 

United States Environmental Protection Agency and 

Dale McKinnon, Manufacturers of Emission Control 

Association (MECA), 9 April, 2003 confirming the 

use of emission control technologies on nonroad 

equipment used in coal mines, refineries, and other 

locations where explosion proofing may be 

required.

46As an alternative to compliance with the ISO 

C1 test procedure, a manufacturer can show 

compliance with the standards by testing over the 

Ramped Modal Cycle (RMC) as described in section 

III.F.

then supplemental heating, as described 

earlier, may be necessary but would not 

be expected to produce temperatures 

higher than the maximum levels 

normally encountered in diesel exhaust. 

Furthermore, even if it were necessary 

to raise exhaust temperatures to a higher 

level in order to promote effective 

emission control, there are technologies 

available to isolate the higher exhaust 

temperatures from flammable materials 

such as dust. One approach would be 

the use of air-gapped exhaust systems 

(i.e., an exhaust pipe inside another 

concentric exhaust pipe separated by an 

air-gap) that serve to insulate the inner 

high temperature surface from the outer 

surface which could come into contact 

with the dust. The use of such a system 

also may be desirable in order to 

maintain higher exhaust temperatures 

inside the catalyst in order to promote 

better catalyst function. Another 

technology to control surface 

temperature already used by some 

nonroad equipment manufacturers is 

water cooled exhaust systems.44 This 

approach is similar to the air-gapped 

system but uses engine coolant water to 

actively cool the exhaust system.

We thus do not believe that 

flammable dust concerns will prevent 

the use of either a NOX adsorber or a 

CDPF because catalyst temperatures are 

not expected to be unacceptably high 

and because remediation technologies 

exist to address these concerns. In fact, 

exhaust emission control technologies 

(i.e., aftertreatment) have already been 

applied on both an original equipment 

manufacturer (OEM) basis and for 

retrofit to nonroad equipment for use in 

potentially explosive environments. 

Many of these applications must 

undergo Underwriters Laboratory (UL) 

approval before they can be used.45

Therefore, while we appreciate the 

commenters’ concerns regarding safety, 

we remain convinced that the 

application of these emission control 

technologies will not compromise (or 

decrease) equipment safety.

We agree that nonroad equipment 

must be designed to address safety and 

durable performance for a wide range of 

operating conditions and applications 

that would not commonly be 

experienced by highway vehicles. We 

believe further as demonstrated by 

retrofit experiences around the world 

that technical solutions exist which 

allow catalyst-based emission control 

technologies to be applied to nonroad 

equipment. 

2. Are the Standards for Engines 75–750 

hp Feasible? 

There are three primary test 

provisions and associated standards in 

the Tier 4 program we are finalizing 

today. These are the Nonroad Transient 

Cycle (NRTC), the existing International 

Organization for Standardization (ISO) 

C1 steady-state cycle, and the highwaybased Not-To-Exceed (NTE) 

provisions.46 Under today’s rules, most 

nonroad diesel engines must meet the 

new standards for each of these three 

test cycles (the exceptions are noted 

below). Compliance on the transient test 

cycle includes weighting the results 

from a cold start and hot start test with 

the cold start emissions weighted at 1/

20 and hot start emissions weighted at 

19/20. Additionally, we have alternative 

optional test cycles including the 

existing ISO–D2 steady-state cycle and 

the Transportation Refrigeration Unit 

(TRU) cycle which a manufacturer can 

choose to use for certification in lieu of 

the NRTC and the ISO–C1, provided 

that the manufacturer can demonstrate 

to the Agency that the engine will only 

be used in a limited range of nonroad 

equipment with known operating 

conditions. A complete discussion of 

these various test cycles can be found in 

chapter 4.2, 4.3, and 4.4 of the RIA.

The standards we are finalizing today 

for nonroad engines with rated power 

from 75 to 750 hp are based upon the 

performance of technologies and 

standards for highway diesel engines 

which go into effect in 2007. As 

explained above, we believe these 

technologies, namely NOX adsorbers 

and catalyzed diesel particulate filters 

enabled by 15 ppm sulfur diesel fuel, 

can be applied to nonroad diesel 

engines in a similar manner as for 

highway diesel engines. The 

combustion process and the means to 

modify that process are fundamentally 

the same for highway and nonroad 

diesel engines regardless of engine size. 

The formation mechanism and quantity 

of pollutants formed in diesel engines 

are fundamental characteristics of 

engine design and are not inherently 

different for highway and nonroad 

engines regardless of engine size. The 

effectiveness of NOX adsorbers to 

control NOX emissions and CDPFs to 

control PM, NMHC, and CO emissions 

are determined by fundamental catalyst 

and filter characteristics. Therefore, we 

disagree with commenters who suggest 

that these highway technology based 

emission standards are infeasible for 

nonroad engines. We acknowledge the 

comments raised regarding the unique 

characteristics nonroad diesel engines 

which must be considered in setting 

these standards, and we have addressed 

those issues by allowing (where 

appropriate) for additional lead time or 

slightly less stringent standards for 

nonroad diesel engines in comparison to 

highway diesel engines (and likewise 

have made appropriate cost estimates to 

account for the technology and 

engineering needed to address these 

issues). 

PM Standard. We are finalizing a PM 

standard for engines in this category of 

0.01 g/bhp-hr based upon the emissions 

reductions possible through the 

application of a CDPF and 15 ppm 

sulfur diesel fuel. This is the same 

emissions level as for highway diesel 

engines in the heavy-duty 2007 

(HD2007) program (66 FR 5001, January 

18, 2001). While emission levels of 

engine-out soot (the solid carbon 

fraction of PM) may be somewhat higher 

for some nonroad engines when 

compared to highway engines, these 

emissions are virtually eliminated 

(reduced by 99 percent) by the CDPF 

technology. With application of the 

CDPF technology, the soluble organic 

fraction (SOF) portion of diesel PM is 

predicted to be all but eliminated. The 

primary emissions from a CDPF 

equipped engine are sulfate PM 

emissions formed from sulfur in diesel 

fuel. The emissions rate for sulfate PM 

is determined primarily by the sulfur 

level of the diesel fuel and the rate of 

fuel consumption. With the 15 ppm 

sulfur diesel fuel, the PM emissions 

level from a CDPF equipped nonroad 

diesel engine will be similar to the 

emissions rate of a comparable highway 

diesel engine. Therefore, the 0.01 g/bhphr emission level is feasible for nonroad 

engines tested on the NRTC cycle and 

on the steady-state cycles, ISO–C1 and 

ISO–D2. Put another way, control of PM 

using CDPF technology is essentially 

independent of duty cycle given active 

catalyst technology (for reliable 

regeneration and SOF oxidation), 

adequate control of temperature (for 

reliable regeneration) and low sulfur 

diesel fuel (for reliable regeneration and 

low PM emissions). While some 

commenters argued that PM filters will 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38987

47For engines between 75 and 100 horsepower, 

this may require re-optimization of the engine to 

lower NOX emissions if they are higher than 3.0, but 

we would not expect any new hardware beyond the 

Tier 3 hardware to be required in the Tier 4 

timeframe to accomplish this reduction.

48 ‘‘The Impact of Sulfur in Diesel Fuel on 

Catalyst Emission Control Technology,’’ report by 

the Manufacturers of Emission Controls 

Association, March 15, 1999, pp. 9 & 11. Copy 

available in EPA Air Docket A–2001–28 Item II–A–

67.

not enable the 0.01 PM emission 

standard for nonroad engines, we 

remain convinced by the demonstration 

of 0.01 or lower PM emission levels 

from a number of diesel engines 

described in the RIA, that the standard 

is feasible given the leadtime provided 

and the availability of 15 ppm sulfur 

diesel fuel. Likewise, the NTE 

provisions for nonroad engines are the 

same as for on-highway engines meeting 

an equivalent PM control level. The 

maximum PM emission level from a 

CDPF equipped diesel engine is 

primarily determined by the maximum 

fuel sulfur conversion level experienced 

at the highest operating conditions. As 

documented in RIA chapter 4.1.1.3, 

testing of diesel engines at conditions 

representative of the highest sulfate PM 

formation rates shows PM levels below 

the level required by the NTE provisions 

when tested on less than 15 ppm sulfur 

diesel fuel. 

NOX Standard. We are finalizing a 

NOX standard of 0.30 g/bhp-hr for 

engines in this category based upon the 

emission reductions possible from the 

application of NOX adsorber catalysts 

and the expected emission levels for 

Tier 3 compliant engines which form 

the baseline technology for Tier 4 

engines. The Tier 3 emission standards 

are a combined NMHC+NOX standard of 

3.0 g/bhp-hr for engines greater than 100 

hp and less than 750 horsepower. For 

engines less than 100 hp but greater 

than 50 horsepower the Tier 3 

NMHC+NOX emission standard is 3.5 g/

bhp-hr. We believe that in the timeframe of the Tier 4 emission standards, 

all engines from 75 to 750 hp can be 

developed to control NOX emissions to 

engine-out levels of 3.0 g/bhp-hr or 

lower.47 This means that all engines will 

need to apply Tier 3 emission control 

technologies (i.e., turbochargers, chargeair-coolers, electronic fuel systems, and 

for some manufacturers EGR systems) to 

get to this baseline level. As discussed 

in more detail in the RIA, our analysis 

of the NRTC and the ISO–C1 cycles 

indicates that the NOX adsorber catalyst 

can provide a 90 percent or greater NOX

reduction level on the cycles. The 

standard of 0.30 g/bhp-hr reflects a 

baseline emissions level of 3.0 g/bhp-hr 

and a greater than 90 percent reduction 

of NOX emissions through the 

application of the NOX adsorber 

catalyst. The additional lead time 

available to nonroad engine 

manufacturers and the substantial 

learning that will be realized from the 

introduction of these same technologies 

to highway diesel engines, plus the lack 

of any fundamental technical 

impediment, makes us confident that 

the new NOX standards can be met.

Given the fundamental similarities 

between highway and nonroad diesel 

engines, we believe that the NOX

adsorber technology developed for 

highway engines can be applied with 

equal effectiveness to nonroad diesel 

engines with additional developments 

in engine thermal management (as 

discussed in section II.B.2 above) to 

address the more widely varied nonroad 

operating cycles. In fact, as discussed 

previously, the NOX adsorber catalyst 

temperature window is particularly well 

matched to transient operating 

conditions as typified by the NRTC. 

As pointed out by some commenters, 

compliance with the NTE provisions 

will be challenging for the nonroad 

engine industry due to the diversity of 

nonroad products and operating cycles. 

However, the technical challenge is 

reduced somewhat by the 1.5 multiplier 

used to calculate the NTE standard as 

discussed in section III.J. Controlling 

NOX emissions under NTE conditions is 

fundamentally similar for both highway 

and nonroad engines. The range of 

control is the same and the amount of 

reduction required is also the same. We 

know of no technical impediment, nor 

were any raised by commenters, that 

would prevent achieving the NTE 

standard under the zone of operating 

conditions required by the NTE. 

NMHC Standard. Meeting the NMHC 

standard under the lean operating 

conditions typical of the biggest portion 

of NOX adsorber operation should not 

present any special challenges to 

nonroad diesel engine manufacturers. 

Since CDPFs and NOX adsorbers contain 

platinum and other precious metals to 

oxidize NO to NO2, they are also very 

efficient oxidizers of hydrocarbons. 

NMHC reductions of greater than 95 

percent have been shown over transient 

and steady-state test procedures.48

Given that typical engine-out NMHC is 

expected to be in the 0.40 g/bhp-hr 

range or lower for engines meeting the 

Tier 3 standards, this level of NMHC 

reduction will mean that under lean 

conditions emission levels will be well 

below the standard. For the same 

reasons, there is no obstacle which 

would prevent achieving the NTE 

standard.

Under the brief episodic periods of 

rich operation necessary to regenerate 

NOX adsorber catalysts, it is possible to 

briefly experience higher levels of 

NMHC emissions. Absent a controlling 

standard, it is possible that these NMHC 

emissions could be high. There are two 

possible means to control the NMHC 

emissions during these periods in order 

to meet the NMHC standard finalized 

today. Manufacturers can design the 

regeneration system and the oxygen 

storage (oxidation function under rich 

conditions) of the NOX adsorber catalyst 

such that the NMHC emissions are 

inherently controlled. This is similar to 

the control realized on today’s threeway automotive catalysts which also 

experience operation that toggles 

between rich and lean conditions. 

Secondly, a downstream clean-up 

catalyst can be used to oxidize the 

excess NMHC emissions to a level 

below the standard. This approach has 

been used in the NOX adsorber 

demonstration program at EPA 

described in the RIA. Our cost analysis 

for engines in the 75 to 750 hp category 

includes a cost for a clean-up catalyst to 

perform this function. 

Cold Start. The standards include a 

cold start provision for the NRTC 

procedure. This means that the results 

of a cold start transient test will be 

weighted with the emissions of a hot 

start test in order to calculate the 

emissions for compliance against the 

standards. In a change from the 

proposed rule, the weightings are 1/20 

cold start and 19/20 for the hot start (as 

opposed to the proposed weightings of 

1/10 and 9/10, respectively) as 

described more fully in chapter 4.2 of 

the RIA and section III.F below. Because 

exhaust temperatures are so important 

to catalyst performance, a cold start 

provision is an important tool to ensure 

that the emissions realized in use are 

consistent with the expectations of this 

program. Achieving this standard 

represents an additional technical 

challenge for NOX control and to a 

lesser extent CO and NMHC control 

(i.e., control of gaseous pollutants). PM 

control with a CDPF is not expected to 

be significantly impacted by cold-start 

provisions due to the primary filter 

mechanism being largely unaffected by 

temperature. 

With respect to achievability of the 

NOX, CO and NMHC standards, during 

the initial start and warmup period for 

a diesel engine, the exhaust 

temperatures are typically below the 

light-off temperature of a catalyst. As a 

result, exhaust stack emissions may 

initially be higher during this period of 

38988 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

49The combined weighted average performance is 

calculated as 1/20 (cold-start) + 19/20 (hot-start). 

Hence it can be seen that 1/20 (70%) + 19/20 (91%) 

= 90% and likewise that 1/20 (50%) + 19/20 (92%) 

= 90%.

operation. The cold start test procedure 

is designed to quantify these emissions 

to ensure that emission control systems 

are designed appropriately to minimize 

the contribution of cold-start emissions. 

Cold-start emissions can be minimized 

by improving catalyst technology to 

allow for control at lower exhaust 

temperatures (i.e., by lowering the 

catalyst light-off temperature) and by 

applying strategies to quickly raise the 

exhaust temperature to a level above the 

catalyst light-off temperature. 

There are a number of technologies 

available to the engine manufacturer to 

promote rapid warmup of the exhaust 

and emission control system. These 

include retarding injection timing, 

increasing EGR, and potentially late 

cycle injection, all of which are 

technologies we expect manufacturers 

to apply as part of the normal operation 

of the NOX adsorber catalyst system. 

These are the same technologies we 

expect highway engine manufacturers to 

use in order to comply with the 

highway cold start FTP provision which 

weights cold start emissions more 

heavily with a 1/7 weighting. As a 

result, we expect the transfer of highway 

technology to be well matched to 

accomplish this control need for 

nonroad engines as well. Using these 

technologies we expect nonroad engine 

manufacturers to be able to comply with 

the new Tier 4 NOX, CO, and NMHC 

emission standards including the cold 

start provisions of the transient test 

procedure.

One commenter has raised the 

concern that if diesel engines are no 

cleaner than 3 g/bhp-hr NOX and if NOX

adsorbers can be no more efficient than 

90 percent, then any increase in NOX

emissions above the 0.30 g/bhp-hr level 

on a cold-start test will make the 

emission standards infeasible. We 

should clarify, when discussing the 

emission reduction potential of the NOX

adsorber catalyst generically in the 

NPRM, we have sometimes simply 

stated that it is 90 percent or more 

effective without plainly saying that this 

refers to our expectation for average 

performance considering both cold and 

hot start emissions. More precisely then, 

we would expect lower effectiveness 

over the cold-start test procedure with 

somewhat higher effectiveness realized 

over the hot-start test procedure. 

Because of the relative weightings of the 

two test cycles (i.e., 1/20 for the coldstart and 19/20 for the hot-start), 

although the degradation of 

performance below 90 percent over the 

cold-start cycle can be substantially 

greater than the performance above 90 

percent realized over the hot-start cycle, 

the standards remain feasible. For 

example, even if the average NOX

adsorber performance over the cold-start 

test cycle was only 70 percent, the 

average NOX adsorber performance over 

the hot-start portion of the test cycle 

would only need to be 91 percent in 

order to realize a weighted average 

performance of 90 percent. Similarly, 

were the cold-start test cycle 

performance only 50 percent, the hotstart performance would only need to be 

92 percent in order to realize a weighted 

average performance of 90 percent.49

We are confident, based on our 

estimates of NOX adsorber performance 

over the nonroad test cycle summarized 

in the RIA, that NOX adsorber 

performance in excess of 92 percent can 

be expected in the time frame of the 

requirements finalized today.

Complying with the PM standard 

given consideration of the cold start test 

procedure is not expected to be as 

challenging as compliance with the NOX

standard. The effectiveness for PM 

filtration is not significantly effected by 

exhaust temperatures, as noted earlier. 

Thus, PM emission levels are similar 

over the cold and hot start tests. 

The standards that we are finalizing 

today for nonroad engines with rated 

horsepower levels from 75 to 750 hp are 

based upon the same emission control 

technologies, clean 15 ppm or lower 

sulfur diesel fuel, and relative levels of 

emission control effectiveness as the HD 

2007 emission standards. We have given 

consideration to the diversity of 

nonroad equipment for which these 

technologies must be developed and the 

timing of the Tier 3 emissions standards 

in determining the appropriate timing 

for the Tier 4 standards. Based upon the 

availability of the emission control 

technologies, the proven effectiveness of 

the technologies to control diesel 

emissions to these levels, the technology 

paths identified here to address 

constraints specific to nonroad 

equipment, and the additional lead time 

afforded by the timing of the standards, 

we have concluded that the standards 

are technically feasible in the leadtime 

provided. 

3. Are the Standards for Engines Above 

750 hp Feasible? 

The preceding discussion of the 

standards for engines of 75 to 750 hp 

highlights the main thrust of our new 

Tier 4 program, a focus on realizing very 

low on-highway like emission levels for 

the vast majority of nonroad diesel 

engines. The emission standards and the 

combination of technologies that we 

expect will be used to meet those 

standards are virtually identical to the 

HD2007 program for on-highway 

engines. The following three sections 

(II.B.3, II.B.4, and II.B.5) describing the 

feasibility of the standards for engines 

above 750 hp, from 25 to 75 hp, and 

below 25 hp, while following the same 

pattern and objective, take additional 

consideration of the fact that engines 

and equipment in these size categories 

have no direct on-highway equivalent 

and differ from highway engines in 

substantial ways that cause us to reach 

differing conclusions regarding the 

appropriate standards and timing for 

those standards. Whether in scale, or 

use, or operating conditions, the 

characteristics of these engines and 

equipment are such that we have taken 

particular consideration of them in 

setting the timing and level of the 

standards. The remainder of this section 

(II.B.3) discusses what makes the above 

750 hp category unique and why the 

standards which we are adopting are 

technologically feasible. 

a. What Makes the Over 750 hp Category 

Different?

The first and most obvious difference 

for engines in this horsepower category 

is scale. No on-highway engines come 

close to the size of the largest engines 

in this category which can produce in 

excess of 3,000 horsepower, consist of 

16 or more cylinders and have 12 or 

more turbochargers. The engines, and 

the equipment that they power, are 

quite simply significantly larger than 

any on-highway diesel engine. Many 

commenters argued that emission 

technologies from on-highway vehicles 

could not be simply scaled up for these 

larger engines and that if they were, the 

consequences of this resizing would 

include structural weakness and 

reduced system robustness. As 

discussed below, our review of the 

information provided with these 

comments and our subsequent analysis 

of the technical characteristics of some 

emission control components has led us 

to conclude that revised emission 

standards (based on performance of 

different technologies that those whose 

performance formed the basis for the 

proposed rule) from those we proposed 

for this horsepower category are 

appropriate and available. 

We have concluded that it is 

appropriate to distinguish between two 

broad categories of engines over 750 hp 

grouped by application: Mobile 

machines and generator sets. Mobile 

machines include the very largest 

nonroad equipment used in mining 

trucks and large excavation equipment. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38989

The environment and operating 

conditions (especially for vibration) 

represent the harshest application into 

which nonroad engines are applied. 

Design considerations for technologies 

used to control emissions from engines 

in these applications must first consider 

robustness to the harsh environments 

that will be experienced in use. In 

contrast, mobile nonroad generator sets 

operate in relatively good operating 

environments. In addition, while mobile 

nonroad generator sets can, and are 

moved between operating locations, 

they are always stationary during actual 

operation. Thus the levels of vibration 

and the general environment for engine 

operation are significantly less 

demanding for generator sets than for 

mobile machines. Also the dynamic 

range of operation is significantly 

narrower and less demanding for 

generator sets. Designed to operate at a 

set engine speed, synchronous to the 

frequency cycle desired for electric 

generation (i.e., 1200 or 1800 RPM for 

60 hz), diesel engines designed for 

generator set applications can be 

optimized for operation in this narrow 

range. 

We have given specific consideration 

to the unique engineering challenges for 

engines in this horsepower category in 

determining the appropriate emission 

standards set in today’s action. We have 

also taken into account the important 

differences between generator set 

applications and other mobile 

applications in developing standards for 

this horsepower category. 

b. Are the New Tier 4 Standards for 

Over 750 hp Engines Technologically 

Feasible? 

The emission standards described in 

section II.A above describe a 

comprehensive program for engines 

over 750 hp that give consideration to 

both the physical size of these engines 

and the applications into which these 

engines are applied. Engines in this 

power category must show compliance 

with the C1 or D2 steady-state test 

cycles as appropriate as well as with the 

NTE provisions finalized today. As 

described in sections III.F and III.G, 

these engines will not be tested over the 

NRTC nor will they be subject to a coldstart test procedure. The feasibility 

discussion in this section describes 

expected performance of the engines 

over the required test cycles and the 

NTE. This section will briefly 

summarize the feasibility analysis 

contained in the RIA for these engines. 

PM Standards. Beginning in 2011 all 

nonroad diesel engines above 750 hp 

must meet a PM standard of 0.075 g/

bhp-hr. We believe that this PM 

standard is feasible based on the 

substantial reductions in sulfate PM due 

to the use of 15 ppm sulfur diesel fuel 

and the potential to improve the 

combustion process to reduce PM 

emissions formed in the engine. 

Specifically, we believe based on the 

evidence in the RIA that increasing fuel 

injection pressure, improving electronic 

controls and optimizing the combustion 

system geometry will allow engine 

manufacturers to meet this level of PM 

control in 2011. Some engine 

manufacturers have in fact indicated to 

the Agency that this level of control 

represents an achievable goal by 2011. 

One commenter argued however, that a 

more relaxed standard of 0.1 g/bhp-hr 

based on today’s on-highway diesel 

engine performance would be 

appropriate. We disagree with this 

comment, believing that given the 

substantial leadtime available and the 

potential for further improvements in 

combustion systems, that it is 

appropriate to set a forward looking PM 

standard of 0.075 g/bhp-hr. Conversely, 

other commenters argued that future onhighway PM filter technology should be 

applied to this class of engines as early 

as 2011 (i.e., that a standard of 0.01 g/

bhp-hr PM is appropriate). While we 

agree with the commenters that in the 

long-term it will be appropriate to apply 

filter-based emission control 

technologies to these engines, we do not 

agree that such control is appropriate as 

early as 2011. As the following section 

explains, we believe that there are 

remaining technical challenges to be 

addressed prior to the application of PM 

filters to these engines and that it is 

necessary to allow additional leadtime 

for those challenges to be addressed.

Beginning in 2015 all nonroad 

engines over 750 hp must meet stringent 

PM filter technology-based emission 

standards of 0.02 g/bhp-hr for engines 

used in generator set applications and 

0.03 g/bhp-hr for engines used in mobile 

machine applications. We are 

predicating these emission standards 

based on the application of a different 

form of diesel particulate filter 

technology, a wire or fiber mesh depth 

filter rather than a ceramic wall flow 

filter. Wire mesh filters are capable of 

reducing PM by 70 percent or more. We 

have not based these standards upon the 

more efficient (>90 percent) control 

possible from ceramic wall flow style 

PM filters, because we believe that the 

application of the wall flow filter 

technology on engines of this size has 

not been adequately demonstrated at 

this time. While it would certainly be 

possible to apply the ceramic-based 

technology to these larger engines, we 

cannot today conclude with certainty 

that such systems would be as robust inuse as needed (see earlier discussion in 

section II.B.1.b). Considering the 

information available to the Agency 

today, we believe it appropriate to set 

the long term PM standard for these 

very large engines based on technologies 

which we can project with confidence 

will give high levels of emission 

reduction, durability, and robustness 

when scaled to these very large engine 

sizes. 

The 0.01 g/bhp-hr difference in the 

PM emission standards between the 

standard for generator sets and for other 

mobile applications in this category 

(0.01 g/bhp-hr lower for generator sets) 

reflects our expectation that engine-out 

emissions from generator sets can be 

reduced below the level for mobile 

machines due to generator set operation 

at a single engine speed. Without the 

need to provide full power and control 

over the wider range of possible 

operating conditions that mobile 

machines must deliver, we believe that 

the air handling systems (especially the 

turbocharger match to the engine) can 

be improved to provide a moderate 

reduction in engine-out emissions. This, 

coupled with the reduction afforded by 

the PM filter technology, would allow 

generator sets to meet a more stringent 

0.02 g/bhp-hr standard. Diesel engines 

designed for use in generator sets 

meeting this standard will need to 

demonstrate compliance over the 

appropriate test cycles, either the ISO 

C1 or D2 tests. As discussed in RIA 

chapter 4.3.6.2, PM emission rates are 

nearly the same for steady-state testing 

or for alternative ramped modal cycle 

(RMC) testing. These test cycles, like the 

engines, are designed to be 

representative of the range of operation 

expected from a generator set. 

As discussed previously, PM emission 

control over the NTE region for PM filter 

equipped diesel engines is 

predominantly a function of sulfate 

formation at high exhaust temperatures. 

Given that fuel consumption (and thus 

sulfur) consumption rates on a brake 

specific basis tend to be lower for 

engines above 750 hp, we can conclude 

that the increase in PM emissions over 

the NTE region will likely be lower for 

these engines than for engines meeting 

the 0.01 g/bhp-hr standard. Thus, we 

can conclude based on the evidence in 

the RIA that compliance with the NTE 

provisions for PM is feasible for engines 

over 750 hp.

Although we are projecting that 

manufacturers will comply with this 

standard using a slightly less efficient 

PM filter technology, we remain 

convinced that 15 ppm sulfur diesel fuel 

38990 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

50Emerachem EMxTM Datasheet—Describing the 

EMx IC (Internal Combustion) System Air Docket 

OAR–2003–0012–0948.

51See for example 68 FR 28375, May 23, 2003.

52Fleetguard StableGuardTM Urea Premix for use 

with SCR NOX Reduction Systems, Air Docket A–

2001–28 Item IV–A–04.

will still be a necessity for this 

technology to be applied. Regardless of 

the filter media chosen for the PM filter, 

the filter will still require catalyst-based 

systems to ensure robust regeneration 

and adequate control of the SOF portion 

of PM. As these catalyst-based 

technologies are adversely impacted by 

sulfur in diesel fuel as described in II.C 

below, 15 ppm sulfur diesel fuel will be 

required in order to ensure compliance 

with the PM standards finalized here for 

engines over 750 hp. 

NOX Standards. As with the PM 

standards, we are setting distinct NOX

standards for this category of engines 

reflecting particular concerns with the 

application of technologies to engines of 

this size and our desire to realize 

significant NOX reductions as soon as 

possible. There are two sets of NOX

standards that we are finalizing today, a 

0.50 g/bhp-hr NOX standard for engines 

used in generator set applications and a 

2.6 g/bhp-hr NOX standard for mobile 

machines. 

For engines used in generator set 

applications we are finalizing a 0.50 g/

bhp-hr standard that goes into effect for 

engines above 1,200 hp in 2011 and in 

2015 for engines above 750 hp. We see 

two possible technology options for 

manufacturers to meet these standards. 

First, compliance with this NOX

standard will be possible through the 

application of a dual bed NOX adsorber 

system (i.e., a system that allows 

regeneration to be controlled external to 

the engine). This approach can work 

well for generator set applications 

where packaging constraints and 

vibration issues are greatly reduced. 

Since this approach requires limited 

engine redesign, it would be an 

appealing approach for these large 

engines sold in very low volumes. NOX

adsorber systems for stationary power 

generation (systems that never move) 

are available today on a retrofit basis, 

and we believe with further 

development to address packaging and 

durability concerns that similar systems 

can be applied to mobile generator 

sets.50

A second possible technology option 

for engines in this category is urea SCR. 

The challenges for urea SCR in mobile 

applications are well known, 

specifically a lack of urea infrastructure 

to provide urea refill at diesel fueling 

locations and a need to ensure that urea 

is added as necessary in use.51 These 

hurdles can be addressed more easily 

for generator sets than for virtually any 

other mobile source emission category. 

Although nonroad generator sets are 

mobile, in operation they remain at a 

fixed location where fuel is delivered to 

them periodically (i.e., a 1,200 hp 

generator set does not and cannot pull 

into the local truck stop for a fuel fill). 

Therefore, the same infrastructure that 

currently provides urea delivery for 

stationary power generation can also be 

utilized for nonroad generator set 

applications.52 It would still remain for 

the manufacturer to develop a 

mechanism to ensure urea refill, but we 

believe it is likely that solutions to this 

problem can be addressed through 

monitoring as for stationary source 

emissions or other technology options 

(e.g., a urea interlock that precludes 

engine operation without the presence 

of urea).

Either of these technology approaches 

could be applied to realize an 

approximately 90 percent reduction 

from the current Tier 2 emission levels 

for these engines in order to comply 

with an emission standard of 0.50 g/

bhp-hr. The 0.50 g/bhp-hr standard is 

different from our proposed level of 0.30 

g/bhp-hr reflecting the changes we have 

made in this final action to the 

implementation schedule for this class 

of engines and therefore our projections 

for a technology path. At the time of the 

proposal, we projected that this class of 

engine would follow an integrated twostep technology path. We are now 

finalizing a program that anticipates the 

application of 90 percent effective NOX

control to diesel engines for use in 

generator sets without a reduction in 

engine-out NOX levels beyond Tier 2. 

This reflects our desire to focus on 

getting the largest emission reduction 

possible in the near term (beginning in 

2011) from these engines. Where we 

believe additional technology 

development is needed, as is the case 

for mobile machines over 750 hp, we are 

finalizing a more gradual emission 

reduction technology pathway 

anticipating further reductions in 

engine-out NOX emissions followed by 

a possible future action to reduce 

emissions further as described in 

section II.A. RIA chapter 4.1.2.3.3 

describes NOX adsorber effectiveness to 

control NOX emissions including 

effectiveness over the NTE region. The 

discussion there is equally applicable to 

engines above and below 750 hp 

regarding NTE performance because the 

key attribute of NTE performance 

(exhaust temperature) is similar for 

engines across the horsepower range. 

For engines over 750 hp used in 

mobile machines (and for 750–1200 hp 

generator sets from 2011 until 2015) we 

are setting a new NOX standard of 2.6 

g/bhp-hr beginning in 2011. We are 

predicating this level of emission 

control (an approximate 50 percent 

reduction from Tier 2) on an improved 

combustion system and proven enginebased NOX control technologies. 

Specifically, we believe manufacturers 

can apply either proven cooled EGR 

technology, or apply additional levels of 

engine boost, a limited form of Miller 

Cycle operation, and increased 

intercooling capacity for the two-stage 

turbocharging systems that are used on 

these engines. The second approach for 

in-cylinder emissions reductions is 

similar in description at least to the 

Caterpillar ACERT technology which we 

believe could be another path for 

compliance with this standard. We are 

projecting a modest increase in heatrejection to the engine coolant for these 

in-cylinder emission control solutions 

and have accounted for those costs in 

our cost analysis. These approaches for 

NOX reduction have been proven for onhighway diesel engines since 2003 

including compliance with NTE 

provisions similar to those for nonroad 

engines finalized here. We can conclude 

based on the on-highway experience 

that the NTE provisions can be met for 

engines in this horsepower category. 

One commenter suggested that a 

standard of 3.5 g/bhp-hr would be 

achievable in this time frame. As 

described here, we believe that further 

emission reductions to 2.6 g/bhp-hr are 

possible in this time frame. Engine 

manufacturers have indicated to the 

Agency that they believe this level of incylinder emission control can be 

realized for these very large diesel 

engines by 2011. We are deferring any 

decision on setting aftertreatment based 

NOX standards for mobile machinery 

above 750 hp to allow additional time 

to evaluate the technical issues 

involved, as discussed in section II.A.4.

NMHC Standards. We are setting two 

different NMHC emission standards for 

engines in this category linked to the 

technologies used to control PM 

emissions. We are requiring all engines 

over 750 hp to meet an NMHC standard 

of 0.30 g/bhp-hr starting in 2011. As 

explained earlier, in 2011 all engines 

over 750 hp must meet a PM emission 

standard of 0.075 g/bhp-hr. We are 

projecting that manufacturers will meet 

this standard through improvements in 

in-cylinder emission control of PM (in 

conjunction with use of 15 ppm sulfur 

diesel fuel). These PM control 

technologies, increased fuel injection 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38991

53The 2013 NOX+NMHC standard is a new 

standard only for engines in the 25–50 hp category. 

For engines in the 50–75 hp category, 3.5 g/bhp-hr 

NOX+NMHC is the existing Tier 3 emission 

standard which will now also apply across the new 

regulated test cycles (e.g., NRTC).

54As discussed in section II.B., manufacturers can 

choose, at their option, to pull-ahead the 2013 PM 

standard for the 50–75 hp engines to 2012, in which 

case they do not need to comply with the 

transitional 2008 PM standard.

55However, a manufacturer can choose to comply 

over the TRU cycle including the associated NTE 

provisions. Compliance with the NTE for engines 

selecting to certify on the TRU cycle is 

straightforward because by the very nature of the 

products, their operation is directly limited to a 

small range of operating modes over which 

compliance with the emission standard has already 

been shown.

pressure, improved electronic controls 

and enhanced combustion system 

designs will concurrently lower NMHC 

emissions to the NMHC standard of 0.30 

g/bhp-hr. 

The second step in our NMHC 

standards is to a level of 0.14 g/bhp-hr, 

consistent with the standard for onhighway diesels beginning in 2007 and 

for other nonroad diesel engines from 75 

to 750 hp beginning in 2011. This 

change in NMHC standards is timed to 

coincide with the requirement that 

engines over 750 hp meet stringent PM 

emission standards that we believe will 

require the use of catalyst-based diesel 

particulate filter systems. These systems 

are expected to incorporate oxidation 

catalyst functions to control the SOF 

portion of diesel PM and to promote 

robust soot regeneration within the 

filter. This same oxidation function is 

highly effective at controlling NMHC 

emissions (the RIA documents 

reductions of more than 80 percent) and 

will result in a reduction in NMHC 

emissions below the 0.14 g/bhp-hr 

standard for these engines. As the high 

level of NMHC control afforded by the 

application of this technology is broadly 

realized across the wide range of diesel 

engine operation, it will allow for 

compliance with the NTE provisions as 

well. Although in practice we expect 

that NMHC emissions may be lower 

than the 0.14 g/bhp-hr standard, we 

have not finalized a more stringent 

standard for NMHC in order to maintain 

consistency with the NMHC standard 

we are finalizing for engines from 75 hp 

to 750 hp, for which the NMHC 

standard is in part based on feasibility 

considerations for NOX adsorber catalyst 

systems that use diesel fuel to 

regenerate themselves (with consequent 

increased NMHC emissions during 

regeneration events). We believe this is 

appropriate considering our expectation 

that NOX adsorber technology will be 

found feasible for all nonroad engines 

over 750 hp. 

4. Are the New Tier 4 Standards for 

Engines 25–75 hp Feasible? 

As discussed in section II.B, our 

standards for 25–75 hp engines consist 

of a 2008 transitional standard and longterm 2013 standards. The transitional 

standard is a 0.22 g/bhp-hr PM 

standard. The 2013 standards consist of 

a 0.02 g/bhp-hr PM standard and a 3.5 

g/bhp-hr NMHC+NOX standard.53 As 

discussed in section II.A, the 

transitional standard is optional for 50–

75 hp engines, as the 2008 

implementation date is the same as the 

effective date of the Tier 3 standards. 

Manufacturers may decide, at their 

option, not to undertake the 2008 

transitional PM standard, in which case 

their implementation date for the 0.02 g/

bhp-hr PM standard begins in 2012. The 

remainder of this section discusses what 

makes the 25–75 hp category unique 

and why the standards are 

technologically feasible.

a. What Makes the 25–75 hp Category 

Unique? 

As EPA explained in the proposal, 

and as discussed in section II.A, one 

cannot assume that highway 

technologies are automatically 

transferable to 25–75 hp nonroad 

engines. In contrast with 75–750 hp 

engines, which share similarities in 

displacement, aspiration, fuel systems, 

and electronic controls with highway 

diesel engines, engines in the 25–75 hp 

category have a number of technology 

differences from the larger engines. 

These include a higher percentage of 

indirect-injection fuel systems, and a 

low fraction of turbocharged engines 

(see generally RIA chapter 4.1). The 

distinction in the under 25 hp category 

is even more pronounced, with no 

turbocharged engines, nearly one-fifth of 

the engines have two cylinders or less, 

and a significant majority of the engines 

have indirect-injection fuel systems. 

The distinction is particularly marked 

with respect to electronically controlled 

fuel systems. These are commonly 

available in the power categories greater 

than or equal to 75 hp, but, based on the 

available certification data as well as 

our discussions with engine 

manufacturers, we believe there are very 

limited numbers, if any, in the 25–75 hp 

category (and no electronic fuel systems 

in the less than 25 hp category). The 

research and development work being 

performed today for the heavy-duty 

highway market is targeted at engines 

which are 4-cylinders or more, directinjection, electronically controlled, 

turbocharged, and with per-cylinder 

displacements greater than 0.5 liters. As 

discussed in more detail below, as well 

as in section II.B.5 (regarding the under 

25 hp category), these engine 

distinctions are important from a 

technology perspective and warrant a 

different set of standards for the 25–75 

hp category (as well as for the under 25 

hp category). 

b. Are the New Tier 4 Standards for 25–

75 hp Engines Technologically Feasible? 

This section will discuss the technical 

feasibility of both the interim 2008 PM 

standard and the 2013 standards. For an 

explanation and discussion of the 

implementation dates, please refer to 

section II.A. 

i. 2008 PM Standards 54

We are today finalizing the interim 

PM control program as proposed for 

engines in the power category from 25–

75 hp. The new PM standard for 2008 

is 0.22 g/bhp-hr over the appropriate 

steady-state test cycle (the NRTC and 

NTE do not apply, for the reasons 

explained below).55 The standard is 

premised on the use of 500 ppm sulfur 

diesel fuel and the potential for 

improvements in engine-out emission 

control where possible or the 

application of a diesel oxidation catalyst 

(DOC). Some commenters raised 

concerns that this level of emission 

control from diesel engines may not be 

possible in 2008 without fuel cleaner 

than 500 ppm or without changes in the 

Tier 3 NMHC+NOX emission standards. 

Other commenters, including some 

engine manufacturers, supported this 

interim program. As explained in the 

following sections, we continue to 

believe that these standards are 

appropriate and feasible in the leadtime 

provided.

Engines in the 25–50 hp category 

must meet Tier 2 NMHC+NOX and PM 

standards today. We have examined the 

model year 2004 engine certification 

data for engines in the 25–50 hp 

category. These data indicate that over 

35 percent of the engine families meet 

the 2008 0.22 g/bhp-hr PM standard and 

5.6 g/bhp-hr NMHC+NOX standard 

(unchanged from Tier 2 in 2008) today 

(even without 500 ppm sulfur diesel 

fuel). At the time of the proposal, we 

had analyzed model year 2002 data for 

this power range, which at that time 

indicated approximately 10 percent of 

the engine families complied with the 

2008 requirements. The most recent 

data for model year 2004 indicates 

substantial progress has already been 

made in just the past few year in 

lowering emissions from these engines. 

This is primarily due to the 

implementation of the Tier 2 standards 

in model year 2004. The model year 

38992 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

56The Tier 1 and Tier 2 standards for this power 

category must be demonstrated on one of a variety 

of different engine test cycles. The appropriate test 

cycle is selected by the engine manufacturer based 

on the intended in-use application of the engine.

57EPA Memorandum ‘‘Documentation of the 

Availability of Diesel Oxidation Catalysts on 

Current Production Nonroad Diesel Equipment,’’

William Charmley. Copy available in EPA Air 

Docket A–2001–28 Item II–B–15.

2001 certification data also showed the 

2008 standard were achievable using a 

mix of engine technologies (IDI and DI, 

turbocharged and naturally aspirated) 

tested on a variety of certification test 

cycles.56 A detailed discussion of these 

data is contained in the RIA.

At the time of the proposal, no 

certification data was available for 

engines in the 50–75 hp range, because 

those engines were not subject to a Tier 

1 standard and were not subject to Tier 

2 standards until model year 2004. We 

have now had an opportunity to analyze 

the model year 2004 certification data 

for engines in the 50–75 hp range. These 

data shows that more than 70 percent of 

the engine families in this power range 

are capable of meeting the 2008 PM 

standards today. However, most of these 

engines do not yet meet the 3.5 g/bhphr Tier 3 NMHC+NOX standard, which 

is required in 2008. We expect that to 

comply with the Tier 3 standards, these 

engines will use technologies such as 

EGR and electronically controlled fuel 

injection systems (and we included the 

costs of these technologies in assessing 

the costs of the Tier 3 standards). These 

technologies have been shown to reduce 

NOX emissions by 50 percent without 

increasing PM emissions. The 

certification data show that for the 70 

percent of the engine families which 

meet the 2008 Tier 4 PM standard (0.22 

g/bhp-hr), a NOX reduction of less than 

50 percent is needed for most of these 

engines to meet the 2008 Tier 4 

NMHC+NOX standard. A detailed 

discussion of these data is contained in 

the RIA.

In addition to using known engine-out 

techniques, we also project that the 

2008 standards can be achieved with the 

use of DOCs. DOCs are passive flowthrough emission control devices which 

are typically coated with a precious 

metal or a base-metal washcoat. DOCs 

have been proven to be durable in use 

on both light-duty and heavy-duty 

diesel applications. In addition, DOCs 

have already been used to control 

carbon monoxide on some nonroad 

applications.57 Some commenters raised 

concerns that DOCs could actually 

increase PM emissions when used on 

500 ppm sulfur diesel fuel due to the 

potential for oxidation of the sulfur in 

the fuel to sulfate PM. While we agree 

with the commenters that sulfur 

reductions are important to control PM 

and in the long term that a 15 ppm fuel 

sulfur level will be the best solution, we 

disagree with the assertion that the 

amount of sulfate PM formed from a 

DOC will be such that compliance with 

the 0.22 g/bhp-hr standard will be 

infeasible. While commenters shared 

data showing increased PM emissions 

when DOCs are used, we have similarly 

found data (included in the RIA) that 

shows an overall reduction in 

emissions. To understand this 

discrepancy, it is important to realize 

that DOCs can be designed for operation 

on a range of fuel sulfur levels. The 

lower the fuel sulfur level, the more 

effective the PM oxidation function, but 

even at 500 ppm sulfur a properly 

designed DOC will realize a net 

reduction in PM emissions. DOCs have 

been successfully applied to diesel 

engines for on-highway applications for 

PM control on 500 ppm fuel since 1994 

through careful design of the DOC 

trading-off PM reduction potential and 

sulfur oxidation potential. The RIA 

contains additional analysis describing 

DOC function, and its expected 

effectiveness when applied to nonroad 

diesel engines.

Other commenters argued that the 

application of DOC to diesel engines in 

this category would lead to an even 

greater emission reduction than 

estimated in our proposal, thus allowing 

the Agency to finalize a lower PM 

standard. While we agree that some 

engines will have lower emissions than 

required to meet the standard and that 

in the long term (once 15 ppm fuel is 

widely available) the PM emissions will 

be further reduced, we do not believe 

that an emission level lower than 0.22 

g/bhp-hr will be generally feasible in 

2008 due to the sulfur level of diesel 

fuel of 500 ppm sulfur and the potential 

for sulfate PM formation. 

In summary then, there are two likely 

means by which companies can comply 

with the interim 2008 PM standard. 

First, engine manufacturers can comply 

with this standard using known engineout techniques (e.g., optimizing 

combustion chamber designs, fuelinjection strategies). In fact, some 

fraction of engines already would 

comply with the emission standard. In 

addition, some engine manufacturers 

may choose to use diesel oxidation 

catalysts to meet this standard. Our cost 

analysis makes the conservative 

assumption (i.e., the higher cost 

assumption) that all manufacturers will 

use DOC catalysts to comply with these 

emission standards. 

Based on the existence of a number of 

engine families which already comply 

with the 0.22 g/bhp-hr PM standard 

(and the 2008 NMHC+NOX standard), 

and the availability of well known PM 

reduction technologies such as engineout improvements and diesel oxidation 

catalysts, we project that the 0.22 g/bhphr PM standards is technologically 

feasible by model year 2008. 

ii. 2013 Standards 

For engines in the 25–50 range, we are 

finalizing standards commencing in 

2013 of 3.5 g/bhp-hr for NMHC+NOX

and 0.02 g/bhp-hr for PM. For the 50–

75 hp engines, we are finalizing a 0.02 

g/bhp-hr PM standard which will be 

implemented in 2013, and for those 

manufacturers who choose to pullahead the standard one-year, 2012 

(manufacturers who choose to pullahead the 2013 standard for engines in 

the 50–75 range do not need to comply 

with the transitional 2008 PM standard). 

A more complete discussion of the 

options available to manufacturers and 

the nature of the transitional program 

can be found in section II.A. These 

standards are measured using the NRTC 

and steady-state tests. These engines 

also will be subject to the NTE starting 

with the 2013 model year.

PM Standard. For engines in the 

horsepower category from 25–75 hp, we 

are finalizing a PM standard of 0.02 g/

bhp-hr based on the application of 

catalyzed diesel particulate filters to 

engines in this category. We received a 

wide range of comments on our 

proposal with some arguing that the 

emission standard could be met earlier 

than 2013 and others arguing that while 

technically possible to apply PM filters 

to engines in this category, that it was 

not economically or otherwise practical 

to do so. 

The RIA discusses in detail catalyzed 

diesel particulate filters, including 

explanations of how CDPFs reduce PM 

emissions, and how to apply CDPFs to 

nonroad engines. We have concluded, 

as explained above, that CDPFs can be 

used to achieve the 0.01 g/bhp-hr PM 

standard for 75–750 hp engines. As also 

discussed in section II.B.2.a above, PM 

filters will require active back-up 

regeneration systems for many nonroad 

applications above and below 75 hp 

because low temperature operation is an 

issue across all power categories. One 

commenter raised concerns regarding 

the low exhaust temperatures possibly 

experienced by small nonroad engines 

and argued that such low temperatures 

make PM filter regeneration impossible 

absent the use of active regeneration 

technologies. We agree with the 

commenter that active regeneration, as 

described previously, may be necessary 

and have included the cost for such 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38993

58 ‘‘The Optimized Deutz Service Diesel 

Particulate Filter System II,’’ H. Houben et. al., SAE 

Technical Paper 942264, 1994 and ‘‘Development of 

a Full-Flow Burner DPF System for Heavy Duty 

Diesel Engines,’’ P. Zelenka et. al., SAE Technical 

Paper 2002–01–2787, 2002.

systems in our cost estimates. See 

section II.B.1.a. A number of secondary 

technologies are likely required to 

enable proper regeneration, including 

possibly electronic fuel systems such as 

common rail systems which are capable 

of multiple post-injections which can be 

used to raise exhaust gas temperatures 

to aid in filter regeneration. 

Particulate filter technology, with the 

requisite trap regeneration technology, 

can also be applied to engines in the 25 

to 75 hp range. As explained earlier, the 

fundamentals of how a filter is able to 

reduce PM emissions are not a function 

of engine power, so that CDPF’s are just 

as effective at capturing soot emissions 

and oxidizing SOF on smaller engines 

as on larger engines. The PM filter 

regeneration systems described in 

section II.B.2 are also applicable to 

engines in this size range and are 

likewise feasible. There are specific trap 

regeneration technologies which we 

believe engine manufacturers in the 25–

75 hp category may prefer over others. 

For example, some manufacturers may 

choose to apply an electronicallycontrolled secondary fuel injection 

system (i.e., a system which injects fuel 

into the exhaust upstream of a PM 

filter). Such a system has been 

commercially used successfully by at 

least one nonroad engine manufacturer, 

and other systems have been tested by 

technology companies.58 However, we 

recognize that the application of these 

technologies will be challenging and 

will require additional time to develop. 

We therefore disagree with commenters 

who say that the standard could be met 

sooner and have decided to finalize the 

implementation schedule as proposed.

As we proposed, we are finalizing a 

slightly higher PM standard (0.02 g/bhphr rather than 0.01) for engines in this 

power category. As discussed in the 

preamble to the proposed rule and in 

some detail in the RIA, with the use of 

a CDPF, the PM emissions emitted by 

the filter are primarily derived from the 

fuel sulfur (68 FR 28389–28390, May 23, 

2003). The smaller power category 

engines tend to have higher fuel 

consumption per unit of work than 

larger engines. This occurs for a number 

of reasons. First, the lower power 

categories include a high fraction of IDI 

engines which by their nature consume 

approximately 15 percent more fuel 

than a DI engine. Second, as engine 

displacements get smaller, the engine’s 

combustion chamber surface-to-volume 

ratio increases. This leads to higher 

heat-transfer losses and therefore lower 

efficiency and higher fuel consumption. 

In addition, frictional losses are a higher 

percentage of total power for the smaller 

displacement engines which also results 

in higher fuel consumption. Because of 

the higher fuel consumption rate, we 

expect a higher particulate sulfate level, 

and therefore we have set a 0.02 g/bhphr standard for engines in this power 

category. We did not receive any 

comments on our proposal arguing that 

the technical basis for this higher PM 

level was inappropriate. 

The 0.02 g/bhp-hr standard applies to 

all of the test cycles applicable to 

engines in this power category (i.e., the 

NRTC including cold-start, the ISO C1, 

D2 and G2 cycles and the alternative 

TRU and RMC cycles, as appropriate). 

Our feasibility analysis summarized 

here and detailed in the RIA takes into 

consideration these different test cycles. 

The control technologies work in a 

similar manner and provide the same 

high level of emission control across 

these different operating regimes 

including the NTE. The most significant 

effect on emission performance is 

related to sulfate PM formation at high 

load, high temperature operating 

conditions. As the RIA details, this level 

of high sulfate formation rate is not high 

enough to preclude compliance with the 

PM emission standard with 15 ppm fuel 

sulfur on the regulated test cycles nor is 

it high enough to preclude compliance 

with the NTE provisions. At higher fuel 

sulfur levels however, compliance with 

the PM emission standard would not be 

feasible. 

The majority of negative comments on 

our proposal to set a PM standard based 

on the control possible from PM filter 

technologies focused on the economic 

and technical challenges to apply these 

technologies and the major engine 

technology enabler, electronic fuel 

systems, to smaller diesel engines. Some 

commenters acknowledged that the 

technologies were ‘‘technically feasible’’

but not economically feasible or 

practical for engines in this power 

category. While we acknowledge that 

the application of these technologies to 

diesel engines in this horsepower 

category will be challenging and have 

given consideration to this in setting the 

timing for the new standard, we believe 

that the technical path for compliance is 

clear and that the cost estimates we 

have made for these engines accurately 

represent this technical path. As 

discussed in the RIA, at the time of the 

proposal we projected no significant 

penetration of electronic fuel systems 

for engines in the 50–100 hp range prior 

to the Tier 3 standards (2008). Since the 

proposal, new information regarding 

model year 2004 engine certifications 

has become available. That data show 

18 percent of the engines in the 75–100 

hp category already use electronically 

controlled fuel systems. In model year 

2001, no engines in this category used 

electronic fuel systems. We believe this 

strong trend toward the introduction of 

more advanced electronic fuel system 

technology will continue in the future 

and, importantly for engines in the 25–

75 hp category, will extend to ever 

smaller engine categories due to the user 

benefits provided by the technology and 

the falling cost for such systems. 

However, acknowledging the substantial 

time between now and 2012, and the 

potential for technologies to mature 

faster or slower than we are estimating 

here, we have decided to conduct a 

technology review of these standards as 

described in section II.A above. This 

review will provide EPA with another 

opportunity to confirm that the 

technical path laid out here is indeed 

progressing in a manner consistent with 

our expectations. 

NMHC+NOX Standard. As we 

proposed, we are finalizing a 3.5 g/bhphr NMHC+NOX standard for engines in 

the 25–50 hp range for 2013. We 

received limited comments arguing that 

the NMHC+NOX standard should be less 

stringent. Like the PM standard, some 

commenters argued that the NOX

standard would be costly and 

complicated, although not necessarily 

infeasible to apply. Other commenters 

argued that the NOX standard for 

engines in this category like the new 

standard for larger engines, should be 

based upon the application of advanced 

NOX catalyst-based technologies. As 

described previously in section II.A, we 

do not believe that the catalyst-based 

NOX technologies have matured to a 

state were we can accurately define a 

feasible technical path for compliance 

for engines in this power category. We 

intend to revisit this question in our 

technology review and if we find that a 

viable technical path can be described 

we will consider the appropriateness of 

a more stringent catalyst-based 

standard.

The new standard aligns the 

NMHC+NOX standard for engines in 

this power range with the Tier 3 

standard for engines in the 50–75 hp 

range which are implemented in 2008. 

EPA’s recent Staff Technical paper 

which reviewed the technological 

feasibility of the Tier 3 standards 

contains a detailed discussion of a 

number of technologies which are 

capable of achieving a 3.5 g/bhp-hr 

standard. These include cooled EGR, 

uncooled EGR, as well as advanced inVerDate jul<14>2003 17:54 Jun 28, 2004 Jkt 203001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
38994 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

59See section 2.2 through 2.3 in ‘‘Nonroad Diesel 

Emission Standards—Staff Technical Paper,’’ EPA 

Publication EPA420–R–01–052, October 2001. Copy 

available in EPA Air Docket A–2001–28.

60See section 8 of ‘‘Control of Emissions of Air 

Pollution from 2004 and Later Model Year HeavyDuty Highway Engines and Vehicles: Response to 

Comments,’’ EPA document EPA420–R–00–011, 

July 2000, and chapter 3 of ‘‘Regulatory Impact 

Analysis: Control of Emissions of Air Pollution 

from Highway Heavy-duty Engines,’’ EPA 

document EPA420–R–00–010, July 2000. Copies of 

both documents available in EPA docket A–2001–

28.

61The Tier 1 and Tier 2 standards for this power 

category must be demonstrated on one of a variety 

of different engine test cycles. The appropriate test 

cycle is selected by the engine manufacturer based 

on the intended in-use application(s) of the engine.

cylinder technologies relying on 

electronic fuel systems and 

turbocharging.59 These technologies are 

capable of reducing NOX emissions by 

as much as 50 percent. Given the Tier 

2 NMHC+NOX standard of 5.6 g/bhp-hr, 

a 50 percent reduction would allow a 

Tier 2 engine to comply with the 3.5 g/

bhp-hr NMHC+NOX standard set in this 

action. Therefore, we are projecting that 

3.5 g/bhp-hr NOX+NMHC standard is 

feasible with the addition of cooled EGR 

(the basis for our cost analysis) or other 

equally effective in-cylinder NOX

control technology as described in the 

RIA and our recent Staff Technical 

Paper. In addition, because this 

NMHC+NOX standard is concurrent 

with the 0.02 g/bhp-hr PM standards 

which we project will be achievable 

with the use of particulate filters, engine 

designers will have significant 

additional flexibility in reducing NOX

because the PM filter will lessen the 

traditional concerns with the engine-out 

NOX vs. PM trade-off.

Our recent highway 2004 standard 

review rulemaking (see 65 FR 59896, 

October 2000) demonstrated that a 

diesel engine with advanced electronic 

fuel injection technology as well as NOX

control technology such as cooled EGR 

is capable of complying with an NTE 

standard set at 1.25 times the laboratorybased FTP standard. We project that the 

same technology (electronic fuel 

systems and cooled EGR) are also 

capable for engine in the 25–75 hp range 

of complying with the NTE standard of 

4.4 g/bhp-hr NMHC+NOX (1.25 × 3.5) in 

2013. This is based on the broad NOX

reduction capability of cooled EGR 

technology, which is capable of 

reducing NOX emissions across the 

engine operating map (including the 

NTE region) by at least 30 percent even 

under high load conditions.60

Based on the information available to 

EPA and presented here, and giving 

appropriate consideration to the lead 

time necessary to apply the technology 

as well, we have concluded the 0.02 g/

bhp-hr PM standard for engines in the 

25–75 hp category and the 3.5 g/bhp-hr 

NMHC+NOX standards for the 25–50 hp 

engines are achievable. 

5. Are the Standards for Engines Under 

25 hp Feasible? 

As we explained at proposal and as 

discussed in section II.A, the new PM 

standard for engines less than 25 hp is 

0.30 g/bhp-hr beginning in 2008. The 

certification test cycle for this standard 

is the ISO C1 cycle (or other appropriate 

steady-state test as defined by the 

engine’s intended use) from 2008 

through 2012. Beginning in 2013, the 

NRTC (with cold-start) and the NTE will 

also apply to engines in this category. 

As discussed below, we are not setting 

a new standard more stringent than the 

existing Tier 2 NMHC+NOX standard for 

this power category at this time. This 

section describes what makes the less 

than 25 hp category different and why 

the standards are technologically 

feasible. 

a. What Makes the Under 25 hp 

Category Unique? 

As we explained at proposal and in 

the RIA, nonroad engines less than 25 

hp are the least sophisticated nonroad 

diesel engines from a technological 

perspective. All of the engines currently 

sold in this power category lack 

electronic fuel systems and 

turbochargers. Nearly 20 percent of the 

products have two-cylinders or less, and 

14 percent of the engines sold in this 

category are single-cylinder products, a 

number of these have no batteries and 

are crank-start machines, much like 

today’s simple walk behind lawnmower 

engines. In addition, given what we 

know today and taking into account the 

Tier 2 standards which have not yet 

been implemented, we are not 

projecting any significant penetration of 

advanced engine technology, such as 

electronically controlled fuel systems, 

into this category in the next 5 to 10 

years.

b. What Data Indicate That the 

Standards Are Feasible? 

We project the Tier 4 PM standard can 

be met by 2008 based on: The existence 

of a large number of engine families 

which meet the new standards today; 

the use of engine-out reduction 

techniques; and the use of diesel 

oxidation catalysts. 

Engines in the less than 25 hp 

category must meet Tier 1 NMHC+NOX

and PM standards today. We have 

examined the 2004 model year engine 

certification data for nonroad diesel 

engines less than 25 hp. These data 

indicate that a number of engine 

families meet the new Tier 4 PM 

standard (and the 2008 NMHC+NOX

standard, unchanged from Tier 2) today. 

The data show that 31 percent of the 

engine families are at or below the PM 

standard today, while meeting the 2008 

NMHC+NOX standard. At the time of 

the proposal, we examined the model 

year 2002 certification, which indicated 

approximately 30 percent of the engine 

families were at or below the 2008 

emission standards. This certification 

data includes both IDI and DI engines, 

as well as a range of certification test 

cycles.61 Many of the engine families are 

certified well below the Tier 4 standard 

while meeting the 2008 NMHC+NOX

level. Specifically, for the model year 

2002 data, 15 percent of the engine 

families are cleaner than the new Tier 

4 PM standard by more than 20 percent. 

The public certification data indicate 

that these engines do not use 

turbocharging, electronic fuel systems, 

exhaust gas recirculation, or 

aftertreatment technologies. We saw 

little change between the model year 

2002 and 2004 data for this power 

category primarily because both model 

years are subject to the Tier 1 standards, 

and many engine families are simply 

carried over from the previous model 

year. Tier 2 standards for these engines 

will not be implemented until model 

year 2005. A detailed discussion of 

these data is contained in the RIA.

In summary then, there are two likely 

means by which companies can comply 

with the 2008 PM standard for engines 

under 25 hp. First, engine 

manufacturers can comply with this 

standard using known engine-out 

techniques (e.g., optimizing combustion 

chamber designs, fuel-injection 

strategies). In fact, some fraction of 

engines already would comply with the 

emission standard. In addition, some 

engine manufacturers may choose to use 

diesel oxidation catalysts to meet this 

standard. Our cost analysis makes the 

conservative assumption (i.e., the higher 

cost assumption) that all manufacturers 

will use DOCs to comply with these 

emission standards. 

As discussed in section II.A, we are 

finalizing supplemental test procedures 

and standards (nonroad transient test 

cycle and not-to-exceed requirements) 

for engines in the under 25 hp category 

beginning in 2013. The supplemental 

test procedures and standards will 

apply not only to PM, but also to 

NMHC+NOX. The engine technologies 

necessary to comply with the 

supplemental test procedures and 

standards are the same as the 

technology necessary to comply with 

the 2008 standard, and we have given 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38995

consideration to these test conditions in 

setting this standard. The range of 

operating conditions covered by the 

various test cycles and the mechanism 

for emission control over those ranges of 

operation are substantially similar 

allowing us to conclude that emission 

control will be substantially uniform 

across these test procedures. However, 

we are delaying the implementation of 

the supplemental test procedures and 

standards until 2013, as proposed, in 

order to implement these supplemental 

requirements on the larger powered 

nonroad engines before the smallest 

power category. (There were no adverse 

comments on this aspect of the 

proposed rule.) This will also provide 

engine manufacturers with additional 

time to install any emission testing 

equipment upgrades they may need in 

order to implement the new nonroad 

transient test cycle. 

Based on the existence of a number of 

engine families which already comply 

with the new Tier 4 PM standard (and 

the 2008 NMHC+NOX standard), and 

the availability of PM reduction 

technologies such as improved 

mechanical fuel systems, combustion 

chamber improvements, and in 

particular diesel oxidation catalysts, we 

project that the 0.30 g/bhp-hr PM 

standards is technologically feasible by 

model year 2008. 

6. Meeting the Crankcase Emissions 

Requirements 

The most common way to eliminate 

crankcase emissions has been to vent 

the blow-by gases into the engine air 

intake system, so that the gases can be 

recombusted. Prior to the HD2007 

rulemaking, we have required that 

crankcase emissions be controlled only 

on naturally aspirated diesel engines. 

We had made an exception for 

turbocharged diesel engines (both 

highway and nonroad) because of 

concerns in the past about fouling that 

could occur by routing the diesel 

particulates (including engine oil) into 

the turbocharger and aftercooler. 

However, this is an environmentally 

significant exception since most 

nonroad equipment over 75 hp use 

turbocharged engines, and a single 

engine can emit over 100 pounds of 

NOX, NMHC, and PM from the 

crankcase over its lifetime. 

Given the available means to control 

crankcase emissions, we eliminated this 

exception for highway engines in 2007 

and similarly in today’s action are 

eliminating the exception for nonroad 

diesel engines as well. A number of 

commenters supported this provision 

noting that the necessary technologies 

are already in application in Europe and 

will be required for heavy-duty diesel 

trucks in the United States beginning in 

2007. 

We anticipate that the diesel engine 

manufacturers will be able to control 

crankcase emissions through the use of 

closed crankcase filtration systems or by 

routing unfiltered blow-by gases directly 

into the exhaust system upstream of the 

emission control equipment. However, 

the provisions have been written such 

that if adequate control can be had 

without ‘‘closing’’ the crankcase then 

the crankcase can remain ‘‘open.’’

Compliance would be ensured by 

adding the emissions from the crankcase 

ventilation system to the emissions from 

the engine control system downstream 

of any emission control equipment. We 

have limited this provision for 

controlling emissions from open 

crankcases to turbocharged engines, 

which is the same as for heavy-duty 

highway diesel engines. 

Some commenters in essence argued 

that the Agency was obligated to show 

that all potential compliance paths were 

feasible and absent that showing that 

the Agency should reconsider this 

provision. Our feasibility analysis is 

based on the use of closed crankcase 

technologies designed to filter crankcase 

gases sending the clean gas to the engine 

intake for combustion and returning the 

oil filtered from the gases to the engine 

crankcase. These systems are proven in 

use and the use of this technology to 

eliminate crankcase emissions is 

acceptable to demonstrate compliance. 

The other options, the option to vent 

crankcase emissions into the exhaust or 

to continue to vent crankcase emissions 

to the atmosphere provided the total 

emissions including tailpipe and 

crankcase emissions do not exceed the 

standards are provided as alternate 

solutions that are clearly effective to 

control emissions (i.e., if the emissions 

are measured and are below the 

standard they are adequately 

controlled). The commenter suggests 

however, that they may not be able to 

control the emissions to the required 

level using these alternate approaches. 

In this case, a manufacturer would need 

to use the primary approach identified 

by EPA, closing the crankcase and 

routing the filtered gases to the engine’s 

intake (this is the approach we used in 

the cost analysis summarized in section 

VI). We have allowed the alternative 

approaches at the recommendation of 

some in industry, because if they prove 

to be effective we accept that resulting 

total emissions will be acceptably low.

C. Why Do We Need 15 ppm Sulfur 

Diesel Fuel? 

The new Tier 4 emission standards for 

most categories of nonroad diesel 

engines are predicated on the 

application of advanced diesel emission 

control technologies that are being 

developed for on-highway diesel 

engines to meet the HD2007 emission 

standards, namely catalyzed diesel 

particulate filters and NOX adsorber 

catalysts. Sulfur in diesel fuel 

significantly impacts the durability, 

efficiency and cost of applying these 

technologies. Therefore, we required 

that on-highway diesel fuel produced 

for use in 2007 or newer on-highway 

diesel engines have sulfur content no 

higher than 15 ppm. Based on the same 

concerns outlined in the 2007 

rulemaking, discussed in the proposal at 

68 FR 28395–28400, set out in the RIA, 

and briefly summarized below, we 

today are finalizing a requirement that 

diesel fuel for nonroad engines be 

reduced to no higher than 15 ppm 

beginning in 2010. There was consensus 

among commenters that such standards 

were necessary if the proposed 

standards based on advanced diesel 

emission control technologies were to 

be achievable. 

Sulfur in diesel fuel acts to poison the 

oxidation function of platinum-based 

catalysts including DOCs and CDPFs 

reducing the oxidation efficiency 

substantially, especially at lower 

temperatures. This poisoning limits the 

effectiveness of DOCs and CDPFs to 

oxidize CO and HC emissions. Of even 

greater concern is the reduction in NO 

oxidation efficiency of the CDPF due to 

sulfur poisoning. NO oxidation to NO2

is a fundamental mechanism for PM 

filter regeneration necessary to ensure 

robust operation of the CDPF (i.e., to 

prevent filter plugging). Sulfur 

poisoning from sulfur in diesel fuel at 

levels higher than 15 ppm has been 

shown to increase the likelihood of PM 

filter failure due to a depressed NO to 

NO2 oxidation efficiency of the CDPF. 

The RIA documents substantial field 

experience in Europe regarding this 

phenomenon. 

Sulfur in diesel fuel can itself be 

oxidized to form sulfate PM emitted into 

the environment. CDPFs in particular 

are designed for robust regeneration and 

are highly effective at oxidizing sulfur to 

sulfate PM (approaching 100 percent 

conversion under some circumstances). 

The sulfate PM emissions from a CDPF 

when operated on 350 ppm fuel can be 

so high as to actually increase the PM 

emission rate above the baseline level 

for an engine without a PM filter. In 

spite of more than ten years of research, 

38996 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

no effective means has been found to 

provide the NO to NO2 oxidation 

efficiency needed to ensure robust filter 

regeneration without similarly 

increasing efficiency to oxidize sulfur to 

sulfate PM. Conversely, technologies 

developed to suppress sulfate PM 

formation (e.g., the addition of 

vanadium to DOCs designed to operate 

on 500 ppm sulfur fuel) also suppress 

NO to NO2 formation. Therefore, it is 

not possible to apply the robust CDPF 

technology to achieve the PM standards 

without first having lower diesel fuel 

sulfur levels. The RIA documents 

substantial test data showing the impact 

of sulfur in diesel fuel on total PM 

emissions due to an increase in sulfate 

PM emissions. 

Sulfur from diesel fuel likewise 

poisons the storage function of the NOX

adsorber catalyst. Sulfur in the exhaust 

in the form of SOX is stored on the 

catalyst in the same way as the NOX

emissions are stored. Unfortunately, due 

to the chemical properties of the 

materials, the sulfur is stored 

preferentially to the NOX and will 

actually displace the stored NOX

emissions. The stored sulfur is not 

easily removed from the catalyst. A 

sulfur removal step, called a 

desulfation, can be accomplished by 

raising exhaust temperatures to a very 

high level while simultaneously 

increasing the reductant content of the 

exhaust above the stoichiometric level 

(i.e., more fuel than oxygen in the 

exhaust). This process can be effective 

to remove sulfur from the catalyst but at 

the expense of damaging the catalyst 

slightly. Over the lifetime of a diesel 

engine the cumulative damage from 

repeated desulfation events, as would be 

required if operation on higher than 15 

ppm sulfur fuels were attempted, would 

lead to excessive damage and loss in 

NOX control. The RIA contains an 

extensive description of this phenomena 

including the tradeoff between higher 

fuel sulfur levels and more frequent 

desulfation events. 

The damage that sulfur inflicts on 

both the CDPF and NOX adsorber 

technologies not only reduces their 

effectiveness but also impacts the fuel 

economy of their application. Reduced 

soot regeneration potential due to sulfur 

poisoning would lead to the need for 

more frequent active CDPF regeneration. 

As each active soot regeneration event 

consumes fuel, more frequent 

regeneration events with higher fuel 

sulfur levels leads to an increase in fuel 

consumption. Similarly, higher fuel 

sulfur levels would necessitate more 

frequent NOX adsorber desulfation 

events and thus higher fuel 

consumption. An estimate of the impact 

of higher fuel sulfur levels on fuel 

economy due to more frequent 

desulfation events can be found in the 

RIA. 

For all of the reasons documented in 

the RIA and summarized here, we 

remain convinced that a cap of 15 ppm 

fuel sulfur is necessary for both onhighway and nonroad diesel engines in 

order to apply the advanced emission 

control technologies necessary to meet 

the emission standards we are finalizing 

today.

III. Requirements for Engine and 

Equipment Manufacturers 

This section describes the regulatory 

changes being made for the engine and 

equipment compliance program. A 

number of specific items are discussed 

in this section, including test 

procedures, certification fuels, and 

credit program provisions. These 

provisions are important in that they 

help us ensure the engines and 

equipment will meet the new 

requirements throughout their entire 

useful life, thus achieving the expected 

emission and public health benefits. 

One of the most obvious changes from 

the Tier 2/Tier 3 program is that the 

regulations for Tier 4 engines have been 

written in a plain language format. They 

are structured to contain the provisions 

that are specific to nonroad compression 

ignition (CI) engines in a new part 1039, 

and to apply the general provisions of 

existing parts 1065 and 1068. The plain 

language regulations, however, are not 

intended to significantly change the 

compliance program, except as 

specifically noted in today’s notice and 

supporting documents. These plain 

language regulations will only apply for 

Tier 4 engines. The changes from the 

existing nonroad program are described 

below along with other notable aspects 

of the compliance program. 

As described below, we received 

comments from a broad range of 

commenters for some of these issues. 

For other issues, we received only 

manufacturer comments or no 

comments at all. See Chapter 9 of the 

Summary and Analysis of Comments for 

more information about the comments 

received and our responses to them. 

A. Averaging, Banking, and Trading 

1. Why Are We Adopting an ABT 

Program for Tier 4 Nonroad Diesel 

Engines? 

EPA has included averaging, banking, 

and trading (ABT) programs in almost 

all of its recent mobile source emission 

control programs. Our existing 

regulations for nonroad diesel engines 

include an ABT program (40 CFR 89.201 

through 89.212). With today’s action we 

are retaining the basic structure of the 

existing nonroad diesel ABT program, 

though we are adopting a number of 

changes to accommodate 

implementation of the newly adopted 

Tier 4 emission standards. The ABT 

program is intended to enhance the 

ability of engine manufacturers to meet 

the stringent standards adopted today. 

The program is also structured to limit 

production of very high-emitting 

engines and to avoid unnecessary delay 

of the transition to the new exhaust 

emission control technologies. 

We view the ABT program as an 

important element in setting emission 

standards that are appropriate under 

CAA section 213(a) with regard to 

technological feasibility, lead time, and 

cost, given the wide breadth and variety 

of engines covered by the standards. As 

we noted at proposal, if there are engine 

families that will be particularly costly 

or have a particularly hard time coming 

into compliance with the standard, this 

flexibility allows the manufacturer to 

adjust the compliance schedule 

accordingly, without special delays or 

exceptions having to be written into the 

rule. Emission-credit programs also 

create an incentive for the early 

introduction of new technology (for 

example, to generate credits in early 

years to create compliance flexibility for 

later engines), which allows certain 

engine families to act as trailblazers for 

new technology. This can help provide 

valuable information to manufacturers 

on the technology before they apply the 

technology throughout their product 

line. This early introduction of clean 

technology improves the feasibility of 

achieving the standards and can provide 

valuable information for use in other 

regulatory programs that may benefit 

from similar technologies. Early 

introduction of such engines also 

secures earlier emission benefits. 

In an effort to make information on 

the ABT program more available to the 

public, we intend to issue an annual 

report summarizing use of the ABT 

program by engine manufacturers. The 

information contained in the reports 

will be based on the information 

submitted to us by engine 

manufacturers in their annual reports, 

and summarized in a way that protects 

the confidentiality of individual engine 

manufacturers. We believe this 

information will also be helpful to 

engine manufacturers by giving them a 

better indication of the availability of 

credits.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38997

2. What Are the Provisions of the ABT 

Program? 

The following section describes the 

ABT provisions being adopted with 

today’s action. Areas in which we have 

made changes to the proposed ABT 

program are highlighted. A complete 

summary of comments received on the 

proposed ABT program and our 

response to those comments are 

contained in the Summary and Analysis 

of Comments document for this rule. 

The ABT program has three main 

components. Averaging means the 

exchange of emission credits between 

engine families within a given engine 

manufacturer’s product line. Engine 

manufacturers divide their product line 

into ‘‘engine families’’ that are 

comprised of engines expected to have 

similar emission characteristics 

throughout their useful life. Averaging 

allows a manufacturer to certify one or 

more engine families at levels above the 

applicable emission standard, but below 

a set upper limit. However, the 

increased emissions must be offset by 

one or more engine families within that 

manufacturer’s product line that are 

certified below the same emission 

standard, such that the average 

emissions from all the manufacturer’s 

engine families, weighted by engine 

power, regulatory useful life, and 

production volume, are at or below the 

level of the emission standard. (The 

inclusion of engine power, useful life, 

and production volume in the averaging 

calculations is designed to reflect 

differences in the in-use emissions from 

the engines.) Averaging results are 

calculated for each specific model year. 

The mechanism by which this is 

accomplished is certification of the 

engine family to a ‘‘family emission 

limit’’ (FEL) set by the manufacturer, 

which may be above or below the 

standard. An FEL that is established 

above the standard may not exceed an 

upper limit specified in the ABT 

regulations. Once an engine family is 

certified to an FEL, that FEL becomes 

the enforceable emissions limit for all 

the engines in that family for purposes 

of compliance testing. Averaging is 

allowed only between engine families in 

the same averaging set, as defined in the 

regulations. 

Banking means the retention of 

emission credits by the engine 

manufacturer for use in future model 

year averaging or trading. Trading 

means the exchange of emission credits 

between nonroad diesel engine 

manufacturers which can then be used 

for averaging purposes, banked for 

future use, or traded to another engine 

manufacturer. 

The existing ABT program for 

nonroad diesel engines covers 

NMHC+NOX emissions as well as PM 

emissions. With today’s action and as 

proposed, we are making the ABT 

program available for the Tier 4 NOX

standards (and NMHC+NOX standards, 

where applicable) and the Tier 4 PM 

standards. As proposed, ABT will not be 

available for the Tier 4 NMHC standards 

for engines above 75 horsepower. 

Engine manufacturers commented 

that ABT will most likely be necessary 

for the Tier 4 CO standards, given the 

reductions in PM and NOX emissions. In 

the Tier 4 proposal, we proposed minor 

changes in CO standards for some 

engines solely for the purpose of 

helping to consolidate power categories 

and improving administrative 

efficiency. However, as noted earlier in 

section II.A.6, we have withdrawn this 

aspect of the proposal. We do note, 

however, that we are applying new 

certification tests to all pollutants 

covered by the rule, the result being that 

Tier 4 engines will have to certify to CO 

standards measured by the transient test 

(including a cold start component), and 

the NTE. However, as shown in RIA 

chapter 4.1.1.2 (see e.g., note F), we 

believe that application of Tier 4 

technologies will lead to a reduction in 

CO emissions over the Tier 3 baseline. 

We thus believe the CO standards will 

be readily achievable under the 

transient test and NTE. Moreover, we 

believe that there will not be any 

associated costs: The CO standards can 

be met without any further 

technological improvements (i.e., 

improvements other than those already 

necessary to meet the Tier 4 standards) 

and these tests will already be used for 

certification. Since CO standards 

measured by the new certification tests 

are achievable without cost, there is no 

basis for allowing ABT because no 

additional lead time is needed. 

As noted earlier, the existing ABT 

program for nonroad diesel engines 

includes FEL caps—limits on how high 

the emissions from credit-using engine 

families can be. No engine family may 

be certified above these FEL caps. These 

limits provide manufacturers with 

compliance flexibility while protecting 

against the 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. 

With today’s action, we are taking a 

different approach because the level of 

the standards being adopted for most 

engines are significantly lower than the 

current level of the standards. The 

transfer to new technology is feasible 

and appropriate. Thus, as proposed, to 

ensure that the ABT provisions are not 

used to continue unnecessarily to 

produce old-technology high-emitting 

engines under the new program, the FEL 

caps are not, in general, set at the 

previous standards. Exceptions have 

been made for the NMHC+NOX standard 

for engines between 25 and 50 

horsepower effective in model year 2013 

and the NOX standards applicable to 

engines above 750 horsepower in 2011, 

where we are using the estimated NOXonly equivalent for the previously 

applicable NMHC+NOX standard for the 

FEL cap since the gap between the 

previous and newly adopted standards 

is approximately 40 percent (rather than 

90 percent for engines between 75 and 

750 horsepower), and because the 

technology basis for these standards can 

be a form of engine-out control, like the 

previous tier standards. This approach 

of setting FEL caps at lower levels than 

the previously applicable standards is 

consistent with the level of the FEL 

limits set in the 2007 on-highway 

heavy-duty diesel engine program.

STAPPA/ALAPCO supported the 

proposed FEL caps. The Engine 

Manufacturers Association (EMA) 

commented that EPA should eliminate 

the FEL caps altogether. They believe 

FEL caps are unnecessary because the 

zero-sum requirement of ABT will 

ensure that there are no adverse 

emission impacts. Short of eliminating 

the FEL caps, they commented that EPA 

should set FEL caps at the level of the 

previous standards, not the more 

stringent levels proposed. With today’s 

action, EPA is adopting the FEL caps as 

proposed, with some exceptions for 

engines above 750 horsepower (where 

we are adopting different standards than 

originally proposed) and for phase-in 

engines between 75 and 750 horsepower 

(where we have adopted an option for 

manufacturers to certify to alternative 

NOX standards during the phase-in 

period). We continue to believe that it 

is important to ensure that technology 

turns over in a timely manner and that 

manufacturers do not continue 

producing large numbers of highemitting, old technology engines once 

the Tier 4 standards become fully 

effective. (As noted below, however, we 

are adopting provisions that allow 

manufacturers to produce a limited 

number of 75 to 750 horsepower engines 

for a limited period that are certified 

with FELs as high as the previous tier 

of standards.) For the Tier 4 standards, 

where the standards are being reduced 

by an order of magnitude, we believe 

this goal to be particularly important, 

and in keeping with the technologyVerDate jul<14>2003 17:54 Jun 28, 2004 Jkt 203001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
38998 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

forcing provisions of section 213(a). It 

simply would not be appropriate to 

have long-term FEL caps that allowed 

engines to indefinitely have emissions 

as high as ten times the level of the 

standard. 

For engines between 75 and 750 

horsepower certified using the phase-in/

phase-out approach, there will be two 

separate sets of engines with different 

FEL caps. For engines certified to the 

existing (Tier 3) NMHC+NOX standards 

during the NOX phase-in (referred to 

generally as ‘‘phase-out’’ engines), the 

FEL cap for these pollutants will (almost 

necessarily) be the existing FEL caps 

adopted in the October 1998 Tier 3 rule. 

For engines certified to the newly 

adopted Tier 4 NOX standard during the 

phase-in (referred to generally as 

‘‘phase-in’’ engines), we have revised 

the proposed FEL cap to be 0.60 g/bhphr, consistent with the proposed longterm Tier 4 NOX FEL cap. As described 

in section II.A.2.c above, we have used 

the creation of alternative NOX

standards for engines between 75 and 

750 horsepower to restate the phase-in/

phase-out concept as a path truly 

focused on achieving high-efficiency 

NOX aftertreatment during the phase-in 

years. Setting the NOX FEL cap at 0.60 

g/bhp-hr for phase-in engines will 

ensure this happens if a manufacturer 

chooses to certify to the phase-in 

provisions. In contrast, the higher FEL 

caps which we proposed (see 68 FR 

28467–28468) would not have achieved 

this objective. 

Beginning in model year 2014 when 

the Tier 4 NOX standards for engines 

between 75 and 750 horsepower take 

full effect, we are adopting a NOX FEL 

cap of 0.60 g/bhp-hr for all engines. We 

reiterate that given the fact that the Tier 

4 NOX standard is approximately a 90 

percent reduction from the existing 

standards for engines between 75 and 

750 horsepower, we do not believe the 

previous standard is appropriate as the 

FEL cap for engines having to comply 

with the Tier 4 NOX standard of 0.30 g/

bhp-hr. We believe that the NOX FEL 

caps will ensure that manufacturers 

adopt NOX aftertreatment technology 

across all of their engine designs. 

For the interim PM standards for 

engines between 25 and 75 horsepower 

effective in model year 2008 and for the 

Tier 4 PM standards for engines below 

25 horsepower, we are adopting the 

previously applicable Tier 2 PM 

standards for the FEL caps (which do 

vary within the 25 to 75 horsepower 

category) because the gap between the 

previous standards and the newly 

adopted standards is approximately 50 

percent (rather than in excess of 90 

percent for engines between 75 and 750 

horsepower), and the technology basis 

for the 2008 PM standards can be a form 

of engine-out control, like the previous 

tier standard. For the Tier 4 PM 

standard effective in model year 2013 

for engines between 25 and 75 

horsepower, we are adopting a PM FEL 

cap of 0.04 g/bhp-hr, and for the Tier 4 

PM standard effective in model years 

2011 and 2012 for engines between 75 

and 750 horsepower, we are adopting a 

PM FEL cap of 0.03 g/bhp-hr. As with 

the Tier 4 NOX standards for these 

engines, given the fact that these Tier 4 

aftertreatment-based PM standards for 

engines between 25 and 750 horsepower 

are over 90 per cent more stringent than 

the previous standards, we do not 

believe the previous standards are 

appropriate as FEL caps once the Tier 4 

standards take effect. We believe that 

the newly adopted PM FEL caps will 

ensure that manufacturers adopt PM 

aftertreatment technology across all of 

their engine designs (except for a 

limited number of engines), yet will still 

provide substantial flexibility in 

meeting the standards. 

The final Tier 4 standards for engines 

above 750 horsepower have been 

revised from the proposal. We similarly 

revised a number of the proposed ABT 

provisions for engines above 750 

horsepower. Beginning in 2011, all 

engines above 750 horsepower will be 

required to meet a NOX standard of 2.6 

g/bhp-hr, except for those above 1200 

horsepower used in generator sets 

which will be required to meet a NOX

standard of 0.50 g/bhp-hr. The NOX FEL 

cap for the 2011 standards will be 4.6 

g/bhp-hr, which is an estimate of the 

NOX emissions level that is expected 

under the combined NMHC+NOX

standards that apply with the previously 

applicable tier for engines above 750 

horsepower. Beginning in 2011, all 

engines above 750 horsepower will have 

to meet a PM standard of 0.075 g/bhphr. The PM FEL cap for the 2011 PM 

standard will be the previouslyapplicable Tier 2 standard of 0.15 g/

bhp-hr. As noted above, because the 

2011 NOX and PM standards are 

approximately 50 percent lower than 

the previous standard (rather than in 

excess of 90 percent for engines between 

75 and 750 horsepower), and for most 

engines are based on performance of the 

same type of technology (engine-out), 

we are adopting the previously 

applicable Tier 2 standards for the FEL 

caps. 

Beginning in model year 2015, the 

0.50 g/bhp-hr NOX standard will apply 

to all engines above 750 horsepower 

used in generator sets. Beginning in 

model year 2015, the PM standard drops 

to 0.02 g/bhp-hr for engines greater than 

750 horsepower used in generator sets 

and 0.03 g/bhp-hr for engines greater 

than 750 horsepower used in other 

machines. Consistent with the Tier 4 

FEL caps for lower horsepower 

categories where the new standards are 

significantly lower than the previously 

applicable standards and reflect 

performance of aftertreatment 

technology, we are adopting a NOX FEL 

cap of 0.80 g/bhp-hr for engines used in 

generator sets and PM FEL caps of 0.04 

g/bhp-hr for engines used in generator 

sets and 0.05 g/bhp-hr for engines used 

in other machines (i.e., mobile 

machines). We believe that the FEL caps 

for engines above 750 horsepower will 

ensure that manufacturers adopt PM 

aftertreament technology across all of 

their engine designs and NOX

aftertreatment for generator sets once 

the 2015 standards are adopted, while 

allowing for some meaningful use of 

averaging beginning in 2015.

Table III.A–1 contains the FEL caps 

and the effective model year for the FEL 

caps (along with the associated 

standards adopted for Tier 4). It should 

be noted that for Tier 4, where we are 

adopting a new transient test for most 

engines, as well as retaining the current 

steady-state test, the FEL established by 

the engine manufacturer will be used as 

the enforceable limit for the purpose of 

compliance testing under both test 

cycles. In addition, under the NTE 

requirements, the FEL times the 

appropriate multiplier will be used as 

the enforceable limit for the purpose of 

such compliance testing. This is 

consistent with how FELs are used for 

compliance purposes in the 2007 onhighway heavy-duty diesel engine 

program.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 38999

TABLE III.A–1.—FEL CAPS FOR THE TIER 4 STANDARDS IN THE ABT PROGRAM (G/BHP-HR) 

Power category Effective model year NOX standard NOX FEL cap PM 

standard 

PM 

FEL 

cap 

hp <25 (kW <19) ....................................................... 2008+ .............................. a 5.6 7.8 a for <11hp ................

7.1 a for >11hp 

c 0.30 0.60 

25 ≤ hp < 50 (19 ≤ kW <37) ..................................... 2008–2012 ...................... a 5.6 7.1 a ................................. 0.22 0.45 

25 ≤ hp < 50 (19 ≤ kW <37) ..................................... 2013+ .............................. b3.5 5.6 b ................................. 0.02 f 0.04 

50 ≤ hp < 75 (37 ≤ kW <56) ..................................... 2008–2012 d .................... a 3.5 5.6 a ................................. 0.22 0.30 

50 ≤ hp < 75 (37 ≤ kW <56) ..................................... 2013+ e ............................ a 3.5 5.6 a ................................. 0.02 f 0.04 

75 ≤ hp < 175 (56 ≤ kW <130) ................................. 2012+ .............................. 0.30 0.60 fgh ............................ 0.01 f 0.03

175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ............................ 2011+ .............................. 0.30 0.60 fgh ............................ 0.01 f 0.03 

hp > 750 (kW >560) ................................................. 2011–2014 ...................... 2.6 4.6 ................................... 0.075 0.15 i 0.50 4.6

Generator Sets hp > 750 (kW >560) ........................ 2015+ .............................. 0.50 0.80 f ................................ 0.02 f 0.04 

Other Machines hp > 750 (kW >560) ....................... 2015+ .............................. j 2.6 4.6 j .................................. 0.03 f 0.05 

Notes:

aThese are the previous tier NMHC+NOX standards and FEL caps. These levels are not being revised with today’s rule and are printed here 

solely for readers’ convenience. bThese are a combined NMHC+NOX standard and FEL cap. cA manufacturer may delay implementation until 2010 and then comply with a PM standard of 0.45 g/bhp-hr for air-cooled, hand-startable, direct injection engines under 11 horsepower. dThese FEL caps do not apply if the manufacturer opts out of the 2008 standards. In such cases, the existing Tier 3 standards and FEL caps 

continue to apply. eThe FEL caps apply in model year 2012 if the manufacturer opts out of the 2008 standards. 

fAs described in this section, a small number of engines are allowed to exceed these FEL caps. 

gFor engines certified as phase-out engines, the NMHC+NOX FEL caps for the Tier 3 standards apply. hFor engines certified to the alternative NOX standards during the phase-in, the NOX FEL caps shown in tables III.A–3 and III.A–4 apply. iThe 0.50 g/bhp-hr NOX standard applies only to engines above 1200 horsepower used in generator sets. 

jThe 2011 NOX standard and FEL cap continue to apply unless and until revised by EPA in a future action. 

As noted above, we are allowing a 

limited number of engines to have a 

higher FEL than the caps noted in Table 

III.A–1 in certain instances. The FEL 

cap for such engines would be set based 

on the level of the standards that 

applied in the year prior to the new 

standards and will allow manufacturers 

to produce a limited number of engines 

certified to these earlier standards in the 

Tier 4 timeframe. The allowance to 

certify up to these higher FEL caps will 

apply to Tier 4 engines between 25 and 

750 horsepower beginning as early as 

the 2011 model year, and will apply to 

engines above 750 horsepower starting 

with the 2015 model year. The 

provisions are intended to provide some 

limited flexibility for engine 

manufacturers as they make the 

transition to the aftertreatment-based 

Tier 4 standards while ensuring that the 

vast majority of engines are converted to 

the advanced low-emission technologies 

expected under the Tier 4 program. 

Under the proposal, manufacturers 

would have been allowed to certify at 

levels up to these FEL caps for ten 

percent of its engines in each of the first 

four years after the Tier 4 standards took 

effect and then five percent for 

subsequent years. The California Air 

Resources Board supported the 

proposed allowance. The Engine 

Manufacturers Association commented 

that the percentages of engines allowed 

to the higher FEL caps may not be 

sufficient, noting that it is too early to 

tell if the proposed amounts provided 

enough flexibility. 

In an effort to provide flexibility to 

engine manufacturers while preserving 

the effective number of engines allowed 

to certify at levels up to the higher FEL 

caps, we are revising the proposed 

provisions with today’s action. The 

revised provisions are intended to allow 

manufacturers to produce the same 

number of engines certified to the 

higher FEL caps as would have been 

allowed under the proposal, but provide 

added flexibility in how they distribute 

the allowances over the first four years 

of the transition to the new standards. 

This additional lead time appears 

appropriate, given the potential that a 

limited set of nonroad engines may face 

especially challenging compliance 

difficulties. Under the provisions 

adopted today and subject to the 

limitations explained below, a 

manufacturer would be allowed to 

certify up to 40 percent of its engines 

above the FEL caps shown in Table 

III.A–1 over the first four years the 

aftertreatment-based Tier 4 standards 

take effect (calculated as a cumulative 

total of the percent of engines exceeding 

these FEL caps in each year over the 

four years), with a maximum of 20 

percent allowed in any given year 

(provided the FELs for these engines do 

not exceed levels specified below). 

During this four year period, 

manufacturers would not be required to 

perform transient testing or NTE testing 

on these engines because we expect 

these engines would be carried over 

directly from the previous tier without 

any modification. (NTE testing would 

apply to engines above 750 horsepower 

because the previously applicable set of 

standards required NTE testing.) 

Similarly, for engines between 75 and 

750 horsepower, manufacturers would 

not be required to have closed crankcase 

controls on these engines because we 

also expect that these engines would be 

carried over directly from the previous 

tier without any modification. (Engines 

between 25 and 75 horsepower, and 

engines above 750 horsepower, would 

be required to have closed crankcase 

controls because the previously 

applicable set of standards require 

closed crankcase controls.)

For the purpose of calculating the 

number of credits such engines would 

use, the manufacturer would include an 

adjustment to the FEL to be used in the 

credit calculation equation. The 

adjustment would be included by 

multiplying the steady-state FEL by a 

Temporary Compliance Adjustment 

Factor (TCAF) of 1.5 for PM and 1.1 for 

NOX. (The NOX TCAF would not apply 

to engines that are not subject to the 

transient testing requirements for NOX

as discussed in section III.F.) We are 

adopting TCAFs in part to assure in-use 

control of emission from these engines 

in the absence of transient and NTE 

testing, and also to assure that any 

credits these engines use reflect the

39000 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

level of reductions expected in use. The 

level of the TCAFs are based on data 

from pre-control, Tier 1, and Tier 2 

engines which show that the emissions 

from such engines tested over transient 

test cycles which are more 

representative of real in-use operation 

are higher than emissions from those 

engines tested over the steady-state 

certification test cycle. This is a sales 

weighted version of the Transient 

Adjustment Factor used in the 

NONROAD model. For compliance 

purposes, a manufacturer would be held 

accountable to the unadjusted steadystate FEL established for the engine 

family. 

As proposed, after the fourth year the 

Tier 4 standards apply, the allowance to 

certify engines using the higher FEL 

caps shown in Table III.A–2 will still be 

available but for no more than five 

percent of the engines a manufacturer 

produces in each power category in a 

given year. When the 5 percent 

allowance takes effect, these engines 

will be considered Tier 4 engines and 

all other requirements for Tier 4 engines 

will also apply, including the Tier 4 

NMHC standard, transient testing, NTE 

testing, and closed crankcase controls. 

TCAFs thus do not apply when 

calculating the number of credits such 

engines would use. 

In the two power categories where we 

are adopting phase-in provisions (i.e., 

75 to 175 horsepower engines and 175 

to 750 horsepower engines), the 

allowance to use a higher FEL cap will 

only apply to PM from phase-out 

engines during the phase-in years. We 

originally proposed that the allowance 

to use a higher FEL cap would apply to 

PM from either phase-in or phase-out 

engines during the phase-in years. On 

reflection, this is inconsistent with our 

policy that phase-in engines truly have 

low emissions reflecting use of 

aftertreatment (see also the discussion 

above where we explain that, for the 

same reason, we are adopting a NOX

FEL cap of 0.60 g/bhp-hr for phase-in 

engines). We consequently are revising 

the proposed allowance so that it is 

available for PM emissions only from 

phase-out engines. As proposed, the 

allowance to use a higher FEL cap for 

NOX will apply starting in 2014 when 

the phase-in period is complete. 

For the power category between 25 

and 75 horsepower, this allowance to 

certify engines at levels up to the higher 

FEL caps will apply beginning with the 

Tier 4 standards taking effect in the 

2013 model year and will apply to PM 

only. For manufacturers choosing to opt 

out of the 2008 model year Tier 4 

standards for engines between 50 and 75 

horsepower and instead comply with 

the Tier 4 standards beginning in 2012, 

the 40% allowance would apply to 

model years 2012 through 2015, and the 

5% allowance would apply to model 

year 2016 and thereafter. The allowance 

to use the higher FEL caps is not 

applicable for the 2008 standards or the 

2013 NMHC+NOX standards for these 

engines because the FEL caps for those 

standards already are set at the level of 

the standard which previously applied. 

For engines above 750 horsepower, 

the allowance to certify a limited 

number of engines at levels up to the 

higher FEL caps would apply beginning 

in model year 2015. (As noted, this is 

because the FEL caps being adopted for 

the 2011 standards for engines above 

750 horsepower are the previous tier PM 

standard and the NOX-only equivalent 

of the previous tier standard.) For NOX, 

the allowance to certify a limited 

number of engines above the FEL cap 

beginning in model year 2015 will apply 

only to engines used in generator sets. 

Engines used in other machines are still 

subject to the model year 2011 NOX

standard and FEL caps. For PM, the 

allowance to certify a limited number of 

engines above the FEL caps beginning in 

model year 2015 will apply to all 

engines above 750 horsepower. 

Table III.A–2 presents the model 

years, percent of engines, and higher 

FEL caps that will apply under these 

allowances. As noted above, engines 

certified under these higher FEL caps 

during the first four years would not be 

required to perform transient testing or 

NTE testing and engines between 75 and 

750 horsepower would not be required 

to have closed crankcase controls on 

these engines. However, as also noted 

earlier, beginning in the fifth year, when 

the 5 percent allowance takes effect, 

these engines will be considered Tier 4 

engines and all other requirements for 

Tier 4 engines will also apply, including 

the Tier 4 NMHC standard, transient 

testing, NTE testing, and closed 

crankcase controls.

TABLE III.A–2.—ALLOWANCE FOR LIMITED USE OF AN FEL CAP HIGHER THAN THE TIER 4 FEL CAPS

Power category Model years 

Engines allowed to 

have higher 

FELs (%) 

NOX FEL cap (g/bhp-hr) PM FEL cap (g/bhp-hr) 

25 ≤ hp < 75 .............. 2013–2016 a ................................ b 40 Not applicable ............................. 0.22 

(19 ≤ kW < 56) ........... 2017+ a ........................................ 5

75 ≤ hp < 175 ............ 2012–2015 .................................. b 40 3.3 c for hp <100 .......................... 0.30 d for hp <100 

(56 ≤ kW <130) .......... 2016+ .......................................... 5 2.8 c for hp ≥100 .......................... 0.22 d for hp ≥100 

175 ≤ hp ≤ 750 .......... 2011–2014 .................................. b 40 2.8 c ............................................. 0.15 d

(130 ≤ kW ≤ 560) ....... 2015+ .......................................... 5

>750 hp ...................... 2015–2018 .................................. b c 40 2.6 ............................................... 0.075 

(>560 kW) .................. 2019+ .......................................... e 5 .

aFor manufacturers choosing to opt out of the 2008 model year Tier 4 standards for engines between 50 and 75 horsepower and instead comply with the Tier 4 standards beginning in 2012, the 40% allowance would apply to model years 2012 through 2015, and the 5% allowance would 

apply to model year 2016 and thereafter. b Compliance with the 40% limit is determined by adding the percent of engines that have FELs above the FEL caps shown in Table III.A.–1 in 

each of the four years. A manufacturer may not have more than 20% of its engines exceed the FEL caps shown in Table III.A–1 in any model 

year in any power category. cThe allowance to certify to these higher NOX FEL caps is not applicable during the phase-in period. dThese higher PM FEL caps are applicable to phase-out engines only during the phase-in period. 

eThe limits of 40% or 5% allowed to exceed the NOX FEL cap would apply to engines used in generator sets only. (Engines >750 hp used in 

other machines are allowed to have an NOX FEL as high as 4.6 g/bhp-hr.) The limits of 40% or 5% allowed to exceed the PM FEL cap would 

apply to all engines above 750 hp. 

Under the Tier 4 program, there will 

be two different groups of 75–750 

horsepower engines during the NOX

phase-in period. In one group (‘‘phaseout engines’’), engines will certify to the applicable Tier 3 NMHC+NOX standard

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39001

and will be subject to the NMHC+NOX

ABT restrictions and allowances 

previously established for Tier 3. In the 

other group (‘‘phase-in engines’’), 

engines will certify to the 0.30 g/bhp-hr 

NOX standard, and will be subject to the 

restrictions and allowances in this 

program. Although engines in each 

group are certified to different 

standards, we are (as proposed) 

allowing manufacturers to transfer 

credits across these two groups of 

engines with the following adjustment 

to the amount of credits generated. 

Manufacturers will be able to use credits 

generated during the phase-out of 

engines subject to the Tier 3 

NMHC+NOX standard to average with 

engines subject to the 0.30 g/bhp-hr 

NOX standard, but these credits will be 

subject to a 20 percent discount, the 

adjustment reflecting the NMHC 

contribution. Thus, each gram of 

NMHC+NOX credits from the phase-out 

engines will be worth 0.8 grams of NOX

credits in the new ABT program. The 

ability to average credits between the 

two groups of engines will give 

manufacturers a greater opportunity to 

gain experience with the low-NOX

technologies before they are required to 

meet the final Tier 4 standards across 

their full production. The 20 percent 

discount will also apply, for the same 

reason, to all NMHC+NOX credits used 

for averaging purposes with the NOX

standards for engines greater than 75 

horsepower. 

The California Air Resources Board 

supported the proposed discount of 20 

percent on NMHC+NOX credits used for 

NOX compliance. The Engine 

Manufacturer’s Association commented 

that we should eliminate the 20 percent 

‘‘discount’’ on NMHC+NOX credits used 

for NOX compliance.

We disagree with the Engine 

Manufacturer’s Association comments. 

As noted in the proposal, we have two 

main reasons for adopting this 

adjustment. First, the discounting 

addresses the fact that NMHC 

reductions can provide substantial 

NMHC+NOX credits, which are then 

treated as though they were NOX

credits. For example, a 2010 model year 

175 horsepower engine emitting at 2.7 

g/bhp-hr NOX and 0.3 g/bhp-hr NMHC 

meets the 3.0 g/bhp-hr NMHC+NOX

standard in that year, but gains no 

credits. In 2011, that engine, equipped 

with a PM trap to meet the new PM 

standard, will have very low NMHC 

emissions because of the trap, an 

emission reduction already accounted 

for in our assessment of the air quality 

benefit of this program. As a result, 

without substantially redesigning the 

engine to reduce NOX or NMHC, the 

manufacturer could garner nearly 0.3 g/

bhp-hr of NMHC+NOX credit for each of 

these engines produced. Allowing these 

NMHC-derived credits to be used 

undiscounted to offset NOX emissions 

on the phase-in engines in 2011 (for 

which each 0.1 g/bhp-hr of margin can 

make a huge difference in facilitating 

the design of engines to meet the 0.30 

g/bhp-hr NOX standard) would be 

inappropriate. Therefore, while we are 

reducing the value of credits earned 

from Tier 2/Tier 3 engines, the 

adjustment accounts for the NMHC 

fraction of the credits which we do not 

believe should be used to demonstrate 

compliance with the NOX-only Tier 4 

standards (such credits would be 

‘‘windfalls’’ because they would 

necessarily occur by virtue of the 

technology needed to meet the PM 

standard) (68 FR 28469, May 23, 2003). 

Second, the discounting will work 

toward providing a small net 

environmental benefit from the ABT 

program, such that the more 

manufacturers use banked and averaged 

credits, the greater the potential 

emission reductions overall. Most 

basically, it is inherently reasonable, in 

using NOX+NMHC reductions to show 

credit with a NOX-only standard, to use 

only that portion which represents NOX

reductions. (Indeed, for this reason, 

terming the 20 per cent a ‘‘discount 

factor’’ is a misnomer; it apportions the 

NMHC fraction of the reduction.) As 

noted, this is further supported by the 

fact that the NMHC reductions for 

phase-out engines are not extra 

reductions above and beyond what 

would otherwise occur, and therefore 

don’t warrant eligibility as credits. 

We are adopting one additional 

restriction on the use of credits under 

the ABT program. For the Tier 4 

standards, we proposed that 

manufacturers could only use credits 

generated from other Tier 4 engines or 

from engines certified to the previously 

applicable tier of standards (i.e., Tier 2 

for engines below 50 horsepower, Tier 

3 for engines between 50 and 750 

horsepower, and Tier 2 engines above 

750 horsepower). This proposed 

restriction was similar to a restriction 

we currently have that prohibits the use 

of Tier 1 credits to demonstrate Tier 3 

compliance. STAPPA/ALAPCO and the 

Natural Resources Defense Council 

supported the proposed approach that 

limited the use of previous-tier credits 

for Tier 4. The Engine Manufacturer’s 

Association commented that by limiting 

the use of previous-tier credits, we are 

engaged in an unconstitutional taking 

because EPA had guaranteed in the 

previous Tier 2/Tier 3 rulemaking that 

such credits would not expire. We 

disagree that adopting a restriction on 

the use of the previous tier ABT credits 

is an unconstitutional taking. EPA did 

not, and could not, decide in the Tier 2/

3 rulemaking that Tier 2/3 credits could 

be used to show compliance with some 

future standards that had not yet even 

been adopted. Thus, EPA in this 

rulemaking is not taking away 

something previously given. We are not 

revisiting the Tier 2/3 standards but 

establishing a new set of engine 

standards. In doing so, we necessarily 

must evaluate the provisions of previous 

rules and their potential impact on the 

future standards being considered. We 

are reasonably concerned that credits 

from engines certified to relatively high 

standards could be used to significantly 

delay the implementation of the final 

Tier 4 program and its benefits, 

resulting in a situation where the 

standards would no longer reflect the 

greatest degree of emission reduction 

available as required under section 

213(a)(3) of the Clean Air Act, or would 

no longer be appropriate under section 

213(a)(4) of the Clean Air Act. 

Therefore, with today’s action, we are 

adopting the proposed provisions 

regarding the use of credits from 

previous tier engines, with one minor 

revision. 

Under today’s action, manufacturers 

may only use credits generated from 

other Tier 4 engines or from engines 

certified to the previously applicable 

tier of standards—except for engines 

between 50 and 75 horsepower. Because 

we are adopting Tier 4 standards that 

take effect as early as 2008 for those 

engines, the same year the previouslyadopted Tier 3 standards are scheduled 

to take effect (see section II.A.1.a above), 

there is no possibility to earn credits 

against the Tier 3 standards for 

manufacturers that certify with the pullahead standards in 2008 for engines 

between 50 and 75 horsepower. 

Therefore, we will allow manufacturers 

to use credits from engines in the Tier 

2 power category that includes 50 to 75 

horsepower (i.e., the 50 to 100 

horsepower category) that are certified 

to the Tier 2 standards if they choose to 

demonstrate compliance with the pullahead Tier 4 standards in 2008 for 

engines between 50 and 75 horsepower. 

Manufacturers that do not choose to 

comply with the 2008 Tier 4 standards 

for engines between 50 and 75 

horsepower and instead comply with 

the 2012 Tier 4 standards for such 

engines will not be allowed to use Tier 

2 credits in Tier 4, but instead will be 

allowed to use Tier 3 credits as allowed 

under the standard provisions regarding 

39002 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

use of previous-tier credits only for Tier 

4 compliance demonstration. 

With regard to other restrictions on 

the use of ABT credits, we are adopting 

one restriction on the use of credits 

across the 750 horsepower threshold. In 

previous rulemakings, EPA has defined 

‘‘averaging sets’’ within which 

manufacturers may use credits under 

the ABT program. Credits may not be 

used outside of the averaging set in 

which they were generated. As 

described in section II.A.4 of today’s 

action, we have revised the Tier 4 

standards for engines above 750 

horsepower. Because the standards for 

Tier 4 engines greater than 750 

horsepower will not be based on the use 

of PM aftertreatment technology in 2011 

or NOX aftertreatment technology for all 

mobile machinery engines in 2015, we 

are adopting provisions that prevent 

manufacturers from using credits from 

model year 2011 and later model year 

engines greater than 750 horsepower to 

demonstrate compliance with engines 

below 750 horsepower. Without such a 

limit, we are concerned that 

manufacturers could use credits from 

such engines to significantly delay 

compliance with the numerically lower 

standards for engines below 750 

horsepower. In addition, without such a 

limit, we are concerned that 

manufacturers could use credits from 

engines below 750 horsepower to delay 

implementation of aftertreatment 

technology for engines above 750 

horsepower. 

One engine manufacturer commented 

that EPA should include a barrier to 

trading credits across the 75 horsepower 

level. They cited concerns over the 

ability of manufacturers that produce a 

large range of engine sizes to use credits 

from high horsepower engines to offset 

emissions from their small horsepower 

engines. We are not adopting any 

averaging set restrictions for Tier 4 

engines below 750 horsepower in 

today’s action. In the current nonroad 

diesel ABT program, there are averaging 

set restrictions. The current averaging 

sets consist of engines less than 25 

horsepower and engines greater than or 

equal to 25 horsepower. We adopted 

this restriction because of concerns over 

the ability of manufacturers to generate 

significant credits from the existing 

engines and use the credits to delay 

compliance with the newly adopted 

standards (63 FR 56977, October 23, 

1998). We believe the Tier 4 standards 

for engines below 750 horsepower are 

sufficiently rigorous to limit the ability 

of manufacturers to generate significant 

credits from their engines. In addition, 

we believe the FEL caps being adopted 

today provide sufficient assurance that 

low-emissions technologies will be 

introduced in a timely manner. 

Therefore, we believe averaging can be 

allowed between all engine power 

categories below 750 horsepower 

without restriction effective with the 

Tier 4 standards. (It should be noted 

that the averaging set restriction placed 

on credits generated from Tier 2 and 

Tier 3 engines will continue to apply if 

they are used to demonstrate 

compliance for Tier 4 engines.)

EPA also proposed to allow engine 

manufacturers to demonstrate 

compliance with the NOX phase-in 

requirements by certifying evenly split 

engine families at, or below, specified 

NOX FELs (68 FR 28470, May 23, 2003). 

As described in section II.A.2.c above, 

EPA is revising the evenly split family 

provisions for the Tier 4 program and is 

now codifying them as alternative 

standards. (As described in section III.L, 

we also are adopting the proposed 

provisions allowing manufacturers to 

certify ‘‘split’’ engine families during 

the phase-in years.) Because the evenly 

split family provision has evolved into 

a set of alternative NOX standards, we 

believe it is appropriate to allow 

manufacturers to use ABT for them. 

Table III.A–3 presents the FEL caps that 

will apply to engines certified to the 

alternative NOX standards during the 

phase-in years. The FEL caps for these 

alternative standards have been set at 

levels reasonably close to the alternative 

standards and are intended to ensure 

sizeable emission reductions from the 

previously-applicable Tier 3 standards. 

(For engines between 75 and 175 

horsepower certified under the reduced 

phase-in option, the FEL cap is the 

NOX-only equivalent of the previously 

applicable NMHC+NOX standards 

because the alternative standard is 

sufficiently close to the Tier 3 standard.)

TABLE III.A–3.—NOX FEL CAPS FOR ENGINES CERTIFIED TO THE ALTERNATIVE NOX STANDARDS

Power category 

Alternative 

NOX standard 

(g/bhp-hr) 

NOX FEL cap (g/bhphr) 

50/50/100 phase-in option for 75 ≤ hp < 175 (56 ≤ kW <130) ................................................................... 1.7 2.2. 

25/25/25/100 phase-in option for 75 ≤ hp < 175 (56 ≤ kW <130) .............................................................. 2.5 3.3 (for 75–100 hp). 

2.8 (for 100–175 hp) 

175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ............................................................................................................... 1.5 2.0. 

Because we are allowing 

manufacturers to use ABT for 

demonstrating compliance with the 

alternative standards for engines 

between 75 and 750 horsepower, we are 

allowing manufacturers to exceed the 

FEL caps noted in table III.A–3 and 

include them in the count of engines 

allowed to exceed the FEL caps (i.e., the 

40 percent over the first four years the 

Tier 4 standards take effect as described 

earlier). Table III.A–4 presents the NOX

FEL caps that would apply to engines 

certified under the alternative standards 

(limited by the 40 percent cap over the 

first four years). The higher NOX FEL 

caps are set at the estimated NOX-only 

equivalent of the previous-tier 

NMHC+NOX standards. For 

manufacturers certifying under the 

reduced phase-in (25 percent) option, 

because the FEL caps are the NOX-only 

equivalent of the Tier 3 NMHC+NOX

standards, they may not exceed the FEL 

cap during the years the alternative 

standard applies.

TABLE III.A–4.—LIMITED-USE NOX FEL CAPS UNDER THE ALTERNATIVE NOX STANDARDS

Power category Model years NOX FEL cap (g/bhphr) 

50/50/100 phase-in option for 75 ≤ hp < 175a ............................................................................................ 2012–2013 3.3 for hp <100. 

(56 ≤ kW <130) ............................................................................................................................................ 2.8 for hp ≥100. 

175 ≤ hp ≤ 750 ............................................................................................................................................ 2011–2013 2.8. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39003

TABLE III.A–4.—LIMITED-USE NOX FEL CAPS UNDER THE ALTERNATIVE NOX STANDARDS—Continued

Power category Model years NOX FEL cap (g/bhphr) 

(130 ≤ kW ≤ 560) .........................................................................................................................................

For reasons explained in section 

II.A.1.b.i above, we are also adopting 

unique phase-in requirements for NOX

standards for engines between 75 and 

175 horsepower in order to ensure 

appropriate lead time for these engines. 

Because of these unique phase-in 

provisions, as proposed, we are 

adopting slightly different provisions 

regarding 75 to 175 horsepower engines’

use of previous-tier credits. Under 

today’s action, manufacturers that 

choose to demonstrate compliance with 

these phase-in requirements (i.e., 50 

percent in 2012 and 2013 and 100 

percent in 2014) or the 1.7 g/bhp-hr 

alternative NOX standard (which is 

based on the 50 percent phase-in 

option) will be allowed to use Tier 2 

NMHC+NOX credits generated by 

engines between 50 and 750 horsepower 

(even though they are not generated by 

previous-tier engines), along with any 

other allowable credits, to demonstrate 

compliance with the Tier 4 NOX

standards for engines between 75 and 

175 horsepower during model years 

2012, 2013 and 2014 (the years of the 

phase-in) only. These Tier 2 credits will 

be subject to the power rating 

conversion already established in our 

ABT program, and to the 20% credit 

adjustment being adopted today for use 

of NMHC+NOX credits as NOX credits. 

The requirements for manufacturers 

that choose to demonstrate compliance 

with the optional reduced phase-in 

requirement for engines between 75 and 

175 horsepower (i.e, the 25/25/25 

percent phase-in option; see Table II.A.–

2, note b) or the 2.5 g/bhp-hr alternative 

NOX standard (which is based on the 25 

percent phase-in option) are different. 

Under the reduced phase-in 

requirement, use of credits will be 

allowed in accordance with the general 

ABT program provisions. In other 

words, manufacturers will not have the 

special allowance to use Tier 2 

NMHC+NOX credits generated by 

engines between 50 and 750 horsepower 

noted above to demonstrate compliance 

with the Tier 4 standards. In addition, 

manufacturers choosing the reduced 

phase-in option will not be allowed to 

generate NOX credits from engines in 

this power category in 2012, 2013, and 

most of 2014, except for use in 

averaging within this power category 

(i.e., no banking or trading, or averaging 

with engines in other power categories 

will be permitted). This restriction will 

apply throughout this period even if the 

reduced phase-in option is exercised 

during only a portion of this period. We 

believe that this restriction is important 

to avoid potential abuse of the added 

flexibility allowance, considering that 

larger engine categories will be required 

to demonstrate substantially greater 

compliance levels with the 0.30 g/bhphr NOX standard several years earlier 

than engines built under the reduced 

phase-in option.

As described in section II.A.3.a of 

today’s action, and as proposed, we are 

adopting an optional PM standard for 

air-cooled, hand-startable, direct 

injection engines under 11 horsepower 

effective in 2010. In order to avoid 

potential abuse of this standard, engines 

certified under this requirement will not 

be allowed to generate any credits as 

part of the ABT program. Credit use by 

these engines will be allowed. The 

restriction on generating credits should 

not be a burden to manufacturers, as it 

will apply only to those air-cooled, 

hand-startable, direct injection engines 

under 11 horsepower that are certified 

under the optional approach, and the 

production of credit-generating engines 

would be contrary to the standard’s 

purpose. No adverse comments were 

submitted to EPA on this issue. 

The current ABT program contains a 

restriction on trading credits generated 

from indirect injection engines greater 

than 25 horsepower. The restriction was 

originally adopted because of concerns 

over the ability of manufacturers to 

generate significant credits from existing 

technology engines (63 FR 56977, 

October 23, 1998). With today’s action, 

there will be no restriction prohibiting 

manufacturers from trading credits 

generated on Tier 4 indirect fuel 

injection engines greater than 25 

horsepower. Based on the certification 

levels of indirect injection engines, we 

do not believe there is the potential for 

manufacturers to generate significant 

credits from their currently certified 

engines against the Tier 4 standards. 

Therefore, as proposed, we are not 

adopting any restrictions on the trading 

of credits generated on Tier 4 indirect 

injection engines to other 

manufacturers. The restriction placed 

on the trading of credits generated from 

Tier 2 and Tier 3 indirect injection 

engines will continue to apply in the 

Tier 4 timeframe. No adverse comments 

were submitted to EPA on this issue. 

As explained in the proposal, we are 

not applying a specific discount to Tier 

3 PM credits used to demonstrate 

compliance with the Tier 4 standards 

(68 FR 28471, May 23, 2003). PM credits 

generated under the Tier 3 standards are 

based on testing performed over a 

steady-state test cycle. Under the Tier 4 

standards, the test cycle is being 

supplemented with a transient test (see 

section III.F.1 below). Because in-use 

PM emissions from Tier 3 engines will 

vary depending on the type of 

application in which the engine is used 

(most applications having higher in-use 

PM emissions, some having lower inuse PM emissions), the relative ‘‘value’’

of the Tier 3 PM credits in the Tier 4 

timeframe will differ. Instead of 

requiring manufacturers to gather 

information to estimate the level of inuse PM emissions compared to the PM 

level of the steady-state test, we believe 

allowing manufacturers to bring Tier 3 

PM credits directly into the Tier 4 time 

frame without any adjustment is 

appropriate because it discounts their 

value for use in the Tier 4 timeframe 

(since the initial baseline being reduced 

is higher than measured in the Tier 2 

test procedure for most applications). 

No adverse comments were submitted to 

EPA on this issue. 

3. Are We Expanding the Nonroad ABT 

Program To Include Credits From 

Retrofit of Nonroad Engines? 

In the proposal, we requested 

comment on expanding the scope of the 

standards by setting voluntary new 

engine emission standards applicable to 

the retrofit of nonroad diesel engines (68 

FR 28471, May 23, 2003). As described 

in the proposal, retrofit nonroad engines 

would be able to generate PM and NOX

credits which would be available for use 

by new nonroad engines in the 

certification ABT program. We received 

a significant number of comments on a 

retrofit ABT program. A number of 

commenters associated with the 

agricultural sector were concerned 

retrofits would be mandatory. Some 

commenters were opposed to a retrofit 

credit program that would allow use of 

the credits under the certification ABT 

program. However, a number of 

commenters supported the concept of a 

retrofit program, but noted a number of 

39004 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

62See memorandum referenced at 68 FR 28471 

(May 23, 2003), footnote 299.

concerns regarding the details of such a 

program, including making sure that 

any credits earned would be verifiable 

and enforceable. Some commenters 

suggested that EPA consider the 

establishment of a retrofit credit 

program through a separate rulemaking 

because there were many details of the 

program that needed to be explored 

more fully before adopting such a 

program. In response to the comments, 

we are not adopting a retrofit credit 

program with today’s action. Although 

we provided a detailed explanation of a 

potential program at proposal, 62 we 

believe it is important to more fully 

consider the details of a nonroad engine 

retrofit credit program and work with 

interested parties in determining 

whether a viable program can be 

developed. EPA intends to explore the 

possibility of a voluntary, opt-in 

nonroad retrofit credit program through 

a separate action later this year. Such a 

program would be based on the 

generation of credits beyond the scope 

of any existing retrofit program. The 

final rule contains no requirements for 

retrofitting existing engines or 

equipment.

B. Transition Provisions for Equipment 

Manufacturers 

1. Why Are We Adopting Transition 

Provisions for Equipment 

Manufacturers? 

As EPA developed the 1998 Tier 2/3 

standards for nonroad diesel engines, 

we determined, as an aspect of 

determining an appropriate lead time 

for application of the requisite 

technology (pursuant to section 213(b) 

of the Act), that provisions were needed 

to avoid unnecessary hardship and to 

create additional flexibility for 

equipment manufacturers. The specific 

concern is the amount of work required 

and the resulting time needed for 

equipment manufacturers to incorporate 

all of the necessary equipment redesigns 

into their applications in order to 

accommodate engines that meet the new 

emission standards. We therefore 

adopted a set of provisions for 

equipment manufacturers to provide 

them with reasonable lead time for the 

transition process to the newly adopted 

standards. The program consisted of 

four major elements: (1) A percent-ofproduction allowance, (2) a smallvolume allowance, (3) availability of 

hardship relief, and (4) continuance of 

the allowance to use up existing 

inventories of engines (63 FR 56977–

56978, October 23, 1998 and 68 FR 

28472–28476, May 23, 2003).

Given the levels of the newly adopted 

Tier 4 standards, we believe that there 

will be engine design and other changes 

at least comparable in magnitude to 

those involved during the transition to 

Tier 2/3. Therefore, with a few 

exceptions described in more detail 

below, we are adopting transition 

provisions for Tier 4 that are similar to 

those adopted with the previous Tier 2/

3 rulemaking. We also note that 

opportunities for greater flexibility 

arises from the structure of the Tier 4 

rule. For example, Tier 4 consolidates 

the nine power categories in Tier 2/3 

into five categories, providing 

opportunities for more flexibility by 

allowing more engine families within 

each power category, with consequent 

increased averaging possibilities. The 

NOX phase-in also provides increased 

flexibility opportunities, as do the 

longer Tier 4 lead times. 

We are adding new notification, 

reporting, and labeling requirements to 

the Tier 4 program. We believe these 

additional provisions are necessary for 

EPA to gain a better understanding of 

the extent to which these provisions 

will be used and to ensure compliance 

with the Tier 4 transition provisions. 

We are also adopting new provisions 

dealing specifically with foreign 

equipment manufacturers and the 

special concerns raised by the use of the 

transition provisions for equipment 

imported into the U.S. The following 

section describes the Tier 4 transition 

provisions available to equipment 

manufacturers. (Section III.C of this 

preamble describes all of the provisions 

that will be available specifically for 

small businesses.) 

As under the existing Tier 2/Tier 3 

provisions, equipment manufacturers 

are not obligated to use any of these 

provisions, but all equipment 

manufacturers are eligible to do so. 

Also, as under the existing program, all 

entities under the control of a common 

entity, and that meet the regulatory 

definition of a nonroad vehicle or 

nonroad equipment manufacturer, must 

be considered together for the purpose 

of applying exemption allowances. This 

will not only provide certain benefits for 

the purpose of pooling exemptions, but 

will also preclude the abuse of the 

small-volume allowances that would 

exist if companies could treat each 

operating unit as a separate equipment 

manufacturer. 

2. What Transition Provisions Are We 

Adopting for Equipment Manufacturers? 

The following section describes the 

transition provisions being adopted 

with today’s action. Areas in which we 

have made changes to the proposed 

transition program are highlighted. A 

complete summary of comments 

received on the proposed transition 

program and our response to those 

comments are contained in the 

Summary and Analysis of Comments 

document for this rule. 

EPA believes that the lead time 

provided through the equipment maker 

transition flexibilities, as adopted in this 

rule, will be sufficient, as has proved 

the case in past tiers. These flexibilities 

provide equipment manufacturers with 

the selective ability to delay use of the 

Tier 4 engines in those applications 

where additional time is needed to 

successfully incorporate the redesigned 

engines into their equipment.

Ingersoll-Rand, an equipment 

manufacturer, submitted a number of 

comments arguing that significant 

expansions of the proposed flexibility 

program are needed if equipment 

manufacturers are to produce compliant 

applications within the effective dates 

of the standards. One suggestion was for 

EPA to include provisions that provide 

a definitive period of lead time for 

incorporation of Tier 4 engines into 

nonroad equipment. Ingersoll-Rand 

would have the rules specify a ‘‘made 

available’’ date before which each 

engine supplier must provide technical 

and performance specifications, 

complete drawings, and a final 

compliant engine to EPA and the open 

market. After the mandated ‘‘made 

available’’ date, equipment 

manufacturers should be provided a 

minimum 18 months of lead time to 

incorporate the new engines into 

nonroad equipment. One form of the 

suggestion also entailed a prohibition on 

design changes once the engine, 

specifications, drawings, etc. had been 

initially provided to EPA and to the 

open market. As an alternative, 

Ingersoll-Rand urged that the percent of 

production allowance flexibility be 

expanded to 150 percent for the power 

categories between 75 and 750 

horsepower and 120 percent for the 

power category between 25 and 75 

horsepower. Ingersoll-Rand believes 

these levels correspond proportionately 

to the increased challenges facing 

equipment manufacturers during Tier 4 

as opposed to Tier 2 and Tier 3. 

As discussed in greater detail in the 

Summary and Analysis of Comments, as 

well as in later parts of this section of 

this preamble and elsewhere in the 

administrative record, we disagree with 

most of Ingersoll-Rand’s suggestions. 

Our fundamental disagreement is with 

Ingersoll-Rand’s premise that Tier 4 will 

create a situation where need for 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39005

63 ‘‘Tier 4 Nonroad Diesel Equipment Flexibility 

Provisions,’’ memorandum from Byron Bunker, et 

al., (EPA) to EPA Air Docket OAR–2003–0012.

64 ‘‘Tier 4 Nonroad Diesel Equipment Flexibility 

Provisions,’’ memorandum from Byron Bunker, et 

al., (EPA) to EPA Air Docket OAR–2003–0012.

expanded equipment maker lead time is 

the norm rather than the exception so 

that the rule must provide a drastic, 

across-the-board expansion of 

equipment manufacturer lead time. We 

believe that the lead time provided for 

equipment makers in this rule is 

adequate, and that the equipment maker 

flexibilities we are adopting provide a 

reasonable and targeted safety valve to 

deal with isolated problems. There is no 

across-the-board problem necessitating a 

drastic expansion of equipment 

manufacturer lead time, or a drastic 

expansion of equipment manufacturer 

flexibilities. We base these conclusions 

largely on three factors: (a) Our 

investigation and understanding of the 

engineering process by which engine 

makers and equipment manufacturers 

bring new products to market; (b) the 

specific engineering challenges which 

equipment manufacturers will address 

in complying with the Tier 4 rule; and 

(c) past practice of equipment 

manufacturers under previous rules 

providing transition flexibilities for 

nonroad equipment. 

Because it is in both parties’ interest 

for new engines and new equipment 

applications to reach the market 

expeditiously, engine makers and 

equipment manufacturers usually adopt 

concurrent engineering programs 

whereby the new equipment design 

process occurs simultaneous to the new 

engine development process. We believe 

that this concurrent process should 

work well for Tier 4 because, in many 

important ways, the engineering 

challenges facing equipment 

manufacturers can be anticipated and 

dealt with early in the design process. 

We expect that relatively early in the 

design process, engine manufacturers 

will be able to define the size and 

characteristics of the emission control 

technologies (e.g., NOX adsorbers and 

CDPFs), based on the same systems that 

will be in production for on-highway 

engines. The equipment manufacturers 

will concurrently redesign their 

equipment to accommodate these new 

technologies, including designing, 

mounting and supporting the catalytic 

equipment similar to current exhaust 

muffler systems. 

Moreover, while we expect the 

redesign challenge for Tier 4 equipment 

to be similar to that for Tier 2/3, we also 

expect the redesign to be better and 

more clearly defined well in advance of 

the Tier 4 introduction dates. This is 

because we do not expect the catalyst 

system size or shape to change 

significantly during the last 24 months 

of the engine design and validation 

process.63

We also have studied the extent to 

which equipment manufacturers have 

used their flexibilities under the Tier 2/

3 program. Although at an early stage in 

the Tier 2/3 process, initial indications 

are that the flexibility program is being 

used by many equipment 

manufacturers, but in general, 

manufacturers do not appear to be using 

the full level of allowances.64 It appears 

that the flexibilities are being used as 

EPA intended, providing manufacturers 

with flexibility to deal with specific 

limited situations, rather than to deal 

with an across-the-board problem.

The emerging pattern is thus the one 

on which the flexibility program is 

predicated: there is not a need for 

across-the-board drastic expansion of 

equipment manufacturer lead time. 

Indeed, such an expansion would be 

inconsistent with the lead time-forcing 

nature of section 213 (b) of the Act. This 

is not to say that there is no need for 

equipment manufacturer flexibilities, or 

that the Tier 2/3 flexibility format need 

not be adjusted to accommodate 

potential problems to be faced under the 

Tier 4 regime. Instances where 

additional lead time could be justified 

are where resource constraints prevent 

completion of certain applications, or 

where for business reasons it makes 

sense for equipment manufacturers to 

delay completion of small volume 

families in order to complete larger 

volume equipment applications. In 

addition, the Tier 2/3 experience 

illustrates that there can be instances 

where emission control optimization 

which necessitates equipment design 

changes occurs late in the design cycle, 

resulting in a need for additional 

equipment manufacturer lead time. The 

equipment manufacturer flexibilities 

adopted in today’s rule accommodate 

these possibilities. 

We have specific objections to 

Ingersoll-Rand’s preferred approach of a 

mandated made available date, followed 

by 18 months of additional lead time for 

equipment manufacturers. 

Superimposing a government mandate 

on the engine maker—equipment 

manufacturer business relationship 

insinuates EPA into the middle of 

contractual/market relationships (e.g., 

when is an objectively reasonable 

delivery date?), forcing EPA to prejudge 

myriad differing business relationships/

engineering situations. Moreover, 

selection of any single made available 

date is bound to be arbitrary in most 

situations. We also believe that the 18-

month lead time following a made 

available date entails a mandated 18-

month period (at least) with no return 

on investment to engine suppliers (i.e. 

the period between when the Tier 4 

engine would be produced and when it 

could lawfully be sold), which would 

increase the engine cost, and discourage 

design changes (since such changes 

would entail more investment with 

delayed return on that investment). The 

ultimate result would be a costlier rule 

and less environmental benefit due to 

the delay in introducing Tier 4 engines. 

Even were EPA to put forth such a 

regulation, it is not clear that it could be 

enforced or that it would help the 

situation. It would only be natural for 

engine manufacturers to continue to 

improve its products even after the 

predefined ‘‘made available date’’ and 

equipment manufacturers would want 

to use this improved product even if it 

meant they had to make last minute 

changes to the equipment design. For 

EPA to preclude engine manufacturers 

from changing their product designs 

over the period between the certification 

date and the equipment manufacturer 

date would be both unusual and 

counterproductive to our goal of seeing 

the best possible products available in 

the market. Moreover, EPA sees no need 

to interfere with the concurrent design 

market mechanism, which allows 

engine makers and equipment 

manufacturers to negotiate optimal 

solutions. We believe it is better to leave 

to the market participants the actual 

decision for how and when to conduct 

concurrent engineering designs. 

The California Air Resources Board 

commented that EPA should eliminate 

or reduce the amount of flexibilities 

provided for less than 25 horsepower 

engines, because the Tier 4 engine 

standards are not aftertreatment-based. 

The Engine Manufacturers Association 

commented that we should expand the 

amount of flexibilities for engines 

greater than 750 horsepower, given the 

difficulty of complying with the 

proposed standards for engines above 

750 horsepower. With today’s action, 

we are applying the same flexibility for 

all power categories, including engines 

below 25 horsepower and engines above 

750 horsepower. While it is true that the 

Tier 4 standards for engines below 25 

horsepower are not aftertreatmentbased, we believe there will be changes 

in engine design for many of those 

engines in response to the Tier 4 

standards. As engine designs change, 

there is the potential for impacts on 

39006 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

equipment design as well (as shown in 

implementing the Tier 2/3 rule). 

Therefore, we believe providing 

equipment manufacturer flexibility for 

engines below 25 horsepower is 

appropriate and we are adopting the 

same flexibilities for engines below 25 

horsepower as for other power 

categories. With regard to engines above 

750 horsepower, we are retaining the 

same flexibilities for those engines as for 

other power categories. As described in 

section II.A.4, the Tier 4 standards being 

adopted today for engines above 750 

horsepower have been revised from the 

proposal. We believe that these 

revisions have appropriately 

accommodated concerns for the most 

difficult to design applications (i.e., 

NOX adsorbers for engines in mobile 

applications), so that additional 

equipment flexibilities are not 

warranted for these engines. 

The Engine Manufacturers 

Association commented that some 

equipment manufacturers may be 

capable of making an on-time transition 

to the interim Tier 4 standards (e.g. the 

2011 standards applicable for 175–750 

horsepower engines) without the use of 

flexibilities. Such equipment 

manufacturers would like the ability to 

start the seven-year period in which 

they may use flexibilities in the year the 

final Tier 4 standards (the 

aftertreatment-based standards for both 

PM and NOX) take effect. Put another 

way, they would not need more lead 

time for equipment to meet the interim 

standards, but could need more lead 

time for equipment required to meet the 

final standards. In addition, the 

commenter suggested a modified 

approach that could lead to earlier 

emission reductions than under the 

proposed rule: Requiring delayed 

flexibility engines to meet the interim 

Tier 4 standards instead of meeting the 

Tier 2/3 standards (as would have been 

allowed under the proposal if the 

flexibilities started in the first year of 

the interim Tier 4 standards). 

EPA wants to encourage the 

implementation of the Tier 4 standards 

as early as possible. Therefore, we 

believe it makes sense to provide 

incentives to equipment manufacturers 

to use interim Tier 4 compliant engines 

in their equipment during the transition 

to the final Tier 4 standards. Moreover, 

it is reasonable to expect that more lead 

time will be needed for the 

aftertreatment-based standards than for 

the interim standards. Therefore, in 

response to these comments, we are 

revising the proposed flexibility 

provisions to allow equipment 

manufacturers to have the option of 

starting the seven-year period in which 

flexibility engines may be used in either 

the first year of the interim Tier 4 

standards or the first year of the final 

Tier 4 standards. For engines between 

25 and 75 horsepower, the final Tier 4 

standards may begin in 2012 or 2013 

depending on whether the manufacturer 

chooses to comply with the interim 

2008 Tier 4 standards. An equipment 

manufacturer who does not use 

flexibilities in 2008 thus may need 

flexibilities as early as 2012. Therefore, 

the seven-year period for the final Tier 

4 standards for engines between 25 and 

75 horsepower will begin in 2012 

instead of 2013. Moreover, it is clearly 

appropriate that these delayed 

flexibility engines meet the interim Tier 

4 standards, in order not to backslide 

from existing levels of performance. 

Table III.B–1 shows the years in 

which manufacturers could choose to 

start the Tier 4 flexibilities given the 

standards being adopted today. (The 

seven-year period for engines below 25 

horsepower takes effect in 2008 as 

proposed, because there are no interim 

standards for such engines.)

TABLE III.B–1.—FLEXIBILITY PERIODS FOR THE TIER 4 STANDARDS

Power category 

Model year

flexibility

period

options 

Standards to which flexibility engines would have to certify 

25 ≤ hp < 75 ........................................................................................................................... 2008–2014 Tier 2 standards. 

(19 ≤ kW < 56) ....................................................................................................................... 2012–2018 Model Year 2008 Tier 4 standards. 

75 ≤ hp < 175 ......................................................................................................................... 2012–2018 Tier 3 standards. 

(56 ≤ kW <130) ...................................................................................................................... 2014–2020 Model Year 2012 Tier 4 standards. 

175 ≤ hp ≤ 750 ....................................................................................................................... 2011–2017 Tier 3 standards. 

(130 ≤ kW ≤ 560) ................................................................................................................... 2014–2020 Model Year 2011 Tier 4 standards. 

>750 hp .................................................................................................................................. 2011–2017 Tier 2 standards. 

(>560 kW) ............................................................................................................................... 2015–2021 Model Year 2011 Tier 4 standards. 

Under today’s action, and as 

proposed, only those nonroad 

equipment manufacturers that install 

engines and have primary responsibility 

for designing and manufacturing 

equipment will qualify for the 

allowances or other relief provided 

under the Tier 4 transition provisions. 

As a result of this definition, importers 

that have little involvement in the 

manufacturing and assembling of the 

equipment will be ineligible to receive 

any allowances. The Engine 

Manufacturers Association and one 

engine manufacturer commented that 

the proposed definition of equipment 

manufacturer needed to be revised to 

cover situations in which a 

manufacturer contracts out the design 

and production of equipment to another 

manufacturer. While we understand 

there are many different types of 

relationships between equipment 

manufacturers, we believe it is 

important to establish firm criteria for 

determining eligibility to use the 

equipment manufacturer allowances. 

We are concerned that the change to the 

equipment manufacturer definition 

suggested by the commenters would 

allow entities that have little or no 

involvement in the actual design, 

manufacture and assembly of equipment 

(e.g., companies that only import 

equipment) to claim they contracted 

with an equipment manufacturer to 

produce equipment for them and 

therefore claim allowances. This is the 

exact situation we are attempting to 

prevent with the changes to the 

eligibility requirements for the 

allowances. Therefore, we are adopting 

the proposed requirement that only 

those nonroad equipment manufacturers 

that install engines and have primary 

responsibility for designing, and 

manufacturing equipment will qualify 

for the allowances or other relief 

provided under the Tier 4 transition 

provisions. However, we are revising 

the provisions regarding which engines 

an equipment manufacturer may 

include in its total count of U.S.-

directed equipment production, which 

in turn affects the number of allowances 

an equipment manufacturer may claim. 

Under today’s action, an equipment 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39007

65As explained at proposal, for emissions 

modeling purposes, we have assumed that 

manufacturers take full advantage of the allowances 

under the existing transition program for equipment 

manufacturers (adopted in the October 1998 rule; 

see 63 FR 56967 (October 23, 2003) in establishing 

the baseline emissions inventory. In modeling the 

impact of the Tier 4 standards, because the 

standards will not take effect for many years and 

it is not possible to accurately forecast use of the 

transition program for equipment manufacturers, so 

to assess costs in a conservative manner, we have 

assumed that all engines will meet the Tier 4 

standards in the timeframe required by the 

standards without use of the Tier 4 transition 

provisions. As discussed in section VI.C, this is 

consistent with our cost analysis, which assumes no 

use of the transition program for equipment 

manufacturers.

manufacturer may include equipment 

produced by other manufacturers under 

license to them for which they had 

primary design responsibility (see 

section 1039.625(a) of the regulations). 

This should cover the type of situation 

described by the commenters while 

preventing an import-only entity from 

claiming it is an equipment 

manufacturer and thereby gaining 

access to the allowances.

a. Percent-of-Production Allowance 

Under the percent-of-production 

allowance adopted today, each 

equipment manufacturer will be 

allowed to install engines not certified 

to the Tier 4 emission standards in a 

limited percentage of machines 

produced for the U.S. market. 

Equipment manufacturers will need to 

provide written assurance to the engine 

manufacturer that such engines are 

being procured for the purpose of the 

transition provisions for equipment 

manufacturers. These engines will 

instead have to be certified to the 

standards that would apply in the 

absence of the Tier 4 standards (see 

Table III.B–1 for the applicable 

standards). As proposed, this percentage 

will apply separately to each of the Tier 

4 power categories (engines below 25 

horsepower, engines between 25 and 75 

horsepower, engines between 75 and 

175 horsepower, engines between 175 

and 750 horsepower, and engines above 

750 horsepower) and is expressed as a 

cumulative percentage of 80 percent 

over the seven years beginning when the 

Tier 4 standards apply in a category (see 

Table III.B–1 for the applicable sevenyear periods). No exemptions will be 

allowed after the seventh year. For 

example, an equipment manufacturer 

could install engines certified to the 

Tier 3 standards in 40 percent of its 

entire 2011 production of nonroad 

equipment that use engines rated 

between 175 and 750 horsepower, 30 

percent of its entire 2012 production in 

this horsepower category, and 10 

percent of its entire 2013 production in 

this horsepower category. (During the 

transitional period for the Tier 4 

standards, the fifty percent of engines 

that are allowed to certify to the 

previous tier NOX standard but meet the 

Tier 4 PM standard are considered Tier 

4-compliant engines for the purpose of 

the equipment manufacturer transition 

provisions.) If the same manufacturer 

produces equipment using engines rated 

above 750 horsepower, a separate 

cumulative percentage allowance of 80 

percent will apply to those machines 

during the seven years beginning in 

2011 or 2015. This percent-ofproduction allowance is almost 

identical to the percent-of-production 

allowance adopted in the October 1998 

final rule (63 FR 56967, October 23, 

2003), the difference being, as explained 

earlier, that there are fewer power 

categories (and consequent increased 

flexibility in spreading the flexibility 

among engine families) associated with 

the Tier 4 standards. 

The 80 percent exemption allowance, 

were it to be used to its maximum 

extent by all equipment manufacturers, 

will bring about the introduction of 

cleaner engines several months later 

than would have occurred if the new 

standards were to be implemented on 

their effective dates. However, the 

equipment manufacturer flexibility 

program has been integrated with the 

standard-setting process from the initial 

development of this rule, and as such 

we believe it is a key factor in assuring 

that there is sufficient lead time to 

initiate the Tier 4 standards according to 

the final implementation schedule.65

As proposed, machines that use 

engines built before the effective date of 

the Tier 4 standards do not have to be 

included in an equipment 

manufacturer’s percent of production 

calculations under this allowance. 

Machines that use engines certified to 

the previous tier of standards under our 

Small Business provisions (as described 

in section III.C of this preamble ) do not 

have to be included in an equipment 

manufacturer’s percent of production 

calculations under this allowance. All 

engines certified to the Tier 4 standards, 

including those engines that produce 

emissions at higher levels than the 

standards, but for which an engine 

manufacturer uses ABT credits to 

demonstrate compliance, will count as 

Tier 4 complying engines and do not 

have to be included in an equipment 

manufacturer’s percent of production 

calculations. Engines that meet the Tier 

4 PM standards but are allowed to meet 

the Tier 3 NMHC+NOX standards during 

the phase-in period also count as Tier 4 

complying engines and do not have to 

be included in an equipment 

manufacturer’s percent of production 

calculations. 

The choice of a cumulative percent 

allowance of 80 percent is based on our 

best estimate of the degree of reasonable 

lead time needed by equipment 

manufacturers. We believe the 80 

percent allowance responds to the need 

for flexibility identified by equipment 

manufacturers, while ensuring a 

significant level of emission reductions 

in the early years of the program. (As 

noted in the following section III.B.2.b, 

we are adopting a technical hardship 

provision that allows an equipment 

manufacturer to request additional relief 

under the percent of production 

allowance under certain conditions and 

with EPA approval.) 

b. Technical Hardship Flexibility 

Ingersoll-Rand commented that the 

80% percent of production allowance 

level is not sufficient for Tier 4 given 

the stringency of the standard and the 

difficulty engine manufacturers will 

have complying with the standards. In 

further discussions with Ingersoll-Rand 

on this issue, they suggested that a 

percent of production allowance level of 

150% for totally non-integrated 

equipment manufacturers (i.e., 

equipment manufacturers producing no 

diesel engines) was appropriate for Tier 

4 power categories above 25 

horsepower. A fully integrated 

manufacturer would still receive the 

80% level and partially-integrated 

companies would receive somewhere 

between 80% and 150% depending on 

the share of self-produced engines in 

each specific power category. The basis 

for this comment is their belief that nonintegrated manufacturers are at a 

disadvantage to integrated 

manufacturers (manufacturers making 

both the engine and equipment) when it 

comes to planning for new Tier 4 engine 

designs. 

Although we do not accept the 

premise that equipment manufacturer 

lead time must be drastically expanded 

across-the-board for the Tier 4 program, 

we do agree, as explained earlier, that 

there may be situations where 

additional lead time, in the form of 

increased equipment manufacturer 

transition flexibilities, can be justified. 

Therefore, we have added an additional 

flexibility (which has no direct analogue 

in the Tier 2/3 rule) to this rule in order 

to provide additional needed lead time 

in appropriate, individualized 

circumstances based on a showing of 

extreme technical or engineering 

hardship. Ingersoll-Rand has agreed, by 

letter to EPA, that this provision 

satisfies all of its concerns regarding 

39008 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

adequacy of lead time for meeting Tier 

4 standards.

This additional flexibility would be 

available for the three Tier 4 power 

categories between 25 and 750 

horsepower. As noted earlier, IngersollRand did not believe additional 

flexibility was needed for engines below 

25 horsepower. We agree because the 

Tier 4 standards for engines below 25 

horsepower are not based on the use of 

advanced aftertreatment. We also are 

not including this new provision for 

engines above 750 horsepower because 

nearly all of the equipment 

manufacturers utilizing engines above 

750 horsepower make small volumes of 

equipment. The small-volume 

allowance (described in the following 

section) allows a manufacturer to 

exempt a specific number of engines 

over a seven-year period, which in most 

cases will be greater than the increased 

percentage potentially available under 

this new provision. 

This new provision, found in new 

§ 1039.625(m), is a case-by-case 

exemption granted by EPA to an 

equipment manufacturer. The 

equipment manufacturer would have 

the burden of demonstrating existence 

of extreme technical or engineering 

hardship conditions that are outside its 

control. It must also demonstrate that it 

has exercised reasonable due diligence 

to avoid the situation. EPA would treat 

each request for technical hardship 

separately, with no guarantee that it 

would grant the exemption. If EPA 

grants the exemption, the equipment 

manufacturer could receive up to an 

additional 70 percent under the percent 

of production allowance for each of the 

three power categories noted above 

(meaning that there is a potential total 

150 percent under the percent of 

production allowance available, the 

initial 80 percent available without 

application, and an additional potential 

increment of up to 70 percent available 

on a case-by-case basis). 

The exemption could only be granted 

upon written application to EPA setting 

forth essentially why the normally 

successful elements of engine maker/

equipment manufacturer design cycle 

have not provided adequate lead time 

for a particular equipment model. The 

application would therefore have to 

address, with documentation: The 

engineering or technical problems that 

have proved unsolvable within the lead 

time provided, the normal design cycle 

between the engine maker and 

equipment manufacturer and why that 

cycle has not worked in this instance, 

all information (such as written 

specifications, performance data, 

prototype engines) the equipment 

manufacturer has received from the 

engine supplier, and a comparison of 

the design process for the equipment 

model for which the exemption is 

requested with the design process for 

other models for which no exemption is 

needed. The equipment manufacturer 

also would have to make and describe 

all efforts to find other compliant 

engines for the model. EPA will then 

evaluate and determine whether or not 

to grant each such request, and what 

additional increment under the percent 

of production allowance (above the 80 

percent normally allowed) is justified 

(not to exceed an additional 70 percent 

as noted above). As part of our 

evaluation of requests based on 

technical hardship, we may contact the 

engine supplier(s) listed by the 

equipment manufacturer to check on the 

accuracy of the engine-related 

information supplied by the equipment 

manufacturer. This extension of lead 

time is premised on the existence of 

extreme technical or engineering 

problems, in contrast to the economic 

hardship provision described in section 

III.B.2.f below, where consideration of 

economic impact is critical. 

EPA would not grant an application 

for technical hardship exemption unless 

the equipment manufacturer 

demonstrates that the full 80 percent 

allowed under the percent of production 

allowance is reasonably expected to be 

used up in the first two years of the 

seven-year flexibility period. The reason 

is obvious. If that allowance would not 

be fully utilized, then no further 

extension of lead time can be justified. 

Furthermore, any technical hardship 

allowance would have to be used up 

within two years after the Tier 4 percent 

of production allowances start for any 

power category. This is because, 

although we believe that circumstances 

of extreme technical or engineering 

hardship may arise, we cannot see that 

these circumstances could not be solved 

within the first two years of the 

transition. Indeed, Ingersoll-Rand itself 

clearly indicated that this is a temporary 

burden which exists during initial 

model transition and indicated that only 

18 months (rather than two years) could 

be needed from receipt of the certified 

engine. 

This flexibility will be available to all 

equipment manufacturers, but may only 

be requested for equipment in which the 

equipment manufacturer is different 

than the engine manufacturer. We 

believe that integrated manufacturers 

who produce both the equipment and 

the engine used in the piece of 

equipment could have an advantage in 

the equipment redesign process 

(compared to an equipment 

manufacturer, whether integrated or not, 

that uses engines from a different 

manufacturer) that makes additional 

relief under the percent of production 

allowance unnecessary. In addition, 

integrated equipment manufacturers 

have other programs available to them 

(that non-integrated manufacturers do 

not have) such as the engine averaging, 

banking and trading program, which can 

provide lead time flexibility during the 

transition years. Most basically, 

integrated manufacturers should be able 

to design concurrently in all 

circumstances, so that extreme technical 

or engineering hardships should not 

arise. 

c. Small-Volume Allowance 

The percent-of-production approach 

described above may provide little 

benefit to businesses focused on a small 

number of equipment models, and 

hence there could be situations where 

there is insufficient lead time for such 

models. Therefore, with today’s action, 

we are adopting a small-volume 

allowance that will allow any 

equipment manufacturer to exceed the 

percent-of-production allowances 

described above during the same sevenyear period, provided the manufacturer 

limits the number of exempted engines 

to 700 total over the seven years, and to 

200 in any one year. The limit of 700 

exempted engines (and no more than 

200 engines per year) applies separately 

to each of the Tier 4 power categories 

(engines below 25 horsepower, engines 

between 25 and 75 horsepower, engines 

between 75 and 175 horsepower, 

engines between 175 and 750 

horsepower, and engines above 750 

horsepower). In addition, manufacturers 

making use of this provision must limit 

exempted engines to a single engine 

family in each Tier 4 power category.

We are also adopting an alternative 

small-volume allowance, which 

equipment manufacturers have the 

option of utilizing. In discussions 

regarding the current small-volume 

allowance, some manufacturers 

expressed the desire to be able to 

exempt engines from more than one 

engine family, but still fall under the 

number of exempted engine limit. For 

that reason, we solicited comment on a 

small-volume allowance program that 

would allow manufacturers to exempt 

engines in more than one family, but 

have lower numerical limits. Under this 

alternative, manufacturers using the 

small-volume allowance could exempt 

525 machines over seven years (with a 

maximum of 150 in any given year) for 

each of the three power categories below 

175 horsepower, and 350 machines over 

seven years (with a maximum of 100 in 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39009

66 ‘‘Analysis of Small Volume Equipment 

Manufacturer Flexibilities,’’ memo from Phil 

Carlson (EPA) to Docket A–2001–28.

67Memorandum, Phil Carlson to Docket A–2001–

28, ‘‘Analysis of Equipment Manufacturer 

Flexibilities,’’ April 15, 2003. Docket A–2001–28, 

document no. II–B–24.

any given year) for the two power 

categories above 175 horsepower. 

Concurrent with the revised caps of 525 

or 350, depending on power category, 

manufacturers could exempt engines 

from more than one engine family under 

the small-volume allowance program. 

Based on sales information for small 

businesses, we estimated that the 

alternative small-volume allowance 

program to include lower numbers of 

eligible engines and allow 

manufacturers to exempt more than one 

engine family would keep the total 

number of engines eligible for the 

allowance at roughly the same overall 

level as the 700-unit program.66 We also 

requested comment on allowing 

equipment manufacturers to choose 

between the two small-volume 

allowance programs described above (68 

FR 28474–28475, May 23, 2003).

Both engine and equipment 

manufacturers supported dropping the 

one engine family restriction from the 

700 unit small-volume allowance. In 

addition, they commented that if the 

one engine family restriction was not 

dropped from the 700 unit option, they 

supported the option of allowing 

equipment manufacturers to choose 

between the two small-volume 

allowance options. With today’s action, 

we are revising the proposed smallvolume allowance to allow equipment 

manufacturers to choose between the 

700 unit over seven years option, with 

exempted engines limited to one engine 

family, or the proposed alternative 

which would allow equipment 

manufacturers to exempt fewer engines 

over seven years (525 or 350 units, 

depending on the power category), but 

with no restriction on the number of 

engine families that could be included 

in the exempted engine count. Based on 

our analysis of small businesses noted 

above, we expect the number of engines 

that could be exempted under either 

option is roughly the same. Giving 

equipment manufacturers the ability to 

choose between the two options should 

not significantly impact the number of 

engines likely to be exempted under the 

small-volume allowance. We have not 

chosen to drop the one engine family 

restriction from the 700-unit smallvolume allowance because it would 

result in a significant increase in the 

number of engines eligible to be 

exempted to levels which we believe are 

not needed to provide adequate lead 

time for the Tier 4 program.67

As with the percent-of-production 

allowance, machines that use engines 

built before the effective date of the Tier 

4 standards do not have to be included 

in an equipment manufacturer’s count 

of engines under the small-volume 

allowance. Similarly, machines that use 

engines certified to the previous tier of 

standards under our Small Business 

provisions (as described in section III.C 

of today’s action) do not have to be 

included in an equipment 

manufacturer’s count of engines under 

the small-volume allowance. All 

engines certified to the Tier 4 standards, 

including those that produce emissions 

at higher levels than the standards but 

for which an engine manufacturer uses 

ABT credits to demonstrate compliance, 

will be considered to be Tier 4 

complying engines and do not have to 

be included in an equipment 

manufacturer’s count of engines under 

the small-volume allowance. Engines 

that meet the Tier 4 PM standards but 

are allowed to meet the Tier 3 

NMHC+NOX standards during the 

phase-in period (i.e., phase-out engines) 

will also be considered as Tier 4 

complying engines and do not have to 

be included in an equipment 

manufacturer’s count of engines under 

the small-volume allowance. All 

engines used under the small-volume 

allowance must certify to the standards 

that would be in effect in the absence of 

the Tier 4 standards (see Table III.B–1 

for the applicable standards). As noted 

earlier, equipment manufacturers will 

need to provide written assurance to the 

engine manufacturer when it purchases 

engines under the transition provisions 

for equipment manufacturers. 

The Engine Manufacturers 

Association commented that the 

proposed regulations for the smallvolume allowance established a limit on 

the total number of engines an 

equipment manufacturer could use that 

did not meet the Tier 4 standards and 

should be revised to set a limit based on 

U.S.-directed production (consistent 

with the proposed regulatory language 

for the percent-of-production 

allowance). EPA agrees that the limit 

under the small-volume allowance 

should apply to U.S.-directed 

production only—as the commenter 

surmised, this is what EPA intended—

and has revised the final regulations for 

the small-volume allowance 

accordingly. 

We are also finalizing a technical 

hardship provision for small business 

equipment manufacturers using 25–50 

horsepower engines, as discussed in 

III.C.2.b.ii. 

d. Early Use of Tier 4 Flexibilities in the 

Tier 2/3 Timeframe 

As proposed, we are also adopting 

provisions that allow equipment 

manufacturers to start using a limited 

number of the new Tier 4 percent of 

production allowances or Tier 4 smallvolume allowances once the seven-year 

period for the existing Tier 2/Tier 3 

program expires (and so continue using 

engines meeting Tier 1 or Tier 2 

standards). In this way, a manufacturer 

can potentially continue exempting the 

most difficult applications once the 

seven-year period of the current Tier 2/

3 flexibility provisions is finished. 

(Under the existing transition program 

for equipment manufacturers, any 

unused Tier 2/3 allowances expire after 

the seven-year period.) However, opting 

to start using Tier 4 allowances once the 

seven-year period from the current Tier 

2/Tier 3 program expires will reduce the 

number of exemptions available from 

the Tier 4 standards under either the 

percent of production allowance or the 

small-volume allowance. 

With today’s action, equipment 

manufacturers may use up to a total of 

10 percent of their Tier 4 percent of 

production allowances or up to 100 of 

their Tier 4 small-volume allowances 

prior to the effective date of the Tier 4 

standards. (The early use of Tier 4 

allowances will be allowed in each Tier 

4 power category.) This amount of 

equipment utilizing the early Tier 4 

allowances will be subtracted from 

either the Tier 4 allowance of 80 percent 

under the percent of production 

allowance or the applicable limit under 

the small-volume allowance for the 

appropriate power category, resulting in 

fewer allowances once the Tier 4 

standards take effect. For example, if an 

equipment manufacturer uses the 

maximum amount of early Tier 4 

percent of production allowances of 10 

percent, then the manufacturer will 

have a cumulative total of 70 percent 

remaining for that power category when 

the Tier 4 standards take effect (i.e., 80 

percent production allowance minus 10 

percent).

The California Air Resources Board 

commented that we should discount the 

early use of Tier 4 flexibilities to 

discourage abuse of the provisions, by 

requiring equipment manufacturers to 

give up more than one flexibility after 

Tier 4 begins for every flexibility used 

prior to Tier 4. California did not 

specifically recommend what the 

discount level should be. We are not 

adopting a discount for early use of the 

Tier 4 flexibilities. The intent of 

39010 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

allowing manufacturers to use the Tier 

4 flexibilities early was to allow them to 

carry over the few remaining equipment 

models that might not have been 

redesigned at the end of the seven-year 

Tier 2/Tier 3 flexibility period until Tier 

4 begins, and not requiring a possible 

double redesign in a short period of 

time. Because we have placed a 

relatively low cap (10% under the 

percent of production allowance or 100 

units under the small volume 

allowance) on the amount an equipment 

manufacturer could use early from Tier 

4, we do not believe that manufacturers 

will be able to abuse the program and 

therefore should not have to discount 

the number of Tier 4 flexibilities used 

early. 

We view this provision on early use 

of Tier 4 allowances as providing 

reasonable lead time for introducing 

Tier 4 engines, since it should result in 

earlier introduction of Tier 4-compliant 

engines (assuming that the allowances 

would otherwise be fully utilized) with 

resulting net environmental benefit 

(notwithstanding longer utilization of 

earlier Tier engines, due to the 

stringency of the Tier 4 standards) and 

should do so at net reduction in cost by 

providing cost savings for the engines 

that have used the Tier 4 allowances 

early. (This is another reason we see no 

reason to discount the allowance.) 

e. Early Tier 4 Engine Incentive Program 

for Equipment Manufacturers 

Ingersoll-Rand commented that nonintegrated equipment manufacturers 

who incorporate Tier 4 compliant 

engines into their equipment prior to 

the applicable date for the Tier 4 

standards should be able to earn early 

compliance credits. These early 

compliance credits could allow use of 

the previous-tier engine (above and 

beyond the base percentage granted 

under the flexibility program) for up to 

18 months after the certification date of 

the engine. Ingersoll-Rand also 

commented that such early compliance 

credits should be able to be traded 

across power categories with 

appropriate weightings applied. 

We believe a program that provides an 

incentive for equipment manufacturers 

to use early Tier 4-compliant engines is 

worthwhile from both a technology 

development perspective and an 

environmental perspective. As we noted 

at proposal when we proposed a similar 

incentive program for engine makers, 

early use of Tier 4 compliant engines 

will help foster technology development 

by getting the Tier 4 technologies out in 

the market early and provide real-world 

experience to manufacturers and users 

(68 FR 28482, May 23, 2003). It will also 

lead to additional emission reductions 

above and beyond those expected under 

the existing Tier 2/3 standards in the 

years prior to Tier 4 taking effect. 

Moreover, equipment manufacturers 

(and especially non-integrated 

equipment manufacturers) are unlikely 

to buy early Tier 4 engines without 

some incentive to do so since these 

engines are likely to be more expensive 

than Tier 2/3 engines. For these reasons, 

we are adopting new provisions that 

will allow any equipment manufacturer 

to earn early compliance credits that 

could be used to increase the number of 

equipment flexibilities above and 

beyond the levels allowed under the 

percent of production allowance or 

small-volume allowance (and for 

reasons independent of those 

allowances: namely, an inducement to 

make early use of Tier 4 engines). 

The program will be available to all 

equipment manufacturers regardless of 

whether they are integrated or nonintegrated. While Ingersoll-Rand 

commented that the program should be 

available to non-integrated equipment 

manufacturers only, we believe the 

program should provide an incentive for 

all equipment manufacturers to use 

early Tier 4 engines (since the benefits 

accruing from early use of such engines 

exist regardless of whether the 

equipment manufacturer is integrated 

with the engine maker). 

Before describing this provision 

further, it is desirable to put it in 

context by explaining its relationship to 

the engine manufacturer incentive 

program for early Tier 4 or very low 

emission engines (described in section 

III.M below), as well as to the similar 

incentive provisions for engine 

manufacturers which we proposed (68 

FR 28482, May 23, 2003). We are, in 

essence, redirecting the proposed 

incentive for using early Tier 4 

compliant engines to equipment 

manufacturers. Thus, under today’s 

rule, an engine manufacturer could use 

the incentive program (as described in 

section III.M) only if an equipment 

manufacturer uses an early Tier 4 

engine but (for whatever reason) 

declines to use the early engine 

flexibility allowance. In such a case, the 

engine manufacturer could opt to earn 

either ‘‘engine offsets’’ (which would 

allow them to make fewer engines 

certified to the Tier 4 standards once the 

Tier 4 program takes effect) or ABT 

credits, but not both. In the more likely 

case of an equipment manufacturer 

using early Tier 4 engines and using the 

incentive flexibilities itself, the engine 

manufacturer would be eligible to 

generate ABT credits from such early 

Tier 4 compliant engines. 

The early Tier 4 engine incentive 

program for equipment manufacturers 

will apply to the four power categories 

above 25 horsepower where the use of 

advanced exhaust aftertreatment is 

expected under the Tier 4 standards. 

Because the Tier 4 standards for engines 

below 25 horsepower are not expected 

to result in the use of advanced 

aftertreatment technologies, we are not 

including such engines in the program. 

In order for an engine to be 

considered an early Tier 4 compliant 

engine, it will need to be certified to the 

final Tier 4 standards for PM, NOX, and 

NMHC (i.e., the 2013 standards for 

engines between 25 and 75 horsepower, 

the 2014 standards for engines between 

75 and 175 horsepower, the 2014 

standards for engines between 175 and 

750 horsepower, and the 2015 standards 

for engines above 750 horsepower) or to 

the final PM and NMHC standards and 

the alternative NOX standards during 

the phase-in (as described in section 

II.A.2.c of today’s rule for engines 

between 75 and 750 horsepower). In 

order to be an early Tier 4 compliant 

engine, these engines would also have 

to certify to the Tier 4 CO standards. 

Because 15 ppm sulfur diesel fuel will 

be available on a widespread basis in 

time for 2007 (due to the requirements 

for on-highway heavy-duty engines), we 

are allowing engine manufacturers to 

begin certifying engines to the Tier 4 

standards, and therefore have engines 

eligible for the early Tier 4 engine 

incentive program, beginning with the 

2007 model year.

In order to provide assurance that 

early Tier 4 compliant engines are 

placed into equipment earlier than 

would otherwise happen under the Tier 

4 program, engine manufacturers will be 

required to certify and start producing 

such engines before September 1 of the 

year prior to the post-2011 Tier 4 

standards taking effect or before 

September 1, 2010 for engines in the 

175 to 750 horsepower category. 

Similarly, equipment manufacturers 

will be required to install such engines 

in equipment before January 1 of the 

year the post-2011 Tier 4 standards take 

effect or before January 1, 2011 for 

engines in the 175 to 750 horsepower 

category. In addition, in order to be 

considered an early Tier 4 compliant 

engine, such engines would be required 

to comply with all of the requirements 

associated with the final Tier 4 

standards such as NTE requirements, 

transient testing (where otherwise 

required for certification, i.e. for 25–750 

horsepower engines), and closed 

crankcase requirements. Finally, for 

engines certified prior to model year 

2011, the engine manufacturer would be 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39011

allowed to demonstrate early 

compliance with the Tier 4 standards on 

a 15 ppm sulfur fuel (as allowed under 

the certification fuel requirements 

specified in section III.D of today’s rule) 

provided the engine manufacturer 

demonstrates that the equipment in 

which the engines are placed will use 

fuel meeting this low sulfur 

specification and includes appropriate 

information on the engine label and 

ensures that ultimate purchasers of 

equipment using these engines are 

informed that ultra low-sulfur diesel 

fuel is recommended (see section 

1039.104(e) of the regulations). 

Equipment manufacturers using such 

pre-2011 engines in their equipment 

would likewise need to take steps to 

ensure that fuel meeting this low sulfur 

specification is used in the equipment 

once operated in use to earn the 

additional flexibility allowances. 

Equipment manufacturers installing 

engines complying with the final Tier 4 

standards (as described above) would 

earn one flexibility allowance for each 

early Tier 4 compliant engine used in its 

equipment. Equipment manufacturers 

installing engines between 75 and 750 

horsepower that comply with the final 

Tier 4 PM standard and the alternative 

NOX standard (described in section 

II.A.2.c) would earn one-half of a 

flexibility allowance for each early Tier 

4 compliant engine used in its 

equipment. Table III.B–2 presents the 

requirements an engine would need to 

meet to be considered an early Tier 4 

engine for the purposes of this early Tier 

4 engine incentive program.

TABLE III.B–2.—REQUIREMENTS FOR ENGINES

[Under the Early Tier 4 Engine Incentive Program] 

Power category Tier 4 standards the engines must meet Date before which engines must be installed by 

the equipment manufacturer 

Number of 

flexibility allowances earned 

for use of 

early tier 4 engines 

25 ≤ hp < 75 .............. Model Year 2013 .................................................... January 1, 2013a .................................................... 1–to–1 

(19 ≤ kW < 56) ..........

75 ≤ hp < 175 ............ Model Year 2014 .................................................... January 1, 2012 ..................................................... 1–to–1 

(56 ≤ kW <130) ......... Model Year 2012b .................................................. January 1, 2012 ..................................................... 0.5–to–1 

175 ≤ hp ≤ 750 .......... Model Year 2014 .................................................... January 1, 2011 ..................................................... 1–to–1 

(130 ≤ kW ≤ 560) ...... Model Year 2011b .................................................. January 1, 2011 ..................................................... 0.5–to–1 

Generator Sets .......... Model Year 2015 .................................................... January 1, 2015 ..................................................... 1–to–1 

>750 hp .....................

(>560 kW) ..................

Other Machines ......... Model Year 2015 .................................................... January 1, 2015 ..................................................... 1–to–1 

>750 hp .....................

(>560 kW) ..................

aThe installation date for 50 to 75 horsepower engines purchased from manufacturers choosing to opt out of the 2008 model year Tier 4 

standards and instead comply with the Tier 4 standards beginning in 2012 would be January 1, 2012. bTo be eligible, engines must meet the 0.01g/bhp-hr PM standard and the alternative NOX standards in section 1039.102 (e) described in section II.A.2.c. 

As described above, equipment 

manufacturers using early Tier 4 

compliant engines can earn flexibility 

allowances that can be used to 

effectively increase the number of 

allowances provided under the percent 

of production allowance or the small 

volume allowance in the same power 

category. For example, an equipment 

manufacturer that uses 500 engines in 

the 175 to 750 horsepower category that 

met the model year 2011 PM standards 

and alternative NOX standards would 

earn 250 additional flexibility 

allowances in that power category. That 

manufacturer could then exclude 250 

engines from its calculations before 

demonstrating compliance with the 80 

percent limit under the percent of 

production allowance (or the applicable 

limit under the small volume allowance 

if the equipment manufacturer is using 

that option) once Tier 4 starts in that 

power category. 

Equipment manufacturers would be 

required to report certain information 

regarding the early Tier 4 compliant 

engines (such as engine family name, 

number of engines used prior to Tier 4 

in each power category, the rated power 

of the engines, and the type of 

application the engines above 750 

horsepower were used in) when they 

submit their first report under the Tier 

4 flexibility program. For engines above 

750 horsepower, equipment 

manufacturers also would be required to 

keep records of how many early Tier 4 

compliant engines are used in generator 

sets, versus how many are used in other 

machinery. This is because the 

additional flexibility allowances earned 

from the use of early Tier 4 compliant 

engines used in generator sets could 

only be used for additional flexibility 

allowances for generator sets. Likewise, 

the additional flexibility allowances 

earned from the use of early Tier 4 

compliant engines used in mobile 

machinery (labeled ‘other machinery’ in 

the table above) applications could only 

be used for additional flexibility 

allowances for other non-generator set 

applications. 

Under the early Tier 4 engine 

incentive program, we will allow 

equipment manufacturers to ‘‘trade’’ the 

additional flexibilities earned in the two 

power categories between 75 and 750 

horsepower, with the power rating of 

the engines factored into the ‘‘trade’’ to 

ensure equivalent emissions for the 

engines generating the early allowances 

and the engines using the allowances. 

For example, an equipment 

manufacturer that earned 100 additional 

flexibility allowances under the early 

Tier 4 engine incentive program from 

100 horsepower engines, could ‘‘trade’’

those flexibilities into the next power 

category up (175 to 750 horsepower). 

The equipment manufacturer would 

generate 10,000 horsepower-allowances 

from those early engines (i.e., 100 

horsepower times 100 allowances). The 

equipment manufacturer could then 

produce, for this example, an additional 

25 engines with a power rating of 400 

horsepower above and beyond the 

normal limit on allowances (or any 

other combination of engines such that 

the sum of the horsepower-weighted 

allowances adds up to the 10,000 

horsepower-allowances used in this 

39012 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

example). We are not allowing trading 

for engines in the 25 to 75 horsepower 

category because the Tier 4 standards 

for these engines are based on the 

application of only PM aftertreatment 

technology. Similarly, we are not 

allowing trading for engines in the 

above 750 horsepower category because 

the Tier 4 standards are based on the 

application of PM aftertreatment to all 

engines, but NOX aftertreatment for only 

some engines. 

f. Economic Hardship Relief Provision 

With today’s action, and as proposed, 

we are providing an additional Tier 4 

transition flexibility for ‘‘economic 

hardship relief’’ for equipment 

manufacturers. Under the economic 

hardship relief provisions, an 

equipment manufacturer that does not 

make its own engines could obtain 

limited additional relief by providing 

evidence that, despite its best efforts, it 

cannot meet the implementation dates, 

even with the Tier 4 equipment 

flexibility program provisions outlined 

above. Such a situation could occur if 

an engine supplier without a major 

business interest in the equipment 

manufacturer were to change or drop an 

engine model very late in the 

implementation process. The purpose of 

the provision is to redress individual 

situations of extreme economic 

hardship, not merely to perpetuate 

existing market share. That is, if 

situations arise where one equipment 

maker cannot produce equipment using 

Tier 4-compliant engines by the 

compliance date, but another can, 

ordinarily EPA would not adjust the 

program to allow use of the noncompliant application absent extreme, 

compelling equitability considerations. 

Applications for economic hardship 

relief will have to be made in writing, 

and will need to be submitted before the 

earliest date of noncompliance. The 

application will also have to include 

evidence that failure to comply is not 

the fault of the equipment manufacturer 

(such as a supply contract broken by the 

engine supplier), and include evidence 

that serious economic hardship to the 

company will result if relief is not 

granted. (As explained in section 

III.B.2.b above, this is a significant 

difference between this economic 

hardship provision and the technical 

hardship flexibility, where 

consideration of cost is generally 

irrelevant.) We expect to work with the 

applicant to ensure that all other 

remedies available under the flexibility 

provisions are exhausted before granting 

additional relief (if appropriate), and 

place a limit on the period of relief to 

no more than one year. Applications for 

economic hardship relief generally will 

only be accepted during the first year 

after the effective date of an applicable 

new emission standard.

The Agency expects this provision 

will be rarely used. This expectation has 

been supported by our initial experience 

with the Tier 2 standards in which only 

one equipment manufacturer has 

applied under the existing hardship 

relief provisions (and the request was 

subsequently denied). Requests for 

economic hardship relief will be 

evaluated by EPA on a case-by-case 

basis, and may require, as a condition of 

granting the applications, that the 

equipment manufacturer agree (in 

writing) to some appropriate measure to 

recover the lost environmental benefit. 

Ingersoll-Rand commented that the 

provisions regarding eligibility for 

hardship relief should be revised so that 

they do not require a demonstration of 

severe economic hardship, noting that 

such a showing would invariably 

preclude large entities (like IngersollRand) from utilizing the provision, even 

though delays were beyond their 

control. As described earlier in this 

section, we have included an additional 

flexibility in the Tier 4 rule in order to 

provide additional needed lead time in 

appropriate, individualized 

circumstances based on a showing of 

extreme technical or engineering 

hardship. We believe the provisions of 

the technical hardship address the 

concerns noted by Ingersoll-Rand in 

their comments, and therefore we are 

not revising the existing economic 

hardship relief provisions (which 

require a demonstration of severe 

economic impact) for the Tier 4 final 

program. 

g. Existing Inventory Allowance 

The current program for nonroad 

diesel engines includes a provision for 

equipment manufacturers to continue to 

use engines built prior to the effective 

date of new standards, until the older 

engine inventories are depleted. It also 

prohibits stockpiling of previous tier 

engines. As proposed, we are extending 

these provisions for the transition to the 

Tier 4 standards adopted today. We are 

also extending the existing provision 

that provides an exception to the 

applicable compliance regulations for 

the sale of replacement engines. In 

extending this provision, we are 

requiring that engines built to replace 

certified engines be identical in all 

material respects to an engine of a 

previously certified configuration that is 

of the same or later model year as the 

engine being replaced. The term 

‘‘identical in all material respects’’

allows for minor differences that would 

not reasonably be expected to affect 

emissions such as a change in materials 

or a change in the company supplying 

the components of the engine. 

3. What Are the Recordkeeping, 

Notification, Reporting, and Labeling 

Requirements Associated With the 

Equipment Manufacturer Transition 

Provisions? 

The following section describes the 

recordkeeping, notification, reporting, 

and labeling requirement being adopted 

today. As proposed, failure to comply 

with these requirements will subject the 

noncomplying party to penalties as 

described in 40 CFR 1068.101. 

a. Recordkeeping Requirements for 

Engine and Equipment Manufacturers 

With today’s action, we are extending 

the recordkeeping requirements from 

the current equipment manufacturer 

transition program. Under the Tier 4 

transition program, engine 

manufacturers will be allowed to 

continue to build and sell previous tier 

engines needed to meet the market 

demand created by the equipment 

manufacturer flexibility program, 

provided they receive written assurance 

from the engine purchasers that such 

engines are being procured for this 

purpose. Engine manufacturers will be 

required to keep copies of the written 

assurance from the engine purchasers 

for at least five full years after the final 

year in which allowances are available 

for each power category. 

Equipment manufacturers choosing to 

take advantage of the Tier 4 allowances 

will be required to: (1) Keep records of 

the production of all pieces of 

equipment excepted under the 

allowance provisions for at least five 

full years after the final year in which 

allowances are available for each power 

category; (2) include in such records the 

serial and model numbers and dates of 

production of equipment and installed 

engines, and the rated power of each 

engine, (3) calculate annually the 

number and percentage of equipment 

made under these transition provisions 

to verify compliance that the allowances 

have not been exceeded in each power 

category; and (4) make these records 

available to EPA upon request. 

b. Notification Requirements for 

Equipment Manufacturers 

We are adopting new notification 

requirements for equipment 

manufacturers with the Tier 4 program. 

Under the Tier 4 transition program, 

equipment manufacturers wishing to 

participate in the Tier 4 transition 

provisions will be required to notify 

EPA prior to their use of the Tier 4 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39013

transition provisions. Equipment 

manufacturers will be required to 

submit their notification before the first 

calendar year in which they intend to 

use the transition provisions. We 

believe that prior notification will 

greatly enhance our ability to ensure 

compliance. Under the newly adopted 

notification requirements, each 

equipment manufacturer will be 

required to notify EPA in writing and 

provide the following information prior 

to the start of the first year in which the 

manufacturer intends to use the 

flexibilities: 

(1) The nonroad equipment 

manufacturer’s name, address, and 

contact person’s name, phone number; 

(2) The allowance program that the 

nonroad equipment manufacturer 

intends to use by power category; 

(3) The calendar years in which the 

nonroad equipment manufacturer 

intends to use the exception;

(4) An estimation of the number of 

engines to be exempted under the 

transition provisions by power category; 

(5) The name and address of the 

engine manufacturer from whom the 

equipment manufacturer intends to 

obtain exempted engines; and 

(6) Identification of the equipment 

manufacturer’s prior use of Tier 2/3 

transition provisions. 

Engine manufacturers supported the 

new notification requirements for 

equipment manufacturers. One 

equipment company, however, 

commented that the notification 

requirements are of minimal value and 

should be deleted. We disagree and 

continue to believe the new notification 

requirements will greatly enhance our 

ability to ensure compliance with the 

flexibility provisions. Given the limited 

information that must be provided by 

equipment manufacturers, we do not 

expect that the notifications will require 

any significant effort to pull the 

information together and submit to EPA. 

EPA had requested comment on 

whether the notification provisions 

should also apply to the current Tier 2/

Tier 3 transition program, and if so, how 

these provisions should be phased in for 

equipment manufacturers using the 

current Tier 2/Tier 3 transition 

provisions. We did not receive any 

comments on this issue. However, 

consistent with our approach to several 

other Tier 4 requirements that we were 

considering applying to the Tier 2/Tier 

3 transition program, we are not 

adopting such notification requirements 

for equipment manufacturers for the 

current Tier 2/Tier 3 program. 

c. Reporting Requirements for Engine 

and Equipment Manufacturers 

As with the current program, engine 

manufacturers who participate in the 

Tier 4 program will be required to 

submit information each year on the 

number of such engines produced and 

to whom the engines are provided. The 

purpose of these submittals is to help 

EPA monitor compliance with the 

program and prevent abuse of the 

program. 

We are adopting new reporting 

requirement for equipment 

manufacturers participating in the Tier 

4 equipment manufacturer transition 

provisions. With today’s action, 

equipment manufacturers participating 

in the program will be required to 

submit an annual written report to EPA 

that calculates its annual number of 

exempted engines under the transition 

provisions by power category in the 

previous year. Equipment 

manufacturers using the percent of 

production allowance, will also have to 

calculate the percent of production the 

exempted engines represented for the 

appropriate year. Each report will 

include a cumulative calculation (both 

total number and, if appropriate, the 

percent of production) for all years the 

equipment manufacturer is using the 

transition provisions for each of the Tier 

4 power categories. In order to ease the 

reporting burden on equipment 

manufacturers, EPA intends to work 

with the manufacturers to develop an 

electronic means for submitting 

information to EPA.

EPA had requested comment on 

whether these new reporting 

requirements for equipment 

manufacturers should also apply to the 

current Tier 2/Tier 3 transition program, 

and if so, how these provisions should 

be phased in for equipment 

manufacturers using the current Tier 2/

Tier 3 transition provisions. We did not 

receive any comments on this issue. 

However, consistent with our approach 

to several other Tier 4 requirements that 

we were considering applying to the 

Tier 2/Tier 3 transition program, we are 

not adopting reporting requirements for 

equipment manufacturers for the 

current Tier 2/Tier 3 program. 

d. Labeling Requirements for Engine 

and Equipment Manufacturers 

Engine manufacturers are currently 

required to label their certified engines 

with a label that contains a variety of 

information. Under today’s action, as 

proposed, we are adopting requirements 

that engine manufacturers be required to 

identify on the engine label if the engine 

is exempted under the Tier 4 transition 

program. In addition, and also as 

proposed, equipment manufacturers 

will be required to apply a label to the 

engine or piece of equipment that 

identifies the equipment as using an 

engine produced under the Tier 4 

transition program for equipment 

manufacturers. 

Engine manufacturers were opposed 

to the new labeling requirements. We 

believe these new labeling requirements 

will allow EPA to easily identify the 

exempted engines and equipment, 

verify which equipment manufacturers 

are using these exceptions, and more 

easily monitor compliance with the 

transition provisions. Labeling of the 

equipment should also help U.S. 

Customs to quickly identify equipment 

being imported using the exemptions for 

equipment manufacturers. 

4. What Are the Requirements 

Associated With Use of Transition 

Provisions for Equipment Produced by 

Foreign Manufacturers? 

Under the current regulations in 40 

CFR 89.2, importers are treated as 

equipment manufacturers and are each 

allowed the full allowance under the 

transition provisions in 40 CFR 

89.102(d). Therefore, under the current 

provisions, importers of equipment from 

a foreign equipment manufacturer could 

as a group import more excepted 

equipment from that foreign 

manufacturer than 80% of that 

manufacturer’s production for the U.S. 

market (i.e., more than the percent-ofproduction), or more than the smallvolume allowance. Therefore, the 

current regulation creates a potentially 

significant adverse environmental 

impact. EPA did not intend this 

outcome, and does not believe it is 

needed to provide reasonable lead time 

to foreign equipment manufacturers. 

EPA thus proposed to change the 

current regulations to eliminate this 

disparity. 

As noted earlier, with today’s action, 

only those nonroad equipment 

manufacturers that install engines and 

have primary responsibility for 

designing and manufacturing equipment 

will qualify for the allowances or other 

relief provided under the Tier 4 

transition provisions. Foreign 

equipment manufacturers who comply 

with the compliance related provisions 

discussed below will receive the same 

allowances and other transition 

provisions as domestic manufacturers. 

Foreign equipment manufacturers who 

do not comply with these compliance 

related provisions will not receive 

allowances. Importers that have little 

involvement in the manufacturing and 

assembling of the equipment will not 

39014 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

68See, for example, 40 CFR 80.410 concerning 

provisions for foreign refiners with individual 

gasoline sulfur baselines.

receive any allowances or other 

transition relief directly, but can import 

exempt equipment if it is covered by an 

allowance or transition provision 

associated with a foreign equipment 

manufacturer. These provisions allow 

the transition allowances and other 

provisions to be used by foreign 

equipment manufacturers in the same 

way as domestic equipment 

manufacturers, while avoiding the 

potential for importers using 

unnecessary allowances. 

Under today’s action, a foreign 

equipment manufacturer includes any 

equipment manufacturer that produces 

equipment outside of the United States 

that is eventually sold in the United 

States. All foreign nonroad equipment 

manufacturers wishing to use the 

transition provisions will have to 

comply with all requirements of the 

regulation discussed above including: 

Notification, recordkeeping, reporting 

and labeling. Along with the equipment 

manufacturer’s notification described 

earlier, a foreign nonroad equipment 

manufacturer will have to comply with 

various compliance related provisions 

similar to those adopted in several fuel 

regulations relating to foreign refiners.68

As part of the notification, the foreign 

nonroad equipment manufacturer will 

have to:

(1) Agree to provide EPA with full, 

complete and immediate access to conduct 

inspections and audits; 

(2) Name an agent in the District of 

Columbia for service of process; 

(3) Agree that any enforcement action 

related to these provisions will be governed 

by the Clean Air Act; 

(4) Submit to the substantive and 

procedural laws of the United States; 

(5) Agree to additional jurisdictional 

provisions; 

(6) Agree that the foreign nonroad 

equipment manufacturer will not seek to 

detain or to impose civil or criminal 

remedies against EPA inspectors or auditors 

for actions performed within the scope of 

EPA employment related to the provisions of 

this program; 

(7) Agree that the foreign nonroad 

equipment manufacturer becomes subject to 

the full operation of the administrative and 

judicial enforcement powers and provisions 

of the United States without limitation based 

on sovereign immunity; and 

(8) Submit all reports or other documents 

in the English language, or include an 

English language translation.

In addition to these requirements, we 

are adopting a new provision for foreign 

equipment manufacturers that 

participate in the transition program to 

comply with a bond requirement for 

engines imported into the U.S. We 

believe the bond requirements are an 

important tool to ensure that foreign 

equipment manufacturers are subject to 

the same level of enforcement as 

domestic equipment manufacturers. 

Furthermore, we believe that a bonding 

requirement for the foreign equipment 

manufacturer is an important 

enforcement tool in order to ensure that 

EPA has the ability to collect any 

judgements assessed against a foreign 

equipment manufacturer for violations 

of these transition provisions. 

Under the bond program adopted 

today, a participating foreign equipment 

manufacturer will have to obtain 

annually a bond in the proper amount 

that is payable to satisfy United States 

judicial judgments that results from 

administrative or judicial enforcement 

actions for conduct in violation of the 

Clean Air Act. The foreign equipment 

manufacturer will have two options for 

complying with the bonding 

requirement. The foreign equipment 

manufacturer can:

(1) Obtain a bond in the proper amount 

from a third-party surety agent that is cited 

in the U.S. Department of Treasury Circular 

570, ‘‘Companies Holding Certificates of 

Authority as Acceptable Sureties on Federal 

Bonds and as Acceptable Reinsuring 

Companies’’; or 

(2) Obtain an EPA waiver from the bonding 

requirement, if the foreign equipment 

manufacturer can show that it has assets of 

an appropriate value in the United States.

EPA expects the second bond option 

to address instances where an 

equipment manufacturer produces 

equipment outside the United States 

containing flexibility engines, but also 

has facilities (and thus significant 

assets) inside the United States. Under 

this second option, such a manufacturer 

can apply to the EPA for a waiver of the 

bonding requirement. 

Because EPA’s concerns of 

compliance will relate to the nature and 

tier of engines used in the transition 

equipment, we believe the bond value 

should be related to the value of the 

engine used. Therefore, we are adopting 

requirements that the bond be set at a 

level designed to represent 

approximately 10% of the cost of the 

engine for each piece of transition 

equipment produced for import into the 

United States under this program. So 

that manufacturers have certainty 

regarding the bond amounts and so that 

there isn’t a need for extensive data 

submittals and evaluation between EPA 

and the manufacturer, the rule specifies 

the bond value for each imported engine 

based on the estimated average cost for 

a Tier 4 engine on which the bond 

would be based. Based on average 

engine cost estimates from table 6.2–5 of 

the final RIA, equipment using engines 

exempted under the transition program 

will require a bond in the amount 

shown in table III.B–3.

TABLE III.B–3.—BOND VALUE FOR

ENGINES IMPORTED

[Under the Tier 4 Transition Program] 

Power range 

Per engine bond 

value 

(dollars) 

0 < hp < 25 ................................... 150 

25 ≤ hp < 75 ................................. 300 

75 ≤ hp < 175 ............................... 500 

175 ≤ hp < 300 ............................. 1,000 

300 ≤ hp < 600 ............................. 3,000 

hp ≥ 600 hp .................................. 8,000 

Depending on the number of engines/

equipment brought into the U.S. each 

year, the value of the bond calculated 

using the above values could change 

from year to year. Under the provisions 

adopted today, an importer would 

calculate the estimated bond amount 

using the values in table III.B–3 and be 

required to obtain a bond equal to the 

highest bond value estimated over the 

seven-year flexibility period. Because 

we have the authority to bring 

enforcement actions against a 

manufacturer for five years beyond the 

end of the program, the manufacturer 

would be required to maintain the bond 

for five years beyond the end of the 

flexibility period or five years after 

using up all of its available allowances, 

whichever occurs first. Finally, if a 

foreign equipment manufacturer’s bond 

is used to satisfy a judgment within the 

seven-year flexibility period, the foreign 

equipment manufacturer will then be 

required to increase the bond to cover 

the amount used within 90 days of the 

date the bond is used. 

Most comments received on this issue 

supported the proposed provisions. 

However, Ingersoll-Rand commented 

that EPA should clarify whether the 

special requirements for foreign 

equipment manufacturers apply to U.S.-

based companies that have foreign 

manufacturing facilities. Ingersoll-Rand 

believes that such requirements should 

not apply because EPA appears to be 

concerned about abuse of the program 

by foreign companies that export 

machines into the U.S. With today’s 

action, all equipment manufacturers 

who import equipment into the U.S. 

will be required to comply with the 

provisions for foreign equipment 

manufacturers, even if they are U.S.-

based companies. Because there is a 

wide range of actual presence in this 

country for ‘‘U.S.-based’’ companies, 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39015

EPA believes it is important that all 

companies importing equipment to the 

U.S. comply with the requirements for 

foreign equipment manufacturers. 

Neither the notification requirements 

described earlier for foreign equipment 

manufacturers nor the bonding 

requirements should cause any burden 

for companies with significant presence 

in this country. We would expect that 

only those companies with limited 

presence or no presence in this country 

will be impacted to any measurable 

degree because of the requirements 

placed on foreign equipment 

manufacturers. 

In addition to the foreign equipment 

manufacturer requirements discussed 

above, EPA is also requiring importers 

of exempted equipment from a 

complying foreign equipment 

manufacturer to comply with certain 

provisions. EPA believes these importer 

provisions are essential to EPA’s ability 

to monitor compliance with the 

transition provisions. Under today’s 

action, each importer will be required to 

notify EPA prior to their initial 

importation of equipment exempted 

under the Tier 4 transition provisions. 

Importers will be required to submit 

their notification prior to the first 

calendar year in which they intend to 

import exempted equipment from a 

complying foreign equipment 

manufacturer under the transition 

provisions. The importer’s notification 

will need to include the following 

information:

(1) The name and address of importer (and 

any parent company); 

(2) The name and address of the 

manufacturers of the exempted equipment 

and engines the importer expects to import; 

(3) Number of exempted equipment the 

importer expects to import for each year 

broken down by equipment manufacturer 

and power category; and 

(4) The importer’s use of the transition 

provisions in prior years (number of 

flexibility engines imported in a particular 

year, under what power category, and the 

names of the equipment and engine 

manufacturers).

In addition, EPA is requiring that any 

importer electing to import to the 

United States exempted equipment from 

a complying foreign equipment 

manufacturer will have to submit 

annual reports to EPA. The annual 

report will have to include the number 

of exempted equipment the importer 

actually imported to the United States 

in the previous calendar year; and the 

identification of the equipment 

manufacturers and engine 

manufacturers whose exempted 

equipment/engines were imported.

C. Engine and Equipment Small 

Business Provisions (SBREFA) 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute, 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 

organizations, and small governmental 

jurisdictions. As EPA believed that the 

ultimate rule could have a significant 

economic impact on small businesses, 

we prepared a regulatory flexibility 

analysis as part of this rulemaking. We 

prepared an Initial Regulatory 

Flexibility Analysis (IRFA) pursuant to 

section 603 of the RFA which is part of 

the record for the NPRM, and we 

prepared a Final Regulatory Flexibility 

Analysis (FRFA) to support today’s 

action. 

Under section 609(b) of the RFA, a 

Small Business Advocacy Review Panel 

(SBAR Panel or Panel) is required to be 

convened prior to publication of both an 

IRFA and a FRFA. Section 609(b) of the 

RFA directs the Panel to, through 

outreach with small entity 

representatives (SERs), report on the 

comments of the SERs and make 

findings under section 603 of the RFA 

on issues related to identified elements 

of an IRFA during the proposal stage of 

a rulemaking. During the development 

of the rulemaking, EPA is to analyze the 

elements of the IRFA in developing the 

FRFA for the final rulemaking (see 

section X.C of this preamble for more 

discussion on the elements of a FRFA). 

The purpose of the Panel was to gather 

information to identify impacts on small 

businesses and to develop potential 

regulatory options to mitigate these 

concerns. At the completion of the 

SBAR Panel process, the Panel prepared 

a Final Panel Report. This report 

includes: 

• Background information on the 

proposed rule being developed; 

• Information on the types of small 

entities that would be subject to the 

proposed rule; 

• A description of efforts made to 

obtain the advice and recommendations 

of representatives of those small 

entities; and, 

• A summary of the comments that 

had been received to date from those 

representatives. 

The Panel report was included in the 

proposal’s rulemaking record (and 

hence in the rulemaking record for this 

final rule), and provided the Panel and 

the Agency with an opportunity to 

identify and explore potential ways of 

shaping the rule to minimize the burden 

of the rule on small entities while 

achieving the rule’s purposes and being 

consistent with Clean Air Act statutory 

requirements. 

EPA approached this process with 

care and diligence. To identify 

representatives of small businesses for 

this process, we used the definitions 

provided by the Small Business 

Administration (SBA) for manufacturers 

of nonroad diesel engines and vehicles. 

The categories of small entities in the 

nonroad diesel sector that will 

potentially be affected by this 

rulemaking are defined in the following 

table:

Industry 

Defined as 

small entity 

by SBA if: 

Major SIC 

codes 

Engine manufacturers.Less than 

1,000 employees.

Major Group 

35 

Equipment 

manufacturers: 

—construction 

equipment.

Less than 

750 employees.

Major Group 

35 

—industrial 

truck 

manufacturers 

(i.e., forklifts).

Less than 

750 employees.

Major Group 

35 

—all other 

nonroad 

equipment 

manufacturers.

Less than 

500 employees.

Major Group 

35 

One small engine manufacturer and 5 

small equipment manufacturers agreed 

to serve as Small Entity Representatives 

(SERs) throughout the SBAR Panel 

process for this proposal. These 

companies represented the nonroad 

market well, as the group of SERs 

consisted of businesses that 

manufacture various types of nonroad 

diesel equipment. 

The following are the provisions 

recommended by the SBAR Panel. As 

described in section III.B above, there 

are other provisions that apply to all 

equipment manufacturers; however, the 

discussion in this section focuses 

mainly on small entities. 

39016 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

1. Nonroad Diesel Small Engine 

Manufacturers 

a. Lead Time Transition Provisions for 

Small Business Engine Manufacturers

i. Panel Recommendations and Our 

Proposal 

The transition provisions 

recommended by the SBAR Panel for 

engines produced or imported by small 

entities are listed below. For all of the 

provisions, the Panel recommended that 

small business engine manufacturers 

and small importers must have certified 

engines in model year 2002 or earlier in 

order to take advantage of these 

provisions. Each manufacturer would be 

limited to 2,500 units per year as this 

number allows for some market growth. 

The Panel recommended these 

stipulations in order to prohibit the 

misuse of the transition provisions as a 

tool to enter the nonroad diesel market 

or to gain unfair market position relative 

to other manufacturers. 

Currently, certified nonroad diesel 

engines produced by small 

manufacturers all have a horsepower 

rating of 80 or less. At proposal, we 

considered both a one-step approach, 

and the two-step approach which we are 

finalizing today. Due to the structure of 

the standards and their timing, EPA 

proposed transition provisions for small 

business engine manufacturers which 

encompassed both approaches 

recommended by the Panel, with the 

inclusion of the 2,500 unit limit (as 

suggested by the Panel) for each 

manufacturer. Given the two-step 

structure of the final rule, we are only 

providing those proposed provisions 

related to that approach (a complete 

description of the provisions proposed 

by the Panel, and also by specific Panel 

members, is located in the SBAR Final 

Panel Report). 

For a two-step approach the Panel 

recommended that: 

• An engine manufacturer should be 

allowed to skip the first phase and 

comply on time with the second; or, 

• A manufacturer could delay 

compliance with each phase of 

standards for up to three years. 

We proposed the following provisions 

in the NPRM (based on available data, 

we believe that there are no small 

manufacturers of nonroad diesel engines 

above the 75–175 hp category): 

With regard to PM—

• Engines under 25 hp and those 

between 75 and 175 hp have only one 

standard so the manufacturer could 

delay compliance with these standards 

for up to three years. 

• For engines between 50 and 75 hp, 

we proposed to delay compliance for 

one year if the 2008 interim standards 

are met, with the stipulation that small 

business manufacturers cannot use PM 

credits to meet the interim standard. 

However, if a small manufacturer elects 

the optional approach to the standard 

(elects to skip the interim standard), no 

further relief will be provided. 

With regard to NOX—

• There is no change in the level of 

the NOX standard for engines under 25 

hp and those between 50 and 75 hp, so 

we did not propose any special 

provisions for these categories. 

• For engines in the 25–50 hp and the 

75–175 hp categories we proposed a 

three year delay in the program 

consistent with the one-phase approach 

recommendation above. 

ii. What We Are Finalizing 

We are finalizing all of the provisions 

set out above for NOX. For PM, we are 

finalizing some of the proposed 

provisions with certain revisions, as 

described below. In finalizing these 

provisions, we considered not only the 

recommendations of the Panel, but also 

the public comments on the proposed 

small business engine manufacturer 

transition provisions. Extensions of an 

applicable standard also apply to all 

certification requirements associated 

with that standards (so that transient 

and NTE testing would not be required 

until expiration of the extension). Based 

on available data, and further 

conversations with manufacturers 

during the development of this 

rulemaking (documented in the 

administrative record), we have found 

no small business manufacturers of 

nonroad diesel engines above 175 hp. 

For engines under 25 hp:

• PM—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

• NOX—there is no change in the 

level of the existing NOX standard for 

engines in this category, so no special 

provisions are being provided. 

For engines in the 25–50 hp category: 

• PM—manufacturers must comply 

with the interim standards (the Tier 4 

requirements that begin in model year 

2008) on time, and may elect to delay 

compliance with the 2013 Tier 4 

requirements (0.02 g/bhp-hr PM 

standard) for up to three years. Due to 

an oversight at proposal, we did not 

include transition provisions for this 

category in the NPRM, but there is no 

reason to exclude them when all other 

small business engines are eligible for 

extensions. We therefore are adopting a 

three year extension with today’s action. 

As engines in this category must meet 

the 2008 standard, we are not 

conditioning this three year extension 

on meeting this standard. (Please note 

the distinction between these engines 

and engines in the 50–75 hp power 

band, where we are conditioning a 

three-year extension on meeting the 

2008 standards. The difference is that 

engines in the 50–75 hp category have 

an option of whether or not to meet 

those 2008 standards. We consequently 

have structured the small business 

engine extension to encourage a choice 

to comply with those standards.) 

• NOX—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

For engines in the 50–75 hp category: 

• As proposed, EPA is adopting 

special provisions for these engines, 

reflecting the special provisions in the 

rules which give engine manufacturers 

the choice of meeting an interim 

standard for PM in 2008 and meeting 

the aftertreatment-based standard in 

2013, or meeting the aftertreatmentbased standard in 2012 without meeting 

an interim standard. A small business 

engine manufacturer may delay 

compliance with the 2013 Tier 4 

requirement of 0.02 g/bhp-hr PM for up 

to three years provided that it complies 

with the interim Tier 4 requirements 

that begin in model year 2008 on time, 

without the use of credits. We proposed 

an extension of only one year, but this 

would be inconsistent with the 

extension period we are adopting, and 

which we proposed, for all of the other 

power categories. In addition, this 

provision for 50–75 hp engines is 

structured to encourage small business 

engine manufacturers to opt for early 

PM reductions by meeting the 2008 

interim PM standard, so that an 

extension of three years is appropriate 

as an incentive. We are requiring that 

these engines achieve the 2008 standard 

without use of credits to assure that 

there be improvements in actual 

performance by engines certifying to the 

standard. We believe that such 

assurance is a necessary and reasonable 

balance for the three year additional 

lead time for meeting the aftertreatmentbased standard. There were no adverse 

comments on conditioning the 

extension in this manner. 

In the alternative, a manufacturer may 

elect to skip the interim standard 

completely. However, manufacturers 

choosing this option will receive only 

one additional year for compliance with 

the 0.02 g/bhp-hr standard (i.e.

compliance in 2013, rather than 2012). 

These engines would already have had 

eight years of lead time to prepare for 

the PM standard without any diversion 

of resources to meet an interim PM 

standard, so that an extension of longer 

than one year would not be appropriate, 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39017

69The one comment that we received supported 

the provisions proposed for small business engine 

manufacturers.

within the meaning of section 213(b) of 

the Act. In addition, structuring the 

extension in this way encourages small 

engine manufacturers to choose to meet 

the 2008 interim standard for PM, 

furthering the objective of early PM 

emission reductions. 

• NOX—there is no change in the 

NOX standard for engines in this 

category, therefore no special provisions 

are being provided. 

For engines in the 75 to 175 hp 

category: 

• PM—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

• NOX—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

These provisions are also set out 

below in the following table (in all 

instances, these engines must meet the 

previously applicable standards as set 

out in § 1039.104 (c):

Horsepower 

category Provision 

<25 hp .......... NOX No special provisions 

are being provided. 

PM Manufacturers may 

delay compliance 

with the standard 

for three years. 

NOX Manufacturers may 

delay compliance 

with the standard 

for three years. 

25–50 hp ...... PM Manufacturers must 

comply with the interim standards in 

2008, and may 

delay compliance 

with the 2013 Tier 

4 requirements 

(0.02 g/bhp-hr PM 

standard) for three 

years. 

NOX No special provisions 

are being provided. 

Manufacturers must 

comply with the interim Tier 4 requirements in 

2008, without the 

use of credits, and 

may elect to delay 

compliance with 

the 2013 Tier 4 requirements (0.02 

g/bhp-hr PM 

standard) for three 

years 

50–75 hp ...... PM —OR—

Horsepower 

category Provision 

Manufacturers may 

skip the interim 

standard completely, and will receive an additional 

year for compliance with the 0.02 

g/bhp-hr PM Tier 4 

standard (i.e. compliance in 2013, 

rather than 2012). 

75–175 hp .... NOX Manufacturers may 

delay compliance 

with the standard 

for three years. 

PM Manufacturers may 

delay compliance 

with the standard 

for three years. 

b. Hardship Provisions for Small 

Business Engine Manufacturers 

i. Panel Recommendations and Our 

Proposals 

The Panel recommended two types of 

hardship provisions for small business 

engine manufacturers. These provisions 

would allow for relief in the following 

cases:

• A catastrophic event, or other 

extreme unforseen circumstances, 

beyond the control of the manufacturer 

that could not have been avoided with 

reasonable discretion (i.e., fire, tornado, 

supplier not fulfilling contract, etc.); 

and 

• The event where a manufacturer 

has taken all reasonable business, 

technical, and economic steps to 

comply but cannot. 

The Panel believed that either 

hardship relief provision would provide 

lead time for up to 2 years, and that a 

manufacturer should have to 

demonstrate to EPA’s satisfaction that 

failure to sell the noncompliant engines 

would jeopardize the company’s 

solvency. EPA may also require that the 

manufacturer make up the lost 

environmental benefit. 

We proposed the Panel 

recommendations for hardship 

provisions for small business engine 

manufacturers. While perhaps 

ultimately not necessary given the 

phase-in schedule discussed above, we 

stated that such provisions provide a 

useful safety valve in the event of 

unforeseen extreme hardship. 

ii. What We Are Finalizing 

We received two comments on the 

provisions for small business engine 

manufacturers. SBA’s Office of 

Advocacy commented that the rule 

would impose significant burdens on a 

substantial number of small entities 

with little corresponding environmental 

benefit; and further, that we should 

exclude smaller engines (those under 75 

hp) from further regulation in order to 

comply with the Regulatory Flexibility 

Act and fulfill the requirement of 

reducing the burden on small engine 

classes. As proposed, we are not 

adopting standards based on 

performance of NOX aftertreatment 

technologies for engines under 75 hp. 

As described in more detail in section 

II of this preamble, the Summary and 

Analysis of Comment Document, and 

the RIA, we have found no factual basis 

supporting the assertion that standards 

for PM for engines between 25 and 75 

hp based on use of advanced 

aftertreatment impose costs out of 

relation to environmental benefit, have 

a disproportionate impact on small 

businesses, or are otherwise 

inappropriate. In fact, it is our finding 

that these standards for PM are 

‘‘appropriate’’ within the meaning of 

section 213(a)(4) of the Clean Air Act, 

and that PM standards for these engines 

not based on performance of advanced 

aftertreatment would be inappropriate 

as failing to reflect standards based on 

available treatment for these engines 

(taking into account costs, noise, safety, 

and energy factors). We received no 

adverse comments from small business 

engine manufacturers on the proposed 

transition provisions for those 

manufacturers.69 Accordingly, we are 

finalizing the small business engine 

manufacturer hardship provisions that 

we proposed in the NPRM (as 

recommended by the Panel). We believe 

that these provisions will provide 

adequate regulatory flexibility for these 

manufacturers, while remaining 

consistent with the requirements of 

section 213(a)(4) and 213(b) of the Clean 

Air Act.

c. Other Small Business Engine 

Manufacturer Issues 

i. Panel Recommendations and Our 

Proposals 

The Panel also recommended that an 

ABT program be included as part of the 

overall rulemaking program. In 

addition, the Panel suggested that EPA 

take comment on including specific 

ABT provisions for small business 

engine manufacturers. We proposed an 

ABT program for all engine 

manufacturers, with this program 

retaining the basic structure of the 

current nonroad diesel ABT program. 

We did not include small business 

engine manufacturer-specific ABT 

39018 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

70The Panel recognized that, similar to the Tier 

2/3 standards, it may be necessary to provide 

transition provisions for all equipment 

manufacturers, not just for small entities, and the 

Panel recommended that this be taken into account.

provisions in the proposal. Discussions 

during the SBAR process indicated that 

small volume manufacturers would 

need extra time to comply due to cost 

and personnel constraints, and there is 

little reason to believe that small 

business manufacturer specific ABT 

provisions could create an incentive to 

accelerate compliance. 

ii. What We Are Finalizing

As discussed above in section III.B, 

we are finalizing an ABT program in 

today’s action similar to that already in 

place for nonroad engine manufacturers. 

We have also made a number of changes 

to accommodate implementation of 

these new emission standards. 

2. Small Nonroad Diesel Equipment 

Manufacturers 

a. Transition Provisions for Small 

Business Equipment Manufacturers 

i. Panel Recommendations and Our 

Proposals 

The Panel recommended that we 

adopt the transition provisions 

described below for small business 

manufacturers and small business 

importers of nonroad diesel equipment. 

These transition provisions are similar 

to those in the Tier 2/3 rule (see 40 CFR 

89.102). The recommended transition 

provisions were as follows: 

• Percent-of-Production Allowance: 

Over a seven model year period, 

equipment manufacturers may install 

engines not certified to the new 

emission standards in an amount of 

equipment equivalent to 80 percent of 

one year’s production. This is to be 

implemented by power category with 

the average determined over the period 

in which the flexibility is used. 

• Small Volume Allowance: A 

manufacturer may exceed the 80 percent 

allowance in seven years as described 

above, provided that the previous Tier 

engine use does not exceed 700 total 

over seven years, and 200 in any given 

year. This is limited to one family per 

power category. Alternatively, the Panel 

recommended, at the manufacturer’s 

choice by hp category, a program that 

eliminates the ‘‘single family provision’’

restriction with revised total and annual 

sales limits as shown below: 

—For categories ≤175 hp–525 

previous Tier engines (over 7 years) 

with an annual cap of 150 units (these 

engine numbers are separate for each hp 

category defined in the regulations) 

—For categories of > 175 hp–350 

previous Tier engines (over 7 years) 

with an annual cap of 100 units (these 

engine numbers are separate for each hp 

category defined in the regulations). 

The Panel recommended that EPA 

seek comment on the total number of 

engines and annual cap values listed 

above. In contrast to the Tier 2/Tier3 

rule, the SBA Office of Advocacy 

expected the transition to the Tier 4 

technology will be more costly and 

technically difficult. Therefore, the 

small business equipment 

manufacturers may need more liberal 

flexibility allowances especially for 

equipment using the lower hp engines. 

The Panel’s recommended flexibility 

may not adequately address the 

approximately 50 percent of small 

business equipment models where the 

annual sales per model is less than 300 

and the fixed costs are higher. Thus, the 

SBA Office of Advocacy and the Office 

of Management and Budget (OMB) 

Panel members recommended that 

comment be sought on implementing 

the small volume allowance (700 engine 

provision) for small business equipment 

manufacturers without a limit on the 

number of engine families which could 

be covered in any hp category.

• Due to the changing nature of the 

technology as the manufacturers make 

the transition from Tier 2 to Tier 3 and 

Tier 4, the Panel recommended that the 

equipment manufacturers be permitted 

to borrow from the Tier3/Tier 4 

flexibilities for use in the Tier 2/Tier 3 

time frame. 

• Lastly, the Panel recommended 

proposing a continuation of the current 

transition provisions, without 

modifications to the levels or nature of 

the provisions, that are available to 

these manufacturers. 

To maximize the likelihood that the 

application of these provisions will 

result in the availability of previous Tier 

engines for use by the small business 

equipment manufacturers, the Panel 

recommended that—similar to the 

application of flexibility options that are 

currently in place—these provisions 

should be provided to all equipment 

manufacturers.70

We did in fact propose the Percent-ofProduction and Small Volume 

Allowances listed above for all 

equipment manufacturers, and 

explicitly took the Panel report into 

account in making that proposal. We 

also requested comment on a number of 

additional items, some of which were 

proposed by the Panel (see section III.B 

above). 

ii. What We Are Finalizing 

We are finalizing the Percent-ofProduction and Small Volume 

Allowances for all equipment 

manufacturers, with a few changes. 

Some non-small equipment 

manufacturers commented that the 

small-volume provision should enable 

manufacturers to exempt up to 700 

pieces of equipment over a seven-year 

period, with no engine family 

restriction. As explained earlier in 

section III.B.2.c, we are finalizing 

provisions that allow manufacturers to 

choose between two options: (a) 

Manufacturers would be allowed to 

exempt 700 pieces of equipment over 

seven years, within one engine family; 

or (b) manufacturers using the smallvolume allowance could exempt 525 

machines over seven years (with a 

maximum of 150 in any given year) for 

each of the three power categories below 

175 horsepower, and 350 machines over 

seven years (with a maximum of 100 in 

any given year) for the two power 

categories above 175 horsepower. 

Concurrent with the revised caps, 

manufacturers could exempt engines 

from more than one engine family under 

the small-volume allowance program. 

As explained earlier, based on sales 

information for small businesses, we 

estimated that the alternative smallvolume allowance program to include 

lower caps and allow manufacturers to 

exempt more than one engine family 

would keep the total number of engines 

eligible for the allowance at roughly the 

same overall level as the 700–unit 

program. The Agency believes that these 

provisions will afford manufacturers the 

type of transition leeway recommended 

by the Panel. Further, these transition 

provisions could allow small business 

equipment manufacturers to postpone 

any redesign needed on low sales 

volume or difficult equipment packages, 

thus saving both money and strain on 

limited engineering staffs. Within limits, 

small equipment manufacturers would 

be able to continue to use their current 

engine/equipment configuration and 

avoid out-of-cycle equipment redesign 

until the allowances are exhausted or 

the time limit passes. 

During the SBREFA Panel process, the 

Panel discussed the possible misuse of 

the transition provisions by using them 

as a loophole to enter the nonroad diesel 

equipment market or to gain unfair 

market position relative to other 

manufacturers. See 68 FR at 28481. EPA 

was concerned that importers of 

equipment from a foreign equipment 

manufacturer could, as a group, import 

more exempted equipment from that 

foreign manufacturer than 80 percent of 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39019

that manufacturer’s production for the 

United States market or more than the 

small volume allowances identified in 

the transition provisions. This would 

create a potentially significant disparity 

between the treatment of foreign and 

domestic equipment manufacturers. 

EPA did not intend this outcome, and 

did not believe it was needed to provide 

reasonable lead time to foreign 

equipment manufacturers. The Panel 

recognized that this was a possible 

problem, and believed that a 

requirement that small equipment 

manufacturers and importers must have 

reported equipment sales using certified 

engines in model year 2002 or earlier in 

order to be eligible to access the 

transition provisions was sufficient to 

alleviate this problem. Upon further 

analysis during the development of the 

proposal, EPA decided to limit the 

availability of transition provisions to 

entities that install engines and have 

primary responsibility for designing and 

manufacturing equipment and included 

such a requirement in the proposal. Id. 

at 28477. Therefore, a company that 

only imported equipment, and had no 

involvement in the actual 

manufacturing of the equipment, would 

be ineligible to access the transition 

provisions. As described in section 

III.B.4, we are finalizing the proposed 

requirements associated with the use of 

transition provisions by foreign 

importers. Therefore, we no longer 

believe it is necessary to have a separate 

requirement that small equipment 

manufacturers and importers have 

reported equipment sales using certified 

engines in model year 2002 or earlier, 

and therefore are not finalizing this 

redundant provision. 

We are also finalizing the Panel’s 

recommendation that equipment 

manufacturers be allowed to borrow 

from Tier 4 flexibilities in the Tier2/3 

time frame. See the more extended 

discussion on this issue in section 

III.B.2.d above.

We are not finalizing the Panel 

recommendation of a provision allowing 

small manufacturers to request limited 

‘‘application specific’’ alternative 

standards for equipment configurations 

which present unusually challenging 

technical issues for compliance. We do 

not believe that the need for such a 

provision has been established, and 

further, it could likely provide more 

lead time than can be justified, and 

undermine emission reductions which 

are achievable. Moreover, no participant 

in the SBAR process or during the 

public comment period offered any 

empirical support that such a problem 

even exists. Nor have such issues been 

demonstrated (or raised) by equipment 

manufacturers, small or large, in 

implementing the current nonroad 

standards. In addition, we believe that 

any application-specific difficulties can 

be accommodated by the transition 

provisions the Agency is proposing 

including ABT. 

We are also finalizing two additional 

provisions for all equipment 

manufacturers that small business 

equipment manufacturers may take 

advantage of. These provisions are the 

Technical Hardship Provision and the 

Early Tier 4 Engine Incentive Program. 

Both provisions are discussed in greater 

detail in sections III.B.2.b and e above. 

b. Hardship Provisions for Small 

Business Equipment Manufacturers 

i. Panel Recommendations and Our 

Proposals 

The Panel also recommended that two 

types of hardship provisions be 

extended to small business equipment 

manufacturers. These provisions would 

allow for relief in the following cases: 

• A catastrophic event, or other 

extreme unforseen circumstances, 

beyond the control of the manufacturer 

that could not have been avoided with 

reasonable discretion (i.e., fire, tornado, 

supplier not fulfilling contract, etc.). 

• The event where a manufacturer 

has taken all reasonable business, 

technical, and economic steps to 

comply but cannot. In this case relief 

would have to be sought before there is 

imminent jeopardy that a 

manufacturer’s equipment could not be 

sold and a manufacturer would have to 

demonstrate to the Agency’s satisfaction 

that failure to get permission to sell 

equipment with a previous Tier engine 

would create a serious economic 

hardship. Hardship relief of this nature 

cannot be sought by an ‘‘integrated’’

manufacturer (one which also 

manufactures the engines for its 

equipment). 

We proposed that the hardship 

provisions recommended by the Panel 

be extended to small business 

equipment manufacturers in addition to 

the transition provisions described 

above. We also requested comment on 

the stipulation that, to be eligible for 

these hardship provisions (as well as the 

other proposed transition provisions), 

equipment manufacturers and importers 

must have reported equipment sales 

using certified engines in model year 

2002 or earlier. 

ii. What We Are Finalizing 

We are finalizing the Panelrecommended hardship provisions for 

small business equipment 

manufacturers (which are the same 

provisions that are being adopted for all 

equipment manufacturers). 

EPA also received comment 

concerning the situation faced by small 

business equipment manufacturers 

using engines in the 25–50 horsepower 

range. The concern was raised that 

small businesses in this power grouping 

will face a greater relative burden in 

designing equipment for engines with 

aftertreatment, and that they may need 

additional lead time beyond that 

provided by the small volume 

allowances. EPA believes that in general 

the small volume allowances should 

provide reasonable lead time 

opportunity for these manufacturers, but 

recognizes that there may be individual 

cases where more lead time would be 

appropriate for small business 

manufacturers in this power category. 

EPA is therefore adopting a technical 

hardship provision similar to that 

adopted for the percent of production 

allowance. Small business 

manufacturers using engines in the 25–

50 hp range could petition EPA to 

approve additional needed lead time in 

appropriate, individualized 

circumstances, based on a showing of 

extreme technical or engineering 

hardship as provided in 40 CFR 

1039.625(m). EPA could approve 

additional small volume allowances, up 

to a total number of 1100 units. This 

total number includes the allowances 

that are already available under the rule 

without request. These additional 

allowances could only be used for 

engines in the 25–50 horsepower range, 

and could only be approved for 

qualifying small business equipment 

manufacturers. The limitations on the 

use of small volume allowances (such as 

when allowances may only be used 

within a single engine family and the 

annual limits) continue to apply to the 

standard allowances (that are available 

under the rule without request). Finally, 

any additional allowances granted 

under this provision would have to be 

used within 36 months after the 

transition flexibility period commences 

for these engines. The additional 

allowances would not be subject to the 

annual limits noted earlier but they 

could only be used after the maximum 

amount of standard allowances are used 

in a given year (e.g., a manufacturer 

using the 700 unit allowance would 

have to use 200 of their standard 

allowances for that year before they 

could use any of the additional 

allowances granted by EPA under this 

technical hardship provisions). 

EPA recognizes that it is important to 

facilitate the process for small business 

equipment manufacturers to seek such 

approval, and intends to work with 

39020 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

71See 66 FR 5112–5113 (January 18, 2001) where 

we adopted a similar approach to certification fuels 

for highway heavy-duty diesel engines (HDDEs).

small manufacturers so that any 

transaction costs for them or for EPA 

can be minimized. For example, EPA 

could consider at one time a common 

request from similarly situated small 

business equipment manufacturers, as 

long as all of the necessary individual 

information for each applicant were 

provided. Given that information in 

such an application would still be both 

company- and fact-specific (and likely 

confidential as well), and that the 

criteria for relief as well as the scope of 

appropriate relief are case-specific, we 

would necessarily evaluate and decide 

whether or not to approve additional 

small volume allowances on a companyby-company, case-by-case basis.

For a detailed description of the 

comments received on small business 

engine and equipment manufacturer 

issues, please refer to the Summary and 

Analysis of comments, which is a part 

of the rulemaking record (E-DOCKET 

number OAR–2003–0012, and legacy 

docket number A–2001–28). A summary 

of the SBREFA process is located in 

section X.C of this preamble. 

D. Certification Fuel 

It is well-established that measured 

emissions may be 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 

number and sulfur content. These 

specifications are intended to represent 

most typical fuels that are commercially 

available in use. This helps to ensure 

that the emissions reductions expected 

from the standards occur in use as well 

as during emissions testing. 

We are establishing all 6 provisions 

that we proposed related to the sulfur 

content of fuel used in conducting 

nonroad diesel engine emissions testing: 

• 300–500 ppm for model year 2008 

to 2010 engines, 

• 7–15 ppm for 2011 and later model 

year engines, 

• Extension through model year 2007 

of the maximum 2000 ppm specification 

for Agency testing on pre-Tier 4 engines, 

• 7–15 ppm for 2007–2010 model 

year engines that use sulfur-sensitive 

technology, 

• 7–15 ppm for 2008–2010 model 

year engines under 75 hp, 

• 300–500 ppm for some model year 

2006–2007 engines at or above 100 hp.

The last 3 of these provisions are at the 

certifying manufacturer’s option, and 

involve additional measures that the 

manufacturer must take to help ensure 

that the specified fuel is used in the 

field. The below discussion provides 

more detail on each of these provisions. 

We received very little comment on 

our proposed certification fuel 

provisions. Detroit Diesel commented 

that we should set a maximum sulfur 

specification of 500 ppm for Tier 3 

engines, which we are in fact doing 

beginning in model year 2008 after this 

fuel is introduced in the nonroad 

market, and optionally allowing as early 

as 2006, the earliest Tier 3 model year, 

provided manufacturers take steps to 

encourage the use of this fuel, as 

discussed below. 

Because we are lowering the upper 

limit for in-use nonroad diesel fuel 

sulfur content to 500 ppm in 2007, and 

again to 15 ppm in 2010, we are also 

establishing new ranges of allowable 

sulfur content for testing. These are 300 

to 500 ppm (by weight) for model year 

2008 to 2010 engines, and 7 to 15 ppm 

(by weight) for 2011 and later model 

year engines. We believe that these 

ranges best correspond to the fuels that 

diesel machines will potentially see in 

use.71 These specifications will apply to 

emission testing conducted for 

certification, selective enforcement 

audits, in-use, and NTE testing, as well 

as any other laboratory engine testing 

for compliance purposes for engines in 

the designated model years. Any 

compliance testing of previous model 

year engines will be done with the fuels 

designated in our regulations for those 

model years. Note that, as proposed, we 

are allowing certification with fuel 

meeting the 7 to 15 ppm sulfur 

specification in 2010 for under 11 hp, 

air-cooled, hand-startable, direct 

injection (DI) engines certified under the 

optional standard provision discussed 

in section II.A.3.a.

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. As for 

highway fuel, we expect that, under the 

15 ppm maximum sulfur requirement, 

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 will use fuel having a 

sulfur content between 7 and 10 ppm 

sulfur for our emission testing. This is 

the same as the range we indicated will 

be used for heavy-duty diesel engine 

(HDDE) engine testing in model year 

2007 and later (66 FR 5002, January 18, 

2001). As with the highway fuel, should 

we determine that the typical in-use 

nonroad diesel fuel has significantly 

more sulfur than this, we would adjust 

this target upward.

We are also adopting two options for 

early use of the new 7 to 15 ppm sulfur 

diesel test fuel. The first will be 

available beginning in the 2007 model 

year for engines employing sulfursensitive technology. (Model year 2007 

coincides approximately with the 

introduction of 15 ppm highway fuel.) 

This allowance to use the new fuel in 

model years before 2011 will only be 

available for engines which the 

manufacturer demonstrates will be 

operated in use on fuel with 15 ppm 

sulfur or less. Any testing that we 

perform on these engines will also use 

fuel meeting this lower sulfur 

specification. This optional certification 

fuel provision is intended to encourage 

the introduction of low-emission diesel 

technologies in the nonroad sector. 

These engines will be able to use the 

lower sulfur fuel throughout their 

operating life, given the early 

availability of this fuel under the 

highway program, and the assured 

availability of this fuel for nonroad 

engines by mid-2010. 

Considering that our Tier 4 program 

will subject engines under 75 hp to new 

emission standards in 2008 when 15 

ppm maximum sulfur fuel will be 

readily available from highway fuel 

pumps (and will enter the nonroad fuel 

market shortly after in 2010), we believe 

it is appropriate to provide a second, 

less proscriptive, option for use of 15 

ppm sulfur certification fuel. This 

option will be available to any 

manufacturers willing to take extra steps 

to encourage the use of this fuel before 

it is required in the field. We are 

allowing the early use of 15 ppm 

certification fuel for 2008–2010 engines 

under 75 hp, provided the certifying 

manufacturer ensures that ultimate 

purchasers of equipment using these 

engines are informed that the use of fuel 

meeting the 15 ppm specification is 

recommended, and also recommends to 

equipment manufacturers buying these 

engines that labels be applied at the fuel 

inlet to remind users of this 

recommendation. This option does not 

apply to those 50–75 hp engines not 

being certified to the 0.22 g/bhp-hr PM 

standard, under the manufacturers’

option discussed in section II.A.1.a. 

We believe that there may be a very 

small loss of emissions benefit from any 

of these engines for which the operator 

chooses to ignore the recommendation. 

This is because the engine manufacturer 

will be designing the engine to comply 

with the emissions standards when 

tested using 15 ppm fuel, potentially 

resulting in slightly higher emissions 

when it is not operated on the 15 ppm 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39021

fuel. We also believe, however, that this 

is more than offset overall by the 

encouragement this provision provides 

for early use of 15 ppm fuel. We are not 

making this option available for engine 

designs employing oxidation catalysts 

or other sulfur-sensitive exhaust 

emission control devices except under 

the more restrictive provision for early 

use of 15 ppm fuel described above, 

involving a demonstration by the 

manufacturer that the fuel will indeed 

be used. Because these devices could 

potentially have very high sulfur-tosulfate conversion rates (see section 

II.B.4 and 5 above), and because very 

high-sulfur fuels will still be available to 

some extent, we believe that allowing 

this provision for these engines would 

risk very high PM emissions until the 15 

ppm nonroad fuel is introduced. We are 

not making this second early 15 ppm 

test fuel option available for engines not 

subject to a new Tier 4 standard in 2008 

as these engines should already be 

designed to meet applicable standards 

in earlier years without need for the 15 

ppm fuel. 

We are also adopting a similar 

provision for use of certification fuel 

meeting the 300–500 ppm sulfur 

specification before the 2008 model 

year. We believe certification of model 

year 2006 and 2007 engines being 

designed without the use of sulfursensitive technologies to meet new Tier 

2 or Tier 3 emission standards taking 

effect in those years (2006 for engines at 

or above 175 hp and 2007 for 100–175 

hp engines) should be able to use this 

fuel, provided the certifying 

manufacturer is willing to take measures 

equivalent to those discussed above to 

encourage the early use of this fuel (a 

recommendation to the ultimate 

purchaser to use fuel with 500 ppm 

maximum sulfur and a recommendation 

to equipment manufacturers to so label 

their equipment). 

The widespread availability of 500 

ppm sulfur highway fuel, the short time 

that these 2006 and 2007 engines could 

use higher sulfur fuels if an operator 

were to ignore the recommendation, and 

the eventual use of 15 ppm sulfur fuel 

in most of these engines for most of 

their operating lives, gives us 

confidence that this provision to 

encourage early use of lower sulfur fuel 

will be beneficial to the environment 

overall. As with the change to 300–500 

ppm cert fuel for model years 2008–

2010, engine manufacturers will design 

their engines to comply based on the 

test fuel specifications for certification 

and compliance testing. The change 

from a fuel specification for compliance 

testing that ranges up to 2000 ppm 

sulfur for Tier 2 and 3 engines to a 

specification of 500 ppm sulfur 

maximum could have some limited 

effect on the emissions control designs 

used on these Tier 2 and 3 engines, in 

that it will be slightly easier to meet the 

Tier 2 and 3 standards using the lower 

sulfur test fuel. In general, it is 

reasonable to set specifications of test 

fuel reflecting representative in-use 

fuels, and here the engines are expected 

to be using fuel with sulfur levels of 500 

ppm or lower until 2010, and 15 ppm 

or lower after that. In this case, any 

impact on expected engine emissions 

from this change in test fuel for Tier 2 

and 3 is expected to be slight.

We note that under current 

regulations manufacturers are already 

allowed to conduct testing with 

certification fuel sulfur levels as low as 

300 ppm. The additional provision for 

early use of 300–500 ppm sulfur test 

fuel will, however, result in any 

compliance testing conducted by the 

Agency being done with fuel meeting 

the 300–500 ppm specification. 

Likewise choice of the option for early 

use of 15 ppm sulfur test fuel would 

result in any Agency testing being done 

using that fuel. However, under both of 

these early certification fuel options 

involving a recommended fuel use 

provision, the Agency will not reject 

engines from in-use testing for which 

there is evidence or suspicion that the 

engine had been fueled at some time 

with higher sulfur fuel. 

Finally, we are extending a provision 

adopted in the 1998 final rule (63 FR 

56967, October 23, 1998). In that rule 

we set a 2000 ppm upper limit on the 

test fuel sulfur concentration for any 

testing to be performed by the Agency 

on Tier 1 engines under 50 hp and Tier 

2 engines at or above 50 hp. We did not 

extend this provision to later model year 

engines at that time because we felt that 

more time was needed to assess trends 

in fuel sulfur levels for fuels used in 

nonroad diesels. At this time we are not 

aware of any additional information that 

would indicate that a change in this test 

specification is warranted. More 

importantly, because the fuel regulation 

we are adopting will make 500 ppm 

maximum sulfur nonroad diesel fuel 

available by mid-2007, Tier 3 engines at 

or above 50 hp (which phase in 

beginning in 2006) will be in the field 

for only 11⁄2 years prior to the in-use 

introduction of 500 ppm fuel, and Tier 

2 engines under 50 hp (which phase in 

beginning in 2004) will be in the field 

for at most 31⁄2 years prior to this time. 

We believe it is appropriate to avoid 

adding the unnecessary complication of 

frequent multiple changes to the test 

fuel specification. We are therefore 

extending the 2000 ppm limit to testing 

conducted on engines until the 2008 

model year when the 500 ppm 

maximum test fuel sulfur level takes 

effect as discussed above. 

E. Temporary In-Use Compliance 

Margins 

The Tier 4 standards will be 

challenging for diesel engine 

manufacturers to achieve, and will 

require manufacturers to develop and 

adapt new technologies for a large 

number and wide variety of engine 

platforms. Not only will manufacturers 

be responsible for ensuring that these 

technologies enable compliance with 

Tier 4 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 will comply in use when tested 

by EPA. Furthermore, for the first time, 

these nonroad diesel engines will be 

subject to transient emissions control 

requirements and to NTE standards. 

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 for a limited number of 

model years after new standards take 

effect it is appropriate to adjust the 

compliance levels for assessing in-use 

compliance for diesel engines equipped 

with high-efficiency exhaust emissions 

control devices. This provides 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 lightduty highway Tier 2 final rule (65 FR 

6796, February 10, 2000) and the 

highway heavy-duty rule (66 FR 5113–

5114, January 18, 2001), both of which 

involve similar approaches to 

introducing the new technologies. In 

fact, the similarities of nonroad diesel 

engines and expected Tier 4 control 

technologies to counterpart engines and 

technologies for heavy-duty highway 

diesel engines led us to model the 

proposed Tier 4 add-on provisions after 

the 2007 heavy-duty highway diesel 

program, with add-on levels chosen to 

be roughly equivalent to the levels 

adopted in the highway rule. 

Comments on the proposal were 

received from engine manufacturers, 

requesting changes that would make the 

temporary in-use adjustments more 

closely parallel the highway 

requirements. Specifically, they 

requested: (1) Providing two full model 

years of applicability following the 

completion of standards phase-in for the 

39022 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

72See EPA Dear Manufacturer Letter VPCD–98–

13, ‘‘Heavy-duty Diesel Engines Controlled by 

Onboard Computers: Guidance on Reporting and 

Evaluating Auxiliary Emission Control Devices and 

the Defeat Device Prohibition of the Clean Air Act,’’

October 15, 1998 and EPA Advisory Circular 24–

3, ‘‘Implementation of Requirements Prohibiting 

Defeat Devices for On-Highway Heavy-Duty Diesel 

Engines.’’ A copy of both of these documents is 

available in EPA Air Docket A–2001–28.

75–175 hp category, as was proposed for 

the other power categories, (2) adjusting 

the NOX threshold for applicability of 

the provisions to a level 8% above the 

split family standard, (3) adopting 3 

levels of add-ons based on how many 

hours the test engine had been used, 

with cutpoints at 2000 and 3400 hours, 

and (4) a 25% upward adjustment to the 

add-on levels. We agree that these 

changes would result in a closer 

approximation to the highway program. 

Our goal in proposing provisions 

somewhat different from the highway 

program was to avoid unnecessary 

complexity. However, we believe that 

maintaining consistency with the 

highway program is a more important 

goal and the manufacturers’ suggested 

changes do not overly complicate the 

program, and so we have decided to 

make these changes. 

We note too that changes we are 

making to the Tier 4 program for 

engines over 750 hp necessitate other 

changes to the in-use add-on program 

for these engines as well. Specifically, 

these are the extension of model year 

applicability to 2016, two years after the 

final Tier 4 standards take effect, and 

the clarification of what PM thresholds 

apply for engines used in generator sets 

and for other engines. 

Table III.E–1 shows the in-use 

adjustments that we will apply. These 

in-use add-on levels will be applied 

only to engines certified in the indicated 

model years and having FELs (or 

certifying to standards without FELs) at 

or below the specified threshold levels. 

These adjustments are added to the 

appropriate FELs (see section III.A) or, 

for engines certified to the standards 

without the use of ABT program credits, 

to the standards themselves, in 

determining the in-use compliance level 

for a given in-use hours accumulation 

on the engine being tested. Note that the 

PM adjustment is the same for all in-use 

hours accumulation. Note also that, 

because the standards in the regulations 

are expressed in g/kW-hr, the 

adjustments included in the regulations 

are set at levels that make the resulting 

adjusted in-use standard equivalent in 

stringency to the standards in this 

preamble (expressed in g/bhp-hr) 

adjusted by the values in Table III.E–1 

(also expressed in g/bhp-hr). 

Note too that, as part of the 

certification demonstration, 

manufacturers will still be required to 

demonstrate compliance with the 

unadjusted Tier 4 certification standards 

using deteriorated emission rates. 

Therefore, the manufacturer will not be 

able to use these in-use standards as the 

design targets for the engine. They will 

need to project that most engines will 

meet the standards in-use without 

adjustment. The in-use adjustments will 

merely provide some assurance that 

they will not be forced to recall engines 

because of some small miscalculation of 

the expected deterioration rates.

TABLE III.E–1.—ADD-ON LEVELS USED IN DETERMINING IN-USE STANDARDS

Engine power Model years 

NOX PM 

Add-on level a

(g/bhp-hr) 

For operating 

hours 

Add-On level b

(g/bhp-hr) 

25 ≤ hp <75 .............................................................................................

(19 ≤ kW <56) .......................................................................................... 2013–2014 none 0.01

0.12 ≤ 2000 

75 ≤ hp <175 ........................................................................................... 2012–2016 0.19 2001–3400 0.01 

(56 ≤ kW <130) ........................................................................................ 0.25 > 3400 

0.12 ≤ 2000 

175 ≤ hp ≤750 .......................................................................................... 2011–2015 0.19 2001–3400 0.01 

(130≤ kW ≤560) ....................................................................................... 0.25 > 3400 

0.12 ≤ 2000 

hp >750 .................................................................................................... 2011–2016 0.19 2001–3400 0.01 

(kW >560) ................................................................................................ 0.25 > 3400 

Notes:

aApplicable only to those engines certifying to standards or with FELs at or below 1.6 g/bhp-hr NOX. bApplicable only to those engines certifying to standards or with FELs at or below the filter-based Tier 4 PM standards (0.01 g/bhp-hr for 75–

750 hp engines, 0.02 g/bhp-hr for 25–75 hp engines and for >750 hp engines in generator sets, and 0.03 g/bhp-hr for all other >750 hp engines). 

F. Test Cycles 

1. Transient Test 

In the 1998 final rule that set new 

emission standards for nonroad diesel 

engines, EPA expressed a concern that 

the steady-state test cycles used to 

demonstrate compliance with emission 

standards did not adequately reflect 

transient operation as many nonroad 

engines are used in applications that are 

largely transient in nature and would 

not therefore yield adequate control of 

emissions in use (63 FR 56984, October 

23, 1998). Although we were not 

prepared to adopt a transient test at that 

time, we announced our intention in 

that final rule to move forward with the 

development of such a test. This 

development progressed steadily and 

has resulted in the creation of the 

Nonroad Transient Composite (NRTC) 

test cycle which we are adopting in our 

Tier 4 nonroad diesel program. The 

NRTC cycle supplements the existing 

nonroad steady-state test requirements. 

Thus, most nonroad engines subject to 

today’s Tier 4 standards will be required 

to certify using both of these tests.72 The 

NRTC cycle captures transient 

emissions over much of the typical 

nonroad engine operating range, and 

thus helps to ensure effective control of 

all regulated pollutants. The speed and 

load operating schedule for EPA’s NRTC 

test cycle is described in regulations at 

40 CFR 1039.505. A detailed discussion 

of the transient test cycle and its 

derivation is contained in chapter 4.2 of 

the RIA for this rule.

We expect that this transient test 

requirement will significantly reduce 

real world emissions from nonroad 

diesel equipment. Proper transient 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39023

73Letter from Jed Mandel of the Engine 

Manufacturers Association to Chet France of U.S. 

EPA, Office of Transportation and Air Quality, 

‘‘Development of appropriate transient test cycle for 

variable speed land-based compression ignition 

non-road engines,’’ Air Docket A–2001–28, II–B–33.

74 Informal Document No.2, ISO—45th GRPE, 

‘‘Proposal for a Charter for the Working Group on 

a New Test Protocol for Exhaust Emissions from 

Nonroad Mobile Machinery,’’ Jan. 13–17, 2003, Air 

Docket A–2001–28, document II–A–171.

75Please note that this discussion does not apply 

to engines certifying to the alternative NOX phasein standards, which engines are required to meet 

transient and NTE requirements for gaseous 

pollutants (as well as all other requirements that 

would apply to phase-in engines). See discussion at 

II.A.2.c; also please note that these engines are 

expressly not defined as phase-out engines in the 

rules; see section 1039.801 and 1039.102 (e).

76As noted elsewhere, the TCAFs are derived 

identically to the Transient Adjustment Factor used 

in the NONROAD emissions model.

operation testing captures engine 

emissions from the broad range of 

engine speed and load combinations 

that the engine may attain in-use, while 

the steady-state emission test 

characterizes emissions at the few 

isolated operating points that may be 

typical for that family of engines. 

Testing for transient emissions will 

likewise identify emissions which result 

from the operation of the engine, as with 

speed and load changes, turbocharger 

lag, etc. 

In keeping with our goal to maximize 

the harmonization of emissions control 

programs as much as possible, we have 

developed this cycle in collaboration 

with nonroad engine manufacturers and 

regulatory bodies, both domestic and 

foreign, over the last several years.73

Further, the NRTC cycle has been 

introduced as a work item for possible 

adoption as a potential global technical 

regulation under the 1998 Agreement 

for Working Party 29 at the United 

Nations.74

EPA’s nonroad transient test will 

apply (with one exception noted below) 

to a nonroad diesel engine when that 

engine must first show compliance with 

EPA’s Tier 4 PM and NOX+NMHC 

emissions standards which are based on 

the performance of the advanced postcombustion emissions control systems 

(e.g. catalyzed-diesel particulate filters 

and NOX adsorbers). This is 2011 for 

engines at 175 hp–750 hp, 2012 for 75–

175 hp engines (2012, as well, for 50–

75 hp engines made by a manufacturer 

choosing the option to not comply with 

the 2008 transitional PM standard.), and 

2013 for engines under 75 hp. The 

transient test cycle will not apply to 

engines greater than 750 hp. Specific 

provision is made for engines under 25 

hp for PM and under 75 hp for NOX

(which are not based on performance of 

advanced aftertreatment). Constantspeed, variable-load engines of any 

horsepower category currently certify to 

EPA’s 5–Mode Steady State duty cycle 

and are not subject to transient duty 

cycle testing. As with current nonroad 

diesel standards, today’s Tier 4 emission 

standards will apply to certification, 

Selective Enforcement Audits (SEAs) 

and to recall testing of equipment in-use 

for all engines subject to these 

standards.

TABLE III.F–1.—IMPLEMENTATION

MODEL YEAR FOR NONROAD TRANSIENT TESTING

Power category 

Transient test

implementation

model years 

< 25 hp ............................. 2013 

25 ≤ hp < 75 ..................... 2013 

75 ≤ hp < 175 ................... 2012 

175≤ hp < 750 .................. 2011 

In addition, any engines for which an 

engine manufacturer (see section III.M) 

or equipment maker (see section 

III.B.2.c) claims credit under the 

incentive program for early-introduction 

engines will have to be certified to that 

program’s standards under applicable 

Tier 4 nonroad transient and steadystate duty cycles, e.g., NRTC, 8-mode 

and 5-mode steady-state cycles. In turn, 

any 2011 or later model year engine that 

uses these engine count-based credits 

will not need to demonstrate 

compliance under the NRTC cycle. 

Engines in any power category certified 

to an alternate NOX standard are all 

subject to the transient test requirement, 

as they clearly will be substantially 

redesigned to achieve Tier 4 

compliance, regardless of whether or 

not they use high-efficiency exhaust 

emission controls. See section II.A.1.c 

above.

We solicited comment on whether the 

transient duty cycle should apply to 

NOX emissions from phase-out engines 

(68 FR 28484, May 23, 2003) and 

received comment from EMA. EMA 

prefers that the transient cycle only be 

applicable to PM emission testing and 

not for NOX, NMHC and CO for phaseout engine families. They believe that 

the application of the transient NRTC 

and standards could result in the need 

to redevelop the NOX/NMHC/CO 

emission control systems used for their 

members’ compliance with Tier 3 

standards. 

We essentially agree with this 

comment to the extent that phase-out 

engines do not include improvements in 

gaseous pollutant emission control (i.e.

they remain essentially Tier 3 engines 

for emissions other than PM). Imposing 

new requirements with respect to these 

engines’ gaseous pollutant emissions 

could divert resources inappropriately. 

The rule therefore states (in 40 CFR 

1039.102 (a)(2)) that gaseous pollutant 

emissions from these engines are not 

subject to transient testing standards. 

This would not apply if a manufacturer 

declares a new NOX+NMHC FEL for the 

engine family (since the manufacturer 

would then already be choosing to alter 

these engines’ performance with respect 

to gaseous pollutant emissions).75

Transient testing standards do apply 

with respect to PM emissions from 

phase-out engines, however. The reason 

is evident: the PM standard for phaseout (and phase-in) engines is based on 

performance of aftertreatment, so the 

full complement of test cycles (NTE as 

well as transient testing) should apply. 

A consequence of this is that phase-out 

engines will generally be tested over the 

transient cycle, since they must do so 

with respect to PM emissions. We 

repeat, however, that although the 

engines will do transient testing, only 

PM (and not gaseous pollutants) is 

subject to the transient test standard. 

In addition, manufacturers choosing 

to certify engines under 750 hp using 

alternative FEL caps during the first four 

years that the alternative caps are 

available (see section III.A.i.2 above) 

will not be subject to the transient or 

NTE standards. However, to properly 

account for the transient effects when 

calculating credits, we are requiring the 

FELs of such engines to be adjusted 

upwards by applying a Temporary 

Compliance Adjustment Factor 

(TCAF) 76. See 40 CFR 1039.104 (g) (2).

Even though we are requiring that 

NRTC testing start when the PM 

aftertreatment-based standards take 

effect, one should not infer that the 

NRTC is directed at solely (or even 

primarily) at PM control. In fact, we 

believe that advanced NOX emission 

controls may be even more sensitive to 

transient operation than PM filters, 

since the PM filters ordinarily operate 

equally effectively in all operating 

modes, as noted earlier. It is, however, 

our intent that the control of emissions 

during transient operation be an integral 

part of Tier 4 engine design 

considerations. We have therefore 

chosen to apply the transient test 

requirement starting with the PM filterbased Tier 4 PM standards as these 

standards precede or accompany the 

earliest Tier 4 NOX or NMHC standards 

in all power categories except engines 

over 750 hp. 

As EPA is not promulgating PM filterbased standards for engines below 25 hp 

in today’s rulemaking, we are likewise 

not requiring these engines to be tested 

39024 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

77Memorandum from Kent Helmer to Cleophas 

Jackson, ‘‘Applicability EPA’s NRTC cycle to 

Nonroad Diesel Population,’’ Air Docket A–2001–

28, document II–B–34.

over the NRTC test cycle until model 

year 2013. More broadly, though we 

intend for transient emissions control to 

be an integral part of Tier 4 design 

considerations, we do not believe it 

appropriate to mandate compliance 

with the transient test for the engines 

under 50 hp which are subject to PM 

standards in 2008. We recognize that 

transient emission testing, though 

routine in highway engine programs, 

involves a fair amount of laboratory 

equipment and new expertise in the 

nonroad engine certification process. As 

with the transfer of advanced emission 

control technology itself, we believe that 

the transient test requirement should be 

implemented first for larger 

displacement engines. These engines are 

more likely to be made by 

manufacturers who provide engines to 

the on-highway market and therefore 

have had prior on-highway engine 

development and certification 

experience. We do not believe that the 

smaller engines should be the power 

categories first charged with 

implementing the new transient test, as 

early as 2008, especially because 

manufacturers of these engines do not 

generally make highway engines and are 

neither as experienced nor as wellequipped as their larger engine 

manufacturer counterparts at 

conducting transient cycle testing. 

However, to encourage earlier transient 

emission control in these engines, EPA 

will allow manufacturers of engines 

below 25 hp to submit data describing 

emission levels for their engines over 

the appropriate certification transient 

duty cycle beginning in model year 

2008. We extend this option as well to 

manufacturers of 25–50 hp engines, 

subject to those engines meeting the 

Tier 4 transitional PM standard in 2008. 

Should a manufacturer choose to submit 

data in the 2008–2011 time frame, prior 

to required certification data 

submissions, that transient data will not 

be used for compliance enforcement. 

EPA requested comment on whether 

engines greater than 750 hp should be 

subject to the transient cycle, noting 

concerns of technical difficulties and 

cost for these engines (68 FR 28484, 

May 23, 2003). STAPPA–ALAPCO and 

other agencies representing the States’

interests responded to EPA that all 

nonroad engines should be uniformly 

required to test their transient 

emissions. Likewise, they asked that the 

Agency not delay implementation of 

this particular requirement. However, at 

this time, the Agency is not adopting a 

transient emission testing requirement 

for engines 750 hp and over. EPA sees 

the burden of transient cycle testing in 

these very large displacement engines as 

being greater than the benefit of 

gathering transient emission 

measurements from them. For example, 

in many instances, these engines will 

have multiple aspiration and exhaust 

systems requiring a test cell designed to 

accommodate multiple large flow 

volumes in real-time on a five Hertz, or 

faster, basis. New transient test 

requirements could require 

manufacturers to create new or 

expanded testing facilities to house, 

prepare and run transient tests on these 

larger engines. The space requirements, 

i.e., ‘‘footprint,’’ of such facilities could 

make building them cost-prohibitive. 

Absent transient testing, these engines 

will still be required to certify to both 

steady-state and NTE test requirements. 

Moreover, we are modifying the 

certification requirements to include 

additional information for engines 

under 750 hp. For more detail on this 

submission, see the discussion in 

section III.I of this preamble and 40 CFR 

1039.205(p) of the regulations. 

Finally, engines in this power 

category are found in a relatively small 

proportion of the nonroad equipment 

population and, despite the potential for 

large quantities of emissions from this 

class of engines during operation, units 

equipped with these engines have 

likewise been noted to contribute a 

small proportion of total diesel nonroad 

engine emissions.77 Many of these 

larger-displacement engines operate 

predominately in a constant-speed 

fashion with few transient excursions, 

as with electric power generation sets 

(gen sets) which make up a significant 

percent of these larger engines. Many of 

these gen sets, too, operate on an 

intermittent or stand-by only basis. 

Indeed, as explained below, such 

constant-speed, variable-load engines 

(for example, those certifying 

exclusively to the 5-mode steady-state 

cycle) of any horsepower category are 

not subject to the nonroad transient test 

cycle.

Further, the Agency does not intend 

at this time to require that 

manufacturers use partial-flow sampling 

systems (PFSS) to determine PM 

emissions from their engines for 

certification. A large engine 

manufacturer may, however, choose to 

submit PM data to the Agency using 

PFSS as an alternative test method, if 

that manufacturer can demonstrate test 

equivalency using a paired-T test and FTest, as outlined in regulations at 40 

CFR 86.1306–07. 

Transient testing requires 

consideration of statistical parameters 

for verifying that test engines adequately 

follow the prescribed schedule of speed 

and load values. The regulations in 40 

CFR 1065.514, table 1, detail these 

statistical parameters, also known as 

cycle performance statistics. These 

values are somewhat different than the 

comparable values for highway diesel 

engines to take into account the 

characteristics of nonroad engine 

operation. The values are an outgrowth 

of the long development process for the 

NRTC test cycle, itself.

2. Cold Start Transient Testing 

Nonroad diesel engines typically 

operate in the field by starting and 

warming to a point of stabilized hot 

operation at least once in a workday. 

Such ‘‘cold-start’’ conditions may also 

occur at other times over the course of 

the workday, such as after a lunch 

break. We have observed that certain 

test engines, which generally had 

emission-control technologies for 

meeting Tier 2 or Tier 3 standards, had 

elevated emission levels for about 10 

minutes after starting from a cold 

condition. The extent and duration of 

increased cold-start emissions will 

likely be affected by changing 

technology for meeting Tier 4 standards, 

but there is no reason to believe that this 

effect will lessen. In fact, cold-start 

concerns are especially pronounced for 

engines with catalytic devices for 

controlling exhaust emissions, because 

many require heating to a ‘‘light-off’’ or 

peak-efficiency temperature to begin 

working. See, for example, RIA section 

4.1.2.2 and following. EPA’s highway 

engine and vehicle programs, which 

increasingly involve such catalytic 

devices, address this by specifying a test 

procedure that first measures emissions 

with a cold engine, then repeats the test 

after the engine is warmed up, 

weighting emission results from the two 

tests for a composite emission 

measurement. 

In the proposal, we described an 

analytical approach that led to a 

weighting of 10 percent for the coldstart test and 90 percent for the hot-start 

test. Manufacturers pointed out that 

their analysis of the same data led to a 

weighting of about 4 percent for coldstart testing and that a high cold-start 

weighting would affect the feasibility of 

the proposed emission standards. 

Manufacturers also expressed a concern 

that there would be a significant test 

burden associated with cold-start 

testing. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39025

78Note that this discussion applies only to 

engines that are subject to testing with transient test 

procedures. For example, this excludes constantspeed engines and all engines over 750 hp.

79Two Memoranda from Kent Helmer to 

Cleophas Jackson, ‘‘Speed and Load Operating 

Schedule for the Constant Speed Variable Load 

(CSVL) transient test cycle,’’ e-Docket OAR–2003–

0012–0993, and ‘‘CSVL Cycle Construction,’’ A–

2001–28, II–B–50.

80Memorandum from Kent Helmer to Cleophas 

Jackson, ‘‘Brake-specific Emissions Impact of 

Nonroad Diesel Engine Testing Over the NRTC, 

AWQ, and AW1 duty cycles,’’ Docket A–2001–28, 

#.

Unlike steady-state tests, which 

always start with hot-stabilized engine 

operation, transient tests come closer to 

simulating actual in-use operation, in 

which engines may start operating after 

only a short cool-down (hot-start) or 

after an extended soak (cold-start). The 

new transient test and manufacturers’

expected use of catalytic devices to meet 

Tier 4 emission standards make it 

imperative to address cold-start 

emissions in the measurement 

procedure.78 We are therefore adopting 

a test procedure that requires 

measurement of both cold-start and hotstart emissions over the transient duty 

cycle, much like for highway diesel 

engines. We acknowledge, however, that 

limited data are available to establish an 

appropriate cold-start weighting. For 

this final rule, we are therefore opting 

to establish a cold-start weighting of 5 

percent. This is based on a typical 

scenario of engine operation involving 

an overnight soak and a total of seven 

hours of operation over the course of a 

workday. Under this scenario, the 20–

minute cold-start portion constitutes 5 

percent of total engine operation for the 

day. Section II.B above addresses the 

feasibility of meeting the emission 

standards with cold-start testing. 

Regarding the test burden associated 

with cold-start testing, we believe that 

manufacturers will be able to take steps 

to minimize the burden by taking 

advantage of the provision that allows 

for forced cooling to reduce total testing 

time (40 CFR 1039.510(c)).

We believe the 5-percent weighting is 

based on a reasonable assessment of 

typical in-use operation and it addresses 

the need to design engines to control 

emissions under cold-start operation. 

We believe cold-start testing with these 

weighting factors will be sufficient to 

require manufacturers to take steps to 

minimize emission increases under 

cold-start conditions. Once 

manufacturers have applied 

technologies and strategies to minimize 

cold-start emissions, they will be 

achieving the greatest degree of 

emission reductions achievable under 

those conditions. A higher weighting 

factor for cold-start testing is not likely 

be more effective in achieving in-use 

emission control as new technologies 

will be expected to have resulted in 

significant control of emissions at 

engine startup. 

However, given our interest in 

controlling emissions under cold-start 

conditions and the relatively small 

amount of information available in this 

area at this time, we intend to revisit the 

cold-start weighting factor for transient 

testing in the future as additional data 

become available. Since the composite 

transient test represents a combination 

of variable-speed and constant-speed 

operation, we would consider operation 

from both of these types of engines in 

evaluating the cold-start weighting. 

Also, we intend to apply the same coldstart weighting when we adopt a 

transient duty cycle specifically for 

engines certified only for constant-speed 

operation.

The planned data-collection effort 

will focus on characterizing cold-start 

operation for nonroad diesel equipment. 

The objective will be to reassess, and if 

necessary, redevelop a weighting factor 

that properly accounts for the degree of 

cold-start operation so that in-use 

engines effectively control emissions 

during these conditions. As we move 

forward with this investigation, other 

interested parties, including the State of 

California, will be invited to participate. 

We are interested in pursuing a joint 

effort, in consultation with other 

national government bodies, to ensure a 

robust and portable data set that will 

facilitate common global technical 

regulations. This effort will require 

consideration of at least the following 

factors:

• What types of equipment will we 

investigate? 

• How many units of each equipment type 

will we instrument? 

• How do we select individual models that 

will together provide an accurate crosssection of the type of equipment they 

represent? 

• When will the program start and how 

long will it last? 

• How should we define a cold-start event 

from the range of in-use operation?

We expect to complete our further 

evaluation of the cold-start weighting in 

the context of the 2007 Technology 

Review, if not sooner. In case changes 

to the regulation are necessary, this 

timing will allow enough time for 

manufacturers to adjust their designs as 

needed to meet the Tier 4 standards. 

3. Constant-Speed Tests 

The Agency proposed that engine 

manufacturers could certify constantspeed engines using EPA’s ConstantSpeed, Variable-Load (CSVL) transient 

duty cycle 79 as an alternative to 

certifying these engines under its NRTC 

test cycle. The CSVL transient cycle was 

developed to approximate the speed and 

load operating characteristics of many 

constant-speed nonroad diesel 

applications.80 It, too, would have been 

subject to the cold-start requirement of 

nonroad transient test cycles as is the 

NRTC. However, after considerable 

discussion with and comment from 

engine manufacturers, equipment 

makers and other interested parties, the 

Agency has decided not to promulgate 

an alternative nonroad transient test 

cycle for constant-speed engines at this 

time. EMA, in its comments on the 

CSVL cycle, felt generally that: (1) The 

average load factor is much too low; (2) 

the frequency of the transient operations 

was too high; (3) the amplitudes of the 

transients were too great; and (4) the 

rates of transient load increase and 

response were too fast.

It was further noted that the CSVL test 

cycle is based solely upon the operation 

of a single, relatively small, naturallyaspirated arc welder engine, which 

EMA claims is a variable-speed type of 

engine certified generally on the 8-mode 

test cycle. Arc welders, Cummins noted, 

are not much like generator sets, which 

comprise around 50% of population of 

constant-speed engines and have a very 

different operation and test cycle than 

the typical portable generator set. 

Generator sets, DDC wrote, were built 

generally for a higher power capability 

at a single speed, many having larger, 

less-responsive turbochargers to achieve 

the higher brake mean effective pressure 

(BMEP). This made it difficult for these 

engines to shed load as quickly as the 

CSVL test cycle would require them to 

do. Commenters likewise wrote that the 

test cycle was costly and burdensome 

for equipment which, like generator 

sets, was only operated infrequently or 

when emergencies occurred. Some 

wrote that it would compromise 

generator set engine performance if 

manufacturers had to re-engineer their 

products to run over the CSVL test 

cycle, especially for larger BMEP 

engines. One commenter noted that 

these changes to nonroad engines would 

carry over to other stationary 

applications of these generator sets. A 

more extensive discussion of comments 

relating to the CSVL cycle may be read 

in the Summary and Analysis of 

Comment document for this rule. 

Given these potential problems and 

the strong possibility of fixing them by 

2007, the Agency has decided to defer 

adopting the CSVL test cycle here. 

39026 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

81These three steady-state test cycles are similar 

to test cycles found in the International Standard 

ISO 8178–4:1996 (E) and remain consistent with the 

existing 40 CFR part 89 steady-state duty cycles.

Instead, EPA with all of its stakeholders 

in this regard will map out a process of 

engine testing and analysis to better 

characterize constant-speed equipment 

in-use to design the most appropriate 

test cycle for the largest number of 

constant-speed engines. EPA undertakes 

this process with an eye to initiating 

rulemaking which would lead to 

promulgation of a transient cycle for 

constant-speed engines before the 

Agency’s 2007 Nonroad Diesel 

Technical Review. 

EPA defines a constant-speed engine 

in this regard as one which is certified 

to constant-speed operation, in other 

words, an engine which may not operate 

at a speed outside a single, fixed 

reference speed set by the engine’s 

governor. It should be clear then that 

any engine for which the governor 

doesn’t strictly limit the engine speed 

in-use to constant-speed operation, that 

engine will be subject to the NRTC. 

Thus, if a manufacturer’s engine is 

certified to EPA’s 8-mode steady-state 

test, the engine would also need to 

certify to the NRTC, since the 8-mode 

test does not limit the engine’s fixed 

operating speed. Conversely, those 

manufacturers who certify their engines 

to EPA’s constant-speed steady-state 

test, the 5-mode test cycle, are not 

required to have their engines certify to 

the NRTC. 

By utilizing an inclusive, data-driven 

approach (see Summary and Analysis 

document for more detail), the Agency 

is allowing time to develop, and if 

appropriate, finalize and implement a 

test procedure that meets the needs of 

the Agency, manufacturers, and other 

parties in advance of the 2007 

Technology Review. In fact, the Agency 

envisions constant speed variable load 

cycle generation to be completed by July 

2005. This approach should allow the 

Agency to develop a testing program 

which ensures robust control in-use, is 

data-driven and remains globally 

harmonized. We expect to initiate this 

effort within 3 months of promulgation 

of this rule and to conclude the work on 

the new test cycle in enough time to 

promulgate it through rulemaking and 

to provide industry adequate lead time 

to implement it in an orderly manner. 

If we encounter unforeseen and 

unavoidable delays or complications in 

this process, we will consider 

approaches to control based on available 

data at the time of the 2007 Technology 

Review. 

The Agency is adopting additional 

requirements, in conjunction with 

existing steady-state test requirements, 

which will help ensure that constantspeed nonroad diesel engines are 

subject to a rigorous program of in-use 

control of emissions and that diesel 

engine emissions will be controlled over 

a wide range of speed and load 

combinations. EPA is finalizing 

stringent nonroad NTE limits and 

related test procedures for all new 

nonroad diesel engines subject to the 

Tier 4 emissions standards beginning in 

2011 which will supplement the 

existing steady-state five-mode test 

cycle for constant-speed application 

engines. NTE testing for transient 

operation will add further assurance 

that emissions from constant-speed 

engines within this class, which have a 

limited speed response in-use, are 

controlled under in-use operation. 

Typically, engines which are designed 

to a particular transient cycle will 

control emissions effectively under 

other types of transient operation not 

specifically included in that 

certification procedure. Engines that are 

capable of meeting emission standards 

on a constant-speed, variable-load cycle 

will have the transient-response 

characteristics that are appropriate for 

controlling emissions at higher engine 

loads and for less dynamic transient 

operation. EPA, engine manufacturers, 

and interested parties will, in the mean 

time, work to develop a more 

appropriate transient test for constantspeed engines. A transient test for this 

broad class of nonroad engines will 

ensure a robust level of emissions 

control in-use within the diverse 

population of constant-speed engines 

and equipment. 

4. Steady-State Tests 

Recognizing the variety of both power 

classes and work applications to be 

found within the nonroad equipment 

and engine population, and as 

proposed, EPA is retaining current 

Federal steady-state test procedures for 

nonroad engines. (Manufacturers are 

thus required to meet emission 

standards under steady-state conditions, 

in addition to meeting emission 

standards under the transient test cycle, 

whenever the transient test cycle 

applies.) This requirement, like NTE 

emission testing, is one of two tests 

which apply to every Tier 4 engine. 

Table III–2 below sets out the particular 

steady-state duty cycle applicable to 

each of the following categories: (1) 

Nonroad engines 25 hp and greater; (2) 

nonroad engines less than 25 hp; and (3) 

nonroad engines having constant-speed, 

variable-load applications, (e.g., gen 

sets). The steady-state cycles remain, 

respectively, the 8-mode cycle, the 6-

mode cycle and the 5-mode cycle.81

Steady-state test cycles are needed so 

that testing for certification will reflect 

the broad range of operating conditions 

experienced by these engines. A steadystate test cycle represents an important 

type of modern engine operation, in 

power and speed ranges that are typical 

in-use. The mid-to-high speeds and 

loads represented by present steadystate testing requirements are the speeds 

and loads at which these engines are 

designed to operate for extended 

periods for maximum efficiency and 

durability. Details concerning the three 

steady-state procedures for nonroad 

engines and equipment are found in 

regulations at 40 CFR 1039.505 and in 

Appendices I–III to 40 CFR part 1039. 

Manufacturers will perform each 

steady-state test following all applicable 

test procedures in the regulations at 40 

CFR part 1039, e.g., procedures for 

engine warm-up and exhaust emissions 

measurement. The testing must be 

conducted with all emission-related 

engine control variables in the 

maximum NOX-producing condition 

which could be encountered for a 30 

second or longer averaging period at a 

given test point. Table III.F–2 below 

summarizes the steady-state testing 

requirements by individual engine 

power categories.

TABLE III.F–2.—SUMMARY OF STEADY-STATE TEST REQUIREMENTS

Nonroad engine power classes 

Steady-state testing requirements 

8-Mode cycle (C1 weighting) 6-Mode cycle (G3 weighting) 5-Mode cycle (D2 weighting) 

hp < 25 (kW < 19) .................................................... applies a ............................... applies a ............................... applies b

25 ≤ hp < 75 (19 ≤ kW < 56) ................................... applies .................................. NAc ...................................... applies b

75 ≤ hp < 175 (56 ≤ kW < 130) ............................... applies .................................. NAc ...................................... applies c

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39027

82Letter from EMA (Engine Manufacturers 

Association) to EPA Air Docket A–2001–28, IV–D–

402, pp 64. 83Memorandum and summary of technical 

discussions (including Appendix ‘‘A’’ text) in the 

e-Docket submission, OAR–2003–0012–0028, to 

EPA’s Air Docket.

TABLE III.F–2.—SUMMARY OF STEADY-STATE TEST REQUIREMENTS—Continued

Nonroad engine power classes 

Steady-state testing requirements 

8-Mode cycle (C1 weighting) 6-Mode cycle (G3 weighting) 5-Mode cycle (D2 weighting) 

175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ........................... applies .................................. NAc ...................................... applies b

hp > 750 (kW > 560) ................................................ applies .................................. NAc ...................................... applies b

a Manufacturers may use either of these tests for this class of engines. 

bFor constant, or nearly constant, speed engines and equipment with variable, or intermittent, load. 

cTesting procedures not applicable to this class of engines. 

Nonroad engine manufacturers 82, 

have called for steady-state testing 

which would collect emissions 

continuously ‘‘in a pseudo-transient 

manner,’’ proposing in effect, one-filter 

PM collections during a steady-state 

duty cycle. In response to these and 

other manufacturer concerns for 

emission variability during certification 

testing due to unanticipated emission 

control system regeneration between 

steady-state test modes, the Agency 83

has adopted, in its 40 CFR 1065.515 

regulations, the concept of modifying 

EPA’s 40 CFR part 89 steady-state 

engine certification duty cycles. The 

section describes ramped ‘‘modal’’

steady-state certification tests which 

would link the modes of a steady-state 

test together for the purpose of 

collecting a continuous stream of engine 

emissions. These tests provide for 

operating an engine at all of the modes 

specified in the present steady-state 

nonroad test cycles but without the 

breaks in emission collection required 

by switching between modes, stabilizing 

engine operation, and collecting 

emissions at that next operating mode. 

Since a ramped modal cycle (RMC) test 

cycle may more reliably and 

consistently report engine emissions 

from particulate trap and other emission 

control hardware-equipped nonroad 

engines than the comparable steadystate duty cycle from which it was 

derived, the Agency is providing the 

option of using these RMC versions of 

its steady-state engine duty cycles for 

nonroad diesel engine certification 

testing in lieu of the otherwise 

applicable steady-state cycles. Details 

on the procedures may be found in 

chapter 4.2 of the RIA for this rule and 

at regulations at 40 CFR 1039.505 and 

Appendix I of part 1039.

The optional RMC duty cycles do not 

represent a relaxation in stringency of 

emission testing nor are they an 

unreasonable increase in the emission 

test burden of diesel engine 

manufacturers. Rather, the RMC 

versions of EPA’s steady-state test cycles 

allow for more consistent and 

predictable emission testing of emission 

control system hardware-equipped 

diesel engines. Eliminating the 

‘‘downtime’’ between modes for the 

emission collection equipment allows 

sampling of emissions to be done on a 

composite basis for the whole test as 

opposed to sampling emissions modeby-mode. The RMC versions of these 

tests simply create a negligible 

transition period 20 seconds long 

connecting each mode and collects 

emissions during these brief transitions, 

as well as collecting emissions during 

the running of each test’s discrete 

operating modes. The continuous 

emission sampling allows regeneration 

events from engine emission control 

hardware to be captured more reliably 

and repeatably. By running emission 

testing without breaks and over the 

same engine duty schedule for each 

repetition of a RMC test, regeneration 

within the engine’s emission control 

hardware should become almost a 

predictable event. The longer sampling 

times of RMCs, while creating an 

identical weighting of each mode’s 

emissions, also help to avoid collecting 

a minuscule, possibly unreliably 

measured, amount of sample over the 

course of any single operating mode. PM 

emissions, for example, can be collected 

and measured more precisely under 

these test conditions as either batch or 

continuous samples. The opportunities 

for loss of emissions during sampling 

and storage due to sample retention by 

equipment at shut-down between modes 

or by filter handling and weighing are 

greatly reduced. As well, running a 

‘‘steady-state’’ test on a continuous basis 

allows cycle performance statistics to be 

applied to RMC emission tests (see 40 

CFR, part 39). Manufacturers are 

familiar with test cycles run with a set 

of statistical engine duty cycle 

performance ‘‘targets’’. Further, their 

test runs will be subject to less test cell 

‘‘tuning’’, modifying control strategies 

using repeat testing runs to fit the 

emission test cycle and the 

dynamometer to operate a particular 

engine. Finally, statistical targets serve 

to increase repeatability and reduce 

variability of engine operating 

parameters and emission test results on 

a test-to-test basis.

Transport refrigeration unit (TRU) 

engines, a specific application of a 

steady-state operation engine (68 FR 

28485, May 23, 2003), will be subject to 

both steady-state and NTE standards 

based on any normal operation that 

these engines would experience in the 

field. To that end, EPA has adopted a 

four-mode steady-state test cycle 

designed specifically for engines used in 

TRU applications which may be used by 

the manufacturer in lieu of normal 

steady-state testing. Commenters to the 

rule agreed that a TRU test cycle would 

be more representative of refrigeration 

unit operation than the nonroad cycles 

currently available to manufacturers of 

TRU engines, but some took issue with 

EPA’s usage restrictions in paragraphs 

(d)(2), (e)(2), and (e)(3) of regulations 

proposed at 40 CFR part 1039 subpart G. 

In response, the final rule allows 

manufacturers to test their engines 

under a broad definition of intermediate 

test speed. The definition covers the 60–

75% range of engine rpm at the 

specified test cycle engine load points, 

as defined in 40 CFR, 89.2. This will 

enable an engine manufacturer to more 

closely match the TRU cycle to the 

operation of their engines in-use. 

Further, the engine is allowed to exhibit 

no more than 2% variation in transient 

operation (speed or torque change) 

around the four operating modes 

defined under this test cycle. The 

provisions to address load set point drift 

are discussed in detail in the RIA 

chapter 4.3.2 and in regulations at 40 

CFR part 1039 subpart G. 

In choosing to certify their engine as 

a TRU engine, manufacturers will need 

to state on the engine emission control 

label that the engine will only be used 

in a TRU application and records must 

be kept on the delivery destination(s) for 

their engines. Manufacturers of these 

engines may petition EPA at 

certification for a waiver of the 

requirement to provide smoke emission 

39028 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

data for their constant-torque engines. A 

more detailed discussion of the TRU 

associated provisions is contained in 

chapter 4.2 of the RIA. It should be 

noted that an RMC version of the steady 

state TRU duty cycle is provided in 

Table 2 of 40 CFR part 1039 subpart G. 

G. Other Test Procedure Issues 

This section contains further detail 

and explanation regarding several 

related nonroad diesel engine emissions 

test and measurement provisions. The 

test procedures are specified in 40 CFR 

part 1065 and part 1039 subpart F. Part 

1065 contains general test procedure 

requirements and part 1039 contains the 

provisions that are specific to CI 

nonroad engines, such as test cycles. 

The changes described here will not 

significantly affect the stringency of the 

standards. While some of the changes 

being made may appear to increase the 

stringency of the standards when 

considered by themselves, others would 

appear to have the opposite effect. 

When considered together, however, 

they will result in more repeatable and 

less subjective testing that is equivalent 

to the existing procedures with respect 

to stringency. 

1. Smoke Testing

To control smoke emissions, we are 

requiring in this final rule that the 

current smoke standards and procedures 

will continue to apply to certain 

engines. We proposed to change these 

smoke standards and procedures, based 

on recent developments toward an 

established international protocol that 

was designed to allow a straightforward 

method to test engines in the field (68 

FR 28486, May 23, 2003). We have 

chosen not to adopt the proposed 

approach, mainly because it is becoming 

increasingly clear that ongoing 

development of in-use testing 

equipment will allow direct 

measurement of PM emissions in the 

field. We believe this will provide the 

best long-term control of both PM 

emissions. Controlling smoke is in some 

ways independent of PM, but the 

interest in developing an in-use smoke 

test was primarily as a means of 

providing a secondary indicator of high 

in-use PM emissions from these engines. 

Direct PM measurement removes much 

of the advantage of in-use smoke 

measurements. Relying on the existing 

smoke test also addresses concerns 

raised by manufacturers that the effort 

to comply with the new smoke 

requirements would be a large testing 

and development burden with little airquality benefit. We believe that 

aftertreatment-based Tier 4 PM 

standards will control smoke emissions 

as well as improved smoke testing 

standards and procedures. Engines 

below 19 kilowatts (kW) will generally 

not have particulate filters, but most of 

these are constant-speed engines and are 

therefore not subject to smoke 

standards, as described below. 

We are continuing the established 

policy of exempting constant-speed 

engines and single-cylinder engines 

from smoke standards. We do not 

believe that constant-speed engines 

undergo the kind of acceleration or 

lugging events that occur during this 

smoke test procedure, so it would not be 

appropriate for these engines to be 

subject to smoke standards. We exempt 

single-cylinder engines for a different 

reason. These engines, which very often 

provide power for generator sets and 

other constant-speed applications, but 

may in some cases experience 

accelerations, the nature of singlecylinder engine operation makes it 

difficult to get a valid smoke emission 

measurement. Single-cylinder engines 

generally have discrete puffs of smoke, 

rather than a stable emission stream for 

measuring smoke values. We believe it 

is not appropriate to use such erratic 

measurements to evaluate an engine’s 

emission performance. As a result, we 

will not require single-cylinder engines 

to meet our smoke standards until we 

find a test method that takes this into 

account. 

Also, as described in the proposed 

rule, we are exempting from smoke 

emission standards any engines that are 

certified to PM emission standards or 

FELs at or below 0.07 g/kW-hr. We 

believe any engine that has such low 

PM emissions will have inherently low 

smoke emissions. No commenters 

disagreed with this position. 

2. Maximum Test Speed 

We are changing how test cycles are 

specified. As proposed, we are applying 

the existing definition of maximum test 

speed in 40 CFR part 1065 to nonroad 

CI engines. This definition of maximum 

test speed is the single point on an 

engine’s normalized maximum power 

versus speed curve that lies farthest 

away from the zero-power, zero-speed 

point. This is intended to ensure that 

the maximum speed of the test is 

representative of actual engine operating 

characteristics and is not improperly 

used to influence the parameters under 

which their engines are certified. In 

establishing this definition of maximum 

test speed, it was our intent to specify 

the highest speed at which the engine is 

likely to be operated in use. Under 

normal circumstances this maximum 

test speed should be close to the speed 

at which peak power is achieved. 

However, in past discussions, some 

manufacturers have indicated that it is 

possible for the maximum test speed to 

be unrepresentative of in-use operation. 

Since we were aware of this potential 

during the original development of this 

definition, we included provisions to 

address issues such as these. Part 1065 

allows EPA to modify test procedures in 

situations where the specified test 

procedures would otherwise be 

unrepresentative of in-use operation. 

Thus, in cases in which the definition 

of maximum test speed resulted in an 

engine speed that was not expected to 

occur with in-use engines, we would 

work with the manufacturers to 

determine the maximum speed that 

would be expected to occur in-use (see 

regulations at 40 CFR 1065.10 (c)). 

3. Improvements to the Test Procedures 

As we proposed, we are making 

changes to the test procedures to 

improve the precision of emission 

measurements. These changes address 

the potential effect of measurement 

precision on the feasibility of the 

standards. It is important to note that 

these changes are not intended to bias 

results high or low, but only to improve 

the precision 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. 

The rationale for the changes are 

discussed in detail elsewhere. The 

changes affecting Constant Volume 

Sampling (CVS) and PM testing are 

discussed in a memo to the docket (Air 

Docket A–99–06, IV–B–11), which was 

originally submitted in support of the 

recent highway heavy-duty diesel 

engine rule (66 FR 5001, January 18, 

2001).

In general, we are applying the 

highway heavy-duty engine test 

procedures to nonroad CI engines in this 

rulemaking. Many of the specific 

changes being adopted are to the PM 

sampling procedures. The PM 

procedures are the procedures finalized 

as part of the highway heavy-duty diesel 

engine rule (66 FR 5001, January 18, 

2001). 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. 

It is also worth noting that we intend 

to make additional improvements to the 

test procedures in a separate rulemaking 

that will be proposed later this year to 

incorporate the latest measurement 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39029

84Auxiliary emission control device is defined at 

40 CFR 89.2 as ‘‘any element of design that senses 

temperature, vehicle speed, engine RPM, 

transmission gear, or any other parameter for the 

purpose of activating, modulating, delaying or 

deactivating the operation of any part of the 

emission control system.’’

85 40 CFR 89.107(b)(1) states ‘‘Defeat device 

includes any auxiliary emission control device 

(AECD) that reduces the effectiveness of the 

emission control system under conditions which 

may reasonably be expected to be encountered in 

normal operation and use unless such conditions 

are included in the test procedure.’’

technologies. Many of the 

improvements being considered were 

discussed in the previously-mentioned 

memo to the docket (Air Docket A–99–

06, IV–B–11). We recognize the 

importance of these improvements for 

use in testing by nonroad diesel engine 

manufacturers and EPA. However, since 

we expect that the changes would also 

apply to many nonroad spark-ignition 

engine manufacturers, it is appropriate 

to conduct a separate notice and 

comment rulemaking for all affected 

parties. We remain committed to 

incorporating appropriate additional 

improvements to the test procedures. 

We have placed into the docket a draft 

revised version of part 1065 that 

represents our current thinking on 

appropriate testing regulations. 

H. Engine Power 

Currently, rated power and power 

rating are undefined, and we are 

concerned that this makes the 

applicability of the standards too 

subjective and confusing. One 

manufacturer may choose to define 

rated power as the maximum measured 

power output, while another may define 

it as the maximum measured power at 

a specific engine speed. Using this 

second approach, an engine’s rated 

power may be somewhat less than the 

true maximum power output of the 

engine. Given the importance of engine 

power in defining which standards an 

engine must meet and when, we believe 

that it is critical that a singular power 

value be determined objectively 

according to a specific regulatory 

definition. 

To address this, we proposed to add 

a definition of ‘‘maximum engine 

power’’ to the regulations. This term 

was to be used instead of previously 

undefined terms such as ‘‘rated power’’

or ‘‘power rating’’ to specify the 

applicability of the standards. The 

addition of this definition was intended 

to allow for more objective applicability 

of the standards. More specifically, we 

proposed that:

Maximum engine power means the 

measured maximum brake power output of 

an engine. The maximum engine power of an 

engine configuration is the average maximum 

engine power of the engines within the 

configuration. The maximum engine power 

of an engine family is the highest maximum 

engine power of the engines within the 

family.

During the comment period, 

manufacturers opposed the proposed 

definition. (We received no other 

comments on this issue.) The 

manufacturers correctly pointed out that 

they cannot know the average actual 

power of production engines when they 

certify an engine family, because 

certification typically occurs before 

production begins. Therefore the 

definition of ‘‘maximum engine power’’

being finalized today relies primarily 

upon the manufacturer’s design 

specifications and the maximum torque 

curve that the manufacturer expects to 

represent the actual production engines. 

This provision is specified in a new 

section 40 CFR 1039.140. Under this 

approach the manufacturer would take 

the torque curve that is projected for an 

engine configuration, based on the 

manufacturer’s design and production 

specifications, and convert it into a 

‘‘nominal power curve’’ that would 

relate the maximum power that would 

be expected to engine speed when a 

production engine is mapped according 

our specified mapping procedures. The 

maximum engine power is being 

defined as the maximum power point 

on that nominal power curve.

Manufacturers will be required to 

report the maximum engine power of 

each configuration in their applications 

for certification. As with other engine 

parameters, manufacturers will be 

required to ensure that the engines that 

they produce under the certificate have 

maximum engine power consistent with 

those described in their applications. 

However, since we recognize that 

variability is a normal part of engine 

production, we will not require that all 

production engines have exactly the 

power specified in the application. 

Instead, we will only require that the 

power specified in the application be 

within the normal range of powers of 

the production engines. Typically, we 

would expect the specified power to be 

within one standard deviation of the 

mean power of the production engines. 

If a manufacturer determines that the 

specified power is outside of the normal 

range, we may require the manufacturer 

to change the settings of the engines 

being produced and/or amend the 

application for certification. In deciding 

whether to require such amendment, we 

would consider the degree to which the 

specified power differed from the 

production engines, the normal power 

variability for those engines, whether 

the engine used or generated emission 

credits, and whether the error affected 

which standards applied to the engine. 

The preceding discussion presumes 

that each manufacturer will develop its 

production processes to produce the 

engines described in the application. If 

a manufacturer were to intentionally 

produce engines different than those 

described in the application, we would 

consider the application to be 

fraudulent, and could void the 

certificate ab initio for those engines. 

For example, for engines that use 

emission credits, this could occur if a 

manufacturer deliberately biased its 

production variability so that the 

engines have higher average power than 

described in the application. If we 

voided the certificate for those engines 

the manufacturer would be subject to 

large fines and any other appropriate 

enforcement provisions for each engine. 

Finally, in light of some of the 

comments that we received, it is worth 

clarifying that the maximum engine 

power will not be used during engine 

testing. It is only used to define power 

categories and calculate ABT emission 

credits. 

I. Auxiliary Emission Control Devices 

and Defeat Devices 

Existing nonroad regulations prohibit 

the use of a defeat device (see 40 CFR 

89.107) in nonroad diesel engines. The 

defeat device prohibition is intended to 

ensure that engine manufacturers do not 

use auxiliary emission control devices 

(AECD) which sense engine operation in 

a regulatory test procedure and as a 

result reduce the emission control 

effectiveness of that procedure.84 In 

today’s notice we are supplementing 

existing nonroad test procedures with a 

transient engine test cycle and NTE 

emission standards with associated test 

requirements. As such, the Agency 

believes that a clarification of the 

existing nonroad diesel engine 

regulations regarding defeat devices is 

required in light of these additional 

emission test requirements. The defeat 

device prohibition makes it clear that 

AECDs which reduce the effectiveness 

of the emission control system are 

defeat devices, unless one of several 

conditions is met. One of these 

conditions is that an AECD which 

operates under conditions ‘‘included in 

the test procedure’’ is not a defeat 

device.85 While the existing defeat 

device definition does contain the term 

‘‘test procedure,’’ and therefore should 

be interpreted as including the 

supplemental testing requirements, we 

want to make it clear that both the 

supplemental transient test cycle and 

NTE emission test procedures are 

39030 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

86Base emissions control maps describe the 

modulation of an emissions control parameter as a 

function of changing engine speed and torque.

included within the defeat device 

regulations as conditions under which 

an operational AECD will not be 

considered a defeat device. Therefore, 

we are clarifying the defeat device 

regulations by specifying the 

appropriate test procedures (i.e., the 

existing steady-state procedures and the 

supplemental tests). We are clarifying 

the engine manufacturers certification 

reporting requirements with respect to 

the description of AECDs. Under the 

previous nonroad engine regulations, 

manufacturers are required to provide a 

generalized description of how the 

emissions control system operates and a 

‘‘detailed’’ description of each AECD 

installed on the engine (see 40 CFR 

89.115(d)(2)). This change clarifies what 

is meant by ‘‘detailed.’’

For engines rated above 750 

horsepower, the expanded 

interpretation of ‘‘included in the test 

cycle’’ extends only to the NTE because 

we are not requiring these engine to be 

tested over the supplemental transient 

test cycle. Transient emissions control 

strategies that are substantially included 

in the NTE will be considered to comply 

with the defeat device criteria. For 

instances where transient emissions 

control strategies are not well 

represented over the official test 

requirements, we will rely on the defeat 

device provisions to ensure appropriate 

transient off-cycle emissions control. 

The defeat device provisions restrict the 

ability of manufacturers to reduce the 

level of emissions control during 

transient operation compared to that 

employed over the steady state cycle. In 

order to evaluate transient emissions 

control strategies for compliance with 

the defeat device provisions, we are 

requiring manufacturers to submit 

information which indicates how 

transient emissions are controlled 

during normal operation and use. 

Information that would adequately 

fulfill this requirement includes but is 

not limited to: 

A. Emissions data gathered with 

portable emissions measurement 

systems from in-service engines 

operating over a broad range of typical 

transient conditions; 

B. Emissions data generated under 

laboratory conditions representing a 

broad range of typical transient 

operation; 

C. Transient test cycle results from 

certified engines rated at or below 750 

horsepower which share nearly 

identical transient emissions control 

strategies; 

D. Base emissions control maps along 

with an explanation for differences in 

control between portions of the map 

substantially included in the steadystate test cycle and that which is 

predominately associated with transient 

operation;86

E. A comparative analysis of the base 

emissions control maps from certified 

engines rated at or below 750 

horsepower and those rated over 750 

horsepower. 

We will use this information to 

determine the degree to which the 

design and effectiveness of the transient 

emissions control system compares to 

the control demonstrated over the 

steady-state cycle as well as the 

transient control used for certified 

engines at or below 750 horsepower 

where compliance over the transient 

cycle is required. 

A thorough disclosure of the presence 

and purpose of AECDs is essential in 

allowing EPA to evaluate the AECD and 

determine whether it represents a defeat 

device. Clearly, any AECD which is not 

fully identified in the manufacturer’s 

application for certification cannot be 

appropriately evaluated by EPA and 

therefore cannot be determined to be 

acceptable by EPA. Our clarifications to 

the certification application 

requirements include additional detail 

specific to those AECDs which the 

manufacturer believes are necessary to 

protect the engine or the equipment in 

which it is installed against damage or 

accident (‘‘engine protection’’ AECDs). 

While the definition of a defeat device 

allows as an exception strategies needed 

to protect the engine and equipment 

against damage or accident, we intend 

to continue our policy of closely 

reviewing the use of this exception. In 

evaluating whether a reduction in 

emissions control effectiveness is 

needed for engine protection, EPA will 

closely evaluate the actual technology 

employed on the engine family, as well 

as the use and availability of other 

emission control technologies across the 

industry, taking into consideration how 

widespread the use is, including its use 

in similar engines and similar 

equipment. While we have specified 

additional information related to engine 

protection AECDs in the regulations, we 

reserve the right to request additional 

information on a case-by-case basis as 

necessary. 

In the last several years, EPA has 

issued extensive guidance on the 

disclosure of AECDs for both highway 

and nonroad diesel engine 

manufactures. These provisions do not 

impose any new certification burden on 

engine manufacturers, rather, it clarifies 

the existing certification application 

regulations by specifying what type of 

information manufacturers must submit 

regarding AECDs. 

Finally, we take this opportunity to 

emphasize that the information 

submitted must be specific to each 

engine family. The practice of 

describing AECDs in a ‘‘common’’

section, wherein the strategies are 

described in general for all the 

manufacturer’s engines, is acceptable as 

long as each engine family’s application 

contains specific references to the 

AECDs in the common section which 

clearly indicate which AECDs are 

present on that engine family, and the 

application contains specific calibration 

information for that engine family’s 

AECDs. The regulatory requirements 

can be found at 40 CFR 89.115(d)(2) in 

today’s notice.

J. Not-To-Exceed Requirements 

In today’s action we are finalizing notto-exceed (NTE) emission standards for 

all new nonroad diesel engines subject 

to the Tier 4 emissions standards 

beginning in 2011. These NTE standards 

and requirements are largely identical to 

the NTE provisions we proposed, except 

as noted below. 

The NTE standards and test 

procedures are being finalized to help 

ensure that nonroad diesel emissions 

are controlled over the wide range of 

speed and load combinations commonly 

experienced in-use. EPA has similar 

NTE standards for highway heavy-duty 

diesel engines, compression ignition 

marine engines, and nonroad sparkignition engines. The NTE requirements 

supplement the existing steady-state test 

as well as the new transient test which 

is also being finalized today. 

The NTE standards and test 

procedures which we proposed, and 

which we are finalizing, are derived 

from similar NTE standards and test 

procedures which EPA adopted for 

highway heavy-duty diesel engines. In 

the proposal, we requested comment on 

an alternative NTE test procedure 

approach (see 68 FR 28369, May 23, 

2003). As discussed in the proposal, the 

two NTE approaches would result in the 

same overall level of emission control, 

but the implementation of each 

approach from an in-use measurement 

and data gathering perspective are quite 

different. We have decided not to 

finalize this alternative approach. This 

decision is based primarily on our belief 

that nonroad engine manufacturers will 

more easily transfer the knowledge and 

experience gained from the highway 

NTE implementation (which begins in 

2007) to the nonroad program if the two 

programs have similar requirements. For 

additional discussion regarding our 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39031

87Torque is a measure of rotational force. The 

torque curve for an engine is determined by an 

engine ‘‘mapping’’ procedure specified in the Code 

of Federal Regulations. The intent of the mapping 

procedure is to determine the maximum available 

torque at all engine speeds. The torque curve is 

merely a graphical representation of the maximum 

torque across all engine speeds.

decision to not finalize the alternative 

approach, please see the Summary and 

Analysis of Comments. 

The NTE requirements establish an 

area (the ‘‘NTE zone’’ or ‘‘NTE control 

area’’) under the torque curve of an 

engine where emissions must not 

exceed a specified value for any of the 

regulated pollutants.87 An illustrative 

NTE zone is shown in Figure III.J–1.

The NTE standard applies during any 

conditions that could reasonably be 

expected to be seen by that engine in 

normal operation and use, within 

certain broad ranges of real ambient 

conditions. The NTE requirements will 

help to ensure emission benefits over 

the full range of in-use operating 

conditions. The NTE being finalized 

today for nonroad contains the same 

basic provisions as the highway NTE. 

This NTE control area is defined in the 

same manner as the highway NTE 

control area, and is therefore a subset of 

the engine’s possible speed and load 

operating range. The NTE standard 

applies to emissions sampled during a 

time duration as small as 30 seconds. 

The NTE standard requirements for 

nonroad diesel engines are summarized 

below and specified in the regulations at 

40 CFR 1039.101 and 40 CFR 1039.515. 

These requirements will take effect as 

early as 2011, as shown in table III.J–1. 

The NTE standard applies to engines at 

the time of certification as well as in use 

throughout the useful life of the engine.

TABLE III.J–1.—NTE STANDARD

IMPLEMENTATION SCHEDULE

Power category 

NTE implementation 

model year a

<25 hp ...................................... 2013 

25–75 hp ................................... 2013 b

75–175 hp ................................. 2012 

175–750 hp ............................... 2011 

>750 hp .................................... 2011 

Notes:

aThe NTE applies for each power category 

once Tier 4 standards are implemented, such 

that all engines in a given power category are 

required to meet NTE standards. bThe NTE standard would apply in 2012 for 

any engines in the 50–75 hp range which 

choose not to comply with the proposed 2008 

transitional PM standard. 

The NTE test procedure can be run in 

nonroad equipment during field 

operation or in an emissions testing 

laboratory using an appropriate 

dynamometer. The test itself does not 

involve a specific operating cycle of any 

specific length; rather, it involves 

nonroad equipment operation of any 

type which could reasonably be 

expected to occur in normal nonroad 

equipment operation that could occur 

within the bounds of the NTE control 

area. The nonroad engine is operated 

under conditions that may reasonably 

be expected to be encountered in 

normal operation and use, including 

operation under steady-state or transient 

conditions and under varying ambient 

conditions. Emissions are averaged over 

a minimum time of thirty seconds and 

then compared to the applicable 

emission standard. The NTE standard 

applies over a wide range of ambient 

conditions, including up to an altitude 


ER29JN04.002</GPH>
39032 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

of 5,500 feet above-sea level at ambient 

temperatures as high as 86 deg. F, and 

at sea-level up to ambient temperatures 

as high as 100 deg. F. The specific 

temperature and altitude conditions 

under which the NTE applies, as well as 

the methodology for correcting 

emissions results for temperature and/or 

humidity, are specified in the 

regulations. 

For new nonroad diesel engines 

subject to the NTE standards, we will 

require that manufacturers state in their 

application for certification that they are 

able to meet the NTE standards under 

all conditions that may reasonably be 

expected to occur in normal equipment 

operation and use. Manufacturers will 

have to maintain a detailed description 

of any testing, engineering analysis, and 

other information that forms the basis 

for their statement. We believe that 

there is a variety of information that a 

manufacturer could use as a reasonable 

basis for a statement that engines are 

expected to meet NTE standards. For 

example, a reasonable basis could 

include data from laboratory steadystate and transient test cycle operation, 

a robust engine emissions map derived 

from laboratory testing (e.g., an 

emissions map of similar resolution to 

the engine’s base fuel injection timing 

map) and technical analysis relying on 

good engineering judgment which are 

sufficient, in combination, to project 

emissions levels under NTE conditions 

reasonably expected to be encountered 

in normal operation and use. Data 

generated from in-use nonroad 

equipment testing to determine 

emission levels could, at the 

manufacturer’s option, also be part of 

this combination. However, a reasonable 

basis for the manufacturer’s statement 

does not require in-use emissions test 

data. This statement could reasonably 

be based solely on laboratory test data, 

analysis, and other information 

reasonably sufficient to support a 

conclusion that the engine will meet the 

NTE under conditions reasonably 

expected to be encountered in normal 

vehicle operation and use. If a 

manufacturer has relevant in-use 

nonroad emissions test data, it should 

be taken into consideration by the 

manufacturer in developing the basis for 

its statement. 

In addition, as we proposed, we are 

finalizing a transition period during 

which a manufacturer could apply for 

an NTE deficiency for a nonroad diesel 

engine family. The NTE deficiency 

provisions would allow the 

Administrator to accept a nonroad 

diesel engine as compliant with the NTE 

standards even though some specific 

requirements are not fully met. We are 

finalizing these NTE deficiency 

provisions because we believe that, 

despite the best efforts of manufacturers, 

for the first few model years it is 

possible some manufacturers may have 

technical problems that are limited in 

nature but cannot be remedied in time 

to meet production schedules. We are 

not limiting the number of NTE 

deficiencies a manufacturer can apply 

for during the first three model years for 

which the NTE applies. For the fourth 

through the seventh model year after 

which the NTE standards are 

implemented, a manufacturer could 

apply for no more than three NTE 

deficiencies per engine family. Within 

an engine family, NTE deficiencies must 

be applied for on an engine model or 

power rating basis; however, the same 

deficiency when applied to multiple 

ratings or models counts as a single 

deficiency within an engine family. No 

deficiency may be applied for or granted 

after the seventh model year. The NTE 

deficiency provision will only be 

considered for failures to meet the NTE 

requirements. EPA will not consider an 

application for a deficiency for failure to 

meet the FTP or supplemental transient 

standards.

Similar to the 2007 highway HD rule, 

we are also finalizing a provision which 

would allow a manufacturer to exclude 

defined regions of the NTE engine 

control zone from NTE compliance if 

the manufacturer could demonstrate 

that the engine, when installed in a 

specified nonroad equipment 

application(s), is not capable of 

operating in such regions. We have also 

finalized a provision which would 

allow a manufacturer to petition the 

Agency to limit testing in a defined 

region of the NTE engine control zone 

during NTE testing. This optional 

provision would require the 

manufacturer to provide the Agency 

with in-use operation data which the 

manufacturer could use to define a 

single, continuous region of the NTE 

control zone. This single area of the 

control zone must be specified such that 

operation within the defined region 

accounts for 5 percent or less of the total 

in-use operation of the engine, based on 

the supplied data. Further, to protect 

against ‘‘gaming’’ by manufacturers, the 

defined region must generally be 

elliptical or rectangular in shape, and 

share a boundary with the NTE control 

zone. If approved by EPA, the 

regulations then disallow testing with 

sampling periods in which operation 

within the defined region constitutes 

more than 5.0 percent of the timeweighted operation within the sampling 

period. 

The NTE numerical standard is a 

function of FTP emission standards 

contained in today’s final rule, which 

standards are described in section II. As 

with the NTE standards we have 

established for the 2007 highway rule, 

the nonroad NTE standard is 

determined as a multiple of the engine 

families’ underlying FTP emission 

standard. In addition, as with the 2007 

highway standard, the multiple is either 

1.25 or 1.5, depending on the emission 

pollutant type and the value of the FTP 

standard (or the engine families’ FEL). 

These multipliers are based on EPA’s 

assessment of the technological 

feasibility of the NTE standard, and our 

assessment that as the underlying FTP 

standard becomes more stringent, the 

NTE multiplier should increase (from 

1.25 to 1.5). The FTP standard or FEL 

thresholds for the NTE standard’s 1.25x 

multiplier and the 1.5x multiplier are 

specified for each regulated emission in 

table III.J–2.

TABLE III.J–2.—THRESHOLDS FOR APPLYING NTE STANDARD OF 1.25X FTP STANDARD VS. 1.5X FTP STANDARD

Emission Apply 1.25x NTE when . . . Apply 1.5x when . . . 

NOX .................................................................... NOX std or FEL ≥ 1.9 g/bhp-hr ........................ NOX std or FEL < 1.9 g/bhp-hr 

NMHC ................................................................ NOX std or FEL ≥ 1.9 g/bhp-hr ........................ NOX std or FEL < 1.9 g/bhp-hr 

NOX+NMHC ....................................................... NMHC+NOX std or FEL ≥ 2.0 g/bhp-hr ........... NMHC+NOX std or FEL < 2.0 g/bhp-hr 

PM ...................................................................... PM std or FEL ≥ 0.05 g/bhp-hr ........................ PM std or FEL < 0.05 g/bhp-hr 

CO ...................................................................... All stds or FELs ................................................ No stds or FELs 

For example, beginning in 2011, the 

NTE standard for engines meeting a FTP 

PM standard of 0.01 g/bhp-hr and a FTP 

NOX standard of 0.30 g/bhp-hr would be 

0.02 g/bhp-hr PM and 0.45 g/bhp-hr 

NOX. In the NPRM, we proposed a NOX

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39033

threshold value of 1.5 g/bhp-hr as the 

value at which the NTE multiplier 

would switch from 1.5 to 1.25. 

We proposed this NOX emission 

threshold level (1.5 g/bhp-hr) primarily 

because it is the same value as we 

finalized for the highway NTE. As 

shown in table III.J–2, we have finalized 

a threshold value of 1.9 g/bhp-hr NOX

for nonroad engines. We have finalized 

this higher NOX threshold based on the 

differences in the emission performance 

of NOX control technologies between 

highway and nonroad diesel engines. 

Specifically, nonroad diesel NOX

standards have traditionally been higher 

than the equivalent highway NOX

standard due primarily to the 

effectiveness of charge-air-cooling and 

the lack of ram-air for nonroad 

applications. For example, the nonroad 

Tier 3 NMHC+NOX standards are higher 

than the 2004 heavy-duty highway 

standards (e.g., 3.0 g/bhp-hr vs. 2.5 g/

bhp-hr), and the Tier 4 NOX standard is 

higher than the 2007 heavy-duty 

highway standard (e.g., 0.3 g/bhp-hr vs. 

0.2 g/bhp-hr). We expect that the 

nonroad Tier 3 standard for engines 

above 100 hp will require NOX levels of 

approximately 2.5 g/bhp-hr and we 

expect that for the 2004 highway heavyduty standards, NOX levels are 

approximately 2 g/bhp-hr. In both cases, 

these emission levels are the building 

blocks for the next set of EPA standards 

(e.g., Tier 4 for nonroad and 2007 for 

highway). Because the nonroad Tier 3 

NOX emission levels are expected to be 

approximately 25 percent greater than 

the 2004 highway level (2.5 vs 2), we 

believe that the NTE NOX multiplier 

threshold for nonroad should be 25 

percent greater for nonroad as compared 

to highway. For these reasons, we have 

finalized a NOX multiplier threshold of 

1.9 g/bhp-hr, which is 25 percent greater 

than the highway multiplier threshold. 

In addition, as proposed, we are 

finalizing a number of specific engine 

operating conditions during which the 

nonroad NTE standard would not apply. 

The exact criteria for these conditions 

are defined in the regulations, but in 

summary: the NTE does not apply 

during engine start-up conditions; the 

NTE does not apply during very cold 

engine intake air temperatures for EGRequipped engines during which the 

engine may require an engine protection 

strategy; and, finally, for engines 

equipped with NOX and/or NMHC 

aftertreatment (such as a NOX adsorber), 

the NTE does not apply during warmup conditions for the exhaust emission 

control device. Finally, while we did 

not propose this, we are finalizing the 

NTE PM carve-out provisions for 

engines which will not require PM 

filters. The PM only carve-out is a subregion of the NTE zone in which the 

NTE PM standard does not apply. 

Figure III.J–1 contains an illustration of 

the PM carve-out. This is a region of 

high engine speed and low engine 

torque during which engine-out PM 

emissions are difficult to control to 

levels below the PM NTE standard. The 

dimensions of the PM carve-out are 

specified in the regulations. For engines 

equipped with a PM filter, compliance 

with the PM NTE standard in this region 

is achievable due to the highly efficient 

PM reduction capabilities of the CDPF 

technology. However, for engines in the 

under 25 hp category, for which we 

have established Tier 4 emission 

standards that do not require the use of 

a PM filter, PM control in this subregion of the NTE zone with 

conventional PM reduction technologies 

may not be achievable. Therefore, as we 

allowed with highway heavy-duty 

engines certifying to the 0.1 g/bhp-hr 

standard, we have created a PM carveout for nonroad engines that use incylinder PM control technologies. 

Specifically, the PM carve-out applies to 

engines meeting a PM standard or FEL 

greater than or equal to 0.05 g/bhp-hr.

K. Investigating and Reporting 

Emission-Related Defects 

In 40 CFR part 1068, subpart F, we are 

adopting defect reporting requirements 

that obligate manufacturers to tell us 

when they learn that emission-control 

systems are defective and to conduct 

investigations under certain 

circumstances to determine if an 

emission-related defect is present. 

Under these defect-reporting 

requirements, manufacturers must track 

available warranty claims and any other 

available information from dealers, 

hotlines, diagnostic reports, or fieldservice personnel to identify possible 

defects. If the number of possible 

defects exceeds certain thresholds, they 

must investigate future warranty claims 

and other information to establish 

whether these are actual defects. 

We believe the investigation 

requirement in this rule will allow both 

EPA and the engine manufacturers to 

fully understand the significance of any 

unusually high rates of warranty claims 

for systems or parts that may have an 

impact on emissions. In the past, defect 

reports were submitted based on a very 

low threshold with the same threshold 

applicable to all size engine families 

and with little information about the 

full extent of the problem. The new 

approach should result in fewer overall 

defect reports being submitted by 

manufacturers than would otherwise be 

required under the old defect-reporting 

requirements because the number of 

defects triggering the submission 

requirement rises with the engine family 

size. The new approach may trigger 

some additional reports for smallvolume families, but the percentagebased approach will ensure that 

investigations and reports correspond to 

issues that are likely to be significant. 

Part 1068, subpart F, is intended to 

require manufacturers to use 

information we would expect them to 

keep in the normal course of business. 

We believe in most cases manufacturers 

will not be required to institute new 

programs or activities to monitor 

product quality or performance. A 

manufacturer that does not keep 

warranty or replacement part 

information may ask for our approval to 

use an alternate defect-reporting 

methodology that is at least as effective 

in identifying and tracking possible 

emission-related defects as the 

requirements of 40 CFR 1068.501. Thus 

manufacturers will have the flexibility 

to develop defect tracking and reporting 

programs that work better for their 

standard business practices. However, 

until we approve such a request, the 

thresholds and procedures of subpart F 

continue to apply. 

Manufacturers may also ask for our 

approval to use an alternate defectreporting methodology when the 

requirements of 40 CFR 1068.501 can be 

demonstrated to be highly impractical 

or unduly burdensome. In such cases, 

we will generally allow alternate 

methodologies that are at least as 

effective in identifying, correcting, and 

informing EPA of possible emissionrelated defects as the requirements of 40 

CFR 1068.501. We expect this flexibility 

to be useful in special circumstances 

such as when new models of very large 

engines are introduced for the first time. 

In this situation, it may be appropriate 

to allow an alternate defect reporting 

method because the high cost of these 

engines often makes it impractical to 

build and test large numbers of 

prototype engines. The initial 

production of these engines can have 

similar defect rates to the high levels 

often associated with prototype engines. 

While we are concerned about such 

defects and want to be kept informed 

about them, it is not clear that our basic 

program would be the best way to 

address these defects. In such cases, we 

believe it may be more appropriate for 

manufacturers to propose an alternative 

approach that consolidates reports on a 

regular interval, such as quarterly, and 

identifies obvious early-life defects 

without a formal tracking process. In 

general, we would encourage 

manufacturers to propose an alternate 

39034 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

approach to ensure that these defects are 

properly addressed while minimizing 

the associated burden. 

Issues related to parts shipments 

received the most attention from 

commenters who pointed out that the 

proposed requirement to track 

shipments of all emission-related 

components was overly burdensome 

and not likely to reveal useful 

information. We have concluded that it 

is not appropriate to use parts 

shipments as a quantitative indicator to 

evaluate whether manufacturers exceed 

the threshold that would trigger an 

investigation. We generally agree with 

manufacturers concerns that partsshipments data would be too difficult to 

evaluate, for example, because parts are 

often shipped for stocking purposes, 

parts are installed in compliant and 

noncompliant products (such as 

exported engines), and part shipments 

are generally not identifiable by model 

year. The final rule therefore requires 

manufacturers to pursue a defect 

investigation if the number of shipped 

parts is higher than the manufacturer 

would expect based on historical 

shipment levels, specifications for 

scheduled maintenance, or other factors. 

We have modified the proposed 

thresholds to address concerns that 

manufacturers would be required to 

investigate and report defects too 

frequently. For engines under 750 hp, 

we are adopting investigation thresholds 

of 10 percent of total production or 50 

engines, whichever is greater, for any 

single engine family in one model year. 

Similarly, we are adopting defectreporting thresholds of 2 percent of total 

production or 20 engines, whichever is 

greater. For engines over 750 hp, the 

same percentage thresholds apply, but 

we are extending the percentage values 

down to smaller engine families to 

reflect their disproportionate 

contribution to total emissions. For 

these engines, the absolute thresholds 

are 25 engines for investigations and 10 

or 15 engines for defects (see table III.K–

1). We believe these thresholds 

adequately balance the desire to 

document emission-related defects 

without imposing an unreasonable 

reporting burden. Also, we believe this 

approach to adopting thresholds 

adequately addresses reporting 

requirements for aftertreatment and 

non-aftertreatment components.

TABLE III.K–1.—INVESTIGATION AND DEFECT-REPORTING THRESHOLDS FOR VARYING SIZES OF ENGINE FAMILIES1

Engine size Investigation threshold Defect-reporting threshold 

≤750 hp .............................................................. less than 500: 50 ............................................. less than 1,000: 20 

500–50,000: 10% ............................................. 1,000–50,000: 2% 

50,000+: 5,000 ................................................. 50,000+: 1,000 

>750 hp .............................................................. ........................................................................... less than 150: 10 

less than 250: 25 ............................................. 150–750: 15 

250+: 10% ........................................................ 750+: 2% 

Notes:

1For varying sizes of engine families, based on sales per family in a given model year. 

EMA also expressed concern about 

the existing regulatory language in 40 

CFR 1068.501(b)(3), which states that 

manufacturers must ‘‘consider defects 

that occur within the useful life period, 

or within five years after the end of the 

model year, whichever is longer.’’

However, this provision has no effect on 

the diesel engines subject to the Tier 4 

standards being adopted today, since 

they all have useful lives of at least five 

years. We recognize that this issue may 

be relevant to engine categories that do 

not have five-year useful lives, such as 

small SI engines, and will consider 

these concerns in our future regulation 

of such engines. 

When manufacturers start an 

investigation, they must consider any 

available information that would help 

them evaluate whether any of the 

possible defects that contributed to 

triggering the investigation threshold 

would lead them to conclude that these 

were actual defects. Otherwise, 

manufacturers are expected to look 

prospectively at any possible defects 

and attempt to determine whether these 

are actual defects. Also, during an 

investigation, manufacturers should use 

appropriate statistical methods to 

project defect rates if they are unable to 

collect information to evaluate possible 

defects, taking steps as necessary to 

prevent bias in sampled data (or making 

adjusted calculations to take into 

account any bias that may remain). For 

example, if 75 percent of the 

components replaced under warranty 

are available for evaluation, it would be 

appropriate to extrapolate known 

information on failure rates to the 

components that are unavailable for 

evaluation. 

The second threshold in 40 CFR 

1068.501 specifies when a manufacturer 

must report that there is an emissionrelated defect. This threshold involves a 

smaller number of engines because each 

possible occurrence has been screened 

to confirm that it is in fact an emissionrelated defect. In counting engines to 

compare with the defect-reporting 

threshold, the manufacturer generally 

considers a single engine family and 

model year. Where information cannot 

be differentiated by engine family and 

model year, the manufacturer must use 

good engineering judgment to evaluate 

whether the information leads to a 

conclusion that the number of defects 

exceeds the applicable thresholds. 

However, when a defect report is 

required, the manufacturer must report 

all occurrences of the same defect in all 

engine families and all model years. 

If the number of engines with a 

specific defect is found to be less than 

the threshold for submitting a defect 

report, but information such as warranty 

data later indicates that there may be 

additional defective engines, all the 

information must be considered in 

determining whether the threshold for 

submitting a defect report has been met. 

If a manufacturer has actual knowledge 

from any source that the threshold for 

submitting a defect report has been met, 

a defect report must be submitted even 

if the trigger for investigating has not yet 

been met. For example, if manufacturers 

receive from their dealers, technical 

staff or other field personnel 

information showing conclusively that 

there is a recurring emission-related 

defect, they must submit a defect report. 

If manufacturers trigger the threshold 

to start an investigation, they must 

promptly and thoroughly investigate 

whether their parts are defective, 

collecting specific information to 

prepare a report describing their 

conclusions. Manufacturers must send 

the report if an investigation concludes 

that the number of actual defects did not 

exceed reporting thresholds. 

Manufacturers must also send these as 

status reports twice annually during an 

investigation. After investigating for 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39035

several months, or perhaps a couple 

years, it may become clear that the 

problems that triggered the investigation 

will never show enough actual defects 

to trigger a defect report. In this case, 

the manufacturer would send us a 

report justifying this conclusion.

In general, we believe this updated 

approach to defect reporting will 

decrease the number of defect reports 

submitted by manufacturers overall 

while significantly improving their 

quality and their value to both EPA and 

the manufacturer. 

Note that misbuilds are a special type 

of emission-related defect. An engine 

that is not built consistent with its 

application for certification violates the 

prohibited act of introducing into 

commerce engines that are not covered 

by a certificate of conformity. 

L. Compliance With the Phase-In 

Provisions 

In section II we described the NOX

and NMHC standards phase-in 

schedule, which is intended to allow 

engine manufacturers to phase-in their 

new advanced technology engines, 

while they phase-out existing engines. 

This phase-in requirement is based on 

percentages of a manufacturer’s 

production for the U.S. market. 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. On the other hand, we 

believe that it would be inappropriate 

and infeasible to base compliance solely 

on a manufacturer’s projections. That 

could encourage manufacturers to 

overestimate their production of 

complying phase-in engines, and could 

result in significantly lower emission 

benefits during the phase-in. In 

response to these concerns, we 

proposed to initially only require 

nonroad 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. We received no 

comments on this issue and are 

finalizing it as proposed. 

Because 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 

would be allowed, as in the highway 

program. In all cases, the manufacturer 

would be required to produce at least 

25% of its production in each phase-in 

power category as ‘‘phase-in’’ engines 

(meeting the NOX and NMHC standards 

or demonstrating compliance through 

use of ABT credits) in the phase-in years 

(after factoring in any adjustments for 

early introduction engine credits; see 

section III.M). This minimum required 

production level would be 20% for the 

75–175 hp category if a manufacturer 

exercises the option to comply with a 

reduced phase-in schedule in lieu of 

using banked Tier 2 ABT credits, as 

discussed in section III.A.1.b. Another 

important restriction is that 

manufacturers would not be allowed to 

have a deficit in the year immediately 

preceding the completion of the phasein to 100%. This would help ensure that 

manufacturers are able to make up the 

deficit. Since they could not produce 

more than 100% low-NOX engines after 

the final phase-in year, it would not be 

possible to make up a deficit from this 

year. These provisions are identical to 

those adopted in the highway HDDE 

program. 

We are also finalizing the proposed 

‘‘split family’’ allowance for the phasein years. This provision, which is 

similar to a provision of the highway 

program, allows manufacturers to certify 

engine families to both the phase-in and 

phase-out standards. Manufacturers 

choosing this option must assign at the 

end of the model year specific numbers 

of engines to the phase-in and phase-out 

categories. All engines in the family 

must be labeled with the same NOX and 

PM FELs, which apply for all 

compliance testing, and must meet all 

other requirements that apply to phasein engines. Engines assigned to the 

phase-out category may generate 

emission credits relative to the phaseout standards. 

M. Incentive Program for Early or Very 

Low Emission Engines 

We believe that it is appropriate and 

beneficial to provide voluntary 

incentives for manufacturers to 

introduce engines emitting at very low 

levels early. Such inducements may 

help pave the way for greater and/or 

more cost effective emission reductions 

from future engines and vehicles. To 

encourage early introduction of lowemission engines, the proposal 

contained provisions to allow engine 

manufacturers to benefit from producing 

engines certified to the final 

(aftertreatment-based) Tier 4 standards 

prior to the 2011 model year, by being 

allowed to make fewer engines certified 

to these standards once the Tier 4 

program takes effect, a concept that we 

are terming ‘‘engine offsets’’ to avoid 

confusion with ABT program credits. 

The number of offsets that could be 

generated would depend on the degree 

to which the engines are able to meet, 

or perform better than, the final Tier 4 

standards. Commenters generally 

supported this approach, as long EPA 

ensures that compliance requirements 

for these engines are enforced.

However, one equipment 

manufacturer submitted comments 

suggesting that we should adopt a 

program that would provide incentives 

for equipment manufacturers to use the 

early Tier 4 engines in their equipment. 

For an early low-emission engine 

program to be successful, we agree that 

it is important to provide incentives to 

both the engine manufacturer and the 

equipment manufacturer, who may 

incur added cost to install and market 

the advanced engine in the equipment. 

As was pointed out in comments, the 

proposed program did not provide clear 

incentives to equipment manufacturers 

to use the (presumably more expensive) 

early low-emission engines. Therefore, 

we are adding such provisions. Section 

III.B.2.e describes these early Tier 4 

engine incentive provisions under 

which equipment manufacturers can 

earn increased allowance flexibilities. 

Under those provisions, the engine 

manufacturer’s incentive to produce the 

low-emitting engines will come from 

customers’ demand for them, and from 

the fact that the engine manufacturer 

can earn ABT program credits for these 

engines in the same way as without 

these incentive provisions. If the 

equipment manufacturer does not wish 

to earn the increased allowance 

flexibilities, then the engine 

manufacturer would be allowed to use 

the provisions of the incentive program 

for early low-emission engines 

described below in this subsection, 

though to do so would require the 

forfeiture of any ABT credits earned by 

the subject engines, essentially to avoid 

double counting, as explained below. 

This engine manufacturer incentive 

program is being adopted as proposed, 

except for engines above 750 hp, for 

which the proposed program requires 

some adjustment to account for the 

approach we are taking to final 

standards. 

As discussed in section II.A.4, the 

final rule does not phase in standards 

for engines above 750 hp as proposed, 

and instead adopts application-specific 

standards in 2011 and 2015. The 2011 

standards are not based on advanced 

aftertreatment except for NOX on 

engines above 1200 hp used in generator 

sets. To avoid overcomplication of the 

incentive program, which might 

discourage its use, we are not separating 

over and under 1200 hp generator set 

engines into separate groups for these 

provisions. Instead, any of these engines 

that meet the 2015 standards before 

2015 can earn offsets. We are, however, 

39036 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

separating the generator set engines and 

non-generator set engines above 750 hp 

into separate groups, because we are 

deferring setting a NOX standard for the 

latter that is based on use of advanced 

aftertreatment technology. 

Table III.M–1 summarizes the 

requirements and available offsets for 

engine manufacturers in this program. 

As the purpose of the incentive is to 

encourage the introduction of clean 

technology engines earlier than 

required, we require that the emission 

standard levels actually be met, and met 

early, by qualifying engines to earn the 

early introduction offsets. The 

regulations specify that the standards 

must be met without the use of ABT 

credits and actual production of the 

engines must begin by September 1 

preceding the first model year when the 

standards would otherwise be 

applicable. Also, to avoid doublecounting, as explained in the proposal, 

the early engines can earn either the 

engine offsets or the ABT emission 

credit, but not both. Note that this is 

different than the approach taken in the 

early Tier 4 engine incentive program 

for equipment manufacturers described 

in section III.B.2.e, where incentives for 

both the engine manufacturer (ABT 

credits) and the equipment 

manufacturer (allowance flexibilities) 

are needed to ensure successful early 

introduction of clean engines. Because 

15 ppm sulfur diesel fuel will be 

available on a widespread basis in time 

for 2007 (due to the requirements for onhighway heavy-duty engines), we are 

allowing engine manufacturers to begin 

certifying engines to the very low 

emission levels required to be eligible 

for this incentive program, beginning 

with the 2007 model year.

TABLE III.M–1.—PROGRAM FOR EARLY INTRODUCTION OF CLEAN ENGINES

Category Engine group Must meet a Per-engine offset 

Early ..................................... 25–75 hp ........................... 0.02 g/bhp-hr PM .......................................................... 1.5-to-1 

PM-only b ............................. 75–750 hp ......................... 0.01 g/bhp-hr PM .......................................................... PM-only 

25–75 hp ........................... 0.02/3.5 g/bhp-hr PM/NMHC+NOX.

75–750 hp ......................... 0.01/0.30/0.14 g/bhp-hr PM/NOX/NMHC.

>750 hp generator set ....... 0.02/0.50/0.14 g/bhp-hr PM/NOX/NMHC ...................... 1.5–to–1 

Early Engine b ...................... >750 hp non-generator set 0.03/2.6/0.14 g/bhp-hr PM/NOX/NMHC.

Low NOX Engine ................. >25 hp ............................... as above for Early Engine, except must meet 0.15 g/

bhp-hr NOX standard.

2–to–1 

Notes:

aAll engines must also meet the Tier 4 crankcase emissions requirements. Engines must certify using all test and other requirements (such as 

NRTC and NTE) otherwise required for final Tier 4 standards. bOffsets must be earned prior to the start of phase-in requirements in applicable engine groups (prior to 2013 for 25–75 hp engines, prior to 

2012 for 75–175 hp engines, prior to 2011 for 175–750 hp engines, prior to 2015 for >750 hp engines). 

For any engines being certified under 

this program before the 2011 model year 

using 15 ppm sulfur certification fuel, 

the manufacturer would have to meet 

the requirements described in section 

III.D, including demonstrating that the 

engine would indeed be fueled with 15 

ppm sulfur fuel in the field. We expect 

this would occur through selling such 

engines into fleet applications, such as 

municipal maintenance fleets, large 

construction company fleets, or any 

such well-managed centrally-fueled 

fleet. While obtaining a reliable supply 

of 15 ppm maximum sulfur diesel fuel 

prior to the 2011 model year will be 

possible, it will require some effort by 

nonroad diesel machine operators. We 

therefore believe it is necessary and 

appropriate to provide a greater 

incentive for early introduction of clean 

diesel technology. Thus, as proposed, 

we would count one early engine (that 

is, an engine meeting the final Tier 4 

standards) as offsetting 1.5 engines later. 

This means that fewer clean diesel 

engines than otherwise required may 

enter the market in later years, but, more 

importantly, it means that emission 

reductions would be realized earlier 

than under our base program. We 

believe that providing incentives for 

early emission reductions is a 

worthwhile goal for this program, 

because improving air quality is an 

urgent need in many parts of the 

country as explained in section I, and 

because the early learning opportunity 

with new technologies can help to 

ensure a smooth transition to Tier 4 

standards. 

We are providing this early 

introduction offset for engines over 25 

hp that meet all of today’s Tier 4 

emissions standards (NOX, PM, and 

NMHC) in the applicable engine 

category. We are also providing this 

early introduction offset to engines that 

pull ahead compliance with only the 

PM standard. However, a PM-only early 

engine would offset only the PM 

standard for an offset-using engine. For 

engines in power categories with a 

percentage phase-in, this would 

correspond (during the phase-in years) 

to offset use for ‘‘phase-out’’ engines 

(those required to meet the new Tier 4 

standard for PM but not for NOX or 

NMHC). Engines using the PM-only 

offset would be subject to the other 

applicable Tier 4 emission standards, 

including applicable transient and NTE 

standards (see Section III.F) and 

crankcase requirements. The applicable 

PM standard and requirements for these 

PM-only offset-using engines would be 

those of Tier 3 (Tier 2 for 25–50 hp 

engines). PM-only offsets would not 

offset engines required to meet other 

Tier 4 standards such as the phase-in 

NOX and NMHC standards (since there 

is no reason for PM offsets to offset 

emissions of other pollutants). Tier 4 

engines between 25 and 75 hp certified 

to the 2008 PM standard would not 

participate in this program, nor would 

engines below 25 hp, because they do 

not have advanced aftertreatment-based 

standards. 

An important aspect of the early 

incentive provision is that it must be 

done on an engine count basis. That is, 

a diesel engine meeting new standards 

early would count as 1.5 such diesel 

engines later. This contrasts with a 

provision done on an engine percentage 

basis which would count one percent of 

diesel engines early as 1.5 percent of 

diesel engines later. Basing the 

incentive on an engine count alleviates 

any possible influence of fluctuations in 

engine sales in different model years. 

Another important aspect of this 

program is that it is limited to engines 

sold prior to the 2013 model year for 

engines between 25 and 75 hp, prior to 

the 2012 model year for engines 

between 75 and 175 hp, and prior to the 

2011 model year for engines between 

175 and 750 hp. In other words, as in 

the highway program, nonroad diesel 

engines sold during the transitional 

‘‘phase-in’’ model years would not be 

considered ‘‘early’’ introduction engines 

and would therefore be ineligible to 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39037

88We also required that highway vehicles be 

labeled on the dashboard. Given the type of 

equipment using nonroad CI engines, we are not 

adopting any dashboard requirement here.

generate early introduction offsets. 

However, such engines and vehicles 

would still be able to generate ABT 

credits. Because the engines over 750 hp 

engines have no percent-of-production 

phase-in provisions, we are allowing 

offsets for early engines in any model 

year prior to 2015. For the same reason, 

there is no PM-only offset for these 

engines. As with the phase-in itself, and 

for the same reasons, an early 

introduction engine could only be used 

to offset requirements for engines in the 

same engine group (25–75 hp, 75–175 

hp, 175–750 hp, >750 hp generator sets, 

and >750 hp non-generator sets) as the 

offset-generating engine. 

As a further incentive to introduce 

clean engines and vehicles early, we are 

also adopting the proposed provision 

that gives engine manufacturers an early 

introduction offset equal to two engines 

during or after the phase-in years for 

engines with NOX levels well below the 

final Tier 4 NOX standard. This 

incentive applies for diesel engines 

achieving a 0.15 g/bhp-hr NOX standard 

level (one-half of the aftertreatmentbased standard for most engines) while 

also meeting the NMHC and PM 

standards. Due to the extremely low 

emission levels to which these engines 

and vehicles would need to certify, we 

believe that the double engine count 

offset is appropriate. 

In the NPRM we asked for comment 

on whether or not we should extend the 

existing Blue Sky program that 

encourages the early introduction of 

engines with emission levels (as 

measured on a transient test) about 40% 

lower than the Tier 2 standards levels. 

See 68 FR at 28483. We received 

comments both for and against doing so, 

but no commenter provided substantive 

arguments or information. Given the 

very low emissions levels being adopted 

in Tier 4, we have decided not to extend 

the existing Blue Sky Series program, 

because it does not encourage engines 

emitting at such low emission levels.

N. Labeling and Notification 

Requirements 

As explained in section II, the 

emissions standards will make it 

necessary for manufacturers to employ 

exhaust emission control devices that 

require very low-sulfur fuel (less than 

15 ppm) to ensure proper operation. 

This action restricts the sulfur content 

of diesel fuel used in these engines. 

However, the 2008 emissions standards 

would be achievable with less sensitive 

technologies and thus it could be 

appropriate for those engines to use 

diesel fuel with up to 500 ppm sulfur. 

There could be situations in which 

vehicles requiring either 15 ppm fuel or 

500 ppm may be accidentally or 

purposely misfueled with higher-sulfur 

fuel. Any of these misfueling events 

could seriously degrade the emission 

performance of sulfur-sensitive exhaust 

emission control devices, or perhaps 

destroy their functionality altogether. 

In the highway rule, we adopted a 

requirement that heavy-duty vehicle 

manufacturers notify each purchaser 

that the vehicle must be fueled only 

with the applicable low-sulfur diesel 

fuel. We also required that diesel 

vehicles be equipped by the 

manufacturer with labels near the 

refueling inlet to indicate that low 

sulfur fuel is required. We are adopting 

similar requirements here.88

Specifically, manufacturers will be 

required to notify each purchaser that 

the nonroad engine must be fueled only 

with the applicable low-sulfur diesel 

fuel, and ensure that the equipment is 

labeled near the refueling inlet to 

indicate that low sulfur fuel is required. 

We believe that these measures would 

help owners find and use the correct 

fuel and would be sufficient to address 

misfueling concerns. Thus, more costly 

provisions, such as fuel inlet restrictors, 

should not be necessary.

In general, beginning in model year 

2011, nonroad engines will be required 

to use the Ultra Low Sulfur diesel fuel 

(with less than 15 ppm sulfur). Thus, 

the default label will state ‘‘ULTRA 

LOW SULFUR FUEL ONLY.’’ The 

labeling requirements for earlier model 

year Tier 4 engines are specified in 

§ 1039.104(e). Some new labeling 

requirements for earlier model year Tier 

3 engines are specified in 40 CFR 

89.330(e). These requirements for earlier 

years generally require that engines and 

equipment be labeled consistent with 

the sulfur of the test fuel used for their 

certification. So where the engine is 

certified using Low Sulfur diesel fuel 

(with less than 500 ppm sulfur), the 

required label will state ‘‘LOW SULFUR 

FUEL ONLY.’’ See section III.D and the 

regulatory text for the other specific 

requirements related to labeling the 

earlier model years.

O. General Compliance 

1. Good Engineering Judgment 

The process of testing engines and 

preparing an application for 

certification requires the manufacturer 

to make a variety of judgments. This 

includes, for example, selecting test 

engines, operating engines between 

tests, and developing deterioration 

factors. EPA has the authority to 

evaluate whether a manufacturer’s use 

of engineering judgment is reasonable. 

The regulations describe the 

methodology we use to address any 

concerns related to how manufacturers 

use good engineering judgment in cases 

where the manufacturer has such 

discretion (see 40 CFR 1068.5). If we 

find a problem with a manufacturer’s 

use of engineering judgment, we will 

take into account the degree to which 

any error in judgment was deliberate or 

in bad faith. If manufacturers object to 

a decision we make under this 

provisions, they are entitled to a 

hearing. This subpart is consistent with 

provisions already adopted for lightduty highway vehicles, marine diesel 

engines, industrial spark-ignition 

engines, and recreational vehicles. 

2. Replacement Engines 

In the proposal we included a 

provision allowing manufacturers to sell 

a new, noncompliant engine intended to 

replace an engine that fails in service. 

The proposed language closely mirrored 

the existing provisions in 40 CFR 

89.1003(b)(7), except that it specified 

that manufacturers could produce new, 

noncompliant replacement engines if no 

engine from any manufacturer were 

available with the appropriate physical 

or performance characteristics. 

Manufacturers objected to this provision 

and requested that the final regulations 

follow the language in 40 CFR part 89, 

in which the manufacturer of the new 

engine confirm that no appropriate 

engine is available from its product line 

(or that of the manufacturer of the 

original engine, if that were a different 

company). We agree that the language 

from 40 CFR part 89 is appropriate, but 

we note two things to address remaining 

concerns that manufacturers could 

potentially use the replacement-engine 

provisions to produce large numbers of 

noncompliant products. First, we are 

including a specific statement in the 

regulations that manufacturers may not 

use the replacement-engine exemption 

to circumvent the regulations. Second, 

we plan to use the data-collection 

provision under 40 CFR 1068.205(d) to 

ask manufacturers to report the number 

of engines they sell under the 

replacement-engine exemption. Rather 

than adopting a specific data-reporting 

requirement, we believe this more 

flexible approach is most appropriate to 

allow us to get information to evaluate 

how manufacturers are using the 

exemption without imposing reporting 

requirements that may involve more or 

less information than is actually needed. 

39038 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

3. Warranty 

We are modifying 40 CFR 1068.115 

regarding engine manufacturers’

warranty obligations by removing 

paragraph (b). This paragraph addresses 

specific circumstances under which 

manufacturers may not deny emissionrelated warranty claims, while 

paragraph (a) of this section addresses 

the circumstances under which 

manufacturers may deny such claims. 

As described in our Summary and 

Analysis of Comments related to our 

November 8, 2002 final rule (67 FR 

68242), we intended to adopt 40 

CFR1068.115 without this paragraph. 

We wanted to remove paragraph (b) 

because we agreed with a comment 

pointing out that publishing both 

paragraphs leaves ambiguous which 

provision applies if a situation applies 

that is not on either list. Since neither 

list can be comprehensive, we believe 

the provisions in paragraph (a) 

describing when manufacturers may 

deny warranty claims appropriately 

addresses the issue. As a result, 

paragraph (b) was inadvertently adopted 

as part of the November 2002 final rule.

4. Separate Catalyst Shipment 

We are adopting provisions that will 

allow engine manufacturers to ship 

engines to equipment manufacturers 

where the engine manufacturer had not 

yet installed the aftertreatment or 

otherwise included it as part of the 

engine shipment. This allows the engine 

manufacturer to ship the engine without 

the aftertreatment; for example, in cases 

where it would be impractical to install 

aftertreatment devices on the engine 

before shipment or even ship products 

with the aftertreatment devices 

uninstalled along with the engine; or 

where shipping it already installed 

would require it to be disassembled and 

reinstalled when the engine was placed 

in the equipment. Today’s final rule 

requires that the components be 

included in the price of the engine and 

that the engine manufacturer provide 

sufficiently detailed and clear 

instructions so that the equipment 

manufacturer can readily install the 

engine and its ancillary components in 

a configuration covered under the 

certificate of conformity held by the 

engine manufacturer. We are also 

requiring that the engine manufacturer 

have a contractual agreement obligating 

the equipment manufacturer to 

complete the final assembly into a 

certified configuration. The engine 

manufacturer must ship any 

components directly to the equipment 

manufacturer or arrange for their 

shipment from a component supplier. 

The engine manufacturer must tag the 

engines and keep records. The engine 

manufacturer must obtain annual 

affidavits from each equipment 

manufacturer as to the parts and part 

numbers that the equipment 

manufacturer installed on each engine 

and must conduct a limited number of 

audits of equipment manufacturers’

facilities, procedures, and production 

records to monitor adherence to the 

instructions it provided. Where an 

equipment manufacturer is located 

outside of the U.S., the audits may be 

conducted at U.S. port of distribution 

facilities. 

The rule also contains various 

provisions establishing responsibility 

for proper installation. Where the 

engines are not in a certified 

configuration when installed in nonroad 

equipment because the equipment 

manufacturer used improper emissioncontrol devices or failed to install the 

shipped parts or failed to install the 

devices correctly, then both the engine 

manufacturer and the installer have 

responsibility. For the engine maker, the 

exemption is void for those engines that 

are not in their certified configuration 

after installation. We may also suspend 

or revoke the exemption for future 

engines where appropriate, or void the 

exemption for the entire engine family. 

The installer is also liable. We may find 

the equipment manufacturer to be in 

violation of the tampering prohibitions 

at 40 CFR 1068.101(b)(1) for the 

improper installation, which could 

subject it to substantial civil penalties. 

In any event, the engine manufacturer 

remains liable for the in-use compliance 

of the engine as installed. For example, 

it has responsibility for the emissionrelated warranty, including for the 

aftertreatment, and is responsible for 

any potential recall liability. However, if 

noncompliance of the in-use engines 

stems from improper installation of the 

aftertreatment, then the tampering that 

occurred by the installer may remove 

recall liability. Where the engine 

manufacturer had complied with the 

regulations and the failure was solely 

due to the equipment manufacturer’s 

actions, we would not be inclined to 

revoke or suspend the exemption or to 

void the exemption for the entire engine 

family. We may deny the exemption for 

future model years if the engine 

manufacturer does not take action to 

address the factors causing the 

nonconformity. On the other hand, if 

the manufacturer failed to comply, had 

shipped improper parts, had provided 

instructions that led to improperly 

installed parts, or had otherwise 

contributed to the installation of engines 

in an uncertified configuration, we 

might suspend, revoke, or void the 

exemption for the engine family. In this 

case, the engine manufacturer would be 

subject to substantial civil penalties. 

P. Other Issues 

We are also making other minor 

changes to the compliance program. 

These changes are summarized in table 

III.Q–1 below. For more information 

about these changes, you should read 

the NPRM and Summary and Analysis 

of Comments for this rulemaking. We 

believe that these changes are 

straightforward and noncontroversial.

TABLE III.Q–1.—REGULATORY CHANGES

Issue Regulatory provision 

Applicability to alcohol-fueled engines ....................................................................................................................... §§ 1039.101, 1039.107. 

Prohibited controls ..................................................................................................................................................... § 1039.115. 

Emission-related maintenance instructions ............................................................................................................... § 1039.125. 

Engine installation instructions ................................................................................................................................... § 1039.130. 

Engines labels ............................................................................................................................................................ §§ 1039.20, 1039.135, 

1068.320. 

Engine family definition .............................................................................................................................................. § 1039.230. 

Test engine selection ................................................................................................................................................. § 1039.235. 

Deterioration factors ................................................................................................................................................... § 1039.240. 

Engines that use noncommercial fuels ...................................................................................................................... § 1039.615. 

Use of good engineering judgment ............................................................................................................................ § 1068.5. 

Separate shipment of aftertreatment ......................................................................................................................... § 1068.260. 

Exemptions ................................................................................................................................................................. 40 CFR 1068 Subpart C. 

Importing engines ....................................................................................................................................................... 40 CFR 1068 Subpart D. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39039

TABLE III.Q–1.—REGULATORY CHANGES—Continued

Issue Regulatory provision 

Hearings ..................................................................................................................................................................... 40 CFR 1068 Subpart G. 

Q. Highway Engines

We are changing the diesel engine/

vehicle labeling requirements in 40 CFR 

86.007–35 to be consistent with the new 

pump labels. This change corrects a 

mistake in the proposal that would have 

resulted in confusion for highway 

vehicle operators. (We received no 

comment on this issue.) 

R. Changes That Affect Other Engine 

Categories 

We are making some minor changes to 

the regulations in 40 CFR parts 1048 

and 1051 for nonroad spark-ignition 

engines over 19 kW and recreational 

vehicles, respectively. We are also 

changing several additional provisions 

in 40 CFR parts 1065 and 1068, which 

define test procedures and compliance 

provisions for these same categories of 

engines. See the regulatory text for the 

specific changes. The proposed rule 

included most of these changes. To the 

extent there were comments on any of 

these changes, those issues are 

addressed elsewhere in this document 

or in the Summary and Analysis of 

Comments. 

• In 40 CFR 1048.125 and 40 CFR 

1051.125, we are correcting the 

provisions related to critical emissionrelated maintenance to allow 

manufacturers to do maintenance 

during service accumulation for 

durability testing, as long as their 

maintenance steps meet the specified 

criteria ensuring that in-use engines will 

undergo those maintenance procedures. 

• In 40 CFR 1068.27, we clarify that 

manufacturers must make available a 

reasonable number of production-line 

engines so we can test or inspect them 

if we make such a request. 

• We are changing the definition of 

nonroad engine to explicitly exclude 

aircraft engines. This is consistent with 

our longstanding interpretation of the 

Clean Air Act. Clarifying the definition 

this way allows us to more clearly 

specify the applicability of the fuel 

requirements to nonroad engines in this 

final rule. 

• We are adding a provision directing 

equipment manufacturers to request 

duplicate labels from engine 

manufacturers and keep appropriate 

records if the original label is obscured 

in the final installation. The former 

approach under 40 CFR part 1068 was 

to require equipment manufacturers to 

make their own duplicate labels as 

needed. We intend to amend 40 CFR 

parts 1048 and 1051 to correspond with 

this change. 

• As described above in section III, 

we are revising the criteria 

manufacturers would use to show that 

they may use the replacement-engine 

exemption under 40 CFR 1068.240. We 

also clarify that we may require 

manufacturers to report to us how many 

engines they sell in given year under the 

replacement-engine exemption. 

• As described above and in the 

Summary and Analysis of Comments, 

we are adding a provision in 40 CFR 

1068.260 to allow manufacturers to ship 

aftertreatment devices directly from the 

component supplier to the equipment 

manufacturer. This regulatory section 

includes several provisions to ensure 

that the equipment manufacturer 

installs the aftertreatment device in a 

way that brings the engine to its 

certified configuration. 

• As described above, we are 

modifying the defect-reporting 

requirements in 40 CFR 1068.501. 

• While most of the changes being 

adopted for part 1065 will only affect 

diesel nonroad engines, we are also 

making minor changes that will also 

apply for SI engines. These changes, 

however, are generally limited to 

clarifications, corrections, and options. 

They will not affect the stringency of the 

standards or create new burdens for 

manufacturers.

IV. Our Program for Controlling 

Nonroad, Locomotive and Marine 

Diesel Fuel Sulfur 

We are finalizing today a two-step 

sulfur standard for nonroad, locomotive 

and marine (NRLM) diesel fuel that will 

achieve significant, cost-effective sulfate 

PM and SO2 emission reductions. These 

emission reductions will, by 

themselves, provide dramatic 

environmental and public health 

benefits which far outweigh the cost of 

meeting the standards necessary to 

achieve them. In addition, the final 

sulfur standards for nonroad diesel fuel 

will enable advanced high efficiency 

emission control technology to be 

applied to nonroad engines. As a result, 

these nonroad fuel sulfur standards, 

coupled with our program for more 

stringent emission standards for new 

nonroad engines and equipment, will 

also achieve dramatic NOX and PM 

emission reductions. Sulfur 

significantly inhibits or impairs the 

function of the diesel exhaust emission 

control devices which will generally be 

necessary for nonroad diesel engines to 

meet the emission standards finalized 

today. With the 15 ppm sulfur standard 

for nonroad diesel fuel, we have 

concluded that this emission control 

technology will be available for model 

year 2011 and later nonroad diesel 

engines to achieve the NOX and PM 

emission standards adopted today. The 

benefits of today’s program also include 

the sulfate PM and SO2 reductions 

achieved by establishing the same 

standard for the sulfur content of 

locomotive and marine diesel fuel. 

The sulfur requirements established 

under today’s program are similar to the 

sulfur limits established for highway 

diesel fuel in prior rulemakings —500 

ppm in 1993 (55 FR 34120, August 21, 

1990) and 15 ppm in 2006 (66 FR 5002, 

January 18, 2001). Beginning June 1, 

2007, refiners will be required to 

produce NRLM diesel fuel with a 

maximum sulfur content of 500 ppm. 

Then, beginning June 1, 2010, the sulfur 

content will be reduced for nonroad 

diesel fuel to a maximum of 15 ppm. 

The sulfur content of locomotive and 

marine diesel fuel will be reduced to 15 

ppm beginning June 1, 2012. The 

program contains certain provisions to 

ease refiners’ transition to the lower 

sulfur standards and to enable the 

efficient distribution of all diesel fuels. 

These provisions include the 2012 date 

for locomotive and marine diesel fuel, 

early credits for refiners and importers 

and special provisions for small 

refiners, transmix processors, and 

entities in the fuel distribution system. 

In general, the comments we received 

during the public comment period 

supported the proposed program. 

Adjustments we have made to the 

proposed program will make the final 

program even stronger, both in terms of 

our ability to enforce it and the 

environmental and public health 

benefits that it will achieve. In 

particular, today’s final program 

contains provisions to smooth the 

refining industry’s transition to the low 

sulfur fuel requirements, encourage 

earlier introduction of cleaner burning 

fuel, maintain the fuel distribution 

system’s flexibility to fungibly distribute 

similar products, and provide an outlet 

39040 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

89While today’s program does not establish more 

stringent emission standards for locomotive or 

marine diesel engines, the Agency intends in the 

near future to initiate a rulemaking to adopt new 

emission standards for locomotive and marine 

engines based on the use of high efficiency exhaust 

emission control technology like that required for 

the nonroad standards adopted in today’s rule. An 

advanced notice of proposed rulemaking (ANPRM) 

for this rule is published elsewhere in today’s 

Federal Register, June 29, 2004.

for off-specification distillate product, 

all while maintaining, and even 

enhancing, the health and 

environmental benefits of today’s 

program.

The first adjustment that we made to 

the proposed program was to move from 

the ‘‘refiner baseline’’ approach 

discussed in the proposal to a 

‘‘designate and track’’ approach. Under 

the proposed refiner baseline approach, 

any refiner or importer could choose to 

fungibly distribute its 500 ppm sulfur 

NRLM and highway diesel fuels without 

adding red dye to the NRLM at the 

refinery gate. However, the refiners’

production would then be subject to a 

non-highway distillate baseline, 

established as a percentage of its total 

distillate fuel production volume. While 

EPA preferred this approach in the 

proposal, we decided not to finalize it 

because we concluded that it would 

have unnecessarily constrained refiners’

ability to meet market demands. It 

would have encouraged them to dye 500 

ppm sulfur NRLM at the refinery gate, 

resulting in an additional grade of diesel 

fuel and, consequently, an added 

burden to the distribution system. 

Furthermore, we were concerned that it 

would have created a trend that could 

reduce the volume of 15 ppm sulfur 

highway diesel fuel and potential 

options to remove the market 

constraints could have increased the 

possibility for reduced volume. 

In place of the refiner baseline 

approach, we are finalizing a designate 

and track approach. The final designate 

and track approach is a modified 

version of the designate and track 

approach discussed in the proposal. As 

finalized it now allows us to enforce the 

program through the entire distribution 

system. In essence, the final designate 

and track approach requires refiners and 

importers to designate the volumes of 

diesel fuel they produce and/or import. 

Refiners/importers will identify whether 

their diesel fuel is highway or NRLM 

and the applicable sulfur level. They 

may then mix and fungibly ship 

highway and NRLM diesel fuels that 

meet the same sulfur specification 

without dyeing their NRLM diesel fuel 

at the refinery gate. The designations 

will follow the fuel through the 

distribution system with limits placed 

on the ability of downstream parties to 

change the designation. These limits are 

designed to restrict the inappropriate 

sale of 500 ppm sulfur NRLM diesel fuel 

into the highway market , the 

inappropriate sale of heating oil into the 

NRLM market, the inappropriate sale of 

500 ppm sulfur LM into the nonroad 

market, and to implement the 

downgrading restrictions that apply to 

15 ppm sulfur highway diesel fuel. The 

designate and track approach includes 

record keeping and reporting 

requirements for all parties in the fuel 

distribution system, associated with 

tracking designated fuel volumes 

through each custodian in the 

distribution chain until the fuel exits 

the terminal. The program also includes 

enforcement and compliance assurance 

provisions to enable the Agency to 

rapidly and accurately review for 

discrepancies the large volume of data 

collected on fuel volume hand-offs. The 

bulk of the designate and track 

provisions end May 31, 2010 when all 

highway diesel fuel must meet the 15 

ppm sulfur standard. However, as 

discussed below, scaled back designate 

and track provisions continue beyond 

2010 for purposes of enforcing against 

heating oil being used in the NRLM 

market and to enforce against 500 ppm 

LM diesel fuel being used in the 

nonroad market. 

The second adjustment that we made 

to the proposed NRLM diesel fuel 

program was to establish a 15 ppm 

sulfur standard at the refinery gate for 

locomotive and marine (LM) diesel fuel 

in addition to nonroad (NR) diesel 

fuel.89 We are finalizing this standard 

for several reasons as discussed below.

While we are finalizing a 15 ppm 

sulfur standard for locomotive and 

marine diesel fuel, we are doing so in 

a manner that responds to the primary 

concerns raised in comments regarding 

the need for an outlet for offspecification product. We are setting a 

refinery gate standard of 15 ppm sulfur 

beginning June 1, 2012, two years later 

than for nonroad diesel fuel. We are also 

continuing to provide an outlet for offspecification product generated in the 

distribution system, thereby affording 

the opportunity to reduce reprocessing 

and transportation costs. We are leaving 

the downstream standard for LM diesel 

fuel at 500 ppm sulfur. In this way the 

LM diesel fuel pool may remain an 

outlet for off-specification distillate 

product and interface/transmix material. 

In developing the provisions of the 

NRLM diesel fuel program adopted 

today, we identified several principles 

that we want the program to achieve. 

Specifically, as described in more detail 

below, we believe the fuel program—

(1) Achieves the greatest reduction in 

sulfate PM and SO2 emissions from nonroad, 

locomotive, and marine diesel engines as 

early as practicable; 

(2) Provides for a smooth transition of the 

NRLM diesel fuel pool to 15 ppm sulfur; 

(3) Ensures that 15 ppm sulfur diesel fuel 

is produced and distributed widely for use in 

all 2011 and later model year nonroad diesel 

engines; 

(4) Ensures that the fuel program’s 

requirements are enforceable and verifiable. 

(5) Enables the efficient distribution of all 

diesel fuels; and 

(6) Maintains the benefits and program 

integrity of the highway diesel fuel program.

The remainder of this section covers 

several topics. In section IV.A, we 

discuss the fuel that is covered by 

today’s program, the standards that 

apply for refiners and importers (for 

both steps of the program), and the 

standards that apply for downstream 

entities. In section IV.B, we address the 

various hardship provisions that we are 

including in today’s program. In section 

IV.C, we describe the special provisions 

that apply in the State of Alaska and the 

Territories. Next, in section IV.D, we 

describe the design of the designate and 

track provisions of the NRLM diesel fuel 

program for compliance purposes and 

how it differs from what we proposed. 

In section IV.E, we discuss the impact 

of today’s program on state NRLM diesel 

fuel programs. In sections IV.F and G, 

we discuss the technological feasibility 

of the NRLM diesel fuel standards 

adopted today and the impacts of 

today’s program on lubricity and other 

fuel properties. Finally, in section IV.H, 

we discuss the steps the Agency will 

take to streamline the refinery air 

permitting process for the equipment 

that refiners may need to install to meet 

today’s NRLM diesel fuel standards.. 

Analyses supporting the design and 

cost of the fuel program are located in 

chapters 5, 7, and 8 of the RIA. Section 

V of this preamble discusses the details 

of the additional compliance and 

enforcement provisions affecting NRLM 

diesel fuel and explains various 

additional elements of the program. 

A. Nonroad, Locomotive and Marine 

Diesel Fuel Quality Standards 

1. What Fuel Is Covered by This 

Program? 

The fuel covered by today’s final rule 

is generally the same as the fuel that was 

covered by the proposal. We have not 

expanded or reduced the pool of diesel 

fuel that will be subject to the lower 

sulfur standards. However, the second 

step of the program now includes the 

same ultra low sulfur standard for 

locomotive and marine diesel fuel as for 

nonroad diesel fuel. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39041

90Category 3 marine engines frequently are 

designed to use residual fuels and include special 

fuel handling equipment to use the residual fuel.

91For the purposes of this final rule, the term 

heating oil basically refers to any No. 1 or No. 2 

distillate other than jet fuel, kerosene, and diesel 

fuel used in highway, nonroad, locomotive, or 

marine applications. For example, heating oil 

includes fuel which is suitable for use in furnaces, 

boilers, stationary diesel engines and similar 

applications and is commonly or commercially 

known or sold as heating oil, fuel oil, or other 

similar trade names.

Specifically, the sulfur standards 

finalized under today’s program apply 

to all the diesel fuel that is used in 

nonroad, locomotive, and marine diesel 

applications—fuel not already covered 

by the previous standards for highway 

diesel fuel. This includes all fuel used 

in nonroad, locomotive, and marine 

diesel engines, except for fuels heavier 

than a No. 2 distillate used in Category 

2 and 3 marine engines 90 and any fuel 

that is exempted for national security or 

other reasons. While we are not 

adopting sulfur standards for other 

distillate fuels (such as jet fuel, heating 

oil, kerosene, and No. 4 fuel oil) we are 

adopting provisions to prevent the 

inappropriate use of these other fuels. 

Use of distillate fuels in nonroad, 

locomotive, or marine diesel engines 

will generally be prohibited unless they 

meet the fuel sulfur standards finalized 

today.91 The program includes several 

provisions, as described below in 

section IV.D, to ensure that heating oil 

and other higher sulfur distillate fuels 

will not be used in nonroad, locomotive, 

or marine applications.

The regulated fuels under today’s 

program include the following:

(1) Any No. 1 and 2 distillate fuels used, 

intended for use, or made available for use 

in nonroad, locomotive, or marine diesel 

engines. Fuels under this category include 

those meeting the American Society for 

Testing and Materials (ASTM) D 975 or D 396 

specifications for grades No. 1–D and No. 2–

D. Fuels meeting ASTM DMX and DMA 

specifications would be covered; 

(2) Any No. 1 distillate fuel (e.g., kerosene) 

added to such No. 2 diesel fuel, e.g., to 

improve its cold flow properties; 

(3) Any other fuel used in nonroad, 

locomotive, or marine diesel engines or 

blended with diesel fuel for use in such 

engines. Fuels under this category include 

non-distillate fuels such as biodiesel and 

certain specialty fuel grades such as JP–5, JP–

8, and F76 if used in a nonroad, locomotive, 

or marine diesel engine, except when a 

national security or research and 

development exemption has been approved. 

See V. A.1. and 2.

On the other hand, the sulfur 

standards do not apply to—

(1) No. 1 distillate fuel used to power 

aircraft; 

(2) No. 1 or No. 2 distillate fuel used for 

stationary source purposes, such as to power 

stationary diesel engines, industrial boilers, 

or for heating; 

(3) Number 4, 5, and 6 fuels (e.g., residual 

fuels or residual fuel blends, IFO Heavy Fuel 

Oil Grades 30 and higher), used for stationary 

source purpose; 

(4) Any distillate fuel with a T–90 

distillation point greater than 700 F, when 

used in Category 2 or 3 marine diesel 

engines. This includes Number 4, 5, and 6 

fuels (e.g., IFO Heavy Fuel Oil Grades 30 and 

higher), as well as fuels meeting ASTM 

specifications DMB, DMC, and RMA–10 and 

heavier; and 

(5) Any fuel for which a national security 

or research and development exemption has 

been approved or fuel that is exported from 

the U.S. (see section V.A.1. and 2).

It is useful to clarify what marine 

diesel fuels are covered by the sulfur 

standards. As with nonroad and 

locomotive diesel fuel, our basic 

approach is that the standards apply to 

any diesel or distillate fuel used or 

intended for use in marine diesel 

engines. However, the fuel used by 

marine diesel engines spans a wide 

variety of fuels, ranging from No. 1 and 

2 diesel fuel to residual fuel and 

residual fuel blends used in the largest 

engines. It is not EPA’s intention to 

cover all such fuels, and EPA has 

adopted an objective criteria to identify 

those marine fuels subject to regulation 

and those that are not. Any distillate 

fuel with a T–90 greater than 700 F will 

not be subject to the sulfur standards 

when used in Category 2 or 3 marine 

engines. This criteria is designed to 

exclude fuels heavier than No. 2 

distillate, including blends containing 

residual fuel. In addition, residual fuel 

is not subject to the sulfur standards. 

While many marine diesel engines 

use No. 2 distillate, ASTM 

specifications for marine fuels identify 

four kinds of marine distillate fuels: 

DMX, DMA, DMB, and DMC. DMX is a 

special light distillate intended mainly 

for use in emergency engines. DMA 

(also called MGO) is a general purpose 

marine distillate that is to contain no 

traces of residual fuel. These fuels can 

be used in all marine diesel engines but 

are primarily used by Category 1 

engines. DMX and DMA fuels intended 

for use in any marine diesel engine are 

subject to the fuel sulfur standards. 

DMB, also called marine diesel oil, is 

not typically used with Category 1 

engines, but is used for Category 2 and 

3 engines. DMB is allowed to have a 

trace of residual fuel, which can be high 

in sulfur. This contamination with 

residual fuel usually occurs due to the 

distribution process, when distillate is 

brought on board a vessel via a barge 

that has previously contained residual 

fuel, or using the same supply lines as 

are used for residual fuel. DMB is 

produced when fuels such as DMA are 

brought on board the vessel in this 

manner. EPA’s sulfur standards will 

apply to the distillate that is used to 

produce the DMB, for example the DMA 

distillate, up to the point that it becomes 

DMB. DMB itself is not subject to the 

sulfur standards when it is used in 

Category 2 or 3 engines. 

DMC is a grade of marine fuel that 

may contain some residual fuel and is 

often a residual fuel blend. This fuel is 

similar to No. 4 diesel, and can be used 

in Category 2 and Category 3 marine 

diesel engines. DMC is produced by 

blending a distillate fuel with residual 

fuel, for example at a location 

downstream in the distribution system. 

EPA’s standards will apply to the 

distillate that is used to produce the 

DMC, up to the point that it is blended 

with the residual fuel to produce DMC. 

DMC itself is not subject to the sulfur 

standards when it is used in Category 2 

or 3 marine engines. 

Residual fuel is typically designated 

by the prefix RM (e.g., RMA, RMB, etc.). 

These fuels are also identified by their 

nominal viscosity (e.g., RMA10, RMG35, 

etc.). Most residual fuels require 

treatment by a purifier-clarifier 

centrifuge system, although RMA and 

RMB do not require this. For the 

purpose of this rule, we consider all RM 

grade fuel as residual fuel. Residual fuel 

is not covered by the sulfur content 

standards as it is not a distillate fuel.

The distillation criteria adopted by 

EPA, T–90 greater than 700F, is 

designed to identify those fuels that are 

not subject to the sulfur standards when 

used in Category 2 or 3 marine diesel 

engines. It is intended to exclude DMB, 

DMC, and other heavy distillates or 

blends, when used in Category 2 or 3 

marine diesel engines. 

Hence, the fuel that refiners and 

importers are required to produce to the 

more stringent sulfur standards include 

those No. 1 and No. 2 diesel fuels as 

well as similar distillate or nondistillate fuels that are intended or made 

available for use in NRLM diesel 

engines. Furthermore, the sulfur 

standard also covers any fuel that is 

blended with or substituted for No. 1 or 

No. 2 diesel fuel for use in nonroad, 

locomotive, or marine diesel engines. 

For instance, as required under the 

highway diesel fuel program, in those 

situations where the same batch of 

kerosene is distributed for two purposes 

(e.g., kerosene to be used for heating and 

to improve the cold flow of No. 2 NRLM 

diesel fuel), or where a batch distributed 

just for heating is later distributed for 

blending with No. 2 diesel fuel, that 

batch of kerosene must meet the 

standards adopted today for NRLM 

39042 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

92Off-specification fuel here refers to 15 ppm 

diesel fuel that becomes contaminated such that it 

no longer meets the 15 ppm sulfur cap. In most 

cases, off-specification 15 ppm sulfur diesel fuel is 

expected to easily meet a 500 ppm sulfur cap.

diesel fuel. The purpose of this 

requirement is to ensure that fuels like 

jet fuel, kerosene, and/or military 

specification fuels meet the diesel fuel 

sulfur standards adopted under today’s 

program when they are used in nonroad, 

locomotive, or marine diesel engines. 

2. Standards and Deadlines for Refiners 

and Importers 

The NRLM diesel fuel program 

adopted today is a two-step approach to 

reduce the sulfur content of NRLM 

diesel fuel from uncontrolled levels 

down to 15 ppm sulfur. While we 

received several comments supporting a 

single step down to 15 ppm sulfur, the 

vast majority of commenters, especially 

most refiners and engine manufacturers, 

supported the two-step approach. We 

are finalizing the two-step approach 

primarily because it achieves the 

greatest reduction in sulfate PM and SO2

emissions from nonroad, locomotive, 

and marine diesel engines as early as 

practicable. By starting with an initial 

step of 500 ppm sulfur we can achieve 

significant emission reductions and 

associated health and welfare benefits 

from the current fleet of equipment as 

soon as possible. As discussed in 

section VI, the health-related benefits of 

the fuel standards finalized today, even 

without the engine standards, amount to 

more than $28 billion in 2030, while the 

projected costs, after taking into account 

engine maintenance benefits amount to 

just $0.7 billion. 

In addition, the two-step approach 

encourages a more smooth and orderly 

transition by the refining industry to 15 

ppm sulfur NRLM diesel fuel, by 

providing more time for refiners to 

develop the most cost-effective 

approaches, finance them, and then 

implement the necessary refinery 

modifications. 

Finally, by waiting until 2010 to drop 

to the 15 ppm sulfur standard for NR 

diesel fuel, the two-step approach 

harmonizes with the highway diesel 

fuel program by delaying the 

implementation of the 15 ppm sulfur 

standard for NR diesel fuel until the end 

of the phase-in period for 15 ppm sulfur 

highway diesel fuel. The 2010 date also 

harmonizes with the date 15 ppm 

nonroad fuel is needed to enable the 

nonroad engines standards finalized 

today. The second step to 15 ppm sulfur 

for the LM diesel fuel is set for 2012. On 

balance we believe that the advantages 

of the two-step approach outweigh those 

of a single step down to 15 ppm. 

As discussed in section IV.C, below, 

later deadlines for meeting the 500 and 

15 ppm sulfur standards apply to 

refineries covered by special hardship 

provisions as well as transmix 

processors. 

a. The First Step to 500 ppm Sulfur 

NRLM Diesel Fuel 

Under today’s program, NRLM diesel 

fuel produced by refiners or imported 

into the U.S. by importers must meet a 

500 ppm sulfur standard beginning June 

1, 2007. Refiners and importers may 

comply by either producing such fuel at 

or below 500 ppm sulfur, or they may 

comply by obtaining credits as 

discussed in section IV.D below. 

We believe that the adopted level of 

500 ppm sulfur is appropriate for 

several reasons. First, the reduction to 

500 ppm sulfur is significant 

environmentally. The 500 ppm sulfur 

level achieves approximately 90 percent 

of the sulfate PM and SO2 benefits 

otherwise achievable by going all the 

way to 15 ppm sulfur. Second, because 

this first step is only to 500 ppm sulfur, 

it also allows for a short lead time for 

implementation, enabling the 

environmental benefits to begin 

accruing as soon as possible. Third, it is 

consistent with the current specification 

for highway diesel fuel, a grade which 

may remain for highway purposes until 

2010. As such, adopting the same 500 

ppm sulfur level for NRLM diesel fuel 

helps to avoid issues and costs 

associated with more grades of fuel in 

the distribution system during this 

initial step of the program.

b. The Second Step to 15 ppm Sulfur 

NRLM Diesel Fuel 

We are finalizing a second step of 

sulfur control down to 15 ppm sulfur for 

all NRLM. This second step provides 

additional important direct sulfate PM 

and SO2 emission reductions and 

associated health benefits. As discussed 

in the RIA, the health related benefits 

for this second step of fuel control by 

itself are greater than the associated 

cost. Furthermore, the second step for 

nonroad diesel fuel is essential to enable 

the application of high efficiency 

exhaust emission control technologies 

to nonroad diesel engines beginning 

with the 2011 model year as discussed 

in Section II of this preamble. 

In the proposal, the second step of the 

program only applied to nonroad diesel 

fuel, while locomotive and marine 

diesel fuel could remain at 500 ppm 

sulfur. We also sought comment on 

finalizing the 15 ppm sulfur standard 

for LM diesel fuel in 2010 along with 

nonroad diesel fuel, as well as delaying 

it until as late as 2012 to allow for an 

additional outlet for any offspecification product a refinery might 

produce as it shifts all of its distillate 

production to 15 ppm sulfur.92

We are finalizing the 15 ppm sulfur 

standard for locomotive and marine 

diesel fuel, along with nonroad diesel 

fuel, for several reasons. First, it will 

provide important health and welfare 

benefits from the additional sulfate PM 

and SO2 emission reductions as early as 

possible. Second, it is technologically 

feasible, as it is for nonroad diesel fuel. 

Third, the benefits outweigh the costs 

and the costs do not otherwise warrant 

delaying this second step for locomotive 

and marine. As shown in chapter 8 of 

the RIA, the costs for the increment of 

LM diesel fuel going from 500 to 15 

ppm sulfur is just $0.20 billion in 2030. 

Fourth, it will simplify the fuel 

distribution system and overall design 

of the fuel program. For example, the 

addition of a marker to locomotive and 

marine diesel fuel after 2012 is no 

longer necessary to successfully enforce 

the program. Finally, it will allow 

refiners to coordinate plans to reduce 

the sulfur content of all of their offhighway diesel fuel at one time. 

Our primary reason in the NPRM for 

leaving locomotive and marine diesel 

fuel at the 500 ppm sulfur specification 

was to preserve an outlet for offspecification product that may be 

created in the distribution system 

through contamination of 15 ppm sulfur 

diesel fuel with higher sulfur distillates 

and for off-specification batches of fuel 

that are produced by refineries during 

the first couple years of the 15 ppm 

sulfur program (when they are still 

perfecting their production processes). 

However, we have concluded that it is 

not necessary to leave the standard for 

all locomotive and marine diesel fuel at 

the 500 ppm sulfur specification to 

address these concerns. Setting a 15 

ppm sulfur standard for refiners and 

importers in 2012, but maintaining a 

downstream standard for locomotive 

and marine diesel fuel at 500 ppm 

sulfur and allowing off-specification 

product to continue to be sold into this 

market accomplishes the same goal. 

In addition, controlling the sulfur 

content of NRLM diesel fuel from 

uncontrolled levels to 15 ppm is clearly 

a cost-effective fuel control program. 

While the incremental cost-effectiveness 

from 500 ppm sulfur to 15 ppm sulfur 

is less cost-effective, the benefits of this 

second step outweigh the costs, the 

concerns about a market for offspecification product have been 

addressed, and other factors discussed 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39043

93 In some cases the off-specification product can 

not be added to the adjoining products because of 

the applicable sulfur standards. In other cases, the 

off-specification product, called transmix, must be 

re-processed before it can be used.

94The Effect of Cetane Number Increase Due to 

Additives on NOX Emissions From Heavy-Duty 

Highway Engines, Final Technical Report, February 

2003, EPA420–R–03–002.

above support the reasonableness of this 

approach. The body of evidence 

strongly supports the view that 

controlling sulfur in NRLM fuel to 15 

ppm, through a two-step process, is 

quite reasonable in light of the 

emissions reductions achieved, taking 

costs into consideration. 

Implementation of today’s rule will 

reduce the sulfur level of almost all 

distillate fuel to a 15 ppm maximum 

sulfur level. In addition to the small 

refiner, hardship, and other provisions 

adopted in this rule, EPA is adopting 

several provisions that will help ensure 

a smooth transition to the second step 

of 15 ppm sulfur diesel fuel. First, 

refiners and importers of locomotive 

and marine diesel fuel, a small segment 

of the entire distillate pool, will be 

required to meet a 15 ppm sulfur 

standard starting June 1, 2012, two years 

later than for nonroad diesel fuel. 

Second, 500 ppm sulfur diesel fuel 

generated in the distribution system 

through contamination of 15 ppm sulfur 

fuel can be marketed in the nonroad, 

locomotive and marine market until 

June 2014, and in the locomotive and 

marine market after that date. Third, 500 

ppm sulfur diesel fuel produced by 

transmix processors from contaminated 

downstream diesel fuel can also be 

marketed to the nonroad, locomotive 

and marine markets, under the same 

schedule. While today’s rule does not 

contain an end date for the downstream 

distribution of 500 ppm sulfur 

locomotive and marine fuel, we will 

review the appropriateness of allowing 

this flexibility based on experience 

gained from implementation of the 15 

ppm sulfur NRLM diesel fuel standard. 

We expect to conduct such an 

evaluation in 2011. 

When EPA adopted a 15 ppm sulfur 

standard for highway diesel fuel, we 

included several provisions to ensure a 

smooth transition to 15 ppm sulfur 

highway fuel. One provision was a 

temporary compliance option, with an 

averaging, banking and trading 

component. In a similar manner, the 

2012 deadline for 15 ppm sulfur LM 

fuel, the last, relatively small segment of 

diesel fuel, will help ensure that the 

entire pool of diesel fuel is smoothly 

transitioned to the 15 ppm sulfur level 

over a short period of time. (See section 

8.3 of the summary and analysis of 

comments.)

EPA is also adopting two provisions 

aimed at smoothing the transition of the 

distribution system to ultra low sulfur 

diesel fuel. These provisions are 

designed to accommodate offspecification fuel generated in the 

distribution system, such as through the 

mixing that occurs at product interfaces. 

This off-specification material generally 

cannot be added in any significant 

quantity to either of the adjoining 

products that produced the interface.93

Under today’s program, as discussed in 

more detail in section A.3, below, offspecification material that is generated 

in the distribution system may be 

distributed as 500 ppm NRLM diesel 

fuel from June 1, 2010 through May 31, 

2014 and as 500 ppm LM from June 1, 

2014 and beyond. Furthermore, as 

discussed in section IV.C, below, 

transmix processors, which are facilities 

that process transmix by separating it 

into its components (e.g., separating 

gasoline from diesel fuel), are treated as 

a separate class of refiners. One hundred 

percent of the diesel fuel they produce 

from transmix may be sold as high 

sulfur NRLM until June 1, 2010, 500 

ppm sulfur NRLM until June 1, 2014, 

and 500 ppm sulfur LM diesel fuel after 

June 1, 2014.

These provisions provide refiners and 

importers with a similar degree of 

flexibility for off-specification product 

as the proposal which held the sulfur 

standard for all locomotive and marine 

diesel fuel at 500 ppm indefinitely. If 

off-specification product is produced, 

there is a temporary outlet for it. If 

providing the off-specification product 

to a locomotive and marine market is 

difficult under this final rule, such that 

a refiner will choose to re-process it, 

then the refiner would have been in the 

same position under the proposal. 

Furthermore, these provisions provide 

the refining industry an alternative to 

reprocessing the off-specification 

material created in the distribution 

system, which preserves refining 

capacity for the production of new fuel 

volume, helping to maintain overall 

diesel fuel supply. 

As with the 500 ppm sulfur standard 

under the first step of today’s program, 

refiners and importers may comply with 

the 15 ppm sulfur standard by either 

producing NRLM diesel fuel containing 

no more than 15 ppm sulfur or by 

obtaining sulfur credits (until June 1, 

2014), as described below. 

c. Cetane Index or Aromatics Standard 

Currently, in addition to containing 

no more than 500 ppm sulfur, highway 

diesel fuel must meet a minimum cetane 

index level of 40 or, as an alternative, 

contain no more than 35 volume percent 

aromatics. Today’s program extends this 

cetane index/aromatics content 

specification to NRLM diesel fuel. 

One refining company commented 

that EPA should not implement the 

cetane index and aromatic requirements 

in the proposed rule since the impacts 

are weak or nonexistent for engines to 

be used in the future. In addition, the 

commenter stated that the vast majority 

of diesel fuel already meets the EPA 

cetane index/aromatics specification for 

highway diesel fuel and that there is 

nothing in the RIA that either 

demonstrates the benefits or supports 

the need for such a requirement. The 

commenter also stated that EPA should 

not set a requirement simply because 

the ASTM standard has a cetane number 

specification for a particular fuel. 

Low cetane levels are associated with 

increases in NOX and PM emissions 

from current nonroad diesel engines.94

Thus, we expect that extending the 

cetane index specification to NRLM 

diesel fuel will directionally lead to a 

reduction in these emissions from the 

existing fleet. However, because the vast 

majority of NRLM diesel fuel already 

meets the specification, the NOX and 

PM emission reductions will be small. 

At the same time, the refining/

production costs associated with 

extending the cetane index specification 

to NRLM diesel fuel are negligible as 

current NRLM diesel fuel already meets 

a more stringent ASTM specification.

ASTM already recommends a cetane 

number specification of 40 for NRLM 

diesel fuel, which is, in general, more 

stringent than the similar 40 cetane 

index specification. Because of this, the 

vast majority of current NRLM diesel 

fuel already meets the EPA cetane 

index/aromatics specification for 

highway diesel fuel. Thus, the cetane 

index specification will impact only a 

few refiners and there will be little 

overall cost associated with producing 

fuel to meet the cetane/aromatic 

requirement. In fact, as discussed in 

chapter 5.9 of the RIA, compliance with 

the sulfur standards adopted today is 

expected to result in a small cetane 

increase as increases in cetane correlate 

with decreases in sulfur, leaving little or 

no further control to meet the standard. 

While the emissions benefits and 

refining/production costs of extending 

the specification to NRLM diesel fuel 

may be small, the extension will reduce 

costs by giving refiners and distributors 

the ability to fungibly distribute 

highway and NRLM diesel fuels of like 

sulfur content. For that small fraction of 

NRLM diesel fuel today that does not 

meet the cetane index or aromatics 

39044 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

95A bulk plant is a secondary distributor of 

refined petroleum products. They typically receive 

fuel from terminals and distribute fuel in bulk by 

truck to end users. Consequently, while for highway 

fuel, bulk plants often serve the role of a fuel 

distributor, delivering fuel to retail stations, for 

nonroad fuel, they often serve the role of the 

retailer, delivering fuel directly to the end-user.

96By December 1, 2010, all NRLM diesel fuel, 

including fuel in end-user tanks, must comply with 

at least the 500 ppm sulfur standard.

97By December 1, 2014, all NR diesel fuel, 

including fuel in end-user tanks, must comply with 

at least the 15 ppm sulfur standard.

specification, the requirement will 

eliminate the need for refiners and fuel 

distributors to separately distribute fuels 

of different cetane/aromatics 

specifications. Requiring NRLM diesel 

fuel to meet this cetane index 

specification thus gives fuel distributors 

certainty in being able to combine 

shipments of highway and NRLM diesel 

fuels. Perhaps more importantly, it can 

also give engine manufacturers and endusers the confidence they need that 

their fuel will meet the minimum cetane 

or maximum aromatics standard. Given 

the inherent difficulty in segregating 

two otherwise identical fuels, were we 

not to carry over these standards to 

NRLM, lower cetane NRLM could easily 

find its way into current highway 

engines. If not designed for this lower 

cetane fuel, these engines could have 

elevated emission levels and 

performance problems. 

Overall, we believe that there will be 

a small reduction in NOX and PM 

emissions from current engines and the 

economic benefits from more efficient 

fuel distribution will likely exceed the 

cost of raising the cetane level for the 

small volume of NRLM diesel fuel that 

does not already meet the cetane index 

or aromatics content specification.

3. Standards, Deadlines, and 

Flexibilities for Fuel Distributors 

The first years of the NRLM diesel 

fuel program include various 

flexibilities to smooth the refining and 

distribution industry’s transition to 15 

ppm sulfur fuel. These flexibilities 

include a 2012 deadline for production 

of 15 ppm sulfur locomotive and marine 

diesel fuel, credit provisions, small 

refiner provisions, hardship provisions, 

and downstream off-specification fuel 

provisions. As a result, during the 

transition years, we are not able to 

simply enforce the sulfur standards 

downstream based on a single sulfur 

level of the new standard. From June 1, 

2007 through May 31, 2010, both 500 

ppm sulfur diesel fuel and high sulfur 

diesel fuel can be produced, distributed, 

and sold for use in NRLM diesel 

engines. From June 1, 2010 through May 

31, 2014, both 15 ppm sulfur and 500 

ppm sulfur diesel fuel can be produced, 

distributed, and sold for use in NRLM 

diesel engines. Beyond June 1, 2014, 

both 15 ppm sulfur and 500 ppm sulfur 

diesel fuel that is produced from fuel 

product downgrade and transmix in the 

distribution system can be distributed 

and sold for use in locomotive and 

marine diesel engines. As these 

transition flexibilities expire, however, 

we are able to streamline our 

downstream enforcement provisions. 

a. Standards and Deadlines From June 1, 

2007 Through May 31, 2010 

As soon as the program begins on 

June 1, 2007, all NRLM diesel fuel must 

be designated or classified and must 

comply with the designation or 

classification stated on its product 

transfer document (PTD), pump label, or 

other documentation. In other words, if 

the fuel is intended for sale as NRLM 

diesel fuel and is labeled as 500 ppm 

sulfur diesel fuel, then beginning June 1, 

2007, it must comply with the 500 ppm 

sulfur standard. Similarly, if fuel is 

intended for sale as NRLM diesel fuel 

and is labeled as 15 ppm sulfur, then 

beginning June 1, 2010 (or June 1, 2009 

under the early credit provisions), it 

must comply with the 15 ppm sulfur 

standard. 

Beginning June 1, 2010, all NRLM 

diesel fuel produced or imported is 

required to meet at least a 500 ppm 

sulfur limit. In order to allow for a 

smooth and orderly transition to 500 

ppm sulfur NRLM diesel fuel in the 

distribution system, and allow any 

remaining high sulfur fuel to be sold, we 

are providing parties downstream of 

refineries time to turnover their NRLM 

tanks to 500 ppm sulfur diesel fuel. At 

the terminal level, all NRLM diesel fuel 

must meet at least the 500 ppm sulfur 

standard beginning August 1, 2010. At 

any wholesale purchaser-consumer 

facilities and any retail stations carrying 

NRLM diesel fuel, including bulk plants 

that serve as retailers, all diesel fuel 

must meet the 500 ppm sulfur standard 

beginning October 1, 2010.95 Thus, 

beginning October 1, 2010, high sulfur 

(greater than 500 ppm sulfur) NRLM 

diesel fuel may no longer legally exist 

in the fuel distribution system.96

Although we expect that most NRLM 

diesel fuel in the distribution system 

will be subject to the 500 ppm sulfur 

standard during the period from June 1, 

2007 through May 31, 2010, based on its 

designation or classification, some of 

the 500 ppm sulfur NRLM diesel fuel 

may be mixed with high sulfur NRLM 

diesel fuel. Since the blended product 

will likely no longer meet the 500 ppm 

sulfur standard, it must be re-designated 

and labeled as high sulfur NRLM diesel 

fuel. Similarly, fuel that results from 

blending 500 ppm sulfur NRLM diesel 

fuel and heating oil must be redesignated and labeled as heating oil. 

b. Standards and Deadlines From June 

1, 2010 Through May 31, 2014 

Beginning June 1, 2010, most NR 

diesel fuel will be required to meet the 

15 ppm sulfur standard, and beginning 

June 1, 2012, most LM diesel fuel will 

be required to meet the 15 ppm sulfur 

standard. However, some production of 

500 ppm sulfur NRLM diesel fuel may 

continue through May 31, 2014. As with 

the delayed downstream compliance 

dates for the 500 ppm sulfur standard 

under the first step of today’s program, 

parties downstream of refineries will be 

allowed additional time to turnover 

their tanks to 15 ppm sulfur NR diesel 

fuel. Specifically, at the terminal level, 

all NR diesel fuel will be required to 

meet the 15 ppm sulfur standard 

beginning August 1, 2014. At any 

wholesale purchaser-consumer facilities 

and retail stations carrying all NR diesel 

fuel, including bulk plants serving as 

retailers, NR diesel fuel must meet the 

15 ppm sulfur standard beginning 

October 1, 2014. Thus, beginning 

October 1, 2014, 500 ppm sulfur NR 

diesel fuel may no longer legally exist 

in the fuel distribution system.97

Like the first step to 500 ppm sulfur, 

prior to these 2014 downstream 

deadlines all NRLM diesel fuel would 

still be designated or classified with 

respect to sulfur level and required to 

meet the designation or classification 

stated on its PTD, pump label, or other 

documentation. 

c. Sulfur Standard for NRLM Diesel Fuel 

Beginning June 1, 2014 

As discussed above, all refiners will 

be required to produce and importers 

will be required to import only 15 ppm 

sulfur NRLM diesel fuel by June 1, 2014. 

However, we will continue to allow 500 

ppm sulfur diesel fuel to be sold into 

the LM diesel fuel markets beyond 2014. 

The LM diesel fuel markets are expected 

to provide a valuable outlet for higher 

sulfur distillate fuel produced in the 

distribution system, at least through the 

early years of the program. 

Consequently, beyond 2014, both 15 

ppm sulfur and 500 ppm sulfur LM 

diesel fuel may continue to exist in the 

distribution system, and each fuel must 

comply with the designation stated on 

its PTD, pump label, or other 

documentation. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39045

98Segregated interface refers to the mixing zone 

between two batches of fuel that abut each other in 

the pipeline, where the volume in the mixing zone 

can not be cut into either of the fuel batches, but 

can still meet another fuel product specification 

without reprocessing, provided that it is drawn off 

of the pipeline separately and segregated.

99As mentioned above, the Agency intends in the 

near future to initiate a rulemaking to adopt new 

emission standards for locomotive and marine 

engines. An advanced notice of proposed 

rulemaking (ANPRM) for this rule is published 

elsewhere in today’s Federal Register, June 29, 

2004. While we are not finalizing a sunset date for 

this downgrade provision in today’s final rule, we 

are evaluating the appropriateness of establishing a 

sunset date on this provision in the context of the 

subsequent engine standards rule. We also intend 

to review the appropriateness of any sunset 

provision in light of experience gained from 

implementation of the 15 ppm sulfur NRLM diesel 

fuel standard. We would conduct such an 

evaluation in 2011.

100Although, as mentioned above, the Agency 

intends in the near future to initiate a rulemaking 

to adopt new emission standards for locomotive 

and marine engines. An advanced notice of 

proposed rulemaking (ANPRM) for this rule is 

published elsewhere in today’s Federal Register, 

June 29, 2004.

d. Interface/Transmix Flexibility for 

Fuel Distributors 

As described above, today’s program 

provides flexibility to the distribution 

system by allowing interface/transmix 

material generated within the 

distribution system to be sold into the 

NRLM diesel fuel markets. Specifically, 

any fuel interface/transmix generated in 

the fuel distribution system may be sold 

as:

(1) High sulfur NRLM diesel fuel or heating 

oil from June 1, 2007 through May 31, 2010; 

(2) 500 ppm sulfur NRLM diesel fuel or 

heating oil from June 1, 2010 through May 

31, 2014; or 

(3) 500 ppm sulfur LM diesel fuel or 

heating oil after June 1, 2014.

Hence, beginning June 1, 2014, 

interface/transmix material exceeding 

15 ppm sulfur may only be sold into the 

LM diesel fuel or heating oil markets. As 

discussed above, the downstream 

standard for LM diesel fuel will be 500 

ppm sulfur. However, heating oil may 

not be shifted into the LM markets. 

Parties in the distribution system 

receiving diesel fuel with a sulfur 

content greater than 15 ppm sulfur must 

maintain records and report to EPA 

information demonstrating that they did 

not shift heating oil into the LM 

markets, as discussed in section IV.D. 

The generation of greater than 15 ppm 

sulfur distillate fuel from pipeline 

interface/transmix cannot be avoided 

due to the physical realities of a multiproduct fuel distribution system. Such 

fuel first appears at the terminus of the 

pipeline distribution system; at 

terminals due to the generation of 

segregated interface, or at transmix 

processing facilities.98 In areas where 

there is a strong demand for heating oil, 

much of this pipeline-generated offspecification fuel can be sold into the 

heating oil market, just as it is today. 

However, in many areas of the country 

the demand for heating oil would not be 

sufficient to accommodate distillate fuel 

exceeding 15 ppm sulfur that is 

generated in the pipeline. Therefore, 

such fuel would need to be returned to 

a refinery for reprocessing to meet a 15 

ppm sulfur standard. In addition, some 

refiners may be reluctant to accept such 

material for reprocessing given the 

impact this would have on their refinery 

operations. More importantly, because 

such material appears at the terminus of 

the pipeline distribution system and 

often where no access to pipeline or 

marine shipment is available, it would 

have to be shipped back to a refinery by 

truck, or rail if available, at additional 

cost.

As discussed in chapter 7 of the RIA, 

fuel generated from such interface/

transmix will typically meet a 500 ppm 

sulfur standard. Therefore, allowing the 

continued use of such 500 ppm sulfur 

diesel fuel in locomotive and marine 

engines could reduce the burden on the 

fuel distribution industry by lowering 

costs. Our cost estimates of marketing 

such fuel include additional shipping 

charges for situations where there is not 

a local locomotive or marine market (see 

section VI of this preamble).99 Allowing 

the continued sale of 500 ppm sulfur 

diesel fuel into the locomotive and 

marine markets without requiring it to 

be reprocessed will also help preserve 

refining capacity for the overall diesel 

fuel production. Therefore, this 

provision also serves to address 

lingering concerns expressed by some 

refiners regarding the impacts of the 15 

ppm sulfur standard for highway and 

NRLM diesel fuel on overall diesel fuel 

supply.

Downstream-generated 500 ppm 

sulfur diesel fuel may only be used in 

nonroad engines until December 1, 

2014, due to concerns regarding 

enforceability and the increased 

potential for misfueling of nonroad 

equipment (equipment with advanced 

emission controls). Beginning with the 

2011 model year, such equipment will 

require the use of 15 ppm sulfur diesel 

fuel to operate properly. The same 

concerns do not exist regarding the 

continued use of such 500 ppm sulfur 

diesel fuel in locomotive and marine 

engines for three reasons. First, 

locomotive and marine engines are not 

currently required to be equipped with 

the sulfur sensitive emissions 

aftertreatment that will start being used 

on nonroad equipment in 2011.100

Second, locomotive and marine markets 

are centrally fueled to a much greater 

extent than nonroad markets, and thus 

enforceability is not as significant of an 

issue. Finally, we believe the program’s 

designate and track provisions 

discussed below will be sufficient to 

enforce the limits on production and 

use of 500 ppm sulfur diesel fuel.

It is difficult to project exactly how 

much of this downstream generated 

downgraded fuel could be segregated 

and shipped to LM markets. However, it 

is clear that this provision represents an 

important flexibility for the distribution 

system. In fact, it provides virtually the 

same flexibility as provided by the 

proposal to handle off-specification 

product. In both cases, use of the 

flexibility is dependent on the ability to 

segregate the interface and transport it 

to available LM markets. While today’s 

rule does not contain an end date for the 

downstream distribution of 500 ppm 

sulfur locomotive and marine fuel, we 

will review the appropriateness of 

allowing this flexibility based on 

experience gained from implementation 

of the 15 ppm sulfur NRLM diesel fuel 

standard. We expect to conduct such an 

evaluation in 2011.

A summary of the NRLM sulfur levels 

and final deadlines for refiners, 

importers, terminals, and other 

downstream parties is shown in table 

IV–1 below.

TABLE IV–1.—500 PPM SULFUR AND 15 PPM SULFUR NRLM FINAL COMPLIANCE DATES

Refiners and

importers Credit, small refiner Terminals 

Bulk plants, wholesale purchaser-consumers and retail outlets 

Other locations 

500 ppm NRLM .......... June 1, 2007 ............. June 1, 2010 ............. August 1, 2010 ......... October 1, 2010 ........ December 1, 2010. 

15 ppm NR ................. June 1, 2010 ............. June 1, 2014 ............. August 1, 2014 ......... October 1, 2014 ........ December 1, 2014. 

39046 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

101We are not adopting specific provisions to 

generate credits for early production of LM diesel 

fuel prior to June 1, 2012. The difference in start 

date between 2010 and 2012 already provides 

additional flexibility to producers of LM diesel fuel, 

and setting separate credit generation periods for 

NR and LM diesel fuel would unnecessarily 

complicate the compliance assurance provisions.

102For the purposes of this rule, credits are 

labeled on the basis of their use in order to follow 

the convention used in the highway diesel rule. A 

high-sulfur credit is generated through the 

production of one gallon of 500 ppm sulfur NRLM 

diesel fuel and allows the production of one gallon 

of high sulfur NRLM diesel fuel.

TABLE IV–1.—500 PPM SULFUR AND 15 PPM SULFUR NRLM FINAL COMPLIANCE DATES—Continued

Refiners and

importers Credit, small refiner Terminals 

Bulk plants, wholesale purchaser-consumers and retail outlets 

Other locations 

15 ppm LM ................. June 1, 2012 ............. June 1, 2014.

4. Diesel Sulfur Credit Banking and 

Trading Provisions 

Today’s final program includes 

provisions for refiners and importers to 

generate early credits for the production 

of 500 ppm sulfur NRLM diesel fuel 

prior to June 1, 2007 and for the 

production of 15 ppm sulfur NRLM 

diesel fuel prior to June 1, 2010. These 

credit banking and trading provisions 

will provide implementation flexibility 

by facilitating a somewhat smoother 

transition at the start of the program in 

2007, with some refineries/import 

facilities complying early, others on 

time, and others a little later. These 

credit banking and trading provisions 

may also facilitate some of the 

environmental benefits of the program 

being achieved earlier than otherwise 

required, and may increase the overall 

environmental benefits of the program. 

As discussed below, overall benefits 

will accrue if refiners produce 500 ppm 

earlier in lieu of high sulfur NRLM and 

then bank those credits to continue 

producing 500 ppm sulfur NR diesel 

fuel in 2010 or 500 ppm LM diesel fuel 

in 2012 in lieu of 15 ppm.101

Specifically, credits generated under 

the NRLM diesel fuel program may be 

banked and later used to delay 

compliance with either the 500 ppm 

sulfur NRLM standard that begins in 

2007, the 15 ppm sulfur NR standard 

that begins in 2010, or the 15 ppm 

sulfur LM standard that begins in 2012. 

Credits may also be traded within 

companies such that credits generated at 

one refinery/import facility in a given 

company may be traded to another 

refinery/import facility within that same 

company. In addition, refiners or 

importers may purchase credits 

generated by other refiners or importers 

to meet the program requirements. 

Finally, and perhaps most importantly, 

individual refineries/import facilities 

may be able to use credits to permit the 

continued sale of otherwise offspecification product at the beginning of 

the program’s second step when they 

are still adjusting their operations for 

consistent production/importation of 

NRLM diesel fuel that is subject to the 

new sulfur standards. 

a. Credit Generation From June 1, 2006 

Through May 31, 2007 

Credits may be generated under 

today’s program to allow for the 

production of high sulfur NRLM diesel 

fuel after June 1, 2007. A refiner or 

importer may obtain credit for early 

production/importation of fuel meeting 

the 500 ppm sulfur standard that they 

designate as NRLM diesel fuel, from 

June 1, 2006 through May 31, 2007. In 

addition, small refiners may also 

generate credits for the early production 

of 500 ppm sulfur diesel fuel that they 

designate as NRLM diesel fuel. As 

described in section IV.B, below, small 

refiners are not required to produce any 

500 ppm sulfur NRLM diesel fuel until 

June 1, 2010. Those small refiners who 

choose to comply with the 500 ppm 

sulfur standard earlier than required, 

that is before June 1, 2010, may generate 

credits for any volume of diesel fuel 

they produce from June 1, 2007 through 

May 31, 2010 and designate as NRLM. 

Credits for the early production of 500 

ppm sulfur fuel (including by small 

refineries) are fungible, may be banked 

for future use, or traded to any other 

refiner or importer nationwide. In order 

to ensure that these early credits are real 

and not merely shifts from the highway 

market, both early credits and small 

refinery credits will be subject to a limit 

determined by the following formula:

CreditHS = (Vol15 + Vol500) ¥ Volhwy

CreditHS Limit = (Vol15 + Vol500) ¥

Basehwy

Where:

Credit500 Limit = Limit for 500 ppm 

NRLM credits 

CreditHS = High-Sulfur NRLM credits102

Vol15 = Volume of 15 ppm sulfur diesel 

fuel produced and designated as 

highway or NRLM 

Vol500 = Volume of 500 ppm sulfur 

diesel fuel produced and designated 

as highway or NRLM 

Basehwy = 2003–2005 highway diesel 

fuel baseline volume 

Volhwy = Volume of diesel fuel produced 

and designated as highway

If the excess production is 15 ppm 

sulfur diesel fuel instead of 500 ppm 

sulfur diesel fuel, then the refiner will 

have the option of generating 500 ppm 

sulfur credits under the highway diesel 

fuel program. Credit may not be earned 

under both programs for a given volume 

of 500 ppm sulfur or 15 ppm sulfur 

diesel fuel.

b. Credit Generation From June 1, 2009 

Through May 31, 2010 

In addition to allowing credit for the 

early production of 500 ppm sulfur 

NRLM diesel fuel, today’s program also 

allows credit for the early production of 

15 ppm sulfur NRLM diesel fuel. 

Specifically, refiners and importers may 

obtain credit for early production/

importation of fuel meeting the 15 ppm 

sulfur standard and that they designate 

as NRLM from June 1, 2009 through 

May 31, 2010. In addition, small 

refiners, which are not required to 

produce any 15 ppm sulfur NRLM 

diesel fuel until June 1, 2014, may also 

generate credits for the early production 

of any volume of 15 ppm sulfur diesel 

fuel that they designate as NRLM from 

June 1, 2010 through December 31, 

2013. Again, these early credits are 

fungible, may be banked for future use, 

or traded to any other refinery or 

importer nationwide. However, in order 

to ensure these credits are real and not 

merely shifts from the highway market, 

credits for the early production or 

importation of 15 ppm sulfur fuel will 

be subject to a limit determined by the 

following formula:

Credit500 = Vol15 ¥ Vol15hwy

Credit500 Limit = Vol15 ¥ Base15hwy

Where: 

Credit500 Limit = Limit for 500 ppm 

sulfur NRLM credits 

Vol15 = Volume of 15 ppm sulfur diesel 

fuel produced and designated as 

highway or NRLM 

Base15hwy = 2006–2008 15 ppm sulfur 

highway diesel fuel baseline 

volume

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39047

Hence, to generate credits, a refiner or 

importer’s highway diesel fuel volume 

for the compliance period must be 

greater than or equal to the baseline 

volume. That is, a refiner or importer 

may only generate credits for ‘‘new’’

volumes of 15 ppm sulfur diesel fuel 

that it produces. If their highway diesel 

fuel volume were to drop below the 

baseline volume, that would likely 

indicate a shift in production from the 

highway market to generate 15 ppm 

sulfur NRLM diesel fuel credits. 

c. Credit Use 

There are two ways in which refiners 

or importers may use high-sulfur NRLM 

credits under the NRLM diesel fuel 

program. First, credits may be used 

during the period from June 1, 2007 

through May 31, 2010 to continue to 

produce high sulfur NRLM diesel fuel. 

Any high sulfur NRLM diesel fuel that 

is produced, however, must be 

designated and labeled as such for 

tracking purposes throughout the 

distribution system and be dyed red at 

the refinery gate. 

The second way in which refiners and 

importer could use high-sulfur NRLM 

credits is by banking them for use 

during the June 1, 2010 through May 31, 

2014 period. Credits used in this 

manner would provide a net 

environmental benefit, since they were 

generated by reducing the sulfur level 

from approximately 3000 ppm to less 

than 500 ppm (a net change of 2500 

ppm sulfur), but when used only allow 

the sulfur level to increase from 15 ppm 

to 500 ppm (a net change of less than 

500 ppm sulfur). 500 ppm sulfur credits 

generated from the early production of 

15 ppm sulfur NRLM diesel fuel may 

also be used from June 1, 2010 through 

May 31, 2014. Thus, during this period, 

when the 15 ppm sulfur standard is in 

effect for nonroad diesel fuel, refiners/

importers may use either high sulfur 

credits or 500 ppm sulfur credits to 

continue producing/importing 500 ppm 

sulfur nonroad diesel fuel. Any 500 

ppm sulfur diesel fuel that is produced, 

however, must be appropriately 

designated and labeled for tracking 

purposes throughout the distribution 

system, and cannot be sold for use in 

2011 and later model year nonroad 

engines. From June 1, 2012, when the 15 

ppm sulfur standard for LM diesel fuel 

becomes effective, through May 31, 

2014, refiners/importers may use either 

high sulfur credits or 500 ppm sulfur 

credits to continue producing/importing 

500 ppm sulfur NRLM diesel fuel. All 

credits expire after May 31, 2014. 

Hence, beginning June 1, 2014, all 

NRLM diesel fuel produced by refiners 

or imported in the U.S. will be subject 

to the 15 ppm sulfur standard, except 

LM diesel fuel produced by transmix 

processors from transmix can continue 

to meet the 500 ppm sulfur limit. 

We proposed that all credits would 

expire May 31, 2012, however we are 

finalizing an expiration date of May 31, 

2014 based on the comments we 

received. The additional two years that 

we are now allowing for credit use (1) 

will provide a longer period for refiners 

to sell off-specification fuel instead of 

having to reprocess it, (2) is an 

environmentally neutral change to the 

overall program, and (3) is now 

consistent with the end-date for small 

refiner flexibility. 

While credits can be generated and 

traded nationwide, they are restricted 

from use in certain parts of the country 

under the provisions of this final rule. 

As discussed in section IV.D, we are 

avoiding the burden to terminals of 

adding marker to heating oil in those 

areas of the country where demand for 

heating oil is expected to continue to 

remain high after today’s final rule. The 

NRLM diesel fuel sulfur standards will 

be enforced based on sulfur level in 

these areas, not through the refinery 

designation and marker provisions. 

Consequently, in the area defined in 

section IV.D comprising most of the 

Northeast and Mid-Atlantic region of 

the country, as well as in the State of 

Alaska, many of the fuel program’s 

flexibilities, including refiners’ ability to 

use credits, are not allowed. Refiners 

and importers may not use credits to 

produce or import diesel fuel with a 

sulfur content greater than 500 ppm 

beginning June 1, 2007 or 15 ppm 

beginning June 1, 2010, for sale or 

distribution in this Northeast/MidAtlantic area or the State of Alaska. 

However, credits generated in these 

areas can be sold to other refiners and/

or importers for use outside these areas.

B. Hardship Relief Provisions for 

Qualifying Refiners 

As in our gasoline sulfur and highway 

diesel fuel sulfur programs, today’s 

program contains the following 

hardship relief provisions to provide 

regulatory flexibility to challenged 

refiners: 

• Small refiner hardship for 

qualifying small refiners; 

• General hardship for any refiner 

experiencing either—

(1) Extreme unforeseen circumstances 

such as natural disaster or acts of God; 

or 

(2) Extreme hardship circumstances 

such as financial or technical hardship. 

Similar provisions have proved 

invaluable for some refiners in the 

recent implementation of the gasoline 

sulfur standards, as well as for refiners’

planning for the highway diesel 

standards. The details of these 

provisions are discussed below. 

1. Hardship Provisions for Qualifying 

Small Refiners 

As in previous fuel rulemakings, our 

justification for including provisions 

specific to small refiners is that, in 

general, small refiners generally have a 

degree of hardship in complying with 

the standards compared to other 

refiners. In the NPRM, we proposed 

flexibilities/transition provisions, or 

‘‘hardship provisions’’ (these terms are 

equivalent), for small refiners. We are 

adopting the provisions that were 

proposed for small refiners virtually 

unchanged, and including similar 

provisions for the treatment of 

locomotive and marine fuel. 

a. Regulatory Process and Justification 

for Small Refiner Relief 

In developing our NRLM diesel fuel 

sulfur program, we evaluated the 

environmental need as well as the 

technical and financial ability of 

refiners to meet the 500 and 15 ppm 

sulfur standards as expeditiously as 

possible. We believe it is feasible and 

necessary for the vast majority of the 

program to be implemented in the 

established time frame to achieve the air 

quality benefits as soon as possible. 

Based on information available from 

small refiners and others, we believe 

that refiners classified as small generally 

face unique circumstances with regard 

to compliance with environmental 

programs, compared to larger refiners. 

Consequently, as discussed below, we 

are finalizing several special provisions 

for refiners that qualify as ‘‘small 

refiners’’ to reduce the disproportionate 

burden that today’s program will have 

on them. 

Small refiners generally lack the 

resources that are available to large 

refining companies, including those 

large companies that own smallcapacity refineries, to raise capital for 

investing in desulfurization equipment, 

such as shifting of internal funds, 

securing of financing, or selling of 

assets. Small refiners are also likely to 

have more difficulty in competing for 

engineering and construction resources 

needed for the installation of the 

desulfurization equipment which will 

likely be required to meet the standards 

finalized in this action. 

Because small refiners are more likely 

to face adverse circumstances with 

regard to regulatory compliance than 

larger refiners, we are finalizing interim 

provisions that will provide additional 

time for refineries owned by small 

39048 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

refiners to meet the sulfur standards. 

This approach will allow the overall 

program to begin as early as possible, 

avoiding the need for delay in order to 

address the ability of small refiners to 

comply. 

i. Regulatory Flexibility Process for 

Small Refiners 

As explained in the discussion of our 

compliance with the Regulatory 

Flexibility Act (RFA) in section X.C of 

this preamble, and in the Final 

Regulatory Flexibility Analysis in 

chapter 11 of the RIA, we considered 

the impacts of today’s regulations on 

small businesses. Most of our analysis of 

small business impacts was performed 

as part of the Small Business Advocacy 

Review (SBAR) Panel convened by EPA, 

pursuant to the RFA as amended by the 

Small Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA). The 

Panel’s final report is available in the 

rulemaking public docket (Docket A–

2001–28, Document No. II–A–172). 

For the SBREFA process, EPA 

conducted outreach, fact-finding, and 

analysis of the potential impacts of the 

proposed nonroad regulations on small 

businesses. Based on these discussions 

and analyses by all panel members, the 

Panel concluded that small refiners in 

general would likely experience a 

significant and disproportionate 

financial burden in reaching the 

objectives of the proposed nonroad 

diesel fuel sulfur program. 

One indication of the 

disproportionate burden on small 

refiners is the relatively high cost per 

gallon projected for producing NRLM 

diesel fuel under today’s program. 

Refinery modeling of refineries owned 

by refiners likely to qualify as small 

refiners, and of refineries owned by 

other non-small refiners, indicates 

significantly higher refining costs for 

small refiners. Specifically, we project 

that without special provisions, refining 

costs for small refiners on average 

would be about two cents per gallon 

higher than for other refiners in the 

same PADD to meet the 15 ppm sulfur 

standard. 

The Panel also noted that the burden 

imposed on small refiners by the 

proposed sulfur standards may vary 

from refiner to refiner. Thus, the Panel 

recommended more than one type of 

burden mitigation so that most, if not 

all, small refiners could benefit. We 

considered the issues raised during the 

SBREFA process, and discussed them in 

the NPRM, and have decided to finalize 

each of the provisions recommended by 

the Panel. A discussion of the comments 

we received regarding small refiners and 

terminal operators, and our responses to 

those comments, can be found in 

section X.C of this preamble, and also 

the Summary and Analysis of 

Comments.

ii. Rationale for Small Refiner 

Regulatory Flexibility Provisions 

Generally, we structured the small 

refiner provisions to reduce the burden 

on small refiners while expeditiously 

achieving air quality benefits and 

ensuring that the availability of 15 ppm 

sulfur NR diesel fuel will coincide with 

the introduction of 2011 model year 

nonroad diesel engines and equipment. 

We believe the special provisions for 

small refiners are necessary and 

appropriate for several reasons. 

First, the compliance schedule for 

today’s program, combined with special 

relief provisions for small refiners, will 

achieve the air quality benefits of the 

program as soon as possible, while 

helping to ensure that small refiners 

will have adequate time to raise capital 

for new or upgraded fuel desulfurization 

equipment. Most small refiners have 

limited additional sources of income 

beyond refinery earnings for financing 

and typically do not have the financial 

backing that larger and generally more 

integrated companies have. Therefore, 

additional time to accumulate capital 

internally or to secure capital financing 

from lenders can be central to their 

ability to comply. 

Second, we recognize that while the 

sulfur levels in today’s program can be 

achieved using conventional refining 

technologies, new technologies are also 

being developed that may reduce the 

capital and/or operating costs of sulfur 

removal. Thus, we believe that 

providing small refiners some 

additional time to allow for new 

technologies to be proven out by other 

refiners will have the added benefit of 

reducing the risks faced by small 

refiners. The added time will likely 

enable small refiners to benefit from the 

lower costs of these improvements in 

desulfurization technology (e.g., better 

catalyst technology or lower-pressure 

hydrotreater technology). This will help 

to offset the disproportionate financial 

burden that may be imposed upon small 

refiners. 

Finally, providing small refiners more 

time to comply will spread out the 

availability of engineering and 

construction resources. Most refiners 

will need to install additional 

processing equipment to meet the 

NRLM diesel fuel sulfur requirements. 

We anticipate that there may be 

significant competition for technology 

services, engineering resources, and 

construction management and labor. In 

addition, as has been the experience in 

gasoline sulfur control, vendors will be 

more likely to contract their services 

with the larger refiners first, as their 

projects will offer larger profits for the 

vendors. Temporarily delaying 

compliance for small refiners will 

spread out the demand for these 

resources and may help reduce cost 

premiums for everyone caused by 

limited engineering and construction 

supply. 

We discuss below the provisions that 

we are finalizing to minimize the degree 

of hardship imposed upon small 

refiners by this program. With these 

provisions we are confident in going 

forward with the 500 ppm sulfur 

standard for NRLM diesel fuel in 2007 

and the 15 ppm sulfur standard for NR 

diesel fuel in 2010 and for LM diesel 

fuel in 2012, for the rest of the industry. 

The provisions for small refiners will 

allow these refiners to continue to 

produce higher sulfur NRLM fuel until 

June 1, 2010, and similarly, will allow 

for the production of 500 ppm nonroad 

NRLM fuel until June 1, 2014. Without 

small refiner relief, we would have to 

consider delaying the overall program 

until the burden of the program on 

many small refiners was diminished, 

which would delay the air quality 

benefits of the overall program. By 

providing temporary relief to small 

refiners, we are able to adopt a program 

that expeditiously reduces NRLM diesel 

fuel sulfur levels in a feasible manner 

for the industry as a whole. 

The four-year leadtime from which 

begins in 2010 for small refiners for 

locomotive and marine diesel fuel is 

identical to the relief that was supported 

by small refiners for nonroad diesel fuel. 

We believe that this relief is necessary 

and adequate to reduce the burden on 

small entities while still achieving our 

air quality goals. Small refineries vary 

considerably in their markets for NRLM 

diesel fuels. Consequently, the proposal 

to control nonroad diesel fuel to 15 ppm 

sulfur impacted small refiners with 

significant nonroad market shares, but 

left those with significant locomotive 

and marine market shares relatively 

untouched. With control of all NRLM 

diesel fuel to 15 ppm sulfur in this final 

rule, all small refiners of NRLM diesel 

fuel will face similar challenges, and 

therefore the same four year lead time 

from 2010 proposed for those small 

refiners impacted by nonroad fuel 

control alone is also appropriate when 

the standards are expanded to all 

NRLM. In essence, while more small 

refiners face the challenge of 

desulfurizing all of their diesel fuel to 

the 15 ppm sulfur standard, the 

magnitude of this challenge is not any 

greater. Furthermore, providing 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39049

additional relief (beyond 2014) to small 

refiners would undermine the program 

by further delaying air quality benefits. 

The 2014 deadline for all small refiner 

diesel fuel to 15 ppm sulfur will also 

simplify the fuel program and it will 

allow small refiners the ability to 

coordinate their plans to reduce the 

sulfur content of all off-highway diesel 

fuel at the same time. 

iii. Impact of Small Refiner Options on 

Program Emissions Benefits 

Small refiners that choose to delay the 

NRLM diesel fuel sulfur requirements 

will also delay to some extent the 

emission reductions that would 

otherwise have been achieved. 

However, for several reasons, the overall 

impact of these postponed emission 

reductions will be small. First, small 

refiners represent only a fraction of 

national non-highway diesel 

production. Today, refiners that we 

expect to qualify as small refiners 

represent only about six percent of all 

high-sulfur diesel production. Second, 

the delayed compliance provisions 

described below will affect only engines 

without new emission controls. During 

the program’s first step to 500 ppm 

sulfur NRLM diesel fuel, small refiner 

NRLM diesel fuel could be well above 

500 ppm sulfur, but the new advanced 

engine controls will not yet be required. 

During the second step to 15 ppm sulfur 

NRLM diesel fuel, equipment with the 

new controls will be entering the 

market, but use of the 500 ppm small 

refiner fuel will be restricted to older 

engines without the new controls. There 

will be some loss of sulfate PM control 

in the older engines that operate on 

higher sulfur small refiner fuel, but no 

effect on the major emission reductions 

that the new engine standards will 

achieve starting in 2011. Finally, 

because small diesel refiners are 

generally dispersed geographically 

across the country, the limited loss of 

sulfate PM control will also be 

dispersed. 

One option for small refiner relief will 

allow a modest 20 percent relaxation in 

the gasoline sulfur interim standards for 

small refiners that produce all of their 

NRLM diesel fuel at 15 ppm sulfur by 

June 1, 2006. To the extent that small 

refiners elect this option, a small loss of 

emission control from Tier 2 gasoline 

vehicles that use the higher sulfur 

gasoline could occur. We believe that 

such a loss of control will be very small. 

Very few small refiners will be in a 

position to use this provision. Further, 

the relatively small production of 

gasoline with slightly higher sulfur 

levels should have no measurable 

impact on the emissions of new Tier 2 

vehicles, even if the likely ‘‘blending 

down’’ of sulfur levels does not occur as 

this fuel mixed with lower sulfur fuel 

during distribution. This provision will 

also maintain the maximum 450 ppm 

gasoline sulfur per-gallon cap standard 

in all cases, providing a reasonable 

sulfur ceiling for any small refiners 

using this provision. 

b. Small Refiner Definition for Purposes 

of the Hardship Provisions 

The definition of small refiner under 

the NRLM diesel program is similar to 

the definitions under the Tier 2/

Gasoline Sulfur and Highway Diesel 

rules. Under the NRLM program, a small 

refiner must demonstrate that it meets 

the following criteria:

• Produced NRLM diesel from crude; 

• No more than 1,500 employees 

corporate-wide, based on the average 

number of employees for all pay periods 

from January 1, 2002 to January 1, 2003; 

and, 

• A corporate crude oil capacity less 

than or equal to 155,000 barrels per 

calendar day (bpcd) for 2002. 

As with the earlier fuel sulfur 

programs, the effective dates for the 

determination of employee count and 

for calculation of the crude capacity 

represent the most recent complete year 

prior to the issuing of the proposed 

rulemaking (2002, in this case). 

In determining its total number of 

employees and crude oil capacity, a 

refiner must include the number of 

employees and crude oil capacity of any 

subsidiary companies, any parent 

company and subsidiaries of the parent 

company, and any joint venture 

partners. We define a subsidiary of a 

company to mean any subsidiary in 

which the company has a 50 percent or 

greater ownership interest. However, 

refiners owned and controlled by an 

Alaska Regional or Village Corporation 

organized under the Alaska Native 

Claims Settlement Act (43 U.S.C. 1626), 

are also eligible for small refiner status, 

based only on the refiner’s employees 

and crude oil capacity. Such an 

exclusion is consistent with our desire 

to grant regulatory relief to that part of 

the industry that is the most challenged 

with respect to regulatory compliance. 

We believe that very few refiners, 

probably only one, will qualify under 

this provision. We are also 

incorporating this exclusion into the 

small refiner provisions of the highway 

diesel and gasoline sulfur rules, which 

did not address this issue. 

As under the gasoline sulfur and 

highway diesel fuel rules, refiners that 

either acquire or restart a refinery in the 

future may be eligible for small refiner 

status under the NRLM program. 

Specifically, a refiner that either 

acquires or restarts a refinery that was 

shut down or non-operational between 

January 1, 2002 and January 1, 2003 

may apply for small refiner status. In 

such cases, we will judge eligibility 

under the employment and crude oil 

capacity criteria based on the most 

recent 12 consecutive months of data 

unless we conclude from the data 

provided by the refiner that another 

period of time is more appropriate. 

Companies with refineries built after 

January 1, 2002 are not eligible for the 

small refiner provisions. Similarly, 

entities that do not own or operate a 

refinery are not eligible to apply for 

small refiner status. 

c. Provisions for Small Refiners 

We are finalizing several provisions 

intended to reduce the regulatory 

burden of today’s program on small 

refiners as well as to encourage their 

early compliance whenever possible. As 

described below, these small refiner 

relief options consist of additional time 

for compliance and, for small refiners 

that choose to comply earlier than 

required, the option of either generating 

diesel fuel sulfur credits or receiving a 

limited relaxation of their gasoline 

sulfur standards. 

i. NRLM Delay Option 

First, we are finalizing an option that 

allows small refiners to postpone their 

compliance with the NRLM diesel fuel 

sulfur standards. The delayed 

compliance schedule for small refiners 

is intended to compensate for the 

relatively higher compliance burdens on 

these refiners. It is not intended as an 

opportunity for those refiners to greatly 

expand their production of uncontrolled 

diesel fuel (2007–2010) or 500 ppm 

sulfur diesel fuel (2010–2014). To help 

ensure that any significant expansion of 

refining capacity that a small refiner 

might undertake in the future is 

accompanied by an expansion of 

desulfurization capacity, small refiners 

producing higher sulfur fuel must limit 

their production to baseline volume 

levels. Specifically, during the first step 

of today’s diesel fuel program to 500 

ppm sulfur, from June 1, 2007 through 

May 31, 2010, a small refiner may at any 

or all of its refineries produce 

uncontrolled NRLM diesel fuel up to the 

2003 through 2005 non-highway 

baseline volume for the refinery(s). Any 

diesel fuel produced over the baseline 

volume will be subject to the 500 ppm 

sulfur standard applying to other 

refiners. Similarly, from June 1, 2010 

through May 31, 2014, a small refiner 

may produce at any or all of its 

refineries NRLM diesel fuel subject to 

39050 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

the 500 ppm sulfur standard at a volume 

equal to or less than the refineries’

2006–2008 non-highway baseline 

volumes. LM fuel produced to the 500 

ppm standard during 2010 to 2012 

would be counted towards meeting this 

baseline volume. NRLM fuel produced 

in excess of the baseline volume will be 

subject to the 15 ppm sulfur NRLM 

diesel fuel standard. The baseline for 

2003–2005 will be determined by 

subtracting the refinery’s highway 

volume from its total highway and 

heating oil volume production. The 

baseline for 2006–2008 will be 

determined based upon the volume of 

the refinery’s NRLM fuel designations 

discussed in section IV.D. 

As discussed in section IV.D, the costs 

to the distribution system to mark 

heating oil in areas of PADD 1 with high 

heating oil demand to distinguish it 

from small refiner or credit-using high 

sulfur NRLM made this option 

undesirable in these areas. Based on our 

review of anticipated small refiner 

situations, this portion of PADD 1 

appears unlikely to provide a 

meaningful market for small refiners 

seeking this option. Therefore, in this 

part of the country it imposed costs 

without providing the intended benefit. 

Consequently, while this option was 

proposed to be available nationwide, we 

are not finalizing it for a portion of 

PADD 1. This change from the proposal 

should have no meaningful impact on 

small refiners’ flexibility, but will 

reduce the costs for fuel distributors. 

Since new engines with sulfur 

sensitive emission controls will begin to 

become widespread beginning in 2011, 

small refiner fuel can only be sold for 

use in pre-2011 nonroad equipment or 

in locomotives or marine engines during 

this time. Section IV.D below discusses 

the requirements for designating and 

tracking the production of 500 ppm 

sulfur NRLM diesel fuel produced by 

small refiners during this period.

The following table illustrates the 

small refiner NRLM diesel fuel sulfur 

standards as compared to the standards 

for the base NRLM diesel fuel program. 

As previously stated, small refiners will 

receive additional lead time, compared 

to non-small refiners for 15 ppm sulfur 

locomotive and marine diesel fuel. This 

lead time is identical to that which had 

been proposed for 15 ppm sulfur 

nonroad diesel fuel. This will ensure 

that emission benefits of ultra low sulfur 

diesel fuel are achieved as soon as 

possible, and should not significantly 

change the nature or magnitude of the 

burden on affected small refiners.

TABLE IV–4.—SMALL REFINER NRLM DIESEL FUEL SULFUR STANDARDS, PPM A

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015+ 

Non-Small Refiners–NR fuel ................................................ .......... 500 500 500 15 15 15 15 15 15

Non-Small Refiners–LM fuel ................................................ .......... 500 500 500 500 500 15 15 15 15

Small Refiners–NR diesel fuel ............................................. .......... .......... .......... .......... 500 500 500 500 15 15

Small Refiners–LM diesel fuel ............................................. .......... .......... .......... .......... 500 500 500 500 15 15

Notes: a New standards will take effect on June 1 of the applicable year. 

ii. NRLM Credit Option 

Some small refiners have indicated 

that, for a variety of reasons, they might 

need to produce fuel meeting the NRLM 

diesel fuel sulfur standards earlier than 

required under the small refiner 

program described above. For some 

small refiners, the distribution system 

might limit the number of grades of 

diesel fuel that will be carried. Others 

might find it economically 

advantageous to make 500 ppm or 15 

ppm sulfur NRLM diesel fuel earlier 

than required to prevent losing market 

share. At least one small refiner has 

indicated that it might decide to 

desulfurize its NRLM pool at the same 

time as it desulfurizes its highway 

diesel fuel, in June 2006, due to 

limitations in its distribution system 

and to take advantage of economies of 

scale. 

The NRLM Credit option allows small 

refiners to participate in the NRLM 

diesel fuel sulfur credit banking and 

trading program discussed earlier in this 

section. Under this option, a small 

refiner may generate diesel fuel sulfur 

credits by producing any volume of 500 

ppm sulfur NRLM diesel fuel from 

crude oil prior to from June 1, 2006 

through May 31, 2010, and by 

producing any volume from crude oil of 

15 ppm sulfur NRLM diesel fuel from 

June 1, 2010 through December 31, 

2013. The specifics of the credit 

program are described in section IV.A.4, 

including how the program applies to 

small refiners. Generating and selling 

credits could provide small refiners 

with funds to help defray the costs of 

early NRLM compliance. 

iii. NRLM/Gasoline Compliance Option 

The NRLM/Gasoline Compliance 

option is available to small refiners that 

produce greater than 95 percent of their 

NRLM diesel fuel at the 15 ppm sulfur 

standard by June 1, 2006 and elect not 

to use the provision described above to 

earn NRLM diesel fuel sulfur credits for 

this early compliance. Refiners choosing 

this option will receive a modest 

revision in their small refiner interim 

gasoline sulfur standards, beginning 

January 1, 2004. Specifically, the 

applicable small refiner annual average 

and per-gallon cap gasoline sulfur 

standards will be increased by 20 

percent for the duration of the interim 

program. The interim program is 

through either 2007 or 2010, depending 

on whether the refiner extended the 

duration of its interim gasoline sulfur 

standards by producing 15 ppm sulfur 

highway diesel fuel by June 1, 2006, as 

provided under 40 CFR 80.552(c). In no 

case may the per-gallon gasoline sulfur 

cap exceed 450 ppm, the highest level 

allowed under the gasoline sulfur 

program. 

We believe it is very important to link 

any relaxation of a small refiner’s 

interim gasoline sulfur standards with 

the environmental benefit of early 

desulfurization of a significant volume 

of NRLM diesel fuel. As such, a small 

refiner choosing to use this option must 

produce a minimum volume of NRLM 

diesel fuel at the 15 ppm sulfur standard 

by June 1, 2006. Each participating 

small refiner must produce a volume of 

15 ppm sulfur fuel that is at least 85 

percent of the annual average volume of 

non-highway diesel fuel it produced 

from 2003–2005. If the refiner began to 

produce gasoline in 2004 at the higher 

interim standard under this provision 

but then either fails to meet the 15 ppm 

sulfur standard for its NRLM diesel fuel 

by June 1, 2006 or fails to meet the 85 

percent minimum volume requirement, 

the original small refiner interim 

gasoline sulfur standard applicable to 

that refiner will automatically apply 

retroactively to 2004. In addition, the 

refiner must compensate for the higher 

gasoline sulfur levels by purchasing 

gasoline sulfur credits or producing an 

equivalent volume of gasoline below the 

required sulfur levels. Under this 

option, a small refiner could in effect 

shift some funds from its gasoline sulfur 

program to accelerate desulfurization of

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39051

NRLM diesel fuel. While there would be 

a small potential loss of emission 

reduction under the gasoline sulfur 

program from fuel produced by the very 

few small refiners that we believe would 

choose this second option, there are also 

environmental benefits gained from the 

production of 15 ppm sulfur diesel fuel 

earlier than otherwise required. 

iv. Relationship of the Options to Each 

Other 

A small refiner may choose to use the 

NRLM Delay option, the NRLM Credit 

option or both in combination, since it 

has no requirement to produce 500 ppm 

sulfur NRLM diesel fuel before June 1, 

2010, or 15 ppm sulfur NRLM diesel 

fuel before June 1, 2014. Thus any fuel 

that it produces from crude at or below 

the sulfur standards earlier than 

required will qualify for generating 

credits. 

On the other hand, the NRLM/

Gasoline Compliance option may not be 

used in combination with either the 

NRLM Delay option or the NRLM Credit 

option, since a small refiner must 

produce at least 85 percent of its NRLM 

diesel fuel at the 15 ppm sulfur standard 

under the NRLM/Gasoline Compliance 

option.

d. How Do Refiners Apply for Small 

Refiner Status? 

A refiner applying for small refiner 

status must provide the Agency with 

several types of information by 

December 31, 2004. The detailed 

application requirements are 

summarized in section V.F.2 below. In 

general, a potential small refiner must 

own the refinery/refineries in question 

and must provide the following 

information for the parent company and 

all subsidiaries at all locations: (1) The 

average number of employees for all pay 

periods from January 1, 2002 through 

January 1, 2003; (2) the total corporate 

crude oil capacity, which must be a 

positive number; and (3) an indication 

of which small refiner option the refiner 

intends to use (see section IV.B.1.c 

above). As with applications for relief 

under other fuel programs, applications 

for small refiner status under this rule 

that are later found to contain false or 

inaccurate information will be void ab 

initio. 

e. The Effect of Financial and Other 

Transactions on Small Refiner Status 

and Small Refiner Relief Provisions 

Since the gasoline sulfur and highway 

diesel fuel sulfur programs were 

finalized, several refiners have raised 

concerns about how various financial 

and other transactions could affect 

implementation of the small refiner fuel 

sulfur provisions. These types of 

transactions typically involve refiners 

with approved small refiner status that 

are involved in potential or actual sales 

of the small refiner’s refinery, or involve 

the small refiner merging with another 

refiner or purchasing another refinery 

(or other non-refining asset). We believe 

that these concerns are also relevant to 

the small refiner provisions described 

below for the NRLM diesel fuel sulfur 

program. 

i. Large Refiner Purchasing a Small 

Refiner’s Refinery 

The first type of transaction involves 

a ‘‘non-small’’ refiner that wishes to 

purchase a refinery owned by an 

approved small refiner. In some cases, 

the small refiner may not have 

completed or even begun refinery 

upgrades to meet the long-term fuel 

sulfur standards if it was using an 

interim small refiner compliance 

provision. Under the gasoline sulfur and 

highway diesel fuel sulfur programs, 

once such a purchase transaction is 

completed, the ‘‘non-small’’ buyer does 

not have the benefit of the small refiner 

relief provisions that had applied to the 

previous owner. 

The purchasing refiner would have to 

perform the necessary upgrades on the 

acquired refinery for it to meet the 

‘‘non-small’’ sulfur standards. As the 

gasoline sulfur and highway diesel fuel 

sulfur provisions existed prior to today’s 

action, such a refiner would be left with 

very little or, in the case of the gasoline 

sulfur program which has already 

begun, no lead time to bring the refinery 

into compliance. The refiners that have 

raised this issue have claimed that 

refiners in this situation would not be 

able to immediately comply with the 

‘‘non-small refiner’’ standards upon 

acquisition of the new refinery. These 

refiners claim that this could prevent 

them from purchasing a refinery from a 

small refiner and, as a result, this would 

severely limit the ability of small 

refiners to sell such an asset. The 

refiners that raised this issue requested 

additional lead time before the nonsmall refiner sulfur standards take 

effect. 

We received comments on this issue 

from two refiners. Both refiners 

commented that lead time for refiners 

losing their small refiner status should 

only be allowed for the case where a 

small refiner merges with, or acquires, 

another small refiner. Neither refiner 

supports allowing additional lead time 

for a large refiner that merges with or 

acquires a small refiner. In addition, 

these refiners also commented that it 

would be inappropriate to allow a small 

refiner that receives this lead time to be 

able to generate credits for ‘‘early’’

production of lower sulfur diesels 

during this two-year period. 

Nevertheless, we continue to believe 

these lead-time concerns are valid. 

Failure to address them could lead to 

unnecessary disruption to the diesel 

fuel market. Therefore, we are adopting 

a provision to provide an appropriate 

period of lead time for compliance with 

the NRLM diesel fuel sulfur 

requirements for situations in which a 

refiner purchases any refinery owned by 

a small refiner, whether by purchase of 

the refinery or purchase of the small 

refiner entity. Refiners that acquire a 

refinery from an approved small refiner 

will be provided 30 additional months 

from the date of the completion of the 

purchase transaction (but no later than 

June 1, 2010 for 500 ppm NRLM fuel 

and June 1, 2014 for 15 ppm NRLM 

fuel). During this interim period, 

production at the newly-acquired 

refinery may remain at the interim 

sulfur levels that applied to that refinery 

for the previous small refiner owner 

under the small refiner options 

discussed below. At the end of this 

period, the refiner must comply with 

the ‘‘non-small refinery’’ sulfur 

standards. 

We received comments suggesting 

that the proposed 24 months of 

additional lead time would not be 

adequate, and further, discussions with 

several refiners indicated that in most 

cases, 24 months would be inadequate. 

As discussed in section IV.F, we project 

a range of 27–39 months is needed to 

design and construct a diesel 

hydrotreater. Therefore, in order to 

allow a reasonable opportunity for 

complying, we are finalizing the 

provision that 30 months of additional 

lead time will be afforded. Thirty 

months should in most cases be 

sufficient for the new refiner-owner to 

accomplish the necessary engineering, 

permitting, construction, and start-up of 

the necessary desulfurization 

equipment. However, if there are 

instances where the technical 

characteristics of its planned 

desulfurization project will require 

additional lead time, we have included 

provisions for the refiner to apply for up 

to six months of additional time and for 

EPA to consider such requests on a caseby-case basis. Such an application must 

be based on the technical factors 

supporting the need for more time and 

should include detailed technical 

information and projected schedules for 

engineering, permitting, construction, 

and startup. Based on information 

provided in such an application and 

other relevant information, EPA will 

decide whether additional time is 

39052 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

technically necessary and, if so, how 

much additional time is appropriate. 

However, we anticipate that in most 

cases 30 months will be sufficient, since 

developing plans for compliance should 

be expected to be a part of any purchase 

decision.

All existing small refiner provisions 

and restrictions, as described below, 

will also remain in place for that 

refinery during the 30 months of 

additional lead time and any further 

lead time approved by EPA for the 

purchasing refiner; including the perrefinery volume limitation on the 

amount of NRLM diesel that may be 

produced at the small refiner standards. 

Furthermore, since the purpose of this 

grace period is solely to provide time to 

bring the refinery into compliance with 

the NRLM standards, refiners will not 

be allowed to generate credits for early 

compliance during this 30 month 

period. There will be no adverse 

environmental impact of this provision, 

since the small refiner would have 

already been provided this same relief 

prior to the purchase and this provision 

is no more generous. 

ii. Small Refiner Losing Its Small 

Refiner Status Due To Merger or 

Acquisition 

Another type of transaction involves a 

refiner with approved small refiner 

status that later loses its small refiner 

status because it exceeds the small 

refiner criteria. Under the gasoline 

sulfur and highway diesel fuel sulfur 

regulations, an approved small refiner 

that exceeds 1,500 employees due to 

merger or acquisition will lose its small 

refiner status. We also intended for 

refiners that exceeded the 155,000 barrel 

per calendar day crude capacity limit 

due to merger or acquisition to lose its 

small refiner status and in this rule we 

are amending the regulations to reflect 

that criterion as well. This includes 

exceedances of the employee or crude 

capacity criteria caused by acquisitions 

of assets such as plant and equipment, 

as well as acquisitions of business 

entities. 

Our intent in the gasoline and 

highway diesel fuel sulfur programs, as 

well as the NRLM diesel fuel sulfur 

program, has been and continues to be, 

limiting the small refiner relief 

provisions to a small subset of refiners 

that are challenged, as discussed above. 

At the same time, it is also our intent 

to avoid stifling normal business 

growth. Therefore, the regulations we 

are adopting today will disqualify a 

refiner from small refiner status if it 

exceeds the small refiner criteria 

through its involvement in transactions 

such as being acquired by or merging 

with another entity, through the small 

refiner itself purchasing another entity 

or assets from another entity, or when 

it ceases to process crude oil. However, 

an approved small refiner who exceeds 

the employee or crude oil capacity 

criteria without merger or acquisition, 

may retain its small refiner status for the 

purposes of the complying with the 

NRLM diesel fuel standards. 

Furthermore, in the sole case of a 

merger between two approved small 

refiners we will allow such refiners to 

retain their small refiner status for 

purposes of complying with the NRLM 

diesel fuel program. Commenters 

explained that additional financial 

resources would not typically be 

provided in the case of a merger 

between small refiners. In light of these 

comments, we believe the justification 

for continued small refiner relief for the 

merged entity is valid. Small refiner 

status for the two entities of the merger 

will not be affected, hence the original 

compliance plans of the two refiners 

should not be impacted. Moreover, no 

environmental detriment will result 

from the two small refiners maintaining 

their small refiner status within the 

merged entity as they would have likely 

maintained their small refiner status 

had the merger not occurred.

Consistent with our intent in the 

gasoline sulfur and highway diesel fuel 

sulfur programs to limit the use of the 

small refiner hardship provisions, we 

also intended in the gasoline sulfur and 

highway diesel fuel sulfur programs that 

an exceedance of corporate crude oil 

capacity limit of 155,000 bpcd, due to 

merger or acquisition, would be grounds 

for disqualifying a refiner’s small refiner 

status. However, we inadvertently failed 

to include this second criterion as 

grounds for disqualification in the 

regulations. In today’s action, we are 

resolving this error by including the 

crude capacity limit, along with the 

employee limit for both the gasoline 

sulfur and highway diesel fuel sulfur 

programs, effective January 1, 2004. 

Thus, a refiner exceeding either 

criterion due to merger or acquisition 

will lose its small refiner status. The 

exception to this would be in the case 

of merger only between two small 

refiners. We received comments 

supporting the allowance of additional 

lead time for small refiners that lose 

their small refiner status through a 

merger with, or acquisition of, another 

small refiner. 

We recognize that a small refiner that 

loses its small refiner status because of 

a merger with, or acquisition of, a nonsmall refiner would face the same type 

of lead time concerns in complying with 

the non-small refiner standards as a 

non-small refiner that acquired a small 

refiner’s refinery would. Therefore, the 

additional lead time described above for 

non-small refiners purchasing a small 

refiner’s refinery will also apply to this 

situation. Thus, this 30 month lead time 

will apply to all of the refineries, 

existing or newly-purchased, that had 

previously been subject to the small 

refiner program, but would not apply to 

a newly-purchased refinery that is 

subject to the non-small refiner 

standards. Again, there would be no 

adverse environmental impact because 

of the pre-existing relief provisions that 

applied to the newly-purchased small 

refiner. 

The issues discussed in this section 

apply equally to the gasoline sulfur and 

highway diesel fuel sulfur programs. 

Thus, we are also adopting the same 

provisions relating to additional lead 

time in cases of certain financial, or 

other, transactions for the small refiner 

programs in the earlier fuel sulfur 

programs. 

In the proposal for today’s final rule, 

we invited comment on several other 

related provisions that were considered 

during the development of this 

rulemaking: 

(1) Instead of merely allowing small 

refiners a grace period to come into 

compliance if they lose their small 

refiner status, we also asked for 

comment on whether or not such a 

small refiner should instead be allowed 

to ‘‘grandfather’’ the small refiner relief 

provisions for its existing refinery or 

refineries. We did not receive any 

specific comments on this issue and we 

are not finalizing this provision in 

today’s action. 

(2) Regarding small refiners that 

exceed the small refiner criteria due to 

the purchase of a non-small refiner’s 

refinery, we requested comment on 

whether or not the proposed additional 

lead time should apply to the purchased 

refinery. We also requested comment on 

whether or not the refiner should be 

required to meet the non-small refiner 

standards on schedule at the purchased 

refinery, since the previous owner could 

be assumed to have anticipated the new 

standards and taken steps to accomplish 

this prior to the purchase. One refiner 

commented that merger acquisition 

flexibility for refineries that lose their 

small refiner status should be limited to 

instances where a small refiner merges 

with another small refiner. They 

believed that any small refiner that loses 

its small refiner status due to an 

acquisition of a non-small refiner’s 

refinery should not be eligible for 

hardship relief. Similarly, another 

refiner commented that a refiner should 

not retain small refiner status if it has 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39053

the financial resources to acquire 

additional refineries that increase 

corporate-wide crude processing above 

155,000 bpd. We are not adopting any 

flexibility for the purchased refinery in 

this situation (except in the case of a 

merger between two small refiners, as 

discussed above). 

f. Provisions for Approved Gasoline and 

Highway Diesel Fuel Small Refiners 

That Do Not Qualify for Small Refiner 

Status Under Today’s Program 

Some refiners that have approved 

small refiner status under the gasoline 

sulfur and highway diesel fuel programs 

may not qualify for small refiner status 

under today’s program if they have 

grown through normal business 

operations and now exceed the 

qualification criteria for NRLM small 

refiner status. One refiner commented 

on the lack of a ‘‘grandfather’’ provision 

in the nonroad proposal that would 

automatically continue small refiner 

status to refiners already approved as 

small refiners under the gasoline and 

highway diesel fuel sulfur programs. 

Without such a provision some refiners 

could be approved small refiners under 

the gasoline sulfur and highway diesel 

fuel sulfur programs (because they grew 

through normal business expansions 

and not through merger or acquisition) 

but would not qualify under the NRLM 

program because they now exceed the 

criteria. As a consequence, the 

commenter argued that in some cases 

benefits afforded to such small refiners 

under the gasoline and highway diesel 

fuel sulfur programs could be negated. 

Specifically, under the highway diesel 

rule they were allowed until 2010 before 

needing to have diesel fuel 

hydrotreating capacity. Under the 

nonroad rule, they would have to do so 

in 2007. Since it would only make sense 

to invest for adequate 15 ppm capacity 

when they do invest, the nonroad 

standards essentially would require 

them to invest to bring all highway and 

nonroad diesel to 15 ppm sulfur in 

2007, eliminating the flexibility granted 

them in the highway rule. Furthermore, 

the refiners’ clean fuel projects for low 

sulfur gasoline, highway diesel fuel, and 

NRLM diesel fuel could no longer be 

staggered. In fact, small refiners in such 

situations would be required to make 

investments for compliance with all 

three fuel programs in the same three to 

four year period, if not virtually all at 

once. 

We believe that a refiner who no 

longer meets the criteria for small 

refiner status, since it has successfully 

grown through normal business 

operations, does not face the same level 

of hardship described earlier in this 

section. We do not intend for the NRLM 

program to undermine the benefits 

afforded to small refiners under the 

gasoline and highway diesel fuel sulfur 

programs, as described in the 

comments. At the same time, however, 

we want to preserve small refiner status 

under today’s program only for those 

businesses that meet the criteria 

described above. Under the nonroad 

proposal, a refiner with approved small 

refiner status under the highway diesel 

fuel program but not the NRLM program 

would be required to produce 500 ppm 

sulfur NRLM diesel fuel in 2007 and 

both 15 ppm sulfur highway and NR 

diesel fuel in 2010. Under today’s final 

program, such a refiner may instead 

skip the 2007 500 ppm interim sulfur 

standard for its NRLM diesel fuel, and 

meet the 15 ppm sulfur standard for 

both its highway and NR diesel fuel in 

2010 and LM diesel fuel in 2012. Such 

an approach will maintain the refiner’s 

flexibility under the highway program 

by allowing it to delay diesel 

hydrotreating investment until 2010, 

while limiting its flexibility under the 

nonroad diesel program. 

g. Additional Provisions and Program 

Elements 

To reduce the burden on all refiners 

(including small refiners), we have 

chosen to finalize the designate and 

track approach, rather than the baseline 

approach. Discussions with parties in 

all parts of the distribution system led 

us to believe that this is the preferred 

approach, as tracking is currently done 

by parties throughout the distribution 

system. We are also finalizing 

provisions to simplify the segregation, 

marking, and dyeing requirements. In 

addition, we are finalizing provisions to 

alleviate the concern raised by small 

terminal operators regarding the heating 

oil marker. Terminals in parts of PADD 

1 (Northeast/Mid-Atlantic Area) will not 

have to add the marker to home heating 

oil. Therefore we expect that no 

terminals inside of the Northeast/MidAtlantic Area will need to install 

injection equipment. These provisions 

are discussed in greater detail in section 

IV.D, below.

2. General Hardship Provisions 

a. Temporary Waivers From NRLM 

Diesel Fuel Sulfur Requirements in 

Extreme Unforseen Circumstances 

We are finalizing a provision which, 

at our discretion, will permit any 

domestic or foreign refiner to seek a 

temporary relief from the NRLM diesel 

fuel sulfur standards under certain rare 

circumstances. This waiver provision is 

similar to provisions in the reformulated 

gasoline, low sulfur gasoline, and 

highway diesel fuel sulfur regulations. It 

is intended to provide refiners shortterm relief due to unanticipated 

circumstances, such as a refinery fire or 

a natural disaster, that cannot be 

reasonably foreseen now or in the near 

future. 

Under this provision, a refiner may 

seek a waiver to distribute NRLM diesel 

fuel that does not meet the applicable 

500 ppm or 15 ppm sulfur standards for 

a brief time period. An approved waiver 

of this type could, for example, allow a 

refiner to produce and distribute diesel 

fuel with higher than allowed sulfur 

levels, so long as the other conditions 

described below were met. Such a 

request must be based on the refiner’s 

inability to produce complying NRLM 

diesel fuel because of extreme and 

unusual circumstances outside the 

refiner’s control that could not have 

been avoided through the exercise of 

due diligence. The request must also 

show that other avenues for mitigating 

the problem, such as the purchase of 

credits to be used toward compliance, 

had been pursued yet were insufficient. 

As with other types of regulatory relief 

established in this rule, this type of 

temporary waiver will have to be 

designed to prevent fuel exceeding the 

15 ppm sulfur standard from being used 

in 2011 and later model year nonroad 

engines. 

The conditions for obtaining a NRLM 

diesel fuel sulfur waiver are similar to 

those under the RFG, gasoline sulfur, 

and highway diesel fuel sulfur 

regulations. These conditions are 

necessary and appropriate to ensure that 

any waivers that are granted are limited 

in scope, and that refiners do not gain 

economic benefits from a waiver. 

Therefore, refiners seeking a waiver will 

be required to show that the waiver is 

in the best public interest and that they: 

(1) Were not able to avoid the 

nonconformity; (2) will make up the air 

quality detriment associated with the 

waiver; (3) will make up any economic 

benefit from the waiver; and (4) will 

meet the applicable diesel fuel sulfur 

standards as expeditiously as possible. 

b. Temporary Relief Based on Extreme 

Hardship Circumstances 

In addition to the provision for shortterm relief under extreme unforseen 

circumstances, we are finalizing a 

provision for relief based on extreme 

hardship circumstances such as 

circumstances that impose extreme 

hardship and significantly affect a 

refiners ability to comply with the 

program requirements by the applicable 

dates. This provision is also very similar 

to those established under the gasoline 

39054 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

sulfur and highway diesel fuel sulfur 

programs. Under the gasoline sulfur 

program, we have granted relief in the 

form of individual compliance plans to 

five refiners. Under the highway diesel 

program, we have approved two. Each 

plan was designed for the specific 

situation of that refiner. In all cases, the 

companies would have experienced 

severe hardship if temporary relief had 

not been granted. Moreover, some 

refineries were at a high risk of shutting 

down without the relief. 

In developing today’s program, as 

under our other fuel programs, we 

considered whether any refiners would 

face particular difficulty in complying 

with the standards in the lead time 

provided. As described earlier in this 

section, we concluded that, in general, 

small refiners would experience more 

difficulty in complying with the 

standards on time because they have 

less ability to raise the capital necessary 

for refinery investments, face 

proportionately higher costs because of 

poorer economies of scale, and are less 

able to successfully compete for limited 

engineering and construction resources. 

However, it is possible that other 

refiners that are not small refiners may 

also face particular difficulty in 

complying on time with the sulfur 

standards required under today’s 

program. Therefore, we are including in 

this rulemaking a provision which 

allows us, at our discretion, to grant 

temporary waivers from the NRLM 

diesel fuel sulfur standards based on a 

showing of extreme hardship 

circumstances. 

The extreme hardship provision 

allows any domestic or foreign refiner to 

request relief from the sulfur standards 

based on a showing of unusual 

circumstances that result in extreme 

hardship and significantly affect a 

refiner’s ability to comply with either 

the 500 ppm or 15 ppm sulfur NRLM 

diesel fuel standards by either June 1, 

2007, June 1, 2010, or June 1, 2012, 

respectively. The Agency will evaluate 

each application on a case-by-case basis, 

considering the factors described below. 

Approved hardship applications may 

include compliance plans with relief 

similar to the provisions for small 

refiners, which are described in detail 

above in section IV.B.1.c. Depending on 

the refiner’s specific situation, such 

approved delays in meeting the sulfur 

requirements may be more stringent 

than those allowed for small refiners, 

but will not likely be less stringent. 

Given such an approval, we expect to 

impose appropriate conditions to: (1) 

Assure the refiner is making its best 

effort; and (2) minimize any loss of 

emissions benefits from the program. As 

with other relief provisions established 

in this rule, any waiver under this 

provision will be designed to prevent 

fuel exceeding the 15 ppm sulfur 

standard from being used in 2011 and 

later model year nonroad engines. 

Providing short-term relief to those 

refiners that need additional time 

because they face hardship 

circumstances facilitates adoption of an 

overall program that reduces NRLM 

diesel fuel sulfur to 500 ppm beginning 

in 2007, and NRLM diesel fuel sulfur to 

15 ppm in 2010 and 2012, for the 

majority of the industry. However, we 

do not intend for this waiver provision 

to encourage refiners to delay the 

planning and investments they would 

otherwise make. We do not expect to 

grant temporary waivers that apply to 

more than approximately one percent of 

the national NRLM diesel fuel pool in 

any given year.

The regulatory language for today’s 

action includes a list of the information 

that must be included in a refiner’s 

application for an extreme hardship 

waiver. If a refiner fails to provide all of 

the information specified in the 

regulations as part of its hardship 

application, we will deem the 

application void. In addition, we may 

request additional information as 

needed. Our experience to date shows 

that detailed technical and financial 

information from the companies seeking 

relief has been necessary to fully 

evaluate whether a hardship situation 

exists. The following are some examples 

of the types of information that must be 

contained in an application:

—The crude oil refining capacity and 

fuel sulfur level(s) of each diesel fuel 

product produced at each of the 

refiner’s refineries. 

—A technical plan for capital 

equipment and operating changes to 

achieve the NRLM diesel fuel sulfur 

standards. 

—The anticipated timing for the overall 

project the refiner is proposing and 

key milestones to ultimately produce 

100 percent of NRLM diesel fuel at 

the 15 ppm sulfur cap. 

—The refiner’s capital requirements for 

each step of its proposed projects. 

—Detailed plans for financing the 

project and financial statements 

demonstrating the nature of and 

degree of financial hardship and how 

the requested relief would mitigate 

this hardship. This would include a 

description of the overall financial 

situation of the company and its plans 

to secure financing for the 

desulfurization project (e.g., internal 

cash flow, bank loans, issuing of 

bonds, sale of assets, or sale of stock). 

—A plan demonstrating how the refiner 

would achieve the standards as 

quickly as possible, including a 

timetable for obtaining the necessary 

capital, contracting for engineering 

and construction resources, obtaining 

any necessary permits, and beginning 

and completing construction. 

—A description of the market area for 

the refiner’s diesel fuel products. 

—In some cases, it could also include a 

compliance plan for how the refiner’s 

diesel fuel will be segregated through 

to the end-user and information on 

each of the end-users to whom its fuel 

is delivered.

We will consider several factors in 

our evaluation of any hardship waiver 

applications that we receive. Such 

factors include whether a refinery’s 

configuration is unique or atypical; the 

proportion of non-highway diesel fuel 

production relative to other refinery 

products; whether the refiner, its parent 

company, and its subsidiaries are faced 

with severe economic limitations and 

steps the refiner has taken to attempt to 

comply with the standards, including 

efforts to obtain credits towards 

compliance. In addition, we will 

consider the total crude oil capacity of 

the refinery and its parent or subsidiary 

corporations, if any, in assessing the 

degree of hardship and the refiner’s role 

in the diesel market. Finally, we will 

consider where the diesel fuel is 

intended to be sold in evaluating the 

environmental impacts of granting a 

waiver. Typically, because of EPA’s 

comprehensive evaluation of both 

financial and technical information, 

action on hardship applications can take 

six or more months. 

This extreme hardship provision is 

intended to address unusual 

circumstances that should be apparent 

now or could emerge in the near future. 

Thus, refiners seeking additional time 

under this provision must apply for 

relief by June 1, 2005, although we 

retain the discretion to consider 

hardship applications later as well for 

good cause. 

3. Provisions for Transmix Facilities 

In the petroleum products 

distribution system, certain types of 

interface mixtures in product pipelines 

cannot be added in any significant 

quantity to either of the adjoining 

products that produced the interface. 

These mixtures are known as 

‘‘transmix.’’ The pipeline and terminal 

industry’s practice is to transport 

transmix via truck, pipeline, or barge to 

a facility with an on-site fractionator 

that is designed to separate the 

products. The owner or operator of such 

a facility is called a ‘‘transmix 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39055

103 In a tank lock out situation a storage tank can 

no longer accept product from upstream in the 

distribution system because there is not sufficient 

outlet for the product it holds. A tank lock our 

downstream can quickly propagate upstream.

104Copies of information regarding Alaska?s 

petition for exemption, subsequent requests by 

Alaska, public comments received, and actions by 

EPA are available in public docket A–96–26.

105Letter and attached document to Jeffrey 

Holmstead of EPA from Michele Brown of the 

Alaska Department of Environmental Conservation, 

dated April 1, 2002. The communities on the 

connected road system or served by the Alaska 

State ferry system are listed in the attached 

document.

106Letter and attached document to Jeffrey 

Holmstead of EPA from Ernesta Ballard of the 

Continued

processor.’’ Such entities are generally 

considered to be a refiner under existing 

EPA fuel regulations. 

Transmix processors, like 

conventional refiners, are also currently 

subject to the ‘‘80 percent/20 percent’’

production requirement for 15 ppm and 

500 ppm sulfur highway diesel fuel. 

This requirement, however, is 

inconsistent with the inherent nature of 

the transmix processors’ business. 

Unlike conventional refiners, transmix 

processors refine batches of fuel that 

vary in volume and timing—largely 

unpredictably. Complying with set 

percentages of different highway diesel 

fuel sulfur grades would be very 

difficult, probably resulting in either a 

need to purchase credits or to postpone 

processing of some shipments. 

Transmix processors commented that it 

would not be appropriate to have any 

additional restrictions, beyond those 

based on sulfur content, imposed on 

their ability to market the fuel that they 

produce. They stated that the 

implementation of other restrictions, 

such as those under the highway diesel 

program’s 80/20 requirement, would 

force them to ship large volumes of 

blendstocks back to refineries by truck, 

resulting in tank lock-outs that could 

cascade upstream though the 

distribution system potentially 

interfering with pipeline operations. 103

Furthermore, transmix processors do 

not have the ability to change the nature 

of their products, as their processing 

equipment consists only of a distillation 

column to separate the blendstocks. 

This simple refinery configuration 

further limits their ability to install and 

operate a distillate hydrotreater. The 

commenters added that the sulfur 

content of the slate of fuel products that 

they produce is completely dependant 

on feed material that they receive, and 

that it is not feasible for them to install 

desulfurization equipment. We agree 

that it is not feasible for transmix 

processors to alter the sulfur content of 

the fuels that they produce and that 

limiting the market for these fuels could 

potentially lead to disruptions in the 

fuel distribution system. 

In light of this disproportionate 

burden on transmix processors, today’s 

final rule removes the restriction on the 

volume of highway or NRLM diesel fuel 

they produce, if they produce diesel fuel 

according to typical operational 

practices involving the separation of 

transmix and not, for example, by 

blending of blendstocks or processing 

crude or heavy oils. Therefore, under 

today’s final rule, transmix processors 

may choose to continue to produce all 

of their highway diesel fuel to the 500 

ppm sulfur standard until 2010. They 

may further choose to continue to 

produce all of their NRLM diesel fuel as 

high sulfur diesel fuel until June 1, 

2010, all of their NRLM diesel fuel to 

the 500 ppm sulfur standard until June 

1, 2014, and all of their LM diesel fuel 

to a 500 ppm sulfur limit indefinitely. 

Transmix processors will be required 

to properly designate their fuel with the 

proper PTDs. Because the volume of 

fuel involved will be small and the fuel 

processed will already have been offspecification, we believe that providing 

this flexibility for transmix processors 

will have essentially no environmental 

impact and will not affect the efficient 

functioning of the NRLM diesel fuel 

program or the existing highway diesel 

fuel program. Rather, this approach will 

allow fuel volume to remain in the 

highway, NRLM, or LM (as applicable 

based on time frame) markets that might 

otherwise be forced into the heating oil 

market. 

C. Special Provisions for Alaska and the 

Territories 

1. Alaska 

The nationwide engine emission 

standards established today apply to all 

NR engines throughout Alaska. The 

nationwide NRLM diesel fuel sulfur 

standards and implementation dates 

apply to NRLM diesel fuel used in the 

areas of Alaska served by the federal aid 

highway system (FAHS). In this final 

rule, EPA is not finalizing fuel sulfur 

standards and implementation 

deadlines for NRLM diesel fuel used in 

the areas of Alaska not served by the 

FAHS (i.e., the ‘‘rural’’ areas). They will 

be addressed in a separate rulemaking to 

allow EPA to address the requirements 

for highway and NRLM diesel fuel in 

the rural areas in the same rulemaking. 

This final rule does, however, adopt the 

prohibition in the rural areas on the use 

of high sulfur (greater than 15 ppm) 

diesel fuel in model year 2011 and later 

nonroad engines, which will be 

manufactured to operate on ultra-low 

sulfur diesel fuel. 

a. How Do the Highway Diesel Engine 

Standards, the Highway Diesel Fuel 

Standards, and Implementation 

Deadlines Apply in Alaska? 

Unlike the rest of the nation, Alaska 

is currently exempt from the 500 ppm 

sulfur standard for highway diesel fuel 

and the dye provisions for diesel fuel 

not subject to this standard. Since the 

beginning of the 500 ppm sulfur 

highway diesel fuel program, we have 

granted Alaska exemptions from both 

the sulfur standard and dye provisions 

because of its unique geographical, 

meteorological, air quality, and 

economic factors. 104 On December 12, 

1995, Alaska submitted a petition for a 

permanent exemption for all areas of the 

state served by the FAHS, that is, those 

areas previously covered only by a 

temporary exemption. While 

considering that petition, we started 

work on a nationwide rule to consider 

more stringent highway diesel fuel 

requirements for sulfur content.

In the January 18, 2001, highway 

diesel rule EPA fully applied the 2007 

motor vehicle engine emission 

standards in Alaska. Based on factors 

unique to Alaska, we provided the state 

with: (1) An extension of the exemption 

from the 500 ppm sulfur fuel standard 

until the effective date of the new 15 

ppm sulfur standard for highway diesel 

fuel in 2006; (2) an opportunity to 

request an alternative implementation 

plan for the 15 ppm sulfur diesel fuel 

program; and (3) a permanent 

exemption from the diesel fuel dye 

provisions. In response to these 

provisions in our January 18, 2001, 

highway rule, Alaska informed us that 

areas served by the FAHS, i.e., 

communities on the connected road 

system or served by the Alaska state 

ferry system (‘‘urban’’ areas), would 

follow the nationwide requirements. 105

Diesel fuel produced for use in areas of 

Alaska served by the FAHS will 

therefore be required to meet the same 

requirements for highway diesel fuel as 

diesel fuel produced for the rest of the 

nation. For the rural parts of the state—

areas not served by the FAHS—Alaska 

requested that highway diesel fuel not 

be subject to the highway diesel fuel 

sulfur standard until June 1, 2010. 

Between 2006 and 2010, the rural 

communities would choose their own 

fuel management strategy, except that 

all 2007 model year and newer diesel 

vehicles would require ultra-low sulfur 

diesel fuel. Beginning June 1, 2010, all 

highway diesel fuel in the rural areas 

would be subject to the 15 ppm sulfur 

highway diesel fuel sulfur standard. 106

39056 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Alaska Department of Environmental Conservation, 

dated June 12, 2003.

EPA intends to propose and request 

comment on an amendment to the 

highway diesel sulfur rule to 

incorporate the rural area transition 

plan submitted by the state.

b. What NRLM Diesel Fuel Standards 

Are We Establishing for Urban Areas of 

Alaska?

Since Alaska is currently exempt from 

the 500 ppm sulfur standard for 

highway diesel fuel, we also considered 

exempting Alaska from the 500 ppm 

sulfur step of the proposed NRLM 

standards. However, despite the 

exemption, officials from the state of 

Alaska have informed us that some 500 

ppm sulfur diesel fuel is nevertheless 

being marketed in many parts of Alaska. 

Market forces have brought the prices 

for 500 ppm diesel fuel down such that 

it is now becoming competitive with 

higher sulfur, uncontrolled diesel fuel. 

Assuming this trend continues, 

requiring that NRLM diesel fuel be 

produced to 500 ppm beginning June 1, 

2007 would not appear to be unduly 

burdensome. Even if 500 ppm diesel 

fuel were not available in Alaska today, 

our expectation is that compliance with 

the highway program described above 

will likely result in the transition of all 

of the urban area highway diesel fuel 

distribution system to 15 ppm sulfur 

beginning in 2006. It could prove very 

challenging for the distribution system 

in some of the areas to segregate a 500 

ppm sulfur grade of NRLM from a 15 

ppm sulfur grade of highway and an 

uncontrolled grade for other purposes. 

We believe economics would determine 

whether the distribution system would 

handle the new grade of fuel or 

substitute 15 ppm sulfur highway diesel 

fuel for NRLM applications. Thus, in the 

2007 to 2010 time frame, the NRLM 

market in some urban areas might be 

supplied with 500 ppm sulfur diesel, 

and in other areas might be supplied 

with 15 ppm sulfur diesel. For this 

reason, today’s action applies the 500 

ppm sulfur standard for NRLM diesel 

fuel to Alaska’s urban areas. 

Regardless of what occurs prior to 

2010, we anticipate that 15 ppm sulfur 

highway diesel fuel will be made 

available in urban areas of Alaska by 

this time frame. The 2007 and later 

model year highway fleet will be 

growing, demanding more and more 

supply of 15 ppm sulfur diesel fuel. 

Adding nonroad volume to this would 

not appear to create any undue burden. 

Thus, today’s action also applies the 15 

ppm sulfur standard for NR and LM 

diesel fuel in the urban areas of Alaska, 

along with the rest of the nation 

beginning June 1, 2010 and June 1, 

2012, respectively. 

The state, in its comments on the 

proposal, supports today’s action for the 

urban areas described above. One 

refiner in Alaska commented that we 

should implement a one-step approach 

requiring 15 ppm sulfur diesel fuel 

starting in 2010. The refiner indicated 

that, due to the limited NRLM market, 

the benefits of introducing 500 ppm 

sulfur diesel fuel in 2007 would be 

minimal. Also, the distribution system 

in Alaska is not capable of handling the 

two grades of diesel fuel that would be 

required between 2007 and 2010, thus 

15 ppm sulfur fuel would be distributed 

as NRLM. We agree that the distribution 

system in Alaska is limited compared to 

the rest of the nation, and that 

consumption of diesel fuel by NRLM 

applications in Alaska is small. 

However, as previously discussed, we 

expect that some 500 ppm sulfur diesel 

fuel will be available due to market 

forces, and that 15 ppm sulfur highway 

diesel fuel will be available beginning in 

2006 in the urban areas. Thus, requiring 

500 ppm sulfur diesel fuel (or 15 ppm 

sulfur diesel fuel as a substitute) for the 

limited NRLM applications beginning in 

2007 does not appear to create any 

undue burden on the fuel supply or the 

distribution system in urban Alaska. 

During the development of the 

original 500 ppm sulfur highway diesel 

fuel standards in the early 1990’s, 

refiners and distributors in Alaska 

expressed concern that if Alaska were 

required to dye its non-highway diesel 

fuel red along with the rest of the 

country, residual dye in tanks or other 

equipment would be enough to 

contaminate and disqualify Jet-A 

kerosene used as aviation fuel. Since 

much of the diesel fuel in Alaska is No. 

1 and is indistinguishable from Jet-A 

kerosene, not only would tanks and 

transfer equipment have to be cleaned, 

but separate tankage would be needed. 

Consequently, we granted Alaska 

temporary exemptions from the dye 

requirement and in the January 18, 

2001, highway diesel rule granted the 

state a permanent exemption. 

The proposed use of a marker for 

heating oil in the 2007–10 time period 

presents similar concerns in Alaska’s 

distribution system. In response to our 

request for comments on this issue, the 

state and refiners indicated that Alaska’s 

system is not capable of accommodating 

dyes or markers and segregation. The 

priority of the state and fuel industry is 

to keep dyes and markers out of the fuel 

stream to prevent contamination of JetA and facilitate movement of the fuel. 

The comments suggested that 

implementation of refiner product 

designations, labeling of fuel pumps, 

retailer education, and rapid transition 

to ULSD would ensure that 500 ppm 

sulfur diesel fuel is used in NRLM 

equipment from 2007–10 and that 15 

ppm sulfur diesel fuel is used in 

nonroad equipment after 2010. 

In section IV.D below, we discuss the 

provisions that we are adopting for the 

State of Alaska that will allow us to 

enforce the NRLM diesel fuel program 

without requiring the fuel marker. 

c. Why Are We Deferring Final Action 

on NRLM Diesel Fuel Standards for 

Rural Areas of Alaska? 

We are deferring final action on the 

fuel sulfur standards and 

implementation deadlines for the rural 

areas of Alaska. We proposed to 

permanently exempt NRLM diesel fuel 

used in the rural areas from fuel content 

standards, except that diesel fuel used 

in 2011 and later model year nonroad 

engines would have had to meet the 

sulfur content standard of 15 ppm 

sulfur. However, this proposed action is 

inconsistent with the action requested 

by the state in its comments to the 

proposal. It is also inconsistent with the 

state’s alternative implementation plan 

for highway diesel fuel in rural Alaska, 

which was submitted after publication 

of the proposal. 

We intend to issue a supplemental 

proposal that would address both 

highway and NRLM diesel fuel sulfur 

standards for Alaska’s rural areas. This 

proposal will address the comments 

submitted by the state, as well as the 

state’s alternative implementation plan 

for highway diesel fuel.

2. American Samoa, Guam, the 

Commonwealth of Northern Mariana 

Islands, and Puerto Rico 

a. What Provisions Apply in American 

Samoa, Guam, and the Commonwealth 

of Northern Mariana Islands? 

As we proposed, we are excluding 

American Samoa, Guam and the 

Commonwealth of the Northern Mariana 

Islands (CNMI) from the NRLM diesel 

fuel sulfur standards and associated 

requirements. We also are excluding 

these territories from the tier 4 nonroad 

engine emissions standards, and other 

requirements associated with those 

emission standards. The territories will 

continue to have access to new nonroad 

diesel engines and equipment using pretier 4 technologies, at least as long as 

manufacturers choose to market those 

technologies. In the future, if 

manufacturers choose to market 

nonroad diesel engines and equipment 

only with tier 4 emission control 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39057

107See 57 FR 32010, July 20, 1992 for American 

Samoa; 57 FR 32010, July 30, 1992 for Guam; and 

59 FR 26129, May 19, 1994 for CNMI.

technologies, we believe the market will 

determine if and when the territories 

will make the investment needed to 

obtain and distribute the diesel fuel 

necessary to support these technologies. 

We are also requiring that all nonroad 

diesel engines and equipment for these 

territories be certified and labeled to the 

applicable requirements—either to the 

previous-tier standards and associated 

requirements under this exclusion, or to 

the Tier 4 standards and associated 

requirements applicable for the model 

year of production under the 

nationwide requirements of today’s 

action. The engines would still be 

emissions warranted, as otherwise 

required under the CAA and EPA 

regulations. Special recall and warranty 

considerations due to the use of 

excluded high sulfur fuel would be the 

same as those for Alaska during its 

exemption and transition periods for 

highway diesel fuel and for these 

territories for highway diesel fuel (see 

66 FR 5086, 5088, January 18, 2001). 

To protect against circumvention of 

the emission requirements applicable to 

the rest of the U.S., we are restricting 

the importation of nonroad engines and 

equipment from these territories into the 

rest of the U.S. After the 2010 model 

year, nonroad diesel engines and 

equipment certified under this 

exclusion for sale in American Samoa, 

Guam and the Commonwealth of the 

Northern Mariana Islands will not be 

permitted entry into the rest of the U.S. 

b. Why Are We Treating These 

Territories Uniquely? 

Like Alaska, these territories are 

currently exempt from the 500 ppm 

sulfur standard for highway diesel fuel. 

Unlike Alaska, they are also exempt 

from the new highway diesel fuel sulfur 

standard effective in 2006 and the new 

highway vehicle and engine emission 

standards effective beginning in 2007 

(see 66 FR 5088, January 18, 2001).

Section 325 of the CAA provides that 

upon request of Guam, American 

Samoa, the Virgin Islands, or the 

Commonwealth of the Northern Mariana 

Islands, we may exempt any person or 

source, or class of persons or sources, in 

that territory from any requirement of 

the CAA, with some specific exceptions. 

The requested exemption could be 

granted if we determine that compliance 

with such requirement is not feasible or 

is unreasonable due to unique 

geographical, meteorological, or 

economic factors of the territory, or 

other local factors as we consider 

significant. Prior to the effective date of 

the current highway diesel fuel sulfur 

standard of 500 ppm, the territories of 

American Samoa, Guam and the 

Commonwealth of the Northern Mariana 

Islands petitioned us for an exemption 

under section 325 of the CAA from the 

sulfur requirement under section 211(i) 

of the CAA and associated regulations at 

40 CFR 80.29. We subsequently granted 

the petitions.107 Consistent with this 

decision, in our January 18, 2001 

highway rule (66 FR 5088), we 

determined that the 2007 heavy-duty 

engine emission standards and 2006 

diesel fuel sulfur standard would not 

apply to these territories.

Compliance with the NRLM diesel 

fuel sulfur standards would result in 

major economic burden on the 

territories. All three of these territories 

lack internal petroleum supplies and 

refining capabilities and rely on long 

distance imports. Given their remote 

location from Hawaii and the U.S. 

mainland, most petroleum products are 

imported from east rim nations, 

particularly Singapore. Australia, the 

Philippines, and certain other Asian 

countries are beginning to consider and 

in some cases implement lower sulfur 

diesel fuel standards. However, it is not 

clear that supply, especially of 15 ppm 

sulfur diesel fuel, would be possible to 

these territories. 

Furthermore, compliance with new 15 

ppm sulfur requirement for highway 

diesel fuel beginning in 2006 and 

today’s 15 ppm sulfur requirement for 

NRLM diesel fuel beginning in 2010 (or 

the 500 ppm sulfur requirement for 

NRLM diesel fuel beginning 2007) 

would require construction of separate 

storage and handling facilities for a 

unique grade of diesel fuel for highway 

and nonroad purposes, or use of 15 ppm 

sulfur diesel fuel for all diesel 

applications to avoid segregation. Either 

of these alternatives would require 

importation of 500 and 15 ppm sulfur 

diesel fuel from Hawaii or the U.S. 

mainland, and would significantly add 

to the already high cost of diesel fuel in 

these territories, which rely heavily on 

U.S. support for their economies. At the 

same time, it is not clear that the 

environmental benefits in these areas 

would warrant this cost. Therefore, we 

are not applying the fuel and engine 

standards to these territories. 

The Caribbean Petroleum Corporation 

(CPC) commented that the proposed 

nonroad diesel rule would result in a 

major economic burden for Puerto Rico, 

the environmental benefits do not 

warrant the cost, and that Puerto Rico 

should be exempt. However, the CPC 

did not include any cost or 

environmental information to support 

its claims. We have no reason to believe 

that the costs of the NRLM diesel fuel 

program in Puerto Rico will be 

significantly greater than that of the U.S. 

For example, Puerto Rico is close to the 

U.S. mainland, and to South American 

and Central American suppliers of fuel 

to the U.S. mainland, and therefore has 

ready access to nearby fuel supplies that 

meet U.S. requirements. Similar to the 

fuel distribution system in the rest of 

the country, the fuel distribution system 

in Puerto Rico is geared to separate fuel 

handling and storage facilities for 

highway and non-highway diesel fuels. 

Today’s rule will require additional 

segregation for the NRLM diesel fuels, 

but no differently for Puerto Rico than 

for the U.S. Nevertheless, to avoid that 

additional fuel segregation, Puerto Rico 

could substitute highway fuel for use in 

NRLM diesel engines and equipment. 

We also believe that the important air 

quality benefits to be realized by today’s 

rule for the four million people in 

Puerto Rico should not be significantly 

different than those for the rest of the 

country. Consequently, today’s rule 

includes Puerto Rico in the NRLM 

diesel fuel program. 

D. NRLM Diesel Fuel Program Design 

In addition to specifying the sulfur 

standards and the implementation dates 

when the standards take effect, the 

diesel fuel program compliance 

provisions must be designed and 

structured carefully to achieve the 

overall principles of the program. 

Specifically, the health and welfare 

benefits of the NRLM diesel fuel and the 

highway diesel programs, and the need 

for widespread availability of 15 ppm 

sulfur highway diesel fuel must be 

maintained. The program benefits and 

fuel availability will only happen if the 

NRLM diesel fuel program is designed 

such that the amount of 15 ppm sulfur 

fuel expected to be produced under the 

highway diesel fuel program is in fact 

produced and that 500 ppm highway 

fuel is not overproduced. Likewise, the 

benefits of the NRLM diesel fuel sulfur 

standards adopted today will only be 

achieved if the program is designed to 

ensure that the volume of diesel fuel 

consumed by NRLM diesel engines is 

matched by the supply of NRLM diesel 

fuel produced to the appropriate low 

sulfur levels. At the same time, 

promoting the efficiency of the 

distribution system calls for fungible 

distribution of physically similar 

products, and minimizing the need for 

product segregation.

As discussed below, the situation 

faced in 1993 when EPA first regulated 

the sulfur content of highway diesel fuel 

parallels some of the issues that EPA 

39058 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

108 Diesel fuel produced to highway specifications 

but used for non-highway purposes is referred to as 

‘‘spill-over.’’ It leaves the refinery gate and is 

fungibly distributed as if it were highway diesel 

fuel, and is typically dyed at a point later in the 

distribution system. Once it is dyed it is no longer 

available for use in highway vehicles, and is not 

part of the supply of highway fuel.

needed to address in today’s rule. Prior 

to the implementation of the 500 ppm 

sulfur standard for highway diesel fuel 

in 1993, most No. 2 distillate fuel was 

produced to essentially the same 

specifications, shipped fungibly, and 

used interchangeably by highway diesel 

engines, nonroad diesel engines, 

locomotive and marine diesel engines, 

and heating oil applications. Beginning 

in 1993, highway diesel fuel was 

required to meet a 500 ppm sulfur cap 

and was segregated from other distillate 

fuels as it left the refinery by the use of 

a visible level of dye solvent red 164 in 

all non-highway distillate. At about the 

same time, the Internal Revenue Service 

(IRS) similarly required non-highway 

diesel fuel to be dyed red to a much 

higher concentration prior to retail sale 

to distinguish it from highway diesel 

fuel for excise tax purposes. Dyed nonhighway fuel is exempt from this tax. 

This splitting of the distillate pool 

necessitated changes in the distribution 

system to ship and store the now 

distinct products separately. In some 

parts of the country where the costs to 

segregate non-highway diesel fuel from 

highway diesel fuel could not be 

justified, both fuels have been produced 

to highway specifications.108

1. Requirements During the First Step of 

the Fuel Program 

EPA is adopting specific compliance 

provisions during the first step of 

today’s NRLM diesel fuel sulfur control 

program for three reasons. The first is to 

maintain the integrity of the highway 

diesel program, while allowing the 

efficient distribution of highway and 

NRLM diesel fuel. Since 500 ppm sulfur 

highway diesel fuel allowed under the 

highway diesel fuel program’s 

Temporary Compliance Option (TCO) 

and NRLM diesel fuel meeting today’s 

500 ppm sulfur standard will be 

physically the same, it would be 

impossible to maintain the benefits and 

program integrity of the highway diesel 

fuel program without some means of 

differentiating highway diesel fuel from 

NRLM diesel fuel. 

Continuing the current practice of 

dyeing NRLM diesel fuel at the refinery 

gate and requiring that it be segregated 

throughout the distribution system is 

not a practical way to differentiate 

NRLM diesel fuel from highway fuel. At 

the same time, allowing the unrestricted 

fungible distribution of highway and 

NRLM diesel fuel with the same sulfur 

level risks the loss of important benefits 

of the highway program. For example, if 

a refiner produced all 500 ppm sulfur 

fuel and designated it as NRLM diesel 

fuel, that refiner would have no 

obligation to produce any 15 ppm sulfur 

highway diesel fuel. Without an 

effective way of limiting the use in the 

highway market of 500 ppm sulfur 

diesel fuel produced as NRLM diesel 

fuel, much more 500 ppm sulfur fuel 

could, and likely would find its way 

into the highway market than would 

otherwise happen under the current 

highway program. This would displace 

15 ppm sulfur diesel fuel that would 

have otherwise been produced. This 

likely series of events would circumvent 

the intent of the highway program’s 

TCO and sacrifice some of the resulting 

PM and SO2 emission benefits of the 

overall highway diesel program. If this 

occurred to any significant degree, it 

could also undermine the integrity of 

the highway program by threatening the 

availability of 15 ppm sulfur diesel fuel 

nationwide for the vehicles that need it. 

This is no longer a concern after 2010, 

when all highway diesel fuel is required 

to meet a 15 ppm sulfur standard. 

The second reason is to maintain the 

integrity of the NRLM diesel fuel 

program, while allowing the efficient 

distribution of NRLM diesel fuel and 

heating oil where they have similar 

sulfur levels. By establishing new sulfur 

standards for NRLM diesel fuel but not 

heating oil, today’s program creates the 

need to distinguish the fuel used for 

these two purposes. Currently, there is 

no grade of diesel fuel which is 

produced and marketed as a 

distinguishable grade for NRLM diesel 

engine uses. It is typically produced and 

shipped fungibly with other distillate 

used for heating oil purposes, and it is 

all dyed red in accordance with EPA 

and IRS regulations. Because today’s 

rule includes small refiner and credit 

provisions that allow the limited 

production of high sulfur (greater than 

500 ppm) NRLM diesel fuel through 

2010, it is not possible to rely on sulfur 

content alone to differentiate NRLM 

diesel fuel from heating oil during the 

first step of the program. Without 

adequate controls, a refiner could 

choose not to desulfurize any of its fuel 

that is destined for the NRLM diesel fuel 

market, instead designating that volume 

as heating oil at the refinery gate. This 

fuel, ostensibly manufactured for use as 

heating oil could be misdirected for use 

in NRLM diesel equipment, and would 

be indistinguishable from legal high 

sulfur NRLM diesel fuel produced by 

small refiners and/or through the use of 

credits. This could substantially reduce 

the environmental benefits of today’s 

rule.

After 2010, when the 15 ppm sulfur 

standard for NR diesel fuel goes into 

effect, small refiner and credit NR fuel 

must meet a 500 ppm standard. 

Therefore, after 2010 NRLM diesel fuel 

can be distinguished from high sulfur 

(greater than 500 ppm) home heating 

fuel based on sulfur content. However, 

500 ppm NR (small refiner, credit) 

produced from June 1, 2010 through 

May 31, 2012, and 500 ppm NRLM 

(small refiner, credit) diesel fuel 

produced from June 1, 2012 through 

May 31, 2014, could not be 

distinguished from heating oil produced 

to meet a similar 500 ppm sulfur limit. 

Likewise, from June 1, 2010 to June 1, 

2012, 500 ppm NR (small refiner, credit) 

diesel fuel and LM diesel fuel need to 

be distinguished from each other, so 

that diesel fuel produced as 500 ppm 

LM is not later misdirected to the NR 

diesel market. Such misdirected 500 

ppm sulfur LM diesel fuel would be 

indistinguishable from legal 500 ppm 

sulfur NR diesel fuel, reducing the 

environmental benefits of today’s rule. 

These various 500 ppm fuels could not 

be distinguished based on sulfur level. 

As previously discussed, the situation 

which was faced in 1993 regarding the 

need to differentiate 500 ppm sulfur 

highway diesel fuel from other diesel 

fuel is similar to the need today to 

differentiate highway diesel fuel, NRLM 

diesel fuel, and heating oil. 

The third reason is to maintain the 

integrity of the anti-downgrading 

requirements in the highway diesel 

program. The highway diesel program 

requires that each entity in the 

distribution system downgrade no more 

than 20 percent of the 15 ppm sulfur 

highway diesel fuel for which it 

assumes custody to 500 ppm sulfur 

highway diesel fuel. These provisions 

are necessary to ensure the widespread 

availability of 15 ppm sulfur diesel fuel 

for use in model year 2007 and later 

highway vehicles, in which the use of 

15 ppm sulfur fuel is essential to 

facilitate the projected emissions 

benefits of the highway program. The 

highway program placed no restrictions 

on the volume of highway diesel fuel 

that could be downgraded to NRLM 

diesel fuel. Under the proposed rule 

there would be no way to distinguish 

500 ppm sulfur NRLM diesel fuel from 

500 ppm sulfur highway diesel fuel 

downstream of the refinery. Therefore, 

to preserve the integrity of the highway 

program, the proposal would have made 

the highway program’s anti-downgrade 

requirements more stringent by also 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39059

109The IRS requirements concerning dyeing of 

non-highway fuel prior to sale to consumers are not 

changed by this rulemaking.

110Under the highway program the potential 

exists to add a third grade of diesel fuel in an 

estimated 40 percent of the country, and we 

projected one-time tankage and distribution system 

costs of $1.05 billion to accomplish this. Using 

similar assumptions, to add a second 500 ppm 

grade nationwide would cost in excess of $2 billion. 

This assumes that the capability exists to add such 

new tankage.

restricting downgrades to 500 ppm 

sulfur NRLM diesel fuel. We received 

several negative comments on this 

proposed restriction. The compliance 

and record keeping requirements 

finalized to address the two concerns 

discussed above, can be utilized to 

facilitate the implementation of the 

highway program’s anti-downgrading 

requirements without the need to 

further restrict downgrading. As a 

result, today’s rule also contains several 

modifications which clarify the antidowngrading provisions of the highway 

diesel program.

The requirements described below 

will help ensure that the projected 

benefits of the highway diesel program 

and of today’s NRLM diesel program are 

achieved. 

a. Ensuring Refiner Production Volumes 

of 15 ppm Sulfur Highway Diesel Fuel 

Are Consistent With the Highway Rule’s 

80/20 Requirement 

To avoid adding unnecessary cost to 

the fuel distribution system, we 

proposed that the current requirement 

of dyeing non-highway distillate fuels at 

the refinery gate become voluntary as of 

June 1, 2006.109 As discussed in the 

proposal, continuing to require that 

NRLM diesel fuel and heating oil 

contain a visible trace of red dye at the 

refinery gate would allow for simple 

enforcement of the highway standards 

throughout the duration of the highway 

program’s TCO. Clear, undyed diesel 

fuel would have to meet the 80/20 ratio 

of 15 ppm to 500 ppm sulfur highway 

diesel fuel, and dyed fuel could only be 

used in NRLM diesel equipment or as 

heating oil. Continuing the current dye 

provisions would therefore ensure that 

the intended benefits of the highway 

program are achieved. However, 

maintaining this dye distinction would 

also require segregation of a new grade 

of dyed 500 ppm sulfur NRLM diesel 

fuel throughout the entire distribution 

system. The costs of requiring 

segregation of two otherwise identical 

fuels throughout the entire distribution 

system could be quite substantial.110

Comments on the proposed rule 

confirmed EPA’s assessment that the 

ability of the fuel distribution system to 

distribute these fuels fungibly is 

essential, since segregating the fuels 

could result in substantial additional 

transportation costs and necessitate 

additional storage tanks throughout the 

system.

The NPRM invited comment on two 

alternative approaches to ensure that 

refiner production of 15 ppm sulfur 

highway diesel fuel met the highway 

rule’s 80/20 requirement; the ‘‘refiner 

baseline’’ approach, and the ‘‘designate 

and track’’ approach. The baseline 

approach is essentially a constraint on 

the sulfur levels of the various distillate 

fuel products a refiner produces, based 

on historical production volumes. Fuel 

with similar sulfur levels could then be 

fungibly distributed with only limited 

controls on the downstream distribution 

system. The designate and track 

approach requires that a refiner 

designate into which market discrete 

volumes of the distillate fuels it 

produces must be sold, without any 

consideration of historical production 

volumes. The fuel must then be tracked 

through the distribution system and 

sold only for its designated purpose (or 

a purpose that requires less control). As 

with the baseline approach, diesel fuel 

with similar sulfur levels could be 

fungibly shipped up to the point of 

distribution from a terminal where offhighway diesel fuel must be dyed red 

pursuant to IRS requirements to indicate 

its tax exempt status. 

We proposed the baseline approach 

because, in the absence of a red dye 

requirement at the refinery-gate for 

NRLM diesel fuel, we expected that it 

would: (1) Allow for the fungible 

distribution of 500 ppm sulfur highway 

and NRLM diesel fuel; (2) ensure the 

enforceability of the highway diesel fuel 

and NRLM diesel fuel standards; (3) 

maintain the projected production 

volume of 15 ppm sulfur highway diesel 

fuel; (4) allow refinery production of 

500 ppm sulfur NRLM diesel fuel and 

heating oil to remain flexible to meet 

market demand; and (5) enable the 

efficient distribution of diesel fuel while 

imposing the least burden on the parties 

in the fuel production and distribution 

system. In the proposal, we also 

discussed how a refiner’s baseline 

would be set, and invited comment on 

ways to account for changes refiners 

might make from their historical 

production practices in response to the 

highway diesel program. 

In the NPRM, we expressed concerns 

that a designate and track approach 

would raise significant workability and 

enforceability issues and therefore 

might not maintain the integrity of 

highway and NRLM diesel fuel sulfur 

programs. Our concerns about the 

workability and enforceability of a 

designate and track approach amplified 

potential concerns regarding whether 

the approach might reduce the volume 

of 15 ppm sulfur diesel fuel required to 

be produced under the highway diesel 

program, leading to a reduction in the 

environmental benefits of the highway 

diesel program and calling into question 

the availability of 15 ppm sulfur diesel 

fuel. We were also concerned about 

whether this approach would place too 

much burden on the numerous entities 

in the fuel distribution system, as 

compliance was focused on downstream 

parties. While the designate and track 

approach provided greater production 

flexibility to refiners than the baseline 

approach, it appeared to increase the 

burden and restrictions on downstream 

parties. 

Of the approaches discussed in the 

NPRM, we expected that the baseline 

approach would provide the best 

mechanism to achieve the fuel program 

goals described at the beginning of this 

section. Since the proposal, we have 

comprehensively evaluated the 

advantages and disadvantages of both 

approaches. Based on this review, we 

now believe that a baseline approach 

would produce significant adverse 

problems because of its overly 

restrictive impact on the ability of fuel 

producers and distributors to efficiently 

respond to the myriad and daily needs 

of the markets for highway and NRLM 

diesel fuel. Implementation of the 

approach could also produce an 

unintended bias that would tend to 

reduce the benefits of the highway 

program and reduce the availability of 

15 ppm sulfur highway diesel fuel. At 

the same time, our review of the 

approaches shows that the designate 

and track approach can be implemented 

in an enforceable manner and likely 

would not cause a reduction in the 

environmental benefits of the highway 

diesel program or adversely impact the 

widespread availability of 15 ppm 

sulfur highway diesel fuel. Our 

evaluation of these alternate approaches 

is discussed in more detail in the 

following sections.

i. Proposed Refiner Baseline Approach 

Under the refiner baseline approach, 

we proposed that from June 1, 2007 

through May 31, 2010, any refiner or 

importer could choose to distribute its 

500 ppm sulfur NRLM and highway 

diesel fuels fungibly without adding red 

dye at the refinery gate. Refiners and 

importers who elect to distribute these 

fuels fungibly would need to establish a 

non-highway distillate baseline, defined 

as a percentage of its total distillate fuel 

production volume based on historical 

production data. For future production 

39060 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

111 ‘‘Summary and Analysis of the Highway 

Diesel Fuel 2003 Pre-compliance Reports,’’ EPA 

420–R–03–103, October 2003.

purposes, this percentage of the volume 

of diesel fuel produced would have to 

either meet the 500 ppm sulfur NRLM 

diesel fuel sulfur standard or be marked 

as heating oil. All the remaining 

production of diesel fuel would have to 

meet the requirements of the highway 

fuel program (i.e., 80 percent of this fuel 

would have to meet a 15 ppm sulfur 

cap). Refiners not wishing to participate 

in the baseline approach would have to 

dye all of their 500 ppm sulfur NRLM 

diesel fuel at the refinery. However, we 

anticipated that few refiners would opt 

to dye 500 ppm sulfur NRLM diesel 

fuel, other than the volumes that they 

dispense from their own racks, since 

this would eliminate the ability to 

fungibly distribute 500 ppm sulfur 

highway and NRLM diesel fuels. 

Since the publication of the proposed 

rule, we have developed a better 

understanding of refiner concerns about 

the constraints associated with the 

baseline approach. Specifically, it is 

now clear that individual refiners would 

be significantly constrained by the 

baseline approach from efficiently 

responding to changes in contract 

arrangements with their clients and 

changes in market demands. Refiners 

commented that they win and lose 

contracts on a daily basis and that 

depending on which contracts they 

secure, they may not be able to comply 

with their baseline. Specific concerns 

were raised regarding the ability of 

refiners to compensate for the loss of 

export contracts and to respond to 

spikes in the demand for heating oil 

which periodically result from an 

unexpectedly cold winter. Refiners also 

related that the constraints under the 

baseline approach could cause an anticompetitive dynamic between fuel 

refiners and their customers. 

Based on our reevaluation of the 

baseline approach and the information 

gathered from the public comments, it is 

now clear that the constraints on the 

slate of fuels that a refiner produces 

under the baseline approach could 

interfere with a refiner’s ability to meet 

market demands, which in turn could 

result in supply shortages and increased 

fuel prices. For example, if a refiner 

were to lose an export contract for high 

sulfur diesel fuel, the baseline approach 

could prevent that refiner from seeking 

to market that product domestically. 

This could impact the overall supply of 

diesel fuel since the refiner may not 

have sufficient facilities to desulfurize 

diesel fuel. Also, knowing that losing 

such an export contract would leave the 

refiner with no ability to market its fuel 

domestically could give the refiner’s 

export client an undue advantage during 

contract negotiations. 

In the case of a spike in heating oil 

demand due to an unusually cold 

winter, the baseline approach would 

limit a refiner’s ability to produce 

additional volumes of high sulfur 

distillate fuel beyond the volume 

established under its baseline. Refiners 

that were limited in their ability to 

produce additional high sulfur fuel 

could choose to supply low sulfur diesel 

fuel to the heating oil market. However, 

they may not have sufficient 

hydrotreating capacity to do so. This 

could limit their ability to respond to a 

supply shortage. 

The proposed rule suggested various 

potential modifications to the baseline 

approach to address refiner concerns 

regarding the associated constraints on 

the slate of fuels they produce. We 

received comments on the potential 

modifications discussed in the NPRM as 

well as other potential changes to the 

baseline approach. Some commenters 

suggested that if EPA were to finalize a 

baseline approach, refiners should be 

able to apply to EPA for a yearly 

adjustment to their baseline based on 

annual demand forecasts. Even with 

such flexibility, refiners still concluded 

that in many cases they would likely be 

forced to dye their fuel instead. For fuel 

distributors, having refiners dye their 

NRLM diesel fuel presented an 

unacceptable situation due to the need 

to distribute another grade of fuel. As a 

result, all comments from the refining 

and fuel distribution community were 

in agreement that the baseline approach 

may be unworkable. 

Based on our review of the comments 

and our discussions with fuel producers 

and distributors, it has become clear 

that none of the potential modifications 

to the baseline approach would 

adequately compensate for the inherent 

inflexibility of requiring refiners to 

comply with set production ratios. Even 

if EPA were to adjust such ratios on an 

annual basis, refiners might need to 

approach EPA for an interim adjustment 

if their contractual agreements changed 

or if market demand shifted 

unexpectedly. The process of evaluating 

requests for baseline adjustments could 

be very burdensome to the industry and 

to EPA, and EPA would unlikely be able 

to respond quickly enough to changing 

market conditions. 

More importantly, all of the potential 

alternatives that we might implement to 

mitigate the constraints of the baseline 

approach could potentially undermine 

the environmental benefits of the 

highway program. Such alternatives all 

would involve granting allowances to 

some refiners to produce additional 

volumes of non-highway fuels above the 

set baseline to facilitate a refiner 

meeting the market demand for such 

fuels. At the same time, it would not be 

possible for EPA to reduce the ability of 

other refiners to produce non-highway 

fuel who may have lost these markets. 

Therefore, for such alternatives to be 

effective in responding to changing 

market conditions, an unintended 

downward bias would result regarding 

the required production of 15 ppm 

sulfur highway diesel fuel.

Even without any changes we 

discovered from the highway diesel 

program pre-compliance reports that the 

proposed baseline approach has a 

downward bias that could result in a 

reduction in the volume of 15 ppm 

sulfur diesel fuel produced under the 

highway diesel program.111 We 

proposed that refiners could choose to 

calculate their off-highway baseline 

using either an average of 2003 through 

2005 production data or 2006 

production data. Providing the option 

for a 2006 baseline was necessary 

because a number of refiners will be 

changing the slate of fuels that they 

produce in response to the highway 

diesel rule which becomes effective in 

2006. While the highway diesel precompliance reports indicate an overall 

increase in production volume, they 

also indicate that 40 percent of highway 

diesel refiners will decrease the volume 

of highway diesel fuel they produce. If 

all of these refiners were to take a 2006 

baseline to determine the volume of 15 

ppm sulfur diesel fuel they would be 

required to produce, a substantial drop 

in the total volume of 15 ppm sulfur 

diesel fuel produced could result.

The pre-compliance reports indicate 

that the other 60 percent of refiners will 

be increasing the volume of highway 

diesel fuel they produce. We projected 

that these shifts in the slate of fuel 

products that refiners produce would 

have an overall positive impact on 

diesel fuel supply. However, refiners 

that increase the volume of highway 

fuel they produce would likely chose to 

calculate their baseline using their 

lower 2003–2005 production volumes. 

Doing so would result in a lower 

percentage of their distillate fuel that 

would be required to be produced for 

highway diesel use, and subject to a 15 

ppm sulfur standard. 

The volume of spillover could also be 

reduced refiners were to dye 500 ppm 

sulfur diesel they manufactured to meet 

anticipated NRLM diesel fuel demand 

in order to avoid needing to comply 

with the baseline approach. Many 

refiners commented that they 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39061

considered the baseline approach so 

unworkable and onerous that they 

would choose to dye all of their 500 

ppm sulfur NRLM diesel fuel at the 

refinery gate. This could force some 

parts of the distribution systems which 

had previously not carried two grades of 

diesel fuel for highway and off-highway 

uses to begin doing so. 

In summary, we are not finalizing the 

proposed baseline system because we 

believe—

1. It could unnecessarily constrain 

refiners ability to meet market demands, 

encouraging them to dye 500 ppm sulfur 

NRLM diesel fuel at the refinery 

resulting in an added burden to the 

distribution system; 

2. It could create a bias that could 

result in a loss in the volume of 15 ppm 

sulfur highway diesel fuel produced, 

and the options to remove these market 

constraints would only increase the bias 

to reduce the volume of 15 ppm sulfur 

highway diesel fuel; and 

3. The baseline approach would not 

ensure that the environmental benefits 

of the 2007 highway diesel program 

would be maintained. 

ii. Designate and Track Approach 

At the time of the NPRM, we invited 

comment on an alternative to the 

baseline approach called the ‘‘designate 

and track’’ approach. Under the 

envisioned designate and track 

approach, refiners and importers would 

designate the volumes of 500 ppm 

sulfur diesel fuel they produce/import 

as either highway or NRLM diesel fuel 

and would ship them fungibly. These 

designations would follow the fuel 

through the distribution system and be 

used to restrict the sale of 500 ppm 

sulfur NRLM diesel fuel from the 

highway market. While we sought 

comment on various forms of the 

designate and track approach, we also 

expressed serious reservations regarding 

its workability, enforceability, impact 

on the benefits of the highway rule, and 

constraints on the distribution system. 

For example, at the time of the proposal, 

refiners supported a designate and track 

approach where certain parts of the 

distribution system (e.g., pipelines) did 

not have to report. EPA believed that 

such an approach was unenforceable. 

Refiners were also supporting the 

designate and track approach as an 

option for refiners to choose in addition 

to the baseline approach. However, EPA 

believed that the two approaches were 

incompatible. 

As noted in the proposal, the 

designate and track approach allows 

maximum flexibility for refiners and 

importers, but EPA had concerns that 

the volume reconciliation requirements 

would inappropriately restrict the 

flexibility of downstream parties to 

respond to market changes. EPA also 

had concerns that it would reduce the 

amount of 15 ppm spillover from the 

highway market, reducing the 

environmental benefits of that rule.

Since the proposal, we received 

extensive input both in the written 

comments and through in-depth 

meetings with representatives of all 

segments of the fuel distribution 

industry on how the designate and track 

system might be structured to provide 

the needed compliance oversight 

without placing an undue burden on 

industry. Refiners now agree that the 

designate and track approach should not 

be an option for refiners in addition to 

the baseline approach, and support it as 

a stand alone approach. All parties in 

the fuel distribution system have also 

now expressed support for the record 

keeping and reporting requirements 

associated with tracking designated fuel 

volumes through each custodian in the 

distribution chain until the fuel leaves 

the terminal either taxed or dyed. 

Furthermore, commenters from all 

segments of the fuel distribution 

industry from the refiner through to the 

terminal stated that the information 

needed to support the designate and 

track approach is already kept as part of 

normal business practices. Commenters 

stated that only modest upgrades in 

their record keeping procedures would 

be needed to compile the needed 

information and that preparing the 

necessary reports would not represent a 

significant burden. Thus, our concerns 

that a designate and track approach 

might represent a large burden to fuel 

distributors were unfounded. 

In addition, we have developed 

appropriate solutions to the various 

open questions and issues that we had 

with the designate and track approach at 

the time of the proposal. In the proposal 

it was unclear how a designate and track 

approach would be structured to 

account for the swell in highway diesel 

fuel volumes in the winter that results 

from downstream kerosene blending to 

improve cold flow properties. Without 

an adequate control mechanism, normal 

swell in downstream highway diesel 

fuel volumes in the North due to 

kerosene blending during winter 

months could mask the inappropriate 

shifting of NRLM-designated 500 ppm 

sulfur fuel to the highway diesel pool. 

We have developed an appropriate 

mechanism to address this situation as 

described in section IV.D.3. 

In the proposal, we also expressed 

concerns regarding how normal 

volumetric fluctuations in the 

distribution system such as those 

caused by product downgrading in 

pipelines could be adequately 

accounted for under a designate and 

track system so that such fluctuations 

would not mask the inappropriate 

shifting of 500 ppm sulfur NRLM diesel 

fuel to the highway pool. We have 

subsequently developed a periodic 

volume account balance system to 

account for such fluctuations. 

Through discussions with terminal 

operators, we have also resolved 

concerns expressed in the NPRM that a 

designate and track approach might 

limit a terminal operator’s ability to 

respond to shifts in demand for 500 

ppm sulfur highway versus NRLM 

diesel fuel. To avoid this potential 

problem today’s rule allows terminal 

operators and others to switch the 

designation of 500 ppm sulfur NRLM 

diesel fuel to highway diesel fuel on a 

temporary basis but not on a cumulative 

basis over time. This will allow terminal 

operators to sell NRLM designated 500 

ppm sulfur fuel into the highway market 

provided that they later sell the same 

volume of highway-designated 500 ppm 

sulfur fuel into the NRLM market. To 

ensure that 500 ppm sulfur NRLM 

diesel fuel is not inappropriately shifted 

into the highway diesel pool, terminal 

operators will need to demonstrate that 

the volume of 500 ppm sulfur highway 

diesel fuel they delivered is less than or 

equal to the volume received. 

In the NPRM, we stated that 

determining the responsible party for a 

violation of the restriction against 

shifting 500 ppm sulfur NRLM diesel 

fuel into the highway pool would be 

difficult under a designate and track 

approach because a number of parties in 

the distribution chain take custody of 

the fuel without taking ownership. 

However, this concern can be addressed 

by structuring the provisions to hold the 

custodian of the fuel accountable for 

any such violation that takes place 

while the fuel is in their custody. 

Review of electronic data submitted 

from all custodians in the highway and 

NRLM diesel fuel distribution chain 

will reveal the custodian responsible for 

a violation. By comparing such data on 

the hand-offs of designated fuel volumes 

between all adjacent pairs of custodians 

in the distribution chain for 

discrepancies, we can identify any party 

responsible for inappropriately shifting 

volumes of 500 ppm sulfur fuel 

designated for use in NRLM equipment 

to the highway market. Many terminals 

do not take ownership of the fuel that 

they handle. Terminals that lease 

storage tanks to multiple owners will 

need to enter into contractual 

agreements with their tenants to ensure 

that they understand their obligations as 

39062 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

112This highway diesel fuel would meet the 

currently-applicable 500 ppm sulfur standard for 

highway diesel fuel.

113Additional injection equipment will be 

required to inject the heating oil marker.

a custodian of designated fuel and do 

not inappropriately change the 

designation of fuels stored in such 

leased tanks.

An effective enforcement and 

compliance assurance program must 

include the ability to rapidly and 

accurately review the large amount of 

data on the hand-offs of designated fuel 

volumes for discrepancies. This can be 

accomplished if all parties report 

electronically to a database which can 

reconcile hand-off volumes between all 

parties in the distribution chain in an 

automated fashion. All segments in the 

fuel distribution system are now in 

support of providing the necessary 

information to such an electronic 

reporting system. We have conducted a 

review of the Agency resources that 

would be needed to compile the 

industry reports on the transfer of 

designated fuel volumes, perform 

quality assurance on these data, and to 

perform the necessary analysis of the 

database to discover potential 

violations. Our review indicates that the 

reporting forms can be standardized and 

the review process automated in such a 

fashion as to minimize the Agency 

resource requirements, while at that 

same time ensuring the quality of the 

data and completeness of the review 

process. In light of the above discussion, 

we are now convinced that a designate 

and track approach can be designed to 

meet our enforcement and compliance 

assurance needs under today’s rule. 

In addition to concerns regarding the 

workability and enforceability of a 

designate and track approach, the 

NPRM expressed concerns that 

application of such an approach could 

reduce the benefits of the highway 

diesel program by reducing the amount 

of highway diesel fuel that is used in 

nonroad equipment due to the logistical 

constraints in the distribution system 

(‘‘spillover’’). Specifically, it was 

thought that the opportunity to fungibly 

ship batches of 500 ppm sulfur NRLM 

diesel fuel and 500 ppm sulfur highway 

diesel fuel might allow refiners to 

supply highway and NRLM diesel fuel 

to markets where they would otherwise 

have supplied just highway fuel for both 

purposes. Our reevaluation since the 

proposal indicates that this is not a 

significant concern. As noted earlier, 

there are currently substantial regions of 

the country where only highway diesel 

fuel is supplied by bulk shipments to 

both the highway and NRLM markets 

due to the high costs associated with 

segregating an additional distillate grade 

in the distribution system.112 These are 

the same areas where the majority of 

spillover occurs today. After the 

highway diesel program becomes 

effective in 2006, we project that only 

15 ppm sulfur highway diesel fuel will 

be supplied in bulk shipments to both 

the highway and NRLM markets in most 

of these same areas. Although 500 ppm 

sulfur highway diesel fuel could be 

shipped in bulk to these areas through 

2010 under the highway program’s TCO, 

the potential demand for such fuel and 

for 500 ppm sulfur NRLM diesel fuel 

would not be sufficient to justify the 

cost of segregating an additional grade 

of 500 ppm sulfur diesel fuel in these 

areas for a short period of time. The 

designate and track approach does not 

impact the costs of segregation, and 

therefore is not expected to change 

distribution patterns that are based on 

these costs.

After 2010, when 500 ppm sulfur 

highway fuel no longer exists, the total 

volume of 500 ppm sulfur diesel fuel in 

the distribution system will be 

substantially reduced, and there will be 

even less incentive to distribute an 

additional grade of 500 ppm sulfur 

diesel fuel in bulk. Therefore, the only 

areas where substantial flexibility will 

exist under today’s program to supply 

either highway or NRLM diesel fuel to 

the NRLM market is in areas where this 

flexibility exists today. Despite this 

flexibility in the current regulations, 

spillover currently still occurs. 

Therefore, we project that there will be 

little additional potential due to today’s 

rule for refiners to reduce highway 

spillover into the NRLM market under 

a designate and track approach and that 

such spillover levels would not be 

significantly reduced from historical 

levels. In contrast, as discussed above, 

we now believe that the baseline 

approach would have resulted in a 

significant loss of 15 ppm diesel 

production. 

Furthermore, concerns regarding a 

potential reduction in the spillover of 15 

ppm sulfur highway diesel into the 

NRLM markets has been lessened by the 

information provided in the highway 

program pre-compliance reports. These 

reports suggest that more than 95 

percent of highway diesel fuel will be 

produced to a 15 ppm sulfur standard 

beginning in 2006. In calculating the 

projected benefits of the highway diesel 

program, we assumed that only 80 

percent of highway diesel fuel would 

meet a 15 ppm sulfur standard. 

Therefore, the actual benefits of the 

highway program will be substantially 

greater than estimated if the projections 

in the pre-compliance reports are 

realized. 

Based on the above discussion, we 

believe that the concerns regarding the 

designate and track approach’s 

workability, enforceability, and ability 

to preserve the benefits of the highway 

program and today’s NRLM diesel fuel 

program have been satisfactorily 

resolved.

b. Ensuring That Heating Oil Is Not 

Used in NRLM Equipment From June 1, 

2007 Through June 1, 2010 

i. Use of a Fuel Marker in Heating Oil 

To prevent shifting heating oil into 

the NRLM market, we proposed that a 

fuel marker be added to heating oil at 

the refinery gate. We proposed that the 

presence of the marker required in 

heating oil would be strictly prohibited 

in NRLM diesel fuel. As noted earlier, 

this approach is similar to red dye 

requirements for high sulfur diesel fuel 

that were implemented in 1993 to 

prevent its use as highway diesel fuel 

subject to the then applicable 500 ppm 

sulfur standard. 

We proposed that the marker be 

added at the refinery gate rather than at 

the terminal for several reasons. First, 

this seemed to be the most efficient and 

lowest cost option for addition of the 

marker given that the number of 

terminals is far greater than the number 

of refineries.113 Second, requiring that 

the marker be present in heating oil 

when it is introduced into the 

distribution system would ensure that 

we could differentiate high sulfur small 

refiner and credit fuel from heating oil 

at any point in the system. This 

approach would provide good assurance 

that the inability to use fuel sulfur 

content to differentiate heating oil from 

high sulfur NRLM diesel fuel produced 

under the small refiner and credit 

provisions in today’s rule (effective 

until June 1, 2010) would not provide 

an opportunity to mask the potential use 

of heating oil in NRLM equipment. 

Providing such assurance is an essential 

element to enable the implementation of 

the small refiner and credit provisions 

in today’s rule. Lastly, under the 

proposed baseline approach, there was 

no other way to ensure that heating oil 

was not shifted into the NRLM diesel 

fuel pool during distribution from the 

refinery/importer to the terminal.

We received numerous comments that 

the upstream addition of the proposed 

marker to heating oil would raise 

significant concerns that the marker 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39063

114 Including every end-user of heating oil. 115Letter to Paul Machiele, EPA, from James 

Thomas, American Society for Testing and 

Materials (ASTM), entitled ‘‘Withdrawal of ASTM 

Request,’’ January 19, 2004. In this letter ASTM 

withdraws its request for a postponement of the 

finalization of the heating oil marker requirements 

in today’s rule. See section V.E regarding the 

selection of the heating oil marker required in 

today’s rule. 116See section VIII.H. of today’s preamble. 117To test for contamination, jet fuel marketers 

typically fill a white five gallon bucket with jet fuel. 

The presence of a pink tinge to the light straw 

colored jet fuel indicates that the fuel has been 

contaminated with fuel that contains red dye.

118 If IRS amends its red dye requirements, EPA 

will also seriously consider amending the fuel 

marker and associated red dye requirements 

contained in today’s rule. See section V.E. of 

today’s preamble.

might contaminate jet fuel. Commenters 

stated that this would represent a 

substantial safety concern unless the 

proposed marker was proven not to 

adversely impact the quality of jet fuel 

and the operation of jet engines. 

The designate and track approach 

described above for 500 ppm sulfur 

NRLM diesel fuel, however, also 

provides an effective means to address 

concerns about the use of the fuel 

marker. By extending the designate and 

track approach to high sulfur NRLM 

diesel fuel and heating oil, these 

otherwise identical fuel grades can be 

tracked down to the terminal, and the 

marker then can be added at the 

terminal instead of at the refinery gate. 

Going beyond the terminal with 

designate and track is not feasible give 

the breadth and nature of entities 

involved.114 As a result, the marker is 

still required downstream of the 

terminal. However, shifting the point of 

marker addition downstream to the 

terminal should eliminate any 

significant opportunity for jet fuel 

contamination. Subsequent comments 

and discussions appear to have 

confirmed this.115 EPA will continue to 

work with other federal agencies, 

including FAA and DoD, and to follow 

ongoing research and studies regarding 

the effect of dyes and markers on jet 

fuel, particularly potential 

contamination that could have an 

adverse impact on the safe operation of 

aircraft. We will keep abreast of the 

ASTM, CRC, FAA, IRS, and EU 

activities regarding the evaluation of the 

use of SY–124 and commit to a review 

of our use of SY–124 under today’s rule 

based on these findings. If alternative 

markers are identified that do not raise 

concerns regarding the potential 

contamination of jet fuel, we will 

initiate a rulemaking to evaluate the use 

of one of these markers in place of SY–

124.116

We also received a number of 

comments expressing concern over the 

inability of the proposed marker to be 

detected using the standard simple test 

used today to detect contamination with 

red dye.117 The marker finalized by 

today’s rule does not provide visual 

evidence of its presence. However, if the 

marker is added at the terminal it will 

only be present in heating oil when red 

dye is also present. The fact that heating 

oil will be dyed red pursuant to IRS 

requirements before it leaves the 

terminal will enable jet fuel distributors 

to continue to use the ‘‘white bucket 

test’’ to detect heating oil 

contamination, and hence marker 

contamination of jet fuel. Today’s rule 

also includes a stand-alone requirement 

that any fuel to which the fuel marker 

is added must also contain visible 

evidence of red dye.118

ii. Provisions To Ensure Heating Oil Is 

Not Used in NRLM Equipment in the 

Northeast and Mid-Atlantic 

In the Northeast, heating oil will 

continue to be distributed in significant 

quantities after implementation of the 

NRLM diesel fuel program. Discussions 

with terminal operators in the 

Northeast, and other representatives of 

heating oil users and distributors, 

revealed concerns that the proposed 

heating oil marker requirement would 

represent a substantial new burden on 

terminal operators and users of heating 

oil. Terminal operators stated that the 

cost of installing new injection 

equipment would be burdensome, and 

that the cost of the marker itself would 

be significant given the large volume of 

heating oil used in the Northeast. They 

also stated that they did not expect any 

small refiner or credit fuel to be used in 

the Northeast, and that consequently, 

the marker requirement was not needed 

in this area. They suggested that if we 

prohibited the sale of small refiner and 

credit fuel in PADD I, this area could be 

exempted from the heating oil marker 

requirement.

We evaluated the viability of avoiding 

the heating oil marker requirement in 

portions of PADD I and instead 

enforcing the NRLM diesel fuel 

standards on the basis of sulfur content 

alone. The heating oil marker is needed 

to ensure that heating oil is not sold into 

the NRLM market as high sulfur NRLM 

fuel. The marker is needed only if high 

sulfur NRLM fuels will otherwise be in 

the market. High sulfur NRLM fuel can 

be produced under the small refiner and 

credit provisions, and through the 

generation of high sulfur NRLM in the 

distribution system from the 

downgrading of 500 ppm sulfur NRLM. 

In evaluating the feasibility of avoiding 

the heating oil marker, EPA therefore 

focused on determining the likely 

production and marketing of these high 

sulfur NRLM fuels in portions of PADD 

I in this time frame. 

We held in-depth discussions with 

organizations representing refiners, 

pipelines, and terminal operators to 

evaluate this issue. Representatives of 

non-small refiners including API and 

NPRA stated that being precluded from 

selling sulfur credit fuel in the 

Northeast and Mid-Atlantic would not 

significantly reduce the intended 

benefits to refiners of the credit 

provisions in today’s rule. We also 

spoke with small refiner representatives 

of and the specific small refiners whose 

marketing area might include the 

Northeast and Mid-Atlantic and found 

that in fact, small refiners were not 

expected to market fuel in this area. 

Finally, we evaluated the current and 

likely future practices in the Northeast 

and Mid-Atlantic areas for the sale of 

downgraded fuel generated in the 

distribution system. We found that this 

downgraded diesel fuel could easily 

continue to be sold in the very large and 

ubiquitous heating oil market that is 

expected to continue to exist in this 

region. This avoids any need for 

additional storage or tankage for both 

high sulfur and low sulfur NRLM fuels, 

and fits into the pre-existing market 

structure for heating oil. 

Consequently, unlike the rest of the 

country, there was little expected need 

to maintain a high sulfur NRLM market 

in this part of the country as an outlet 

for small refiner, credit, or offspecification, downgraded diesel fuel. 

Based on this input, we concluded that 

codifying this expected practice and 

making it enforceable, i.e. not allowing 

high sulfur fuel to be marketed as NRLM 

in this area of the country, would be 

consistent with the current distribution 

practices in this area of the country and 

that the potential impact of taking such 

an approach on the flexibility offered in 

the program would be minimal or 

nonexistent. If we codified it we would 

no longer need the marker requirement, 

and the resulting benefits and cost 

savings to terminals would be 

substantial. The approach would also 

simplify and strengthen the enforcement 

of today’s sulfur requirements in this 

area by allowing EPA to enforce the 

NRLM standards simply based on the 

measurement of the sulfur content of the 

fuel. There would be little expected 

impact on the environment as this is not 

expected to change the amount of high 

sulfur fuel produced from small 

refiners, credit usage, or downgrade in 

the distribution system, only the market 

into which it is sold. 

39064 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

119See chapter V of the RIA for a detailed 

discussion of the analysis which supports our 

definition of the Northeast/Mid-Atlantic areas 

where the marker requirement is waived. See

section VI of today’s preamble and chapter VII of 

the RIA for a discussion of the costs of the heating 

oil marker requirements finalized by today’s rule.

In deciding which parts of PADD I to 

use this enforcement mechanism, we 

attempted to minimize the number of 

terminals that would need to install new 

injection equipment and the amount of 

heating oil that would need to be 

marked, while preserving the benefits of 

the small refiner and credit fuel 

provisions in today’s rule to the 

maximum extent possible. To assess the 

placement of the boundary for the 

Northeast/Mid-Atlantic area where the 

marker requirement was waived, we 

evaluated the magnitude of heating oil 

demand by state (see chapter 5 of the 

RIA), solicited input from the 

potentially affected parties, evaluated 

the area supplied by the pipeline 

distribution systems that are expected to 

continue to ship heating oil after the 

implementation of today’s rule, 

evaluated the locations of terminals that 

are likely to receive bulk shipments of 

heating oil, evaluated the distribution 

area of small refiner(s) for high sulfur 

NRLM diesel fuel, and reviewed heating 

oil use levels in areas that will have 

access to bulk shipments of heating oil. 

Based on our assessment we concluded 

that defining the Northeast/Mid-Atlantic 

area as described below would best 

achieve our goals.119 In most cases, 

whole states in PADD 1 were assigned 

to this ‘‘Northeast/Mid-Atlantic’’ area. 

This decision was primarily based on 

the continued high level of heating oil 

use projected in these states and the 

lack of significant concern regarding the 

elimination of the program’s flexibilities 

to produce high sulfur NRLM diesel fuel 

in these states. A few counties in 

Eastern West Virginia were also 

assigned to the Northeast/Mid-Atlantic 

area based on supply patterns in the 

area. On the other hand, a number of 

counties in Western New York and 

Pennsylvania were not assigned to the 

Northeast/Mid-Atlantic area due to the 

need to maintain flexibilities for refiners 

serving this area.

In summary, the areas excluded from 

the marker requirement and where the 

sale of NRLM diesel fuel produced or 

imported under the credit and hardship 

provisions or from the downstream 

downgrade provisions of today’s rule is 

prohibited are: North Carolina, Virginia, 

Maryland, Delaware, New Jersey, 

Connecticut, Rhode Island, 

Massachusetts, Vermont, New 

Hampshire, Maine, Washington DC, 

New York (except for the counties of 

Chautauqua, Cattaraugus, and 

Allegany), Pennsylvania (except for the 

counties of Erie, Warren, Mc Kean, 

Potter, Cameron, Elk, Jefferson, Clarion, 

Forest, Venango, Mercer, Crawford, 

Lawrence, Beaver, Washington, and 

Greene), and the eight eastern-most 

counties in West Virginia (namely: 

Jefferson, Berkeley, Morgan, Hampshire, 

Mineral, Hardy, Grant, and Pendleton). 

The Northeast/Mid-Atlantic Area is 

illustrated in the following figure:

As discussed in section IV.D.2 below, 

the marker requirement for 500 ppm 

sulfur LM diesel fuel that will be 

effective outside of this Northeast/MidAtlantic area and Alaska from June 1, 

2010, through May 31, 2012, was not a 

significant factor in our evaluation of 

how to define the boundary of the 

Northeast/Mid-Atlantic area. We expect 

that locomotive and marine diesel fuel 

subject to the marker requirements will 

primarily be distributed via segregated 

pathways from a limited number of 

refineries. Therefore, a significant 

number of terminals will not need to 

handle LM diesel fuel that is subject to 

the marker requirement. Thus, the 

potential cost of installing injection


ER29JN04.003</GPH>
Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39065

equipment to add the marker to 500 

ppm sulfur LM diesel fuel which is 

subject to the marker requirement will 

be limited to only a few refineries and 

terminals (i.e. approximately 15, see

section VI.A of today’s preamble). 

In all areas of the country other than 

the Northeast/Mid-Atlantic area shown 

in figure IV.D–1 (and Alaska as 

discussed below), heating oil, and high 

sulfur NRLM diesel fuel will be 

designated at the refinery or importer 

and tracked through the distribution 

system to the terminal. From June 1, 

2010, through May 31, 2012, 500 ppm 

sulfur LM diesel fuel and 500 ppm 

nonroad diesel fuel must also be 

designated at the refinery or importer 

and tracked through the distribution 

system to the terminal outside of the 

Northeast/Mid-Atlantic area and Alaska. 

The specified fuel marker (see section 

V.E of this preamble) must be added to 

heating oil distributed from all 

terminals located outside of the 

Northeast/Mid-Atlantic area defined 

above and Alaska. The same fuel marker 

must also be added to 500 ppm sulfur 

LM diesel fuel produced at a refinery or 

imported that is distributed from 

terminals located outside of the 

Northeast/Mid-Atlantic area and Alaska 

from June 1, 2010, through May 31, 

2012. This includes all heating oil and 

the subject 500 ppm sulfur LM diesel 

fuel distributed from terminals outside 

of the Northeast/Mid-Atlantic area 

regardless of whether the fuel is 

delivered to a retailer, wholesale 

purchaser-consumer, or end-user 

located inside or outside of the 

Northeast/Mid-Atlantic area. 

Terminals inside the Northeast/MidAtlantic area are exempted from the fuel 

marker requirements in today’s rule, but 

only for the volume of heating oil and 

500 ppm sulfur LM diesel fuel subject 

to the marker requirements that is used 

by wholesale-purchaser-consumers and 

end-users that are located inside the 

Northeast/Mid-Atlantic area. Any 

heating oil and subject 500 ppm sulfur 

LM diesel fuel distributed from 

terminals inside the Northeast/MidAtlantic area to a retailer, wholesalepurchaser-consumer, or end-user that is 

located outside of the Northeast/MidAtlantic area must be marked. 

Terminal operators do not often 

distribute fuel to retailers, wholesalepurchaser-consumers, and end-users 

directly. This task is frequently 

accomplished by ‘‘jobbers’’ who pick up 

large tank truck loads of fuel from the 

terminal for delivery to their retailer and 

wholesale-purchaser-consumer 

customers, ‘‘heating oil dealers’’ who 

pick up fuel from a terminal using a 

smaller capacity tank truck (often 

referred to as a tank wagon) for direct 

delivery to heating oil users, and by 

bulk plant operators. Bulk plant 

operators pick up fuel from terminals as 

described above. However, since they 

maintain their own bulk fuel storage 

facilities, they have the choice of storing 

the fuel at their facility prior to eventual 

delivery to their customers. Under the 

provisions of today’s rule, as long as a 

bulk plant only receives heating oil to 

which the marker has already been 

added, it does not have to register, keep 

records, or report. However, if it chooses 

to receive any unmarked heating oil, 

then it will be treated the same as a large 

terminal under the provisions of today’s 

final rule. We do not expect that bulk 

plants will handle LM diesel fuel to a 

significant degree. For bulk plant 

operators that might handle LM diesel 

fuel, today’s rule provides that as long 

as a bulk plant does not receive any 500 

ppm sulfur LM diesel fuel which is 

required to be marked under today’s 

rule, but which has not yet been 

marked, it does not have to register, 

keep records, or report. However, if it 

chooses to receive any unmarked 500 

ppm sulfur LM diesel fuel which is 

subject to the marker requirements 

under today’s rule, then it will be 

treated the same as a large terminal 

under the provisions of today’s final 

rule. 

Any party that transports bulk 

quantities of heating oil solely to the 

Northeast/Mid-Atlantic area or within 

this area is not subject to the designate 

and track requirements for heating oil 

described below. Similarly, any party 

that transports bulk quantities of 500 

ppm sulfur LM diesel fuel solely to the 

Northeast/Mid-Atlantic area or within 

this area is not subject to the designate 

and track requirements for LM diesel 

fuel. However, any high sulfur fuel 

distributed from inside the Northeast/

Mid-Atlantic area to outside of the 

Northeast/Mid-Atlantic area must be 

designated as heating oil by the party 

responsible for the transfer and must be 

marked. Likewise, any 500 ppm sulfur 

LM diesel fuel distributed from inside 

the Northeast/Mid-Atlantic area from 

June 1, 2010, through May 31, 2012, 

must be designated as 500 ppm sulfur 

LM diesel fuel by the party responsible 

for the transfer and must be marked.

Entities who are required to inject 

marker into heating oil must maintain 

records of the volume of marker used in 

heating oil, and the volume of heating 

oil distributed over the compliance 

period. Entities that are required to 

inject marker into 500 ppm sulfur LM 

diesel fuel must maintain records of the 

volume of marker used in 500 ppm 

sulfur LM diesel fuel, and the volume of 

500 ppm sulfur LM diesel that is 

required to be marked which is 

distributed over the compliance period. 

These records must demonstrate that the 

prescribed marker concentration was 

present in the heating oil and the 500 

ppm sulfur LM diesel fuel subject to the 

marker requirement that they 

discharged. 

iii. State of Alaska 

Although the fuel marker facilitates 

the enforcement of the NRLM diesel fuel 

sulfur standards by distinguishing it 

from heating oil, as described above, we 

are not requiring use in Alaska. Unlike 

the situation in the Northeast and MidAtlantic area, however, we are not 

prohibiting the production of high 

sulfur NRLM diesel fuel after 2007, and 

500 ppm nonroad diesel fuel from after 

2010 by small refiners in Alaska. While 

such a prohibition in the Northeast/

Mid-Atlantic area does not impact small 

refiners, flexibility for small refiners is 

expected to be important in Alaska. 

Thus, we need to preserve the flexibility 

for high sulfur NRLM diesel fuel in 

Alaska for small refiners along with 

eliminating the marker. The program 

must therefore provide another means of 

enforcing the NRLM diesel fuel sulfur 

standards without eliminating a small 

refiner’s ability to produce and 

distribute high sulfur NRLM diesel fuel. 

Under today’s program we are 

finalizing a provision that will allow 

flexibility for small refiners to delay 

compliance with the NRLM diesel fuel 

sulfur standards as discussed in section 

IV.B. Small refiners in Alaska may avail 

themselves of this option provided that 

the refiner first obtains approval from 

the administrator for a compliance plan. 

The plan must at a minimum show the 

following information:

(1) How they will segregate its fuel through 

to end-users; 

(2) How they will segregate its fuels from 

other grades and other refiners’ fuels; and 

(3) All end-users to whom the fuel is sold 

as well as the fuel volumes.

End-users who receive the fuel must 

retain records of all fuel shipments to 

demonstrate that no heating oil was 

used in NRLM diesel equipment and 

that no 500 ppm sulfur LM diesel was 

used in nonroad equipment. In order to 

limit the potential sources of fuel not 

meeting the sulfur standard, constrain 

the number of end-users who may 

legitimately have higher sulfur fuel in 

their NRLM diesel equipment, and thus 

maintain the overall program’s 

enforceability, we are not finalizing the 

other provisions that allow for higher 

sulfur fuel to be produced and/or 

distributed in Alaska (i.e., credit, 

transmix processor, or downstream 

39066 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

120The use of 500 ppm fuel in nonroad 

equipment is restricted to 2011 model year and 

earlier equipment.

distribution system provisions). In this 

regard, Alaska is treated in the same 

manner as the Northeast/Mid-Atlantic 

area. 

c. Updating the Highway Program’s 

Anti-Downgrade Requirements 

Under the highway diesel fuel 

program, each entity in the distribution 

system may downgrade a maximum of 

20 percent of the 15 ppm sulfur 

highway diesel fuel it receives to 500 

ppm sulfur highway diesel fuel. 

However, there was no limit on the 

volume of 15 ppm sulfur highway diesel 

fuel that could be downgraded to NRLM 

diesel fuel. Prior to today’s rule, this 

was appropriate because the sulfur 

content of NRLM diesel fuel was 

uncontrolled, and hence once 15 ppm 

sulfur highway diesel fuel was 

downgraded to NRLM diesel fuel such 

fuel could not be used in the 500 ppm 

sulfur highway diesel market. The 

implementation of today’s 500 ppm 

sulfur standard for NRLM diesel fuel, 

however, means that 15 ppm sulfur 

highway fuel downgraded to 500 ppm 

sulfur NRLM diesel fuel potentially 

could be shifted into the highway 

market. This could undermine the 

benefits of the highway program for the 

reasons described previously. To 

prevent this situation, we proposed that 

the anti-downgrading requirements 

under the highway diesel program 

would also apply to the downgrading of 

15 ppm sulfur highway diesel fuel to 

500 ppm sulfur NRLM diesel fuel. We 

received comments from refiners and 

fuel distributors that such a limitation 

would restrict their ability to supply the 

NRLM diesel market, particularly in 

areas where refiners plan to supply only 

15 ppm sulfur diesel fuel for both the 

highway and NRLM markets.

Putting in place the designate and 

track provisions allows 500 ppm sulfur 

highway and 500 ppm sulfur NRLM 

diesel fuel to be tracked separately. This 

enables the anti-downgrading 

requirements to only apply to the 

downgrading of 15 ppm sulfur highway 

diesel fuel to 500 ppm sulfur highway 

fuel as originally required in the 2007 

highway final rule. In the context of the 

designate and track requirements in 

today’s rule, the highway program’s 

anti-downgrading provisions are 

clarified as described below. Similar to 

the approach described above regarding 

the prevention of the use of 500 ppm 

sulfur NRLM diesel fuel in the highway 

market, each custodian of 15 ppm sulfur 

No. 2 highway diesel fuel must maintain 

records that demonstrate their 

compliance with the highway program’s 

anti-downgrade requirements. The antidowngrading requirements do not apply 

to 15 ppm sulfur No 1, diesel fuel. Such 

fuel will be manufactured for 

wintertime blending to improve diesel 

cold flow properties. In a number of 

areas we expect that 15 ppm sulfur No. 

1 fuel will be the only No.1 fuel 

available for winterizing highway and 

NRLM diesel fuel, and heating oil. 

Therefore, applying the antidowngrading requirements to 15 ppm 

sulfur No. 1 fuel would be unnecessary 

to maintain the availability of 15 ppm 

sulfur highway diesel fuel, and would 

interfere with its intended use in the 

range of No. 2 fuels. 

From October 1, 2006, through May 

31, 2010, all fuel distributors 

downstream of the refiner or import 

facility must satisfy one of four criteria 

as outlined in 40 CFR 80.598 of today’s 

regulation to demonstrate compliance 

with the highway program’s antidowngrading requirements. These 

criteria are based on the designate and 

track system for different grades of fuel 

through the distribution system. The 

first criteria is the simplest and most 

straightforward, with the least record 

keeping burden. It merely tracks a 

facility’s No. 2 15 ppm sulfur highway 

diesel volume receipts and deliveries 

and requires the deliveries to be at least 

80 percent of the receipts. Since the 

anti-downgrading provisions were 

implemented to protect against 

intentional downgrading and not to 

limit downgrading that would occur in 

the normal distribution of 15 ppm sulfur 

fuel, we anticipate that most facilities 

will be able to easily meet this simple 

criteria. 

The second criteria tracks a facility’s 

receipts and distribution of both No. 2 

15 ppm sulfur fuel and No.2 500 ppm 

sulfur highway diesel fuel, and limits 

deliveries of No. 2 500 ppm sulfur 

highway diesel fuel to no more than 

what was received plus 20 percent of 

the No. 2 15 ppm sulfur highway diesel 

fuel volume received. This allows more 

flexibility than the first criteria by not 

constraining downgrades to NRLM 

diesel fuel or heating oil, but does so by 

requiring tracking and records of 

volumes of No. 2 15 ppm sulfur 

highway diesel fuel received and the 

products to which it is downgraded. 

The third and fourth criteria provide 

even more flexibility, especially for 

wintertime blending of No. 1 15 ppm 

sulfur highway diesel fuel, and also for 

any temporary shifts that might occur 

between NRLM diesel fuel and highway 

diesel fuel markets from 2007–2010. 

However, a facility will have to meet 

more extensive criteria to demonstrate 

compliance.

Today’s final rule does not change 

any other aspects of the antidowngrading provisions finalized in the 

2007 highway diesel final rule, such as 

the provisions unique to fuel retailers. 

2. Requirements During the Second Step 

of Today’s Sulfur Control Program 

Beginning June 1, 2010, all NR diesel 

fuel and beginning June 1, 2012 all LM 

diesel fuel produced or imported must 

meet a 15 ppm sulfur standard except 

for fuel manufactured under the credit 

and small refiner provisions in today’s 

rule. This credit and small refiner diesel 

fuel must meet a 500 ppm sulfur level. 

From June 1, 2010 to June 1, 2012, all 

LM diesel fuel must meet a 500 ppm 

sulfur standard. Today’s rule also allows 

500 ppm sulfur diesel fuel generated in 

the pipeline distribution system to be 

used in NRLM equipment through May 

31, 2014 120 and in locomotive and 

marine equipment thereafter. After May 

31, 2014, the credit and small refiner 

provisions expire.

We proposed that once refiners were 

no longer able to produce 500 ppm 

sulfur diesel fuel for use in nonroad 

engines and such fuel had a few months 

to work its way through the distribution 

system, that 500 ppm sulfur diesel fuel 

could no longer be used in nonroad 

equipment. Today’s rule adopts this 

proposed prohibition. Although today’s 

rule extends the 15 ppm sulfur nonroad 

diesel standard to locomotive and 

marine diesel fuel, we have elected not 

to extend the prohibition against the use 

of 500 ppm sulfur diesel fuel in 

locomotive and marine equipment after 

refiners and importers are no longer 

allowed to produce/import such fuel. 

Diesel fuel with a maximum sulfur 

concentration of 500 ppm that is 

generated in the pipeline distribution 

system can continue to be used in 

locomotive and marine equipment after 

June 1, 2014, as discussed in section 

IV.A above. 

Providing for the continued use of 500 

ppm sulfur diesel fuel in NRLM 

equipment through May 31, 2014, 

means that without adequate controls 

similar to those under the first step of 

today’s program, a refiner could 

manufacture 500 ppm sulfur diesel fuel 

ostensibly for use as heating oil which 

could actually be sold downstream into 

the NRLM market through May 31, 

2014. Similarly, the continued use of 

500 ppm fuel in locomotive and marine 

engines after May 31, 2014, means that 

without adequate controls, a refiner 

could continue to manufacture 500 ppm 

sulfur diesel fuel ostensibly for use as 

heating oil which could actually be sold 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39067

121Unless, in the case of Alaska, the refiner 

segregates its fuel through to the end user as 

discussed in section IV.D.1.b.ii.

122This requirement also applies to parties inside 

of the Northeast/Mid-Atlantic area who handle 

heating oil.

123Transmix operators that produce diesel fuel 

from transmix and terminal operators that produce 

from segregated interface will be treated as a refiner 

Continued

downstream into the locomotive and 

marine market indefinitely. To prevent 

this possibility, we have elected to 

continue the designate and track and 

marker requirements for heating oil 

applicable under the first step of today’s 

program indefinitely with some 

simplifications. It is a significantly 

smaller program during the second step, 

since only heating oil needs to be 

tracked, and we expect that by then very 

little heating oil will be produced for 

sale outside of the Northeast/MidAtlantic area. Consistent with the 

approach taken during the first step of 

today’s program, these designate and 

track provisions would not be 

applicable in the Northeast/MidAtlantic area or Alaska, since the 

flexibility to sell greater than 15 ppm 

sulfur diesel fuel into the NRLM market 

there does not exist under this final 

rule.121 Any diesel fuel with a sulfur 

content greater than 500 ppm beginning 

June 1, 2007, any NR diesel fuel with 

greater than 15 ppm sulfur beginning 

June 1, 2010, and any LM diesel fuel 

with greater than 15 ppm sulfur 

beginning June 1, 2012 in the Northeast/

Mid-Atlantic area can only be sold as 

heating oil, and if shipped outside of the 

Northeast/Mid-Atlantic area must be 

marked as heating oil.

While today’s rule does not contain 

an end date for the downstream 

distribution of 500 ppm sulfur 

locomotive and marine fuel, we will 

review the appropriateness of allowing 

this flexibility based on experience 

gained from implementation of the 15 

ppm sulfur NRLM diesel fuel standard. 

We expect to conduct such an 

evaluation in 2011. Were we to 

discontinue the downstream provision 

for downgraded fuel, we would also 

evaluate discontinuing the designate 

and track and marker requirements for 

heating oil, as is the case now for the 

Northeast/Mid-Atlantic area. 

Providing for the continued 

production and import of 500 ppm 

sulfur LM diesel fuel from June 1, 2010 

to June 1, 2012 means that without 

adequate controls similar to those under 

the first step of today’s program, a 

refiner could manufacture 500 ppm 

sulfur diesel fuel ostensibly for use as 

LM diesel fuel which could actually be 

sold downstream into the NR market. To 

prevent this possibility, we have 

adopted designate and track and marker 

requirements similar to those applicable 

to heating oil under the first step of 

today’s program. For these two years, 

500 ppm sulfur NR and LM diesel fuel 

would be tracked, and the 500 ppm 

sulfur LM fuel would be marked in the 

same manner as heating oil. The same 

provisions that apply to marking of 

heating oil, such as the Northeast/MidAtlantic area, would also apply to the 

marking of 500 ppm sulfur LM fuel. The 

tracking and marking provisions would 

not apply to any 15 ppm sulfur LM 

diesel fuel. 

3. Summary of the Designate and Track 

Requirements 

The designate and track program 

requires refiners and importers to 

designate the volumes of diesel fuel 

they produce and/or import. Refiners/

importers will identify whether their 

diesel fuel is highway or NRLM and the 

applicable sulfur level. They may then 

mix and fungibly ship highway and 

NRLM diesel fuels that meet the same 

sulfur specification without dyeing their 

NRLM diesel fuel at the refinery gate. 

The volume designations will follow the 

fuel through the distribution system 

with limits placed on the ability of 

downstream parties to change the 

designation. These limits are designed 

to restrict the inappropriate sale of 500 

ppm sulfur NRLM diesel fuel into the 

highway market; from 2007 to 2010, the 

inappropriate sale of 500 ppm sulfur LM 

diesel fuel into the 500 ppm sulfur NR 

market from 2010 to 2012; and the 

inappropriate sale of heating oil into the 

NRLM market. The designate and track 

approach includes record keeping and 

reporting requirements for all parties in 

the fuel distribution system, associated 

with tracking designated fuel volumes 

through each custodian in the 

distribution chain until the fuel exits 

the terminal. The program also includes 

enforcement and compliance assurance 

provisions to enable the Agency to 

rapidly and accurately review for 

discrepancies the large volume of data 

collected on fuel volume hand-offs.

a. Registration 

Each entity in the fuel distribution 

system, up through and including the 

point where fuel is loaded onto trucks 

for distribution to retailers or wholesale 

purchaser-consumers, must register 

each of its facilities with EPA no later 

than December 31, 2005, or six months 

prior to commencement of producing, 

importing, generating, or distributing 

any designated diesel fuel.122 A facility 

is defined as the physical location(s) 

where a party has custody of designated 

fuel, from when it was produced, 

imported, or received from one party to 

when it is delivered to another party. 

The definition also include mobile 

components, such as the vessels in a 

barge facility. Examples of facilities 

include refineries, import terminals, 

pipelines, terminals, bulk plants, and 

barge systems. Where the same entity 

owns and operates a series of locations 

in the distribution system (e.g., refiner 

to pipeline to terminal), it may choose 

to register them as a single aggregated 

facility, provided the entity maintains 

custody of the fuel throughout the 

facility. However, if the aggregated 

facility includes a refinery, then it may 

not receive any diesel fuel from another 

entity at any place within the aggregated 

facility. Under this approach, a pipeline 

could be treated as one facility from the 

point where it receives fuel to the point 

where it either delivers it to a terminal, 

or into a tank truck after passing 

through their terminal. The choice made 

by the entity to treat these places as a 

single facility or separate facilities may 

not change during any applicable 

compliance period. These same 

definitions for facility will apply for 

both the designate and track provisions, 

as well as the anti-downgrading 

provisions of the highway rule. 

Therefore, if a proprietary system 

chooses to aggregate into one facility for 

purposes of the designate and track 

provisions, it will also be treated as one 

facility for determining compliance with 

the 20 percent anti-downgrading limit of 

the highway rule. EPA will provide a 

unique registration number to each 

custodial facility of designated fuels. In 

addition, EPA intends to work with 

industry subsequent to this final rule to 

provide guidance regarding facility 

boundary and aggregation decisions that 

will address the many unique 

situations.

The designation provisions described 

below require refiners and importers to 

designate all distillates they produce or 

import consistent with the production 

and end-use requirements in today’s 

rule. These designations serve as the 

foundation upon which the fuel 

distributors are able to properly track, 

designate, redesignate, and label the fuel 

they receive. 

b. Designation by Refiners and 

Importers

i. Designation of 500 ppm and 15 ppm 

Sulfur Diesel Fuel 

From June 1, 2006, through May 31, 

2010, any refiner 123 or importer that 

39068 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

for the purposes of compliance with these 

requirements.

produces or imports 15 ppm sulfur 

diesel fuel, and/or 500 ppm sulfur 

diesel fuel must designate all batches of 

such fuel as one of the following. The 

purpose of this designation requirement 

is to ensure that 500 ppm sulfur NRLM 

diesel fuel is not shifted into the 

highway market, and to evaluate 

compliance with the highway program’s 

anti-downgrade requirements.

• 15 ppm sulfur No. 2 highway diesel 

fuel; 

• 15 ppm sulfur No. 1 highway diesel 

fuel; 

• 500 ppm sulfur No. 2 highway 

diesel fuel; 

• 500 ppm sulfur No. 1 highway 

diesel fuel; 

• 500 ppm sulfur No. 2 NRLM diesel 

fuel; 

• 500 ppm sulfur No. 1 NRLM diesel 

fuel; 

• 500 ppm sulfur jet fuel; or 

• 500 ppm sulfur kerosene. 

The start date for these requirements 

coincides with the start date for the 

early credit program under today’s final 

rule, and the start date for the highway 

diesel program for the purposes of antidowngrading. The end date for these 

requirements coincides with the end 

date for the highway program’s 

Temporary Compliance Option and 

today’s NRLM diesel fuel early credit 

program. 

Any batch of 15 ppm or 500 ppm No. 

1 diesel fuel which is also suitable for 

use as kerosene or jet fuel (referred to as 

dual-purpose kerosene) may be 

considered kerosene or jet fuel and need 

not be designated as highway or NRLM 

diesel fuel, even if it may later be 

blended into highway or NRLM diesel 

fuel downstream of the refinery to 

improve the cold-flow properties of the 

fuel. Upon such blending, the kerosene 

or jet fuel takes on the designation of the 

diesel fuel into which it was blended. 

We expect refiners and importers will 

elect to designate all of their 15 ppm 

sulfur No. 1 diesel fuel as highway fuel, 

since this will aid in their compliance 

with the highway program’s 80/20 

highway fuel production requirement. 

Designation as highway diesel fuel by 

the refiner will also help avoid 

downstream blending from causing a 

violation by the downstream party 

under the tracking and compliance 

calculations finalized today. We also 

expect that refiners and importers will 

elect to designate their 500 ppm sulfur 

No. 1 fuel as kerosene or jet fuel since 

this will be the predominant use for 

such fuel, and designating it as highway 

would hinder their compliance with the 

80/20 highway requirements. As with 

15 ppm sulfur kerosene or jet fuel, 

downstream parties would later 

redesignate it as highway or NRLM 

diesel fuel if blended in or used for 

these purposes. Any 500 ppm sulfur 

diesel fuel containing visible evidence 

of red dye must be designated as NRLM 

diesel fuel or heating oil unless it is tax 

exempt highway diesel fuel (e.g., fuel 

for use in school buses or certain 

municipal fleets). 

The reported volumes of designated 

fuels must be the volumes delivered to 

the first downstream party. This is 

typically a pipeline facility, a marine 

barge/tanker loading dock that accepts 

product from a refiner/importer, or the 

refiner’s/importer’s truck loading rack. 

This is consistent with normal business 

practices. Refiners, importers, and 

transmix processors are not required to 

add red dye to NRLM diesel fuel unless 

the fuel is distributed over their truck 

loading rack such that the IRS requires 

the addition of red dye for the 

assessment of taxes. 

Fuel designated by a refiner or 

importer as highway diesel fuel must 

comply with the highway program’s 80/

20 requirement for 15 ppm/500 ppm 

sulfur highway diesel fuel. The volume 

of fuel designated as NRLM early credit 

fuel must be consistent with the credit 

provisions in today’s rule. Since 

highway diesel fuel volumes are 

determined at the point of delivery from 

the refiner/importer to another party, 

the anti-downgrade requirements do not 

apply to refiners and importers. Under 

the highway diesel fuel program, 

refiners that are required to produce 100 

percent of their highway diesel fuel to 

a 15 ppm sulfur standard are provided 

with an allowance to deliver a small 

percentage of 500 ppm sulfur diesel fuel 

to the pipeline (e.g., small refiners and 

GPA refiners who exercise an option 

under the 2007 highway rule to delay 

compliance with gasoline sulfur 

standards). This allowance is provided 

because a small volume of ‘‘line-wash’’

is typically generated in the feed line 

from the refiner’s facility to the 

pipeline. This line-wash will often be 

suitable for use as 500 ppm sulfur 

highway diesel fuel. Under the 

provisions of the highway rule this linewash could have been excluded from 

compliance with the 15 ppm standard if 

the refiner accounted for their 

production volume prior to shipment. 

However, in this rule, all volume-related 

requirements are keyed to the volume 

actually delivered. As a result of this 

change in the point of fuel volume 

measurement (delivered versus 

produced), we are amending the 

highway diesel fuel program 

requirements such that refiner who was 

previously required to produce 100 

percent of its highway diesel fuel to the 

15 ppm sulfur standard may now 

produce 95 percent to the 15 ppm sulfur 

standard (in order to avail itself of the 

extended gasoline sulfur interim 

standards). 

ii. Designation of High Sulfur NRLM 

Diesel Fuel, Heating Oil, and Jet Fuel/

Kerosene 

From June 1, 2007 through May 31, 

2010, any refiner, or importer not 

located in the Northeast/Mid-Atlantic 

area or Alaska, that produces or imports 

unmarked high sulfur distillate fuel 

must designate all batches of such fuel 

as one of the following: heating oil, high 

sulfur NRLM diesel fuel, or jet fuel/

kerosene. Any heating oil distributed 

from a refiner’s or importer’s rack not 

located in the Northeast/Mid-Atlantic 

area or Alaska must contain the 

designated marker and red dye. Any 

heating oil distributed from a refiner/

importer rack inside of the Northeast/

Mid-Atlantic area or Alaska is exempted 

from the marker requirement except any 

heating oil that is delivered outside the 

Northeast/Mid-Atlantic area must be 

marked. 

As discussed previously, 500 ppm 

sulfur diesel fuel may be used in NRLM 

equipment through May 31, 2014 and in 

locomotive and marine equipment 

thereafter. Therefore, designate and 

track provisions for heating oil will be 

needed to ensure that heating oil is not 

shifted into the NRLM market from June 

1, 2007 through May 31, 2014, and to 

the locomotive and marine market 

thereafter. Consequently, from June 1, 

2010 through May 31, 2014, refiners and 

importers must continue to designate 

any heating oil they produce as such as 

well as any 500 ppm sulfur NRLM 

diesel fuel produced under the small 

refiner, transmix/segregated interface, 

and credit provisions. 

Beginning June 1, 2014, refiners and 

importers may no longer produce or 

import 500 ppm sulfur diesel fuel for 

use in NRLM equipment. Therefore, 

beginning June 1, 2014, all diesel fuel 

with a sulfur level greater than 15 ppm 

must be designated as heating oil, jet 

fuel, or kerosene. The one exception to 

this is transmix processors and 

terminals acting as refiners which will 

be permitted to produce 500 ppm sulfur 

diesel fuel for use in locomotive and 

marine equipment from transmix and 

segregated interface. 

iii. Designation of 500 ppm NR and 500 

ppm LM Sulfur Diesel Fuel

From June 1, 2010, through May 31, 

2012, any refiner or importer that

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39069

124Any party is free to redesignate highway diesel 

fuel to NRLM diesel fuel or heating oil at any time. 

The required volume balance does not limit such 

designations.

produces or imports 500 ppm sulfur NR 

diesel fuel (small refiner and credit) 

and/or 500 ppm sulfur LM diesel fuel 

must designate all batches of such fuel. 

The purpose of this designation 

requirement is to ensure that 500 ppm 

sulfur LM diesel fuel is not shifted into 

the NR market. Any 500 ppm sulfur LM 

diesel fuel distributed from a refiner’s or 

importer’s rack not located in the 

Northeast/Mid-Atlantic area or Alaska 

must contain the designated marker and 

red dye, along with heating oil. Any 500 

ppm sulfur LM diesel fuel distributed 

from a refiner/importer rack inside of 

the Northeast/Mid-Atlantic area or 

Alaska is exempted from the marker 

requirement except any 500 ppm sulfur 

LM fuel that is delivered outside the 

Northeast/Mid-Atlantic area must be 

marked. 

c. Designation and Tracking 

Requirements Downstream of the 

Refinery or Importer 

The result of the refiner/importer 

designation provisions is that all of the 

diesel fuel received by distributors will 

be clearly and accurately designated. 

The distributors are then subject to their 

own designation and tracking 

requirements. The downstream 

provisions are designed to ensure that 

certain fuel shifts do not occur, such as 

the inappropriate shifting of 500 ppm 

sulfur NRLM diesel fuel to the highway 

market, the inappropriate shifting of 500 

ppm sulfur LM diesel fuel into the 

nonroad market, the inappropriate 

downgrading of 15 ppm sulfur to 500 

ppm sulfur highway diesel fuel, and the 

inappropriate shifting of heating oil to 

the NRLM market. The downstream 

provisions are designed to ensure these 

results in a readily enforceable manner 

while maximizing downstream 

flexibility to address changing market 

conditions. 

In general, each time custody of 

designated fuel is transferred from one 

facility to another facility, the transferor 

must designate the fuel and record it’s 

volume. The party who receives custody 

must record the same information, to 

ensure that each party relies on the 

same designation and volume for its 

own compliance purposes. This process 

occurs each time custody of diesel fuel 

is transferred. Each distributor may 

redesignate fuel while in its custody or 

when it is delivered, subject to certain 

basic requirements. First, any redesignation must be accurate. For 

example, 500 ppm sulfur NRLM diesel 

fuel can not be redesignated as 15 ppm 

unless it in fact meets the 15 ppm 

standard. The sulfur standard applicable 

to downstream fuel is based on the 

fuel’s designation. Second, there are 

limits on the fuel volumes that can be 

redesignated, calculated as a volume 

balance over a specified compliance 

period. Specifically, the volumes of 15 

ppm and 500 ppm sulfur highway 

received must be compared to the 

volumes of these fuels delivered, to 

ensure that the amount of 15 ppm sulfur 

highway diesel fuel that is downgraded 

to 500 ppm sulfur highway diesel fuel 

complies with the highway program’s 

anti-downgrading requirements. The 

volumes of 500 ppm sulfur highway and 

NRLM diesel fuel that a distributor 

receives must also be compared to the 

volumes of 500 ppm sulfur highway and 

NRLM diesel fuel delivered, to ensure 

that NRLM diesel fuel was not 

inappropriately transferred to the 

highway market. The volumes of 500 

ppm sulfur NR and LM diesel fuel 

received must be compared to the 

volumes of 500 ppm sulfur NR and LM 

diesel fuel delivered, to ensure that the 

500 ppm sulfur LM fuel was not 

inappropriately transferred to the NR 

market. In addition, the volumes of 

heating oil received must be compared 

to the volumes distributed to ensure it 

was not inappropriately transferred to 

the NRLM market. These volume 

balances are calculated over a 

compliance period, providing 

distributor’s the day to day flexibility to 

redesignate fuel based on market 

conditions, as long as the required 

volume balance is achieved over the 

compliance period. Finally, once NRLM 

diesel fuel is dyed, 500 ppm sulfur LM 

diesel fuel is marked (2010–2012), or 

heating oil is marked, the dye and 

marker may be used to ensure the fuels 

are not inappropriately shifted to other 

markets, and the designation, tracking 

and volume balance requirements are no 

longer needed; just the PTD, labeling, 

and record keeping provisions typical of 

our other fuel regulations (e.g., highway 

diesel) apply.

In large part, the designate and track 

provisions are structured to be 

compatible with the normal business 

practices currently used by the industry 

to record and reconcile volume 

transactions between parties. As such, 

EPA expects that these downstream 

provisions can be implemented in a 

fairly straightforward manner. 

i. Designation and Tracking of 500 ppm 

and 15 ppm Sulfur Diesel Fuel 

From June 1, 2006 through May 31, 

2010, facilities downstream of the 

refiner or importer must designate and 

maintain records of all volumes of fuel 

designated as 15 ppm sulfur highway 

diesel fuel, 500 ppm sulfur highway 

diesel fuel, or 500 ppm sulfur NRLM 

diesel fuel that they receive and deliver. 

In many cases, we expect that 

downstream facilities will not change 

the designation of 500 ppm sulfur diesel 

fuel from NRLM diesel fuel to highway 

while the fuel is in their custody. 

However, to accommodate fluctuations 

in the demand for highway-designated 

versus NRLM-designated 500 ppm 

sulfur fuel, today’s rule allows terminals 

and other distributors to change the 

designation of 500 ppm sulfur fuel from 

NRLM diesel fuel to highway diesel fuel 

on a daily basis, as long as the required 

volume balance is achieved over the 

compliance period.124 Terminal 

operators must ensure that the running 

balance of total highway-designated fuel 

that they discharged from the beginning 

of today’s program does not exceed the 

volume of highway fuel that they 

received since, and had in their 

possession at the beginning of today’s 

program (adjusted for changes in 

inventory). This simple one-sided test 

allows 15 ppm sulfur highway diesel 

fuel to flow to 500 ppm sulfur highway 

diesel fuel (subject to anti-downgrading 

limits), 500 ppm sulfur NRLM diesel 

fuel, or heating oil. It also allows 500 

ppm sulfur highway diesel fuel to flow 

to NRLM diesel fuel or heating oil. 

However, the flow of NRLM diesel fuel 

to highway diesel fuel must first have 

been offset by shifts from highway to 

NRLM diesel fuel. In this way we can 

have assurance that the 500 ppm sulfur 

fuel sold for highway purposes was in 

fact produced pursuant to the 80/20 

requirements of the highway rule. Since 

any 500 ppm sulfur diesel fuel in the 

possession of parties downstream of the 

refiner at the beginning of today’s 

program will be considered as highway 

diesel fuel, each custodian will begin 

today’s program with a positive 

volumetric account balance regarding 

their input/output of highwaydesignated 500 ppm sulfur. Conformity 

with this requirement will be evaluated 

by EPA at the end of each quarterly 

compliance period.

In order to accommodate volumetric 

fluctuations due to such factors as 

thermal expansion of the fuel, facilities 

such as pipelines upstream of the 

terminal can use the same volumetric 

balance. However, since these facilities 

typically do not, and should not change 

designations, the compliance periods 

can be annual. In addition, to ensure 

that there are no significant 

redesignations, we are also requiring 

that the volume of highway-designated 

500 ppm sulfur diesel fuel that a facility 

39070 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

125As discussed in section V, these records must 

be kept for five years.

discharges from its custody must be no 

greater than 102 percent of the volume 

of such fuel that it received during each 

annual compliance period. All parties 

downstream of the refiner, importer, or 

transmix processor also must 

demonstrate that over any given 

compliance period, they did not 

downgrade more than 20 percent of the 

15 ppm highway diesel fuel that they 

received to 500 ppm sulfur highway 

diesel fuel. 

From June 1, 2006 through May 31, 

2010, distributors must maintain 

records regarding each transfer of a 

designated fuel into and out of their 

facility on a batch-by-batch basis. These 

records must include the EPA 

registration number of the source or 

recipient facility, and the volume of 

each designated fuel transfer. However, 

for transfers of dyed NRLM and 

highway diesel fuel on which taxes have 

been assessed, the recipient or source 

facility need not be specifically 

identified. In such cases, records must 

be kept regarding the total volume of 

dyed and tax assessed fuel that is 

received, discharged, and in inventory 

during each compliance period. After 

May 31, 2010, unique records for these 

designate and track provisions are no 

longer required, but the normal records 

and PTDs must still be kept regarding 

compliance with the fuel standards. 

ii. Designation and Tracking of High 

Sulfur NRLM Diesel Fuel and Heating 

Oil 

The requirements regarding the 

designation and tracking of heating oil 

and high sulfur or 500 ppm sulfur 

NRLM diesel fuel parallel those 

regarding the designation and tracking 

of 500 ppm sulfur highway and NRLM 

diesel fuel discussed above. However, 

the requirements described below 

pertain only to facilities not in the 

Northeast/Mid-Atlantic area or Alaska, 

and to facilities inside of the Northeast/

Mid-Atlantic area that transport heating 

oil outside of the Northeast/MidAtlantic area. 

From June 1, 2007 through May 31, 

2010, facilities downstream of the 

refiner or importer must designate all 

high sulfur diesel fuel they distribute as 

NRLM diesel fuel and all heating oil 

they distribute as heating oil, and must 

keep records of all volumes of fuel 

designated as high sulfur NRLM diesel 

fuel or heating oil. In many cases, we 

expect that downstream facilities will 

not change the designation of diesel fuel 

from heating oil to high sulfur NRLM 

diesel fuel while the fuel is in their 

custody. However, today’s final rule 

provides the flexibility to make this 

change in designation provided that 

volume balance requirements for high 

sulfur NRLM diesel fuel are met.

The volume balance for heating oil 

requires that the volumes of high sulfur 

NRLM diesel fuel and heating oil 

received must be compared to the 

volumes of high sulfur NRLM diesel 

fuel and heating oil delivered over a 

compliance period. The volume of high 

sulfur NRLM diesel fuel may not 

increase by a greater proportion than the 

volume of heating oil over a compliance 

period. There are many reasons why the 

combined pool of high sulfur fuel will 

increase in volume such as the 

inevitable downgrades from 15 ppm and 

500 ppm when these fuels are shipped 

by pipeline. The volume balance allows 

for this to occur while keeping fuel 

produced as heating oil from being 

shifted to NRLM diesel fuel. The 

volume balance calculation allows high 

sulfur NRLM diesel fuel and heating oil 

to increase proportionately, satisfying 

both needs. As discussed previously, 

high sulfur NRLM diesel fuel and 

heating oil compliance will be required 

on a quarterly basis for terminal 

facilities that add marker/dye (and are 

more likely to change designations on a 

day to day basis), while compliance for 

other entities (e.g., pipelines) will be on 

an annual basis. Compliance with the 

volume balance requirement is 

determined by comparing volumes 

received and delivered during that 

compliance period. There is no need to 

have a running total volume of high 

sulfur NRLM diesel fuel delivered from 

the beginning of the program since we 

do not expect any party will need to 

redesignate heating oil to high sulfur 

NRLM diesel fuel, even on a day-to-day 

basis. Further, we are not providing any 

tolerance since sufficient flexibility 

already exists due to the many sources 

of downgrade to heating oil. 

Facilities must maintain records 

regarding each transfer of heating oil 

and high sulfur NRLM diesel fuel that 

they receive and discharge from June 1, 

2007 through May 31, 2010 on a batchby-batch basis.125 These records must 

include the EPA registration number of 

the source or recipient facility, and the 

volume of each fuel transfer. However, 

for transfers of marked heating oil, the 

recipient or source facility need not be 

specifically identified. In such cases, 

records must be kept regarding the total 

volume of marked heating oil that is 

received, discharged, and in inventory 

during each compliance period. For 

transfers of dyed high sulfur NRLM 

diesel fuel from a truck loading rack, the 

specific recipients also do not need to 

be identified. In such cases, records 

must be kept regarding the total volume 

of high sulfur NRLM diesel fuel that is 

received, discharged, and in inventory 

during each compliance period.

From June 1, 2010 through May 31, 

2014, facilities downstream of the 

refiner or importer must continue to 

designate heating oil and any 500 ppm 

sulfur NRLM diesel fuel that they 

distribute. Beyond June 1 2014, they 

must designate 500 ppm sulfur LM 

diesel fuel in addition to heating oil. 

Designations for heating oil are subject 

to the volume balance requirements and 

records must be kept on the 

designations. 

Beginning June 1, 2010, the volume 

balance requirement for heating oil is 

simply that the volume of heating oil 

may not decrease. As discussed 

previously, there are many reasons why 

the volume could increase. 

Consequently, if the volume decreases it 

would mean that heating oil is being 

shifted to NRLM or locomotive and 

marine uses, thereby allowing refiners 

to circumvent the NRLM diesel fuel 

sulfur standards. Given the likely 

increase in heating oil volume for other 

reasons, there should be ample 

flexibility provided with this one-sided 

test to account for minor variations due 

to volume swell/shrinkage related to 

temperature, meter differences, or other 

causes, so no additional tolerance or 

flexibility is necessary. 

iii. Designation and Tracking of 500 

ppm Sulfur NR and LM Diesel Fuel 

The requirements regarding the 

designation and tracking of 500 ppm 

sulfur NR and LM diesel fuel parallel 

those regarding the designation and 

tracking of 500 ppm sulfur highway and 

NRLM diesel fuel discussed above. 

However, the requirements described 

below pertain only to facilities not in 

the Northeast/Mid-Atlantic area or 

Alaska, and to facilities inside of the 

Northeast/Mid-Atlantic area that 

transport 500 ppm sulfur NR and LM 

diesel fuel outside of the Northeast/MidAtlantic area. 

From June 1, 2010 through May 31, 

2012, facilities downstream of the 

refiner or importer must continue to 

designate 500 ppm sulfur NR and LM 

diesel fuel that they distribute, and must 

keep records of all volumes of fuel 

designated as these fuels. In many cases, 

we expect that downstream facilities 

will not change the designation of diesel 

fuel from 500 ppm sulfur LM to 500 

ppm sulfur NR diesel fuel while the fuel 

is in their custody. However, today’s 

final rule provides the flexibility to 

make this change in designation 

provided that volume balance 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39071

requirements for 500 ppm sulfur NR 

diesel fuel are met. 

The volume balance for 500 ppm 

sulfur NR and LM diesel fuel requires 

that the volumes of 500 ppm sulfur NR 

and LM diesel fuel received must be 

compared to the volumes of 500 ppm 

sulfur NR and LM diesel fuel delivered 

over a compliance period. The volume 

of 500 ppm sulfur NR diesel fuel may 

not increase by a greater proportion than 

the volume of 500 ppm sulfur LM diesel 

fuel over a compliance period. The 

combined pool of 500 ppm sulfur diesel 

fuel may increase in volume such as the 

inevitable downgrades from 15 ppm and 

500 ppm sulfur diesel fuel when these 

fuels are shipped by pipeline. The 

volume balance allows for this to occur 

while keeping fuel produced as 500 

ppm sulfur LM diesel fuel from being 

shifted to NR fuel. The volume balance 

calculation allows 500 ppm sulfur NR 

and LM diesel fuel to increase 

proportionately, satisfying both needs. 

500 ppm sulfur NR and LM diesel fuel 

compliance will be required on an 

annual basis, for terminal facilities as 

well as other entities. Compliance with 

the volume balance requirement is 

determined by comparing volumes 

received and delivered during that 

compliance period.

Facilities must maintain records 

regarding each transfer of 500 ppm 

sulfur NR and LM diesel fuel that they 

receive and discharge from June 1, 2010 

through May 31, 2012 on a batch-bybatch basis. These records must include 

the EPA registration number of the 

source or recipient facility, and the 

volume of each fuel transfer. However, 

for transfers of marked 500 ppm sulfur 

LM diesel fuel, the recipient or source 

facility need not be specifically 

identified. In such cases, records must 

be kept regarding the total volume of 

marked 500 ppm sulfur LM diesel fuel 

that is received, discharged, and in 

inventory during each compliance 

period. For transfers of dyed 500 ppm 

sulfur NR diesel fuel from a truck 

loading rack, the specific recipients also 

do not need to be identified. In such 

cases, records must be kept regarding 

the total volume of 500 ppm sulfur NR 

diesel fuel that is received, discharged, 

and in inventory during each 

compliance period. 

EPA plans to work closely with 

members of the diesel fuel refining and 

distribution industry, to provide clear 

and comprehensive guidance on what is 

expected of the various parties under 

the designate and track and volume 

balance provisions adopted in this rule. 

EPA invites suggestions from these 

parties on the most useful ways to 

provide such guidance. 

d. Reporting Requirements 

i. Compliance and Reporting Periods 

We believe that any regulatory 

program should promote compliance 

and deter non-compliance. Today’s 

program includes compliance and 

reporting provisions to deter 

noncompliance and to detect and 

correct instances of noncompliance in a 

timely fashion. Under today’s program 

entities must submit to the Agency 

compliance reports containing 

information on the diesel fuel volumes 

they handle, separately by fuel 

designation category. Compliance with 

these volume designation and tracking 

requirements will be determined on an 

annual basis for refiners and pipelines 

and a quarterly basis for terminals 

during the first step of today’s program. 

Compliance will be determined on an 

annual basis for everyone after 2010. To 

demonstrate compliance, refiners, 

pipelines, and terminals will be 

required to submit reports on a quarterly 

basis during the first step of today’s 

program and then on an annual basis 

every year thereafter. 

We are requiring the submission of 

volume reports on a quarterly basis 

during the first step of today’s program 

for several reasons. First, and most 

importantly, today’s program allows 

entities to change the designations of 

500 ppm sulfur diesel fuel from NRLM 

diesel fuel to highway diesel fuel and 

heating oil to NRLM diesel fuel on a 

daily basis (provided that they later 

redesignate the same volume of 500 

ppm diesel fuel from highway diesel 

fuel to NRLM diesel fuel and the same 

volume of NRLM diesel fuel to heating 

oil). Second, quarterly reporting 

coupled with quarterly compliance by 

terminals will constrain the magnitude 

of any noncompliance. Finally, during 

the start up of the designate and track 

system, there may also be a greater 

potential for errors in the transmission 

of records between custodians of 

designated fuels, in the calculations 

related to compliance with the volume 

account balance requirements, and in 

the materials provided in reports. 

Today’s program establishes quarterly 

compliance periods which are based on 

standard industry practices. 

Specifically, the quarterly compliance 

periods finalized in today’s rule are as 

follows: 

• 1st quarter: July 1–September 30; 

• 2nd quarter: October 1–December 

31; 

• 3rd quarter: January 1–March 31; 

• 4th quarter: April 1–June 30. 

Where the start and end dates of the 

program do not line up with these dates, 

the quarters are lengthened or shortened 

accordingly (e.g., June 1, 2007–

September 30, 2007, and April 1, 2010–

May 31, 2010). Quarterly reports are due 

two months following the end of the 

quarterly compliance period (i.e., 

December 1, March 1, June 1, and 

September 1). Annual compliance 

periods begin on July 1 and end June 30 

of the following year. Again, certain 

annual compliance periods were 

lengthened or shortened to match the 

significant dates of the program (e.g., 

June 1, 2007–June 30, 2008). Annual 

reports are due by August 31 following 

the annual compliance period. For the 

sake of simplifying compliance and 

record keeping, the compliance periods 

for the highway final rule have been 

adjusted to match these. 

Reports must be submitted 

electronically, or in a form which 

facilitates direct entry into an electronic 

database. Without reliance on an 

electronic database and reporting 

system to cross check and verify 

reported information, the designate and 

track provisions would become so 

cumbersome as to be virtually 

unenforceable by EPA staff given 

projected resource availability. 

ii. Reporting Requirements During the 

First Step of Today’s Program 

During the first step of today’s 

program, from June 1, 2007 through May 

31, 2010, entities must report to EPA for 

each of their facilities regarding the total 

volume of each of the designated fuels 

that they receive from, or discharge to, 

another entity’s facility in the fuel 

distribution system. If a facility is a 

refiner as well as a distributor (e.g., a 

blender of biodiesel or blendstocks from 

unfinished diesel fuel or heating oil or 

otherwise both accepts previously 

designated fuel and also produces fuel), 

it must also report both volumes 

produced and released to other entities 

in its capacity as refiner and also report 

the volumes received and released for 

each designation like any other terminal 

or pipeline.

For example, an entity that operates a 

pipeline may have multiple points 

where it discharges fuel, and at each of 

these points it may supply multiple 

terminals. The pipeline operator must 

report on the receipt of designated fuel 

from each party that transfers fuel to it, 

and on the designated fuel transferred 

by the pipeline at each discharge point 

which specifies the fuel transferred, 

separately for each of its terminal 

customers. Entities must report for each 

of their facilities the total volumes of the 

designated fuels that were either dyed 

red, marked, or on which taxes were 

assessed tax while in their custody. 

Reports regarding these volumes do not 

39072 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

126 500 ppm sulfur NR diesel fuel, and starting 

June 1, 2012, 500 ppm sulfur NRLM diesel fuel, is 

not permitted in the Northeast/Mid-Atlantic area 

and only in the State of Alaska in limited 

circumstances.

127 During this time period, 500 ppm sulfur NR 

diesel fuel is not permitted in the Northeast/MidAtlantic area and only in the State of Alaska in 

limited circumstances.

128See 66 FR 36543, July 12, 2001 (notice 

proposing approval of Houston SIP revisions). See 

also letter from Carl Edlund, Director, Multimedia 

Planning and Permitting Division, U.S. 

Environmental Protection Agency, Region VI, to 

Jeffrey Saitas, Executive Director, Texas Natural 

Resources Conservation Commission, dated 

September 25, 2000, providing comments on 

proposed revisions to the Texas State 

Implementation Plan for the control of ozone, 

specifically the Post 99 Rate of Progress Plan and 

Attainment Demonstration for the Houston/

Galveston area. This letter noted that preemption 

under section 211(c)(4) of the CAA did not apply 

to controls on nonroad diesel fuel.

need to include details on the recipients 

of the fuel (but product transfer 

documents must be kept to facilitate 

EPA’s ability to compare the outgoing 

transfers and to fuel received). 

Entities that handle only dyed NRLM 

diesel fuel, dyed and marked 500 ppm 

sulfur LM diesel fuel (2010–2012) and 

heating oil, or highway diesel fuel on 

which taxes have been assessed do not 

need to report to EPA. Information from 

such entities is not needed for 

compliance purposes, because there is 

no chance of violating the prohibitions 

against the shifting of fuel from one pool 

to another contained in today’s rule 

without also violating either the 

requirement that highway diesel fuel 

contain no red dye, or the requirement 

that NRLM diesel fuel contain no 

heating oil marker. Furthermore, 

consistent with the highway rule, there 

are no periodic reporting requirements 

regarding the demonstration of 

compliance with the highway program’s 

anti-downgrading requirements in 

today’s rule. Maintenance of records 

should be sufficient for EPA to 

adequately monitor compliance with 

these requirements, as insufficient 15 

ppm sulfur diesel fuel availability in an 

area should highlight potential antidowngrading violations. 

Quarterly reports from facilities 

downstream of the refinery and 

importer must also include data on the 

total volume of the designated fuels 

received, discharged, and in inventory 

during the quarterly reporting period. 

Using these data, the reporting party 

must demonstrate compliance with the 

volume account balance requirements 

regarding highway diesel fuel and high 

sulfur NRLM. 

iii. Reporting Requirements During the 

Second Step of Today’s Program 

We believe that we may safely 

dispense with quarterly reporting and 

compliance evaluations starting June 1, 

2010 and instead rely on annual reports. 

During the second step of today’s rule, 

the designate and track requirements 

will be focused on preventing the use of 

heating oil in NRLM equipment, and 

during 2010–2012 preventing the use of 

500 ppm sulfur LM diesel fuel in 

nonroad equipment. By 2010, all 

reporting parties in the system will have 

had experience in complying with the 

program’s designate and track 

provisions. In addition, the Agency will 

have had ample experience in 

administering the system. Consequently, 

we expect that there will be few errors 

or omissions in reports and that EPA 

will have determined how best to detect 

and remedy instances of 

noncompliance. We believe an annual 

reporting period is therefore sufficient 

and appropriate.

Beginning June 1, 2010, entities that 

produce, import, or take custody of 500 

ppm sulfur NRLM diesel fuel, marked 

heating oil, or unmarked heating oil 

outside of the Northeast/Mid-Atlantic 

area and Alaska, must submit an annual 

report to EPA that provides summary 

information regarding the transfer of 

these fuels.126 Entities must report for 

each of their facilities the total volume 

of each of these fuels that they received 

from, or discharge to, another entity’s 

facility in the fuel distribution system 

during each annual compliance period. 

For batches of heating oil that are 

delivered marked, the reports do not 

need to indicate the entities to which 

the batches were delivered—only the 

total volume of marked heating oil 

delivered during each compliance 

period must be reported. If an entity 

only receives marked heating oil (i.e., it 

does not receive any unmarked heating 

oil), it does not need to report at all. If 

a facility received marked heating oil in 

addition to unmarked heating oil, it 

must report the volume of marked 

heating oil separately and indicate the 

facility from which the marked heating 

oil was received.

Beginning June 1, 2010 to June 1, 

2012, entities that produce, import, or 

take custody of 500 ppm sulfur NR and 

LM diesel fuel outside of the Northeast/

Mid-Atlantic area and Alaska, must 

submit an annual report to EPA that 

provides summary information 

regarding the transfer of these fuels.127

Entities must report for each of their 

facilities the total volume of each of 

these fuels that they received from, or 

discharge to, another entity’s facility in 

the fuel distribution system during each 

annual compliance period. For batches 

of 500 ppm sulfur LM diesel fuel that 

are delivered marked, the reports do not 

need to indicate the entities to which 

the batches were delivered—only the 

total volume of marked 500 ppm sulfur 

LM diesel fuel delivered during each 

compliance period must be reported. If 

an entity only receives marked 500 ppm 

sulfur LM diesel fuel (i.e., it does not 

receive any unmarked 500 ppm sulfur 

LM diesel fuel), it does not need to 

report at all. If a facility received 

marked in addition to unmarked 500 

ppm sulfur LM diesel fuel, it must 

report the volume of marked 500 ppm 

sulfur LM diesel fuel separately and 

indicate the facility from which the 

marked 500 ppm sulfur LM diesel fuel 

was received.

E. How Are State Diesel Fuel Programs 

Affected by the Sulfur Diesel Program? 

Section 211(c)(4)(A) of the CAA 

prohibits states and political 

subdivisions of states from prescribing 

or attempting to enforce, for purposes of 

motor vehicle emission control, ‘‘any 

control or prohibition respecting any 

characteristic or component of a fuel or 

fuel additive in a motor vehicle or motor 

vehicle engine,’’ if EPA has prescribed 

‘‘a control or prohibition applicable to 

such characteristic or component of the 

fuel or fuel additive’’ under section 

211(c)(1). This prohibition applies to all 

states except California, as explained in 

section 211(c)(4)(B). This express 

preemption provision in section 

211(c)(4)(A) applies only to controls or 

prohibitions respecting any 

characteristics or components of fuels or 

fuel additives for motor vehicles or 

motor vehicle engines, that is, highway 

vehicles. It does not apply to controls or 

prohibitions respecting any 

characteristics or components of fuels or 

fuel additives for nonroad engines or 

nonroad vehicles.128

Section 211(c)(4)(A) specifically 

mentions only controls respecting 

characteristics or components of fuel or 

fuel additives in a ‘‘motor vehicle or 

motor vehicle engine,’’ adopted ‘‘for 

purposes of motor vehicle emissions 

control,’’ and the definitions of motor 

vehicle and nonroad engines and 

vehicles in CAA section 216 are 

mutually exclusive. This is in contrast 

to sections 211(a) and (b), which 

specifically mention application to fuels 

or fuel additives used in nonroad 

engines or nonroad vehicles, and with 

section 211(c)(1) which refers to fuel 

used in motor vehicles or engines or 

nonroad engines or vehicles. 

Thus, today’s action does not preempt 

state controls or prohibitions respecting 

characteristics or components of fuel or 

fuel additives used in nonroad, 

locomotive, or marine engines or 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39073

129 ‘‘Standard Specification for Diesel Fuel Oils,’’

ASTM D 975–98b and ‘‘Standard Specifications for 

Fuel Oils,’’ ASTM D 396–98.

130These ASTM requirements were formed after 

and are consistent with the EPA regulations for 

highway diesel fuel.

131Some states, particularly those in the 

Northeast, limit the sulfur content of No. 2 fuel oil 

to 2000–3000 ppm.

nonroad, locomotive, or marine vehicles 

under the provisions of section 

211(c)(4)(A). At the same time, a state 

control that regulates both highway fuel 

and nonroad fuel is preempted to the 

extent that the state control respects a 

characteristic or component of highway 

fuel regulated by EPA under section 

211(c)(1). 

A court may consider whether a state 

control for fuels or fuel additives used 

in nonroad engines or nonroad vehicles 

is implicitly preempted under the 

supremacy clause of the U.S. 

constitution. Courts have determined 

that a state law is preempted by federal 

law where the state requirement 

actually conflicts with federal law by 

preventing compliance with the federal 

requirement, or by standing as an 

obstacle to accomplishment of 

congressional objectives. A court could 

thus consider whether a given state 

standard for sulfur in nonroad, 

locomotive or marine diesel fuel is 

preempted if it places such significant 

cost and investment burdens on refiners 

that refiners cannot meet both state and 

federal requirements in time, or if the 

state control would otherwise meet the 

criteria for conflict preemption. 

F. Technological Feasibility of the 500 

and 15 ppm Sulfur Diesel Fuel Program 

This section summarizes our 

assessment of the feasibility of refining 

and distributing 500 ppm NRLM diesel 

fuel starting in 2007 and 15 ppm 

nonroad diesel fuel in 2010 and 

locomotive and marine diesel fuel in 

2012. Based on this evaluation, we 

believe it is technologically feasible for 

refiners and distributors to meet both 

sulfur standards in the lead time 

provided with the desulfurization 

technology available. We begin this 

section by describing the nonroad, 

locomotive and marine diesel fuel 

market and how these fuels differ from 

current highway diesel fuel. We discuss 

desulfurization technologies, both 

conventional and advanced, which are 

available for complying with the 500 

ppm and 15 ppm NRLM standards. We 

then present what mix of technologies 

we believe will be used. Next we 

provide our analysis of the lead time for 

complying with either standard. Finally, 

we analyze the feasibility of distributing 

low sulfur NRLM diesel fuel. We refer 

the reader to the Final RIA for more 

details regarding these assessments.

1. What Is the Nonroad, Locomotive and 

Marine Diesel Fuel Market Today? 

Nonroad, locomotive and marine 

(NRLM) engines almost exclusively use 

No. 2 distillate fuel. No. 2 distillate fuel 

is a class of fuel defined by its boiling 

range. It boils at a higher average 

temperature than gasoline, No. 1 

distillate, jet fuel and kerosene, and at 

a lower average temperature than 

residual fuel (or bunker fuel). ASTM 

defines three No. 2 distillate fuels: (1) 

Low sulfur No. 2 diesel fuel (No. 2–D); 

(2) high sulfur No. 2–D; and (3) No. 2 

fuel oil.129 Low sulfur No. 2–D fuel 

must contain 500 ppm sulfur or less, 

have a minimum cetane number of 40, 

and have a minimum cetane index limit 

of 40 (or a maximum aromatic content 

of 35 volume percent) (i.e., meet the 

EPA standard for highway diesel 

fuel).130 Both high sulfur No. 2–D and 

No. 2 fuel oil must contain no more than 

5000 ppm sulfur,131 and currently 

averages 3000 ppm nationwide. The 

ASTM specification for high sulfur No. 

2–D fuel also includes a minimum 

cetane number of 40. Practically, since 

most No. 2 fuel oil meets this minimum 

cetane number specification, pipelines 

which ship fuel fungibly need only 

carry one high sulfur No. 2 distillate 

fuel which meets both sets of 

specifications. Currently, nonroad, 

locomotive and marine engines can be 

and are fueled with both low and high 

sulfur No. 2–D fuels. If No. 1 distillate 

is blended into highway diesel fuel, as 

is sometimes done to prevent gelling in 

the winter, the final blend must meet 

the 500 ppm EPA cap.

No. 1 distillate (e.g., jet fuel and 

kerosene) meets lower boiling point and 

viscosity specifications requirements 

than No. 2 distillate. No. 1 distillate, or 

any of these other similar boiling 

distillates, added to No. 2 NRLM 

distillate becomes NRLM diesel fuel and 

thus, must meet the applicable 

specifications for No. 2 distillate. 

For the purpose of this rule, we split 

the No. 2 distillate market into three 

pieces, according to the sulfur standard 

which each must meet: (1) Highway 

diesel fuel, (2) NRLM diesel fuel, and 

heating oil, which is used in both 

furnaces and boilers, as well as in 

stationary diesel engines to generate 

power. 

In the NPRM, EPA estimated current 

production and demand for NRLM fuel 

from studies conducted by the U.S. 

Energy Information Administration 

(EIA). We projected growth in nonroad 

fuel demand using EPA’s NONROAD 

emission model. We based the growth in 

locomotive and marine fuel demand 

from analyses supporting EPA’s 

locomotive and marine engine 

rulemaking. These future levels of 

NRLM fuel demand differed from those 

implicit in our projection of the 

emission reductions associated with the 

rule, which were based primarily on 

EPA’s NONROAD emission model. We 

pointed out this inconsistency in the 

rule and indicated that we would 

resolve this inconsistency for the final 

rule. 

In their comments on the NPRM, the 

American Petroleum Institute (API), the 

Engine Manufacturers Association 

(EMA) and others highlighted this 

inconsistency and suggested that EPA 

resolve it by basing its projection of 

future NRLM fuel demand using 

information developed by EIA and not 

from the NONROAD emission model. 

API pointed to a lower estimate of 

nonroad fuel demand developed in a 

contracted study performed by Baker 

and O’Brien. A detailed analysis of 

these comments and additional 

technical analyses of distillate fuel 

demand are described in Section 4.6.3.1 

of the Summary and Analysis document 

to this rule. In summary, we decided to 

continue using the NONROAD emission 

model to project the emission benefits of 

this rule. To eliminate the inconsistency 

in the NPRM, we also use the 

NONROAD model to determine demand 

for nonroad fuel and project the 

economic impacts of this final rule. 

However, the analyses presented in 

Section 4.6.3.1 of the Summary and 

Analysis document to this rule 

identified uncertainties in the current 

and future level of nonroad fuel 

demand. To insure that these 

uncertainties did not affect the outcome 

of this rulemaking process, we evaluate 

the emissions, costs and cost 

effectiveness of the standards contained 

in this rule using an alternative estimate 

of nonroad fuel demand derived from 

EIA information. This alternative 

analysis is presented in Appendix 8A of 

the Final RIA. In addition to use of the 

NONROAD model to project nonroad 

fuel demand, we also updated our 

projections of the production of and 

demand for highway fuel and heating 

oil using more recent versions of the 

same EIA reports used in the NPRM 

analysis. 

In 2001, nationwide outside of 

California, nonroad diesel fuel 

comprised about 18 percent of all No. 2 

distillate fuel, while locomotive and 

marine diesel fuel comprised about 

eight percent of all No. 2 distillate fuel. 

Diesel fuel consumed by highway 

vehicles/engines comprised about 56 

percent of all No. 2 distillate fuel. 

39074 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

132These refiners have said that they will leave 

the highway market in 2006 in their pre-compliance 

reports for complying with the Highway Diesel 

Rule, thus freeing up their existing hydrotreaters to 

produce 500 ppm NRLM diesel fuel.

133 ‘‘Highway Diesel Progress Review,’’ USEPA, 

EPA420–R–02–016, June 2002. The leadtime 

analysis in the RIA can be found in section 5.3.

Heating oil comprised about 19 percent 

of No. 2 distillate. Because of limitations 

in the fuel distribution system and other 

factors, about 18 percent of all nonhighway distillate met the 500 ppm 

highway diesel fuel cap. Thus, about 64 

percent of No. 2 distillate pool met the 

500 ppm sulfur cap, not just the 56 

percent used in highway vehicles. We 

project that this spillover of highway 

fuel to the NRLM diesel fuel market will 

continue under the highway diesel fuel 

program. Thus, today’s rule will only 

materially affect about 19 percent of 

today’s distillate market. The remaining 

17 percent of No. 2 distillate which is 

high sulfur heating oil is estimated to 

remain at higher sulfur levels.

This rule will also affect any No. 1 

distillate which is blended into 

wintertime NRLM fuel. Because gelling 

can also be prevented through the use 

of pour point additives, the current and 

future level of this of No. 1 distillate 

blending is uncertain. However, the 

feasibility of desulfurizing and 

distributing this No. 1 distillate will also 

be addressed below. 

2. What Technology Will Refiners Use 

To Meet the 500 ppm Sulfur Cap? 

Refiners currently hydrotreat most or 

all of their distillate blendstocks using 

what is commonly referred to as 

‘‘conventional’’ hydrotreating 

technology to meet the 500 ppm sulfur 

and cetane limits applicable to highway 

diesel fuel. This conventional 

technology has been available and in 

use for many years. U.S. refiners have 

nearly ten years of experience with this 

technology in producing highway diesel 

fuel. The distillate blendstocks 

comprising NRLM fuel do not differ 

substantially from those comprising 

highway diesel fuel. Thus, the 

technology to produce 500 ppm sulfur 

NRLM diesel fuel has clearly been 

demonstrated and optimized over the 

last decade. Additionally, this 

technology continues to evolve 

primarily through the development of 

more active catalysts and motivated by 

the 15 ppm cap applicable to most 

highway diesel fuel starting in 2006. 

Several advanced desulfurization 

technologies are being developed and 

are discussed in more detail in the next 

section. However, the fact that none of 

these technologies have been 

demonstrated commercially for a typical 

catalyst life (i.e., two years) makes it 

unlikely that they would be selected by 

many refiners for use in mid-2007. Also, 

these advanced technologies promise 

the greatest cost savings in achieving 15 

ppm levels, rather than 500 ppm. These 

advanced technologies can also be 

combined with a conventional 

hydrotreater to meet the 15 ppm 

standard in 2010 and 2012. EPA 

therefore projects that the 500 ppm 

sulfur cap NRLM standard will be met 

using conventional hydrotreating 

technology. We made this same 

projection in the NPRM and no 

comments to the contrary were received. 

In some cases, refiners will also need 

to install or expand several ancillary 

processes related to sulfur removal (e.g., 

hydrogen production and purification, 

sulfur processing, and sour water 

treatment). These technologies are all 

commercially demonstrated, as nearly 

all refineries already have such units. 

3. Is the Leadtime Sufficient To Meet 

the 2007 500 ppm NRLM Sulfur 

Standard? 

After the highway diesel fuel program 

is implemented, we project that 92 

refineries in U.S. will be producing high 

sulfur distillate fuel. We project that 36 

of these refineries will likely produce 

500 ppm sulfur NRLM diesel fuel in 

2007. Of those 36, 30 will have to build 

new hydrotreaters while the other 6 are 

expected to use existing hydrotreaters to 

produce 500 ppm NRLM diesel fuel.132

The remaining 56 refineries are 

projected to continue to produce high 

sulfur distillate fuel, with 26 of the 56 

refineries producing heating oil. The 

other 30 refineries are owned by small 

refiners and will likely produce high 

sulfur NRLM diesel fuel. The 56 

refineries continuing to produce high 

sulfur distillate will not have to add or 

modify any equipment to continue 

producing this fuel.

This rule will provide refiners and 

importers 37 months before they will 

have to begin producing 500 ppm 

NRLM diesel fuel on June 1, 2007. Our 

lead time analysis projects that 27–39 

months are typically needed to design 

and construct a diesel fuel 

hydrotreater.133 As discussed below, we 

believe that 37 months will be sufficient 

for all refiners of NRLM fuel.

Easing the task is the fact that we 

project that essentially all refiners will 

use conventional hydrotreating to 

comply with the 500 ppm sulfur NRLM 

diesel fuel cap. This technology has 

been used extensively for more than 10 

years and its capabilities to process a 

wide range of diesel fuel blendstocks are 

well understood. Thus, the time 

necessary to apply this technology for a 

specific refiner’s situation should be 

relatively short.

Twenty-six out of the 36 refineries 

projected to produce 500 ppm NRLM 

diesel fuel in 2007 have indicated that 

they will produce highway diesel fuel in 

their highway diesel fuel precompliance reports, see RIA section 

7.2.1.3.4.1, Table 7.2.1–38 and following 

discussion for description of these 

refineries. Thus, roughly 70% of the 

refiners likely to produce 500 ppm 

sulfur NRLM diesel fuel in 2007 are 

already well into their planning for 

meeting the 15 ppm highway diesel fuel 

standard, effective June 1, 2006. It is 

likely that these refiners have already 

chemically characterized their high 

sulfur diesel fuel blendstocks, as well as 

their highway diesel fuel, in assessing 

how to meet produce 15 ppm fuel. They 

will also have already assessed the 

various technologies for producing 15 

ppm diesel fuel. This provides an 

extensive base of information on how to 

design a hydrotreater to produce 500 

ppm NRLM fuel, as well as how to 

revamp this hydrotreater to produce 15 

ppm NRLM diesel fuel in 2010 and 

2012. Those refiners only producing 

high sulfur distillate fuel today will be 

able to take advantage of the significant 

experience that technology vendors 

have obtained in assisting refiners of 

highway diesel fuel meet the 15 ppm 

cap in 2006. 

We also expect that roughly 20 

percent of the 101 refineries in the U.S. 

and its territories will build a new 

hydrotreater to produce 15 ppm 

highway fuel. Those which also produce 

high sulfur distillate will be able to 

produce 500 ppm NRLM fuel with their 

existing highway hydrotreater. In 2007, 

we conservatively assumed that 20% of 

the 500 ppm NRLM production from 

refineries that produce highway and 

high sulfur distillate could be produced 

with these existing treaters at no capital 

costs (existing highway treater capacity 

available for 500 ppm NRLM production 

would be higher if based on highway 

treater capacity). Thus, in 2007 we 

project that four refineries will be able 

to use their recently idled highway 

treater due to building a new highway 

treater unit for 2006. Furthermore, the 

highway diesel program pre-compliance 

reports indicate that another 7 refineries 

currently producing 500 ppm highway 

fuel will likely leave the highway fuel 

market in 2006. We project that 2 of 

these would use their existing treater to 

produce 500 ppm NRLM with no 

investment costs. Another three of these 

101 refineries produce relatively small 

volumes of high sulfur distillate 

compared to highway diesel fuel today. 

We project that they will be able to 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39075

134 ‘‘Highway Diesel Progress Review,’’ USEPA, 

EPA420–R–02–016, June 2002.

produce 500 ppm sulfur NRLM fuel 

from their high sulfur distillate with 

only minor modification to their 

existing highway diesel fuel 

hydrotreater. 

Refiners not planning on producing 

100 percent highway fuel in 2006 will 

also need some time to assess which 

distillate market in which to participate 

starting in 2007, NRLM or heating oil. 

While this is a decision which requires 

some amount of time for analysis, 

refiners also needed to assess what 

market they would participate in for the 

1993 500 ppm highway diesel fuel 

sulfur cap. In all, we project that the 

task of producing 500 ppm sulfur NRLM 

fuel in 2007 will be less difficult than 

the task refiners faced with the 

implementation of the 500 ppm 

highway diesel fuel cap in 1993. 

Refiners had just over three years of lead 

time for complying with the 1993 500 

ppm highway diesel fuel cap, as is the 

case here, and this proved sufficient.

No explicit comments were made by 

refiners on the lead time needed for 

complying with the proposed NRLM 

500 ppm sulfur standard. However, 

their comments supported the two step 

approach, preferring it over a one step, 

15 ppm NRLM cap starting in 2008. 

4. What Technology Will Refiners Use 

To Meet the 15 ppm Sulfur Cap? 

In the highway diesel rule, we 

projected that refiners producing 15 

ppm fuel in 2006 would utilize 

extensions of conventional 

hydrotreating technology. We also 

projected that refiners first producing 15 

ppm fuel in 2010 would use a mix of 

extensions of conventional and 

advanced technologies. Based on the 

refiners’ highway pre-compliance 

reports, it appears that 95% of highway 

fuel could meet the 15 ppm cap in 2006. 

We expect that virtually all of this 15 

ppm fuel will be produced with 

conventional hydrotreating. Thus, it 

appears that conventional hydrotreating 

will be used to produce the vast 

majority of 15 ppm highway diesel fuel. 

In the nonroad NPRM, we projected 

that refiners would use advanced 

desulfurization technologies to produce 

80 percent of 15 ppm nonroad diesel 

fuel in 2010, with the balance using 

conventional hydrotreating. At the time 

of the NPRM, all of the advanced 

technologies appeared to be progressing 

rapidly. Since the proposal, we have 

learned that a couple of these 

technologies, Unipure and S-Zorb, are 

not going to be commercially 

demonstrated as soon as expected. 

However, one refiner is already using 

Process Dynamics’ IsoTherming 

technology to commercially produce 15 

ppm diesel fuel. Thus, we continue to 

believe that advanced technologies will 

be used to produce a large percentage of 

15 ppm NRLM fuel. However, the 

number of advanced technologies used 

may be smaller. Because of the more 

limited choices, we project that the 

penetration of advanced technologies 

will be only 60 percent. The remainder 

of this section discusses the production 

of 15 ppm diesel fuel using 

conventional and advanced 

technologies. 

One approach to produce 15 ppm 

NRLM fuel would be to revamp the 

conventional hydrotreater built to 

produce 500 ppm NRLM fuel in 2007. 

Knowing that the 500 ppm NRLM cap 

will only be in effect for three years for 

nonroad refiners and five years for 

locomotive and marine refiners (four 

years for small refiners), we expect that 

refiners will design their 500 ppm 

hydrotreater to allow the production of 

15 ppm fuel through the addition of 

reactor volume or a second 

hydrotreating stage. Refiners might also 

shift to a more active catalyst in the 

existing reactor, as the life of that 

catalyst might be nearing its end. 

Equipment to further purify its 

hydrogen supply could also be added. 

Producing 15 ppm NRLM fuel via these 

steps will be feasible as they are 

essentially the same steps refiners will 

be using in 2006 to produce 15 ppm 

highway diesel fuel. 

EPA recently reviewed the progress 

being made by refining technology 

vendors and refiners in meeting the 

2006 highway diesel sulfur cap.134 All 

evidence available confirms EPA’s 

projection that conventional 

hydrotreating will be capable of 

producing diesel fuel containing less 

than 10 ppm sulfur. Furthermore, as 

part of the highway program’s reporting 

requirements, refiners are required to 

report their progress in complying with 

the 15 ppm highway diesel fuel 

standard. In those reports they indicated 

that they primarily will be applying 

extensions of conventional 

hydrotreating. NRLM fuel refiners will 

have the added advantage of being able 

to design their 500 ppm hydrotreater 

with the production of 15 ppm fuel in 

mind. Additionally, refiners producing 

15 ppm NRLM fuel will be able to take 

advantage of the experience gained from 

those producing 15 ppm highway fuel.

As mentioned above, several 

advanced technologies are presently 

being developed to produce 15 ppm 

diesel fuel at lower cost. One of these 

advanced technologies, Process 

Dynamics IsoTherming, improves the 

contact between hydrogen, diesel fuel 

and the desulfurization catalyst. The 

IsoTherming process dissolves the 

hydrogen in the liquid fuel phase prior 

to passing the liquid over the catalyst, 

eliminating the need for a two-phase 

(gas and liquid) reactor. The liquid, plug 

flow reactor design also avoids the poor 

liquid distribution over the catalyst bed 

often present in a two-phase reactor 

design. Process Dynamics projects that 

their IsoTherming process could reduce 

the hydrotreater volume required to 

achieve sub-15 ppm sulfur levels by 

roughly a factor of two. 

Process Dynamics has already built a 

commercial-sized demonstration unit 

(5000 barrels per day) at a refinery in 

New Mexico. They have been operating 

the unit since September 2002, and 

demonstrating the capability to meet a 

15 ppm cap since the spring of 2003. 

Thus, refiners will have 4–5 years of 

operating data on this process before 

they would have to select a technology 

to produce 15 ppm nonroad diesel fuel 

in 2010, and 6–7 years before producing 

15 ppm locomotive and marine diesel 

fuel in 2012. This should be more than 

sufficient for essentially all refiners to 

consider this process for 2010 or 2012. 

Based on information received from 

Process Dynamics, we estimate that this 

technology could reduce the cost of 

meeting the 15 ppm cap for many 

refiners by about 30 percent. This 

savings arises from a smaller reactor, 

less catalyst and avoiding the need for 

a recycle gas compressor and reactor 

distributor. Refineries facing poorer 

economies of scale, such as small 

refineries, would particularly benefit 

from this desulfurization process. 

A second process being developed to 

produce 15 ppm diesel fuel is the 

Unipure oxidation process. This process 

oxidizes the sulfur in distillate 

molecules, facilitating its removal. 

Unipure Corporation installed a small 

(50 barrels per day), continuous flow 

demonstration unit at Valero’s Krotz 

Spring refinery in the spring of 2003. It 

appears that this technology could 

reduce the cost of producing 15 ppm 

diesel fuel for some refiners compared 

to conventional hydrotreating. However, 

the small size of the demonstration unit 

may make the risk associated with a 

new technology too large. Thus, we 

believe that this technology needs be 

demonstrated further before most 

refiners will seriously considered it for 

commercial application. This 

technology, however, may be ideal for 

use at transmix processing plants or 

large terminals to reprocess 15 ppm 

diesel fuel which have become 

contaminated during shipment. We 

39076 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

discuss this distillate downgrade in 

greater detail in Section VI.A.2 of this 

preamble. This oxidation process avoids 

the need for high pressure hydrogen, 

which is usually not economically 

available at these smaller facilities. 

Finally, Conoco-Phillips has adapted 

their S–Zorb adsorption technology 

which was originally designed for 

gasoline desulfurization, for diesel fuel 

desulfurization. At the time of the 

NPRM, Conoco-Phillips had signed 23 

licensing agreements with refiners in 

North America regarding the use of SZorb to comply with the Tier 2 gasoline 

sulfur standards. Furthermore, ConocoPhillips had plans for the quick 

installation of an S-Zorb unit to 

demonstrate the production of 15 ppm 

diesel fuel. However, we have since 

learned that Conoco-Phillips has 

dropped its plans to build a commercial 

demonstration unit for desulfurizing 

diesel fuel. Without a commercial unit 

operating in the 2006 time frame, we do 

not believe that many refiners will 

seriously consider S-Zorb to produce 15 

ppm NRLM diesel fuel in 2010 and 

2012. 

Due to the fact that the Process 

Dynamics IsoTherming process is 

already operating commercially and 

operational data indicate a 30 percent 

reduction in the cost of producing 15 

ppm fuel relative to conventional 

hydrotreating, we project that 60 

percent of the new volume of 15 ppm 

NRLM diesel fuel will be produced 

using this technology. We project that 

the remaining 40 percent of 15 ppm 

NRLM diesel fuel will use extensions of 

conventional hydrotreating. We assume 

this 60/40 mix of Isotherming and 

extensions of conventional 

hydrotreating, respectively, for 2010, 

2012 and even for 2014 when the small 

refiners exemptions expire.

API commented that the advanced 

desulfurization technologies have not 

been commercially demonstrated and 

thus should not be used as the basis for 

estimating the cost of desulfurizing 

NRLM diesel fuel to 15 ppm. While this 

is true for the Unipure oxidation and 

Conoco-Phillip’s S-Zorb processes, the 

Process Dynamics IsoTherming process 

has been commercially demonstrated. It 

is therefore appropriate for use as a 

partial basis for the refining costs 

associated with today’s final rule. To 

indicate the effect that this projection 

for the use of IsoTherming has on the 

rule’s cost, in Section 7.2.2 of the Final 

RIA, we estimate the cost of producing 

15 ppm NRLM fuel with only the use of 

conventional hydrotreating technology. 

5. Is the Leadtime Sufficient To Meet 

the 2010 and 2012 15 ppm NRLM Sulfur 

Cap? 

We project that 32 refineries will 

produce 15 ppm nonroad diesel fuel in 

2010, with two of these being owned by 

small refiners. In 2012, we project that 

15 refineries will produce 15 ppm 

locomotive and marine diesel fuel. We 

project that an additional 15 refineries 

will produce 500 ppm nonroad diesel 

fuel in 2010 under the small refiner 

provisions included in the today’s final 

rule. Then in 2014, we project that the 

15 refineries exempted under the small 

refiner provisions will begin producing 

15 ppm NRLM diesel fuel in 2014. 

The timing of this rule provides 

refiners and importers with more than 

six years before they will have to 

produce 15 ppm nonroad diesel fuel, 

and two years more for producing 15 

ppm locomotive and marine diesel fuel. 

Our leadtime analysis, which is 

presented in Section 5.4.2 of the Final 

RIA, projects that 30–39 months are 

typically needed to design and construct 

a diesel fuel hydrotreater, perhaps less 

if it is a Process Dynamics unit. Thus, 

refiners will have about three years 

before they would have to begin 

detailed design and construction for 

2010, and five years before 2012. This 

will allow sufficient time to consult 

with vendors, test their diesel fuel in 

pilot plants to assess the difficulty of its 

desulfurization via a variety of 

technologies, and to select its 

technology for 2010 and 2012. In 

addition, these refiners will also have 

the chance to observe the performance 

of the hydrotreaters being used to 

produce 15 ppm highway diesel fuel for 

at least one year for those complying in 

2010, and two years more for those 

complying in 2012. While not a full 

catalyst cycle, any unusual degradation 

in catalyst performance should be 

apparent within the first year. Based on 

the pre-compliance reports, some 

refineries in the U.S. will be producing 

15 ppm sulfur highway diesel fuel 

earlier than 2006. Some refineries are 

expected to produce complying fuel 

earlier than the compliance date in 

Europe as well. The refineries which are 

complying early will accrue experience 

earlier and longer providing refiners a 

better sense of the reliability of 

producing 15 ppm diesel fuel. Thus, we 

project that the 2010 and 2012 start 

dates will allow refiners to be quite 

certain that the designs they select in 

mid-2007 will perform adequately in 

2010 and 2012. 

In addition, refiners will have three to 

four years or more to observe the 

performance of the Process Dynamics 

IsoTherming process before having to 

make their technology selections for 

2010 and 2012 . This should be more 

than adequate to fully access the costs 

and capabilities of this technology for 

all but the most cautious refiners. 

Considering the amount of leadtime 

available and the desulfurization 

technologies which will be available 

and proven for complying with a 15 

ppm sulfur standard, we do not expect 

that the leadtime for complying with the 

15 ppm NRLM cap standard in 2010 and 

2012 will be an issue for refiners. 

6. Feasibility of Distributing 500 and 15 

ppm NRLM Fuel 

There are two considerations with 

respect to the feasibility of distributing 

non-highway diesel fuels meeting the 

sulfur standards in today’s rule. The 

first pertains to whether sulfur 

contamination can be adequately 

managed throughout the distribution 

system so that fuel delivered to the enduser does not exceed the specified 

maximum sulfur concentration. The 

second pertains to the physical 

limitations of the system to 

accommodate any additional 

segregation of product grades.

a. Limiting Sulfur Contamination 

With respect to limiting sulfur 

contamination during distribution, the 

physical hardware and distribution 

practices for non-highway diesel fuel do 

not differ significantly from those for 

highway diesel fuel. Therefore, we do 

not anticipate any new issues with 

respect to limiting sulfur contamination 

during the distribution of non-highway 

fuel that would not have already been 

accounted for in distributing highway 

diesel fuel. Highway diesel fuel has 

been required to meet a 500 ppm sulfur 

standard since 1993. Thus, we expect 

that limiting contamination during the 

distribution of 500 ppm non-highway 

diesel engine fuel can be readily 

accomplished by the industry. This 

applies to locomotive and marine diesel 

fuel as well as nonroad diesel fuel. 

In the highway diesel rule, EPA 

acknowledged that meeting a 15 ppm 

sulfur specification would pose a 

substantial new challenge to the 

distribution system. Refiners, pipelines, 

and terminals would have to pay careful 

attention to and eliminate any potential 

sources of contamination in the system 

(e.g., tank bottoms, deal legs in 

pipelines, leaking valves, interface cuts, 

etc.). In addition, bulk plant operators 

and delivery truck operators would have 

to carefully observe recommended 

industry practices to limit 

contamination, including practices as 

simple as cleaning out transfer hoses, 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39077

135The fuel marker requirements only apply 

outside of the Northeast/Mid-Atlantic area. Inside 

the Northeast/Mid-Atlantic area, high sulfur NRLM 

cannot be sold to end users. See section IV.D for 

a detailed discussion of the fuel marker provisions.

136 15 ppm diesel fuel and high sulfur heating oil 

will be the largest volume products at such 

terminals.

137The definition of a refiner includes persons 

who produce highway or NRLM diesel fuel by 

blending.

138This fuel will be produced by transmix 

processors and at terminals by segregating the 

pipeline interface between 15 ppm diesel fuel and 

jet fuel.

139While today?s rule does not contain an end 

date for the downstream distribution of 500 ppm 

sulfur locomotive and marine fuel, we will review 

the appropriateness of allowing this flexibility 

based on experience gained from implementation of 

the 15 ppm sulfur NRLM diesel fuel standard. We 

expect to conduct such an evaluation in 2011.

140 DoD Performance Specification, Inhibitor, 

Corrosion/Lubricity Improver, Fuel Soluble, MIL–

PRF–25017F, 10 November 1997, Superseding MIL–

I–25017E, 15 June 1989.

proper sequencing of fuel deliveries, 

and parking on a level surface when 

draining the storage tank. Due to the 

need to prepare for compliance with the 

highway diesel program, we anticipate 

that issues related to limiting sulfur 

contamination during the distribution of 

15 ppm NRLM diesel fuel will be 

resolved well in advance of the 2010 

and 2012 implementation dates . We are 

not aware of any additional issues that 

might arise unique to NRLM diesel fuel. 

If anything we anticipate limiting 

contamination will become easier as 

batch sizes are allowed to increase and 

potential sources of contamination 

decrease as more and more of the diesel 

pool turns over to 500 and 15 ppm 

sulfur. Industry representatives 

acknowledge that the task can be 

accomplished. However, they are still in 

the process of identifying all of the 

measures that will need to be taken. 

b. Potential Need for Additional Product 

Segregation 

As discussed in section IV.D, we have 

designed the NRLM diesel fuel program 

to minimize the need for additional 

product segregation and the feasibility 

and cost issues associated with it. This 

final rule allows for the fungible 

distribution of 500 ppm highway and 

500 ppm sulfur NRLM diesel fuel in 

2007, and 15 ppm highway and 15 ppm 

NR diesel fuel in 2010 and 15 ppm 

NRLM diesel fuel in 2012, up until the 

point where NRLM, LM, or nonroad fuel 

must be dyed for IRS excise tax 

purposes. We proposed that heating oil 

would be required to be segregated 

throughout the distribution system by 

the use of a marker added at the refiners 

from 2007 through 2010. We received 

comments that addition of the marker at 

the refinery would cause significant 

concerns regarding potential marker 

contamination in the jet fuel. In 

responding to these and other 

comments, we have chosen to adopt a 

designate and track system of ensuring 

refiner compliance with desulfurization 

requirements (see IV.D.). This allows the 

point of marker addition to be moved 

downstream to the terminal where such 

contamination concerns are minimal. As 

a result heating oil and high-sulfur 

NRLM will also be fungible in the 

distribution system up to the point 

where the fuel marker must be added at 

the terminal.135

The design of today’s fuel program 

eliminates any potential feasibility 

issues associated with the need for 

product segregation. This is not to say 

that additional steps will not have to be 

taken. However, this program will result 

in only a limited number of entities in 

the distribution system choosing to add 

new tankage due to new product 

segregation. Bulk plants in areas of the 

country where heating oil is expected to 

remain in the market will have to decide 

whether to add tankage to distribute 

both heating oil and 500 ppm sulfur 

NRLM fuel. Terminal operators 

commented that the proposed presence 

of a fuel marker in heating oil would 

make it impossible for them to blend 

500 ppm sulfur diesel from 15 ppm 

sulfur and high sulfur fuels. They 

related that this ability would be 

important to certain terminal operators 

who would not have the storage 

facilities available for three grades of 

diesel fuel, but would still not wish to 

forgo selling 500 ppm diesel fuel.136

Today’s rule allows the required marker 

to be added to heating oil before it 

leaves the terminal (see section IV.D of 

this preamble). Therefore, terminals will 

be able to blend 500 ppm diesel from 15 

ppm and high sulfur diesel fuels, 

provided they fulfill all of the 

responsibilities associated with acting 

as a fuel refiner (see section V of this 

preamble).137 However, because this 

will be a relatively costly way of 

producing 500 ppm diesel fuel, we do 

not expect that the practice will be 

widespread. In all other cases we 

anticipate segments of the distribution 

system will choose to avoid any fuel 

segregation costs by limiting the range 

of sulfur grades they choose to carry, 

just as they do today. Regardless, 

however, the costs and impacts of these 

choices are small. A more detailed 

explanation of this assessment can be 

found in chapter 7 of the RIA.

A limited volume of 500 ppm sulfur 

diesel fuel is projected to be produced 

downstream due to interface mixing in 

the distribution system (see section 

IV.A).138 Fuel from these sources is 

currently sold into the NRLM and 

heating oil markets. The 

implementation of the 15 ppm sulfur 

standard for NR diesel fuel in 2010 and 

for LM diesel fuel in 2012 raises the 

concern that the heating oil market 

might be insufficient to absorb all such 

downstream 500 ppm sulfur diesel fuel 

in areas outside of the Northeast (where 

most heating oil is used). If the market 

for this fuel was limited, it would have 

to be trucked back to a refinery to be 

desulfurized which could raise 

significant logistical and cost issues. 

Consequently, today’s rule provides that 

500 ppm sulfur diesel fuel produced 

due to interface mixing can continue to 

be used in nonroad equipment until 

2014 (subject to specific sulfur 

requirements for new equipment), and 

in locomotive and marine engines 

indefinitely.139 These provisions ensure 

that there will be a sufficient market for 

such 500 ppm sulfur diesel fuel.

G. What Are the Potential Impacts of the 

15 ppm Sulfur Diesel Program on 

Lubricity and Other Fuel Properties? 

1. What Is Lubricity and Why Might It 

Be a Concern? 

Engine manufacturers and owner/

operators depend on diesel fuel 

lubricity properties to lubricate and 

protect moving parts within fuel pumps 

and injection systems for reliable 

performance. Unit injector systems and 

in-line pumps, commonly used in diesel 

engines, are actuated by cams lubricated 

with crankcase oil, and have minimal 

sensitivity to fuel lubricity. However, 

rotary and distributor type pumps, 

commonly used in light and mediumduty diesel engines, are completely fuel 

lubricated, resulting in high sensitivity 

to fuel lubricity. The types of fuel 

pumps and injection systems used in 

nonroad diesel engines are the same as 

those used in highway diesel vehicles. 

Consequently, nonroad and highway 

diesel engines share the same need for 

adequate fuel lubricity to maintain fuel 

pump and injection system durability.

Diesel fuel lubricity concerns were 

first highlighted for private and 

commercial vehicles during the initial 

implementation of the federal 500 ppm 

sulfur highway diesel program and the 

state of California’s diesel program. The 

Department of Defense (DoD) also has a 

longstanding concern regarding the 

lubricity of distillate fuels used in its 

equipment as evidenced by the 

implementation of its own fuel lubricity 

improver performance specification in 

1989.140 The diesel fuel requirements in 

the state of California differed from the 

39078 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

141Chevron Products Diesel Fuel Technical 

Review provides a discussion of the impacts on fuel 

lubricity of current diesel fuel compositional 

requirements in California versus the rest of the 

nation; see http://www.chevron.com/prodserv/

fuels/bulletin/diesel/l2%5F7%5F2%5Frf.htm.

142The cost from the increased use of lubricity 

additives in 500 ppm NRLM diesel fuel in 2007 and 

in 15 ppm nonroad diesel fuel in 2010 and 

locomotive and marine diesel fuel in 2012 is 

discussed in section VI of this preamble.

143See chapter 5 of the RIA for a discussion of 

the potential impacts on fuel lubricity of this 

proposal.

144Nonroad and highway diesel engines meeting 

similar emissions standards use similar fuel 

systems provided by common suppliers. For 

example, a nonroad engine meeting the 2001 Tier 

2 nonroad diesel engine emission standards would 

have the same fuel system as a highway diesel 

engine meeting the 1998 highway diesel engine 

emissions standards.

federal requirements by substantially 

restricting the aromatic content of diesel 

fuel which requires more severe 

hydrotreating than reducing the sulfur 

content to meet a 500 ppm standard.141

Consequently, concerns regarding diesel 

fuel lubricity have primarily been 

associated with California diesel fuel 

and some California refiners treat their 

diesel fuel with a lubricity additive as 

needed. Outside of California, 

hydrotreating to meet the current 500 

ppm sulfur specification does not 

typically result in a substantial 

reduction of lubricity. Diesel fuels 

outside of California seldom require the 

use of a lubricity additive. Therefore, we 

anticipate only a marginal increase in 

the use of lubricity additives in NRLM 

diesel fuel meeting the 500 ppm sulfur 

standard for 2007.142 Today’s action 

requires diesel fuel used in nonroad, 

locomotive, and marine diesel engines 

to meet a 15 ppm sulfur standard in 

2010 and 2012, respectively. Based on 

the following discussion, we believe 

that the increase in the use of lubricity 

additives in 15 ppm sulfur NRLM diesel 

fuel would be the same as that estimated 

for 15 ppm highway diesel fuel.

The state of California currently 

requires the same standards for diesel 

fuel used in nonroad equipment as in 

highway equipment. Outside of 

California, highway diesel fuel is often 

used in nonroad equipment when 

logistical constraints or market 

influences in the fuel distribution 

system limit the availability of high 

sulfur fuel. Thus, for nearly a decade 

nonroad equipment has been using 

federal 500 ppm sulfur diesel fuel and 

California diesel fuel, some of which 

may have been treated with lubricity 

additives. During this time, there has 

been no indication that the level of 

diesel lubricity needed for fuel used in 

nonroad engines differs substantially 

from the level needed for fuel used in 

highway diesel engines. 

Blending small amounts of lubricityenhancing additives increases the 

lubricity of poor-lubricity fuels to 

acceptable levels. These additives are 

available in today’s market, are 

effective, and are in widespread use 

around the world. Among the available 

additives, biodiesel has been suggested 

as one potential means for increasing 

the lubricity of conventional diesel fuel. 

Indications are that low concentrations 

of biodiesel might be sufficient to raise 

the lubricity to acceptable levels. 

Biodiesel is a renewable fuel made from 

agricultural sources such as soybean oil, 

peanut oil and other vegetable oils as 

well as rendered and animal fats and 

recycled cooking oils. Biodiesel 

generally contains very low amounts of 

sulfur, which is an attractive 

characteristic for use in diesel engines 

using advanced aftertreatment systems. 

Additionally, biodiesel, by virtue of its 

lubricity properties, may be a good 

alternative to additives currently used to 

ensure adequate fuel lubricity. 

According to the U.S. Department of 

Agriculture, there is a current capacity 

to produce 100 million gallons 

annually. Thus, we believe that 

biodiesel is a feasible technology that 

could help support today’s clean diesel 

fuel program. 

Research remains to be performed to 

better understand which fuel 

components are most responsible for 

lubricity. Consequently, it is unclear 

whether and to what degree the sulfur 

standards for NRLM diesel fuel will 

impact fuel lubricity. Nevertheless, 

there is evidence that the typical 

process used to remove sulfur from 

diesel fuel ‘‘hydrotreating’’ can impact 

lubricity depending on the severity of 

the treatment process and 

characteristics of the crude. We expect 

that hydrotreating will be the 

predominant process used to reduce the 

sulfur content of NRLM diesel fuel to 

meet the 500 ppm sulfur standard 

during the first step of the program. 

Similarly, we project that both 

conventional hydrotreating and the 

Linde Isotherming process will be used 

to meet the 15 ppm sulfur standard for 

NRLM diesel fuel.

Based on our comparison of the 

blendstocks and processes used to 

manufacture non-highway diesel fuels, 

we believe that the potential decrease in 

the lubricity of these fuels from 

hydrotreating that might result from the 

sulfur standards should be 

approximately the same as that 

experienced in desulfurizing highway 

diesel fuel.143 To provide a 

conservative, high cost estimate, we 

assumed that the potential impact on 

fuel lubricity from the use of the new 

desulfurization processes would be the 

same as that experienced when 

hydrotreating diesel fuel to meet a 15 

ppm sulfur standard. Given that the 

requirements for fuel lubricity in 

highway and nonroad engines are the 

same, and the potential decrease in 

lubricity from desulfurization of NRLM 

diesel fuel would be no greater than that 

experienced in desulfurizing highway 

diesel fuel, we estimate that the 

potential need for lubricity additives in 

NRLM diesel fuel under today’s action 

would be the same as that for highway 

diesel fuel meeting the same sulfur 

standard.

a. Farm and Mining Equipment 

The types of fuel pumps and injection 

systems used in the nonroad diesel 

engines found in farm and mining 

equipment are similar to those used in 

highway diesel vehicles.144 The 

hydrotreating process for generating 500 

ppm diesel fuel will not adversely effect 

fuel injection equipment in farm and 

mining equipment based on the use of 

comparable injection systems in 

highway diesel vehicles. We believe that 

the use of lubricity additives in 15 ppm 

sulfur NRLM diesel fuel will be required 

and result in adequate protection of fuel 

injection equipment and is similar to 

that needed for 15 ppm sulfur highway 

diesel fuel.

b. Locomotives 

One of the locomotive manufacturers 

expressed concern in its comments that 

low sulfur fuel might damage existing 

locomotives. However, the manufacturer 

provided no evidence to show that such 

damage would likely occur. 

Locomotives already use a significant 

amount of low sulfur fuel, especially in 

California, and we have not seen any 

evidence of sulfur-related problems. The 

railroads expressed a similar concern, 

but acknowledged that any potential 

problems would be manageable with 

sufficient lead time. At this time, we see 

no reason for any special concern 

related to locomotives using low sulfur 

fuel. 

2. A Voluntary Approach on Lubricity 

In the United States, there is no 

government or industry standard for 

diesel fuel lubricity. Therefore, 

specifications for lubricity are 

determined by the market. Since the 

beginning of the 500 ppm sulfur 

highway diesel program in 1993, 

refiners, engine manufacturers, engine 

component manufacturers, and the 

military have been working with ASTM

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39079

145ASTM sub committee D02.E0.

146Hydrotreating diesel fuel involves the use of 

process heaters, which have the potential to emit 

pollutants associated with combustion, such as 

NOX, PM, CO and SO2. In addition, reconfiguring 

refinery processes to add desulfurization equipment 

could increase fugitive VOC emissions. The 

emissions increases associated with diesel 

desulfurization would vary widely from refinery to 

refinery, depending on many source-specific 

factors, such as crude oil supply, refinery 

configuration, type of desulfurization technology, 

amount of diesel fuel produced, and type of fuel 

used to fire the process heaters.

to develop protocols and standards for 

diesel fuel lubricity in its D 975 

specifications for diesel fuel. ASTM is 

working towards a single lubricity 

specification that is applicable to all 

diesel fuel used in any type of engine. 

Although ASTM has not yet adopted 

specific protocols and standards, 

refiners that supply the U.S. market 

have been treating diesel fuel with 

lubricity additives on a batch by batch 

basis, when poor lubricity fuel is 

produced. ASTM’s target 

implementation date for this 

specification is January 1, 2005. 

The potential need for lubricity 

additives in diesel fuel meeting a 15 

ppm sulfur specification was evaluated 

during the development of EPA’s 

highway diesel rule. In response to the 

proposed highway diesel rule, all 

comments submitted regarding lubricity 

either stated or implied that the 

proposed sulfur standard of 15 ppm 

would likely cause the refined fuel to 

have lubricity characteristics that would 

be inadequate to protect fuel injection 

equipment, and that mitigation 

measures such as lubricity additives 

would be necessary. However, the 

commenters suggested varied 

approaches for addressing lubricity. For 

example, some suggested that we need 

to establish a lubricity requirement by 

regulation while others suggested that 

the current voluntary, market based 

system would be adequate. The 

Department of Defense recommended 

that we encourage the industry (ASTM) 

to adopt lubricity protocols and 

standards before the 2006 

implementation date of the 15 ppm 

sulfur standard for highway diesel fuel. 

The final highway diesel rule did not 

establish a lubricity standard for 

highway diesel fuel. We believe the 

issues related to the need for diesel 

lubricity in fuel used in nonroad diesel 

engines are substantially the same as 

those related to the need for diesel 

lubricity for highway engines. 

Consequently, we expect the same 

industry-based voluntary approach to 

ensuring adequate lubricity in nonroad 

diesel fuels that we recognized for 

highway diesel fuel. We believe the best 

approach is to allow the market to 

address the lubricity issue in the most 

economical manner, while avoiding an 

additional regulatory scheme. A 

voluntary approach should provide 

adequate customer protection from 

engine failures due to low lubricity, 

while providing the maximum 

flexibility for the industry. This 

approach would be a continuation of 

current industry practices for diesel fuel 

produced to meet the current federal 

and California 500 ppm sulfur highway 

diesel fuel specifications, and benefits 

from the considerable experience gained 

since 1993. It would also include any 

new specifications and test procedures 

that we expect would be adopted by 

ASTM regarding lubricity of NRLM 

diesel fuel quality. 

In any event, this is an issue that will 

be resolved to meet the demands of the 

highway diesel market, and whatever 

resolution is reached for highway diesel 

fuel could be applied to NRLM diesel 

fuel with sufficient advance notice. We 

are continuing to participate in the 

ASTM Diesel Fuel Lubricity Task 

Force 145 and will assist their efforts to 

finalize a lubricity standard. We are 

hopeful that ASTM can reach a 

consensus this summer at the next 

meeting of the ASTM’s Lubricity Task 

Force. If for some reason ASTM does 

not take action to set a lubricity 

specification, EPA will consider taking 

appropriate action to ensure 15 ppm 

sulfur diesel fuel has adequate lubricity.

3. What Other Impact Would Today’s 

Actions Have on the Performance of 

Diesel and Other Fuels? 

We do not expect that the fuel 

program finalized today will have any 

negative impacts on the performance of 

diesel engines in the existing fleet 

which would use the fuels regulated 

today. 

While the process of lowering sulfur 

levels to 500 ppm does lower 

polynuclear aromatic hydrocarbons 

(PNAs) and total aromatics in general, it 

does not achieve the near-zero levels 

previously seen in California. The 15 

ppm sulfur standard will further reduce 

PNAs, however, in most diesel fuel, 

there will still be PNAs present. 

Furthermore, since the 1990’s, diesel 

engine manufacturers have switched to 

alternative materials (such as Viton), 

which do not experience leakage when 

PNAs are reduced. We believe that there 

will be no issues with leaking fuel 

pump O-rings with the changes in diesel 

fuel sulfur levels required by this 

rulemaking. 

The moderate reduction in PNAs and 

total aromatics associated with the 

hydrotreating of diesel fuel will tend to 

increase the cetane index and number of 

diesel fuel. This will improve the 

driveability of vehicles operating on this 

higher cetane diesel fuel. 

We do not expect any negative 

impacts on other fuels, such as jet fuel 

or heating oil. We do expect that the 

sulfur levels of heating oil may decrease 

because of this rulemaking. Beginning 

in mid-2007, we expect that controlling 

NRLM diesel fuel to 500 ppm sulfur will 

lead many pipelines to discontinue 

carrying high sulfur heating oil as a 

separate grade. In areas served by these 

pipelines, heating oil users will likely 

switch to 500 ppm sulfur diesel fuel. 

This will reduce emissions of SO2 and 

sulfate PM from furnaces and boilers 

fueled with heating oil. The primary 

exception to this will likely be the 

Northeast, where a distinct higher sulfur 

heating oil will still be distributed as a 

separate fuel. Also, we expect that a 

small volume of moderate sulfur 

distillate fuel will be created during 

distribution from the mixing of low 

sulfur diesel fuels and higher sulfur 

fuels, such as jet fuel in the pipeline 

interface. Such moderate sulfur 

distillate will often be sold by the 

terminal as high sulfur heating oil, but 

in fact its sulfur level will be lower than 

that normally sold as heating oil. 

H. Refinery Air Permitting 

Prior to beginning diesel 

desulfurization projects, some refineries 

may be required to obtain a 

preconstruction permit, under the New 

Source Review (NSR) program, from the 

applicable state/local air pollution 

control agency.146 We believe that 

today’s program provides sufficient lead 

time for refiners to obtain any necessary 

NSR permits well in advance of the 

applicable compliance dates.

Given that today’s diesel sulfur 

program provides roughly three years of 

lead time before the 500 ppm standard 

takes effect, we believe refiners will 

have time to obtain any necessary 

preconstruction permits. In addition, 

the experience gained by many 

refineries to obtain the preconstruction 

permits needed to comply with the Tier 

2 and highway diesel fuel programs 

should benefit them in obtaining the 

necessary permits to comply with 

today’s new diesel fuel requirements. 

Nevertheless, we believe it is reasonable 

to continue our efforts under the Tier 2 

and highway diesel fuel programs, to 

help states in facilitating the issuance of 

permits under the NRLM diesel fuel 

sulfur program whenever such 

assistance may be needed and 

requested. We anticipate that such 

assistance may include both technical 

39080 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

and procedural assistance as would be 

provided by the appropriate EPA 

Regional and Headquarters offices. 

Finally, to facilitate the processing of 

permits, we encourage refineries to 

begin discussions with permitting 

agencies and to submit permit 

applications as early as possible. 

V. Nonroad, Locomotive and Marine 

Diesel Fuel Program: Details of the 

Compliance and Enforcement 

Provisions 

As with earlier fuel programs, we 

have developed a comprehensive set of 

compliance and enforcement provisions 

designed to promote effective and 

efficient implementation of this fuel 

program and thus to achieve the full 

environmental potential of the program. 

The compliance provisions under 

today’s final rule are designed to ensure 

that nonroad, locomotive, and marine 

diesel fuel sulfur content requirements 

are met throughout the distribution 

system, from the refiner or importer 

through to the end user, subject to 

certain provisions applicable during the 

early transition years. Section IV above 

describes our program for the reduction 

of sulfur in nonroad, locomotive and 

marine (NRLM) diesel fuel including the 

standards and basic design of the 

compliance and enforcement program. 

This section contains additional details 

regarding the compliance and assurance 

program. The provisions discussed in 

this section fall into several broad 

categories:

—Special fuel provisions and 

exemptions; 

—Additional provisions applicable to 

refiners and importers; 

—Additional provisions applicable to 

parties downstream of the refinery or 

importer; 

—Special provisions regarding 

additives, kerosene, and the 

prohibition against the use of motor 

oil in fuel;

—Fuel testing and sampling 

requirements; 

—Records required to be kept, including 

those applying under the designate 

and track, credit provisions, small 

refiner, and refiner hardship 

provisions; 

—Reporting requirements; 

—Exemptions from the program; 

—Provisions concerning liability, 

defenses, and penalties for 

noncompliance; and 

—The selection of the marker for 

heating oil and 500 ppm sulfur LM 

diesel fuel. (The specific requirements 

with respect to heating oil and 500 

ppm sulfur LM diesel fuel inside and 

outside of the Northeast/Mid-Atlantic 

Area are discussed in section IV.D.) 

A. Special Fuel Provisions and 

Exemptions 

As discussed in section IV.A.1 above, 

the sulfur standards in today’s rule 

generally cover all the diesel fuel that is 

intended for use in or used in nonroad, 

locomotive, and marine (NRLM) 

applications that is not already covered 

by the standards for highway diesel fuel. 

For the purposes of this preamble, this 

fuel is defined primarily by the type of 

engine which it is used to power: Landbased nonroad, locomotive, and marine 

diesel engines. Section IV.A.1 above 

also describes several types of 

petroleum distillate that are not covered 

by the sulfur standards promulgated 

today, including jet fuel and heating oil, 

provided they are not used in NRLM 

engines. The following paragraphs 

discuss several provisions and 

exemptions for NRLM diesel fuel that 

will apply in special circumstances. 

1. Fuel Used in Military Applications 

NRLM diesel fuel used in military 

applications is treated in the same 

manner as under the recent highway 

diesel rule. Refiners are not required to 

produce these fuels to the NRLM 

standards. However, at the same time, 

their use is limited only to certain 

military applications. NRLM diesel fuel 

is defined so that JP–5, JP–8, F76, and 

any other military fuel that is used or 

intended for use in NRLM diesel 

engines or equipment is initially subject 

to all of the requirements applicable to 

NRLM diesel fuel. However, today’s rule 

also exempts these military fuels from 

the diesel fuel sulfur content and other 

requirements in certain circumstances. 

First, these fuels are exempt if they are 

used in tactical military motor vehicles 

or nonroad engines, or equipment that 

have a national security exemption from 

the vehicle or engine emissions 

standards. Due to national security 

considerations, EPA’s existing 

regulations allow the military to request 

and receive national security 

exemptions (NSE) for their motor 

vehicles and NRLM diesel engines and 

equipment from emissions regulations if 

the operational requirements for such 

vehicles, engines, or equipment warrant 

such an exemption. This final rule does 

not change these provisions. Fuel used 

in these applications is exempt. Second, 

these fuels are also exempt if they are 

used in tactical military vehicles, 

engines, or equipment 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), these 

vehicles, engines, and equipment need 

to be fueled on the same fuel as 

vehicles, engines, or equipment with a 

national security exemption. Use of JP–

5, JP–8, F76, or any other fuel not 

meeting NRLM diesel fuel standards in 

a motor vehicle or NRLM diesel engine 

or equipment other than the those 

described above is prohibited under 

today’s rule. 

EPA and the Department of Defense 

have developed a process to address the 

tactical vehicles, engines, and 

equipment covered by the diesel fuel 

exemption and are discussing whether 

changes to it might be appropriate. 

Based on data provided by the 

Department of Defense to date in the 

context of implementing a similar 

exemption provision in the highway 

program, EPA believes that providing an 

exemption for military fuel used in 

tactical nonroad engines and equipment 

will not have any significant 

environmental impact. 

The Department of Defense (DoD) 

commented that EPA should reconsider 

its determination that the definition of 

diesel fuel includes JP8 and JP5. DoD 

cited a 1995 letter from EPA which 

stated that there was insufficient reason 

to conclude that JP–8 is commonly and 

commercially known as diesel fuel 

under the then applicable definition of 

motor vehicle diesel fuel. Since the time 

of this letter, EPA has become aware of 

a substantial number of cases of the 

misuse of aviation turbine fuel in 

highway engines. The potential for 

misuse of JP–8 or similar fuels in NRLM 

equipment where no national security 

exemption exists would remain. To 

ensure that NRLM equipment is 

properly fueled with low sulfur fuel, the 

definition of NRLM diesel fuel has been 

written to encompass all diesel or other 

distillate fuels used or intended for use 

in NRLM engines, which would include 

JP–8 and JP–5. Furthermore, the 

provisions in today’s rule allow 

vehicles, engines, and equipment to be 

fueled with military specification fuels 

that are exempt from the sulfur 

standards when needed for national 

security. We believe that this provides 

DoD with the needed flexibility to meet 

its goals of keeping vehicles, engines, 

and equipment ready for quick 

deployment overseas. 

2. Fuel Used in Research, Development, 

and Testing 

Today’s final rule permits parties to 

request an exemption from the sulfur or 

other standards for NRLM diesel fuel 

used for research, development and 

testing purposes (‘‘R & D exemption’’). 

We recognize that there may be 

legitimate research programs that 

require the use of diesel fuel with higher 

sulfur levels than allowed under today’s 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39081

rule. As a result, this final rule contains 

provisions for obtaining an exemption 

from the prohibitions for persons, 

producing, distributing, transporting, 

storing, selling, or dispensing NRLM 

diesel fuel that exceeds the standards, 

where such diesel fuel is necessary to 

conduct a research, development, or 

testing program. 

Parties seeking an R & D exemption 

must submit an application for 

exemption to EPA that describes the 

purpose and scope of the program, and 

the reasons why higher-sulfur diesel 

fuel is necessary. Upon presentation of 

the required information, an exemption 

can be granted at the discretion of the 

Administrator, with the condition that 

EPA can withdraw the exemption in the 

event the Agency determines the 

exemption is not justified. In addition, 

an exemption based on false or 

inaccurate information will be 

considered void ab initio. Fuel subject 

to an exemption is exempt from certain 

provisions of this rule, including the 

sulfur standards, provided certain 

requirements are met. These 

requirements include the segregation of 

the exempt fuel from non-exempt NRLM 

and highway diesel fuel, identification 

of the exempt fuel on PTDs, pump 

labeling, and where appropriate, the 

replacement, repair, or removal from 

service of emission systems damaged by 

the use of the high sulfur fuel. 

3. Fuel Used in Racing Equipment 

There are no provisions for an 

exemption from the sulfur or other 

content standard and other 

requirements for diesel fuel used in 

racing in today’s final rule. Under 

certain conditions, racing vehicles are 

not considered nonroad vehicles. See, 

for example, 40 CFR § 89.2, definition of 

‘‘nonroad vehicle.’’ The fuel used by 

such racing vehicles would not 

necessarily be considered nonroad 

diesel fuel. However, we believe that 

there is a realistic chance that such fuel 

also could be used in NRLM equipment, 

and therefore, should be considered 

NRLM diesel fuel. We received no 

comments supporting the need for an 

exemption for racing fuel. We are not 

aware of any advantage for racing 

vehicles or racing equipment to use fuel 

having higher sulfur levels than are 

required by this rule, and we are 

concerned about the potential for 

misfueling of nonroad equipment and 

motor vehicles that could result from 

having a high sulfur (e.g., 3,000 ppm) 

fuel for vehicle or nonroad equipment 

available in the marketplace. 

Consequently, as was the case with the 

highway diesel rule, this final rule does 

not provide an exemption from the 

nonroad diesel fuel requirements for 

fuel used in racing vehicles or 

equipment. 

4. Fuel for Export 

Fuel produced for export, and that is 

actually exported for use in a foreign 

country, is exempt from the fuel content 

standards and other requirements of this 

final rule. Such fuel will be considered 

as intended for use in the U.S. and 

subject to the standards in today’s rule 

unless it is designated by the refiner as 

for export only and PTDs state that the 

fuel is for export only. Fuel intended for 

export must be segregated from all fuel 

intended for use in the U.S., and 

distributing or dispensing such fuel for 

domestic use is illegal. 

B. Additional Requirements for Refiners 

and Importers 

The primary requirements for refiners 

and importers under today’s final rule 

are discussed in section IV above. In 

that section, we discuss the general 

structure of the compliance and 

enforcement provisions applicable to 

refiners and importers, including fuel 

content standards, fuel volume 

designation and tracking provisions, 

and credit provisions. In this 

subsection, we discuss several 

additional requirements for refiners and 

importers that are not addressed in 

section IV. In addition, sections V.G, 

V.H, and V.I below discuss several 

provisions that apply to all parties in 

the diesel fuel production and 

distribution system, including refiners 

and importers. 

1. Transfer of Credits 

This final rule includes provisions for 

NRLM diesel sulfur credit transfers that 

are essentially identical to other fuels 

rules that have credits provisions. As in 

other fuels rules, NRLM diesel sulfur 

credits can only be transferred between 

the refiner or importer generating the 

credits and the refiner or importer using 

the credits. If a credit purchaser can not 

use all the credits it purchased from the 

refiner who generated them, the credits 

can be transferred one additional time. 

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, where the 

credits are later found to have been 

calculated or created improperly, or 

otherwise found to be invalid. As with 

the reformulated gasoline rule, the Tier 

2/Gasoline Sulfur rule, and the highway 

diesel sulfur rule, invalid credits 

purchased in good faith are not valid for 

use by the purchaser. To allow such use 

would not be consistent with the 

environmental goals of the regulation. In 

addition, both the seller and purchaser 

of invalid credits must adjust their 

credit calculations to reflect the proper 

credits and either party (or both) can be 

deemed in violation if the adjusted 

calculations demonstrated 

noncompliance. We expect that the 

parties to such a credit transaction will 

develop contractual provisions to 

address these circumstances.

Nevertheless, in a situation where 

invalid credits are transferred, our 

strong preference will be to hold the 

credit seller liable for the violation, 

rather than the credit purchaser. As a 

general matter we expect to enforce a 

shortfall in credit compliance 

calculations against the credit seller, 

and we 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 will 

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. 

2. Additional Provisions for Importers 

and Foreign Refiners Subject to the 

Credit Provisions or Hardship 

Provisions 

Since this final rule includes several 

compliance options that can be used by 

NRLM diesel fuel importers and foreign 

refiners, we are also finalizing specific 

compliance and enforcement provisions 

to ensure compliance for imported 

NRLM diesel fuel. These additional 

foreign refiner provisions are similar to 

those under the gasoline anti-dumping 

regulations, the gasoline sulfur 

regulations and the highway diesel fuel 

regulations (see 40 CFR 80.94, 80.410, 

and 80.620). 

Under today’s final rule, the per 

gallon standards for NRLM diesel fuel 

produced by refineries owned by foreign 

refiners must be met by the importer, 

unless the foreign refiner has been 

approved to produce NRLM diesel fuel 

under the credit provisions, small 

refiner provisions or hardship 

provisions of this final rule. If the 

foreign refiner is approved under any of 

these provisions, the volume and other 

requirements must be met by the foreign 

refiner for its refinery(s) and the foreign 

refiner must be the entity(s) generating, 

using, banking or trading any credits for 

the NRLM diesel fuel produced for and 

39082 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

147 Volumes of previously designated diesel fuel 

would be reported as volumes received under the 

designate and track provisions of Section IV.D.

148 Importer/refiners availing themselves of the 

DTAB provisions are still subject to the 

downgrading provisions, and other provisions 

applicable to any importer or refiner.

149An owner/operator of a tanker truck that 

delivers fuel directly from the tanker truck tank into 

motor vehicles or nonroad equipment of another 

business entity (i.e. a mobile refueler) would be 

acting as a retailer, and the truck would be 

operating as a retail outlet. In other words, the term 

retail outlet is not limited to stationary facilities. 

EPA proposed specific textual changes to the 

definition of retail outlet to clarify this, but has 

decided there is no need to change the definition, 

as it has always had this plain meaning. The owner/

operator of such a tanker truck may also be subject 

to distributor requirements and prohibitions, or 

carrier responsibilities if the trucker company does 

not take title to the fuel. As the definitions in 40 

CFR 80.2 make clear, it is the functions performed 

by the owner/operator that determine whether they 

come within the scope of the applicable definitions, 

and the resulting obligations or requirements that 

apply. Mobile refuelers are not subject to the 

labeling requirements applicable to other retailers 

but are required to provide PTDs to their customers.

150For example: Once the required marker is 

added to heating oil at the terminal, heating oil 

must be segregated from all other fuel grades. Once 

red dye is added to NRLM it must be segregated 

from highway diesel fuel.

imported into the U.S. Importers 

themselves are not eligible for small 

refiner or hardship relief as they do not 

face the same capital cost and lead-time 

issues faced by refiners. Importers may 

participate in the credit programs, 

however, an importer and a foreign 

refiner may not generate credits for the 

same fuel. 

Any foreign refiner that produces 

NRLM diesel fuel subject to the credit 

provisions, small refiner provisions or 

the hardship provisions will be subject 

to the same requirements as domestic 

refiners operating under the same 

provisions. Additionally, provisions for 

foreign refiners exist that are similar to 

the provisions at 40 CFR 80.94, 80.410, 

and 80.620, which include:

—Segregation of NRLM diesel fuel 

produced at the foreign refinery until 

it reaches the U.S. and separate 

tracking of volumes imported into 

each PADD; 

—Controls on product designation; 

—Load port and port of entry testing; 

and 

—Requirements regarding bonds and 

sovereign immunity.

These provisions will aid the Agency 

in tracking NRLM 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 diesel fuel requirements in today’s 

rule can be enforced against foreign 

refiners. 

3. Diesel Fuel Treated as Blendstock 

(DTAB) 

Under today’s program, a situation 

could arise for importers where fuel that 

was expected to comply with the 15 

ppm sulfur NRLM standard is found to 

be slightly higher in sulfur than the 

standard. Rather than require that 

importer to account for, and report, that 

fuel as 500 ppm sulfur fuel, an importer 

will be able to designate the noncomplying fuel as blendstock—‘‘diesel 

fuel treated as blendstock’’ or DTAB—

rather than as NRLM diesel fuel. In its 

capacity as a refiner, the party can then 

blend this DTAB fuel with lower sulfur 

diesel fuel or with other blendstocks to 

cause the sulfur level of the combined 

product to meet the 15 ppm sulfur 

NRLM diesel fuel standard prior to 

delivery to another entity. The same 

situation exists with respect to 

compliance with the 15 ppm sulfur 

highway standard. However, no 

provision was made in the 2007 

highway final rule for this. 

Consequently, we are also finalizing 

these DTAB provisions in this final rule 

for application to 15 ppm sulfur 

highway diesel fuel. 

Where diesel fuel that has been 

previously designated by a refiner is 

used to reduce the sulfur level of the 

DTAB to 15 ppm or less, the party, in 

its refiner capacity, is required to report 

only the volume of the imported DTAB 

as the amount of diesel fuel 

produced.147 This avoids the double 

counting that would result if the same 

diesel fuel is reported twice (i.e., once 

by the refiner who originally produced 

it and again by the refiner using it to 

blend with DTAB). If the product that is 

blended with the DTAB is not 

previously designated diesel fuel, but is 

also blendstock, the total combined 

volume of the DTAB and other 

blendstock constitutes the batch 

produced.

When an importer classifies diesel 

fuel as DTAB, that DTAB does not count 

toward the importer’s calculations 

under the highway diesel rule’s 

temporary compliance option, toward 

credit generation or use, or for volume 

account balance compliance 

calculations (see section IV).148 The 

same party, however, must include the 

DTAB in such calculations in its 

capacity as a refiner. We believe such an 

approach will increase the supply of 15 

ppm sulfur fuel by reducing the volume 

of near-compliant fuel that is 

downgraded to higher sulfur 

designations. In essence, it allows 

importers the same flexibility that 

refiners have within their refinery gate.

Similar to the provisions discussed 

above regarding the manufacture of 15 

ppm sulfur diesel fuel using DTAB, 500 

ppm sulfur NRLM and highway diesel 

fuel can also be manufactured using 

DTAB provided that this is 

appropriately reflected in the importer’s 

compliance calculations. 

C. Requirements for Parties Downstream 

of the Refinery or Import Facility 

In order for the environmental 

benefits of the NRLM diesel program to 

be realized, parties in the fuel 

distribution system downstream of the 

refinery (including pipelines, terminals, 

bulk plants, wholesale purchaserconsumers, and retailers 149) must 

ensure that the sulfur level of fuels 

supplied to the various end-users 

covered by today’s rule complies with 

the requirements in today’s rule. At 

certain points in the distribution 

system, such parties must keep the 

various grades of fuel having different 

sulfur specifications physically 

separate,150 and ensure that the fuel is 

properly designated and labeled. In 

other words, fuel represented as 15 ppm 

sulfur must comply with the 15 ppm 

sulfur standard, and fuel represented as 

500 ppm sulfur must meet the 500 ppm 

sulfur standard. At other points in the 

distribution system, certain fuels may be 

commingled provided that the fuel 

volumes are appropriately designated 

and accounted for in the custody 

holders volume account balance. 

Owners and operators of NRLM diesel 

equipment must also use fuels meeting 

specific sulfur content standards. The 

following paragraphs discuss several 

provisions that apply to these parties: 

Distribution of various fuel sulfur 

grades; diesel fuel pump labeling; use of 

used motor oil in diesel fuel; use of 

kerosene in diesel fuel; use of additives 

in diesel fuel; requirements for end 

users; and provisions covering 

downgrading of undyed diesel fuel to 

different grades of fuel. These 

provisions are analogous to similar 

provisions that apply to highway diesel 

fuel under the highway program. 

Section IV discusses in detail the 

provisions applicable to downstream 

parties under the designate and track 

program.

1. Product Segregation and End Use 

Requirements 

The main requirements for 

compliance with the fuel sulfur 

standards under today’s rule, including 

the designate and track provisions, are 

discussed in section IV of today’s 

preamble. The sulfur content of all fuels 

subject to the sulfur requirements in 

today’s rule must be appropriately 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39083

151Fuel produced in the distribution system that 

meets a 500 ppm sulfur specification may be used 

in NRLM equipment through June 1, 2014, and in 

locomotive and marine equipment thereafter.

152This requirement becomes effective June 1, 

2006 to support the anti-downgrade requirements in 

the highway diesel rule.

153Such 500 ppm sulfur downstream flexibility 

nonroad diesel fuel may be also be used in LM 

equipment since it complies with the LM sulfur 

standard applicable during this time period. Thus, 

both marked and unmarked 500 ppm sulfur fuel 

may be used in LM equipment during this time 

period.

154These flexibilities do not exist in the 

Northeast/Mid-Atlantic Area, and only the small 

refiner option exists in Alaska.

represented (designated/classified/

labeled) at all times through to the 

retailer or wholesale purchaser 

consumer. Furthermore, the designation 

and classification information on the 

label and PTD, and the actual sulfur 

content of any subject fuel must be 

consistent with the requirements 

detailed in section IV. Section IV also 

details how to accurately redesignate, 

reclassify, and re-label fuel volumes. 

This subsection discusses the various 

grades and uses of NRLM fuel under the 

NRLM diesel program. In later 

subsections, we discuss related 

requirements for PTDs to identify fuels 

throughout the distribution system and 

provisions relating to the liability that 

all parties in the distribution face for 

failing to maintain the standards of 

these different fuel sulfur grades. 

a. The Period From June 1, 2007 

Through May 31, 2010 

From June 1, 2007 through May 31, 

2010, all fuel used in NRLM equipment 

must meet a 500 ppm sulfur standard 

except for fuel produced or imported 

under the hardship, small refiner, and 

credit provisions.151 Outside of the 

Northeast/Mid-Atlantic Area and 

Alaska, we will not be able to rely upon 

the measurement of sulfur content alone 

to enforce the segregation requirements 

for heating oil, and are therefore 

requiring that heating oil be marked 

before it leaves the terminal by the 

addition of 6 mg/L of SY–124. Fuel 

containing more than 0.1 mg/L of the 

marker will be deemed to be heating oil 

and may not be used as nonroad, 

locomotive or marine fuel.

NRLM fuel designated or labeled as 

500 ppm sulfur must meet the 500 ppm 

sulfur standard and any fuel designated 

or labeled as 15 ppm must meet the 15 

ppm sulfur standard.152 If a fuel meeting 

these standards is mixed or 

contaminated with a higher sulfur fuel 

it must be downgraded to the higher 

sulfur product and new documentation 

(e.g., PTD, label) must be created to 

reflect the downgrade. During this 

period there will also be nonroad 

equipment that is expected to be 

equipped with sulfur sensitive 

emissions control technology that needs 

to operate on 500 ppm sulfur or less fuel 

in order to meet the NRLM program’s 

emission standards in-use. Fuels sold 

for use in, or dispensed into, these 

engines must be identified as meeting 

the 15 ppm sulfur standard or the 500 

ppm sulfur standard, as applicable, and 

if so identified must meet such 

standard. Distributors and retailers must 

avoid contaminating fuel represented by 

them on PTDs or pump labels as 15 ppm 

sulfur fuel or 500 ppm sulfur fuel with 

higher sulfur fuels. End users are 

required to use only the fuel grades 

identified as appropriate for use on the 

label affixed to their NRLM equipment.

b. The Period From June 1, 2010 

Through May 31, 2012

Beginning June 1, 2010, all fuel used 

in nonroad equipment must meet a 15 

ppm sulfur standard except for 500 ppm 

sulfur fuel produced or imported under 

the hardship, small refiner, and credit 

provisions, or downstream flexibility 

provisions which may continue to be 

used in nonroad engines produced prior 

to 2011. Locomotive and marine fuel 

will continue to be subject to the sulfur 

requirements applicable beginning June 

1, 2007, until May 31, 2012. 

During this time period, we will not 

be able to rely upon the measurement of 

sulfur content alone to enforce the 

segregation requirements for LM fuel 

and NR 500 ppm sulfur fuel outside of 

the Northeast/Mid-Atlantic Area and 

Alaska, and are therefore requiring that 

LM fuel produced or imported for use 

outside of the Northeast/Mid-Atlantic 

Area and Alaska be marked before it 

leaves the terminal by the addition of 6 

mg/L of SY–124. Fuel containing more 

than 0.1 mg/L of the marker will be 

deemed to be either LM fuel or heating 

oil and may not be used as nonroad fuel. 

Fuel containing the marker that meets a 

500 ppm sulfur standard will be deemed 

to be LM fuel, whereas fuel containing 

the marker with a sulfur content above 

500 ppm will be deemed to be heating 

oil. 

As discussed in section IV above, 

small refiners will be able to continue 

to produce 500 ppm sulfur nonroad 

fuel, through May 31, 2014. Other 

refiners may use credits through May 

31, 2014 to continue to produce fuel to 

the 500 ppm sulfur nonroad diesel fuel 

standard. Nonroad diesel fuel meeting a 

500 ppm sulfur standard may also be 

produced due to interface mixing in the 

distribution system.153 In any case, 15 

ppm sulfur diesel fuel must be 

segregated from 500 ppm sulfur NRLM 

diesel fuel throughout the distribution 

system including the end user, such that 

it maintains its designation, or it must 

be redesignated and labeled to its 

downgraded specification.154

Because of the sulfur sensitivity of the 

expected engine emission control 

systems beginning in model year 2011 

for nonroad diesel engines, it is 

imperative that the distribution system 

segregate nonroad diesel fuel subject to 

the 15 ppm sulfur standard from higher 

sulfur distillate products, such as 500 

ppm sulfur LM fuel, 500 ppm sulfur 

nonroad diesel fuel produced by small 

refiners or through the use of credits, 

heating oil, and jet fuel. End users are 

required to use only the fuel grades 

identified as appropriate for use on the 

label affixed to their NR and LM 

equipment. 

We are also concerned about potential 

misfueling of engines requiring 15 ppm 

sulfur fuel at retail or wholesale 

purchaser-consumer facilities (as 

defined under this program), or other 

end-user facilities, even when 

segregation of 15 ppm sulfur fuel from 

the higher-sulfur grades of diesel fuel 

has been maintained in the distribution 

system. Thus, downstream compliance 

and enforcement provisions of this rule 

are aimed at both preventing 

contamination of nonroad diesel fuel 

subject to the 15 ppm sulfur standard 

(i.e., fuel represented to meet that 

standard) and preventing misfueling of 

new nonroad equipment. 

c. The Period From June 1, 2012 

Through May 31, 2014 

Beginning June 1, 2012, all fuel used 

in locomotive and marine equipment 

must meet a 15 ppm sulfur standard 

except for 500 ppm sulfur fuel produced 

or imported under the hardship, small 

refiner, and credit provisions, or 

downstream flexibility provisions. As 

discussed in section IV above, small 

refiners will be able to continue to 

produce 500 ppm sulfur LM fuel, 

through May 31, 2014. Other refiners 

may use credits through May 31, 2014 

to continue to produce fuel to the 500 

ppm sulfur LM diesel fuel standard. 

Locomotive, and marine diesel fuel 

meeting a 500 ppm sulfur standard may 

also be produced due to interface 

mixing in the distribution system 

indefinitely. 

The marker requirement for 500 ppm 

sulfur LM diesel fuel expires on June 1, 

2012. After June 1, 2012, only heating 

oil must continue to be marked and any 

LM diesel fuel distributed from the 

terminal must not contain the marker. 

To allow marked LM diesel fuel 

39084 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

155Allowing four months for the LM fuel 

distribution system to sufficiently purge itself of 

marked fuel is consistent with the time allowed for 

LM diesel fuel to comply with a 500 ppm sulfur 

standard after the refinery gate 15 ppm sulfur 

standard for LM fuel becomes effective.

156 In the highway diesel rule, the term ‘‘highsulfur’’ means diesel fuel with a sulfur level greater 

than 15 ppm, whereas in this rule it means diesel 

fuel with a sulfur level greater than 500 ppm. In the 

highway diesel rule, the term ‘‘low-sulfur’’ means 

diesel fuel with a sulfur level less than or equal to 

15 ppm, whereas in this rule it means diesel fuel 

with a sulfur level less than or equal to 500 ppm. 

In addition, the term ‘‘nonroad’’ as used in the 

highway diesel rule means ‘‘non-highway’’ (i.e., all 

fuel that is not highway fuel), but the term 

‘‘nonroad’’ as used in this rule does not include 

locomotive diesel, marine diesel and heating oil.

distributed prior to June 1, 2012 to be 

consumed by end-users, the 

downstream prohibition against LM fuel 

containing the marker will not become 

effective until October 1, 2012. 

Beginning October 1, 2012, LM diesel 

fuel at any location must contain no 

more than 0.1 mg/L of the marker.155

We believe that allowing four months 

for downstream parties to blend down 

their stocks of marked LM diesel fuel 

with receipts of unmarked LM diesel 

fuel will be sufficient for such parties to 

comply with the prohibition against 

possessing LM fuel with a marker 

concentration greater than 0.1 mg/L.

The requirements that became 

effective for fuel used in nonroad 

equipment on June 1, 2010, will remain 

effective until May 31, 2014. 

d. After May 31, 2014 

After the small refiner, credit, and offspecification fuel flexibilites have 

expired, the remaining sulfur grades of 

diesel fuel will be 15 ppm sulfur 

highway and NRLM fuel, 500 ppm 

sulfur LM diesel fuel (produced due to 

interface mixing in the distribution 

system outside of the Northeast/MidAtlantic Area and Alaska), and heating 

oil, some of which may meet a 500 ppm 

sulfur standard. Product transfer 

documents are required to accompany 

the batches of such fuels which must 

contain the specified identifying 

information. Highway and NRLM diesel 

fuel meeting a 15 ppm sulfur 

specification must be segregated from 

500 ppm sulfur LM diesel fuel, and 

heating oil. Today’s rule contains 

provisions for the fungible shipment of 

LM diesel fuel with any heating oil 

meeting a 500 ppm sulfur cap up to the 

point where the fuel leaves the terminal 

that are similar to the provisions that 

allow the fungible shipment of high 

sulfur NRLM diesel fuel and high sulfur 

heating oil discussed in the previous 

section. Under such circumstances the 

designate and track and heating oil 

account balance requirements must be 

satisfied. 

2. Diesel Fuel Pump Labeling To 

Discourage Misfueling 

For any multiple-fuel program like the 

two-step program we are finalizing 

today, we believe that the clear labeling 

of nonroad diesel fuel pumps is vital so 

that end users can readily distinguish 

between the several grades of fuel that 

may be available at fueling facilities, 

and properly fuel their nonroad 

equipment. Section III.N above 

describes the labels that manufacturers 

are required to place on nonroad 

equipment, and the information that 

must be provided to nonroad equipment 

owners. Section VI discusses the likely 

benefit for many nonroad engines to 

utilize 500 ppm sulfur diesel fuel as 

soon as it becomes available in 2007. 

Today’s final rule includes requirements 

for labeling fuel pump stands used to 

fuel NRLM equipment and highway 

diesel vehicles. 

To help prevent misfueling of 

nonroad, locomotive and marine 

engines, and to thus ensure that the 

environmental benefits of the program 

are realized, we are finalizing pump 

labeling requirements similar to those 

adopted in the highway diesel rule (40 

CFR 80.570). Today’s pump dispenser 

labeling requirements are discussed 

separately according to the date they 

become effective: June 1, 2006, June 1, 

2007, June 1, 2010, and June 1, 2014.

Today’s final rule also amends the 

pump dispenser labeling language in the 

highway diesel regulations for 

consistency with the NRLM program. 

Because existing highway diesel 

regulations prohibit highway diesel fuel 

with sulfur levels above 500 ppm, the 

highway diesel final rule and this 

program have different meanings for the 

terms ‘‘low sulfur’’ and ‘‘high sulfur,’’

and the highway diesel final rule does 

not use the term ‘‘ultra low-sulfur.’’

Further, because the highway diesel 

final rule did not need to categorize the 

different uses of non-highway diesel 

fuel, the highway diesel final rule and 

this program have different meanings 

for the term ‘‘nonroad.’’ 156 The 

amendments to the highway pump 

dispenser labeling language finalized by 

today’s rule are meant to avoid 

confusion at the fuel pumps caused by 

labels that would have different 

meanings depending on whether the 

pump is dispensing highway or nonhighway diesel fuel. Today’s final rule 

adds effective dates to each paragraph of 

the labeling provisions of the highway 

diesel rule for consistency with the 

additional pump labeling sections of 

this program, and to distinguish the 

non-highway labeling requirement 

effective June 1, 2006 under the 

highway diesel rule from the nonhighway labeling requirements of this 

rule that are effective in 2007.

Alternate labels to those specified in 

today’s rule may be used if they are 

approved by the Administrator. 

Today’s rule also finalizes labeling 

requirements for pumps in Alaska that 

dispense NRLM diesel fuel and heating 

oil which is exempt from the red dye 

and fuel marker requirements which 

differ from the labeling requirements 

discussed in this section. Please refer to 

§ 69.52(e) of the regulatory text to 

today’s rule for these pump labeling 

requirements applicable in Alaska. 

a. Pump Labeling Requirements that 

Become Effective June 1, 2006 

The pump labeling requirements 

described in this section become 

effective June 1, 2006. 

i. Pumps Dispensing Highway Diesel 

Fuel Subject to the 15 ppm Sulfur 

Standard 

The label on pumps dispensing 

highway diesel fuel subject to the 15 

ppm sulfur standard must read as 

follows:

ULTRA LOW-SULFUR HIGHWAY DIESEL 

FUEL (15 ppm Sulfur Maximum) 

Required for use in all model year 2007 

and later highway diesel vehicles and 

engines. 

Recommended for use in all diesel vehicles 

and engines.

The above labeling requirement for 15 

ppm sulfur highway diesel fuel 

continues through May 31, 2010, after 

which time different pump label 

requirements for this fuel become 

effective as described in section 

V.C.2.c.3. of this preamble. 

ii. Pumps Dispensing Highway Diesel 

Fuel Subject to the 500 ppm Sulfur 

Standard 

The label on pumps dispensing 

highway diesel fuel subject to the 500 

ppm sulfur standard must read as 

follows:

LOW-SULFUR HIGHWAY DIESEL FUEL 

(500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in model year 

2007 and later highway vehicles and engines. 

Its use may damage these vehicles and 

engines.

Dispensing highway diesel fuel that 

has a sulfur content above 15 ppm is 

prohibited into any highway vehicle 

after September 30, 2010. Hence no 

pumps may display the above label after 

September 30, 2010. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39085

157The IRS requires that 15 ppm sulfur nonhighway diesel fuel must contain red dye after it 

leaves the terminal.

158Production of 500 ppm sulfur fuel under the 

credit provisions is allowed until June 1, 2012, but 

small refiner fuel subject to the 500 ppm sulfur 

standard can continue to be produced until June 1, 

2014 and will be available to end users until 

September 1, 2014.

iii. Pumps Dispensing Diesel Fuel for 

Non-Highway Equipment That Does Not 

Meet the Standards for Motor Vehicle 

Diesel Fuel 

The label on pumps dispensing diesel 

fuel for non-highway equipment that 

does not meet the standards for motor 

vehicle diesel fuel must read as follows:

NON-HIGHWAY DIESEL FUEL (May Exceed 

500 ppm Sulfur) 

WARNING 

Federal law prohibits use in any highway 

vehicle or engine 

Its use may damage these vehicles and 

engines.

This labeling requirement is effective 

until May 31, 2007, after which high 

sulfur non-highway diesel fuel must be 

labeled according to the provisions 

described in section V.C.2.b.iii and 500 

ppm sulfur non-highway diesel fuel 

must be labeled according to the 

provisions described in section 

V.C.2.b.1. of today’s preamble. 

b. Pump Labeling Requirements That 

Become Effective June 1, 2007 

As discussed in section IV, between 

June 1, 2007 and September 30, 2010, 

end users are not always required to 

dispense fuel meeting the 500 ppm 

sulfur standard into nonroad, 

equipment, locomotives or marine 

vessels. During this time period, small 

refiner fuel and fuel produced under the 

credit provisions with sulfur levels 

exceeding 500 ppm will continue to 

exist in the distribution system. During 

this time period, there will also be 

nonroad equipment with engines 

certified as meeting the Tier 4 emission 

standards (i.e., engines equipped with 

emission controls that allow them to 

meet the Tier 4 standards earlier than 

required). Some of this equipment is 

expected to be equipped with sulfur 

sensitive technology that will need to 

operate on fuel with a sulfur content of 

500 ppm or less to function properly. 

For this reason, it is important that 

NRLM end users be able to know the 

sulfur level of the fuel they are 

purchasing and dispensing. Therefore, 

fuel pump dispensers for the various 

sulfur grades must also be properly 

labeled. The following pump labeling 

requirements become effective from 

June 1, 2007: 

i. Pumps Dispensing NRLM Diesel Fuel 

Subject to the 500 ppm Sulfur Standard 

The label on pumps dispensing 500 

ppm (maximum) sulfur content diesel 

fuel for use in NRLM engines must read 

as follows:

LOW-SULFUR NON-HIGHWAY DIESEL 

FUEL (500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in any highway 

vehicle or engine

The above labeling requirement 

remains effective until May 31, 2010, 

after which it is superceded by the 

requirements described below. 

ii. Pumps Dispensing NRLM Diesel Fuel 

Subject to the 15 ppm Sulfur Standard 

It is also likely that prior to June 1, 

2010 some 15 ppm sulfur (maximum) 

diesel fuel will be introduced into the 

nonroad market early. Both the engine 

and fuel credit provisions envision such 

early introduction of 2011–compliant 

engines and 15 ppm sulfur diesel fuel. 

Thus, it is important that nonroad end 

users be able to know when they are 

purchasing diesel fuel with 15 ppm or 

less sulfur.157 The label on pumps 

dispensing 15 ppm sulfur diesel fuel for 

use in NRLM engines must read as 

follows:

ULTRA-LOW SULFUR NON-HIGHWAY 

DIESEL FUEL (15 ppm Sulfur Maximum) 

Required for use in all model year 2011 

and newer nonroad diesel engines. 

Recommended for use in all nonroad, 

locomotive and marine diesel engines. 

WARNING 

Federal law prohibits use in any highway 

vehicle or engine.

The above labeling requirement 

continues until May 31, 2014, after 

which it is superceded by the labeling 

provisions described in section V.C.2.e.i 

of today’s preamble. 

iii. Pumps Dispensing Diesel Fuel With 

a Sulfur Content Greater Than 500 ppm 

for Use in Older NRLM Equipment 

The label on pumps dispensing diesel 

fuel having a sulfur content greater than 

500 ppm (for use in older nonroad, 

locomotive, and marine diesel engines) 

must read as follows:

HIGH-SULFUR NON-HIGHWAY DIESEL 

FUEL (May Exceed 500 ppm Sulfur) 

WARNING 

Federal law prohibits use in highway 

vehicles or engines 

May damage nonroad, diesel engines 

required to use low-sulfur or ultra-low sulfur 

diesel fuel.

The above labeling requirement 

remains effective until September 30, 

2010. After September 30, 2010 no 

pump may display this label. 

iv. Pumps Dispensing Heating Oil 

As discussed in section IV.B.2.b, it is 

necessary to segregate heating oil from 

NRLM diesel fuel to ensure that the fuel 

used in nonroad, locomotive, and 

marine equipment is compliant with the 

sulfur standards in today’s rule. The 

label on pumps dispensing nonhighway diesel fuel for use other than 

in nonroad, locomotive or marine 

engines, such as for use in stationary 

diesel engines or as heating oil, must 

read as follows:

HEATING OIL (May Exceed 500 ppm Sulfur) 

WARNING 

Federal law prohibits use in highway 

vehicles or engines, or in nonroad, 

locomotive, or marine engines. 

Its use may damage these diesel engines.

The above labeling will remain 

effective indefinitely. 

c. Pump Labeling Requirements That 

Become Effective June 1, 2010 

Beginning October 1, 2010, all diesel 

fuel introduced into highway diesel 

vehicles, regardless of the year of 

manufacture, must meet the 15 ppm 

sulfur standard. Furthermore, with 

certain exceptions, fuel introduced into 

any nonroad engine must meet the 15 

ppm sulfur standard. The exceptions are 

fuel allowed to meet the 500 ppm sulfur 

standard for use only in pre-model year 

2011 nonroad engines and locomotive 

and marine engines, for example, small 

refiner nonroad diesel fuel and credit 

nonroad diesel fuel, as well as 

downgraded 15 ppm sulfur diesel fuel 

from the distribution system. This use of 

500 ppm sulfur diesel fuel in nonroad 

engines will continue through 

September 30, 2014,158 after which all 

nonroad diesel fuel must meet the 15 

ppm sulfur standard. The following 

pump labeling requirements become 

effective June 1, 2010:

i. Pumps Dispensing NRLM Diesel Fuel 

Subject to the 500 ppm Sulfur Standard 

The label on pumps dispensing 500 

ppm (maximum) nonroad, locomotive, 

and marine diesel fuel, as discussed in 

section IV.B.3.b, must read as follows:

LOW-SULFUR NON-HIGHWAY DIESEL 

FUEL (500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in all model year 

2011 and newer nonroad engines. 

May damage model year 2011 and newer 

nonroad engines. 

39086 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Federal Law Prohibits Use in any Highway 

Vehicle or Engine. 

Recommended for use in all locomotive 

and marine equipment.

The above labeling requirement 

remains effective until September 30, 

2014. After September 30, 2014, no 

pump may display this label. 

ii. Pumps Dispensing Marked LM Fuel 

The label on pumps dispensing 500 

ppm sulfur locomotive, and marine 

diesel fuel, as discussed in section 

IV.B.3.b., must read as follows:

LOW-SULFUR LOCOMOTIVE AND 

MARINE DIESEL FUEL (500 ppm Sulfur 

Maximum) 

WARNING 

Federal law prohibits use in nonroad 

engines or in highway vehicles or engines.

The above labeling requirement 

remains effective until September 30, 

2012. After September 30, 2012, no 

pump may display this label. 

iii. Pumps Dispensing Highway Diesel 

Fuel Subject to the 15 ppm Sulfur 

Standard 

The label on pumps dispensing 

highway diesel fuel subject to the 15 

ppm sulfur standard of § 80.520(a)(1) 

must read as follows:

ULTRA LOW-SULFUR HIGHWAY DIESEL 

FUEL (15 ppm Sulfur Maximum) 

Required for use in all highway diesel 

vehicles and engines. 

Recommended for use in all diesel vehicles 

and engines.

The above labeling requirement for 15 

ppm sulfur highway diesel fuel 

continues indefinitely. 

d. Pump Labeling Requirements That 

Become Effective June 1, 2014 

Beginning October 1, 2014, all 

nonroad fuel distributed to end-users is 

required to meet the 15 ppm sulfur 

standard, without exception. 

Locomotive and marine fuel 

downstream of the refinery or importer 

is still subject to the 500 ppm sulfur 

standard. The pump labels for heating 

oil will continue to be the same as for 

the period 2010 through 2014. The 

following pump labeling requirements 

become effective beginning June 1, 

2014: 

i. Pumps Dispensing NRLM Diesel Fuel 

Subject to the 15 ppm Sulfur Standard 

For pumps dispensing nonroad diesel 

fuel the label must read as follows:

ULTRA-LOW SULFUR NON-HIGHWAY 

DIESEL FUEL (15 ppm Sulfur Maximum) 

Required for use in all nonroad diesel 

engines. 

Recommended for use in all locomotive 

and marine diesel engines. 

WARNING 

Federal law prohibits use in any highway 

vehicle or engine.

The above labeling requirement 

continues indefinitely. 

ii. Pumps Dispensing Locomotive and 

Marine Diesel Fuel Subject to the 500 

ppm Sulfur Standard 

For pumps dispensing locomotive or 

marine diesel fuel, the label must read 

as follows:

LOW-SULFUR LOCOMOTIVE OR MARINE 

DIESEL FUEL (500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in nonroad 

engines or in highway vehicles or engines. 

Its use may damage these engines.

The above labeling requirement will 

remain effective indefinitely. 

f. Nozzle Size Requirements or other 

Requirements To Prevent Misfueling 

Like the highway diesel fuel program, 

the NRLM diesel fuel program does not 

include a nozzle size requirement. In 

part this is because we are not aware of 

an effective and practicable scheme to 

prevent misfueling through the use of 

different nozzle sizes or shapes, and in 

part because we do not believe that 

improper fueling will be a significant 

enough problem to warrant such an 

action. In the preamble to the highway 

diesel fuel rule, we stated our belief that 

the use of unique nozzles, color-coded 

scuff-guards, or dyes to distinguish the 

grades of diesel fuel may be useful in 

preventing accidental use of the wrong 

fuel. (See 66 FR 5119, January 18, 2001.) 

However, we did not finalize any such 

requirements, for the reasons described 

in the RIA for that final rule (section 

IV.E). 

Similar reasoning applies to the 

NRLM diesel fuel program. For 

example, 15 ppm sulfur diesel fuel will 

be the dominant fuel in the market by 

2010, likely comprising more than 80 

percent of all number 2 distillate. 

Further, we believe that 500 ppm sulfur 

diesel fuel will have limited availability 

between 2010 and 2014. High-sulfur 

distillate for heating oil uses will 

remain, but will only exist in significant 

volumes in certain parts of the country. 

In addition, as with highway diesel 

engines, there is currently no 

standardization of fuel tank openings 

and filler necks that would allow for a 

simple, inexpensive, standardization of 

nozzles. In any event, we believe that 

most owners and operators of new 

nonroad diesel engines and equipment 

will not risk voiding the general 

warranty and the emissions warranty by 

misfueling. 

Although in the highway diesel fuel 

rule we did not finalize any provisions 

beyond fuel pump labeling 

requirements, we recognized that some 

potential for misfueling could still exist. 

Consequently, we expressed a desire to 

continue to explore with industry 

simple, cost-effective approaches that 

could further minimize misfueling 

potential such as color-coded nozzles/

scuff guards. Since the highway diesel 

rule was promulgated, we have had 

discussions with fuel retailers, 

wholesale purchaser-consumers, vehicle 

manufacturers, and nozzle 

manufacturers, and continue to examine 

different methods for preventing 

accidental or intentional misfueling 

under the highway diesel fuel sulfur 

program. To date, the affected 

stakeholders, including engine and 

truck manufacturers, truck operators, 

fuel retailers, and fuel nozzle 

manufacturers have not reached any 

common view that the concerns over 

misfueling warrant any additional 

prevention measures. 

3. Prohibition Against the Use of Used 

Motor Oil in New Nonroad Diesel 

Equipment 

We understand that used motor oil is 

sometimes blended with diesel fuel 

today for use as fuel in nonroad diesel 

equipment. Such practices include 

blending used motor oil directly into the 

equipment fuel tank, blending it into the 

fuel storage tanks, and blending small 

amounts of motor oil from the engine 

crank case into the fuel system as the 

equipment is operated.

However, motor oil normally contains 

high levels of sulfur. Thus, the addition 

of used motor oil to nonroad diesel fuel 

could substantially impair the sulfursensitive emissions control equipment 

expected to be used by engine 

manufacturers to meet the emissions 

standards in today’s final rule. 

Depending on how the oil is blended, it 

could increase the sulfur content of the 

fuel by as much as 200 ppm sulfur. As 

a result, we believe blending used motor 

oil into nonroad diesel fuel could render 

inoperative the expected emission 

control technology and potentially 

cause driveability problems. 

Consequently, it would violate the 

tampering prohibition in the Act. See

CAA sections 203(a)(3), and 213(d). 

Therefore, like the highway diesel 

rule, 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 

nonroad equipment engines 

manufactured in model year 2011 and 

later. The only exception to this will be 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39087

159 Diesel fuel additives are used at 

concentrations commonly expressed in parts per 

million. Diesel fuel additives can include speciallyformulated 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.

160See Chapter IV.D. of the RIA for the highway 

diesel fuel rule for more information on diesel fuel 

additives, EPA Air docket A–99–06, docket item V–

B–01. Also see 40 CFR part 79.

161Most diesel fuel additives are added at the 

terminal to bulk fuel volumes before sale to the 

consumer. These additives are referred to as bulk 

additives. End users and wholesale purchaser 

consumers sometimes also add additives to diesel 

Continued

where the engine was explicitly 

certified to the emission standard with 

used motor oil added and the oil was 

added in a manner consistent with the 

certification. Furthermore, as discussed 

in section IV, today’s rule includes 

certain sunset dates when all NRLM 

diesel fuel in the distribution system 

must meet the applicable sulfur 

standard, and before that date any 

NRLM designated, classified, or labeled 

as 15 ppm sulfur fuel must meet that 

sulfur standard. Blending of used motor 

oil into NRLM could cause these 

standards to be exceeded in violation of 

today’s rule. Any party who causes the 

sulfur content of nonroad diesel fuel 

subject to the 15 ppm sulfur standard to 

exceed 15 ppm by blending motor oil 

into nonroad diesel fuel, or by using 

motor oil as nonroad diesel fuel, is 

subject to liability for violating the 

sulfur standard. Similarly, parties who 

cause the sulfur level of nonroad diesel 

fuel subject to the 500 ppm sulfur 

nonroad diesel fuel standard to exceed 

that standard by blending motor oil into 

the fuel, are also subject to liability. 

4. Use of Kerosene in Diesel Fuel 

As we discussed in the highway 

diesel final rule, kerosene is commonly 

added to diesel fuel to reduce fuel 

viscosity in cold weather (see 66 FR 

5120, January 18, 2001). This final rule 

does not limit this practice with regard 

to 15 ppm sulfur or 500 ppm sulfur 

NRLM diesel fuel. However the 

resulting blend will still be subject to 

the 15 ppm sulfur or 500 ppm sulfur 

standard. Kerosene that is used, 

intended for use, or made available for 

use as, or for blending with, 15 ppm 

sulfur or 500 ppm sulfur diesel fuel is 

itself required to meet the 15 ppm sulfur 

or 500 ppm sulfur standard. 

As a general matter, any party who 

blends kerosene, or any blendstock, into 

NRLM diesel fuel, or who produces 

NRLM diesel fuel by mixing 

blendstocks, will be treated as a refiner 

and will be subject to the requirements 

and prohibitions applicable to refiners 

under today’s rule. For example, the 

fuel that they manufacture must meet 

the sulfur standards established in this 

rule, and represented on the PTD. 

However, in deference to the 

longstanding and widespread practice of 

blending kerosene into diesel fuel at 

downstream locations, downstream 

parties who only blend kerosene into 

NRLM and highway diesel fuel will not 

be subject to the requirements 

applicable to other refiners, provided 

that they do not alter the fuel in any 

other way, and do not violate the 

volume balance requirements discussed 

in section IV.D. For example, they will 

not need to meet the 80/20 requirements 

under the highway diesel program. This 

activity is treated the same way under 

the final highway diesel rule. Parties 

that blend kerosene into diesel fuel are 

subject to the downstream designate and 

track provisions applicable to other 

downstream parties. 

In order to ensure the continued 

compliance of 15 ppm sulfur fuel with 

the 15 ppm sulfur standard, 

downstream parties choosing to blend 

kerosene into 15 ppm sulfur NRLM 

diesel fuel are required to either have a 

PTD for that kerosene indicating 

compliance with the 15 ppm sulfur 

standard, or to have test results for the 

kerosene establishing such compliance. 

Further, downstream parties choosing to 

blend kerosene into 15 ppm sulfur 

NRLM diesel fuel are entitled to the two 

ppm adjustment factor discussed in 

section V.D.2. 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 NRLM diesel 

fuel into which it is blended.

Any party who causes the sulfur 

content of NRLM diesel fuel represented 

as meeting the 15 ppm sulfur standard 

to exceed 15 ppm sulfur by blending 

kerosene into NRLM diesel fuel, or by 

using greater than 15 ppm sulfur 

kerosene as NRLM diesel fuel, is subject 

to liability for violating the sulfur 

standard. Similarly, parties who cause 

the sulfur level of NRLM diesel fuel 

subject to the 500 ppm sulfur diesel fuel 

standard to exceed that standard by 

blending kerosene into the fuel, are also 

subject to liability. 

Today’s 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 ultra low 

sulfur kerosene in the same refinery 

processes that they use to produce ultra 

low sulfur diesel fuel, and that the 

market will drive supply of ultra low 

sulfur kerosene for those areas where, 

and during those seasons when, the 

product is needed for blending with 

NRLM, as well a highway, diesel fuel. 

As discussed in section IV.D, 

kerosene blending also factors into the 

designate and track provisions finalized 

today from June 1, 2006 until June 1, 

2010. During this time period it is 

possible, and in fact likely, that 

kerosene meeting the 15 ppm sulfur 

standard will instead be designated as 

No. 1 highway diesel fuel, and will 

simply need to meet all of the 

requirements of highway diesel fuel. It 

is also possible, though less likely that 

kerosene meeting the 500 ppm sulfur 

standard will be designated as No. 1 

highway diesel fuel. However, if it is, it 

would also merely need to comply with 

all the requirements applicable to 

highway diesel fuel. 

5. Use of Diesel Fuel Additives 

Diesel fuel additives include lubricity 

improvers, corrosion inhibitors, coldoperability improvers, and static 

dissipaters. Use of such additives is 

distinguished from the use of kerosene 

or biodiesel by the low concentrations at 

which they are used (defined to be one 

percent or less) and their relatively more 

complex chemistry.159 The suitability of 

diesel fuel additives for use in diesel 

fuel meeting a 500 ppm sulfur 

specification has been well established 

due to the existence of 500 ppm sulfur 

highway diesel fuel in the marketplace 

since 1993. The suitability of additives 

for use in 15 ppm sulfur diesel fuel was 

first addressed by EPA in the highway 

diesel program, which requires highway 

diesel fuel to meet a 15 ppm sulfur 

standard beginning in 2006. At the time 

of the finalization of the highway diesel 

final rule and during our development 

of the proposed NRLM diesel rule, our 

review of data submitted by additive 

and fuel manufacturers to comply with 

EPA’s Fuel and Fuel Additive 

Registration requirements indicated that 

additives to meet every purpose, 

including static dissipation, are 

currently in common use which meet a 

15 ppm cap on sulfur content.160

a. Additives Used in 15 ppm Sulfur 

Diesel Fuel 

Similar to the highway diesel rule, 

today’s rule allows the bulk addition of 

diesel fuel additives with a sulfur 

content greater than 15 ppm in NRLM 

diesel fuel under certain 

circumstances.161 However, NRLM 

39088 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

fuel by hand blending into the vehicle fuel tank or 

fleet fuel storage tanks. Such additives are referred 

to as aftermarket additives. As discussed at the end 

of this section, today’s rule contains different 

requirements regarding the use of aftermarket 

additives.

162All additives must be registered with EPA 

Fuel and Fuel Additive Database prior to their use 

in motor vehicle diesel fuel.

diesel fuel containing such additives 

will continue to be subject to the 15 

ppm sulfur cap. We believe that it is 

most appropriate for the market to 

determine how best to accommodate 

increases in fuel sulfur content from the 

refinery gate to the end user, while 

maintaining the 15 ppm sulfur cap, and 

whether such increases result from 

contamination in the distribution 

system or bulk 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 bulk additive 

contribution to fuel sulfur content.

Thus, as in the highway diesel 

program, additive manufacturers that 

market bulk diesel additives with a 

sulfur content higher than 15 ppm and 

blenders that use them in nonroad 

diesel have additional requirements to 

ensure that the 15 ppm sulfur cap for 

NRLM diesel fuel is not exceeded. 

The 15 ppm sulfur cap on highway 

diesel fuel that becomes effective in 

2006 may encourage the gradual 

retirement of additives that do not meet 

a 15 ppm sulfur cap. The 15 ppm sulfur 

cap for NR fuel in 2010 and for LM fuel 

in 2012 may further this trend. 

However, we do not anticipate that this 

will result in disruption to additive 

users and producers or a significant 

increase in cost. Additive manufacturers 

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 accomplished prior to the 

implementation of the 15 ppm sulfur 

cap on highway diesel fuel in 2006. 

Like the highway diesel fuel rule, this 

rule will limit the continued use in 15 

ppm sulfur fuel of a bulk additive that 

exceeds 15 ppm sulfur to a 

concentration 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. See

40 CFR 79.2(d)(1) and 40 CFR part 80. 

The specific requirements regarding 

the use of bulk diesel fuel additives in 

NRLM fuel subject to the 15 ppm sulfur 

standard are as follows:

—Bulk 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.’’

—Bulk additives that exceed 15 ppm 

sulfur could continue to be used in 

diesel fuel subject to the 15 ppm 

sulfur standard 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) A warning that the additive’s 

sulfur content may exceed 15 ppm and 

that improper use of the additive may 

result in non-complying fuel, 

(2) The additive’s maximum sulfur 

concentration, 

(3) The maximum recommended 

concentration for use of the additive in 

diesel fuel, and 

(4) The contribution to the sulfur level 

of the fuel that would result if the 

additive is used at the maximum 

recommended concentration. 

We proposed that the affirmative 

defenses to presumptive liability for 

blenders of bulk additives with a sulfur 

content greater than 15 ppm must 

include periodic sulfur tests after the 

addition of the additive showing that 

the finished fuel does not exceed the 15 

ppm sulfur cap. We are adopting this 

proposed requirement for additives 

other than static dissipater additives. 

b. Static Dissipater Additives 

Comments from diesel fuel 

distributors and additive manufactures 

stated that static dissipater additives are 

unique among the various types of 

diesel fuel additives in that there are 

currently none available with a sulfur 

content below 15 ppm which are fully 

effective. Considering the lack of static 

dissipater additives meeting a 15 ppm 

sulfur cap, and the inability to add static 

dissipater (S–D) additives prior to 

shipment by pipeline, commenters 

stated that the prohibitive cost of testing 

fuel batches after the addition of static 

dissipater additives could discourage 

their use. To avoid the potential adverse 

impact on the safety of the fuel 

distribution industry which could 

result, commenters requested that we 

provide an alternative method for use in 

demonstrating their affirmative defense 

to presumptive liability when they use 

static dissipater additives with a sulfur 

content above 15 ppm. Manufacturers of 

static dissipater additives stated that 

due to very low treatment rates that are 

needed for such additives, their use will 

raise the sulfur content of the finished 

fuel by no more than 0.02 ppm. 

Commenters stated that because of the 

extremely low potential contribution to 

the sulfur level of the finished diesel 

fuel which might result from the use of 

static dissipater additives, there was 

little risk that use of such additives 

would result in noncompliance with the 

15 ppm sulfur cap. 

We contacted all of the additive 

manufactures that have registered static 

dissipater additives in EPA’s Fuel and 

Fuel Additive Database.162 All of these 

manufactures stated that there are no 

fully-effective static dissipater additives 

available that have a sulfur content 

below 15 ppm. They further stated that 

sulfur is an essential component in 

static dissipater additives, and that it is 

currently unclear how to formulate a 

static dissipater additive that would 

have a sulfur content below 15 ppm. 

Because of this input, we now recognize 

that static dissipater additives are in a 

unique category with respect to the 

ability to comply with a 15 ppm sulfur 

cap. Additive manufactures stated that 

reformulation of static dissipater 

additives to meet a 15 ppm sulfur cap 

will likely be a lengthy undertaking.

It is unclear which of the naturallyoccurring components in diesel fuel act 

to dissipate static electricity. However, 

certain batches of fuel are periodically 

found which do not have adequate static 

dissipating qualities. In such cases, 

static dissipater additives are necessary 

to prevent a static discharge from 

occurring during the transfer of fuel into 

a storage tank which might cause an 

explosion. Therefore, it is essential that 

today’s rule is structured in such a way 

so as to not impede the use static 

dissipater additives. Because of the lack 

of static dissipater additives meeting a 

15 ppm sulfur specification, the unique 

difficulty in reformulating them to meet 

a 15 ppm sulfur standard, the fact that 

they are essential to the safety of the 

fuel distribution system, and the 

impracticability for them to be added at 

the refinery, today’s rule includes 

special affirmative defense provisions to 

reduce the sulfur testing burden 

associated with the use of static 

dissipater additives that have a sulfur 

content greater than 15 ppm. 

Commenters suggested an alternative 

mechanism to demonstrate an 

affirmative defense to presumptive 

liability for blenders of static-dissipater 

(S–D) additives which would avoid the 

need to test every batch of fuel at the 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39089

163Phone conversation with Eon McMullen, Octel 

additives, February 12, 2004.

terminal after additization. Under this 

approach, blenders of S–D additives 

would be required to provide volume 

accounting reconciliation (VAR) records 

similar to those under EPA’s deposit 

control additive rule (40 CFR part 80, 

subpart G) which would show whether 

the S–D additive is being added at the 

appropriate rate on average over a 

course of a monthly accounting period. 

Today’s rule finalizes the approach 

suggested by commenters with certain 

modifications. In cases where a 

violation of the 15 ppm sulfur cap for 

diesel fuel is discovered on a batch of 

fuel downstream of a blender of S–D 

additives that have a sulfur content 

above 15 ppm, the S–D additive blender 

must provide the following information 

to EPA in order to meet their affirmative 

defense to presumptive liability 

regarding the potential that the use of S–

D additive might have caused or 

contributed to the violation:

• A sulfur test on the diesel batch 

prior to the addition of the S–D additive 

package that indicates that the additive, 

when added, will not cause the fuel to 

exceed 15 ppm 

• A product transfer document that 

accompanied the transfer of the S–D 

additive package to the additive blender 

which contains the following: 

—A statement that the S–D additive 

package exceeds 15 ppm in sulfur 

content and that special requirements 

apply if it is to be used in diesel fuel 

subject to the 15 ppm sulfur cap. 

—The maximum sulfur level of the S–

D additive package including other 

additive components such as diesel 

detergents and carrier fluid to the 

extent that they are part of the 

package. Each component of the 

additive package other than the S–D 

additive itself must comply with the 

15 ppm sulfur cap. 

—The maximum recommended 

concentration for the S–D additive 

package. 

—The contribution to the final sulfur 

content of a finished fuel when the 

additive is added at the maximum 

recommended concentration. The 

maximum recommended 

concentration must result in a 

potential increase in the sulfur 

content of the finished fuel of no more 

than 0.05 ppm.

• Monthly volume accounting 

reconciliation (VAR) records that 

include: 

—The amount of S–D additive package 

used during the month 

—The volume of the fuel into which the 

additive was injected during the 

month 

—The measured sulfur level of each fuel 

batch prior to injection of the additive 

which shows that the contribution to 

the sulfur level of the finished diesel 

fuel from the use of the additive at the 

treatment level at which it was 

injected would not cause any such 

batch of fuel to exceed the 15 ppm 

sulfur specification 

• Quality assurance records which 

show that the precision of the additive 

injection equipment has been 

maintained in such a manner as to 

prevent malfunctions which could 

result in the injection of the S–D 

additive at a higher concentration than 

that reported. 

The additive blender must also be 

able to meet its normal diesel fuel 

defense elements: That the additive 

blender-fuel distributor did not cause 

the violation; that PTDs account for all 

the fuel and show apparent compliance; 

and that quality assurance sampling and 

testing has occurred, as modified by the 

discussion above. 

In addition, the ratio of the amount of 

additive used to the amount of fuel into 

which the additive was injected over 

any given monthly VAR period must not 

exceed the maximum treatment rate 

which could be added to any batch of 

fuel additized during the period. If not, 

the blender could be liable for any batch 

of diesel fuel found that exceeded the 15 

ppm sulfur cap which had been in their 

possession. The above provisions are 

only relevant for establishing affirmative 

defense to presumptive liability 

regarding the potential that the use of S–

D additives might have caused a 

violation. Under no circumstances may 

an additive blender cause the sulfur 

level of any batch of finished fuel to 

exceed the 15 ppm sulfur cap. Blenders 

of S–D additives must meet all other 

requirements for distributors of 15 ppm 

sulfur diesel fuel. Regardless of the 

cause of a violation of the 15 ppm sulfur 

standard, any party that had custody or 

title of off-specification fuel is 

potentially liable and responsible for 

their affirmative defense elements. 

These provisions may only be used 

for static dissipater additives which 

have the potential to raise the sulfur 

content of the finished fuel by no more 

than 0.050 ppm when used at their 

maximum recommended treatment 

level. Based on the input from additive 

manufacturers noted above, this will 

allow the use of S–D additives that are 

fully effective for this purpose. The use 

of S–D additives that might have a 

higher contribution to the sulfur content 

of the finished fuel, therefore, is 

unnecessary. To establish affirmative 

defense to presumptive liability, 

blenders that use S–D additives that 

could contribute more than 0.050 ppm 

to the sulfur content of a finished fuel 

subject to the 15 ppm sulfur 

specification when used at the 

maximum recommended treatment level 

are required to conduct a sulfur test on 

the fuel batch after the addition of the 

additive. Blenders of additives other 

than S–D additives which have a sulfur 

content greater than 15 ppm into diesel 

fuel subject to the 15 ppm sulfur 

standard are also required to conduct a 

sulfur test on the fuel batch after the 

addition of the additive for affirmative 

defense purposes. 

EPA may require additive 

manufactures to supply samples of the 

additive packages (or the components 

additives in such packages) that are 

used in 15 ppm sulfur diesel fuel, or 

may sample from additive batches 

already in the distribution system. In 

such cases, we may test the sulfur 

content of these additives to evaluate 

whether they are in compliance with the 

information provided on the PTDs or 

other relevant documentation. In cases 

where a violation is discovered, any 

party in the distribution system that had 

custody of the additive batch found to 

be in violation may be held 

presumptively liable for the violation. 

Today’s rule amends the highway 

diesel regulation so that the provisions 

finalized today regarding the use of S–

D additives with a sulfur content above 

15 ppm in NRLM diesel fuel also apply 

to the use of such additives in highway 

diesel fuel subject to a 15 ppm sulfur 

standard. However, we continue to be 

concerned about the use of additives 

having a sulfur content greater than 15 

ppm. We will continue to monitor this 

issue and may initiate an additional 

rulemaking in the future to consider 

further limiting or prohibiting the use of 

greater than15 ppm sulfur additives in 

diesel fuel subject to a 15 ppm sulfur 

cap. 

The special provisions for staticdissipater additives finalized in today’s 

rule will ensure that the unique 

challenges regarding the manufacture 

and use of such additives do not present 

a barrier to their continued use. 

Additive manufactures have stated that 

they are working on reformulation of 

their S–D additives to meet a 15 ppm 

sulfur limit.

We recently learned that industry is 

beginning to develop a standardized test 

to quantify the concentration of staticdissipater additives in finished fuel.163

If such a test were available, it might be 

useful for establishing an additive 

blender’s affirmative defense to 

presumptive liability in place of some of 

the VAR provisions described above. If 

39090 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

164The 500 ppm sulfur highway diesel final rule 

contains the requirement that highway diesel fuel 

not exceed 500 ppm sulfur at any point in the fuel 

distribution system including after the blending of 

additives. Fuel Quality Regulations for Highway 

Diesel Fuel Sold in 1993 and Later Calendar Years, 

Final Rule, 55 FR 34120, August 21, 1990.

165Other EPA fuels regulations have allowed 

downstream parties conducting periodic quality 

assurance testing for defense purposes to use 

methods other than the designated method, so long 

as the method is an ASTM method appropriate for 

testing for the applicable fuel property, and so long 

as the instrument is correlated to the designated 

method.

a batch of fuel was found to exceed the 

15 ppm sulfur cap, the use of such a test 

would allow for the measurement of the 

contribution to the sulfur level of the 

finished fuel which resulted from the 

addition of the static dissipater additive. 

If the contribution was below the 

permissible level given the sulfur 

measurements on each batch of fuel 

additized with the greater than 15 ppm 

S–D additive, it might be useful in 

association with other blender records 

to demonstrate that the additive blender 

was not at fault for the violation. If such 

a standardized test becomes available, 

EPA will work with the appropriate 

industry parties to evaluate its 

applicability for affirmative defense 

purposes, and conduct a rulemaking if 

appropriate to amend the elements 

required to establish affirmative defense 

to presumptive liability under the 

NRLM and highway diesel programs.

c. Additives Used in 500 ppm Sulfur 

Diesel Fuel 

The 1993 and 2007 highway diesel 

programs did not contain any 

requirements regarding the maximum 

sulfur content of additives used in 

highway diesel fuel subject to a 500 

ppm sulfur cap.164 Our experience 

under the highway program indicates 

that application of the 500 ppm sulfur 

cap throughout the distribution system 

to the end-user has been sufficient to 

prevent the use of additives from 

jeopardizing compliance with the 500 

ppm sulfur standard. The potential 

increase of several ppm in the sulfur 

content of diesel fuel which might result 

from the use of some diesel additives 

raises substantial concerns regarding the 

impact on compliance with a 15 ppm 

sulfur cap. However, this is not the case 

with respect to the potential impact on 

compliance with a 500 ppm sulfur cap. 

The current average sulfur content of 

highway diesel fuel of 340 ppm 

provides ample margin for the minimal 

increase in the fuel sulfur content which 

might result from the use of additives. 

We expect that this will also be the case 

for NRLM fuel subject to the 500 ppm 

sulfur standard. Therefore, we are not 

finalizing any requirements regarding 

the sulfur content of additives used in 

NRLM fuel subject to the 500 ppm 

sulfur standard. We believe that the 

requirement that NRLM fuel comply 

with a 500 ppm sulfur cap throughout 

the distribution system to the end-user 

will be sufficient to ensure that entities 

who introduce additives into such fuel 

take into account the potential increase 

in fuel sulfur content.

d. Aftermarket Additives 

We believe that more stringent 

requirements are needed for aftermarket 

additives than for bulk additives due to 

the lack of practical safeguards to ensure 

that the use of such additives do not 

cause a violation of the sulfur standards 

in today’s rule. Also, the presence of 

multiple grades of aftermarket additives, 

some suitable for use in engines 

equipped with sulfur sensitive 

emissions control equipment as well as 

pre-control engines, and some suitable 

for use only in pre-control engines 

would raise significant concerns 

regarding the misuse. The misuse of a 

high sulfur additive in an engine with 

sulfur sensitive emissions control 

equipment could damage this 

equipment. Therefore, today’s rule 

requires that all aftermarket additives 

sold for use in nonroad, locomotive, and 

marine equipment must meet a 500 ppm 

sulfur cap beginning June 1, 2007, and 

that all aftermarket additives sold for 

use in nonroad equipment must meet a 

15 ppm sulfur specification beginning 

June 1, 2010. After June 1, 2010, 

aftermarket additives with a sulfur 

content less than 500 ppm may continue 

to be used in locomotive and marine 

engines. This approach is consistent 

with that taken in the highway diesel 

rule which requires all aftermarket 

additives to meet a 15 ppm sulfur 

specification beginning June 1, 2006. 

6. End User Requirements 

In light of the importance of ensuring 

that the proper fuel is used in nonroad, 

locomotive, and marine engines covered 

by this program, any person is 

prohibited from fueling such an engine 

with fuel not meeting the applicable 

sulfur standard.

Specifically: 

(1) No person may introduce, or 

permit the introduction of fuel 

containing the heating oil marker into 

nonroad, locomotive, marine or 

highway diesel engines; 

(2) No person may introduce, or 

permit the introduction of, fuel that 

exceeds 15 ppm sulfur content into 

nonroad equipment with a model year 

2011 or later engine; 

(3) Beginning December 1, 2010, no 

person may introduce, or permit the 

introduction of any fuel exceeding 500 

ppm sulfur content into any nonroad, 

locomotive, and marine engine; and 

(4) Beginning December 1, 2014, no 

person may introduce, or permit the 

introduction of any fuel exceeding 15 

ppm sulfur content into any nonroad 

diesel engine regardless of year of 

manufacture. 

D. Diesel Fuel Sulfur Sampling and 

Testing Requirements 

1. Testing Requirements 

Today’s action provides a new 

approach for fuel sulfur measurement. 

The details of this approach are 

described below, followed by a 

description of who will be required to 

conduct fuel sulfur testing as well as 

what fuel must be tested. The diesel fuel 

sulfur sampling and testing provisions 

described below are similar to those that 

were proposed. Adjustments we made 

to the proposed provisions were in 

response to comments we received 

during the public comment period. 

a. Test Method Approval, Recordkeeping, and Quality Control 

Requirements 

Most current and past EPA fuel 

programs designated specific analytical 

methods which refiners, importers, and 

downstream parties 165 use to analyze 

fuel samples at all points in the fuel 

distribution system for regulatory 

compliance purposes. Some of these 

programs have also allowed certain 

specific alternative methods which may 

be used as long as the test results are 

correlated to the designated test method. 

The highway diesel rule (66 FR 5002, 

January 18, 2001), for example, specifies 

one designated test method and three 

alternative methods for measuring the 

sulfur content of highway diesel fuel 

subject to the 15 ppm sulfur standard. 

The rule also specifies one designated 

method and three alternative methods 

for measuring the sulfur content of 

highway diesel fuel subject to the 500 

ppm sulfur standard.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39091

166These are standard-setting organizations, like 

ASTM, and ISO that have broad representation of 

all interested stakeholders and make decisions by 

consensus.

167Sulfur Repeatability of Diesel by Method at 15 

ppm, ASTM Report on Low Level Sulfur 

Determination in Gasoline and Diesel 

Interlaboratory Study—A Status Report, June 2002. 168 0.72 ppm is equal to 1.5 times the standard 

deviation of ASTM D 3120, where the standard 

deviation is equal to the repeatability of ASTM D 

3120 (1.33) divided by 2.77. 9.68 ppm is equal to 

1.5 times the standard deviation of ASTM D 2622, 

where the standard deviation is equal to the 

repeatability of ASTM D 2622 (17.88) divided by 

2.77. In the proposal, we stated that the 

repeatability of ASTM D 2622 was 26.81. While that 

reported value was incorrect due to either a 

typographical or a computational error, the 

resulting precision value that we are finalizing 

today was correctly calculated and reported as 9.68 

ppm. The ‘‘sample standard deviation’’ should be 

used for this purpose. By its use of N–1 in the 

denominator, this measure applies a correction for 

the small sample bias and provides an unbiased 

estimate of the standard deviation of the larger 

population from which the sample was drawn. 

Since the conditions of the precision qualification 

test admit more sources of variability than the 

conditions under which ASTM repeatability is 

determined (longer time span, different operators, 

environmental conditions, etc.) the repeatability 

standard deviation derived from the round robin 

was multiplied by what we believe to be a 

reasonable adjustment factor, 1.5, to compensate for 

the difference in conditions.

TABLE V.H–1.—DESIGNATED AND ALTERNATIVE SULFUR TEST METHODS ALLOWED UNDER THE HIGHWAY DIESEL

PROGRAM

Sulfur Test Method 500 ppm 15 ppm 

ASTM D 2622–03, as modified, Standard Test Method for Sulfur in Petroleum Products 

by Wavelength Dispersive X-ray Fluorescence Spectrometry.

Designated ....................... Alternative. 

ASTM D 3120–03a, Standard Test Method for Trace Quantities of Sulfur in Light Liquid 

Petroleum Hydrocarbons by Oxidative Microcoulometry.

..................................... Alternative. 

ASTM D 4294–03, Standard Test Method for Sulfur in Petroleum and Petroleum Products by Energy-Dispersive X-ray Fluorescence Spectrometry.Alternative ........................

ASTM D 5453–03a, Standard Test Method for Determination of Total Sulfur in Light Hydrocarbons, Motor Fuels and Motor Oils by Ultraviolet Fluorescence.Alternative ........................ Alternative. 

ASTM D 6428–99, Test Method for Total Sulfur in Liquid Aromatic Hydrocarbons and 

Their Derivatives by Oxidative Combustion and Electrochemical Detection.

Alternative ........................ Designated. 

The highway diesel fuel rule also 

announced the Agency’s intention to 

adopt a performance-based test method 

approach in the future, as well as our 

intention to continue working with the 

industry to develop and improve sulfur 

test methods. Today’s action adopts 

such a performance-based test method 

approach for both highway and NRLM 

diesel fuel subject to the 15 ppm and 

500 ppm sulfur standards. In addition, 

the current approach for measuring the 

sulfur content of diesel fuel subject to 

the 500 ppm sulfur standard, i.e., using 

the designated sulfur test method or one 

of the alternative test methods with 

correlation will remain applicable. 

Under the performance-based 

approach, a given test method can be 

approved for use in a specific laboratory 

by meeting certain precision and 

accuracy criteria specified in the 

regulations. The method can be 

approved for use by that laboratory as 

long as appropriate quality control 

procedures are followed. Properly 

selected precision and accuracy values 

allow multiple methods and multiple 

commercially available instruments to 

be approved, thus providing greater 

flexibility in method and instrument 

selection while also encouraging the 

development and use of better methods 

and instrumentation in the future. 

Under today’s rule, there is no 

designated sulfur test method as 

specified under previous regulations. 

Since any test method that meets the 

specified performance criteria may 

qualify, this type of approach does not 

conflict with the ‘‘National Technology 

Transfer and Advancement Act of 1995’’

(NTTAA), section 12(d) of Public Law 

104–113, and the Office of Management 

and Budget (OMB) Circular A–119. Both 

of these are designed to encourage the 

adoption of standards developed by 

‘‘voluntary consensus standards bodies’’

(VCSB) 166 and to reduce reliance on 

government-unique standards where 

such consensus standards would 

suffice. Under the performance criteria 

approach in today’s rule, methods 

developed by consensus bodies as well 

as methods not yet approved by a 

consensus body qualify for approval 

provided they meet the specified 

performance criteria as well as the 

record-keeping and reporting 

requirements for quality control 

purposes.

i. How Can a Given Method Be 

Approved? 

A given test method can be approved 

for use under today’s program by 

meeting certain precision and accuracy 

criteria. Approval applies on a 

laboratory/facility-specific basis. If a 

company chooses to employ more than 

one laboratory for fuel sulfur testing 

purposes, then each laboratory must 

separately seek approval for each 

method it intends to use. Likewise, if a 

laboratory chooses to use more than one 

sulfur test method, then each method 

must be approved separately. Separate 

approval is not necessary for individual 

operators or laboratory instruments 

within a given laboratory facility. 

The specific precision and accuracy 

criteria were derived from existing 

sulfur test methods that are either 

required or allowed under the highway 

diesel fuel sulfur program. The first 

criterion, precision, refers to the 

consistency of a set of measurements 

and is used to determine how closely 

analytical results can be duplicated 

based on repeat measurements of the 

same material under prescribed 

conditions. To demonstrate the 

precision of a given sulfur test method 

under the performance-based approach, 

a laboratory facility must perform 20 

repeat tests over 20 days on samples 

taken from a homogeneous supply of a 

commercially available diesel fuel. 

Based on the comments we received on 

this issue, we are also clarifying that the 

test results must in general be a 

sequential record of the analyses with 

no omissions. A laboratory facility may 

exclude a given sample or test result 

only if (1) the exclusion is for a valid 

reason under good laboratory practices 

and (2) it maintains records regarding 

the sample and test results and the 

reason for excluding them. Using the 

test results167 of ASTM D 3120 for 

diesel fuel subject to the 15 ppm sulfur 

standard, the precision must be less 

than 0.72 ppm.168 Similarly, using the 

test results of ASTM D 2622 for diesel 

fuel subject to the 500 ppm sulfur 

standard, the precision must be less 

than 9.68 ppm.

The second criterion, accuracy, refers 

to the closeness of agreement between a 

measured or calculated value and the 

actual or specified value. To 

demonstrate the accuracy of a given test 

method under the performance-based 

approach, a laboratory facility is 

required to perform 10 repeat tests on a 

39092 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

169 0.54 and 7.26 are equal to 0.75 times the 

precision values of 0.72 for 15 ppm sulfur diesel 

and 9.68 for 500 ppm sulfur diesel, respectively.

standard sample, the mean of which for 

diesel fuel subject to the 15 ppm sulfur 

standard can not deviate from the 

Accepted Reference Value (ARV) of the 

standard by more than 0.54 ppm and for 

diesel fuel subject to the 500 ppm sulfur 

standard can not deviate from the ARV 

of the standard by more than 7.26 

ppm 169. These tests must be performed 

using commercially available 

gravimetric sulfur standards. Ten tests 

are required using each of two different 

sulfur standards. For 15 ppm fuel, one 

must be in the range of 1–10 ppm sulfur 

and the other in the range of 10–20 ppm 

sulfur. For 500 ppm fuel, one must be 

in the range of 100–200 ppm sulfur and 

the other in the range of 400–500 ppm 

sulfur for 500 ppm sulfur diesel fuel. 

Therefore, a minimum of 20 total tests 

is required for sufficient demonstration 

of accuracy for a given sulfur test 

method at a given laboratory facility. As 

with the requirement for precision 

demonstration described above, the test 

results must be a sequential record of 

the analyses with no omissions. Finally, 

any known interferences for a given test 

method must be mitigated.

Some commenters remarked that the 

ARV of the standards does not account 

for any uncertainty given that all 

commercially available standards have 

an uncertainty associated with the 

certified value. The commenters added 

that EPA should specify what maximum 

value in the uncertainty associated with 

the ARV is allowed.

These requirements are not intended 

to be overly burdensome. Indeed, we 

believe these requirements are 

equivalent to what a laboratory would 

do during the normal start up procedure 

for a given test method. In addition, we 

believe this approach will allow 

regulated entities to know that they are 

measuring diesel fuel sulfur levels 

accurately and within reasonable site 

reproducibility limits. 

ii. What Information Must Be Reported 

to the Agency? 

For test methods that have already 

been approved by a VCSB, such as 

ASTM or the International Standards 

Organization (ISO), each laboratory 

facility must report to the Agency the 

precision and accuracy results as 

described above for each method for 

which it is seeking approval. Such 

submissions to EPA, as described 

elsewhere, are subject to the Agency’s 

review for 90 days, and the method will 

be considered approved in the absence 

of EPA comment. Laboratory facilities 

are required to retain the fuel samples 

used for precision and accuracy 

demonstration for 90 days. While we 

proposed a 30 day sample retention 

period, commenters stated that the 

sample retention period for fuel samples 

that are used for precision and accuracy 

demonstrations should be equivalent to 

the length of EPA’s review period (i.e., 

90 days). We agree with the commenters 

and are thus finalizing a 90 day sample 

retention period in today’s rule. This 

sample retention requirement also 

applies to non-VCSB methods which are 

described below. 

For test methods that have not been 

approved by a VCSB, full test method 

documentation, including a description 

of the technology/instrumentation that 

makes the method functional, as well as 

subsequent EPA approval of the method 

is also required. These submissions will 

also be subject to the Agency’s review 

for 90 days, and the method will be 

considered approved in the absence of 

EPA comment. Submission of VCSB 

methods is not required since they are 

available in the public domain. In 

addition, industry and the Agency will 

likely have had substantial experience 

with such methods. 

As described above, federal 

government and EPA policy is to use 

standards developed by voluntary 

consensus bodies when available. The 

purpose of the NTTAA, at least in part, 

is to foster consistency in regulatory 

requirements, to take advantage of the 

collective industry wisdom and widespread technical evaluation required 

before a test method is approved by a 

consensus body, and to take advantage 

of the ongoing oversight and evaluation 

of a test method by the consensus body 

that results from wide-spread use of an 

approved method e.g., the ongoing 

round-robin type analysis and typical 

annual updating of the method by the 

consensus body. These goals are not met 

where the Agency allows use of a nonconsensus body test method in 

perpetuity. Moreover, it is not possible 

to realize many of the advantages that 

result from consensus status where a 

test method is used by only one or a few 

companies. It will not have the practical 

scrutiny that comes from ongoing widespread use, or the independent scrutiny 

of the consensus body and periodic 

updating. In addition, EPA does not 

have the resources to conduct the degree 

of initial scrutiny or ongoing scrutiny 

that are practiced by consensus bodies. 

Nevertheless, EPA believes it is 

appropriate to allow limited use of a 

proprietary test method for a limited 

time, even though the significant 

advantages of consensus test methods 

are absent, because EPA can evaluate 

the initial quality of a method and a 

company may have invested significant 

resources in developing a method. 

However, if after a reasonable time a test 

method fails to gain consensus body 

approval, EPA believes approval of the 

method should be withdrawn because of 

the absence of ongoing consensus 

oversight. Accordingly, a non-VCSB 

method will cease to be qualified five 

years from the date of its original 

approval by EPA in the absence of VCSB 

approval. 

To assist the Agency in determining 

the performance of a given sulfur test 

method, non-VCSB methods, in 

particular, we reserve the right to send 

samples of commercially available fuel 

to laboratories for evaluation. Such 

samples are intended for situations in 

which the Agency has concerns 

regarding a test method and, in 

particular, its ability to measure the 

sulfur content of a random 

commercially available diesel fuel. 

Laboratory facilities are required to 

report their results from tests of this 

material to the Agency. 

iii. What Quality Control Provisions Are 

Required? 

We are requiring ongoing Quality 

Control (QC) procedures for sulfur 

measurement instrumentation. These 

are procedures used by laboratory 

facilities to ensure that the test methods 

they have qualified and the instruments 

on which the methods are run are 

yielding results with appropriate 

accuracy and precision, e.g., that the 

results from a particular instrument do 

not ‘‘drift’’ over time to yield 

unacceptable values. It is our 

understanding that most laboratories 

already employ QC procedures, and that 

these are commonly viewed as 

important good laboratory practices. 

Laboratories will be required, at a 

minimum, to abide by the following QC 

procedures for each instrument used to 

test batches of diesel fuel under these 

regulations even where a laboratory 

elects to use the test method used to 

establish the precision and accuracy 

criteria finalized in today’s rule: 

(1) Follow the mandatory provisions 

of ASTM D 6299–02, Standard Practice 

for Applying Statistical Quality 

Assurance Techniques to Evaluate 

Analytical Measurement System 

Performance. Laboratories are required 

to construct control charts from the 

mandatory QC sample testing prescribed 

in paragraph 7.1, following the 

guidelines under A 1.5.1 for individual 

observation charts and A 1.5.2 for 

moving range charts. 

(2) Follow ASTM D 6299–02 

paragraph 7.3.1 (check standards) using 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39093

170 1.44 ppm is equal to two times the precision 

value of 0.72 ppm for 15 ppm diesel and 19.36 is 

equal to two times the precision value of 9.68 ppm 

for 500 ppm diesel.

171 65 FR 6833–34 (Feb. 10, 2000). Today’s rule 

also provides that these methods be used under the 

RFG and CG rules. See 62 FR 37337 et seq. (July 

11, 1997).

a standard reference material. Check 

standard testing is required to occur at 

least monthly and should take place 

following any major change to the 

laboratory equipment or test procedure. 

Any deviation from the accepted 

reference value of the check standard 

greater than 1.44 ppm for diesel fuel 

subject to the 15 ppm sulfur standard 

and 19.36 ppm for diesel fuel subject to 

the 500 ppm sulfur standard170 must be 

investigated.

(3) Upon discovery of any QC testing 

violation of A 1.5.2.1 or A 1.5.3.2 or 

check standard deviation greater than 

1.44 ppm and 19.36 ppm for 15 ppm 

sulfur diesel and 500 ppm sulfur diesel, 

respectively, as provided in item 2 

above, any measurement made while 

the system was out of control must be 

tagged as suspect and an investigation 

conducted into the reasons for this 

anomalous performance. Refiners and 

importers are required to retain batch 

samples for 30 days or the period equal 

to the interval between QC sample tests, 

whichever is longer. If an instrument is 

found to be out of control, all of the 

retained samples since the last time the 

instrument was shown to be in control 

must be retested. 

(4) QC records, including 

investigations under item 3 above must 

be retained for five years and must be 

provided to the Agency upon request. 

b. Requirements To Conduct Fuel Sulfur 

Testing

Given the importance of assuring that 

NRLM diesel fuel designated to meet the 

15 ppm sulfur standard in fact meets 

that standard, we are requiring that 

refiners, importers, and transmix 

processors test each batch of NRLM 

diesel fuel designated to meet the 15 

ppm sulfur standard and maintain 

records of such testing. Requiring that 

refiners, importers, and transmix 

processors test each batch of fuel subject 

to the 15 ppm sulfur NRLM standard 

assures that compliance can be 

confirmed through testing records, and 

even more importantly, assures that 

diesel fuel exceeding the 15 ppm 

standard is not introduced into 

commerce as fuel for use in nonroad 

equipment having sulfur-sensitive 

emission control devices. Batch testing 

was not required under the highway 

diesel fuel rule. Instead, such testing 

was expected to be performed to 

establish a defense to potential liability. 

However, for the same reasons 

discussed above, today’s rule extends 

this batch testing requirement to15 ppm 

sulfur highway diesel fuel beginning in 

2006. 

In order to address situations where 

refiners produce NRLM diesel fuel using 

computer-controlled inline blending 

equipment and do not have storage 

tanks from which to withdraw samples, 

we are including in today’s final rule a 

provision to allow refiners to test a 

composited sample of a batch of diesel 

fuel for its sulfur content after the diesel 

fuel has been shipped from the refinery. 

This inline blending provision is similar 

to the provision that exists under the 

reformulated gasoline and gasoline 

sulfur programs and applies to both 

highway and NRLM diesel fuel under 

today’s action. 

Today’s rule does not require 

downstream parties to conduct everybatch testing. However, we believe that 

most downstream parties will 

voluntarily conduct ‘‘periodic’’

sampling and testing for quality 

assurance purposes if they want to 

establish a defense to presumptive 

liability, as discussed in section V.H. 

below. 

2. Two Part-Per-Million Downstream 

Sulfur Measurement Adjustment 

We believe that it is appropriate to 

recognize sulfur test variability in 

determining compliance with the 15 

ppm sulfur NRLM diesel fuel standards 

downstream of a refinery or import 

facility. Thus, today’s rule provides that 

for all 15 ppm sulfur NRLM diesel fuel 

at locations downstream of a refinery or 

import facility, sulfur test results can be 

adjusted by subtracting two ppm. In the 

same manner as finalized for 15 ppm 

sulfur highway diesel fuel, the sole 

purpose of this downstream compliance 

provision is to address test variability 

concerns (see the highway diesel fuel 

rule). We received comments suggesting 

that a higher downstream test tolerance 

is needed based on the current values 

for test method variability. However, we 

anticipate that the reproducibility of 

sulfur test methods is likely to improve 

to two ppm or even less by the time the 

15 ppm sulfur standard for highway 

diesel fuel is implemented—four years 

before implementation date of the 15 

ppm standard for NRLM diesel fuel. 

With this provision, we anticipate that 

refiners will be able to produce diesel 

fuel with an average sulfur level of 

approximately 7–8 ppm and some 

contamination could occur throughout 

the distribution system, without fear of 

causing a downstream violation due 

solely to test variability. As test methods 

improve in the future, we will 

reevaluate whether two ppm is the 

appropriate allowance for purposes of 

this compliance provision. We also 

received comments that a test tolerance 

should be provided in determining 

compliance with the 500 ppm sulfur 

standards for NRLM fuel. We believe 

that such a tolerance is not needed for 

fuels subject to a 500 ppm sulfur 

standard because of the flexibility that 

refiners possess to produce fuel with a 

sufficiently low sulfur content to 

accommodate test variability. 

3. Sampling Requirements 

Today’s rule adopts the same 

sampling methods adopted by the 

highway diesel rule (66 FR 5002, 

January 18, 2001). These sampling 

methods are American Society for 

Testing and Materials (ASTM) D 4057–

95 (manual sampling) and D 4177–95 

(automatic sampling from pipelines/inline blending). The requirement to use 

these methods becomes effective for 

NRLM diesel fuel on June 1, 2007. 

These same methods were also adopted 

for use in the Tier 2/Gasoline Sulfur 

rule.171

4. Alternative Sampling and Testing 

Requirements for Importers of Diesel 

Fuel Who Transport Diesel Fuel by 

Tanker Truck

We understand that importers who 

transport diesel fuel into the U.S. by 

tanker truck are frequently relatively 

small businesses that could be subject to 

a substantial burden if they were 

required to sample and test each batch 

of NRLM or highway diesel fuel 

imported by truck, especially where a 

trucker imports many small loads of 

diesel fuel. Therefore, today’s rule 

provides that truck importers may 

comply with an alternative sampling 

and testing requirement, involving a 

sampling and testing program of the 

foreign truck loading terminal, if certain 

conditions are met. For an importer to 

be eligible for the alternative sampling 

and testing requirement, the terminal 

must conduct sampling and testing of 

the NRLM or highway diesel fuel 

immediately after each receipt into its 

terminal storage tank but before loading 

product into the importer’s tanker truck 

storage compartments or immediately 

prior to loading product into the 

importer’s tanker truck if it hasn’t tested 

after each receipt. Moreover, the 

importer will be required to conduct 

periodic quality assurance testing of the 

terminal’s diesel fuel, and the importer 

will be required to assure EPA that we 

will be allowed to make unannounced 

39094 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

172Heating oil sold inside the Northeast/MidAtlantic Area adopted under today’s rule and 

Alaska does not need to contain a marker (see

section IV.D.).

173 Inside the Northeast/Mid-Atlantic Area, 500 

ppm sulfur fuel produced from transmix or 

segregated interface could be sold into the LM or 

heating oil markets from 2010–2012, and could only 

be sold into the heating oil market after 2012. 

Outside of the Northeast/Mid-Atlantic Area, such 

fuel could be sold into the NRLM market from 

2010–2012, and into the LM market thereafter.

174See section IV.D of today’s preamble for a 

discussion of the provisions for the Northeast/MidAtlantic Area and Alaska.

175Opinion on Selection of a Community-wide 

Mineral Oils Marking System, (‘‘Euromarker’’), 

European Union Scientific Committee for Toxicity, 

Ecotoxicity and the Environment plenary meeting, 

September 28, 1999.

inspections and audits, to sample and 

test fuel at the foreign terminal facility, 

to assure that the terminal maintained 

sampling and testing records, and to 

submit such records to EPA upon 

request. 

E. Selection of the Marker for Heating 

Oil 

As discussed in section IV.D, to 

ensure that heating oil is not shifted into 

the NRLM market, we need a way to 

distinguish heating oil from high sulfur 

or 500 ppm sulfur NRLM diesel fuel 

produced under the small refiner and 

credit provisions in today’s rule. 

Currently, there is no differentiation 

today between fuel used for NRLM uses 

and heating oil. Both are typically 

produced to the same sulfur 

specification, and both are required to 

have the same red dye added prior to 

distribution from downstream of the 

terminal. Based on recommendations 

from refiners, in the NPRM, we 

concluded that the best approach to 

differentiate heating oil from NRLM 

diesel fuel would be to require that a 

marker be added to heating oil at the 

refinery gate. Since the proposal we 

received additional information which 

allows us to rely upon record-keeping 

and reporting provisions to differentiate 

heating oil from NRLM up to the point 

where it leaves the terminal (see section 

IV.D). Therefore, today’s rule requires 

that a marker be added to heating oil 

before it leaves the terminal gate rather 

than the refinery gate as proposed.172

Section IV.D of today’s preamble also 

discusses the need to distinguish 500 

ppm sulfur locomotive and marine fuel 

produced by refiners and imported from 

2010–2012 from 500 ppm sulfur 

nonroad diesel fuel produced during 

this time frame under the small refiner, 

credit, and downstream flexibility 

provisions in today’s rule. Without this 

ability, it would be possible for 500 ppm 

sulfur LM diesel fuel to be shifted into 

the nonroad market during this time 

period outside of the Northeast/MidAtlantic Area and Alaska. Therefore, 

today’s rule requires that from June 1, 

2010 through May 31, 2012, the same 

marker added to heating oil must also be 

added to 500 ppm sulfur LM diesel fuel 

produced by a refiner or imported for 

use outside of the Northeast/MidAtlantic Area and Alaska before the fuel 

leaves the terminal. Nonroad diesel fuel 

meeting a 500 ppm sulfur standard 

produced under the small refiner or 

credit provisions, and 500 ppm sulfur 

NRLM diesel fuel generated under the 

downstream flexibility provisions in 

today’s rule could be sold into the LM 

market outside of the Northeast/MidAtlantic Area and Alaska. Such 500 

ppm sulfur NRLM diesel fuel does not 

need to be marked. Therefore, both 

marked and unmarked 500 ppm sulfur 

diesel fuel could be used in locomotive 

and marine diesel equipment outside of 

the Northeast/Mid-Atlantic Area and 

Alaska from 2010 through 2012.173

As discussed in section IV.D., use of 

the same marker in heating oil and 500 

ppm sulfur LM fuel is feasible because 

the underlying goal is the same, i.e.,

keeping 500 ppm sulfur diesel fuel 

produced as heating oil or LM fuel from 

begin shifted into the nonroad diesel 

market from 2010 through 2012. We will 

be able to determine whether heating oil 

with a sulfur content greater than 500 

ppm has been shifted into the LM 

market downstream of the terminal by 

testing the sulfur content of LM. 500 

ppm fuel initially designated as heating 

oil can be later shifted into the LM 

market, since the sulfur standard for LM 

diesel fuel during this period is 500 

ppm.

Terminal operators suggested that we 

might be able to rely on record-keeping 

and reporting downstream of the 

terminal as well as above the terminal 

level, thereby eliminating any need for 

a fuel marker. However, we believe such 

record-keeping and reporting 

mechanisms would be insufficient to 

keep heating oil out of the NRLM 

market and 500 ppm sulfur LM fuel 

produced by a refiner or imported out 

of the nonroad market downstream of 

the terminal under typical 

circumstances. We can rely on such 

measures before the fuel leaves the 

terminal because it is feasible to require 

all of the facilities in the distribution 

system to report to EPA on their fuel 

transfers. As discussed in section IV.D., 

these electronic reports can be 

compared by EPA to identify parties 

responsible for shifting heating oil into 

the NRLM market from 2007–2014, 500 

ppm sulfur LM fuel into the nonroad 

market from 2010–2012, and heating oil 

into the LM market beginning 2014. 

Downstream of the terminal the parties 

involved in the fuel distribution system 

become far too numerous for such a 

system to be implemented and enforced 

(including jobbers, bulk plant operators, 

heating oil dealers, retailers, and even 

end-users with storage tanks such as 

farmers. Reporting errors for even a 

small fraction would require too many 

resources to track down and correct and 

would eliminate the effectiveness of the 

system. 

Our proposal envisioned that a fuel 

marker would be required in heating oil 

from June 1, 2006 through May 31, 

2010, and that the same marker would 

be required in locomotive and marine 

fuel from June 1, 2010 through May 31, 

2014. As a consequence of finalizing the 

15 ppm sulfur standard for locomotive 

and marine fuel in 2012, we no longer 

need to require that LM diesel fuel be 

marked after June 1, 2012. The 2010–

2012 marking requirement for 500 ppm 

sulfur LM diesel fuel does not apply to 

500 ppm sulfur LM fuel produced by a 

refiner or imported in the Northeast/

Mid-Atlantic Area or in Alaska. There is 

an ongoing need to require the 

continued use of the marker in heating 

oil indefinitely (see section IV of today’s 

preamble). 

We proposed that beginning June 1, 

2007 SY–124 must be added to heating 

oil in the U.S. at a concentration of 6 

milligrams per liter (mg/L). Today’s rule 

adopts this requirement except for 

heating oil used in the Northeast/MidAtlantic Area and Alaska.174 The 

chemical composition of SY–124 is as 

follows: N-ethyl-N-[2-[1-(2-

methylpropoxy)ethoxyl]-4-phenylazo]-

benzeneamine.175 This concentration is 

sufficient to ensure detection of SY–124 

in the distribution system, even if 

diluted by a factor of 50. Any fuel found 

with a marker concentration of 0.1 

milligrams per liter or more will be 

presumed to be heating oil. Below this 

level, the prohibition on use in 

highway, nonroad, locomotive, or 

marine applications would not apply.

There are a number of other types of 

dyes and markers. Visible dyes are most 

common, are inexpensive, and are easily 

detected. Using a second dye in 

addition to the red dye required by IRS 

in all non-highway fuel for segregation 

of heating oil based on visual 

identification raises certain challenges. 

The marker that we require in heating 

oil and 500 ppm sulfur LM diesel fuel 

must be different from the red dye 

currently required by IRS and EPA and 

not interfere with the identification of 

red dye in distillate fuels. Invisible 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39095

176The European Union marker legislation, 2001/

574/EC, document C(2001) 1728, was published in 

the European Council Official Journal, L203 

28.072001.

177The color of distillate fuel can range from near 

water white to a dark blackish brown but is most 

frequently straw colored.

178See the Summary and Analysis of Comments 

for a more detailed discussion of our response to 

concerns about the possible contamination of jet 

fuel with the marker prescribed for use in heating 

oil and 500 ppm sulfur LM fuel under today’s rule.

markers are beginning to see more use 

in branded fuels and are somewhat 

more expensive than visible markers. 

Such markers are detected either by the 

addition of a chemical reagent or by 

their fluorescence when subjected to 

near-infra-red or ultraviolet light. Some 

chemical-based detection methods are 

suitable for use in the field. Others must 

be conducted in the laboratory due to 

the complexity of the detection process 

or concerns regarding the toxicity of the 

reagents used to reveal the presence of 

the marker. Near-infra-red and ultraviolet flourescent markers can be easily 

detected in the field using a small 

device and after brief training of the 

operator. There are also more exotic 

markers available such as those based 

on immunoassay, and isotopic or 

molecular enhancement. Such markers 

typically need to be detected by 

laboratory analysis. 

We selected SY–124, however, for a 

number of reasons: 

(1) There is considerable data and 

experience with it which indicates there 

are no significant issues with its use; 

(2) It is compatible with the existing 

red dye; 

(3) Test methods exist to quantify its 

concentration, even if diluted by a factor 

of 50 to one; 

(4) It is reasonably inexpensive; and 

(5) It can be produced and provided 

by a number of sources.

Effective in August 2002, the 

European Union (EU) enacted the 

requirement that SY–124 be added at 6 

mg/L to diesel fuel that is taxed at a 

lower rate in all EU member states.176

Solvent yellow 124 is referred to as the 

‘‘Euromarker’’ in the EU. The EU has 

found this treatment rate to be sufficient 

for their enforcement purposes while 

not interfering with the identification of 

the various different colored dyes 

required by different EU member states 

(including the same red dye that is 

required in the U.S.). Despite its name, 

SY–124 does not impart a strong color 

to diesel fuel when used at a 

concentration of 6 mg/L. Most often it 

is reportedly nearly invisible in 

distillate fuel given that the slight 

yellow color imparted is similar to the 

natural color of many distillate fuels.177

In the presence of red dye, SY–124 can 

impart a slight orange tinge to the fuel. 

However, it does not interfere with the 

visual identification of the presence of 

red dye or the quantification of the 

concentration of red dye in distillate 

fuel. Thus, the use of SY–124 at 6 mg/

L in diesel fuel would not interfere with 

the use of the red dye by IRS to identify 

non-taxed fuels.

Solvent yellow 124 is chemically 

similar to other additives used in 

gasoline and diesel fuel, and has been 

registered by EPA as a fuel additive 

under 40 CFR part 79. Therefore, we 

expect that its products of combustion 

would not have an adverse impact on 

emission control devices, such as a 

catalytic converter. Extensive evaluation 

and testing of SY–124 was conducted by 

the European Commission. This 

included combustion testing which 

showed no detectable difference 

between the emissions from marked and 

unmarked fuel. Norway specifically 

evaluated the use of distillate fuel 

containing SY–124 for heating purposes 

and determined that the presence of the 

Euromarker did not cause an increase in 

harmful emissions from heating 

equipment. Based on the European 

experience with SY–124, we do not 

expect that there would be concerns 

regarding the compatibility of SY–124 

in the U.S. fuel distribution system or 

for use in motor vehicle engines and 

other equipment such as in residential 

furnaces. 

Our evaluation of the process 

conducted by the EU in selecting SY–

124 for use in the EU convinced us that 

SY–124 was also the most appropriate 

marker to propose for use in heating oil 

under today’s program. We received a 

number of comments expressing 

concern about the use of SY–124 in 

heating oil. Based on our evaluation of 

these comments (summarized below 

and in the S&A), we continue to believe 

that SY–124 is the most appropriate 

marker to specify for use in heating oil 

and 500 ppm sulfur LM diesel fuel 

under today’s rule. Therefore, today’s 

rule requires that beginning June 1, 

2007, SY–124 be added to heating oil, 

and that from June 1, 2010 through May 

31, 2012, SY–124 be added to 500 ppm 

sulfur LM diesel fuel produced by a 

refiner or imported at a concentration of 

6 mg/L before such fuel leaves the 

terminal except in the Northeast/MidAtlantic Area and Alaska.

The concerns regarding the use of SY–

124 in heating oil primarily pertained 

to: the potential impact on jet engines if 

jet fuel were contaminated with SY–

124; the potential health effects of SY–

124 when used in fuel for heating 

purposes, particularly for unvented 

heaters; the potential cost impact on 

fuel distributors and transmix 

processors; and the potential conflict 

with IRS red dye requirements. 

The American Society of Testing and 

Materials (ASTM), the Coordinating 

Research Council (CRC), and the Federal 

Aviation Administration (FAA) 

requested that we delay finalizing the 

selection of a specific marker for use in 

heating oil in today’s rule. They 

requested that selection of a specific 

marker should be deferred until testing 

could be conducted regarding the 

potential impact of SY–124 on jet 

engines. The Air Transport Association 

stated that EPA should conduct an 

extensive study regarding the potential 

for contamination, determine the levels 

at which the marker will not pose a risk 

to jet engines, and seek approval of SY–

124 as a jet fuel additive. Other parties 

including the Department of Defense 

(DoD) also stated that EPA should 

refrain from specifying a heating oil 

marker under today’s rule until industry 

and other potentially affected parties 

can recommend an appropriate marker. 

Representatives of the heating oil 

industry stated that they were 

concerned that EPA had not conducted 

an independent review regarding the 

safety/suitability of SY–124 for use in 

heating oil. 

We met and corresponded with 

numerous and diverse parties to 

evaluate the concerns expressed 

regarding the use of SY–124, and to 

determine whether it might be more 

appropriate to specify a different marker 

for use in heating oil. These parties 

include IRS, FAA, ASTM, CRC, various 

marker/dye manufacturers, European 

distributors of fuels containing the 

Euromarker, marker suppliers, and 

members of all segments in the U.S. fuel 

distribution system. 

We believe that concerns related to 

potential jet fuel contamination have 

been sufficiently addressed for us to 

finalize the selection of SY–124 as the 

required heating oil marker in today’s 

rule.178 As discussed in section IV.D of 

today’s preamble, changes in the 

structure of the fuel program finalized 

in today’s rule from that in the proposed 

program have allowed us to move the 

point where the marker must be added 

from the refinery gate to the terminal. 

The vast majority of concerns regarding 

the potential for contamination of jet 

fuel with SY–124 pertained to the 

shipment of marked fuel by pipeline. 

All parties were in agreement that 

nearly all of the potential for marker 

contamination of jet fuel would 

disappear if the point of marker 

addition was moved to the terminal. We 

39096 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

spoke with terminal operators, both 

large and small, who confirmed that 

they maintain strictly segregated 

distribution facilities for red dyed fuel 

and jet fuel because of jet fuel 

contamination concerns. The same type 

of segregation practices will apply to the 

handling of marked heating oil, marked 

500 ppm sulfur LM diesel fuel, and jet 

fuel since the marker will only be 

present in heating oil and locomotive 

and marine fuel when red dye is also 

present. Therefore, these practices will 

be equally effective in limiting 

contamination of jet fuel with SY–124. 

Downstream of the terminal, the only 

other chance for marker contamination 

of jet fuel pertains to bulk plant 

operators and jobbers that handle 

marked heating oil and jet fuel. For the 

most part, these parties also currently 

maintain strict segregation of the 

facilities used to transport jet fuel and 

heating oil. The one exception is that 

small bulk plant operators that supply 

small airports sometimes use the same 

tank truck to alternately transport jet 

fuel and heating oil. In such cases, they 

flush the tank compartment prior to 

transporting jet fuel to remove any 

residual heating oil left behind after the 

tank is drained. Since few, if any bulk 

plants handle LM fuel, it is unlikely that 

the same tank trucks will be used to 

alternately transport LM fuel and jet 

fuel. Thus, we expect that there will be 

even less chance for LM fuel containing 

the marker to contaminate jet fuel.

Today’s rule requires that heating oil 

and locomotive and marine fuel which 

contains the marker must also contain 

visible evidence of red dye. Therefore, 

the ‘‘white bucket’’ test that distributors 

currently use to detect red dye 

contamination of jet fuel can also be 

relied upon to detect marker 

contamination of jet fuel. Based on the 

above discussion, we concluded that the 

required addition of the marker to 

heating oil and 500 ppm sulfur 

locomotive and marine fuel from 2010–

2012 would not significantly increase 

the likelihood of jet fuel contamination, 

and that when such contamination 

might occur, it could be readily 

identified without the need for 

additional testing. Our finalization of 

the Northeast/Mid-Atlantic Area in (see

section IV.D) also minimizes potential 

concerns regarding the potential that jet 

fuel may become contaminated with the 

marker, since no marker is required in 

this area. Furthermore, there is expected 

to be little heating oil used outside of 

the Northeast/Mid-Atlantic Area, the 

locomotive and marine market outside 

of the Northeast/Mid-Atlantic Area is 

limited. We anticipate that the 

distribution of marked LM diesel fuel 

will primarily be by segregated 

pathways, and the duration of the 

marker requirement for 500 ppm sulfur 

LM diesel fuel produced by refiners or 

imported for use outside of the 

Northeast/Mid-Atlantic Area and Alaska 

is only two years. On the whole, we 

actually expect that today’s rule will 

reduce the potential for jet fuel to 

become contaminated with the azo dyes 

such as the IRS-required red dye and 

SY–124 since visual evidence will no 

longer be required leaving the refinery 

gate in 500 ppm NRLM fuel beginning 

June 1, 2007, and will no longer be 

required in any off-highway diesel fuel 

beginning June 1, 2010. 

This final rule requires addition of the 

marker at the terminal rather than the 

refinery gate as proposed. Based on this 

change, ASTM withdrew its request to 

delay the finalization of the marker 

requirements in today’s rule. However, 

ASTM stated that some concern remains 

regarding jet fuel contamination 

downstream of the terminal (due to the 

limited use of the same tank wagons to 

alternately transport jet fuel and heating 

oil discussed above). Nevertheless, 

ASTM related that these concerns need 

not delay finalization of the marker 

requirements in this rule. ASTM intends 

to support a CRC program to evaluate 

the compatibility of markers with jet 

fuel. The Federal Aviation 

Administration is also undertaking an 

effort to identify fuel markers that 

would be compatible for use in jet fuel. 

We commit to a review of the use of SY–

124 in the future based on the findings 

of the CRC and the FAA, experience 

with the use of SY–124 in Europe, and 

future input from ASTM or other 

concerned parties. If alternative markers 

are identified that do not raise concerns 

regarding the potential contamination of 

jet fuel, we will initiate a rulemaking to 

evaluate the use of one of these markers 

in place of SY–124. 

Since the NPRM, no new information 

has been provided which indicates that 

the combustion of SY–124 in heating 

equipment would result in more 

harmful emissions than when 

combusted in engines, or would result 

in more harmful emissions than 

combustion of unmarked heating oil. 

The European experience with the use 

of SY–124 and the evaluation process it 

underwent prior to selection by the EU, 

provides strong support regarding the 

compatibility of SY–124 in the U.S. fuel 

distribution system, and for use in 

motor vehicle engines and other 

equipment such as in residential 

furnaces and nonroad, locomotive, and 

marine engines. We believe that 

concerns regarding the potential health 

impacts from the use of SY–124 do not 

present sufficient cause to delay 

finalization of the requirement for it’s 

use that is contained in today’s rule. 

The European Union intends to 

review the use of SY–124 after 

December 2005, but may undertake the 

review earlier if any health and safety or 

environmental concerns about its use 

are raised. We intend to keep abreast of 

such activities and may initiate our own 

review of the use of SY–124 depending 

on the European Union’s findings, or 

other relevant information. There will 

be nearly four years of accumulated 

field experience with the use of SY–124 

in Europe at the time of the review by 

the EU and nearly 5 years by the 

implementation of the marker 

requirement under today’s rule. This 

will provide ample time for any 

potential unidentified issues with SY–

124 to be identified, and for us to 

choose a different marker if warranted. 

Commenters stated that potential 

health concerns regarding the use of 

SY–124 might be exacerbated with 

respect to its use in unvented space 

heaters. Commenters further stated that 

there are prohibitions against the dyeing 

of kerosene (No. 1 diesel) used in such 

heaters. No information was provided to 

support these concerns, however, and 

we have no information to suggest any 

health concerns exist regarding the use 

of SY–124 in unvented heaters. 

Nevertheless, even if there were such 

concerns, today’s rule will not require 

SY–124 to be used in the fuel used in 

unvented heaters. Furthermore, today’s 

rule, does not require that SY–124 be 

added to kerosene. This resolves most of 

what concern might remain regarding 

this issue, since kerosene is the 

predominate fuel used in unvented 

heaters. However, the DoD stated that 

No. 2 diesel fuel is sometimes used in 

its tent heaters and expressed concern 

regarding the presence of SY–124 in fuel 

used for this purpose. We understand 

that to simplify the DoD fuel 

distribution system, it is DoD policy to 

use a single fuel called JP–8 for multiple 

purposes where practicable, including 

space heating. JP–8 used for such a 

purpose would not be subject to today’s 

fuel marker requirement. In cases where 

JP–8 might not be available for space 

heating, DoD could avoid the use of SY–

124 containing fuel by using kerosene in 

their space heaters.

We believe that the concerns 

expressed regarding the potential 

impact on distributors and transmix 

processors from the presence of SY–124 

in heating oil and 500 ppm sulfur LM 

fuel have been addressed by moving the 

point of marker addition to the terminal. 

Terminal operators stated that they 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39097

179Terminals that manufacture 500 ppm diesel 

fuel by blending 15 ppm and high sulfur fuel are 

treated as a refiner under today’s rule. They must 

also comply with all applicable designate and track 

requirements, anti-downgrading provisions, and the 

other applicable requirements in today’s rule (see 

section IV.D of today’s preamble).

180We do not expect that there will be sufficient 

demand for 500 ppm sulfur LM diesel fuel 

produced by refiners or importers to justify its 

shipment by pipeline after 2010.

181Phone conversation between Carl Dalton and 

Rick Stiff, IRS and Jeff Herzog and Paul Machiele, 

EPA, February 19, 2004.

182 ibid.

183Memorandum to the docket entitled ‘‘Use of 

a Visible Spectrometer Based Test Method in 

Detecting the Presence and Determining the 

Concentration of Solvent Yellow 124 in Diesel 

Fuel.’’

desire the flexibility to blend 500 ppm 

diesel fuel from 15 ppm diesel fuel and 

heating oil. This practice would have 

been prevented by the proposed 

addition of the marker at the refinery 

gate. Under today’s rule, terminal 

operators will have access to unmarked 

high sulfur fuel with which to 

manufacture 500 ppm diesel fuel by 

blending with 15 ppm diesel fuel.179

Transmix processors stated that the 

presence of a marker in transmix would 

limit the available markets for their 

reprocessed distillates. The feed 

material for transmix processors 

primarily consists of the interface 

mixing zone between batches of fuels 

that abut each other during shipment by 

pipeline where this mixing zone can not 

be cut into either of the adjacent 

products. If marked heating oil and 

locomotive and marine fuel was 

shipped by pipeline, the source material 

for transmix processors fed by pipelines 

that carry marked fuel could contain 

SY–124.180 Transmix processors stated 

that it would be prohibitively expensive 

to segregate pipeline-generated transmix 

containing the marker from that which 

does not contain the marker prior to 

processing, and that they could not 

economically remove the marker during 

reprocessing. Thus, in cases where the 

marker would be present in a transmix 

processor’s feed material, they would be 

limited to marketing their reprocessed 

distillate fuels into the heating oil 

market. Since today’s final rule requires 

that the marker be added at the terminal 

gate (rather than at the refinery gate), the 

feed material that transmix processors 

receive from pipelines will not contain 

the marker. Hence, they will not 

typically need to process transmix 

containing the fuel marker prescribed in 

today’s rule, and today’s marker 

requirement is not expected to 

significantly alter their operations. 

There is little opportunity for marker 

contamination of fuels that are not 

subject to the marker requirements to 

occur at the terminal and further 

downstream. In the rare instances where 

this might occur, the fuel contaminated 

would likely also be a distillate fuel, 

and thus could be sold into the heating 

oil market without need for 

reprocessing.

We do not expect that the fuel marker 

requirements will result in the need for 

additional fuel storage tanks or tank 

trucks in the distribution system. As 

discussed in section VI.A of today’s 

preamble, the implementation of the 

NRLM sulfur standards in today’s rule 

is projected to result in the need for 

additional storage tanks and tank truck 

de-manifolding at a limited number of 

bulk plant facilities. The marker 

requirement does not add another 

criteria apart from the sulfur content of 

the fuel which would force additional 

product segregation. As discussed 

above, industry has expressed concern 

about the use of the same tank trucks to 

alternately transport heating oil and jet 

fuel. We do not expect that the addition 

of marker to heating oil and 500 ppm 

sulfur LM diesel fuel will exacerbate 

these concerns. However, depending on 

the outcome of the aforementioned CRC 

program, the addition of marker to 

heating oil may hasten the current trend 

to avoid the use of tank trucks to 

alternately transport jet fuel and heating 

oil. To the extent that this does occur, 

we do not expect that it would result in 

substantial additional costs since few 

tank truck operators currently use the 

same tank truck compartments to 

alternately transport heating oil and jet 

fuel. 

Through our discussions with the IRS, 

we have confirmed that the presence of 

SY–124 will not interfere with 

enforcement of their red dye 

requirement. 181 Although, SY–124 may 

impart a slight orange tint to red-dyed 

diesel fuel, this will not complicate the 

identification of the presence of the IRS 

red dye. In fact, IRS has determined that 

the presence of SY–124 may even 

enhance enforcement of their fuel tax 

program. 182 However, as identified in 

the comments, the implementation of 

today’s marker requirement for heating 

oil arguably may be in conflict with IRS 

regulations at 26 CFR 48.4082–1(b) 

which state that no dye other than the 

IRS-specified red dye must be present in 

untaxed diesel fuel. IRS is evaluating 

what actions might be necessary to 

clarify that the addition of SY–124 to 

heating oil would not be in violation of 

IRS regulations.

IRS also related that they are 

investigating new markers for potential 

use either to supplement or to replace 

red dye under their diesel tax program 

which might be compatible with jet fuel. 

IRS stated that it might result in a 

reduced burden on industry if EPA were 

to adopt one of the markers from the 

family of markers that they are 

investigating. Given the changes to our 

program in today’s final rule, the marker 

provisions will not impose a significant 

burden. However, if the IRS program 

were to develop an alternate marker that 

would be compatible with jet we will 

initiate a rulemaking to evaluate the use 

of one of these markers in place of SY–

124 (see section VIII.H.). 

Commenters also expressed concerns 

regarding the proprietary rights related 

to the manufacture and use of SY–124, 

and stated that EPA should adopt a 

nonproprietary marker if possible. The 

proprietary rights related to SY–124 

expire several months after the 

implementation of the marker 

requirements finalized in today’s rule. 

Therefore, we do not expect that the 

current proprietary rights regarding SY–

124 are a significant concern. 

Commenters also stated that our 

estimated cost of SY–124 in the NPRM 

(0.2 cents per gallon of treated fuel) was 

high compared to other markers that 

cost hundredths of a cent per gallon. 

Since the proposal we have obtained 

more accurate information which 

indicates that the current cost of bulk 

quantities of SY–124 is approximately 

0.03 cents per gallon of treated fuel (see

section VI.A.). Based on conversations 

with various marker manufacturers, this 

cost is comparable to or less than other 

fuel markers. 

F. Fuel Marker Test Method 

As discussed in section V.E above, 

today’s rule requires the use of SY–124 

at a concentration of 6mg/L in heating 

oil beginning in 2007, and in 500 ppm 

sulfur LM diesel fuel produced by a 

refiner or importer from 2010 through 

2012, except for such fuels that used in 

the Northeast/Mid-Atlantic Area and 

Alaska. There is currently no industry 

standard test procedure to quantify the 

presence of SY–124 in distillate fuels. 

The most commonly accepted method is 

based on the chemical extraction of the 

SY–124 using hydrocloric acid solution 

and cycloxane, and the subsequent 

evaluation of the extract using a visual 

spectrometer to determine the 

concentration of the marker.183 This test 

is inexpensive and easy to use for field 

inspections. However, the test involves 

reagents that require some safety 

precautions and the small amount of 

fuel required in the test must be 

disposed of as hazardous waste. 

Commenters expressed concerns about 

39098 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

184Today’s rule requires that red dye be present 

in heating oil which contains the marker.

185Memorandum to the docket entitled ‘‘Use of 

a Visible Spectrometer Based Test Method in 

Detecting the Presence and Determining the 

Concentration of Solvent Yellow 124 in Diesel 

Fuel.’’

186Technical Data on Fuel/Dye/Marker & Color 

Analyzers, as downloaded from the Petroleum 

Analyzer Company L.P. Web site at http://

www.petroleum-analyzer.com/product/PetroSpec/

lit_pspec/DTcolor.pdf.

187Repeatability and reproducibility are terms 

related to test variability. ASTM defines 

repeatability as the difference between successive 

results obtained by the same operator with the same 

apparatus under constant operating conditions on 

identical test materials that would, in the long run, 

in the normal and correct operation of the test 

method be exceeded only in one case in 20. 

Reproducibility is defined by ASTM as the 

difference between two single and independent 

results obtained by different operators working in 

different laboratories on identical material that 

would, in the long run, be exceeded only in one 

case in twenty.

188See section V.H of this proposal for a 

discussion of the methodology used in deriving the 

proposed precision and accuracy values for the 

sulfur test method.

the use of a test procedure which 

involves a hazardous reagent 

(hydrochloric acid) and which generates 

a waste product that must be disposed 

of as hazardous waste. Nevertheless, we 

continue to believe that such safety 

concerns are manageable here in the 

U.S. just as they are in Europe and that 

the small amount of waste generated can 

be handled along with other similar 

waste generated by the company 

conducting the test, and that the 

associated effort and costs will be 

negligible.

Changes made in today’s final rule 

from the proposal will mean that few 

parties in industry will need to test for 

the marker, thereby minimizing 

concerns about the burden of such 

testing. Much of the testing for the fuel 

marker that was envisioned by industry 

was associated with detecting marker 

contamination in other fuels. By moving 

the required point of marker addition 

downstream to the terminal, today’s rule 

virtually eliminates these concerns. 

Where such concerns continue to exist, 

the presence of the red dye will provide 

a visual means of detecting marker 

contamination.184 Therefore, we expect 

that the instances where parties will 

need to test for marker contamination 

will be rare. Also, the Northeast/MidAtlantic Area provisions finalized in 

today’s rule will exempt the vast 

majority of heating oil used in the U.S. 

from the marker requirement. Based on 

the above discussion, we believe that 

the vast majority of testing for the 

presence of the fuel marker that will be 

conducted will be that by EPA for 

enforcement purposes.

Similar to the approach proposed 

regarding the measurement of fuel 

sulfur content discussed in section V.H 

above, we are finalizing a performancebased procedure to measure the 

concentration of SY–124 in distillate 

fuel. Section V.H above describes our 

rationale for finalizing performancebased test procedures. Under the 

performance-based approach, a given 

test method can be approved for use in 

a specific laboratory or for field testing 

by meeting certain precision and 

accuracy criteria. Properly selected 

precision and accuracy values allow 

multiple methods and multiple 

commercially available instruments to 

be approved, thus providing greater 

flexibility in method and instrument 

selection while also encouraging the 

development and use of better methods 

and instrumentation in the future. For 

example, we are hopeful that with more 

time and effort a simpler test can be 

developed for SY–124 that can avoid the 

use of reagents and the generation of 

hazardous waste that is by product of 

the current commonly accepted method. 

Under the performance criteria 

approach, methods developed by 

consensus bodies as well as methods 

not yet approved by a consensus body 

will qualify for approval provided they 

meet the specified performance criteria 

as well as the record-keeping and 

reporting requirements for quality 

control purposes. There is no designated 

marker test method. 

1. How Can a Given Marker Test 

Method Be Approved? 

A marker test method can be 

approved for use under today’s program 

by meeting certain precision and 

accuracy criteria. Approval will apply 

on a laboratory/facility-specific basis. If 

a company chooses to employ more 

than one laboratory for fuel marker 

testing purposes, then each laboratory 

will have to separately seek approval for 

each method it intends to use. Likewise, 

if a laboratory chooses to use more than 

one marker test method, then each 

method will have to be approved 

separately. Separate approval will not 

be necessary for individual operators or 

laboratory instruments within a given 

laboratory facility. The method will be 

approved for use by that laboratory as 

long as appropriate quality control 

procedures were followed.

In developing the precision and 

accuracy criteria for the sulfur test 

method, EPA drew upon the results of 

an inter-laboratory study conducted by 

the American Society for Testing and 

Materials (ASTM) to support ASTM’s 

standardization of the sulfur test 

method. Unfortunately, there has not 

been sufficient time for industry to 

standardize the test procedure used to 

measure the concentration of SY–124 in 

distillate fuels or to conduct an interlaboratory study regarding the 

variability of the method. Nevertheless, 

the European Union has been successful 

in implementing its marker requirement 

while relying on the marker test 

procedures which are currently 

available, as noted above. We used, the 

most commonly used marker test 

procedure to establish the precision and 

accuracy criteria on which a marker test 

procedure would be approved under the 

today’s rule.185

There has been substantial experience 

in the use of this reference market test 

method since the August 2002 effective 

date of the European Union’s marker 

requirement. However, EPA is aware of 

only limited summary data on the 

variability of the reference test method 

from a manufacturer of the visible 

spectrometer apparatus used in the 

testing.186 The stated resolution of the 

test method from the materials provided 

by this equipment manufacturer is 0.1 

mg/L, with a repeatability of plus or 

minus 0.08 mg/L and a reproducibility 

of plus or minus 0.2 mg/L.187 Given the 

lack of more extensive data, we have 

decided to use these available data as 

the basis of the precision and accuracy 

criteria for the marker test procedure 

under today’s rule (as discussed below). 

EPA may initiate a review of the 

precision and accuracy criteria finalized 

in today’s rule should additional test 

data become available.

Using a similar methodology to that 

employed in deriving the sulfur test 

procedure precision value results in a 

precision value for the marker test 

procedure of 0.043 mg/L (see section 

V.H).188 However, we are concerned 

that the use of this precision value, 

because it is based on very limited data, 

might preclude the acceptability of test 

procedures that would be adequate for 

the intended regulatory use. In addition, 

the lowest measurement of marker 

concentration that will have relevance 

under the regulations is 0.1 mg per liter. 

Consequently, today’s rule requires that 

the precision of a marker test procedure 

will need to be less than 0.1 mg/L for 

it to qualify.

To demonstrate the accuracy of a 

given test method, a laboratory facility 

will be required to perform 10 repeat 

tests, the mean of which can not deviate 

from the Accepted Reference Value 

(ARV) of the standard by more than 0.05 

mg/L. We believe that this accuracy 

level is not overly restrictive, while 

being sufficiently protective considering 

that the lowest marker level of 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39099

189These are standard-setting organizations, like 

ASTM, and ISO that have broad representation of 

all interested stakeholders and make decisions by 

consensus.

190 ‘‘Subsidiary’’ here covers entities of which the 

parent company has 50 percent or greater 

ownership.

191We will evaluate each foreign refiner?s 

documentation of crude oil capacity on an 

individual basis.

regulatory significance would be 0.1 

mg/L. Ten tests will be required using 

each of two different marker standards, 

one in the range of 0.1 to 1 mg/L and 

the other in the range of 4 to 10 mg/L 

of SY–124. Therefore, a minimum of 20 

total tests will be required for sufficient 

demonstration of accuracy for a given 

marker test method at a given laboratory 

facility. Finally, any known 

interferences for a given test method 

will have to be mitigated. These tests 

must be performed using commercially 

available SY–124 standards. Since the 

European Union’s marker requirement 

will have been in effect for nearly 5 

years by the implementation date of 

today’s marker, we believe that such 

standards will be available by the 

implementation date for today’s rule. 

These requirements are not overly 

burdensome. To the contrary, these 

requirements are equivalent to what a 

laboratory would do during the normal 

start up procedure for a given test 

method. In addition, we believe the 

performance based approach finalized 

in today’s rule will allow regulated 

entities to know that they are measuring 

fuel marker levels accurately and within 

reasonable site reproducibility limits. 

2. What Information Would Have To Be 

Reported to the Agency? 

As noted above, the European Union’s 

(EU) marker requirement will have been 

in effect for nearly five years prior to the 

effective data for the proposed marker 

requirements and we expect the EU 

requirement to continue indefinitely. 

Thus, we anticipate that the European 

testings standards community will 

likely have standardized a test 

procedure to measure the concentration 

of SY–124 in distillate fuels prior to the 

implementation of the marker 

requirement in today’s final rule. The 

United States testing standards 

community may also enact such a 

standardized test procedure. To the 

extent that marker test methods that 

have already been approved by a 

voluntary consensus standards body 189

(VCSB), such as the International 

Standards Organization (ISO) or the 

American Society for Testing and 

Materials (ASTM), each laboratory 

facility would be required to report to 

the Agency the precision and accuracy 

results as described above for each 

method for which it is seeking approval. 

Such submissions to EPA, as described 

elsewhere, will be subject to the 

Agency’s review for 30 days, and the 

method will be considered approved in 

the absence of EPA comment. 

Laboratory facilities are required to 

retain the fuel samples used for 

precision and accuracy demonstration 

for 30 days.

For test methods that have not been 

approved by a VCSB, full test method 

documentation, including a description 

of the technology/instrumentation that 

makes the method functional, as well as 

subsequent EPA approval of the method 

is also required. These submissions are 

subject to the Agency’s review for 90 

days, and the method will be considered 

approved in the absence of EPA 

comment. Submission of VCSB methods 

is not required since they are available 

in the public domain. In addition, 

industry and the Agency will likely 

have had substantial experience with 

such methods. 

To assist the Agency in determining 

the performance of a given marker test 

method (non-VCSB methods, in 

particular), we reserve the right to send 

samples of commercially available fuel 

to laboratories for evaluation. Such 

samples are intended for situations in 

which the Agency has concerns 

regarding a test method and, in 

particular, its ability to measure the 

marker content of a random 

commercially available diesel fuel. 

Laboratory facilities are required to 

report the results from tests on this 

material to the Agency. 

G. Requirements for Recordkeeping, 

Reporting, and PTDs 

1. Registration Requirements 

As discussed in section IV.D, by 

December 31, 2005, or six months prior 

to handling fuels subject to the 

designation requirements of today’s 

rule, each entity in the fuel distribution 

system, up through and including the 

point where fuel is loaded onto trucks 

for distribution to retailers or wholesale 

purchaser-consumers, must register 

each of its facilities with EPA.

An entity’s registration must include 

the following information: 

• Corporate name and address

—Contact name, telephone number, and 

e-mail address

• For each facility operated by the 

entity:

—Type of facility (e.g. refinery, import 

facility, pipeline, terminal) 

—Facility name 

—Physical location 

—Contact name, telephone number, and 

e-mail address 

2. Applications for Small Refiner Status 

An application of a refiner for small 

refiner status must be submitted to EPA 

by December 31, 2004 and shall include 

the following information: 

• The name and address of each 

location at which any employee of the 

company, including any parent 

companies, subsidiaries, or joint venture 

partners 190 worked From January 1, 

2002 until January 1, 2003;

• The average number of employees 

at each location, based on the number 

of employees for each of the company’s 

pay periods from January 1, 2002 until 

January 1, 2003; 

• The type of business activities 

carried out at each location; and 

• The total crude oil refining capacity 

of the corporation. We define total 

capacity as the sum of all individual 

refinery capacities for multiple-refinery 

companies, including any and all 

subsidiaries, and joint venture partners 

as reported to the Energy Information 

Administration (EIA) for 2002, or in the 

case of foreign refiners, a comparable 

reputable source, such as professional 

publication or trade journal.191 Refiners 

do not need to include crude oil 

capacity used in 2002 through a lease 

agreement with another refiner in which 

it has no ownership interest.

The crude oil capacity information 

reported to the EIA is presumed to be 

correct. However, in cases where a 

company disputes this information, we 

will allow 60 days after the company 

submits its application for small refiner 

status for that company to petition us 

with detailed data it believes shows that 

the EIA’s data was in error. We will 

consider this data in making a final 

determination about the refiner’s crude 

oil capacity.

Finally, applications for small refiner 

status must also include information on 

which small refiner option the refiner 

expects to use at each of its refineries. 

3. Applications for Refiner Hardship 

Relief 

As discussed above in section IV.C, a 

refiner seeking general hardship relief 

under today’s program will apply to 

EPA and provide several types of 

financial and technical information, 

such as internal cash flow data and 

information on bank loans, bonds, and 

assets as well as detailed engineering 

and construction plans and permit 

status. Applications for general 

hardship relief are due June 1, 2005. 

39100 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

4. Pre-Compliance Reports for Refiners 

We believe that an early general 

understanding of the refining industry’s 

progress in complying with the 

requirements in today’s rule will be 

valuable to both the industry and EPA. 

As with the highway diesel program, we 

are requiring that each refiner and 

importer provide annual reports on the 

progress of compliance and plans for 

compliance for each of their refineries 

or import facilities. These precompliance reports are due June 1 of 

each year beginning in 2005 and 

continuing through 2011, or until the 

production of 15 ppm sulfur NR and LM 

diesel fuel commences, whichever is 

later. 

EPA will maintain the confidentiality 

of information submitted in precompliance reports to the full extent 

authorized by law. We will report 

generalized summaries of this data 

following receipt of the pre-compliance 

reports. We recognize that plans may 

change for many refiners or importers as 

the compliance dates approach. Thus, 

submission of the reports will not 

impose an obligation to follow through 

on plans projected in the reports. 

Pre-compliance reports can, at the 

discretion of the refiner/importer, be 

submitted in conjunction with the 

annual compliance reports discussed 

below and/or the pre-compliance and 

annual compliance reports required 

under the highway diesel program, as 

long as all of the information that is 

required in all reports is clearly 

provided. Based on experience with the 

first pre-compliance reports for the 

highway diesel program, we are 

clarifying the information request for 

the pre-compliance reports as shown 

below. This should provide responses in 

a more standardized format which will 

allow for better aggregation of the data, 

as well as eliminate reporting of 

unnecessary information. 

Pre-compliance reports must include 

the following information: 

• Any changes in the basic corporate 

or facility information since registration; 

• Estimates of the average daily 

volumes (in gallons) of each sulfur grade 

of highway and NRLM diesel fuel 

produced (or imported) at each refinery 

(or facility). These volume estimates 

must be provided both for fuel produced 

from crude oil, as well as any fuel 

produced from other sources, and must 

be provided for the periods of June 1, 

2010–December 31, 2010, calendar years 

2011–13, January 1, 2014–May 31, 2014, 

and June 1, 2014–December 31, 2014; 

• For entities expecting to participate 

in the credit program, estimates of 

numbers of credits to be earned and/or 

used; 

• Information on project schedule by 

known or projected completion date (by 

quarter) by the stage of the project. For 

example, following the five project 

phases described in EPA’s June 2002 

Highway Diesel Progress Review report 

(EPA420–R–02–016): (1) Strategic 

planning, (2) planning and front-end 

engineering, (3) detailed engineering 

and permitting, (4) procurement and 

construction, and (5) commissioning 

and startup. 

• Basic information regarding the 

selected technology pathway for 

compliance (e.g., conventional 

hydrotreating vs other technologies, 

revamp vs grassroots, etc.); 

• Whether capital commitments have 

been made or are projected to be made; 

and 

• The pre-compliance reports in 2006 

and later years must provide an update 

of the progress in each of these areas.

5. Compliance Reports for Refiners, 

Importers, and Distributors of 

Designated Diesel Fuel 

a. Designate and Track Reporting 

Requirements 

i. Quarterly Reports 

From June 1, 2007 and through 

September 1, 2010, all entities who are 

required to maintain records must 

report the following information by 

facility to EPA on a quarterly basis: 

• The total volume in gallons of each 

type of designated diesel fuel for which 

custody was transferred by the entity to 

any other entity, and the EPA entity and 

facility identification number(s), as 

applicable, of the transferee; and 

• The total volume in gallons of each 

type of designated diesel fuel for which 

custody was received by the entity from 

any other entity and the EPA entity and 

facility identification number(s), as 

applicable, of the transferor. 

If a facility receives fuel from another 

facility that does not have an EPA 

facility identification number then that 

batch of fuel must be designated and 

reported as (1) heating oil if it is 

marked, (2) highway diesel fuel if taxes 

have been assessed, (3) NRLM diesel 

fuel if the fuel is dyed but not marked. 

Terminals must also report the results 

of all compliance calculations including 

the following: 

• The total volumes received of each 

fuel designation required to be reported 

over the quarterly compliance period; 

• The total volumes transferred of 

each fuel designation required to be 

reported over the quarterly compliance 

period; 

• Beginning and ending inventories 

of each fuel designation required to be 

reported over the quarterly compliance 

period; 

• Calculations showing that the 

volume of highway diesel fuel 

distributed from the facility relative to 

the volume received did not increase 

since June 1, 2007; and 

• Calculations showing that the 

volume of high sulfur NRLM diesel fuel 

did not increase by a greater proportion 

than the volume of heating oil over the 

quarterly compliance period (not 

applicable in the Northeast/MidAtlantic Area or Alaska). 

The quarterly compliance periods and 

dates by which the reports are due for 

each period are as follows.

TABLE V.G–1. QUARTERLY COMPLIANCE PERIODS AND REPORTING

DATES a

Quarterly compliance period Report due date 

July 1 through September 

30.

November 30. 

October 1 though December 31.February 28. 

January 1 through March 

31.

May 31. 

April 1 through June 30 ..... August 31. 

Notes: aThe first quarterly reporting period 

will be from June 1, 2007 though September 

30, 2007 and the last quarterly compliance period will be from April 1, 2010 through May 31, 

2010. 

ii. Annual Reports 

Beginning June 1, 2007, all entities 

that are required to maintain records for 

batches of fuel must report by facility on 

an annual basis (due August 31) 

information on the total volumes 

received of each fuel designation as well 

as the results of all compliance 

calculations including the following: 

• The total volumes transferred of 

each fuel designation; 

• Beginning and ending inventories 

of each fuel designation; 

• In Alaska, for diesel fuel designated 

as high sulfur NRLM delivered from 

June 1, 2007 through May 31, 2010 and 

for diesel fuel designated as 500 ppm 

sulfur NRLM delivered from June 1, 

2010 through May 31, 2014, refiners 

must report all information required 

under their individual compliance plan, 

including the end-users to whom each 

batch of fuel was delivered and the total 

delivered to each end-user for the 

compliance period; 

• Ending with the report due August 

31, 2010, calculations showing that the 

volume of highway diesel fuel 

distributed from the facility relative to 

the volume received did not increase 

since June 1, 2007; 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39101

192Only one PTD is required for each fuel 

designation or classification regardless of the 

number of motor vehicles or the number of dieselpowered NRLM equipment that are fueled.

• Ending with the report due August 

31, 2010, calculations showing that the 

volume of highway diesel fuel 

distributed from the facility relative to 

new volume received did not increase 

over the annual compliance period by 

more than two percent of the total 

volume of highway diesel fuel received; 

• Ending with the report due August 

31, 2010, calculations showing that the 

volume of high sulfur NRLM diesel fuel 

did not increase by a greater proportion 

than the volume of heating oil over the 

annual compliance period (not 

applicable in the Northeast/MidAtlantic Area or Alaska); 

• Calculations showing that the 

volume of heating oil did not decrease 

over the annual compliance period, 

beginning June 1, 2010 (not applicable 

in the Northeast/Mid-Atlantic Area or 

Alaska); and 

• From June 1, 2010 through August 

1, 2012, calculations showing that the 

volume of 500 ppm sulfur NR diesel 

fuel did not increase by a greater 

proportion than the volume of 500 ppm 

sulfur LM diesel fuel over the annual 

compliance period (not applicable in 

the Northeast/Mid-Atlantic Area and 

Alaska.

b. Other Reporting Requirements 

After the NRLM diesel fuel sulfur 

requirements begin on June 1, 2007, 

refiners and importers will be required 

to submit annual compliance reports for 

each refinery or import facility. If a 

refiner produces 15 ppm sulfur or 500 

ppm sulfur fuel early under the credit 

provisions, its annual compliance 

reporting requirement will begin on 

June 1 following the beginning of the 

early fuel production. These reporting 

requirements will sunset after all 

flexibility provisions end (i.e., after May 

31, 2014). Annual compliance reports 

will be due on August 31. 

A refiner’s or importer’s annual 

compliance report must include the 

following information for each of its 

facilities: 

• Batch reports for each batch 

produced or imported providing 

information regarding volume, 

designation (e.g., 500 highway), sulfur 

level and whether the fuel was dyed 

and/or marked. Each batch can only 

have one designation. Therefore, if a 

refiner ships 100 gallons of 500 ppm 

sulfur fuel in 2007 and wants to 

designate 50 gallons as highway 500 and 

50 gallons as NR 500, the refiner must 

report two separate batches and there 

must be two PTDs—one for 50 gallons 

of highway 500 and one for 50 gallons 

of NR 500). 

• Report on the generation, use, 

transfer and retirement of diesel sulfur 

credits. Credit transfer information must 

include the identification of the number 

of credits obtained from, or transferred 

to, each entity. Reports must also show 

the credit balance at the start of the 

period, and the balance at the end of the 

period. NRLM or nonroad diesel sulfur 

credit information is required to be 

stated separately from highway diesel 

credit information since the two credit 

programs are treated separately. 

• For a small refiner that elects to 

produce 15 ppm sulfur NRLM diesel 

fuel by June 1, 2006 and therefore is 

eligible for a limited relaxation in its 

interim small refiner gasoline sulfur 

standards, the annual reports must also 

include specific information on gasoline 

sulfur levels and progress toward 

highway and NRLM diesel fuel 

desulfurization. 

6. PTDs 

Refiners, importers, and other parties 

in the distribution system must provide 

information on commercial PTDs that 

identify diesel fuel distributed by use 

designation and sulfur content; i.e., for 

use in or motor vehicles, nonroad 

equipment, locomotive and marine 

equipment, or nonroad, locomotive, and 

marine diesel equipment, as 

appropriate, and the sulfur standard to 

which the fuel is subject. The PTD must 

indicate whether the fuel is diesel fuel, 

heating oil, kerosene, exempt fuel, or 

other. It must further state whether it is 

No. 1 or No. 2, dyed or undyed, marked 

heating oil, marked LM fuel, or 

unmarked. The specific designations on 

PTDs will change during the course of 

the program. For example, the highway 

designation for 500 ppm sulfur fuel 

ends after 2010. Where a party delivers 

or receives a particular load of fuel that 

has a uniform sulfur content but that 

has two different designations, the 

parties must utilize two different PTDs. 

For example, if, in 2007 a refiner moves 

1,000 gallons of 500 ppm sulfur diesel 

into a pipeline, and the refiner’s 

designation is that half of that product 

is highway 500 and half is nonroad 500, 

the parties would utilize one PTD for 

500 gallons of highway 500 ppm sulfur 

diesel fuel and another for 500 gallons 

of nonroad 500 diesel fuel. 

As in other fuels programs, PTDs 

must accompany each transfer of either 

title or custody of fuel. However, only 

custody transfers are relevant to 

compliance with the designation and 

tracking requirements and the 

downgrade limitations, and transfers to 

retail outlets and wholesale purchaserconsumers of fuel by distributors below 

the truck rack are not covered by the 

designate and track scheme. Therefore, 

the PTDs for these non-designate and 

track transfers are somewhat more 

straightforward. 

We believe this additional 

information on commercial PTDs is 

necessary to maintain the integrity of 

the various grades of diesel fuel in the 

distribution system. Parties in the 

system will be better able to identify 

which type of fuel they are dealing with 

and more effectively ensure that they 

are meeting the requirements of today’s 

program. This in turn will help to 

ensure that misfueling of sulfur 

sensitive engines does not occur and 

that the program results in the needed 

emission reductions. 

Today’s rule allows the use of product 

codes to convey the required 

information, except for transfers to truck 

carriers, retailers and wholesale 

purchaser-consumers. We believe that 

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 

will not be required for transfers of 

product into nonroad, locomotive, or 

marine equipment at retail outlets or 

wholesale purchaser-consumer facilities 

with the exception of mobile refuelers. 

Mobile refuellers are required to provide 

a separate PTD to their customers for 

each type of fuel (e.g., 500 ppm sulfur 

NRLM diesel fuel, 15 ppm sulfur NRLM 

diesel fuel, or 15 ppm highway diesel 

fuel) that they dispense from tanker 

trucks or other vessels into motor 

vehicles, nonroad diesel engines or 

nonroad diesel engine equipment, for 

each instance when they refuel such 

equipment at a given location.192

a. Kerosene and Other Distillates To 

Reduce Viscosity 

To ensure that downstream parties 

can determine the sulfur level of 

kerosene or other distillates that may be 

distributed for use for blending into 15 

ppm sulfur highway or NRLM diesel 

fuel, for example, to reduce viscosity in 

cold weather, we are requiring that 

PTDs identify distillates specifically 

distributed for such use as meeting the 

15 ppm sulfur standard. 

b. Exported Fuel 

Consistent with other EPA fuel 

programs, NRLM diesel fuel exported 

from the U.S. is not required to meet the 

sulfur standards of today’s regulations. 

For example, where a refiner designates 

a batch of diesel fuel for export, and can 

demonstrate through commercial 

documents that the fuel was exported, 

such fuel would not be required to 

39102 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

193Transmix processors and terminal operators 

acting as refiners that produce 500 ppm sulfur 

diesel fuel for sale into the locomotive and marine 

markets are also subject to the recordkeeping 

requirements.

comply with the NRLM sulfur standards 

in today’s rule. Product transfer 

documents accompanying the transfer of 

custody of the fuel at each point in the 

distribution system are required to state 

that the fuel is for export only and may 

not be used in the United States. 

c. Additives 

Today’s rule requires that PTDs for 

additives for use in NRLM diesel fuel 

state whether the additive complies 

with the 15 ppm sulfur standard. Like 

the highway diesel rule, this program 

allows 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.

For additives that have a sulfur 

content less than 15 ppm, the PTD must 

state: ‘‘The sulfur content of this 

additive does not exceed 15 ppm.’’ For 

additives that have a sulfur content 

greater than 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 maximum recommended 

concentration for use of the additive in 

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 maximum recommended 

concentration. 

Today’s rule contains provisions for 

aftermarket additives sold to owner/

operators for use in diesel powered 

nonroad equipment. These provisions 

are in response to concerns that 

additives designed for engines not 

requiring 15 ppm sulfur fuel, such as 

locomotive or marine engines, could 

accidentally be introduced into nonroad 

engines if they had no label stating 

appropriate use. Beginning June 1, 2010, 

aftermarket additives for use in nonroad 

equipment must be accompanied by 

information that states that the additive 

complies with the 15 ppm sulfur 

standard. We believe this information is 

necessary for end users to determine if 

an additive is appropriate for use. 

7. Recordkeeping Requirements for 

Refiners and Importers 

Refiners and importers of distillate 

fuel must maintain the following 

designate and track records for the 

distillate fuel they produce and/or 

import. The specific types of distillate 

fuel that are subject to these 

recordkeeping requirements are 

described below for the various periods 

of the program.193

• Batch number (including whether it 

is an incoming or out-going batch for 

refineries that also handle previously 

designated fuel); 

• Batch designation; 

• Volume in gallons; 

• Date/time of day of custody 

transfer; and 

• Name and EPA entity and facility 

identification number of the facility to 

which the batch was transferred. 

For highway diesel fuel, the records 

must also identify whether the batch 

was received or delivered with or 

without taxes assessed. For NRLM 

diesel fuel, the records must also 

identify whether the batch was received 

or delivered with or without the IRS red 

dye. For heating oil, the records must 

indicate whether the batch was received 

or delivered with or without the fuel 

marker. From June 1, 2010, through May 

31, 2012, the records for LM fuel 

batches must also indicate whether the 

batch was received or delivered with or 

without the fuel marker.

In addition to the designate and track 

records, refiners and importers must 

maintain the following records on the 

highway and NRLM diesel fuel that they 

produce and/or import: 

• PTDs; 

• Sampling and testing results for 

sulfur content (for highway and NRLM 

diesel fuel that is subject to either the 

15 ppm or 500 ppm sulfur standards), 

as well as sampling and testing results 

that are part of a quality assurance 

program; 

• Sampling and testing results for the 

cetane index or aromatics content, as 

well as sampling and testing results for 

additives; 

• Records on credit generation, use, 

transfer, purchase, or termination, 

maintained separately for the highway 

and NRLM diesel fuel credit programs; 

and 

• Records related to individual 

compliance plans, if applicable, and 

annual compliance calculations. 

a. June 1, 2006 through May 31, 2007

Refiners and importers must maintain 

the records listed above for each batch 

of diesel fuel that they designate and 

transfer custody of during the time 

period from June 1, 2006 through May 

31, 2007, with the following fuel types: 

• No. 1 15 ppm sulfur highway diesel 

fuel; 

• No. 2 15 ppm sulfur highway diesel 

fuel; 

• 15 ppm sulfur NRLM diesel fuel; 

• No. 1 500 ppm sulfur highway 

diesel fuel; 

• No. 2 500 ppm sulfur highway 

diesel fuel; or 

• 500 ppm sulfur NRLM diesel fuel. 

b. June 1, 2007 Through May 31, 2010 

Refiners and importers must maintain 

the records listed above for each batch 

of distillate fuel that they designate and 

transfer custody of during the time 

period from June 1, 2007 through May 

31, 2010 with the following fuel types: 

• No. 1 15 ppm sulfur highway diesel 

fuel; 

• No. 2 15 ppm sulfur highway diesel 

fuel; 

• 15 ppm sulfur NRLM diesel fuel; 

• No. 1 500 ppm sulfur highway 

diesel fuel; 

• No. 2 500 ppm sulfur highway 

diesel fuel; or 

• 500 ppm sulfur NRLM diesel fuel; 

• High sulfur NRLM diesel fuel; or 

• Heating oil. 

c. June 1, 2010 Through May 31, 2012

Refiners and importers must maintain 

the records listed above for each batch 

of diesel fuel that they designate and 

transfer custody of during the time 

period from June 1, 2010 through May 

31, 2012, with the following fuel types: 

• 500 ppm sulfur NR diesel fuel; 

• 500 ppm sulfur LM diesel fuel; or 

• Heating oil. 

d. June 1, 2012 Through May 31, 2014

Refiners and importers must maintain 

the records listed above for each batch 

of distillate fuel that they transfer 

custody of and designate during the 

time period from June 1, 2012 through 

May 31, 2014 with the following fuel 

types: 

• 15 ppm sulfur highway or NRLM 

diesel fuel; 

• 500 ppm sulfur NRLM diesel fuel; 

or 

• Heating oil.

d. June 1, 2014 and Beyond 

Refiners and importers must maintain 

the records listed above for each batch 

of heating oil that they transfer custody 

of and designate during the time period 

from June 1, 2014 and beyond. 

8. Recordkeeping Requirements for 

Distributors 

Distributors of distillate fuel must 

maintain the following designate and 

track records on a facility-specific basis 

for the distillate fuel they distribute. 

The specific distillate fuel designations 

that are subject to these recordkeeping 

requirements are described below for 

the various periods of the program. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39103

194After August 1, 2012, LM fuel distributed from 

terminals must contain a concentration of the 

marker no greater than 0.1 mg/L. After October 1, 

2012, LM fuel at any location in the fuel 

distribution system must contain no more than a 

trace amount of the marker (0.1 mg/L).

• Batch number (including whether it 

is an incoming or out-going batch); 

• Batch designation; 

• Volume in gallons; 

• Date/time of day of custody 

transfer; 

• Name and EPA entity and facility 

identification number of the facility 

from which the fuel batch was received 

or to which the fuel batch was 

delivered; 

• Beginning and ending inventory 

volumes on a quarterly basis; and 

• Inventory adjustments. 

For highway diesel fuel, the records 

must also identify whether the batch 

was received or delivered with or 

without taxes assessed. For NRLM 

diesel fuel, the records must also 

identify whether the batch was received 

or delivered with or without the IRS red 

dye. For heating oil, the records must 

indicate whether the batch was received 

or delivered with or without the fuel 

marker. From June 1, 2010, through 

October 1, 2012, the records must 

indicate whether LM fuel was received 

or delivered with or without the fuel 

marker.194 In addition to these designate 

and track records, distributors will be 

required to maintain records related to 

their quarterly and annual compliance 

calculations as well as copies of all 

PTDs.

If a facility receives fuel from another 

facility that does not have an EPA 

facility identification number then that 

batch of fuel must be designated as (1) 

heating oil if it is marked, or from 2010 

through 2012, LM diesel fuel if the fuel 

is dyed and marked and is not heating 

oil (2) highway diesel fuel if taxes have 

been assessed, and (3) NRLM diesel fuel 

if the fuel is dyed but not marked. 

If a facility delivers fuel to other 

facilities and that fuel is either 500 ppm 

sulfur highway diesel fuel on which 

taxes have been assessed or 500 ppm 

sulfur NRLM, or LM diesel fuel into 

which red dye has been added pursuant 

to IRS requirements, then the facility 

does not need to maintain separate 

records for each of the other facilities to 

which it delivered fuel. Similarly, if a 

facility delivers batches of marked 

heating oil to other facilities, then it 

does not need to maintain separate 

records for each of the other facilities to 

which it delivered the marked heating 

oil. If a facility only receives marked 

heating oil (i.e., it does not receive any 

unmarked heating oil), then it does not 

need to maintain any heating oil 

records. Similarly, if a facility only 

receives highway diesel fuel on which 

taxes have been assessed or NRLM 

diesel fuel which has been dyed 

pursuant to IRS regulations (i.e., it does 

not receive any untaxed highway diesel 

fuel or undyed NRLM diesel fuel), then 

it does not need to maintain records of 

the 500 ppm sulfur highway or NRLM 

diesel fuel that it receives. 

a. June 1, 2006 Through May 31, 2007 

Facilities that receive No. 2 15 ppm 

sulfur highway diesel fuel and 

distribute any No. 2 500 ppm sulfur 

highway diesel fuel, must maintain 

records for each batch of diesel fuel 

with the following designations that 

they receive or deliver during the time 

period from June 1, 2006 through May 

31, 2007: 

• No. 1 15 ppm sulfur highway diesel 

fuel; 

• No. 2 15 ppm sulfur highway diesel 

fuel; 

• No. 2 500 ppm sulfur highway 

diesel fuel; and 

• 500 ppm sulfur NRLM diesel fuel.

b. June 1, 2007 Through May 31, 2010 

All facilities must maintain records 

for each batch of diesel fuel or heating 

oil with the following designations for 

which they receive or transfer custody 

during the time period from June 1, 

2007 through May 31, 2010: 

• No. 1 15 ppm sulfur highway diesel 

fuel; 

• No. 2 15 ppm sulfur highway diesel 

fuel; 

• No. 1 500 ppm sulfur highway 

diesel fuel; 

• No. 2 500 ppm sulfur highway 

diesel fuel; 

• 500 ppm sulfur NRLM diesel fuel; 

• 15 ppm sulfur NRLM diesel fuel; 

• High sulfur NRLM diesel fuel; and 

• Heating oil. 

c. June 1, 2010 Through May 31, 2012 

All facilities must maintain records 

for each batch of diesel fuel or heating 

oil with the following designations for 

which they receive or transfer custody 

during the time period from June 1, 

2007 through May 31, 2012. This 

requirement does not apply to facilities 

located in the Northeast/Mid-Atlantic 

Area or Alaska. 

• 500 ppm sulfur NR diesel fuel; 

• 500 ppm sulfur LM diesel fuel; or 

• Heating oil. 

d. June 1, 2012 Through May 31, 2014 

Facilities that receive unmarked fuel 

designated as heating oil, must maintain 

records for each batch of diesel fuel 

with the following designations that 

they receive or deliver during the time 

period from June 1, 2012 through May 

31, 2014. This requirement does not 

apply to facilities located in Alaska or 

the Northeast/Mid-Atlantic Area unless 

they deliver marked heating oil to 

facilities outside of these areas. 

• 500 ppm sulfur NRLM diesel fuel; 

and 

• Heating oil. 

9. Recordkeeping Requirements for EndUsers 

Today’s program also contains certain 

recordkeeping provisions for end-users. 

From June 1, 2007 through October 1, 

2010, end-users that receive any batch 

of high sulfur NRLM in Alaska must 

maintain records of each batch of fuel 

received for use in NRLM equipment 

unless otherwise allowed by EPA. From 

June 1, 2010 through October 1, 2012, 

end-users that receive any batch of 500 

ppm sulfur NR in Alaska must maintain 

records of each batch of fuel received for 

use in NR equipment unless otherwise 

allowed by EPA. In addition, from June 

1, 2012 through October 1, 2014, endusers that receive any batch of 500 ppm 

sulfur NRLM in Alaska must maintain 

records of each batch of fuel received for 

use in NRLM equipment unless 

otherwise allowed by EPA. 

10. Record Retention 

We are adopting a retention period of 

five years for all records required to be 

kept under today’s rule. This is the same 

period of time required in other fuels 

rules, and it coincides with the 

applicable statute of limitations. We 

believe that 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 required under the designate 

and track provisions, records of any test 

results performed by any regulated party 

for quality assurance purposes or 

otherwise (whether or not such testing 

was required by this rule), 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 

must also be maintained for five years. 

All records that are required to be 

maintained by refiners or importers 

participating in the generation or use of 

credits, 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 options, are also covered by the 

retention period. 

39104 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

195See section 80.5 (penalties for fuels 

violations); section 80.23 (liability for lead 

violations); section 80.28 (liability for gasoline 

volatility violations); section 80.30 (liability for 

highway 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).; 

and section 80.610–614 (prohibited acts, liability 

for violations, and penalties for highway diesel 

sulfur regulations.

196Today’s rule, in 40 CFR 80.610, provides that 

no person shall, inter alia, ‘‘dispense, supply, offer 

for supply, store or transport * * *’’ fuel not in 

compliance with applicable standards and 

requirements starting on a certain date. These 

prohibitions apply at downstream locations such as 

retail outlets, wholesale purchaser-consumer 

facilities as well as end-user locations. The act of 

storage or transport refers to storage or transport in 

fuel storage tanks from which fuel is dispensed into 

motor vehicles or NRLM engines or equipment. It 

does not refer to storing or transporting the fuel that 

is in the motor vehicle propulsion tank or other 

tank that is incorporated in the NRLM equipment 

for the purpose of supplying the engine with fuel. 

While the prohibition against dispensing 

inappropriate fuels does apply as of the applicable 

date, the motor vehicle or NRLM engine or 

equipment may continue to burn any fuel in the 

motor vehicle fuel tank or NRLM equipment fuel 

tank that was properly dispensed into such tank.

197An additional type of liability, vicarious 

liability, is also imposed on branded refiners under 

today’s rule.

198This limit is amended periodically pursuant to 

Congressional authority to change maximum civil 

penalties to account for inflation.

H. Liability and Penalty Provisions for 

Noncompliance 

1. General

The liability and penalty provisions of 

the today’s NRLM diesel sulfur rule are 

very similar to the liability and penalty 

provisions found in the highway diesel 

sulfur rule, the gasoline sulfur rule, the 

reformulated gasoline rule and other 

EPA fuels regulations.195 Regulated 

parties are subject to prohibitions which 

are typical in EPA fuels regulations, 

such as prohibitions on selling or 

distributing fuel that does not comply 

with the applicable standard, and 

causing others to commit prohibited 

acts. For example, liability will also 

arise under the NRLM diesel rule for 

violating certain prohibited acts and 

requirements, such as: Distributing or 

dispensing NR diesel fuel not meeting 

the 15 ppm sulfur standard for use in 

model year 2011 or later nonroad 

equipment (and after Dec 1, 2014 into 

any nonroad diesel equipment); 

distributing or dispensing diesel fuel 

not meeting the 500 ppm sulfur 

standard for locomotive and marine 

engines; distributing fuel containing the 

marker for use in engines that require 

the use of fuel that does not contain the 

marker; prohibitions and requirements 

under the designate and track 

provisions in today’s rule, including 

specific prohibitions and requirements 

regarding fuel produced or distributed 

in the Northeast/Mid-Atlantic Area or in 

Alaska.196

Small refiners and refiners using 

credits can produce high sulfur NRLM 

when NRLM would otherwise be 

required to meet a 500 ppm sulfur 

standard, and can produce 500 ppm 

sulfur NR or LM diesel fuel when 

nonroad or LM diesel fuel would 

otherwise be required to meet a 15 ppm 

sulfur standard. A refiner that produces 

fuel under the small refiner and credit 

provisions would be in violation unless 

they can demonstrate that they meet the 

definition of a small refiner or have 

sufficient credits for the volume of fuel 

produced. All regulated 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. 

Under today’s rule, the party in the 

diesel fuel distribution system that 

controls the facility where a violation 

occurred, and other parties in that fuel 

distribution system (such as the refiner, 

reseller, and distributor), will be 

presumed to be liable for the 

violation.197 As in the Tier 2 gasoline 

sulfur rule and the highway diesel fuel 

rule, today’s rule explicitly prohibits 

causing another person to commit a 

prohibited act or causing nonconforming diesel fuel to be in the 

distribution system. Non-conforming 

fuels include: (1) Diesel fuel with sulfur 

content above 15 ppm incorrectly 

represented as appropriate for model 

year 2011 or later nonroad equipment or 

other engines requiring 15 ppm fuel; (2) 

diesel fuel with sulfur content above 

500 ppm incorrectly represented as 

appropriate for nonroad equipment or 

locomotives or marine engines after the 

applicable date for the 500 ppm sulfur 

standard for these pieces of equipment; 

(3) heating oil that is required to contain 

the marker which does not, LM fuel 

which is required to contain the marker 

which does not, or other fuels that are 

required to be free of the marker in 

which the marker is present; (4) fuel 

designated or labeled as 500 ppm sulfur 

highway diesel fuel above and beyond 

the volume balance limitations; (5) fuel 

designated or labeled as NRLM above 

and beyond the volume balance 

limitations; or (6) fuels otherwise not 

complying with the requirements of this 

rule. Parties outside the diesel fuel 

distribution system, such as diesel 

additive manufacturers and distributors, 

are also subject to liability for those 

diesel rule violations which could have 

been caused by their conduct.

Today’s rule also provides affirmative 

defenses for each party presumed liable 

for a violation, and all presumptions of 

liability are rebuttable. In general, in 

order to rebut the presumption of 

liability, parties will be 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. As part of their 

affirmative defense diesel fuel refiners 

or importers, diesel fuel additive 

manufacturers, and blenders of high 

sulfur additives into diesel fuel, will 

also be required to provide test results 

establishing the conformity of the 

product prior to leaving that party’s 

control. Blenders of static dissipater 

additives have alternative defense 

provisions as discussed in section V.C. 

Branded refiners have additional 

affirmative defense elements to 

establish. The defenses under the 

nonroad diesel sulfur rule are similar to 

those available to parties for violations 

of the highway diesel sulfur, 

reformulated gasoline, gasoline 

volatility, and the gasoline sulfur 

regulations. Today’s rule also clarifies 

that parent corporations are liable for 

violations of subsidiaries, in a manner 

consistent with the gasoline sulfur rule 

and the highway diesel sulfur rule. 

Finally, the NRLM diesel sulfur rule 

mirrors the gasoline sulfur rule and the 

highway diesel 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.

As is the case with the other EPA 

fuels regulations, today’s rule will apply 

the provisions of section 211(d)(1) of the 

Clean Air Act (Act) for the collection of 

penalties. These penalty provisions 

currently subject any person that 

violates any requirement or prohibition 

of the diesel sulfur rule to a civil 

penalty of up to $32,500 for every day 

of each such violation and the amount 

of economic benefit or savings resulting 

from the violation.198 A violation of a 

NRLM diesel sulfur standard will 

constitute a separate day of violation for 

each day the diesel fuel giving rise to 

the violation remains in the fuel 

distribution system. Under today’s 

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. This is the same time 

presumption that is incorporated in the 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39105

199At downstream locations the violation will 

occur if EPA’s test result show a sulfur content of 

greater than 17 ppm, which takes into account the 

two ppm adjustment factor for testing 

reproducibility for downstream parties.

RFG, gasoline sulfur and highway diesel 

sulfur rules. The penalty provisions in 

today rule are also be similar to the 

penalty provisions for violations of 

these regulations.

EPA has included in today’s rule two 

prohibitions for ‘‘causing’’ violations: 

(1) Causing another to commit a 

violation; and (2) causing noncomplying diesel fuel to be in the 

distribution system. These causation 

prohibitions are like similar 

prohibitions included in the gasoline 

sulfur and the highway diesel sulfur 

regulations, and, as discussed in the 

preamble to those rules, EPA believes 

they are consistent with EPA’s 

implementation of prior motor vehicle 

fuel regulations. See the liability 

discussion in the preamble to the 

gasoline sulfur final rule, at 65 FR 6812 

et seq. 

The prohibition against causing 

another to commit a violation will 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 

nonroad diesel fuel designated as 

complying with the 15 ppm sulfur 

standard, while the fuel, in fact, had an 

actual sulfur content greater than the 

standard.199 In this scenario, parties in 

the fuel distribution system, as well as 

parties in the distribution system of any 

diesel additive that had been blended 

into the fuel, will be presumed liable for 

causing the terminal to be in violation. 

Each party will have the right to present 

an affirmative defense to rebut this 

presumption.

The prohibition against causing noncompliant diesel fuel to be in the 

distribution system will apply, for 

example, if a refiner transfers noncompliant 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 violated a prohibited 

act with this fuel. 

The Agency expects to enforce the 

liability scheme of the NRLM 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, 

recognizing that party should primarily 

be liable for penalties for the violation. 

2. What are the Liability Provisions for 

Additive Manufacturers and 

Distributors, and Parties That Blend 

Additives into Diesel Fuel? 

a. General

The final highway diesel rule permits 

the blending of diesel fuel additives 

with sulfur content in excess of 15 ppm 

into 15 ppm highway diesel fuel under 

limited circumstances. As more fully 

discussed earlier in this preamble, this 

rule also permits downstream parties to 

blend fuel additives having a sulfur 

content exceeding 15 ppm into 15 ppm 

nonroad diesel, 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 discussed in 

section V.C, today’s rule includes 

alternate affirmative defense 

requirements for blenders of S–D 

additives that can contribute a 

maximum of 0.050 ppm to the sulfur 

content of finished fuel subject to the 15 

ppm sulfur standard. Today’s rule also 

implements these same alternate 

defense requirements regarding the 

blending of such additives into 15 ppm 

highway diesel fuel. 

Since today’s rule permits the limited 

use in nonroad diesel fuel of additives 

with high sulfur content, the Agency 

believes it might be 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 

diesel additive distribution system 

could cause a violation of the sulfur 

standard warrants the imposition by the 

Agency of increased liability for such 

parties. Therefore, today’s rule, like the 

final highway diesel rule, explicitly 

makes parties in the diesel 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, 

today’s 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 will differ 

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 

Additives blended into diesel fuel 

downstream of the refinery are required 

to have a sulfur content no greater than 

15 ppm, and be accompanied by PTD(s) 

accurately identifying them as 

complying with the 15 ppm sulfur 

standard, with the sole exception of 

diesel additives blended into nonroad 

diesel fuel at a concentration no greater 

than one percent by volume of the 

blended fuel. 

All parties in the fuel and additive 

distribution systems will be subject to 

presumptive liability if the blended fuel 

exceeds the sulfur standard. The two 

ppm downstream adjustment will apply 

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 could rebut the 

presumption of liability by showing the 

following: (1) Additive distributors will 

only be required to produce PTDs 

stating that the additive complies with 

the 15 ppm sulfur standard; (2) additive 

manufacturers are also be required to 

produce PTDs accurately indicating 

compliance 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 they meet 

their defense to presumptive liability, 

these additive system parties will 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 rule, parties in the 

diesel fuel distribution system will have 

the typical affirmative defenses of other 

fuels rules. For parties blending an 

additive into their diesel fuel, the 

requirement to maintain PTDs showing 

that the product complied with the 

39106 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

regulatory standards will necessarily 

include PTDs for the additive that was 

used, affirming the compliance of the 

additive and the fuel.

c. Liability When the Additive Is 

Designated as Having a Possible Sulfur 

Content Greater than 15 ppm 

Under today’s rule, a nonroad diesel 

fuel additive will be permitted to have 

a maximum sulfur content above 15 

ppm if the blended fuel continues to 

meet the 15 ppm standard and the 

additive is used at a concentration no 

greater than one volume percent of the 

blended fuel. However, if nonroad 

diesel fuel containing that additive is 

found by EPA to have high sulfur 

content, then all the parties in both the 

additive and the fuel distribution chains 

will be presumed liable for causing the 

nonroad 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 additive distribution 

system for such a high sulfur additive 

will also be required to 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 distribution 

system will essentially have to establish 

the same affirmative elements as in 

other fuels rules, with an addition 

comparable to the highway diesel rule. 

Blenders of high sulfur additives into 15 

ppm sulfur nonroad diesel fuel, will 

have to establish a more rigorous quality 

control program than will exist without 

the addition of such a high sulfur 

additive. For additives other than static 

dissipater additives, to establish a 

defense to presumptive liability, the 

Agency has adopted the proposal to 

require test results establishing that the 

blended fuel was in compliance with 

the 15 ppm sulfur standard after being 

blended with the high sulfur additive. 

This additional defense element will be 

required as a safeguard to ensure 

nonroad diesel fuel compliance, since 

the blender has voluntarily chosen to 

use an additive which increases the risk 

of diesel fuel non-compliance. 

An exception to this defense element 

is made for blenders of static dissipater 

additives, that are allowed by today’s 

rule to contribute no more than 0.05 

ppm to the sulfur content of a finished 

fuel subject to the 15 ppm sulfur 

standard. As discussed in section V.C.5, 

blenders of such additives may rely on 

volume accounting reconciliation 

records in lieu of the requirement to 

sample and test each batch of fuel 

subject to the 15 ppm sulfur standard 

after the addition of an additive that 

exceeds the 15 ppm sulfur standard. 

Today’s rule also implements these 

same alternate defense requirements 

regarding the blending of such additives 

into 15 ppm highway diesel fuel. 

I. How Will Compliance With the Sulfur 

Standards Be Determined? 

Today’s rule provides that compliance 

with the sulfur standards and use 

requirements under today’s rule can be 

determined by evaluating the designate 

and track records (discussed in section 

IV.D.) and other records, such as PTDs; 

by evaluating compliance with the fuel 

marker requirements discussed in 

section IV.D and V.E; and by sampling 

fuel and testing for sulfur content. 

Today’s rule includes a requirement for 

refiners and importers to measure the 

sulfur content of every batch of NRLM 

fuel designated under the rule, using a 

testing methodology approved under the 

provisions discussed in section V.H of 

this preamble. In general, downstream 

parties must conduct only periodic 

sampling and testing as an element of a 

defense to presumptive liability 

(retailers are exempt from sampling and 

testing). Today’s rule further provides 

that in determining compliance, any 

evidence from any source or location 

can be used to establish the diesel fuel 

sulfur level, provided that such 

evidence is relevant to whether the 

sulfur level would have met the 

applicable standard had compliance 

been determined using an approved test 

methodology. While the use of a nonapproved test method might produce 

results relevant to determining sulfur 

content, this does not remove any 

liability for failing to conduct required 

batch testing using an approved test 

method. This is consistent with the 

approach taken under the gasoline 

sulfur rule and the highway diesel 

sulfur rule. 

For example, the Agency might not 

have sulfur results derived from an 

approved test method for diesel fuel 

sold by a terminal, yet the terminal’s 

own test results, based on testing using 

methods other than those approved 

under the regulations, could reliably 

show a violation of the sulfur standard. 

Under today’s rule, evidence from the 

non-approved test method could be 

used to establish the diesel fuel’s sulfur 

level that would have resulted if an 

approved 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 an 

approved method, commercial 

documents asserting the sulfur level of 

diesel fuel or additive could be used as 

some evidence of what the sulfur level 

of the fuel would be if the product 

would have been tested using an 

approved method. 

The Agency believes that the same 

statutory authority for EPA to adopt the 

gasoline sulfur rule’s evidentiary 

provisions, Clean Air Act section 211(c), 

provides appropriate authority for the 

evidentiary provisions of today’s diesel 

sulfur rule. For a fuller explanation of 

this statutory authority, see the gasoline 

sulfur final rule preamble, 65 FR 6815, 

February 10, 2000.

VI. Program Costs and Benefits 

In this section, we present the 

projected cost impacts and cost 

effectiveness of the nonroad Tier 4 

emission standards and fuel sulfur 

requirements. We also present a benefitcost analysis and an economic impact 

analysis. The benefit-cost analysis 

explores the net yearly economic 

benefits to society of the reduction in 

mobile source emissions likely to be 

achieved by this rulemaking. The 

economic impact analysis explores how 

the costs of the rule will likely be shared 

across the manufacturers and users of 

the engines, equipment and fuel that 

would be affected by the standards. 

We revised our cost and benefit 

analysis to reflect the comments we 

received on our analysis. The fuelrelated costs have been updated to 

reflect information received from 

refiners as part of EPA’s highway diesel 

fuel program, comments received on the 

nonroad NPRM, as well as more recent 

information available on future energy 

costs and the cost of advanced 

desulfurization technologies. The 

engine and equipment-related costs 

were revised to reflect additional R&D 

costs associated with tailoring R&D to 

each particular engine line and to 

accommodate changes in the final 

emission control requirements, 

particularly with regard to engines 

above 750 hp. These costs are also now 

presented in 2002 instead of 2001 

dollars. With regard to the benefits 

analysis, we have updated our methods 

consistent with Science Advisory Board 

(SAB) advice as specified in RIA chapter 

9. Finally, we adjusted the economic 

impact analysis to reflect the revised 

cost inputs and to explicitly model the 

impacts on the locomotive and marine 

intermediate market sectors. 

The results detailed below show that 

this rule would be highly beneficial to 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39107

society, with net present value benefits 

through 2036 of $805 billion using a 3 

percent discount rate and $352 billion 

using a 7 percent discount rate, 

compared to a net present value of 

social cost of about $27 billion using a 

3 percent discount rate and $14 billion 

using a 7 percent discount rate. The 

impact of these costs on society should 

be minimal, with the prices of goods 

and services produced using equipment 

and fuel affected by standards being 

expected to increase about 0.1 percent. 

Further information on these and 

other aspects of the economic impacts of 

this emission control program are 

summarized in the following sections 

and are presented in more detail in the 

Final RIA for this rulemaking. 

A. Refining and Distribution Costs 

Meeting the 500 and 15 ppm sulfur 

caps will generally require that refiners 

add hydrotreating equipment and 

possibly new or expanded hydrogen and 

sulfur plants in their refineries. We have 

estimated the cost of building and 

operating this equipment using the same 

basic methodology which was described 

in the NPRM. We have updated that 

analysis with new information obtained 

from the vendors of advanced 

desulfurization technology, to better 

reflect current crude oil properties and 

refinery configurations, as well as future 

hydrogen costs. We have also 

incorporated information received from 

refiners regarding their plans to produce 

15 ppm highway diesel fuel from 2006–

2010. Finally, we incorporated the 15 

ppm cap on locomotive and marine fuel 

in 2012, as well as improving our 

analysis of the impact of this cap on 

costs incurred in the distribution 

system. 

The costs to provide NRLM fuel under 

the two-step fuel program are 

summarized in Table VI.A–1 below. All 

of the following costs estimates are in 

2002 dollars. Capital investments have 

been amortized at 7 percent per annum 

before taxes. These estimates do not 

include costs associated with fuel sulfur 

testing, labeling, reporting or record 

keeping, which we believe will be small 

relative to those associated with 

refining, distribution and lubricity 

additives. A more detailed description 

of the costs associated with this final 

rule is presented in the Final RIA.

TABLE VI.A–1.—COST OF PROVIDING NRLM DIESEL FUEL

(cents per gallon of affected fuel) 

NRLM diesel fuel Years 

Affected fuel 

volume (million gallons 

per year) a

Refining Distribution 

(and lubricity) Total 

500 ppm ......................................................... 2007–2010 ..................................................... 11,860 1.9 0.2 2.1 

2010–2012 ..................................................... 3,589 2.7 0.6 3.3 

2012–2014 ..................................................... 715 2.9 0.6 3.5 

15 ppm ........................................................... 2010–2012 ..................................................... 8,145 5.0 0.8 5.8 

2012–2014 ..................................................... 12,068 5.6 0.8 6.4 

2014 + ........................................................... 13,399 5.8 1.2 7.0 

Notes: a Volumes shown are for first full year in each period (2008, 2011, 2013, and 2015). 

The costs shown (and all of the costs 

described in the rest of this section) 

apply to the 74 percent of current NRLM 

fuel that currently contains more than 

500 ppm sulfur (hereafter referred to as 

the affected volume). 

In 2014, the affected volume of NRLM 

fuel is 14.6 billion gallons out of total 

NRLM fuel volume of 19.7 billion 

gallons. The other 5.1 billion gallons of 

NRLM fuel is currently spillover from 

fuel certified to the highway diesel fuel 

standards. We expect this to continue 

under the 2007 highway diesel fuel 

program. Thus, 26 percent of NRLM fuel 

will already meet at least a 500 ppm 

sulfur cap by 2007 and a 15 ppm cap by 

2010 and will not be affected by today’s 

rule. The costs and benefits of 

desulfurizing this highway fuel which 

spills over into the non-highway 

markets was included in our cost 

estimates for the 2007 highway diesel 

fuel rule. 

The estimated cost of the first step of 

the NRLM fuel program is slightly less 

than that projected in the NPRM (cents 

per gallon). However, we have increased 

our estimated cost of the second step 

significantly in response to comments. 

These comments and the changes to our 

cost estimates are discussed in more 

detail in the next two sections. The 

combined cost for both steps is therefore 

somewhat higher than expected in the 

NPRM, but nevertheless consistent with 

projections for the cost of 15 ppm 

highway diesel fuel. 

We expect that the increased cost of 

refining and distributing 500 ppm 

NRLM fuel will be completely offset by 

reductions in maintenance costs, while 

those for 15 ppm NRLM fuel will be 

significantly offset. These savings will 

apply to all diesel engines in the fleet 

due to the reduced fuel sulfur content, 

not just new engines. Refer to section 

V.B for a more complete discussion on 

the projected maintenance savings 

associated with lower sulfur fuels. 

1. Refining Costs 

Methodology: We followed the same 

process that we used in the NPRM to 

project refining costs, though we have 

broken down the description into five 

steps instead of four. 

First, we estimate the total volume of 

NRLM fuel which must be desulfurized 

during each step of the program, as well 

as each refinery’s future total 

production of distillate fuel. Current 

and future demand for all distillate fuels 

except diesel fuel for land-based 

equipment were based on estimates 

from the Energy Information 

Administration’s (EIA) Fuel Oil and 

Kerosene Survey (FOKS) for 2001 and 

the 2003 Annual Energy Outlook (AEO). 

EPA’s NONROAD emission model was 

used to estimate both current and future 

fuel consumption by land-based 

nonroad equipment to ensure the 

consistent treatment of both the costs 

and benefits associated with this rule. 

Table VI.A–2 shows our projections of 

the volumes of fuel affected by today’s 

rule. These volumes exclude NRLM fuel 

expected to be certified to highway 

diesel fuel sulfur caps prior to the 

implementation of this rule. They also 

exclude distillate fuel meeting a 500 

ppm cap which is produced during 

distribution from highway diesel fuel, 

jet fuel, etc.

39108 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

200The year 2014 represents a mid-point between 

the initial year of today’s fuel program and the end 

of the expected life of desulfurization equipment 

(roughly 15 years).

201Under EPA’s 2007 highway diesel program, 

refiners are required to submit their production 

plans for highway diesel fuel for 2006–2010. The 

first of these reports were due during the summer 

of 2003. EPA published a summary of the results 

this past fall. We consider these reports to provide 

a more accurate projection of individual refinery 

plans than our projections made during the 

highway fuel FRM. The latter was based on cost 

minimization using our refinery-specific 

desulfurization refinery model.

TABLE VI.A–2.—VOLUME OF NRLM FUEL AFFECTED BY TODAY’S RULE

(billion gallons per year) 

Nonroad Locomotive and 

marine 

Total 

500 

ppm 15 ppm 500 

ppm 15 ppm 

500 

ppm 15 ppm 

2008 ................................................................................................................................. 8,406 0 3,454 0 11,860 0 

2011 ................................................................................................................................. 614 8,145 2,975 0 3,589 8,145 

2013 ................................................................................................................................. 468 8,671 247 3,395 715 12,066 

2015 ................................................................................................................................. 0 10,539 2,860 0 13,399 

This marks a change from the 

proposal, where all distillate fuel 

volumes were based on EIA FOKS and 

AEO estimates. Commenters pointed out 

that this approach underestimated fuelrelated costs relative to emission 

reductions and monetized benefits, 

since the NONROAD fuel volumes used 

to estimate the latter were larger. We in 

fact had acknowledged this 

inconsistency in the proposal and had 

said we would address it in the final 

rule. Our approach to address the 

inconsistency was to utilize the landbased nonroad fuel volumes estimated 

by the NONROAD model for both the 

costs and monetized benefits. However, 

we also conducted a sensitivity analysis 

whereby both emissions and costs were 

estimated using EIA estimates of fuel 

demand by land-based nonroad 

equipment. The results of that analysis 

are discussed in chapter VII of the Final 

RIA. 

We made one other revision to the 

volume of diesel fuel affected by this 

rule. In analyzing the impact of the 2007 

highway diesel fuel program for the 

NPRM analysis, we estimated that 4.4 

percent of 15 ppm highway diesel fuel 

would be contaminated during 

shipment and not available for sale as 

15 ppm highway fuel. This increased 

the volume of 15 ppm highway fuel 

which had to be produced at refineries 

before accounting for the production of 

additional 500 and 15 ppm NRLM fuel 

in response to the NRLM fuel program. 

Due to comments made on the NRPM 

(discussed in section VI.A.3. below), we 

have improved our analysis to track the 

disposition of this contaminated 15 ppm 

fuel. Much of this contaminated fuel can 

be sold as 500 ppm NRLM from 2007–

2014 and as L&M fuel thereafter. Thus, 

the contaminated 15 ppm fuel reduces 

the volume of 500 and 15 ppm NRLM 

fuel which must be produced at 

refineries.

Second, total distillate production by 

individual refineries were based on 

their actual production volumes in 

2002, as reported to EIA. This represents 

a minor revision to the NPRM analysis, 

which utilized actual refiner production 

in 2000. The number of refineries 

needing to produce 500 ppm and 15 

ppm diesel fuel under today’s final rule 

was based on the projected diesel fuel 

and heating oil demand in 2014.200 To 

be consistent, the 2002 distillate 

production volumes of individual 

refiners were increased to 2014 levels 

using EPA projections of growth in total 

distillate production by domestic 

refiners.

Third, we estimated the cost to 

desulfurize diesel fuel to both 500 ppm 

and 15 ppm for each domestic refinery. 

This considered both the volume of 

diesel fuel being produced and its 

composition (e.g., percentage of straight 

run, light cycle oil, etc.). Estimates of 

the volumes of diesel fuel already being 

desulfurized to meet the highway diesel 

fuel standards in 2006–2010 prior to the 

implementation of this final rule were 

based on refiners’ pre-compliance 

reports.201 This marks a change from the 

NPRM analysis, where we assumed that 

refiners would continue to produce 

their current mix of highway and high 

sulfur diesel fuel. While many refiners 

indicated that their plans were 

preliminary and subject to change, we 

consider these projections to be more 

probable than assuming that current 

producers of diesel fuel will make no 

change to their product mix in 

complying with the highway rule. 

Meeting the 15 ppm highway diesel fuel 

cap will require significant investment, 

but some refiners will face more than 

others. Some refiners will be able to 

revamp their current hydrotreater, while 

others will need to build an entirely 

new unit. Some refiners will be able to 

expand their production of highway fuel 

at little incremental cost, while others 

will be able to reduce their investment 

substantially by reducing their 

production volume. Use of refiners’ own 

projections, as opposed to our own cost 

methodology assumptions, allows us to 

incorporate as much refinery-specific 

information as is currently possible.

In projecting desulfurization costs, we 

updated a number of the inputs to our 

cost estimation methodology. We 

increased natural gas and utility costs to 

reflect those projected in EIA’s 2003 

AEO. The NPRM analysis utilized 

projections from 2002 AEO. Forecasted 

natural gas costs in 2003 AEO are 

considerable higher than in 2002 AEO, 

though still lower than current market 

prices. In response to comments, we 

also increased the factor for off-site 

capital costs to better reflect the cost of 

sulfur plant expansions. The NPRM 

analysis utilized an off-site factor 

developed in support of the Tier 2 

gasoline and 2007 highway diesel fuel 

programs, where the amount of sulfur 

removed per gallon was a fraction of 

that occurring here with NRLM fuel. We 

also continued to update our cost 

estimates for advanced desulfurization 

technologies, as these technologies 

continue their evolution. As discussed 

in Section IV, the latest information 

concerning Process Dynamics’s 

IsoTherming process indicate somewhat 

higher costs than earlier estimates. We 

also reduced our projection of the 

penetration of these advanced 

technologies in 2010 from 80 to 60 

percent. 

Fourth, we estimated which refineries 

will likely find it difficult to stay in the 

heating oil market after the 

implementation of the NRLM sulfur 

standards, due to their location relative 

to major pipelines and the size of the 

heating oil market in their area. Those 

not located in major heating oil markets 

and not connected to pipelines serving 

these areas were projected to have to 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39109

meet the 500 and 15 ppm caps in 2007 

and 2010, respectively. 

Fifth, we estimated which of the 

remaining refineries would likely 

produce NLRM fuel under today’s 

program. As was done in the proposal, 

we assumed that those refineries with 

the lowest projected compliance costs 

would be the most likely to produce the 

required fuel until demand was met. 

Inter-PADD transfers of fuel between 

PADD 3 and PADD 1 were not 

constrained. PADD 3 refineries were 

also assumed to supply PADD 2 with 15 

ppm NRLM fuel once all PADD 2 

refineries were producing 15 ppm 

distillate fuel. We also assumed that 

domestic refineries would preferentially 

supply the lowest sulfur fuels compared 

to imports. Thus, imports of 15 and 500 

ppm NRLM fuel were only assumed 

after all refineries in a PADD were 

projected to produce either 15 or 500 

ppm fuel, respectively. The small 

refiner provisions included in today’s 

NRLM fuel program were considered, as 

these provisions temporarily reduce the 

volume of 500 and 15 ppm fuel required 

to be produced in 2007 and 2010, 

respectively. This portion of the 

methodology was the same as that used 

in the NRPM analysis. 

Results: Based on EIA data, in 2002 

114 refineries produced highway diesel 

fuel and 102 refineries produce high 

sulfur diesel fuel or heating oil. Based 

on refiners’ pre-compliance reports, we 

project that 100 refineries will produce 

15 ppm highway diesel fuel; 96 

refineries starting in 2006 and 4 in 2010. 

Of these 100 refineries, 96 currently 

produce some volume of highway diesel 

fuel, while 4 refineries currently only 

produce high sulfur distillate fuel. Also, 

18 refineries will cease to produce 

highway diesel fuel and shift to 

producing solely high sulfur distillate 

fuel. This will leave a total of 92 

refineries still producing high sulfur 

distillate after full implementation of 

the 2007 highway diesel fuel program. 

The number of these 92 domestic 

refineries expected to produce either 15 

or 500 ppm NRLM diesel fuel in 

response to today’s rule is summarized 

in Table VI.A–3.

TABLE VI.A–3.—REFINERIES PROJECTED TO PRODUCE NRLM DIESEL FUEL UNDER THIS FINAL RULE

Year of

program 

500 ppm NRLM diesel fuel 15 ppm NRLM diesel fuel 

All refineries Small

refineries All refineries Smallrefineries 

2007–2010 ....................................................................................................................... 36 0 0 0 

2010–2012 ....................................................................................................................... 26 13 32 2 

2012–2014 ....................................................................................................................... 15 13 47 2 

2014+ ............................................................................................................................... 0 0 63 15 

During the four periods shown in 

table VI.A–3, two roughly parallel sets 

of standards become effective. For nonsmall refiners, the 500 ppm NRLM fuel 

cap starts in 2007, followed by the 15 

ppm nonroad fuel cap in 2010, in turn 

followed by the 15 ppm L&M fuel cap 

in 2012. For small refiners, the 500 ppm 

NRLM fuel cap starts in 2010, followed 

by the 15 ppm nonroad NRLM fuel cap 

in 2014. As shown, beginning in 2014, 

63 refineries are projected to be affected 

by today’s final rule. After complete 

implementation of today’s rule, 29 

refineries are expected to be able to 

produce high sulfur heating oil, some as 

their entire distillate production, others 

along with 15 ppm fuel. The number of 

refineries estimated to be affected by 

today’s rule is one more than that 

projected in the NPRM. There, we 

estimated that 62 refineries would have 

to produce either 15 or 500 ppm NRLM 

fuel in 2014 and beyond. 

We project that the capital cost 

involved to meet the 2007 500 ppm 

sulfur cap will be $310 million. This 

represents about $10 million for each of 

the 30 refineries building a new 

hydrotreater. Six refineries are expected 

to produce 500 ppm NRLM fuel using 

existing hydrotreaters no longer being 

used to produce 500 ppm highway fuel. 

The total investment cost is roughly half 

that projected in the NPRM ($600 

million). The decrease is due to a greater 

volume of 500 ppm NRLM fuel coming 

from existing hydrotreaters. This 

conclusion is based on the number of 

refineries leaving the highway diesel 

fuel market according to the refiners’

highway program pre-compliance 

reports. The investment per refinery that 

we projected in the NPRM ($9.7 million) 

was essentially unchanged. Operating 

costs will be about $4.9 million per year 

for the average refinery, or slightly 

greater than that projected in the NPRM 

(due to higher hydrogen costs and a 

lower percentage of hydrocrackate in 

the NRLM pool). The average cost of 

producing 500 ppm NRLM fuel in 2007 

will be 1.9 cents per gallon, 0.3 cent per 

gallon lower than that projected in the 

NPRM, due primarily to the reduced 

capital expenditure. 

In 2010, an additional $1170 million 

will be invested in revamped and new 

desulfurization equipment, $1090 

million to meet the 15 ppm nonroad 

fuel cap and $80 million to produce 500 

ppm NRLM fuel no longer eligible for a 

small refiner exemption to sell high 

sulfur NRLM fuel. In 2012, an 

additional $590 million will be invested 

in revamped and new desulfurization 

equipment to meet the 15 ppm L&M cap 

Finally, in 2014 an additional $210 

million will be invested in additional 15 

ppm fuel capacity. Thus, total capital 

cost of new equipment and revamps 

related to the NRLM fuel program will 

be $2280 million, or $36 million per 

refinery, roughly 5 percent greater than 

that projected in the NPRM. Total 

operating costs will be about $8.1 

million per year for the average refinery, 

slightly lower than that projected in the 

NPRM ($8.3 million per year). The total 

refining cost, including the amortized 

cost of capital, will be 5.0, 5.6 and 5.8 

cents per gallon of new 15 ppm NRLM 

fuel in 2010, 2012, and 2014, 

respectively. 

The 500 pm NRLM fuel being 

produced in 2010 is projected to cost 2.7 

cents per gallon. The cost of this 500 

ppm fuel is higher than that projected 

in the NPRM, due primarily to a higher 

cost for natural gas in the future. The 

500 pm, small refiner fuel being 

produced in 2012 is projected to cost 2.9 

cents per gallon. All of these costs are 

relative to the cost of producing high 

sulfur fuel today, and includes the cost 

of meeting the 500 ppm standard 

beginning in 2007. 

The 15 ppm refining costs are 

significantly higher than the 4.4 cent per 

gallon cost projected in the NPRM for 

the option where L&M fuel was 

controlled to 15 ppm in addition to 

nonroad fuel. The increase is due to the 

changes in refining cost methodology 

described above, particularly the 

reduced use of advanced desulfurization 

technology, reduced synergies with the 

highway fuel program and increased 

natural gas costs.

39110 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

202See chapter 7 of the RIA for further details 

regarding our estimation of distribution costs.

The average refining costs by refining 

region are shown in table VI.A–4 below. 

These costs include consideration of the 

small refiner provisions. Combined 

costs are shown for PADDs 1 and 3 

because of the large volume of diesel 

fuel which is shipped from PADD 3 to 

PADD 1.

TABLE VI.A–4.—AVERAGE REFINING COSTS BY REGION

[Cents per gallon] 

500 ppm Cap 15 ppm Cap 

2007–2010 2010–2012 2012–2014 2010–2012 2012–2014 2014+ 

PADDs 1 & 3 ........................................................................... 1.6 3.7 2.5 4.6 4.9 5.1 

PADD 2 .................................................................................... 2.8 2.9 3.7 7.1 7.8 7.8 

PADD 4 .................................................................................... 3.3 9.0 9.0 11.6 11.7 11.8 

PADD 5 .................................................................................... 1.2 2.8 3.5 4.3 4.3 5.7 

Nationwide ............................................................................... 1.8 2.7 2.9 5.0 5.6 5.8 

Fuel-Only Control Programs: We used 

the same methodology to estimate 

refining costs for stand-alone 500 ppm 

and 15 ppm NRLM fuel programs. The 

fully phased in refining impacts of a 15 

ppm NRLM standard are the same as 

those described above for the final rule 

in 2014 and beyond. A fully phased in 

500 ppm NRLM fuel program is 

projected to affect 63 refineries, cost 2.0 

cents per gallon and require a capital 

investment of $480 million. 

2. Distribution Costs 

Today’s rule is projected to impact 

distribution costs in four ways. First, we 

project that a slightly greater volume of 

diesel fuel will have to be distributed, 

due to the fact that some of the 

desulfurization processes reduce the 

fuel’s volumetric energy density during 

processing. Total energy is not lost 

during processing, as the total volume of 

fuel is increased in the hydrotreater. 

However, a greater volume of fuel must 

be consumed in the engine to produce 

the same amount of power. We project 

that desulfurizing diesel fuel to 500 

ppm will reduce volumetric energy 

content by 0.7 percent. The cost of 

which is equivalent to 0.08 cent per 

gallon of affected NRLM fuel. 202 We 

project that desulfurizing diesel fuel to 

15 ppm will reduce volumetric energy 

content by an additional 0.52 percent. 

This will increase the cost of 

distributing fuel by an additional 0.05 

cents per gallon, for a total cost of 0.13 

cents per gallon of affected 15 ppm 

NRLM fuel.

The second impact on distribution 

costs relates to the disposition of 15 

ppm fuel contaminated during pipeline 

shipment. We received comments that 

the control of L&M fuel sulfur content, 

particularly to 15 ppm, would make it 

difficult to sell off-specification 15 ppm 

fuel. The comments argued that much of 

this material would have to be shipped 

back to refineries and reprocessed to 

meet the 15 ppm cap. We designed the 

program finalized today to allow the 

continued sale of 500 ppm fuel into the 

NRLM market until June 1, 2014, and 

into the locomotive and marine market 

indefinitely. By doing so, we were able 

to minimize, though not eliminate, 

much of the reprocessing and 

distribution cost impacts of concern. We 

have evaluated both the production and 

potential sale of distillate interface and 

estimated the distribution cost impacts 

of today’s final rule provisions. The 

details of this analysis are contained in 

chapter 7 of the Final RIA.

In our analysis of the 15 ppm highway 

fuel program, we projected that the need 

to protect the quality of 15 ppm 

highway diesel fuel would increase the 

volume of highway diesel fuel 

downgraded to a lower value product, 

such as high sulfur diesel fuel and 

heating oil, from its current level of 

approximately 2.2 percent to 4.4 

percent. Under today’s rule, we expect 

that 15 ppm NRLM fuel will be shipped 

together with 15 ppm highway. Thus, 

the size of each batch of 15 ppm fuel 

will increase, but the number of batches 

will not. As the downgrade occurs at the 

interface between batches, the volume 

being downgraded should not increase. 

At the same time, we are not projecting 

that interface volume will decrease, as 

high sulfur fuels, such as jet fuel and, 

in some cases heating oil, will still be 

in the system. 

The issue here is the market to which 

this interface volume can be sold. When 

this interface volume meets the 

specifications of one of the two fuels 

being shipped next to each other, the 

interface is simply added to the batch of 

that fuel. For example, the interface 

between regular and premium gasoline 

is added to the regular grade batch. Or, 

the interface between jet fuel and 

heating oil is added to the heating oil 

batch. One interface which is never 

added to either adjacent batch is a 

mixture of gasoline and any distillate 

fuel, such as jet or diesel fuel. If this 

interface was added to the distillate 

batch, the gasoline content in the 

interface would result in a violation of 

the distillate’s flash point specification. 

If this interface was added to the 

gasoline batch, it would cause the 

gasoline to violate its end point 

specification. Therefore, this interface 

must be shipped to a transmix processor 

to separate the mixture into naphtha (a 

sub-octane gasoline) and distillate. The 

2007 highway diesel fuel program will 

not change this practice. The naphtha 

produced by transmix processors from 

gasoline/distillate mixtures is usually 

blended with premium gasoline to 

produce regular grade gasoline. The 

distillate produced is an acceptable high 

sulfur diesel fuel or heating oil, though 

if the feed material was primarily low 

sulfur distillate and gasoline it will 

likely also meet the current 500 ppm 

highway fuel cap. 

With the implementation of the 

highway diesel rule, there is another 

incompatible interface, that between jet 

fuel and 15 ppm diesel fuel. This 

interface can not be cut into jet fuel due 

to end point and other concerns. 

However, it can usually be cut into 500 

ppm diesel fuel as long as the sulfur 

level of the jet fuel is not too high. With 

the lowering of the highway standard to 

15 ppm, however, this will no longer be 

possible. We expect that pipelines 

minimize this interface by abutting jet 

fuel and high sulfur distillate in the 

pipeline whenever possible. However, it 

will be unavoidable under many 

circumstances. A substantial part of the 

pipeline distribution system currently 

does not handle high sulfur distillate, 

and we expect that the highway 

program and today’s rule will likely 

cause additional pipeline systems to 

discontinue carrying high sulfur 

distillate. Pipelines that do not carry 

high sulfur distillates will generate this 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39111

203We expect that only three types of fuel will 

be carried by such pipeline systems: jet fuel, 15 

ppm diesel fuel, and gasoline (premium and 

regular). Premium and regular gasolines are always 

shipped next to each other so the interface between 

premium and regular gasoline can be cut into the 

batch of regular gasoline. Thus, whenever jet fuel 

is shipped it will abut 15 ppm diesel fuel on one 

end and gasoline on the other.

204See chapter 7.1.7 of the RIA regarding our 

analysis of the sulfur levels of this interface 

material. This analysis indicated that although the 

maximum sulfur specification of jet fuel 3,000 ppm, 

in-use jet fuel sulfur levels are frequently below 500 

ppm.

205 Including the refinery, pipeline, terminal, 

marine tanker, and barge segments of the 

distribution system.

interface whenever they ship jet fuel.203

The highway rule, and today’s rule 

projects that pipeline operators will 

segregate this interface by cutting it into 

a separate storage tank. Because this 

interface can be sold as 500 ppm NRLM 

fuel or heating oil, and because these 

markets exist nationwide, there is little 

impact beyond the need for refiners to 

produce more 15 ppm highway diesel 

fuel (compared to the volume of 

highway diesel fuel produced prior to 

the implementation of the 15 ppm 

standard), which was considered as part 

of the refining costs in the highway 

diesel rule.

With control of nonroad fuel to 15 

ppm sulfur in 2010 and LM fuel to 15 

ppm sulfur in 2012, the opportunities to 

downgrade interface to another product 

become increasing limited. Where 

limited this will increase costs due to 

the need to transport the interface to 

where it can be marketed or to a facility 

for reprocessing. In areas with large 

heating oil markets, such as the 

Northeast and the Gulf Coast, the 

control of NRLM sulfur content will still 

have little impact on the sale of this 

interface. However, in areas lacking a 

large heating oil market, the sale of this 

distillate interface will be more 

restricted. Because this interface will 

composed of 15 ppm diesel fuel and jet 

fuel, we estimate that the distillate 

interface created should nearly always 

meet a 500 ppm cap.204 Thus, this 

interface can be added to 500 ppm 

NRLM batches (as well as heating oil, 

where it is present at the terminal) 

through 2014. After 2014, this 500 ppm 

interface fuel can only be sold as L&M 

fuel or heating oil. An exception to this 

applies in the Northeast/Mid-Atlantic 

Area, where this interface cannot be 

sold into the nonroad fuel market after 

2010, nor into the L&M fuel market after 

2012.

In chapter 7 of the Final RIA, we 

estimate the costs related to handling 

this interface fuel during the four time 

periods (2007–2010, 2010–2012, 2012–

2014, and 2014 and beyond). We project 

that there will be no additional costs 

prior to 2010, as 500 ppm fuel will be 

the primary NRLM fuel and be widely 

distributed. Beyond 2010, we estimate 

that terminals will have to add a small 

storage tank for this fuel, as 500 ppm 

highway diesel fuel and the majority of 

500 ppm NRLM disappears from the 

distribution system. In many places, this 

interface will be the primary, if not sole 

source of 500 ppm fuel, so existing 

tankage to add this interface to will be 

limited. We have also added shipping 

costs to transport this fuel to NRLM and 

heating oil users. The volume of this 

interface is significant, sometimes a 

sizeable percentage of the combined 

NRLM fuel and heating oil markets. In 

the post-2014 period, the volume of this 

interface fuel is larger than the 

combined L&M fuel and heating oil 

markets in certain PADDs. Also, the 

volume of interface received at each 

terminal will vary substantially, 

depending on where that terminal is on 

the pipeline. The advantage of this is 

that where the interface accumulates it 

may be of sufficient volume to justify 

marketing as a separate grade of fuel. 

Conversely, the potential users of this 

500 ppm interface fuel may not be 

located near the terminals with the fuel 

necessitating additional transportation 

costs.

Prior to 2014, 500 ppm fuel can be 

used as NRLM fuel and heating oil 

outside of the Northeast/Mid-Atlantic 

Area. Additional storage tanks will be 

needed in some cases, as this will be the 

only source of 500 ppm fuel in the 

marketplace. Amortizing the cost of a 

range of storage tank sizes over 15 years 

of weekly shipments at a seven percent 

rate of return before taxes costs 

produced an amortized cost of 0.2–1.6 

cents per gallon. These costs include the 

carrying cost of the fuel stored in the 

tank. We estimate that the average 

storage cost will be closer to the lower 

end of this range, or 0.5 cent per gallon. 

Nonroad fuel users are fairly ubiquitous. 

Thus, increased shipping distances 

should be fairly short. We estimated 45 

miles at a cost of roughly 1.5 cents per 

gallon. The distance to L&M fuel users 

will likely be longer, roughly 100 miles, 

but cost the same due to greater 

efficiencies of rail transport. It will 

likely cost more to deliver interface fuel 

to heating oil users, as many of these 

users are smaller, not evenly dispersed 

geographically, purchase fuel 

seasonally, and lack rail connections. 

We estimate that transport distances 

will increase an average of 85 miles and 

cost an additional 3.0 cents per gallon 

over today’s costs to deliver this fuel to 

the end user, in addition to the 0.5 cent 

per gallon storage cost. When spread 

over all the 15 and 500 ppm NRLM fuel 

being produced from 2010–2014 due to 

today’s rule, the additional distribution 

cost from 2010–2014 is 0.4 cents per 

gallon. 

Starting in 2014, this interface fuel 

can no longer be sold to the nonroad 

fuel market. Since the interface volume 

does not change, this increases the 

volume of fuel that must be sold to the 

L&M and heating oil markets. Thus, 

overall, transportation distances and 

costs will likely increase. We expect 

that the transportation cost for fuel sold 

to the L&M market will increase from 

1.5 to 3.0 cents per gallon, while that for 

heating oil will increase to 5.0 cents per 

gallon, both including fuel storage. 

However, in PADD 5, the volume of 

interface generated exceeds the total 

fuel demand of these two markets. Thus, 

we estimate that some fuel will have to 

be shipped back to refineries and 

reprocessed to meet a 15 ppm cap and 

shipped out a second time. We estimate 

that the cost of this shipping and 

reprocessing will cost 10 cents per 

gallon. When spread over all the 15 ppm 

NRLM fuel being produced after 2014 

due to today’s rule, the additional 

distribution cost is 0.8 cent per gallon. 

The third impact of today’s rule on 

distribution costs is related to the need 

for additional storage tanks to market 

additional product grades at bulk plants. 

While this final rule minimizes the 

segregation of similar fuels, some 

additional segregation of products in the 

distribution system will still be 

required. The allowance that highway 

and NRLM diesel fuel meeting the same 

sulfur specification can be shipped 

fungibly until it leaves the terminal 

obviates the need for additional storage 

tanks in this segment of the distribution 

system except for the limited tankage at 

terminals necessary to handle 500 ppm 

sulfur interface fuel discussed above.205

Today’s final rule also allows 500 ppm 

NRLM diesel fuel to be mixed with 

high-sulfur NRLM (though it can no 

longer be sold as 500 ppm fuel).

However, we expect that the 

implementation of the 500 ppm 

standard for NRLM diesel fuel in 2007 

will compel some bulk plants in those 

parts of the country still distributing 

heating oil as a separate fuel grade to 

install a second diesel storage tank to 

handle this 500 ppm NRLM fuel. These 

bulk plants currently handle only highsulfur fuel and hence will need a second 

tank to continue their current practice of 

selling fuel into the heating oil market 

in the winter and into the nonroad 

market in the summer. We believe that 

39112 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

206This estimated cost includes the addition of a 

separate delivery system on the tank truck. 207To avoid sulfur contamination of NRLM fuel, 

the tank compartment would need to be flushed 

with some NRLM fuel prior to switching from 

carrying heating oil to NRLM fuel.

208See Section IV of today’s preamble for 

additional discussion of our rational for this 

conclusion.

209A refinery rack functions similar to a terminal 

in that it distributes fuel by truck to wholesale 

purchaser consumers and retailers.

some of these bulk plants will convert 

their existing diesel tank to 500 ppm 

fuel in order to avoid the expense of 

installing an additional tank. However, 

to provide a conservatively high 

estimate we assumed that 10 percent of 

the approximately 10,000 bulk plants in 

the U.S. (1,000) will install a second 

tank in order to handle both 500 ppm 

NRLM diesel fuel and heating oil. 

The cost of an additional storage tank 

at a bulk plant is estimated at $90,000 

and the cost of de-manifolding a 

delivery truck is estimated at 

$10,000.206 In the NPRM, we estimated 

that each bulk plant that needed to 

install a new storage tank would need 

to de-manifold a single tank truck. Thus, 

the NPRM estimated the cost per bulk 

plant would be $100,000. Fuel 

distributors stated that the assumptions 

and calculations made by EPA in 

characterizing costs for bulk plant 

operators seem reasonable. However, 

they also stated that our estimate that a 

single tank truck would service a bulk 

plant is probably not accurate. No 

suggestion was offered regarding what 

might be a more appropriate estimate 

other than the number is likely to be 

much greater. Part of the reason why we 

estimated that only a single tank truck 

would need to be de-manifolded, is that 

we expected that due to the seasonal 

nature of the demand for heating oil 

versus nonroad fuel, it would primarily 

only be at the juncture of these two 

seasons that both fuels would need to be 

distributed in substantial quantities. We 

also expected that the small demand for 

heating oil in the summer and the small 

demand for nonroad fuel in the winter 

could be serviced using a single demanifolded truck. The primary fuel 

distributed during a given season would 

be distributed by single compartment 

tank trucks. During the crossover 

between seasons, bulk plant operators 

would switch the fuel to which such 

single compartment tank trucks are used 

from nonroad to heating oil and back 

again.207 Nevertheless, we agree that the 

subject bulk plant operators would 

likely be compelled to de-manifold 

more that a single tank truck. Lacking 

additional specific information, we 

believe that assuming that each bulk 

plant operator de-manifolds three tank 

trucks will provide a conservatively 

high estimate of the cost to bulk plant 

operators due to today’s rule.

If all 1,000 bulk plants were to install 

a new tank and de-manifold three tank 

trucks, the cost for each bulk plant 

would be $120,000, and the total onetime capital cost would be 

$120,000,000. To provide a 

conservatively high estimate of the costs 

to bulk plant operators, we are assuming 

that all 1,000 bulk plants will do so. 

Amortizing the capital costs over 20 

years, results in a estimated cost for 

tankage at such bulk plants of 0.1 cents 

per gallon of affected NRLM diesel fuel 

supplied. Although the impact on the 

overall cost of the program is small, the 

cost to those bulk plant operators who 

need to put in a separate storage tank 

may represent a substantial investment. 

Thus, we believe many of these bulk 

plants will search out other 

arrangements to continue servicing both 

heating oil and NRLM markets such as 

an exchange agreement between two 

bulk plants that serve a common area. 

As a consequence of the end of the 

highway program’s temporary 

compliance option (TCO) in 2010 and 

the disappearance of high-sulfur diesel 

fuel from much of the fuel distribution 

system resulting from the 

implementation of today’s rule, we 

expect that storage tanks at many bulk 

plants that were previously devoted to 

500 ppm TCO highway fuel and highsulfur fuel will become available for 

dyed 15 ppm nonroad fuel service. 

Based on this assessment, we do not 

expect that a significant number of bulk 

plants will need to install an additional 

storage tank in order to provide dyed 

and undyed 15 ppm diesel fuel to their 

customers beginning in 2010 (the 

implementation date for the 15 ppm 

nonroad standard).208 There could 

potentially be some additional costs 

related to the need for new tankage in 

some areas not already carrying 500 

ppm fuel under the temporary 

compliance option of the highway 

diesel program and which continue to 

carry high sulfur fuel. However, we 

expect them to be minimal relative to 

the above 0.1 cent per gallon cost. Thus, 

we estimate that the total cost of 

additional storage tanks at bulk plants 

that will result from today’s rule will be 

0.1 cent per gallon of affected NRLM 

diesel fuel supplied.

The fourth impact on fuel distribution 

costs is a result of the requirement that 

high sulfur heating oil be marked 

beginning June 1, 2007 and that 500 

ppm sulfur LM diesel produced by 

refiners or imported be marked from 

2010 through 2012 outside of the 

Northeast/Mid-Atlantic Area and 

Alaska. The NPRM projected that there 

would be no capital costs associated 

with the proposed marker requirement. 

We proposed that the marker would be 

added at the refinery gate, and that the 

current requirement that non-highway 

fuel be dyed red at the refinery gate be 

made voluntary. Thus, we believed that 

the refiner’s additive injection 

equipment that is currently used to 

inject red dye into off-highway diesel 

fuel could instead be used to inject the 

marker as needed. As a result of the 

allowance provided in today’s final rule 

that the marker be added at the terminal 

rather than the refinery gate, and our 

reevaluation of the conditions for dye 

injection at the refinery, we are now 

assessing capital costs for terminals and 

refiners related to compliance with the 

fuel marker requirements. 

Except for fuel that is distributed 

directly from a refiner’s rack, today’s 

final rule allows the marker to be added 

at the terminal rather than at the 

refinery as we proposed (see section 

IV.D for a discussion of the fuel marker 

requirements).209 We expect that except 

for fuel dispensed directly from the 

refinery rack, the fuel marker will be 

added to at the terminal to avoid the 

potential for marked fuel to contaminate 

jet fuel during distribution by pipeline. 

Terminals that need to inject the fuel 

marker will need to purchase a new 

injection system, including a marker 

storage tank and a segregated line and 

injector for each truck loading station at 

which fuel that is required to be marked 

is dispensed. Terminals will still be 

subject to IRS red dye requirements, and 

thus will not be able to rededicate such 

injection equipment to inject the fuel 

marker. Due to concerns regarding the 

need to maintain a visible evidence of 

the presence of the fuel marker, today’s 

rule also contains a requirement that 

nay fuel which contains the fuel marker 

also contains visible evidence of red 

dye. Furthermore, there is little chance 

to adapt parts of the red dye injection 

system (such as the feed lines and 

injectors) for the alternate injection of 

red dye and the fuel marker due to 

concerns that NRLM fuel become 

contaminated with the marker.

Terminal operators expressed concern 

regarding the potential burden on 

terminal operators from the capital costs 

of adding new additive injection 

equipment for heating oil. In response to 

these comments, today’s rule includes 

provisions that exempt terminal 

operators from the fuel marker 

requirements in a geographic 

‘‘Northeast/Mid-Atlantic Area’’ and 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39113

210Small refiner and credit high sulfur NRLM 

will not be permitted to be sold in the area where 

terminals are not required to add the fuel marker 

to heating oil (the ‘‘Northeast/Mid-Atlantic Area’’). 

See section IV.D.

211The estimated marker injection equipment 

costs include the cost of marker storage tanks, lines, 

and injectors.

Alaska.210 These provisions provide that 

any heating oil or 500 ppm sulfur LM 

diesel fuel that would otherwise be 

subject to the fuel marker requirements 

which is delivered to a retailer or 

wholesale-purchaser consumer inside 

the Northeast/Mid-Atlantic Area or 

Alaska does not need to contain the 

marker. The costs of the marker 

requirements for heating oil beginning 

in 2007 and for 500 ppm sulfur LM 

diesel fuel from 2010 through 2012 are 

discussed separately below.

The Northeast/Mid-Atlantic Area was 

defined to include the region where the 

majority of heating oil in the country is 

projected to continue to be supplied 

through the bulk distribution system 

(the Northeast and Mid-Atlantic). The 

vast majority of heating oil consumption 

in the U.S. will be within the Northeast/

Mid-Atlantic Area. Outside of the 

Northeast/Mid-Atlantic Area, we expect 

that only limited quantities of heating 

oil will be supplied, primarily from 

certain refiner’s racks. We estimate that 

30 refineries and transmix processor 

facilities outside of the Northeast/MidAtlantic Area will distribute heating oil 

from their racks (in limited volumes) on 

a sufficiently frequent basis to warrant 

the installation of a marker injection 

system at a total one time cost of 

$1,500,000. 

Terminals outside of the Northeast/

Mid-Atlantic Area will mostly be 

located in areas without continued 

production and/or bulk shipment of 

heating oil. Consequently, any high 

sulfur diesel fuel they sell will typically 

be NRLM. Terminals located within the 

Northeast/Mid-Atlantic Area will not 

need to mark their heating oil, except 

for those few that choose to ship heating 

oil outside of the Northeast/MidAtlantic Area. The terminals most likely 

to install marker injection equipment 

will therefore be those in states outside 

the Northeast/Mid-Atlantic Area with 

modest markets for heating oil after the 

implementation of this program. As 

discussed in chapter 7 of the RIA, in 

analyzing the various situations, we 

project that fewer than 60 terminals 

nationwide will choose to install marker 

injection equipment at a total cost of 

$4,150,000. 211 The total capital cost to 

refiners and terminals to install marker 

injection equipment is estimated to be 

$5,650,000. Thus, the Northeast/MidAtlantic Area provisions in today’s rule 

minimizes the number of terminals that 

will need to install additive injection 

equipment and its associated cost to 

comply with the marker requirement for 

heating oil.

In the NPRM we estimated that the 

cost to blenders of the fuel marker in 

bulk quantities would translate to 0.2 

cents per gallon of fuel treated with the 

marker. This estimate was based on the 

fee charged by a major pipeline to inject 

red dye at the IRS concentration into its 

customers diesel fuel. We used this 

estimate because we lacked specific cost 

information on the proposed marker, 

and we believed that it provided a 

conservatively high estimate of marker 

cost. Since the proposal, we received 

input from a major distributor of fuel 

markers and dyes, regarding the cost of 

bulk deliveries of the specified fuel 

marker to terminals which translates to 

a cost of 0.03 cents per gallon of fuel 

treated with the marker. The volume of 

heating oil that we expect will need to 

be marked has also decreased 

substantially from that estimated in the 

NPRM due to the Northeast/MidAtlantic Area provisions. We estimate 

that 1.4 billion gallons of heating oil 

will be marked annually, for an annual 

marker cost of $425,000. In the NPRM, 

we projected that the cost of marking 

heating oil would continue for three 

years (2007–2010). Under today’s final 

rule, heating oil must be marked 

indefinitely beginning in 2007, but only 

outside of the Northeast/Mid-Atlantic 

Area and Alaska. 

Because heating oil outside of the 

Northeast/Mid-Atlantic Area is being 

marked to prevent its use in NRLM 

engines, for the purposes of estimating 

the impact of the marker requirement on 

the cost of the NRLM program we have 

spread the cost for the marker for 

heating oil over NRLM diesel fuel. 

Amortizing the capital costs of marker 

injection equipment over 20 years, 

results in an estimated cost of 0.006 

cents per gallon of affected NRLM diesel 

fuel supplied. Spreading the cost of the 

marker over the volume of affected 

NRLM fuel results in an estimated cost 

of 0.003 cents per gallon of affected 

NRLM fuel. Adding the amortized cost 

of the injection equipment necessary to 

add the marker to heating oil and the 

cost or the marker results in a total 

estimated cost of the marker 

requirement for heating oil in today’s 

rule of 0.01 cents per gallon of affected 

NRLM fuel. 

The final NRLM rule also requires 

that 500 ppm L&M fuel produced at 

refineries or imported be marked from 

mid-2010 through mid-2012 outside of 

the Northeast/Mid-Atlantic Area and 

Alaska. The adoption of a 15 ppm sulfur 

standard for LM diesel fuel in 2012 in 

today’s rule allows us to require that LM 

fuel be marked from 2010 through 2012 

rather than from 2010 through 2014 as 

proposed (see section IV.A). In addition, 

the way in which the program was 

crafted to avoid requiring the fuel 

marker be added to heating oil in the 

Northeast/Mid-Atlantic Area and Alaska 

allows us to also provide that 500 ppm 

sulfur LM diesel fuel in these areas is 

not subject to the marker requirement 

(see section IV.D). We project that only 

a small number of refiners will produce 

500 ppm sulfur diesel fuel subject to the 

marker requirements fuel and that it 

will not be shipped via pipeline. Thus, 

most of this fuel can be marked at the 

refinery, limiting the number of 

facilities which need to add marking 

equipment in response to this 

requirement. We estimate that 15 

facilities will have to do so, at a cost of 

$60,000 each, for a total of $900,000. 

Amortizing this over the total volume of 

affected NRLM fuel produced from mid2010 to mid-2012 at seven percent per 

year before taxes yields a cost for the 

LM marker requirement of 0.004 cent 

per gallon. Including the cost of the 

marker (0.03 cent per gallon of marked 

fuel) increases this cost to 0.01 cent per 

gallon of NRLM fuel. 

We summed these various costs 

incurred to the distribution system over 

four different time periods. As shown in 

table VI.A–5, the total additional 

distribution cost will be 0.2 cent per 

gallon of NRLM fuel during the first step 

of the fuel program (from 2007 through 

2010), 0.6 cents per gallon of NRLM fuel 

from 2010 to 2012 and from 2012 to 

2014, and increase to 1.0 cent per gallon 

thereafter. A more detailed description 

of the costs associated with downgraded 

jet fuel and 15 ppm diesel fuel is 

presented in chapter 7 of the Final RIA.

39114 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

212Please refer to section IV in today’s preamble 

for additional discussion regarding our projections 

of the potential impact on fuel lubricity of this 

proposed rule.

213Hirshfeld, David, MathPro, Inc., ‘‘Refining 

economics of diesel fuel sulfur standards,’’

performed for the Engine Manufactuers Association, 

October 5, 1999.

TABLE VI.A–5.—SUMMARY OF DISTRIBUTION COSTS

[Cents per gallon] 

Cause of increase in distribution costs 

Time period over which costs apply 

2007–2010 2010–2012 2010–2014 2014+ 

Distribution of additional NRLM volume .......................................................................... 0.08 0.1 0.1 0.1 

Distillate interface handling .............................................................................................. 0 0.4 0.4 0.8 

Bulk plant storage tanks .................................................................................................. 0.1 0.1 0.1 0.1 

Heating oil and L&M fuel marker ..................................................................................... 0.01 0.02 0.01 0.01 

Total .......................................................................................................................... 0.2 0.6 0.6 1.0 

3. Cost of Lubricity Additives 

Hydrotreating diesel fuel tends to 

reduce the natural lubricating quality of 

diesel fuel, which is necessary for the 

proper functioning of certain fuel 

system components. There are a variety 

of fuel additives which can be used to 

restore diesel fuel’s lubricating quality. 

These additives are currently used to 

some extent in highway diesel fuel. We 

expect that the need for lubricity 

additives that will result from the 

proposed 500 ppm sulfur standard for 

NRLM diesel fuel will be similar to that 

for highway diesel fuel meeting the 

current 500 ppm sulfur cap standard.212

Industry experience indicates that the 

vast majority of highway diesel fuel 

meeting the current 500 ppm sulfur cap 

does not need lubricity additives. 

Therefore, we expect that the great 

majority of NRLM diesel fuel meeting 

the proposed 500 ppm sulfur standard 

will also not need lubricity additives. In 

estimating lubricity additive costs for 

500 ppm diesel fuel, we assumed that 

fuel suppliers will use the same 

additives at the same concentration as 

we projected will be used in 15 ppm 

highway diesel fuel. Based on our 

analysis of this issue for the 2007 

highway diesel fuel program, the cost 

per gallon of the lubricity additive is 

about 0.2 cents. This level of use is 

likely conservative, as the amount of 

lubricity additive needed increases 

substantially as diesel fuel is 

desulfurized to lower levels. We also 

project that only five percent of all 500 

ppm NRLM diesel fuel will require the 

use of a lubricity additive. Thus, we 

project that the cost of additional 

lubricity additives for the affected 500 

ppm NRLM diesel fuel will be 0.01 cent 

per gallon. See the Final RIA for more 

details on the issue of lubricity 

additives. We have no reason to expect 

that the implementation of today’s 

NRLM sulfur standards will impact 

diesel properties other than fuel 

lubricity in such a way as to require the 

use of additives.

We project that all NRLM fuel 

meeting a 15 ppm cap will require 

treatment with lubricity additives. Thus, 

the projected cost will be 0.2 cent per 

affected gallon of 15 ppm NRLM fuel. 

4. How EPA’s Projected Costs Compare 

to Other Available Estimates 

Historically, the price of highway 

diesel fuel meeting a 500 ppm sulfur 

cap has exceeded that of high sulfur 

diesel fuel, ranging from 0–5 cents per 

gallon from 1995–99 and averaging 2.2 

cents per gallon over this time period 

(see chapter 7 of the Final RIA). Fuel 

prices are often a function of market 

forces which might not reflect the cost 

of producing the fuel. Still, given this is 

a five-year average price difference, it is 

likely a reasonable indication of the cost 

of reducing highway diesel fuel sulfur to 

500 ppm. Once the small refiner 

provisions applicable to 500 ppm fuel 

expire in 2010, we project that the total 

cost of the 500 ppm NRLM fuel cap will 

be 2.4 cents per gallon, well within the 

range of the historical highway-high 

sulfur fuel price difference. This 

similarity exists despite changes in a 

number of factors. One, our projection 

of future natural gas costs are 

significantly higher than those existing 

during the above price comparison. 

Two, the refineries producing highway 

diesel fuel historically likely did so 

because they faced lower costs than 

those refineries continuing to produce 

high sulfur distillate. Three, 

desulfurization catalyst efficiency has 

improved dramatically since the 

highway units were installed and 

significant operating experience has 

been obtained on highway units. Four, 

inflation since the early 1990’s will have 

increased the cost of constructing the 

same hydrotreater. Five, and perhaps 

most importantly, the construction of 

some new hydrotreaters to produce 15 

ppm highway diesel fuel will allow the 

existing hydrotreaters to produce 500 

ppm NRLM fuel at no capital cost. Thus, 

there are at least five significant factors, 

two of which would tend to decrease 

costs and three of which would tend to 

increase costs. It is not surprising that 

these factors could counter-balance each 

other, leading to the conclusion that the 

500 ppm cap could be extended to 

NRLM fuel at roughly the same cost as 

for highway diesel fuel.

The only existing market for 15 ppm 

diesel fuel is a niche market for fleets 

and the prices for this fuel likely bear 

little resemblance to the costs of the 15 

ppm highway or NRLM caps. Thus, the 

only cost comparisons which can be 

made are those between engineering 

studies. One such study was performed 

by Mathpro for the Engine Manufactures 

Association (EMA). Mathpro estimated 

the cost of controlling the sulfur content 

of highway and NRLM fuel to levels 

consistent with both 500 ppm and 15 

ppm cap standards.213 A detailed 

evaluation of the Mathpro costs is 

presented in the Final RIA. There are a 

number of aspects of the study that 

make direct comparisons between its 

estimates and our cost estimates 

difficult. Nonetheless, a crude 

comparison of 15 ppm costs indicates 

that our average cost range of 5.7–5.9 

cent per gallon is quite similar to the 

5.4–6.6 cents per gallon cost range 

estimated by Mathpro.

The other available study of 15 ppm 

fuel costs was performed by Baker and 

O’Brien for API and submitted in 

response to the nonroad NPRM. Baker 

and O’Brien analyzed two NRLM fuel 

control scenarios, but neither one 

matched today’s final NRLM fuel 

program. The scenario closest to today’s 

program assumed that a NRLM fuel 

would be capped at 15 ppm in 2008. In 

this case, Baker and O’Brien projected 

that the refinery-specific cost of 15 ppm 

NRLM fuel would range from 4–17 cents 

per gallon. This is higher than our 

projected range of 2–14 cents per gallon. 

In addition, as described in the next 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39115

214Closure would occur at the beginning of the 

15 ppm highway fuel program, or 2006.

section, Baker and O’Brien projected 

that the volume of NRLM fuel produced 

at these costs would not fully satisfy 

NRLM fuel demand. Presumably, totally 

fulfilling NRLM fuel demand with 

domestic production would have cost 

more. 

Baker and O’Brien described portions 

of their cost methodology and indicated 

some general assumptions which they 

made during the study. However, the 

absence of detail prevents any detailed 

comparisons of their results to ours. It 

was clear from their report, though, that 

Baker and O’Brien made a number of 

pessimistic assumptions about refiners’

willingness to invest in desulfurization 

capacity and that this limited the 

number of refineries which they 

assumed would invest to meet the 

NRLM sulfur caps. This inevitably led 

to higher projected costs (and lower 

production volumes), than if all 

refineries had been considered. Thus, it 

is not surprising that they would derive 

slightly higher costs for a much smaller 

volume of fuel. A more detailed 

evaluation of the Baker and O’Brien cost 

estimates can be found in the Final RIA 

and RTC. 

5. Supply of Nonroad, Locomotive and 

Marine Diesel Fuel 

We have developed today’s NRLM 

fuel program to minimize its impact on 

the supply of distillate fuel. For 

example: We have split the control of 

NRLM fuel to 15 ppm sulfur into two 

steps, providing 8 years of leadtime for 

the final step. We are proposing to 

provide flexibility to refiners through 

the availability of banking and trading 

provisions. We have provided relief for 

small refiners and hardship relief for 

any qualifying refiner. We are also 

allowing 500 ppm diesel fuel generated 

in the distribution system to be sold as 

L&M fuel indefinitely. 

In the NPRM, we evaluated four 

possible reasons why refiners might 

reduce their production of NRLM fuel: 

(1) Chemical processing losses during 

the desulfurization process, (2) refiners 

might leave the NRLM fuel market, (3) 

refiners might stop operations altogether 

(i.e., shut down), and (4) refiners might 

remove certain blendstocks from the 

fuel pool to reduce desulfurization 

costs. In all four cases, we concluded 

that the answer was no, that the supply 

of NRLM fuel would likely remain 

adequate after implementation of the 

proposed fuel program. All of these 

findings started from the position that 

there would be adequate supply of 

diesel fuel after implementation of the 

2007 highway diesel fuel program. 

Several commenters, namely API and 

NPRA, took issue with the above four 

sets of arguments, as well as with our 

conclusion that refiners would not 

reduce NRLM fuel production. While 

not requesting any changes to the 2007 

highway diesel fuel program, they 

reiterated previous concerns that supply 

shortages could occur under the 

highway diesel fuel program, even 

without the added challenge of 

producing low sulfur NRLM fuel. The 

primary basis for their comments was a 

study they had sponsored by Baker and 

O’Brien, which evaluated the costs and 

likely supply impacts of the proposal. 

Baker and O’Brien evaluated two 

NRLM fuel scenarios: (1) A 15 ppm 

NRLM fuel cap starting in 2008, and (2) 

a 500 ppm NRLM fuel cap starting in 

2008, followed by a 15 ppm cap only for 

nonroad fuel in 2010. First, Baker and 

O’Brien projected that 13 refineries with 

a total crude oil capacity of 971,000 

barrels per day would close in response 

to the 2007 highway rule, roughly half 

in 2006 and half in 2010. (Total U.S. 

refining capacity is currently 16 million 

barrels per day.) Then Baker and 

O’Brien projected that adding a 15 ppm 

NRLM cap would cause all of the 

refineries shutting down in 2010 to 

close in 2008, plus one additional 

refinery (for a total of 14). Delaying the 

15 ppm cap until 2010 and leaving L&M 

fuel at 500 ppm reduced the number of 

refineries projected to close in 2008, but 

did not change Baker and O’Brien’s 

projection that 14 refineries would close 

by 2010. Given the fact that Baker and 

O’Brien projected the same number of 

refinery closures for scenarios #1 and 

#2, it is reasonable to assume that they 

would project similar results for today’s 

final NRLM fuel program.

TABLE VI.A–6.—PROJECTED REFINERY CLOSURES: API SPONSORED STUDY BY BAKER AND O’BRIEN

No. of refineries Lost crude capacity 

(1000 bbl/day) 

2008 2010 2008 2010 

2007 Highway Fuel Program ........................................................................................................... 214 8 13 504 971 

Plus One-Step 15 ppm NRLM Program .......................................................................................... 14 14 1043 1043 

Plus Two-Step NRLM Program ....................................................................................................... 12 14 924 1043 

As a result of these refinery closures, 

Baker and O’Brien projected shortfalls 

in 15 and 500 ppm supply domestic 

refiners. The net shortfalls are shown in 

table VI.A–7 below. Baker and O’Brien 

stated that imports would have to make 

up the shortfall, with potentially high 

price impacts.

TABLE VI.A–7.—PROJECTED SHORTFALL IN NEAR-TERM DIESEL FUEL SUPPLY

[1000 barrels per day] 

15 ppm Fuel 500 ppm Fuel 

2008 2010 2008 2010 

2007 Highway Fuel Program ........................................................................................................... 359 579 308 22 

Plus One-Step 15 ppm NRLM Program .......................................................................................... 684 930 165 0 

Plus Two-Step NRLM Program ....................................................................................................... 351 639 481 82 

39116 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

215Shifting NRLM fuel blendstocks to heating oil 

is essentially the same as leaving the NRLM market, 

which was discussed under Point #2 above.

To put these projected shortfalls in 

context, Baker and O’Brien projects total 

diesel fuel demand to be 3.3 million 

barrels per day in this timeframe 

(slightly lower than our own projection 

summarized above). Thus, these 

projected shortfalls total roughly 10–20 

percent of total diesel fuel demand, 

which if true, would be very significant. 

We evaluated the Baker and O’Brien 

study and their findings. Baker and 

O’Brien made very pessimistic 

assumptions regarding the likelihood 

that refiners would invest in 

desulfurization capacity. Their 

judgment that a refinery would close 

rather than invest also was apparently 

based only on what they perceived to be 

excessively high desulfurization costs. 

Baker and O’Brien presents no 

information regarding the location of 

these refineries, the competition they 

face, costs related to closing down, nor 

the profits that they would forego by 

closing. Baker and O’Brien also makes 

no mention of EPA’s special provisions 

for refiners facing economic hardship, 

nor the small refiner provisions. 

We believe that it is not possible to 

project refinery closures without 

considering these factors. This is 

supported by comments made in 

response to our proposal of the 2007 

highway diesel fuel program by 

Mathpro and the National Economic 

Research Associates. While we are 

aware of a couple of refineries that are 

being offered for sale and whose plans 

for producing low sulfur fuels are 

uncertain, we have no indications of as 

many as eight refineries closing in 2006 

in response to the highway fuel 

program. In addition, despite 

uncertainties at a few refineries, 

refiners’ pre-compliance reports for the 

highway fuel program indicate that they 

are planning to produce a sufficient 

supply of 15 and 500 ppm highway 

diesel fuel from 2006–2010. Therefore, 

there is ample evidence that Baker and 

O’Brien’s projections for the highway 

diesel fuel program are overly 

pessimistic. It therefore appears likely 

that their projection that the NRLM fuel 

program will cause an additional 

refinery to close is also overly 

pessimistic. The reader is referred to the 

RTC for a summary of these comments 

and our detailed response to them. 

In their comments, API also 

challenged our findings that refiners 

would maintain sufficient supply under 

the proposed NRLM fuel program. After 

a careful review of their comments and 

other information newly available since 

the NPRM, we do not believe that the 

arguments presented by API and NPRA 

justify changing our position that (1) 

chemical processing losses during the 

desulfurization process will be very 

small, (2) refiners will be unlikely to 

leave the NRLM fuel market, and (3) 

refiners are unlikely to shut down due 

to this rule. 

Regarding point #1, the distillate 

material lost during desulfurization, our 

position is that the amount lost is small 

(two percent), and most of it is lost in 

the form of naphtha which can be 

blended into gasoline. Refiners can then 

adjust their mix of gasoline and 

distillate production to compensate. API 

claimed that in the winter, refiners were 

already at maximum distillate 

production and could not shift any 

additional heavy gasoline material into 

the distillate pool. API did not present 

any evidence that this is in fact the case. 

The fact that some refiners actually 

crack distillate material into gasoline 

makes it difficult to accept their 

position.

Regarding point #2, refiners leaving 

the NRLM fuel market, we argued that 

the only high sulfur distillate market 

remaining after 2007 was heating oil. 

Heating oil demand is flat or declining 

over time. We project that over 30 

domestic refiners will still be able to 

produce heating oil after 2007, while 

other refiners will be able to produce 

sufficient quantities of NRLM fuel. If 

more refiners choose to produce heating 

oil, this market will be oversupplied 

and prices will drop significantly. 

Exporting high sulfur distillate is a 

possibility for some refiners, but this 

entails both transport costs, as well as 

relatively low prices overseas. Thus, a 

decision to not invest in NRLM fuel 

desulfurization has to be compared to 

the losses involved with the other 

options. API argued that some refiners 

face much higher desulfurization costs 

than others and this would lead those 

refiners to leave the NRLM fuel market. 

API did not estimate the losses that 

refiners would entail when they left the 

market. Studies performed for the 

highway fuel program indicate that 

these losses can be quite significant and 

inappropriate conclusions can be drawn 

if they are ignored. The highway 

program pre-compliance reports also 

indicate that some highway fuel refiners 

are planning on leaving the highway 

fuel market in 2006, while others will 

enter it for the first time. Decisions to 

stay in or leave the NRLM fuel market 

are analogous. We have no reason to 

believe refiners would approach this 

market any differently than the highway 

market. 

Regarding point #3, refineries shutting 

down, API again pointed towards the 

high costs faced by some refineries and 

the fact that a number of refineries have 

shut down over the past ten years. There 

have been a number of refinery closures 

over the past decade, though the trend 

has slowed considerably. API pointed 

towards two specific refineries which 

identified EPA’s gasoline and diesel fuel 

sulfur controls as prime reasons for their 

shutting down. A closer look at these 

situations showed that the future capital 

investment related to the sulfur controls 

could have been a contributing factor. 

However, these refineries faced many 

other challenges and the timing of their 

closure (2000 and 2001, respectively) 

showed that the EPA rules were not the 

direct cause. The refiner involved did 

not approach EPA concerning any relief 

from the rules’ requirements due to 

economic hardship. Thus, the 

connection between their closure and 

our sulfur controls appears even more 

tenuous. 

Another example of a refinery closure 

unrelated to desulfurization costs was 

Shell’s recent decision to close their 

refinery in Bakersfield, California. The 

reason was an insufficient supply of 

crude oil being produced locally. 

Analogous to a decision to leave the 

NRLM fuel market, shutting down 

completely involves the total loss of any 

profit being made on the production of 

other fuels. API presented no economic 

calculations or projections showing that 

it would be in the best interest of any 

refiner to shut down rather than invest 

in NRLM fuel desulfurization. 

This leaves point #4, that refiners 

might shift NRLM fuel blendstocks to 

other markets. This is really only an 

issue if the blendstocks are shifted to a 

non-distillate market.215 The most likely 

place that NRLM fuel blendstocks might 

be shifted is to the residual fuel market. 

In particular, heavy (material with high 

densities and high distillation 

temperatures) LCO and LCGO could be 

shifted to residual fuel using existing 

refining equipment. The heavy portions 

of these two blendstocks contain the 

greatest concentrations of sulfur which 

is the most difficult to remove. Shifting 

this material to residual fuel, which 

currently does not have a sulfur 

standard, would reduce the size and 

cost of desulfurization equipment 

needed to meet a 15 ppm cap. Or, it 

would increase the volume of 15 ppm 

NRLM fuel which could be produced in 

an existing hydrotreater.

To evaluate this possibility, we 

estimated the cost of processing LCO 

(the worse of the two blendstocks) into 

15 ppm diesel fuel for each domestic 

refinery. On average, desulfurizing LCO 

to 15 ppm sulfur cost 11.4 cents per 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39117

216Executive Order 13211, ‘‘Actions Concerning 

Regulations That Significantly Affect Energy 

Supply, Distribution, or Use’’ (66 FR 28355, May 

22, 2001).

gallon. However, in some cases, this 

cost reached 15 cents per gallon. The 

cost to process heavy LCO could be 

twice these amounts, since the 

concentration of both total sulfur and 

the most difficult to remove sulfur are 

concentrated in the heaviest molecules. 

A review of historic fuel prices 

showed that residual fuel is usually 

priced 25–30 cents per gallon less than 

diesel fuel. The highest incremental 

desulfurization costs for heavy LCO 

could potentially exceed this loss. Thus, 

a few refiners could find it economical 

to shift a portion of their LCO to the 

residual fuel market. The U.S. residual 

fuel market is small relative to the 

distillate fuel market, flat, and already 

being fulfilled. Worldwide, the residual 

fuel market is shrinking. Thus, it is 

unlikely that large volumes of LCO 

could leave the NRLM fuel market. 

However, we cannot rule out the 

possibility that some LCO, particularly 

that produced by capital-strapped 

refiners, could be shifted to residual 

fuel. To estimate the upper limit of this 

shift, we estimated the volume of heavy 

LCO produced by refineries whose LCO 

processing costs exceeded 12 cents per 

gallon and which were not owned by 

large, integrated oil companies or small 

refiners. This costly, heavy LCO 

represents 0.4 percent of total NRLM 

fuel demand, a very small volume. In 

this case, we would expect that this loss 

could easily be made up by increased 

imports of 15 ppm diesel fuel or 

domestic refiners facing lower 15 ppm 

NRLM fuel costs. 

Overall, we expect that domestic 

refiners will continue to produce 

sufficient supplies of NRLM fuel. The 

greatest potential for near term loss will 

be due to the possibility that some 

refiners might decide to limit their 

capital investment in desulfurization 

capacity by shifting some heavy LCO to 

the residual fuel market. 

Fuel-Only Control Programs: The 

potential supply impacts of a long-term 

500 ppm NRLM cap would necessarily 

be less than those of today’s final NRLM 

fuel program. In particular, 

desulfurizing ‘‘difficult’’ blendstocks, 

like LCO, to 500 ppm is not technically 

challenging and does not have the 

potential to cost more than would be 

lost in shifting LCO or heavy LCO to 

residual fuel. The capital investment to 

meet a 500 ppm cap is also half of that 

needed to meet a 15 ppm cap or less. 

Thus, the likelihood that raising this 

capital would prove difficult is much 

less. Given that we expect the final fuel 

program to have a very minimal impact 

on supply, a 500 ppm NRLM cap would 

be negligible.

The potential impact of a long-term 15 

ppm NRLM cap is the same as that for 

today’s final fuel program. 

6. Fuel Prices 

It is well known that it is difficult to 

predict fuel prices in absolute terms 

with any accuracy. The price of crude 

oil dominates the cost of producing 

gasoline and diesel fuel. Crude oil 

prices have varied by more than a factor 

of two in the past two years. In addition, 

unexpectedly warm or cold winters can 

significantly affect heating oil 

consumption, which affects the amount 

of gasoline produced and the amount of 

distillate material available for diesel 

fuel production. Economic growth, or its 

lack, affects fuel demand, particularly 

for diesel fuel. Finally, both planned 

and unplanned shutdowns of refineries 

for maintenance and repairs can 

significantly affect total fuel production, 

inventory levels and resulting fuel 

prices. 

Predicting the impact of any 

individual factor on fuel price is also 

difficult. The overall volatility in fuel 

prices limits the ability to determine the 

effect of a factor which changed at a 

specific point in time which might have 

led to the price change, as other factors 

continue to change over time. 

Occasionally, a fuel quality change, 

such as reformulated gasoline or a 500 

ppm cap on diesel fuel sulfur content, 

only affects a portion of the fuel pool. 

In this case, an indication of the impact 

on price can be inferred by comparing 

the prices of the two fuels at the same 

general location over time. However, 

this is still only possible after the fact, 

and cannot be done before the fuel 

quality change takes place. 

Because of these difficulties, EPA has 

generally not attempted to project the 

impact of its rules on fuel prices. 

However, in response to Executive 

Order 13211, we are doing so here.216

To reflect the inherent uncertainty in 

making such projections, we developed 

three projections for the potential 

impact of the proposed fuel program on 

fuel prices. The range of potential longterm price increases are shown in table 

VI.A–8. (Due to their similarity, we have 

grouped the potential price impacts for 

similar quality fuels in the 2010–2012 

and 2012–2014 time periods.) Shortterm price impacts are highly volatile, 

as are short-term swings in absolute fuel 

prices, and much too dependent on 

individual refiners’ decisions, 

unexpected shutdowns, etc. to be 

predicted even with broad ranges.

TABLE VI.A–8.—RANGE OF POSSIBLE TOTAL DIESEL FUEL PRICE INCREASES

[Cents per gallon] a

Maximum operating cost Average total 

cost 

Maximum total 

cost 

500 ppm Sulfur Cap: Nonroad, Locomotive and Marine Diesel Fuel (2007–2010)

PADDs 1 and 3 ............................................................................................................................ 2.9 1.8 4.5 

PADD 2 ........................................................................................................................................ 3.0 2.5 3.8 

PADD 4 ........................................................................................................................................ 3.7 3.5 6.1 

PADD 5 ........................................................................................................................................ 1.2 1.5 1.5 

15 ppm Sulfur Cap: NRLM Fuel (2010–2014)

PADDs 1 and 3 ............................................................................................................................ 5.6 5.7 9.4 

PADD 2 ........................................................................................................................................ 7.3 7.4 10.8 

PADD 4 ........................................................................................................................................ 7.9 12.6 13.6 

PADD 5 ........................................................................................................................................ 4.5 5.1 5.2 

39118 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

217 ‘‘Potential Impacts of Environmental 

Regulations on Diesel Fuel Prices,’’ NERA, for 

AAM, December 2000.

TABLE VI.A–8.—RANGE OF POSSIBLE TOTAL DIESEL FUEL PRICE INCREASES—Continued

[Cents per gallon] a

Maximum operating cost Average total 

cost 

Maximum total 

cost 

15 ppm Sulfur Cap: NRLM Fuel (fully implemented program: 2014 +)

PADDs 1 and 3 ............................................................................................................................ 7.7 6.3 9.8 

PADD 2 ........................................................................................................................................ 7.7 7.9 11.2 

PADD 4 ........................................................................................................................................ 8.3 13.0 13.9 

PADD 5 ........................................................................................................................................ 5.1 6.9 7.3 

Notes: aAt the current wholesale price of approximately $1.00 per gallon, these values also represent the percentage increase in diesel fuel 

price. 

The lower end of the range assumes 

that prices within a PADD increased to 

reflect the highest operating cost 

increase faced by any refiner in that 

PADD (please see the Final RIA for 

details on this methodology). This 

refiner with the highest operating cost 

will not recover any of his invested 

capital, but all other refiners will 

recover some or all of their investment. 

In this case, the price of NRLM fuel will 

increase in 2007 by 1–3 cents per gallon, 

depending on the area of the country. In 

2010, the price of 15 ppm NRLM fuel 

will increase a total of 3–7 cents per 

gallon. In 2014, under this pricing 

scenario, 15 ppm NRLM fuel prices will 

increase slightly, to 4–7 cents per 

gallon. The increase in 2014 is due to 

the expiration of the small refiner 

provisions, as well as the fact that 500 

ppm fuel created in the distribution 

system can no longer be sold to the 

land-based nonroad market. 

The mid-range estimate of price 

impacts assumes that prices within a 

PADD increase by the average refining 

and distribution cost within that PADD, 

including full recovery of capital (at 

seven percent per annum before taxes). 

Lower cost refiners will recover more 

than their capital investment, while 

those with higher than average costs 

recover less. Under this assumption, the 

price of NRLM fuel will increase in 

2007 by 1–3 cents per gallon, depending 

on the area of the country. In 2010, the 

price of 15 ppm NRLM fuel will 

increase a total of 4–11 cents per gallon. 

In 2014, under this pricing scenario, 15 

ppm NRLM fuel prices will increase 

slightly, to 5–11 cents per gallon. 

The upper end estimate of price 

impacts assumes that prices within a 

PADD increase by the maximum total 

refining and distribution cost of any 

refinery within that PADD, including 

full recovery of capital (at seven percent 

per annum before taxes). All other 

refiners will recover more than their 

capital investment. Under this 

assumption, the price of NRLM fuel will 

increase in 2007 by 1–4 cents per gallon, 

depending on the area of the country. In 

2010, the price of 15 ppm NRLM fuel 

will increase a total of 4–13 cents per 

gallon. In 2014, under this pricing 

scenario, 15 ppm NRLM fuel prices will 

increase further to 6–13 cents per 

gallon. All these potential price impacts 

for 500 and 15 ppm fuel, relative to 

those projected in the NPRM, reflect the 

differences in cost estimates discussed 

above. 

There are a number of assumptions 

inherent in all three of the above price 

projections. First, both the lower and 

upper limits of the projected price 

impacts described above assume that 

the refinery facing the highest 

compliance costs is currently the price 

setter in their market. This is a worse 

case assumption which is impossible to 

validate. Many factors affect a refinery’s 

total costs of fuel production. Most of 

these factors, such as crude oil cost, 

labor costs, age of equipment, etc., are 

not considered in projecting the 

incremental costs associated with lower 

NRLM diesel fuel sulfur levels. Thus, 

current prices may very well be set in 

any specific market by a refinery facing 

lower incremental compliance costs 

than other refineries. This point was 

highlighted in a study by the National 

Economic Research Associates (NERA) 

for AAM of the potential price impacts 

of EPA’s 2007 highway diesel fuel 

program.217 In that study, NERA 

criticized the above referenced study 

performed by Charles River Associates, 

et al. for API, which projected that 

prices will increase nationwide to 

reflect the total cost faced by the U.S. 

refinery with the maximum total 

compliance cost of all the refineries in 

the U.S. producing highway diesel fuel. 

To reflect the potential that the refinery 

with the highest projected compliance 

costs under the maximum price scenario 

is not the current price setter, we 

included the mid-point price impacts 

above. It is possible that even the lower 

limit price impacts are too high, if the 

conditions exist where prices are set 

based on operating costs alone. 

However, these price impacts are 

sufficiently low that considering even 

lower price impacts was not considered 

critical to estimating the potential 

economic impact of this rule.

Second, we assumed in some cases 

that a single refinery’s costs could affect 

fuel prices throughout an entire PADD. 

While this is a definite improvement 

over analyses which assume that a 

single refinery’s costs could affect fuel 

prices throughout the entire nation, it is 

still conservative. High cost refineries 

are more likely to have a more limited 

geographical impact on market pricing 

than an entire PADD. In many cases, 

high cost refiners continue to operate 

simply because they are in a niche 

location where transportation costs limit 

competition. 

Third, by focusing solely on the cost 

of desulfurizing NRLM diesel fuel, we 

assume that the production of NRLM 

diesel fuel is independent of the 

production of other refining products, 

such as gasoline, jet fuel and highway 

diesel fuel. However, this is clearly not 

the case. Refiners have some flexibility 

to increase the production of one 

product without significantly affecting 

the others, but this flexibility is quite 

limited. It is possible that the relative 

economics of producing other products 

could influence a refiner’s decision to 

increase or decrease the production of 

NRLM diesel fuel under today’s fuel 

program. It is this price response that 

causes fuel supply to match fuel 

demand. And, this response in turn 

could increase or decrease the price 

impact relative to those projected above. 

Fourth, all three of the above price 

projections are based on the projected 

cost for U.S. refineries of meeting the 

NRLM fuel sulfur caps. Thus, these 

price projections assume that imports of 

NRLM fuel, which are currently 

significant in the Northeast, are 

available at roughly the same cost as 

those for U.S. refineries in PADDs 1 and 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39119

218 ‘‘Cost of Diesel Fuel Desulfurization In Asian 

Refineries,’’ Estrada International Ltd., for the Asian 

Development Bank, December 17, 2002.

219See Heavy-duty 2007 Highway Final RIA, 

Chapter V.C.5, and ‘‘Study of the Effects of Reduced 

Diesel Fuel Sulfur Content on Engine Wear,’’ EPA 

report # 460/3–87–002, June 1987.

3. We have not performed any analysis 

of the cost of lower sulfur caps on diesel 

fuel produced by foreign refiners. 

However, there are reasons to believe 

that imports of 500 and 15 ppm NRLM 

diesel fuel will be available at prices in 

the ranges of those projected for U.S. 

refiners. 

One recent study analyzed the relative 

cost of lower sulfur caps for Asian 

refiners relative to those in the U.S., 

Europe and Japan.218 It concluded that 

costs for Asian refiners will be 

comparatively higher, due to the lack of 

current hydrotreating capacity at Asian 

refineries. This conclusion is certainly 

valid when evaluating lower sulfur 

levels for highway diesel fuels which 

are already at low levels in the U.S., 

Europe and Japan and for which 

refineries in these areas have already 

invested in hydrotreating capacity. It 

appears to be less valid when assessing 

the relative cost of meeting lower sulfur 

standards for NRLM fuels and heating 

oils which are currently at much higher 

sulfur levels in the U.S., Europe and 

Japan. All refineries face additional 

investments to remove sulfur from these 

fuels and so face roughly comparable 

control costs on a per gallon basis.

One factor arguing for competitively 

priced imports is the fact that refinery 

utilization rates are currently higher in 

the U.S. and Europe than in the rest of 

the world. The primary issue is whether 

overseas refiners will invest to meet 

tight sulfur standards for U.S., European 

and Japanese markets. Many overseas 

refiners will not invest, instead focusing 

on local, higher sulfur markets. 

However, many overseas refiners focus 

on exports. Both Europe and the U.S. 

are moving towards highway and 

nonroad diesel fuel sulfur caps in the 

10–15 ppm range. Europe is currently 

and projected to continue to need to 

import large volumes of highway diesel 

fuel. Thus, it seems reasonable to expect 

that a number of overseas refiners will 

invest in the capacity to produce some 

or all of their diesel fuel at these levels. 

Many overseas refiners also have the 

flexibility to produce 10–15 ppm diesel 

fuel from their cleanest blendstocks, as 

most of their available markets have less 

stringent sulfur standards. Thus, there 

are reasons to believe that some capacity 

to produce 10–15 ppm diesel fuel will 

be available overseas at competitive 

prices. If these refineries were operating 

well below capacity, they might be 

willing to supply complying product at 

prices which only reflect incremental 

operating costs. This could hold prices 

down in areas where importing fuel is 

economical. However, it is unlikely that 

these refiners could supply sufficient 

volumes to hold prices down 

nationwide. Despite this expectation, to 

be conservative, in the refining cost 

analysis conducted earlier in this 

chapter, we assumed no imports of 500 

ppm or 15 ppm NRLM diesel fuel. All 

500 ppm and 15 ppm NRLM fuel was 

produced by domestic refineries. This 

raised the average and maximum costs 

of 500 ppm and 15 ppm NRLM diesel 

fuel and increased the potential price 

impacts projected above beyond what 

would have been projected had we 

projected that 5–10 percent of NRLM 

diesel fuel will be imported at 

competitive prices. 

Fuel-Only Control Programs: We used 

the same methodology to estimate the 

potential price impacts for stand-alone 

500 ppm and 15 ppm NRLM fuel 

programs. The potential price impacts of 

long-term 500 ppm and 15 ppm NRLM 

caps would be the same as those shown 

in table VI.A–8 above for the 500 ppm 

NRLM cap in 2007 and for the 15 ppm 

NRLM cap in 2014 and beyond, 

respectively. 

B. Cost Savings to the Existing Fleet 

From the Use of Low Sulfur Fuel 

We estimate that reducing fuel sulfur 

to 500 ppm would reduce engine wear 

and oil degradation to the existing 

nonroad diesel equipment fleet and that 

a further reduction to 15 ppm sulfur 

would result in even greater reductions. 

This reduction in wear and oil 

degradation would provide a dollar 

savings to users of nonroad equipment. 

The cost savings would also be realized 

by the owners of future nonroad engines 

that are subject to the standards in this 

proposal. As discussed below, these 

maintenance savings have been 

conservatively estimated to be greater 

than 3 cents per gallon for the use of 15 

ppm sulfur fuel when compared to the 

use of today’s unregulated nonroad 

diesel fuel. A summary of the range of 

benefits from the use of low-sulfur fuel 

is presented in Table VI.B–1.219

TABLE VI.B–1.—ENGINE COMPONENTS POTENTIALLY AFFECTED BY LOWER SULFUR LEVELS IN DIESEL FUELa

Affected components Effect of lower sulfur Potential impact on engine system 

Piston Rings ...................................................... Reduced corrosion wear .................................. Extended engine life and less frequent rebuilds. 

Cylinder Liners ................................................... Reduced corrosion wear .................................. Extended engine life and less frequent rebuilds. 

Oil Quality .......................................................... Reduced deposits, reduced acid build-up, and 

less need for alkaline additives.

Reduce wear on piston ring and cylinder liner 

and less frequent oil changes. 

Exhaust System (tailpipe) .................................. Reduced corrosion wear .................................. Less frequent part replacement. 

Exhaust Gas Recirculation System ................... Reduced corrosion wear .................................. Less frequent part replacement 

Notes: aThe degree to which all of these benefits may occur for any specific engine will vary. For example, the impact of high sulfur fuel on 

piston rings, cylinder liners and oil quality are somewhat interdependent. To the extent an end-user lengthens the oil drain interval, the benefit of 

the low sulfur fuel on piston ring and cylinder liner wear will be lessened (though not eliminated). For users who do not alter oil drain intervals, 

the benefit of low sulfur fuel on extending piston ring and cylinder liner wear will be greater. The benefit of low sulfur fuel on reducing exhaust 

system and EGR system corrosion are independent of oil drain intervals. 

The monetary value of these benefits 

over the life of the equipment will 

depend upon the length of time that the 

equipment operates on low-sulfur diesel 

fuel and the degree to which engine and 

equipment manufacturers specify new 

maintenance practices and the degree to 

which equipment operators change 

engine maintenance patterns to take 

advantage of these benefits. For 

equipment near the end of its life in the 

2008 time frame, the benefits will be 

quite small. However, for equipment 

produced in the years immediately 

preceding the introduction of 500 ppm 

sulfur fuel, the savings would be 

substantial. Additional savings would 

39120 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

220For example, Appendix A of EPA 

Memorandum ‘‘Estimate of the Impact of Low 

Sulfur Fuel on Oil Change Intervals for Nonroad 

Diesel Equipment’’ contains a service bulletin from 

a nonroad diesel engine manufacturer. Copy of 

memo available in EPA Air Docket A–2001–28, 

item II–A–194. 221For example, Appendix C of EPA 

Memorandum ‘‘Estimate of the Impact of Low 

Sulfur Fuel on Oil Change Intervals for Nonroad 

Diesel Equipment’’, which indicates Caterpillar 

recommends owners use Scheduled Oil Sampling 

analysis as the best means for users to determine 

appropriate oil change intervals. Copy of memo 

available in EPA Air Docket A–2001–28, item II–A–

194.

be realized in 2010 when the 15 ppm 

sulfur fuel would be introduced.

We estimate the single largest savings 

would be the impact of lower sulfur fuel 

on oil change intervals. The RIA 

presents our analysis for the oil change 

interval extension which would be 

realized by the introduction of 500 ppm 

sulfur fuel in 2007, as well as the 

additional oil extension which would be 

realized with the introduction of 15 

ppm sulfur nonroad diesel fuel in 2010. 

As explained in the RIA, these estimates 

are based on our analysis of publically 

available information from nonroad 

engine manufacturers. Due to the wide 

range of diesel fuel sulfur which today’s 

nonroad engines may see around the 

world, engine manufacturers specify 

different oil change intervals as a 

function of diesel sulfur levels. We have 

used this data as the basis for our 

analysis. Taken together, when 

compared to today’s relatively high 

nonroad diesel fuel sulfur levels, we 

estimate the use of 15 ppm sulfur fuel 

will enable an oil change interval 

extension of 35 percent from today’s 

products.

We received comments on our 

estimated maintenance savings 

primarily from a number of end-user 

groups (e.g., equipment dealers, 

equipment rental organizations, farming 

organizations). Several commenters 

believed our estimates were too high, 

and one commenter believed the 

estimate was too low. However, all of 

the commenters who believed our cost 

savings estimates were too high 

provided no data to support their 

comments, beyond unsubstantiated 

opinions, nor did they comment on 

EPA’s substantial related technical 

analysis. 

The commenter who suggested the 

estimates were too low provided an 

example cost estimate for existing oil 

change intervals which, if used in our 

analysis, would have resulted in an 

estimated cost savings 4 times EPA’s 

estimate. We have not changed our 

estimate based on the comments we 

received. 

We present here a fuel operating cost 

savings attributed to the oil change 

interval extension in terms of a cents 

per gallon operating cost. We estimate 

that an oil change interval extension of 

31 percent, as would be enabled by the 

use of 500 ppm sulfur fuel in 2007, 

results in a fuel operating costs savings 

of 2.9 cents per gallon for the nonroad 

fleet. We estimate an additional cost 

savings of 0.3 cents per gallon for the oil 

change interval extension which would 

be enabled by the use of 15 ppm sulfur 

beginning in 2010. Thus, for the 

nonroad fleet as a whole, beginning in 

2010 nonroad equipment users can 

realize an operating cost savings of 3.2 

cents per gallon compared to today’s 

engine. This means that the end cost to 

the typical user for 15 ppm sulfur fuel 

is approximately 3.8 cents per gallon 

(7.0 cent per gallon cost for fuel minus 

3.2 cent per gallon maintenance 

savings). For a typical 100 horsepower 

nonroad engine this represents a net 

present value lifetime savings, 

excluding the higher fuel costs, of more 

than $500. 

These savings will occur without 

additional new cost to the equipment 

owner beyond the incremental cost of 

the low-sulfur diesel fuel, although 

these savings are dependent on changes 

to existing maintenance schedules. Such 

changes seem likely given the 

magnitude of the savings. There are 

many mechanisms by which end-users 

could become aware of the opportunity 

to extend oil drain intervals. First, it is 

typical practice for engine and 

equipment manufacturers to issue 

service bulletins regarding lubrication 

and fueling guidance for end-users.220

Manufacturers provide these service 

bulletins to equipment dealerships and 

large equipment customers (such as 

rental companies). In addition, the 

equipment and end-user industries have 

a number of annual conferences which 

are used to share information, including 

information regarding appropriate 

engine and equipment maintenance 

practices. The end-user conferences are 

also designed to help specific industries 

and business reduce operating costs and 

maximize profits, which would include 

information on equipment maintenance 

practices. There are trade journals and 

publications which provide information 

and advice to their users regarding 

proper equipment maintenance. Finally, 

some nonroad users perform routine oil 

sample analysis in order to determine 

appropriate oil drain intervals, and in 

some cases to monitor overall engine 

wear rates in order to determine engine 

rebuild needs.221 We have not estimated 

the value of the savings from all of the 

benefits listed in table VI.B–1, and 

therefore we believe the 3.2 cents per 

gallon savings is conservative as it only 

accounts for the impact of low sulfur 

fuel on oil change intervals. While some 

of these benefits are impacted by 

changes in oil change interval, a number 

are independent and not included in 

our cost savings estimate.

C. Engine and Equipment Cost Impacts 

The following sections briefly discuss 

the various engine and equipment cost 

elements considered for this final rule 

and present the total costs we have 

estimated. The reader is referred to the 

RIA for a complete discussion. 

Estimated engine and equipment costs 

depend largely on both the size of the 

piece of equipment and its engine, and 

on the technology package being added 

to the engine to ensure compliance with 

the new Tier 4 standards. The wide size 

variation (e.g., engines under 4 

horsepower through engines above 2500 

horsepower) and the broad application 

variation (e.g., lawn equipment through 

large mining trucks) that exists in the 

nonroad industry makes it difficult to 

present here an estimated cost for every 

possible engine and/or piece of 

equipment. Nonetheless, for illustrative 

purposes, we present some examples of 

engine and equipment cost impacts 

throughout this discussion. Note that 

the costs presented here are for those 

nonroad engines and equipment that are 

mobile nonroad equipment and are, 

therefore, subject to nonroad engine 

standards. These costs would not apply 

for that equipment that is stationary—

some portion of some equipment 

segments such as generator sets, pumps, 

compressors—and not subject to 

nonroad engine standards. The analysis 

summarized here is presented in detail 

in chapter 6 of the RIA. 

Note that the costs presented here do 

not reflect any savings that are expected 

to occur because of the engine ABT 

program and/or the equipment 

manufacturer transition program, which 

are discussed in sections III.A and B. 

These optional programs have the 

potential to provide significant savings 

for both engine and equipment 

manufacturers. As a result, we consider 

our cost estimates to be conservative, in 

the sense that they likely overstate total 

engine and equipment costs. 

In general, the final engine and 

equipment cost analysis is the same as 

that done for our proposal. We have 

made the following changes: 

• In response to a comment, we have 

increased our engine research and 

development (R&D) costs. In the 

proposal, we estimated the R&D 

expenditure that each engine 

manufacturer would make to comply 

with the Tier 4 standards. In response 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39121

222 In order to avoid inconsistencies in the way 

our emission reductions, and cost-effectiveness 

estimates are calculated, our cost methodology for 

engines and equipment relies on the same 

projections of new nonroad engine growth as those 

used in our emissions inventory projections. Our 

NONROAD emission inventory model includes 

estimates of future engine populations that are 

consistent with the future engine sales used in our 

cost estimates. The NONROAD model inputs 

include an estimate of what percentage of generator 

sets sold in the U.S. are ‘‘mobile’’ and, thus, subject 

to the nonroad standards, and what percentage are 

‘‘stationary’’ and not subject to the nonroad 

standards. These percentages vary by power 

category and are documented in ‘‘Nonroad Engine 

Population Estimates,’’ EPA Report 420–P–02–004, 

December 2002. For generator sets above 750 

horsepower, NONROAD assumes 100 percent are 

stationary and, therefore, not subject to the new 

nonroad standards. For generator sets under 750 

horsepower, we have assumed other percentages of 

mobile versus stationary. During our discussions 

with engine manufacturers after the proposal, it 

became apparent not only that our estimate for 

generator sets above 750 horsepower may not be 

correct and many are indeed mobile, but also that 

some of our estimates for generator sets above 750 

horsepower may also not be correct and many more 

than we estimate may indeed be mobile. If true, this 

increased percentage of mobile generator sets will 

be subject to the new nonroad standards. 

Unfortunately, we have not received sufficient data 

to make a conclusive change to the NONROAD 

model to include the potentially increased 

percentages of mobile generator sets and, therefore, 

for the above described purpose of maintaining 

consistency, we have not included their costs or 

their emissions reductions in our official estimates 

for this final rule (costs and emissions reductions 

for the current percentages in the NONROAD model 

are included in our estimates for the final rule). 

Instead, we present a sensitivity analysis in Chapter 

8 of the RIA that includes both an estimate of the 

costs and emissions reductions that would result 

from including a higher percentage of generator sets 

as mobile equipment and subject to the new 

standards.

to the comment, we have refined that 

analysis and increased our estimate of 

engine R&D by roughly 50 percent. We 

did not receive any other comments 

with respect to our estimates for engine 

R&D.

• Because the final standards for 

engines above 750 horsepower have 

changed from the proposed standards, 

we have made changes to the engine 

R&D expenditures attributed to those 

engines. For costing purposes, the NOX

portion of the engine R&D expenditures 

are no longer shared by engines above 

750 horsepower. This increases NOX

R&D attributed to other engines because 

a significant portion of engine R&D costs 

are costs shared across a wide range of 

products. We have also reduced the 

engine variable costs for engines above 

750 horsepower since we are no longer 

projecting that NOX adsorbers will be 

added to them.222 This has no impact on 

the engine variable costs for other 

engines. We have also reduced the 

equipment redesign costs for engines 

above 750 horsepower since less 

redesign effort is projected to 

accommodate only a catalyzed diesel 

particulate filter (CDPF). This has no 

impact on the redesign costs of other 

equipment. Lastly, we have decreased 

the equipment variable costs for engines 

above 750 horsepower for the same 

reason as was done for engine variable 

costs.

• We have changed the engine 

operating costs for engines above 750 

horsepower to reflect a different fuel 

economy impact than was associated 

with the proposed standards and to 

reflect the new timing for adding the 

CDPF and therefore incurring the 

maintenance costs associated with it. 

• We have included costs for 

additional cooling on engines adding 

cooled EGR systems (engines of 25 to 50 

horsepower and greater than 750 

horsepower). These costs include the 

larger radiator and/or engine cooling fan 

that may be required on engines 

expected to add cooled EGR to meet the 

new standards. In the proposal, we had 

estimated the costs for the EGR system 

but not the costs for additional cooling.

• We have expressed all costs in 2002 

dollars for the final rule rather than the 

proposal’s use of 2001 dollars. 

We received comments on other 

aspects of the proposed engine and 

equipment cost analysis that are not 

reflected in the final analysis. Some of 

the comments were: 

• Some commenters claimed that we 

had underestimated costs for engines 

under 75 horsepower, and in the 75 to 

100 horsepower range. For the engines 

under 75 horsepower, one commenter 

suggested the costs were higher than 

EPA estimated. Please see section 5.4.1 

of the Summary and Analysis of 

Comments for a detailed discussion of 

the comments and our response. In the 

75 to 100 horsepower range, one 

commenter suggested that we were 

incorrect in our assumption that those 

engines would have electronic fuel 

systems in the NRT4 baseline case, 

maintaining the electronic fuel systems 

would have to be added to these engines 

to comply with the Tier 4 standards 

and, therefore, are a cost of the Tier 4 

rule. From this premise, the commenter 

argued that the costs for 75 to 100 

horsepower engines will be 

disproportionately high. 

We disagree. In the proposal, we 

estimated that by 2012, engines in this 

power range would already have 

electronic fuel injection systems. This 

estimate was based on our engineering 

assessment of what technologies would 

be required to comply with the Tier 2 

and Tier 3 emission standards, as well 

as technical discussions we had with 

engine manufacturers regarding future 

product plans. Therefore, the costs of 

these electronic fuel injection systems 

are not attributable to the Tier 4 rule. 

Our assessment at proposal is consistent 

with our projections in the Tier 2/3 

rulemaking where we estimated costs 

for electronic fuel injection systems as 

a cost of complying with those 

standards. In the preamble to the 

proposed Tier 4 rule, we presented 

estimates of the penetration of various 

engine technologies into several power 

ranges, including 75 to 100 horsepower, 

based on engine manufacturers’ 2001 

model year certification data. See 68 FR 

28386, May 23, 2003. Since then, model 

year certification data for 2004 are 

available, and these data substantiate 

our earlier prediction. These model year 

2004 data represent implementation of 

the Tier 2 standards so these data 

illustrate the technologies engine 

manufacturers are using to comply with 

those standards. These data show that 

nearly 20 percent of the engines that 

will be produced in this power range 

will have electronically controlled fuel 

systems, while the model year 2001 data 

show no engines in this power range 

had electronic fuel systems. This 

dramatic increase in electronics as a 

result of the Tier 2 standards, let alone 

the Tier 3 standards, gives us 

confidence that our projections 

regarding 2012 are reasonable. Section 

4.1.4 of the RIA contains a detailed 

discussion of this information; see also 

the discussions in sections II.B.4.b.i and 

II.B.5 above. Thus, we continue to 

believe that we have properly attributed 

costs of electronic fuel systems to the 

Tier 3 rule, or, put another way, that the 

cost of an electronic fuel system is not 

a cost attributable to this Tier 4 rule for 

engines in the 75 to 100 horsepower 

category. Since the cost of electronic 

fuel systems is the essential difference 

in the costs we attribute to the Tier 4 

rule for these engines versus the costs 

the commenter would attribute, we 

therefore disagree with the comment 

and believe our estimates to be 

reasonable. See also section II.A.5 

above. 

• One commenter took exception to 

our method of amortizing fixed costs 

over a period of years following 

implementation of the new standards. 

The commenter suggested that we used 

such a method to imply to the regulated 

industries that they would not only 

recover their investments but would 

also make a gain on those investments. 

This is not the case. We use this method 

of amortization, briefly described here 

and more fully in the RIA, only to 

reflect the time value of money so that 

we can get a more accurate estimate of 

the cost to the companies. 

The Summary and Analysis of 

Comments document contains the 

39122 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

223 In the 2007 rule, we estimated a value of $35 

million in 1999 dollars. Here we have adjusted that 

value to express it in 2002 dollars.

details of all comments and our 

responses. 

1. Engine Cost Impacts 

Estimated engine costs are broken into 

fixed costs (for research and 

development, retooling, and 

certification), variable costs (for new 

hardware and assembly time), and lifecycle operating costs. Total operating 

costs include the estimated incremental 

cost for low-sulfur diesel fuel, any 

expected increases in maintenance costs 

associated with new emission control 

devices, any costs associated with 

increased fuel consumption, and any 

decreases in operating cost (i.e., 

maintenance savings) expected due to 

low-sulfur fuel. Cost estimates 

presented here represent an expected 

incremental cost of engines in the model 

year of their introduction. Costs in 

subsequent years will be reduced by 

several factors, as described below. All 

engine and equipment costs are 

presented in 2002 dollars since 

producer price indexes for 2003 were 

not available in time for use in this 

analysis. 

a. Engine Fixed Costs 

i. Engine and Emission Control Device 

R&D 

The technologies described in Section 

II represent those technologies we 

believe will be used to comply with the 

Tier 4 emission standards. For many 

manufacturers, these technologies are 

part of an ongoing research and 

development effort geared toward 

compliance with the 2007 heavy-duty 

diesel highway emission standards. The 

engine manufacturers making R&D 

expenditures toward compliance with 

highway emission standards will have 

to undergo some additional R&D effort 

to transfer emission control technologies 

to engines they wish to sell into the 

nonroad market. These R&D efforts will 

allow engine manufacturers to develop 

and optimize these new technologies for 

maximum emission-control 

effectiveness with minimum negative 

impacts on engine performance, 

durability, and fuel consumption.

Many nonroad engine manufacturers 

are not part of the ongoing R&D effort 

toward compliance with highway 

emissions standards because they do not 

sell engines into the highway market. 

Nonetheless, these manufacturers are 

expected to benefit from the R&D work 

that has already occurred and will 

continue through the coming years 

through their contact with highway 

manufacturers, emission control device 

manufacturers, and the independent 

engine research laboratories conducting 

relevant R&D. 

We project the use of several 

technologies for complying with the 

Tier 4 emission standards. We are 

projecting that NOX adsorbers and 

catalyzed diesel particulate filters 

(CDPFs) will be the most likely 

technologies applied by industry to 

meet our new emissions standards for 

engines above 75 horsepower. The fact 

that these technologies are being 

developed for implementation in the 

highway market before the Tier 4 

implementation dates, and the fact that 

engine manufacturers will have several 

years before implementation of the Tier 

4 standards, ensures that the 

technologies used to comply with the 

nonroad standards will undergo 

significant development before reaching 

production. This ongoing development 

could lead to reduced costs in three 

ways. First, we expect research will lead 

to enhanced effectiveness for individual 

technologies, allowing manufacturers to 

use simpler packages of emission 

control technologies than we would 

predict given the current state of 

development. Similarly, we anticipate 

that the continuing effort to improve the 

emission control technologies will 

include innovations that allow lowercost production. Finally, we believe that 

manufacturers will focus research 

efforts on any drawbacks, such as fuel 

economy impacts or maintenance costs, 

in an effort to minimize or overcome 

any potential negative effects. 

We anticipate that, in order to meet 

the Tier 4 standards, industry will 

introduce a combination of primary 

technology upgrades. Achieving very 

low NOX emissions will require basic 

research on NOX exhaust emission 

control technologies and improvements 

in engine management to take advantage 

of the new exhaust emission control 

system capabilities. The manufacturers 

are expected to address the challenge by 

optimizing the engine and new exhaust 

emission control system to realize the 

best overall performance. This will 

entail optimizing the engine and 

emission control system for both 

emissions and fuel economy 

performance in light of the presence of 

the new exhaust emission control 

devices and their ability to control 

pollutants previously controlled only 

via in-cylinder means or with exhaust 

gas recirculation. Since most research to 

date with exhaust emission control 

technologies for nonroad applications 

has focused on retrofit programs which 

typically add an exhaust emission 

control device without making engine 

control changes, there remains room for 

significant improvements by taking such 

a systems approach. The NOX adsorber 

technology in particular is expected to 

benefit from re-optimization of the 

engine management system to better 

match the NOX adsorber’s performance 

characteristics. The majority of the 

dollars we have estimated for research 

is expected to be spent on developing 

this synergy between the engine and 

NOX exhaust emission control systems. 

Therefore, for engines where we project 

use of both a CDPF and a NOX adsorber 

(i.e., 75 to 750 horsepower), we have 

attributed two-thirds of the R&D 

expenditures to NOX control, and onethird to PM control. 

As we mentioned earlier, we have 

further refined our estimate of engine 

R&D costs since our proposal. We have 

taken these R&D costs and have broken 

them into two components. The first of 

these components estimates the 

corporate R&D applicable across all 

engine lines. The second of these 

estimates the engine line by engine line 

R&D cost. The estimates of line by line 

R&D correlate to power range—$1 

million for under 75 horsepower engine 

lines, $3 million for 75 to 750 

horsepower engine lines, and $6 million 

for above 750 horsepower engine lines. 

We estimated these expenditures based 

on the confidential information 

provided by the commenter and our 

analysis of that information. The end 

result is consistent with the 

commenter’s suggested expenditure 

levels. We have applied these engineline R&D estimates only where CDPFs 

and/or CDPF/NOX adsorber systems are 

expected to be implemented (i.e., this 

R&D is not applied for the under 75 

horsepower engines in 2008 because the 

R&D already estimated for complying 

with those standards should not require 

the same effort to tailor it to each 

engine). We have also applied these 

estimates only for those engines without 

a highway counterpart (note that only 

16 of a total 133 nonroad engine lines 

had a highway counterpart). 

In the 2007 HD highway rule, we 

estimated that each engine manufacturer 

would expend $36.1 million for R&D to 

redesign their engines and apply 

catalyzed diesel particulate filters 

(CDPF) and NOX adsorbers.223 For their 

nonroad R&D efforts on engines where 

we project that compliance will require 

CDPFs and NOX adsorbers (i.e., 75 to 

750 horsepower) and on greater than 

750 horsepower engines requiring a 

CDPF, engine manufacturers that also 

sell into the highway market will incur 

some level of R&D effort but not at the 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39123

224 In the proposal, we estimated a value of $3.5 

million in 1999 dollars. Here we have adjusted that 

value to express it in 2002 dollars. 225 In the proposal, we estimated a value of $24.5 

million in 1999 dollars. Here we have adjusted that 

value to express it in 2002 dollars.

226 In the proposal, we estimated values of $1.2 

million and $8 million in 1999 dollars. Here we 

have adjusted those values to express them in 2002 

dollars.

227 In the proposal, we estimated values of 

$600,000 and $4 million in 1999 dollars. Here we 

have adjusted those values to express them in 2002 

dollars.

228 In the 2007 rule, we estimated a value of $1.6 

million in 1999 dollars. Here we have adjusted that 

value to express it in 2002 dollars.

level incurred for the highway rule. In 

many cases, the engines used by 

highway manufacturers in nonroad 

products are based on the same engine 

platform as those used in highway 

products. However, horsepower and 

torque characteristics are often different 

so some effort will have to be expended 

to accommodate those differences. For 

these manufacturers, we have estimated 

that they will incur an average R&D 

expense of $3.6 million 224 not 

including the nonroad engine line R&D 

noted above. This $3.6 million R&D 

expense will allow for the transfer of 

R&D knowledge from their highway 

experience to their nonroad engine 

product line. For the reasons stated 

above, two-thirds of this R&D is 

attributed to NOX control and one-third 

to PM control for 75 to 750 horsepower 

engines; for engines above 750 

horsepower, all of this R&D is attributed 

to PM control.

For those manufacturers that sell 

larger engines only into the nonroad 

market, and where we project those 

engines will add a CDPF and a NOX

adsorber (75 to 750 horsepower) or a 

CDPF-only (above 750 horsepower), we 

believe that they will incur an R&D 

expense nearing that incurred by 

highway manufacturers for the highway 

rule although not quite at the same 

level. Nonroad manufacturers will be 

able to learn from the R&D efforts 

already underway for both the highway 

rule and for the Tier 2 light-duty 

highway rule (65 FR 6698, February 10, 

2000). This learning could be done via 

seminars, conferences, and contact with 

highway manufacturers, emission 

control device manufacturers, and the 

independent engine research 

laboratories conducting relevant R&D. 

Therefore, for these manufacturers, we 

have estimated an average expenditure 

of $25.3 million 225 not including the 

nonroad engine line R&D noted above. 

This lower number—$25.3 million 

versus $36.1 million in the highway 

rule—reflects the transfer of knowledge 

to nonroad manufacturers that will 

occur from the many stakeholders in the 

diesel industry. Two-thirds of this R&D 

is attributed to NOX control and onethird to PM control.

Note that the $3.6 million and $25.3 

million estimates represent our estimate 

of the average R&D expected by 

manufacturers to gain knowledge about 

the anticipated emission control 

devices. These estimates will be 

different for each manufacturer—some 

higher, some lower—depending on 

product mix and the number of engine 

lines in their product line.

For those engine manufacturers 

selling smaller engines that we project 

will add a CDPF-only (i.e., 25 to 75 

horsepower engines in 2013), we have 

estimated that the average R&D they will 

incur will be roughly one-third that 

incurred by manufacturers conducting 

CDPF/NOX adsorber R&D. We believe 

this is a good estimate because CDPF 

technology is further along in its 

development than is NOX adsorber 

technology and, therefore, a 50/50 split 

is not appropriate. Using this estimate, 

the R&D incurred by manufacturers that 

already have been selling any engines 

into both the highway and the nonroad 

markets will be $1.2 million not 

including their nonroad engine line 

R&D, and the R&D for manufacturers 

selling engines into only the nonroad 

market will be roughly $8.3 million 226

not including their nonroad engine line 

R&D. All of this R&D is attributed to PM 

control.

For those engine manufacturers 

selling engines that we project will add 

only a DOC or make some engine-out 

modifications (i.e., engines under 75 

horsepower in 2008), we have estimated 

that the average R&D they will incur 

will be roughly one-half the amount 

estimated for their CDPF-only R&D. 

Using this estimate, the R&D incurred 

by manufacturers selling any engines 

into both the highway and nonroad 

markets will be roughly $600,000, and 

the R&D for manufacturers selling 

engines into only the nonroad market 

will be roughly $4.2 million.227 All of 

this R&D is attributed to PM control.

We have assumed that all R&D 

expenditures occur over a five year span 

preceding the first year any emission 

control device is introduced into the 

market. There is one exception to this 

assumption in that the expenditures for 

DOC-only R&D are assumed to occur 

over the four year span between the 

final rule and the 2008 standards. 

Where a phase-in exists (e.g., for NOX

standards on 75 to 750 horsepower 

engines), expenditures are assumed to 

occur over the five year span preceding 

the first year NOX adsorbers will be 

introduced, and then to continue during 

the phase-in years. The expenditures 

will be incurred in a manner consistent 

with the phase-in of the standard. All 

R&D expenditures are then recovered by 

the engine manufacturer over an 

identical time span following the 

introduction of the technology, with the 

exception that expenditures for DOConly R&D are recovered over a five year 

span rather than a four year span. We 

assume an opportunity cost of capital of 

seven percent for all R&D. We have 

apportioned these R&D costs across all 

engines that are expected to use these 

technologies, including those sold in 

other countries or regions that are 

expected to have similar standards. We 

have estimated the fraction of the U.S. 

sales to this total sales at 42 percent. 

Therefore, we have attributed this 

amount to U.S. sales. Note that all 

engine R&D costs for engines under 25 

horsepower have been attributed to U.S. 

sales since other countries are not 

expected to have similar standards on 

these engines. 

Using this methodology, we have 

estimated the total R&D expenditures 

attributable to the new standards at 

$323 million with $206 million spent on 

corporate R&D and $118 million spent 

on engine line R&D. For comparison, 

our proposal estimated $199 million for 

basic R&D and none for engine line 

R&D. The amount for corporate R&D is 

higher here solely due to the change to 

2002 dollars. 

ii. Engine-Related Tooling Costs 

Once engines are ready for 

production, new tooling will be 

required to accommodate the assembly 

of the new engines. We have indicated 

below where our tooling cost estimates 

have changed from the proposal. In the 

2007 highway rule, we estimated 

approximately $1.65 million per engine 

line for tooling costs associated with 

CDPF/NOX adsorber systems.228 For the 

nonroad Tier 4 standards, we have 

estimated that nonroad-only 

manufacturers will incur the same $1.65 

million per engine line requiring a 

CDPF/NOX adsorber system and that 

these costs will be split evenly between 

NOX control and PM control. For those 

systems requiring only a CDPF, we have 

estimated one-half that amount, or 

$825,000 per engine line. For those 

systems requiring only a DOC or some 

engine-out modifications, we have 

applied a one-half factor again, or 

$412,500 per engine line. Tooling costs 

for CDPF-only and for DOC engines are 

attributed solely to PM control. None of 

these estimates have changed since our 

proposal, with the exception of being 

39124 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

229 In the proposal we added a certification fee to 

this cost. In the final rule we have not included the 

certification fee because that cost will be accounted 

for in the certification fees rulemaking (see 67 FR 

51402 for the proposed rule). Including in the 

proposal was essentially double counting that fee. 

Similarly, if we were to include it in this final rule, 

we would be double counting that fee.

230Note that the transport refrigeration unit (TRU) 

test cycle is an optional duty cycle for steady-state 

certification testing specifically tailored to the 

operation of TRU engines. Likewise, the ramped 

modal cycles are available test cycles that can be 

used to replace existing steady-state test 

requirements for nonroad constant-speed engines, 

generally. Manufacturers of these engines who opt 

to use one of these test cycles would incur no new 

costs above those estimated here and may incur less 

cost.

231Note that the proposal incorrectly used a value 

of $10,500 for costs associated with the new test 

procedures. Here, we have corrected this error by 

using a value of $31,500. Note also that the proposal 

erroneously did not include certification costs 

associated with transient testing and the NTE for 

engines under 25 horsepower. We have corrected 

that error in the final analysis.

expressed in 2002 dollars. We received 

no comments on our tooling cost 

estimates.

For those manufacturers selling into 

both the highway and nonroad markets, 

we have estimated one-half the baseline 

tooling cost, or $825,000, for those 

engine lines requiring a CDPF/NOX

adsorber system. We believe this is 

reasonable since many nonroad engines 

are produced on the same engine line 

with their highway counterparts. For 

such lines, we believe very little to no 

tooling costs will be incurred. For 

engine lines without a highway 

counterpart, something approaching the 

$1.65 million tooling cost is applicable. 

For this analysis, we have assumed a 

50/50 split of engine product lines for 

highway manufacturers and, therefore, a 

50 percent factor applied to the $1.65 

million baseline. These tooling costs 

will be split evenly between NOX

control and PM control. For engine lines 

under 75 horsepower and above 750 

horsepower, we have used the same 

tooling costs as the nonroad-only 

manufacturers because these engines 

tend not to have a highway counterpart. 

Therefore, for those engine lines 

requiring only a CDPF (i.e., those 

between 25 and 75 horsepower and 

those above 750 horsepower), we have 

estimated a tooling cost of $825,000. 

Note that this is a change from the 

proposal for engines above 750 

horsepower; the proposal used the full 

$1.65 million since both a CDPF and a 

NOX adsorber were being projected. The 

tooling costs for DOC and/or engine-out 

engine lines has also been estimated to 

be $412,500. Tooling costs for CDPFonly and for DOC engines are attributed 

solely to PM control. With the exception 

of the greater than 750 horsepower 

change, none of these tooling estimates 

have changed since our proposal, with 

the exception of being expressed in 

2002 dollars. 

We expect engines in the 25 to 50 

horsepower range to apply EGR systems 

to meet the Tier 4 NOX standards for 

2013. For these engines, we have 

included an additional tooling cost of 

$41,300 per engine line, consistent with 

the EGR-related tooling cost estimated 

for 50–100 horsepower engines in our 

Tier 2/3 rulemaking. The EGR tooling 

costs are applied equally to all engine 

lines in that horsepower range 

regardless of the markets into which the 

manufacturer sells. We have applied 

this tooling cost equally because engines 

in this horsepower range tend not to 

have highway counterparts. Tooling 

costs for EGR systems are attributed 

solely to NOX control. 

We have also estimated some tooling 

costs for engines above 750 horsepower 

to meet the 2011 standards. We have 

estimated this amount at ten times the 

amount for 25 to 50 horsepower 

engines, or $413,000 per engine line. 

This cost was not in the proposal since 

NOX adsorbers were being projected for 

engines above 750 horsepower. We have 

applied this tooling to all engine lines 

above 750 horsepower, regardless of 

what markets into which a manufacturer 

sells, since such engines clearly have no 

highway counterpart. For the purpose of 

allocating costs, we have attributed this 

cost entirely to NOX control. Note that 

there is a new 2011 PM standard for 

engines above 750 horsepower. 

However, we believe that PM standard 

could be met via engine-out control 

which would result in no new tooling 

costs associated with that standard. 

We have applied all the above tooling 

costs to all manufacturers that appear to 

actually make engines. We have not 

eliminated joint venture manufacturers 

because these manufacturers will still 

need to invest in tooling to make the 

engines even if they do not conduct any 

R&D. We have assumed that all tooling 

costs are incurred one year in advance 

of the new standard and are recovered 

over a five year period following 

implementation of the new standard; all 

tooling costs include a capital 

opportunity cost of seven percent. As 

done for R&D costs, we have attributed 

a portion of the tooling costs to U.S. 

sales and a portion to sales in other 

countries expected to have similar 

levels of emission control. Note that all 

engine tooling costs for under 25 

horsepower engines have been 

attributed to U.S. sales since other 

countries are not expected to have 

similar standards on these engines. 

More information is contained in 

chapter 6 of the RIA. 

Using this methodology, we estimate 

the total tooling expenditures 

attributable to the new Tier 4 standards 

at $74 million. For comparison, our 

proposal estimated $67 million. The 

higher value here is a result of: 

Expressing values in 2002 dollars rather 

than 2001 dollars; attributing all under 

25 horsepower tooling costs to U.S. 

sales while the proposal attributed 42 

percent of those costs to U.S. sales; and, 

above 750 horsepower tooling is slightly 

higher because of the proposal’s phasein (50/50/50/100) of one set of standards 

while the final rule has two sets of 

standards. 

iii. Engine Certification Costs

The comments we received with 

respect to our estimated certification 

costs noted that we had underestimated 

costs associated with new test 

procedures, especially transient testing 

for engines above 750 horsepower. For 

the final rule, we have tripled the costs 

associated with new test procedures. 

Because we are not finalizing transient 

test procedures for engines above 750 

horsepower, comments about the cost of 

these engines certifying using the 

transient test are now moot. 

Manufacturers will incur more than 

the normal level of certification costs 

during the first few years of 

implementation because engines will 

need to be certified to the new emission 

standards using new test procedures (at 

least in some instances). Consistent with 

our recent standard setting regulations, 

we have estimated engine certification 

costs at $60,000 per new engine 

certification to cover existing testing 

and administrative costs.229 The 

$60,000 certification cost per engine 

family was used for 25 to 75 horsepower 

engines certifying to the 2008 standards. 

For 25 to 75 horsepower engines 

certifying to the 2013 standards, and for 

75 to 750 horsepower engines certifying 

to their new standards, we have added 

costs to cover the new test procedures 

for nonroad diesel engines (e.g., the 

transient test, the NTE); 230 these costs 

are estimated at $31,500 per engine 

family.231 For engines under 25 

horsepower, we have assumed (for cost 

purposes) that all engines will certify to 

the transient test and the NTE in 2008. 

We believe manufacturers may choose 

to do this rather than certifying all 

engines again in 2013 when the 

transient test and NTE requirements 

actually begin for those engines. This 

assumption results in higher 

certification costs in 2008 than if these 

engines certified only to the steady-state 

standard. However, we believe 

manufacturers may choose to do this 

because it would avoid the need to 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39125

232Note that the change to 2002 dollars had 

different effects on different pieces of hardware. We 

have used two different PPI adjustments in the 

analysis: one for motor vehicle catalytic converters 

which was used to adjust costs for DOCs, NOX

adsorbers, and CDPFs; and another for motor 

vehicle parts and accessories which was used for all 

other pieces of hardware. The former of these 

adjustments actually caused costs to decrease 

relative to the proposal while the latter caused costs 

to increase slightly.

recertify all engines under 25 

horsepower again in 2013. These 

certification costs—whether it be the 

$60,000 or the $91,500 per engine 

family—apply equally to all engine 

families for all manufacturers regardless 

of into what markets the manufacturer 

sells. For engines above 750 

horsepower, the certification costs used 

were $87,000 per family since these 

engines will not be certifying over the 

new transient test procedure. We have 

applied these certification costs to all 

U.S. sold engine families and then 

spread the total over U.S. sales. In other 

words, we have not presumed that 

certification conducted for U.S. engines 

would fulfill the certification 

requirements of other countries and 

have, therefore, not spread total costs 

over engine sales outside the U.S.

Applying these costs to each of the 

665 engine families as they are certified 

to a new emissions standard results in 

total costs of $91 million expended 

during implementation of the Tier 4 

standards. These costs are attributed to 

NOX and PM control consistent with the 

phase-in of the new emissions 

standards—where new NOX and PM 

standards are introduced together, the 

certification costs are split evenly; 

where only a new PM standard is 

introduced, the certification costs are 

attributed to PM only; where a NOX

phase-in becomes 100 percent in a year 

after full implementation of a PM 

standard, the certification costs are 

attributed to NOX only. All certification 

costs are assumed to occur one year 

prior to the new emission standard and 

are then recovered over a five year 

period following compliance with the 

new standard; all certification costs 

include a capital opportunity cost of 

seven percent. For comparison, our 

proposal estimated certification costs at 

$72 million. The increase here is a 

result of using a higher cost associated 

with the new test procedures than was 

used in the proposal. 

We also received comment that we 

should estimate certification costs based 

on use of the ABT program rather than 

based on the phase-in. Doing this would 

result in higher certification costs 

because all engine families would be 

certified in year one of the phase-in and 

all families would again be certified in 

the final year of the phase-in. In 

contrast, since we have based 

certification costs on the phase-in, all 

engine families are certified in year one 

(PM standards have no phase-in) and 

only half are again certified in the final 

year (the 50 percent not meeting the 

new NOX standard in year one). We 

have chosen not to estimate certification 

or any costs based on use of the ABT 

program (or the TPEM program) since it 

is so difficult to predict how this 

program will be used. Furthermore, we 

must remain consistent throughout our 

cost analysis so that, if we estimated 

certification costs based on use of the 

ABT program, we should also base 

engine variable costs and equipment 

variable costs on use of the ABT 

program. Doing so, we believe, would 

decrease engine variable costs since that 

is the primary reason manufacturers 

choose to make use of the ABT program. 

Since engine variable costs, as discussed 

below, are a much greater fraction of the 

overall program costs, we believe that 

we are being conservative by generating 

our costs based on use of the phase-in. 

Therefore, we believe that use of the 

ABT program (and the TPEM program) 

will provide substantial net savings to 

industry even though widespread use of 

ABT might cause certification costs to 

be higher. 

b. Engine Variable Costs 

This section summarizes the detailed 

analysis presented in chapter 6 of the 

RIA. For our analysis, we have used the 

2002 annual average costs for platinum 

and rhodium (the two platinum group 

metals (PGMs) we expect will be used) 

because we believe they represent a 

better estimate of the cost for PGM than 

other metrics. In the RIA, we present a 

cost sensitivity that estimates the 

recovery value of precious metals 

returned to the open market upon 

retirement of an aftertreatment device. 

We present that analysis to gauge the 

true social cost of these devices when 

new.

We have not made any changes to our 

engine variable costs as a result of 

public comments. Some commenters 

(engine manufacturers) claimed that we 

had underestimated these costs but did 

not provide any detailed information 

about where they believed we had erred 

or what they believed the costs should 

be. Other commenters (emission control 

device manufacturers) claimed that we 

had done a fair job with our estimates. 

Some commenters (equipment 

manufacturers) claimed that our 

assumptions with respect to baseline 

engine configurations were not accurate. 

However, as discussed earlier, based on 

our own engineering judgement and the 

positive comments of the engine 

manufacturers—who we consider a 

better source for such information than 

equipment manufacturers since engine 

manufacturers are the directly affected 

entities—we have maintained our 

original assumptions for baseline engine 

configurations. Further, our assumed 

Tier 4 baseline engine configurations are 

consistent with our assumed compliant 

technology packages for T2/3, and those 

packages included the things equipment 

manufacturers are claiming will not be 

present in the Tier 4 baseline. As a 

result, we have already considered the 

costs associated with reaching our Tier 

4 baseline engine configurations in the 

context of the T2/3 rule. 

We have made changes to engine 

variable costs to remain consistent with 

the final program—i.e., we have 

changed our greater than 750 

horsepower cost estimates since the 

final standards differ from those that 

were proposed. We have also changed 

the costs by expressing them in 2002 

dollars rather than 2001 dollars.232

i. NOX Adsorber System Costs 

The NOX adsorber system that we are 

anticipating will be used to comply with 

Tier 4 engine standards will be the same 

as that used for highway applications. In 

order for the NOX adsorber to function 

properly, a systems approach that 

includes a reductant metering system 

and control of engine A/F ratio is also 

necessary. Many of the new air handling 

and electronic system technologies 

developed in order to meet the Tier

2/3 nonroad engine standards can be 

applied to accomplish the NOX adsorber 

control functions as well (these costs 

were accounted for in our T2/3 rule). 

Some additional hardware for exhaust 

NOX or O2 sensing and for fuel metering 

will likely be required. The cost 

estimates include a DOC for clean-up of 

hydrocarbon emissions that occur 

during NOX adsorber regeneration 

events. We have also estimated that 

warranty costs will increase due to the 

application of this new hardware. 

Chapter 6 of the RIA contains the details 

for how we estimated costs associated 

with the new NOX control technologies 

required to meet the Tier 4 emission 

standards. These costs are estimated to 

increase engine costs by roughly $670 in 

the near-term for a 150 horsepower 

engine, and $2,040 in the near-term for 

a 500 horsepower engine. In the longterm, we estimate these costs to be $550 

and $1,650 for the 150 horsepower and 

500 horsepower engines, respectively. 

These costs may differ slightly from the 

proposal due to the adjustments to 2002 

dollars. Note that we have estimated 

costs for all engines in all horsepower 

39126 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

233This is particularly true with respect to 

engines above 750 horsepower where we believe 

that manufacturers may in fact use a wire mesh 

substrate rather than the SiC substrate we have 

costed and, indeed, we have based the level of the 

2015 PM standard on this use of wire mesh 

substrates (see section II.B.3.b). We have chosen to 

remain conservative in our cost estimates by 

assuming use of a SiC substrate for all engines.

234We refer here to PM standards. There also is 

a NOX+NMHC standard for 25–50 horsepower 

engines that takes effect in 2013 and is equivalent 

to the Tier 3 NOX+NMHC standard for 50–75 

horsepower engines (see section II.A).

ranges, and these estimates are 

presented in detail in the RIA. 

Throughout this discussion of engine 

and equipment costs, we present costs 

for a 150 and a 500 horsepower engine 

for illustrative purposes. 

ii. Catalyzed Diesel Particulate Filter 

(CDPF) Costs 

CDPFs can be made from a wide range 

of filter materials including wire mesh, 

sintered metals, fibrous media, or 

ceramic extrusions. The most common 

material used for CDPFs for heavy-duty 

diesel engines is cordierite. Here we 

have based our cost estimates on the use 

of silicon carbide (SiC) even though it 

is more expensive than other filter 

materials.233 We estimate that the CDPF 

systems will add $760 to engine costs in 

the near-team for a 150 horsepower 

engine and $2,710 in the near-term for 

a 500 horsepower engine. In the longterm, we estimate these CDPF system 

costs to be $580 and $2,070 for the 150 

horsepower and the 500 horsepower 

engines, respectively. These costs may 

differ slightly from the proposal due to 

the adjustments to 2002 dollars.

iii. CDPF Regeneration System Costs 

Application of CDPFs in nonroad 

applications may present challenges 

beyond those of highway applications. 

For this reason, we anticipate that some 

additional hardware beyond the diesel 

particulate filter itself may be required 

to ensure that CDPF regeneration 

occurs. For some engines this may be 

new fuel control strategies that force 

regeneration under some circumstances, 

while in other engines it might involve 

an exhaust system fuel injector to inject 

fuel upstream of the CDPF to provide 

necessary heat for regeneration under 

some operating conditions. We estimate 

the near-term costs of a CDPF 

regeneration system to be $200 for a 150 

horsepower engine and $330 for a 500 

horsepower engine. In the long-term, we 

estimate these costs at $150 and $250, 

respectively. These costs may differ 

slightly from the proposal due to the 

adjustments to 2002 dollars. 

iv. Closed-Crankcase Ventilation System 

(CCV) Costs

Today’s final rule eliminates the 

exemption that allows turbo-charged 

nonroad diesel engines to vent 

crankcase gases directly to the 

environment. Such engines are said to 

have an open crankcase system. We 

project that this requirement to close the 

crankcase on turbo-charged engines will 

force manufacturers to rely on 

engineered closed crankcase ventilation 

systems that filter oil from the blow-by 

gases prior to routing them into either 

the engine intake or the exhaust system 

upstream of the CDPF. We have 

estimated the initial cost of these 

systems to be roughly $30 for low 

horsepower engines and up to $90 for 

very high horsepower engines. These 

costs are incurred only by turbo-charged 

engines because today’s naturally 

aspirated engines already have CCV 

systems. These costs may differ slightly 

from the proposal due to the 

adjustments to 2002 dollars. 

v. Variable Costs for Engines Below 75 

Horsepower and Above 750 Horsepower 

The Tier 4 program includes 

standards for engines under 25 

horsepower that begin in 2008, and two 

sets of standards for 25 to 75 

horsepower engines—one set that begins 

in 2008 and another that begins in 

2013.234 The 2008 standards for all 

engines under 75 horsepower are of 

similar stringency and are expected to 

result in use of similar technologies (i.e., 

the possible addition of a DOC). The 

2013 standards for 25 to 75 horsepower 

engines are considerably more stringent 

than the 2008 standards and are 

expected to force the addition of a CDPF 

along with some other engine hardware 

to enable the proper functioning of that 

new technology. More detail on the mix 

of technologies expected for all engines 

under 75 horsepower is presented in 

section II.B.4 and 5. As discussed there, 

if changes are needed to comply, we 

expect manufacturers to comply with 

the 2008 standards through either 

engine-out improvements or through the 

addition of a DOC. From a cost 

perspective, we have projected that 

engines will add a DOC. Presumably, 

the manufacturer will choose the least 

costly approach that provides the 

necessary reduction. If engine-out 

modifications are less costly than a 

DOC, our estimate here is conservative. 

If the DOC proves to be less costly, then 

our estimate is representative of what 

most manufacturers will do. Therefore, 

we have assumed that, beginning in 

2008, all engines below 75 horsepower 

add a DOC. Note that this estimate is 

made more conservative since we have 

assumed this cost for all engines when, 

in fact, some engines below 75 

horsepower currently meet the Tier 4 

PM standard (for 2008) and will not, 

therefore, incur any incremental costs to 

meet it. We have estimated this added 

hardware to result in an increased 

engine cost of $143 in the near-term and 

$136 in the long-term for a 30 

horsepower engine. These costs may 

differ slightly from the proposal due to 

the adjustments to 2002 dollars.

We have also projected that some 

engines in the 25 to 75 horsepower 

range will have to upgrade their fuel 

systems to accommodate the CDPF. We 

have estimated the incremental costs for 

these fuel systems at roughly $870 for a 

three cylinder engine in the 25–50 

horsepower range, and around $450 for 

a four cylinder engine in the 50–75 

horsepower range. This difference 

reflects a different base fuel system, 

with the smaller engines assumed to 

have mechanical fuel systems and the 

larger engines assumed to already be 

electronic. The electronic systems will 

incur lower costs because they already 

have the control unit and electronic fuel 

pump. Also, we have assumed these 

fuel changes will occur for only direct 

injection (DI) engines; indirect injection 

engines (IDI) are assumed to remain IDI 

but to add more hardware as part of 

their CDPF regeneration system to 

ensure proper regeneration under all 

operating conditions. Such a 

regeneration system, described above, is 

expected to cost roughly twice that 

expected for DI engines, or around $320 

for a 30 horsepower IDI engine versus 

$160 for a DI engine. These costs may 

differ slightly from the proposal due to 

the adjustments to 2002 dollars. 

We have also projected that engines in 

the 25–50 horsepower range will add 

cooled EGR to comply with their new 

NOX standard in 2013. Additionally, we 

have estimated, for cost purposes, that 

engines above 750 horsepower will add 

cooled EGR to comply with their new 

NOX standard in 2011. This represents 

a conservative estimate since we do not 

necessarily anticipate that cooled EGR 

will be applied to all, if any, engines 

above 750 horsepower. Nonetheless, we 

do expect some changes to be made 

(most probably some form of engine-out 

emission control) and, consistent with 

our approach to costing DOCs for 

engines below 75 horsepower in 2008, 

we have conservatively costed cooled 

EGR for engines above 750 horsepower 

in 2011. We have estimated that the 

EGR system will add $100 in the nearterm and $70 in the long-term to the 

cost of a 30 horsepower engine, and 

$550 and $420, respectively, for engines 

above 750 horsepower. These costs may 

differ slightly from the proposal due to 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39127

235For example, see, ‘‘Learning Curves in 

Manufacturing,’’ Linda Argote and Dennis Epple, 

Science, February 23, 1990, Vol. 247, pp. 920–924.

the adjustments to 2002 dollars. To 

these costs, we have added costs 

associated with additional cooling that 

may be needed to reject the heat 

generated by the cooled EGR system or 

other in-cylinder technologies. These 

costs were not included in the proposal. 

Such additional cooling might take the 

form of a larger radiator and/or a larger 

or more powerful cooling fan. Based on 

cost estimates from our 

Nonconformance Penalty rule (67 FR 

51464), we have estimated that the costs 

associated with additional cooling will 

add $40 in the near-term and $30 in the 

long-term to the cost of a 30 horsepower 

engine, and $710 in the near-term and 

$560 in the long-term for engine above 

750 horsepower. Note that we are also 

projecting use of a CDPF for engines 

above 750 horsepower, as was discussed 

above.

We believe there are factors that will 

cause variable hardware costs to 

decrease over time, making it 

appropriate to distinguish between nearterm and long-term costs. Research in 

the costs of manufacturing has 

consistently shown that as 

manufacturers gain experience in 

production, they are able to apply 

innovations to simplify machining and 

assembly operations, use lower cost 

materials, and reduce the number or 

complexity of component parts.235 Our 

analysis, as described in more detail in 

the RIA, incorporates the effects of this 

learning curve by projecting that the 

variable costs of producing the lowemitting engines decreases by 20 

percent starting with the third year of 

production. For this analysis, we have 

assumed a baseline that represents such 

learning already having occurred once 

due to the 2007 highway rule (i.e., a 20 

percent reduction in emission control 

device costs is reflected in our near-term 

costs). We have then applied a single 

learning step from that point in this 

analysis. Additionally, manufacturers 

are expected to apply ongoing research 

to make emission controls more 

effective and to have lower operating 

costs over time. However, because of the 

uncertainty involved in forecasting the 

results of this research, we 

conservatively have not accounted for it 

in this analysis.

c. Engine Operating Costs 

We are projecting that a variety of 

new technologies will be introduced to 

enable nonroad engines to meet the new 

Tier 4 emissions standards. Primary 

among these are advanced emission 

control technologies and low-sulfur 

diesel fuel. The technology enabling 

benefits of low-sulfur diesel fuel are 

described in Section II, and the 

incremental cost for low-sulfur fuel is 

described in section VI.A. The new 

emission control technologies are 

themselves expected to introduce 

additional operating costs in the form of 

increased fuel consumption and 

increased maintenance demands. 

Operating costs are estimated in the RIA 

over the life of the engine and are 

expressed in terms of cents/gallon of 

fuel consumed. In section VI.C.3, we 

present these lifetime operating costs as 

a net present value (NPV) in 2002 

dollars for several example pieces of 

equipment. 

Total operating cost estimates include 

the following elements: the change in 

maintenance costs associated with 

applying new emission controls to the 

engines; the change in maintenance 

costs associated with low sulfur fuel 

such as extended oil change intervals; 

the change in fuel costs associated with 

the incrementally higher costs for low 

sulfur fuel, and the change in fuel costs 

due to any fuel consumption impacts 

associated with applying new emission 

controls to the engines. This latter cost 

is attributed to the CDPF and its need 

for periodic regeneration which we 

estimate may result in a one percent fuel 

consumption increase where a NOX

adsorber is also applied, or a two 

percent fuel consumption increase 

where no NOX adsorber is applied (refer 

to chapter 6, section 6.2.3.3 of the RIA). 

Maintenance costs associated with the 

new emission controls on the engines 

are expected to increase since these 

devices represent new hardware and, 

therefore, new maintenance demands. 

For CDPF maintenance, we have used a 

maintenance interval of 3,000 hours for 

smaller engines and 4,500 hours for 

larger engines and a cost of $65 through 

$260 for each maintenance event. For 

closed-crankcase ventilation (CCV) 

systems, we have used a maintenance 

interval of 675 hours for all engines and 

a cost per maintenance event of $8 to 

$48 for small to large engines. Offsetting 

these maintenance cost increases will be 

a savings due to an expected increase in 

oil change intervals because low sulfur 

fuel will be far less corrosive than is 

current nonroad diesel fuel. Less 

corrosion will mean a slower 

acidification rate (i.e., less degradation) 

of the engine lubricating oil and, 

therefore, more operating hours between 

needed oil changes. As discussed in 

section VI.B, the use of 15 ppm sulfur 

fuel can extend oil change intervals by 

as much as 35 percent for both new and 

existing nonroad engines and 

equipment. We have used a 35 percent 

increase in oil change interval along 

with costs per oil change of $70 through 

$400 to arrive at estimated savings 

associated with increased oil change 

intervals.

These operating costs are expressed as 

a cent/gallon cost (or savings). As a 

result, operating costs are directly 

proportional to the amount of fuel 

consumed by the engine. We have 

estimated these operating costs—fuelrelated refining and distribution costs, 

maintenance related costs, and fuel 

economy impacts—to be 5.4 cents/

gallon for a 150 horsepower engine and 

6.5 cents/gallon for a 500 horsepower 

engine. More detail on operating costs 

can be found in Chapter 6 of the RIA. 

The existing fleet will also benefit 

from lower maintenance costs due to the 

use of low sulfur diesel fuel. The 

operating costs for the existing fleet are 

discussed in section VI.B. We did 

receive comments with respect to our 

oil change maintenance savings 

estimates. These comments were 

address in section VI.B. We received no 

comments on our CDPF and CCV 

maintenance costs or our CDPF 

regeneration costs. 

2. Equipment Cost Impacts 

In addition to the costs directly 

associated with engines that incorporate 

new emission controls to meet new 

standards, costs will increase due to the 

need to redesign the nonroad equipment 

in which these engines are used. Such 

redesigns will probably be necessary 

due to the expected addition of new 

emission control systems, but could also 

occur if the engine has a different shape 

or heat rejection rate, or is no longer 

made available in the configuration 

previously used. We have accounted for 

these potential changes in establishing 

the lead time for the Tier 4 emissions 

standards. The transition flexibility 

provisions for equipment manufacturers 

that are included in this final rule are 

an element of that lead time. These 

flexibility provisions are described in 

detail in section III.B. 

In assessing the economic impact of 

the new emission standards, EPA has 

made a best estimate of the 

modifications to equipment that relate 

to packaging (installing engines in 

equipment engine compartments). The 

incremental costs for new equipment 

will be comprised of fixed costs (for 

redesign to accommodate new emission 

control devices) and variable costs (for 

new equipment hardware to affix the 

new emission control devices and for 

labor to install those emission control 

devices). Note that the fixed costs do not 

39128 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

236 ‘‘Meeting between Staff of Eagle Crusher 

Company, Inc., and EPA,’’ memorandum from Todd 

Sherwood to Air Docket A–2001–28, Docket Item 

IV–E–40, EDOCKET OAR–2003–0012–0868, March 

16, 2004.

237Note that the equipment redesign estimates, 

and all other equipment related costs, have been 

adjusted from the NPRM to express them in 2002 

dollars.

include certification costs because the 

equipment is not certified to emission 

standards. The engine is certified by the 

engine manufacturer; therefore, the 

related certification costs are counted as 

an engine fixed cost. We have also 

attributed all changes in operating costs 

(e.g., additional maintenance) to the cost 

estimates for engines. Included in 

section VI.C.3 is a discussion of several 

example pieces of equipment (e.g., skid/

steer loader, dozer, etc.) and the costs 

we have estimated for these specific 

example pieces of equipment. Full 

details of our equipment cost analysis 

can be found in chapter 6 of the RIA. All 

costs are presented in 2002 dollars. 

We have made only limited changes 

relative to the proposal with respect to 

our estimated equipment costs, as 

discussed below. We did receive 

comment that we underestimated costs 

for equipment redesign and for markups 

on equipment variable costs. The 

commenters making these claims 

relative to equipment redesign costs 

tended to be those that have relative 

high equipment sales volumes. Such 

manufacturers tend to expend levels 

higher than we estimated in our 

proposal for equipment redesign 

because they sell into highly 

competitive markets and they can 

spread costs over many units. However, 

some equipment manufacturers we have 

met with, most notably those with small 

sales volumes, do not appear to expend 

nearly the level we estimated in the 

proposal. These manufacturers tend to 

sell into markets with few competitors, 

produce machines by hand, and expend 

less redesign effort relative to a high 

sales volume manufacturer.236 Our goal 

in the proposal was to estimate the 

redesign costs spent by industry (i.e.,

the average cost per piece of equipment 

multiplied by all equipment resulting in 

an estimated total industry cost), rather 

than estimating the maximum cost to be 

spent by any particular manufacturer. 

As a result, our equipment redesign 

estimates per model may be too low for 

some manufacturers, but they are also 

too high for others. We believe this cost 

methodology provides as accurate an 

estimate as can be made. We have used 

the same methodology for the final cost 

estimates presented here.

As for the comments with respect to 

equipment variable costs, we did indeed 

include a markup of 29 percent and 

disagree with the commenter that a twoto-one markup would be more 

appropriate. Such a high markup on 

equipment variable costs is not 

sustainable in a competitive market, at 

least on average, and the commenter 

provided no data nor study that 

supported the comment. 

We have made minor changes to the 

proposed numbers to express them in 

2002 dollars and to reflect where the 

program has changed (i.e., greater than 

750 horsepower mobile machines). We 

have also attributed all under 25 

horsepower redesign costs to U.S. sales 

since we do not expect other countries 

to have similar emission standards for 

these engines/equipment. Lastly, we 

have corrected some minor errors made 

in the proposal in determining motive 

versus non-motive models and 

determining the number of unique 

equipment models needing redesign. 

We now estimate that a total of over 

4,500 equipment models will be 

redesigned as compared to the 

proposal’s estimate of just over 4,100 

equipment models. Further discussion 

of these changes can be found in 

Chapter 6 of the RIA. 

a. Equipment Fixed Costs 

As we noted in the proposal, the most 

significant changes anticipated for 

equipment redesign are changes to 

accommodate the physical changes to 

engines, especially for those engines 

that add PM traps and NOX adsorbers. 

The costs for engine development and 

the emission control devices are 

included as costs to the engines, as 

described above. Equipment 

manufacturers must still incur the effort 

and expense of integrating the engine 

and emissions control devices into the 

piece of equipment. Therefore, we have 

allocated extensive engineering time for 

this effort.

The costs we have estimated are based 

on engine power and whether an 

application is non-motive (e.g., a 

generator set) or motive (e.g., a skid 

steer loader). The designs we have 

considered to be non-motive are those 

that lack a propulsion system. In 

addition, the new emission standards 

for engines rated under 25 horsepower 

and the 2008 standards for 25–75 

horsepower engines are projected to 

require no significant equipment 

redesign beyond that done to 

accommodate the Tier 2 standards. As 

explained earlier, we expect that these 

engines will comply with the new Tier 

4 standards through either engine 

modifications to reduce engine-out 

emissions or through the addition of a 

DOC. We have projected that engine 

modifications will not affect the outer 

dimensions of the engine and that a 

DOC will replace the existing muffler. 

Therefore, either approach taken by the 

engine manufacturer should have 

limited to no impact on the equipment 

design. Nonetheless, we have 

conservatively estimated their redesign 

costs at $53,100 per model.237

A number of equipment 

manufacturers have shared detailed 

information with us regarding the 

investments made for Nonroad Tier 2 

equipment redesign efforts, as well as 

redesign estimates for significant 

changes such as installing a new engine 

design. These estimates range from 

approximately $53,100 for some lower 

powered equipment models to well over 

$1 million for high horsepower 

equipment with very challenging design 

constraints. We believe that the 

equipment redesign efforts undertaken 

for the T2/3 are representative of the 

effort that will be required for Tier 4 

because the changes needed are the 

same in nature—increasing available 

space within the machine to 

accommodate new hardware. We have 

based our Tier 4 estimates, in part, on 

that industry input and have estimated 

that equipment redesign costs will range 

from $53,100 per model for 25 

horsepower equipment up to $796,500 

per model for 300 horsepower 

equipment and above. For mobile 

machines greater than 750 horsepower, 

we have used a new redesign cost of 

$106,000 associated with the 2011 

standards which is consistent in scale 

with the estimate used for 25 to 50 

horsepower equipment that add both 

EGR and a CDPF in the 2013 timeframe. 

This estimate was not in the proposal. 

For this larger equipment, we have 

continued with an estimate of $796,500 

associated with the 2015 standards even 

though we project no need to 

accommodate a NOX adsorber. We have 

attributed only a portion of the 

equipment redesign costs to U.S. sales 

in a manner consistent with that taken 

for engine R&D costs and engine tooling 

costs. In addition, we expect 

manufacturers to incur some fixed costs 

to update service and operation manuals 

to address the maintenance demands of 

new emission control technologies and 

the new oil service intervals; we 

estimate these service manual updates 

to cost between $2,660 and $10,620 per 

equipment model. 

These equipment fixed costs (redesign 

and manual updates) were then 

allocated appropriately to each new 

model to arrive at a total equipment 

fixed cost of $828 million. We have 

assumed that these costs will be 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39129

238We are not analyzing a scenario involving just 

the engine standards because the nonroad engine 

standards involving advanced emissions control 

technologies require the use of the 15ppm fuel.

recovered over a ten year period with a 

seven percent opportunity cost of 

capital. By comparison, our proposal 

estimated equipment fixed costs at $698 

million. The costs are higher now 

because of the changes mentioned 

above—expressing costs in 2002 dollars; 

attributing all under 25 horsepower 

redesign costs to U.S. sales; and, 

correcting upward the number of 

equipment models to be redesigned. 

b. Equipment Variable Costs 

Equipment variable cost estimates are 

based on costs for additional materials 

to mount the new hardware (i.e.,

brackets and bolts required to secure the 

aftertreatment devices) and additional 

sheet metal assuming that the body 

cladding of a piece of equipment (i.e.,

the hood) might change to accommodate 

the aftertreatment system. Variable costs 

also include the labor required to install 

these new pieces of hardware. For 

engines above 75 horsepower—those 

expected to incorporate CDPF and NOX

adsorber technology—the amount of 

sheet metal is based on the size of the 

aftertreatment devices. 

For equipment of 150 horsepower and 

500 horsepower, respectively, we have 

estimated the costs to be roughly $60 to 

$150. Note that we have estimated costs 

for equipment in all horsepower ranges, 

and these estimates are presented in 

detail in the RIA. Throughout this 

discussion of engine and equipment 

costs, we present costs for a 150 and a 

500 horsepower engine for illustrative 

purposes. 

3. Overall Engine and Equipment Cost 

Impacts 

To illustrate the engine and 

equipment cost impacts we are 

estimating for the Tier 4 standards, we 

have chosen several example pieces of 

equipment and have presented the 

estimated costs for them. Using these 

examples, we can calculate the costs for 

a specific piece of equipment in several 

horsepower ranges and better illustrate 

the cost impacts of the new standards. 

These costs along with information 

about each example piece of equipment 

are shown in table VI.C–1. Costs 

presented are near-term and long-term 

costs for the final standards to which 

each piece of equipment will comply. 

Long-term costs are only variable costs 

and, therefore, represent costs after all 

fixed costs have been recovered and all 

projected learning has taken place. 

Included in the table are estimated 

prices for each piece of equipment to 

provide some perspective on how our 

estimated control costs relate to existing 

equipment prices.

TABLE VI.C–1.—NEAR-TERM AND LONG-TERM COSTS FOR SEVERAL EXAMPLE PIECES OF EQUIPMENT a

($2002, for the final emission standards to which the equipment must comply) 

Gen-Set Skid/steer 

loader 

Backhoe Dozer Ag tractor Dozer Off-highway 

truck 

Horsepower 9 hp 33 hp 76 hp 175 hp 250 hp 503 hp 1000 hp 

Incremental Engine & Equipment Cost ............... $120 $790 $1,200 $2,560 $1,970 $4,140 $4,670 

Long-Term ........................................................ 180 1,160 1,700 3,770 3,020 6,320 8,610 

Near-Term.

Estimated Equipment Price when New b ............. 4,000 20,000 49,000 238,000 135,000 618,000 840,000 

Incremental Operating Costs c ............................. ¥80 70 610 2,480 2,110 7,630 20,670 

Baseline Operating Costs (Fuel & Oil only) c ....... 940 2,680 7,960 27,080 23,750 77,850 179,530 

Notes: a Near-term costs include both variable costs and fixed costs; long-term costs include only variable costs and represent those costs that 

remain following recovery of all fixed costs. b ‘‘Price Database for New Nonroad Equipment,’’ memorandum from Zuimdie Guerra to EDOCKET 

OAR–2003–0012–0960. cPresent value of lifetime costs. 

More detail and discussion regarding 

what these costs and prices mean from 

an economic impact perspective can be 

found in section VI.E. 

D. Annual Costs and Cost Per Ton 

One tool that can be used to assess the 

value of the Tier 4 standards for NRLM 

fuel and nonroad engines is the costs 

incurred per ton of emissions reduced. 

This analysis involves a comparison of 

our new program to other measures that 

have been or could be implemented. As 

summarized in this section and detailed 

in the RIA, the program being finalized 

today represents a highly cost effective 

mobile source control program for 

reducing PM, NOX, and SO2 emissions. 

We have calculated the cost per ton of 

our Tier 4 program based on the net 

present value of all costs incurred and 

all emission reductions generated over a 

30 year time window following 

implementation of the program (i.e.,

calendar years 2007 through 2036). This 

approach captures all of the costs and 

emissions reductions from our new 

program including those costs incurred 

and emissions reductions generated by 

the existing fleet. The baseline for this 

evaluation is the existing set of fuel and 

engine standards (i.e., unregulated 

NRLM fuel and the Tier 2/Tier 3 

program). The 30 year time window 

chosen is meant to capture both the 

early period of the program when very 

few new engines that meet the new 

standards will be in the fleet, and the 

later period when essentially all engines 

will meet the new standards. 

We have analyzed the cost per ton 

reduced of several different scenarios. 

The costs and emissions reductions of 

each of these scenarios are presented in 

detail in chapter 8 of the RIA. Here, we 

present information of the cost and cost 

effectiveness for the following two 

scenarios: (1) The full NRLM fuel and 

nonroad engine program, meaning two 

steps of fuel control (to 500 ppm and 

then to 15 ppm) for both NR and L&M 

fuel and all of the nonroad engine 

standards; and, (2) the NRLM fuel-only 

program, meaning two steps of fuel 

control (to 500 ppm and then to 15 

ppm) for both NR and L&M fuel but 

without any new nonroad engine 

standards.238 For the first of these 

scenarios, the discussion illustrates the 

costs and relative cost effectiveness of 

the final NRT4 program to other 

programs. For the second of these 

scenarios, the discussion illustrates the 

costs and cost effectiveness associated 

with the fuel program as if implemented 

as a stand alone program without new 

engine standards.

In sections VI.D.1 and 2, we present 

the cost of the full NRLM fuel and 

nonroad engine program and the cost 

per ton of PM, NOX+NMHC, and SO2

reductions that will be realized. The 

analysis presented in sections VI.D.1 

and 2 represents the total Tier 4 

program for nonroad diesel engines and 

NRLM fuel being finalized today. In 

sections VI.D.3 and 4, we summarize the 

39130 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

cost for the NRLM fuel-only scenario 

and the cost per ton of PM and SO2

reductions that would be realized. 

1. Annual Costs for the Full NRLM Fuel 

and Nonroad Engine Program 

The costs of the full NRLM fuel and 

nonroad engine program include costs 

associated with both steps in the NRLM 

fuel program—the NR fuel reduction to 

500 ppm sulfur in 2007 and to 15 ppm 

sulfur in 2010 and the L&M fuel 

reduction to 500 ppm sulfur in 2007 and 

to 15 ppm sulfur in 2012. Also included 

are costs for the 2008 nonroad engine 

standards for engines less than 75 

horsepower, the 2013 standards for 25 

to 75 horsepower engines, and costs for 

the nonroad engine standards for 

engines above 75 horsepower. All 

maintenance and operating costs are 

included along with maintenance 

savings realized by both the existing 

fleet (nonroad, locomotive, and marine) 

and the new fleet of engines complying 

with the Tier 4 standards. 

Figure VI.D–1 presents these results. 

All capital costs for NRLM fuel 

production and nonroad engine and 

equipment fixed costs have been 

amortized at seven percent. The figure 

shows that total annual costs are 

estimated to be $50 million in the first 

year the new engine standards apply, 

increasing to a peak of $2.2 billion in 

2036 as increasing numbers of engines 

become subject to the new nonroad 

standards and an ever increasing 

amount of NRLM fuel is consumed. The 

net present value of the annualized 

costs over the period from 2007 to 2036 

is $27 billion using a 3 percent discount 

rate and $14 billion using a 7 percent 

discount rate.

2. Cost per Ton of Emissions Reduced 

for the Full NRLM Fuel and Nonroad 

Engine Program 

We have calculated the cost per ton of 

emissions reduced associated with the 

NRT4 engine and NRLM fuel program. 

The resultant cost per ton numbers 

depend on how the costs presented 

above are allocated to each pollutant. 

Therefore, we have carefully allocated 

costs according to the pollutants for 

which they are incurred. Where fuel 

changes occur in conjunction with new 

engine standards (engine standards 

enabled by those fuel changes), we 

allocate one-half of the fuel-related costs 

to fuel-derived emissions reductions 

(PM and SO2, with one-third of that half 

allocated to PM and two-thirds to SO2) 

and one-half to engine-derived 

emissions reductions (NOX+NMHC and 

PM, with that half split 50/50 between 

each pollutant). Where fuel changes 

occur without new engine standards on 

which fuel changes are premised (i.e., 

500ppm NRLM fuel and 15ppm L&M 

fuel), we have allocated costs associated 

with fuel-derived emissions reductions 

one-third to PM and two-thirds to SO2. 

We have allocated costs associated with 

engine-derived emissions reductions 

(i.e., engine/equipment costs) directly to 


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Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39131

the pollutant for which the cost is 

incurred. These engine and equipment 

cost allocations are noted throughout 

the discussion in section VI.C, and are 

detailed in full in chapter 8 of the RIA. 

We have calculated the costs per ton 

using the net present value of the 

annualized costs of the program through 

2036 and the net present value of the 

annual emission reductions through 

2036. We have also calculated the cost 

per ton of emissions reduced in the year 

2030 using the annual costs and 

emissions reductions in that year alone. 

This number represents the long-term 

cost per ton of emissions reduced. The 

cost per ton numbers include costs and 

emission reductions that will occur 

from the existing fleet (i.e., those pieces 

of nonroad equipment that were sold 

into the market prior to the new 

emission standards). These results are 

shown in Table VI.D–1 using both a 

three percent and a seven percent social 

discount rate.

TABLE VI.D–1.—TOTAL FUEL AND ENGINE PROGRAM 30 YEAR AGGREGATE COST PER TON AND LONG-TERM ANNUAL

COST PER TON

($2002) 

Pollutant 30 year discounted lifetime cost per ton at 3% 

30 year discounted lifetime cost per ton at 7% Long-term cost per ton 

in 2030 

NOX+NMHC ................................................................................. $1,010 $1,160 $680 

PM ................................................................................................ 11,200 11,800 9,300 

SOX .............................................................................................. 690 620 810 

3. Annual Costs for the NRLM Fuel-only 

Scenario 

Cent per gallon costs for the new 500 

ppm NRLM fuel, the new 500 ppm L&M 

fuel, the new 15 ppm NR fuel, and the 

new 15 ppm NRLM fuel were presented 

in section IV.A. Having this fuel will 

result in maintenance savings associated 

with increased oil change intervals for 

both the new and the existing fleet of 

nonroad, locomotive, and marine 

engines. These maintenance savings 

were discussed in section VI.B. There 

are no engine and equipment costs 

associated with the NRLM fuel-only 

scenario because new engine emissions 

standards are not included in that 

scenario. Figure VI.D–2 shows the 

annual costs associated with the NRLM 

fuel-only program. 

As can be seen in figure VI.D–1, the 

costs for refining and distributing the 

fuel range from $250 million in 2008 to 

nearly $1.3 billion in 2036. The increase 

in fuel costs in 2010 reflect the change 

to higher cost 15 ppm NR fuel. Fuel 

costs continue to grow as more fuel is 

consumed by the increasing number of 

engines and equipment. The fuel costs 

are largely offset by the maintenance 

savings that range from $250 million in 

2008 to $500 million in 2036. As a 

whole, the net cost of the program in 

each year ranges from a small net 

savings in 2008 to around $780 million 

in 2036. The net present value (i.e., the 

value in 2004) of the net costs 

associated with the NRLM fuel-only 

program during the 30 year period from 

2007 to 2036 is estimated at $9.2 billion 

using a 3 percent discount rate and $4.6 

billion using a 7 percent discount rate.

39132 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

4. Cost Per Ton of Emissions Reduced 

for the NRLM Fuel-Only Scenario 

The fuel-borne sulfur reduction under 

the NRLM fuel-only scenario will result 

in significant reductions of both SO2

and PM emissions. Since there are no 

new engine standards associated with 

the NRLM fuel-only scenario, the 

emissions reductions that result are 

entirely fuel-derived. Roughly 98 

percent of fuel-borne sulfur is converted 

to SO2 in the engine with the remaining 

two percent being exhausted as sulfate 

PM. We have allocated one-third of the 

costs of this program to PM control and 

two-thirds to SO2 control. This is 

consistent with the cost accounting we 

have used throughout our analysis in 

that costs associated with fuel-derived 

emissions reductions are attributed onethird to PM control and two-thirds to 

SO2 control. 

As discussed above, the 30 year net 

present value of costs associated with 

the fuel-only program are estimated at 

$9.2 billion using 3 percent discounting 

and $4.6 billion using 7 percent 

discounting. We have estimated the 30 

year net present value of the SO2

emission reductions at 5.7 million tons 

and PM emission reductions at 462,000 

tons using 3 percent discounting, 3.2 

million tons and 255,000 tons, 

respectively, using 7 percent 

discounting. 

Table VI.D–1 shows the cost per ton 

of emissions reduced as a result of the 

NRLM fuel-only scenario. The cost per 

ton numbers include costs and 

emissions reductions that will occur 

from both the new and the existing fleet 

(i.e., those pieces of nonroad equipment 

that were sold into the market prior to 

the new fuel standards) of nonroad, 

locomotive, and marine engines.

TABLE VI.D–2.—NRLM FUEL-ONLY SCENARIO—30-YEAR AGGREGATE COST PER TON AND LONG-TERM ANNUAL COST

PER TON

[$2002] 

Pollutant 30 year discounted lifetime cost per ton at 3% 

30 year discounted lifetime cost per ton at 7% Long-term cost per ton 

in 2030 

PM ................................................................................................ $6,600 $6,000 $7,900 

SO2 .............................................................................................. 1,070 970 1,270 


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Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39133

239While we did not include separate estimates 

of the number of premature deaths that would be 

avoided due to reductions in ozone levels, recent 

evidence has been found linking short-term ozone 

exposures with premature mortality independent of 

PM exposures. Recent reports by Thurston and Ito 

(2001) and the World Health Organization (WHO) 

support an independent ozone mortality impact, 

and the EPA Science Advisory Board has 

recommended that EPA reevaluate the ozone 

mortality literature for possible inclusion in the 

estimate of total benefits. Based on these new 

analyses and recommendations, EPA is sponsoring 

three independent meta-analyses of the ozonemortality epidemiology literature to inform a 

determination on inclusion of this important health 

endpoint. Upon completion and peer-review of the 

meta-analyses, EPA will make its determination on 

whether and how benefits of reductions in ozonerelated mortality will be included in the benefits 

analysis for future rulemakings.

We also considered the cost per ton of 

the NRLM fuel-only scenario without 

including the expected maintenance 

savings associated with low sulfur fuel. 

Without the maintenance savings, the 

30 year discounted cost per ton of PM 

reduced would be $11,800 and of SO2

reduced would be $1,900 using 3 

percent discounting and $11,200 and 

$1,800, respectively, using 7 percent 

discounting. More detail on how the 

costs and cost per ton numbers 

associated with the NRLM fuel-only 

scenario were calculated can be found 

in the RIA. 

5. Comparison With Other Means of 

Reducing Emissions 

In comparison with other emissions 

control programs, we believe that the 

Tier 4 programs represent a cost 

effective strategy for generating 

substantial NOX+NMHC, PM, and SO2

reductions. This can be seen by 

comparing the cost per ton of emissions 

reduced by the NRLM fuel-only scenario 

(i.e., reducing fuel sulfur to 500 ppm in 

2007 and 15 ppm in 2010 without any 

new nonroad engine standards) and the 

cost per ton of emissions reduced by the 

full NRLM fuel and nonroad engine 

program (i.e., fuel control and new 

engine standards) with a number of 

standards that EPA has adopted in the 

past. Tables VI.D–3 and VI.D–4 

summarize the cost per ton of several 

past EPA actions to reduce emissions of 

NOX+NMHC and PM from mobile 

sources, all of which were considered 

by EPA to be appropriate.

TABLE VI.D–3.—NRT4 COST PER

TON COMPARISON TO PREVIOUS

MOBILE SOURCE PROGRAMS FOR

NOX + NMHC 

Program $/ton 

Tier 4 Nonroad Diesel (full 

program) ............................ 1,010 

Tier 2 Nonroad Diesel .......... 630 

Tier 3 Nonroad Diesel .......... 430 

Tier 2 vehicle/gasoline sulfur 1,400–2,350 

2007 Highway HD ................ 2,240 

2004 Highway HD ................ 220–430 

Tier 1 vehicle ........................ 2,150–2,910 

NLEV .................................... 2,020 

Marine SI engines ................ 1,220–1,930 

On-board diagnostics ........... 2,410 

Marine CI engines ................ 30–190 

Large SI Exhaust .................. 80 

Recreational Marine ............. 670 

Note: Costs adjusted to 2002 dollars using 

the Producer Price Index for Total Manufacturing Industries. 

TABLE VI.D–4. ‘‘NRT4 COST PER

TON COMPARISON TO PREVIOUS

MOBILE SOURCE PROGRAMS FOR

PM 

Program $/ton 

Tier 4 Nonroad Diesel (full 

program) ............................ 11,200 

Tier 4 NRLM fuel-only (fuelonly scenario) .................... 6,800 

Tier 1/Tier 2 Nonroad Diesel 2,390 

2007 Highway HD ................ 14,180 

Marine CI engines ................ 4,040–5,440 

1996 urban bus .................... 12,780–20,450 

Urban bus retrofit/rebuild ...... 31,530 

1994 highway HD diesel ...... 21,780–25,500 

Note: Costs adjusted to 2002 dollars using 

the Producer Price Index for Total Manufacturing Industries. 

To compare the cost per ton of SO2

emissions reduced, we looked at the 

cost per ton for the Title IV (acid rain) 

SO2 trading programs. This information 

is found in EPA report 430/R–02–004, 

‘‘Documentation of EPA Modeling 

Applications (V.2.1) Using the 

Integrated Planning Model’’, in Figure 

9.11 on page 9–14 (www.epa.gov/

airmarkets/epa-ipm/

index.html#documentation). The SO2

cost per ton results of the full Tier 4 

program presented in table VI.D–2 

compare very favorably with the 

program shown in table VI.D–5.

TABLE VI.D–5.—NRT4 COST PER

TON COMPARISON TO SO2 FROM

BOTH THE EPA BASE CASE 2000 

FOR THE TITLE IV SO2 TRADING

PROGRAMS AND THE PROPOSED

INTERSTATE AIR QUALITY RULE

Program $/ton 

Tier 4 Nonroad Diesel (full 

program).

$690 

Tier 4 Nonroad Diesel (fuelonly scenario).1,070 

Title IV SO2 Trading Programs.490 in 2010 to 

610 in 2020 

Interstate Air Quality Rule 

(average cost).

730 in 2010 to 

830 in 2015 

Note: Costs adjusted to 2002 dollars using 

the Producer Price Index for Total Manufacturing Industries. 

As the above comparisons show, both 

the NRLM fuel-only scenario, when 

viewed by itself, and the combination of 

NRLM fuel and nonroad engine 

standards, are both cost effective 

strategies to achieve the associated 

emissions reductions. 

E. Do the Benefits Outweigh the Costs 

of the Standards? 

Our analysis of the health and 

environmental benefits to be expected 

from this final rule are presented in this 

section. Briefly, the analysis projects 

major benefits throughout the period 

from initial implementation of the rule 

over a 30 year period through 2036. As 

described below, thousands of deaths 

and other serious health effects would 

be prevented, yielding a net present 

value in 2004 of those benefits we could 

monetize of approximately $805 billion 

dollars using a 3 percent discount rate 

and $352 billion using a 7 percent 

discount rate. These benefits exceed the 

net present value of the social cost of 

the proposal ($27 billion using a 3 

percent discount rate and $14 billion 

using a 7 percent discount rate) by $780 

billion using a 3 percent discount rate 

and $340 billion using a 7 percent 

discount rate. 

1. What Were the Results of the BenefitCost Analysis? 

Table VI.E–1 presents the primary 

estimate of reduced incidence of PMrelated health effects for the years 2020 

and 2030. 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 PMrelated benefits associated with the 

reduction of several health effects. In 

2030, we estimate that there will be 

12,000 fewer fatalities in adults 239 and 

20 fewer fatalities in infants per year 

associated with fine PM, and the rule 

will result in about 5,600 fewer cases of 

chronic bronchitis, 8,900 fewer 

hospitalizations (for respiratory and 

cardiovascular disease combined), and 

result in 1 million days per year when 

adults miss work because of their 

respiratory symptoms and 5.9 million 

days of when adults must restrict their 

activity due to respiratory illness. We 

also estimate substantial health 

improvements for children from 

reduced upper and lower respiratory 

illness, acute bronchitis, and asthma 

39134 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

240Our PM-related estimate in 2030 incorporates 

significant reductions of 160,000 fewer cases of 

lower respiratory symptoms in children ages 7 to 

14 each year, 120,000 fewer cases of upper 

respiratory symptoms (similar to cold symptoms) in 

asthmatic children each year, and 13,000 fewer 

cases of acute bronchitis in children ages 8 to 12 

each year. In addition, we estimate that this rule 

will reduce almost 6,000 emergency room visits for 

asthma attacks in children each year from reduced 

exposure to particles. Additional incidents would 

be avoided from reduced ozone exposures. Asthma 

is the most prevalent chronic disease among 

children and currently affects over seven percent of 

children under 18 years of age.

attacks.240 We were unable to quantify 

the benefits related to ozone and other 

pollutants for the final rule, although we 

do present some preliminary ozone 

modeling in Chapter 9 of the RIA.

Table VI.E–2 presents the total 

monetized benefits for the years 2020 

and 2030. This table also indicates with 

a ‘‘B’’ those additional health and 

environmental effects which we were 

unable to quantify or monetize. These 

effects are additive to estimate of total 

benefits, and EPA believes there is 

considerable value to the public of the 

benefits that could not be monetized. A 

full listing of the benefit categories that 

could not be quantified or monetized in 

our estimate are provided in table VI.E–

6. 

In summary, EPA’s primary estimate 

of the benefits of the rule are $83 + B 

billion in 2030 using a 3 percent 

discount rate and $78 + B billion using 

a 7 percent discount rate. In 2020, total 

monetized benefits are $42 + B billion 

using a 3 percent discount rate and $41 

+ B billion using a 7 percent discount 

rate. These estimates account for growth 

in real gross domestic product (GDP) per 

capita between the present and the years 

2020 and 2030. As the table indicates, 

total benefits are driven primarily by the 

reduction in premature fatalities each 

year, which account for over 90 percent 

of total benefits.

TABLE VI.E–1.—REDUCTIONS IN INCIDENCE OF PM-RELATED ADVERSE HEALTH EFFECTS ASSOCIATED WITH THE FINAL

NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PROGRAM

Endpoint 

Avoided incidence a (cases/year) 

2020 2030 

Premature mortality b: Long-term exposure (adults, 30 and over) .............................................................. 6,500 12,000 

Infant mortality (infants under one year) ..................................................................................................... 15 22 

Chronic bronchitis (adults, 26 and over) ..................................................................................................... 3,500 5,600 

Non-fatal myocardial infarctions (adults, 18 and older) .............................................................................. 8,700 15,000 

Hospital admissions—Respiratory (adults, 20 and older) c ......................................................................... 2,800 5,100 

Hospital admissions—Cardiovascular (adults, 20 and older) d ................................................................... 2,300 3,800 

Emergency Room Visits for Asthma (18 and younger) .............................................................................. 3,800 6,000 

Acute bronchitis (children, 8–12) ................................................................................................................. 8,400 13,000

Asthma exacerbations (asthmatic children, 6–18) ...................................................................................... 120,000 200,000 

Lower respiratory symptoms (children, 7–14) ............................................................................................. 100,000 160,000 

Upper respiratory symptoms (asthmatic children, 9–11) ............................................................................ 76,000 120,000 

Work loss days (adults, 18–65) ................................................................................................................... 670,000 1,000,000 

Minor restricted activity days (adults, age 18–65) ...................................................................................... 4,000,000 5,900,000 

Notes: a Incidences are rounded to two significant digits. bPremature mortality associated with ozone is not separately included in this analysis. c Respiratory hospital admissions for PM includes admissions for COPD, pneumonia, and asthma. d Cardiovascular hospital admissions for PM 

includes total cardiovascular and subcategories for ischemic heart disease, dysrhythmias, and heart failure. 

TABLE VI.E–2.—EPA PRIMARY ESTIMATE OF THE ANNUAL QUANTIFIED AND MONETIZED BENEFITS ASSOCIATED WITH IMPROVED PM AIR QUALITY RESULTING FROM THE FINAL NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PROGRAM

Endpoint 

Monetary Benefits a, b (millions 2000$, 

Adjusted for Income Growth) 

2020 2030 

Premature mortality c: (adults, 30 and over) 

3% discount rate ................................................................................................................................... $41,000 $77,000 

7% discount rate ................................................................................................................................... 38,000 72,000 

Infant mortality (infants under one year) ..................................................................................................... 97 150 

Chronic bronchitis (adults, 26 and over) ..................................................................................................... 1,500 2,400 

Non-fatal myocardial infarctions d

3% discount rate ................................................................................................................................... 750 1,200 

7% discount rate ................................................................................................................................... 720 1,200 

Hospital Admissions from Respiratory Causes e ......................................................................................... 49 92 

Hospital Admissions from Cardiovascular Causes f .................................................................................... 51 83 

Emergency Room Visits for Asthma ........................................................................................................... 1.1 1.7 

Acute bronchitis (children, 8–12) ................................................................................................................. 3.2 5.2 

Asthma exacerbations (asthmatic children, 6–18) ...................................................................................... 5.7 9.2 

Lower respiratory symptoms (children, 7–14) ............................................................................................. 1.7 2.7 

Upper respiratory symptoms (asthmatic children, 9–11) ............................................................................ 2.0 3.2 

Work loss days (adults, 18–65) ................................................................................................................... 92 130 

Minor restricted activity days (adults, age 18–65) ...................................................................................... 210 320 

Recreational visibility (86 Class I Areas) ..................................................................................................... 1,000 1,700 

Monetized Total g.

3% discount rate ........................................................................................................................... 44,000+B 83,000+B 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39135

TABLE VI.E–2.—EPA PRIMARY ESTIMATE OF THE ANNUAL QUANTIFIED AND MONETIZED BENEFITS ASSOCIATED WITH IMPROVED PM AIR QUALITY RESULTING FROM THE FINAL NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PROGRAM—Continued

Endpoint 

Monetary Benefits a, b (millions 2000$, 

Adjusted for Income Growth) 

2020 2030 

7% discount rate ........................................................................................................................... 42,000+B 78,000+B 

Notes: a Monetary benefits are rounded to two significant digits. b Monetary benefits are adjusted to account for growth in real GDP per capita 

between 1990 and the analysis year (2020 or 2030). cValuation of base estimate assumes discounting over the lag structure described in the 

RIA Chapter 9. dEstimates assume costs of illness and lost earnings in later life years are discounted using either 3 or 7 percent. e Respiratory 

hospital admissions for PM includes admissions for COPD, pneumonia, and asthma. f Cardiovascular hospital admissions for PM includes total 

cardiovascular and subcategories for ischemic heart disease, dysrhythmias, and heart failure. gB represents the monetary value of the 

unmonetized health and welfare benefits. A detailed listing of unquantified PM, ozone, CO, and NMHC related health effects is provided in Table 

VI.E–6. 

The estimated social cost (measured 

as changes in consumer and producer 

surplus) in 2030 to implement the final 

rule from table VI.E–3 is $2.0 billion 

(2000$). Thus, the net benefit (social 

benefits minus social costs) of the 

program at full implementation is 

approximately $81 + B billion using a 3 

percent discount rate and $78 + B 

billion using a 7 percent discount rate. 

In 2020, partial implementation of the 

program yields net benefits of $42 + B 

billion using a 3 percent discount rate 

and $41 + B billion using a 7 percent 

discount rate. Therefore, 

implementation of the final rule is 

expected to provide society with a net 

gain in social welfare based on 

economic efficiency criteria. Table VI.E–

3 presents a summary of the benefits, 

costs, and net benefits of the final rule’s 

full program. Figure VI–E.1 displays the 

stream of benefits, costs, and net 

benefits of the Nonroad Diesel Vehicle 

Rule from 2007 to 2036 using two 

different discount rates. In addition, 

table VI.E–4 presents the net present 

value of the stream of benefits, costs, 

and net benefits associated with the rule 

for this 30 year period. The total net 

present value in 2004 of the stream of 

net benefits (benefits minus costs) is 

$780 billion using a 3 percent discount 

rate and $340 billion using a 7 percent 

discount rate.

TABLE VI.E–3.—SUMMARY OF BENEFITS, COSTS, AND NET BENEFITS OF THE FINAL NONROAD DIESEL ENGINE AND FUEL

STANDARDS FULL PROGRAM

2020 a (Billions of 2000 dollars) 2030 a (Billions of 2000 dollars) 

Social Costs b .......................................................................................... $1.8 ................................................ $2.0. 

Social Benefits: bcd

CO, VOC, Air Toxic-related benefits ................................................ Not monetized ............................... Not monetized. 

Ozone-related benefits ..................................................................... Not monetized ............................... Not monetized. 

PM-related Welfare benefits ............................................................ $1.0 ................................................ $1.7. 

PM-related Health benefits [3% discount] ....................................... $43 + B .......................................... $81 + B. 

PM-related Health benefits [7% discount] ....................................... $41 + B .......................................... $78 + B. 

Net Benefits (Benefits-Costs) [3% discount] c ......................................... $44 + B .......................................... $81 + B. 

Net Benefits (Benefits-Costs) [7% discount] c ......................................... $42 + B .......................................... $78 + B. 

Notes: aAll costs and benefits are calculated using 3 and 7 percent discount rates and are rounded to two significant digits. Numbers may appear not to sum due to rounding. b Note that costs are the total costs of reducing all pollutants, including CO, VOCs and air toxics, as well as NOX and PM. Costs were converted to 2000$ using the PPI for Total Manufacturing Industries. Benefits in this table are associated only with PM endpoints related to direct 

PM, NOX and SO2 reductions in 48-states. c 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 VI.E–6. B is the sum of all unquantified benefits and disbenefits. 

39136 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

TABLE VI.E–4.—NET PRESENT VALUE

IN 2004 OF THE STREAM OF 30 

YEARS OF BENEFITS, COSTS, AND

NET BENEFITS FOR THE FULL

NONROAD DIESEL ENGINE AND FUEL

STANDARDS

[Billions of 2000$] 

3% discount rate 7% discount rate 

Social Costs .......... $27 $14 

Social Benefits ...... 805 352 

Net Benefits a ........ 780 340 

Notes: a Numbers do not add due to rounding. Benefits represent 48-state benefits and 

exclude home heating oil sulfur reduction benefits, whereas costs include 50-state 

estimates. 

In addition, we analyzed the social 

benefits and costs of the fuel-only 

components of the program, as 

discussed in the RIA. EPA’s primary 

estimate of the benefits of the fuel-only 

component of the final rule are 

approximately $28 + B billion in 2030 

using a 3 percent discount rate and $25 

+ B billion using a 7 percent discount 

rate. In 2020, total monetized benefits 

are approximately $18 + B billion using 

a 3 percent discount rate and $16 + B 

billion using a 7 percent discount rate. 

These estimates account for growth in 

real gross domestic product (GDP) per 

capita between the present and the years 

2020 and 2030. We present the 

engineering costs of implementing the 

fuel-only components of the rule. 

Engineering compliance costs are very 

similar to the total social costs for the 

entire program. The net benefit (social 

benefits minus engineering costs) of the 

fuel-only program at full 

implementation is approximately $330 

+ B billion using a 3 percent discount 

rate and $160 + B billion using a 7 

percent discount rate. Therefore, 

implementation of the fuel-only 

components of the final rule is expected 

to provide society with a net gain in 

social welfare based on economic 

efficiency criteria. Table VI.E–5 presents 

a summary of the social benefits, 

engineering costs, and net benefits of 

the final rule’s fuel-only program for a 

30 year period.

TABLE VI.E–5.—NET PRESENT VALUE

IN 2004 OF THE STREAM OF BENEFITS, COSTS, AND NET BENEFITS

FOR THE FUEL-ONLY STANDARDS

[Billions of 2000$] 

3% Discount rate 7% Discount rate 

Costs ..................... $9.2 $4.6 

Social Benefits ...... 340 160 

Net Benefits .......... 330 160 

Notes: A Results are rounded to two significant digits. Sums may differ because of rounding. B Engineering costs are presented instead of 

social costs. As discussed in previous chapters, total engineering costs include fuel costs 

(refining, distribution, lubricity) and other operating costs (oil change maintenance savings). C Note that costs are the total costs of reducing all pollutants, including CO, VOCs and 

air toxics, as well as NOX and PM. Benefits in 

this table are associated only with PM, NOX

and SO2 reductions. The estimates do not include the benefits of reduced sulfur in home 

heating oil or benefits in Alaska or Hawaii. 

2. What Was Our Overall Approach to 

the Benefit-Cost Analysis? 

The basic question we sought to 

answer in the benefit-cost analysis was, 


ER29JN04.006</GPH>
Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39137

241The section 812 studies include: (1) U.S. 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). See Docket A–99–06, 

Document II–A–21.

242 Interested parties may want to consult the 

webpage: http://www.epa.gov/science1 regarding 

components of our analytical blueprint.

‘‘What are the net yearly economic 

benefits to society of the reduction in 

mobile source emissions likely to be 

achieved by this proposed rulemaking?’’

In designing an analysis to address this 

question, we selected two future years 

for analysis (2020 and 2030) that are 

representative of the stream of benefits 

and costs at partial and fullimplementation of the program. 

To quantify benefits, we evaluated 

PM-related health effects (including 

directly emitted PM and sulfate, as well 

as SO2 and NOX contributions to fine 

particulate matter). Our approach 

requires the estimation of changes in air 

quality expected from the rule and then 

estimating the resulting impact on 

health. In order to characterize the 

benefits of today’s action, given the 

constraints on time and resources 

available for the analysis, we adopted a 

benefits transfer technique that relies on 

air quality and benefits modeling for a 

preliminary control option for nonroad 

diesel engines and fuels. Results from 

this modeling conducted for 2020 and 

2030 are then scaled and transferred to 

the emission reductions expected from 

the final rule. We also transferred 

modeled results by using scaling factors 

associated with time to examine the 

stream of benefits in years other than 

2020 and 2030. 

More specifically, our health benefits 

assessment is conducted in two phases. 

Due to the time requirements for 

running the sophisticated emissions and 

air quality models, it is often necessary 

to select an example set of emission 

reductions to use for the purposes of 

emissions and air quality modeling 

early in the development of the 

proposal. In phase one, we evaluate the 

PM- and ozone-related health effects 

associated with a modeled preliminary 

control option that was a close 

approximation of the standards in the 

years 2020 and 2030. Using information 

from the modeled preliminary control 

option on the changes in ambient 

concentrations of PM and ozone, we 

then estimate the number of reduced 

incidences of illnesses, hospitalizations, 

and premature fatalities associated with 

this scenario and estimate the total 

economic value of these health benefits. 

Based on public comment and other 

data described in the RIA, the standards 

we are finalizing in this rulemaking are 

slightly different in the amount of 

emission reductions expected to be 

achieved in 2020 and 2030 relative to 

the modeled scenario. Thus, in phase 

two of the analysis, we apportion the 

results of the phase one analysis to the 

underlying NOX, SO2, and PM emission 

reductions and scale the apportioned 

benefits to reflect differences in 

emissions reductions between the 

modeled preliminary control option and 

the proposed standards. The sum of the 

scaled benefits for the PM, SO2, and 

NOX emission reductions provide us 

with the total benefits of the rule. 

The benefit estimates derived from 

the modeled preliminary control option 

in phase one of our analysis uses an 

analytical structure and sequence 

similar to that used in the benefits 

analyses for the Heavy Duty Engine/

Diesel Fuel final rule and in the 

‘‘section 812 studies’’ to estimate the 

total benefits and costs of the full Clean 

Air Act. 241 We used many of the same 

models and assumptions used in the 

Heavy Duty Engine/Diesel Fuel analysis 

as well as other Regulatory Impact 

Analyses (RIAs) prepared by the Office 

of Air and Radiation. 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. In addition, we will be 

working through the next section 812 

study process to enhance our 

methods. 242

The benefits transfer method used in 

phase two of the analysis is similar to 

that used to estimate benefits in the 

recent analysis of the Nonroad Large 

Spark-Ignition Engines and Recreational 

Engines standards (67 FR 68241, 

November 8, 2002). A similar method 

has also been used in recent benefits 

analyses for the proposed Industrial 

Boilers and Process Heaters NESHAP 

and the Reciprocating Internal 

Combustion Engines NESHAP.

On September 26, 2002, the National 

Academy of Sciences (NAS) released a 

report on its review of the Agency’s 

methodology for analyzing the health 

benefits of measures taken to reduce air 

pollution. The report focused on EPA’s 

approach for estimating the health 

benefits of regulations designed to 

reduce concentrations of airborne PM. 

In its report, the NAS panel said that 

EPA has generally used a reasonable 

framework for analyzing the health 

benefits of PM-control measures. It 

recommended, however, that the 

Agency take a number of steps to 

improve its benefits analysis. In 

particular, the NAS stated that the 

Agency should: 

• Include benefits estimates for a 

range of regulatory options; 

• Estimate benefits for intervals, such 

as every five years, rather than a single 

year; 

• Clearly state the projected baseline 

statistics used in estimating health 

benefits, including those for air 

emissions, air quality, and health 

outcomes; 

• Examine whether implementation 

of proposed regulations might cause 

unintended impacts on human health or 

the environment; 

• When appropriate, use data from 

non-U.S. studies to broaden age ranges 

to which current estimates apply and to 

include more types of relevant health 

outcomes; and 

• Begin to move the assessment of 

uncertainties from its ancillary analyses 

into its Base analyses by conducting 

probabilistic, multiple-source 

uncertainty analyses. This assessment 

should be based on available data and 

expert judgment. 

Although the NAS made a number of 

recommendations for improvement in 

EPA’s approach, it found that the 

studies selected by EPA for use in its 

benefits analysis were generally 

reasonable choices. In particular, the 

NAS agreed with EPA’s decision to use 

cohort studies to derive benefits 

estimates. It also concluded that the 

Agency’s selection of the American 

Cancer Society (ACS) study for the 

evaluation of PM-related premature 

mortality was reasonable, although it 

noted the publication of new cohort 

studies that should be evaluated by the 

Agency. 

EPA has addressed many of the NAS 

comments in our analysis of the final 

rule. We provide benefits estimates for 

each year over the rule implementation 

period for a wide range of regulatory 

alternatives, in addition to our final 

emission control program. We use the 

estimated time path of benefits and 

costs to calculate the net present value 

of benefits of the rule. In the RIA, we 

provide baseline statistics for air 

emissions, air quality, population, and 

health outcomes. We have examined 

how our benefits estimates might be 

impacted by expanding the age ranges to 

which epidemiological studies are 

applied, and we have added several new 

health endpoints, including non-fatal 

heart attacks, which are supported by 

both U.S. studies and studies conducted 

in Europe. We have also improved the 

documentation of our methods and 

39138 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

provided additional details about model 

assumptions. 

Several of the NAS recommendations 

addressed the issue of uncertainty and 

how the Agency can better analyze and 

communicate the uncertainties 

associated with its benefits assessments. 

In particular, the Committee expressed 

concern about the Agency’s reliance on 

a single value from its analysis and 

suggested that EPA develop a 

probabilistic approach for analyzing the 

health benefits of proposed regulatory 

actions. The Agency agrees with this 

suggestion and is working to develop 

such an approach for use in future 

rulemakings. 

EPA plans to continue to refine its 

plans for addressing uncertainty in its 

analyses. EPA conducted a pilot study 

to address uncertainty in important 

analytical parameters such as the 

concentration-response relationship for 

PM-related premature mortality. EPA is 

also conducting longer-term elements 

intended to provide scientifically 

sound, peer-reviewed characterizations 

of the uncertainty surrounding a broader 

set of analytical parameters and 

assumptions, including but not limited 

to emissions and air quality modeling, 

demographic projections, population 

health status, concentration-response 

functions, and valuation estimates. 

3. 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 

quantitative 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, which can cause the 

valuations to be higher or lower, are 

discussed in detail in the Regulatory 

Support Document and its supporting 

documents and references, the key 

uncertainties which have a bearing on 

the results of the benefit-cost analysis of 

this final rule include the following: 

• The exclusion of potentially 

significant benefit categories (such as 

health, odor, and ecological benefits of 

reduction in CO, VOCs, air toxics, and 

ozone);

• 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 

scaling of the results of the modeled 

benefits analysis to the proposed 

standards, especially regarding the 

assumption of similarity in geographic 

distribution between emissions and 

human populations and years of 

analysis; 

• Variability in the estimated 

relationships of health and welfare 

effects to changes in pollutant 

concentrations; 

• Uncertainties in exposure 

estimation; 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 final 

rulemaking in future years under a set 

of assumptions. Accordingly, we 

present a primary estimate of the total 

benefits, based on our interpretation of 

the best available scientific literature 

and methods and supported by the 

SAB–HES and the NAS. 

Some of the key assumptions 

underlying the primary estimate for the 

premature mortality which accounts for 

90 percent of the total benefits we were 

able to quantify include the following: 

(1) Inhalation of fine particles is 

causally associated with premature 

death at concentrations near those 

experienced by most Americans on a 

daily basis. Although biological 

mechanisms for this effect have not yet 

been definitively established, the weight 

of the available epidemiological 

evidence supports an assumption of 

causality. 

(2) All fine particles, regardless of 

their chemical composition, are equally 

potent in causing premature mortality. 

This is an important assumption, 

because PM produced via transported 

precursors emitted from EGUs may 

differ significantly from direct PM 

released from diesel engines and other 

industrial sources, but no clear 

scientific grounds exist for supporting 

differential effects estimates by particle 

type. 

(3) The impact function for fine 

particles is approximately linear within 

the range of ambient concentrations 

under consideration. Thus, the 

estimates include health benefits from 

reducing fine particles in areas with 

varied concentrations of PM, including 

both regions that are in attainment with 

fine particle standard and those that do 

not meet the standard. 

(4) The forecasts for future emissions 

and associated air quality modeling are 

valid. Although recognizing the 

difficulties, assumptions, and inherent 

uncertainties in the overall enterprise, 

these analyses are based on peerreviewed scientific literature and up-todate assessment tools, and we believe 

the results are highly useful in assessing 

this rule. 

We provide sensitivity analyses to 

illustrate the effects of uncertainty about 

key analytical assumptions in the RIA. 

In addition, one significant limitation 

to the benefit transfer method applied in 

this analysis is the inability to scale 

ozone-related benefits. Because ozone is 

a homogeneous gaseous pollutant, it is 

not possible to apportion ozone benefits 

to the precursor emissions of NOX and 

VOC. Coupled with the potential for 

NOX reductions to either increase or 

decrease ambient ozone levels, this 

prevents us from scaling the benefits 

associated with a particular 

combination of VOC and NOX emissions 

reductions to another. Because of our 

inability to scale ozone benefits, we do 

not include ozone benefits as part of the 

monetized benefits of the proposed 

standards. For the most part, ozone 

benefits contribute substantially less to 

the monetized benefits than do benefits 

from PM, thus their omission will not 

materially affect the conclusions of the 

benefits analysis. Although we expect 

economic benefits to exist, we were 

unable to quantify or to value specific 

changes in ozone, CO or air toxics 

because we did not perform additional 

air quality modeling. 

There are also a number of health and 

environmental effects which we were 

unable to quantify or monetize. A full 

appreciation of the overall economic 

consequences of the proposed rule 

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. A complete listing 

of the benefit categories that could not 

be quantified or monetized in our 

estimate are provided in Table VI.E–6. 

These effects are denoted by ‘‘B’’ in 

Table VI.E–3 above, and are additive to 

the estimates of benefits.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39139

243This analysis is based on an earlier version of 

the engineering costs developed for this rule. The 

Continued

TABLE VI.E–6.—ADDITIONAL, NON-MONETIZED BENEFITS OF THE NONROAD DIESEL ENGINE AND FUEL STANDARDS

Pollutant Unquantified effects 

Ozone Health ....................... Premature mortality a. 

Respiratory hospital admissions. 

Minor restricted activity days. 

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. 

Non-asthma respiratory emergency room visits. 

Increased school absence rates. 

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. 

Damage to ecosystem functions. 

PM Health ............................ Low birth weight. 

Changes in pulmonary function. 

Chronic respiratory diseases other than chronic bronchitis. 

Morphological changes. 

Altered host defense mechanisms. 

Cancer. 

Non-asthma respiratory emergency room visits. 

PM Welfare .......................... Visibility in many Class I areas. 

Residential and recreational visibility in non-Class I areas. 

Soiling and materials damage. 

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. 

CO Health ............................ Premature mortality a. 

Behavioral effects. 

HC Health b ........................... Cancer (benzene, 1,3-butadiene, formaldehyde, acetaldehyde). 

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). 

Upper respiratory tract irritation and congestion (acrolein). 

HC Welfare ........................... Direct toxic effects to animals. 

Bioaccumulation in the food chain. 

Damage to ecosystem function. 

Odor. 

Notes: aPremature mortality associated with ozone and carbon monoxide is not separately included in this analysis. In this analysis, we assume that the Pope, et al. C-R function for premature mortality captures both PM mortality benefits and any mortality benefits associated with 

other air pollutants. b Many of the key hydrocarbons related to this rule are also hazardous air pollutants listed in the Clean Air Act. 

F. Economic Impact Analysis 

We prepared a draft Economic Impact 

Analysis (EIA) for this rule to estimate 

the economic impacts of the proposed 

control program on producers and 

consumers of nonroad engines, 

equipment, fuel, and related 

industries.243 We received comments on 

39140 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

final cost estimates for the engine program are 

slightly higher ($142 million) and the final fuel 

costs are slightly lower ($246 million), resulting in 

a 30-year net present value of $27.1 billion (30 year 

net present values in the year 2004, using a 3 

percent discount rate, $2002) or $104 million less 

than the engineering costs used in this analysis. We 

do not expect that the revised engineering costs 

would change the overall results of this economic 

impact analysis given the small portion of engine, 

equipment, and fuel costs to total production costs 

for goods and services using these inputs and given 

the inelastic value of the estimated demand 

elasticities for the application markets.

244EPA Guidelines for Preparing Economic 

Analyses, EPA 240–R–00–003, September 2000, p 

113.

our draft analysis from stakeholders 

representing agricultural interests, 

equipment rental and dealer interests, 

and equipment manufacturers. The 

commenters conveyed their concerns 

about our general analytic approach and 

some of the model assumptions. As 

explained in our responses to these 

comments, which can be found in the 

Summary and Analysis of Comments 

document prepared for this final rule, 

we do not believe these comments 

require us to adjust our EIA 

methodology. We did adjust the 

methodology, however, to estimate the 

economic impacts of the fuel sulfur 

content requirements on the locomotive 

and marine sectors. As explained below, 

this revision was necessary to correct an 

oversight in the draft EIA. We also 

revised the price and quantity data 

inputs to the model to make them 

consistent with the revised engine and 

fuel cost analyses described earlier in 

this section.

This section briefly describes the 

methodology we used to estimate the 

economic impacts of this final rule, 

including the model revisions for the 

marine and locomotive fuel sectors, and 

the results of that analysis. A detailed 

description of the Nonroad Diesel 

Economic Impact Model (NDEIM) 

prepared for this analysis, the model 

inputs, and several sensitivity analyses 

can be found in Chapter 10 of Final 

Regulatory Impact Analysis prepared for 

this rule.

1. What Is an Economic Impact 

Analysis? 

An Economic Impact Analysis is 

prepared to inform decision makers 

within the Agency about the potential 

economic consequences of a regulatory 

action. The analysis contains estimates 

of the social costs of a regulatory 

program and explores the distribution of 

these costs across stakeholders. These 

estimated social costs can then be 

compared with estimated social benefits 

(as presented in Section VI.E). As 

defined in EPA’s Guidelines for 

Preparing Economic Analyses, social 

costs are the value of the goods and 

services lost by society resulting from 

(a) the use of resources to comply with 

and implement a regulation and (b) 

reductions in output. 244 In this analysis, 

social costs are explored in two steps. In 

the first step, called the market analysis, 

we estimate how prices and quantities 

of good directly and indirectly affected 

by the emission control program can be 

expected to change once the emission 

control program goes into effect. The 

estimated price and quantity changes for 

engines, equipment, fuel, and goods 

produced using these inputs are 

examined separately. In the second step, 

called the economic welfare analysis, 

we look at the total social costs 

associated with the program and their 

distribution across stakeholders. The 

analysis is based on compliance cost 

estimates and baseline market 

conditions for prices and quantities of 

engines, equipment, and fuel produced 

presented earlier in this section.

In this EIA, we look at price and 

quantity impacts for engine, equipment, 

diesel fuel, and goods produced with 

these inputs. With regard to the goods 

produced with these inputs, we 

distinguish between three application 

markets: agriculture, construction, and 

manufacturing. It should be noted from 

the outset that diesel engines, 

equipment, and fuel represent only a 

small portion of the total production 

costs for each of the three application 

market sectors (the final users of the 

engines, equipment and fuel affected by 

this rule). Other more significant 

production costs include land, labor, 

other capital, raw materials, insurance, 

profits, etc. These other production 

costs are not affected by this emission 

control program. This is important 

because it means that this rule directly 

affects only a small part of total inputs 

for the relevant markets. Therefore, the 

rule is not expected to have a large 

adverse impact on output and prices of 

goods produced in the three application 

sectors. 

It should also be noted that our 

analysis of the impacts on the three 

application markets is limited to market 

output. The economic impacts on 

particular groups of application market 

suppliers (e.g., the profitability of farm 

production units or manufacturing or 

construction firms) or particular groups 

of consumers (e.g., households and 

companies that consume agricultural 

goods, buildings, or durable or 

consumer goods) are not estimated. In 

other words, while we estimate that the 

application markets will bear most of 

the burden of the regulatory program 

and we apportion the decrease in 

application market surplus between 

application market producers and 

application market consumers, we do 

not estimate how those social costs will 

be shared among specific application 

market producers and consumers (e.g., 

farmers and households). In some cases, 

application market producers may be 

able to pass most if not all of their 

increased costs to the ultimate 

consumers of their products; in other 

cases, they may be obliged to absorb a 

portion of these costs. While some 

commenters requested that we perform 

a sector-by-sector analysis of application 

market producers and consumers, we do 

not believe this is appropriate. The 

focus on market-level impacts in this 

analysis is appropriate because the 

standards in this emission control 

program are technical standards that 

apply to nonroad engines, equipment, 

and fuel regardless of how they are used 

and the structure of the program does 

not suggest that different sectors will be 

affected differently by the requirements. 

In addition, the results of our EIA 

suggest that the overall burden on the 

application market is expected to be 

small: approximately 0.1 percent 

increase in prices, on average, and less 

than 0.02 percent decrease in 

production, on average. Estimated 

economic impacts of this size do not 

warrant performing a sector-by-sector 

analysis to investigate whether some 

subsectors may be affected 

disproportionately. 

Finally, as a market-level model, the 

NDEIM estimates the economic impacts 

of the rule on the engine, equipment, 

and application markets and the 

transportation service sector. It is not a 

firm-level analysis and therefore the 

equipment demand elasticity facing any 

particular manufacturer may be greater 

than the demand elasticity of the market 

as a whole. This difference can be 

important, particularly where the rule 

affects different firms’ costs over 

different volumes of production. 

However, to the extent there are 

differential effects, EPA believes that the 

wide array of flexibilities provided in 

this rule are adequate to address any 

cost inequities that are likely to arise. 

2. What Methodology Did EPA Use in 

This Economic Impact Analysis? 

EPA used the same methodology in 

this final EIA as was used in the draft 

EIA. The model was revised to 

accommodate analysis of the locomotive 

and marine fuel sectors. 

a. Conceptual Approach 

The Nonroad Diesel Economic Impact 

Model (NDEIM) uses a multi-market 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39141

245U.S. Environmental Protection Agency, Office 

of Air Quality Planning and Standards, Innovative 

Strategies and Economics Group, OAQPS Economic 

Analysis Resource Document, April 1999. A copy 

of this document can be found in Docket A–2001–

28, Document No. II–A–14.

246EPA Guidelines for Preparing Economic 

Analyses, EPA 240–R–00–003, September 2000, p. 

125–6.

analysis framework that considers 

interactions between regulated markets 

and other markets to estimate how 

compliance costs can be expected to 

ripple through these markets. In the 

NDEIM, compliance costs are directly 

borne by engine manufacturers, 

equipment manufacturers, petroleum 

refiners and fuel distributors. 

Depending on market characteristics, 

some or all of these compliance costs 

will be passed on through the supply 

chain in the form of higher input prices 

for the application markets (in this case, 

construction, agriculture, and 

manufacturing) which in turn affect 

prices and quantities of goods produced 

in those application markets. Producers 

in the application markets adjust their 

demand for diesel engines, equipment, 

and fuel in response to these input price 

changes and consumer demand for 

application market outputs. This 

information is passed back to the 

suppliers of diesel equipment, engines, 

and fuel in the form of purchasing 

decisions. The NDEIM explicitly models 

these interactions and estimates 

behavioral responses that lead to new 

equilibrium prices and output for all 

sectors and the resulting distribution of 

social costs across the modeled sectors. 

b. Markets Examined 

The NDEIM uses a multi-market 

partial equilibrium approach to track 

changes in price and quantity for 62 

integrated product markets, as follows: 

• 7 diesel engine markets: less than 

25 hp, 26 to 50 hp, 51 to 75 hp, 76 to 

100 hp, 101 to 175 hp, 176 to 600 hp, 

and greater than 600 hp. The EIA 

includes more horsepower categories 

than the standards to allow more 

efficient use of the engine compliance 

costs estimates. The additional 

categories also allow estimating 

economic impacts for a more diverse set 

of markets. 

• 42 diesel equipment markets: 7 

horsepower categories within 7 

application categories: agricultural, 

construction, general industrial, pumps 

and compressors, generator and welder 

sets, refrigeration and air conditioning, 

and lawn and garden. There are 7 

horsepower/application categories that 

did not have sales in 2000 and are not 

included in the model, so the total 

number of diesel equipment markets is 

42 rather than 49.

• 3 application markets: agricultural, 

construction, and manufacturing. 

• 8 nonroad diesel fuel markets: 2 

sulfur content levels (15 ppm and 500 

ppm) for each of 4 PADDs. PADDs 1 and 

3 are combined for the purpose of this 

analysis. It should be noted that PADD 

5 includes Alaska and Hawaii. Also, 

California fuel volumes that are not 

affected by the program (because they 

are covered by separate California 

nonroad diesel fuel standards) are not 

included in the analysis. 

• 2 transportation service markets: 

locomotive and marine. 

As noted above, this final EIA also 

estimates the economic impact on two 

additional markets that were not 

included in the draft analysis: the 

locomotive and marine diesel 

transportation service markets. In the 

NPRM, we proposed to set fuel sulfur 

standards for locomotive and distillate 

marine diesel as well as for nonroad 

diesel fuel. We developed cost estimates 

for these two types of fuel as well as for 

nonroad diesel fuel. In the draft EIA, 

however, we did not consider the 

economic impacts of these fuel costs on 

the locomotive and marine sectors 

separately. Instead, we applied all of 

these additional fuel costs to the 

manufacturing application market. 

In preparing the final RIA for this 

rule, we determined that it would be 

more appropriate to consider the 

impacts of the fuel program on the 

diesel marine and locomotive sectors 

separately. This is because the 

locomotive and marine markets are 

directly affected by the higher diesel 

fuel prices associated with the rule. In 

addition, production and consumption 

decisions of downstream end-use 

markets that use these services are 

influenced by the prices of 

transportation services. At the same 

time, locomotive and marine diesel 

transportation services are not used 

solely in the three application markets 

modeled in the NDEIM. These services 

are also provided to electric utilities 

(transporting coal to electric power 

plants), non-manufacturing service 

industries (public transportation) and 

governments. We take this into account 

and report impacts on those sectors 

separately. 

c. Model Methodology 

A detailed description of the model 

methodology, inputs, and parameters 

used in this economic impact analysis is 

provided in Chapter 10 of the Final RIA 

prepared for this rule. The model 

methodology is firmly rooted in applied 

microeconomic theory and was 

developed following the OAQPS 

Economic Analysis Resource 

Document.245

The NDEIM is a computer model 

comprised of a series of spreadsheet 

modules that define the baseline 

characteristics of the supply and 

demand for the relevant markets and the 

relationships between them. The model 

is constructed based on the market 

characteristics and inter-connections 

summarized in this section and 

described in more detail in Chapter 10 

of the RIA. The model is shocked by 

applying the engineering compliance 

cost estimates to the appropriate market 

suppliers, and then numerically solved 

using an iterative auctioneer approach 

by ‘‘calling out’’ new prices until a new 

equilibrium is reached in all markets 

simultaneously. The output of the 

model is new equilibrium prices and 

quantities for all affected markets. This 

information is used to estimate the 

social costs of the model and how those 

costs are shared among affected markets.

The NDEIM uses a multi-market 

partial equilibrium approach to track 

changes in price and quantity for the 

modeled product markets. As explained 

in the EPA Guidelines for Preparing 

Economic Analyses, ‘‘partial’’

equilibrium refers to the fact that the 

supply and demand functions are 

modeled for just one or a few isolated 

markets and that conditions in other 

markets are assumed either to be 

unaffected by a policy or unimportant 

for social cost estimation. Multi-market 

models go beyond partial equilibrium 

analysis by extending the inquiry to 

more than just a single market. Multimarket analysis attempts to capture at 

least some of the interactions between 

markets.246

The NDEIM uses an intermediate run 

time frame. The use of the intermediate 

run means that some factors of 

production are fixed and some are 

variable. This modeling period allows 

analysis of the economic effects of the 

rule’s compliance costs on current 

producers. The short run, in contrast, 

imposes all compliance costs on the 

manufacturers (no pass-through to 

consumers), while the long run imposes 

all costs on consumers (full cost passthrough to consumers). The use of the 

intermediate run time frame is 

consistent with economic practices for 

this type of analysis. 

The NDEIM assumes perfect 

competition in the market sectors. This 

assumption was questioned by one 

commenter, who noted that the 25 to 75 

hp engine category does not appear to 

be competitive based on the number of 

firms in that subsector. Specifically, one 

39142 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

247See, for example, EPA Guidelines for 

Preparing Economic Analyses, EPA 240–R–00–003, 

September 2000, p 126. See also the Final RIA for 

this rule, Chapter 10, Section 10.2.3.1.

248 If the elasticity of demand for a final product 

is less than the elasticity of substitution between an 

input and other inputs to the final product, then the 

demand for the input is less elastic the smaller its 

cost share. Hicks, J.R., 1961. Marshall’s Third Rule: 

A Further Comment. Oxford Economic Papers 

13:262–65; Hicks, J.R., 1963. The Theory of Wages. 

St. Martins Press, NY, pp. 233–247. See Docket A–

2001–28, Document No. IV–B–25 for relevant 

excerpts. See Docket A–2001–28, Document No. IV–

B–25 for relevant excerpts.

firm has nearly 29 percent of the market 

and the top nine firms have about 88 

percent. The remaining twelve percent 

of this market shared among nineteen 

other firms. While the commenter is 

correct in noting the limited number of 

firms in this subsector, we believe it is 

still appropriate to rely on the perfect 

competition assumption in this analysis. 

The perfect competition assumption 

relies not only on the number of firms 

in a market but also on other market 

characteristics. For example, there are 

no indications of barriers to entry, the 

firms in these markets are not price 

setters, and there is no evidence of high 

levels of strategic behavior in the price 

and quantity decisions of the firms. In 

addition, the products produced within 

each market are somewhat 

homogeneous in that engines from one 

firm can be purchased instead of 

engines from another firm. Finally, 

according to contestable market theory, 

oligopolies and even monopolies will 

behave very much like firms in a 

competitive market if it is possible to 

enter particular markets costlessly (i.e., 

there are no sunk costs associated with 

market entry or exit). With regard to the 

nonroad engine market, production 

capacity is not fully utilized. This 

means that manufacturers could 

potentially switch their product line to 

compete in another segment of the 

market without a significant investment. 

For all these reasons, the number of 

firms in a particular engine submarket 

does not prevent us from relying on the 

perfect competition assumption for that 

submarket. This is true of other engine 

and equipment subsectors as well. In 

addition, changing the assumption of 

perfect competition based on the limited 

evidence raised by the commenter 

would break with widely accepted 

economic practice for this type of 

analysis.247

d. Model Inputs—Elasticities 

The estimated social costs of this 

emission control program are a function 

of the ways in which producers and 

consumers of the engines, equipment, 

and fuels affected by the standards 

change their behavior in response to the 

costs incurred in complying with the 

standards. As the compliance costs 

ripple through the markets, producers 

and consumers change their production 

and purchasing decisions in response to 

changes in prices. In the NDEIM, these 

behavioral changes are modeled by the 

demand and supply elasticities 

(behavioral-response parameters), which 

measure the price sensitivity of 

consumers and producers. 

The supply elasticities for the 

equipment, engine, diesel fuel, and 

transportation service markets and the 

demand and supply elasticities for the 

application markets used in the NDEIM 

were obtained from peer-reviewed 

literature sources or were estimated 

using econometric methods. These 

econometric methods are welldocumented and are consistent with 

generally accepted econometric 

practice. Appendix 10H of the RIA 

contains detailed information on how 

the elasticities were estimated.

The equipment and engine supply 

elasticities are elastic, meaning that 

quantities supplied are expected to be 

fairly sensitive to price changes. The 

supply elasticities for the fuel, 

transportation, and application markets 

are inelastic or unit elastic, meaning 

that the quantity supplied/demanded is 

expected to be fairly insensitive to price 

changes or will vary one-to-one with 

price changes. The demand elasticities 

for the application markets are also 

inelastic. This is consistent with the 

Hicks-Allen derived demand 

relationship, according to which a low 

cost-share in production combined with 

limited substitution yields inelastic 

demand.248 As noted above, diesel 

engines, equipment, and fuel represent 

only a small portion of the total 

production costs for each of the three 

application sectors. The limited ability 

to substitute for these inputs is 

discussed below.

In contrast to the above, the demand 

elasticities for the engine, equipment, 

fuel, and transportation markets are 

internally derived as part of the process 

of running the model. This is an 

important feature of the NDEIM, which 

allows it to link the separate market 

components of the model and simulate 

how compliance costs can be expected 

to ripple through the affected economic 

sectors. In the real world, for example, 

the quantity of nonroad equipment units 

produced in a particular period depends 

on the price of engines (the engine 

market) and the demand for equipment 

(the application markets). Similarly, the 

number of engines produced depends 

on the demand for engines (the 

equipment market) which depends on 

the demand for equipment (the 

application markets). Changes in 

conditions in one of these markets will 

affect the others. By designing the 

model to derive the engine, equipment, 

transportation market, and fuel demand 

elasticities, the NDEIM simulates these 

connections between supply and 

demand among all the product markets 

and replicates the economic interactions 

between producers and consumers. 

e. Model Inputs—Fixed and Variable 

Costs 

The EIA treats the fixed costs 

expected to be incurred by engine and 

equipment manufacturers differently in 

the market and social costs analyses. 

This feature of the model is described in 

greater detail in Section 10.2.3.3 of the 

RIA. In the market analysis, estimated 

engine and equipment market impacts 

(changes in prices and quantities) are 

based solely on the expected increase in 

variable costs associated with the 

standards. Fixed costs are not included 

in the market analysis reported in Table 

VI–F–1 because in an analysis of 

competitive markets the industry supply 

curve is based on its marginal cost curve 

and fixed costs are not reflected in 

changes in the marginal cost curve. In 

addition, the fixed costs associated with 

the rule are primarily R&D costs for 

design and engineering changes. Firms 

in the affected industries currently 

allocate funds for R&D programs and 

this rule is not expected to lead firms to 

change the size of their R&D budgets. 

Therefore, changes in fixed costs for 

engine and equipment redesign 

associated with this rule are not likely 

to affect the prices of engines or 

equipment. Fixed costs are included in 

the social cost analysis reported in 

Table VI–F–2, however, as an additional 

cost to producers. This is appropriate 

because even though firms currently 

allocated funds to R&D those resources 

are intended for other purposes such as 

increasing engine power, ease of use, or 

comfort. These improvements will 

therefore be postponed for the length of 

the rule-related R&D program. This is a 

cost to society. 

One commenter recommended that 

EPA include engine and equipment R&D 

(fixed) costs in the market analysis. This 

commenter argued that while in the 

long run total costs are not determined 

by changes in fixed costs, total costs are 

determined initially by both fixed and 

variable costs. This commenter was 

concerned that by not including fixed 

costs, EPA’s analysis underestimates the 

increase in the average price of goods 

and services produced using engines 

affected by the rule. In fact, we included 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39143

R&D costs in a sensitivity analysis 

performed for the draft EIA, which has 

been updated and can be found in 

Appendix I to Chapter 10 of the Final 

RIA. Including fixed costs results in a 

transfer of economic welfare losses from 

engine and equipment markets to the 

application markets (engine and 

equipment producer surplus losses 

decrease; consumer surplus losses 

increase), but does not change the 

overall economic welfare losses 

associated with the rule. 

Unlike for engines and equipment, 

most of the petroleum refinery fixed 

costs are for production hardware. 

Refiners are expected to have to make 

physical changes to their refineries and 

purchase additional equipment to 

produce 500 ppm and then 15 ppm fuel. 

Therefore, fixed costs are included in 

the market analysis for fuel price and 

quantity impacts. 

f. Model Inputs—Substitution by 

Application Suppliers 

In modeling the market impacts and 

social costs of this rule, the NDEIM 

considers only diesel equipment and 

fuel inputs to the production of goods 

in the applications markets. It does not 

explicitly model alternate production 

inputs that would serve as substitutes 

for new nonroad equipment or nonroad 

diesel fuel. In the model, market 

changes in the final demand for 

application goods and services directly 

correspond to changes in the demand 

for nonroad equipment and fuel (i.e., in 

normalized terms there is a one-to-one 

correspondence between the quantity of 

the final goods produced and the 

quantity of nonroad diesel equipment 

and fuel used as inputs to that 

production). We believe modeling the 

market in this manner is economically 

sound and reflects the general 

experience for the nonroad market.

Some commenters suggested that the 

NDEIM should consider substitution to 

alternate means of production such as 

pre-buying, delayed buying, extending 

the life of a current machine, and 

substituting with different (e.g., 

gasoline-powered) equipment. These 

commenters did not provide detailed 

explanations for their comments or data 

in support of their substitution 

arguments. After considering these 

comments, we conclude that revising 

the NDEIM to include these effects 

would be inappropriate. 

The term ‘‘pre-buying’’ appears to 

refer to the possibility that the suppliers 

in the application market may choose to 

buy additional unneeded quantities of 

nonroad equipment prior to the 

beginning of the Tier 4 program, thus 

avoiding the higher cost for the Tier 4 

equipment. It should be noted that this 

effect is limited to equipment and does 

not extend to nonroad diesel fuel. We 

believe that equipment pre-buying will 

not be economically viable in most 

cases due to the cost of holding capital 

(equipment) idle and of maintaining 

unused equipment. Such strategic 

purchases, if they occur at all, would be 

limited to a period of a few months 

before the effective date of the 

standards. The NDEIM models market 

reactions in the intermediate time 

frame, beyond the scope of any potential 

pre-buy. For these reasons, we do not 

believe it is appropriate to revise the 

model to include pre-buy as a means of 

substitution in NDEIM. 

‘‘Delayed-buying’’ appears to refer to 

the possibility that suppliers in the 

application market would defer 

purchasing new equipment initially but 

would eventually make those purchases. 

Similarly to pre-buying, this appears to 

be a short-term effect and would 

therefore be inappropriate to include in 

an economic model designed to model 

the intermediate time frame. 

Extending the life of a current 

machine is suggested as another 

alternative to purchasing new 

equipment. We believe this would also 

be a short term phenomena that is not 

relevant for the intermediate time frame 

of the NDEIM. Based on our meetings 

with equipment users and suppliers, we 

do not believe that extending the life of 

nonroad equipment will prove to be an 

economically viable substitute in the 

near or long term. Most users of nonroad 

equipment already extend the life of 

their equipment to the maximum extent 

possible and purchase new equipment 

only when the existing equipment can 

no longer perform its function, when 

new demand for production requires 

additional means for production, or 

when new equipment offers a cheaper 

means of production than existing 

equipment. This situation is not 

expected to change as a result of this 

rule. In addition, even if it were possible 

to extend equipment life even more, this 

would lower the cost of nonroad 

equipment as an input to production 

(because it would be less expensive to 

maintain old equipment than purchase 

new equipment) and thus would reduce 

the economic impact of the Tier 4 

program compared to our estimate. For 

all of the reasons stated here, we have 

decided not to attempt to model an 

extended equipment life alternative in 

the NDEIM. 

Finally, some commenters noted that 

equipment users may chose to substitute 

with different equipment, particularly 

gasoline-powered equipment. We 

believe substitution to gasoline-powered 

equipment is an alternative only for the 

smaller power categories (below 75 hp). 

Based on discussions with equipment 

manufacturers and users, the dominant 

reasons for choosing diesel engines over 

the substantially less expensive gasoline 

engines include better performance from 

diesel engines, lower fuel consumption 

from diesel engines, and the ability to 

use diesel fuel. The use of diesel fuel is 

preferable for two reasons: it is safer to 

store and dispense, and it is compatible 

with the fuel needed for larger 

equipment at the same worksite. Where 

these issues are not a concern, gasoline 

engines already enjoy a substantial 

economic advantage over diesel. We do 

not believe that the incremental increase 

in new equipment cost associated with 

this program would provide the 

necessary economic incentives for 

switching to gasoline equipment. 

Equipment users who can use gasolinefueled equipment already do so, while 

those who can’t due to the high costs of 

storing and dispensing gasoline fuel 

already use diesel engines. Therefore, 

we have not attempted to model the 

possibility of substitution to gasoline 

equipment in NDEIM. 

g. Model Inputs—Other 

Compliance Costs. The NDEIM uses 

the estimated engine, equipment, and 

fuel compliance costs described in 

above and presented in Chapters 6 and 

7 of the RIA. Engine and equipment 

costs vary over time because fixed costs 

are recovered over five to ten year 

periods while total variable costs, 

despite learning effects that serve to 

reduce costs on a per unit basis, 

continue to increase at a rate consistent 

with new sales increases. Similarly, 

engine operating costs also vary over 

time because oil change maintenance 

savings, PM filter maintenance, and fuel 

economy effects, all of which are 

calculated on the basis of gallons of fuel 

consumed, change over time consistent 

with the growth in nationwide fuel 

consumption. Fuel-related compliance 

costs (costs for refining and distributing 

regulated fuels) also change over time. 

These changes are more subtle than the 

engine costs, however, as the fuel 

provisions are largely implemented in 

discrete steps instead of phasing in over 

time. Compliance costs were developed 

on a ¢/gallon basis; total compliance 

costs are determined by multiplying the 

¢/gallon costs by the relevant fuel 

volumes. Therefore, total fuel costs 

increase as the demand for fuel 

increases. The variable operating costs 

are based on the natural gas cost of 

producing hydrogen and for heating 

diesel fuel for the new desulfurization 

39144 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

equipment, and thus would fluctuate 

along with the price of natural gas. 

Operating Savings. Operating savings 

refers to changes in operating costs that 

are expected to be realized by users of 

both existing and new nonroad diesel 

equipment as a result of the reduced 

sulfur content of nonroad diesel fuel. 

These include operating savings (cost 

reductions) due to fewer oil changes, 

which accrue to nonroad, marine and 

locomotive engines that are already in 

use as well as new nonroad engines that 

will comply with the standards (see

Section VI.B). These also include any 

extra operating costs associated with the 

new PM emission control technology 

which may accrue to certain new 

engines that use this technology. 

Operating savings are not included in 

the market analysis because some of the 

savings accrue to existing engines and 

because, as explained in Section 

VI.C.1.c, these savings are not expected 

to affect consumer decisions with 

respect to new engines. Operating 

savings are included in the social cost 

analysis, however, because they accrue 

to society. They are added into the 

estimated social costs as an additional 

savings to the application and 

transportation service markets, since it 

is the users of these engines and fuels 

who will see these savings. A sensitivity 

analysis was performed as part of this 

EIA that includes the operating savings 

in the market analysis. The results of 

this sensitivity analysis are presented in 

Appendix 10.I. 

Fuel Marker Costs. Fuel marker costs 

refers to costs associated with marking 

high sulfur heating oil to distinguish it 

from high sulfur diesel fuel produced 

after 2007 through the use of early 

sulfur credits or small refiner 

provisions. Only heating oil sold 

outside of the Northeast is affected. The 

higher sulfur NRLM fuel is not allowed 

to be sold in most of the Northeast, so 

the marker need not be added in this 

large heating oil market. These costs are 

expected to be about $810,000 in 2007, 

increasing to $1.38 million in 2008, but 

steadily decreasing thereafter to about 

$940,000 in 2040 (see Chapter 10 of the 

RIA). Because these costs are relatively 

small, they are incorporated into the 

estimated compliance costs for the fuel 

program (see discussion of fuel costs, 

above). They are therefore not counted 

separately in this economic impact 

analysis. This means that the costs of 

marking heating fuel are allocated to all 

users of the fuel affected by this rule 

(nonroad, locomotive, and marine) 

instead of uniquely to heating oil users. 

This is a reasonable approach since it is 

likely that refiners will pass the marker 

costs along their complete nonroad 

diesel product line and not just to 

heating oil.

Fuel Spillover. Spillover fuel is 

highway grade diesel fuel consumed by 

nonroad equipment, stationary diesel 

engines, boilers, and furnaces. As 

described in Section 7.1 of Chapter 7 of 

the final RIA, refiners are expected to 

produce more 15 ppm fuel than is 

required for the highway diesel market. 

This excess 15 ppm fuel will be sold 

into markets that allow fuel with a 

higher sulfur level (i.e., nonroad for a 

limited period of time, locomotive, 

marine diesel and heating oil). This 

spillover fuel is affected by the diesel 

highway rule and is not affected by this 

regulation. Therefore, it is important to 

differentiate between spillover and 

nonspillover fuel to ensure that the 

compliance costs for that fuel pool are 

not counted twice. In the NDEIM, this 

is done by incorporating the impact of 

increased fuel costs associated with the 

highway rule prior to analysis of the 

final nonroad rule (see RIA Section 

10.3.8). 

Compliance Flexibility Provisions. 

Consistent with the engine and 

equipment cost discussion in Section 

VI.C, the EIA does not include any cost 

savings associated with the equipment 

transition flexibility program or the 

nonroad engine ABT program. As a 

result, the results of this EIA can be 

viewed as somewhat conservative. 

Locomotive and Marine Fuel Costs.

The locomotive and marine 

transportation sectors are affected by 

this rule through the sulfur limits on the 

diesel fuel used by these engines. These 

sectors provide transportation to the 

three application markets as well as to 

other markets not considered in the 

NDEIM (e.g., public utilities, 

nonmanufacturing service industries, 

government). As explained in Section 

10.3.1.5 of the RIA, the NDEIM applies 

only a portion of the locomotive and 

marine fuel costs to the three 

application markets. The rest of the 

locomotive and marine fuel costs are 

added as a separate item to the total 

social cost estimates (as Application 

Markets Not Included in NDEIM). 

3. What Are the Results of this 

Analysis? 

Using the revised cost data described 

earlier in this section and the NDEIM 

described above and in Chapter 10 of 

the Final RIA, we estimated the 

economic impacts of the nonroad 

engine, equipment and fuel control 

program. Economic impact results for 

2013, 2020, 2030, and 2036 are 

presented in this section. The first of 

these years, 2013, corresponds to the 

first year in which the standards affect 

all engines, equipment, and fuels. It 

should be noted that, as illustrated in 

Table VI–F–3, aggregate program costs 

peak in 2014; increases in costs after 

that year are due to increases in the 

population of engines over time. The 

other years, 2020, 2030 and 2036, 

correspond to years analyzed in our 

benefits analysis. Detailed results for all 

years are included in the appendices to 

Chapter 10 of the RIA. 

In the following discussion, social 

costs are computed as the sum of market 

surplus offset by operating savings. 

Market surplus is equal to the aggregate 

change in consumer and producer 

surplus based on the estimated market 

impacts associated with the rule. As 

explained above, operating savings are 

not included in the market analysis but 

instead are listed as a separate category 

in the social cost results tables.

In considering the results of this 

analysis, it should be noted that the 

estimated output quantities for diesel 

engines, equipment, and fuel are not 

identical to those estimated in the 

engineering cost described in above and 

presented in Chapters 6 and 7 of the 

RIA. The difference is due to the 

different methodologies used to estimate 

these costs. As noted above, social costs 

are the value of goods and services lost 

by society resulting from: (a) the use of 

resources to comply with and 

implement a regulation (i.e., compliance 

costs); and (b) reductions in output. 

Thus, the social cost analysis considers 

both price and output (quantity) effects 

associated with consumer and producer 

reaction to increased prices associated 

with the regulatory compliance costs. 

The engineering cost analysis, on the 

other hand, is based on applying 

additional technology to comply with 

the new regulations. The engine 

population in the engineering cost 

analysis does not reflect consumer and 

producer reactions to the compliance 

costs. Consequently, the estimated 

output quantities from the cost analysis 

are slightly larger than the estimated 

output quantities from the social cost 

analysis. 

The results of this analysis suggest 

that the economic impacts of this rule 

are likely to be small, on average. Price 

increases in the application markets are 

expected to average about 0.1 percent 

per year. Output decrease in the 

application markets are expected to 

average less than 0.02 percent for all 

years. The price increases for engines, 

equipment, and fuel are expected to be 

about 20 percent, 3 percent, and 7 

percent, respectively (total impact 

averaged over the relevant years). The 

number of engines and equipment 

produced is expected to decrease by less 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39145

249The NDEIM distinguishes between 

‘‘merchant’’ engines and ‘‘captive’’ engines. 

‘‘Merchant’’ engines are produced for sale to 

another company and are sold on the open market 

to anyone who wants to buy them. ‘‘Captive’’

engines are produced by a manufacturer for use in 

its own nonroad equipment line (this equipment is 

said to be produced by ‘‘integrated’’ manufacturers). 

The market analysis for engines includes 

compliance costs for merchant engines only. The 

market analysis for equipment includes equipment 

compliance costs plus a portion of the engine 

compliance costs attributable to captive engines.

250 It should be noted that the equipment prices 

used in this analysis reflect current market 

conditions. An increase in equipment prices 

associated with the nonroad Tier 3 standards would 

reduce size of the percentage increase in price. In 

this sense, our Economic Impact Analysis is 

conservative as it is based on the impact of the Tier 

4 program on Tier 1 and Tier 2 equipment prices 

and therefore overestimates the market impacts of 

the Tier 4 program.

than 250 units, and the amount of fuel 

produced annually is expected to 

decrease by less than 4 million gallons. 

With respect to the economic welfare 

analysis, producers and consumers in 

the application markets are expected to 

bear about 83 percent of the burden in 

2013; this will increase to about 96 

percent in 2030 and beyond. In other 

words, despite the almost total passthrough of costs the average price of 

goods and services in the application 

markets is expected to increase by only 

0.1 percent. This outcome reflects the 

fact that diesel engines, equipment, and 

fuel are only a small part of total costs 

for the application markets. These 

results are described in more detail 

below and in Chapter 10 of the Final 

RIA. 

a. Expected Market Impacts 

The estimated market impacts for 

2013, 2020, and 2030 are presented in 

Table VI.F–1. The market-level impacts 

presented in this table represent 

production-weighted averages of the 

individual market-level impact 

estimates generated by the model: the 

average expected price increase and 

quantity decrease across all of the units 

in each of the engine, equipment, fuel, 

and final application markets. For 

example, the model includes seven 

individual engine markets that reflect 

the seven different horsepower size 

categories. The 21.4 percent price 

change for engines shown in Table 

VI.F–1 for 2013 is an average price 

change across all engine markets 

weighted by the number of production 

units. Similarly, the equipment impacts 

presented in Table VI.F–1 are the 

weighted averages of 42 equipmentapplication markets, such as small 

(<25hp) agricultural equipment and 

large (>600hp) industrial equipment. 

Note that price increases and quantity 

decreases for specific types of engines, 

equipment, application sectors, or diesel 

fuel markets are likely to be different. 

The aggregated data presented in this 

table provide a broad overview of the 

expected market impacts that is useful 

when considering the impacts of the 

rule on the economy as a whole. The 

individual market-level impacts are 

presented in Chapter 10 of the Final 

RIA.249

The market impacts of this rule 

suggest that the overall economic 

impact of the emission control program 

on society is expected to be small, on 

average. According to this analysis, the 

average prices of goods and services 

produced using equipment and fuel 

affected by the rule are expected to 

increase by about 0.1 percent (as noted 

above), despite the almost total passthrough of compliance costs to those 

markets. 

Engine Market Results: This analysis 

suggests that most of the variable costs 

associated with the rule will be passed 

along in the form of higher prices. The 

average price increase in 2013 for 

engines is estimated to be about 21.4 

percent. This percentage is expected to 

decrease to about 18.3 percent by 2020. 

In 2036, the last year considered, the 

average price increase is expected to be 

about 18.2 percent. This expected price 

increase varies by engine size because 

compliance costs are a larger share of 

total production costs for smaller 

engines. In 2013, the largest expected 

percent price increase is for engines 

between 25 and 50 hp: 29 percent or 

$850; the average price for an engine in 

this category is about $2,900. However, 

this price increase is expected to drop 

to 22 percent, or about $645, for 2015 

and later. The smallest expected percent 

price increase in 2013 is for engines in 

the greater than 600 hp category. These 

engines are expected to see price 

increases of about 3 percent increase in 

2013, increasing to about 7.6 percent in 

2015 and then decreasing to about 6.6 

percent in 2017 beyond. The expected 

price increase for these engines is about 

$2,240 in 2013, increasing to about 

$6,150 in 2015 and then decreasing to 

$5,340 in 2017 and later, for engines 

that cost on average about $80,500. 

The market impact analysis predicts 

that even with these increased in engine 

prices, total demand is not expected to 

change very much. The expected 

average change in quantity is less than 

150 engines per year, out of total sales 

of more than 500,000 engines. The 

estimated change in market quantity is 

small because as compliance costs are 

passed along the supply chain they 

become a smaller share of total 

production costs. In other words, firms 

that use these engines and equipment 

will continue to purchase them even at 

the higher cost because the increase in 

costs will not have a large impact on 

their total production costs (diesel 

equipment is only one factor of 

production for their output of 

construction, agricultural, or 

manufactured goods). 

Equipment Market Results: Estimated 

price changes for the equipment markets 

reflect both the direct costs of the new 

standards on equipment production and 

the indirect cost through increased 

engine prices. In general, the estimated 

percentage price changes for the 

equipment are less than that for engines 

because the engine is only one input in 

the production of equipment. In 2013, 

the average price increase for nonroad 

diesel equipment is estimated to be 

about 2.9 percent.250 This percentage is 

expected to decrease to about 2.5 

percent for 2020 and beyond. The range 

of estimated price increases across 

equipment types parallels the share of 

engine costs relative to total equipment 

price, so the estimated percentage price 

increase among equipment types also 

varies. For example, the market price in 

2013 for agricultural equipment 

between 175 and 600 hp is estimated to 

increase about 1.2 percent, or $1,740 for 

equipment with an average cost of 

$143,700. This compares with an 

estimated engine price increase of about 

$1,700 for engines of that size. The 

largest expected price increase in 2013 

for equipment is $2,290, or 2.6 percent, 

for pumps and compressors over 600 

hp. This compares with an estimated 

engine price increase of about $2,240 for 

engines of that size. The smallest 

expected price increase in 2013 for 

equipment is $120, or 0.7 percent, for 

construction equipment less than 25 hp. 

This compares with an estimated engine 

price increase of about $120 for engines 

of that size.

Again, the market analysis predicts 

that even with these increased 

equipment prices total demand is not 

expected to change very much. The 

expected average change in quantity is 

less than 250 pieces of equipment per 

year, out of a total sales of more than 

500,000 units. The average decrease in 

the quantity of nonroad diesel 

equipment produced as a result of the 

regulation is estimated to be about 0.02 

percent for all years. The largest 

expected decrease in quantity in 2013 is 

18 units of construction equipment per 

year for construction equipment 

between 100 and 175 hp, out of about 

63,000 units. The smallest expected 

decrease in quantity in 2013 is less than 

39146 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

one unit per year in all hp categories of 

pumps and compressors. 

It should be noted that the absolute 

change in the number of engines and 

equipment does not match. This is 

because the absolute change in the 

quantity of engines represents only 

engines sold on the market. Reductions 

in engines consumed internally by 

integrated engine/equipment 

manufacturers are not reflected in this 

number but are captured in the cost 

analysis.

TABLE VI.F–1.—SUMMARY OF MARKET IMPACTS ($2002) 

Market 

Engineering 

cost 

Change in price Change in quantity 

Per unit 

Absolute 

($million) Percent Absolute Percent 

2013

Engines .................................................................................................... $1,052 $821 21.4 a¥79 ¥0.014 

Equipment ................................................................................................ 1,198 975 2.9 ¥139 ¥0.017 

Loco/Marine Transp b ............................................................................... .................... .................... 0.009 .................... ¥0.007 

Application Markets b ............................................................................... .................... .................... 0.097 .................... ¥0.015 

No. 2 Distillate Nonroad ........................................................................... 0.06 0.07 6.0 c¥2.75 ¥0.019 

2020

Engines .................................................................................................... 950 761 18.3 a¥98 ¥0.016 

Equipment ................................................................................................ 1,107 976 2.5 ¥172 ¥0.018 

Loco/Marine Transp b ............................................................................... .................... .................... 0.001 .................... ¥0.008 

Application Markets b ............................................................................... .................... .................... 0.105 .................... ¥0.017 

No. 2 Distillate Nonroad ........................................................................... 0.07 0.07 7.0 c¥3.00 ¥0.021 

2030

Engines .................................................................................................... 937 751 18.2 a¥114 ¥0.016 

Equipment ................................................................................................ 968 963 2.5 ¥200 ¥0.018 

Loco/Marine Transp b ............................................................................... .................... .................... 0.010 .................... ¥0.008 

Application Markets b ............................................................................... .................... .................... 0.102 .................... ¥0.016 

No. 2 Distillate Nonroad ........................................................................... 0.07 0.07 7.0 c¥3.53 ¥0.022 

2036

Engines .................................................................................................... 931 746 18.2 a¥124 ¥0.016 

Equipment ................................................................................................ 962 956 2.5 ¥216 ¥0.018 

Loco/Marine Transp b ............................................................................... .................... .................... 0.010 .................... ¥0.008 

Application Markets b ............................................................................... .................... .................... 0.101 .................... ¥0.016 

No. 2 Distillate Nonroad ........................................................................... 0.07 0.07 7.0 c¥3.85 ¥0.022 

Notes:

aThe absolute change in the quantity of engines represents only engines sold on the market. Reductions in engines consumed internally by integrated engine/equipment manufacturers are not reflected in this number but are captured in the cost analysis. For this reason, the absolute 

change in the number of engines and equipment does not match. bThe model uses normalized commodities in the application markets because of the great heterogeneity of products. Thus, only percentage 

changes are presented. c Units are in million of gallons. 

Transportation Market Results: The 

estimated price increase associated with 

the proposed standards in the 

locomotive and marine transportation 

markets is negligible, at 0.01 percent for 

all years. This means that these 

transportation service providers are 

expected to pass along nearly all of their 

increased costs to the agriculture, 

construction, and manufacturing 

application markets, as well as other 

application markets not explicitly 

modeled in the NDEIM. This price 

increases represent a small share of total 

application market production costs, 

and therefore are not expected to affect 

demand for these services.

Application Market Results: The 

estimated price increase associated with 

the new standards in all three 

application markets is very small and 

averages about 0.1 percent for all years. 

In other words, on average, the prices of 

goods and services produced using the 

affected engines, equipment, and fuel 

are expected to increase negligibly. This 

results from the observation that 

compliance costs passed on through 

price increases represent a very small 

share of total production costs in all the 

application markets. For example, the 

construction industry realizes an 

increase in production costs of 

approximately $580 million in 2013 

because of the price increases for diesel 

equipment and fuel. However, this 

represents less than 0.001 percent of the 

$820 billion value of shipments in the 

construction industry in 2000. The 

estimated average commodity price 

increase in 2013 ranges from 0.08 

percent in the manufacturing 

application market to about 0.5 percent 

in the construction market. The 

percentage change in output is also 

estimated to be very small and averages 

less than 0.02 percent for all years. Note 

that these estimated price increases and 

quantity decreases are average for these 

sectors and may vary for specific 

subsectors. Also, note that absolute 

changes in price and quantity are not 

provided for the application markets in 

Table VI.F–1 because normalized 

commodity values are used in the 

market model. Because of the great 

heterogeneity of manufactured or 

agriculture products, a normalized 

commodity ($1 unit) is used in the 

application markets. This has no impact 

on the estimated percentage change 

impacts but makes interpretation of the 

absolute changes less informative. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39147

Fuel Markets Results: The estimated 

average price increase across all 

nonroad diesel fuel is about 7 percent 

for all years. For 15 ppm fuel, the 

estimated price increase for 2013 ranges 

from 5.6 percent in the East Coast region 

(PADD 1&3) to 9.1 percent in the 

mountain region (PADD 4). The average 

national output decrease for all fuel is 

estimated to be about 0.02 percent for 

all years, and is relatively constant 

across all four regional fuel markets. 

b. Expected Economic Welfare Impacts 

Estimated social costs are presented 

in Table VI.F–2. In 2013, the total social 

costs are projected to be about $1,510 

million ($2002). About 83 percent of the 

total social costs is expected to be borne 

by producers and consumers in the 

application markets in 2013, indicating 

that the majority of the compliance costs 

associated with the rule are expected to 

be passed on in the form of higher 

prices. When these estimated impacts 

are broken down, about 58.5 percent of 

the social costs are expected to be borne 

by consumers in the application markets 

and about 41.5 percent are expected to 

be borne by producers in the application 

markets. Equipment manufacturers are 

expected to bear about 9.5 percent of the 

total social costs. Engine manufacturers 

and diesel fuel refineries are expected to 

bear 2.8 percent and 0.5 percent, 

respectively. The remaining 4.2 percent 

of the social costs is expected to be 

borne by the locomotive and marine 

transportation service sector. In this last 

sector, about 97 percent of the gross 

decrease in market surplus is expected 

to be borne by the application markets 

that are not included in the NDEIM but 

that use these services (e.g., public 

utilities, nonmanufacturing service 

industries, government) while about 3 

percent is expected to be borne by 

locomotive and marine service 

providers. Because of the way the 

NDEIM is structured, with the fuel 

savings added separately, the results 

imply that locomotive and marine 

service provider would see net benefits 

from the rule due to the operating 

savings associated with low sulfur fuel. 

In fact, they are likely to pass along 

some or all of those operating savings to 

the users of their services, reducing the 

size of the welfare losses for those users. 

Total social costs continue to increase 

over time and are projected to be about 

$2,046 million by 2030 and $2,227 

million in 2036 ($2002). The increase is 

due to the projected annual growth in 

the engine and equipment populations. 

Producers and consumers in the 

application markets are expected to bear 

an even larger portion of the costs, 

approximately 96 percent. This is 

consistent with economic theory, which 

states that, in the long run, all costs are 

passed on to the consumers of goods 

and services. 

The present value of total social costs 

through 2036, contained in Table VI.F–

3, is estimated to be $27.2 billion 

($2002). This present value is calculated 

using a social discount rate of 3 percent 

from 2004 through 2036. We also 

performed an analysis using a 7 percent 

social discount rate. Using that discount 

rate, the present value of the social costs 

through 2036 is estimated to be $13.9 

billion ($2002). As shown in Table 

VI.F–3, these results suggest that total 

engineering costs exceed compliance 

costs by a small amount. This is due 

primarily to the fact that the estimated 

output quantities for diesel engines, 

equipment, and fuel are not identical to 

those estimated in the engineering cost 

analysis, which is due to the different 

methodologies used to estimate these 

costs (see previous discussion in this 

Section IV.F.3).

TABLE VI.F–2.—SUMMARY OF SOCIAL COSTS ESTIMATES ASSOCIATED WITH PRIMARY PROGRAM 2015, 2020, 2030, AND

2036 

[2002, $Million]a, b

Market surplus ($10 6) 

Operating 

savings 

($10 6) 

Total Percent 

2013

Engine Producers Total ................................................................................................... $42.0 .................... $42.0 2.8 

Equipment Producers Total ............................................................................................. 143.1 .................... 143.1 9.5 

Construction Equipment ........................................................................................... 64.0 .................... 64.0 ....................

Agricultural Equipment ............................................................................................. 51.8 .................... 51.8 ....................

Industrial Equipment ................................................................................................. 27.2 .................... 27.2 ....................

Application Producers & Consumers Total ..................................................................... 1,496.7 ($243.2) 1,253.5 83.0 

Total Producer .......................................................................................................... 620.9 .................... .................... 41.5 

Total Consumer ........................................................................................................ 875.7 .................... .................... 58.5 

Construction .............................................................................................................. 584.3 ($115.2) 469.2 ....................

Agriculture ................................................................................................................. 430.0 ($78.2) 351.8 

Manufacturing ........................................................................................................... 482.4 ($49.8) 432.5 ....................

Fuel Producers Total ....................................................................................................... 8.0 .................... 8.0 0.5 

PADD I&III ................................................................................................................ 4.1 .................... 4.1 ....................

PADD II ..................................................................................................................... 3.3 .................... 3.3 ....................

PADD IV ................................................................................................................... 0.0 .................... 0.0 ....................

PADD V .................................................................................................................... 0.6 .................... 6.0 ....................

Transportation Services, Total ......................................................................................... 104.9 ($41.5) 63.4 4.2 

Locomotive ............................................................................................................... 1.6 ($12.4) ($10.8) ....................

Marine ....................................................................................................................... 0.9 ($9.9) ($9.0) ....................

Application markets not included in NDEIM ............................................................. 102.4 ($19.2) $83.2 ....................

Total ................................................................................................................... 1,794.7 ($284.7) $1,510.0 100.0%

2020

.

Engine Producers Total ................................................................................................... 0.1 .................... 0.1 0.0 

Equipment Producers Total ............................................................................................. 122.7 .................... 122.7 6.7 

Construction Equipment ........................................................................................... 57.8 .................... 57.8 ....................

Agricultural Equipment ............................................................................................. 39.7 .................... 39.7 ....................

39148 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

TABLE VI.F–2.—SUMMARY OF SOCIAL COSTS ESTIMATES ASSOCIATED WITH PRIMARY PROGRAM 2015, 2020, 2030, AND

2036—Continued

[2002, $Million]a, b

Market surplus ($10 6) 

Operating 

savings 

($10 6) 

Total Percent 

Industrial Equipment ................................................................................................. 25.2 .................... 25.2 ....................

Application Producers & Consumers Total ..................................................................... 1,826.1 ($192.3) 1,633.8 89.4 

Total Producer .......................................................................................................... 762.2 .................... .................... 41.7 

Total Consumer ........................................................................................................ 1,063.8 .................... .................... 58.3 

Construction .............................................................................................................. 744.0 ($91.1) 653.0 ....................

Agriculture ................................................................................................................. 524.3 ($61.8) 462.5 ....................

Manufacturing ........................................................................................................... 557.8 ($39.4) 518.3 ....................

Fuel Producers Total ....................................................................................................... 11.2 .................... 11.2 0.6 

PADD I&III ................................................................................................................ 5.6 .................... 5.6 ....................

PADD II ..................................................................................................................... 4.6 .................... 4.6 ....................

PADD IV ................................................................................................................... 0.2 .................... 0.2 ....................

PADD V .................................................................................................................... 0.8 .................... 0.8 

Transportation Services, Total ......................................................................................... 95.7 ($35.1) 60.6 3.3 

Locomotive ............................................................................................................... 2.0 ($7.2) ($5.2) ....................

Marine ....................................................................................................................... 1.1 ($11.6) ($10.5) ....................

Application markets not included in NDEIM ............................................................. 92.6 ($16.3) 76.3 ....................

Total ................................................................................................................... 2,055.7 ($227.4) $1,828.3 100.0% 

2030

Engine Producers Total ................................................................................................... 0.1 .................... 0.1 0.0 

Equipment Producers Total ............................................................................................. 5.9 .................... 5.9 0.3 

Construction Equipment ........................................................................................... 4.0 .................... 4.0 ....................

Agricultural Equipment ............................................................................................. 1.9 .................... 1.9 ....................

Industrial Equipment ................................................................................................. 0.1 .................... 0.1 ....................

Application Producers & Consumers Total ..................................................................... 2,112.3 ($154.2) 1,958.1 95.7 

Total Producer .......................................................................................................... 882.2 .................... .................... 41.7 

Total Consumer ........................................................................................................ 1,230.1 .................... .................... 58.3 

Construction .............................................................................................................. 863.8 ($73.0) 790.8 ....................

Agriculture ................................................................................................................. 606.8 ($49.6) 557.2 ....................

Manufacturing ........................................................................................................... 641.6 ($31.6) 610.0 ....................

Fuel Producers Total ....................................................................................................... 13.2 .................... 13.2 0.6 

PADD I&III ................................................................................................................ 6.7 .................... 6.7 ....................

PADD II ..................................................................................................................... 5.2 .................... 5.2 ....................

PADD IV ................................................................................................................... 0.3 .................... 0.3 ....................

PADD V .................................................................................................................... 1.0 .................... 1.0 ....................

Transportation Services, Total ......................................................................................... 109.1 ($39.9) 69.2 3.4 

Locomotive ............................................................................................................... 2.5 ($7.8) ($5.3) ....................

Marine ....................................................................................................................... 1.4 ($13.6) ($12.2) ....................

Application markets not included in NDEIM ............................................................. 105.2 ($18.5) 86.7 ....................

Total ................................................................................................................... 2,240.6 ($194.1) $2,046.4 100.0% 

2036

Engine Producers Total ................................................................................................... 0.2 .................... 0.2 0.0 

Equipment Producers Total ............................................................................................. 6.4 .................... 6.4 0.3 

Construction Equipment ........................................................................................... 4.3 .................... 4.3 ....................

Agricultural Equipment ............................................................................................. 2.0 .................... 2.0 ....................

Industrial Equipment ................................................................................................. 0.1 .................... 0.1 ....................

Application Producers & Consumers Total ..................................................................... 2,287.4 ($155.7) 2,131.7 95.7 

Total Producer .......................................................................................................... 955.5 .................... .................... 41.7 

Total Consumer ........................................................................................................ 1,331.9 .................... .................... 58.3 

Construction .............................................................................................................. 936.4 ($50.0) 862.7 ....................

Agriculture ................................................................................................................. 657.8 ($73.7) 607.8 ....................

Manufacturing ........................................................................................................... 693.2 ($31.9) 661.3 ....................

Fuel Producers Total ....................................................................................................... 14.5 .................... 14.5 0.7 

PADD I&III ................................................................................................................ 7.3 .................... 7.3 ....................

PADD II ..................................................................................................................... 5.8 .................... 5.8 ....................

PADD IV ................................................................................................................... 0.3 .................... 0.3 ....................

PADD V .................................................................................................................... 1.0 .................... 1.0 ....................

Transportation Services, Total ......................................................................................... 116.9 ($42.6) 74.3 3.3 

Locomotive ............................................................................................................... 2.8 ($8.2) ($5.4) ....................

Marine ....................................................................................................................... 1.6 ($14.6) ($13.0) ....................

Application markets not included in NDEIM ............................................................. 112.5 ($19.8) 92.7 ....................

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39149

TABLE VI.F–2.—SUMMARY OF SOCIAL COSTS ESTIMATES ASSOCIATED WITH PRIMARY PROGRAM 2015, 2020, 2030, AND

2036—Continued

[2002, $Million]a, b

Market surplus ($10 6) 

Operating 

savings 

($10 6) 

Total Percent 

Total ................................................................................................................... $2,425.3 ($198.4) $2,227.0 100.0 

Notes: a Figures are in 2002 dollars. bOperating savings are shown as negative costs. 

TABLE VI.F–3.—NATIONAL ENGINEERING COMPLIANCE COSTS AND SOCIAL COSTS ESTIMATES FOR THE

RULE (2004–2036) 

[$2002; $Million] 

Year 

Engineering 

compliance 

costs 

Total social 

costs 

2004 0 0 

2005 0 0 

2006 0 0 

2007 ($17) ($18) 

2008 54 54 

2009 54 54 

2010 328 327 

2011 923 922 

2012 1,305 1,304 

2013 1,511 1,510 

2014 1,691 1,690 

2015 1,742 1,741 

2016 1,743 1,743 

2017 1,763 1,762 

2018 1,778 1,778 

2019 1,795 1,795 

2020 1,829 1,828 

2021 1,816 1,815 

2022 1,819 1,818 

2023 1,844 1,843 

2024 1,858 1,857 

2025 1,888 1,887 

2026 1,921 1,920 

2027 1,954 1,952 

2028 1,985 1,984 

2029 2,017 2,016 

2030 2,047 2,046 

2031 2,078 2,077 

2032 2,108 2,107 

2033 2,139 2,137 

2034 2,169 2,167 

2035 2,198 2,197 

2036 2,228 2,227 

NPV at 3% 27,247 27,232 

NPV at 7% 13,876 13,868 

VII. Alternative Program Options 

Considered 

Our final emission control program 

for nonroad engines and equipment 

consists of a two-step program to reduce 

the sulfur content of nonroad diesel fuel 

in conjunction with Tier 4 engine 

standards. The rule also contains limits 

on sulfur levels in locomotive and 

marine diesel fuel. As described in the 

draft Regulatory Impact Analysis for the 

proposal, we evaluated a number of 

alternative options with regard to the 

scope, level, and timing of the 

standards. This section presents a 

summary of those alternative program 

options and our reasons for either 

adopting or not adopting these options. 

A. Summary of Alternatives 

For our Notice of Proposed 

Rulemaking (NPRM), we developed 

emissions, benefits, and cost analyses 

for a number of alternative program 

options involving variations in both the 

fuel and engine programs. The 

alternatives we considered can be 

categorized according to the structure of 

their fuel requirements: whether the 15 

ppm fuel sulfur limit for nonroad diesel 

fuel is reached in two steps, like the 

program we are finalizing today, or in 

one step. Within each of these two 

broad fuel program categories, we 

considered a number of different engine 

programs. This section summarizes the 

alternatives. A more detailed 

description of the alternatives can be 

found in the NPRM and the draft RIA.

One-step alternatives were those in 

which the 15 ppm fuel sulfur standard 

for nonroad diesel fuel is applied in a 

single step. We evaluated three one-step 

alternatives, summarized in table VII–1. 

Option 1 represented an engine program 

that was similar to that in our proposed 

program, the primary difference being 

the generally earlier phase-in dates for 

the PM standards. We considered the 

Option 1 engine program as being the 

most stringent one-step program that 

could be considered even potentially 

feasible considering cost, lead-time, and 

other factors. Option 1 also included a 

June 2008 start date for the 15 ppm 

sulfur standard applicable to nonroad 

diesel fuel and the 500 ppm sulfur 

standard applicable to locomotive and 

marine fuel. We also considered two 

other one-step alternatives which differ 

from Option 1. As described in table 

VII–1, Option 1b differed from Option 1 

regarding the timing of the fuel 

standards, while Option 1a differed 

from Option 1 in terms of the engine 

standards. Options 1a and 1b also 

differed from Option 1 by extending the 

15 ppm fuel sulfur limit to locomotive 

and marine diesel fuel. 

Two-step alternatives were those in 

which the nonroad diesel fuel sulfur 

standard was set first at 500 ppm and 

then was reduced to 15 ppm. The twostep alternatives varied from the 

proposed program in terms of both the 

timing and levels of the engine 

standards and the timing of the fuel 

standards. Option 2a was the same as 

the proposed program except the 500 

ppm fuel standard was introduced a 

year earlier, in 2006. Option 2b was the 

same as the proposed program except 

the 15 ppm fuel standard was 

introduced a year earlier (in 2009) and 

the trap-based PM standards began 

earlier for all engines. Option 2c was the 

same as the proposed program except 

the 15 ppm fuel standard was 

introduced a year earlier in 2009 and 

the trap-based PM standards began 

earlier for engines 175–750 hp. Option 

2d was the same as the proposed 

program except the NOX standard was 

reduced to 0.30 g/bhp-hr for engines of 

25–75 hp, and this standard was phased 

in. Finally, Option 2e was the same as 

the proposed program except there were 

no new Tier 4 NOX limits. 

In the NPRM, option 3 was identical 

to the proposed program, except that it 

would have exempted mining 

equipment over 750 hp from the Tier 4 

standards. We explained in detail in 

section 12.6.2.2.7 of the draft RIA that 

we had very serious reservations 

regarding the legality of this option 

given these engines’ high emission rates 

of PM, NOX and NMHC and the 

availability of further emissions control 

at reasonable cost. We adhere to these 

conclusions here. We do note, however, 

that we are adopting somewhat different 

provisions for this engine category than 

we proposed. As explained in sections 

II.A. and II.B above, although we have 

adopted aftertreatment-based PM 

standards for these engines, the 

standards are slightly higher than those 

proposed to assure their technical 

feasibility. We also have deferred a 

decision on whether to adopt 

aftertreatment-based standards for NOX

for mobile machines with engines 

greater than 750 hp. We also have 

provided ample lead time for these 

engines to comply with the Tier 4 

standards, both in terms of the rule’s 

compliance dates (which include a 2015 

39150 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

date for the final Tier 4 standards, one 

year later than we proposed) and the 

ABT and equipment manufacturer 

flexibilities. This lead time takes into 

account the long design periods, high 

cost, and low sales volumes of these 

engines. Thus, although we strongly 

disagree with the option of not adopting 

Tier 4 standards for these engines, we 

do recognize their need for unique 

standards and compliance dates. 

Option 4 included applying the 15 

ppm sulfur limit to both locomotive and 

marine diesel fuel in addition to 

nonroad fuel. On the basis of comments 

received and additional analyses, we 

have determined that a 15ppm sulfur 

standard for locomotive and marine fuel 

is appropriate, though we have included 

certain options for utilization of offspecification fuel and transmix not 

represented in our original Option 4. 

This aspect of our final program is 

discussed in detail in section IV. 

Options 5a and 5b were identical to 

the proposed program except with 

respect to standards for engines less 

than 75 hp. Option 5a was identical to 

the proposed program except that no 

new program requirements would be set 

in Tier 4 for engines under 75 hp. 

Instead, Tier 2 standards and testing 

requirements for engines under 50 hp, 

and Tier 3 standards and testing 

requirements for 50–75 hp engines, 

would continue indefinitely. The 

Option 5b program was identical to the 

proposed program except that for 

engines under 75 hp only the 2008 

engine standards would be set, i.e. there 

would be no additional PM filter-based 

standard in 2013 for 25–75 hp engines, 

and no additional NOX + NMHC 

standard in 2013 for 25–50 hp engines. 

We are not adopting Options 5a or 5b 

in today’s action. As explained at 8.2.3 

of the Summary and Analysis of 

Comments, and in sections 12.6.2.2.9 

and 12.6.2.2.10 of chapter 12 of the draft 

RIA, these options would forego 

substantial PM and NOX + NMHC 

emission reductions (on the order of 

hundreds of thousands of tons of each 

pollutant) which are feasible at 

reasonable cost. We note further that 

many of these smaller engines operate 

in populated areas and in equipment 

without closed cabs—in mowers, small 

construction machines, and the like—

where personal exposures to toxic 

emissions (both PM and air toxics 

which are part of the NMHC fraction) 

may be pronounced well beyond what 

is indicated simply by a comparison of 

nationwide emissions inventory 

estimates. We would also emphasize the 

remarkable growth in recent sales and 

usage for these smaller diesel machines, 

and we expect this trend to continue, 

pointing up the need for effective PM 

emissions control from these engines. 

We thus do not see a basis in law or 

policy to adopt either of these options. 

In response to comments on our 

NPRM we also investigated a number of 

other variations in the engine standards 

as we developed our final rule. These 

variations were generally related to the 

phase-in of engine standards in a 

number of different horsepower 

categories. A discussion of these 

variations is provided in section II as 

well as in various background 

documents. 

Table VII–1 contains a summary of a 

number of these alternatives. The 

expected emission reductions, costs, 

and monetized benefits associated with 

them in comparison to the proposed 

program were evaluated for the NPRM. 

Those analyses were not revised for this 

final rulemaking to reflect changes in 

our empirical models or assumptions. 

We received no new information that 

would cause us to believe that the 

relative impacts and differences for 

those alternative program options 

relative to our final program would 

change enough to make an impact on 

our assessments of the feasibility or 

appropriateness of the options. The 

remainder of this section will 

summarize some of the comments we 

received on the options and our 

responses to those comments.

TABLE VII–1.—SUMMARY OF ALTERNATIVE PROGRAM OPTIONS

Option Fuel Standards Engine Standards a

Final program

• 500 PPM in 2007 for NR, loco/marine ........................................ • <75 hp: PM standards in 2008 

• 15 ppm in 2010 for NR ................................................................ • 25–75 hp: PM AT-based standards in 2013 

• 15 ppm in 2012 for loco/marine .................................................. • 75–175 hp: PM AT-based standards in 2012 

• 175–750 hp: PM AT-based standards in 2011 

• 75–175 hp: NOX AT-based standards phase-in 2012–2014 

• 175–750 hp: NOX AT-based standards phase-in 2011–2014 

• >750 hp: PM and NOX AT phased-in 2011 and 2015 

1-Step Fuel Options

1 ........... • 15 ppm in 2008 for NR and loco/marine ..................................... • <50 hp: PM stds only in 2009 

• 25–75 hp: PM AT stds and EGR or equivalent NOX technology 

in 2013; no NOX AT 

• >75 hp: PM AT stds phasing in beginning in 2009; NOX AT 

phasing in beginning in 2011 

1a ......... • 15 ppm in 2008 for NR, loco/marine ........................................... • PM AT introduced in 2009–10 

• NOX AT introduced in 2011–12 

1b ......... • 15 ppm in 2006 for NR, loco/marine ........................................... Same as 1a 

2-Step Fuel Options

2a ......... Same as proposed program except— ............................................ Same as proposed program 

• 500 ppm in 2006 for NR, loco/marine.

2b ......... Same as proposed program except— ............................................ Same as proposed program except—

• 15 ppm in 2009 for NR and loco/marine ..................................... • Move PM AT up 1 year for all engines >25 hp (phase in starts 

2010) 

2c ......... Same as proposed program except— ............................................ Same as proposed program except—

• 15 ppm in 2009 for NR and loco/marine ..................................... • Move PM AT up 1 year for all engines 175–750 hp (phase in 

starts 2010) 

2d ......... • Same as proposed program ........................................................ Same as proposed program except—

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39151

TABLE VII–1.—SUMMARY OF ALTERNATIVE PROGRAM OPTIONS—Continued

Option Fuel Standards Engine Standards a

• Phase-in NOX AT for 25–75hp beginning in 2013 

Other Options

3 ........... • Same as proposed program ........................................................ Same as proposed program except—

• Mining equipment over 750 hp left at Tier 2 

4 ........... Same as proposed program except— ............................................ Same as proposed program 

• Downgrade flexibilities for loco/marine not included.

5a ......... • Same as proposed program ........................................................ Same as proposed program except—

• No Tier 4 standards <75 hp 

5b ......... • Same as proposed program ........................................................ Same as proposed program except—

• No new <75hp standards after 2008 (i.e., no CDPFs in 2013) 

Notes: aAT = aftertreatment. 

B. Introduction of 15 ppm Nonroad 

Diesel Sulfur Fuel in One Step 

EPA carefully evaluated an alternative 

which would require that the nonroad 

diesel sulfur level be reduced to 15ppm 

in a single step, beginning June 1, 2008. 

The one-step fuel options, including the 

three variations Option 1, Option 1a, 

and Option 1b, were presented and 

discussed in detail in the NPRM and in 

the draft RIA. 

Many comments were received about 

a one step diesel fuel sulfur control 

approach taking effect in 2008. Refiners 

commented that they did not think that 

they could reduce both the highway and 

nonroad diesel fuel pools down to 15 

ppm in the same timeframe while 

maintaining the supply of these two 

diesel fuel pools. The refiners went on 

to say that having a 500 ppm outlet for 

off-specification material in the nonroad 

diesel fuel pool is critical in the years 

after reducing the highway diesel fuel 

pool to 15 ppm to ensure supply of 

highway fuel. The refining industry 

further commented that the one step 

program would provide fewer 

environmental benefits and also provide 

the refining industry less time and 

flexibility to make the transition to the 

15 ppm sulfur level for nonroad diesel 

fuel compared to a two step approach. 

While many environmental 

organizations and the Engine 

Manufacturers Association (EMA) 

commented that they preferred a 15 

ppm standard as soon as possible, EMA 

also pointed out that a quick transition 

to 500 ppm would provide important 

fleet-wide emission reductions, reduce 

maintenance costs and enable the use of 

certain emission control technology 

such as exhaust gas recirculation and 

oxidation catalysts. Commenters 

generally said little about the engine 

standards associated with the one-step 

options, other than to point out that 

earlier introduction of 15 ppm sulfur 

fuel means that aftertreatment-based 

standards and nonroad engine retrofits 

can also be introduced earlier. 

The reasons provided in the NPRM 

for choosing the two step program over 

the one-step program still apply and 

generally address the comments 

received (see section 12.6.2 of the draft 

RIA). Although there would be greater 

PM and NOX emission reductions with 

the one-step approach due to earlier 

introduction of aftertreatment 

technology enabled by the 15 ppm 

sulfur diesel fuel, the SO2 emission 

benefits for the two-step approach are 

greater due to the earlier adoption of the 

500 ppm sulfur standard. Thus, even 

assuming that the one-step approach 

would not jeopardize implementation of 

the highway diesel emission rule, the 

emission impacts of these two options 

are mixed. Moreover, the costs for 

achieving the second step (15 ppm) of 

the two step approach are likely to be 

lower than under the one step approach. 

This is because advanced 

desulfurization technologies are much 

more likely to be used in 2010 after 

additional testing and demonstration, 

while they may hardly be considered at 

all if they would have to be installed for 

2008. One advanced desulfurization 

technology, Process Dynamics 

Isotherming, is expected to lower the 

cost of complying with the 15 ppm step 

by about one cent per gallon. This cost 

discrepancy is expected to persist since 

it is associated with the investment of 

significant capital which cannot be 

modified or replaced without significant 

additional expense. Additionally, under 

the two step program, refiners will be 

able to use their experience in 

complying with 15 ppm highway diesel 

fuel sulfur standard to better design 

their nonroad hydrotreaters needed for 

2010.

After careful consideration of these 

matters, we have decided to finalize the 

two-step approach in today’s action. 

C. Applying the 15 ppm Sulfur Cap to 

Locomotive and Marine Diesel Fuel 

In the NPRM, we requested comment 

on extending the 15 ppm cap to 

locomotive and marine diesel fuel in 

2010 or some later year as part of this 

rule. The costs and inventory impacts of 

this alternative were explored in the 

context of Option 4 in the NPRM. A 

15ppm sulfur cap for locomotive and 

marine fuel would increase the longterm PM and SO2 benefits of the rule 

and would reduce the number of fuels 

being carried in the distribution system 

after 2014, when the small refiner 

provisions of this rule expire. It would 

also allow refiners to plan to comply 

with the 15 ppm cap for locomotive and 

marine diesel fuel at the same time as 

they plan to comply with the 500 ppm 

cap for NRLM fuel and the 15 ppm cap 

for nonroad fuel. 

As a result of comments received and 

additional analyses performed since the 

NPRM, we are finalizing a 15 ppm 

sulfur cap for locomotive and marine 

fuel in today’s notice. A full discussion 

of the feasibility and benefits of a 15 

ppm sulfur cap for locomotive and 

marine fuel can be found in section IV, 

along with a summary of the comments 

we received and our responses to those 

comments. In addition, we are planning 

a separate rule to implement new 

emission standards for locomotive and 

marine diesel engines that will build 

upon the 15 ppm sulfur standard 

applicable to fuel used by these engines. 

We are publishing an Advanced Notice 

of Proposed Rulemaking in another 

section of today’s Federal Register

describing our plans in this area. 

D. Other Alternatives 

We also analyzed a number of other 

alternatives in the NPRM, as 

summarized in table VII–1. Some of 

these focused on control options more 

stringent than our final program while 

others reflect modified engine 

39152 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

251Council of the European Union, ≥Directive of 

the European Parliament and of the Council 

amending Directive 97/68/EC,≥ March 15, 2004.

requirements that result in less stringent 

control. In the NPRM we presented our 

assessment of these options in terms of 

the feasibility, emission reductions, 

costs, and other relevant factors. Few 

comments were received on these other 

alternatives, and no new information 

arose to alter what we believe are 

significant concerns with respect to 

these Options compared to the final 

program. Hence, with the exception of 

the few alternative program elements 

that we did incorporate into our final 

program as described earlier in this 

section, we did not include these 

options into our final program. Our 

detailed responses to all the comments 

received on the other alternatives can be 

found in section 8 of the Summary and 

Analysis of Comments document. 

VIII. Future Plans 

The above discussion describes the 

contents of this final rule. This section 

addresses a variety of areas not 

addressed by this rule. In these several 

areas, we expect to continue our efforts 

to improve our compliance programs 

and achieve further reductions in 

emissions from nonroad engines. 

A. Technology Review 

As we described in sections III.E and 

G of the proposal, there are some 

technology issues that warrant our 

planning a future review of emissions 

control technology for engines under 75 

hp. Under our implementation schedule 

presented in section II.A, standards 

based on the use of PM filter technology 

will take effect in the 2013 model year 

for 25–75 hp engines (or in the 2012 

model year for manufacturers opting to 

skip the transitional standards for 50–75 

hp engines). However, at this time we 

have not decided what long-term PM 

standards for engines under 25 hp are 

appropriate. No PM filter-based 

standards are being adopted for these 

under 25 hp engines in this final rule. 

Likewise, we have not decided what the 

long-term NOX standards for engines 

under 75 hp should be, and no NOX

adsorber-based standards are being set 

for these engines in this final rule. As 

part of the technology review, we plan 

to thoroughly evaluate progress made 

toward applying advanced PM and NOX

control technologies to these smaller 

engines.

We plan to conduct the technology 

review in 2007, and to conclude it by 

the end of that year, to give 

manufacturers lead time should an 

adjustment in the program be 

considered appropriate. We do not 

intend to include in the technology 

review a reassessment of PM filter 

technology needed to meet the optional 

0.02 g/hp-hr PM standard for 50–75 hp 

engines in 2012. We assume that 

manufacturers would only choose this 

option if they had confidence that they 

could meet the 0.02 g/hp-hr standard in 

2012, a year earlier than otherwise 

required. 

Numerous commenters expressed 

support for the planned technology 

review. MECA and STAPPA/ALAPCO 

stressed that the review should not be 

limited to considering the need to relax 

PM filter-based standards for small 

engines, but should also consider 

technology innovations that would 

justify increasing the stringency of small 

engine standards that are not currently 

aftertreatment-based. This is indeed our 

intent. Yanmar suggested that the 

review be deferred to 2010 or later, 

because NOX control experience from 

highway diesels will not be sufficient by 

2007. On the contrary, based on the rate 

of technology development progress to 

date for highway engines, we believe 

that there will be a very large amount 

of pertinent new information available 

by 2007, even though widespread field 

experience may be lacking. Waiting 

longer to conduct the technology review 

would, we believe, provide insufficient 

leadtime to the industry should an 

adjustment to the 2013 standards be 

found appropriate. Some engine and 

equipment manufacturers called for 

expanding the technology review to 

other power categories. As discussed in 

the proposal, we do not believe that a 

generalized technology review of the 

sort being conducted for the heavy-duty 

highway engine program is warranted, 

primarily due to the very fact that the 

nonroad standards are modeled on the 

highway program, and the highway 

program does include this 

comprehensive review. We also do not 

see the specific technical issues for 

engines above 75 hp that have been 

identified for smaller engines, such as 

might warrant our expanding the review 

at this time. Engine manufacturers also 

expressed interest in a consultative 

process in the near future that would 

establish the scope, outputs, and criteria 

for the review, possibly including 

assigning responsibility for the review 

to an independent entity. Although we 

plan and hope to have the active 

participation of all interested parties in 

the review process, assigning 

responsibility for the review to groups 

or individuals outside the Agency 

would be inappropriate. As the review 

would be closely tied to potential 

subsequent rulemaking action by the 

Agency, it is essential that it adequately 

cover the relevant issues. To ensure this, 

it is imperative that we retain overall 

responsibility for the review. We have 

not yet worked out process details for 

the review, but will do so at some later 

date. 

Several commenters strongly stressed 

the need for EPA to work with 

governmental standards-setting bodies 

in other countries to harmonize future 

standards. As discussed in section 

II.A.8, we recognize the importance of 

harmonizing nonroad diesel standards 

and have worked diligently with our 

colleagues responsible for setting such 

standards outside the U.S., thus far with 

good success. The March 2004 Directive 

that sets future nonroad diesel standards 

in the European Union (EU) will very 

closely align the EU program with our 

program in the Tier 4 timeframe. 251

Further enhancing prospects for close 

harmonization, the Directive includes 

plans for a future technical review: 

‘‘There are still some uncertainties 

regarding the cost effectiveness of using 

after-treatment equipment to reduce 

emissions of particulate matter (PM) and 

of oxides of nitrogen (NOX). A technical 

review should be carried out before 31 

December 2007 and, where appropriate, 

exemptions or delayed entry into force 

dates should be considered.’’

Note that the timing for this review 

coincides with that of our own planned 

review. Among other things, both our 

review and the EU review will consider 

the appropriate long-term standards for 

engines between 25 and 50 hp, engines 

for which we have set PM-filter based 

standards and for which the EU has not. 

Furthermore, in addition to reevaluating the standards, the EU 

technical review will consider the need 

to introduce standards for engines 

below 25 hp and above 750 hp, the two 

categories for which the EU has not yet 

set emission standards, and for which 

harmonization is thus most lacking. We 

are greatly encouraged by the degree of 

harmonization achieved thus far, and, 

given our common interests, issues and 

planned timing, expect to work closely 

with Commission staff in carrying out 

the 2007 technology review, with an 

aim of preserving and enhancing 

harmonization of standards.

In response to comments received on 

the proposal, we wish to clarify that the 

technology review for engines under 75 

hp will be a comprehensive undertaking 

that may result in adjustments to 

standards, implementation dates, or 

other provisions (such as flexibilities) in 

either direction (that is, toward more or 

less stringency), depending on 

conclusions reached in the review about 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39153

appropriate standards under the Clean 

Air Act. All relevant factors including 

technical feasibility and commercial 

viability of engines and machines 

designed to meet the standards will be 

taken into account. 

B. Test Procedure Issues 

Section III describes two issues 

related to test procedures that warrant 

further attention in the future. First, we 

are adopting transient test procedures 

for engines subject to Tier 4 emission 

standards, but we intend to collect data 

that would help us adopt a duty cycle 

that would appropriately test constantspeed engines. Second, we are adopting 

cold-start test procedures, but are 

interested in collecting additional data 

that could be used to revise those 

procedures if appropriate. 

C. In-Use Testing 

Although this final rule does not 

include an in-use testing program for 

nonroad diesel engines, we expect to 

establish such a program for the future 

in a separate rulemaking action. The 

goal of this program will be to ensure 

that emissions standards are met 

throughout the useful life of the engines, 

under conditions normally experienced 

in-use. The Agency expects to pattern 

the in-use testing requirements for 

nonroad diesel engines after a program 

that is being developed for heavy-duty 

diesel highway vehicles. This program 

will be funded and conducted by the 

manufacturer’s of heavy-duty diesel 

highway engines with our oversight. We 

expect it will incorporate a two-year 

pilot program. The pilot program will 

allow the Agency and manufacturers to 

gain the necessary experience with the 

in-use testing protocols and generation 

of in-use test data using portable 

emission measurement devices prior to 

fully implementing program. A similar 

pilot program is expected to be part of 

any manufacturer-run, in-use NTE test 

program for nonroad engines. 

The Agency plans to promulgate the 

in-use testing requirements for heavyduty highway vehicles in the December 

2004 time frame. We anticipate 

proposing a manufacturer-run, in-use 

testing program for nonroad diesel 

engines by 2005 or earlier. As 

mentioned above, the nonroad diesel 

engine program is expected to be 

patterned after the heavy-duty highway 

program. 

D. Engine Diagnostics 

We are also in the process of defining 

diagnostic requirements that would 

apply to highway diesel engines. Once 

we have adopted requirements for 

highway engines, we would aim to 

adapt the requirements as needed to 

appropriately address diagnostic needs 

for nonroad diesel engines. These 

programs would likely be very similar, 

but the diagnostics for nonroad engines 

my need to differ in some ways, 

depending on the technologies used by 

different types and sizes of engines and 

on an assessment of an appropriate level 

of information and control for engines 

used in nonroad applications. 

E. Future NOX Standards for Engines in 

Mobile Machinery Over 750 hp 

In section II.A.4, we explain that we 

are not, at this time, setting Tier 4 NOX

standards for mobile machinery over 

750 hp based on the performance of 

high-efficiency aftertreatment, although 

we note that the 2.6 g/bhp-hr NOX

standard taking effect for these engines 

in 2011 represents a more than 60% 

NOX reduction from the 6.9 g/bhp-hr 

Tier 1 level in effect today, and a more 

than 40% reduction from the 4.8 g/bhphr NOX+NMHC Tier 2 standard level 

that takes effect in 2006. We are still 

evaluating the issues involved for these 

engines to achieve a more stringent NOX

standard, and believe that these issues 

are resolvable. We intend to continue 

evaluating the appropriate long-term 

NOX standard for mobile machinery 

over 750 hp and expect to announce 

further plans regarding these issues, 

perhaps as early as 2007. 

F. Emission Standards for Locomotive 

and Marine Diesel Engines 

This final rule adopts limited 

requirements to limit sulfur levels in 

distillate fuels used in locomotive and 

many marine diesel engines, which will 

help reduce PM emissions from these 

engines. In an upcoming rulemaking, we 

will consider an additional tier of NOX

and PM standards for marine diesel 

engines less than 30 liters per cylinder 

and for locomotive engines. These 

standards would reflect the application 

of advanced emission-control 

technology, including the potential to 

use the high-efficiency catalytic 

emission-control devices like those 

described elsewhere in this preamble. In 

developing these new standards, we 

will consider the substantial overlap in 

engine technology between the 

locomotive and marine engines and the 

nonroad engines covered by this final 

rule. We will also take into account the 

unique features associated with 

locomotive and marine engines (and 

their respective markets) and the extent 

to which these differences may 

constrain the feasibility of applying 

advanced emission control technologies 

to those engines. 

We are concurrently publishing an 

Advance Notice of Proposed 

Rulemaking that describes the emissioncontrol program we are contemplating 

for these engines. After consideration of 

comments submitted on the Advance 

Notice, we will publish a Notice of 

Proposed Rulemaking. Our proposal 

will be subject to comment before its 

expected completion in the 2006 time 

frame.

The engine emission control program 

to be described in the Advance Notice 

will cover all locomotive engines 

subject to 40 CFR part 92 and all marine 

diesel engines with displacement below 

30 liters per cylinder. Note that the rule 

will therefore cover marine diesel 

engines below 37 kW, which are 

currently regulated through Tier 3 with 

land-based nonroad engines in 40 CFR 

part 89. The rule will also address both 

recreational and commercial marine 

diesel engines with displacement below 

30 liters per cylinder. Marine engines at 

or above 30 liters per cylinder typically 

use a different kind of fuel, residual 

fuel, and will be considered in a 

separate rulemaking to be finalized by 

April 27, 2007, pursuant to a regulatory 

provision adopted in our recent rule 

setting standards for those engines (68 

FR 9783, February 28, 2003). 

G. Retrofit Programs 

In the proposal, we requested 

comment on setting voluntary new 

engine emission standards applicable to 

the retrofit of nonroad diesel engines. 

As described in section III.A, we are not 

adopting a retrofit credit program with 

today’s action. We believe it is 

important to more fully consider the 

details of a retrofit credit program and 

work with interested parties in 

determining whether a viable program 

can be developed. EPA intends to 

explore the possibility of a voluntary 

nonroad retrofit credit program through 

future action. 

H. Reassess the Marker Specified for 

Heating Oil 

As discussed in sections IV and V, we 

are requiring that the chemical marker 

solvent yellow 124 (SY–124) be added 

to heating oil outside of the Northeast/

Mid-Atlantic Area. We received 

comments from the American Society of 

Testing and Materials (ASTM), the 

Coordinating Research Council (CRC), 

the Department of Defense (DoD), and 

the Federal Aviation Administration 

(FAA) requesting that we delay 

finalizing the selection of a specific 

marker for use in this final rule due to 

concerns for jet fuel contamination. 

ASTM withdrew its request for a 

postponement in the regulation, given 

39154 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

that this final rule requires addition of 

the marker at the terminal, rather than 

the refinery gate as proposed. This 

eliminates most of the concern 

regarding jet fuel contamination. 

However, ASTM stated that some 

concern remains regarding jet fuel 

contamination downstream of the 

terminal. Nevertheless, ASTM related 

that these concerns need not delay 

finalization of the marker requirements 

in this rule, since a CRC program to 

evaluate these concerns is expected to 

be completed well before SY–124 must 

be added to heating oil. FAA is also 

undertaking an effort to identify fuel 

markers that would be compatible for 

use in jet fuel. 

We also received comments from the 

heating oil industry and the Department 

of Defense, which expressed concerns 

regarding the potential health effects 

and maintenance impacts on heating oil 

equipment from the use of SY–124 in 

heating oil. As discussed in section V, 

we believe these concerns have been 

adequately addressed for us to specify 

the use of SY–124 in this final rule. The 

EU has required the use of SY–124 in 

heating oil since August 2002. The EU 

intends to re-evaluate the use of SY–124 

after December 2005 or earlier if they 

learn of any health, safety, or 

environmental concerns from their inuse experience with SY–124. 

We will keep abreast of the ASTM, 

CRC, FAA, IRS, and EU activities and 

commit to a review of our use of SY–

124 under today’s rule based on these 

findings. If alternative markers are 

identified that do not raise concerns 

regarding the potential contamination of 

jet fuel, we will initiate a rulemaking to 

evaluate the use of one of these markers 

in place of SY–124. 

IX. Public Participation 

Many interested parties provided 

their input on the proposed rulemaking 

during our public comment period. This 

comment period, along with the three 

public hearings that were held in New 

York, Chicago, and Los Angeles, 

provided ample opportunity for public 

participation. Throughout the 

rulemaking process, EPA met with 

stakeholders including representatives 

from the fuel refining and distribution 

industry, engine and equipment 

manufacturing industries, emission 

control manufacturing industry, 

environmental organizations, states, 

agricultural interests, and others. 

A detailed Response to Comments 

document was prepared for this 

rulemaking that describes the comments 

that we received on the proposal along 

with our response to each of these 

comments. The Response to Comments 

document is available in the air docket 

and e-docket for this rule, as well as on 

the Office of Transportation and Air 

Quality homepage. In addition, 

comments and responses for many key 

issues are included throughout this 

preamble.

X. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), the Agency 

must determine whether the regulatory 

action is ‘‘significant’’ and therefore 

subject to review by the Office of 

Management and Budget (OMB) and the 

requirements of this Executive Order. 

The Executive 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. 

A final Regulatory Impact Analysis 

has been prepared and is available in 

the docket for this rulemaking and at the 

internet address listed under ‘‘How Can 

I Get Copies of This Document and 

Other Related Information?’’ above. This 

action was submitted to the Office of 

Management and Budget for review 

under Executive Order 12866. Estimated 

annual costs of this rulemaking are 

estimated to be $2 billion per year, thus 

this proposed rule is considered 

economically significant. Written 

comments from OMB and responses 

from EPA to OMB comments are in the 

public docket for this rulemaking. 

B. Paperwork Reduction Act 

The information collection 

requirements in this rule have been 

submitted for approval to the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. The information collection 

requirements are not enforceable until 

OMB approves them. The OMB control 

number for engine-related information 

collection is 2060–0460 (EPA ICR 

number 1897.07) and for fuel-related 

information collection is 2060–0308 

(EPA ICR number 1718.07). 

We will use the engine-related 

information to ensure that new nonroad 

diesel engines comply with emission 

standards through certification 

requirements and various subsequent 

compliance provisions. This 

information collection is mandatory 

under the provisions of 42 U.S.C. 7401–

7671(q). We will use the fuel-related 

information to ensure that diesel fuel 

meets the sulfur limits and 

corresponding requirements related to 

marking and segregating the different 

types and grades of diesel fuel. This 

information collection is mandatory 

under the provisions of 42 U.S.C. 

7545(c), (g) and (i), and 7625–1. 

In addition, this notice announces 

OMB’s approval of the information 

collection requirements for other 

programs, as summarized in Table X.B–

1.

TABLE X.B–1—APPROVED INFORMATION COLLECTION REQUESTS FROM OTHER PROGRAMS

Program Final rule cite OMB control 

number 

EPA ICR number OMB approval 

Nonroad spark-ignition engines over 19 kW .............. November 8, 2002 (67 FR 

68242).

2060–0460 1897.04 January 31, 2003. 

Recreational vehicles .................................................. November 8, 2002 (67 FR 

68242).

2060–0460 1897.04 January 31, 2003. 

Rebuilders of various types of engines ...................... November 8, 2002 (67 FR 

68242).

2060–0104 0783.46 June 11, 2003. 

Highway motorcycles .................................................. January 15, 2004 (69 FR 

2398).

2060–0104 0783.46 March 26, 2004. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39155

The estimated annual public reporting 

and recordkeeping burden for collecting 

information from all these programs is 

shown in Table X.B–2. 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.

TABLE X.B–2.—INFORMATION COLLECTION BURDENS

Engine type Respondents Hours per respondent 

Hours for all 

respondents 

Capital costs 

for all respondents 

Operating and 

maintenance 

costs for all respondents 

Total costs for 

all respondents 

Nonroad diesel engine manufacturers ..... 75 3,304 247,783 $0 $5,894,802 $18,661,614 

Diesel fuel suppliers ................................. 2,615 75 196,288 1,800,000 1,800,000 18,371,600 

Nonroad spark-ignition engine manufacturers .................................................... 12 1,832 21,986 174,419 2,507,790 3,617,683 

Recreational vehicle manufacturers ........ 39 684 26,669 1,627,907 2,137,115 4,869,253 

Highway motorcycles ............................... 46 32 1,449 0 23,686 79,428 

Importers .................................................. 40 13 529 0 150,000 169,223 

Rebuilders ................................................ 200 6 1,200 0 0 38,800 

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 EPA’s regulations in 40 

CFR are listed in 40 CFR part 9. When 

this ICR is approved by OMB, the 

Agency will publish a technical 

amendment to 40 CFR part 9 in the 

Federal Register to display the OMB 

control number for the approved 

information collection requirements 

contained in this final rule. EPA 

received various comments on the 

rulemaking provisions covered by the 

ICRs, but no comments on the 

paperwork burden or other information 

in the ICRs. All comments that were 

submitted to EPA are considered in the 

relevant Summary and Analysis of 

Comments, which can be found in the 

docket. A copy of any of the submitted 

ICR documents may be obtained from 

Susan Auby, Collection Strategies 

Division, U.S. Environmental Protection 

Agency (2822–T), 1200 Pennsylvania 

Ave., NW., Washington, DC 20460 or by 

e-mail at auby.susan@epa.gov. 

To comment on the Agency’s need for 

this information, the accuracy of the 

provided burden estimates, and any 

suggested methods for minimizing 

respondent burden, including the use of 

automated collection techniques, EPA 

has a public docket for this rule, which 

includes this ICR, under Docket ID 

number OAR–2003–0012. Submit any 

comments related to the ICR for this rule 

to EPA and OMB. Address comments to 

OMB by e-mail to 

drostker@omb.eop.gov or fax to (202) 

395–7285. Please do not send comments 

to OMB via U.S. Mail. 

C. Regulatory Flexibility Act (RFA), as 

Amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (SBREFA), 5 U.S.C. 601 et seq.

EPA has decided to prepare a 

Regulatory Flexibility Analysis (RFA) in 

connection with this final rule. For 

purposes of assessing the impacts of 

today’s rule on small entities, a small 

entity is defined as: (1) A small business 

that is primarily engaged in the 

manufacturing of nonroad diesel 

engines and equipment that meets the 

definitions based on the Small Business 

Administration’s (SBA) size standards 

(see table X.C.–1 below); (2) a small 

governmental jurisdiction that is a 

government of a city, county, town, 

school district, or special district with a 

population of less than 50,000; and (3) 

a small organization that is any not-forprofit enterprise which is independently 

owned and operated and is not 

dominant in its field.

TABLE X.C–1.—SMALL BUSINESS ADMINISTRATION SIZE STANDARDS FOR VARIOUS BUSINESS CATEGORIES

Industry Defined as small entity by SBA if: Major SIC a

Codes 

Engine manufacturers .............................................................. Less than 1,000 employees .................................................... Major Group 35. 

Equipment manufacturers: 

—Construction equipment ................................................. Less than 750 employees ....................................................... Major Group 35. 

—Industrial truck manufacturers (i.e. forklifts) .................. Less than 750 employees ....................................................... Major Group 35. 

—All other nonroad equipment manufacturers ................. Less than 500 employees ....................................................... Major Group 35. 

Fuel refiners .............................................................................. Less than 1500 employees b ................................................... 2911. 

Fuel distributors ........................................................................ <varies> ................................................................................... <varies> 

Notes:

aStandard Industrial Classification. 

bEPA has included in past fuels rulemakings a provision that, in order to qualify for the small refiner flexibilities, a refiner must also have a 

company-wide crude refining capacity of no greater than 155,000 barrels per calendar day. EPA has included this criterion in the small refiner 

definition for a nonroad diesel sulfur program as well. 

39156 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Pursuant to 5 U.S.C. 603, EPA 

prepared an Initial Regulatory 

Flexibility Analysis (IRFA) for the 

proposed rule and convened a Small 

Business Advocacy Review Panel 

(SBAR Panel, or ‘‘the Panel’’) to obtain 

advice and recommendations of 

representatives of the regulated small 

entities pursuant to 5 U.S.C. 609(b) (see

68 FR 28518–28521, May 23, 2003). A 

detailed discussion of the Panel’s advice 

and recommendations can be found in 

the Panel Report (Docket A–2001–28, 

Document No. II–A–172). See also

section III.C above.

We have also prepared a Regulatory 

Flexibility Analysis for today’s rule. The 

Regulatory Flexibility Analysis 

addresses the issues raised in public 

comments on the IRFA, which was part 

of the proposal of this rule. The 

Regulatory Flexibility Analysis is 

available for review in the docket and is 

summarized below. The key elements of 

a regulatory flexibility analysis 

include—

—The need for, and objectives of, the 

rule; 

—The significant issues raised by public 

comments, 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; and 

—The steps taken to minimize the 

impact of the rule on small entities, 

consistent with the stated objectives 

of the applicable statute. 

1. Need for and Objectives of the Rule 

Controlling emissions from nonroad 

engines and equipment, in conjunction 

with controls on sulfur concentrations 

in diesel fuel, has very significant 

public health and welfare benefits, as 

explained in section I of this preamble. 

We are finalizing new engine standards 

and related provisions under sections 

213(a)(3) and (4) of the Clean Air Act 

which, among other things, direct us to 

establish (and from time to time revise) 

emission standards for new nonroad 

diesel engines. Similarly, section 

211(c)(1) authorizes EPA to regulate 

fuels if any emission product of the fuel 

causes or contributes to air pollution 

that may endanger public health or 

welfare, or that may impair the 

performance of emission control 

technology on engines and vehicles. We 

are finalizing new fuel standards today 

for both of these reasons. 

2. Summary of Significant Public 

Comments on the IRFA 

We received comments from engine 

and equipment manufacturers, fuel 

refiners, fuel distributors and marketers, 

and consumers during the public 

comment period following the proposal 

of this rulemaking. All of the following 

comments were taken into account in 

developing today’s final rule. Responses 

to these comments are located in 

subsection 5 below, along with the 

description of the provisions that we are 

finalizing to reduce the rule’s impact on 

small businesses. More detailed 

information in response to these 

comments can be found in sections III.C. 

(Engine and Equipment Small Business 

Provisions) and IV.B (Hardship Relief 

Provisions for Qualifying Refiners) of 

this preamble. Additional detail may 

also be found in the Final Regulatory 

Flexibility Analysis, located in the 

Regulatory Impact Analysis, as well as 

in the Summary and Analysis of 

Comments for this final rule. 

a. Public Comments Received on Engine 

and Equipment Standards 

One small engine manufacturer 

commented that the proposed 

provisions for small business engine 

manufacturers are appropriate and 

strongly supported their inclusion in the 

final rule. The manufacturer raised 

many concerns of why it believes that 

it is necessary to include provisions, 

such as: Larger/higher-volume 

manufacturers will have priority in 

supply of new technologies and will 

have more R&D time to complete 

development of these systems before 

they are available to smaller 

manufacturers; smaller manufacturers 

do not command the same amount of 

attention from potential suppliers of 

critical technologies for Tier 4 controls, 

and are thus concerned that they may 

not be able to attract a manufacturer to 

work with them on the development of 

compliant technologies. This small 

manufacturer believes that the 

additional three-year time period 

proposed for small engine 

manufacturers in the NPRM is necessary 

for the company, and is their estimate 

of the time that it will take for these 

technologies to be available to small 

engine manufacturers. 

The Small Business Administration’s 

Office of Advocacy (‘‘Advocacy’’) raised 

the concern that the rule would impose 

significant burdens on a substantial 

number of small entities producing 

engines of 75 hp or less, with little 

corresponding environmental benefit. 

Advocacy therefore recommended that 

PM standards for engines in the 25–75 

hp range not be based on performance 

of aftertreatment technologies. 

Advocacy believed that the proposed 

flexibilities will not suffice on their own 

to appropriately minimize the 

regulatory burdens on small entities; 

and Advocacy noted that during the 

SBREFA process some small equipment 

manufacturers stated that although EPA 

would allow some equipment to be sold 

which would not require new emissions 

controls, engine manufacturers would 

not produce or sell such equipment. 

Advocacy also commented that we have 

not shown that substantial numbers of 

small businesses have taken advantage 

of previous small business flexibilities, 

or that small businesses would be able 

to take advantage of the flexibilities 

under this rule. Lastly, Advocacy 

commented that although full 

compliance with the more stringent 

emissions controls requirements would 

be delayed for small manufacturers, 

small business manufacturers 

eventually will be required to produce 

equipment meeting the new 

requirements. 

b. Public Comments Received on Fuel 

Standards 

i. General Comments on Small Refiner 

Flexibility 

One small refiner commented that it 

is not feasible at this time to evaluate 

the impact of the three fuels regulations 

on the refining industry (and small 

refiners), however it stated that we 

should continue to evaluate the impacts 

and act quickly to avoid shortages and 

price spikes and we should be prepared, 

if necessary, to act quickly in 

considering changes in the regulations 

to avoid these problems. We also 

received comment that some small 

refiners that produce locomotive and 

marine fuels fear that future sulfur 

reductions to these markets could be 

very damaging.

ii. Comments on the Small Refiner 

Definition 

A small refiner commented that the 

proposed redefinition of a small refiner 

(to not grandfather as small refiners 

those that were small for highway 

diesel) would both negate the benefits 

afforded under the small refiner 

provisions in the Highway Diesel Sulfur 

rule and disqualify its status as a small 

refiner. The small refiner is, however, in 

support of the addition of the capacity 

limit in the small refiner definition 

which will correct the problem of the 

inadvertent loop-hole in the two 

previous fuel rules. Though the refiner 

is concerned that the wording of the 

proposed language may result in small 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39157

refiners such as itself, who grew by 

normal business practice, being 

disqualified as small refiners. The 

refiner suggested that we clarify the 

language and include provisions for 

continuance of small refiner flexibility 

for refiners who qualified under the 

Highway Diesel Sulfur rule (and have 

not been disqualified as the result of a 

merger or acquisition). 

iii. Comments on the Baseline Approach 

A coalition of small refiners provided 

comments on a few aspects of concern. 

The small refiners believe that the fuel 

segregation, and ensuing marking and 

dying, provisions are quite complex. 

One small refiner believes that 

mandating a minimum volume of NRLM 

production would conflict with the 

purpose of maintaining adequate onhighway volumes of 15 ppm sulfur fuel 

and unnecessarily restricts small 

refiners, and offered suggestions in their 

comments on how to improve the 

language. In addition, the small refiner 

believes that mandating a minimum 

volume of NRLM production would 

conflict with the purpose of maintaining 

adequate on-highway volumes of 15 

ppm sulfur fuel and unnecessarily 

restricts small refiners, and offered 

suggestions in their comments on how 

to improve the language. 

iv. Comments on Small Refiner ‘‘Option 

4’’

A coalition of small refiners 

commented that if the final rule is not 

issued before January 1, 2004, a 

provision should be made to 

accommodate those small refiners 

planning to take advantage of the 

proposed small refiner ‘‘Option 4’’ (the 

NRLM/Gasoline Compliance option). A 

small refiner echoed the concerns of the 

small refiner coalition, commenting that 

delayed finalization of the final rule 

would undermine the benefits of small 

refiner flexibility Option 4. The small 

refiner is concerned that a delay in 

issuing the rule, and subsequent delay 

in the opportunity to apply the interim 

gasoline flexibility, would negate its 

opportunity to take full advantage of the 

credits the refiner now has, as it would 

not be able to comply with the 300 ppm 

cap. The small refiner suggested that we 

allow small refiners to apply for 

temporary relief and operate under the 

Option 4 provision. Another small 

refiner commented that, in the NPRM, it 

was unclear if a small refiner could elect 

to use any or all of the first three of the 

small refiner provisions if it did not 

elect to use Option 4. Further, the 

refiner understood that if Option 4 was 

chosen, a small refiner could not use 

any of the first three options. The refiner 

believes that it is important that a small 

refiner be able to use Options 1, 2, and 

3 in combination with each other, and 

stated that we need to clarify the intent 

in the final rule. The small refiner also 

commented that the provisions in 40 

CFR 80.553 and 80.554 are not clear and 

should be revised to clarify their intent. 

Specifically, the refiner questioned 

whether or not a small refiner who 

committed to producing ULSD by June 

1, 2006 in exchange for an extension of 

its interim gasoline sulfur standards 

(under 40 CFR 80.553) could elect to 

exercise the options allowed under 40 

CFR 80.554. 

A small refiner raised the concern that 

the small refiner Option 4 only provides 

an adjustment to those small refiners 

whose small refiner gasoline sulfur 

standards were established through the 

hardship process of 40 CFR 80.240. The 

small refiner suggested that we finalize 

a compliance option that allows a 20 

percent increase in small refiner 

gasoline sulfur standards be extended to 

all small refiners, not just those with 

standards established pursuant to 40 

CFR 80.240(a), and offers suggested 

language in its comments. 

v. Comments on Emission Impacts of 

the Small Refiner Provisions 

A state environmental group 

commented that the provisions for small 

refiners raise substantial environmental 

concerns. The group is concerned that 

these provisions will allow small 

refiners the ability to produce gasoline 

with an unknown sulfur content for an 

unknown length of time; this fuel may 

then be sold at the refiner’s retail outlet, 

and may become the primary fuel for 

some vehicles, which alters vehicle fleet 

emissions performance. This 

environmental group also commented 

that the absence of any process of 

notification regarding small business 

provisions to notify States of these 

provisions is troubling. The concern is 

that these deviations from fuel content 

that affects fuels consumed in states that 

use emissions inventories for air quality 

planning purposes, and can 

significantly alter inventories. The 

group suggested that in the future there 

should be greater communication from 

us regarding decisions that impact the 

quality of fuels consumed in a state, and 

thus impact the quality of that state’s 

air. 

Another state environmental group 

commented on the flexibility provisions 

for small refiners; the group is 

concerned that the exemption will not 

have a minor effect on the nation’s fuel 

supply, as the state is an intermountain 

western state. The group comments that 

the impact of this exemption is 

concentrated in these states, namely 

Washington and Oregon—states which 

are served primarily by refineries that 

will be allowed to delay compliance 

with the ULSD standards until 2014. 

Therefore, the group commented, 

residents of these areas are denied air 

quality benefits equivalent to those 

promised the rest of the country. Those 

seeking to purchase and use equipment 

in these areas will be subject to the 

ULSD standard regardless of fuel supply 

and availability in their area, would be 

faced with misfueling, deferring 

purchase of new equipment, or paying 

a premium for a ‘‘boutique’’ fuel. 

vi. Comments on Inclusion of a Crude 

Capacity Limit for Small Refiners and 

Leadtime Afforded for Mergers and 

Acquisitions

A non-small refiner supported the 

inclusion of the 155,000 bpcd limit, but 

suggested that we limit the provision of 

affording a two-year leadtime to small 

refiners who lose their small status due 

to merger or acquisition to the case 

where a small refiner merges with 

another small refiner. Further, the 

refiner commented that it would be 

inappropriate to allow such small 

refiners to be able to generate credits for 

‘‘early’’ production of lower sulfur 

diesels during this two-year leadtime. 

Lastly, the refiner commented that a 

small refiner which acquires a nonsmall refiner, and thus loses its small 

refiner status, should not be eligible for 

hardship provisions. Another 

commenter stated that if we were to 

finalize the 155,000 bpcd limit, we 

should not apply it in cases of a merger 

between two small refiners. The 

commenter further stated that a merger 

of two small companies in a hardship 

condition does not imply improved 

financial health in the same way that an 

acquisition would. Another non-small 

refiner commented that it supports the 

two-year lead time for refineries that 

lose their status as a small refiner; the 

refiner believes that any refiner with the 

financial wherewithal to acquire 

additional refineries to allow its crude 

capacity to exceed 155,000 bpcd should 

not be able to retain status as a small 

refiner. 

vii. Necessity of Small Refiner Program 

A non-small refiner provided 

comment on the NPRM stating the belief 

that the proposed provisions for small 

refiners are not practical. The refiner is 

concerned that having provisions for 

small refiners adds a level of 

complication, results in emissions 

losses, increases the potential for ULSD 

contamination, and create an unfair 

situation in the marketplace. Similarly, 

39158 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

252All sales information used for this analysis 

was 2000 data.

another non-small refiner and a trade 

group representing many refiners and 

others in the fuels industry commented 

that they oppose the extension of 

compliance deadlines for small refiners, 

as this can result in inequitable 

situations that may affect the refining 

industry for some time and can put the 

distribution system at risk for 

contamination of lower sulfur fuels. 

They further stated that all refiners will 

face challenges in complying with the 

upcoming standards and would not 

significantly alter the business decisions 

that small refiners would make. They 

also stated that non-small refiners face 

similar issues with their older and/or 

smaller refineries, but will not have the 

benefit of being able to postpone making 

these decisions as small refiners will. 

viii. Comments on Fuel Marker 

We received comments from terminal 

operators stating that the proposed 

heating oil marker requirements would 

force small terminal operators to install 

expensive injection equipment and that 

they would not be able to recoup the 

costs. 

3. Types and Number of Small Entities 

The small entities directly regulated 

by this final rule are nonroad diesel 

engine and equipment manufacturers, 

nonroad diesel fuel refiners, and 

nonroad diesel fuel distributors and 

marketers. These categories are 

described in more detail below, and the 

definitions of small entities in those 

categories are listed in table X.C–1 

above. 

a. Nonroad Diesel Engine Manufacturers 

Before beginning the SBREFA 

process, EPA conducted an industry 

profile for the nonroad diesel sector. We 

have not received any new information 

since that time and we continue to 

believe that this is a valid 

characterization of the industry. Using 

information from the industry profile, 

EPA identified a total of 61 engine 

manufacturers. The top 10 engine 

manufacturers comprise 80 percent of 

the total market, while the other 51 

companies make up the remaining 20 

percent. 252 Of the 61 manufacturers, 

four fit the SBA definition of a small 

entity. These four manufacturers were 

Anadolu Motors, Farymann Diesel 

GMBH, Lister-Petter Group, and V & L 

Tools (parent company of Wisconsin 

Motors LLC, formerly ‘‘Wis-Con Total 

Power’’). These businesses comprised 

eight percent of the total nonroad engine 

sales for the year 2000.

b. Nonroad Diesel Equipment 

Manufacturers 

We also used the industry profile to 

determine the number of nonroad small 

business equipment manufacturers. EPA 

identified over 700 manufacturers with 

sales and/or employment data that 

could be included in the screening 

analysis. These businesses included 

manufacturers in the construction, 

agricultural, mining, and outdoor power 

equipment (mainly, lawn and garden 

equipment) sectors of the nonroad 

diesel market. The equipment produced 

by these manufacturers ranged from 

small walk-behind equipment (sub-25 

hp engines) to large mining and 

construction equipment (using engines 

in excess of 750 hp). Of the 

manufacturers with available sales and

employment data (approximately 500 

manufacturers), nonroad small business 

equipment manufacturers represent 68 

percent of total nonroad equipment 

manufacturers (and these manufacturers 

accounted for 11 percent of nonroad 

diesel equipment industry sales in 

2000). 

c. Nonroad Diesel Fuel Refiners 

Our current assessment is that 26 

refiners (collectively owning 33 

refineries) meet SBA’s definition of a 

small business for the refining industry. 

The 33 refineries appear to meet both 

the employee number and production 

volume criteria mentioned above. These 

small refiners currently produce 

approximately 6 percent of the total 

high-sulfur diesel fuel. It should be 

noted that because of the dynamics in 

the refining industry (e.g., mergers and 

acquisitions), the actual number of 

refiners that ultimately qualify for small 

refiner status under the nonroad diesel 

sulfur program could be different than 

this assessment. 

d. Nonroad Diesel Fuel Distributors and 

Marketers

The industry that transports, 

distributes, and markets nonroad diesel 

fuel encompasses a wide range of 

businesses, including bulk terminals, 

bulk plants, fuel oil dealers, and diesel 

fuel trucking operations, and totals 

thousands of entities that have some 

role in this activity. Over 90 percent of 

these entities meet small entity criteria. 

Common carrier pipeline companies are 

also a part of the distribution system; 10 

of them are small businesses. 

4. Reporting, Recordkeeping and Other 

Compliance Requirements 

This section describes the expected 

burden of the compliance requirements 

(for all manufacturers and refiners) for 

the standards being finalized in today’s 

action. 

a. Nonroad Diesel Engine and 

Equipment Manufacturers 

For engine and equipment standards, 

we must have the assurance that engines 

and/or equipment produced by 

manufacturers meet the applicable 

standard, and will continue to meet this 

standard as the equipment passes 

through to the ultimate end user. We are 

continuing many of the reporting, 

recordkeeping, and compliance 

requirements prescribed for nonroad 

engines and equipment, as set out in 40 

CFR part 89. These include, certification 

requirements and reporting of 

production, emissions information, use 

of transition provisions, etc. The types 

of professional skills required to prepare 

reports and records are also similar to 

the types of skills that were needed to 

meet the regulatory requirements set out 

in 40 CFR part 89. Key differences in the 

requirements of today’s rule as related 

to 40 CFR part 89 are the additional 

testing and defect reporting. We are 

finalizing an increase in the number of 

data points (i.e., transient testing) that 

will be required for reporting emissions 

information. Also, as proposed, we are 

requiring additional defect reporting for 

Tier 4 and later engines. We are 

requiring that manufacturers report to 

us if they learn that a substantial 

number of their engines have emissionrelated defects. This is generally not a 

requirement to collect information; 

however if manufacturers learn that 

there are or might be a substantial 

number of emission-related defects, 

then they must send us information 

describing the defects. 

b. Nonroad Diesel Fuel Refiners, 

Distributors, and Marketers 

For any fuel control program, we must 

have the assurance that fuel produced 

by refiners meets the applicable 

standard, and that the fuel continues to 

meet this standard as it passes 

downstream through the distribution 

system to the ultimate end user. This is 

particularly important in the case of 

diesel fuel, where the aftertreatment 

technologies expected to be used to 

meet the engine standards are highly 

sensitive to sulfur. Many of the 

recordkeeping, reporting and 

compliance provisions of the today’s 

action are fairly consistent with those in 

place today for other fuel programs, 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39159

253There is no change in the NOX standard for 

engines under 25 hp and those between 50 and 75 

hp. For these two power bands EPA proposed no 

special provisions.

including the current 15 ppm highway 

diesel regulation. For example, 

recordkeeping involves the use of 

product transfer documents, which are 

already required under the 15 ppm 

highway diesel sulfur rule (40 CFR 

80.560). Under today’s final rule we are 

adding additional recordkeeping and 

reporting requirements for refiners, 

importers, and fuel distributors to 

implement the designate and track 

provisions. However, interactions with 

parties from all segments of the 

distribution system indicated that the 

records necessary were analogous to 

records already kept as a normal process 

of doing business. Consequently, the 

only significant additional burden 

would be associated with the reporting 

requirement. 

General requirements for reporting for 

refiners and importers include: 

registration (only in the case where a 

refiner or importer is not registered 

under a previous fuel program), precompliance reports (on a refiner or 

importer’s progress towards meeting the 

nonroad diesel fuel requirements as 

specified in this rule), quarterly 

designation reports, and annual reports. 

All parties from the refiner to the 

terminal will be required to report 

volumes of designated fuels received 

and distributed, as well as compliance 

with quarterly and annual limits. All 

parties in the distribution system are 

required to keep product transfer 

documents (PTDs), though refiners and 

importers are required to initially 

generate and provide information on 

commercial PTDs that identify the 

diesel fuel with meeting specific needs 

(i.e., 15 ppm highway diesel, 500 ppm 

highway diesel, etc.). Also, refiners in 

Alaska and small refiner/credit fuel 

users must report end users of their fuel. 

These end users must also keep records 

of these fuel purchases. Lastly, small 

refiners are required to apply for small 

refiner status and small refiner 

baselines.

In general, we are requiring that all 

records be kept for at least five years. 

This recordkeeping requirement should 

impose little additional burden, as five 

years is the applicable statute of 

limitations for current fuel programs. 

See section X.B, above, for a 

discussion of the estimated burden 

hours and costs of the recordkeeping 

and reporting that will be required by 

this final rule. Detailed information on 

the reporting and recordkeeping 

measures associated with this 

rulemaking are described in the 

Information Collection Requests (ICRs) 

for this rulemaking—1897.05 for 

nonroad diesel engines, and 1718.05 for 

fuel-related items. 

5. Regulatory Alternatives To Minimize 

Impact on Small Entities 

Below we discuss the Panel 

recommendations, EPA proposals, and 

final regulatory alternatives to minimize 

the rule’s impact on small entities. More 

detailed information on the provisions 

for these entities can be found in 

sections III.C and IV.B of this preamble 

(for small business engine and 

equipment manufacturers and small 

entities throughout the fuel distribution 

system, respectively). 

a. Panel Recommendations 

During the SBREFA process, the Panel 

recommended transition flexibilities 

that we considered during the 

development of the NPRM. The Panel 

recommended provisions for both the 

one-step and two-step options. Since we 

are finalizing a two-step approach, only 

the recommendations for this approach 

are being discussed here. (A complete 

discussion of all of the Panel 

recommendations and our proposals for 

small entities is located in section X.C. 

of the NPRM.) 

Following the SBREFA process, the 

Panel (or some Panel members), 

recommended the following transition 

flexibilities and hardship provisions to 

help mitigate the impacts of the 

rulemaking on small entities. We 

proposed and requested comment on 

these recommendations in the NPRM. 

i. Panel Recommendations for Small 

Business Engine Manufacturers 

For nonroad diesel small business 

engine manufacturers, we proposed the 

following provisions: 

• A manufacturer must have certified 

in model year 2002 or earlier and would 

be limited to 2500 units per year to be 

eligible for all provisions set out below; 

• For PM—

—Small engine manufacturers could 

delay compliance with the standards 

for up to three years for engines under 

25 hp, and those between 75 and 175 

hp (as these engines only have one 

standard) 

—small engine manufacturers have the 

option to delay compliance for one 

year if interim standards are met for 

engines between 50 and 75 hp (for 

this power category we are treating 

the PM standard as a two phase 

standard with the stipulation that 

small manufacturers cannot use PM 

credits to meet the interim standard; 

also, if a small manufacturer elects the 

optional approach to the standard 

(elects to skip the interim standard), 

no further relief will be provided)

• for NOX 253

—A three year delay in the program for 

engines in the 25–50 hp and the 75–

175 hp categories, consistent with the 

one-phase approach recommendation 

above;

• A small engine manufacturer could 

be afforded up to two years of hardship 

(in addition to the transition 

flexibilities) upon demonstrating to EPA 

a significant hardship situation; 

• Small engine manufacturers would 

be able to participate in an averaging, 

banking, and trading (ABT) program 

(which we proposed as part of the 

overall rulemaking program for all 

manufacturers);

• Engines under 25 hp would not be 

subject to standards based on use of 

advanced aftertreatment; and, 

• No NOX aftertreatment-based 

standards for engines 75 hp and under. 

ii. Panel Recommendations for Small 

Business Equipment Manufacturers 

We proposed the following provisions 

for nonroad diesel small business 

equipment manufacturers: 

• Small business nonroad diesel 

equipment manufacturers must have 

reported equipment sales using certified 

engines in model year 2002 or earlier to 

be eligible for all provisions; 

• Essential continuance of the 

transition flexibilities offered for the 

Tier 1 and Tier 2 nonroad diesel 

emission standards (40 CFR 89.102), 

which are available to all nonroad diesel 

equipment manufacturers

—‘Percent-of-production allowance’—

over seven model-year period 

manufacturers may install engines not 

certified to the new emission 

standards in an amount of equipment 

equivalent to 80 percent of one year’s 

production, implemented by power 

category with the average determined 

over the period in which the 

flexibility is used (this proposal 

would afford additional flexibility 

over the comparable flexibility in Tier 

2/3, however, because of the smaller 

number of horsepower categories in 

the Tier 4 rule) 

—‘Small volume allowance’—a 

manufacturer may exceed the 80 

percent allowance in seven years as 

described above, provided that the 

previous Tier engine use does not 

exceed 700 total over seven years, and 

200 in any given year, limited to one 

family per power category; 

alternatively, at the manufacturer’s 

choice by horsepower category, a 

39160 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

254As the cost issues raised in SBA’s comments 

relate to all manufactures (not just small business 

manufacturers), further information on the costs of 

this technology as well as the benefits analysis, can 

be found in section VI of this preamble (and also 

chapters 6 and 9, respectively, of the Regulatory 

Impact Analysis).

program that eliminates the ‘‘single 

family provision’’ restriction with 

revised total and annual sales limits 

as shown below:

≤175 hp: 525 previous Tier engines 

(over 7 years) with an annual cap of 

150 units (separate for each hp 

category) 

>175 hp: 350 previous Tier engines 

(over 7 years) with an annual cap of 

100 units (separate for each hp 

category);

• Small business equipment 

manufacturers would be allowed to 

borrow from the Tier 3/Tier 4 

flexibilities for use in the Tier 2/Tier 3 

time frame; and, 

• Small business equipment 

manufacturers could be afforded up to 

two years of hardship after other 

transition allowances are exhausted, 

similar to that offered small business 

engine manufacturers. 

In addition, we proposed the Panel’s 

recommendation that the provisions for 

small equipment manufacturers be 

extended to all equipment 

manufacturers, regardless of size. We 

also sought comment on the total 

number of engines and annual cap 

values proposed and on implementing 

the small volume allowance provision 

without a limit on the number of engine 

families. 

iii. Panel Recommendations for Small 

Refiners, Distributors, and Marketers 

The following provisions were 

proposed for nonroad diesel small 

refiners: 

• Small refiners would be required to 

use 500 ppm sulfur fuel beginning June 

1, 2010 and 15 ppm fuel beginning June 

1, 2014; 

• Small refiners may choose one of 

the following transition provisions, 

which serve to encourage early 

compliance with the diesel fuel sulfur 

standards:

—Credits for Early Desulfurization: 

would allow small refiners to generate 

and sell credits for nonroad diesel 

fuel that meets the small refiner 

standards earlier than required in the 

regulation; or,

—Limited Relief on Small Refiner 

Interim Gasoline Sulfur Standards: a 

small refiner producing its entire 

nonroad diesel fuel pool at 15 ppm 

sulfur by June 1, 2006, and who 

chooses not to generate nonroad 

credits for early compliance, would 

receive a 20 percent relaxation in its 

assigned small refiner interim 

gasoline sulfur standards (with the 

maximum per-gallon sulfur cap for 

any small refiner remaining at 450 

ppm); and, 

• A small refiner would be afforded 

hardship similar to the provisions 

established under 40 CFR 80.270 and 

80.560 (the gasoline sulfur and highway 

diesel fuel sulfur programs, 

respectively), case-by-case approval of 

hardship applications must be sought 

based on demonstration of extreme 

hardship circumstances. 

We did not propose specific 

provisions for nonroad diesel fuel 

distributors and marketers in the NPRM. 

During the SBREFA process, 

distributors commented that they would 

support a one-step approach to 

eliminate the possibility of having 

multiple grades of fuel in the 

distribution system and the Panel 

recommended that we further study this 

issue during the development of the 

rule. 

iv. Additional Panel Recommendations 

Some, but not all, Panel members 

recommended that the following 

provisions be included in the NPRM; we 

requested comment on these items but 

did not propose them: 

• The inclusion of a technological 

review of the standards in the 2008 time 

frame 

• No PM aftertreatment-based 

standards for engines between 25 and 75 

hp 

b. Discussion of Items Being Finalized 

in Today’s Action 

i. Provisions for Small Business Engine 

Manufacturers 

For nonroad diesel small business 

engine manufacturers, we are finalizing 

many of the provisions set out above 

with some significant revisions, as 

described below. We are finalizing all of 

the hardship provisions that we 

proposed. We believe these provisions 

are an element of providing appropriate 

lead time for this class of engines. 

For engines under 25 hp: 

• PM—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

• NOX—there is no change in the 

existing NOX standard for engines in 

this category, so no special provisions 

are being provided. 

For engines in the 25 to 50 hp 

category: 

• PM—manufacturers must comply 

with the interim standards (the Tier 4 

requirements that begin in model year 

2008) on time, and may elect to delay 

compliance with the 2013 Tier 4 

requirements (0.02 g/bhp-hr PM 

standard) for up to three years. 

• NOX—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

For engines in the 50 to 75 hp 

category: 

• PM—A small business engine 

manufacturer may delay compliance 

with the 2013 Tier 4 requirement of 0.02 

g/bhp-hr PM for up to three years 

provided that it complies with the 

interim Tier 4 requirements that begin 

in model year 2008 on time, without the 

use of credits (as manufacturers of 

engines in this category still have the 

option to comply with the Tier 3 

standard). Alternatively, a manufacturer 

may elect to skip the interim standard 

completely. Manufacturers choosing 

this option will receive only one 

additional year for compliance with the 

0.02 g/bhp-hr standard (i.e. compliance 

in 2013, rather than 2012).

• NOX—there is no change in the 

NOX standard for engines in this 

category, therefore no special provisions 

are being provided. 

For engines in the 75 to 175 hp 

category: 

• PM—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

• NOX—a manufacturer may elect to 

delay compliance with the standard for 

up to three years. 

In regard to the Office of Advocacy’s 

concern regarding the technical 

feasibility of PM and NOX aftertreatment 

devices, as proposed in the NPRM, we 

are not adopting standards based on 

performance of NOX aftertreatment 

technologies for engines under 75 hp. 

We believe the factual record—as 

documented in the RIA, the Summary 

and Analysis of Comments, and this 

preamble—does not support the claim 

that the PM standards will not be 

technically feasible in 2013 for the 25–

75 hp engines. As set out at length in 

section 4.1.3 of the RIA, among other 

places, performance of PM traps is not 

dependent on engine size. 

We disagree with the statement made 

by the Office of Advocacy that, based on 

available information, we do not have a 

sufficient basis for engines between 25 

and 75 hp to be subject to PM standards 

based on use of advanced 

aftertreatment. As we have documented 

earlier and in the RIA, we believe that 

such standards are feasible for these 

engines at reasonable cost,254 and will 

help to improve very important air 

quality problems, especially by reducing 

exposure to diesel PM and by aiding in 

attainment of the PM 2.5 National 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39161

255Since new engines with sulfur sensitive 

emission controls will begin to become widespread 

during this time, small refiner fuel will need to be 

segregated and only supplied for use in pre–2011 

nonroad equipment or in locomotives or marine 

engines.

256This is down from the 100 percent 

requirement proposed to allow for some 

contamination losses in the process of delivering 

fuel from the refinery. As discussed earlier in this 

section, production volumes in the final rule are 

based upon actual delivered volumes. The 5 percent 

allowance for greater than 15 ppm fuel should 

provide adequate flexibility for any refiner’s 

contamination issues, while not providing any

Continued

Ambient Air Quality Standard. See 

generally, comment response 8.2.3 of 

the Summary and Analysis of 

Comments, and sections 12.6.2.2.9 and 

12.6.2.2.10 of chapter 12 of the Draft 

RIA. These standards will also result in 

significant reductions of NMHC, which 

includes many carcinogenic air toxics. 

Indeed, given these facts, we are 

skeptical that an alternative of no 

aftertreatment-based PM standards for 

these engines would be appropriate 

under section 213(a)(4) of the Clean Air 

Act (see section VII.A above, where we 

found that ‘‘[w]e * * * do not see a 

basis in law or policy to adopt either of 

these options’’). We believe that the 

transition and hardship provisions 

being finalized for small business 

engine manufacturers in today’s action 

are reasonable and are a factor in our 

ultimate finding that the PM standards 

for engines in the 25–75 hp range are 

appropriate.

ii. Provisions for Small Business 

Equipment Manufacturers 

The transition and hardship 

provisions that were proposed for small 

business nonroad equipment 

manufacturers are being finalized today, 

with some modifications. 

Adopting an alternative on which we 

solicited comment, the final rule allows 

all equipment manufacturers the 

opportunity to choose between two 

options: (a) Manufacturers would be 

allowed to exempt 700 pieces of 

equipment over seven years, with one 

engine family; or (b) manufacturers 

using the small-volume allowance could 

exempt 525 machines over seven years 

(with a maximum of 150 in any given 

year) for each of the three power 

categories below 175 horsepower, and 

350 machines over seven years (with a 

maximum of 100 in any given year) for 

the two power categories above 175 

horsepower. Concurrent with the 

revised caps, manufacturers could 

exempt engines from more than one 

engine family under the small-volume 

allowance program. Based on sales 

information for small businesses, we 

estimated that the alternative smallvolume allowance program to include 

lower caps and allow manufacturers to 

exempt more than one engine family 

would keep the total number of engines 

eligible for the allowance at roughly the 

same overall level as the 700-unit 

program. We believe that these 

provisions will afford small 

manufacturers the type of transition 

leeway recommended by the Panel. 

Further, these transition provisions 

could allow small business equipment 

manufacturers to postpone any redesign 

needed on low sales volume or difficult 

equipment packages, thus saving both 

money and strain on limited 

engineering staffs. Within limits, small 

business equipment manufacturers 

would be able to continue to use their 

current engine/equipment configuration 

and avoid out-of-cycle equipment 

redesign until the allowances are 

exhausted or the time limit passes.

We are not finalizing the requirement 

that small equipment manufacturers and 

importers have reported equipment 

sales using certified engines in model 

year 2002 or earlier. Please see section 

III.C.2.a.ii above for a detailed 

discussion on our decision to eliminate 

this requirement from today’s rule. 

We are also finalizing three additional 

provisions today. Two of these 

provisions are being finalized for all 

equipment manufacturers, and therefore 

small business equipment 

manufacturers may also take advantage 

of them. These are the Technical 

Hardship Provision and the Early Tier 4 

Engine Incentive Program, and are 

discussed in greater detail in sections 

III.B.2.b and e above. The third 

provision is being finalized for small 

business equipment manufacturers only, 

for the 20–50 hp category. This 

provision is discussed in greater detail 

in section III.C.2.b.ii above. 

iii. Provisions for Small Refiners 

As previously discussed, we are 

finalizing standards for locomotive and 

marine diesel fuel today. Below are the 

regulatory transition and hardship 

provisions that we are finalizing to 

minimize the degree of hardship 

imposed upon small refiners by this 

program. With these provisions we are 

confident about going forward with the 

500 ppm sulfur standard for NRLM 

diesel fuel in 2007, and the 15 ppm 

sulfur standard for nonroad diesel fuel 

in 2010 and locomotive and marine 

diesel fuel in 2012, for the rest of the 

industry. Given the small refiner relief 

provisions that are being finalized 

today, small refiners will be the only 

refiners permitted to continue selling 

500 ppm fuel to nonroad, locomotive, 

and marine markets from 2010 until 

2014 without the use of credits. 

We are finalizing delayed compliance 

for small refiners today (‘‘NRLM Delay’’

option). We are confident with going 

forward with these sulfur standards 

given the regulatory transition 

provisions being offered for small 

refiners. These delayed standards would 

allow for the continued production of 

higher sulfur NRLM fuel until June 1, 

2010, and similarly, for the production 

of 500 ppm NRLM fuel until June 1, 

2014.255 This is identical to the relief 

proposed in the NPRM (which small 

refiners considered sufficient and 

supported) with the exception that it 

applies not only to nonroad fuel, but 

also to locomotive and marine fuel 

given the decision to finalize 15 ppm 

sulfur standards for locomotive and 

marine diesel fuel. Table X.C–2 below 

illustrates the delayed standards in 

relation to the general program. This 

delay option is not being finalized for 

the Northeast and mid-Atlantic areas 

due to the removal of the heating oil 

marker in these areas. However this is 

not expected to impact small refiners, 

and this will provide significant relief 

for small terminal operators. Further, 

this provision will be finalized in 

Alaska only if a refiner gets an approved 

compliance plan for segregating their 

fuel to the end user.

We also are finalizing transition 

provisions to encourage early 

compliance with the standards being 

finalized today. These provisions are: 

• The NRLM credit option—Some 

small refiners have indicated that they 

might need to produce fuel meeting the 

NRLM diesel fuel sulfur standards 

earlier than required under the small 

refiner program described above 

(distribution systems might limit the 

number of grades of diesel fuel that will 

be carried, it may be economically 

advantageous to make compliant NRLM 

diesel fuel earlier to prevent losing 

market share, etc.) This option allows 

small refiners to participate in the 

NRLM diesel fuel sulfur credit banking 

and trading program discussed in 

section IV. Generating and selling 

credits could provide small refiners 

with funds to help defray the costs of 

early NRLM compliance.

• The NRLM/Gasoline Compliance 

Option—This option is available to 

small refiners that produce greater than 

95 percent of their NRLM diesel fuel at 

the 15 ppm sulfur standard by June 1, 

2006 and elect not to use the provision 

described above to earn NRLM diesel 

fuel sulfur credits for this early 

compliance.256 For small refiners

39162 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

opportunity to significantly alter their compliance 

plans.

257The cost-to-sales ratio test assumes that 

control costs are completely absorbed by each entity 

and does not account for or consider interaction 

between manufacturers/producers and consumers 

in a market context.

choosing this option the applicable 

small refiner annual average and pergallon cap gasoline sulfur standards will 

be increased by 20 percent for the 

duration of the interim program; 

however, in no case may the per-gallon 

gasoline sulfur cap exceed 450 ppm.

A small refiner may choose to use the 

relaxed standards (the NRLM Delay 

option), the NRLM Credit option, or 

both in combination. Thus any fuel that 

it produces from crude at or below the 

sulfur standards earlier than required 

will qualify for generating credits. 

However, the NRLM/Gasoline 

Compliance option may not be used in 

combination with either the NRLM 

Delay option or the NRLM Credit 

option, since a small refiner must 

produce at least 85 percent of its NRLM 

diesel fuel at the 15 ppm sulfur standard 

under the NRLM/Gasoline Compliance 

option. 

Small refiners that choose to make use 

of the delayed nonroad diesel sulfur 

requirements would also delay to some 

extent the emission reductions that 

would otherwise have been achieved. 

However, the overall impact of these 

postponed emission reductions would 

be small in comparison to the overall 

program benefits, as small refiners 

represent only a fraction of national 

non-highway diesel production. 

Further, we are aware of some small 

refiners that plan to take advantage of 

one of the flexibility provisions that 

encourages early compliance with the 

standards. Absent specific provisions 

for small refiners, we would have to 

consider delaying the overall program 

until the burden of the program on 

many small refiners was diminished, 

which would delay the air quality 

benefits of the overall program. By 

providing temporary relief to small 

refiners, we are able to adopt a program 

that expeditiously reduces NRLM diesel 

fuel sulfur levels in a feasible manner 

for the industry as a whole.

TABLE X.C–2.—SULFUR STANDARDS FOR THE NONROAD DIESEL FUEL SMALL REFINER PROGRAM

(in parts per million (ppm)) a

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015+ 

Non-Small—NR ................................................ ............ 500 500 500 15 15 15 15 15 15 

Non-Small—LM ................................................ ............ 500 500 500 500 500 15 15 15 15 

Small—all fuel .................................................. ............ ............ ............ ............ 500 500 500 500 15 15

Notes: a New standards are assumed to take effect June 1 of the applicable year. 

iv. Provisions for Small Distributors and 

Fuel Marketers 

Though we did not propose any 

specific regulatory relief for small 

distributors and marketers of nonroad 

fuel, we are finalizing provisions to 

avoid the negative impact to small 

terminal operators raised in the public 

comments on our NPRM (that heating 

oil marker requirements would force 

small terminal operators to install 

expensive injection equipment and that 

they would not be able to recoup the 

costs). To mitigate the burden on these 

operators, terminals in much of PADD 1 

will not have to add the fuel marker to 

home heating oil. No small refiner or 

credit fuel could be sold in this 

exclusion area. The exclusion area 

covers the vast majority of heating oil 

that will be marketed. Further, very 

little fuel above 500 ppm will be 

marketed outside of the exclusion area 

except directly from the refinery gate. 

Therefore, we expect that few terminals 

outside of the exclusion area would 

need to put in injection equipment. 

6. Conclusion 

A cost-to-sales ratio test, a ratio of the 

estimated annualized compliance costs 

to the value of sales per company, was 

performed for these entities during the 

proposal stage of the rulemaking. 257

From this cost-to-sales test, we found 

that approximately four percent (13 

companies) of small entities in the 

engine and equipment manufacturing 

industry would be affected by between 

one and three percent of sales (i.e., the 

estimated costs of compliance with the 

rule would be greater than one percent, 

but less than three percent, of their 

sales). One percent (four companies) of 

small entities would be affected by 

greater than three percent. In all, 17 of 

the 518 potentially affected small engine 

and equipment manufacturers are 

estimated to have compliance costs that 

could exceed one percent of their sales. 

(A complete discussion of the costs to 

engine and equipment manufacturers as 

a result of this final rule is located in 

Chapter 6 of the Final Regulatory Impact 

Analysis.)

Based on our outreach, fact-finding, 

and analysis of the potential impacts of 

our regulations on small businesses, it 

was determined that small refiners in 

general would likely experience a 

significant and disproportionate 

financial hardship in reaching the 

objectives of the nonroad diesel fuel 

sulfur program. One indication of this 

disproportionate hardship for small 

refiners is the relatively high cost per 

gallon projected for producing nonroad 

diesel fuel under the proposed program. 

Refinery modeling (of all refineries), 

indicates significantly higher refining 

costs for small refiners. Specifically, 

without special provisions, refining 

costs (for full compliance with the 15 

ppm sulfur standards) for small refiners 

on average would be about 7 cents per 

gallon compared to about 5.7 cents per 

gallon for non-small refiners. (A 

complete discussion of the fuel-related 

costs as a result of this final rule is 

located in Chapter 7 of the Final 

Regulatory Impact Analysis.) However, 

we believe that the regulatory transition 

provisions that we are affording to small 

entities will significantly minimize this 

impact on these entities. 

In addition, as contemplated by 

section 212 of SBREFA, EPA is also 

preparing a compliance guide to help 

small entities comply with this rule. 

This guide will be available within 60 

days of the effective publication date of 

this rulemaking, and will be available 

on the Office of Transportation and Air 

Quality Web site. Small entities may 

also contact our office to obtain copies 

of the compliance guide. 

D. 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 costbenefit analysis, for proposed and final 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39163

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 in any one year. Before 

promulgating an EPA 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 costeffective, 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 other than the least 

costly, most cost-effective, or least 

burdensome alternative if the 

Administrator publishes with the final 

rule an explanation of why that 

alternative was not adopted. 

Before EPA establishes any regulatory 

requirements that may significantly or 

uniquely affect small governments, 

including tribal governments, it must 

have developed under section 203 of the 

UMRA a small government agency plan. 

The plan must provide for notifying 

potentially affected small governments, 

enabling officials of affected small 

governments to have meaningful and 

timely input in the development of EPA 

regulatory proposals with significant 

federal intergovernmental mandates, 

and 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 the rule would 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 believes that the final 

rule represents the least costly, most 

cost-effective approach to achieve the 

air quality goals of the rule. The costs 

and benefits associated with the final 

rule are discussed above and in the 

Regulatory Impact Analysis, as required 

by the UMRA.

E. 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 proposed 

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 proposed 

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 final 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. 

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. EPA has also 

consulted representatives from 

STAPPA/ALAPCO, which represents 

state and local air pollution officials. 

In the spirit of Executive Order 13132, 

and consistent with EPA policy to 

promote communications between EPA 

and State and local governments, EPA 

specifically solicited comment on the 

proposed rule from State and local 

officials, including from the State of 

Alaska.

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

Executive Order 13175, entitled 

‘‘Consultation and Coordination with 

Indian Tribal Governments’’ (65 FR 

67249, November 6, 2000), requires EPA 

to develop an accountable process to 

ensure ‘‘meaningful and timely input by 

tribal officials in the development of 

regulatory policies that have tribal 

implications.’’

This final rule does not have tribal 

implications as specified in Executive 

Order 13175. This rule will be 

implemented at the Federal level and 

impose compliance costs only on engine 

manufacturers and diesel fuel producers 

and distributors. Tribal governments 

will be affected only to the extent they 

purchase and use equipment with 

regulated engines. Thus, Executive 

Order 13175 does not apply to this rule. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

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 not subject to the 

Executive Order because it does not 

involve decisions on environmental 

health or safety risks that may 

disproportionately affect children. The 

EPA believes that the emissions 

reductions from the strategies proposed 

in this rulemaking will further improve 

air quality and will further improve 

children’s health. 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

39164 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Significantly Affect Energy Supply, 

Distribution, or Use’’ (66 FR 28355 (May 

22, 2001)), requires EPA to prepare and 

submit a Statement of Energy Effects to 

the Administrator of the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, for 

certain actions identified as ‘‘significant 

energy actions.’’ Section 4(b) of 

Executive Order 13211 defines 

‘‘significant energy actions’’ as ‘‘any 

action by an agency (normally 

published in the Federal Register) that 

promulgates or is expected to lead to the 

promulgation of a final rule or 

regulation, including notices of inquiry, 

advance notices of proposed 

rulemaking, and notices of proposed 

rulemaking: (1)(i) That is a significant 

regulatory action under Executive Order 

12866 or any successor order, and (ii) is 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy; or (2) that is designated by the 

Administrator of the Office of 

Information and Regulatory Affairs as a 

significant energy action.’’ We have 

prepared a Statement of Energy Effects 

for this action as follows: 

We have prepared a Statement of 

Energy Effects for this action as follows. 

This rule’s potential adverse effects 

on energy supply, distribution, or use 

have been analyzed, and are discussed 

in detail within the following 

documents: 

1. Fuel provisions of the rule and 

flexibilities, including hardship 

provisions, are described in this 

Preamble, section IV.B. The provision of 

sufficient lead time for refiners is 

discussed in section IV.F. 

2. Potential impacts on fuel supplies 

are summarized in Preamble section 

VI.A.5, RIA section VI.A.5, and within 

the Summary and Analysis of 

Comments document, section 4.6.3. 

3. Costs of low-sulfur fuel are 

discussed in Preamble section VI.F, and 

RIA Chapter 7 (demand and production 

in 7.1, and refining costs in 7.2). 

4. Price impacts are summarized in 

Preamble section VI.A, and RIA section 

7.6, with distribution costs in section 

7.4, alternative estimates of costs in 7.2, 

and effects of alternative demand 

projections in 7.2 as well. Uncertainty 

in fuel demand is also discussed in the 

Summary and Analysis of Comments 

section 2.3.2.2.

5. The need for adequate short-term 

investment in low sulfur refining 

capacity is addressed in RIA section 5.9. 

6. The impacts of regulatory 

alternatives that were considered are 

discussed in Preamble section VII. 

In summary, the cost of No. 2 

distillate nonroad fuel is projected to 

increase overall by approximately 7 

cents per gallon (in 2002 dollar terms) 

as a result of this rule. This would have 

a very small effect on production 

(projected reduction of approximately 

0.02 %, or less than 4 million gallons 

per year by 2036). 

The analysis also concludes that we 

do not expect this rule to have any 

adverse effect on the supply or 

distribution of NRLM fuel, nor to result 

in a significant increase in imports of 

NRLM fuel. Refiners will be unlikely to 

leave the NRLM fuel market and are 

unlikely to shut down due to this rule. 

Price impacts will vary regionally in 

the U.S., and are difficult to project 

precisely. Analysis of various scenarios 

in RIA section 7.6 suggests that in 

PADDs 1 and 3 as well as 2, which 

account for the bulk of demand, prices 

could increase by almost 11 cents per 

gallon in the unlikely ‘‘maximum total 

cost’’ scenario of constrained capacity. 

In contrast, the ‘‘average total cost’’

scenario predicts a 5 cent per gallon 

increase in PADDs 1 and 3. 

We do not believe there are any 

reasonable alternatives to the control of 

sulfur in nonroad fuel which would 

allow the reduction in NOX and PM 

emissions from nonroad equipment 

required by today’s rule. There are also 

no reasonable alternatives to the control 

of sulfur in locomotive and marine fuel 

which would provide the associated 

reductions in sulfur dioxide and sulfate 

PM emissions provided by the 500 and 

15 ppm caps on the sulfur content of 

this fuel. 

I. National Technology Transfer 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law 

104–113, section 12(d) (15 U.S.C. 272 

note) directs EPA to use voluntary 

consensus standards in its regulatory 

activities unless doing 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 rule involves technical 

standards. The following paragraph 

describes how we specify testing 

procedures for engines subject to this 

proposal. 

The International Organization for 

Standardization (ISO) has a voluntary 

consensus standard that can be used to 

test nonroad diesel engines. However, 

the current version of that standard (ISO 

8178) is applicable only for steady-state 

testing, not for transient testing. As 

described in the Regulatory Impact 

Analysis, transient testing is an 

important part of the new emissioncontrol program for these engines. We 

are therefore not adopting the ISO 

procedures in this rulemaking. 

J. 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 before the rule is published 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 adopted today can be found in 

sections 213 (which specifically 

authorizes controls on emissions from 

nonroad engines and vehicles), 203–

209, 216 and 301 of the Clean Air Act, 

42 U.S.C. 7547, 7522, 7523, 7424, 7525, 

7541, 7542, 7543, 7550 and 7601. 

Statutory authority for the new fuel 

controls is found in sections 211(c) and 

211(i) of the Clean Air Act, which allow 

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. 42 U.S.C. 

7545(c) and (i). Additional support for 

the procedural and enforcement-related 

aspects of the fuel controls in the final 

rule, including the record keeping 

requirements, comes from sections 

114(a) and 301(a) of the CAA. 42 U.S.C. 

7414(a) and 7601(a).

List of Subjects 

40 CFR Part 9 

Reporting and recordkeeping 

requirements. 

40 CFR Part 69 

Environmental protection, Air 

pollution controls. 

40 CFR Part 80 

Fuel additives, Gasoline, Imports, 

Incorporation by reference, Labeling, 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39165

Motor vehicle pollution, Penalties, 

Reporting and recordkeeping 

requirements. 

40 CFR Part 86 

Environmental protection, Labeling, 

Motor vehicle pollution, Reporting and 

recordkeeping requirements. 

40 CFR Part 89 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Imports, Labeling, Motor vehicle 

pollution, Reporting and recordkeeping 

requirements, Research, Vessels, 

Warranties. 

40 CFR Part 94 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Confidential 

business information, Imports, 

Incorporation by reference, Penalties, 

Reporting and recordkeeping 

requirements, Vessels, Warranties. 

40 CFR Parts 1039, 1048, and 1051 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Confidential 

business information, Imports, 

Incorporation by reference, Labeling, 

Penalties, Reporting and recordkeeping 

requirements, Warranties. 

40 CFR Part 1065 

Environmental protection, 

Administrative practice and procedure, 

Incorporation by reference, Reporting 

and recordkeeping requirements, 

Research. 

40 CFR Part 1068 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Imports, Motor vehicle pollution, 

Penalties, Reporting and recordkeeping 

requirements, Warranties.

Dated: May 11, 2004. 

Michael O. Leavitt, 

Administrator.

■ For the reasons set out in the preamble, 

title 40, chapter I, of the Code of Federal 

Regulations is amended as set forth 

below.

PART 9—OMB APPROVALS UNDER 

THE PAPERWORK REDUCTION ACT

■ 1. The authority citation for part 9 

continues to read as follows:

Authority: 7 U.S.C. 135 et seq., 136–136y; 

15 U.S.C. 2001, 2003, 2005, 2006, 2601–2671; 

21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 

U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318 

1321, 1326, 1330, 1342 1344, 1345(d) and (e), 

1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971–

1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 

246, 300f, 300g, 300g–1, 300g–2, 300g–3, 

300g–4, 300g–5, 300g–6, 300j–1, 300j–2, 

300j–3, 300j–4, 300j–9, 1857 et seq., 6901–

6992k, 7401–7671q, 7542, 9601–9657, 11023, 

11048.

§ 9.1 [Amended]

■ 2. Section 9.1 is amended in the table 

by adding the center headings and the 

entries under those center headings in 

numerical order to read as follows:

* * * * *

Control of Emissions From New, Large 

Nonroad Spark-Ignition Engines 

1048.20 2040–0460 

1048.201–250 2040–0460 

1048.345 2040–0460 

1048.350 2040–0460 

1048.420 2040–0460 

1048.425 2040–0460

* * * * *

Control of Emissions from Recreational 

Engines and Vehicles 

1051.201–255 2060–0104 

1051.345 2060–0104 

1051.350 2060–0104 

1051.725 2060–0104 

1051.730 2060–0104

* * * * *

General Compliance Provisions for 

Nonroad Programs 

1068.5 2040–0460 

1068.25 2040–0460 

1068.27 2040–0460 

1068.120 2040–0460 

1068.201–260 2040–0460 

1068.301–355 2040–0460 

1068.450 2040–0460 

1068.455 2040–0460 

1068.501 2040–0460 

1068.525 2040–0460 

1068.530 2040–0460

* * * * *

PART 69—SPECIAL EXEMPTIONS 

FROM THE REQUIREMENTS OF THE 

CLEAN AIR ACT

■ 3. The authority citation for part 69 

continues to read as follows:

Authority: 42 U.S.C. 7545(c), (g), and (i), 

and 7625–1.

■ 4. Section 69.51 is revised to read as 

follows:

§ 69.51 Motor vehicle diesel fuel. 

(a) Diesel fuel that is designated for 

use only in Alaska and is used only in 

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 

nonexempt 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 nonhighway diesel fuel only if it is used in 

Alaska.

(b) Beginning on the implementation 

dates under 40 CFR 80.500, motor 

vehicle 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 40 CFR 69.52(c), (d), 

and (e) for commingled motor vehicle 

and non-motor vehicle diesel fuel. 

(c) The Governor of Alaska may 

submit for EPA approval, by April 1, 

2002, a plan for implementing the motor 

vehicle diesel fuel sulfur standard in 

Alaska as an alternative to the 

temporary compliance option provided 

under 40 CFR 80.530 through 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 paragraph (b) of this section.

■ 5. A new § 69.52 is added to read as 

follows:

§ 69.52 Non-motor vehicle diesel fuel. 

(a) Definitions. (1) Areas accessible by 

the Federal Aid Highway System are the 

geographical areas of Alaska designated 

by the State of Alaska as being 

accessible by the Federal Aid Highway 

System. 

(2) Areas not accessible by the Federal 

Aid Highway System are all other 

geographical areas of Alaska. 

(3) Nonroad, locomotive, or marine 

diesel fuel (NRLM) has the meaning 

given in 40 CFR 80.2. 

(b) Applicability. NRLM diesel fuel 

and heating oil that are used or intended 

for use in areas of Alaska accessible by 

the Federal Aid Highway System are 

subject to the provisions of 40 CFR part 

80, subpart I, except as provided in 

paragraphs (c), (d) and (e) of this 

section. 

(c) Dye and marker. (1) NRLM diesel 

fuel and heating oil referred to in 

paragraph (b) of this section are exempt 

from the red dye requirements, and the 

presumptions associated with the red 

dye requirements, under 40 CFR 

80.520(b)(2) and 80.510(d)(5), (e)(5), and 

(f)(5). 

(2) NRLM diesel fuel and heating oil 

referred to in paragraph (b) of this 

section are exempt from the marker 

solvent yellow 124 requirements, and 

39166 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

the presumptions associated with the 

marker solvent yellow 124 

requirements, under 40 CFR 80.510(d) 

through (f). 

(3) Exempt NRLM diesel fuel and 

heating oil must be segregated from all 

non-exempt NRLM diesel fuel and 

heating oil. 

(4) Exempt heating oil must be 

segregated from exempt NRLM diesel 

fuel unless it also meets the standards 

of 40 CFR 80.510 applicable to the 

NRLM diesel fuel. 

(5) Exempt NRLM diesel fuel and 

heating oil must be segregated from 

motor vehicle diesel fuel, unless it also 

meets the standards of 40 CFR 80.520 

applicable to the motor vehicle diesel 

fuel. 

(d) Product transfer documents.

Product Transfer Documents for exempt 

NRLM diesel fuel and heating oil shall 

include the language specified in 40 

CFR 80.590(a) applicable to undyed 

diesel fuel for the appropriate sulfur 

level, and the following additional 

language as applicable:

(1) For exempt NRLM diesel fuel and 

heating oil, including commingled fuel 

under paragraph (c)(4) or (c)(5) of this 

section: ‘‘Exempt from red dye 

requirement applicable to diesel fuel for 

non-highway purposes if it is used only 

in Alaska.’’

(2) For exempt heating oil, including 

commingled fuel under paragraph (c)(4) 

or (c)(5) of this section: ‘‘Exempt from 

marker solvent yellow 124 requirement 

applicable to heating oil if it is used 

only in Alaska.’’

(3) For exempt 500 ppm sulfur LM 

diesel fuel, including commingled fuel 

under paragraph (c)(4) or (c)(5) of this 

section: ‘‘Exempt from marker solvent 

yellow 124 requirement applicable to 

500 ppm sulfur LM diesel fuel if it is 

used only in Alaska.’’

(e) Pump labels. (1) Pump labels for 

exempt NRLM diesel fuel and heating 

oil shall contain the language specified 

in 40 CFR 80.570 through 80.574 for the 

applicable fuel type and time frame, 

unless the fuel is commingled under 

paragraph (c)(4) or (c)(5) of this section. 

(2) Pump labels for exempt NRLM 

diesel fuel and heating oil that are 

commingled shall contain the language 

specified in 40 CFR 80.570 through 

80.574 for NRLM diesel fuel and the 

applicable time frame. 

(3) Pump labels for exempt NRLM 

diesel fuel and heating oil that are 

commingled with motor vehicle diesel 

fuel shall contain the following 

language for the applicable sulfur level 

and time frame: 

(i) 500 ppm sulfur diesel fuel. From 

June 1, 2006 through September 30, 

2010.

LOW SULFUR DIESEL FUEL (500 ppm 

Sulfur Maximum) 

WARNING 

Federal Law prohibits use in model year 

2007 and later highway diesel vehicles and 

engines 

Its use may damage these vehicles and 

engines. 

For use in all other diesel vehicles and 

engines.

(ii) 15 ppm sulfur diesel fuel. From 

June 1, 2006 through May 31, 2010.

ULTRA-LOW SULFUR DIESEL FUEL (15 

ppm Sulfur Maximum) 

Required for model year 2007 and later 

highway diesel vehicles and engines. 

Recommended for use in all diesel vehicles 

and engines.

(iii) 15 ppm sulfur diesel fuel. From 

June 1, 2010, and beyond,

ULTRA-LOW SULFUR DIESEL FUEL (15 

ppm Sulfur Maximum) 

Required for use in all highway and 

nonroad diesel engines 

Recommended for use in all diesel vehicles 

and engines.

(f) Non-motor vehicle diesel fuel and 

heating oil that is used or intended for 

use only in areas of Alaska not 

accessible by the Federal Aid Highway 

System, are excluded from the 

applicable provisions of 40 CFR part 80, 

subpart I, except that—

(1) All model year 2011 and later 

nonroad diesel engines and equipment 

must be fueled only with diesel fuel that 

meets the specifications of 40 CFR 

80.510(b) or (c); 

(2) The following language shall be 

added to any product transfer 

document: ‘‘This fuel is for use only in 

those areas of Alaska not accessible by 

the FAHS’’; and 

(3) Pump labels for such fuel that does 

not meet the specifications of 40 CFR 

80.510(b) or (c) shall contain the 

following language:

HIGH SULFUR DIESEL FUEL (may be greater 

than 15 Sulfur ppm) 

WARNING 

Federal Law prohibits use in model year 

2007 and later highway diesel vehicles and 

engines, or in model year 2011 and later 

nonroad diesel engines and equipment. 

Its use may damage these vehicles and 

engines.

(g) Alternative labels to those 

specified in paragraphs (e)(3) and (f)(3) 

of this section may be used as approved 

by the Administrator.

PART 80—REGULATION OF FUELS 

AND FUEL ADDITIVES

■ 6. The authority citation for part 80 

continues to read as follows:

Authority: 42 U.S.C. 7414, 7545, and 

7601(a).

■ 7. Section 80.2 is amended by adding 

paragraph (f) and revising paragraphs (j), 

(o), (x), (y), and (xx), removing and 

reserving paragraph (nn), adding and 

reserving paragraphs (yy), and (zz), and 

adding and reserving paragraphs (aaa) 

through (rrr) to read as follows:

§ 80.2 Definitions.

* * * * *

(f) Previously designated diesel fuel or 

PDD means diesel fuel that has been 

previously designated and included by 

a refiner or importer in a batch for 

purposes of complying with the 

standards and requirements of subpart I 

of this part.

* * * * *

(j) Retail outlet means any 

establishment at which gasoline, diesel 

fuel, methanol, natural gas or liquified 

petroleum gas is sold or offered for sale 

for use in motor vehicles or nonroad 

engines, including locomotive engines 

or marine engines.

* * * * *

(o) Wholesale purchaser-consumer

means any person that is an ultimate 

consumer of gasoline, diesel fuel, 

methanol, natural gas, or liquified 

petroleum gas and which purchases or 

obtains gasoline, diesel fuel, natural gas 

or liquified petroleum gas from a 

supplier for use in motor vehicles or 

nonroad engines, including locomotive 

engines or marine engines and, in the 

case of gasoline, diesel fuel, methanol or 

liquified petroleum gas, receives 

delivery of that product into a storage 

tank of at least 550-gallon capacity 

substantially under the control of that 

person.

* * * * *

(x) Diesel fuel means any fuel sold in 

any State or Territory of the United 

States and suitable for use in diesel 

engines, and that is—

(1) A distillate fuel commonly or 

commercially known or sold as No. 1 

diesel fuel or No. 2 diesel fuel; 

(2) A non-distillate fuel other than 

residual fuel with comparable physical 

and chemical properties (e.g., biodiesel 

fuel); or 

(3) A mixture of fuels meeting the 

criteria of paragraphs (1) and (2) of this 

definition. 

(y) Motor vehicle diesel fuel means 

any diesel fuel or other distillate fuel 

that is used, intended for use, or made 

available for use in motor vehicles or 

motor vehicle engines.

* * * * *

(xx) Diesel fuel additive means any 

substance not composed solely of 

carbon and/or hydrogen, or of diesel 

blendstocks, that is added to, intended 

to be added to, used in, or offered for 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39167

use in motor vehicle diesel fuel or 

NRLM diesel fuel or in diesel motor 

vehicle or diesel NRLM engine fuel 

systems subsequent to the production of 

diesel fuel by processing crude oil from 

refinery processing units. 

(yy)–(zz) [Reserved] 

(aaa) Distillate fuel means diesel fuel 

and other petroleum fuels that can be 

used in engines that are designed for 

diesel fuel. For example, jet fuel, 

heating oil, kerosene, No. 4 fuel, DMX, 

DMA, DMB, and DMC are distillate 

fuels; and natural gas, LPG, gasoline, 

and residual fuel are not distillate fuels. 

Blends containing residual fuel may be 

distillate fuels. 

(bbb) Residual fuel means a petroleum 

fuel that can only be used in diesel 

engines if it is preheated before 

injection. For example, No. 5 fuels, No. 

6 fuels, and RM grade marine fuels are 

residual fuels. Note: Residual fuels do 

not necessarily require heating for 

storage or pumping. 

(ccc) Heating oil means any No. 1 or 

No. 2 distillate fuel that is sold for use 

in furnaces, boilers, stationary diesel 

engines, and similar applications and 

which is commonly or commercially 

known or sold as heating oil, fuel oil, 

and similar trade names, and that is not 

jet fuel, kerosene, or MVNRLM diesel 

fuel. 

(ddd) Jet fuel means any distillate fuel 

used, intended for use, or made 

available for use in aircraft. 

(eee) Kerosene means any No.1 

distillate fuel commonly or 

commercially sold as kerosene. 

(fff) #1D means the distillate fuel 

classification relating to ‘‘No. 1–D’’

diesel fuels as described in ASTM D 

975–04. The Director of the Federal 

Register approved the incorporation by 

reference of ASTM D 975–04, Standard 

Specification for Diesel Fuel Oils, as 

prescribed in 5 U.S.C. 552(a) and 1 CFR 

part 51. Anyone may purchase copies of 

this standard from the American Society 

for Testing and Materials, 100 Barr 

Harbor Dr., West Conshohocken, PA 

19428. Anyone may inspect copies at 

the U.S. EPA, Air and Radiation Docket 

and Information Center, 1301 

Constitution Ave., NW., Room B102, 

EPA West Building, Washington, DC 

20460 or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html.

(ggg) #2D means the distillate fuel 

classification relating to ‘‘No. 2–D’’

diesel fuels as described in ASTM D 

975–04. 

(hhh)–(jjj) [Reserved] 

(kkk) Nonroad diesel engine means an 

engine that is designed to operate with 

diesel fuel that meets the definition of 

nonroad engine in 40 CFR 1068.30, 

including locomotive and marine diesel 

engines. 

(lll) Locomotive engine means an 

engine used in a locomotive as defined 

under 40 CFR 92.2.

(mmm) Marine engine and Category 3

have the meanings given under 40 CFR 

94.2. 

(nnn) Nonroad, locomotive, or marine 

(NRLM) diesel fuel means any diesel 

fuel or other distillate fuel that is used, 

intended for use, or made available for 

use, as a fuel in any nonroad diesel 

engines, including locomotive and 

marine diesel engines, except the 

following: Distillate fuel with a T90 

greater than 700 °F that is used only in 

Category 2 and 3 marine engines is not 

NRLM diesel fuel. Use the distillation 

test method specified in 40 CFR 

1065.1010 to determine the T90 of the 

fuel. NR diesel fuel and LM diesel fuel 

are subcategories of NRLM diesel fuel. 

(ooo) Nonroad (NR) diesel fuel means 

any NRLM diesel fuel that is not 

‘‘locomotive or marine (LM) diesel 

fuel.’’

(ppp) Locomotive or marine (LM) 

diesel fuel means any diesel fuel or 

other distillate fuel that is used, 

intended for use, or made available for 

use, as a fuel in locomotive or marine 

diesel engines, except for the following 

fuels: 

(1) Fuel that is also used, intended for 

use, or made available for use in motor 

vehicle engines or nonroad engines 

other than locomotive and marine diesel 

engines is not LM diesel fuel. 

(2) Distillate fuel with a T90 greater 

than 700 °F that is used only in Category 

2 and 3 marine engines is not LM diesel 

fuel. Use the distillation test method 

specified in 40 CFR 1065.1010 to 

determine the T90 of the fuel. 

(qqq) MVNRLM diesel fuel means any 

diesel fuel or other distillate fuel that 

meets the definition of motor vehicle 

(MV) or nonroad, locomotive, or marine 

(NRLM) diesel fuel. Motor vehicle diesel 

fuel, NRLM diesel fuel, NR diesel fuel, 

and LM diesel fuel are subcategories of 

MVNRLM diesel fuel. 

(rrr) Solvent yellow 124 means Nethyl-N-[2-[1-(2-

methylpropoxy)ethoxyl]-4-phenylazo]-

benzeneamine.

■ 8. Section 80.230 is amended by 

revising paragraph (b) to read as follows:

§ 80.230 Who is not eligible for the 

hardship provisions for small refiners?

* * * * *

(b)(1)(i) Refiners who qualify as small 

under § 80.225 and subsequently cease 

production of diesel fuel from 

processing crude oil through refinery 

processing units, or employ more than 

1,500 people or exceed the 155,000 

bpcd crude oil capacity limit after 

January 1, 2004 as a result of merger 

with or acquisition of or by another 

entity, are disqualified as small refiners, 

except this shall not apply in the case 

of a merger between two previously 

approved small refiners. If 

disqualification occurs, the refiner shall 

notify EPA in writing no later than 20 

days following this disqualifying event. 

(ii) Except as provided under 

paragraph (b)(1)(iii) of this section, any 

refiner whose status changes under this 

paragraph shall meet the applicable 

standards of § 80.195 within a period of 

up to 30 months of the disqualifying 

event for any of its refineries that were 

previously subject to the small refiner 

standards of § 80.240(a). However, such 

period shall not extend beyond 

December 31, 2007, or, for refineries for 

which the Administrator has approved 

an extension of the small refiner 

gasoline sulfur standards under 

§ 80.553(c), December 31, 2010. 

(iii) A refiner may apply to EPA for 

an additional six months to comply 

with the standards of § 80.195 if more 

than 30 months will be required for the 

necessary engineering, permitting, 

construction, and start-up work to be 

completed. Such applications must 

include detailed technical information 

supporting the need for additional time. 

EPA will base its decision to approve 

additional time on the information 

provided by the refiner and on other 

relevant information. In no case will 

EPA extend the compliance date beyond 

December 31, 2007, or, for refineries for 

which the Administrator has approved 

an extension of the small refiner 

gasoline sulfur standards under 

§ 80.553(c), December 31, 2010. 

(iv) During the period of time up to 30 

months provided under paragraph 

(b)(1)(ii) of this section, and any 

extension provided under paragraph 

(b)(1)(iii) of this section, the refiner may 

not generate gasoline sulfur credits 

under § 80.310. 

(2) Any refiner who qualifies as a 

small refiner under § 80.225 may elect 

to meet the standards under § 80.195 by 

notifying EPA in writing no later than 

November 15 prior to the year that the 

change will occur. Any refiner whose 

status changes under this paragraph 

(b)(2) shall meet the standards under 

§ 80.195 beginning with the first 

averaging period subsequent to the 

status change.

■ 9. Section 80.240 is amended by 

adding paragraph (f) to read as follows:

39168 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

§ 80.240 What are the small refiner 

gasoline sulfur standards?

* * * * *

(f)(1) In the case of a refiner without 

approved small refiner status who 

acquires a refinery from a refiner with 

approved small refiner status under 

§ 80.235, the applicable small refiner 

standards under paragraph (a) of this 

section will apply to the acquired small 

refinery for a period up to 30 months 

from the date of acquisition of the 

refinery, but no later than December 31, 

2007, or, for a refinery for which the 

Administrator has approved an 

extension of the small refiner gasoline 

sulfur standards under § 80.553(c), 

December 31, 2010, after which time the 

standards of § 80.195 shall apply to the 

acquired refinery. 

(2) A refiner may apply to EPA for an 

additional six months to comply with 

the standards of § 80.195 for the 

acquired refinery if more than 30 

months will be required for the 

necessary engineering, permitting, 

construction, and start-up work to be 

completed. Such applications must 

include detailed technical information 

supporting the need for additional time. 

EPA will base its decision to approve 

additional time on information provided 

by the refiner and on other relevant 

information. In no case will EPA extend 

the compliance date beyond December 

31, 2007, or, for a refinery for which the 

Administrator has approved an 

extension of the small refiner gasoline 

sulfur standards under § 80.553(c), 

December 31, 2010.

■ 10. Section 80.500 is amended by 

removing paragraph (f) and revising the 

section heading to read as follows:

80.500 What are the implementation dates 

for the motor vehicle diesel fuel sulfur 

control program?

■ 11. Section 80.501 is revised to read as 

follows:

§ 80.501 What fuel is subject to the 

provisions of this subpart? 

(a) Included fuel and additives. The 

provisions of this subpart apply to the 

following fuels and additives except as 

specified in paragraph (b) of this 

section: 

(1) Motor vehicle diesel fuel. 

(2) Nonroad, locomotive, or marine 

diesel fuel. 

(3) Diesel fuel additives. 

(4) Heating oil. 

(5) Other distillate fuels. 

(6) Motor oil that is used as or 

intended for use as fuel in diesel motor 

vehicles or nonroad diesel engines or is 

blended with diesel fuel for use in 

diesel motor vehicles or nonroad diesel 

engines, including locomotive and 

marine diesel engines, at any 

downstream location. 

(b) Excluded fuel. The provisions of 

this subpart do not apply to distillate 

fuel that is designated for export outside 

the United States in accordance with 

§ 80.598, identified for export by a 

transfer document as required under 

§ 80.590, and that is exported.

■ 12. A new § 80.502 is added to read as 

follows:

§ 80.502 What definitions apply for 

purposes of this subpart? 

The definitions of § 80.2 and the 

following additional definitions apply 

to this subpart I: 

(a) Entity means any refiner, importer, 

distributor, retailer or wholesalepurchaser consumer of any distillate 

fuel. 

(b) Facility means any place, or series 

of places, where an entity produces, 

imports, or maintains custody of any 

distillate fuel from the time it is 

received to the time custody is 

transferred to another entity, except as 

described in paragraphs (b)(1) through 

(b)(4) of this section: 

(1) Where an entity maintains custody 

of a batch of diesel fuel from one place 

in the distribution system to another 

place (e.g., from a pipeline to a 

terminal), all owned by the same entity, 

both places combined are considered to 

be one single aggregated facility, except 

where an entity chooses to treat 

components of such an aggregated 

facility as separate facilities. The choice 

made to treat these places as separate 

facilities may not be changed by the 

entity during any applicable compliance 

period. Except as specified in paragraph 

(b)(2) of this section, where compliance 

requirements depend upon facility-type, 

the entire facility must comply with the 

requirements that apply to its 

components as follows: 

(i) If an aggregated facility includes a 

refinery, the entire facility must comply 

with the requirements applicable to 

refineries. 

(ii) If an aggregated facility includes a 

truck loading terminal but not a 

refinery, the entire facility must comply 

with the requirements applicable to 

truck loading terminals. 

(2) A refinery or import facility may 

not be aggregated with facilities that 

receive fuel from other refineries or 

import facilities, either directly or 

indirectly. For example, a refinery may 

not be aggregated with a terminal that 

receives any fuel from a common carrier 

pipeline. However, a refinery may be 

aggregated with a pipeline and terminal 

that are owned by the same entity and 

which receive no fuel from any source 

other than the refinery. If a refinery or 

import facility is aggregated with other 

facilities, then the aggregated facility is 

treated as a refinery or import facility. 

(3) Retail outlets or wholesale 

purchaser consumers may not be 

aggregated with any other facility. 

(4) Where an entity maintains custody 

of diesel fuel in one or more mobile 

components (e.g., rail, barge, or trucking 

operations) the mobile components may 

be aggregated as a single facility. Mobile 

components may also be aggregated 

with a facility from which they receive 

fuel or a facility to which they deliver 

fuel. However, mobile components may 

not be aggregated with both a facility 

from which they receive fuel and a 

facility to which they deliver fuel.

(5) An individual refinery or 

contiguous pipeline may not be 

subdivided into more than one facility. 

An individual terminal may not be 

subdivided into more than one facility 

unless approved by the Administrator. 

(c) Truck loading terminal means any 

facility that dyes NRLM diesel fuel, pays 

taxes on motor vehicle diesel fuel per 

IRS code (26 CFR part 48), or adds a fuel 

marker pursuant to § 80.510 to heating 

oil and delivers diesel fuel or heating oil 

into trucks for delivery to retail or 

ultimate consumer locations. 

(d) Batch means a quantity of diesel 

fuel or distillate which is homogeneous 

with regard to those properties that are 

specified for MVNRLM diesel fuel 

under this subpart I of this part, has the 

same designation under this subpart I (if 

applicable), and whose custody is 

transferred from one facility to another 

facility. 

(e) Downstream location means any 

point in the diesel fuel distribution 

system that is downstream of refineries 

and import facilities, for example, diesel 

fuel at facilities of distributors, carriers, 

retailers, kerosene blenders, and 

wholesale purchaser-consumers.

■ 13. A new § 80.510 is added to read as 

follows:

§ 80.510 What are the standards and 

marker requirements for NRLM diesel fuel? 

(a) Beginning June 1, 2007. Except as 

otherwise specifically provided in this 

subpart, all NRLM diesel fuel is subject 

to the following per-gallon standards: 

(1) Sulfur content. 500 parts per 

million (ppm) maximum. 

(2) Cetane index or aromatic content, 

as follows: 

(i) A minimum cetane index of 40; or 

(ii) A maximum aromatic content of 

35 volume percent. 

(b) Beginning June 1, 2010. Except as 

otherwise specifically provided in this 

subpart, all NR and LM diesel fuel is 

subject to the following per-gallon 

standards: 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39169

(1) Sulfur content. 

(i) 15 ppm maximum for NR diesel 

fuel. 

(ii) 500 ppm maximum for LM diesel 

fuel. 

(2) Cetane index or aromatic content, 

as follows: 

(i) A minimum cetane index of 40; or 

(ii) A maximum aromatic content of 

35 volume percent. 

(c) Beginning June 1, 2012. Except as 

otherwise specifically provided in this 

subpart, all NRLM diesel fuel is subject 

to the following per-gallon standards:

(1) Sulfur content. 15 ppm maximum. 

(2) Cetane index or aromatic content, 

as follows: 

(i) A minimum cetane index of 40; or 

(ii) A maximum aromatic content of 

35 volume percent. 

(d) Marking provisions. From June 1, 

2007 through May 31, 2010: 

(1) Except as provided for in 

paragraph (i) of this section, prior to 

distribution from a truck loading 

terminal, all heating oil shall contain six 

milligrams per liter of marker solvent 

yellow 124. 

(2) All motor vehicle and NRLM 

diesel fuel shall be free of solvent 

yellow 124. 

(3) Any diesel fuel that contains 

greater than or equal to 0.10 milligrams 

per liter of marker solvent yellow 124 

shall be deemed to be heating oil and 

shall be prohibited from use in any 

motor vehicle or nonroad diesel engine 

(including locomotive, or marine diesel 

engines). 

(4) Except as provided for in 

paragraph (i) of this section, any diesel 

fuel, other than jet fuel or kerosene that 

is downstream of a truck loading 

terminal, that contains less than 0.10 

milligrams per liter of marker solvent 

yellow 124 shall be considered motor 

vehicle diesel fuel or NRLM diesel fuel, 

as appropriate. 

(5) Any heating oil that is required to 

contain marker solvent yellow 124 

pursuant to the requirements of this 

paragraph (d) must also contain visible 

evidence of dye solvent red 164. 

(e) Marking provisions. From June 1, 

2010 through May 31, 2012: 

(1) Except as provided for in 

paragraph (i) of this section, prior to 

distribution from a truck loading 

terminal, all heating oil and diesel fuel 

designated as 500 ppm sulfur LM diesel 

fuel shall contain six milligrams per 

liter of solvent yellow 124. 

(2) All motor vehicle and NR diesel 

fuel shall be free of marker solvent 

yellow 124. 

(3) Any diesel fuel that contains 

greater than or equal to 0.10 milligrams 

per liter of marker solvent yellow 124 

shall be deemed to be LM diesel fuel or 

heating oil, as appropriate, and shall be 

prohibited from use in any motor 

vehicle or nonroad diesel engine (except 

for locomotive or marine diesel 

engines). 

(4) Except as provided for in 

paragraph (i) of this section, any diesel 

fuel, other than jet fuel or kerosene that 

is downstream of a truck loading 

terminal, that contains less than 0.10 

milligrams per liter of marker solvent 

yellow 124 shall be considered motor 

vehicle diesel fuel or NR diesel fuel, as 

appropriate. 

(5) Any LM diesel fuel or heating oil 

that is required to contain marker 

solvent yellow 124 pursuant to the 

requirements of this paragraph (e) must 

also contain visible evidence of dye 

solvent red 164. 

(f) Marking provisions. Beginning June 

1, 2012:

(1) Except as provided for in 

paragraph (i) of this section, prior to 

distribution from a truck loading 

terminal, all heating oil shall contain six 

milligrams per liter of marker solvent 

yellow 124. 

(2) All motor vehicle and NRLM 

diesel fuel shall be free of marker 

solvent yellow 124. 

(3) Any diesel fuel that contains 

greater than or equal to 0.10 milligrams 

per liter of marker solvent yellow 124 

shall be deemed to be heating oil and 

shall be prohibited from use in any 

motor vehicle or nonroad diesel engine 

(including locomotive, or marine diesel 

engines). 

(4) Except as provided for in 

paragraph (i) of this section, any diesel 

fuel, other than jet fuel or kerosene that 

is downstream of a truck loading 

terminal, that contains less than 0.10 

milligrams per liter of marker solvent 

yellow 124 shall be considered motor 

vehicle diesel fuel or NRLM diesel fuel, 

as appropriate. 

(5) Any heating oil that is required to 

contain marker solvent yellow 124 

pursuant to the requirements of this 

paragraph (f) must also contain visible 

evidence of dye solvent red 164. 

(g) Special provisions in this part 

apply to the following areas: 

(1) Northeast/Mid-Atlantic Area 

which includes the following states and 

counties: North Carolina, Virginia, 

Maryland, Delaware, New Jersey, 

Connecticut, Rhode Island, 

Massachusetts, Vermont, New 

Hampshire, Maine, Washington D.C., 

New York (except for the counties of 

Chautauqua, Cattaraugus, and 

Allegany), Pennsylvania (except for the 

counties of Erie, Warren, Mc Kean, 

Potter, Cameron, Elk, Jefferson, Clarion, 

Forest, Venango, Mercer, Crawford, 

Lawrence, Beaver, Washington, and 

Greene), and the eight eastern-most 

counties of West Virginia (Jefferson, 

Berkeley, Morgan, Hampshire, Mineral, 

Hardy, Grant, and Pendleton). 

(2) Alaska. 

(h) Pursuant and subject to the 

provisions of §§ 80.536, 80.554, 80.560, 

and 80.561: 

(1) Except as provided in paragraph (j) 

of this section, from June 1, 2007 

through May 31, 2010, NRLM diesel fuel 

produced or imported in full 

compliance with the requirements of 

§§ 80.536, 80.554, 80.560, and 80.561 is 

exempt from the per-gallon sulfur 

content standard and cetane or 

aromatics standard of paragraph (a) of 

this section. 

(2) Except as provided in paragraph (j) 

of this section, from June 1, 2010 

through May 31, 2012 for NR diesel fuel 

and from June 1, 2012 through May 31, 

2014 for NRLM diesel fuel produced or 

imported in full compliance with the 

requirements of §§ 80.536, 80.554, 

80.560, and 80.561 is exempt from the 

per-gallon standards of paragraphs (b) 

and (c) of this section, but is subject to 

the per-gallon standards of paragraph (a) 

of this section. 

(i) The marking requirements of 

paragraphs (d)(1), (d)(4), (e)(1), (e)(4), 

(f)(1), and (f)(4) of this section do not 

apply to heating oil, or, for paragraphs 

(e)(1) and (e)(4) of this section, diesel 

fuel designated as LM diesel fuel that is 

distributed from a truck loading 

terminal located within the areas listed 

in paragraphs (g)(1) and (g)(2) of this 

section and is for sale or intended for 

sale within these areas, or that is 

distributed from any other truck loading 

terminal and is for sale or intended for 

sale within the area listed in (g)(2) of 

this section.

(j) The provisions of paragraphs (h)(1) 

and (h)(2) of this section do not apply 

to diesel fuel sold or intended for sale 

in the areas listed in paragraph (g)(1) of 

this section that is produced or 

imported in full compliance with the 

requirements of §§ 80.536 and 80.554 or 

to diesel fuel sold or intended for sale 

in the area listed in paragraph (g)(2) of 

this section that is produced or 

imported in full compliance with the 

requirements of § 80.536.

■ 14. A new § 80.511 is added to read as 

follows:

§ 80.511 What are the per-gallon and 

marker requirements that apply to NRLM 

diesel fuel and heating oil downstream of 

the refiner or importer? 

(a) Applicable dates for marker 

requirements. Beginning June 1, 2006, 

all NRLM diesel fuel shall contain less 

than 0.10 milligrams per liter of the 

marker solvent yellow 124, except for 

39170 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

LM diesel fuel subject to the marking 

requirements of § 80.510(e). 

(b) Applicable dates for per-gallon 

standards. (1) Beginning June 1, 2006, 

all NRLM diesel fuel must comply with 

the per-gallon sulfur standard for the 

designation or classification stated on 

its PTD, pump label, or other 

documentation. Based on the provisions 

of § 80.510(h) and (j), there is no 

uniform downstream sulfur standard 

until the downstream dates identified in 

paragraphs (b)(3) through (b)(8) of this 

section. 

(2) Except as provided in paragraphs 

(b)(5) and (b)(8) of this section, 

beginning December 1, 2010, all NRLM 

diesel fuel must comply with the cetane 

index or aromatics standard of § 80.510. 

(3) Except as provided in paragraphs 

(b)(5) through (b)(8) of this section, the 

per-gallon sulfur standard of § 80.510(a) 

shall apply to all NRLM diesel fuel 

beginning August 1, 2010 for all 

downstream locations other than retail 

outlets or wholesale purchaserconsumer facilities, shall apply to all 

NRLM diesel fuel beginning October 1, 

2010 for retail outlets and wholesale 

purchaser-consumer facilities, and shall 

apply to all NRLM diesel fuel beginning 

December 1, 2010 for all locations. 

(4) Except as provided in paragraphs 

(b)(5) through (b)(8) of this section, the 

per-gallon sulfur standard of § 80.510(c) 

shall apply to all NRLM diesel fuel 

beginning August 1, 2014 for all 

downstream locations other than retail 

outlets or wholesale purchaserconsumer facilities, shall apply to all 

NRLM diesel fuel beginning October 1, 

2014 for retail outlets and wholesale 

purchaser-consumer facilities, and shall 

apply to all NRLM diesel fuel beginning 

December 1, 2014 for all locations. This 

paragraph (b)(4) does not apply to LM 

diesel fuel that is sold or intended for 

sale in areas other than those listed in 

§ 80.510(g)(1) or (g)(2). 

(5) For all NRLM diesel fuel that is 

sold or intended for sale in the areas 

listed in § 80.510(g)(1), the per-gallon 

sulfur standard and the cetane index or 

aromatics standard of 80.510(a) shall 

apply to all NRLM diesel fuel beginning 

August 1, 2007 for all downstream 

locations other than retail outlets or 

wholesale purchaser-consumer 

facilities, shall apply to all NRLM diesel 

fuel beginning October 1, 2007 for retail 

outlets and wholesale purchaserconsumer facilities, and shall apply to 

all NRLM diesel fuel beginning 

December 1, 2007 for all locations. 

(6) For all NR diesel fuel that is sold 

or intended for sale in the areas listed 

in § 80.510(g)(1), the per-gallon sulfur 

standard of § 80.510(b) shall apply to all 

NR diesel fuel beginning August 1, 2010 

for all downstream locations other than 

retail outlets or wholesale purchaserconsumer facilities, shall apply to all 

NR diesel fuel beginning October 1, 

2010 for retail outlets and wholesale 

purchaser-consumer facilities, and shall 

apply to all NR diesel fuel beginning 

December 1, 2010 for all locations. 

(7) For all NRLM diesel fuel that is 

sold or intended for sale in the areas 

listed in § 80.510(g)(1), the per-gallon 

sulfur standard of § 80.510(c) shall 

apply to all NRLM diesel fuel beginning 

August 1, 2012 for all downstream 

locations other than retail outlets or 

wholesale purchaser-consumer 

facilities, shall apply to all NRLM diesel 

fuel beginning October 1, 2012 for retail 

outlets and wholesale purchaserconsumer facilities, and shall apply to 

all NRLM diesel fuel beginning 

December 1, 2012 for all locations. 

(8) The provisions of paragraphs (b)(5) 

through (b)(7) of this section shall apply 

for all NRLM or NR diesel fuel that is 

sold or intended for sale in the area 

listed in § 80.510(g)(2), except for NRLM 

or NR diesel fuel that is produced in 

accordance with a compliance plan 

approved under § 80.554. 

(9) For the purposes of this section, 

distributors that have their own fuel 

storage tanks and deliver only to 

ultimate consumers shall be treated the 

same as retailers and their facilities 

treated the same as retail outlets.

■ 15. A new § 80.512 is added to read as 

follows:

§ 80.512 May an importer treat diesel fuel 

as blendstock?

An importer may exclude diesel fuel 

that it imports from the requirements 

under this subpart, and instead may 

designate such diesel fuel as diesel fuel 

treated as blendstock (DTAB), if all the 

following conditions are met: 

(a) The DTAB must be included in all 

applicable designation, credit and 

compliance calculations for diesel fuel 

for a refinery operated by the same 

entity that is the importer . That entity 

must meet all refiner standards and 

requirements. 

(b) The importer entity may not 

transfer title of the DTAB to another 

entity until the DTAB has been used to 

produce diesel fuel and all refiner 

standards and requirements have been 

met for the diesel fuel produced. 

(c) The refinery at which the DTAB is 

used to produce diesel fuel must be 

physically located at either the same 

terminal at which the DTAB first arrives 

in the U.S., the import facility, or at a 

facility to which the DTAB is directly 

transported from the import facility. 

(d) The DTAB must be completely 

segregated from any other diesel fuel, 

including any diesel fuel tank bottoms, 

prior to the point of blending, sampling 

and testing in the importer entity’s 

refinery operation. The DTAB may, 

however, be added to a diesel fuel 

blending tank where the diesel fuel tank 

bottom is not included as part of the 

batch volume for a prior batch. In 

addition, the DTAB may be placed into 

a storage tank that contains other DTAB 

imported by that importer. The DTAB 

also may be discharged into a tank 

containing finished diesel fuel of the 

same category as the diesel fuel which 

will be produced using the DTAB (for 

example, 15 ppm sulfur undyed or 15 

ppm sulfur dyed diesel fuel) provided 

the blending process is performed in 

that same tank. 

(e) The entity must account for the 

volume of diesel fuel produced using 

DTAB in a manner that excludes the 

volume of any previously designated 

diesel fuel. The diesel fuel tank bottom 

may not be included in the company’s 

refinery compliance calculations for that 

batch of diesel fuel if the fuel in that 

tank bottom has been previously 

designated by a refiner or importer. This 

exclusion of previously designated 

diesel fuel must be accomplished using 

the following approach: 

(1) Determine the volume of any tank 

bottom that is previously designated 

diesel fuel before any diesel fuel 

production begins. 

(2) Add the DTAB plus any 

blendstock to the storage tank, and 

completely mix the tank. 

(3) Determine the volume and sulfur 

content of the diesel fuel contained in 

the storage tank after blending is 

complete. Mathematically subtract the 

volume of the tank bottom to determine 

the volume of the DTAB plus 

blendstock added, and subsequently 

transferred to another facility. Such fuel 

is reported to EPA as a batch of diesel 

fuel under §§ 80.593, 80.601, and 

80.604. 

(4) If previously designated motor 

vehicle diesel fuel having a sulfur 

content of 15 ppm or less is blended 

with DTAB, and the combined product 

after blending has a sulfur content that 

exceeds 15 ppm, the importer entity, in 

its capacity as a refiner, must 

redesignate all the diesel fuel as 500 

ppm sulfur motor vehicle diesel fuel for 

purposes of the temporary compliance 

option under § 80.530, or other 

permissible redesignation under 

§ 80.598. If #2D 15 ppm sulfur motor 

vehicle diesel fuel is redesignated as 

#2D 500 ppm sulfur motor vehicle 

diesel fuel, such entity must apply the 

volume of previously designated 15 

ppm sulfur diesel fuel, for purposes of 

its operations as a distributor, to its 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39171

downgrading limitation under § 80.527, 

if applicable, and for volume balancing 

purposes under § 80.599. 

(5) As an alternative to paragraphs 

(e)(1) through (e)(4) of this section, 

where an importer has a blending tank 

that is used only to combine DTAB and 

blending components, and no 

previously designated diesel fuel is 

added to the tank, the importer entity, 

in its capacity as a refiner, may account 

for the diesel fuel produced in such a 

blending tank by sampling and testing 

for the sulfur content of the batch after 

DTAB and blendstock are added and 

mixed, and reporting the volume of 

diesel fuel transferred from that tank to 

a different facility, up to the point 

where a new blend is produced by 

adding new DTAB and blendstock. 

(f) The importer must include the 

volume and sulfur content of each batch 

of DTAB in the annual importer reports 

to EPA, as prescribed under §§ 80.593, 

80.601, and 80.604, but with a notation 

that the batch is not included in the 

importer compliance calculations 

because the product is DTAB. Any 

DTAB that ultimately is not used in the 

importer’s refinery operation (for 

example, a tank bottom of DTAB at the 

conclusion of the refinery operation), 

must be treated as newly imported 

diesel fuel, for which all required 

sampling and testing, and recordkeeping 

must be accomplished, and included in 

the importer’s compliance calculations 

for the averaging period when this 

sampling and testing occurs. 

(g) The importer must retain records 

that reflect the importation, sampling 

and testing, and physical movement of 

any DTAB, and must make these records 

available to EPA on request.

■ 16. A new § 80.513 is added to read as 

follows:

§ 80.513 What provisions apply to 

transmix processing facilities? 

For purposes of this section, transmix 

means a mixture of finished fuels that 

no longer meets the specifications for a 

fuel that can be used or sold without 

further processing. This section applies 

to refineries that produce diesel fuel 

from transmix by distillation or other 

refining processes but do not produce 

diesel fuel by processing crude oil. This 

section only applies to the volume of 

diesel fuel produced by such a transmix 

processor using these processes, and 

does not apply to any diesel fuel 

produced by the blending of 

blendstocks. 

(a) From June 1, 2006 through May 31, 

2010, motor vehicle diesel fuel 

produced by a transmix processor is 

subject to the 500 ppm sulfur standard 

under § 80.520(c). 

(b) Beginning June 1, 2010, motor 

vehicle diesel fuel produced by a 

transmix processor is subject to the 

sulfur standard under § 80.520(a)(1). 

(c) From June 1, 2007 through May 31, 

2010, NRLM diesel fuel produced by a 

transmix processor is exempt from the 

standards of § 80.510(a). This paragraph 

(c) does not apply to NRLM diesel fuel 

that is sold or intended for sale in the 

areas listed in § 80.510(g)(1) or (g)(2). 

(d) From June 1, 2010 through May 

31, 2014, NRLM diesel fuel produced by 

a transmix processor is subject to the 

standards under § 80.510(a). This 

paragraph (d) does not apply to NRLM 

diesel fuel that is sold or intended for 

sale in the areas listed in § 80.510(g)(1) 

or (g)(2). 

(e) From June 1, 2014 and beyond, 

NRLM diesel fuel produced by a 

transmix processor is subject to the 

standards of § 80.510(c), except that LM 

diesel fuel is subject to the sulfur 

standard of § 80.510(a). This paragraph 

(e) does not apply to NRLM or LM 

diesel fuel that is sold or intended for 

sale in the areas listed in § 80.510(g)(1) 

or (g)(2).

■ 17. Section 80.520 is amended by 

revising paragraph (b) and removing 

paragraph (d) to read as follows:

§ 80.520 What are the standards and dye 

requirements for motor vehicle diesel fuel?

* * * * *

(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. All motor 

vehicle diesel fuel shall be free of 

yellow solvent 124. 

(2) Until June 1, 2010, any #1D or #2D 

distillate 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 distillate fuel designated 

or classified as any of the following: 

(i) For use only in the State of Alaska, 

as provided under 40 CFR 69.51. 

(ii) For use under a national security 

exemption under § 80.606 or for use 

only in a research and development 

testing program exempted under 

§ 80.607. 

(iii) For use in the U.S. Territories as 

provided under § 80.608. 

(iv) Jet fuel meeting the definition 

under § 80.2. 

(v) Kerosene meeting the definition 

under § 80.2. 

(vi) Diesel fuel that is produced 

beginning June 1, 2006, with a sulfur 

level less than or equal to 500 ppm, and 

designated as NRLM or LM that has not 

yet been distributed from a truck 

loading terminal or bulk terminal to a 

retail outlet, wholesale purchaserconsumer or ultimate consumer.

* * * * *

■ 18. Section 80.521 is revised to read as 

follows:

§ 80.521 What are the standards and 

identification requirements for diesel fuel 

additives? 

(a) Except as provided in paragraph 

(b) of this section, any diesel fuel 

additive that is added to, intended for 

adding to, used in, or offered for use in 

any MVNRLM diesel fuel subject to the 

15 ppm sulfur content standards of 

§ 80.510(b), § 80.510(c), or § 80.520(a) at 

any downstream location must—

(1) Have a sulfur content less than or 

equal to 15 ppm. 

(2) Be accompanied by a product 

transfer document pursuant to § 80.591 

indicating that the additive complies 

with the 15 ppm sulfur standard for 

diesel fuel, except for those diesel fuel 

additives which are only sold in 

containers for use by the ultimate 

consumer of diesel fuel and which are 

subject to the requirements of 

§ 80.591(d).

(b) Any diesel fuel additive that is 

added to, intended for adding to, used 

in, or offered for use in diesel fuel 

subject to the 15 ppm sulfur content 

standards of § 80.510(b) or (c) or 

§ 80.520(a) may have a sulfur content 

exceeding 15 ppm provided that each of 

the following conditions are met: 

(1) The additive is added to or used 

in the diesel fuel in a quantity less than 

one percent by volume of the resultant 

additive/diesel fuel mixture; 

(2) The product transfer document 

complies with the informational 

requirements of § 80.591; and 

(3) The additive is not used or 

intended for use by an ultimate 

consumer in diesel motor vehicles or 

nonroad diesel engines.

■ 19. Section 80.522 is revised to read as 

follows:

§ 80.522 May used motor oil be dispensed 

into diesel motor vehicles or nonroad diesel 

engines? 

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 or model year 2011 or later 

nonroad diesel engines (not including 

locomotive or marine diesel engines), 

unless both of the following 

requirements have been met: 

(a) The vehicle or engine 

manufacturer has received a Certificate 

39172 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

of Conformity under 40 CFR part 86, 40 

CFR part 89, or 40 CFR part 1039 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.

■ 20. Section 80.523 is removed and 

reserved.

§ 80.523 [Removed and Reserved]

■ 21. Section 80.527 is revised to read as 

follows:

§ 80.527 Under what conditions may motor 

vehicle diesel fuel subject to the 15 ppm 

sulfur standard be downgraded to motor 

vehicle diesel fuel subject to the 500 ppm 

sulfur standard? 

(a) Definitions. As used in this 

section, downgrade means changing the 

designation or classification of motor 

vehicle diesel fuel subject to the 15 ppm 

sulfur standard under § 80.520(a)(1) to 

motor vehicle diesel fuel subject to the 

500 ppm sulfur standard under 

§ 80.520(c). A downgrade occurs when 

the change in designation or 

classification takes place. Changing the 

designation or classification of motor 

vehicle diesel fuel subject to the 15 ppm 

sulfur standard under § 80.520(a)(1) to 

any designation or classification that is 

not a motor vehicle diesel fuel is not a 

downgrade for purposes of this section. 

(b) Who is subject to the downgrade 

limitation: Any distributor, retailer, or 

wholesale purchaser consumer that 

takes custody of any diesel fuel 

designated or classified as #2D 15 ppm 

sulfur motor vehicle diesel fuel and 

delivers any diesel fuel designated or 

classified as #2D 500 ppm motor vehicle 

diesel fuel. 

(c) Downgrading limitation. (1) Except 

as provided in paragraphs (d) and (e) of 

this section, a person described in 

paragraph (b) of this section may not 

downgrade a total of more than 20 

percent of the #2D motor vehicle diesel 

fuel (by volume) that is subject to the 15 

ppm sulfur standard of § 80.520(a)(1) to 

#2D motor vehicle diesel fuel subject to 

the sulfur standard of § 80.520(c) while 

such person has custody of such fuel. 

(2) The limitation of paragraph (c)(1) 

of this section applies separately to each 

facility as defined under § 80.502 where 

there is custody of the fuel when it is 

downgraded. 

(3) Compliance with the limitation of 

paragraph (c)(1) of this section applies 

separately for the compliance periods of 

October 1, 2006 through May 31, 2007; 

June 1, 2007 through June 30, 2008; July 

1, 2008 through June 30, 2009; July 1, 

2009 through May 31, 2010. 

(4) Compliance with the limitation of 

paragraph (c)(1) of this section shall be 

as calculated under § 80.599(e). 

(d) Diesel fuel in violation of the 15 

ppm standard. Where motor vehicle 

diesel fuel subject to the 15 ppm sulfur 

standard of § 80.520(a)(1) is found to be 

in violation of any standard under 

§ 80.520(a) and is consequently 

downgraded to 500 ppm sulfur motor 

vehicle diesel fuel, the person having 

custody of the fuel at the time it is found 

to be in violation must include the 

volume of such downgraded fuel toward 

its 20 percent volume limitation under 

paragraph (c)(1) of this section, unless 

the person demonstrates that it did not 

cause the violation.

(e) Special provisions for retail outlets 

and wholesale purchaser-consumer 

facilities. Notwithstanding the 

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 purchaserconsumers who sell, offer for sale, or 

dispense motor vehicle diesel fuel that 

is subject to the 15 ppm sulfur standard 

under § 80.520(a)(1) are exempt from the 

volume limitations of paragraph (c)(1) of 

this section. 

(2) A retailer or wholesale purchaserconsumer who does not sell, offer for 

sale, or dispense motor vehicle diesel 

fuel subject to the 15 ppm sulfur 

standard under § 80.520(a)(1) must 

comply with the downgrading 

limitations of paragraph (c) of this 

section, and compliance shall be 

calculated as specified in § 80.599(e)(2). 

(f) Termination of downgrading 

limitations. The provisions of this 

section shall not apply after May 31, 

2010.

■ 22. Section 80.530 is revised to read as 

follows:

§ 80.530 Under what conditions can 500 

ppm motor vehicle diesel fuel be produced 

or imported after May 31, 2006? 

(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 

§ 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 § 80.598(a). 

(2) The refiner or importer must meet 

the requirements for product transfer 

documents in § 80.590 for each batch 

subject to the 500 ppm sulfur content 

standard. 

(3)(i) The volume of motor vehicle 

diesel fuel that is produced or imported 

during a compliance period (V500, as 

provided in paragraph (a)(5) of this 

section, may not exceed the following 

volume limit: 

(A) For the compliance periods prior 

to the period from July 1, 2009 through 

May 31, 2010, 20 percent of the volume 

of motor vehicle diesel fuel that is 

produced or imported during a 

compliance period (Vt) plus an 

additional volume of motor vehicle 

diesel fuel represented by credits 

properly generated and used pursuant to 

the requirements of §§ 80.531 and 

80.532. 

(B) For the compliance period from 

July 1, 2009 through May 31, 2010, 20 

percent of the volume of motor vehicle 

diesel fuel that is produced or imported 

prior to January 1, 2010 during the 

compliance period (Vt), plus an 

additional volume of motor vehicle 

diesel fuel represented by credits 

properly generated and used pursuant to 

the requirements of §§ 80.531 and 

80.532. From January 1, 2010 through 

May 31, 2010, the volume of motor 

vehicle diesel fuel that is produced or 

imported shall not exceed the volume 

represented by credits used pursuant to 

§ 80.532. 

(ii) The terms V500 and Vt have the 

meaning specified in § 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 § 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 an annual basis, 

where the annual compliance period is 

from July 1 through June 30. For the 

year 2006, compliance shall be 

determined for the period June 1, 2006 

through June 30, 2007. For the year 

2010, compliance shall be determined 

for the period of July 1, 2009 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 the 

compliance period July 1, 2009 through 

May 31, 2010, 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 of diesel fuel 

produced or imported during the 

compliance period (Vt), provided that 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39173

for the immediately following 

compliance period: 

(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 §§ 80.531 and 80.532 

that represent a volume of motor vehicle 

diesel fuel, equal to the volume of the 

exceedance 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.

■ 23. Section 80.531 is amended by 

revising paragraphs (a)(1), (a)(2), (d)(1) 

(d)(5), (e)(1), and (e)(2)(i) to read as 

follows:

§ 80.531 How are motor vehicle diesel fuel 

credits generated? 

(a) * * *

(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 § 80.520(a)(1). Credits may be 

generated only if the volume of motor 

vehicle diesel fuel designated under 

§ 80.598(a) as subject to the 15 ppm 

sulfur standard of § 80.520(a) exceeds 80 

percent of the total volume of motor 

vehicle diesel fuel produced or 

imported as described in paragraph 

(a)(2) of this section. 

(2) The number of motor vehicle 

diesel fuel credits generated shall be 

calculated for each compliance period 

(as specified in § 80.530(a)(5)) as 

follows:

C = V1515¥(0.80 × Vt) 

Where: 

C = the positive number of motor vehicle 

diesel fuel credits generated, in gallons. 

V15 = the total volume in gallons of diesel 

fuel produced or imported that is 

designated under § 80.598 as motor 

vehicle diesel fuel and subject to the 

standards of § 80.520(a) during the 

compliance period. 

Vt n =15 + V500. 

V500 = the total volume in gallons of diesel 

fuel produced or imported that is 

designated under § 80.598(a) as motor 

vehicle diesel fuel and subject to the 500 

ppm sulfur standard under § 80.520(c) 

plus the total volume of any other diesel 

fuel (not including V15, diesel fuel that 

is dyed in accordance with § 80.520(b) at 

the refinery or import facility where the 

diesel fuel is produced or imported, or 

diesel fuel that is designated as NRLM 

under § 80.598(a)) represented as having 

a sulfur content less than or equal to 500 

ppm.

* * * * *

(d) * * *

(1) The designation requirements of 

§ 80.598, and all recordkeeping and 

reporting requirements of §§ 80.592, 

80.593, 80.594, 80.600, and 80.601.

* * * * *

(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 August 31, 2005 for the period 

from June 1, 2004 through May 31, 

2005, or August 31, 2006 for the period 

from June 1, 2005 through May 31, 

2006, 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) * * *

(1) Notwithstanding the provisions of 

paragraph (a) of this section, a small 

refiner that is approved by the EPA as 

a small refiner under § 80.551(g) may 

generate credits under § 80.552(b). Such 

a small refiner may generate one credit 

for each gallon of motor vehicle diesel 

fuel produced that is designated under 

§ 80.598 as motor vehicle diesel fuel 

subject to the 15 ppm sulfur standard 

under § 80.520(a)(1). 

(2) * * *

(i) Credits may be generated under 

this paragraph (e) and § 80.552(b) only 

during the compliance periods 

beginning June 1, 2006 and ending on 

May 31, 2010, however diesel fuel 

produced after December 31, 2009 shall 

not generate credits. 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 June 30, 

2007. The annual compliance period for 

2010 shall be July 1, 2009 through May 

31, 2010.

* * * * *

■ 24. Section 80.532 is revised to read as 

follows:

§ 80.532 How are motor vehicle diesel fuel 

credits used and transferred? 

(a) Credit use stipulations. Motor 

vehicle diesel fuel credits generated 

under § 80.531 may be used to meet the 

volume limit of § 80.530(a)(3) provided 

that: 

(1) The motor vehicle diesel fuel 

credits were generated and reported 

according to the requirements of this 

subpart; and 

(2) The conditions of this section are 

met. 

(b) Use of credits generated under 

§ 80.531. Motor vehicle diesel fuel 

credits generated under § 80.531 may be 

used by a refiner or by an importer to 

comply with § 80.530 by applying one 

credit for every gallon of motor vehicle 

diesel fuel needed to meet compliance 

with the volume limit of § 80.530(a)(3). 

(c) Credit banking. Motor vehicle 

diesel fuel credits generated may be 

banked for use or transfer in a later 

compliance period or may be transferred 

to another refiner or importer for use as 

provided in paragraph (d) of this 

section.

(d) Credit transfers. (1) Motor vehicle 

diesel fuel credits obtained from another 

refiner or from another importer, 

including early motor vehicle diesel fuel 

credits and small refiner motor vehicle 

diesel fuel credits as described in 

§ 80.531(b) through (e), may be used to 

satisfy the volume limit of § 80.530(a)(3) 

if all the following conditions are met: 

(i) The motor vehicle diesel fuel 

credits were generated in the same CTA 

as the CTA in which motor vehicle 

diesel fuel credits are used to achieve 

compliance; 

(ii) The motor vehicle diesel fuel 

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 August 31 following the 

compliance period when the motor 

vehicle diesel fuel 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 motor vehicle diesel fuel credits 

necessary to meet the transferor’s 

annual compliance requirements before 

transferring motor vehicle diesel fuel 

credits to any other refinery or importer; 

(vi) No motor vehicle diesel fuel 

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 motor vehicle diesel fuel 

39174 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

credits were generated, the identity of 

the refiner (and refinery) or importer 

who generated the motor vehicle diesel 

fuel credits, the CTA of credit 

generation, and the identity of the 

transferring entity, if it is not the same 

entity who generated the motor vehicle 

diesel fuel credits. 

(2) In the case of motor vehicle diesel 

fuel credits that have been calculated or 

created improperly, or are otherwise 

determined to be invalid, the following 

provisions apply: 

(i) Invalid motor vehicle diesel fuel 

credits cannot be used to achieve 

compliance with the transferee’s volume 

requirements regardless of the 

transferee’s good faith belief that the 

motor vehicle diesel fuel credits were 

valid. 

(ii) The refiner or importer who used 

the motor vehicle diesel fuel credits, 

and any transferor of the motor vehicle 

diesel fuel credits, must adjust their 

credit records, reports and compliance 

calculations as necessary to reflect the 

proper motor vehicle diesel fuel credits. 

(iii) Any properly created motor 

vehicle diesel fuel credits existing in the 

transferor’s credit balance after 

correcting the credit balance, and after 

the transferor applies motor vehicle 

diesel fuel 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 

motor vehicle diesel fuel credits.

(e) Limitations on credit use. (1) 

Motor vehicle diesel fuel credits may 

not be used to achieve compliance with 

any requirements of this subpart other 

than the volume limit of § 80.530(a)(3), 

unless specifically approved by the 

Administrator pursuant to a hardship 

relief petition under § 80.560 or 80.561. 

(2) A refiner or importer possessing 

motor vehicle diesel fuel credits must 

use all motor vehicle diesel fuel credits 

in its possession prior to applying the 

credit deficit provisions of 

§ 80.530(a)(6). 

(3) No motor vehicle diesel fuel 

credits may be used to meet compliance 

with this subpart subsequent to the 

compliance period ending May 31, 

2010.

■ 25. A new § 80.533 is added to read as 

follows:

§ 80.533 How does a refiner or importer 

apply for a motor vehicle or non-highway 

baseline? 

(a) A refiner or importer wishing to 

generate credits under § 80.535 or use 

the small refiner provisions under 

§ 80.554 must submit an application to 

EPA that includes the information 

required under paragraph (c) of this 

section by the dates specified in 

paragraph (f) of this section. A refiner 

must apply for a motor vehicle baseline 

for each refinery in order to generate 

credits under § 80.535 and apply for a 

non-highway baseline for each refinery 

to use the provisions of § 80.554 (a), (b), 

or (d). 

(b) The baseline must be sent to the 

following address: U.S. EPA—Attn: 

Nonroad Rule Diesel Fuel Baseline, 

Transportation and Regional Programs 

Division (6406J), 1200 Pennsylvania 

Avenue, NW., Washington, DC 20460 

(regular mail) or U.S. EPA, Attn: 

Nonroad Rule Diesel Fuel Baseline, 

Transportation and Regional Programs 

Division (6406J), 1310 L Street, NW., 6th 

floor, Washington, DC 20005 (express 

mail). 

(c) A baseline application must be 

submitted for each refinery or import 

facility and include the following 

information: 

(1) A listing of the names and 

addresses of all refineries or import 

facilities owned by the company for 

which the refiner or importer is 

applying for a motor vehicle or nonhighway baseline. 

(2)(i) For purposes of a motor vehicle 

baseline volume for use in determining 

early credits per § 80.535(a) and (b) and 

for purposes of a non-highway baseline 

volume used in determining compliance 

with the provisions of § 80.554(a) or (d), 

the baseline volume produced during 

the three calendar years beginning 

January 1, 2003, 2004, and 2005, as 

calculated under paragraph (e)(1) of this 

section. 

(ii) For purposes of a motor vehicle 

baseline volume for use in determining 

early credits per § 80.535(c) and for 

purposes of a non-highway baseline 

volume used in determining compliance 

with the provisions of § 80.554(b), the 

baseline volumes produced during the 

three calendar years beginning January 

1, 2006, 2007, and 2008, as calculated 

under paragraph (e)(2) of this section. 

(3) A letter signed by the president, 

chief operating officer of the company, 

or his/her delegate, stating that the 

information contained in the motor 

vehicle or non-highway baseline 

application is true to the best of his/her 

knowledge. 

(4) Name, address, phone number, 

facsimile number and e-mail address of 

a corporate contact person. 

(5) For each batch of diesel fuel 

produced or imported during each 

calendar year: 

(i) The date that production was 

completed or importation occurred for 

the batch and the batch designation or 

classification. 

(ii) The batch volume. 

(6) Other appropriate information as 

requested by EPA. 

(d) Calculation of the Motor vehicle 

Baseline, BMV. (1) Under paragraph 

(c)(2)(i) of this section, BMV equals the 

average annual volume of motor vehicle 

diesel fuel produced or imported from 

January 1, 2003 through December 31, 

2005. 

(2) Under paragraph (c)(2)(ii) of this 

section, BMV equals the average annual 

volume of motor vehicle diesel fuel 

produced during the period from 

January 1, 2006 through December 31, 

2008. 

(3) For purposes of this paragraph, 

fuel produced for export, jet fuel 

(kerosene), and fuel specifically 

produced to meet military specifications 

(such as JP–4, JP–8, and F–76), shall not 

be included in baseline calculations.

(e) Calculation of the Non-highway 

Baseline, BNRLM. (1) Under paragraph 

(c)(2)(i) of this section, BNRLM equals the 

average annual volume of all #2D 

distillate produced or imported from 

January 1, 2003 through December 31, 

2005, less BMV as determined in 

paragraph (d)(1) of this section. 

(2) Under paragraph (c)(2)(ii) of this 

section, NRLM equals the average annual 

volume of MVNRLM produced or 

imported from January 1, 2006 through 

December 31, 2008, less BMV as 

determined in paragraph (d)(2) of this 

section. 

(3) For purposes of this paragraph (e), 

fuel produced for export, jet fuel, 

kerosene, and fuel specifically produced 

to meet military specification (such as 

JP–4, JP–8, and F–76), shall not be 

included in baseline calculations. 

(f)(1) Applications submitted under 

paragraph (c)(2)(i) of this section must 

be postmarked by February 28, 2006. 

(2) Applications submitted under 

paragraph (c)(2)(ii) of this section must 

be postmarked by February 28, 2009. 

(g)(1) For applications submitted 

under paragraph (c)(2)(i) of this section, 

EPA will notify refiners or importers by 

June 1, 2006 of approval of the baselines 

for each of the refiner’s refineries or 

importer’s import facilities or of any 

deficiencies in the refiner’s or 

importer’s application. 

(2) For applications submitted under 

paragraph (c)(2)(ii) of this section, EPA 

will notify refiners or importers by June 

1, 2009 regarding approval of the 

baselines for each of the refiner’s 

refineries or importer’s import facilities 

of any deficiencies in the refiner’s or 

importer’s application. 

(h) If at any time the motor vehicle 

baseline or non-highway baseline 

submitted in accordance with the 

requirements of this section is 

determined to be incorrect, EPA will 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39175

notify the refiner or importer of the 

corrected baseline and any compliance 

calculations made on the basis of that 

baseline will have to be adjusted 

retroactively.

■ 26. A new § 80.535 is added to read as 

follows.

§ 80.535 How are NRLM diesel fuel credits 

generated? 

(a) Generation of high sulfur NRLM 

credits from June 1, 2006 through May 

31, 2007. (1) During the period June 1, 

2006 through May 31, 2007, a refiner or 

importer may generate credits pursuant 

to the provisions of this section if all of 

the following conditions are met: 

(i) The refiner or importer notifies 

EPA of its intention to generate credits 

and the period during which it will 

generate credits. This notification must 

be received by EPA at least 120 calendar 

days prior to the date it begins 

generating credits under this section. 

(ii) Each batch or partial batch of 

NRLM diesel fuel for which credits are 

claimed shall be subject to all of the 

provisions of this subpart for NRLM 

diesel fuel as if it had been produced 

after June 1, 2007 and before June 1, 

2010. 

(iii) The number of high-sulfur NRLM 

credits (HSC) that are generated shall be 

a positive number. 

(2) The refiner or importer shall 

choose one of the following methods for 

calculating credits for each calculation 

period. 

(i) For fuel that is dyed under the 

provisions of § 80.520, HSC equals the 

volume of fuel in gallons produced or 

imported during the period identified in 

paragraph (a)(1) of this section that is 

designated as NRLM diesel fuel and that 

is subject to and complies with the 

provisions of § 80.510(a); or 

(ii) For dyed or undyed fuel that 

complies with the provisions of § 80.598 

for a calculation period of June 1, 2006 

through May 31, 2007, determine HSC 

as follows:

HSC = V510 + V520 ¥ BMV

Where:

V510 = The total volume of NRLM diesel fuel 

produced or imported during the annual 

calculation period that complies with the 

standards of § 80.510(a) or (b). 

V520 = The total volume of motor vehicle 

diesel fuel produced or imported during 

the annual calculation period that 

complies with the standards of 

§ 80.520(a) or (c). 

BMV = As calculated in § 80.533(d)(1).

(3) High-sulfur NRLM credits shall be 

generated and designated as follows: 

(i) Credits shall be generated 

separately for each refiner or importer.

(ii) Credits may not be generated by 

both a foreign refiner and by an 

importer for the same motor vehicle 

diesel fuel. 

(iii) Credits shall not be generated 

under both § 80.531 and this section for 

the same diesel fuel. 

(iv) Any credits generated by a foreign 

refiner shall be generated as provided in 

§ 80.620(c) and this section. 

(4) No credits may be generated under 

this paragraph (a) after May 31, 2007. 

(5) Any fuel for which a refiner or 

importer wishes to generate credits must 

be designated as 500 ppm sulfur NRLM 

diesel fuel when delivered to the next 

entity. The refiner may not designate the 

fuel as 500 ppm sulfur with the intent 

that it be mixed by the next entity with 

a batch of distillate with a higher sulfur 

level to create a fuel with a 

classification other than 500 ppm sulfur 

or the classification of the fuel it is 

mixed with (e.g., it cannot mix fuel 

designated as 500 ppm sulfur with fuel 

classified as high sulfur to produce a 

fuel classified as 2000 ppm sulfur to 

meet state or local sulfur limits). 

(6) The refiner or importer must 

submit a report to the Administrator no 

later than July 31, 2007. The report must 

demonstrate that all the NRLM diesel 

fuel produced or imported which 

generated credits met the applicable 

requirements of paragraphs (a)(1) 

through (a)(5) of this section. If the 

Administrator finds that such credits 

did not in fact meet the requirements of 

paragraphs (a)(1) through (a)(5) 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. 

(b) Generation of high-sulfur NRLM 

credits by small refiners from June 1, 

2006 through May 31, 2010. (1) 

Notwithstanding the dates specified in 

paragraph (a) of this section, during the 

period from June 1, 2006 through May 

31, 2010, a refiner that is approved by 

the EPA as a small refiner under 

§ 80.551 may generate credits under 

paragraph (a) of this section during any 

compliance period as specified under 

§ 80.599(a)(2) for diesel fuel produced or 

imported that is designated as NRLM 

diesel fuel and complies with the 

provisions of § 80.510(a). 

(2) The small refiner must submit a 

report to the Administrator no later than 

August 31 after the end of each 

calculation period during which credits 

were generated. The report must 

demonstrate that all the NRLM diesel 

fuel produced or imported which 

generated credits met the applicable 

requirements of paragraphs (a)(1) 

through (a)(5) of this section. If the 

Administrator finds that such credits 

did not in fact meet the requirements of 

paragraphs (a)(1) through (a)(5) 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. 

(3) In addition, a foreign refiner that 

is approved by the Administrator to 

generate credits under § 80.554 shall 

comply with the requirements of 

§ 80.620. 

(c) Generation of 500 ppm sulfur 

NRLM credits from June 1, 2009 through 

May 31, 2010. (1) During the period of 

June 1, 2009 through May 31, 2010, a 

refiner or importer may generate credits 

pursuant to the provisions of this 

section if all of the following conditions 

are met: 

(i) The refiner or importer notifies 

EPA of its intention to generate credits 

and the period during which it will 

generate credits. This notification must 

be received by EPA at least 120 calendar 

days prior to the date it begins 

generating credits under this section. 

(ii) Each batch or partial batch of 

NRLM diesel fuel for which credits are 

claimed shall be subject to all of the 

provisions of this subpart for NRLM 

diesel fuel as if it had been produced 

after June 1, 2010. 

(iii) The number of 500 ppm sulfur 

NRLM credits in gallons that are 

generated, C500, shall be a positive 

number calculated as follows:

C500 = V15¥BMV

Where: 

V15 = The total volume in gallons of 15 ppm 

diesel fuel produced or imported during 

the period stated under paragraph 

(c)(1)(i) of this section that is designated 

as either motor vehicle diesel fuel or 

NRLM diesel fuel. 

BMV = As determined in § 80.533(d)(2).

(2) 500 ppm sulfur NRLM credits 

shall be generated and designated as 

follows: 

(i) Credits shall be generated 

separately for each refiner or importer. 

(ii) Credits may not be generated by 

both a foreign refiner and by an 

importer for the same diesel fuel.

(iii) Credits shall not be generated 

under both § 80.531 and this section for 

the same diesel fuel. 

(iv) Any credits generated by a foreign 

refiner shall be generated as provided in 

§ 80.620(c) and this section. 

(3) No credits may be generated under 

this paragraph (c) after May 31, 2010. 

(4) The refiner or importer must 

submit a report to the Administrator no 

later than August 31, 2010. The report 

must demonstrate that all the 15 ppm 

sulfur NRLM diesel fuel produced or 

imported which generated credits met 

39176 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

the applicable requirements of 

paragraphs (c)(1) through (c)(3) of this 

section. If the Administrator finds that 

such credits did not in fact meet the 

requirements of paragraphs (c)(1) 

through (c)(3) 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. 

(d) Generation of 500 ppm sulfur 

NRLM credits by small refiners from 

June 1, 2009 through December 31, 

2013. (1) Notwithstanding the dates 

specified in paragraph (c) of this 

section, during the period from June 1, 

2009 through December 31, 2013, a 

refiner that is approved by the EPA as 

a small refiner under § 80.551 may 

generate credits under paragraph (c) of 

this section during any compliance 

period as specified under § 80.599(a)(2) 

for diesel fuel produced or imported 

that is designated as NR or NRLM diesel 

fuel and complies with the provisions of 

§ 80.510(b) or (c). 

(2) The small refiner must submit a 

report to the Administrator no later than 

August 31 after the end of each 

calculation period during which credits 

were generated. The report must 

demonstrate that all the 15 ppm sulfur 

NR or NRLM diesel fuel produced or 

imported for which credits were 

generated met the applicable 

requirements of paragraphs (c)(1) 

through (c)(3) of this section. If the 

Administrator finds that such credits 

did not in fact meet the requirements of 

paragraphs (c)(1) through (c)(3) 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. 

(3) In addition, a foreign refiner that 

is approved by the Administrator to 

generate credits under § 80.554 shall 

comply with the requirements of 

§ 80.620.

■ 27. A new § 80.536 is added to read as 

follows:

§ 80.536 How are NRLM diesel fuel credits 

used and transferred? 

(a) Credit use stipulations. Credits 

generated under § 80.535(a) and (b) may 

be used to meet the NRLM diesel fuel 

sulfur standard of § 80.510(a), and 

credits generated under 80.535(c) and 

(d) may be used to meet the NR and 

NRLM diesel fuel sulfur standard of 

80.510(b) and (c), respectively, provided 

that: 

(1) The credits were generated and 

reported according to the requirements 

of this subpart; and 

(2) The conditions of this section are 

met. 

(b) Using credits generated under 

§ 80.535. Credits generated under 

§ 80.535 may be used by a refiner or an 

importer to comply with the diesel fuel 

standards of § 80.510 (a), (b), and (c) by 

applying one credit for every gallon of 

diesel fuel that does not comply with 

the applicable standard. 

(c) Credit banking. Credits generated 

may be banked for use at a later time or 

may be transferred to any other refiner 

or importer nationwide for use as 

provided in paragraph (d) of this 

section. 

(d) Credit transfers. (1) Credits 

generated under § 80.535 that are 

obtained from another refiner or 

importer may be used to comply with 

the diesel fuel sulfur standards of 

§ 80.510(a), (b), and (c) if all the 

following conditions are met: 

(i) The credits are used in compliance 

with the time period limitations for 

credit use in this subpart; 

(ii) Any credit transfer is completed 

no later than August 31 following the 

compliance period when the credits are 

used to comply with a standard under 

paragraph (a) of this section; 

(iii) No credit is transferred more than 

twice, as follows: 

(A) The first transfer by the refiner or 

importer who generated the credit may 

only be made to a refiner or importer 

that 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; and

(B) In no case may a credit be 

transferred more than twice before it is 

used or it expires; 

(iv) The credit transferor applies any 

credits necessary to meet the transferor’s 

annual compliance requirements before 

transferring credits to any other refinery 

or importer; 

(v) No credits are transferred that 

would result in the transferor having a 

negative credit balance; and 

(vi) Each transferor supplies to the 

transferee records indicating the year 

the credits were generated, the identity 

of the refiner (and refinery) or importer 

that generated the credits, and the 

identity of the transferor, if it is not the 

same party that 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 that used 

the credits, and any transferor of the 

credits, must adjust its 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 calendar year, must first be applied 

to correct the invalid transfers before the 

transferor trades or banks the credits. 

(e) General limitation on credit use.

Credits may not be used to achieve 

compliance with any requirements of 

this subpart other than the standards of 

§ 80.510(a), (b), and (c), unless 

specifically approved by the 

Administrator pursuant to a hardship 

relief petition under § 80.560 or 

§ 80.561. 

(f) Use of high sulfur NRLM credits.

(1) High sulfur NRLM credits generated 

under § 80.535(a) or (b) may be used on 

a one-for-one basis to meet the NRLM 

diesel fuel sulfur standard of § 80.510(a) 

from June 1, 2007 through May 31, 

2010. For example, one credit generated 

by the production or importation of one 

gallon of NRLM diesel fuel subject to 

the NRLM diesel fuel sulfur standard of 

§ 80.510 (a) may be used to produce or 

import one gallon of NRLM diesel fuel 

that is exempt from the sulfur standard 

of § 80.510(a) during the period from 

June 1, 2007 through May 31, 2010. 

(2) Any high sulfur NRLM diesel fuel 

produced after June 1, 2007 through the 

use of credits must—

(i) Be dyed red under the provisions 

of § 80.520 at the point of production or 

importation; 

(ii) Be associated with a product 

transfer document that bears a unique 

product code as specified in § 80.590; 

and 

(iii) Not be used to sell or deliver 

diesel fuel into areas specified in 

§ 80.510(g)(1) or (g)(2). 

(3) No high sulfur NRLM credits may 

be used subsequent to the compliance 

period ending May 31, 2010. 

(4) Any high sulfur NRLM credits not 

used under the provisions of paragraph 

(f)(1) of this section may be converted 

into 500 ppm sulfur NRLM credits on a 

one-for-one basis for use under 

paragraph (g) of this section. 

(g) Use of 500 ppm sulfur NRLM 

credits. (1) 500 ppm sulfur NRLM 

credits generated under § 80.535(c) or 

(d) or converted from high sulfur NRLM 

credits under paragraph (f)(3) of this 

section may be used on a one-for-one 

basis to meet the NR or NRLM diesel 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39177

fuel sulfur standards of § 80.510(b) or (c) 

from June 1, 2010 through May 31, 

2014. For example, one credit generated 

by the production or importation of one 

gallon of NRLM diesel fuel subject to 

the NRLM diesel fuel sulfur standard of 

§ 80.510 (c) may be used to produce or 

import one gallon of NR diesel fuel that 

is subject to the sulfur standard of 

§ 80.510(a) during the period from June 

1, 2010 through May 31, 2014. 

(2) Any 500 ppm sulfur NR or NRLM 

diesel fuel produced or imported after 

June 1, 2010 through the use of these 

credits must—

(i) Bear a unique product code as 

specified in § 80.590; and 

(ii) Not be used to sell or deliver 

diesel fuel into areas specified in 

§ 80.510(g)(1) or (g)(2). 

(3) No 500 ppm sulfur NRLM credits 

may be used after May 31, 2014.

■ 28. Section 80.540 is amended by 

revising paragraphs (b), (d), (e), and (f) to 

read as follows:

§ 80.540 How may a refiner be approved to 

produce gasoline under the GPA gasoline 

sulfur standards in 2007 and 2008?

* * * * *

(b) The refiner must submit an 

application in accordance with the 

provisions of §§ 80.595 and 80.596. The 

application must also include 

information, as provided in § 80.594(c), 

demonstrating that starting no later than 

June 1, 2006, 95 percent of the motor 

vehicle diesel fuel produced by the 

refinery for United States use will 

comply with the 15 ppm sulfur standard 

under § 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.

* * * * *

(d) From June 1, 2006 through 

December 31, 2008, 95 percent of the 

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 standards in 2007 and 2008, must 

be accurately designated under § 80.598 

as meeting the 15 ppm sulfur standard 

of § 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 standard under 

paragraph (d) of this section must meet 

or exceed 85 percent of the baseline 

volume established under paragraph (c) 

of this section, except that for the first 

compliance period from June 1, 2006 

through June 30, 2007, the total volume 

must meet or exceed 92 percent of the 

baseline volume. 

(f) Compliance with the volume 

requirements in paragraph (e) of this 

section shall be determined each 

compliance period. Annual compliance 

periods shall be from July 1 through 

June 30. For the year 2006, the 

compliance period shall be from June 1, 

2006 through June 30, 2007.

* * * * *

■ 29. Section 80.550 is amended by 

revising the section heading and 

paragraphs (a), (b), (c), (d), (e) and (f) to 

read as follows:

§ 80.550 What is the definition of a motor 

vehicle diesel fuel small refiner or a NRLM 

diesel fuel small refiner under this subpart? 

(a) A motor vehicle diesel fuel 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; and 

(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 oil capacity 

less than or equal to 155,000 barrels per 

calendar day (bpcd) for 1999; or 

(4) Has been approved by EPA as a 

small refiner under § 80.235 and 

continues to meet the criteria of a small 

refiner under § 80.225. 

(b) A NRLM diesel fuel 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, 2002, to January 1, 2003; 

and 

(3) Had an average crude oil capacity 

less than or equal to 155,000 barrels per 

calendar day (bpcd) for 2003. 

(c) Determine the number of 

employees and crude oil capacity under 

paragraphs (a) or (b) of this section, as 

follows: 

(1) The refiner shall include the 

employees and crude oil capacity of any 

subsidiary companies, any parent 

company and subsidiaries of the parent 

company in which the parent has 50 

percent or greater ownership, and any 

joint venture partners. 

(2) For any refiner owned by a 

governmental entity, the number of 

employees and total crude oil capacity 

as specified in paragraph (a) of this 

section shall include all employees and 

crude oil production of the government 

to which the governmental entity is a 

part.

(3) Any refiner owned and controlled 

by an Alaska Regional or Village 

Corporation organized pursuant to the 

Alaska Native Claims Settlement Act (43 

U.S.C. 1601) is not considered an 

affiliate of such entity, or with other 

concerns owned by such entity solely 

because of their common ownership. 

(d)(1) Notwithstanding the provisions 

of paragraph (a) of this section, a refiner 

that acquires or reactivates a refinery 

that was shut down or non-operational 

between January 1, 1999, and January 1, 

2000, may apply for motor vehicle 

diesel fuel small refiner status in 

accordance with the provisions of 

§ 80.551(c)(1)(ii). 

(2) Notwithstanding the provisions of 

paragraph (b) of this section, a refiner 

that acquires or reactivates a refinery 

that was shutdown or non-operational 

between January 1, 2002, and January 1, 

2003, may apply for NRLM diesel fuel 

small refiner status in accordance with 

the provisions of § 80.551(c)(2)(ii). 

(e) The following are ineligible for the 

small refiner provisions: 

(1)(i) For motor vehicle diesel fuel, 

refiners with refineries built or started 

up after January 1, 2000. 

(ii) For NRLM diesel fuel, refiners 

with refineries built or started up after 

January 1, 2003. 

(2)(i) For motor vehicle diesel fuel, 

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 

employees or crude oil capacity is due 

to operational changes at the refinery or 

a company sale or reorganization. 

(ii) For NRLM diesel fuel, persons 

who exceed the employee or crude oil 

capacity criteria under this section on 

January 1, 2003, but who meet these 

criteria after that date, regardless of 

whether the reduction in employees or 

crude oil capacity is due to operational 

changes at the refinery or a company 

sale or reorganization. 

(3) Importers. 

(4) Refiners who produce motor 

vehicle diesel fuel or NRLM diesel fuel 

other than by processing crude oil 

through refinery processing units. 

(f)(1)(i) Refiners who qualify as motor 

vehicle diesel fuel small refiners under 

this section and subsequently cease 

production of diesel fuel from 

processing crude oil through refinery 

processing units, or employ more than 

1,500 people or exceed the 155,000 

bpcd crude oil capacity limit after 

January 1, 2004 as a result of merger 

with or acquisition of or by another 

entity, are disqualified as small refiners, 

except as provided for under paragraph 

(f)(4) of this section. If disqualification 

occurs, the refiner shall notify EPA in 

39178 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

writing no later than 20 days following 

this disqualifying event. 

(ii) Except as provided under 

paragraph (f)(3) of this section, any 

refiner whose status changes under this 

paragraph shall meet the applicable 

standards of § 80.520 within a period of 

up to 30 months from the disqualifying 

event for any of its refineries that were 

previously subject to the small refiner 

standards of § 80.552, but no later than 

the May 31, 2010. 

(2)(i) Refiners who qualify as NRLM 

diesel fuel small refiners under this 

section and subsequently cease 

production of diesel fuel from crude oil, 

or employ more than 1,500 people or 

exceed the 155,000 bpcd crude oil 

capacity limit after January 1, 2004 as a 

result of merger with or acquisition of 

or by another entity, are disqualified as 

small refiners, except as provided for 

under paragraph (f)(4) of this section. If 

disqualification occurs, the refiner shall 

notify EPA in writing no later than 20 

days following this disqualifying event. 

(ii) Except as provided under 

paragraph (f)(3) of this section, any 

refiner whose status changes under this 

paragraph shall meet the applicable 

standards of § 80.510 within a period of 

up to 30 months of the disqualifying 

event for any of its refineries that were 

previously subject to the small refiner 

standards of § 80.552, but no later than 

the dates specified in § 80.554(a) or (b), 

as applicable. 

(3) A refiner may apply to EPA for up 

to an additional six months to comply 

with the standards of § 80.510 or 

§ 80.520 if more than 30 months would 

be required for the necessary 

engineering, permitting, construction, 

and start-up work to be completed. Such 

applications must include detailed 

technical information supporting the 

need for additional time. EPA will base 

a decision to approve additional time on 

information provided by the refiner and 

on other relevant information. In no 

case will EPA extend the compliance 

date beyond May 31, 2010 for a motor 

vehicle diesel fuel small refiner or 

beyond the dates specified in § 80.554(a) 

or (b), as applicable, for a NRLM diesel 

fuel small refiner. 

(4) Disqualification under paragraphs 

(f)(1) or (f)(2) of this section shall not 

apply in the case of a merger between 

two previously approved small refiners.

(5) During the period of time up to 30 

months provided under paragraph 

(f)(1)(ii) of this section, and any 

extension provided under paragraph 

(f)(3) of this section, the refiner may not 

generate motor vehicle diesel fuel sulfur 

credits under § 80.531(e). During the 

period of time up to 30 months 

provided under paragraph (f)(2)(ii) of 

this section, and any extension provided 

under paragraph (f)(3) of this section, 

the refiner may not generate NRLM 

diesel fuel sulfur credits under 

§ 80.535(b) or (d).

* * * * *

■ 30. Section 80.551 is revised to read as 

follows:

§ 80.551 How does a refiner obtain 

approval as a small refiner under this 

subpart? 

(a)(1)(i) Applications for motor 

vehicle diesel fuel small refiner status 

must be submitted to EPA by December 

31, 2001. 

(ii) Applications for NRLM diesel fuel 

small refiner status must be submitted 

to EPA by December 31, 2004. 

(2)(i) In the case of a refiner who 

acquires or reactivates a refinery that 

was shutdown or non-operational 

between January 1, 1999, and January 1, 

2000, the application for motor vehicle 

diesel fuel small refiner status must be 

submitted to EPA by June 1, 2003. 

(ii) In the case of a refiner who 

acquires or reactivates a refinery that 

was shutdown or non-operational 

between January 1, 2002, and January 1, 

2003, the application for NRLM diesel 

fuel small refiner status must be 

submitted to EPA by June 1, 2006. 

(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., 

Washington, DC 20460 (certified mail/

return receipt) or Attn: Diesel Small 

Refiner Status, Transportation and 

Regional Programs Division, 1310 L 

Street, NW., 6th floor, Washington, DC 

20005 (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 percent or 

greater ownership, and any joint venture 

partners: 

(1) For motor vehicle diesel fuel small 

refiners—

(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 or reactivates a refinery that 

was shutdown or non-operational 

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) For NRLM diesel fuel small 

refiners—

(i) A listing of the name and address 

of each location where any employee 

worked during the 12 months preceding 

January 1, 2003; 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, 2003; and the type of 

business activities carried out at each 

location; or 

(ii) In the case of a refiner who 

acquires or reactivates a refinery that 

was shutdown or non-operational 

between January 1, 2002, and January 1, 

2003, 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. 

(3) The total corporate crude oil 

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. 

(4) For motor vehicle diesel fuel, 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 standard under § 80.520(c) 

or generate credits under § 80.531, 

pursuant to the provisions of § 80.552(a) 

or (b); or 

(ii) An extension of the duration of its 

small refiner gasoline sulfur standard 

under § 80.553, pursuant to the 

provisions of § 80.552(c). 

(5) For NRLM diesel fuel, an 

indication of whether the refiner, for 

each refinery, is applying for—

(i) The ability to delay compliance 

under § 80.554(a) or (b), or to generate 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39179

NRLM diesel sulfur credits under 

§ 80.535(b) or (d), pursuant to the 

provisions of § 80.554(c); or 

(ii) An adjustment to its small refiner 

gasoline sulfur standards under 

§ 80.240(a), pursuant to the provisions 

of § 80.554(d). 

(6) 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. 

(7) 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 § 80.550(e) 

will be based on all information 

submitted under paragraph (c) of this 

section, except as provided in 

§ 80.550(e). 

(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 

standards in § 80.510 or 80.520, as 

appropriate, 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 standards 

in § 80.510 or 80.520, as appropriate, 

unless one of the other hardship 

provisions of this subpart apply.

■ 31. Section 80.552 is amended by 

revising the section heading and 

paragraphs (a), (b), (c), and (e) to read as 

follows:

§ 80.552 What compliance options are 

available to motor vehicle diesel fuel small 

refiners? 

(a) A refiner that has been approved 

by EPA as a motor vehicle diesel fuel 

small refiner under § 80.551(g) may 

produce motor vehicle diesel fuel 

subject to the 500 ppm sulfur standard 

pursuant to the provisions of § 80.530, 

except that the volume limits of 

§ 80.530(a)(3) shall only apply to that 

volume of diesel fuel that is produced 

or imported during an annual 

compliance period that exceeds 105 

percent of the baseline volume 

established under § 80.595 (V500). The 

annual compliance period shall be from 

July 1 through June 30. For the year 

2006, the compliance period shall be 

from June 1, 2006 through June 30, 

2007, and the volume limits shall only 

apply to that volume V500 that exceeds 

113 percent of the baseline volume. 

(b) A refiner that has been approved 

by EPA as a motor vehicle diesel fuel 

small refiner under § 80.551(g) may 

generate motor vehicle diesel fuel 

credits pursuant to the provisions of 

§ 80.531, except that for purposes of 

§ 80.531(a), the term ‘‘Credit’’ shall 

equal V15, without further adjustment. 

(c) A refiner that has been approved 

by EPA as a motor vehicle diesel fuel 

small refiner under § 80.551(g) may 

apply for an extension of the duration 

of its small refiner gasoline sulfur 

standards pursuant to § 80.553.

* * * * *

(e) The provisions of this section shall 

apply separately for each refinery 

owned or operated by a motor vehicle 

diesel fuel small refiner.

■ 32. Section 80.553 is amended by 

revising paragraphs (d), (e), (f), and (k) to 

read as follows:

§ 80.553 Under what conditions may the 

small refiner gasoline sulfur standards be 

extended for a small refiner of motor 

vehicle diesel fuel?

* * * * *

(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 § 80.598 

as meeting the 15 ppm sulfur content 

standard under § 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 percent of the 

baseline volume established under 

paragraph (c) of this section, except that 

for the first compliance period from 

June 1, 2006 through June 30, 2007, the 

total volume must meet or exceed 92 

percent of the baseline volume. 

(f) Compliance with the volume 

requirements in paragraph (e) of this 

section shall be determined each 

compliance period. Annual compliance 

periods shall be from July 1 through 

June 30. For the year 2006, the 

compliance period shall be from June 1, 

2006 through June 30, 2007 and for the 

year 2009 the compliance period shall 

be from July 1, 2009 through May 31, 

2010.

* * * * *

(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 July 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.

* * * * *

■ 33. A new § 80.554 is added to read as 

follows:

§ 80.554 What compliance options are 

available to NRLM diesel fuel small 

refiners? 

(a) Option 1: A refiner that has been 

approved by EPA as a NRLM diesel fuel 

small refiner under § 80.551(g) may 

produce NRLM diesel fuel from crude 

oil from June 1, 2007 through May 31, 

2010, that is exempt from the standards 

under § 80.510(a), but only for a refinery 

located outside the areas specified 

under § 80.510(g)(1). 

(1) The volume of NRLM diesel fuel 

that is exempt from § 80.510(a) must be 

less than or equal to 105 percent of 

BNRLM as defined under § 80.533, less 

any volume of heating oil produced. 

(2) Any volume of NRLM diesel fuel 

in excess of the volume allowed under 

(a)(1) of this section will be subject to 

the 500 ppm sulfur standard under 

§ 80.510(a). 

(3) High-sulfur NRLM produced 

under this paragraph must—

(i) Be dyed red pursuant to the 

provisions of § 80.520 at the point of 

production or importation;

(ii) Be associated with a product 

transfer document that bears a unique 

product code as specified under 

§ 80.590; and 

(iii) Not be delivered into areas 

specified under § 80.510(g)(1). 

(4) From June 1, 2007 through May 

31, 2010, a refiner that has been 

approved by EPA as a NRLM diesel fuel 

small refiner under § 80.551(g) may 

produce at a refinery located in 

80.510(g)(2) NRLM diesel fuel that is 

exempt from the standards under 

§ 80.510(a) only if the refiner first 

obtains approval from the Administrator 

for a compliance plan. The compliance 

plan must detail how the refiner will 

segregate any fuel produced that does 

39180 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

not meet the standards under § 80.510(a) 

from the refinery through to the ultimate 

consumer from fuel having any other 

designations and from fuel produced by 

any other refiner. The compliance plan 

must also identify all ultimate 

consumers to whom the refiner supplies 

the fuel that does not meet the standards 

under § 80.510(a). 

(b) Option 2: A refiner that has been 

approved by EPA as a NRLM diesel fuel 

small refiner under § 80.551(g) may 

produce NR diesel fuel from crude oil 

from June 1, 2010, through May 31, 

2014, and NRLM diesel fuel from crude 

oil from June 1, 2012 through May 31, 

2014 that is subject to the standards 

under § 80.510(a), but only for a refinery 

located outside the areas specified 

under § 80.510(g)(1). 

(1) The volume of NR diesel fuel that 

may be subject to the 500 ppm sulfur 

standard from June 1, 2010 through June 

30, 2011 must be less than or equal to 

113 percent of BNRLM, and from July 1, 

2011 through May 31, 2012 must be less 

than or equal to 96 percent of BNRLM, as 

defined under § 80.533, less any volume 

of locomotive and marine diesel fuel 

produced. 

(2) The volume of NRLM diesel fuel 

that may be subject to the 500 ppm 

sulfur standard from June 1, 2012 

through June 30, 2013 must be less than 

or equal to 113 percent of BNRLM, and 

from July 1, 2013 through May 31, 2014 

must be less than or equal to 96 percent 

of BNRLM, as defined under § 80.533. 

(3) NRLM diesel fuel produced in 

excess of the volume allowed under 

paragraph (b)(1) of this section will be 

subject to the standards under 

§ 80.510(b) and (c). 

(4) 500 ppm sulfur NRLM diesel fuel 

produced under this paragraph must—

(i) Bear a unique product code as 

specified under § 80.590; and 

(ii) Not be sold or delivered into areas 

specified under § 80.510(g)(1). 

(5) From June 1, 2010 through May 

31, 2012, for NR diesel fuel, and from 

June 1, 2012 through May 31, 2014 for 

NRLM diesel fuel, a refiner that has 

been approved by EPA as a NRLM 

diesel fuel small refiner under 

§ 80.551(g) may produce, at a refinery 

located in Alaska, NR and NRLM diesel 

fuel, as applicable, from crude oil that 

is subject to the standards of § 80.510(a), 

only if the refiner first obtains approval 

from the Administrator for a compliance 

plan. The compliance plan must detail 

how the refiner will segregate any fuel 

produced subject to the standards under 

§ 80.510(a) from the refinery through to 

the ultimate consumer from fuel having 

any other designations and from fuel 

produced by any other refiner. The 

compliance plan must also identify all 

ultimate consumers to whom the refiner 

supplies the fuel that does not meet the 

standards under § 80.510(a). 

(c) Option 3: A refiner that has been 

approved by EPA as a NRLM diesel fuel 

small refiner under § 80.551(g) may 

generate diesel fuel credits under the 

provisions of § 80.535(b) and (d), except 

as provided in paragraph (d)(1) of this 

section. 

(d) Option 4: (1) In lieu of Options 1, 

2, and 3 of this section, a refiner that has 

been approved by EPA as a NRLM 

diesel fuel small refiner under 

§ 80.551(g) may choose to adjust its 

small refiner gasoline sulfur standards, 

subject to the following conditions: 

(i) From June 1, 2006 until the 

expiration of the refiner’s small refiner 

gasoline sulfur standards (through 

December 31, 2007 or 2010) 95 percent 

of the NRLM diesel fuel produced by 

the refiner must be accurately 

designated under § 80.598(a) as meeting 

the 15 ppm sulfur standard of 

§ 80.510(b). 

(ii) The refiner must produce NRLM 

diesel fuel each year or partial year 

under paragraph (d)(1)(i) of this section 

at a volume that is equal to or greater 

than 85 percent of BNRLM , as defined in 

§ 80.533, calculated on an annual basis. 

(2)(i) For a refiner meeting the 

conditions of paragraph (d)(1) of this 

section, beginning January 1, 2004, the 

applicable small refiner’s annual 

average and per-gallon cap gasoline 

sulfur standards will be the standards of 

§ 80.240(a) increased by a factor of 1.20 

for the duration of the refiner’s small 

refiner gasoline sulfur standards under 

§ 80.240(a) or § 80.553 (i.e., through 

calendar years 2007 or 2010). 

(ii) In no case may the per-gallon cap 

exceed 450 ppm.

(3)(i) If the refiner fails to produce the 

necessary volume of 15 ppm sulfur 

NRLM diesel fuel by June 1, 2006 and 

every year thereafter through the 

deadlines specified under paragraph 

(d)(1)(i) of this section, the refiner must 

report this in its annual report under 

§ 80.604, and the adjustment of gasoline 

sulfur standards under paragraph 

(d)(2)(i) of this section will be 

considered void as of January 1, 2004. 

(ii) If such a refiner had produced 

gasoline above its interim gasoline 

sulfur standard of § 80.240(a) prior to 

June 1, 2006, such fuel will not be 

considered in violation of the small 

refiner standards under § 80.240(a), 

provided the refiner obtains and uses a 

quantity of gasoline sulfur credits equal 

to the volume of gasoline exceeding the 

small refiner standards multiplied by 

the number of parts per million by 

which the gasoline exceeded the small 

refiner standards. 

(e) Multiple refineries. The provisions 

of this section shall apply separately for 

each refinery owned or operated by a 

NRLM diesel fuel small refiner. 

(f) Other provisions. From June 1, 

2007 through May 31, 2010, a refiner 

who is an approved motor vehicle diesel 

fuel small refiner under § 80.550(a) but 

does not qualify as a NRLM diesel fuel 

small refiner under § 80.550(b) may 

produce NRLM diesel fuel that is 

exempt from the per-gallon sulfur 

standard and the cetane or aromatics 

standard of § 80.510(a). This exemption 

does not apply to diesel fuel sold or 

intended for sale in the areas listed in 

§ 80.510(g)(1) or (g)(2). From June 1, 

2010 through May 31, 2012, NR and LM 

diesel fuel produced by such refiners is 

subject to the standards under 

§ 80.510(b) and beginning June 1, 2012, 

all NRLM diesel fuel is subject to the 

standards under § 80.510(c).

■ 34. A new § 80.555 is added to read as 

follows:

§ 80.555 What provisions are available to a 

large refiner that acquires a small refiner or 

one or more of its refineries? 

(a) In the case of a refiner without 

approved small refiner status who 

acquires a refinery from a refiner with 

approved status as a motor vehicle 

diesel fuel small refiner or a NRLM 

diesel fuel small refiner under 

§ 80.551(g), the applicable small refiner 

provisions of §§ 80.552 and 80.554 may 

apply to the acquired refinery for a 

period of up to 30 months from the date 

of acquisition of the refinery. In no case 

shall this period extend beyond May 31, 

2010 for a refinery acquired from a 

motor vehicle diesel fuel small refiner 

or beyond the dates specified in 

§ 80.554(a) or (b), as applicable, for a 

refinery acquired from a NRLM diesel 

fuel small refiner. 

(b) A refiner may apply to EPA for up 

to an additional six months to comply 

with the standards of § 80.510 or 80.520 

for the acquired refinery if more than 30 

months would be required for the 

necessary engineering, permitting, 

construction, and start-up work to be 

completed. Such applications must 

include detailed technical information 

supporting the need for additional time. 

EPA will base a decision to approve 

additional time on information provided 

by the refiner and on other relevant 

information. In no case will EPA extend 

the compliance date beyond May 31, 

2010 for a refinery acquired from a 

motor vehicle diesel fuel small refiner 

or beyond the dates specified in 

§ 80.554(a) or (b), as applicable, for a 

refinery acquired from a NRLM diesel 

fuel small refiner. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39181

(c) Refiners who acquire a refinery 

from a refiner with approved status as 

a motor vehicle diesel fuel small refiner 

or a NRLM diesel fuel small refiner 

under § 80.551(g), shall notify EPA in 

writing no later than 20 days following 

the acquisition.

■ 35. Section 80.560 is amended by 

revising paragraphs (a), (b), (d), (e), (h), 

(i), (k), and (l) to read as follows:

§ 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 of crude oil that processes crude 

oil through refinery processing units, 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 

§ 80.552 for motor vehicle diesel fuel 

and § 80.554 for NRLM diesel fuel. 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)(1) For motor vehicle diesel fuel, 

applications must be submitted to EPA 

by June 1, 2002 to the following address: 

U.S. EPA—Attn: Diesel Hardship, 

Transportation and Regional Programs 

Division (6406J), 1200 Pennsylvania 

Avenue, NW., Washington, DC 20460 

(certified mail/return receipt) or Attn: 

Diesel Hardship, Transportation and 

Regional Programs Division, 1310 L 

Street, NW., 6th floor, Washington, DC 

20005 (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. 

(2) For NRLM diesel fuel, applications 

must be submitted to EPA by June 1, 

2005 to the following address: U.S. 

EPA—Attn: Diesel Hardship, 

Transportation and Regional Programs 

Division (6406J), 1200 Pennsylvania 

Avenue, NW., Washington, DC 20460 

(certified mail/return receipt) or Attn: 

Diesel Hardship, Transportation and 

Regional Programs Division, 1310 L 

Street, NW., 6th floor, Washington, DC 

20005 (express mail/return receipt). 

EPA reserves the right to deny 

applications for appropriate reasons, 

including unacceptable environmental 

impact. Approval to distribute NRLM 

diesel fuel not subject to the 500 ppm 

sulfur standard may be granted for such 

time period as EPA determines is 

appropriate, but shall not extend 

beyond May 31, 2010 for NR diesel fuel 

and May 31, 2012 for NRLM diesel fuel. 

Approval to distribute NRLM 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, 2014.

* * * * *

(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 § 80.531 for motor 

vehicle diesel fuel or §§ 80.535 through 

80.536 for NRLM diesel fuel; 

(2) Bond rating of entity that owns the 

refinery (in the case of joint ventures, 

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) through 

(d) of this section, a refiner’s application 

for temporary relief under this 

paragraph (e) must also include a 

compliance plan. Such compliance plan 

shall demonstrate how the refiner will 

engage in a quality assurance testing 

program, where appropriate, to ensure 

that the following conditions are met: 

(1)(i) Its motor vehicle diesel fuel 

subject solely to the sulfur standards 

under § 80.520(c) has not caused motor 

vehicle diesel fuel subject to the 15 ppm 

sulfur standard § 80.520(a)(1) to fail to 

comply with that standard; or 

(ii) Its NRLM diesel fuel subject solely 

to the 500 ppm sulfur standard under 

§ 80.510(a) has not caused NRLM diesel 

fuel subject to the 15 ppm sulfur 

standard under § 80.510(b) or (c) to fail 

to comply with that standard. 

(2) 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.

* * * * *

(h) Refiners who are granted a 

hardship relief standard for any refinery 

and importers of fuel subject to 

temporary foreign refiner relief 

standards, must comply with the 

requirements of § 80.561(f). 

(i) EPA may impose any reasonable 

conditions on waivers under this 

section, including limitations on the 

refinery’s volume of motor vehicle 

diesel fuel and NRLM diesel fuel subject 

to temporary refiner relief standards.

* * * * *

(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 receives an 

approval letter from EPA. Unless 

approved, the refiner or, where 

applicable, the importer must comply 

with the motor vehicle diesel fuel 

standard under § 80.520(a)(1) by the 

appropriate compliance date specified 

in § 80.500 or the NRLM diesel fuel 

standards and compliance dates under 

§ 80.510(a), (b), and (c) as applicable. 

(l) If EPA finds that a refiner provided 

false or inaccurate information on its 

application for hardship relief, EPA’s 

approval of the refiners application will 

be void ab initio.

■ 36. Section 80.561 is amended by 

revising the introductory text and 

paragraphs (c), (d), and (f) to read as 

follows:

§ 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 (for example, 

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 or NRLM diesel fuel which 

does not meet the requirements of this 

subpart if:

* * * * *

(c) The refiner or importer can show 

how the requirements for motor vehicle 

diesel fuel or NRLM diesel fuel will be 

expeditiously achieved; 

(d) The refiner or importer agrees to 

make up any air quality detriment 

associated with the nonconforming 

39182 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

motor vehicle diesel fuel or NRLM 

diesel fuel, where practicable;

* * * * *

(f)(1) In the case of motor vehicle 

diesel fuel distributed under this section 

that does not meet the 15 ppm sulfur 

standard under § 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 § 80.520(c), or 

to diesel fuel that is not motor vehicle 

diesel fuel, as applicable.

(2) In the case of NRLM diesel fuel 

distributed under this section from June 

1, 2007 through May 31, 2010 that does 

not meet the 500 ppm sulfur standard 

under § 80.510(a), such diesel fuel must 

meet the requirements and prohibitions 

applicable to high sulfur NRLM credit 

fuel under § 80.536(f)(1)(i) and (ii). 

(3) In the case of NR diesel fuel 

distributed under this section after May 

31, 2010 that does not meet the 15 ppm 

sulfur standard under § 80.510(b), such 

diesel fuel shall not be distributed for 

use in model year 2011 or later nonroad 

engines, and must meet all the 

requirements and prohibitions of this 

subpart applicable to diesel fuel meeting 

the sulfur standard under § 80.510(a) for 

NRLM diesel fuel. 

(4) In the case of NRLM diesel fuel 

distributed under this section after May 

31, 2012 that does not meet the 15 ppm 

sulfur standard under § 80.510(c), such 

diesel fuel shall not be distributed for 

use in model year 2011 or later nonroad 

engines, and must meet all the 

requirements and prohibitions of this 

subpart applicable to diesel fuel meeting 

the sulfur standard under § 80.510(a) for 

NRLM diesel fuel.

■ 37. Section 80.570 is revised to read as 

follows:

§ 80.570 What labeling requirements apply 

to retailers and wholesale purchaserconsumers of diesel fuel beginning June 1, 

2006? 

(a) From June 1, 2006 through May 31, 

2010, 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 

§ 80.520(a)(1), must affix the following 

conspicuous and legible label, in block 

letters of no less than 24-point bold 

type, and printed in a color contrasting 

with the background, to each pump 

stand:

ULTRA-LOW SULFUR HIGHWAY DIESEL 

FUEL (15 ppm Sulfur Maximum) 

Required for use in all model year 2007 

and later highway diesel vehicles and 

engines. 

Recommended for use in all diesel vehicles 

and engines.

(b) From June 1, 2006 through 

September 30, 2010, 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 § 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 sulfur standard is offered for sale 

or dispensing, the following legible 

label, in block letters of no less than 24-

point bold type, printed in a color 

contrasting with the background:

LOW SULFUR HIGHWAY DIESEL FUEL 

(500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in model year 

2007 and later highway vehicles and engines. 

Its use may damage these vehicles and 

engines.

(c) From June 1, 2006 through May 31, 

2007, any retailer or wholesale 

purchaser-consumer who sells, 

dispenses, or offers for sale or 

dispensing, diesel fuel for non-motor 

vehicle 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 24-point bold 

type, and printed in a color contrasting 

with the background, to each pump 

stand:

NON-HIGHWAY DIESEL FUEL (May Exceed 

500 ppm Sulfur) 

WARNING 

Federal law prohibits use in highway 

vehicles or engines. 

Its use may damage these vehicles and 

engines.

(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 that has 

gallon and price meters. The labels shall 

be on the upper two-thirds of the pump, 

in a location where they are clearly 

visible. 

(e) Alternative labels to those 

specified in paragraphs (a) through (c) of 

this section may be used as approved by 

the Administrator.

■ 38. A new § 80.571 is added to read as 

follows:

§ 80.571 What labeling requirements apply 

to retailers and wholesale purchaserconsumers of NRLM diesel fuel or heating 

oil beginning June 1, 2007? 

Any retailer or wholesale purchaserconsumer who sells, dispenses, or offers 

for sale or dispensing nonroad, 

locomotive or marine (NRLM) diesel 

fuel (including nonroad (NR) and 

locomotive or marine (LM)), or heating 

oil, must prominently and 

conspicuously display in the immediate 

area of each pump stand from which 

non-highway diesel fuel is offered for 

sale or dispensing, one of the following 

legible labels, as applicable, in block 

letters of no less than 24-point bold 

type, printed in a color contrasting with 

the background: 

(a) From June 1, 2007 through May 31, 

2010, for pumps dispensing NRLM 

diesel fuel meeting the 15 ppm sulfur 

standard of § 80.510(b):

ULTRA-LOW SULFUR NON-HIGHWAY 

DIESEL FUEL (15 ppm Sulfur Maximum) 

Required for use in all model year 2011 

and newer nonroad diesel engines. 

Recommended for use in all nonroad, 

locomotive, and marine diesel engines. 

WARNING 

Federal Law prohibits use in highway 

vehicles or engines.

(b) From June 1, 2007 through May 

31, 2010, for pumps dispensing NRLM 

diesel fuel meeting the 500 ppm sulfur 

standard of § 80.510(a):

LOW SULFUR NON-HIGHWAY DIESEL 

FUEL (500 ppm Sulfur Maximum) 

WARNING 

Federal Law prohibits use in highway 

vehicles or engines.

(c) From June 1, 2007 through 

September 30, 2010, for pumps 

dispensing NRLM diesel fuel not 

meeting, or not offered as meeting, the 

500 ppm sulfur standard of § 80.510(a) 

or the 15 ppm sulfur standard of 

§ 80.510(b):

HIGH SULFUR NON-HIGHWAY DIESEL 

FUEL (May Exceed 500 ppm Sulfur) 

WARNING 

Federal law prohibits use in highway 

vehicles or engines. 

May damage nonroad diesel engines 

required to use low-sulfur or ultra-low sulfur 

diesel fuel.

(d) From June 1, 2007 and beyond, for 

pumps dispensing non-motor vehicle 

diesel fuel for use other than in 

nonroad, locomotive or marine engines, 

such as for use in stationary diesel 

engines or as heating oil:

HEATING OIL (May Exceed 500 ppm Sulfur) 

WARNING 

Federal law prohibits use in highway 

vehicles or engines, or in nonroad, 

locomotive, or marine diesel engines. 

Its use may damage these diesel engines.

(e) The labels required by paragraphs 

(a) through (d) of this section must be 

placed on the vertical surface of each 

pump housing and on each side that has 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39183

gallon and price meters. The labels shall 

be on the upper two-thirds of the pump, 

in a location where they are clearly 

visible. 

(f) Alternative labels to those 

specified in paragraphs (a) through (d) 

of this section may be used as approved 

by the Administrator.

■ 39. A new § 80.572 is added to read as 

follows:

§ 80.572 What labeling requirements apply 

to retailers and wholesale purchaserconsumers of NR and NRLM diesel fuel and 

heating oil beginning June 1, 2010? 

Any retailer or wholesale purchaserconsumer who sells, dispenses, or offers 

for sale or dispensing nonroad, 

locomotive or marine (NRLM) diesel 

fuel (including nonroad (NR) and 

locomotive or marine (LM)), or heating 

oil, must prominently and 

conspicuously display in the immediate 

area of each pump stand from which 

non-highway diesel fuel is offered for 

sale or dispensing, one of the following 

legible labels, as applicable, in block 

letters of no less than 24-point bold 

type, printed in a color contrasting with 

the background: 

(a) From June 1, 2010 and beyond, 

any retailer or wholesale purchaserconsumer who sells, dispenses, or offers 

for sale or dispensing, motor vehicle 

diesel fuel subject to the 15 ppm sulfur 

standard of § 80.520(a)(1), must affix the 

following conspicuous and legible label, 

in block letters of no less than 24-point 

bold type, and printed in a color 

contrasting with the background, to 

each pump stand:

ULTRA-LOW SULFUR HIGHWAY DIESEL 

FUEL (15 ppm Sulfur Maximum) 

Required for use in all highway diesel 

vehicles and engines. 

Recommended for use in all diesel vehicles 

and engines.

(b) From June 1, 2010 through May 

31, 2012, for pumps dispensing NR 

diesel fuel subject to the 15 ppm sulfur 

standard of § 80.510(b):

ULTRA-LOW SULFUR NON-HIGHWAY 

DIESEL FUEL (15 ppm Sulfur Maximum) 

Required for use in all model year 2011 

and later nonroad diesel engines. 

Recommended for use in all other nonhighway diesel engines. 

WARNING 

Federal law prohibits use in highway 

vehicles or engines.

(c) From June 1, 2010 through 

September 30, 2014, for pumps 

dispensing NRLM diesel fuel subject to 

the 500 ppm sulfur standard of 

§ 80.510(a):

LOW SULFUR NON-HIGHWAY DIESEL 

FUEL (500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in all model year 

2011 and newer nonroad engines. 

May damage model year 2011 and newer 

nonroad engines. 

Federal law prohibits use in highway 

vehicles or engines.

(d) From June 1, 2010 through 

September 30, 2012, for pumps 

dispensing LM diesel fuel subject to the 

500 ppm sulfur standard of § 80.510(a):

LOW SULFUR LOCOMOTIVE AND 

MARINE DIESEL FUEL (500 ppm Sulfur 

Maximum) 

WARNING 

Federal law prohibits use in nonroad 

engines or in highway vehicles or engines.

(e) The labels required by paragraphs 

(a) through (d) of this section must be 

placed on the vertical surface of each 

pump housing and on each side that has 

gallon and price meters. The labels shall 

be on the upper two-thirds of the pump, 

in a location where they are clearly 

visible. 

(f) Alternative labels to those 

specified in paragraphs (a) through (d) 

of this section may be used as approved 

by the Administrator.

■ 40. A new § 80.573 is added to read as 

follows:

§ 80.573 What labeling requirements apply 

to retailers and wholesale purchaserconsumers of NRLM diesel fuel and heating 

oil beginning June 1, 2012? 

Any retailer or wholesale purchaserconsumer who sells, dispenses, or offers 

for sale or dispensing nonroad, 

locomotive or marine (NRLM) diesel 

fuel (including nonroad (NR) and 

locomotive or marine (LM)), or heating 

oil, must prominently and 

conspicuously display in the immediate 

area of each pump stand from which 

non-highway diesel fuel is offered for 

sale or dispensing, one of the following 

legible labels, as applicable, in block 

letters of no less than 24-point bold 

type, printed in a color contrasting with 

the background: 

(a) From June 1, 2012 through May 31, 

2014, for pumps dispensing NRLM 

diesel fuel subject to the 15 ppm sulfur 

standard of § 80.510(c):

ULTRA-LOW SULFUR NON-HIGHWAY 

DIESEL FUEL (15 ppm Sulfur Maximum) 

Required for use in all model year 2011 

and later nonroad diesel engines. 

Recommended for use in all other nonhighway diesel engines. 

WARNING 

Federal law prohibits use in highway 

vehicles or engines.

(b) The labels required by paragraph 

(a) of this section must be placed on the 

vertical surface of each pump housing 

and on each side that has gallon and 

price meters. The labels shall be on the 

upper two-thirds of the pump, in a 

location where they are clearly visible. 

(c) Alternative labels to those 

specified in paragraph (a) of this section 

may be used as approved by the 

Administrator.

■ 41. A new § 80.574 is added to read as 

follows:

§ 80.574 What labeling requirements apply 

to retailers and wholesale purchaserconsumers of NRLM diesel fuel, or heating 

oil beginning June 1, 2014?

Any retailer or wholesale purchaserconsumer who sells, dispenses, or offers 

for sale or dispensing nonroad, 

locomotive or marine (NRLM) diesel 

fuel (including nonroad (NR) and 

locomotive or marine (LM)), or heating 

oil, must prominently and 

conspicuously display in the immediate 

area of each pump stand from which 

non-highway diesel fuel is offered for 

sale or dispensing, one of the following 

legible labels, as applicable, in block 

letters of no less than 24-point bold 

type, printed in a color contrasting with 

the background: 

(a) From June 1, 2014 and beyond, for 

pumps dispensing NRLM diesel fuel 

subject to the 15 ppm sulfur standard of 

§ 80.510(c):

ULTRA-LOW SULFUR NON-HIGHWAY 

DIESEL FUEL (15 ppm Sulfur Maximum) 

Required for use in all nonroad diesel 

engines. 

Recommended for use in all locomotive 

and marine diesel engines. 

WARNING 

Federal law prohibits use in highway 

vehicles or engines.

(b) From June 1, 2014 and beyond, for 

pumps dispensing LM diesel fuel 

subject to the 500 ppm sulfur standard 

of § 80.510(a):

LOW SULFUR LOCOMOTIVE OR MARINE 

DIESEL FUEL (500 ppm Sulfur Maximum) 

WARNING 

Federal law prohibits use in nonroad 

engines or in highway vehicles or engines. 

Its use may damage these engines.

(c) The labels required by paragraphs 

(a) and (b) of this section must be placed 

on the vertical surface of each pump 

housing and on each side that has gallon 

and price meters. The labels shall be on 

the upper two-thirds of the pump, in a 

location where they are clearly visible. 

(d) Alternative labels to those 

specified in paragraphs (a) and (b) of 

this section may be used as approved by 

the Administrator.

39184 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

■ 42. Section 80.580 is revised to read as 

follows:

§ 80.580 What are the sampling and 

testing methods for sulfur? 

The sulfur content of diesel fuel and 

diesel fuel additives is to be determined 

in accordance with this section. 

(a) Sampling method. The applicable 

sampling methodology is provided in 

§ 80.330(b). 

(b) Test method for sulfur. (1) Until 

December 27, 2004, for motor vehicle 

diesel fuel and diesel fuel additives 

subject to the 15 ppm sulfur standard of 

§ 80.520(a)(1), sulfur content may be 

determined using ASTM D 6428–99. 

(2) For motor vehicle diesel fuel and 

diesel fuel additives subject to the 500 

ppm sulfur standard of § 80.520(c), and 

NRLM diesel fuel subject to the 500 

ppm sulfur standard of § 80.510(a)(1), 

sulfur content may be determined using 

ASTM D 2622–03. 

(3) Beginning August 30, 2004, for 

motor vehicle diesel fuel and diesel fuel 

additives subject to the 15 ppm sulfur 

standard of § 80.520(a)(1), sulfur content 

may be determined using any test 

method approved under § 80.585. 

(4) Beginning August 30, 2004, for 

NRLM diesel fuel and diesel fuel 

additives subject to the 15 ppm standard 

of § 80.510(b), sulfur content may be 

determined using any test method 

approved under § 80.585. 

(c) Alternative test methods for sulfur.

(1) Until December 27, 2004, for motor 

vehicle diesel fuel and diesel fuel 

additives subject to the 15 ppm standard 

of § 80.520(a)(1), sulfur content may be 

determined using ASTM D 5453–03a or 

ASTM D 3120–03a, provided that the 

refiner or importer test result is 

correlated with the appropriate method 

specified in paragraph (a)(2) of this 

section. 

(2) Options for testing sulfur content 

of 500 ppm diesel fuel. (i) For motor 

vehicle diesel fuel and diesel fuel 

additives subject to the 500 ppm sulfur 

standard of § 80.520(c), and for NRLM 

diesel fuel subject to the 500 ppm sulfur 

standard of § 80.510(a), sulfur content 

may be determined using ASTM D 

4294–03, ASTM D 5453–03a, or ASTM 

D 6428–99, provided that the refiner or 

importer test result is correlated with 

the appropriate method specified in 

paragraph (a)(2)(ii) of this section; or 

(ii) For motor vehicle diesel fuel and 

diesel fuel additives subject to the 500 

ppm sulfur standard of § 80.520(c), and 

for NRLM diesel fuel subject to the 500 

ppm sulfur standard of § 80.510(a), 

sulfur content may be determined using 

any test method approved under 

§ 80.585. 

(d) Adjustment Factor for downstream 

test results. An adjustment factor of 

negative two ppm sulfur shall be 

applied to the test results, to account for 

test variability, but only for testing of 

motor vehicle diesel fuel or NRLM 

diesel fuel identified as subject to the 15 

ppm sulfur standard of § 80.510(b) or 

§ 80.520(a)(1). 

(e) Materials incorporated by 

reference. The Director of the Federal 

Register approved the incorporation by 

reference of the documents listed in this 

section as prescribed in 5 U.S.C. 552(a) 

and 1 CFR part 51. Anyone may inspect 

copies at the U.S. EPA, Air and 

Radiation Docket and Information 

Center, 1301 Constitution Ave., NW., 

Room B102, EPA West Building, 

Washington, DC 20460 or at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html.

(1) ASTM material. Anyone may 

purchase copies of these materials from 

the American Society for Testing and 

Materials, 100 Barr Harbor Dr., West 

Conshohocken, PA 19428. 

(i) ASTM D 2622–03, Standard Test 

Method for Sulfur in Petroleum 

Products by Wavelength Dispersive Xray Fluorescence Spectrometry. 

(ii) ASTM D 3120–03a, Standard Test 

Method for Trace Quantities of Sulfur in 

Light Liquid Petroleum Hydrocarbons 

by Oxidative Microcoulometry. 

(iii) ASTM D 4294–03, Standard Test 

Method for Sulfur in Petroleum and 

Petroleum Products by EnergyDispersive X-ray Fluorescence 

Spectrometry. 

(iv) ASTM D 5453–03a, Standard Test 

Method for Determination of Total 

Sulfur in Light Hydrocarbons, Motor 

Fuels and Motor Oils by Ultraviolet 

Fluorescence. 

(v) ASTM D 6428–99, Test Method for 

Total Sulfur in Liquid Aromatic 

Hydrocarbons and Their Derivatives by 

Oxidative Combustion and 

Electrochemical Detection. 

(2) [Reserved]

■ 43. A new § 80.581 is added to read as 

follows:

§ 80.581 What are the batch testing and 

sample retention requirements for motor 

vehicle and NRLM diesel fuel? 

(a) Beginning on June 1, 2006 or 

earlier pursuant to § 80.531 for motor 

vehicle diesel fuel, and beginning June 

1, 2010 or earlier pursuant to § 80.535 

for NRLM diesel fuel, each refiner and 

importer shall collect a representative 

sample from each batch of motor vehicle 

or NRLM diesel fuel produced or 

imported and subject to the 15 ppm 

sulfur content standard. Batch, for the 

purposes of this section, means batch as 

defined under § 80.2 but without the 

reference to transfer of custody from one 

facility to another facility. 

(b) Except as provided in paragraph 

(c) of this section, the refiner or 

importer shall test each sample 

collected pursuant to paragraph (a) of 

this section to determine its sulfur 

content for compliance with the 

requirements of this subpart prior to the 

diesel fuel leaving the refinery or import 

facility, using an appropriate sampling 

and testing method as specified in 

§ 80.580. 

(c)(1) Any refiner who produces 

motor vehicle or NRLM diesel fuel using 

computer-controlled in-line blending 

equipment, including the use of an online analyzer test method that is 

approved under the provisions of 

§ 80.580, and who, subsequent to 

production of the diesel fuel batch tests 

a composited sample of the batch under 

the provisions of § 80.580 for purposes 

of designation and reporting, is exempt 

from the requirement of paragraph (b) of 

this section to obtain the test result 

required under this section prior to the 

diesel fuel leaving the refinery, 

provided that the refiner obtains 

approval from EPA. 

(2) To obtain an exemption from 

paragraph (b) of this section, the refiner 

must submit to EPA all the information 

required under § 80.65(f)(4)(i)(A). 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 submission is true to the best of his/

her belief must accompany any 

submission under this paragraph (c)(2). 

(3) Refiners who seek an exemption 

under paragraph (c)(2) of this section 

must comply with any request by EPA 

for additional information or any other 

requirements that EPA includes as part 

of the exemption. 

(4) Within 60 days of EPA’s receipt of 

a submission under paragraph (c)(2) of 

this section, EPA will notify the refiner 

if the exemption is not approved or of 

any deficiencies in the refiner’s 

submission, or if any additional 

information is required or other 

requirements are included in the 

exemption pursuant to paragraph (c)(3) 

of this section. In the absence of such 

notification from EPA, the effective date 

of an exemption under this paragraph 

(c) is 60 days from EPA’s receipt of the 

refiner’s submission. 

(5) EPA reserves the right to modify 

the requirements of an exemption under 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39185

this paragraph (c), in whole or in part, 

at any time, if EPA determines that the 

refiner’s operation does not effectively 

or adequately control, monitor or 

document the sulfur content of the 

refinery’s diesel fuel production, or if 

EPA determines that any other 

circumstances exist which merit 

modification of the requirements of an 

exemption, such as advancements in the 

state of the art for in-line blending 

measurement which allow for 

additional control or more accurate 

monitoring or documentation of sulfur 

content. If EPA finds that a refiner 

provided false or inaccurate information 

in any submission required for an 

exemption under this section, upon 

notification from EPA, the refiner’s 

exemption will be void ab initio.

(d) All test results under this section 

shall be retained for five years and must 

be provided to EPA upon request. 

(e) Samples collected under this 

section must be retained for at least 30 

days and provided to EPA upon request.

■ 44. A new § 80.582 is added to read as 

follows:

§ 80.582 What are the sampling and 

testing methods for the fuel marker? 

For heating oil and NRLM diesel fuel 

subject to the fuel marker requirement 

in § 80.510(d), (e), or (f), the 

identification of the presence and 

concentration of the fuel marker in 

diesel fuel may be determined using the 

test procedures qualified in accordance 

with the requirements in this section. 

(a) Sampling and testing for methods 

for the fuel marker. The sampling, 

sample preparation, and testing 

methods qualified for use in accordance 

with the requirements of this section 

may involve the use of hazardous 

materials, operations and equipment. 

This section does not address the 

associated safety problems which may 

exist. It is the responsibility of the user 

of the procedures specified in this 

section to establish appropriate safety 

and health practices prior to their use. 

It is also the responsibility of the user 

to dispose of any byproducts which 

might result from conducting these 

procedures in a manner consistent with 

applicable safety and health 

requirements.

(b) What are the precision and 

accuracy criteria for qualification of fuel 

marker test methods? (1) Precision. A 

standard deviation of less than 0.10 

milligrams per liter is required, 

computed from the results of a 

minimum of 20 repeat tests made over 

20 days on samples taken from a 

homogeneous commercially available 

diesel fuel which meets the applicable 

industry consensus and federal 

regulatory specifications and which 

contains the fuel marker at a 

concentration in the range of 0.10 to 8 

milligrams per liter. In order to qualify, 

the 20 results must be a series of tests 

on the same material and there must be 

a sequential record of the analysis with 

no omissions. A laboratory facility may 

exclude a given sample or test result 

only if the exclusion is for a valid 

reason under good laboratory practices 

and it maintains records regarding the 

sample and test results and the reason 

for excluding them. 

(2) Accuracy. (i) The arithmetic 

average of a continuous series of at least 

10 tests performed on a commercially 

available marker solvent yellow 124 

standard in the range of 0.10 to 1 

milligrams per liter shall not differ from 

the ARV of that standard by more than 

0.05 milligrams per liter. 

(ii) The arithmetic average of a 

continuous series of at least 10 tests 

performed on a commercially available 

marker solvent yellow 124 standard in 

the range of 4 to 10 milligrams per liter 

shall not differ from the ARV of that 

standard by more than 0.05 milligrams 

per liter. 

(iii) In applying the tests of 

paragraphs (b)(2)(i) and (ii) of this 

section, individual test results shall be 

compensated for any known chemical 

interferences. 

(c) What process must a test facility 

follow in order to qualify a test method 

for determining the fuel marker content 

of distillate fuels and how will EPA 

qualify or decline to qualify a test 

method? (1) Qualification of test 

methods approved by voluntary 

consensus-based standards bodies. Any 

standard test method developed by a 

Voluntary Consensus-Based Standards 

Body, such as the American Society for 

Testing and Materials (ASTM) or 

International Standards Organization 

(ISO), shall be considered a qualified 

test method for determining the fuel 

marker content of distillate fuel 

provided that it meets the precision and 

accuracy criteria under paragraph (b) of 

this section. The qualification of a test 

method is limited to the single test 

facility that performed the testing for 

accuracy and precision. The individual 

facility must submit the accuracy and 

precision results for each method, 

including information on the date and 

time of each test measurement used to 

demonstrate precision, following 

procedures established by the 

Administrator. 

(2) Qualification of test methods that 

have not been approved by a voluntary 

consensus-based standards body. A test 

method that has not been approved by 

a voluntary consensus-based standards 

body may be qualified upon approval by 

the Administrator. The following 

information must be submitted in the 

application for approval by each test 

facility, for each test method that it 

wishes to have approved: 

(i) Full test method documentation, 

including a description of the 

technology and/or instrumentation that 

makes the method functional. 

(ii) Information demonstrating that 

the test method meets the accuracy and 

precision criteria under paragraph (b) of 

this section, including information on 

the date and time of each test 

measurement used to demonstrate 

precision. 

(iii) Samples used for precision and 

accuracy determination must be 

retained for 90 days. 

(iv) If requested by the Administrator, 

test results utilizing the method and 

performed on a sample of commercially 

available distillate fuel which meets the 

applicable industry consensus and 

federal regulatory specifications and 

which contains the fuel marker. 

(v) Any additional information 

requested by the Administrator and 

necessary to render a decision as to 

qualification of the test method. 

(vi) The qualification of a test method 

is limited to the single test facility that 

performed the testing for accuracy and 

precision and any other required testing. 

(3)(i) Within 90 days of receipt of all 

materials required to be submitted 

under paragraph (c)(1) or (c)(2) of this 

section, the Administrator shall 

determine whether to qualify the test 

method under this section. The 

Administrator shall qualify the test 

method if all materials required under 

this section are received and the test 

method meets the accuracy and 

precision criteria of paragraph (b) of this 

section. 

(ii) If the Administrator denies 

approval of the test method, within 90 

days of receipt of all materials required 

to be submitted under this section, the 

Administrator will notify the applicant 

of the reasons for not approving the 

method. If the Administrator does not 

notify the applicant within 90 days of 

receipt of the application, that the test 

method is not approved, then the test 

method shall be deemed approved. 

(iii) If the Administrator finds that an 

individual test facility has provided 

false or inaccurate information under 

this section, upon notice from the 

Administrator, the qualification shall be 

void ab initio.

(iv) The qualification of any test 

method under this paragraph (c) shall be 

valid for the duration of the period 

during which the fuel marker 

39186 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

requirements remain applicable under 

this subpart. 

(d) Quality control procedures for fuel 

marker measurement instrumentation.

A test shall not be considered a test 

using a qualified test method unless the 

following quality control procedures are 

performed separately for each 

instrument used to make measurements: 

(1) Follow all mandatory provisions of 

ASTM D 6299–02 and construct control 

charts from the mandatory quality 

control testing prescribed in paragraph 

7.1 of the reference method, following 

guidelines under A 1.5.1 for individual 

observation charts and A 1.5.2 for 

moving range charts. The Director of the 

Federal Register approved the 

incorporation by reference of ASTM D 

6299–02, Standard Practice for 

Applying Statistical Quality Assurance 

Techniques to Evaluate Analytical 

Measurement System Performance, as 

prescribed in 5 U.S.C. 552(a) and 1 CFR 

part 51. Anyone may purchase copies of 

this standard from the American Society 

for Testing and Materials, 100 Barr 

Harbor Dr., West Conshohocken, PA 

19428. Anyone may inspect copies at 

the U.S. EPA, Air and Radiation Docket 

and Information Center, 1301 

Constitution Ave., NW., Room B102, 

EPA West Building, Washington, DC 

20460 or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html.

(2) Follow paragraph 7.3.1 of ASTM D 

6299–02 to check standards using a 

reference material at least monthly or 

following any major change to the 

laboratory equipment or test procedure. 

Any deviation from the accepted 

reference value of a check standard 

greater than 0.10 milligrams per liter 

must be investigated. 

(3) Samples of tested batches must be 

retained for 30 days or the period equal 

to the interval between quality control 

sample tests, whichever is longer. 

(4) Upon discovery of any quality 

control testing violation of paragraph A 

1.5.1.3 or A 1.5.2.1 of ASTM D 6299–

02, or any check standard deviation 

greater than 0.10 milligrams per liter, 

conduct an investigation into the cause 

of such violation or deviation and, after 

restoring method performance to 

statistical control, retest retained 

samples from batches originally tested 

since the last satisfactory quality control 

material or check standard testing 

occasion. 

(5) Retain results of quality control 

testing and retesting of retained samples 

under paragraph (d)(3) of this section for 

five years.

■ 45. A new § 80.583 is added to read as 

follows:

§ 80.583 What alternative sampling and 

testing requirements apply to importers 

who transport motor vehicle diesel fuel or 

NRLM diesel fuel by truck or rail car? 

Importers who import diesel fuel 

subject to the 15 ppm sulfur standard 

under § 80.510(b) or (c) or 80.520(a) into 

the United States by truck or by rail car 

may comply with the following 

requirements instead of the 

requirements to sample and test each 

batch of fuel designated as subject to the 

15 ppm sulfur standard under § 80.581 

otherwise applicable to importers: 

(a) Terminal testing. For purposes of 

determining compliance with the 15 

ppm sulfur standard, the importer may 

use test results for sulfur content testing 

conducted by the foreign truck-loading 

or rail car-loading terminal operator for 

diesel fuel contained in the storage tank 

from which trucks or rail cars used to 

transport diesel fuel designated as 

subject to the 15 ppm sulfur content 

standard into the United States are 

loaded, provided the following 

conditions are met: 

(1) The sampling and testing shall be 

performed after each receipt of diesel 

fuel into the storage tank, or 

immediately before each transfer of 

diesel fuel to the importer’s truck or rail 

car. 

(2) The sampling and testing shall be 

performed according to § 80.580. 

(3) At the time of each transfer of 

diesel fuel to the importer’s truck or rail 

car for import to the U.S., the importer 

must obtain a copy of the terminal test 

result that indicates the sulfur content 

of the truck or rail car load, or truck or 

rail car compartment load, as 

applicable. 

(b) Quality assurance program. The 

importer must conduct a quality 

assurance program, as specified in this 

paragraph (b), for each truck or rail car 

loading terminal. 

(1) Quality assurance samples must be 

obtained from the truck-loading or rail 

car loading terminal and tested by the 

importer, or by an independent 

laboratory, and the terminal operator 

must not know in advance when 

samples are to be collected. 

(2) The sampling and testing must be 

performed using the methods specified 

in § 80.580.

(3) The frequency of the quality 

assurance sampling and testing must be 

at least one sample for each 50 of an 

importer’s trucks or rail cars that are 

loaded at a terminal, or one sample per 

month, whichever is more frequent. 

(c) Party required to conduct quality 

assurance testing. The quality assurance 

program under paragraph (b) of this 

section shall be conducted by the 

importer. In the alternative, this testing 

may be conducted by an independent 

laboratory that meets the criteria under 

§ 80.65(f)(2)(iii), provided the importer 

receives copies of all results of tests 

conducted no later than 21 days after 

the sample was taken. 

(d) Alternative batch designations.

For purposes of maintaining batch 

records under §§ 80.592, 80.600, and 

80.602, designation of batches under 

§ 80.598, and reporting under §§ 80.593, 

80.601, and 80.604: 

(1) In lieu of treating each portion of 

a tank truck compartment delivered to 

a different facility as a different batch, 

a truck importer may treat each 

compartment as a batch, if all the fuel 

in the compartment is delivered only to 

retail outlets, wholesale purchaserconsumers or other end users. Where 

different compartments contain 

homogeneous product of identical 

designations, the total volume of those 

compartments may be treated as a single 

batch, if the entire volume is delivered 

only to retail outlets, wholesale 

purchaser-consumers or other ultimate 

consumers. 

(2) Each portion of a rail car (or rail 

cars) delivery of a different designation 

or each delivery to a different facility is 

considered to be a separate batch. 

(e) EPA inspections of terminals. EPA 

inspectors or auditors must be given full 

and immediate access to the truck or rail 

car-loading terminal and any laboratory 

at which samples of diesel fuel collected 

at the terminal are analyzed, and must 

be allowed to conduct inspections, 

review records, collect diesel fuel 

samples and perform audits. These 

inspections or audits may be either 

announced or unannounced. 

(f) Certified DFR-Diesel. This section 

does not apply to Certified DFR-Diesel 

as defined in § 80.620. 

(g) Effect of noncompliance. If any of 

the requirements of this section are not 

met, all motor vehicle diesel fuel and 

NRLM diesel fuel imported by the truck 

or rail car importer during the time the 

requirements are not met is deemed in 

violation of the 15 ppm sulfur diesel 

fuel standards in § 80.510(b) or (c) or 

§ 80.520(a), as applicable. Additionally, 

if any requirement is not met, EPA may 

notify the importer of the violation, and, 

if the requirement is not fulfilled within 

10 days of notification, the truck 

importer may not in the future use the 

sampling and testing provisions in this 

section in lieu of the provisions in 

§ 80.581.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39187

■ 46. A new § 80.584 is added to read as 

follows:

§ 80.584 What are the precision and 

accuracy criteria for approval of test 

methods for determining the sulfur content 

of motor vehicle and NRLM diesel fuel? 

(a) Precision. (1) For motor vehicle 

diesel fuel and diesel fuel additives 

subject to the 15 ppm sulfur standard of 

§ 80.520(a)(1) and NRLM diesel fuel and 

diesel fuel additives subject to the 15 

ppm sulfur standard of § 80.510(b) and 

(c), a standard deviation less than 0.72 

ppm, computed from the results of a 

minimum of 20 repeat tests made over 

20 days on samples taken from a single 

homogeneous commercially available 

diesel fuel with a sulfur content in the 

range of 5–15 ppm. The 20 results must 

be a series of tests with a sequential 

record of the analyses and no omissions. 

A laboratory facility may exclude a 

given sample or test result only if the 

exclusion is for a valid reason under 

good laboratory practices and it 

maintains records regarding the sample 

and test results and the reason for 

excluding them. 

(2) For motor vehicle diesel fuel 

subject to the 500 ppm sulfur standard 

of § 80.520(c), and for NRLM diesel fuel 

subject to the 500 ppm sulfur standard 

of § 80.510(a), of a standard deviation 

less than 9.68 ppm, computed from the 

results of a minimum of 20 repeat tests 

made over 20 days on samples taken 

from a single homogeneous 

commercially available diesel fuel with 

a sulfur content in the range of 200–500 

ppm. The 20 results must be a series of 

tests with a sequential record of the 

analyses and no omissions. A laboratory 

facility may exclude a given sample or 

test result only if the exclusion is for a 

valid reason under good laboratory 

practices and it maintains records 

regarding the sample and test results 

and the reason for excluding them. 

(b) Accuracy. (1) For motor vehicle 

diesel fuel and diesel fuel additives 

subject to the 15 ppm sulfur standard of 

§ 80.520(a)(1) and NRLM diesel fuel and 

diesel fuel additives subject to the 15 

ppm sulfur standard of § 80.510(b) and 

(c): 

(i) The arithmetic average of a 

continuous series of at least 10 tests 

performed on a commercially available 

gravimetric sulfur standard in the range 

of 1–10 ppm sulfur shall not differ from 

the accepted reference value (ARV) of 

that standard by more than 0.54 ppm 

sulfur; 

(ii) The arithmetic average of a 

continuous series of at least 10 tests 

performed on a commercially available 

gravimetric sulfur standard in the range 

of 10–20 ppm sulfur shall not differ 

from the ARV of that standard by more 

than 0.54 ppm sulfur; and 

(iii) In applying the tests of 

paragraphs (b)(1)(i) and (ii) of this 

section, individual test results shall be 

compensated for any known chemical 

interferences. 

(2) For motor vehicle diesel fuel 

subject to the 500 ppm sulfur standard 

of § 80.520(c), and for NRLM diesel fuel 

subject to the 500 ppm sulfur standard 

of § 80.510(a): 

(i) The arithmetic average of a 

continuous series of at least 10 tests 

performed on a commercially available 

gravimetric sulfur standard in the range 

of 100–200 ppm sulfur shall not differ 

from the ARV of that standard by more 

than 7.26 ppm sulfur; 

(ii) The arithmetic average of a 

continuous series of at least 10 tests 

performed on a commercially available 

gravimetric sulfur standard in the range 

of 400–500 ppm sulfur shall not differ 

from the ARV of that standard by more 

than 7.26 ppm sulfur; and 

(iii) In applying the tests of 

paragraphs (b)(2)(i) and (ii) of this 

section, individual test results shall be 

compensated for any known chemical 

interferences.

■ 47. A new § 80.585 is added to read as 

follows:

§ 80.585 What is the process for approval 

of a test method for determining the sulfur 

content of diesel?

(a) Approval of test methods approved 

by voluntary consensus-based standards 

bodies. For such a method to be 

approved, the following information 

must be submitted to the Administrator 

by each test facility for each test method 

that it wishes to have approved: Any 

test method approved by a voluntary 

consensus-based standards body, such 

as the American Society for Testing and 

Materials (ASTM) or International 

Standards Organization (ISO), shall be 

approved as a test method for 

determining the sulfur content of diesel 

fuel if it meets the applicable accuracy 

and precision criteria under § 80.584. 

The approval of a test method is limited 

to the single test facility that performed 

the testing for accuracy and precision. 

The individual facility must submit the 

accuracy and precision results for each 

method, including information on the 

date and time of each test measurement 

used to demonstrate precision, 

following procedures established by the 

Administrator. 

(b) Approval of test methods not 

approved by a voluntary consensusbased standards body. For such a 

method to be approved, the following 

information must be submitted to the 

Administrator by each test facility for 

each test method that it wishes to have 

approved: 

(1) Full test method documentation, 

including a description of the 

technology and/or instrumentation that 

makes the method functional. 

(2) Information demonstrating that the 

test method meets the applicable 

accuracy and precision criteria of 

§ 80.584, including information on the 

date and time of each test measurement 

used to demonstrate precision. 

(3) If requested by the Administrator, 

test results from use of the method to 

analyze samples of commercially 

available fuel provided by EPA. 

(4) Any additional information 

requested by the Administrator and 

necessary to render a decision as to 

approval of the test method. 

(c) Sample retention. Samples used 

for precision and accuracy 

determination must be retained for 90 

days. 

(d) EPA approval. (1) Within 90 days 

of receipt of all materials required to be 

submitted under paragraph (a) or (b) of 

this section, the Administrator shall 

determine whether the test method is 

approved under this section. 

(2) If the Administrator denies 

approval of the test method, within 90 

days of receipt of all materials required 

to be submitted under paragraph (a) or 

(b) of this section, the Administrator 

will notify the applicant of the reasons 

for not approving the method. If the 

Administrator does not notify the 

applicant within 90 days of receipt of 

the application, that the test method is 

not approved, then the test method shall 

be deemed approved. 

(3) If the Administrator finds that an 

individual test facility has provided 

false or inaccurate information under 

this section, upon notice from the 

Administrator the approval shall be 

void ab initio.

(4) The approval of any test method 

under paragraph (b) of this section shall 

be valid for five years from the date of 

approval by the Administrator and shall 

not be extended. If the method is later 

approved by a voluntary consensusbased standards body, the approval 

shall remain valid as long as the 

conditions of paragraph (a) of this 

section are met.

(e) Quality assurance procedures for 

sulfur measurement instrumentation. A 

test shall not be considered a test using 

an approved test method unless the 

following quality control procedures are 

performed separately for each 

instrument used to make measurements: 

(1) Follow all mandatory provisions of 

ASTM D 6299–02 and construct control 

charts from the mandatory quality 

control testing prescribed in paragraph 

39188 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

7.1 of the reference method, following 

guidelines under A 1.5.1 for individual 

observation charts and A 1.5.2 for 

moving range charts. The Director of the 

Federal Register approved the 

incorporation by reference of ASTM D 

6299–02, Standard Practice for 

Applying Statistical Quality Assurance 

Techniques to Evaluate Analytical 

Measurement System Performance, as 

prescribed in 5 U.S.C. 552(a) and 1 CFR 

part 51. Anyone may purchase copies of 

this standard from the American Society 

for Testing and Materials, 100 Barr 

Harbor Dr., West Conshohocken, PA 

19428. Anyone may inspect copies at 

the U.S. EPA, Air and Radiation Docket 

and Information Center, 1301 

Constitution Ave., NW., Room B102, 

EPA West Building, Washington, DC 

20460 or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html.

(2) Follow paragraph 7.3.1 of ASTM D 

6299–02 to check standards using a 

reference material at least monthly or 

following any major change to the 

laboratory equipment or test procedure. 

Any deviation from the accepted 

reference value of a check standard 

greater than 1.44 ppm (for diesel fuel 

subject to the 15 ppm sulfur standard) 

or 19.36 ppm (for diesel fuel subject to 

the 500 ppm sulfur standard) must be 

investigated. 

(3) Samples of tested batches must be 

retained for 30 days or the period equal 

to the interval between quality control 

sample tests, whichever is longer. 

(4) Upon discovery of any quality 

control testing violation of paragraph A 

1.5.1.3 or A 1.5.2.1 of ASTM D 6299–

02, or any check standard deviation 

greater than 1.44 ppm (for diesel fuel 

subject to the 15 ppm sulfur standard) 

or 19.36 ppm (for diesel fuel subject to 

the 500 ppm sulfur standard), conduct 

an investigation into the cause of such 

violation or deviation and, after 

restoring method performance to 

statistical control, retest retained 

samples from batches originally tested 

since the last satisfactory quality control 

material or check standard testing 

occasion.

■ 48. A new § 80.586 is added to read as 

follows:

§ 80.586 What are record retention 

requirements for test methods approved 

under this subpart? 

Each individual test facility must 

retain records related to the 

establishment of accuracy and precision 

values, all test method documentation, 

and any quality control testing and 

analysis under §§ 80.582, 80.584 and 

80.585, for five years.

■ 49. Section 80.590 is revised to read as 

follows:

§ 80.590 What are the product transfer 

document requirements for motor vehicle 

diesel fuel, NRLM diesel fuel, heating oil 

and other distillates? 

(a) On each occasion that any person 

transfers custody or title to MVNRLM 

diesel fuel or heating oil, including 

distillates used or intended to be used 

as MVNRLM diesel fuel or heating oil, 

except when such fuel is dispensed into 

motor vehicles or nonroad, locomotive, 

or marine equipment, the transferor 

must provide to the transferee 

documents which include the following 

information: 

(1) The names and addresses of the 

transferor and transferee. 

(2) The volume of diesel fuel or 

distillate which is being transferred. 

(3) The location of the diesel fuel or 

distillate at the time of the transfer. 

(4) The date of the transfer. 

(5) For transfers of MVNRLM diesel 

fuel, the sulfur content standard the 

transferor represents the fuel to meet. 

(6) Beginning June 1, 2006, when an 

entity transfers custody of a distillate 

fuel designated under § 80.598, the 

following information must also be 

included: 

(i) The facility registration number of 

the transferor issued under § 80.597, if 

any. 

(ii) An accurate and clear statement of 

the applicable designation and/or 

classification under § 80.598, for 

example, 500 ppm sulfur NRLM diesel 

fuel; and whether the fuel is dyed or 

undyed, and for heating oil, whether 

marked or unmarked.

(7) For transfers of title or custody 

from one facility to another in the 

distribution system where diesel fuel or 

distillates are taxed, dyed or marked, 

and for any subsequent transfers (except 

when such fuel is dispensed into motor 

vehicles or nonroad, locomotive or 

marine equipment), an accurate 

statement on the product transfer 

document of the applicable fuel uses 

and classifications, as follows: 

(i) Undyed 15 ppm sulfur diesel fuel.

For the period from June 1, 2006 and 

beyond, ‘‘15 ppm sulfur (maximum) 

Undyed Ultra-Low Sulfur Diesel Fuel 

For use in all diesel vehicles and 

engines.’’ From June 1, 2006 through 

May 31, 2010, the product transfer 

document must also state whether the 

diesel fuel is #1D or #2D. 

(ii) Dyed 15 ppm sulfur diesel fuel.

From June 1, 2006 and beyond, ‘‘15 ppm 

sulfur (maximum) Dyed Ultra-Low 

Sulfur Diesel Fuel. For use in all 

nonroad diesel engines. Not for use in 

highway vehicles or engines except for 

tax-exempt use in accordance with 

section 4082 of the Internal Revenue 

Code.’’

(iii) Undyed 500 ppm sulfur diesel 

fuel. From June 1, 2006 through 

September 30, 2010, ‘‘500 ppm sulfur 

(maximum) Undyed Low Sulfur Diesel 

Fuel. For use in Model Year 2006 and 

older diesel highway vehicles and 

engines. Also for use in nonroad, 

locomotive, and marine diesel engines. 

Not for use in model year 2007 and 

newer highway vehicles or engines.’’

(iv) Dyed 500 ppm sulfur diesel fuel.

(A) For the period of June 1, 2006 

through September 30, 2010, ‘‘500 ppm 

sulfur (maximum) Dyed Low Sulfur 

Nonroad, Locomotive or Marine Diesel 

Fuel. Not for use in highway vehicles or 

engines except for use in Model Year 

2006 and older highway diesel vehicles 

or engines for tax-exempt use in 

accordance with section 4082 of the 

Internal Revenue Code.’’

(B) From June 1, 2010 through 

September 30, 2014, ‘‘500 ppm sulfur 

(maximum) Dyed Low Sulfur Nonroad 

Diesel Fuel. For use in model year 2010 

and older nonroad diesel engines. May 

be used in locomotive and marine diesel 

engines. Not for use in highway vehicles 

and engines or model year 2011 or later 

nonroad engines other than locomotive 

or marine diesel engines. Not for use in 

the Northeast/Mid-Atlantic Area.’’

(C) For dyed locomotive and marine 

diesel fuel beginning June 1, 2010, ‘‘500 

ppm sulfur (maximum) Dyed Low 

Sulfur Locomotive and Marine diesel 

fuel. Not for use in highway or other 

nonroad vehicles and engines.’’

(v) Dyed High Sulfur NRLM Fuel.

From June 1, 2007 through September 

30, 2010, ‘‘High Sulfur Dyed Nonroad, 

Locomotive, or Marine Engine Diesel 

fuel—sulfur content may exceed 500 

ppm sulfur. Not for use in highway 

vehicles or engines. Not for use in any 

nonroad engines requiring Ultra-Low 

Sulfur Diesel Fuel. Not for use in the 

Northeast/Mid-Atlantic Area.’’

(vi) Heating oil. For heating oil 

produced or imported beginning June 1, 

2007, ‘‘Heating Oil. Not for use in 

highway vehicles or engines or nonroad, 

locomotive, or marine engines.’’

(b) The following may be substituted 

for the descriptions in paragraph (a) of 

this section, as appropriate: 

(1) ‘‘This is high sulfur diesel fuel for 

use only in Guam, American Samoa, or 

the Northern Mariana Islands.’’;

(2) ‘‘This diesel fuel is for export use 

only.’’; 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39189

(3) ‘‘This diesel fuel is for research, 

development, or testing purposes 

only.’’; or 

(4) ‘‘This diesel fuel is for use in 

diesel highway vehicles or nonroad 

equipment under an EPA-approved 

national security exemption only.’’

(c) If undyed and/or unmarked 

distillate fuel is dyed and/or marked 

subsequent to the issuance of a product 

transfer document, at the time the 

distillate fuel is dyed and/or marked, a 

new product transfer document must be 

prepared with the language under 

paragraph (a)(7) of this section 

applicable to the changed fuel and 

provided to subsequent transferees. 

(d) 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 paragraphs (a)(7)(i) and (ii) 

of this section must contain the number 

‘‘15’’, and codes used to convey the 

statement in paragraphs (a)(7)(iii) and 

(iv) of this section must contain the 

number ‘‘500’’. Codes used to convey 

the statement in paragraph (a)(7)(v) of 

this section must contain the statement 

‘‘greater than 500’’ or ‘‘>500’’. 

(e) From June 1, 2001 through May 31, 

2005, any transfer subject to this 

section, which is also subject to the 

early credit provisions of § 80.531(b), 

must comply with all applicable 

requirements of this section. 

(f) From June 1, 2005 through May 31, 

2006, any transfer subject to this 

section, which is also subject to the 

early credit requirements of § 80.531(c), 

must comply with all applicable 

requirements of this section. 

(g) Mobile refuelers. The provisions of 

this section shall also apply to a mobile 

refueler that dispenses fuel from tanker 

trucks or other vessels into motor 

vehicles, nonroad diesel engines or 

nonroad diesel engine equipment. Each 

visit by the mobile refueler to a location 

shall be considered a separate occasion 

for purposes of paragraph (a) of this 

section. The tank trucks used by mobile 

refuelers are not subject to the labeling 

requirements in §§ 80.570 through 

80.574. 

(h) Identifications of fuel designations 

can be limited to a sub-designation that 

accurately identifies the fuel and do not 

need to also include the broader 

designation. For example, NR diesel fuel 

does not also need to be designated as 

NRLM or MVNRLM diesel fuel.

■ 50. Section 80.591 is revised to read as 

follows:

§ 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 

occasion that any person transfers 

custody or title to a diesel fuel additive 

that is subject to the provisions of 

§ 80.521 to a party in the additive 

distribution system or in the 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) Indicate 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 diesel fuel 

additive subject to the requirements of 

§ 80.521(b), to a party in the additive 

distribution system or in the 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 do each of the following: 

(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 diesel fuel additive may exceed the 

federal 15 ppm sulfur standard. Improper use 

of this additive may result in non-complying 

diesel fuel.

(3) If the additive contains a static 

dissipater additive having a sulfur 

content greater than 15 ppm, include 

the following statement:

This diesel fuel contains a static dissipater 

additive having a sulfur content greater than 

15 ppm.

(4) Include 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. 

(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 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 must 

not contain such number. 

(d) For those 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 and nonroad engines.’’; or 

(2) For those additives sold in 

containers for use by the ultimate 

consumer, with a sulfur content in 

excess of 15 ppm the following 

statement: ‘‘This diesel fuel additive 

does not comply with federal ultra-low 

sulfur content requirements for use in 

model year 2007 and newer diesel 

motor vehicles or model year 2011 and 

newer diesel nonroad equipment 

engines.’’

■ 51. Section 80.592 is amended by 

revising the heading and paragraphs (a), 

(b) introductory text, (b)(4), (b)(7) 

introductory text, (c), (d), and (e) to read 

as follows:

§ 80.592 What records must be kept by 

entities in the motor vehicle diesel fuel and 

diesel fuel additive distribution systems? 

(a) Records that must be kept by 

entities in the motor vehicle diesel fuel 

and diesel fuel additive distribution 

systems. Beginning June 1, 2006, or for 

a refiner or importer, the first 

compliance period in which the refiner 

or importer is generating early credits 

under § 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 all the following 

records: 

(1) The applicable product transfer 

documents required under §§ 80.590 

and 80.591. 

(2) For any sampling and testing for 

sulfur content for a batch of motor 

vehicle diesel fuel produced or 

imported and subject to the 15 ppm 

sulfur standard or any sampling and 

testing for sulfur content as part of a 

quality assurance testing program, and 

any sampling and testing for cetane 

index, aromatics content, solvent yellow 

124 content or dye solvent red 164 

39190 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

content of motor vehicle diesel fuel or 

motor vehicle diesel fuel additives: 

(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 § 80.580(a)(4)) and for cetane 

index or aromatics content (as 

applicable), 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 hardship 

standards, small refiner standards and 

early credit provisions. Beginning June 

1, 2006, or for a refiner or importer, the 

first compliance period in which the 

refiner or importer is generating early 

credits under § 80.531(b) or (c), any 

refiner producing motor vehicle diesel 

fuel subject to the sulfur standard under 

§ 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: * * * 

(4) A record designating the batch as 

motor vehicle diesel fuel meeting the 

500 ppm sulfur standard or as motor 

vehicle diesel fuel meeting the 15 ppm 

sulfur standard.

* * * * *

(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, and designated as motor 

vehicle diesel fuel credits and kept 

separately from NRLM credits, as 

follows:

* * * * *

(c) Additional records importers must 

keep. Any importer shall keep records 

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 § 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 

this section must be made available to 

the Administrator or the Administrator’s 

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.

■ 52. Section 80.593 is amended by 

revising the section heading and 

paragraphs (a)(3) and (c)(2) to read as 

follows:

§ 80.593 What are the reporting 

requirements for refiners and importers of 

motor vehicle diesel fuel subject to 

temporary refiner relief standards?

* * * * *

(a) * * * 

(3) The percentage of the volume of 

motor vehicle diesel fuel produced 

during the compliance period 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.

* * * * *

(c) * * * 

(2) Submitted to EPA no later than 

August 31 for the prior annual 

compliance period.

■ 53. Section 80.594 is amended by 

revising the section heading and 

paragraphs (a)(3), (a)(5), (b) introductory 

text, (b)(2), and (c), and adding 

paragraphs (a)(6), (a)(7), (a)(8), and (e) to 

read as follows:

§ 80.594 What are the pre-compliance 

reporting requirements for motor vehicle 

diesel fuel? 

(a) Except as provided in paragraph 

(d) of this section, 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:

* * * * *

(3) An estimate of the average daily 

volumes (in gallons) of each sulfur grade 

of motor vehicle diesel fuel produced 

(or imported) at each refinery (or import 

facility). These volume estimates must 

be provided both for fuel produced from 

crude oil, as well as any fuel produced 

from other sources, and must be 

provided for the periods of June 1, 2006 

through December 31, 2006, January 1, 

2007 through December 31, 2007, 

January 1, 2008 through December 31, 

2008, January 1, 2009 through December 

31, 2009, and January 1, 2010 through 

May 31, 2010, for each refinery and 

import facility;

* * * * *

(5) Information on project schedule by 

quarter of known or projected 

completion date by the stage of the 

project, for example, following the five 

project phases described in EPA’s June 

2002 Highway Diesel Progress Review 

report (EPA420–R–02–016, http://

www.epa.gov/otaq/regs/hd2007/

420r02016.pdf): Strategic planning, 

Planning and front-end engineering, 

Detailed engineering and permitting, 

Procurement and construction, and 

Commissioning and startup; 

(6) Basic information regarding the 

selected technology pathway for 

compliance (e.g., conventional 

hydrotreating vs other technologies, 

revamp vs grassroots, etc.); 

(7) Whether capital commitments 

have been made or are projected to be 

made; and 

(8) 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 motor vehicle diesel fuel 

small refiners shall submit the following 

additional information to EPA, as 

applicable:

* * * * *

(2) In case of a refinery with an 

approved application under § 80.552(c), 

a demonstration that by June 1, 2006 its 

motor vehicle diesel fuel will be at 15 

ppm sulfur at a volume meeting the 

requirements of § 80.553(e). 

(c) For each refiner and importer 

approved under § 80.540, a 

demonstration that by June 1, 2006, 95 

percent of its motor vehicle diesel fuel 

will be at 15 ppm sulfur at a volume of 

meeting the requirements of § 80.540(e).

* * * * *

(e) The pre-compliance reporting 

requirements of this section do not 

apply to refineries subject to the 

provisions of § 80.513.

■ 54. Section 80.597 is revised to read as 

follows:

§ 80.597 What are the registration 

requirements? 

The following registration 

requirements apply under this subpart: 

(a) Registration for motor vehicle 

diesel fuel. Refiners having any refinery 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39191

that is subject to a sulfur standard under 

§ 80.520(a), and importers importing 

such diesel fuel, must provide EPA the 

information under § 80.76, 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 

§ 80.76(c) must be provided. 

(b) Registration for NRLM diesel.

Refiners and importers that intend to 

produce or supply NRLM diesel fuel by 

June 1, 2007, must provide EPA the 

information under § 80.76 no later than 

December 31, 2005, 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 § 80.76(c) must be 

provided. 

(c) Entity registration. (1) Each entity 

as defined in § 80.502 that intends to 

deliver or receive custody of any of the 

following fuels from June 1, 2007 

through May 31, 2014 must register with 

EPA by December 31, 2005 or six 

months prior to commencement of 

producing, importing, or distributing 

any distillate subject to designation 

under § 80.598:

(i) Fuel designated as 500 ppm sulfur 

MVNRLM diesel fuel under § 80.598 on 

which taxes have not been assessed 

pursuant to IRS code (26 CFR part 48). 

(ii) Fuel designated as NRLM diesel 

fuel under § 80.598 that is undyed 

pursuant to § 80.520. 

(iii) Fuel designated as heating oil 

under § 80.598 that is unmarked 

pursuant to § 80.510(d) through (f). 

(iv) Fuel designated as LM diesel fuel 

under § 80.598(a)(2)(iii) that is 

unmarked pursuant to § 80.510(e). 

(2) Registration shall be on forms 

prescribed by the Administrator, and 

shall include the name, business 

address, contact name, telephone 

number, e-mail address, and type of 

production, importation, or distribution 

activity or activities engaged in by the 

entity. 

(3) Registration shall include the 

information required under paragraph 

(d) of this section for each facility 

owned or operated by the entity that 

delivers or receives custody of a fuel 

described in paragraph (c)(1) of this 

section. 

(d) Facility registration. (1) List for 

each separate facility of an entity 

required to register under paragraph (c) 

of this section, the facility name, 

physical location, contact name, 

telephone number, e-mail address and 

type of facility. For facilities that are 

aggregated under § 80.502, provide 

information regarding the nature and 

location of each of the components. If 

aggregation is changed for any 

subsequent compliance period, the 

entity must provide notice to EPA prior 

to the beginning of such compliance 

period. 

(2) If facility records are kept off-site, 

list the off-site storage facility name, 

physical location, contact name, and 

telephone number. 

(e) Changes to registration 

information. Any company or entity 

shall submit updated registration 

information to the Administrator within 

30 days of any occasion when the 

registration information previously 

supplied for an entity, or any of its 

registered facilities, becomes incomplete 

or inaccurate. 

(f) Issuance of registration numbers.

EPA will supply a registration number 

to each entity and a facility registration 

number to each of an entity’s facilities 

that is identified, which shall be used in 

all reports to the Administrator.

■ 55. A new § 80.598 is added to read as 

follows:

§ 80.598 What are the designation 

requirements for refiners, importers, and 

distributors? 

(a) Designation requirements for 

refiners and importers. (1) 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 

§ 80.520(a)(1) or as motor vehicle diesel 

fuel meeting the 500 ppm sulfur 

standard under § 80.520(c). 

(2) Subject to the restrictions in 

paragraph (a)(3) of this section, 

beginning June 1, 2006, any refiner or 

importer shall accurately and clearly 

designate each batch of diesel fuel or 

distillate fuel for which they transfer 

custody to another entity, according to 

the following categories, including 

specifying its volume: 

(i) Designate the fuel as one of the 

following fuel types: 

(A) Motor vehicle, nonroad, 

locomotive or marine (MVNRLM) diesel 

fuel; 

(B) Heating oil; 

(C) Jet fuel; 

(D) Kerosene; 

(E) No. 4 fuel; 

(F) Distillate fuel for export only; or 

(G) Exempt distillate fuels such as 

fuels that are covered by a national 

security exemption under § 80.606, fuels 

that are used for purposes of research 

and development pursuant to § 80.607, 

and fuels used in the U.S. Territories 

pursuant to § 80.608 (including 

additional identifying information). 

(ii) From June 1, 2006 through May 

31, 2014 any batch designated as 

MVNRLM diesel fuel must also be 

designated as one of the following: 

(A) Motor vehicle diesel fuel; or 

(B) NRLM diesel fuel.

(iii) From June 1, 2010 through May 

31, 2012 any batch designated as NRLM 

must also be designated as one of the 

following: 

(A) NR diesel fuel; or 

(B) LM diesel fuel. 

(iv) Until June 1, 2014, any batch 

designated as MVNRLM diesel fuel 

must also be designated according to 

one of the following three sulfur level 

specifications: 

(A) 15 ppm if its sulfur content is less 

than or equal to 15 ppm. 

(B) 500 ppm if its sulfur content is 

less than or equal to 500 ppm. 

(C) High Sulfur if its sulfur content is 

greater than 500 ppm. 

(v) From June 1, 2006 through May 

31, 2010, any batch designated as motor 

vehicle diesel fuel must also be 

designated according to one of the 

following two distillation classifications 

that most accurately represents the fuel: 

(A) #1D. 

(B) #2D. 

(3) The following restrictions and 

clarifications apply: 

(i) Prior to June 1, 2006, any batch of 

MVNRLM not containing visible 

evidence of red dye under § 80.520(b) 

must be designated as motor vehicle 

diesel fuel. 

(ii) Any distillate fuel containing 

visible evidence of dye may not be 

designated as motor vehicle diesel fuel 

unless it is further designated as tax 

exempt motor vehicle diesel fuel. 

(iii) Any distillate containing the 

marker required pursuant to the 

provisions of § 80.510(d) through (f) 

must be designated as heating oil, 

except that from June 1, 2010 through 

May 31, 2012 it may also be designated 

as LM diesel fuel, pursuant to 

§ 80.510(e). 

(iv) Prior to June 1, 2009 all 15 ppm 

sulfur MVNRLM diesel fuel must be 

designated as motor vehicle diesel fuel. 

(v) Beginning June 1, 2010 any 

distillate fuel having a sulfur content 

greater than 15 ppm may not be 

designated as motor vehicle diesel fuel. 

(vi) Beginning June 1, 2014, any 

distillate fuel having a sulfur content 

greater than to 15 ppm may not be 

designated as MVNRLM diesel fuel. 

(vii) Any batch of #1D fuel which is 

suitable for use as MVNRLM and which 

is also suitable for use as kerosene or jet 

fuel (i.e., commonly referred to as dual 

use kerosene) may be designated as 

MVNRLM, kerosene, or jet fuel (as 

applicable). 

(viii) Beginning June 1, 2007, any 

distillate fuel with a sulfur content 

39192 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

greater than 500 ppm distributed or 

intended for distribution in the area 

specified in § 80.510(g)(1), may not be 

designated as MVNRLM diesel fuel. 

(ix) From June 1, 2010 through May 

31, 2012, any distillate fuel with a sulfur 

content greater than 15 ppm distributed 

or intended for distribution in the area 

specified in § 80.510(g)(1), may not be 

designated as NR diesel fuel. 

(x) From June 1, 2012 through May 

31, 2014, any distillate fuel with a sulfur 

content greater than 15 ppm distributed 

or intended for distribution in the area 

specified in § 80.510(g)(1), may not be 

designated as NRLM diesel fuel. 

(xi) Beginning June 1, 2007, any 

distillate fuel with a sulfur content 

greater than 500 ppm distributed or 

intended for distribution in the area 

specified in § 80.510(g)(2) may not be 

designated as NRLM diesel fuel unless 

EPA has first approved a compliance 

plan for the refiner for segregating the 

fuel from all other types of NRLM diesel 

fuel from the refinery gate to the 

ultimate consumer, as specified under 

§ 80.554(a)(4). 

(xii) From June 1, 2010 through May 

31, 2012, any distillate fuel with a sulfur 

content greater than 15 ppm distributed 

or intended for distribution in the area 

specified in § 80.510(g)(2) may not be 

designated as NR diesel fuel unless EPA 

has first approved a compliance plan for 

the refiner for segregating the fuel from 

all other types of NRLM diesel fuel from 

the refinery gate to the ultimate 

consumer, as specified under 

§ 80.554(b)(4). 

(xiii) From June 1, 2012 through May 

31, 2014, any distillate fuel with a sulfur 

content greater than 15 ppm distributed 

or intended for distribution in the area 

specified in § 80.510(g)(2) may not be 

designated as NRLM diesel fuel unless, 

EPA has first approved a compliance 

plan for the refiner for segregating the 

fuel from all other types of NRLM diesel 

fuel from the refinery gate to the 

ultimate consumer, as specified under 

§ 80.554(b)(4). 

(xiv) Beginning June 1, 2014, any 

distillate fuel with a sulfur content 

greater than 15 ppm may not be 

designated as MVNRLM diesel fuel. 

(b) Designation requirements for fuel 

distributors. (1) Pursuant to the 

provisions of paragraphs (b)(2) through 

(b)(9) of this section, beginning June 1, 

2006, any distributor shall accurately 

and clearly designate each batch of 

diesel fuel or distillate fuel for which 

they transfer custody to another facility, 

including specifying its volume, as 

specified in this paragraph (b). 

Distributors must also accurately and 

clearly classify such diesel fuel and 

distillate fuel by sulfur content, while it 

is in their custody between receipt and 

delivery. 

(2) From June 1, 2006 through May 

31, 2009, whenever custody of a batch 

of 15 ppm sulfur motor vehicle diesel 

fuel is transferred to another facility, the 

entity transferring custody must 

accurately and clearly designate the 

batch as one of the following and 

specify its volume: 

(i) #1D 15 ppm sulfur motor vehicle 

diesel fuel. 

(ii) #2D 15 ppm sulfur motor vehicle 

diesel fuel. 

(3) From June 1, 2009 through May 

31, 2010, whenever custody of a batch 

of 15 ppm sulfur MVNRLM diesel fuel 

is transferred to another facility, the 

entity transferring custody must 

accurately and clearly designate the 

batch as one of the following and 

specify its volume:

(i) #1D 15 ppm sulfur motor vehicle 

diesel fuel. 

(ii) #2D 15 ppm sulfur motor vehicle 

diesel fuel. 

(iii) 15 ppm sulfur NRLM diesel fuel. 

(4) From June 1, 2006 through May 

31, 2010, whenever custody of a batch 

of undyed, 500 ppm sulfur MVNRLM is 

transferred to another facility, the entity 

transferring custody must accurately 

and clearly designate the batch as one 

of the following and specify its volume: 

(i) #1D 500 ppm sulfur motor vehicle 

diesel fuel; 

(ii) #2D 500 ppm sulfur motor vehicle 

diesel fuel; or 

(iii) 500 ppm sulfur NRLM diesel fuel. 

(5) From June 1, 2007 through May 

31, 2010, whenever custody of a batch 

of distillate fuel (other than jet fuel, 

kerosene, No. 4 fuel, or fuel for export) 

having a sulfur content greater than 500 

ppm is transferred to another facility, 

the entity transferring custody must 

accurately and clearly designate the 

batch as one of the following and 

specify its volume: 

(i) High sulfur NRLM diesel fuel 

(HSNRLM); 

(ii) Heating oil; or 

(iii) Exempt distillate fuels such as 

fuels that are covered by a national 

security exemption under § 80.606, fuels 

that are used for purposes of research 

and development pursuant to § 80.607, 

and fuels used in the U.S. Territories 

pursuant to § 80.608 (including 

additional identifying information). 

(6) From June 1, 2010 through May 

31, 2012, whenever custody of a batch 

of distillate fuel (other than jet fuel, 

kerosene, No. 4 fuel, or fuel for export) 

having a sulfur content greater than 15 

ppm is transferred to another facility, 

the entity transferring custody must 

accurately and clearly designate the 

batch as one of the following and 

specify its volume: 

(i) 500 ppm sulfur NR diesel fuel; 

(ii) 500 ppm sulfur LM diesel fuel; 

(iii) Heating oil; or 

(iv) Exempt distillate fuels such as 

fuels that are covered by a national 

security exemption under § 80.606, fuels 

that are used for purposes of research 

and development pursuant to § 80.607, 

and fuels used in the U.S. Territories 

pursuant to § 80.608 (including 

additional identifying information). 

(7) From June 1, 2012 through May 

31, 2014, whenever custody of a batch 

of distillate fuel (other than jet fuel, 

kerosene, No. 4 fuel, or fuel for export) 

having a sulfur content greater than 15 

ppm is transferred to another facility, 

the entity transferring custody must 

accurately and clearly designate the 

batch as one of the following and 

specify its volume:

(i) 500 ppm sulfur NRLM diesel fuel; 

(ii) Heating oil; or 

(iii) Exempt distillate fuels such as 

fuels that are covered by a national 

security exemption under § 80.606, fuels 

that are used for purposes of research 

and development pursuant to § 80.607, 

and fuels used in the U.S. Territories 

pursuant to § 80.608 (including 

additional identifying information). 

(8) Beginning June 1, 2014, whenever 

custody of a batch of distillate fuel 

(other than jet fuel, kerosene, No. 4 fuel, 

or fuel for export) having a sulfur 

content greater than 15 ppm is 

transferred to another facility, the entity 

transferring custody must accurately 

and clearly designate the batch as one 

of the following and specify its volume: 

(i) 500 ppm sulfur LM diesel fuel; 

(ii) Heating oil; or 

(iii) Exempt distillate fuels such as 

fuels that are covered by a national 

security exemption under § 80.606, fuels 

that are used for purposes of research 

and development pursuant to § 80.607, 

and fuels used in the U.S. Territories 

pursuant to § 80.608 (including 

additional identifying information). 

(9) The following restrictions and 

clarifications apply. Subject to the 

provisions of this paragraph (b)(9) and 

subject to the dye and marker provisions 

of § 80.520(b) and § 80.510(d) through 

(f), when custody of a batch of distillate 

fuel is transferred, the designation 

provided by the entity transferring 

custody pursuant to paragraphs (b)(1) 

through (b)(8) of this section may be 

different from the designation of the fuel 

when that same entity received custody. 

(i) Any 500 ppm sulfur diesel fuel 

designated under this paragraph (b) and 

containing visible evidence of red dye 

may not be designated as motor vehicle 

diesel fuel. 

(ii) Any distillate fuel containing 

greater than or equal to 0.10 milligrams 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39193

per liter of marker solvent yellow 124 

required under § 80.510(d), (e), or (f) 

must be designated as heating oil except 

that from June 1, 2010 through October 

1, 2012 it may also be designated as LM 

diesel fuel as specified under 

§ 80.510(e). 

(iii) Any batch of #1D fuel which is 

suitable for use as MVNRLM diesel fuel 

and which is also suitable for use as 

kerosene or jet fuel (i.e., commonly 

referred to as dual use kerosene) may be 

designated as either MVNRLM diesel 

fuel, kerosene, or jet fuel (as applicable). 

(iv) Any MVNRLM diesel fuel with a 

sulfur content of 500 ppm or less in 

inventory as of June 1, 2007 may be 

designated as motor vehicle diesel fuel. 

(v) Batches or portions of batches of 

fuel received designated as 15 ppm 

sulfur #2D motor vehicle diesel fuel 

may be re-designated as 500 ppm sulfur 

motor vehicle diesel fuel, but only in 

accordance with the limitations of 

§ 80.527(c). 

(vi) Batches or portions of batches 

received designated as 500 ppm sulfur 

NRLM diesel fuel may be re-designated 

as 500 ppm sulfur motor vehicle diesel 

fuel by a truck loading terminal only if 

the terminal maintains a neutral or 

positive balance at the end of each 

quarterly compliance period on their 

motor vehicle diesel fuel volume from 

June 1, 2007 as calculated in 

§ 80.599(b)(4). 

(vii) Batches or portions of batches 

received designated as 500 ppm sulfur 

NRLM diesel fuel may be re-designated 

as 500 ppm sulfur motor vehicle diesel 

fuel by a facility other than a truck 

loading terminal only if the following 

restrictions are met: 

(A) At the end of each annual 

compliance period, the facility has a 

neutral or positive balance on its motor 

vehicle diesel fuel volume from June 1, 

2007 as calculated in § 80.599(b)(4); and 

(B) At the end of each annual 

compliance period, the facility’s balance 

for motor vehicle diesel fuel volume, 

from the beginning of the compliance 

period must be less than two percent of 

the total volume of motor vehicle diesel 

fuel received during the compliance 

period, as calculated in § 80.599(b)(5). 

(viii) For facilities in areas other than 

those specified in § 80.510(g)(1) and 

(g)(2), batches or portions of batches of 

unmarked distillate received designated 

as heating oil may be re-designated as 

NRLM or LM diesel fuel only if the 

following restrictions are met: 

(A) From June 1, 2007 through May 

31, 2010, for any compliance period, the 

volume of high sulfur NRLM diesel fuel 

delivered from a facility cannot be 

greater than the volume received, unless 

the volume of heating oil delivered from 

the facility is also greater than the 

volume it received by an equal or 

greater proportion, as calculated in 

§ 80.599(c)(2); and 

(B) Beginning June 1, 2010, for any 

compliance period, the volume of fuel 

designated as heating oil delivered from 

a facility cannot be less than the volume 

of fuel designated as heating oil 

received, as calculated in § 80.599(c)(4). 

(ix) For facilities in areas other than 

those specified in § 80.510(g)(1) and 

(g)(2), from June 1, 2010 through May 

31, 2012, batches or portions of batches 

received designated as 500 ppm LM 

diesel fuel may be redesignated as 500 

ppm NR diesel fuel only if for any 

compliance period the following 

restrictions are met: 

(A) The volume of fuel designated as 

500 ppm sulfur NR diesel fuel delivered 

from the facility cannot be greater than 

the volume received as calculated in 

§ 80.599(d)(2)(i); or 

(B) The volume of fuel designated as 

500 ppm sulfur NR diesel fuel delivered 

from the facility in relation to the 

volume received is not a greater 

proportion than the volume of fuel 

designated as 500 ppm sulfur LM diesel 

fuel delivered from the facility in 

relation to the volume received, as 

calculated in § 80.599(d)(2)(ii). 

(x) Notwithstanding the provisions of 

paragraph (b)(5) of this section, 

beginning October 1, 2007, 

(A) No distillate fuel with a sulfur 

content greater than 500 ppm 

distributed or intended for distribution 

in the areas specified in § 80.510(g)(1) 

and (g)(2), may be designated as NRLM 

diesel fuel, including LM diesel fuel 

except as provided in paragraph 

(b)(9)(xiii) of this section; and 

(B) Distillate fuel with a sulfur 

content greater than 500 ppm 

distributed from within the areas 

specified in § 80.510(g)(1) and (g)(2) to 

areas outside these areas is subject to 

the provisions of paragraph (b)(5) of this 

section. 

(xi) Notwithstanding the provisions of 

paragraphs (b)(6) through (b)(8) of this 

section, beginning October 1, 2010—

(A) No distillate fuel with a sulfur 

content greater than 15 ppm distributed 

or intended for distribution in the areas 

specified in § 80.510(g)(1) and (g)(2), 

may be designated as NR diesel fuel, 

except as provided in paragraph 

(b)(9)(xiv) of this section; and 

(B) Distillate fuel with a sulfur 

content greater than 15 ppm distributed 

from within the areas specified in 

§ 80.510(g)(1) and (g)(2) to areas outside 

these areas is subject to the provisions 

of paragraphs (b)(6) through (b)(7) of 

this section. 

(xii) Notwithstanding the provisions 

of paragraphs (b)(7) and (8) of this 

section, beginning October 1, 2012—

(A) No distillate fuel with a sulfur 

content greater than 15 ppm distributed 

or intended for distribution in the areas 

specified in § 80.510(g)(1) and (g)(2), 

may be designated as NRLM diesel fuel, 

including LM diesel fuel, except as 

provided in paragraph (b)(9)(xv) of this 

section; and

(B) Distillate fuel with a sulfur 

content greater than 15 ppm distributed 

from within the areas specified in 

§ 80.510(g)(1) and (g)(2) to areas outside 

these areas is subject to the provisions 

of paragraphs (b)(7) and (8) of this 

section. 

(xiii) From June 1, 2007 through 

September 30, 2010, in the area 

specified in § 80.510(g)(2) only 

segregated batches of distillate fuel 

received designated as HSNRLM diesel 

fuel may be distributed designated as 

HSNRLM diesel fuel and must remain 

segregated from fuel with any other 

designations unless otherwise approved 

by EPA in a refiner compliance plan 

under § 80.554(a)(4). 

(xiv) From June 1, 2010 through 

September 30, 2012, in the area 

specified in § 80.510(g)(2) only 

segregated batches of distillate fuel 

received designated as 500 ppm sulfur 

NR diesel fuel may be distributed 

designated as 500 ppm sulfur NR diesel 

fuel and must remain segregated from 

fuel with any other designations and 

from any other 500 ppm sulfur NRLM 

diesel fuel from any other sources, 

except as approved by EPA in a refiner 

compliance plan under § 80.554(a)(4). 

(xv) From June 1, 2012 through 

September 30, 2014, in the area 

specified in § 80.510(g)(2) only 

segregated batches of distillate fuel 

received designated as 500 ppm sulfur 

NRLM diesel fuel may be distributed 

designated as 500 ppm sulfur NRLM 

diesel fuel and must remain segregated 

from fuel with any other designations 

and from any other 500 ppm sulfur 

NRLM diesel fuel from any other 

sources, except as approved by EPA in 

a refiner compliance plan under 

§ 80.554(a)(4). 

(c) Notwithstanding the provisions of 

paragraph (b) of this section, an entity 

is not required to designate heating oil 

that is delivered from a facility that only 

receives heating oil which is marked 

pursuant to § 80.510(d) through (f). 

(d) Notwithstanding the provisions of 

paragraph (b)(4) of this section, an entity 

is not required to designate 500 ppm 

sulfur MVNRLM diesel fuel that is 

delivered from a facility that only 

receives 500 ppm sulfur MVNRLM 

diesel fuel on which taxes have been 

39194 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

paid or into which red dye has been 

added pursuant to § 80.520(b). 

(e) Notwithstanding the provisions of 

paragraph (b)(6) of this section, an entity 

is not required to designate 500 ppm 

sulfur LM diesel fuel that is delivered 

from a facility that only receives 500 

ppm sulfur LM diesel fuel which is 

marked pursuant to § 80.510(e). 

(f) Any entity that is both a distributor 

and a refiner or importer must comply 

with the provisions of paragraph (a) of 

this section for all distillate fuel 

produced or imported, and the 

provisions of paragraph (b) of this 

section for all distillate fuel for which 

it acted as distributor but not refiner or 

importer. 

(g) No refiner, importer, or distributor 

may use the designation provisions of 

this section to circumvent the standards 

or requirements of § 80.510, 80.511, or 

80.520.

■ 56. A new § 80.599 is added to read as 

follows:

§ 80.599 How do I calculate volume 

balances for designation purposes?

(a) Quarterly compliance periods. The 

quarterly compliance periods are shown 

in the following table:

Beginning date of

quarterly compliance 

period 

Ending date of

quarterly compliance

period 

June 1, 2007 ............. September 30, 2007. 

October 1, 2007 ........ December 31, 2007. 

January 1, 2008 ........ March 31, 2008. 

April 1, 2008 .............. June 30, 2008. 

July 1, 2008 .............. September 30, 2008. 

October 1, 2008 ........ December 31, 2008. 

January 1, 2009 ........ March 31, 2009. 

April 1, 2009 .............. June 30, 2009. 

July 1, 2009 .............. September 30, 2009. 

October 1, 2009 ........ December 31, 2009. 

January 1, 2010 ........ March 31, 2010. 

April 1, 2010 .............. May 31, 2010. 

June 1, 2010 ............. September 30, 2010. 

(1) Annual compliance periods. The 

annual compliance periods before the 

period beginning July 1, 2015 are shown 

in the following table:

Beginning date of

annual compliance 

period 

Ending date of

annual compliance

period 

June 1, 2007 ............. June 30, 2008. 

July 1, 2008 .............. June 30, 2009. 

July 1, 2009 .............. May 31, 2010. 

June 1, 2010 ............. June 30, 2011. 

July 1, 2011 .............. May 31, 2012. 

June 1, 2012 ............. June 30, 2013. 

July 1, 2013 .............. May 31, 2014. 

June 1, 2014 ............. June 30, 2015. 

(2) The annual compliance periods for 

the period beginning July 1, 2015 shall 

be from July 1, through June 30. 

(b) Volume balance for motor vehicle 

diesel fuel. (1) A facility’s motor vehicle 

diesel fuel volume balance is calculated 

as follows:

MVB = MVI¥MVO¥MVINVCHG

Where:

MVB = the volume balance for motor vehicle 

diesel fuel for the compliance period. 

MVI = the total volume of all batches of fuel 

designated as motor vehicle diesel fuel 

received for the compliance period. 

MVO = the total volume of all batches of fuel 

designated as motor vehicle diesel fuel 

delivered for the compliance period. 

MVINVCHG = the total volume of 15 ppm 

sulfur and 500 ppm sulfur motor vehicle 

diesel fuel in inventory at the end of the 

compliance period minus the total 

volume of 15 ppm sulfur and 500 ppm 

sulfur motor vehicle diesel fuel in 

inventory at the beginning of the 

compliance period, including accounting 

for any corrections in inventory due to 

volume swell or shrinkage, difference in 

measurement calibration between 

receiving and delivering meters, and 

similar matters, where corrections that 

increase inventory are defined as 

positive.

(2) Calculate the motor vehicle diesel 

fuel received, as follows:

MVI = MV15I + MV500I

Where:

MV15I = the total volume of all batches of 

fuel designated as 15 ppm sulfur motor 

vehicle diesel fuel received for the 

compliance period. 

MV500I = the total volume of all batches of 

fuel designated as 500 ppm sulfur motor 

vehicle diesel fuel received for the 

compliance period.

(3) Calculate the motor vehicle diesel 

fuel delivered, as follows:

MVO = MV15O + MV500O

Where:

MV15O = the total volume of all batches of 

fuel designated as 15 ppm sulfur motor 

vehicle diesel fuel and delivered during 

the compliance period. 

MV500O = the total volume of all batches of 

fuel designated as 500 ppm sulfur motor 

vehicle diesel fuel and delivered during 

the compliance period.

(4) The neutral or positive volume 

balance required for purposes of 

compliance with § 80.598(b)(9)(vi) and 

(b)(9)(vii)(A) means that the net balance 

of motor vehicle diesel fuel in inventory 

as of the end of the last day of the 

compliance period (MVNBE) must be 

greater than or equal to zero. MVNBE is 

defined by the following equation:

MVNBE = MV15BINV + MV500BINV sMVB

Where:

MV15BINV = the total volume of fuel 

designated as 15 ppm sulfur motor 

vehicle diesel fuel in inventory at the 

beginning of the program on June 1, 

2007. 

MV500BINV = the total volume of fuel 

designated as 500 ppm sulfur motor 

vehicle diesel fuel in inventory at the 

beginning of the program on June 1, 

2007. Any #2D 500 ppm sulfur 

MVNRLM in inventory at the beginning 

of the program on June 1, 2007 may be 

designated as motor vehicle diesel fuel. 

sMVB = the sum of the balances for motor 

vehicle diesel fuel for the current 

compliance period and previous 

compliance periods.

(5) The volume balance required for 

purposes of compliance with 

§ 80.598(b)(9)(vii)(B) means:

¥MVB ≤ 0.02 × MVI

(6) Calculations in paragraphs (b)(4) 

and (b)(5) of this section may be 

combined for all facilities wholly owned 

by an entity.

(7) For purposes of calculations in 

paragraphs (b)(1) through (b)(5) of this 

section, for batches of fuel received from 

facilities without an EPA facility ID#, 

any batches of fuel received on which 

taxes have been paid pursuant to IRS 

code (26 CFR part 48) shall be deemed 

to be MV15I or MV500I as appropriate 

for purposes of this paragraph. 

(c) Volume balance for high sulfur 

NRLM diesel fuel and heating oil. (1) A 

facility’s high sulfur NRLM balance is 

calculated as follows:

HSNRLMB = HSNRLMII ¥ HSNRLMO ¥

HSNRLMINVCHG

Where:

HSNRLMB = the balance for high sulfur 

NRLM diesel fuel for the compliance 

period. 

HSNRLMI = the total volume of all batches 

of fuel designated as high sulfur NRLM 

received diesel fuel for the compliance 

period. 

HSNRLMO = the total volume of all batches 

of fuel designated as high sulfur NRLM 

diesel fuel delivered for the compliance 

period. 

HSNRLMINVCHG = the volume of high sulfur 

NRLM diesel fuel in inventory at the end 

of the compliance period minus the 

volume of high sulfur NRLM diesel fuel 

in inventory at the beginning of the 

compliance period, including accounting 

for any corrections in inventory due to 

volume swell or shrinkage, difference in 

measurement calibration between 

receiving and delivering meters, and 

similar matters, where corrections that 

increase inventory are defined as 

positive.

(2) The volume balance required for 

purposes of compliance with 

§ 80.598(b)(9)(viii)(A) means one of the 

following:

(i) HSNRLMB ≥ 0

(ii) (HSNRLMO + HSNRLMINVCHG) / 

HSNRLMI ≤ (HOO + HOINVCHG) / HOI

(3) A facility’s heating oil volume 

balance is calculated as follows:

HOB = HOI ¥ HOO ¥ HOINVCHG

Where:

HOB = the balance for heating oil for the 

compliance period. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39195

HOI = the total volume of all batches of fuel 

designated as heating oil received for the 

compliance period. 

HOO = the total volume of all batches of fuel 

designated as heating oil delivered to all 

downstream entities for the compliance 

period. 

HOINVCHG = the volume of heating oil in 

inventory at the end of the compliance 

period minus the volume of heating oil 

in inventory at the beginning of the 

compliance period, including accounting 

for any corrections in inventory due to 

volume swell or shrinkage, difference in 

measurement calibration between 

receiving and delivering meters, and 

similar matters, where corrections that 

increase inventory are defined as 

positive.

(4) The volume balance required for 

purposes of compliance with 

§ 80.598(b)(9)(viii)(B) means:

HOB ≤ 0

(5) Calculations in paragraphs (c)(3) 

and (c)(4) of this section may be 

combined for all facilities wholly owned 

by an entity. 

(6) For purposes of calculations in 

paragraphs (c)(1) through (c)(4) of this 

section, for batches of fuel received from 

facilities without an EPA facility ID#, 

any batches of fuel received marked 

pursuant to § 80.510(d) or (f) shall be 

deemed to be HOI, any batches of fuel 

received marked pursuant to § 80.510(e) 

shall be deemed to be HOI or LM500I, 

any diesel fuel with less than or equal 

to 500 ppm sulfur that is dyed pursuant 

to § 80.520(b) and not marked pursuant 

to § 80.510(d) or (f) shall be deemed to 

be NRLM diesel fuel, and any diesel fuel 

with less than or equal to 500 ppm 

sulfur which is dyed pursuant to 

§ 80.520(b) and not marked pursuant to 

§ 80.510(e) shall be deemed to be NR 

diesel fuel. 

(d) Volume balance for NR diesel fuel.

(1) A facility’s 500 ppm nonroad diesel 

fuel balance is calculated as follows:

NR500B = NR500I ¥ NR500O ¥

NR500INVCHG

Where:

NR500B = the balance for 500 ppm sulfur NR 

diesel fuel for the compliance period. 

NR500I = the total volume of all batches of 

fuel designated as 500 ppm sulfur NR 

diesel fuel received for the compliance 

period. 

NR500O = the total volume of all batches of 

fuel designated as 500 ppm sulfur NR 

diesel fuel delivered for the compliance 

period. 

NR500INVCHG = the volume of 500 ppm sulfur 

NR diesel fuel in inventory at the end of 

the compliance period minus the volume 

of 500 ppm sulfur NR diesel fuel in 

inventory at the beginning of the 

compliance period, and accounting for 

any corrections in inventory due to 

volume swell or shrinkage, difference in 

measurement calibration between 

receiving and delivering meters, and 

similar matters, where corrections that 

increase inventory are defined as 

positive.

(2) The volume balance required for 

purposes of compliance with 

§ 80.598(b)(9)(ix) means one of the 

following:

(i) NR500B ≥ 0

(ii) (NR500O + NR500INVCHG) / NR500I ≤

(LM500O + LM500INVCHG) / LM500I.

Where:

LM500I = the total volume of all batches of 

fuel designated as 500 ppm sulfur LM 

diesel fuel received for the compliance 

period. 

LM500O = the total volume of all batches of 

fuel designated as 500 ppm sulfur LM 

diesel fuel delivered for the compliance 

period. 

LM500INVCHG = the volume of 500 ppm 

sulfur LM diesel fuel in inventory at the 

end of the compliance period minus the 

volume of 500 ppm sulfur LM diesel fuel 

in inventory at the beginning of the 

compliance period, and accounting for 

any corrections in inventory due to 

volume swell or shrinkage, difference in 

measurement calibration between 

receiving and delivering meters, and 

similar matters, where corrections that 

increase inventory are defined as 

positive.

(e) Anti-downgrading for motor 

vehicle diesel fuel. (1) A facility must 

satisfy the provisions in either 

paragraphs (e)(2), (e)(3), (e)(4), or (e)(5) 

of this section to comply with the antidowngrading limitation of paragraph 

§ 80.527(c)(1), for the annual 

compliance periods defined in 

§ 80.527(c)(3). 

(2) The volume of #2D 15 ppm sulfur 

motor vehicle delivered must meet the 

following requirement:

(#2MV15O + #2MV15INVCHG) ≥ 0.8 × #2MV15I

Where:

#2MV15O = the total volume of fuel delivered 

during the compliance period that is 

designated as #2D 15 ppm sulfur motor 

vehicle diesel fuel. 

#2MV15INVCHG = the total volume of diesel 

fuel designated as #2D 15 ppm sulfur 

motor vehicle diesel fuel in inventory at 

the end of the compliance period minus 

the total volume of #2D 15 ppm sulfur 

motor vehicle diesel fuel in inventory at 

the beginning of the compliance period, 

and accounting for any corrections in 

inventory due to volume swell or 

shrinkage, difference in measurement 

calibration between receiving and 

delivering meters, and similar matters, 

where corrections that increase 

inventory are defined as positive. 

#2MV15I = the total volume of fuel received 

during the compliance period that is 

designated as #2D 15 ppm sulfur motor 

vehicle diesel fuel.

(3) The volume of #2D 500 ppm sulfur 

motor vehicle diesel fuel delivered must 

meet the following requirement:

#2MV500O ≤ #2MV500I ¥ #2MV500INVCHG + 

0.2 × #2MV15I

Where:

#2MV500O = the total volume of fuel 

delivered during the compliance period 

that is designated as #2D 500 ppm sulfur 

motor vehicle diesel fuel.

#2MV500I = the total volume of fuel received 

during the compliance period that is 

designated as #2D 500 ppm sulfur motor 

vehicle diesel fuel. 

#2MV500INVCHG = the total volume of diesel 

fuel designated as #2D 500 ppm sulfur 

motor vehicle diesel fuel in inventory at 

the end of the compliance period minus 

the total volume of #2D 500 ppm sulfur 

motor vehicle diesel fuel in inventory at 

the beginning of the compliance period, 

and accounting for any corrections in 

inventory due to volume swell or 

shrinkage, difference in measurement 

calibration between receiving and 

delivering meters, and similar matters, 

where corrections that increase 

inventory are defined as positive.

(4) The following calculation may be 

used to account for wintertime blending 

of kerosene:

#2MV500O ≤ #2MV500I ¥ #2MV500INVCHG + 

0.2 * (#1MV15I + #2MV15I) 

Where:

#1MV15I = the total volume of fuel received 

during the compliance period that is 

designated as #1D 15 ppm sulfur motor 

vehicle diesel fuel.

(5) The following calculation may be 

used to account for wintertime blending 

of kerosene and/or changes in the 

facility’s volume balance of motor 

vehicle diesel fuel resulting from a 

temporary shift of 500 ppm sulfur 

NRLM diesel fuel to 500 ppm sulfur 

motor vehicle diesel fuel during the 

compliance period:

#2MV500O < #2MV500I ¥ #2MV500INVCHG + 

0.2 * #2MV15I + #1MV15B + 

#2NRLM500S

Where:

#1MV15B = the total volume of fuel received 

during the compliance period that is 

designated as #1D 15 ppm sulfur motor 

vehicle diesel fuel and that the facility 

can demonstrate they blended into #2D 

500 ppm sulfur motor vehicle diesel fuel. 

#2NRLM500S = the total volume of #2D 500 

ppm sulfur NRLM diesel fuel that the 

facility can demonstrate they 

redesignated as #2D 500 ppm sulfur 

motor vehicle diesel fuel during the 

compliance period.

(f) Inventory adjustments.

Adjustments to inventory under this 

section must be based on normal 

business practices for the industry, 

appropriate physical plant operations 

and use of good engineering judgments. 

(g) Unique circumstances. EPA may, 

at its discretion, grant a fuel 

distributor’s application to modify its 

inventory of motor vehicle diesel fuel, 

NRLM diesel fuel, or heating oil for a 

39196 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

given compliance period. EPA may 

grant an application to address unique 

circumstances, where appropriate, such 

as the start up of a new pipeline or 

pipeline segment.

■ 57. The center header ‘‘EXEMPTIONS’’

before § 80.600 is removed.

■ 58. Section 80.600 is revised to read as 

follows:

§ 80.600 What records must be kept for 

purposes of the designate and track 

provisions? 

(a) In addition to the requirements of 

§ 80.592 and § 80.602, the following 

recordkeeping requirements shall apply 

to refiners and importers: 

(1) Any refiner or importer shall 

maintain the records specified in 

paragraphs (a)(6) through (a)(10) of this 

section for each batch of distillate fuel 

that it transfers custody of and 

designates during the time period from 

June 1, 2006 through May 31, 2010, with 

the following categories: 

(i) #1D 15 ppm sulfur motor vehicle 

diesel fuel; 

(ii) #2D 15 ppm sulfur motor vehicle 

diesel fuel; 

(iii) 15 ppm sulfur NRLM diesel fuel; 

(iv) #1D 500 ppm sulfur motor vehicle 

diesel fuel; 

(v) #2D 500 ppm sulfur motor vehicle 

diesel fuel; or 

(vi) 500 ppm sulfur NRLM diesel fuel. 

(2) Any refiner or importer shall 

maintain the records specified in 

paragraphs (a)(6) through (a)(10) of this 

section for each batch of distillate fuel 

that it transfers custody of and 

designates during the time period from 

June 1, 2007 through May 31, 2010 with 

the following categories: 

(i) High sulfur NRLM diesel fuel; or 

(ii) Heating oil. 

(3) Any refiner or importer shall 

maintain the records specified in 

paragraphs (a)(6) through (a)(10) of this 

section for each batch of distillate fuel 

that it transfers custody of and 

designates during the time period from 

June 1, 2010 through May 31, 2012 with 

the following categories: 

(i) 500 ppm sulfur NR diesel fuel; 

(ii) 500 ppm sulfur LM diesel fuel; or 

(iii) Heating oil. 

(4) Any refiner or importer shall 

maintain the records specified in 

paragraphs (a)(6) through (a)(10) of this 

section for each batch of distillate fuel 

that it transfers custody of and 

designates during the time period from 

June 1, 2012 through May 31, 2014 with 

the following categories: 

(i) 500 ppm sulfur NRLM diesel fuel; 

or 

(ii) Heating oil. 

(5) Any refiner or importer shall 

maintain the records specified in 

paragraphs (a)(6) through (a)(10) of this 

section for each batch of heating oil that 

it transfers custody of and designates 

during the time period from June 1, 

2014 and later as belonging to the 

heating oil category.

(6) The records for each batch with 

designations identified in paragraphs 

(a)(1) through (a)(5) of this section must 

clearly and accurately identify the batch 

number (including an indication as to 

whether the batch was received into the 

facility or delivered from the facility), 

date and time of day (if multiple batches 

are delivered per day) that custody was 

transferred, the designation, the volume 

in gallons of the batch, and the name 

and the EPA entity and facility 

registration number of the facility to 

whom such batch was transferred. 

(i) For motor vehicle diesel fuel, the 

records must also identify whether the 

batch was received or delivered with or 

without taxes paid pursuant to Section 

4082 of the Internal Revenue Code (26 

U.S.C. 4082). 

(ii) For NRLM diesel fuel, the records 

must also identify whether the batch 

was received or delivered with or 

without dye added pursuant to Section 

4082 of the Internal Revenue Code (26 

U.S.C. 4082). 

(iii) For heating oil, the records must 

also identify whether the batch was 

received or delivered with or without 

the marker added pursuant to 

§ 80.510(d) through (f). 

(iv) For LM diesel, the records must 

also identify whether the batch was 

received or delivered with or without 

the marker added pursuant to 

§ 80.510(e). 

(7) Any refiner or importer shall, for 

each of its facilities, maintain records 

that clearly and accurately identify the 

total volume in gallons of designated 

fuel identified in paragraphs (a)(1) 

through (a)(5) of this section transferred 

over each compliance period. The 

records shall be maintained separately 

for each fuel designated in paragraphs 

(a)(1) through (a)(5) of this section, and 

for each EPA entity and facility 

registration number to whom custody of 

the fuel was transferred. 

(8) Notwithstanding the provisions of 

paragraphs (a)(6) and (a)(7) of this 

section, records of batches delivered of 

500 ppm sulfur motor vehicle diesel 

fuel on which taxes have been paid per 

Section 4082 of the Internal Revenue 

Code (26 U.S.C. 4082) and of 500 ppm 

sulfur NRLM diesel fuel into which dye 

has been added per Section 4082 of the 

Internal Revenue Code (26 U.S.C. 4082), 

and of 500 ppm sulfur LM diesel fuel 

which has been properly marked 

pursuant to § 80.510(e) are not required 

to be maintained separately for each 

entity and facility to which the fuel was 

delivered. 

(9) Notwithstanding the provisions of 

paragraphs (a)(6) and (a)(7) of this 

section, records of heating oil batches 

delivered that have been properly 

marked pursuant to § 80.510(d) through 

(f) and records of LM diesel fuel batches 

delivered that have been properly 

marked pursuant to § 80.510(e) are not 

required to be maintained separately for 

each entity and facility to which the fuel 

was delivered. 

(10) Any refiner or importer shall 

maintain copies of all product transfer 

documents required under § 80.590. If 

all information required in paragraph 

(a)(6) of this section is on the product 

transfer document for a batch, then the 

provisions of this paragraph (a)(10) shall 

satisfy the requirements of paragraph 

(a)(6) of this section for that batch. 

(11) Any refiner or importer shall 

maintain records related to annual 

compliance calculations performed 

under § 80.599 and to information 

required to be reported to the 

Administrator under § 80.601. 

(12) Records must be maintained that 

demonstrate compliance with a refiner’s 

compliance plan required under 

§ 80.554, for distillate fuel designated as 

high sulfur NRLM diesel fuel and 

delivered from June 1, 2007 through 

May 31, 2010, for distillate fuel 

designated as 500 ppm sulfur NR diesel 

fuel and delivered from June 1, 2010 

through May 31, 2012, and for distillate 

fuel designated as 500 ppm sulfur 

NRLM diesel fuel and delivered from 

June 1, 2012 through June 1, 2014 in the 

areas specified in § 80.510(g)(2). 

(b) In addition to the requirements of 

§ 80.592 and § 80.602, the following 

recordkeeping requirements shall apply 

to distributors: 

(1) Any distributor shall maintain the 

records specified in paragraphs (b)(2) 

through (b)(10) of this section for each 

batch of distillate fuel with the 

following designations for which 

custody is received or delivered. 

Records shall be kept separately for each 

of its facilities. 

(i) For each facility that receives #2D 

15 ppm sulfur motor vehicle diesel fuel 

and distributes any #2D 500 ppm sulfur 

motor vehicle diesel fuel, records for 

each batch of diesel fuel with the 

following designations for which 

custody is received or delivered during 

the time period from June 1, 2006 

through May 31, 2007: 

(A) #1D 15 ppm sulfur motor vehicle 

diesel fuel; 

(B) #2D 15 ppm sulfur motor vehicle 

diesel fuel; 

(C) #2D 500 ppm sulfur motor vehicle 

diesel fuel; or

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39197

(D) 500 ppm sulfur NRLM diesel fuel. 

(ii) For each facility, records for each 

batch of diesel fuel with the following 

designations for which custody is 

received or delivered during the time 

period from June 1, 2007 through May 

31, 2010: 

(A) #1D 15 ppm sulfur motor vehicle 

diesel fuel; 

(B) #2D 15 ppm sulfur motor vehicle 

diesel fuel; 

(C) #1D 500 ppm sulfur motor vehicle 

diesel fuel; 

(D) #2D 500 ppm sulfur motor vehicle 

diesel fuel; 

(E) 500 ppm sulfur NRLM diesel fuel; 

(F) 15 ppm sulfur NRLM diesel fuel; 

(G) High sulfur NRLM diesel fuel; or 

(H) Heating oil. 

(iii) For each facility that receives 

unmarked fuel designated as NR diesel 

fuel, LM diesel fuel or heating oil, 

records for each batch of diesel fuel 

with the following designations for 

which custody is received or delivered 

during the time period from June 1, 

2010 through May 31, 2012: 

(A) 500 ppm sulfur NR diesel fuel; 

(B) 500 ppm sulfur LM diesel fuel; or 

(C) Heating oil. 

(iv) For each facility that receives 

unmarked fuel designated as heating oil, 

records for each batch of diesel fuel 

with the following designations for 

which custody is received or delivered 

during the time period from June 1, 

2012 through May 31, 2014: 

(A) 500 ppm sulfur NRLM diesel fuel; 

or 

(B) Heating oil. 

(v) For each facility that receives 

unmarked fuel designated as heating oil, 

records for each batch of diesel fuel 

with the following designations for 

which custody is received or delivered 

during the time period beginning June 1, 

2014: 

(A) 500 ppm sulfur LM diesel fuel; or 

(B) Heating oil. 

(vi) From June 1, 2007 through May 

31, 2010, for those facilities in the areas 

specified in § 80.510(g)(2) that receive 

unmarked fuel designated as high sulfur 

NRLM diesel fuel:

(A) High sulfur NRLM diesel fuel; or 

(B) Heating oil. 

(vii) From June 1, 2010 through May 

31, 2012, for those facilities in the areas 

specified in § 80.510(g)(2) that receive 

unmarked fuel designated as 500 ppm 

sulfur NR diesel fuel, 500 ppm sulfur 

LM diesel fuel, or heating oil: 

(A) 500 ppm sulfur NR diesel fuel; 

(B) 500 ppm sulfur LM diesel fuel; or 

(C) Heating oil. 

(viii) From June 1, 2012 through May 

31, 2014, for those facilities in the areas 

specified in § 80.510(g)(2) that receive 

unmarked fuel designated as 500 ppm 

sulfur NRLM diesel fuel or heating oil. 

(A) 500 ppm sulfur NRLM diesel fuel; 

or 

(B) Heating oil. 

(2) Records that for each batch clearly 

and accurately identify the batch 

number (including an indication as to 

whether the batch was received into the 

facility or delivered from the facility), 

date and time of day (if multiple batches 

are delivered per day) that custody was 

transferred, the designation, the volume 

in gallons of each batch of each fuel, 

and the name and the EPA entity and 

facility registration number of the 

facility to whom or from whom such 

batch was transferred. 

(i) For motor vehicle diesel fuel the 

records must also identify whether the 

batch was received or delivered with or 

without taxes paid pursuant to section 

4082 of the Internal Revenue Code (26 

U.S.C. 4082). 

(ii) For NRLM diesel fuel, the records 

must also identify whether it was 

received or delivered with or without 

dye added pursuant to Section 4082 of 

the Internal Revenue Code (26 U.S.C. 

4082). 

(iii) For heating oil, the records must 

also identify whether it was received or 

delivered with or without the marker 

added pursuant to § 80.510(d) through 

(f). 

(iv) For LM diesel fuel, the records 

must also identify whether it was 

received or delivered with or without 

the marker added pursuant to 

§ 80.510(e). 

(v) For batches of fuel received from 

facilities without an EPA facility 

registration number, any batches of fuel 

received marked pursuant to § 80.510(d) 

or (f) shall be deemed designated as 

heating oil, any batches of fuel received 

marked pursuant to § 80.510(e) shall be 

deemed designated as heating oil or LM 

diesel fuel, any batches of fuel received 

on which taxes have been paid pursuant 

to Section 4082 of the Internal Revenue 

Code (26 U.S.C. 4082) shall be deemed 

designated as motor vehicle diesel fuel, 

any 500 ppm sulfur diesel fuel dyed 

pursuant to § 80.520(b) and not marked 

pursuant to § 80.510(d) or (f) shall be 

deemed designated as NRLM diesel fuel, 

and any diesel fuel with less than or 

equal to 500 ppm sulfur which is dyed 

pursuant to § 80.520(b) and not marked 

pursuant to § 80.510(e) shall be deemed 

to be NR diesel fuel. 

(3) Records that clearly and accurately 

identify the total volume in gallons of 

each designated fuel identified under 

paragraph (b)(1) of this section 

transferred over each of the compliance 

periods, and over the periods from June 

1, 2007 to the end of each compliance 

period. The records shall be maintained 

separately for each fuel designated 

under paragraph (b)(1) of this section, 

and for each EPA entity and facility 

registration number from whom the fuel 

was received or to whom it was 

delivered. For batches of fuel received 

from facilities without an EPA facility 

registration number, any batches of fuel 

received marked pursuant to § 80.510(d) 

or (f) shall be deemed designated as 

heating oil, any batches of fuel received 

marked pursuant to § 80.510(e) shall be 

deemed designated as heating oil or LM 

diesel fuel, any batches of fuel received 

on which taxes have been paid pursuant 

to Section 4082 of the Internal Revenue 

Code (26 U.S.C. 4082) shall be deemed 

designated as motor vehicle diesel fuel, 

any 500 ppm sulfur diesel fuel dyed 

pursuant to § 80.520(b) and not marked 

pursuant to § 80.510(d) or (f) shall be 

deemed designated as NRLM diesel fuel, 

and any diesel fuel with less than or 

equal to 500 ppm sulfur which is dyed 

pursuant to § 80.520(b) and not marked 

pursuant to § 80.510(e) shall be deemed 

to be NR diesel fuel. 

(4) Notwithstanding the provisions of 

paragraphs (b)(2) and (b)(3) of this 

section, for batches of 500 ppm sulfur 

motor vehicle diesel fuel delivered on 

which taxes have been paid per Section 

4082 of the Internal Revenue Code (26 

U.S.C. 4082) and 500 ppm sulfur NRLM 

diesel fuel into which red dye has been 

added per Section 4082 of the Internal 

Revenue Code (26 U.S.C. 4082), records 

are not required to be maintained 

separately for each entity or facility to 

whom fuel was delivered.

(5) Notwithstanding the provisions of 

paragraphs (b)(2) and (b)(3) of this 

section, for batches of heating oil 

delivered that are marked pursuant to 

§ 80.510(d) through (f), records do not 

need to identify the EPA entity or 

facility registration number to which 

fuel was delivered. 

(6) Notwithstanding the provisions of 

paragraphs (b)(2) and (b)(3) of this 

section, for batches of LM diesel fuel 

delivered that are marked pursuant to 

§ 80.510(e), records do not need to 

identify the EPA entity or facility 

registration number to which fuel was 

delivered. 

(7) Records that clearly and accurately 

reflect the beginning and ending 

inventory volume for each of the fuels 

for which records must be kept under 

paragraph (b)(1) of this section. Such 

records shall be maintained separately 

by each entity and facility consistent 

with the compliance periods defined in 

§§ 80.598 and 80.599. 

(8) (i) If adjustments are made to 

inventory, the records must include 

detailed information related to the 

amount, type of, and reason for such 

adjustment. 

39198 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(ii) If adjustments are made because of 

measurement error or variation, the 

records must include the adjustment 

made, the meter or gauge or other 

reading(s), and the name of the person 

who took such reading(s) and or applied 

the adjustment. 

(9) For distributors that are required 

to keep records under paragraphs (b)(1) 

through (b)(8) of this section for truck 

loading terminals, records related to 

quarterly or annual compliance 

calculations, as applicable, performed 

under § 80.599 and to information 

required to be reported to the 

Administrator under § 80.601. 

(10) For distributors that are required 

to keep records under paragraphs (b)(1) 

through (b)(8) of this section for 

facilities other than truck loading 

terminals, records related to annual 

compliance calculations performed 

under § 80.599 and to information 

required to be reported to the 

Administrator under § 80.601. 

(c) Notwithstanding the provisions of 

paragraph (b) of this section, records of 

heating oil received are not required to 

be maintained for facilities that do not 

receive any heating oil which is 

unmarked pursuant to § 80.510(d) 

through (f), or LM diesel fuel which is 

unmarked pursuant to § 80.510(e). 

(d) Notwithstanding the provisions of 

paragraph (b) of this section, records of 

500 ppm sulfur MVNRLM diesel fuel 

received are not required to be 

maintained for facilities that do not 

receive any motor vehicle diesel fuel for 

which taxes have not already been paid 

pursuant to Section 4082 of the Internal 

Revenue Code (26 U.S.C. 4082) or 

NRLM diesel fuel which is undyed 

pursuant to § 80.520(b). 

(e) The provisions of paragraphs 

(b)(1)(iii) and (iv) of this section do not 

apply to facilities located in the areas 

specified in § 80.510(g)(1) and (g)(2) 

unless they deliver marked heating oil 

or LM diesel fuel to areas outside the 

areas specified in § 80.510(g)(1) and 

(g)(2). 

(f) Ultimate consumers that receive 

any batch of high sulfur NRLM diesel 

fuel beginning June 1, 2007 in areas 

listed in § 80.510(g)(2) must maintain 

records of each batch of fuel received for 

use in NRLM equipment pursuant to the 

compliance plan provisions of § 80.554, 

unless otherwise allowed by EPA. 

(g) Ultimate consumers that receive 

any batch of 500 ppm sulfur NR diesel 

fuel beginning June 1, 2010 or NRLM 

diesel fuel beginning June 1, 2012 in the 

areas listed in § 80.510(g)(2) must 

maintain records of each batch of fuel 

received for use in NR or NRLM 

equipment, as appropriate, pursuant to 

the compliance plan provisions of 

§ 80.554, unless otherwise allowed by 

EPA. 

(h) For purposes of this section, each 

portion of a shipment of designated 

distillate fuel under this section that is 

differently designated from any other 

portion, even if shipped as fungible 

product having the same sulfur content, 

shall be a separate batch. 

(i) The records required in this section 

must be made available to the 

Administrator or the Administrator’s 

designated representative upon request. 

(j) Notwithstanding the provisions of 

this section, product transfer documents 

must be maintained under the 

provisions of §§ 80.590, 80.592, and 

80.602. 

(k) The records required in this 

section must be kept for five years after 

they are required to be collected. 

(l) Identifications of fuel designations 

can be limited to a sub-designation that 

accurately identifies the fuel and do not 

need to also include the broader 

designation. For example, NR diesel fuel 

does not also need to be designated as 

NRLM or MVNRLM diesel fuel.

■ 59. Section 80.601 is revised to read as 

follows:

§ 80.601 What are the reporting 

requirements for purposes of the designate 

and track provisions? 

(a) Quarterly reporting. Beginning 

November 30, 2007 and continuing 

through August 31, 2010, each entity 

required to maintain records under 

§ 80.600 must report the following 

information separately for each of its 

facilities to the Administrator on a 

quarterly basis, as specified in 

paragraph (e)(1) of this section: 

(1) Separately for each designation 

category and separately for each 

transferee facility, the total volume in 

gallons of distillate fuel designated 

under § 80.598 for which custody was 

delivered by the reporting facility to any 

other entity or facility, and the EPA 

entity and facility registration 

number(s), as applicable, of the 

transferee. 

(2) Separately for each designation 

category and separately for each 

transferor facility, the total volume in 

gallons of distillate fuel designated 

under § 80.598 for which custody was 

received by the reporting facility, and 

the EPA entity and facility registration 

number(s), as applicable, of the 

transferor. 

(3) Any entity that receives custody of 

distillate fuel from another entity or 

facility that does not have an EPA 

facility identification number must 

report such batches as follows: 

(i) Any batch of distillate fuel for 

which custody is received and which is 

marked pursuant to § 80.510(d) or (f) 

shall be deemed designated as heating 

oil, any batch of distillate fuel for which 

custody is received and which is 

marked pursuant to § 80.510(e) shall be 

deemed designated as heating oil or LM 

diesel fuel as applicable, and the report 

shall include that information under 

that designation. 

(ii) Any batch of distillate fuel for 

which custody is received and for 

which taxes have been paid pursuant to 

Section 4082 of the Internal Revenue 

Code (26 U.S.C. 4082) shall be deemed 

designated as motor vehicle diesel fuel 

and the report shall include it under 

that designation. 

(iii) Any batch of 500 ppm sulfur 

diesel fuel dyed pursuant to § 80.520(b) 

and not marked pursuant to § 80.510(d) 

and (f), and for which custody is 

received, shall be deemed designated as 

NRLM diesel fuel and the report shall 

include it under that designation. 

(iv) Any batch of 500 ppm sulfur 

diesel fuel dyed pursuant to § 80.520(b) 

and not marked pursuant to § 80.510(e), 

and for which custody is received, shall 

be deemed designated as NR diesel fuel 

and the report shall include it under 

that designation. 

(4) In the case of truck loading 

terminals, the results of all compliance 

calculations required under § 80.599, 

and including: 

(i) The total volumes received of each 

fuel designation required to be reported 

in paragraphs (a)(1) through (a)(3) of this 

section over the quarterly compliance 

period. 

(ii) The total volumes delivered of 

each fuel designation required to be 

reported in paragraphs (a)(1) through 

(a)(3) of this section over the quarterly 

compliance period. 

(iii) Beginning and ending inventories 

of each fuel designation required to be 

reported in paragraphs (a)(1) 

through(a)(3) of this section over the 

quarterly compliance period. 

(iv) The volume balance under 

§ 80.599(b)(4) and § 80.598(b)(9)(vi). 

(v) The volume balance under 

§ 80.599(c)(2) and § 80.598(b)(9)(viii)(A). 

(b) Annual reports. Beginning August 

31, 2007, all entities required to 

maintain records for batches of fuel 

under § 80.600 must report the 

following information separately for 

each of its facilities to the Administrator 

on an annual basis, as specified in 

paragraph (e)(2) of this section: 

(1) Separately for each designation 

category for which records are required 

to be kept under § 80.600 and separately 

for each transferor facility, the total 

volume in gallons of distillate fuel 

designated under § 80.598 for which 

custody was received by the reporting 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39199

facility, and the EPA entity and facility 

registration number(s), as applicable, of 

the transferor. 

(2) Separately for each designation 

category for which records are required 

to be kept under § 80.600 and separately 

for each transferee facility, the total 

volume in gallons of distillate fuel 

designated under § 80.598 for which 

custody was delivered by the reporting 

facility to any other entity or facility, 

and the EPA entity and facility 

registration number(s), as applicable, of 

the transferee except as provided under 

§ 80.600(a)(7), (a)(8), (b)(4), and (b)(5). 

(3) The results of all compliance 

calculations required under § 80.599, 

and including: 

(i) The total volumes in gallons 

received of each fuel designation 

required to be reported in paragraph 

(b)(1) of this section over the applicable 

annual compliance period. 

(ii) The total volumes in gallons 

delivered of each fuel designation 

required to be reported in paragraph 

(b)(2) of this section over the applicable 

annual compliance period. 

(iii) Beginning and ending inventories 

of each fuel designation required to be 

reported in paragraphs (b)(1) and (b)(2) 

of this section for the annual 

compliance period. 

(iv) In the areas specified in 

§ 80.510(g)(2), for fuel designated as 

high sulfur NRLM diesel fuel delivered 

from June 1, 2007 through May 31, 

2010, for fuel designated as 500 ppm NR 

diesel fuel delivered from June 1, 2010 

through May 31, 2012, and for fuel 

designated as 500 ppm sulfur NRLM 

diesel fuel from June 1, 2012 through 

May 31, 2014, the refiner must report all 

information required under its 

compliance plan approved pursuant to 

§ 80.554(a)(4) and (b)(4) and including 

the ultimate consumers to whom each 

batch of fuel was delivered and the total 

delivered to each ultimate consumer for 

the compliance period. 

(v) Ending with the report due August 

31, 2010, the volume balance under 

§ 80.598(b)(9)(vi) and § 80.599(b)(4). 

(vi) Ending with the report due 

August 31, 2010, the volume balance 

under § 80.598(b)(9)(vii) and 

§ 80.599(b)(5), if applicable. 

(vii) Ending with the report due 

August 31, 2010, the volume balance 

under § 80.598(b)(9)(viii)(A) and 

§ 80.599(c)(2).

(viii) Beginning with the report due 

August 31, 2010, the volume balance 

under § 80.598(b)(8)(viii)(B) and 

§ 80.599(c)(4). 

(ix) Beginning with the report due 

August 1, 2011 and ending with the 

report due August 1, 2012, the volume 

balance under § 80.598(b)(9)(ix) and 

§ 80.599(d)(2). 

(c) Additional information. The 

Administrator may request any 

additional information necessary to 

determine compliance with the 

requirements of §§ 80.598 and 80.599. 

(d) Submission of quarterly and 

annual reports. (1) All quarterly reports 

shall be submitted to the Administrator 

for the compliance periods defined in 

§ 80.599(a)(1) as follows: 

(i) The first quarter report shall be 

submitted by the following November 

30. 

(ii) The second quarter report shall be 

submitted by the following February 28. 

(iii) The third quarter report shall be 

submitted by the following May 31. 

(iv) The fourth quarter report shall be 

submitted by the following August 31. 

(2) All annual reports shall be 

submitted to the Administrator for the 

compliance periods defined in 

§ 80.599(a)(2) by August 31. 

(3) All reports shall be submitted on 

forms and following procedures 

specified by the Administrator, shall 

include a statement that volumes 

reported to the Administrator under this 

section are identical to volumes 

reported to the Internal Revenue Service 

and shall be signed and certified by a 

responsible corporate officer of the 

reporting entity. 

(e) Exclusions. Notwithstanding the 

provisions of this section, an entity is 

not required to report under paragraphs 

(a) or (b) of this section for facilities 

whose only recordkeeping requirements 

under § 80.600 are under § 80.600 (f) or 

(g) or to maintain records solely related 

to calculating compliance with the 

downgrading limitation under § 80.527, 

§ 80.599(e) and § 80.600(b)(1)(i) and (ii).

■ 60. Section 80.602 is revised to read as 

follows:

§ 80.602 What records must be kept by 

entities in the NRLM diesel fuel and diesel 

fuel additive production, importation, and 

distribution systems? 

(a) Records that must be kept by 

parties in the NRLM diesel fuel and 

diesel fuel additive production, 

importation, and distribution systems.

Beginning June 1, 2007, or June 1, 2006, 

if that is the first period credits are 

generated under § 80.535, any person 

who produces, imports, sells, offers for 

sale, dispenses, distributes, supplies, 

offers for supply, stores, or transports 

nonroad, locomotive or marine diesel 

fuel subject to the provisions of this 

subpart, must keep the following 

records: 

(1) The applicable product transfer 

documents required under §§ 80.590 

and 80.591. 

(2) For any sampling and testing for 

sulfur content for a batch of NRLM 

diesel fuel produced or imported and 

subject to the 15 ppm sulfur standard or 

any sampling and testing for sulfur 

content as part of a quality assurance 

testing program, and any sampling and 

testing for cetane index, aromatics 

content, marker solvent yellow 124 

content or dye solvent red 164 content 

of NRLM diesel fuel, NRLM diesel fuel 

additives or heating oil: 

(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 § 80.580(a)(4)), for cetane index or 

aromatics content, dye solvent red 164, 

marker solvent yellow 124 (as 

applicable), 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 NRLM 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 NRLM diesel 

fuel. Beginning June 1, 2007, or June 1, 

2006, pursuant to the provisions of 

§ 80.535 or § 80.554(d), any refiner 

producing diesel fuel subject to a sulfur 

standard under § 80.510, § 80.513, 

§ 80.536, § 80.554, § 80.660, or § 80.561, 

for each of its refineries, and any 

importer importing such diesel fuel 

separately for each facility, shall keep 

records that include the following 

information for each batch of NRLM 

diesel fuel or heating oil produced or 

imported:

(1) The batch volume. 

(2) The batch number, assigned under 

the batch numbering procedures under 

§ 80.65(d)(3). 

(3) The date of production or import. 

(4) A record designating the batch as 

one of the following: 

(i) NRLM diesel fuel, NR diesel fuel, 

LM diesel fuel, or heating oil, as 

applicable. 

(ii) Meeting the 500 ppm sulfur 

standard of § 80.510(a) or the 15 ppm 

sulfur standard of § 80.510(b) and (c) or 

other applicable standard. 

(iii) Dyed or undyed with visible 

evidence of solvent red 164. 

39200 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(iv) Marked or unmarked with solvent 

yellow 124. 

(5) For foreign refiners and importers 

of their fuel, the designations and other 

records required to be kept under 

§ 80.620. 

(6) All of the following information 

regarding credits, kept separately for 

each compliance period, kept separately 

for each refinery and for each importer 

facility, kept separately if converted 

under § 80.535(a) and (b) or § 80.535(c) 

and (d), and kept separately from motor 

vehicle diesel fuel credits: 

(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 

other party, its name, its EPA refiner or 

importer registration number consistent 

with § 80.597, 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. 

(vi) Commercial documents that 

establish each transfer of credits from 

the transferor to the transferee. 

(7) The calculations used to determine 

baselines or compliance with the 

volume requirements and volume 

percentages, as applicable, under this 

subpart. 

(8) The calculations used to determine 

the number of credits generated. 

(9) A copy of reports submitted to 

EPA under § 80.604. 

(c) Additional records importers must 

keep. Any importer shall keep records 

that identify and verify the source of 

each batch of certified DFR-Diesel and 

non-certified DFR-Diesel imported and 

demonstrate compliance with the 

requirements under § 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 five years 

from the date the credits were 

transferred, and shall be kept by the 

transferee for five 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 

this section must be made available to 

the Administrator or the Administrator’s 

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.

■ 61. A new § 80.603 is added to read as 

follows:

§ 80.603 What are the pre-compliance 

reporting requirements for NRLM diesel 

fuel? 

(a) Except as provided in paragraph 

(c) of this section, beginning on June 1, 

2005, and for each year until June 1, 

2011, or until the entity produces or 

imports NR or NRLM diesel fuel 

meeting the 15 ppm sulfur standard of 

§ 80.510(b) or (c), all refiners and 

importers planning to produce or import 

NR or NRLM diesel fuel, 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) Any estimate of the average daily 

volumes (in gallons) of each sulfur grade 

of motor vehicle and NRLM diesel fuel 

produced (or imported) at each refinery 

(or import facility). These volume 

estimates must be provided both for fuel 

produced from crude oil, as well as any 

fuel produced from other sources, and 

must be provided for the periods of June 

1, 2010 through December 31, 2010, 

calendar years 2011 through 2013, 

January 1, 2014 through May 31, 2014, 

and June 1, 2014 through December 31, 

2014; 

(4) If expecting to participate in the 

credit trading program, estimates of the 

number of credits to be generated and/

or used each year the program; 

(5) Information on project schedule by 

quarter of known or projected 

completion date by the stage of the 

project, for example, following the five 

project phases described in EPA’s June 

2002 Highway Diesel Progress Review 

report (EPA420-R–02–016, http://

www.epa.gov/otaq/regs/hd2007/

420r02016.pdf): Strategic planning, 

Planning and front-end engineering, 

Detailed engineering and permitting, 

Procurement and construction, and 

Commissioning and startup; 

(6) Basic information regarding the 

selected technology pathway for 

compliance (e.g., conventional 

hydrotreating vs. other technologies, 

revamp vs. grassroots, etc.); 

(7) Whether capital commitments 

have been made or are projected to be 

made; and 

(8) The pre-compliance reports due in 

2006 and later years must provide an 

update of the progress in each of these 

areas. 

(b) Reports under this section may be 

submitted in conjunction with reports 

submitted under § 80.594. 

(c) The pre-compliance reporting 

requirements of this section do not 

apply to refineries subject to the 

provisions of § 80.513.

■ 62. A new § 80.604 is added to read as 

follows:

§ 80.604 What are the annual reporting 

requirements for refiners and importers of 

NRLM diesel fuel? 

Beginning with the annual 

compliance period that begins June 1, 

2007, or the first period during which 

credits are generated, transferred or 

used, or the first period during which 

NRLM diesel fuel or heating oil is 

produced under a small refiner 

compliance option under this subpart, 

whichever is earlier, any refiner or 

importer who produces or imports 

NRLM diesel fuel must submit annual 

compliance reports for each refinery and 

importer facility that contain the 

following information required, and 

such other information as EPA may 

require. 

(a) All refiners and importers. (1) The 

refiner or importer’s company name and 

the EPA company and facility 

identification number. 

(2) If the refiner is a small refiner, a 

statement regarding to which small 

refiner option it is subject.

(b) Small refiners. (1) For each 

refinery of small refiners subject to the 

provisions of § 80.551(g) and § 80.554(a) 

for each compliance period from June 1, 

2007 through May 31, 2010, report the 

following: 

(i) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel. 

(ii) The volume of diesel fuel 

produced and designated as NRLM 

diesel fuel having a sulfur content less 

than or equal to the 500 ppm sulfur 

standard under § 80.510(a). 

(iii) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel having a sulfur content 

greater than the 500 ppm sulfur 

standard under § 80.510(a). 

(iv) The total volume of heating oil 

produced. 

(v) The baseline under § 80.554(a)(1). 

(vi) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel that is exempt from the 500 

ppm sulfur standard of § 80.510(a). 

(vii) The total volume, if any, of 

NRLM diesel fuel subject to the 500 

ppm sulfur standard § 80.510(a) that had 

a sulfur content exceeding 500 ppm. 

(2) For each refinery of small refiners 

subject to the provisions of § 80.551(g) 

and § 80.554(b), for each compliance 

period between June 1, 2010 and May 

31, 2012, report the following:

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39201

(i) The total volume of diesel fuel 

produced and designated as NR diesel 

fuel. 

(ii) The total volume of diesel fuel 

produced and designated as LM diesel 

fuel. 

(iii) The total volume of diesel fuel 

produced and designated as NR diesel 

fuel subject to the 500 ppm sulfur 

standard under § 80.510(a). 

(iv) The total volume of diesel fuel 

produced and designated as LM diesel 

fuel subject to the 500 ppm sulfur 

standard under § 80.510(a). 

(v) The volume of diesel fuel 

produced and designated as NR diesel 

fuel having a sulfur content of 15 ppm 

or less. 

(vi) The baseline under § 80.554(b)(1). 

(vii) The total volume of NRLM diesel 

fuel produced that is eligible for the 

sulfur standard under § 80.510(a). (viii) 

The total volume, if any, of NRLM 

diesel fuel subject to the 15 ppm sulfur 

standard that had a sulfur content in 

excess of 15 ppm. 

(3) For each refinery of small refiners 

subject to the provisions of § 80.551(g) 

and § 80.554(b), for each compliance 

period between June 1, 2012 and May 

31, 2014, report the following: 

(i) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel. 

(ii) The total volume diesel fuel 

produced and designated as NRLM 

diesel fuel subject to the 500 ppm sulfur 

standard under § 80.510(a). 

(iii) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel having a sulfur content less 

than or equal to the 15 ppm sulfur 

standard under § 80.510(c). 

(iv) The baseline under § 80.554(b)(1). 

(v) The total volume of NRLM diesel 

fuel produced that is eligible for the 500 

ppm sulfur standard under § 80.510(a). 

(vi) The total volume, if any, of NRLM 

diesel fuel subject to the 15 ppm sulfur 

standard that had a sulfur content in 

excess of 15 ppm. 

(4) For each refinery of a small refiner 

that elects to produce NRLM diesel fuel 

subject to the 15 ppm sulfur standard of 

§ 80.510(c) beginning June 1, 2006 

under § 80.551(g) and § 80.554(d), for 

each compliance period report the 

following: 

(i) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel. 

(ii) The total volume of diesel fuel 

produced and designated as NRLM 

diesel fuel having a sulfur content less 

than or equal to 15 ppm. 

(iii) The percentages of NRLM diesel 

fuel produced and designated having a 

sulfur content less than or equal to 15 

ppm under § 80.554(d)(1)(i) and (ii). 

(iv) The deficit, if any, and the 

number of credits purchased, if any, to 

cover any deficit as provided in 

§ 80.554(d)(3). 

(v) A report of the small refiner’s 

progress toward compliance with the 

gasoline standards under §§ 80.240 and 

80.255. 

(c) Credit generation and use.

Information regarding the generation, 

use, transfer and retirement of credits, 

separately by refinery and import 

facility, including the following: 

(1) The number of credits at the 

beginning of the compliance period. 

(2) The number of credits generated. 

(3) The number of credits used. 

(4) If any credits were obtained from 

or transferred to other refineries or 

importers, for each other refinery or 

importer, the name, address, the EPA 

company identification number, and the 

number of credits obtained from or 

transferred to the other party. 

(5) The number of credits retired.

(6) The credit balance at the beginning 

and end of the compliance period. 

(d) Batch reports. For each batch of 

NRLM diesel fuel and heating oil (if 

applicable) produced or imported and 

delivered during the compliance 

periods under paragraph (b) of this 

section, include the following: 

(1) The batch volume. 

(2) The batch number assigned using 

the batch numbering conventions under 

§ 80.65(d)(3) and the appropriate 

designation under § 80.598. 

(3) The date of production or import. 

(4) For each batch provide the 

information specified in paragraph (a)(1) 

of this section. 

(5) The sulfur content and cetane and 

aromatics content of the fuel. 

(6) Whether the batch was dyed with 

visible evidence of dye solvent red 164 

before leaving the refinery or import 

facility or was undyed. 

(7) Whether the batch was marked 

with marker solvent yellow 124 before 

leaving the refinery or import facility or 

was unmarked. 

(e) Additional reporting requirements 

for importers. Importers of NRLM diesel 

fuel are subject to the following 

additional requirements: 

(1) The reporting requirements under 

§ 80.620, if applicable. 

(2) Importers must exclude certified 

DFR–Diesel from calculations under this 

section. 

(f) Report submission. Any report 

required by this section must be—

(1) On forms and following 

procedures specified by the 

Administrator of EPA; 

(2) 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 

(3) Except for small refiners subject to 

§ 80.554(d), submitted to EPA no later 

than August 31 each year for the prior 

annual compliance period. Small 

refiners subject to the provisions of 

§ 80.554(d), reports must be submitted 

August 31 for the previous reporting 

period. 

(4) With the exception of reports 

required under paragraph (b)(3) of this 

section, no reports will be required 

under this section after August 31, 2014.

■ 63. A center heading is added after 

§ 80.604 to read as follows: 

Exemptions

■ 64. A new § 80.606 is added to read as 

follows:

§ 80.606 What national security exemption 

applies to distillate fuel? 

(a) The motor vehicle diesel fuel 

standards of § 80.520(a)(1), (a)(2), and 

(c) and the nonroad, locomotive or 

marine diesel fuel standards of 

§ 80.510(a), (b), and (c) do not apply to 

distillate fuel that is produced, 

imported, sold, offered for sale, 

supplied, offered for supply, stored, 

dispensed, or transported for use in—

(1) Tactical military motor vehicles or 

tactical military nonroad engines, 

vehicles or equipment, including 

locomotive and marine, having an EPA 

national security exemption from the 

motor vehicle emissions standards 

under 40 CFR 85.1708, or from the 

nonroad engine emission standards 

under 40 CFR part 89, 40 CFR part 92, 

40 CFR part 94, or 40 CFR part 1068; 

and 

(2) Tactical military motor vehicles or 

tactical military nonroad engines, 

vehicles or equipment, including 

locomotive and marine, that are not 

subject to a national security exemption 

from vehicle or engine emissions 

standards as described in paragraph 

(a)(1) of this section but, for national 

security purposes (for purposes of 

readiness for deployment oversees), 

need to be fueled on the same fuel as the 

vehicles, engines, or equipment for 

which EPA has granted such a national 

security exemption. 

(b) The exempt fuel must meet the 

following conditions: 

(1) It must be accompanied by 

product transfer documents as required 

under § 80.590; 

(2) It must be segregated from nonexempt MVNRLM diesel fuel at all 

points in the distribution system; 

(3) It must be dispensed from a fuel 

pump stand, fueling truck or tank that 

is labeled with the appropriate 

designation of the fuel, such as ‘‘JP–5’’

or ‘‘JP–8’’; and 

39202 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(4) It may not be used in any motor 

vehicles or nonroad engines, equipment 

or vehicles, including locomotive and 

marine, other than the vehicles, engines, 

and equipment referred to in paragraph 

(a) of this section.

■ 65. A new § 80.607 is added to read as 

follows:

§ 80.607 What are the requirements for 

obtaining an exemption for diesel fuel used 

for research, development or testing 

purposes? 

(a) Written request for a research and 

development exemption. Any person 

may receive an exemption from the 

provisions of this subpart for diesel fuel 

used for research, development, or 

testing purposes by submitting the 

information listed in paragraph (c) of 

this section to:

Director, Transportation and Regional 

Programs Division (6406J), U.S. 

Environmental Protection Agency, 1200 

Pennsylvania Avenue, NW., Washington, 

DC 20460 (postal mail); or

Director, Transportation and Regional 

Programs Division, U.S. Environmental 

Protection Agency, 1310 L Street, NW., 

6th floor, Washington, DC 20005 

(express mail/courier); and

Director, Air Enforcement Division 

(2242A), U.S. Environmental Protection 

Agency, Ariel Rios Building, 1200 

Pennsylvania Avenue, NW., Washington, 

DC 20460.

(b) Criteria for a research and 

development exemption. For a research 

and development 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 a research and 

development 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 research 

and development 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 §§ 80.520 and 80.521 for motor 

vehicle diesel fuel or § 80.510 for NRLM 

diesel fuel. 

(4) With regard to control, a 

demonstration that the program affords 

EPA a monitoring capability, including 

the following: 

(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 research and 

development fuel will be segregated 

from motor vehicle diesel fuel or NRLM 

diesel fuel, as applicable, and how fuel 

pumps will be labeled to ensure proper 

use of the research and development 

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 research and development motor 

vehicle diesel fuel must comply with 

requirements of § 80.590(b)(3). 

(2) The research and development 

diesel fuel must be designated by the 

refiner or supplier, as applicable, as 

research and development diesel fuel. 

(3) The research and development 

diesel fuel must be kept segregated from 

non-exempt MVNRLM diesel fuel at all 

points in the distribution system. 

(4) The research and development 

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 purchaserconsumer facility is associated with the 

research and development 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) (42 U.S.C. 7522 

(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 a research and 

development exemption will be deemed 

approved by the earlier of 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 under 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 reapplication consistent will all 

requirements of this section. 

(3) The passage of 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.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39203

(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 or NRLM diesel fuel that is 

subject to a research and development 

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 

this section and the requirements of this 

section.

(g) Notification of completion. The 

party shall notify EPA in writing within 

30 days after completion of the research 

and development program.

■ 66. A new § 80.608 is added to read as 

follows:

§ 80.608 What requirements apply to 

diesel fuel for use in the Territories? 

The sulfur standards of § 80.520(a)(1) 

and (c) related to motor vehicle diesel 

fuel, and of § 80.510(a), (b), and (c) 

related to NRLM diesel fuel, do not 

apply to diesel fuel that is produced, 

imported, sold, offered for sale, 

supplied, offered for supply, stored, 

dispensed, or transported for use in the 

Territories of Guam, American Samoa or 

the Commonwealth of the Northern 

Mariana Islands, provided that such 

diesel fuel is—

(a) Designated by the refiner or 

importer as high sulfur diesel fuel only 

for use in Guam, American Samoa, or 

the Commonwealth of the Northern 

Mariana Islands; 

(b) Used only in Guam, American 

Samoa, or the Commonwealth of the 

Northern Mariana Islands; 

(c) Accompanied by documentation 

that complies with the product transfer 

document requirements of 

§ 80.590(b)(1); and 

(d) Segregated from non-exempt 

MVNRLM diesel fuel at all points in the 

distribution system from the point the 

diesel fuel is designated as exempt fuel 

only for use in Guam, American Samoa, 

or the Commonwealth of the Northern 

Mariana Islands, while the exempt fuel 

is in the United States but outside these 

Territories.

■ 67. Section 80.610 is revised to read as 

follows:

§ 80.610 What acts are prohibited under 

the diesel fuel sulfur program? 

No person shall—

(a) Standard, dye, marker or product 

violation. (1) Produce, import, sell, offer 

for sale, dispense, supply, offer for 

supply, store or transport motor vehicle 

diesel fuel, NRLM diesel fuel, or heating 

oil that does not comply with the 

applicable standards, dye, marking or 

any other product requirements under 

this subpart I and 40 CFR part 69. 

(2) Beginning June 1, 2007, produce, 

import, sell, offer for sale, dispense, 

supply, offer for supply, store or 

transport any diesel fuel for use in 

motor vehicle or nonroad engines that 

contains greater than 0.10 milligrams 

per liter of solvent yellow 124, except 

for 500 ppm sulfur diesel fuel produced 

or imported from June 1, 2010 through 

September 30, 2012 for use only in 

locomotive or marine diesel engines that 

is marked under the provisions of 

§ 80.510(e). 

(3) Beginning June 1, 2007, produce, 

import, sell, offer for sale, dispense, 

supply, offer for supply, store or 

transport heating oil for use in any 

nonroad diesel engine, including any 

locomotive or marine diesel engine. 

(b) Designation and volume balance 

violation. Produce, import, sell, offer for 

sale, dispense, supply, offer for supply, 

store or transport motor vehicle diesel, 

NRLM diesel fuel, heating oil or other 

distillate that does not comply with the 

applicable designation or volume 

balance requirements under §§ 80.598 

and 80.599. 

(c) Additive violation. (1) Produce, 

import, sell, offer for sale, dispense, 

supply, offer for supply, store or 

transport any motor vehicle diesel fuel 

additive or NRLM diesel fuel additive 

for use at a downstream location that 

does not comply with the applicable 

requirements of § 80.521. 

(2) Blend or permit the blending into 

motor vehicle diesel fuel or NRLM 

diesel fuel at a downstream location, or 

use, or permit the use, in motor vehicle 

diesel fuel or NRLM diesel fuel, of any 

additive that does not comply with the 

applicable requirements of § 80.521. 

(d) Used motor oil violation.

Introduce into the fuel system of a 

model year 2007 or later diesel motor 

vehicle or model year 2011 or later 

nonroad diesel engine (except for 

locomotive or marine engines) or other 

nonroad diesel engine certified for the 

use of 15 ppm sulfur content fuel, or 

permit the introduction into the fuel 

system of such vehicle or nonroad 

engine of used motor oil, or used motor 

oil blended with diesel fuel, that does 

not comply with the requirements of 

§ 80.522. 

(e) Improper fuel usage violation. (1) 

Introduce, or permit the introduction of, 

fuel into model year 2007 or later diesel 

motor vehicles, and beginning 

December 1, 2010 into any diesel motor 

vehicle, that does not comply with the 

standards and dye requirements of 

§ 80.520(a) and (b); 

(2) Introduce, or permit the 

introduction of, fuel into any nonroad 

diesel engine (including any locomotive 

or marine diesel engine) that does not 

comply with the applicable standards, 

dye and marking requirements of 

§ 80.510(a), (d), and (e) and § 80.520(b) 

beginning on the following dates: 

(i) This prohibition begins December 

1, 2007 in the areas specified in 

§ 80.510(g)(1) and (g)(2), except as 

specified in paragraph (e)(2)(ii) of this 

section. 

(ii) This prohibition begins December 

1, 2010 in the area specified in 

§ 80.510(g)(2) for NRLM diesel fuel that 

is produced in accordance with a 

compliance plan approved under 

§ 80.554. 

(iii) This prohibition begins December 

1, 2010 in all other areas. 

(3) Introduce, or permit the 

introduction of, fuel into any nonroad 

diesel engine (other than locomotive 

and marine diesel engines) that does not 

comply with the applicable standards, 

dye and marking requirements of 

§ 80.510(b) and (e) beginning on the 

following dates: 

(i) This prohibition begins December 

1, 2010 in the areas specified in 

§ 80.510(g)(1) and (g)(2), except as 

specified paragraph (e)(3)(ii) of this 

section. 

(ii) This prohibition begins December 

1, 2014 in the area specified in 

§ 80.510(g)(2) for NRLM diesel fuel that 

is produced in accordance with a 

compliance plan approved under 

§ 80.554. 

(iii) This prohibition begins beginning 

December 1, 2014 in all other areas.

(4) Introduce, or permit the 

introduction of, fuel into any 

locomotive and marine diesel engine 

which does not comply with the 

applicable standards, dye and marking 

requirements of § 80.510(c) and 

§ 80.510(f) in the following areas 

beginning on the following dates: 

(i) This prohibition begins December 

1, 2012 in the areas specified in 

§ 80.510(g)(1) and (g)(2), except as 

specified in paragraph (e)(4)(ii) of this 

section. 

(ii) This prohibition does not apply in 

the area specified in § 80.510(g)(2) for 

NRLM diesel fuel that is produced in 

accordance with a compliance plan 

approved under § 80.554. 

(iii) This prohibition does not apply 

in any other areas. 

(5) Introduce, or permit the 

introduction of, fuel into any model 

year 2011 or later nonroad diesel engine 

certified for use on 15 ppm sulfur 

39204 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

content fuel, diesel fuel which does not 

comply with the applicable standards, 

dye and marking requirements of 

§ 80.510(b) through (f). 

(f) Cause another party to violate.

Cause another person to commit an act 

in violation of paragraphs (a) through (e) 

of this section. 

(g) Cause violating fuel or additive to 

be in the distribution system. Cause 

motor vehicle diesel fuel, or NRLM 

diesel fuel, to be in the diesel fuel 

distribution system which does not 

comply with the applicable standard, 

dye or marker requirements or the 

product segregation requirements of this 

Subpart I, or cause any diesel fuel 

additive to be in the diesel fuel additive 

distribution system which does not 

comply with the applicable sulfur 

standards under § 80.521.

■ 68. Section 80.611 is revised to read as 

follows:

§ 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? 

(a) Compliance with sulfur, cetane, 

and aromatics standards, dye and 

marker requirements. Compliance with 

the standards, dye, and marker 

requirements in §§ 80.510, 80.511, 

80.520, and 80.521 shall be determined 

based on the level of the applicable 

component or parameter, using the 

sampling methodologies specified in 

§ 80.330(b), as applicable, and an 

approved testing methodology under the 

provisions of §§ 80.580 through 80.586 

for sulfur; § 80.2(w) for cetane index; 

§ 80.2(z) for aromatic content; and 

§ 80.582 for fuel marker. 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 or additive, or motor oil 

to be used in diesel fuel, if the evidence 

or information is relevant to whether 

that level would have been in 

compliance with the standard if the 

regulatory 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 

(a), business records, and commercial 

documents. 

(b) Compliance with other 

requirements. Determination of 

compliance with the requirements and 

prohibitions of this subpart other than 

the standards described in paragraph (a) 

of this section and in §§ 80.510, 80.511, 

80.520, and 80.521, and determination 

of liability for any violation of this 

subpart, 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.

■ 69. Section 80.612 is amended by 

revising paragraph (a) to read as follows:

§ 80.612 Who is liable for violations of this 

subpart? 

(a) Persons liable for violations of 

prohibited acts. (1) Standard, dye, 

marker, additives, used motor oil, 

heating oil, fuel introduction, and other 

product requirement violations. (i) Any 

refiner, importer, distributor, reseller, 

carrier, retailer, wholesale purchaserconsumer who owned, leased, operated, 

controlled or supervised a facility where 

a violation of any provision of 

§ 80.610(a) through (e) occurred, or any 

other person who violates any provision 

of § 80.610(a) through (e), is deemed 

liable for the applicable violation, 

except that distributors who receive 

diesel fuel or distillate from the point 

where it is taxed, dyed or marked, and 

retailers and wholesale purchaserconsumers are not deemed liable for any 

violation of § 80.610(b). 

(ii) Any person who causes another 

person to violate § 80.610(a) through (e) 

is liable for a violation of § 80.610(f). 

(iii) Any refiner, importer, distributor, 

reseller, carrier, retailer, or wholesale 

purchaser-consumer who produced, 

imported, sold, offered for sale, 

dispensed, supplied, offered to supply, 

stored, transported, or caused the 

transportation or storage of, diesel fuel 

or distillate that violates § 80.610(a), is 

deemed in violation of § 80.610(f). 

(iv) Any person who produced, 

imported, sold, offered for sale, 

dispensed, supplied, offered to supply, 

stored, transported, or caused the 

transportation or storage of a diesel fuel 

additive which is used in motor vehicle 

diesel fuel or NRLM diesel fuel that is 

found to violate § 80.610(a), is deemed 

in violation of § 80.610(f). 

(2) Cause violating diesel fuel or 

additive to be in the distribution system.

Any refiner, importer, distributor, 

reseller, carrier, retailer, or wholesale 

purchaser-consumer or any other person 

who owned, leased, operated, controlled 

or supervised a facility from which 

distillate fuel or additive was released 

into the distribution system which does 

not comply with the applicable 

standards, marking or dye requirements 

of this Subpart I is deemed in violation 

of § 80.610(g). 

(3) Branded refiner/importer liability.

Any refiner or importer whose 

corporate, trade, or brand name, or 

whose marketing subsidiary’s corporate, 

trade, or brand name appeared at a 

facility where a violation of § 80.610(a) 

or (b) occurred, is deemed in violation 

of § 80.610(a) or (b), as applicable. 

(4) Carrier causation. In order for a 

distillate fuel or diesel fuel additive 

carrier to be liable under paragraph 

(a)(1)(ii), (a)(1)(iii), or (a)(1)(iv) of this 

section, as applicable, EPA must 

demonstrate, by reasonably specific 

showing by direct or circumstantial 

evidence, that the carrier caused the 

violation. 

(5) Parent corporation. Any parent 

corporation is liable for any violations 

of this subpart that are committed by 

any subsidiary. 

(6) Joint venture. Each partner to a 

joint venture is jointly and severally 

liable for any violation of this subpart 

that occurs at the joint venture facility 

or is committed by the joint venture 

operation.

* * * * *

■ 70. Section 80.613 is amended by 

revising the section heading and 

paragraphs (a) and (d) to read as follows:

§ 80.613 What defenses apply to persons 

deemed liable for a violation of a prohibited 

act under this subpart? 

(a) Presumptive liability defenses. (1) 

Any person deemed liable for a 

violation of a prohibition under 

§ 80.612(a)(1)(i), (a)(1)(iii), (a)(2), or 

(a)(3), will not be deemed in violation 

if the person demonstrates the 

following: 

(i) The violation was not caused by 

the person or the person’s employee or 

agent; 

(ii) Product transfer documents 

account for fuel or additive found to be 

in violation and indicate that the 

violating product was in compliance 

with the applicable requirements when 

it was under the person’s control; 

(iii) The person conducted a quality 

assurance sampling and testing 

program, as described in paragraph (d) 

of this section, except for those persons 

subject to the provisions of paragraph 

(a)(1)(iv), (a)(1)(v), or (a)(1)(vi) of this 

section or § 80.614. A carrier may rely 

on the quality assurance program 

carried out by another party, including 

the party who owns the diesel fuel in 

question, provided that the quality 

assurance program is carried out 

properly. Retailers, wholesale 

purchaser-consumers, and ultimate 

consumers of diesel fuel are not 

required to conduct quality assurance 

programs; 

(iv) For refiners and importers of 

diesel fuel subject to the 15 ppm sulfur 

standard under § 80.510(b) or (c), or 

§ 80.520(a)(1), or the 500 ppm sulfur 

standard under § 80.510(a) or 80.520(c), 

test results that—

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39205

(A) Were conducted according to an 

appropriate test methodology approved 

or designated under §§ 80.580 through 

80.586, 80.2(w), or 80.2(z), as 

appropriate; and 

(B) Establish that, when it left the 

party’s control, the fuel did not violate 

the sulfur, cetane or aromatics standard, 

or the dye or marking provisions of 

§§ 80.510 or 80.511, as applicable; 

(v) For any truck loading terminal or 

any other person who delivers heating 

oil for delivery to the ultimate consumer 

and is subject to the requirement to 

mark heating oil or LM diesel fuel under 

§ 80.510(d) through (f), data which 

demonstrates that when it left the truck 

loading terminal or other facility, the 

concentration of marker solvent yellow 

124 was equal to or greater than six 

milligrams per liter. In lieu of testing for 

marker solvent yellow 124 

concentration, evidence may be 

presented of an oversight program, 

including records of marker inventory, 

purchase and additization, and records 

of periodic inspection and calibration of 

additization equipment that ensures that 

marker is added to heating oil or LM 

diesel fuel, as applicable, under 

§ 80.510(d) through (f) in the required 

concentration; 

(vi) Except as provided in § 80.614, 

for any person who, at a downstream 

location, blends a diesel fuel additive 

subject to the requirements of 

§ 80.521(b) into motor vehicle diesel 

fuel or NRLM diesel fuel subject to the 

15 ppm sulfur standard under 

§ 80.520(a) or § 80.510(b) or (c), except 

a person who blends additives into fuel 

tanker trucks at a truck loading rack 

subject to the provisions of paragraph 

(d)(2) of this section, test results which 

are conducted subsequent to the 

blending of the additive into the fuel, 

and which comply with the 

requirements of paragraphs (a)(1)(iv)(A) 

and (B) of this section; and 

(vii) Any person deemed liable for a 

designation or volume balance 

provisions violation under § 80.610(b) 

and 80.612(a) will not be deemed in 

violation if the person demonstrates, 

through product transfer documents, 

records, reports and other evidence that 

the diesel fuel or distillate was properly 

designated and volume balance 

requirements were met. 

(2) Any person deemed liable for a 

violation under § 80.612(a)(1)(iv), in 

regard to a diesel fuel additive subject 

to the requirements of § 80.521(a), will 

not be deemed in violation if the person 

demonstrates that—

(i) Product transfer document(s) 

account for the additive in the fuel 

found to be in violation, which comply 

with the requirements under § 80.591(a), 

and indicate that the additive was in 

compliance with the applicable 

requirements while it was under the 

party’s control; and 

(ii) For the additive’s manufacturer or 

importer, test results which accurately 

establish that, when it left the party’s 

control, the additive in the diesel fuel 

determined to be in violation did not 

have a sulfur content greater than or 

equal to 15 ppm. 

(A) Analysis of the additive sulfur 

content pursuant to this paragraph (a)(2) 

may be conducted at the time the batch 

was manufactured or imported, or on a 

sample of that batch which the 

manufacturer or importer retains for 

such purpose for a minimum of two 

years from the date the batch was 

manufactured or imported. 

(B) After two years from the date the 

additive batch was manufactured or 

imported, the additive manufacturer or 

importer is no longer required to retain 

samples for the purpose of complying 

with the testing requirements of this 

paragraph (a)(2). 

(C) The analysis of the sulfur content 

of the additive must be conducted 

pursuant to the requirements of 

§ 80.580. 

(3) Any person who is deemed liable 

for a violation under § 80.612(a)(1)(iv) 

with regard to a diesel fuel additive 

subject to the requirements of 

§ 80.521(b), will not be deemed in 

violation if the person demonstrates 

that—

(i) The violation was not caused by 

the party or the party’s employee or 

agent; 

(ii) Product transfer document(s) 

which comply with the additive 

information requirements under 

§ 80.591(b), account for the additive in 

the fuel found to be in violation, and 

indicate that the additive was in 

compliance with the applicable 

requirements while it was under the 

party’s control; and 

(iii) For the additive’s manufacturer or 

importer, test results which accurately 

establish that, when it left the party’s 

control, the additive in the diesel fuel 

determined to be in violation was in 

conformity with the information on the 

additive product transfer document 

pursuant to the requirements of 

§ 80.591(b). The testing procedures 

applicable under paragraph (a)(2) of this 

section, also apply under this paragraph 

(a)(3).

* * * * *

(d) Quality assurance and testing 

program. To demonstrate an acceptable 

quality assurance program under 

paragraph (a)(1)(iii) of this section, a 

person must present evidence of the 

following: 

(1) A periodic sampling and testing 

program to ensure the diesel fuel or 

additive the person sold, dispensed, 

supplied, stored, or transported, meets 

the applicable standards and 

requirements, including the 

requirements relating to the presence of 

marker solvent yellow 124. 

(2) For those parties who, at a 

downstream location, blend diesel fuel 

additives subject to the requirements of 

§ 80.521(b) into fuel trucks at a truck 

loading rack, the periodic sampling and 

testing program required under this 

paragraph (d) must ensure, by taking 

into account the greater risk of 

noncompliance created through use of a 

high sulfur additive, that the diesel fuel 

into which the additive was blended 

meets the applicable standards 

subsequent to the blending. 

(3) On each occasion when diesel fuel 

or additive is found not in compliance 

with the applicable standard: 

(i) The person immediately ceases 

selling, offering for sale, dispensing, 

supplying, offering for supply, storing or 

transporting the non-complying 

product. 

(ii) The person promptly remedies the 

violation and the factors that caused the 

violation (for example, by removing the 

non-complying product from the 

distribution system until the applicable 

standard is achieved and taking steps to 

prevent future violations of a similar 

nature from occurring). 

(4) For any carrier who transports 

diesel fuel or additive in a tank truck, 

the quality assurance program required 

under this paragraph (d) need not 

include its own periodic sampling and 

testing of the diesel fuel or additive in 

the tank truck, but in lieu of such tank 

truck sampling and testing, the carrier 

shall demonstrate evidence of an 

oversight program for monitoring 

compliance with the requirements of 

this subpart relating to the transport or 

storage of such product by tank truck, 

such as appropriate guidance to drivers 

regarding compliance with the 

applicable sulfur standard, product 

segregation and product transfer 

document requirements, and the 

periodic review of records received in 

the ordinary course of business 

concerning diesel fuel or additive 

quality and delivery.

■ 71. Section 80.614 is revised to read as 

follows:

§ 80.614 What are the alternative defense 

requirements in lieu of § 80.613(a)(1)(vi) for 

static dissipater additives exceeding the 15 

ppm sulfur standard but that contribute less 

than 0.05 ppm sulfur when added to 

MVNRLM diesel fuel? 

Any person who blends a MVNRLM 

diesel fuel additive package into 

39206 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

MVNRLM diesel fuel subject to the 15 

ppm sulfur standards of § 80.510(b) or 

(c) or § 80.520(a) which contains a static 

dissipater additive that has a sulfur 

content greater than 15 ppm but whose 

contribution to the sulfur content of the 

MVNRLM diesel fuel is less than 0.05 

ppm at its maximum recommended 

concentration, and which contains no 

other additives with a sulfur content 

greater than 15 ppm must establish all 

the following in order to use this section 

as an alternative to the defense element 

under § 80.613(a)(1)(vi): 

(a)(1) The blender of the static 

dissipater additive package has a sulfur 

content test result for the MVNRLM 

diesel fuel prior to blending of the 

additive that indicates that the additive 

package, when added, will not cause the 

MVNRLM diesel fuel sulfur content to 

exceed 15 ppm sulfur. 

(2) In cases where the storage tank 

that contains MVNRLM diesel fuel prior 

to additization contains multiple fuel 

batches, the blender of the static 

dissipater additive package must have 

sulfur test results on each batch of 

MVNRLM diesel fuel that was added to 

the storage tank during the current and 

previous VAR periods, which indicates 

that the additive package, when added 

to the component MVNRLM diesel fuel 

batch in the storage tank with the 

highest sulfur level would not cause 

that component batch to exceed 15 ppm 

sulfur. 

(b) The volumetric additive 

reconciliation (VAR) standard is 

attained as determined under the 

provisions of this section. The VAR 

reconciliation standard is attained when 

the actual concentration of a static 

dissipater additive package used per the 

VAR formula record under paragraph (f) 

of this section is less than the 

concentration that would have caused 

any batch of MVNRLM diesel fuel to 

exceed a sulfur content of 15 ppm given 

the maximum sulfur test result on any 

MVNRLM diesel fuel batch described in 

paragraph (a) of this section that is 

additized with the static dissipater 

additive package during the VAR 

period. 

(c) The product transfer document 

complies with the applicable sulfur 

information requirements of § 80.591. 

(d) If more than one static dissipater 

additive package is used during a VAR 

period, then a separate VAR formula 

record must be created for MVNRLM 

diesel fuel additized for each of the 

static dissipater additive packages used. 

In such cases, the amount of the each 

static dissipater additive package used 

must be accurately and separately 

measured, either through the use of a 

separate storage tank, a separate meter, 

or some other measurement system that 

is able to accurately distinguish its use. 

(e) Recorded volumes of MVNRLM 

diesel fuel and static dissipater additive 

package must be expressed to the 

nearest gallon (or smaller units), except 

that static dissipater additive package 

volumes of five gallons or less must be 

expressed to the nearest tenth of a 

gallon (or smaller units). However, if the 

blender’s equipment cannot accurately 

measure to the nearest tenth of a gallon, 

then such volumes must be rounded 

upward to the next higher gallon for 

purposes of determining compliance 

with this section. 

(f) Each VAR formula record must 

also contain the following information: 

(1) Automated blending facilities. In 

the case of an automated static 

dissipater additive package blending 

facility, for each VAR period, for each 

static dissipater additive package 

storage system, and each static 

dissipater additive package in that 

storage system, the following must be 

recorded: 

(i)(A) The manufacturer and 

commercial identifying name of the 

static dissipater additive package being 

reconciled, the maximum recommended 

treatment level, the potential 

contribution to the sulfur content of the 

finished fuel that might result when the 

additive package is used at its maximum 

recommended treatment level, the 

intended treatment level, and the 

contribution to the sulfur content of the 

finished fuel that would result when the 

additive package is used at its intended 

treatment level. The intended treatment 

level is the treatment level that the 

additive injection equipment is set to.

(B) The maximum recommended 

treatment level and the intended 

treatment level must be expressed in 

terms of gallons of static dissipater 

additive package per thousand gallons 

of MVNRLM diesel fuel, and expressed 

to four significant figures. If the static 

dissipater additive package storage 

system which is the subject of the VAR 

formula record is a proprietary system 

under the control of a customer, this fact 

must be indicated on the record. 

(ii) The total volume of static 

dissipater additive package blended into 

MVNRLM diesel fuel, in accordance 

with one of the following methods, as 

applicable. 

(A) For a facility which uses in-line 

meters to measure static dissipater 

additive package usage, the total volume 

of static dissipater additive package 

measured, together with supporting data 

which includes one of the following: the 

beginning and ending meter readings for 

each meter being measured, the metered 

batch volume measurements for each 

meter being measured, or other 

comparable metered measurements. The 

supporting data may be supplied on the 

VAR formula record or in the form of 

computer printouts or other comparable 

VAR supporting documentation. 

(B) For a facility which uses a gauge 

to measure the inventory of the static 

dissipater additive package storage tank, 

the total volume of static dissipater 

additive package shall be calculated 

from the following equation:

Static dissipater additive package Volume = 

(A)¥(B)+(C) ¥ (D)

Where: 

A = Initial static dissipater additive package 

inventory of the tank 

B = Final static dissipater additive package 

inventory of the tank 

C = Sum of any additions to static dissipater 

additive package inventory 

D = Sum of any withdrawals from static 

dissipater additive package inventory for 

purposes other than the additization of 

MVNRLM diesel fuel.

(C) The value of each variable in the 

equation in paragraph (f)(1)(ii)(B) of this 

section must be separately recorded on 

the VAR formula record. In addition, a 

list of each static dissipater additive 

package addition included in variable C 

and a list of each static dissipater 

additive package withdrawal included 

in variable D must be provided, either 

on the formula record or as VAR 

supporting documentation. 

(iii) The total volume of MVNRLM 

diesel fuel to which static dissipater 

additive package has been added, 

together with supporting data which 

includes one of the following: the 

beginning and ending meter 

measurements for each meter being 

measured, the metered batch volume 

measurements for each meter being 

measured, or other comparable metered 

measurements. The supporting data may 

be supplied on the VAR formula record 

or in the form of computer printouts or 

other comparable VAR supporting 

documentation. 

(iv) The actual static dissipater 

additive package concentration, 

calculated as the total volume of static 

dissipater additive package added 

(pursuant to paragraph (f)(1)(ii) of this 

section), divided by the total volume of 

MVNRLM diesel fuel (pursuant to 

paragraph (f)(1)(iii) of this section). The 

concentration must be calculated and 

recorded to 4 significant figures. 

(v) A list of each static dissipater 

additive package concentration rate set 

for the static dissipater additive package 

that is the subject of the VAR record, 

together with the date and description 

of each adjustment to any initially set 

concentration. The concentration 

adjustment information may be 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39207

supplied on the VAR formula record or 

in the form of computer printouts or 

other comparable VAR supporting 

documentation. No concentration 

setting is permitted above the maximum 

recommended concentration supplied 

by the additive manufacturer, except as 

described in paragraph (f)(1)(vii) of this 

section. 

(vi) The dates of the VAR period, 

which shall be no longer than thirty-one 

days. If the VAR period is 

contemporaneous with a calendar 

month, then specifying the month will 

fulfill this requirement; if not, then the 

beginning and ending dates and times of 

the VAR period must be listed. The 

times may be supplied on the VAR 

formula record or in supporting 

documentation. Any adjustment to any 

static dissipater additive package 

concentration rate initially set in the 

VAR period shall terminate that VAR 

period and initiate a new VAR period, 

except as provided in paragraph 

(f)(1)(vii) of this section. 

(vii) The concentration setting for a 

static dissipater additive package 

injector may be changed from the 

concentration initially set in the VAR 

period without terminating that VAR 

period, provided that: 

(A) The purpose of the change is to 

correct a batch under-additization prior 

to the end of the VAR period and prior 

to the transfer of the batch to another 

party, or to correct an equipment 

malfunction where there has been no 

over-additization of the additive; 

(B) The concentration is immediately 

returned after the correction to a 

concentration that fulfills the 

requirements of this paragraph (f);

(C) The blender creates and maintains 

documentation establishing the date and 

adjustments of the correction; and 

(D) If the correction is initiated only 

to rectify an equipment malfunction, 

and the amount of static dissipater 

additive package used in this procedure 

is not added to MVNRLM diesel fuel 

within the compliance period, then this 

amount is subtracted from the static 

dissipater additive package volume 

listed on the VAR formula record. In 

such a case, the addition of this amount 

of static dissipater additive must be 

reflected in the following VAR period. 

(viii) The measured sulfur level for 

each batch of MVNRLM diesel fuel to 

which a static dissipater additive 

package is added during each VAR 

period. In cases where the storage tank 

that contains MVNRLM diesel fuel prior 

to additization contains multiple fuel 

batches, a measured sulfur level on each 

batch added to the storage tank during 

the current and previous VAR periods 

must be recorded. 

(2) Non-automated facilities. In the 

case of a facility in which hand 

blending or any other non-automated 

method is used to blend static dissipater 

additive packages, for each static 

dissipater additive package and for each 

batch of MVNRLM diesel fuel to which 

the static dissipater additive package is 

being added, the following shall be 

recorded: 

(i) The manufacturer and commercial 

identifying name of the static dissipater 

additive package being reconciled, the 

maximum recommended treatment 

level, the potential contribution to the 

sulfur content of the finished fuel that 

might result when the fuel is used at its 

maximum recommended treatment 

level, the intended treatment level, and 

the contribution to the sulfur content of 

the finished fuel that would result when 

the additive package is used at its 

intended treatment level. 

(A) The maximum recommended 

treatment level and the intended 

treatment level must be expressed in 

terms of gallons of static dissipater 

additive package per thousand gallons 

of MVNRLM diesel fuel, and expressed 

to four significant figures. 

(B) If the static dissipater additive 

package storage system which is the 

subject of the VAR formula record is a 

proprietary system under the control of 

a customer, this fact must be indicated 

on the record. 

(ii) The date of the additization that 

is the subject of the VAR formula 

record. 

(iii) The volume of added static 

dissipater additive package. 

(iv) The volume of the MVNRLM 

diesel fuel to which the static dissipater 

additive package has been added. 

(v) The brand (if known) of MVNRLM 

diesel fuel. 

(vi) The actual static dissipater 

additive package concentration, 

calculated as the volume of added static 

dissipater additive package (pursuant to 

paragraph (f)(1)(ii)(B) of this section), 

divided by the volume of MVNRLM 

diesel fuel (pursuant to paragraph 

(f)(1)(iii) of this section). The 

concentration must be calculated and 

recorded to four significant figures. 

(vii) The measured sulfur level for 

each batch of MVNRLM diesel fuel to 

which a static dissipater additive 

package is added during each VAR 

period. In cases where the storage tanks 

that contains MVNRLM diesel fuel prior 

to additization contains multiple fuel 

batches, a measured sulfur level on each 

batch added to the storage tank during 

the current and previous VAR periods 

must be recorded. 

(3) VAR formula records. Every VAR 

formula record created pursuant to 

paragraphs (f)(1) and (f)(2) of this 

section shall contain the following: 

(i) The signature of the creator of the 

VAR record; 

(ii) The date of the creation of the 

VAR record; and 

(iii) A certification of correctness by 

the creator of the VAR record. 

(4) Electronically-generated VAR 

formula and supporting records. (i) 

Electronically-generated records are 

acceptable for VAR formula records and 

supporting documentation (including 

PTDs), provided that they are complete, 

accessible, and easily readable. VAR 

formula records must also be stored 

with access and audit security, which 

must restrict to a limited number of 

specified people those who have the 

ability to alter or delete the records. In 

addition, parties maintaining records 

electronically must make available to 

EPA the hardware and software 

necessary to review the records. 

(ii) Electronically-generated VAR 

formula records may use an electronic 

user identification code to satisfy the 

signature requirements of paragraph 

(f)(3)(i) of this section, provided that: 

(A) The use of the identification is 

limited to the record creator; and 

(B) A paper record is maintained, 

which is signed and dated by the VAR 

formula record creator, acknowledging 

that the use of that particular user ID on 

a VAR formula record is equivalent to 

his/her signature on the document. 

(5) Calibration requirements for 

automated blending facilities.

Automated static dissipater additive 

package blenders must calibrate their 

static dissipater additive package 

equipment at least once in each 

calendar half year, with the acceptable 

calibrations being no less than one 

hundred twenty days apart, except that 

calibrations may be closer in time so 

long as at least two calibrations meet the 

requirements to be in separate halves of 

the calendar year and no less than 120 

days apart. Equipment recalibration is 

also required each time the static 

dissipater additive package is changed, 

unless written documentation indicates 

that the new static dissipater additive 

package has the same viscosity as the 

previous static dissipater additive 

package. Static dissipater package 

change calibrations may be used to 

satisfy the semiannual requirement 

provided that the calibrations occur in 

the appropriate half calendar year and 

are no less than one hundred twenty 

days apart. 

(6) Additional VAR documentation.

The following VAR supporting 

documentation must also be created and 

maintained: 

39208 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(i) For all automated static dissipater 

additive package blending facilities, 

documentation reflecting performance 

of the calibrations required by 

paragraph (f)(5) of this section, and any 

associated adjustments of the automated 

static dissipater additive package 

injection equipment;

(ii) For all static dissipater additive 

package blending facilities, product 

transfer documents for all static 

dissipater additive packages, and static 

dissipater-additized MVNRLM diesel 

fuel transferred into or out of the 

facility; 

(iii) For all automated static dissipater 

additive package blending facilities, 

documentation establishing the brands 

(if known) of the MVNRLM diesel fuel 

which is the subject of the VAR formula 

record; and 

(iv) For all hand blending static 

dissipater additive package blenders, 

the documentation, if in the party’s 

possession, supporting the volumes of 

MVNRLM diesel fuel and static 

dissipater additive package reported on 

the VAR formula record. 

(7) Document retention and 

availability. All static dissipater 

additive package blenders shall retain 

the documents required under this 

section for a period of five years from 

the date the VAR formula records and 

supporting documentation are created, 

and shall deliver them upon request to 

the EPA Administrator or the 

Administrator’s authorized 

representative. 

(i) Except as provided in paragraph 

(f)(7)(iii) of this section, automated 

static dissipater additive package 

blender facilities and hand-blender 

facilities which are terminals, which 

physically blend static dissipater 

additive packages into MVNRLM diesel 

fuel, must make immediately available 

to EPA, upon request, the preceding 

twelve months of VAR formula records 

plus the preceding two months of VAR 

supporting documentation. 

(ii) Except as provided in paragraph 

(f)(7)(iii) of this section, other handblending static dissipater additive 

package facilities which physically 

blend static dissipater additive package 

into MVNRLM diesel fuel must make 

immediately available to EPA, upon 

request, the preceding two months of 

VAR formula records and VAR 

supporting documentation. 

(iii) Facilities which have centrally 

maintained records at other locations, or 

have customers who maintain their own 

records at other locations for their 

proprietary static dissipater additive 

package injection systems, and which 

can document this fact to the Agency, 

may have until the start of the next 

business day after the EPA request to 

supply VAR supporting documentation, 

or longer if approved by the Agency. 

(iv) In this paragraph (f)(7), the term 

‘‘immediately available’’ means that the 

records must be provided, electronically 

or otherwise, within approximately one 

hour of EPA’s request, or within a 

longer time frame as approved by EPA.

■ 72. A new § 80.615 is added to read as 

follows:

§ 80.615 What penalties apply under this 

subpart? 

(a) Any person liable for a violation 

under § 80.612 is subject to civil 

penalties as specified in section 205 of 

the Clean Air Act (42 U.S.C. 7524) for 

every day of each such violation and the 

amount of economic benefit or savings 

resulting from each violation. 

(b)(1) Any person liable under 

§ 80.612(a)(1) for a violation of an 

applicable standard or requirement 

under this Subpart I or for causing 

another party to violate such standard or 

requirement, is subject to a separate day 

of violation for each and every day the 

non-complying diesel fuel remains any 

place in the distribution system. 

(2) Any person liable under 

§ 80.612(a)(2) for causing motor vehicle 

diesel fuel, NRLM diesel fuel, heating 

oil, or other distillate fuel to be in the 

distribution system which does not 

comply with an applicable standard or 

requirement of this Subpart I is subject 

to a separate day of violation for each 

and every day that the non-complying 

diesel fuel remains any place in the 

diesel fuel distribution system. 

(3) Any person liable under 

§ 80.612(a)(1) for blending into diesel 

fuel an additive violating the applicable 

sulfur standard pursuant to the 

requirements of § 80.521(a) or (b), as 

applicable, or of causing another party 

to so blend such an additive, is subject 

to a separate day of violation for each 

and every day the motor vehicle diesel 

fuel or NRLM diesel fuel into which the 

noncomplying additive was blended, 

remains any place in the fuel 

distribution system. 

(4) For purposes of this paragraph (b) 

of this section, the length of time the 

motor vehicle diesel fuel, NRLM diesel 

fuel, heating oil or other distillate fuel 

in question remained in the diesel fuel 

distribution system is deemed to be 25 

days, unless a person subject to liability 

or EPA demonstrates by reasonably 

specific showings, by direct or 

circumstantial evidence, that the noncomplying motor vehicle, NR or NRLM 

diesel fuel, heating oil or distillate fuel 

remained in the distribution system for 

fewer than or more than 25 days. 

(c) Any person liable under 

§ 80.612(b) for failure to meet, or 

causing a failure to meet, a provision of 

this subpart is liable for a separate day 

of violation for each and every day such 

provision remains unfulfilled.

■ 73. Section 80.620 is amended by 

revising the section heading and 

paragraphs (a), (b), (c), (d)(2), (d)(3)(i)(D), 

(e)(1), (f)(2)(ii) introductory text, 

(f)(3)(ii), (g), (h) introductory text, (h)(2), 

(i)(1)(v), (i)(1)(vi), (i)(5), (j), (k)(1), (k)(3), 

(n), (o), (p), (q), (r), and (s) to read as 

follows:

§ 80.620 What are the additional 

requirements for diesel fuel or distillates 

produced by foreign refineries subject to a 

temporary refiner compliance option, 

hardship provisions, or motor vehicle or 

NRLM diesel fuel credit provisions? 

(a) Definitions. (1) A foreign refinery 

is a refinery that is located outside the 

United States, the Commonwealth of 

Puerto Rico, the Virgin Islands, Guam, 

American Samoa, and the 

Commonwealth of the Northern Mariana 

Islands (collectively referred to in this 

section as ‘‘the United States’’). 

(2) A foreign refiner is a person who 

meets the definition of refiner under 

§ 80.2(i) for a foreign refinery. 

(3) A diesel fuel program foreign 

refiner (‘‘DFR’’) is a foreign refiner that 

has been approved by EPA for 

participation in any motor vehicle 

diesel fuel or NRLM diesel fuel 

provision of § 80.530 through 80.533, or 

§§ 80.535, 80.536, 80.540, 80.552, 

80.553, 80.554, 80.560 or 80.561 

(collectively referred to as ‘‘diesel 

foreign refiner program’’). 

(4) ‘‘DFR-Diesel’’ means diesel fuel or 

distillate fuel as applicable under 

subpart I of this part produced at a DFR 

refinery that is imported into the United 

States.

(5) ‘‘Non-DFR-Diesel’’ means diesel 

fuel or distillate fuel that is produced at 

a foreign refinery that has not been 

approved as a DFR foreign refiner, 

diesel fuel produced at a DFR foreign 

refinery that is not imported into the 

United States, and diesel fuel produced 

at a DFR foreign refinery during a period 

when the foreign refiner has opted to 

not participate in the DFR-Diesel foreign 

refiner program under paragraph (c)(3) 

of this section. 

(6) ‘‘Certified DFR-Diesel’’ means 

DFR-Diesel the foreign refiner intends to 

include in the foreign refinery’s 

compliance calculations under any 

provisions of § 80.530 through 80.533, 

or §§ 80.535, 80.536, 80.540, 80.552, 

80.553, 80.554, 80.560 or 80.561 and 

does include in these compliance 

calculations when reported to EPA. 

(7) ‘‘Non-Certified DFR-Diesel’’ means 

DFR-Diesel fuel that a DFR foreign 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39209

refiner imports to the United States that 

is not Certified DFR-Diesel. 

(b) Baseline. For any foreign refiner to 

obtain approval under the diesel foreign 

refiner program of this subpart for any 

refinery, it must apply for approval 

under the applicable provisions of this 

subpart. To obtain approval the refiner 

is required, as applicable, to 

demonstrate a volume baseline under 

subpart I of this part. 

(1) The refiner shall follow the 

procedures, applicable to volume 

baselines and using diesel fuel, or if 

applicable, heating oil, instead of 

gasoline, in §§ 80.91 through 80.93 to 

establish the volume of motor vehicle 

diesel fuel that was produced at the 

refinery and imported into the United 

States during the applicable years for 

purposes of establishing a baseline 

under Subpart I for applicable fuels 

produced for use in the United States. 

(2) In making determinations for 

foreign refinery baselines EPA will 

consider all information supplied by a 

foreign refiner, and in addition may rely 

on any and all appropriate assumptions 

necessary to make such determinations. 

(3) Where a foreign refiner submits a 

petition that is incomplete or 

inadequate to establish an accurate 

baseline, and the refiner fails to correct 

this deficiency after a request for more 

information, EPA will not assign an 

individual refinery baseline. 

(c) General requirements for DFR 

foreign refiners. A foreign refiner of a 

refinery that is approved under the 

diesel foreign refiner program of this 

subpart must designate each batch of 

diesel fuel produced at the foreign 

refinery that is exported to the United 

States as either Certified DFR-Diesel or 

as Non-Certified DFR-Diesel, except as 

provided in paragraph (c)(3) of this 

section. It must further designate all 

Certified DFR-Diesel as provided in 

§ 80.598, and designate whether the 

diesel fuel is dyed or undyed, and for 

heating oil and/or locomotive or marine 

diesel fuel whether it is marked or 

unmarked under § 80.510(d) through (f). 

It must further designate any credits 

earned as either nonroad diesel credits 

or motor vehicle diesel credits. 

(1) In the case of Certified DFR-Diesel, 

the foreign refiner must meet all 

requirements that apply to refiners 

under this subpart, except that: 

(i) For purposes of complying with 

the compliance option requirements of 

§ 80.530, motor vehicle diesel fuel 

produced by a foreign refinery must 

comply separately for each Credit 

Trading Area of import, as defined in 

§ 80.531(a)(5). 

(ii) For purposes of complying with 

the compliance option requirements of 

§ 80.530, credits obtained from any 

other refinery or from any importer 

must have been generated in the same 

Credit Trading Area as the Credit 

Trading Area of import of the fuel for 

which credits are needed to achieve 

compliance. 

(iii) For purposes of generating credits 

under § 80.531, credits shall be 

generated separately by Credit Trading 

Area of import and shall be designated 

by Credit Trading Area of importation 

and by port of importation. 

(2) In the case of Non-Certified DFRDiesel, the foreign refiner shall meet all 

the following requirements: 

(i) The designation requirements in 

this section. 

(ii) The reporting requirements in this 

section and in §§ 80.593, 80.594, 80.601, 

and 80.604. 

(iii) The product transfer document 

requirements in this section and in 

§§ 80.590 and 80.591. 

(iv) The prohibitions in this section 

and in § 80.610. 

(3)(i) Any foreign refiner that has been 

approved to produce diesel fuel subject 

to the diesel foreign refiner program for 

a foreign refinery under this subpart 

may elect to classify no diesel fuel 

imported into the United States as DFRDiesel provided the foreign refiner 

notifies EPA of the election no later than 

60 calendar days prior to the beginning 

of the compliance period. 

(ii) An election under paragraph 

(c)(3)(i) of this section shall be for a 12 

month compliance period and apply to 

all diesel fuel that is produced by the 

foreign refinery that is imported into the 

United States, and shall remain in effect 

for each succeeding year unless and 

until the foreign refiner notifies EPA of 

the termination of the election. The 

change in election shall take effect at the 

beginning of the next annual 

compliance period.

* * * * *

(d) * * * 

(2) On each occasion when any 

person transfers custody or title to any 

DFR-Diesel prior to its being imported 

into the United States, it must include 

the following information as part of the 

product transfer document information 

in this section: 

(i) Designation of the diesel fuel or 

distillate as Certified DFR-Diesel or as 

Non-Certified DFR-Diesel, and if it is 

Certified DFR-Diesel, further designate 

the fuel pursuant to § 80.598, and 

whether the diesel fuel or distillate is 

dyed or undyed, and for heating oil 

whether it is marked or unmarked under 

§ 80.510(d) through (f), and all other 

applicable product transfer document 

information required under § 80.590; 

and 

(ii) The name and EPA refinery 

registration number (under § 80.597) of 

the refinery where the DFR-Diesel was 

produced. 

(3) * * * 

(i) * * * 

(D) In the case of Certified DFRDiesel: 

(1) The sulfur content as determined 

under paragraph (f) of this section, and 

the applicable designations stated in 

paragraph (d)(2)(i) of this section; and

(2) A declaration that the DFR-Diesel 

is being included in the applicable 

compliance calculations required by 

EPA under this subpart.

* * * * *

(e) * * * 

(1)(i) The foreign refiner excludes: 

(A) The volume of diesel from the 

refinery’s compliance report under 

§ 80.593, § 80.601, or § 80.604; and 

(B) In the case of Certified DFR-Diesel, 

the volume of the diesel fuel from the 

compliance report under § 80.593, 

§ 80.601, or § 80.604. 

(ii) The exclusions under paragraph 

(e)(1)(i) of this section shall be on the 

basis of the designations under § 80.598 

and this section, and volumes 

determined under paragraph (f) of this 

section.

* * * * *

(f) * * * 

(2) * * * 

(ii) Determine the sulfur content value 

for each compartment, and if applicable, 

the marker content under § 80.510(d) 

through (f) using an approved 

methodology as specified in §§ 80.580 

through 80.586 by one of the following:

* * * * *

(3) * * * 

(ii) To the Administrator containing 

the information required under 

paragraphs (f)(1) and (f)(2) of this 

section, within thirty days following the 

date of the independent third party’s 

inspection. This report shall include a 

description of the method used to 

determine the identity of the refinery at 

which the diesel fuel or distillate was 

produced, assurance that the diesel fuel 

or distillate remained segregated as 

specified in paragraph (n)(1) of this 

section, and a description of the diesel 

fuel’s movement and storage between 

production at the source refinery and 

vessel loading.

* * * * *

(g) Comparison of load port and port 

of entry testing. (1)(i) Any foreign refiner 

and any United States importer of 

Certified DFR-Diesel shall compare the 

results from the load port testing under 

paragraph (f) of this section, with the 

port of entry testing as reported under 

paragraph (o) of this section, for the 

39210 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

volume of diesel fuel and the sulfur 

content value; except as specified in 

paragraph (g)(1)(ii) of this section. 

(ii) Where a vessel transporting 

Certified DFR-Diesel off loads this diesel 

fuel at more than one United States port 

of entry, and the conditions of 

paragraph (g)(2)(i) of this section are met 

at the first United States port of entry, 

the requirements of paragraph (g)(2) of 

this section do not apply at subsequent 

ports of entry if the United States 

importer obtains a certification from the 

vessel owner that meets the 

requirements of paragraph (s) of this 

section, that the vessel has not loaded 

any diesel fuel or blendstock between 

the first United States port of entry and 

the subsequent port of entry. 

(2)(i) The requirements of this 

paragraph (g)(2) apply if—

(A) The temperature-corrected 

volumes determined at the port of entry 

and at the load port differ by more than 

one percent; or 

(B) The sulfur content value 

determined at the port of entry is higher 

than the sulfur content value 

determined at the load port, and the 

amount of this difference is greater than 

the reproducibility amount specified for 

the port of entry test result by the 

American Society of Testing and 

Materials (ASTM) for a test method used 

for testing the port of entry sample 

under the provisions §§ 80.580 through 

80.586. 

(ii) The United States importer and 

the foreign refiner shall treat the diesel 

fuel as Non-Certified DFR-Diesel, and 

the foreign refiner shall exclude the 

diesel fuel volume from its diesel fuel 

volumes calculations and sulfur 

standard designations under § 80.598. 

(h) Attest requirements. Refiners, for 

each annual compliance period, must 

arrange to have an attest engagement 

performed of the underlying 

documentation that forms the basis of 

any report required under this subpart. 

The attest engagement must comply 

with the procedures and requirements 

that apply to refiners under §§ 80.125 

through 80.130, or other applicable 

attest engagement provisions, and must 

be submitted to the Administrator of 

EPA by August 31 of each year for the 

prior annual compliance period. The 

following additional procedures shall be 

carried out for any foreign refiner of 

DFR-Diesel.

* * * * *

(2) Obtain separate listings of all 

tenders of Certified DFR-Diesel and of 

Non-Certified DFR-Diesel, and obtain 

separate listings of Certified DFR-Diesel 

based on whether it is 15 ppm sulfur 

content diesel fuel, 500 ppm sulfur 

content diesel fuel or high sulfur fuel 

having a sulfur content greater than 500 

ppm (and if so, whether the fuel is 

heating oil, small refiner diesel fuel, 

diesel fuel produced through the use of 

credits, or other applicable designation 

under § 80.598). Agree the total volume 

of tenders from the listings to the diesel 

fuel inventory reconciliation analysis in 

§ 80.128(b), and to the volumes 

determined by the third party under 

paragraph (f)(1) of this section.

* * * * *

(i) * * * 

(1) * * * 

(v) Inspections and audits by EPA 

may include review and copying of any 

documents related to:

(A) Refinery baseline establishment, if 

applicable, including the volume, sulfur 

content and dye and marker status of 

diesel fuel, heating oil and other 

distillates; transfers of title or custody of 

any diesel fuel, heating oil or 

blendstocks whether DFR-Diesel or 

Non-DFR-Diesel, produced at the 

foreign refinery during the period 

January 1, 1998 through the date of the 

refinery baseline petition or through the 

date of the inspection or audit if a 

baseline petition has not been approved, 

and any work papers related to refinery 

baseline establishment; 

(B) The volume and sulfur content of 

DFR-Diesel; 

(C) The proper classification of diesel 

fuel as being DFR-Diesel or as not being 

DFR-Diesel, or as Certified DFR-Diesel 

or as Non-Certified DFR-Diesel, and all 

other relevant designations under this 

subpart, including § 80.598 and this 

section; 

(D) Transfers of title or custody to 

DFR-Diesel; 

(E) Sampling and testing of DFRDiesel; 

(F) Work performed and reports 

prepared by independent third parties 

and by independent auditors under the 

requirements of this section, including 

work papers; and 

(G) Reports prepared for submission 

to EPA, and any work papers related to 

such reports. 

(vi) Inspections and audits by EPA 

may include taking samples of diesel 

fuel, heating oil, other distillates, diesel 

fuel additives or blendstock, dyes and 

chemical markers and interviewing 

employees.

* * * * *

(5) Submitting a petition for 

participation in the diesel foreign 

refiner program or producing and 

exporting diesel fuel or heating oil 

under any such program, and all other 

actions to comply with the requirements 

of this subpart relating to participation 

in any diesel foreign refiner program, or 

to establish an individual refinery motor 

vehicle diesel fuel volume baseline or 

other baseline under subpart I of this 

part (if applicable) constitute actions or 

activities that satisfy the provisions of 

28 U.S.C. 1605(a)(2), but solely with 

respect to actions instituted against the 

foreign refiner, its agents and employees 

in any court or other tribunal in the 

United States for conduct that violates 

the requirements applicable to the 

foreign refiner under this subpart, 

including conduct that violates the 

False Statements Accountability Act of 

1996 (18 U.S.C. 1001) and section 

113(c)(2) of the Clean Air Act (42 U.S.C. 

7413).

* * * * *

(j) Sovereign immunity. By submitting 

a petition for participation in any diesel 

foreign refiner program under this 

subpart (and baseline, if applicable) 

under this section, or by producing and 

exporting diesel fuel to the United 

States under any such program, the 

foreign refiner, and its agents and 

employees, without exception, become 

subject to the full operation of the 

administrative and judicial enforcement 

powers and provisions of the United 

States without limitation based on 

sovereign immunity, with respect to 

actions instituted against the foreign 

refiner, its agents and employees in any 

court or other tribunal in the United 

States for conduct that violates the 

requirements applicable to the foreign 

refiner under this subpart including 

conduct that violates the False 

Statements Accountability Act of 1996 

(18 U.S.C. 1001) and section 113(c)(2) of 

the Clean Air Act (42 U.S.C. 7413). 

(k) * * * 

(1) The foreign refiner shall post a 

bond of the amount calculated using the 

following equation:

Bond = G × $ 0.01

Where:

Bond = amount of the bond in U.S. dollars 

G = the applicable volume baseline under 

Subpart I for diesel fuel or distillate 

produced at the foreign refinery and 

exported to the United States, in gallons.

* * * * *

(3) Bonds posted under this paragraph 

(k) shall—

(i) Be used to satisfy any judicial 

judgment that results from an 

administrative or judicial enforcement 

action for conduct in violation of this 

subpart, including where such conduct 

violates the False Statements 

Accountability Act of 1996 (18 U.S.C. 

1001) and section 113(c)(2) of the Clean 

Air Act (42 U.S.C. 7413); 

(ii) Be provided by a corporate surety 

that is listed in the United States 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39211

Department of Treasury Circular 570 

‘‘Companies Holding Certificates of 

Authority as Acceptable Sureties on 

Federal Bonds;’’ and 

(iii) Include a commitment that the 

bond will remain in effect for at least 

five years following the end of latest 

annual reporting period that the foreign 

refiner produces diesel fuel pursuant to 

the requirements of this subpart.

* * * * *

(n) Prohibitions. (1) No person may 

combine Certified DFR-Diesel with any 

Non-Certified DFR-Diesel or Non–DFRDiesel, and no person may combine 

Certified DFR-Diesel with any Certified 

DFR-Diesel produced at a different 

refinery, until the importer has met all 

the requirements of paragraph (o) of this 

section, except as provided in paragraph 

(e) of this section. No person may 

violate the product segregation 

requirements of § 80.511. 

(2) No foreign refiner or other person 

may cause another person to commit an 

action prohibited in paragraph (n)(1) of 

this section, or that otherwise violates 

the requirements of this section. 

(o) United States importer 

requirements. Any United States 

importer shall meet the following 

requirements: 

(1) Each batch of imported diesel fuel 

and heating oil shall be classified by the 

importer as being DFR-Diesel or as NonDFR-Diesel, and each batch classified as 

DFR-Diesel shall be further classified as 

Certified DFR-Diesel or as Non-Certified 

DFR-Diesel, and each batch of Certified 

DFR-Diesel shall be further designated 

pursuant to the designation 

requirements of § 80.598 and this 

section. 

(2) Diesel fuel shall be classified as 

Certified DFR-Diesel or as Non-Certified 

DFR-Diesel according to the designation 

by the foreign refiner if this designation 

is supported by product transfer 

documents prepared by the foreign 

refiner as required in paragraph (d) of 

this section, unless the diesel fuel is 

classified as Non-Certified DFR-Diesel 

under paragraph (g) of this section. 

Additionally, the importer shall comply 

with all requirements of this subpart 

applicable to importers. 

(3) For each diesel fuel batch 

classified as DFR-Diesel, any United 

States importer shall perform the 

following procedures. 

(i) In the case of both Certified and 

Non-Certified DFR-Diesel, have an 

independent third party: 

(A) Determine the volume of diesel 

fuel in the vessel; 

(B) Use the foreign refiner’s DFRDiesel certification to determine the 

name and EPA-assigned registration 

number of the foreign refinery that 

produced the DFR-Diesel; 

(C) Determine the name and country 

of registration of the vessel used to 

transport the DFR-Diesel to the United 

States; and 

(D) Determine the date and time the 

vessel arrives at the United States port 

of entry. 

(ii) In the case of Certified DFR-Diesel, 

have an independent third party: 

(A) Collect a representative sample 

from each vessel compartment 

subsequent to the vessel’s arrival at the 

United States port of entry and prior to 

off loading any diesel fuel from the 

vessel; 

(B) Obtain the compartment samples; 

and

(C) Determine the sulfur content 

value, and if applicable, the marker 

content, of each compartment sample 

using an appropriate methodology as 

specified in §§ 80.580 through 80.586 by 

the third party analyzing the sample or 

by the third party observing the 

importer analyze the sample. 

(4) Any importer shall submit reports 

within 30 days following the date any 

vessel transporting DFR-Diesel arrives at 

the United States port of entry: 

(i) To the Administrator containing 

the information determined under 

paragraph (o)(3) of this section; and 

(ii) To the foreign refiner containing 

the information determined under 

paragraph (o)(3)(ii) of this section, and 

including identification of the port and 

Credit Trading Area at which the 

product was offloaded. 

(5) Any United States importer shall 

meet the requirements specified in 

§§ 80.510 and 80.520 and all other 

requirements of this subpart, for any 

imported diesel fuel or heating oil that 

is not classified as Certified DFR-Diesel 

under paragraph (o)(2) of this section. 

(p) Truck imports of Certified DFRDiesel produced at a foreign refinery. (1) 

Any refiner whose Certified DFR-Diesel 

is transported into the United States by 

truck may petition EPA to use 

alternative procedures to meet the 

following requirements: 

(i) Certification under paragraph (d)(5) 

of this section; 

(ii) Load port and port of entry 

sampling and testing under paragraphs 

(f) and (g) of this section; 

(iii) Attest under paragraph (h) of this 

section; and 

(iv) Importer testing under paragraph 

(o)(3) of this section. 

(2) These alternative procedures must 

ensure Certified DFR-Diesel remains 

segregated from Non-Certified DFRDiesel and from Non-DFR-Diesel until it 

is imported into the United States. The 

petition will be evaluated based on 

whether it adequately addresses the 

following: 

(i) Provisions for monitoring pipeline 

shipments, if applicable, from the 

refinery, that ensure segregation of 

Certified DFR-Diesel from that refinery 

from all other diesel fuel; 

(ii) Contracts with any terminals and/

or pipelines that receive and/or 

transport Certified DFR-Diesel, that 

prohibit the commingling of Certified 

DFR-Diesel with any of the following: 

(A) Other Certified DFR-Diesel from 

other refineries. 

(B) All Non-Certified DFR-Diesel. 

(C) All Non-DFR-Diesel. 

(D) All diesel fuel or heating oil 

products required to be segregated 

under this subpart; 

(iii) Procedures for obtaining and 

reviewing truck loading records and 

United States import documents for 

Certified DFR-Diesel to ensure that such 

diesel fuel is only loaded into trucks 

making deliveries to the United States; 

(iv) Attest procedures to be conducted 

annually by an independent third party 

that review loading records and import 

documents based on volume 

reconciliation, or other criteria, to 

confirm that all Certified DFR-Diesel 

remains segregated throughout the 

distribution system and is only loaded 

into trucks for import into the United 

States. 

(3) The petition required by this 

section must be submitted to EPA along 

with the application for temporary 

refiner relief individual refinery diesel 

sulfur standard under this subpart. 

(q) Withdrawal or suspension of a 

foreign refinery’s temporary refinery 

flexibility program approval. EPA may 

withdraw or suspend a diesel refiner 

baseline or standard approval for a 

foreign refinery where—

(1) A foreign refiner fails to meet any 

requirement of this section; 

(2) A foreign government fails to 

allow EPA inspections as provided in 

paragraph (i)(1) of this section; 

(3) A foreign refiner asserts a claim of, 

or a right to claim, sovereign immunity 

in an action to enforce the requirements 

in this subpart; or 

(4) A foreign refiner fails to pay a civil 

or criminal penalty that is not satisfied 

using the foreign refiner bond specified 

in paragraph (k) of this section. 

(r) Early use of a foreign refiner motor 

vehicle diesel fuel baseline. (1) A foreign 

refiner may begin using an individual 

refinery baseline under subpart I of this 

part before EPA has approved the 

baseline, provided that: 

(i) A baseline petition has been 

submitted as required in paragraph (b) 

of this section; 

39212 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(ii) EPA has made a provisional 

finding that the baseline petition is 

complete; 

(iii) The foreign refiner has made the 

commitments required in paragraph (i) 

of this section; 

(iv) The persons who will meet the 

independent third party and 

independent attest requirements for the 

foreign refinery have made the 

commitments required in paragraphs 

(f)(3)(iii) and (h)(7)(iii) of this section; 

and 

(v) The foreign refiner has met the 

bond requirements of paragraph (k) of 

this section. 

(2) In any case where a foreign refiner 

uses an individual refinery baseline 

before final approval under paragraph 

(r)(1) of this section, and the foreign 

refinery baseline values that ultimately 

are approved by EPA are more stringent 

than the early baseline values used by 

the foreign refiner, the foreign refiner 

shall recalculate its compliance, ab 

initio, using the baseline values 

approved by the EPA, and the foreign 

refiner shall be liable for any resulting 

violation of the motor vehicle highway 

diesel fuel requirements.

(s) Additional requirements for 

petitions, reports and certificates. Any 

petition for approval to produce diesel 

fuel subject to the diesel foreign refiner 

program, any alternative procedures 

under paragraph (p) of this section, any 

report or other submission required by 

paragraph (c), (f)(2), or (i) of this section, 

and any certification under paragraph 

(d)(3) of this section shall be—

(1) Submitted in accordance with 

procedures specified by the 

Administrator, including use of any 

forms that may be specified by the 

Administrator. 

(2) Be signed by the president or 

owner of the foreign refiner company, or 

by that person’s immediate designee, 

and shall contain the following 

declaration:

I hereby certify: (1) That I have actual 

authority to sign on behalf of and to bind 

[insert name of foreign refiner] with regard to 

all statements contained herein; (2) that I am 

aware that the information contained herein 

is being certified, or submitted to the United 

States Environmental Protection Agency, 

under the requirements of 40 CFR part 80, 

subpart I, and that the information is material 

for determining compliance under these 

regulations; and (3) that I have read and 

understand the information being certified or 

submitted, and this information is true, 

complete and correct to the best of my 

knowledge and belief after I have taken 

reasonable and appropriate steps to verify the 

accuracy thereof. 

I affirm that I have read and understand the 

provisions of 40 CFR part 80, subpart I, 

including 40 CFR 80.620 apply to [insert 

name of foreign refiner]. Pursuant to Clean 

Air Act section 113(c) and 18 U.S.C. 1001, 

the penalty for furnishing false, incomplete 

or misleading information in this 

certification or submission is a fine of up to 

$10,000 U.S., and/or imprisonment for up to 

five years.

PART 86—CONTROL OF EMISSIONS 

FROM NEW AND IN-USE HIGHWAY 

VEHICLES AND ENGINES

■ 74. The authority citation for part 86 

continues to read as follows:

Authority: 42 U.S.C. 7401—7671(q).

■ 75. Section 86.007–35 is amended by 

revising paragraph (c) to read as follows:

§ 86.007–35 Labeling.

* * * * *

(c) Model year 2007 and later dieselfueled vehicles must include permanent 

readily visible labels on the dashboard 

(or instrument panel) and near all fuel 

inlets that state ‘‘Use Ultra Low Sulfur 

Diesel Fuel Only’’ or ‘‘Ultra Low Sulfur 

Diesel Fuel Only’’.

* * * * *

■ 76. Section 86.007–38 is amended by 

revising paragraph (i) to read as follows:

§ 86.007–38 Maintenance instructions.

* * * * *

(i) For each new diesel-fueled engine 

subject to the standards prescribed in 

§ 86.007–11, as applicable, the 

manufacturer shall furnish or cause to 

be furnished to the ultimate purchaser 

a statement that ‘‘This engine must be 

operated only with ultra low-sulfur 

diesel fuel (meeting EPA specifications 

for highway diesel fuel, including a 15 

ppm sulfur cap).’’

PART 89—CONTROL OF EMISSIONS 

FROM NEW AND IN-USE NONROAD 

COMPRESSION-IGNITION ENGINES

■ 77. The authority citation for part 89 

continues to read as follows:

Authority: 42 U.S.C. 7521, 7522, 7523, 

7524, 7525, 7541, 7542, 7543, 7545, 7547, 

7549, 7550, and 7601(a).

■ 78. Section 89.1 is amended by adding 

paragraph (b)(6) to read as follows:

§ 89.1 Applicability.

* * * * *

(b) * * * 

(6) Tier 4 engines. This part does not 

apply to engines that are subject to 

emission standards under 40 CFR part 

1039. See 40 CFR 1039.1 to determine 

when that part 1039 applies. Note that 

certain requirements and prohibitions 

apply to engines built on or after 

January 1, 2006 if they are installed in 

stationary applications or in equipment 

that will be used solely for competition, 

as described in 40 CFR 1039.1 and 40 

CFR 1068.1; those provisions apply 

instead of the provisions of this part 89.

■ 79. Section 89.2 is amended by adding 

a definition for ‘‘Sulfur-sensitive 

technology’’ in alphabetical order to read 

as follows:

§ 89.2 Definitions.

* * * * *

Sulfur-sensitive technology means an 

emission-control technology that 

experiences a significant drop in 

emission-control performance or 

emission-system durability when an 

engine is operated on low-sulfur fuel 

(i.e., fuel with a sulfur concentration up 

to 500 ppm) as compared to when it is 

operated on ultra low-sulfur fuel (i.e., 

fuel with a sulfur concentration less 

than 15 ppm). Exhaust-gas recirculation 

is not a sulfur-sensitive technology.

* * * * *

■ 80. Section 89.112 is amended by 

revising the introductory text of 

paragraph (f)(1) and adding paragraph (g) 

to read as follows:

§ 89.112 Oxides of nitrogen, carbon 

monoxide, hydrocarbon, and particulate 

matter exhaust emission standards.

* * * * *

(f) * * * 

(1) Voluntary standards. Engines may 

be designated ‘‘Blue Sky Series’’ engines 

by meeting the voluntary standards 

listed in Table 3, which apply to all 

certification and in-use testing, as 

follows:

* * * * *

(g) Manufacturers of engines at or 

above 37 kW and below 56 kW from 

model years 2008 through 2012 that are 

subject to the standards of this section 

under 40 CFR 1039.102 must take the 

following additional steps: 

(1) State the applicable PM standard 

on the emission control information 

label. 

(2) Add information to the emissionrelated installation instructions to 

clarify the equipment manufacturer’s 

obligations under 40 CFR 1039.104(f).

■ 81. Section 89.114 is amended by 

adding a new paragraph (b)(3) to read as 

follows:

§ 89.114 Special and alternate test 

procedures.

* * * * *

(b) * * * 

(3) A manufacturer may elect to use 

the test procedures in 40 CFR part 1065 

as an alternate test procedure without 

advance approval by the Administrator. 

The manufacturer must identify in its 

application for certification that the 

engines were tested using the 

procedures in 40 CFR part 1065.

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39213

■ 82. Section 89.203 is amended by 

adding a new paragraph (c)(6) to read as 

follows:

§ 89.203 General provisions.

* * * * *

(c) * * * 

(6) Model year 2008 and 2009 engines 

rated under 8 kW that are allowed to 

certify under this part because they 

meet the criteria in 40 CFR 1039.101(c) 

may not generate emission credits.

■ 83. Section 89.330 is amended by 

revising paragraph (b)(3) and adding 

paragraph (e) to read as follows:

§ 89.330 Lubricating oil and test fuels.

* * * * *

(b) * * * 

(3) Testing of Tier 1 and Tier 2 

engines rated under 37 kW and Tier 2 

and Tier 3 engines rated at or above 37 

kW that is conducted by the 

Administrator shall be performed using 

test fuels that meet the specifications in 

Table 4 in Appendix A of this subpart 

and that have a sulfur content no higher 

than 0.20 weight percent.

* * * * *

(e) Low-sulfur test fuel. (1) Upon 

request, for engines rated at or above 75 

kW in model years 2006 or 2007, the 

diesel test fuel may be the low-sulfur 

diesel test fuel specified in 40 CFR part 

1065, subject to the provisions of this 

paragraph (e)(1). 

(i) To use this option, the 

manufacturer must—

(A) Ensure that ultimate purchasers of 

equipment using these engines are 

informed that the use of fuel meeting 

the 500 ppm specification is 

recommended. 

(B) Recommend to equipment 

manufacturers that a label be applied at 

the fuel inlet recommending 500 ppm 

fuel. 

(ii) None of the engines in the engine 

family may employ sulfur-sensitive 

technologies. 

(iii) For engines rated at or above 130 

kW, this option may be used in 2006 

and 2007. For engines rated at or above 

75 kW and under 130 kW, this option 

may be used only in 2007. 

(2) For model years 2008 through 

2010, except as otherwise provided, the 

diesel test fuel shall be the low-sulfur 

diesel test fuel specified in 40 CFR part 

1065. 

(3) The diesel test fuel shall be the 

ultra low-sulfur diesel test fuel specified 

in 40 CFR part 1065 for model years 

2011 and later. 

(4) For model years 2007 through 

2010 engines that use sulfur-sensitive 

emission-control technology, the diesel 

test fuel is the ultra low-sulfur fuel 

specified in 40 CFR part 1065 if the 

manufacturer demonstrates that the inuse engines will use only fuel with 15 

ppm or less of sulfur. 

(5) Instead of the test fuels described 

in paragraphs (e)(2) through (4) of this 

section, for model years 2008 and later, 

manufacturers may use the test fuel 

described in appendix A of this subpart. 

In such cases, the test fuel described in 

appendix A of this subpart shall be the 

test fuel for all manufacturer and EPA 

testing.

■ 84. Section 89.908 is amended by 

adding paragraph (c) to read as follows:

§ 89.908 National security exemption.

* * * * *

(c) Manufacturers must add a legible 

label, written in block letters in English, 

to each engine exempted under this 

section. The label must be permanently 

secured to a readily visible part of the 

engine needed for normal operation and 

not normally requiring replacement, 

such as the engine block. This label 

must include at least the following 

items: 

(1) The label heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Your corporate name and 

trademark. 

(3) Engine displacement, engine 

family identification (as applicable), and 

model year of the engine or whom to 

contact for further information. 

(4) The statement ‘‘THIS ENGINE 

HAS AN EXEMPTION FOR NATIONAL 

SECURITY UNDER 40 CFR 89.908.’’.

■ 85. Section 89.910 is amended by 

adding paragraph (c) to read as follows:

§ 89.910 Granting of exemptions.

* * * * *

(c) Manufacturers may ask EPA to 

apply the provisions of 40 CFR 

1068.201(i) to engines exempted or 

excluded under this subpart.

PART 94—CONTROL OF AIR 

POLLUTION FROM MARINE 

COMPRESSION-IGNITION ENGINES

■ 86. The authority citation for part 94 

continues to read as follows:

Authority: 42 U.S.C. 7522, 7523, 7524, 

7525, 7541, 7542, 7543, 7545, 7547, 7549, 

7550, and 7601(a).

■ 87. Section 94.908 is amended by 

adding paragraph (c) to read as follows:

§ 94.908 National security exemption.

* * * * *

(c) Manufacturers must add a legible 

label, written in block letters in English, 

to each engine exempted under this 

section. The label must be permanently 

secured to a readily visible part of the 

engine needed for normal operation and 

not normally requiring replacement, 

such as the engine block. This label 

must include at least the following 

items: 

(1) The label heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Your corporate name and 

trademark. 

(3) Engine displacement, engine 

family identification (as applicable), and 

model year of the engine or whom to 

contact for further information. 

(4) The statement ‘‘THIS ENGINE 

HAS AN EXEMPTION FOR NATIONAL 

SECURITY UNDER 40 CFR 94.908.’’.

■ 88. A new part 1039 is added to 

subchapter U of chapter I, to read as 

follows:

SUBCHAPTER U—AIR POLLUTION 

CONTROLS

PART 1039—CONTROL OF EMISSIONS 

FROM NEW AND IN-USE NONROAD 

COMPRESSION-IGNITION ENGINES

Subpart A—Overview and Applicability 

Sec. 

1039.1 Does this part apply for my engines? 

1039.5 Which engines are excluded from 

this part’s requirements? 

1039.10 How is this part organized? 

1039.15 Do any other regulation parts apply 

to me? 

1039.20 What requirements from this part 

apply to excluded stationary engines?

Subpart B—Emission Standards and 

Related Requirements 

1039.101 What exhaust emission standards 

must my engines meet after the 2014 

model year? 

1039.102 What exhaust emission standards 

and phase-in allowances apply for my 

engines in model year 2014 and earlier? 

1039.104 Are there interim provisions that 

apply only for a limited time? 

1039.105 What smoke standards must my 

engines meet? 

1039.107 What evaporative emission 

standards and requirements apply? 

1039.110 [Reserved] 

1039.115 What other requirements must my 

engines meet? 

1039.120 What emission-related warranty 

requirements apply to me? 

1039.125 What maintenance instructions 

must I give to buyers? 

1039.130 What installation instructions 

must I give to equipment manufacturers? 

1039.135 How must I label and identify the 

engines I produce? 

1039.140 What is my engine’s maximum 

engine power?

Subpart C—Certifying Engine Families 

1039.201 What are the general requirements 

for obtaining a certificate of conformity? 

1039.205 What must I include in my 

application? 

1039.210 May I get preliminary approval 

before I complete my application? 

1039.220 How do I amend the maintenance 

instructions in my application? 

39214 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

1039.225 How do I amend my application 

for certification to include new or 

modified engines? 

1039.230 How do I select engine families? 

1039.235 What emission testing must I 

perform for my application for a 

certificate of conformity? 

1039.240 How do I demonstrate that my 

engine family complies with exhaust 

emission standards? 

1039.245 How do I determine deterioration 

factors from exhaust durability testing? 

1039.250 What records must I keep and 

what reports must I send to EPA? 

1039.255 What decisions may EPA make 

regarding my certificate of conformity? 

1039.260 What provisions apply to engines 

that are conditionally exempted from 

certification?

Subpart D—[Reserved]

Subpart E—In-use Testing 

1039.401 General provisions.

Subpart F—Test Procedures 

1039.501 How do I run a valid emission 

test? 

1039.505 How do I test engines using 

steady-state duty cycles, including 

ramped-modal testing? 

1039.510 Which duty cycles do I use for 

transient testing? 

1039.515 What are the test procedures 

related to not-to-exceed standards? 

1039.520 What testing must I perform to 

establish deterioration factors? 

1039.525 How do I adjust emission levels to 

account for infrequently regenerating 

aftertreatment devices?

Subpart G—Special Compliance Provisions 

1039.601 What compliance provisions 

apply to these engines? 

1039.605 What provisions apply to engines 

already certified under the motor-vehicle 

program? 

1039.610 What provisions apply to vehicles 

already certified under the motor-vehicle 

program? 

1039.615 What special provisions apply to 

engines using noncommercial fuels? 

1039.620 What are the provisions for 

exempting engines used solely for 

competition? 

1039.625 What requirements apply under 

the program for equipment-manufacturer 

flexibility? 

1039.626 What special provisions apply to 

equipment imported under the 

equipment-manufacturer flexibility 

program? 

1039.627 What are the incentives for 

equipment manufacturers to use cleaner 

engines? 

1039.630 What are the economic hardship 

provisions for equipment manufacturers? 

1039.635 What are the hardship provisions 

for engine manufacturers? 

1039.640 What special provisions apply to 

branded engines? 

1039.645 What special provisions apply to 

engines used for transportation 

refrigeration units? 

1039.650 [Reserved]

1039.655 What special provisions apply to 

engines sold in Guam, American Samoa, 

or the Commonwealth of the Northern 

Mariana Islands? 

1039.660 What special provisions apply to 

Independent Commercial Importers?

Subpart H—Averaging, Banking, and 

Trading for Certification 

1039.701 General provisions. 

1039.705 How do I generate and calculate 

emission credits? 

1039.710 How do I average emission 

credits? 

1039.715 How do I bank emission credits? 

1039.720 How do I trade emission credits? 

1039.725 What must I include in my 

application for certification? 

1039.730 What ABT reports must I send to 

EPA? 

1039.735 What records must I keep? 

1039.740 What restrictions apply for using 

emission credits? 

1039.745 What can happen if I do not 

comply with the provisions of this 

subpart?

Subpart I—Definitions and Other Reference 

Information 

1039.801 What definitions apply to this 

part? 

1039.805 What symbols, acronyms, and 

abbreviations does this part use? 

1039.810 What materials does this part 

reference? 

1039.815 What provisions apply to 

confidential information? 

1039.820 How do I request a hearing?

Appendix I to Part 1039—[Reserved] 

Appendix II to Part 1039—Steady-state Duty 

Cycles for Constant-Speed Engines 

Appendix III to Part 1039—Steady-state Duty 

Cycles for Variable-Speed Engines with 

Maximum Power below 19 kW 

Appendix IV to Part 1039—Steady-state Duty 

Cycles for Variable-Speed Engines with 

Maximum Power at or above 19 kW 

Appendix V to Part 1039—[Reserved] 

Appendix VI to Part 1039—Nonroad 

Compression-ignition Composite 

Transient Cycle

Authority: 42 U.S.C. 7401–7671(q).

Subpart A—Overview and Applicability

§ 1039.1 Does this part apply for my 

engines? 

(a) The regulations in this part 1039 

apply for all new, compression-ignition 

nonroad engines (defined in 

§ 1039.801), except as provided in 

§ 1039.5. 

(b) This part 1039 applies as follows: 

(1) This part 1039 applies for all 

engines subject to the emission 

standards specified in subpart B of this 

part starting with the model years noted 

in the following table:

TABLE 1 OF § 1039.1.—PART 1039 

APPLICABILITY BY MODEL YEAR

Power category Model year 

kW < 19 .................................... 1 2008 

19 ≤ kW < 56 ............................ 2 2008 

TABLE 1 OF § 1039.1.—PART 1039 

APPLICABILITY BY MODEL YEAR—

Continued

Power category Model year 

56 ≤ kW < 130 .......................... 2012 

130 ≤ kW ≤ 560 ........................ 2011 

kW > 560 .................................. 2011 

1As described in § 1039.102, some engines 

below 19 kW may not be subject to the emission standards in this part until the 2010 

model year. 2As described in § 1039.102, some engines 

in the 19–56 kW power category may not be 

subject to the emission standards in this part 

until the 2012 model year. 

(2) If you use the provisions of 

§ 1039.104(a) to certify an engine to the 

emission standards of this part before 

the model years shown in Table 1 of this 

section, all the requirements of this part 

apply for those engines. 

(3) See 40 CFR part 89 for 

requirements that apply to engines not 

yet subject to the requirements of this 

part 1039. 

(4) This part 1039 applies for other 

compression-ignition engines as 

follows: 

(i) The provisions of paragraph (c) of 

this section and § 1039.801 apply for 

stationary engines beginning January 1, 

2006. 

(ii) The provisions of § 1039.620 and 

§ 1039.801 apply for engines used solely 

for competition beginning January 1, 

2006. 

(c) The definition of nonroad engine 

in 40 CFR 1068.30 excludes certain 

engines used in stationary applications. 

These engines are not required to 

comply with this part, except for the 

requirements in § 1039.20. In addition, 

the prohibitions in 40 CFR 1068.101 

restrict the use of stationary engines for 

nonstationary purposes. 

(d) In certain cases, the regulations in 

this part 1039 apply to engines at or 

above 250 kW that would otherwise be 

covered by 40 CFR part 1048. See 40 

CFR 1048.620 for provisions related to 

this allowance.

§ 1039.5 Which engines are excluded from 

this part’s requirements? 

This part does not apply to the 

following nonroad engines: 

(a) Locomotive engines. (1) The 

following locomotive engines are not 

subject to the provisions of this part 

1039: 

(i) Engines in locomotives subject to 

the standards of 40 CFR part 92. 

(ii) Engines in locomotives that are 

exempt from the standards of 40 CFR 

part 92 pursuant to the provisions of 40 

CFR part 92 (except for the provisions 

of 40 CFR 92.907). For example, an 

engine that is exempt under 40 CFR 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39215

92.906 because it is in a manufacturerowned locomotive is not subject to the 

provisions of this part 1039. 

(2) The following locomotive engines 

are subject to the provisions of this part 

1039: 

(i) Engines in locomotives exempt 

from 40 CFR part 92 pursuant to the 

provisions of 40 CFR 92.907. 

(ii) Locomotive engines excluded 

from the definition of locomotive in 40 

CFR 92.2. 

(b) Marine engines. (1) The following 

marine engines are not subject to the 

provisions of this part 1039: 

(i) Engines subject to the standards of 

40 CFR part 94. 

(ii) Engines not subject to the 

standards of 40 CFR part 94 only 

because they were produced before the 

standards of 40 CFR part 94 started to 

apply. 

(iii) Engines that are exempt from the 

standards of 40 CFR part 94 pursuant to 

the provisions of 40 CFR part 94 (except 

for the provisions of 40 CFR 94.907). For 

example, an engine that is exempt under 

40 CFR 94.906 because it is a 

manufacturer-owned engine is not 

subject to the provisions of this part 

1039. 

(iv) Engines with rated power below 

37 kW. 

(v) Engines on foreign vessels. 

(2) Marine engines are subject to the 

provisions of this part 1039 if they are 

exempt from 40 CFR part 94 based on 

the engine-dressing provisions of 40 

CFR 94.907. 

(c) Mining engines. Engines used in 

underground mining or in underground 

mining equipment and regulated by the 

Mining Safety and Health 

Administration in 30 CFR parts 7, 31, 

32, 36, 56, 57, 70, and 75 are not subject 

to the provisions of this part 1039. 

(d) Hobby engines. Engines with percylinder displacement below 50 cubic 

centimeters are not subject to the 

provisions of this part 1039.

§ 1039.10 How is this part organized? 

The regulations in this part 1039 

contain provisions that affect both 

engine manufacturers and others. 

However, the requirements of this part 

are generally addressed to the engine 

manufacturer. Unless we specifically 

state otherwise, the term ‘‘you’’ means 

the engine manufacturer, as defined in 

§ 1039.801. This part 1039 is divided 

into the following subparts: 

(a) Subpart A of this part defines the 

applicability of part 1039 and gives an 

overview of regulatory requirements. 

(b) Subpart B of this part describes the 

emission standards and other 

requirements that must be met to certify 

engines under this part. Note that 

§ 1039.102 and § 1039.104 discuss 

certain interim requirements and 

compliance provisions that apply only 

for a limited time. 

(c) Subpart C of this part describes 

how to apply for a certificate of 

conformity. 

(d) [Reserved] 

(e) Subpart E of this part describes 

general provisions for testing in-use 

engines. 

(f) Subpart F of this part describes 

how to test your engines (including 

references to other parts of the Code of 

Federal Regulations). 

(g) Subpart G of this part and 40 CFR 

part 1068 describe requirements, 

prohibitions, and other provisions that 

apply to engine manufacturers, 

equipment manufacturers, owners, 

operators, rebuilders, and all others. 

(h) Subpart H of this part describes 

how you may generate and use emission 

credits to certify your engines. 

(i) Subpart I of this part contains 

definitions and other reference 

information.

§ 1039.15 Do any other regulation parts 

apply to me? 

(a) Part 1065 of this chapter describes 

procedures and equipment 

specifications for testing engines. 

Subpart F of this part 1039 describes 

how to apply the provisions of part 1065 

of this chapter to determine whether 

engines meet the emission standards in 

this part. 

(b) The requirements and prohibitions 

of part 1068 of this chapter apply to 

everyone, including anyone who 

manufactures, imports, installs, owns, 

operates, or rebuilds any of the engines 

subject to this part 1039, or equipment 

containing these engines. Part 1068 of 

this chapter describes general 

provisions, including these seven areas: 

(1) Prohibited acts and penalties for 

engine manufacturers, equipment 

manufacturers, and others. 

(2) Rebuilding and other aftermarket 

changes. 

(3) Exclusions and exemptions for 

certain engines. 

(4) Importing engines. 

(5) Selective enforcement audits of 

your production. 

(6) Defect reporting and recall. 

(7) Procedures for hearings. 

(c) Other parts of this chapter apply 

if referenced in this part.

§ 1039.20 What requirements from this 

part apply to excluded stationary engines? 

The provisions of this section apply 

for engines built on or after January 1, 

2006. 

(a) You must add a permanent label 

or tag to each new engine you produce 

or import that is excluded under 

§ 1039.1(c) as a stationary engine. To 

meet labeling requirements, you must 

do the following things: 

(1) Attach the label or tag in one piece 

so no one can remove it without 

destroying or defacing it. 

(2) Secure it to a part of the engine 

needed for normal operation and not 

normally requiring replacement. 

(3) Make sure it is durable and 

readable for the engine’s entire life. 

(4) Write it in English. 

(5) Follow the requirements in 

§ 1039.135(g) regarding duplicate labels 

if the engine label is obscured in the 

final installation. 

(b) Engine labels or tags required 

under this section must have the 

following information: 

(1) Include the heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Include your full corporate name 

and trademark. You may instead 

include the full corporate name and 

trademark of another company you 

choose to designate. 

(3) State the engine displacement (in 

liters) and maximum engine power. 

(4) State: ‘‘THIS ENGINE IS 

EXCLUDED FROM THE 

REQUIREMENTS OF 40 CFR PART 

1039 AS A ‘‘STATIONARY ENGINE.’’

INSTALLING OR USING THIS ENGINE 

IN ANY OTHER APPLICATION MAY 

BE A VIOLATION OF FEDERAL LAW 

SUBJECT TO CIVIL PENALTY.’’.

Subpart B—Emission Standards and 

Related Requirements

§ 1039.101 What exhaust emission 

standards must my engines meet after the 

2014 model year? 

The exhaust emission standards of 

this section apply after the 2014 model 

year. Certain of these standards also 

apply for model year 2014 and earlier. 

This section presents the full set of 

emission standards that apply after all 

the transition and phase-in provisions of 

§ 1039.102 and § 1039.104 expire. See 

§ 1039.102 and 40 CFR 89.112 for 

exhaust emission standards that apply 

to 2014 and earlier model years. Section 

1039.105 specifies smoke standards. 

(a) Emission standards for transient 

testing. Transient exhaust emissions 

from your engines may not exceed the 

applicable emission standards in Table 

1 of this section. Measure emissions 

using the applicable transient test 

procedures described in subpart F of 

this part. The following engines are not 

subject to the transient standards in this 

paragraph (a): 

(1) Engines above 560 kW. 

(2) Constant-speed engines. 

(b) Emission standards for steadystate testing. Steady-state exhaust 

39216 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

emissions from your engines may not 

exceed the applicable emission 

standards in Table 1 of this section. 

Measure emissions using the applicable 

steady-state test procedures described in 

subpart F of this part.

TABLE 1 OF § 1039.101.—TIER 4 EXHAUST EMISSION STANDARDS AFTER THE 2014 MODEL YEAR, G/KW-HR 1

Maximum engine power Application PM NOX NMHC NOX+NMHC CO 

kW < 19 ....................................... All ................................................ 2 0.40 ...................... .................... 7.5 3 6.6

19 ≤ kW < 56 ............................... All ................................................ 0.03 ...................... .................... 4.7 4 5.0

56 ≤ kW < 130 ............................. All ................................................ 0.02 0.40 0.19 .................... 5.0

130 ≤ kW ≤ 560 ........................... All ................................................ 0.02 0.40 0.19 .................... 3.5

Generator sets ............................ 0.03 0.67 0.19 .................... 3.5

kW > 560 ..................................... All except generator sets ............ 0.04 3.5 0.19 .................... 3.5

1 Note that some of these standards also apply for 2014 and earlier model years. This table presents the full set of emission standards that 

apply after all the transition and phase-in provisions of § 1039.102 expire. 2See paragraph (c) of this section for provisions related to an optional PM standard for certain engines below 8 kW. 

3The CO standard is 8.0 g/kW-hr for engines below 8 kW. 

4The CO standard is 5.5 g/kW-hr for engines below 37 kW. 

(c) Optional PM standard for engines 

below 8 kW. You may certify handstartable, air-cooled, direct injection 

engines below 8 kW to an optional Tier 

4 PM standard of 0.60 g/kW-hr. The 

term hand-startable generally refers to 

engines that are started using a hand 

crank or pull cord. This PM standard 

applies to both steady-state and 

transient testing, as described in 

paragraphs (a) and (b) of this section. 

Engines certified under this paragraph 

(c) may not be used to generate PM or 

NOX+NMHC emission credits under the 

provisions of subpart H of this part. 

These engines may use PM or 

NOX+NMHC emission credits, subject to 

the FEL caps in paragraph (d)(1) of this 

section. 

(d) Averaging, banking, and trading.

You may generate or use emission 

credits under the averaging, banking, 

and trading (ABT) program, as described 

in subpart H of this part. This requires 

that you specify a family emission limit 

(FEL) for each pollutant you include in 

the ABT program for each engine 

family. These FELs serve as the 

emission standards for the engine family 

with respect to all required testing 

instead of the standards specified in 

paragraphs (a) and (b) of this section. 

The FELs determine the not-to-exceed 

standards for your engine family, as 

specified in paragraph (e) of this 

section. 

(1) Primary FEL caps. The FEL may 

not be higher than the limits in Table 2 

of this section, except as allowed by 

paragraph (d)(2) of this section or by 

§ 1039.102:

TABLE 2 OF § 1039.101.—TIER 4 FEL CAPS AFTER THE 2014 MODEL YEAR, G/KW-HR

Maximum engine power Application PM NOX NOX+NMHC 

kW < 19 ................................................................ All ......................................................................... 0.80 .................... 1 9.5

19 ≤ kW < 56 ........................................................ All ......................................................................... 0.05 .................... 7.5

56 ≤ kW < 130 ...................................................... All ......................................................................... 0.04 0.80 ....................

130 ≤ kW ≤ 560 .................................................... All ......................................................................... 0.04 0.80 ....................

kW > 560 .............................................................. Generator sets ..................................................... 0.05 1.07 ....................

All except generator sets ..................................... 0.07 6.2 ....................

1For engines below 8 kW, the FEL cap is 10.5 g/kW-hr for NOX+NMHC emissions. 

(2) Alternate FEL caps. For a given 

power category, you may use the 

alternate FEL caps shown in Table 3 of 

this section instead of the FEL caps 

identified in paragraph (d)(1) of this 

section for up to 5 percent of your U.S.-

directed production volume in a given 

model year.

Maximum engine power Starting 

model year 1

PM FEL

cap 

NOX FEL 

cap 

19 ≤ kW < 56 ........................................................................................................................................... 2 2016 0.30 ....................

56 ≤ kW < 130 ......................................................................................................................................... 2016 3 0.30 3 3.8

130 ≤ kW ≤ 560 ....................................................................................................................................... 2015 0.20 3.8

kW > 560 ................................................................................................................................................. 2019 0.10 4 3.5

1See § 1039.104(g) for alternate FEL caps that apply in earlier model years. 2For manufacturers certifying engines under Option #1 of Table 3 of § 1039.102, these alternate FEL caps apply starting with the 2017 model 

year. 3For engines below 75 kW, the FEL caps are 0.40 g/kW-hr for PM emissions and 4.4 g/kW-hr for NOX emissions. 4For engines above 560 kW, the provision for alternate NOX FEL caps is limited to generator-set engines. For example, if you produce 1,000 

generator-set engines above 560 kW in a given model year, up to 50 of them may be certified to the alternate NOX FEL caps. 

(e) Not-to-exceed standards. Exhaust 

emissions from your engines may not 

exceed the applicable not-to-exceed 

(NTE) standards in this paragraph (e). 

(1) Measure emissions using the 

procedures described in subpart F of 

this part. 

(2) Except as noted in paragraph (e)(7) 

of this section, the NTE standard, 

rounded to the same number of decimal 

places as the applicable standard in 

Table 1 of this section, is determined 

from the following equation:

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39217

NTE standard for each pollutant = (STD) ×

(M)

Where:

STD = The standard specified for that 

pollutant in Table 1 of this section (or 

paragraph (c) of this section) if you 

certify without using ABT for that 

pollutant; or the FEL for that pollutant if 

you certify using ABT. 

M = The NTE multiplier for that pollutant, 

as defined in paragraph (e)(3) of this 

section.

(3) The NTE multiplier for each 

pollutant is 1.25, except in the following 

cases:

If . . . Or . . . Then . . . 

(i) The engine family is certified to a NOX

standard less than 2.50 g/kW-hr without 

using ABT.

The engine family is certified to a NOX FEL 

less than 2.50 g/kW-hr or a NOX+NMHC 

FEL less than 2.70 g/kW-hr.

The multiplier for NOX, NMHC, and 

NOX+NMHC is 1.50. 

(ii) The engine family is certified to a PM standard less than 0.07 g/kW-hr without using 

ABT.

The engine family is certified to a PM FEL 

less than 0.07 g/kW-hr.

The multiplier for PM is 1.50. 

(4) There are two sets of specifications 

of ambient operating regions that will 

apply for all NTE testing of engines in 

an engine family. You must choose one 

set for each engine family and must 

identify your choice of ambient 

operating regions in each application for 

certification for an engine family. You 

may choose separately for each engine 

family. Choose one of the following 

ambient operating regions: 

(i) All altitudes less than or equal to 

5,500 feet above sea level during all 

ambient temperature and humidity 

conditions. 

(ii) All altitudes less than or equal to 

5,500 feet above sea level, for 

temperatures less than or equal to the 

temperature determined by the 

following equation at the specified 

altitude:

T = ¥0.00254 × A + 100

Where:

T = ambient air temperature in degrees 

Fahrenheit. 

A = altitude in feet above sea level (A is 

negative for altitudes below sea level).

(5) Temperature and humidity ranges 

for which correction factors are allowed 

are specified in 40 CFR 86.1370–

2007(e). 

(i) If you choose the ambient 

operating region specified in paragraph 

(e)(4)(i) of this section, the temperature 

and humidity ranges for which 

correction factors are allowed are 

defined in 40 CFR 86.1370–2007(e)(1). 

(ii) If you choose the ambient 

operating region specified in paragraph 

(e)(4)(ii) of this section, the temperature 

and humidity ranges for which 

correction factors are allowed are 

defined in 40 CFR 86.1370–2007(e)(2). 

(6) For engines equipped with 

exhaust-gas recirculation, the NTE 

standards of this section do not apply 

during the cold operating conditions 

specified in 40 CFR 86.1370–2007(f). 

(7) For engines certified to a PM FEL 

less than or equal to 0.01 g/kW-hr, the 

PM NTE standard is 0.02 g/kW-hr. 

(f) Fuel types. The exhaust emission 

standards in this section apply for 

engines using the fuel type on which the 

engines in the engine family are 

designed to operate, except for engines 

certified under § 1039.615. For engines 

certified under § 1039.615, the 

standards of this section apply to 

emissions measured using the specified 

test fuel. You must meet the numerical 

emission standards for NMHC in this 

section based on the following types of 

hydrocarbon emissions for engines 

powered by the following fuels: 

(1) Alcohol-fueled engines: THCE 

emissions. 

(2) Other engines: NMHC emissions.

(g) Useful life. Your engines must 

meet the exhaust emission standards in 

paragraphs (a) through (e) of this section 

over their full useful life. 

(1) The useful life values are shown 

in the following table, except as allowed 

by paragraph (g)(2) of this section:

TABLE 4 OF § 1039.101—USEFUL LIFE VALUES

If your engine is certified as . . . And its maximum power is . . . And its rated speed is . . . Then its useful life is . . . 

(i) Variable speed or constant 

speed.

kW <19 ......................................... Any Speed .................................... 3,000 hours or five years, whichever comes first. 

(ii) Constant speed ......................... 19 ≤ kW <37 ................................. 3,000 rpm or higher ...................... 3,000 hours or five years, whichever comes first. 

(iii) Constant speed ........................ 19 ≤ kW <37 ................................. Less than 3,000 rpm .................... 5,000 hours or seven years, 

whichever comes first. 

(iv) Variable .................................... 19 ≤ kW <37 ................................. Any Speed .................................... 5,000 hours or seven years, 

whichever comes first. 

(v) Variable speed or constant 

speed.

kW ≥37 ......................................... Any speed ..................................... 8,000 hours or ten years, whichever comes first. 

(2) You may request in your 

application for certification that we 

approve a shorter useful life for an 

engine family. We may approve a 

shorter useful life if we determine that 

these engines will rarely operate longer 

than the alternate useful life. Your 

demonstration must include 

documentation from in-use engines. 

Your demonstration must also include 

any overhaul interval that you 

recommend and any mechanical 

warranty that you offer for the engine. 

(h) Applicability for testing. The 

emission standards in this subpart apply 

to all testing, including certification, 

selective enforcement audits, and in-use 

testing. For selective enforcement 

audits, we will require you to perform 

duty-cycle testing as specified in 

§§ 1039.505 and 1039.510. The NTE 

standards of this section apply for those 

tests. We will not direct you to do 

additional testing under a selective 

enforcement audit to show that your 

engines meet the NTE standards.

39218 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

§ 1039.102 What exhaust emission 

standards and phase-in allowances apply 

for my engines in model year 2014 and 

earlier? 

The exhaust emission standards of 

this section apply for 2014 and earlier 

model years. See § 1039.101 for exhaust 

emission standards that apply to later 

model years. See 40 CFR 89.112 for 

exhaust emission standards that apply 

to model years before the standards of 

this part 1039 take effect. 

(a) Emission standards for transient 

testing. Transient exhaust emissions 

from your engines may not exceed the 

applicable emission standards in Tables 

1 through 6 of this section. Measure 

emissions using the applicable transient 

test procedures described in subpart F 

of this part. See paragraph (c) of this 

section for a description of provisions 

related to the phase-in and phase-out 

standards shown in Tables 4 through 6 

of this section. The emission standards 

for transient testing are limited for 

certain engines, as follows: 

(1) The transient standards in this 

section do not apply for the following 

engines: 

(i) Engines below 37 kW for model 

years before 2013. 

(ii) Engines certified under Option #1 

of Table 3 of this section. These are the 

small-volume manufacturer engines 

certified to the Option #1 standards for 

model years 2008 through 2015 under 

§ 1039.104(c), and other engines 

certified to the Option #1 standards for 

model years 2008 through 2012. 

(iii) Engines certified to an alternate 

FEL during the first four years of the 

Tier 4 standards for the applicable 

power category, as allowed in 

§ 1039.104(g). However, you may certify 

these engines to the transient standards 

in this section to avoid using temporary 

compliance adjustment factors, as 

described in § 1039.104(g)(2). Note that 

in some cases this four-year period 

extends into the time covered by the 

standards in § 1039.101. 

(iv) Constant-speed engines. 

(v) Engines above 560 kW. 

(2) The transient standards in this 

section for gaseous pollutants do not 

apply to phase-out engines that you 

certify to the same numerical standards 

(and FELs if the engines are certified 

using ABT) for gaseous pollutants as 

you certified under the Tier 3 

requirements of 40 CFR part 89. 

However, except as specified by 

paragraph (a)(1) of this section, the 

transient PM emission standards apply 

to these engines. 

(b) Emission standards for steady-state 

testing. Steady-state exhaust emissions 

from your engines may not exceed the 

applicable emission standards in Tables 

1 through 7 of this section. Measure 

emissions using the applicable steadystate test procedures described in 

subpart F of this part. See paragraph (c) 

of this section for a description of 

provisions related to the phase-in and 

phase-out standards shown in Tables 4 

through 6 of this section.

TABLE 1 OF § 1039.102.—TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): KW < 19 

Maximum engine power Model years PM NOX + 

NMHC CO 

kW < 8 ............................................................................................................................. 2008–2014 1 0.40 7.5 8.0 

8 ≤ kW < 19 ..................................................................................................................... 2008–2014 0.40 7.5 6.6 

1For engines that qualify for the special provisions in § 1039.101(c), you may delay certifying to the standards in this part 1039 until 2010. In 

2009 and earlier model years, these engines must instead meet the applicable Tier 2 standards and other requirements from 40 CFR part 89. 

Starting in 2010, these engines must meet a PM standard of 0.60 g/kW-hr, as described in § 1039.101(c). Engines certified to the 0.60 g/kWhr 

PM standard may not generate ABT credits. 

TABLE 2 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 19 ≤ KW < 37 

Model years PM NOX + 

NMHC CO 

2008–2012 ............................................................................................................................................... 0.30 7.5 5.5 

2013–2014 ............................................................................................................................................... 0.03 4.7 5.5 

TABLE 3 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 37 ≤ KW < 56 

Option 1 Model years PM NOX + 

NMHC CO 

#1 ..................................................................................................................................... 2008–2012 0.30 4.7 5.0 

#2 ..................................................................................................................................... 2012 0.03 4.7 5.0 

All ..................................................................................................................................... 2013–2014 0.03 4.7 5.0 

1You may certify engines to the Option #1 or Option #2 standards starting in the listed model year. Under Option #1, all engines at or above 

37 kW and below 56 kW produced before the 2013 model year must meet the applicable Option #1 standards in this table. These engines are 

considered to be ‘‘Option #1 engines.’’ Under Option #2, all these engines produced before the 2012 model year must meet the applicable standards under 40 CFR part 89. Engines certified to the Option #2 standards in model year 2012 are considered to be ‘‘Option #2 engines.’’

TABLE 4 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 56 ≤ KW < 75 

Model years 1 Phase-in option PM NOX NMHC NOX + 

NMHC CO 

Phase-in ....................................... 0.02 0.40 0.19 .................... 5.0 

2012–2013 .................................... Phase-out ..................................... 0.02 .................... .................... 4.7 5.0 

2014 .............................................. All engines .................................... 0.02 0.40 0.19 .................... 5.0 

1See paragraph (d)(2) of this section for provisions that allow for a different phase-in schedule than that specified in paragraph (c)(1) of this 

section. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39219

TABLE 5 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 75 ≤ KW < 130 

Model years 1 Phase-in option PM NOX NMHC NOX + 

NMHC CO 

Phase-in ....................................... 0.02 0.40 0.19 .................... 5.0 

2012–2013 .................................... Phase-out ..................................... 0.02 .................... .................... 4.0 5.0 

2014 .............................................. All engines .................................... 0.02 0.40 0.19 .................... 5.0 

1See paragraph (d)(2) of this section for provisions that allow for a different phase-in schedule than that specified in paragraph (c)(1) of this 

section. 

TABLE 6 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 130 ≤ KW < 560 

Model years 1 Phase-in option PM NOX NMHC NOX + 

NMHC CO 

Phase-in ....................................... 0.02 0.40 0.19 .................... 3.5 

2011–2013 .................................... Phase-out ..................................... 0.02 .................... .................... 4.0 3.5 

2014 .............................................. All engines .................................... 0.02 0.40 0.19 .................... 3.5 

TABLE 7 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): KW > 560 

Model years Maximum engine power Application PM NOX NMHC CO 

560 < kW ≤ 900 ................ All ...................................... 0.10 3.5 0.40 3.5 

Generator sets .................. 0.10 0.67 0.40 3.5 

2011–2014 ........................ kW > 900 .......................... All except generator sets .. 0.10 3.5 0.40 3.5 

(c) Phase-in requirements. The 

following phase-in provisions apply for 

engines in 56–560 kW power categories 

meeting the interim Tier 4 standards in 

paragraphs (a) and (b) of this section: 

(1) For each model year before 2014 

noted in Tables 4 through 6 of this 

section, you must certify engine families 

representing at least 50 percent of your 

U.S.-directed production volume for 

each power category to the applicable 

phase-in standards, except as allowed 

by paragraph (c)(3), (d)(2), or (e) of this 

section. Any engines not certified to the 

phase-in standards must be certified to 

the corresponding phase-out standards. 

(2) Engines certified to the phase-out 

standards in Tables 4 through 6 of this 

section must comply with all other 

requirements that apply to Tier 4 

engines, except as otherwise specified 

in this section. 

(3) At the time of certification, show 

how you intend to meet the phase-in 

requirements of this paragraph (c) based 

on projected U.S.-directed production 

volumes. If your actual U.S.-directed 

production volume fails to meet the 

phase-in requirements for a given model 

year, you must make up the shortfall (in 

terms of number of engines) by the end 

of the model year representing the final 

year of the phase-in period. For 

example, if you plan in good faith to 

produce 50 percent of a projected 

10,000 engines in the 56–130 kW power 

category (i.e., 5,000 engines) in 2012 in 

compliance with the Tier 4 phase-in 

standards for NOX and NMHC in Table 

4 of this section, but produce 4,500 such 

engines of an actual 10,000 engines, you 

must produce 500 engines in model year 

2013 (i.e., the final year of the phase-in 

for this power category) that meet the 

Tier 4 phase-in standards above and 

beyond the production otherwise 

needed to meet the 50-percent phase-in 

requirement for model year 2013. If any 

shortfall exceeds the applicable limit of 

paragraph (c)(3)(i) or (ii) of this section, 

that number of phase-out engines will 

be considered not covered by a 

certificate of conformity and in violation 

of § 1068.101(a)(1). The shortfall 

allowed by this paragraph (c)(3) may not 

exceed a certain number of engines, as 

follows: 

(i) For engine families certified 

according to the alternate phase-in 

schedule described in paragraph (d)(2) 

of this section, for model years prior to 

the final year of the phase-in, 5 percent 

of your actual U.S.-directed production 

volume for that power category in that 

model year. 

(ii) For all other engine families, for 

model years prior to the final year of the 

phase-in, 25 percent of your actual U.S.-

directed production volume for that 

power category in that model year. 

(iii) No shortfall is allowed in the 

final year of the phase-in. 

(4) Engines you introduce into 

commerce beyond the limits described 

in paragraphs (c)(3) of this section will 

be considered not covered by a 

certificate of conformity and in violation 

of § 1068.101(a)(1). 

(5) For the purposes of this part, the 

term ‘‘phase-in’’ means relating to a 

standard that is identified in this section 

as a phase-in standard and the term 

‘‘phase-out’’ means relating to a 

standard that is identified in this section 

as a phase-out standard. For example, a 

200–kW engine from the 2012 model 

year that is certified to the 4.0 g/kW-hr 

NOX+NMHC standard in Table 6 of 

§ 1039.102 is a phase-out engine. 

(d) Banked credits and alternate 

phase-in for 56–130 kW engines. For 

engines in the 56–130 kW power 

category, you may use only one of the 

following additional provisions: 

(1) For model years 2012 through 

2014, you may use banked NOX+NMHC 

credits from any Tier 2 engine at or 

above 37 kW certified under 40 CFR 

part 89 to meet the NOX phase-in 

standards or the NOX+NMHC phase-out 

standards under paragraphs (b) and (c) 

of this section, subject to the additional 

ABT provisions in § 1039.740. 

(2) Instead of meeting the phase-in 

requirements of paragraph (c)(1) of this 

section, you may certify engine families 

representing at least 25 percent of your 

U.S.-directed production volume for 

each model year from 2012 through 

2014 to the applicable phase-in 

standards in Tables 4 and 5 of this 

section, except as allowed by paragraph 

(c)(3) or (e) of this section. Any engines 

not certified to the phase-in standards 

must be certified to the corresponding 

phase-out standards. Engines certified 

under this paragraph (d)(2) may 

generate NOX emission credits only for 

averaging within the same power 

category during the same model year.

39220 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

For engines certified under this 

paragraph (d)(2), the 2014 model year 

may not extend beyond December 30, 

2014. 

(e) Alternate NOX standards. For 

engines in 56–560 kW power categories 

during the phase-in of Tier 4 standards, 

you may certify engine families to the 

alternate NOX standards in this 

paragraph (e) instead of the phase-in 

and phase-out NOX and NOX+NMHC 

standards described in Tables 4 through 

6 of this section. Engines certified under 

this section must be certified to an 

NMHC standard of 0.19 g/kW-hr. Do not 

include engine families certified under 

this paragraph (e) in determining 

whether you comply with the 

percentage phase-in requirements of 

paragraphs (c) and (d)(2) of this section. 

Except for the provisions for alternate 

FEL caps in § 1039.104(g), the NOX

standards and FEL caps under this 

paragraph (e) are as follows: 

(1) For engines in the 56–130 kW 

power category, apply the following 

alternate NOX standards and FEL caps: 

(i) If you use the provisions of 

paragraph (d)(1) of this section, your 

alternate NOX standard for any engine 

family in the 56–130 kW power category 

is 2.3 g/kW-hr for model years 2012 and 

2013. Engines certified to this standard 

may not exceed a NOX FEL cap of 3.0 

g/kW-hr. 

(ii) If you use the provisions of 

paragraph (d)(2) of this section, your 

alternate NOX standard for any engine 

family in the 56–130 kW power category 

is 3.4 g/kW-hr for model years 2012 

through 2014. Engines below 75 kW 

certified to this standard may not 

exceed a NOX FEL cap of 4.4 g/kW-hr; 

engines at or above 75 kW certified to 

this standard may not exceed a NOX

FEL cap of 3.8 g/kW-hr. 

(iii) If you do not use the provisions 

of paragraph (d) of this section, you may 

apply the alternate NOX standard and 

the appropriate FEL cap from either 

paragraph (e)(1)(i) or (ii) of this section. 

(2) For engines in the 130–560 kW 

power category, the alternate NOX

standard is 2.0 g/kW-hr for model years 

2011 through 2013. Engines certified to 

this standard may not exceed a NOX

FEL cap of 2.7 g/kW-hr.

(f) Split families. For generating or 

using credits for engines in 56–560 kW 

power categories during the phase-in of 

Tier 4 standards, you may split an 

engine family into two subfamilies (for 

example, one that uses credits and one 

that generates credits for the same 

pollutant). 

(1) Identify any split engine families 

in your application for certification. 

Your engines must comply with all the 

standards and requirements applicable 

to Tier 4 engines, except as noted in this 

paragraph (f). You may calculate 

emission credits relative to different 

emission standards (i.e., phase-in and 

phase-out standards) for different sets of 

engines within the engine family, but 

the engine family must be certified to a 

single set of standards and FELs. To 

calculate NOX+NMHC emission credits, 

add the NOX FEL to the NMHC phasein standard for comparison with the 

applicable NOX+NMHC phase-out 

standard. Any engine family certified 

under this paragraph (f) must meet the 

applicable phase-in standard for NMHC. 

You may assign the number and 

configurations of engines within the 

respective subfamilies any time before 

the due date for the final report required 

in § 1039.730. Apply the same label to 

each engine in the family, including the 

NOX FEL to which it is certified. 

(2) For example, a 10,000-unit engine 

family in the 75–130 kW power category 

may be certified to meet the standards 

for PM, NMHC, and CO that apply to 

phase-in engines, with a 0.8 g/kW-hr 

FEL for NOX. When compared to the 

phase-out NOX+NMHC standard, this 

engine family would generate positive 

NOX+NMHC emission credits. When 

compared to the phase-in NOX standard, 

this engine family would generate 

negative NOX emission credits. You 

could create a subfamily with 2,500 

engines (one-quarter of the 10,000 

engines) and identify them as phase-in 

engines. You would count these 2,500, 

with their negative NOX credits, in 

determining compliance with the 50-

percent phase-in requirement in 

paragraph (c)(1) of this section. You 

would calculate negative credits relative 

to the 0.40 g/kW-hr NOX standard for 

these 2,500 engines. You would identify 

the other 7,500 engines in the family as 

phase-out engines and calculate positive 

credits relative to the 4.0 g/kW-hr 

NOX+NMHC standard. 

(g) Other provisions. The provisions 

of § 1039.101(d) through (h) apply with 

respect to the standards of this section, 

with the following exceptions and 

special provisions: 

(1) NTE standards. Use the provisions 

of § 1039.101(e)(3) to calculate and 

apply the NTE standards, but base these 

calculated values on the applicable 

standards in this section or the 

applicable FEL, instead of the standards 

in Table 1 of § 1039.101. All other 

provisions of § 1039.101(e) apply under 

this paragraph (g)(1). The NTE standards 

do not apply for certain engines and 

certain pollutants, as follows: 

(i) All engines below 37 kW for model 

years before 2013. 

(ii) All engines certified under Option 

#1 of Table 3 of this section. These are 

small-volume manufacturer engines 

certified to the Option #1 standards for 

model years 2008 through 2015 under 

§ 1039.104(c), and other engines 

certified to the Option #1 standards for 

model years 2008 through 2012. 

(iii) All engines less than or equal to 

560 kW that are certified to an FEL 

under the alternate FEL program during 

the first four years of the Tier 4 

standards for the applicable power 

category, as described in § 1039.104(g). 

However, if you apply to meet transient 

emission standards for these engines 

under § 1039.102(a)(1)(iii), you must 

also meet the NTE standards in this 

paragraph (g)(1). 

(iv) Gaseous pollutants for phase-out 

engines that you certify to the same 

numerical standards and FELs for 

gaseous pollutants to which you 

certified under the Tier 3 requirements 

of 40 CFR part 89. However, the NTE 

standards for PM apply to these engines. 

(2) Interim FEL caps. As described in 

1039.101(d), you may participate in the 

ABT program in subpart H of this part 

by certifying engines to FELs for PM, 

NOX, or NOX+NMHC instead of the 

standards in Tables 1 through 7 of this 

section for the model years shown. The 

FEL caps listed in the following table 

apply instead of the FEL caps 

in§ 1039.101(d)(1), except as allowed by 

§ 1039.104(g):

TABLE 8 OF § 1039.102.—INTERIM TIER 4 FEL CAPS, G/KW-HR

Maximum

engine power 

Phase-in

option Model years 1 PM NOX NOX+NMHC 

kW < 19 .......................................................... ......................................................... 2008–2014 0.80 .................... 29.5 

19 ≤ kW < 37 ................................................. ......................................................... 2008–2012 0.60 .................... 9.5 

37 ≤ kW < 56 ................................................. ......................................................... 32008–2012 0.40 .................... 7.5 

56 ≤ kW < 130 ............................................... Phase-in .......................................... 2012–2013 0.04 0.80 ....................

56 ≤ kW < 130 ............................................... Phase-out ........................................ 2012–2013 0.04 .................... 4 6.6 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39221

TABLE 8 OF § 1039.102.—INTERIM TIER 4 FEL CAPS, G/KW-HR—Continued

Maximum

engine power 

Phase-in

option Model years 1 PM NOX NOX+NMHC 

130 ≤ kW ≤ 560 ............................................. Phase-in .......................................... 2011–2013 0.04 0.80 ....................

130 ≤ kW ≤ 560 ............................................. Phase-out ........................................ 2011–2013 0.04 .................... 5 6.4 

kW > 560 ........................................................ ......................................................... 2011–2014 0.20 6.2 ....................

1For model years before 2015 where this table does not specify FEL caps, apply the FEL caps shown in § 1039.101. 2For engines below 8 kW, the FEL cap is 10.5 g/kW-hr for NOX+NMHC emissions. 3For manufacturers certifying engines to the standards of this part 1039 in 2012 under Option #2 of Table 3 of § 1039.102, the FEL caps of 

§ 1039.101 apply for model year 2012 and later; see 40 CFR part 89 for provisions that apply to earlier model years. 

4For engines below 75 kW, the FEL cap is 7.5 g/kW-hr for NOX+NMHC emissions. 5For engines below 225 kW, the FEL cap is 6.6 g/kW-hr for NOX+NMHC emissions. 

(3) Crankcase emissions. The 

crankcase emission requirements of 

§ 1039.115(a) do not apply to engines 

using charge-air compression that are 

certified to an FEL under the alternate 

FEL program in § 1039.104(g) during the 

first four years of the Tier 4 standards 

for the applicable power category.

(4) Special provisions for 37–56 kW 

engines. For engines at or above 37 kW 

and below 56 kW from model years 

2008 through 2012, you must take the 

following additional steps: 

(i) State the applicable PM standard 

on the emission control information 

label. 

(ii) Add information to the emissionrelated installation instructions to 

clarify the equipment manufacturer’s 

obligations under § 1039.104(f).

§ 1039.104 Are there interim provisions 

that apply only for a limited time? 

The provisions in this section apply 

instead of other provisions in this part. 

This section describes when these 

interim provisions apply. 

(a) Incentives for early introduction. 

This paragraph (a) allows you to reduce 

the number of engines subject to the 

applicable standards in § 1039.101 or 

§ 1039.102, when some of your engines 

are certified to the specified levels 

earlier than otherwise required. The 

engines that are certified early are 

considered offset-generating engines. 

The provisions of this paragraph (a), 

which describe the requirements 

applicable to offset-generating engines, 

apply beginning in model year 2007. 

These offset generating engines may 

generate additional allowances for 

equipment manufacturers under the 

incentive program described in 

§ 1039.627; you may instead use these 

offsets under paragraph (a)(2) of this 

section in some cases. 

(1) For early-compliant engines to 

generate offsets for use either under this 

paragraph (a) or under § 1039.627, you 

must meet the following general 

provisions: 

(i) You may not generate offsets from 

engines below 19 kW. 

(ii) You must begin actual production 

of engines covered by the corresponding 

certificate by the following dates: 

(A) For engines at or above 19 kW and 

below 37 kW: September 1, 2012. 

(B) For engines at or above 37 kW and 

below 56 kW: September 1, 2012 if you 

choose Option #1 in Table 3 of 

§ 1039.102, or September 1, 2011 if you 

do not choose Option #1 in Table 3 of 

§ 1039.102. 

(C) For engines in the 56–130 kW 

power category: September 1, 2011. 

(D) For engines in the 130–560 kW 

power category: September 1, 2010. 

(E) For engines above 560 kW: 

September 1, 2014. 

(iii) Engines you produce after 

December 31 of the year shown in 

paragraph (a)(1)(ii) of this section may 

not generate offsets. 

(iv) You may not use ABT credits to 

certify offset-generating engines. 

(v) Offset-generating engines must be 

certified to the Tier 4 standards and 

requirements under this part 1039. 

(2) If equipment manufacturers 

decline offsets for your offset-generating 

engines under § 1039.627, you may not 

generate ABT credits with these 

engines, but you may reduce the 

number of engines that are required to 

meet the standards in § 1039.101 or 

1039.102 as follows:

For every . . . With maximum engine 

power . . . 

That are certified to the 

applicable standards in 

. . . 

You may reduce the number of engines in 

the same power category that are required 

to meet the . . . 

In later model 

years by . . . 

(i) 2 engines .............. 19 ≤ kW < 37 .................... Table 2 of § 1039.102 1 .... PM standard in Table 2 of § 1039.102 applicable to model year 2013 or 2014 engines or the PM standard in Table 1 of 

§ 1039.101.

3 engines. 

(ii) 2 engines .............. 56 ≤ kW ≤ 560 .................. Table 4, 5, or 6 of 

§ 1039.102 for Phaseout engines.

Phase-out standards in Tables 4 through 6 

of § 1039.102.

3 engines. 

(iii) 2 engines ............. kW ≥ 19 ............................ Table 1 of § 1039.101 ...... Standards in Tables 2 through 7 of 

§ 1039.102 or standards in Table 1 of 

§ 1039.101.

3 engines.2

(iv) 1 engine .............. kW ≥ 19 ............................ Table 1 of § 1039.101 + 

0.20 g/kW-hr NOX

standard.

Standards in Tables 2 through 7 of 

§ 1039.102 or standards in Table 1 of 

§ 1039.101.

2 engines.2

1The engine must be certified to the PM standard applicable to model year 2013 engines, and to the NOX+NMHC and CO standards applicable to model year 2012 engines. 2For engines above 560 kW, offsets from generator-set engines may be used only for generator-set engines. Offsets from engines for other 

applications may be used only for other applications besides generator sets. 

(3) Example: If you produce 100 

engines in the 56–130 kW power 

category in model year 2008 that are 

certified to the 56–130 kW standards 

listed in § 1039.101, and you produced 

10,000 engines in this power category in

39222 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

model year 2015, then only 9,850 of 

these model year 2015 engines would 

need to comply with the standards 

listed in § 1039.101. The 100 offsetgenerating engines in model year 2008 

could not use or generate ABT credits. 

(4) Offset-using engines (that is, those 

not required to certify to the standards 

of § 1039.101 or § 1039.102 under 

paragraph (a)(2) of this section) are 

subject to the following provisions: 

(i) If the offset is being used under 

paragraph (a)(2)(i) of this section for an 

engine that would otherwise be certified 

to the model year 2013 or 2014 

standards in Table 2 of § 1039.102 or the 

standards in Table 1 of § 1039.101, this 

engine must be certified to the standards 

and requirements of this part 1039, 

except that the only PM standard that 

applies is the steady-state PM standard 

that applies for model year 2012. Such 

an engine may not generate ABT credits. 

(ii) If the offset is being used under 

paragraph (a)(2)(ii) of this section for an 

engine that would otherwise be certified 

to the phase-out standards in Tables 4 

through 6 of § 1039.102, this engine 

must be certified to the standards and 

requirements of this part 1039, except 

that the PM standard is the Tier 3 PM 

standard that applies for this engine’s 

maximum power. Such an engine will 

be treated as a phase-out engine for 

purposes of determining compliance 

with percentage phase-in requirements. 

Such an engine may not generate ABT 

credits. 

(iii) All other offset-using engines 

must meet the standards and other 

provisions that apply in model year 

2011 for engines in the 19–130 kW 

power categories, in model year 2010 for 

engines in the 130–560 kW power 

category, or in model year 2014 for 

engines above 560 kW. Show that 

engines meet these emission standards 

by meeting all the requirements of 

§ 1039.260. You must meet the labeling 

requirements in § 1039.135, but add the 

following statement instead of the 

compliance statement in 

§ 1039.135(c)(12): ‘‘THIS ENGINE 

MEETS U.S. EPA EMISSION 

STANDARDS UNDER 40 CFR 

1039.104(a).’’ For power categories with 

a percentage phase-in, these engines 

should be treated as phase-in engines 

for purposes of determining compliance 

with phase-in requirements. 

(5) If an equipment manufacturer 

claims offsets from your engine for use 

under § 1039.627, the engine generating 

the offset must comply with the 

requirements of paragraph (a)(1) of this 

section. You may not generate offsets for 

use under paragraphs (a)(2) and (5) of 

this section for these engines. You may 

generate ABT credits from these engines 

as follows: 

(i) To generate emission credits for 

NOX, NOX+NMHC, and PM, the engine 

must be certified to FELs at or below the 

standards in paragraph (a)(2) of this 

section. 

(ii) Calculate credits according to 

§ 1039.705 but use as the applicable 

standard the numerical value of the 

standard to which the engine would 

have otherwise been subject if it had not 

been certified under this paragraph (a). 

(iii) For the production volume, use 

the number of engines certified under 

this paragraph (a) for which you do not 

claim offsets under paragraph (a)(2) of 

this section. 

(6) You may include engines used to 

generate offsets under this paragraph (a) 

and engines used to generate offsets 

under § 1039.627 in the same engine 

family, subject to the provisions of 

§ 1039.230. The engine must be certified 

to FELs, as specified in paragraph 

(a)(5)(i) of this section. The FELs must 

be below the standard levels specified 

in paragraph (a)(2) of this section and 

those specified in § 1039.627. In the 

reports required in § 1039.730, include 

the following information for each 

model year: 

(i) The total number of engines that 

generate offsets under this paragraph (a). 

(ii) The number of engines used to 

generate offsets under paragraph (a)(2) 

of this section. 

(iii) The names of equipment 

manufacturers that intend to use your 

offsets under § 1039.627 and the number 

of offsets involved for each equipment 

manufacturer. 

(b) In-use compliance limits. For 

purposes of determining compliance 

after title or custody has transferred to 

the ultimate purchaser, calculate the 

applicable in-use compliance limits by 

adjusting the applicable standards or 

FELs. This applies only for engines at or 

above 19 kW. The NOX adjustment 

applies only for engines with a NOX FEL 

no higher than 2.1 g/kW-hr The PM 

adjustment applies only for engines 

with a PM FEL no higher than the PM 

standard in § 1039.101 for the 

appropriate power category. Add the 

following adjustments to the otherwise 

applicable standards or FELs (steadystate, transient, and NTE) for NOX and 

PM:

In model years . . . If your engine’s maximum power is 

. . . The NOX adjustment in g/kW-hr is . . . 

The PM

adjustment in 

g/kW-hr is 

. . . 

2013–2014 .............. 19 ≤ kW < 56 .................................... not allowed ...................................................................................... 0.01 

2012–2016 .............. 56 ≤ kW < 130 .................................. 0.16 for operating hours ≤ 2000 .....................................................

0.25 for operating hours 2001 to 3400 ...........................................

0.34 for operating hours > 3400 .....................................................

0.01 

2011–2015 .............. 130 ≤ kW < 560 ................................ 0.16 for operating hours ≤ 2000 .....................................................

0.25 for operating hours 2001 to 3400 ...........................................

0.34 for operating hours > 3400 .....................................................

0.01 

2011–2016 .............. kW > 560 .......................................... 0.16 for operating hours ≤ 2000 .....................................................

0.25 for operating hours 2001 to 3400 ...........................................

0.34 for operating hours > 3400 .....................................................

0.01 

(c) Provisions for small-volume 

manufacturers. Special provisions apply 

if you are a small-volume engine 

manufacturer subject to the 

requirements of this part. You must 

notify us in writing before January 1, 

2008 if you intend to use these 

provisions. 

(1) You may delay complying with 

certain otherwise applicable Tier 4 

emission standards and requirements as 

described in the following table:

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39223

If your engine’s maximum 

power is . . . You may delay meeting . . . Until model year . . . 

Before that model year the engine 

must comply with . . . 

kW < 19 .................................. The standards and requirements of this part ................... 2011 The standards and requirements in 

40 CFR part 89. 

19 ≤ kW < 37 .......................... The Tier 4 standards and requirements of this part that 

would otherwise be applicable in model year 2013.

2016 The Tier 4 standards and requirements that apply for model year 

2008. 

37 ≤ kW < 56 .......................... See paragraph (c)(2) of this section for special provisions that apply for engines in this power category. 

56 ≤ kW < 130 ........................ The standards and requirements of this part ................... 2015 The standards and requirements in 

40 CFR part 89. 

(2) To use the provisions of this 

paragraph (c) for engines at or above 37 

kW and below 56 kW, choose one of the 

following: 

(i) If you comply with the 0.30 g/kWhr PM standard in § 1039.102 in all 

model years from 2008 through 2012 

without using PM credits, you may 

continue meeting that standard through 

2015. 

(ii) If you do not choose to comply 

with paragraph (c)(2)(i) of this section, 

you may continue to comply with the 

standards and requirements in 40 CFR 

part 89 for model years through 2012, 

but you must begin complying in 2013 

with Tier 4 standards and requirements 

specified in Table 3 of § 1039.102 for 

model years 2013 and later. 

(3) After the delays indicated in 

paragraph (c)(1) and (2) of this section, 

you must comply with the same Tier 4 

standards and requirements as all other 

manufacturers. 

(4) For engines not in the 19–56 kW 

power category, if you delay compliance 

with any standards under this paragraph 

(c), you must do all the following things 

for the model years when you are 

delaying compliance with the otherwise 

applicable standards:

(i) Produce engines that meet all the 

emission standards and other 

requirements under 40 CFR part 89 

applicable for that model year, except as 

noted in this paragraph (c). 

(ii) Meet the labeling requirements in 

40 CFR 89.110, but use the following 

compliance statement instead of the 

compliance statement in 40 CFR 

89.110(b)(10): ‘‘THIS ENGINE 

COMPLIES WITH U.S. EPA 

REGULATIONS FOR [CURRENT 

MODEL YEAR] NONROAD 

COMPRESSION-IGNITION ENGINES 

UNDER 40 CFR 1039.104(c).’’. 

(iii) Notify the equipment 

manufacturer that the engines you 

produce under this section are excluded 

from the production volumes associated 

with the equipment-manufacturer 

allowance program in § 1039.625. 

(5) For engines in the 19–56 kW 

power category, if you delay compliance 

with any standards under this paragraph 

(c), you must do all the following things 

for the model years when you are 

delaying compliance with the otherwise 

applicable standards: 

(i) Produce engines in those model 

years that meet all the emission 

standards and other requirements that 

applied for your model year 2008 

engines in the same power category. 

(ii) Meet the labeling requirements in 

§ 1039.135, but use the following 

compliance statement instead of the 

compliance statement in § 1039.135: 

‘‘THIS ENGINE COMPLIES WITH U.S. 

EPA REGULATIONS FOR [CURRENT 

MODEL YEAR] NONROAD 

COMPRESSION-IGNITION ENGINES 

UNDER 40 CFR 1039.104(c).’’. 

(iii) Notify the equipment 

manufacturer that the engines you 

produce under this section are excluded 

from the production volumes associated 

with the equipment-manufacturer 

allowance program in § 1039.625. 

(6) The provisions of this paragraph 

(c) may not be used to circumvent the 

requirements of this part. 

(d) Deficiencies for NTE standards.

You may ask us to accept as compliant 

an engine that does not fully meet 

specific requirements under the 

applicable NTE standards. Such 

deficiencies are intended to allow for 

minor deviations from the NTE 

standards under limited conditions. We 

expect your engines to have functioning 

emission-control hardware that allows 

you to comply with the NTE standards. 

(1) Request our approval for specific 

deficiencies in your application for 

certification, or before you submit your 

application. We will not approve 

deficiencies retroactively to cover 

engines already certified. In your 

request, identify the scope of each 

deficiency and describe any auxiliary 

emission-control devices you will use to 

control emissions to the lowest practical 

level, considering the deficiency you are 

requesting. 

(2) We will approve a deficiency only 

if compliance would be infeasible or 

unreasonable considering such factors 

as the technical feasibility of the given 

hardware and the applicable lead time 

and production cycles—including 

schedules related to phase-in or phaseout of engines. We may consider other 

relevant factors. 

(3) Our approval applies only for a 

single model year and may be limited to 

specific engine configurations. We may 

approve your request for the same 

deficiency in the following model year 

if correcting the deficiency would 

require unreasonable hardware or 

software modifications and we 

determine that you have demonstrated 

an acceptable level of effort toward 

complying. 

(4) You may ask for any number of 

deficiencies in the first three model 

years during which NTE standards 

apply for your engines. For the next four 

model years, we may approve up to 

three deficiencies per engine family. 

Deficiencies of the same type that apply 

similarly to different power ratings 

within a family count as one deficiency 

per family. We may condition approval 

of any such additional deficiencies 

during these four years on any 

additional conditions we determine to 

be appropriate. We will not approve 

deficiencies after the seven-year period 

specified in this paragraph (d)(4). 

(e) Diesel test fuels and corresponding 

labeling requirements. For diesel-fueled 

engines in 2011 and later model years, 

the diesel test fuel is ultra low-sulfur 

diesel fuel specified in 40 CFR part 

1065. For diesel-fueled engines in 2010 

and earlier model years, use test fuels 

and meet labeling requirements as 

follows: 

(1) Use the following test fuels in 

2010 and earlier model years: 

(i) Unless otherwise specified, the 

diesel test fuel is low-sulfur diesel fuel 

specified in 40 CFR part 1065. 

(ii) In model years 2007 through 2010, 

you may use ultra low-sulfur diesel fuel 

as the test fuel for any engine family 

that employs sulfur-sensitive technology 

if you can demonstrate that in-use 

engines in the family will use diesel fuel 

with a sulfur concentration no greater 

than 15 ppm. 

(iii) You may use ultra low-sulfur 

diesel fuel as the test fuel for engine 

families in any power category below 56 

kW, as long as none of the engines in 

your engine family employ sulfurVerDate jul<14>2003 17:54 Jun 28, 2004 Jkt 203001 PO 00000 Frm 00267 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
39224 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

sensitive technologies, you ensure that 

ultimate purchasers of equipment using 

these engines are informed that ultra 

low-sulfur diesel fuel is recommended, 

and you recommend to equipment 

manufacturers that a label be applied at 

the fuel inlet recommending 15 ppm 

fuel. 

(iv) For the engines described in 

§ 1039.101(c) that are certified to the 

0.60 g/kW-hr PM standard in Table 1 of 

§ 1039.102 in the 2010 model year, you 

may test with the ultra low-sulfur fuel 

specified in 40 CFR part 1065. 

(2) Meet the labeling requirements of 

this paragraph (e)(2) (or other labeling 

requirements we approve) to identify 

the applicable test fuels specified in 

paragraph (e)(1) of this section. Provide 

instructions to equipment 

manufacturers to ensure that they are 

aware of these labeling requirements.

(i) For engines certified under the 

provisions of paragraph (e)(1)(i) of this 

section, include the following statement 

on the emission control information 

label and the fuel-inlet label specified in 

§ 1039.135: ‘‘LOW SULFUR FUEL OR 

ULTRA LOW SULFUR FUEL ONLY’’. 

(ii) For engines certified under the 

provisions of paragraph (e)(1)(ii) of this 

section, include the following statement 

on the emission control information 

label and the fuel-inlet label specified in 

§ 1039.135: ‘‘ULTRA LOW SULFUR 

FUEL ONLY’’. 

(iii) For engines certified under the 

provisions of paragraph (e)(1)(iii) of this 

section, include the following statement 

on the emission control information 

label specified in § 1039.135: ‘‘ULTRA 

LOW SULFUR FUEL 

RECOMMENDED’’. 

(3) For model years 2010 and earlier, 

we will use the test fuel that you use 

under paragraph (e)(1) of this section, 

subject to the conditions of paragraph 

(e)(1) of this section. 

(f) Requirements for equipment 

manufacturers. If you produce 

equipment with engines certified to Tier 

3 standards under Option #2 of Table 3 

of § 1039.102 during model years from 

2008 through 2011, then a minimum 

number of pieces of equipment you 

produce using 2012 model year engines 

must have engines certified to the 

Option #2 standards, as follows: 

(1) For equipment you produce with 

2012 model year engines at or above 37 

kW and below 56 kW, determine the 

minimum number of these engines that 

must be certified to the Option #2 

standards in Table 3 of § 1039.102 as 

follows: 

(i) If all the equipment you produce 

using 2008 through 2011 model year 

engines use engines certified to Tier 3 

standards under Option #2 of Table 3 of 

§ 1039.102, then all the 2012 model year 

engines you install must be certified to 

the Option #2 standards of Table 3 of 

§ 1039.102. 

(ii) If you produce equipment using 

2008 through 2011 model year engines 

with some engines certified to Option 

#1 standards of Table 3 of § 1039.102 

and some engines certified to Tier 3 

standards under Option #2 standards of 

Table 3 of § 1039.102, calculate the 

minimum number of 2012 model year 

engines you must install that are 

certified to the Option #2 standards of 

Table 3 of § 1039.102 from the following 

equation:

Minimum number = [(T-O1-F)/(T–F)¥0.05] ×

P

Where: 

T = The total number of 2008–2010 model 

year engines at or above 37 kW and 

below 56 kW that you use in equipment 

you produce. 

O1 = The number of engines from the 2008–

2010 model years certified under Option 

#1 of Table 3 of § 1039.102 that you use 

in equipment you produce. 

F = The number of 2008–2010 model year 

engines at or above 37 kW and below 56 

kW that you use in equipment you 

produce under the flexibility provisions 

of § 1039.625. 

P = The total number of 2012 model year 

engines at or above 37 kW and below 56 

kW that you use in equipment you 

produce.

(2) As needed for the calculation 

required by this paragraph (f), keep 

records of all equipment you produce 

using 2008–2012 model year engines at 

or above 37 kW and below 56 kW. If you 

fail to keep these records, you may not 

use any 2012 model year engines 

certified to Option #1 standards in your 

equipment. 

(3) If you fail to comply with the 

provisions of this paragraph (f), then 

using 2012 model year engines certified 

under Option #1 of Table 3 of 

§ 1039.102 (or certified to less stringent 

standards) in such equipment violates 

the prohibitions in § 1068.101(a)(1). 

(g) Alternate FEL caps. You may 

certify a limited number of engines from 

your U.S.-directed production volume 

to the FEL caps in Table 1 of this section 

instead of the otherwise applicable FEL 

caps in § 1039.101(d)(1), § 1039.102(e), 

or § 1039.102(g)(2), subject to the 

following provisions: 

(1) The provisions of this paragraph 

(g) apply during the model years shown 

in Table 1 of this section. During this 

period, the number of engines certified 

to the FEL caps in Table 1 of this section 

must not exceed 20 percent in any 

single model year in each power 

category. The sum of percentages over 

the four-year period must not exceed a 

total of 40 percent in each power 

category. If you certify an engine under 

an alternate FEL cap in this paragraph 

(g) for any pollutant, count it toward the 

allowed percentage of engines certified 

to the alternate FEL caps. 

(2) If your engine is not certified to 

transient emission standards under the 

provisions of § 1039.102(a)(1)(iii), you 

must adjust your FEL upward by a 

temporary compliance adjustment factor 

(TCAF) before calculating your negative 

emission credits under § 1039.705, as 

follows: 

(i) The temporary compliance 

adjustment factor for NOX is 1.1. 

(ii) The temporary compliance 

adjustment factor for PM is 1.5. 

(iii) The adjusted FEL (FELadj) for 

calculating emission credits is 

determined from the steady-state FEL 

(FELss) using the following equation:

FELadj = (FELss) × (TCAF)

(iv) The unadjusted FEL (FELss) 

applies for all purposes other than 

credit calculation. 

(3) These alternate FEL caps may not 

be used for phase-in engines. 

(4) Do not apply TCAFs to gaseous 

emissions for phase-out engines that 

you certify to the same numerical 

standards (and FELs if the engines are 

certified using ABT) for gaseous 

pollutants as you certified under the 

Tier 3 requirements of 40 CFR part 89.

TABLE 1 OF § 1039.104.—ALTERNATE FEL CAPS

Maximum engine power PM FEL cap, 

g/kW-hr 

Model years 

for the alternate PM FEL 

cap 

NOX FEL cap, 

g/kW-hr 

Model years 

for the alternate NOX FEL 

cap 

19 ≤ kW < 56 ................................................................................................... 0.30 1 2012–2015 ........................ ........................

56 ≤ kW < 130 2 ............................................................................................... 0.30 3 2012–2015 3.8 3 2014–2015 

130 ≤ kW ≤ 560 ............................................................................................... 0.20 2011–2014 3.8 2014 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39225

TABLE 1 OF § 1039.104.—ALTERNATE FEL CAPS—Continued

Maximum engine power PM FEL cap, 

g/kW-hr 

Model years 

for the alternate PM FEL 

cap 

NOX FEL cap, 

g/kW-hr 

Model years 

for the alternate NOX FEL 

cap 

kW > 560 4 ....................................................................................................... 0.10 2015–2018 3.5 2015–2018 

1For manufacturers certifying engines under Option #1 of Table 3 of § 1039.102, these alternate FEL caps apply for model years from 2013 

through 2016. 2For engines below 75 kW, the FEL caps are 0.40 g/kW-hr for PM emissions and 4.4 g/kW-hr for NOX emissions. 3For engines certified under the provisions of § 1039.102(d)(2) or (e)(1)(ii), the alternate NOX FEL cap in the table applies only for the 2015 

model year. 4For engines above 560 kW, the provision for alternate NOX FEL caps is limited to generator-set engines. For example, if you produce 1,000 

generator-set engines above 560 kW in 2015, up to 200 of them may be certified to the alternate NOX FEL caps. 

§ 1039.105 What smoke standards must 

my engines meet? 

(a) The smoke standards in this 

section apply to all engines subject to 

emission standards under this part, 

except for the following engines: 

(1) Single-cylinder engines. 

(2) Constant-speed engines. 

(3) Engines certified to a PM emission 

standard or FEL of 0.07 g/kW-hr or 

lower. 

(b) Measure smoke as specified in 

§ 1039.501(c). Smoke from your engines 

may not exceed the following standards: 

(1) 20 percent during the acceleration 

mode. 

(2) 15 percent during the lugging 

mode. 

(3) 50 percent during the peaks in 

either the acceleration or lugging modes.

§ 1039.107 What evaporative emission 

standards and requirements apply? 

There are no evaporative emission 

standards for diesel-fueled engines, or 

engines using other nonvolatile or 

nonliquid fuels (for example, natural 

gas). If your engine uses a volatile liquid 

fuel, such as methanol, you must meet 

the evaporative emission requirements 

of 40 CFR part 1048 that apply to sparkignition engines, as follows: 

(a) Follow the steps in 40 CFR 

1048.245 to show that you meet the 

requirements of 40 CFR 1048.105. 

(b) Do the following things in your 

application for certification: 

(1) Describe how your engines control 

evaporative emissions. 

(2) Present test data to show that 

equipment using your engines meets the 

evaporative emission standards we 

specify in this section if you do not use 

design-based certification under 40 CFR 

1048.245. Show these figures before and 

after applying deterioration factors, 

where applicable.

§ 1039.110 [Reserved]

§ 1039.115 What other requirements must 

my engines meet? 

Engines subject to this part must meet 

the following requirements, except as 

noted elsewhere in this part: 

(a) Crankcase emissions. Crankcase 

emissions may not be discharged 

directly into the ambient atmosphere 

from any engine, except as follows:

(1) Engines may discharge crankcase 

emissions to the ambient atmosphere if 

the emissions are added to the exhaust 

emissions (either physically or 

mathematically) during all emission 

testing. 

(2) If you take advantage of this 

exception, you must do the following 

things: 

(i) Manufacture the engines so that all 

crankcase emissions can be routed into 

the applicable sampling systems 

specified in 40 CFR part 1065. 

(ii) Account for deterioration in 

crankcase emissions when determining 

exhaust deterioration factors. 

(3) For purposes of this paragraph (a), 

crankcase emissions that are routed to 

the exhaust upstream of exhaust 

aftertreatment during all operation are 

not considered to be discharged directly 

into the ambient atmosphere. 

(b)–(d) [Reserved] 

(e) Adjustable parameters. Engines 

that have adjustable parameters must 

meet all the requirements of this part for 

any adjustment in the physically 

adjustable range. An operating 

parameter is not considered adjustable if 

you permanently seal it or if it is not 

normally accessible using ordinary 

tools. We may require that you set 

adjustable parameters to any 

specification within the adjustable range 

during any testing, including 

certification testing, selective 

enforcement auditing, or in-use testing. 

(f) Prohibited controls. You may not 

design your engines with emissioncontrol devices, systems, or elements of 

design that cause or contribute to an 

unreasonable risk to public health, 

welfare, or safety while operating. For 

example, this would apply if the engine 

emits a noxious or toxic substance it 

would otherwise not emit that 

contributes to such an unreasonable 

risk. 

(g) Defeat devices. You may not equip 

your engines with a defeat device. A 

defeat device is an auxiliary emissioncontrol device that reduces the 

effectiveness of emission controls under 

conditions that the engine may 

reasonably be expected to encounter 

during normal operation and use. This 

does not apply to auxiliary-emission 

control devices you identify in your 

certification application if any of the 

following is true: 

(1) The conditions of concern were 

substantially included in the applicable 

test procedures described in subpart F 

of this part. 

(2) You show your design is necessary 

to prevent engine (or equipment) 

damage or accidents. 

(3) The reduced effectiveness applies 

only to starting the engine.

§ 1039.120 What emission-related warranty 

requirements apply to me? 

(a) General requirements. You must 

warrant to the ultimate purchaser and 

each subsequent purchaser that the new 

nonroad engine, including all parts of 

its emission-control system, meets two 

conditions: 

(1) It is designed, built, and equipped 

so it conforms at the time of sale to the 

ultimate purchaser with the 

requirements of this part. 

(2) It is free from defects in materials 

and workmanship that may keep it from 

meeting these requirements. 

(b) Warranty period. Your emissionrelated warranty must be valid for at 

least as long as the minimum warranty 

periods listed in this paragraph (b) in 

hours of operation and years, whichever 

comes first. You may offer an emissionrelated warranty more generous than we 

require. The emission-related warranty 

for the engine may not be shorter than 

any published warranty you offer 

without charge for the engine. Similarly, 

the emission-related warranty for any 

component may not be shorter than any 

published warranty you offer without 

charge for that component. If you 

provide an extended warranty to 

individual owners for any components 

covered in paragraph

39226 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(c) of this section for an additional 

charge, your emission-related warranty 

must cover those components for those 

owners to the same degree. If an engine 

has no hour meter, we base the warranty 

periods in this paragraph (b) only on the 

engine’s age (in years). The warranty 

period begins when the engine is placed 

into service. The minimum warranty 

periods are shown in the following 

table:

If your engine is certified as 

. . . 

And its maximum power is 

. . . And its rated speed is . . . Then its warranty period is . . . 

Variable speed or constant 

speed.

kW < 19 .................................. Any speed .............................. 1,500 hours or two years, whichever comes 

first. 

Constant speed ........................ 19 ≤ kW < 37 ......................... 3,000 rpm or higher ................ 1,500 hours or two years, whichever comes 

first. 

Constant speed ........................ 19 ≤ kW < 37 ......................... Less than 3,000 rpm .............. 3,000 hours or five years, whichever comes 

first. 

Variable speed ......................... 19 ≤ kW < 37 ......................... Any speed .............................. 3,000 hours or five years, whichever comes 

first. 

Variable speed or constant 

speed.

kW ≥ 37 .................................. Any speed .............................. 3,000 hours or five years, whichever comes 

first. 

(c) Components covered. The 

emission-related warranty covers all 

components whose failure would 

increase an engine’s emissions of any 

pollutant. This includes components 

listed in 40 CFR part 1068, Appendix I, 

and components from any other system 

you develop to control emissions. The 

emission-related warranty covers these 

components even if another company 

produces the component. Your 

emission-related warranty does not 

cover components whose failure would 

not increase an engine’s emissions of 

any pollutant. 

(d) Limited applicability. You may 

deny warranty claims under this section 

if the operator caused the problem 

through improper maintenance or use, 

as described in 40 CFR 1068.115. 

(e) Owners manual. Describe in the 

owners manual the emission-related 

warranty provisions from this section 

that apply to the engine.

§ 1039.125 What maintenance instructions 

must I give to buyers? 

Give the ultimate purchaser of each 

new nonroad engine written 

instructions for properly maintaining 

and using the engine, including the 

emission-control system. The 

maintenance instructions also apply to 

service accumulation on your emissiondata engines, as described in § 1039.245 

and in 40 CFR part 1065. 

(a) Critical emission-related 

maintenance. Critical emission-related 

maintenance includes any adjustment, 

cleaning, repair, or replacement of 

critical emission-related components. 

This may also include additional 

emission-related maintenance that you 

determine is critical if we approve it in 

advance. You may schedule critical 

emission-related maintenance on these 

components if you meet the following 

conditions: 

(1) You demonstrate that the 

maintenance is reasonably likely to be 

done at the recommended intervals on 

in-use engines. We will accept 

scheduled maintenance as reasonably 

likely to occur if you satisfy any of the 

following conditions: 

(i) You present data showing that, if 

a lack of maintenance increases 

emissions, it also unacceptably degrades 

the engine’s performance. 

(ii) You present survey data showing 

that at least 80 percent of engines in the 

field get the maintenance you specify at 

the recommended intervals. 

(iii) You provide the maintenance free 

of charge and clearly say so in 

maintenance instructions for the 

customer. 

(iv) You otherwise show us that the 

maintenance is reasonably likely to be 

done at the recommended intervals. 

(2) For engines below 130 kW, you 

may not schedule critical emissionrelated maintenance more frequently 

than the following minimum intervals, 

except as specified in paragraphs (a)(4), 

(b), and (c) of this section: 

(i) For EGR-related filters and coolers, 

PCV valves, and fuel injector tips 

(cleaning only), the minimum interval is 

1,500 hours. 

(ii) For the following components, 

including associated sensors and 

actuators, the minimum interval is 3000 

hours: fuel injectors, turbochargers, 

catalytic converters, electronic control 

units, particulate traps, trap oxidizers, 

components related to particulate traps 

and trap oxidizers, EGR systems 

(including related components, but 

excluding filters and coolers), and other 

add-on components. For particulate 

traps, trap oxidizers, and components 

related to either of these, maintenance is 

limited to cleaning and repair only. 

(3) For engines at or above 130 kW, 

you may not schedule critical emissionrelated maintenance more frequently 

than the following minimum intervals, 

except as specified in paragraphs (a)(4), 

(b), and (c) of this section: 

(i) For EGR-related filters and coolers, 

PCV valves, and fuel injector tips 

(cleaning only), the minimum interval is 

1,500 hours. 

(ii) For the following components, 

including associated sensors and 

actuators, the minimum interval is 4500 

hours: fuel injectors, turbochargers, 

catalytic converters, electronic control 

units, particulate traps, trap oxidizers, 

components related to particulate traps 

and trap oxidizers, EGR systems 

(including related components, but 

excluding filters and coolers), and other 

add-on components. For particulate 

traps, trap oxidizers, and components 

related to either of these, maintenance is 

limited to cleaning and repair only. 

(4) If your engine family has an 

alternate useful life under § 1039.101(g) 

that is shorter than the period specified 

in paragraph (a)(2) or (a)(3) of this 

section, you may not schedule critical 

emission-related maintenance more 

frequently than the alternate useful life, 

except as specified in paragraph (c) of 

this section. 

(b) Recommended additional 

maintenance. You may recommend any 

additional amount of maintenance on 

the components listed in paragraph (a) 

of this section, as long as you state 

clearly that these maintenance steps are 

not necessary to keep the emissionrelated warranty valid. If operators do 

the maintenance specified in paragraph 

(a) of this section, but not the 

recommended additional maintenance, 

this does not allow you to disqualify 

those engines from in-use testing or 

deny a warranty claim. Do not take 

these maintenance steps during service 

accumulation on your emission-data 

engines. 

(c) Special maintenance. You may 

specify more frequent maintenance to 

address problems related to special 

situations, such as atypical engine 

operation. You must clearly state that 

this additional maintenance is

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39227

associated with the special situation you 

are addressing. 

(d) Noncritical emission-related 

maintenance. You may schedule any 

amount of emission-related inspection 

or maintenance that is not covered by 

paragraph (a) of this section, as long as 

you state in the owners manual that 

these steps are not necessary to keep the 

emission-related warranty valid. If 

operators fail to do this maintenance, 

this does not allow you to disqualify 

those engines from in-use testing or 

deny a warranty claim. Do not take 

these inspection or maintenance steps 

during service accumulation on your 

emission-data engines. 

(e) Maintenance that is not emissionrelated. For maintenance unrelated to 

emission controls, you may schedule 

any amount of inspection or 

maintenance. You may also take these 

inspection or maintenance steps during 

service accumulation on your emissiondata engines, as long as they are 

reasonable and technologically 

necessary. This might include adding 

engine oil, changing air, fuel, or oil 

filters, servicing engine-cooling systems, 

and adjusting idle speed, governor, 

engine bolt torque, valve lash, or 

injector lash. You may perform this 

nonemission-related maintenance on 

emission-data engines at the least 

frequent intervals that you recommend 

to the ultimate purchaser (but not the 

intervals recommended for severe 

service). 

(f) Source of parts and repairs. State 

clearly on the first page of your written 

maintenance instructions that a repair 

shop or person of the owner’s choosing 

may maintain, replace, or repair 

emission-control devices and systems. 

Your instructions may not require 

components or service identified by 

brand, trade, or corporate name. Also, 

do not directly or indirectly condition 

your warranty on a requirement that the 

equipment be serviced by your 

franchised dealers or any other service 

establishments with which you have a 

commercial relationship. You may 

disregard the requirements in this 

paragraph (f) if you do one of two 

things: 

(1) Provide a component or service 

without charge under the purchase 

agreement. 

(2) Get us to waive this prohibition in 

the public’s interest by convincing us 

the engine will work properly only with 

the identified component or service. 

(g) Payment for scheduled 

maintenance. Owners are responsible 

for properly maintaining their engines. 

This generally includes paying for 

scheduled maintenance. However, 

manufacturers must pay for scheduled 

maintenance if it meets all the following 

criteria: 

(1) Each affected component was not 

in general use on similar engines before 

the applicable dates shown in paragraph 

(6) of the definition of new nonroad 

engine in § 1039.801. 

(2) The primary function of each 

affected component is to reduce 

emissions. 

(3) The cost of the scheduled 

maintenance is more than 2 percent of 

the price of the engine. 

(4) Failure to perform the 

maintenance would not cause clear 

problems that would significantly 

degrade the engine’s performance. 

(h) Owners manual. Explain the 

owner’s responsibility for proper 

maintenance in the owners manual.

§ 1039.130 What installation instructions 

must I give to equipment manufacturers? 

(a) If you sell an engine for someone 

else to install in a piece of nonroad 

equipment, give the engine installer 

instructions for installing it consistent 

with the requirements of this part. 

Include all information necessary to 

ensure that an engine will be installed 

in its certified configuration. 

(b) Make sure these instructions have 

the following information:

(1) Include the heading: ‘‘Emissionrelated installation instructions’’. 

(2) State: ‘‘Failing to follow these 

instructions when installing a certified 

engine in a piece of nonroad equipment 

violates federal law (40 CFR 

1068.105(b)), subject to fines or other 

penalties as described in the Clean Air 

Act.’’. 

(3) Describe the instructions needed 

to properly install the exhaust system 

and any other components consistent 

with the requirements of § 1039.205(u). 

(4) [Reserved] 

(5) Describe any limits on the range of 

applications needed to ensure that the 

engine operates consistently with your 

application for certification. For 

example, if your engines are certified 

only for constant-speed operation, tell 

equipment manufacturers not to install 

the engines in variable-speed 

applications. 

(6) Describe any other instructions to 

make sure the installed engine will 

operate according to design 

specifications in your application for 

certification. This may include, for 

example, instructions for installing 

aftertreatment devices when installing 

the engines. 

(7) State: ‘‘If you install the engine in 

a way that makes the engine’s emission 

control information label hard to read 

during normal engine maintenance, you 

must place a duplicate label on the 

equipment, as described in 40 CFR 

1068.105.’’. 

(8) Describe equipment-labeling 

requirements consistent with 

§ 1039.135. State whether you are 

providing the label for the fuel inlet or 

the equipment manufacturer must 

provide the label. 

(c) You do not need installation 

instructions for engines you install in 

your own equipment. 

(d) Provide instructions in writing or 

in an equivalent format. For example, 

you may post instructions on a publicly 

available website for downloading or 

printing. If you do not provide the 

instructions in writing, explain in your 

application for certification how you 

will ensure that each installer is 

informed of the installation 

requirements.

§ 1039.135 How must I label and identify 

the engines I produce? 

(a) Assign each engine a unique 

identification number and permanently 

affix, engrave, or stamp it on the engine 

in a legible way. 

(b) At the time of manufacture, affix 

a permanent and legible label 

identifying each engine. The label must 

be—

(1) Attached in one piece so it is not 

removable without being destroyed or 

defaced. However, you may use twopiece labels for engines below 19 kW if 

there is not enough space on the engine 

to apply a one-piece label. 

(2) Secured to a part of the engine 

needed for normal operation and not 

normally requiring replacement. 

(3) Durable and readable for the 

engine’s entire life. 

(4) Written in English. 

(c) The label must—

(1) Include the heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Include your full corporate name 

and trademark. You may identify 

another company and use its trademark 

instead of yours if you comply with the 

provisions of § 1039.640. 

(3) Include EPA’s standardized 

designation for the engine family (and 

subfamily, where applicable). 

(4) State the power category or 

subcategory from § 1039.101 or 

§ 1039.102 that determines the 

applicable emission standards for the 

engine family. 

(5) State the engine’s displacement (in 

liters); however, you may omit this from 

the label if all the engines in the engine 

family have the same per-cylinder 

displacement and total displacement. 

(6) State the date of manufacture 

[MONTH and YEAR]. You may omit 

this from the label if you keep a record 

of the engine-manufacture dates and 

provide it to us upon request. 

39228 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(7) State the FELs to which the 

engines are certified if certification 

depends on the ABT provisions of 

subpart H of this part. 

(8) Identify the emission-control 

system. Use terms and abbreviations 

consistent with SAE J1930 (incorporated 

by reference in § 1039.810). You may 

omit this information from the label if 

there is not enough room for it and you 

put it in the owners manual instead. 

(9) For diesel-fueled engines, unless 

otherwise specified in § 1039.104(e)(2), 

state: ‘‘ULTRA LOW SULFUR FUEL 

ONLY’. 

(10) Identify any additional 

requirements for fuel and lubricants that 

do not involve fuel-sulfur levels. You 

may omit this information from the 

label if there is not enough room for it 

and you put it in the owners manual 

instead. 

(11) State the useful life for your 

engine family if we approve a shortened 

useful life under § 1039.101(g)(2). 

(12) State: ‘‘THIS ENGINE COMPLIES 

WITH U.S. EPA REGULATIONS FOR 

[MODEL YEAR] NONROAD DIESEL 

ENGINES.’’. 

(13) For engines above 560 kW, 

include the following things: 

(i) For engines certified to the 

emission standards for generator-set 

engines, add the phrase ‘‘FOR 

GENERATOR SETS AND OTHER 

APPLICATIONS’’. 

(ii) For all other engines, add the 

phrase ‘‘NOT FOR USE IN A 

GENERATOR SET’’. 

(14) If your engines are certified only 

for constant-speed operation, state ‘‘USE 

IN CONSTANT-SPEED APPLICATIONS 

ONLY’’. 

(d) You may add information to the 

emission control information label to 

identify other emission standards that 

the engine meets or does not meet (such 

as European standards). You may also 

add other information to ensure that the 

engine will be properly maintained and 

used. 

(e) Except as specified in 

§ 1039.104(e)(2), create a separate label 

with the statement: ‘‘ULTRA LOW 

SULFUR FUEL ONLY’’. Permanently 

attach this label to the equipment near 

the fuel inlet or, if you do not 

manufacture the equipment, take one of 

the following steps to ensure that the 

equipment will be properly labeled: 

(1) Provide the label to the equipment 

manufacturer and include the 

appropriate information in the 

emission-related installation 

instructions. 

(2) Confirm that the equipment 

manufacturers install their own 

complying labels. 

(f) You may ask us to approve 

modified labeling requirements in this 

part 1039 if you show that it is 

necessary or appropriate. We will 

approve your request if your alternate 

label is consistent with the requirements 

of this part. 

(g) If you obscure the engine label 

while installing the engine in the 

equipment, you must place a duplicate 

label on the equipment. If others install 

your engine in their equipment in a way 

that obscures the engine label, we 

require them to add a duplicate label on 

the equipment (see 40 CFR 1068.105); in 

that case, give them the number of 

duplicate labels they request and keep 

the following records for at least five 

years: 

(1) Written documentation of the 

request from the equipment 

manufacturer. 

(2) The number of duplicate labels 

you send and the date you sent them.

§ 1039.140 What is my engine’s maximum 

engine power? 

(a) An engine configuration’s 

maximum engine power is the 

maximum brake power point on the 

nominal power curve for the engine 

configuration, as defined in this section. 

Round the power value to the nearest 

whole kilowatt. 

(b) The nominal power curve of an 

engine configuration is the relationship 

between maximum available engine 

brake power and engine speed for an 

engine, using the mapping procedures 

of 40 CFR part 1065, based on the 

manufacturer’s design and production 

specifications for the engine. This 

information may also be expressed by a 

torque curve that relates maximum 

available engine torque with engine 

speed. 

(c) The nominal power curve must be 

within the range of the actual power 

curves of production engines 

considering normal production 

variability. If after production begins it 

is determined that your nominal power 

curve does not represent production 

engines, we may require you to amend 

your application for certification under 

§ 1039.225. 

(d) Throughout this part, references to 

a specific power value or a range of 

power values for an engine are based on 

maximum engine power. For example, 

the group of engines with maximum 

engine power above 560 kW may be 

referred to as engines above 560 kW.

Subpart C—Certifying Engine Families

§ 1039.201 What are the general 

requirements for obtaining a certificate of 

conformity? 

(a) You must send us a separate 

application for a certificate of 

conformity for each engine family. A 

certificate of conformity is valid from 

the indicated effective date until 

December 31 of the model year for 

which it is issued. 

(b) The application must contain all 

the information required by this part 

and must not include false or 

incomplete statements or information 

(see § 1039.255). 

(c) We may ask you to include less 

information than we specify in this 

subpart, as long as you maintain all the 

information required by § 1039.250. 

(d) You must use good engineering 

judgment for all decisions related to 

your application (see 40 CFR 1068.5). 

(e) An authorized representative of 

your company must approve and sign 

the application. 

(f) See § 1039.255 for provisions 

describing how we will process your 

application. 

(g) We may require you to deliver 

your test engines to a facility we 

designate for our testing (see 

§ 1039.235(c)).

§ 1039.205 What must I include in my 

application? 

This section specifies the information 

that must be in your application, unless 

we ask you to include less information 

under § 1039.201(c). We may require 

you to provide additional information to 

evaluate your application. 

(a) Describe the engine family’s 

specifications and other basic 

parameters of the engine’s design and 

emission controls. List the fuel type on 

which your engines are designed to 

operate (for example, ultra low-sulfur 

diesel fuel). List each distinguishable 

engine configuration in the engine 

family. For each engine configuration, 

list the maximum engine power and the 

range of values for maximum engine 

power resulting from production 

tolerances, as described in § 1039.140. 

(b) Explain how the emission-control 

system operates. Describe in detail all 

system components for controlling 

exhaust emissions, including all 

auxiliary-emission control devices 

(AECDs) and all fuel-system 

components you will install on any 

production or test engine. Identify the 

part number of each component you 

describe. For this paragraph (b), treat as 

separate AECDs any devices that 

modulate or activate differently from 

each other. Include all the following: 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39229

(1) Give a general overview of the 

engine, the emission-control strategies, 

and all AECDs. 

(2) Describe each AECD’s general 

purpose and function. 

(3) Identify the parameters that each 

AECD senses (including measuring, 

estimating, calculating, or empirically 

deriving the values). Include 

equipment-based parameters and state 

whether you simulate them during 

testing with the applicable procedures. 

(4) Describe the purpose for sensing 

each parameter. 

(5) Identify the location of each sensor 

the AECD uses. 

(6) Identify the threshold values for 

the sensed parameters that activate the 

AECD. 

(7) Describe the parameters that the 

AECD modulates (controls) in response 

to any sensed parameters, including the 

range of modulation for each parameter, 

the relationship between the sensed 

parameters and the controlled 

parameters and how the modulation 

achieves the AECD’s stated purpose. 

Use graphs and tables, as necessary. 

(8) Describe each AECD’s specific 

calibration details. This may be in the 

form of data tables, graphical 

representations, or some other 

description. 

(9) Describe the hierarchy among the 

AECDs when multiple AECDs sense or 

modulate the same parameter. Describe 

whether the strategies interact in a 

comparative or additive manner and 

identify which AECD takes precedence 

in responding, if applicable. 

(10) Explain the extent to which the 

AECD is included in the applicable test 

procedures specified in subpart F of this 

part. 

(11) Do the following additional 

things for AECDs designed to protect 

engines or equipment: 

(i) Identify the engine and/or 

equipment design limits that make 

protection necessary and describe any 

damage that would occur without the 

AECD. 

(ii) Describe how each sensed 

parameter relates to the protected 

components’ design limits or those 

operating conditions that cause the need 

for protection. 

(iii) Describe the relationship between 

the design limits/parameters being 

protected and the parameters sensed or 

calculated as surrogates for those design 

limits/parameters, if applicable. 

(iv) Describe how the modulation by 

the AECD prevents engines and/or 

equipment from exceeding design 

limits. 

(v) Explain why it is necessary to 

estimate any parameters instead of 

measuring them directly and describe 

how the AECD calculates the estimated 

value, if applicable. 

(vi) Describe how you calibrate the 

AECD modulation to activate only 

during conditions related to the stated 

need to protect components and only as 

needed to sufficiently protect those 

components in a way that minimizes the 

emission impact. 

(c) [Reserved] 

(d) Describe the engines you selected 

for testing and the reasons for selecting 

them. 

(e) Describe the test equipment and 

procedures that you used, including any 

special or alternate test procedures you 

used (see § 1039.501). 

(f) Describe how you operated the 

emission-data engine before testing, 

including the duty cycle and the 

number of engine operating hours used 

to stabilize emission levels. Explain 

why you selected the method of service 

accumulation. Describe any scheduled 

maintenance you did. 

(g) List the specifications of the test 

fuel to show that it falls within the 

required ranges we specify in 40 CFR 

part 1065. 

(h) Identify the engine family’s useful 

life. 

(i) Include the maintenance 

instructions you will give to the 

ultimate purchaser of each new nonroad 

engine (see § 1039.125). 

(j) Include the emission-related 

installation instructions you will 

provide if someone else installs your 

engines in a piece of nonroad 

equipment (see § 1039.130). 

(k) Describe your emission control 

information label (see § 1039.135). 

(l) Identify the emission standards or 

FELs to which you are certifying 

engines in the engine family. Identify 

the ambient operating regions that will 

apply for NTE testing under 

§ 1039.101(e)(4). 

(m) Identify the engine family’s 

deterioration factors and describe how 

you developed them (see § 1039.245). 

Present any emission test data you used 

for this. 

(n) State that you operated your 

emission-data engines as described in 

the application (including the test 

procedures, test parameters, and test 

fuels) to show you meet the 

requirements of this part. 

(o) Present emission data for 

hydrocarbons (such as NMHC or THCE, 

as applicable), NOX, PM, and CO on an 

emission-data engine to show your 

engines meet the applicable duty-cycle 

emission standards we specify in 

§ 1039.101. Show emission data figures 

before and after applying adjustment 

factors for regeneration and 

deterioration factors for each engine. 

Present emission data to show that you 

meet any applicable smoke standards 

we specify in § 1039.105. If we specify 

more than one grade of any fuel type 

(for example, high-sulfur and low-sulfur 

diesel fuel), you need to submit test data 

only for one grade, unless the 

regulations of this part specify 

otherwise for your engine. Note that 

§ 1039.235 allows you to submit an 

application in certain cases without new 

emission data.

(p) State that all the engines in the 

engine family comply with the not-toexceed emission standards we specify in 

subpart B of this part for all normal 

operation and use when tested as 

specified in § 1039.515. Describe any 

relevant testing, engineering analysis, or 

other information in sufficient detail to 

support your statement. 

(q) For engines above 560 kW, include 

information showing how your emission 

controls will function during normal inuse transient operation. For example, 

this might include the following: 

(1) Emission data from transient 

testing of engines using measurement 

systems designed for measuring in-use 

emissions. 

(2) Comparison of the engine design 

for controlling transient emissions with 

that from engines for which you have 

emission data over the transient duty 

cycle for certification. 

(3) Detailed descriptions of control 

algorithms and other design parameters 

for controlling transient emissions. 

(r) Report all test results, including 

those from invalid tests or from any 

other tests, whether or not they were 

conducted according to the test 

procedures of subpart F of this part. If 

you measure CO2, report those emission 

levels. We may ask you to send other 

information to confirm that your tests 

were valid under the requirements of 

this part and 40 CFR part 1065. 

(s) Describe all adjustable operating 

parameters (see § 1039.115(e)), 

including production tolerances. 

Include the following in your 

description of each parameter: 

(1) The nominal or recommended 

setting. 

(2) The intended physically adjustable 

range. 

(3) The limits or stops used to 

establish adjustable ranges. 

(4) Information showing why the 

limits, stops, or other means of 

inhibiting adjustment are effective in 

preventing adjustment of parameters on 

in-use engines to settings outside your 

intended physically adjustable ranges. 

(t) Provide the information to read, 

record, and interpret all the information 

broadcast by an engine’s onboard 

computers and electronic control units. 

39230 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

State that, upon request, you will give 

us any hardware, software, or tools we 

would need to do this. If you broadcast 

a surrogate parameter for torque values, 

you must provide us what we need to 

convert these into torque units. You 

may reference any appropriate publicly 

released standards that define 

conventions for these messages and 

parameters. Format your information 

consistent with publicly released 

standards. 

(u) Confirm that your emission-related 

installation instructions specify how to 

ensure that sampling of exhaust 

emissions will be possible after engines 

are installed in equipment and placed in 

service. If this cannot be done by simply 

adding a 20-centimeter extension to the 

exhaust pipe, show how to sample 

exhaust emissions in a way that 

prevents diluting the exhaust sample 

with ambient air. 

(v) State whether your certification is 

limited for certain engines. If this is the 

case, describe how you will prevent use 

of these engines in applications for 

which they are not certified. This 

applies for engines such as the 

following: 

(1) Constant-speed engines. 

(2) Engines used for transportation 

refrigeration units that you certify under 

the provisions of § 1039.645. 

(3) Hand-startable engines certified 

under the provisions of § 1039.101(c). 

(4) Engines above 560 kW that are not 

certified to emission standards for 

generator-set engines. 

(w) Unconditionally certify that all 

the engines in the engine family comply 

with the requirements of this part, other 

referenced parts of the CFR, and the 

Clean Air Act. 

(x) Include estimates of U.S.-directed 

production volumes. 

(y) Include the information required 

by other subparts of this part. For 

example, include the information 

required by § 1039.725 if you participate 

in the ABT program. 

(z) Include other applicable 

information, such as information 

specified in this part or 40 CFR part 

1068 related to requests for exemptions.

§ 1039.210 May I get preliminary approval 

before I complete my application? 

If you send us information before you 

finish the application, we will review it 

and make any appropriate 

determinations, especially for questions 

related to engine family definitions, 

auxiliary emission-control devices, 

deterioration factors, testing for service 

accumulation, maintenance, and NTE 

deficiencies and carve-outs. Decisions 

made under this section are considered 

to be preliminary approval, subject to 

final review and approval. If you request 

preliminary approval related to the 

upcoming model year or the model year 

after that, we will make best-efforts to 

make the appropriate determinations as 

soon as practicable. We will generally 

not provide preliminary approval 

related to a future model year more than 

two years ahead of time.

§ 1039.220 How do I amend the 

maintenance instructions in my 

application? 

You may amend your emissionrelated maintenance instructions after 

you submit your application for 

certification, as long as the amended 

instructions remain consistent with the 

provisions of § 1039.125. You must send 

the Designated Compliance Officer a 

request to amend your application for 

certification for an engine family if you 

want to change the emission-related 

maintenance instructions in a way that 

could affect emissions. In your request, 

describe the proposed changes to the 

maintenance instructions. We will 

disapprove your request if we determine 

that the amended instructions are 

inconsistent with maintenance you 

performed on emission-data engines. 

(a) If you are decreasing the specified 

maintenance, you may distribute the 

new maintenance instructions to your 

customers 30 days after we receive your 

request, unless we disapprove your 

request. We may approve a shorter time 

or waive this requirement.

(b) If your requested change would 

not decrease the specified maintenance, 

you may distribute the new 

maintenance instructions anytime after 

you send your request. For example, 

this paragraph (b) would cover adding 

instructions to increase the frequency of 

a maintenance step for engines in 

severe-duty applications. 

(c) You need not request approval if 

you are making only minor corrections 

(such as correcting typographical 

mistakes), clarifying your maintenance 

instructions, or changing instructions 

for maintenance unrelated to emission 

control.

§ 1039.225 How do I amend my application 

for certification to include new or modified 

engines? 

Before we issue you a certificate of 

conformity, you may amend your 

application to include new or modified 

engine configurations, subject to the 

provisions of this section. After we have 

issued your certificate of conformity, 

you may send us an amended 

application requesting that we include 

new or modified engine configurations 

within the scope of the certificate, 

subject to the provisions of this section. 

You must amend your application if any 

changes occur with respect to any 

information included in your 

application. 

(a) You must amend your application 

before you take either of the following 

actions: 

(1) Add an engine (that is, an 

additional engine configuration) to an 

engine family. In this case, the engine 

added must be consistent with other 

engines in the engine family with 

respect to the criteria listed in 

§ 1039.230. 

(2) Change an engine already included 

in an engine family in a way that may 

affect emissions, or change any of the 

components you described in your 

application for certification. This 

includes production and design changes 

that may affect emissions any time 

during the engine’s lifetime. 

(b) To amend your application for 

certification, send the Designated 

Compliance Officer the following 

information: 

(1) Describe in detail the addition or 

change in the engine model or 

configuration you intend to make. 

(2) Include engineering evaluations or 

data showing that the amended engine 

family complies with all applicable 

requirements. You may do this by 

showing that the original emission-data 

engine is still appropriate with respect 

to showing compliance of the amended 

family with all applicable requirements. 

(3) If the original emission-data 

engine for the engine family is not 

appropriate to show compliance for the 

new or modified nonroad engine, 

include new test data showing that the 

new or modified nonroad engine meets 

the requirements of this part. 

(c) We may ask for more test data or 

engineering evaluations. You must give 

us these within 30 days after we request 

them. 

(d) For engine families already 

covered by a certificate of conformity, 

we will determine whether the existing 

certificate of conformity covers your 

new or modified nonroad engine. You 

may ask for a hearing if we deny your 

request (see § 1039.820). 

(e) For engine families already 

covered by a certificate of conformity, 

you may start producing the new or 

modified nonroad engine anytime after 

you send us your amended application, 

before we make a decision under 

paragraph (d) of this section. However, 

if we determine that the affected engines 

do not meet applicable requirements, 

we will notify you to cease production 

of the engines and may require you to 

recall the engines at no expense to the 

owner. Choosing to produce engines 

under this paragraph (e) is deemed to be 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39231

consent to recall all engines that we 

determine do not meet applicable 

emission standards or other 

requirements and to remedy the 

nonconformity at no expense to the 

owner. If you do not provide 

information required under paragraph 

(c) of this section within 30 days, you 

must stop producing the new or 

modified nonroad engines.

§ 1039.230 How do I select engine 

families? 

(a) Divide your product line into 

families of engines that are expected to 

have similar emission characteristics 

throughout the useful life. Your engine 

family is limited to a single model year. 

(b) Group engines in the same engine 

family if they are the same in all the 

following aspects: 

(1) The combustion cycle and fuel. 

(2) The cooling system (water-cooled 

vs. air-cooled). 

(3) Method of air aspiration. 

(4) Method of exhaust aftertreatment 

(for example, catalytic converter or 

particulate trap). 

(5) Combustion chamber design. 

(6) Bore and stroke. 

(7) Number of cylinders (for engines 

with aftertreatment devices only). 

(8) Cylinder arrangement (for engines 

with aftertreatment devices only). 

(9) Method of control for engine 

operation other than governing (i.e., 

mechanical or electronic). 

(10) Power category. 

(11) Numerical level of the emission 

standards that apply to the engine. 

(c) You may subdivide a group of 

engines that is identical under 

paragraph (b) of this section into 

different engine families if you show the 

expected emission characteristics are 

different during the useful life. 

(d) You may group engines that are 

not identical with respect to the things 

listed in paragraph (b) of this section in 

the same engine family if you show that 

their emission characteristics during the 

useful life will be similar. 

(e) If you combine engines from 

different power categories into a single 

engine family under paragraph (d) of 

this section, you must certify the engine 

family to the more stringent set of 

standards from the two power categories 

in that model year.

§ 1039.235 What emission testing must I 

perform for my application for a certificate 

of conformity? 

This section describes the emission 

testing you must perform to show 

compliance with the emission standards 

in § 1039.101(a) and (b) or § 1039.102(a) 

and (b). See § 1039.205(p) regarding 

emission testing related to the NTE 

standards. See § 1039.240, § 1039.245, 

and 40 CFR part 1065, subpart E, 

regarding service accumulation before 

emission testing. 

(a) Test your emission-data engines 

using the procedures and equipment 

specified in subpart F of this part. 

(b) Select an emission-data engine 

from each engine family for testing. 

Select the engine configuration with the 

highest volume of fuel injected per 

cylinder per combustion cycle at the 

point of maximum torque—unless good 

engineering judgment indicates that a 

different engine configuration is more 

likely to exceed (or have emissions 

nearer to) an applicable emission 

standard or FEL. If two or more engines 

have the same fueling rate at maximum 

torque, select the one with the highest 

fueling rate at rated speed. In making 

this selection, consider all factors 

expected to affect emission-control 

performance and compliance with the 

standards, including emission levels of 

all exhaust constituents, especially NOX

and PM. 

(c) We may measure emissions from 

any of your test engines or other engines 

from the engine family, as follows: 

(1) We may decide to do the testing 

at your plant or any other facility. If we 

do this, you must deliver the test engine 

to a test facility we designate. The test 

engine you provide must include 

appropriate manifolds, aftertreatment 

devices, electronic control units, and 

other emission-related components not 

normally attached directly to the engine 

block. If we do the testing at your plant, 

you must schedule it as soon as possible 

and make available the instruments, 

personnel, and equipment we need. 

(2) If we measure emissions on one of 

your test engines, the results of that 

testing become the official emission 

results for the engine. Unless we later 

invalidate these data, we may decide 

not to consider your data in determining 

if your engine family meets applicable 

requirements. 

(3) Before we test one of your engines, 

we may set its adjustable parameters to 

any point within the physically 

adjustable ranges (see § 1039.115(e)). 

(4) Before we test one of your engines, 

we may calibrate it within normal 

production tolerances for anything we 

do not consider an adjustable parameter. 

(d) You may ask to use emission data 

from a previous model year instead of 

doing new tests, but only if all the 

following are true: 

(1) The engine family from the 

previous model year differs from the 

current engine family only with respect 

to model year. 

(2) The emission-data engine from the 

previous model year remains the 

appropriate emission-data engine under 

paragraph (b) of this section. 

(3) The data show that the emissiondata engine would meet all the 

requirements that apply to the engine 

family covered by the application for 

certification. 

(e) We may require you to test a 

second engine of the same or different 

configuration in addition to the engine 

tested under paragraph (b) of this 

section. 

(f) If you use an alternate test 

procedure under 40 CFR 1065.10 and 

later testing shows that such testing 

does not produce results that are 

equivalent to the procedures specified 

in subpart F of this part, we may reject 

data you generated using the alternate 

procedure.

§ 1039.240 How do I demonstrate that my 

engine family complies with exhaust 

emission standards? 

(a) For purposes of certification, your 

engine family is considered in 

compliance with the applicable 

numerical emission standards in 

§ 1039.101(a) and (b) or in § 1039.102(a) 

and (b) if all emission-data engines 

representing that family have test results 

showing deteriorated emission levels at 

or below these standards. (Note: if you 

participate in the ABT program in 

subpart H of this part, your FELs are 

considered to be the applicable 

emission standards with which you 

must comply.) 

(b) Your engine family is deemed not 

to comply if any emission-data engine 

representing that family has test results 

showing a deteriorated emission level 

above an applicable FEL or emission 

standard from § 1039.101 for any 

pollutant. 

(c) To compare emission levels from 

the emission-data engine with the 

applicable emission standards, apply 

deterioration factors to the measured 

emission levels for each pollutant. 

Section 1039.245 specifies how to test 

your engine to develop deterioration 

factors that represent the deterioration 

expected in emissions over your 

engines’ full useful life. Your 

deterioration factors must take into 

account any available data from in-use 

testing with similar engines. Smallvolume engine manufacturers may use 

assigned deterioration factors that we 

establish. Apply deterioration factors as 

follows: 

(1) Additive deterioration factor for 

exhaust emissions. Except as specified 

in paragraph (c)(2) of this section, use 

an additive deterioration factor for 

exhaust emissions. An additive 

deterioration factor for a pollutant is the 

difference between exhaust emissions at 

39232 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

the end of the useful life and exhaust 

emissions at the low-hour test point. In 

these cases, adjust the official emission 

results for each tested engine at the 

selected test point by adding the factor 

to the measured emissions. If the factor 

is less than zero, use zero. Additive 

deterioration factors must be specified 

to one more decimal place than the 

applicable standard.

(2) Multiplicative deterioration factor 

for exhaust emissions. Use a 

multiplicative deterioration factor if 

good engineering judgment calls for the 

deterioration factor for a pollutant to be 

the ratio of exhaust emissions at the end 

of the useful life to exhaust emissions at 

the low-hour test point. For example, if 

you use aftertreatment technology that 

controls emissions of a pollutant 

proportionally to engine-out emissions, 

it is often appropriate to use a 

multiplicative deterioration factor. 

Adjust the official emission results for 

each tested engine at the selected test 

point by multiplying the measured 

emissions by the deterioration factor. If 

the factor is less than one, use one. A 

multiplicative deterioration factor may 

not be appropriate in cases where 

testing variability is significantly greater 

than engine-to-engine variability. 

Multiplicative deterioration factors must 

be specified to one more significant 

figure than the applicable standard. 

(3) Deterioration factor for smoke.

Deterioration factors for smoke are 

always additive, as described in 

paragraph (c)(1) of this section. 

(4) Deterioration factor for crankcase 

emissions. If your engine vents 

crankcase emissions to the exhaust or to 

the atmosphere, you must account for 

crankcase emission deterioration, using 

good engineering judgment. You may 

use separate deterioration factors for 

crankcase emissions of each pollutant 

(either multiplicative or additive) or 

include the effects in combined 

deterioration factors that include 

exhaust and crankcase emissions 

together for each pollutant. 

(d) Collect emission data using 

measurements to one more decimal 

place than the applicable standard. 

Apply the deterioration factor to the 

official emission result, as described in 

paragraph (c) of this section, then round 

the adjusted figure to the same number 

of decimal places as the emission 

standard. Compare the rounded 

emission levels to the emission standard 

for each emission-data engine. In the 

case of NOX+NMHC standards, apply 

the deterioration factor to each pollutant 

and then add the results before 

rounding. 

(e) For engines subject to NMHC 

standards, you may base compliance on 

total hydrocarbon (THC) emissions. 

Indicate in your application for 

certification if you are using this option. 

If you do, measure THC emissions and 

calculate NMHC emissions as 98 

percent of THC emissions, as shown in 

the following equation:

NMHC = (0.98) × (THC).

§ 1039.245 How do I determine 

deterioration factors from exhaust 

durability testing? 

Establish deterioration factors to 

determine whether your engines will 

meet emission standards for each 

pollutant throughout the useful life, as 

described in §§ 1039.101 and 1039.240. 

This section describes how to determine 

deterioration factors, either with an 

engineering analysis, with pre-existing 

test data, or with new emission 

measurements. If you are required to 

perform durability testing, see 

§ 1039.125 for limitations on the 

maintenance that you may perform on 

your emission-data engine. 

(a) You may ask us to approve 

deterioration factors for an engine 

family with established technology 

based on engineering analysis instead of 

testing. Engines certified to a 

NOX+NMHC standard or FEL greater 

than the Tier 3 NOX+NMHC standard 

described in 40 CFR 89.112 are 

considered to rely on established 

technology for gaseous emission control, 

except that this does not include any 

engines that use exhaust-gas 

recirculation or aftertreatment. In most 

cases, technologies used to meet the 

Tier 1 and Tier 2 emission standards 

would be considered to be established 

technology. 

(b) You may ask us to approve 

deterioration factors for an engine 

family based on emission measurements 

from similar highway or nonroad 

engines if you have already given us 

these data for certifying the other 

engines in the same or earlier model 

years. Use good engineering judgment to 

decide whether the two engines are 

similar. We will approve your request if 

you show us that the emission 

measurements from other engines 

reasonably represent in-use 

deterioration for the engine family for 

which you have not yet determined 

deterioration factors. 

(c) If you are unable to determine 

deterioration factors for an engine 

family under paragraph (a) or (b) of this 

section, select engines, subsystems, or 

components for testing. Determine 

deterioration factors based on service 

accumulation and related testing to 

represent the deterioration expected 

from in-use engines over the full useful 

life. You must measure emissions from 

the emission-data engine at least three 

times with evenly spaced intervals of 

service accumulation. You may use 

extrapolation to determine deterioration 

factors once you have established a 

trend of changing emissions with age for 

each pollutant. You may use an engine 

installed in nonroad equipment to 

accumulate service hours instead of 

running the engine only in the 

laboratory. You may perform 

maintenance on emission-data engines 

as described in § 1039.125 and 40 CFR 

part 1065, subpart E. Use good 

engineering judgment for all aspects of 

the effort to establish deterioration 

factors under this paragraph (c). 

(d) Include the following information 

in your application for certification: 

(1) If you use test data from a different 

engine family, explain why this is 

appropriate and include all the emission 

measurements on which you base the 

deterioration factor. 

(2) If you determine your 

deterioration factors based on 

engineering analysis, explain why this 

is appropriate and include a statement 

that all data, analyses, evaluations, and 

other information you used are available 

for our review upon request. 

(3) If you do testing to determine 

deterioration factors, describe the form 

and extent of service accumulation, 

including a rationale for selecting the 

service-accumulation period and the 

method you use to accumulate hours.

§ 1039.250 What records must I keep and 

what reports must I send to EPA? 

(a) Within 30 days after the end of the 

model year, send the Designated 

Compliance Officer a report describing 

the following information about engines 

you produced during the model year: 

(1) Report the total number of engines 

you produced in each engine family by 

maximum engine power, total 

displacement, and the type of fuel 

system. 

(2) If you produced exempted engines 

under the provisions of § 1039.625, 

report the number of exempted engines 

you produced for each engine model 

and identify the buyer or shipping 

destination for each exempted engine. 

(b) Organize and maintain the 

following records: 

(1) A copy of all applications and any 

summary information you send us. 

(2) Any of the information we specify 

in § 1039.205 that you were not required 

to include in your application. 

(3) A detailed history of each 

emission-data engine. For each engine, 

describe all of the following: 

(i) The emission-data engine’s 

construction, including its origin and 

buildup, steps you took to ensure that 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39233

it represents production engines, any 

components you built specially for it, 

and all the components you include in 

your application for certification. 

(ii) How you accumulated engine 

operating hours (service accumulation), 

including the dates and the number of 

hours accumulated. 

(iii) All maintenance, including 

modifications, parts changes, and other 

service, and the dates and reasons for 

the maintenance. 

(iv) All your emission tests, including 

documentation on routine and standard 

tests, as specified in part 40 CFR part 

1065, and the date and purpose of each 

test. 

(v) All tests to diagnose engine or 

emission-control performance, giving 

the date and time of each and the 

reasons for the test. 

(vi) Any other significant events. 

(4) Production figures for each engine 

family divided by assembly plant. 

(5) Keep a list of engine identification 

numbers for all the engines you produce 

under each certificate of conformity.

(c) Keep data from routine emission 

tests (such as test cell temperatures and 

relative humidity readings) for one year 

after we issue the associated certificate 

of conformity. Keep all other 

information specified in paragraph (a) of 

this section for eight years after we issue 

your certificate. 

(d) Store these records in any format 

and on any media, as long as you can 

promptly send us organized, written 

records in English if we ask for them. 

You must keep these records readily 

available. We may review them at any 

time. 

(e) Send us copies of any engine 

maintenance instructions or 

explanations if we ask for them.

§ 1039.255 What decisions may EPA make 

regarding my certificate of conformity? 

(a) If we determine your application is 

complete and shows that the engine 

family meets all the requirements of this 

part and the Act, we will issue a 

certificate of conformity for your engine 

family for that model year. We may 

make the approval subject to additional 

conditions. 

(b) We may deny your application for 

certification if we determine that your 

engine family fails to comply with 

emission standards or other 

requirements of this part or the Act. Our 

decision may be based on a review of all 

information available to us. If we deny 

your application, we will explain why 

in writing. 

(c) In addition, we may deny your 

application or suspend or revoke your 

certificate if you do any of the 

following: 

(1) Refuse to comply with any testing 

or reporting requirements. 

(2) Submit false or incomplete 

information (paragraph (e) of this 

section applies if this is fraudulent). 

(3) Render inaccurate any test data. 

(4) Deny us from completing 

authorized activities despite our 

presenting a warrant or court order (see 

40 CFR 1068.20). This includes a failure 

to provide reasonable assistance. 

(5) Produce engines for importation 

into the United States at a location 

where local law prohibits us from 

carrying out authorized activities. 

(6) Fail to supply requested 

information or amend your application 

to include all engines being produced. 

(7) Take any action that otherwise 

circumvents the intent of the Act or this 

part. 

(d) We may void your certificate if 

you do not keep the records we require 

or do not give us information when we 

ask for it. 

(e) We may void your certificate if we 

find that you intentionally submitted 

false or incomplete information. 

(f) If we deny your application or 

suspend, revoke, or void your 

certificate, you may ask for a hearing 

(see § 1039.820).

§ 1039.260 What provisions apply to 

engines that are conditionally exempted 

from certification? 

As specified elsewhere in this part or 

in 40 CFR part 1068, you may in some 

cases introduce engines into commerce 

that are exempt from the requirement to 

certify engines to the otherwise 

applicable standards. If we specify 

alternate standards as a condition of the 

exemption, all the following provisions 

apply: 

(a) Your engines must meet the 

alternate standards we specify in the 

exemption section, and all other 

requirements applicable to engines that 

are subject to such standards. 

(b) You need not apply for and receive 

a certificate for the exempt engines. 

However, you must comply with all the 

requirements and obligations that would 

apply to the engines if you had received 

a certificate of conformity for them, 

unless we specifically waive certain 

requirements. 

(c) You must have emission data from 

testing engines using the appropriate 

procedures that demonstrate 

compliance with the alternate 

standards, unless the engines are 

identical in all material respects to 

engines that you have previously 

certified to standards that are the same 

as, or more stringent than, the alternate 

standards. 

(d) Unless we specify otherwise 

elsewhere in this part or in 40 CFR part 

1068, you must meet the labeling 

requirements in § 1039.135, with the 

following exceptions: 

(1) Instead of the engine family 

designation specified in 

§ 1039.135(c)(3), use a modified 

designation to identify the group of 

engines that would otherwise be 

included in the same engine family. 

(2) Instead of the compliance 

statement in § 1039.135(c)(12), add the 

following statement: ‘‘THIS ENGINE 

MEETS U.S. EPA EMISSION 

STANDARDS UNDER 40 CFR 

1039.260.’’. 

(e) You may not generate ABT credits 

with engines meeting requirements 

under the provisions of this section. 

(f) Keep records to show that you 

meet the alternate standards, as follows: 

(1) If your exempted engines are 

identical to previously certified engines, 

keep your most recent application for 

certification for the certified engine 

family. 

(2) If you previously certified a 

similar engine family, but have 

modified the exempted engine in a way 

that changes it from its previously 

certified configuration, keep your most 

recent application for certification for 

the certified engine family, a description 

of the relevant changes, and any test 

data or engineering evaluations that 

support your conclusions. 

(3) If you have not previously certified 

a similar engine family, keep all the 

records we specify for the application 

for certification and the additional 

records we specify in § 1039.250(b)(3). 

(g) We may require you to send us an 

annual report of the engines you 

produce under this section.

Subpart D—[Reserved]

Subpart E—In-Use Testing

§ 1039.401 General provisions. 

We may perform in-use testing of any 

engine subject to the standards of this 

part. However, we will limit recall 

testing to the first 75 percent of each 

engine’s useful life as specified in 

§ 1039.101(g).

Subpart F—Test Procedures

§ 1039.501 How do I run a valid emission 

test? 

(a) Use the equipment and procedures 

for compression-ignition engines in 40 

CFR part 1065 to determine whether 

engines meet the duty-cycle emission 

standards in § 1039.101(a) and (b). 

Measure the emissions of all the 

pollutants we regulate in § 1039.101 as 

specified in 40 CFR part 1065. Note that 

we do not allow partial-flow sampling 

for measuring PM emissions on a 

39234 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

laboratory dynamometer for transient 

testing. Use the applicable duty cycles 

specified in §§ 1039.505 and 1039.510. 

(b) Section 1039.515 describes the 

supplemental procedures for evaluating 

whether engines meet the not-to-exceed 

emission standards in § 1039.101(e). 

(c) Measure smoke using the 

procedures in 40 CFR part 86, subpart 

I, for evaluating whether engines meet 

the smoke standards in § 1039.105, 

except that you may test two-cylinder 

engines with an exhaust muffler like 

those installed on in-use engines. 

(d) Use the fuels specified in 

§ 1039.104(e) and 40 CFR part 1065 to 

perform valid tests. 

(1) For service accumulation, use the 

test fuel or any commercially available 

fuel that is representative of the fuel that 

in-use engines will use. 

(2) For diesel-fueled engines, use the 

appropriate diesel fuel specified in 40 

CFR part 1065 for emission testing. 

Unless we specify otherwise, the 

appropriate diesel test fuel is the ultra 

low-sulfur diesel fuel. If we allow you 

to use a test fuel with higher sulfur 

levels, identify the test fuel in your 

application for certification and ensure 

that the emission control information 

label is consistent with your selection of 

the test fuel (see § 1039.135(c)(9)). For 

example, do not test with ultra lowsulfur diesel fuel if you intend to label 

your engines to allow use of diesel fuel 

with sulfur concentrations up to 500 

ppm. 

(e) You may use special or alternate 

procedures to the extent we allow them 

under 40 CFR 1065.10. 

(f) This subpart is addressed to you as 

a manufacturer, but it applies equally to 

anyone who does testing for you, and to 

us when we perform testing to 

determine if your engines meet emission 

standards.

§ 1039.505 How do I test engines using 

steady-state duty cycles, including rampedmodal testing? 

This section describes how to test 

engines under steady-state conditions. 

In some cases, we allow you to choose 

the appropriate steady-state duty cycle 

for an engine. In these cases, you must 

use the duty cycle you select in your 

application for certification for all 

testing you perform for that engine 

family. If we test your engines to 

confirm that they meet emission 

standards, we will use the duty cycles 

you select for your own testing. We may 

also perform other testing as allowed by 

the Clean Air Act. 

(a) You may perform steady-state 

testing with either discrete-mode or 

ramped-modal cycles, as follows: 

(1) For discrete-mode testing, sample 

emissions separately for each mode, 

then calculate an average emission level 

for the whole cycle using the weighting 

factors specified for each mode. 

Calculate cycle statistics for the 

sequence of modes and compare with 

the specified values in 40 CFR part 1065 

to confirm that the test is valid. Operate 

the engine and sampling system as 

follows: 

(i) Engines with NOX aftertreatment.

For engines that depend on 

aftertreatment to meet the NOX emission 

standard, operate the engine for 5–6 

minutes, then sample emissions for 1–

3 minutes in each mode. You may 

extend the sampling time to improve 

measurement accuracy of PM emissions, 

using good engineering judgment. If you 

have a longer sampling time for PM 

emissions, calculate and validate cycle 

statistics separately for the gaseous and 

PM sampling periods. 

(ii) Engines without NOX

aftertreatment. For other engines, 

operate the engine for at least 5 minutes, 

then sample emissions for at least 1 

minute in each mode. Calculate cycle 

statistics for the sequence of modes and 

compare with the specified values in 40 

CFR part 1065 to confirm that the test 

is valid. 

(2) For ramped-modal testing, start 

sampling at the beginning of the first 

mode and continue sampling until the 

end of the last mode. Calculate 

emissions and cycle statistics the same 

as for transient testing. 

(b) Measure emissions by testing the 

engine on a dynamometer with one of 

the following duty cycles to determine 

whether it meets the steady-state 

emission standards in § 1039.101(b): 

(1) Use the 5-mode duty cycle or the 

corresponding ramped-modal cycle 

described in Appendix II of this part for 

constant-speed engines. Note that these 

cycles do not apply to all engines used 

in constant-speed applications, as 

described in § 1039.801. 

(2) Use the 6-mode duty cycle or the 

corresponding ramped-modal cycle 

described in Appendix III of this part for 

variable-speed engines below 19 kW. 

You may instead use the 8-mode duty 

cycle or the corresponding rampedmodal cycle described in Appendix IV 

of this part if some engines from your 

engine family will be used in 

applications that do not involve 

governing to maintain engine operation 

around rated speed. 

(3) Use the 8-mode duty cycle or the 

corresponding ramped-modal cycle 

described in Appendix IV of this part 

for variable-speed engines at or above 19 

kW. 

(c) During idle mode, operate the 

engine with the following parameters: 

(1) Hold the speed within your 

specifications. 

(2) Set the engine to operate at its 

minimum fueling rate. 

(3) Keep engine torque under 5 

percent of maximum test torque. 

(d) For full-load operating modes, 

operate the engine at its maximum 

fueling rate. However, for constantspeed engines whose design prevents 

full-load operation for extended periods, 

you may ask for approval under 40 CFR 

1065.10(c) to replace full-load operation 

with the maximum load for which the 

engine is designed to operate for 

extended periods. 

(e) See 40 CFR part 1065 for detailed 

specifications of tolerances and 

calculations. 

(f) For those cases where transient 

testing is not necessary, perform the 

steady-state test according to this 

section after an appropriate warm-up 

period, consistent with 40 CFR part 

1065, subpart F.

§ 1039.510 Which duty cycles do I use for 

transient testing? 

(a) Measure emissions by testing the 

engine on a dynamometer with one of 

the following transient duty cycles to 

determine whether it meets the transient 

emission standards in § 1039.101(a): 

(1) For variable-speed engines, use the 

transient duty cycle described in 

Appendix VI of this part. 

(2) [Reserved] 

(b) The transient test sequence 

consists of an initial run through the 

transient duty cycle from a cold start, 20 

minutes with no engine operation, then 

a final run through the same transient 

duty cycle. Start sampling emissions 

immediately after you start the engine. 

Calculate the official transient emission 

result from the following equation:

Official transient emission result = 0.05 ×

cold-start emission rate + 0.95 × hot-start 

emission rate.

(c) Cool the engine down between 

tests as described in 40 CFR 86.1335–90. 

(d) For validating cycle statistics, you 

may delete from your regression 

analysis speed, torque, and power 

points for the first 23 seconds and the 

last 25 seconds of the transient duty 

cycle.

§ 1039.515 What are the test procedures 

related to not-to-exceed standards? 

(a) General provisions. The provisions 

in 40 CFR 86.1370–2007 apply for 

determining whether an engine meets 

the not-to-exceed emission standards in 

§ 1039.101(e). Interpret references to 

vehicles and vehicle operation to mean 

equipment and equipment operation. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39235

(b) Special PM zone. For engines 

certified to a PM standard or FEL above 

0.07 g/kW-hr, a modified NTE control 

area applies for PM emissions only. The 

speeds and loads to be excluded are 

determined based on speeds B and C, 

determined according to the provisions 

of 40 CFR 86.1360–2007(c). One of the 

following provisions applies: 

(1) If the C speed is below 2400 rpm, 

exclude the speed and load points to the 

right of or below the line formed by 

connecting the following two points on 

a plot of speed-vs.-power: 

(i) 30% of maximum power at the B 

speed; however, use the power value 

corresponding to the engine operation at 

30% of maximum torque at the B speed 

if this is greater than 30% of maximum 

power at the B speed. 

(ii) 70% of maximum power at 100% 

speed. 

(2) If the C speed is at or above 2400 

rpm, exclude the speed and load points 

to the right of the line formed by 

connecting the two points in paragraphs 

(b)(2)(i) and (ii) of this section (the 30% 

and 50% torque/power points) and 

below the line formed by connecting the 

two points in paragraphs (b)(2)(ii) and 

(iii) of this section (the 50% and 70% 

torque/power points). The 30%, 50%, 

and 70% torque/power points are 

defined as follows: 

(i) 30% of maximum power at the B 

speed; however, use the power value 

corresponding to the engine operation at 

30% of maximum torque at the B speed 

if this is greater than 30% of maximum 

power at the B speed. 

(ii) 50% of maximum power at 2400 

rpm. 

(iii) 70% of maximum power at 100% 

speed.

§ 1039.520 What testing must I perform to 

establish deterioration factors? 

Sections 1039.240 and 1039.245 

describe the method for testing that 

must be performed to establish 

deterioration factors for an engine 

family.

§ 1039.525 How do I adjust emission levels 

to account for infrequently regenerating 

aftertreatment devices? 

This section describes how to adjust 

emission results from engines using 

aftertreatment technology with 

infrequent regeneration events. For this 

section, ‘‘regeneration’’ means an 

intended event during which emission 

levels change while the system restores 

aftertreatment performance. For 

example, exhaust gas temperatures may 

increase temporarily to remove sulfur 

from adsorbers or to oxidize 

accumulated particulate matter in a 

trap. For this section, ‘‘infrequent’’

refers to regeneration events that are 

expected to occur on average less than 

once over the applicable transient duty 

cycle or ramped-modal cycle, or on 

average less than once per typical mode 

in a discrete-mode test. 

(a) Developing adjustment factors.

Develop an upward adjustment factor 

and a downward adjustment factor for 

each pollutant based on measured 

emission data and observed 

regeneration frequency. Adjustment 

factors should generally apply to an 

entire engine family, but you may 

develop separate adjustment factors for 

different engine configurations within 

an engine family. If you use adjustment 

factors for certification, you must 

identify the frequency factor, F, from 

paragraph (b) of this section in your 

application for certification and use the 

adjustment factors in all testing for that 

engine family. You may use carryover or 

carry-across data to establish adjustment 

factors for an engine family, as 

described in § 1039.235(d), consistent 

with good engineering judgment. All 

adjustment factors for regeneration are 

additive. Determine adjustment factors 

separately for different test segments. 

For example, determine separate 

adjustment factors for hot-start and 

cold-start test segments and for different 

modes of a discrete-mode steady-state 

test. You may use either of the following 

different approaches for engines that use 

aftertreatment with infrequent 

regeneration events: 

(1) You may disregard this section if 

regeneration does not significantly affect 

emission levels for an engine family (or 

configuration) or if it is not practical to 

identify when regeneration occurs. If 

you do not use adjustment factors under 

this section, your engines must meet 

emission standards for all testing, 

without regard to regeneration. 

(2) If your engines use aftertreatment 

technology with extremely infrequent 

regeneration and you are unable to 

apply the provisions of this section, you 

may ask us to approve an alternate 

methodology to account for regeneration 

events. 

(b) Calculating average adjustment 

factors. Calculate the average 

adjustment factor (EFA) based on the 

following equation:

EFA = (F)(EFH) + (1-F)(EFL)

Where: 

F = the frequency of the regeneration event 

in terms of the fraction of tests during 

which the regeneration occurs. 

EFH = measured emissions from a test 

segment in which the regeneration 

occurs. 

EFL = measured emissions from a test 

segment in which the regeneration does 

not occur.

(c) Applying adjustment factors.

Apply adjustment factors based on 

whether regeneration occurs during the 

test run. You must be able to identify 

regeneration in a way that is readily 

apparent during all testing. 

(1) If regeneration does not occur 

during a test segment, add an upward 

adjustment factor to the measured 

emission rate. Determine the upward 

adjustment factor (UAF) using the 

following equation:

UAF = EFA ¥ EFL

(2) If regeneration occurs or starts to 

occur during a test segment, subtract a 

downward adjustment factor from the 

measured emission rate. Determine the 

downward adjustment factor (DAF) 

using the following equation:

DAF = EFH ¥ EFA

(d) Sample calculation. If EFL is 0.10 

g/kW-hr, EFH is 0.50 g/kW-hr, and F is 

0.1 (the regeneration occurs once for 

each ten tests), then:

EFA = (0.1)(0.5 g/kW-hr) + (1.0 ¥ 0.1)(0.1 g/

kW-hr) = 0.14 g/kW-hr. 

UAF = 0.14 g/kW-hr ¥ 0.10 g/kW-hr = 0.04 

g/kW-hr. 

DAF = 0.50 g/kW-hr ¥ 0.14 g/kW-hr = 0.36 

g/kW-hr.

Subpart G—Special Compliance 

Provisions

§ 1039.601 What compliance provisions 

apply to these engines? 

Engine and equipment manufacturers, 

as well as owners, operators, and 

rebuilders of engines subject to the 

requirements of this part, and all other 

persons, must observe the provisions of 

this part, the requirements and 

prohibitions in 40 CFR part 1068, and 

the provisions of the Act.

§ 1039.605 What provisions apply to 

engines already certified under the motorvehicle program? 

(a) General provisions. If you are an 

engine manufacturer, this section allows 

you to introduce new nonroad engines 

into commerce if they are already 

certified to the requirements that apply 

to compression-ignition engines under 

40 CFR parts 85 and 86. If you comply 

with all the provisions of this section, 

we consider the certificate issued under 

40 CFR part 86 for each engine to also 

be a valid certificate of conformity 

under this part 1039 for its model year, 

without a separate application for 

certification under the requirements of 

this part 1039. See § 1039.610 for 

similar provisions that apply to engines 

certified to chassis-based standards for 

motor vehicles. 

(b) Equipment-manufacturer 

provisions. If you are not an engine 

39236 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

manufacturer, you may produce 

nonroad equipment using motor-vehicle 

engines under this section as long as the 

engine has been properly labeled as 

specified in paragraph (d)(5) of this 

section and you do not make any of the 

changes described in paragraph (d)(2) of 

this section. You must also add the fuelinlet label we specify in § 1039.135(e). 

If you modify the motor-vehicle engine 

in any of the ways described in 

paragraph (d)(2) of this section, we will 

consider you a manufacturer of a new 

nonroad engine. Such engine 

modifications prevent you from using 

the provisions of this section. 

(c) Liability. Engines for which you 

meet the requirements of this section are 

exempt from all the requirements and 

prohibitions of this part, except for 

those specified in this section. Engines 

exempted under this section must meet 

all the applicable requirements from 40 

CFR parts 85 and 86. This paragraph (c) 

applies to engine manufacturers, 

equipment manufacturers who use these 

engines, and all other persons as if these 

engines were used in a motor vehicle. 

The prohibited acts of § 1068.101(a)(1) 

apply to these new engines and 

equipment; however, we consider the 

certificate issued under 40 CFR part 86 

for each engine to also be a valid 

certificate of conformity under this part 

1039 for its model year. If we make a 

determination that these engines do not 

conform to the regulations during their 

useful life, we may require you to recall 

them under 40 CFR part 85 or 40 CFR 

1068.505. 

(d) Specific requirements. If you are 

an engine manufacturer and meet all the 

following criteria and requirements 

regarding your new nonroad engine, the 

engine is eligible for an exemption 

under this section: 

(1) Your engine must be covered by a 

valid certificate of conformity issued 

under 40 CFR part 86. 

(2) You must not make any changes to 

the certified engine that could 

reasonably be expected to increase its 

exhaust emissions for any pollutant, or 

its evaporative emissions if it is subject 

to evaporative-emission standards. For 

example, if you make any of the 

following changes to one of these 

engines, you do not qualify for this 

exemption: 

(i) Change any fuel system parameters 

from the certified configuration. 

(ii) Change, remove, or fail to properly 

install any other component, element of 

design, or calibration specified in the 

engine manufacturer’s application for 

certification. This includes 

aftertreatment devices and all related 

components. 

(iii) Modify or design the engine 

cooling system so that temperatures or 

heat rejection rates are outside the 

original engine manufacturer’s specified 

ranges. 

(3) You must show that fewer than 50 

percent of the engine model’s total sales 

for the model year, from all companies, 

are used in nonroad applications, as 

follows: 

(i) If you are the original manufacturer 

of the engine, base this showing on your 

sales information. 

(ii) In all other cases, you must get the 

original manufacturer of the engine to 

confirm this based on its sales 

information. 

(4) You must ensure that the engine 

has the label we require under 40 CFR 

part 86. 

(5) You must add a permanent 

supplemental label to the engine in a 

position where it will remain clearly 

visible after installation in the 

equipment. In the supplemental label, 

do the following: 

(i) Include the heading: ‘‘NONROAD 

ENGINE EMISSION CONTROL 

INFORMATION’’. 

(ii) Include your full corporate name 

and trademark. You may instead 

include the full corporate name and 

trademark of another company you 

choose to designate. 

(iii) State: ‘‘THIS ENGINE WAS 

ADAPTED FOR NONROAD USE 

WITHOUT AFFECTING ITS EMISSION 

CONTROLS. THE EMISSIONCONTROL SYSTEM DEPENDS ON THE 

USE OF FUEL MEETING 

SPECIFICATIONS THAT APPLY FOR 

MOTOR-VEHICLE APPLICATIONS. 

OPERATING THE ENGINE ON OTHER 

FUELS MAY BE A VIOLATION OF 

FEDERAL LAW.’’. 

(iv) State the date you finished 

modifying the engine (month and year), 

if applicable. 

(6) The original and supplemental 

labels must be readily visible after the 

engine is installed in the equipment or, 

if the equipment obscures the engine’s 

emission control information label, the 

equipment manufacturer must attach 

duplicate labels, as described in 40 CFR 

1068.105. 

(7) You must make sure that nonroad 

equipment produced under this section 

will have the fueling label we specify in 

§ 1039.135(c)(9)(i). 

(8) Send the Designated Compliance 

Officer a signed letter by the end of each 

calendar year (or less often if we tell 

you) with all the following information: 

(i) Identify your full corporate name, 

address, and telephone number. 

(ii) List the engine models you expect 

to produce under this exemption in the 

coming year. 

(iii) State: ‘‘We produce each listed 

engine model for nonroad application 

without making any changes that could 

increase its certified emission levels, as 

described in 40 CFR 1039.605.’’. 

(e) Failure to comply. If your engines 

do not meet the criteria listed in 

paragraph (d) of this section, they will 

be subject to the standards, 

requirements, and prohibitions of this 

part 1039 and the certificate issued 

under 40 CFR part 86 will not be 

deemed to also be a certificate issued 

under this part 1039. Introducing these 

engines into commerce without a valid 

exemption or certificate of conformity 

under this part violates the prohibitions 

in 40 CFR 1068.101(a)(1). 

(f) Data submission. We may require 

you to send us emission test data on any 

applicable nonroad duty cycles.

§ 1039.610 What provisions apply to 

vehicles already certified under the motorvehicle program? 

(a) General provisions. If you are a 

motor-vehicle manufacturer, this section 

allows you to introduce new nonroad 

engines or equipment into commerce if 

the vehicle is already certified to the 

requirements that apply under 40 CFR 

parts 85 and 86. If you comply with all 

of the provisions of this section, we 

consider the certificate issued under 40 

CFR part 86 for each motor vehicle to 

also be a valid certificate of conformity 

for the engine under this part 1039 for 

its model year, without a separate 

application for certification under the 

requirements of this part 1039. See 

§ 1039.605 for similar provisions that 

apply to motor-vehicle engines 

produced for nonroad equipment.

(b) Equipment-manufacturer 

provisions. If you are not an engine 

manufacturer, you may produce 

nonroad equipment from motor vehicles 

under this section as long as the 

equipment has the labels specified in 

paragraph (d)(5) of this section and you 

do not make any of the changes 

described in paragraph (d)(2) of this 

section. You must also add the fuel-inlet 

label we specify in § 1039.135(e). If you 

modify the motor vehicle or its engine 

in any of the ways described in 

paragraph (d)(2) of this section, we will 

consider you a manufacturer of a new 

nonroad engine. Such modifications 

prevent you from using the provisions 

of this section. 

(c) Liability. Engines, vehicles, and 

equipment for which you meet the 

requirements of this section are exempt 

from all the requirements and 

prohibitions of this part, except for 

those specified in this section. Engines 

exempted under this section must meet 

all the applicable requirements from 40 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39237

CFR parts 85 and 86. This applies to 

engine manufacturers, equipment 

manufacturers, and all other persons as 

if the nonroad equipment were motor 

vehicles. The prohibited acts of 

§ 1068.101(a)(1) apply to these new 

pieces of equipment; however, we 

consider the certificate issued under 40 

CFR part 86 for each motor vehicle to 

also be a valid certificate of conformity 

for the engine under this part 1039 for 

its model year. If we make a 

determination that these engines, 

vehicles, or equipment do not conform 

to the regulations during their useful 

life, we may require you to recall them 

under 40 CFR part 86 or 40 CFR 

1068.505. 

(d) Specific requirements. If you are a 

motor-vehicle manufacturer and meet 

all the following criteria and 

requirements regarding your new 

nonroad equipment and its engine, the 

engine is eligible for an exemption 

under this section: 

(1) Your equipment must be covered 

by a valid certificate of conformity as a 

motor vehicle issued under 40 CFR part 

86. 

(2) You must not make any changes to 

the certified vehicle that we could 

reasonably expect to increase its exhaust 

emissions for any pollutant, or its 

evaporative emissions if it is subject to 

evaporative-emission standards. For 

example, if you make any of the 

following changes, you do not qualify 

for this exemption: 

(i) Change any fuel system parameters 

from the certified configuration. 

(ii) Change, remove, or fail to properly 

install any other component, element of 

design, or calibration specified in the 

vehicle manufacturer’s application for 

certification. This includes 

aftertreatment devices and all related 

components. 

(iii) Modify or design the engine 

cooling system so that temperatures or 

heat rejection rates are outside the 

original vehicle manufacturer’s 

specified ranges. 

(iv) Add more than 500 pounds to the 

curb weight of the originally certified 

motor vehicle. 

(3) You must show that fewer than 50 

percent of the total sales as a motor 

vehicle or a piece of nonroad 

equipment, from all companies, are 

used in nonroad applications, as 

follows: 

(i) If you are the original manufacturer 

of the vehicle, base this showing on 

your sales information. 

(ii) In all other cases, you must get the 

original manufacturer of the vehicle to 

confirm this based on their sales 

information. 

(4) The equipment must have the 

vehicle emission control information 

and fuel labels we require under 40 CFR 

86.007–35. 

(5) You must add a permanent 

supplemental label to the equipment in 

a position where it will remain clearly 

visible. In the supplemental label, do 

the following: 

(i) Include the heading: ‘‘NONROAD 

ENGINE EMISSION CONTROL 

INFORMATION’’. 

(ii) Include your full corporate name 

and trademark. You may instead 

include the full corporate name and 

trademark of another company you 

choose to designate. 

(iii) State: ‘‘THIS VEHICLE WAS 

ADAPTED FOR NONROAD USE 

WITHOUT AFFECTING ITS EMISSION 

CONTROLS. THE EMISSIONCONTROL SYSTEM DEPENDS ON THE 

USE OF FUEL MEETING 

SPECIFICATIONS THAT APPLY FOR 

MOTOR-VEHICLE APPLICATIONS. 

OPERATING THE ENGINE ON OTHER 

FUELS MAY BE A VIOLATION OF 

FEDERAL LAW.’’. 

(iv) State the date you finished 

modifying the vehicle (month and year), 

if applicable. 

(6) The original and supplemental 

labels must be readily visible in the 

fully assembled equipment. 

(7) Send the Designated Compliance 

Officer a signed letter by the end of each 

calendar year (or less often if we tell 

you) with all the following information: 

(i) Identify your full corporate name, 

address, and telephone number. 

(ii) List the equipment models you 

expect to produce under this exemption 

in the coming year. 

(iii) State: ‘‘We produce each listed 

engine or equipment model for nonroad 

application without making any changes 

that could increase its certified emission 

levels, as described in 40 CFR 

1039.610.’’. 

(e) Failure to comply. If your engines, 

vehicles, or equipment do not meet the 

criteria listed in paragraph (d) of this 

section, the engines will be subject to 

the standards, requirements, and 

prohibitions of this part 1039, and the 

certificate issued under 40 CFR part 86 

will not be deemed to also be a 

certificate issued under this part 1039. 

Introducing these engines into 

commerce without a valid exemption or 

certificate of conformity under this part 

violates the prohibitions in 40 CFR 

1068.101(a)(1). 

(f) Data submission. We may require 

you to send us emission test data on any 

applicable nonroad duty cycles.

§ 1039.615 What special provisions apply 

to engines using noncommercial fuels? 

In § 1039.115(e), we generally require 

that engines meet emission standards 

for any adjustment within the full range 

of any adjustable parameters. For 

engines that use noncommercial fuels 

significantly different than the specified 

test fuel of the same type, you may ask 

to use the parameter-adjustment 

provisions of this section instead of 

those in § 1039.115(e). Engines certified 

under this section must be in a separate 

engine family. 

(a) If we approve your request, the 

following provisions apply: 

(1) You must certify the engine using 

the test fuel specified in § 1039.501. 

(2) You may produce the engine 

without limits or stops that keep the 

engine adjusted within the certified 

range. 

(3) You must specify in-use 

adjustments different than the 

adjustable settings appropriate for the 

specified test fuel, consistent with the 

provisions of paragraph (b)(1) of this 

section. 

(b) To produce engines under this 

section, you must do the following: 

(1) Specify in-use adjustments needed 

so the engine’s level of emission control 

for each regulated pollutant is 

equivalent to that from the certified 

configuration. 

(2) Add the following information to 

the emission control information label 

specified in § 1039.135: 

(i) Include instructions describing 

how to adjust the engine to operate in 

a way that maintains the effectiveness of 

the emission-control system. 

(ii) State: ‘‘THIS ENGINE IS 

CERTIFIED TO OPERATE IN 

APPLICATIONS USING 

NONCOMMERCIAL FUEL. 

MALADJUSTMENT OF THE ENGINE IS 

A VIOLATION OF FEDERAL LAW 

SUBJECT TO CIVIL PENALTY.’’. 

(3) Keep records to document the 

destinations and quantities of engines 

produced under this section.

§ 1039.620 What are the provisions for 

exempting engines used solely for 

competition? 

The provisions of this section apply 

for new engines built on or after January 

1, 2006. 

(a) Equipment manufacturers may use 

uncertified engines if the vehicles or 

equipment in which they are installed 

will be used solely for competition. 

(b) The definition of nonroad engine 

in 40 CFR 1068.30 excludes engines 

used solely for competition. These 

engines are not required to comply with 

this part 1039 or 40 CFR part 89, but 40 

CFR 1068.101 prohibits the use of 

39238 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

competition engines for noncompetition 

purposes. 

(c) We consider a vehicle or piece of 

equipment to be one that will be used 

solely for competition if it has features 

that are not easily removed that would 

make its use other than in competition 

unsafe, impractical, or highly unlikely. 

(d) As an engine manufacturer, your 

engine is exempt without our prior 

approval if you have a written request 

for an exempted engine from the 

equipment manufacturer showing the 

basis for believing that the equipment 

will be used solely for competition. You 

must permanently label engines 

exempted under this section to clearly 

indicate that they are to be used solely 

for competition. Failure to properly 

label an engine will void the exemption. 

(e) We may discontinue an exemption 

under this section if we find that 

engines are not used solely for 

competition.

§ 1039.625 What requirements apply under 

the program for equipment-manufacturer 

flexibility? 

The provisions of this section allow 

equipment manufacturers to produce 

equipment with engines that are subject 

to less stringent emission standards after 

the Tier 4 emission standards begin to 

apply. To be eligible to use these 

provisions, you must follow all the 

instructions in this section. See 40 CFR 

89.102(d) and (e) for provisions that 

apply to equipment produced while 

Tier 1, Tier 2, or Tier 3 standards apply. 

See § 1039.626 for requirements that 

apply specifically to companies that 

manufacture equipment outside the 

United States and to companies that 

import such equipment without 

manufacturing it. Engines and 

equipment you produce under this 

section are exempt from the 

prohibitions in 40 CFR 1068.101(a)(1), 

subject to the provisions of this section. 

(a) General. If you are an equipment 

manufacturer, you may introduce into 

commerce in the United States limited 

numbers of nonroad equipment with 

engines exempted under this section. 

You may use the exemptions in this 

section only if you have primary 

responsibility for designing and 

manufacturing equipment and your 

manufacturing procedures include 

installing some engines in this 

equipment. Consider all U.S.-directed 

equipment sales in showing that you 

meet the requirements of this section, 

including those from any parent or 

subsidiary companies and those from 

any other companies you license to 

produce equipment for you. If you 

produce a type of equipment that has 

more than one engine, count each 

engine separately. These provisions are 

available over the following periods: 

(1) These provisions are available for 

the years shown in the following table, 

except as provided in paragraph (a)(2) of 

this section:

TABLE 1 OF § 1039.625.—GENERAL

AVAILABILITY OF ALLOWANCES

Power category Calendar years 

kW < 19 ............................ 2008–2014 

19 ≤ kW < 56 .................... 2008–2014 

56 ≤ kW < 130 .................. 2012–2018 

130 ≤ kW ≤ 560 ................ 2011–2017 

kW < 560 .......................... 2011–2017 

(2) If you do not use any allowances 

in a power category before the earliest 

dates shown in the following table, you 

may delay the start of the seven-year 

period for using allowances under this 

section as follows:

TABLE 2 OF § 1039.625.—AVAILABILITY OF DELAYED ALLOWANCES

Power category Calendar years 

kW < 19 ............................ ............................

19 ≤ kW < 56 .................... 2012–2018 

56 ≤ kW < 130 .................. 2014–2020 

130 ≤ kW ≤ 560 ................ 2014–2020 

kW > 560 .......................... 2015–2021 

(b) Allowances. You may choose one 

of the following options for each power 

category to produce equipment with 

exempted engines under this section, 

except as allowed under § 1039.627: 

(1) Percent-of-production allowances.

You may produce a certain number of 

units with exempted engines calculated 

using a percentage of your total sales 

within a power category relative to your 

total U.S.-directed production volume. 

The sum of these percentages within a 

power category during the seven-year 

period specified in paragraph (a) of this 

section may not exceed 80 percent, 

except as allowed under paragraph 

(b)(2) or (m) of this section. 

(2) Small-volume allowances. You 

may determine an alternate allowance 

for a specific number of exempted 

engines under this section using one of 

the following approaches for your U.S.-

directed production volumes: 

(i) You may produce up to 700 units 

with exempted engines within a power 

category during the seven-year period 

specified in paragraph (a) of this 

section, with no more than 200 units in 

any single year within a power category, 

except as provided in paragraph (m) of 

this section. Engines within a power 

category that are exempted under this 

section must be from a single engine 

family within a given year. 

(ii) For engines below 130 kW, you 

may produce up to 525 units with 

exempted engines within a power 

category during the seven-year period 

specified in paragraph (a) of this 

section, with no more than 150 units in 

any single year within a power category, 

except as provided in paragraph (m) of 

this section. For engines at or above 130 

kW, you may produce up to 350 units 

with exempted engines within a power 

category during the seven-year period, 

with no more than 100 units in any 

single year within a power category. 

Exemptions under this paragraph 

(b)(2)(ii) may apply to engines from 

multiple engine families in a given year. 

(c) Percentage calculation. Calculate 

for each calendar year the percentage of 

equipment with exempted engines from 

your total U.S.-directed production 

within a power category if you need to 

show that you meet the percent-ofproduction allowances in paragraph 

(b)(1) of this section. 

(d) Inclusion of engines not subject to 

Tier 4 standards. The following 

provisions apply to engines that are not 

subject to Tier 4 standards: 

(1) If you use the provisions of 

§ 1068.105(a) to use up your inventories 

of engines not certified to new emission 

standards, do not include these units in 

your count of equipment with exempted 

engines under paragraph (b) of this 

section. However, you may include 

these units in your count of total 

equipment you produce for the given 

year for the percentage calculation in 

paragraph (b)(1) of this section. 

(2) If you install engines that are 

exempted from the Tier 4 standards for 

any reason, other than for equipmentmanufacturer allowances under this 

section, do not include these units in 

your count of exempted engines under 

paragraph (b) of this section. However, 

you may include these units in your 

count of total equipment you produce 

for the given year for the percentage 

calculation in paragraph (b)(1) of this 

section. For example, if we grant a 

hardship exemption for the engine 

manufacturer, you may count these as 

compliant engines under this section. 

This paragraph (d)(2) applies only if the 

engine has a permanent label describing 

why it is exempted from the Tier 4 

standards. 

(3) Do not include equipment using 

model year 2008 or 2009 engines 

certified under the provisions of 

§ 1039.101(c) in your count of 

equipment using exempted engines. 

However, you may include these units 

in your count of total equipment you 

produce for the given year for the 

percentage calculation in paragraph 

(b)(1) of this section. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39239

(4) You may start using the 

allowances under this section for 

engines that are not yet subject to Tier 

4 standards, as long as the seven-year 

period for using allowances under the 

Tier 2 or Tier 3 program has expired 

(see 40 CFR 89.102(d)). Table 3 of this 

section shows the years for which this 

applies. To use these early allowances, 

you must use engines that meet the 

emission standards described in 

paragraph (e) of this section. You must 

also count these units or calculate these 

percentages as described in paragraph 

(c) of this section and apply them 

toward the total number or percentage 

of equipment with exempted engines we 

allow for the Tier 4 standards as 

described in paragraph (b) of this 

section. The maximum number of 

cumulative early allowances under this 

paragraph (d)(4) is 10 percent under the 

percent-of-production allowance or 100 

units under the small-volume 

allowance. For example, if you produce 

5 percent of your equipment with 

engines between 130 and 560 kW that 

use allowances under this paragraph 

(d)(4) in 2009, you may use up to an 

additional 5 percent of your allowances 

in 2010. If you use allowances for 5 

percent of your equipment in both 2009 

and 2010, your 80 percent allowance for 

2011–2017 in the 130–560 kW power 

category decreases to 70 percent. 

Manufacturers using allowances under 

this paragraph (d)(4) must comply with 

the notification and reporting 

requirements specified in paragraph (g) 

of this section.

TABLE 3 OF § 1039.625.—YEARS FOR

EARLY ALLOWANCES

Maximum engine power Calendar years 

kW < 19 ............................ 2007

19 ≤ kW < 37 .................... 2006–2011

37 ≤ kW < 56 .................... 2011

56 ≤ kW < 75 .................... 2011

75 ≤ kW < 130 .................. 2010–2011

130 ≤ kW < 225 ................ 2010

225 ≤ kW < 450 ................ 2008–2010

450 ≤ kW ≤ 560 ................ 2009–2010

KW > 560 ......................... ............................

(e) Standards. If you produce 

equipment with exempted engines 

under this section, the engines must 

meet emission standards at least as 

stringent as the following: 

(1) If you are using the provisions of 

paragraph (d)(4) of this section, engines 

must meet the applicable Tier 1 

emission standards described in 

§ 89.112. 

(2) If you are using the provisions of 

paragraph (a)(2) of this section, engines 

must be certified under this part 1039 as 

follows:

Engines in the following 

power category . . . 

Must meet all 

standards and 

requirements that 

applied in the following model 

year . . . 

(i) 19 ≤ kW < 56 ............... 2008

(ii) 56 ≤ kW < 130 ............ 2012

(iii) 130 ≤ kW ≤ 560 .......... 2011

(iv) kW > 560 .................... 2011

(3) In all other cases, engines at or 

above 37 kW and at or below 560 kW 

must meet the appropriate Tier 3 

standards described in § 89.112. Engines 

below 37 kW and engines above 560 kW 

must meet the appropriate Tier 2 

standards described in § 89.112.

(f) Equipment labeling. You must add 

a permanent label, written legibly in 

English, to the engine or another readily 

visible part of each piece of equipment 

you produce with exempted engines 

under this section. This label, which 

supplements the engine manufacturer’s 

emission control information label, 

must include at least the following 

items: 

(1) The label heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Your corporate name and 

trademark. 

(3) The calendar year in which the 

equipment is manufactured. 

(4) The name, e-mail address, and 

phone number of a person to contact for 

further information. 

(5) The following statement:

THIS EQUIPMENT [or identify the type of 

equipment] HAS AN ENGINE THAT MEETS 

U.S. EPA EMISSION STANDARDS UNDER 

40 CFR 1039.625.

(g) Notification and reporting. You 

must notify us of your intent to use the 

provisions of this section and send us 

an annual report to verify that you are 

not exceeding the allowances, as 

follows: 

(1) Before January 1 of the first year 

you intend to use the provisions of this 

section, send the Designated 

Compliance Officer and the Designated 

Enforcement Officer a written notice of 

your intent, including: 

(i) Your company’s name and address, 

and your parent company’s name and 

address, if applicable. 

(ii) Whom to contact for more 

information. 

(iii) The calendar years in which you 

expect to use the exemption provisions 

of this section. 

(iv) The name and address of the 

company that produces the engines you 

will be using for the equipment 

exempted under this section. 

(v) Your best estimate of the number 

of units in each power category you will 

produce under this section and whether 

you intend to comply under paragraph 

(b)(1) or (b)(2) of this section. 

(vi) The number of units in each 

power category you have sold in 

previous calendar years under 40 CFR 

89.102(d). 

(2) For each year that you use the 

provisions of this section, send the 

Designated Compliance Officer and the 

Designated Enforcement Officer a 

written report by March 31 of the 

following year. Include in your report 

the total number of engines you sold in 

the preceding year for each power 

category, based on actual U.S.-directed 

production information. Also identify 

the percentages of U.S.-directed 

production that correspond to the 

number of units in each power category 

and the cumulative numbers and 

percentages of units for all the units you 

have sold under this section for each 

power category. You may omit the 

percentage figures if you include in the 

report a statement that you will not be 

using the percent-of-production 

allowances in paragraph (b)(1) of this 

section. 

(h) Recordkeeping. Keep the following 

records of all equipment with exempted 

engines you produce under this section 

for at least five full years after the final 

year in which allowances are available 

for each power category: 

(1) The model number, serial number, 

and the date of manufacture for each 

engine and piece of equipment. 

(2) The maximum power of each 

engine. 

(3) The total number or percentage of 

equipment with exempted engines, as 

described in paragraph (b) of this 

section and all documentation 

supporting your calculation. 

(4) The notifications and reports we 

require under paragraph (g) of this 

section. 

(i) Enforcement. Producing more 

exempted engines or equipment than we 

allow under this section or installing 

engines that do not meet the emission 

standards of paragraph (e) of this section 

violates the prohibitions in 40 CFR 

1068.101(a)(1). You must give us the 

records we require under this section if 

we ask for them (see 40 CFR 

1068.101(a)(2)). 

(j) Provisions for engine 

manufacturers. As an engine 

manufacturer, you may produce 

exempted engines as needed under this 

section. You do not have to request this 

exemption for your engines, but you 

must have written assurance from 

equipment manufacturers that they need 

a certain number of exempted engines 

under this section. Send us an annual 

report of the engines you produce under 

this section, as described in 

39240 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

§ 1039.250(a). For engines produced 

under the provisions of paragraph (a)(2) 

of this section, you must certify the 

engines under this part 1039. For all 

other exempt engines, the engines must 

meet the emission standards in 

paragraph (e) of this section and you 

must meet all the requirements of 

§ 1039.260. If you show under 

§ 1039.260(c) that the engines are 

identical in all material respects to 

engines that you have previously 

certified to one or more FELs above the 

standards specified in paragraph (e) of 

this section, you must supply sufficient 

credits for these engines. Calculate these 

credits under subpart H of this part 

using the previously certified FELs and 

the alternate standards. You must meet 

the labeling requirements in 40 CFR 

89.110, but add the following statement 

instead of the compliance statement in 

40 CFR 89.110(b)(10):

THIS ENGINE MEETS U.S. EPA EMISSION 

STANDARDS UNDER 40 CFR 1039.625. 

SELLING OR INSTALLING THIS ENGINE 

FOR ANY PURPOSE OTHER THAN FOR 

THE EQUIPMENT FLEXIBILITY 

PROVISIONS OF 40 CFR 1039.625 MAY BE 

A VIOLATION OF FEDERAL LAW SUBJECT 

TO CIVIL PENALTY.

(k) Other exemptions. See 40 CFR 

1068.255 for exemptions based on 

hardship for equipment manufacturers 

and secondary engine manufacturers. 

(l) [Reserved]

(m) Additional exemptions for 

technical or engineering hardship. You 

may request additional engine 

allowances under paragraph (b)(1) of 

this section for 19–560 kW power 

categories or, if you are a small 

equipment manufacturer, under 

paragraph (b)(2) of this section for 

engines at or above 19 and below 37 

kW. However, you may use these extra 

allowances only for those equipment 

models for which you, or an affiliated 

company, do not also produce the 

engine. After considering the 

circumstances, we may permit you to 

introduce into commerce equipment 

with such engines that do not comply 

with Tier 4 emission standards, as 

follows: 

(1) We may approve additional 

exemptions if extreme and unusual 

circumstances that are clearly outside 

your control and that could not have 

been avoided with reasonable discretion 

have resulted in technical or 

engineering problems that prevent you 

from meeting the requirements of this 

part. You must show that you exercised 

prudent planning and have taken all 

reasonable steps to minimize the scope 

of your request for additional 

allowances. 

(2) To apply for exemptions under 

this paragraph (m), send the Designated 

Compliance Officer and the Designated 

Enforcement Officer a written request as 

soon as possible before you are in 

violation. In your request, include the 

following information: 

(i) Describe your process for designing 

equipment. 

(ii) Describe how you normally work 

cooperatively or concurrently with your 

engine supplier to design products. 

(iii) Describe the engineering or 

technical problems causing you to 

request the exemption and explain why 

you have not been able to solve them. 

Describe the extreme and unusual 

circumstances that led to these 

problems and explain how they were 

unavoidable. 

(iv) Describe any information or 

products you received from your engine 

supplier related to equipment design—

such as written specifications, 

performance data, or prototype 

engines—and when you received it. 

(v) Compare the design processes of 

the equipment model for which you 

need additional exemptions and that for 

other models for which you do not need 

additional exemptions. Explain the 

technical differences that justify your 

request. 

(vi) Describe your efforts to find and 

use other compliant engines, or 

otherwise explain why none is 

available. 

(vii) Describe the steps you have taken 

to minimize the scope of your request. 

(viii) Include other relevant 

information. You must give us other 

relevant information if we ask for it. 

(ix) Estimate the increased percent of 

production you need for each 

equipment model covered by your 

request, as described in paragraph 

(m)(3) of this section. Estimate the 

increased number of allowances you 

need for each equipment model covered 

by your request, as described in 

paragraph (m)(4) of this section. 

(3) We may approve your request to 

increase the allowances under 

paragraph (b)(1) of this section, subject 

to the following limitations: 

(i) The additional allowances will not 

exceed 70 percent for each power 

category. 

(ii) You must use up the allowances 

under paragraph (b)(1) of this section 

before using any additional allowance 

under this paragraph (m). 

(iii) Any allowances we approve 

under this paragraph (m)(3) expire 24 

months after the provisions of this 

section start for a given power category, 

as described in paragraph (a) of this 

section. You may use these allowances 

only for the specific equipment models 

covered by your request. 

(4) We may approve your request to 

increase the allowances for the 19–56 

kW power category under paragraph 

(b)(2) of this section, subject to the 

following limitations: 

(i) You are eligible for additional 

allowances under this paragraph (m)(4) 

only if you are a small equipment 

manufacturer and you do not use the 

provisions of paragraph (m)(3) of this 

section to obtain additional allowances 

for the 19–56 kW power category. 

(ii) You must use up all the available 

allowances for the 19–56 kW power 

category under paragraph (b)(2) of this 

section in a given year before using any 

additional allowances under this 

paragraph (m)(4). 

(iii) Base your request only on 

equipment you produce with engines at 

or above 19 kW and below 37 kW. You 

may use any additional allowances only 

for equipment you produce with 

engines at or above 19 kW and below 37 

kW. 

(iv) The total allowances under either 

paragraph (b)(2)(i) or (ii) of this section 

for the 19–56 kW power category will 

not exceed 1,100 units. 

(v) Any allowances we approve under 

this paragraph (m)(4) expire 36 months 

after the provisions of this section start 

for this power category, as described in 

paragraph (a) of this section. These 

additional allowances are not subject to 

the annual limits specified in paragraph 

(b)(2) of this section. You may use these 

allowances only for the specific 

equipment models covered by your 

request. 

(5) For purposes of this paragraph (m), 

small equipment manufacturer means a 

small-business equipment manufacturer 

that had annual U.S.-directed 

production volume of equipment using 

nonroad diesel engines between 19 and 

56 kW of no more than 3,000 units in 

2002 and all earlier calendar years, and 

has 750 or fewer employees (500 or 

fewer employees for nonroad equipment 

manufacturers that produce no 

construction equipment or industrial 

trucks). For manufacturers owned by a 

parent company, the production limit 

applies to the production of the parent 

company and all its subsidiaries and the 

employee limit applies to the total 

number of employees of the parent 

company and all its subsidiaries.

§ 1039.626 What special provisions apply 

to equipment imported under the 

equipment-manufacturer flexibility 

program? 

This section describes requirements 

that apply to equipment manufacturers 

using the provisions of § 1039.625 for 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39241

equipment produced outside the United 

States. Note that § 1039.625 limits these 

provisions to equipment manufacturers 

that install some engines and have 

primary responsibility for designing and 

manufacturing equipment. Companies 

that import equipment into the United 

States without meeting these criteria are 

not eligible for these allowances. Such 

importers may import equipment with 

exempted engines only as described in 

paragraph (b) of this section. 

(a) As a foreign equipment 

manufacturer, you or someone else may 

import equipment with exempted 

engines under this section if you 

comply with the provisions in 

§ 1039.625 and commit to the following: 

(1) Give any EPA inspector or auditor 

complete and immediate access to 

inspect and audit, as follows: 

(i) Inspections and audits may be 

announced or unannounced. 

(ii) Inspections and audits may be by 

EPA employees or EPA contractors. 

(iii) You must provide access to any 

location where—

(A) Any nonroad engine, equipment, 

or vehicle is produced or stored. 

(B) Documents related to 

manufacturer operations are kept. 

(C) Equipment, engines, or vehicles 

are tested or stored for testing. 

(iv) You must provide any documents 

requested by an EPA inspector or 

auditor that are related to matters 

covered by the inspections or audit. 

(v) EPA inspections and audits may 

include review and copying of any 

documents related to demonstrating 

compliance with the exemptions in 

§ 1039.625. 

(vi) EPA inspections and audits may 

include inspection and evaluation of 

complete or incomplete equipment, 

engines, or vehicles, and interviewing 

employees. 

(vii) You must make any of your 

employees available for interview by the 

EPA inspector or auditor, on request, 

within a reasonable time period.

(viii) You must provide English 

language translations of any documents 

to an EPA inspector or auditor, on 

request, within 10 working days. 

(ix) You must provide Englishlanguage interpreters to accompany EPA 

inspectors and auditors, on request. 

(2) Name an agent for service of 

process located in the District of 

Columbia. Service on this agent 

constitutes service on you or any of your 

officers or employees for any action by 

EPA or otherwise by the United States 

related to the requirements of this part. 

(3) The forum for any civil or criminal 

enforcement action related to the 

provisions of this section for violations 

of the Clean Air Act or regulations 

promulgated thereunder shall be 

governed by the Clean Air Act. 

(4) The substantive and procedural 

laws of the United States shall apply to 

any civil or criminal enforcement action 

against you or any of your officers or 

employees related to the provisions of 

this section. 

(5) Provide the notification required 

by § 1039.625(g). Include in the notice 

of intent in § 1039.625(g)(1) a 

commitment to comply with the 

requirements and obligations of 

§ 1039.625 and this section. This 

commitment must be signed by the 

owner or president. 

(6) You, your agents, officers, and 

employees must not seek to detain or to 

impose civil or criminal remedies 

against EPA inspectors or auditors, 

whether EPA employees or EPA 

contractors, for actions performed 

within the scope of EPA employment 

related to the provisions of this section. 

(7) By submitting notification of your 

intent to use the provisions of 

§ 1039.625, producing and exporting for 

resale to the United States nonroad 

equipment under this section, or taking 

other actions to comply with the 

requirements of this part, you, your 

agents, officers, and employees, without 

exception, become subject to the full 

operation of the administrative and 

judicial enforcement powers and 

provisions of the United States as 

described in 28 U.S.C. 1605(a)(2), 

without limitation based on sovereign 

immunity, for conduct that violates the 

requirements applicable to you under 

this part 1039—including such conduct 

that violates 18 U.S.C. 1001, 42 U.S.C. 

7413(c)(2), or other applicable 

provisions of the Clean Air Act’with 

respect to actions instituted against you 

and your agents, officers, and employees 

in any court or other tribunal in the 

United States. 

(8) Any report or other document you 

submit to us must be in the English 

language, or include a complete 

translation in English. 

(9) You must post a bond to cover any 

potential enforcement actions under the 

Clean Air Act before you or anyone else 

imports your equipment under this 

section, as follows: 

(i) The value of the bond is based on 

the per-engine bond values shown in 

Table 1 of this section and on the 

highest number of engines in each 

power category you produce in any 

single calendar year under the 

provisions of § 1039.625. For example, if 

you have projected U.S.-directed 

production volumes of 100 exempt 

engines in the 19–56 kW power category 

and 300 exempt engines in the 56–130 

kW power category in 2013, the 

appropriate bond amount is $180,000. If 

your estimated or actual engine imports 

increase beyond the level appropriate 

for your current bond payment, you 

must post additional bond to reflect the 

increased sales within 90 days after you 

change your estimate or determine the 

actual sales. You may not decrease your 

bond. 

(ii) You may meet the bond 

requirements of this section with any of 

the following methods: 

(A) Get a bond from a third-party 

surety that is cited in the U.S. 

Department of Treasury Circular 570, 

‘‘Companies Holding Certificates of 

Authority as Acceptable Sureties on 

Federal Bonds and as Acceptable 

Reinsuring Companies.’’ Maintain this 

bond for five years after the applicable 

allowance period expires, or five years 

after you use up all the available 

allowances under § 1039.625, whichever 

comes first. 

(B) Get the Designated Enforcement 

Officer to approve a waiver from the 

bonding requirement, as long as you can 

show that you have assets of an 

appropriate liquidity and value readily 

available in the United States. 

(iii) If you forfeit some or all of your 

bond in an enforcement action, you 

must post any appropriate bond for 

continuing importation within 90 days 

after you forfeit the bond amount.

TABLE 1 OF § 1039.626.—PERENGINE BOND VALUES

For engines with maximum 

engine power falling in the 

following ranges . . . 

The per-engine bond 

value is . . . 

kW < 19 ................................ $150 

19 ≤ kW < 56 ........................ 300 

56 ≤ kW < 130 ...................... 500 

130 ≤ kW < 225 .................... 1,000 

225 ≤ kW < 450 .................... 3,000 

kW ≥ 450 .............................. 8,000 

(iv) You will forfeit the proceeds of 

the bond posted under this paragraph 

(a)(9) if you need to satisfy any United 

States administrative final order or 

judicial judgment against you arising 

from your conduct in violation of this 

part 1039, including such conduct that 

violates 18 U.S.C. 1001, 42 U.S.C. 

7413(c)(2), or other applicable 

provisions of the Clean Air Act. 

(b) The provisions of this paragraph 

(b) apply to importers that do not install 

engines into equipment and do not have 

primary responsibility for designing and 

manufacturing equipment. Such 

importers may import equipment with 

engines exempted under § 1039.625 

only if each engine is exempted under 

an allowance provided to an equipment 

manufacturer meeting the requirements 

39242 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

of § 1039.625 and this section. You must 

notify us of your intent to use the 

provisions of this section and send us 

an annual report, as follows: 

(1) Before January 1 of the first year 

you intend to use the provisions of this 

section, send the Designated 

Compliance Officer and the Designated 

Enforcement Officer a written notice of 

your intent, including: 

(i) Your company’s name and address, 

and your parent company’s name and 

address, if applicable. 

(ii) The name and address of the 

companies that produce the equipment 

and engines you will be importing 

under this section. 

(iii) Your best estimate of the number 

of units in each power category you will 

import under this section in the 

upcoming calendar year, broken down 

by equipment manufacturer and power 

category. 

(iv) The number of units in each 

power category you have imported in 

previous calendar years under 40 CFR 

89.102(d). 

(2) For each year that you use the 

provisions of this section, send the 

Designated Compliance Officer and the 

Designated Enforcement Officer a 

written report by March 31 of the 

following year. Include in your report 

the total number of engines you 

imported under this section in the 

preceding calendar year, broken down 

by engine manufacturer and by 

equipment manufacturer.

§ 1039.627 What are the incentives for 

equipment manufacturers to use cleaner 

engines? 

This section allows equipment 

manufacturers to generate additional 

allowances under the provisions of 

§ 1039.625 by producing equipment 

using engines at or above 19 kW 

certified to specified levels earlier than 

otherwise required. 

(a) For early-compliant engines to 

generate offsets for use under this 

section, the following general provisions 

apply: 

(1) The engine manufacturer must 

comply with the provisions of 

§ 1039.104(a)(1) for the offset-generating 

engines. 

(2) Engines you install in your 

equipment after December 31 of the 

years specified in § 1039.104(a)(1) do 

not generate allowances under this 

section, even if the engine manufacturer 

generated offsets for that engine under 

§ 1039.104(a). 

(3) Offset-generating engines must be 

certified to the following standards 

under this part 1039:

If the engine’s maximum power is . . . And you install . . . Certified early to the . . . 

You may reduce the number of engines in the same power category 

that are required to meet the . . . 

In later model

years by . . . 

(i) kW ≥ 19 ................. One engine ................ Emissions standards in § 1039.101 .. Standards in Tables 2 through 7 of 

§ 1039.102 or in § 1039.101.

One engine. 

(ii) 56 ≤ kW < 130 ..... Two engines .............. NOX standards in § 1039.102(d)(1), 

and NMHC standard of 0.19 g/kWhr, a PM standard of 0.02 g/kW-hr, 

and a CO standard of 5.0 g/kW-hr.

Standards in Tables 2 through 7 of 

§ 1039.102 or in § 1039.101.

One engine. 

(iii) 130 ≤ kW < 560 .. Two engines .............. NOX standards in § 1039.102(d)(2), 

an NMHC standard of 0.19 g/kWhr, a PM standard of 0.02 g/kW-hr, 

and a CO standard of 3.5 g/kW-hr.

Standards in Tables 2 through 7 of 

§ 1039.102 or in § 1039.101.

One engine. 

(b) Using engine offsets. (1) You may 

use engine offsets generated under 

paragraph (a) of this section to generate 

additional allowances under § 1039.625, 

as follows: 

(i) For each engine offset, you may 

increase the number of available 

allowances under § 1039.625(b) for that 

power category by one engine for the 

years indicated.

(ii) For engines in 56–560 kW power 

categories, you may transfer engine 

offsets across power categories within 

this power range. Calculate the number 

of additional allowances by scaling the 

number of generated engine offsets 

according to the ratio of engine power 

for offset and allowance engines. Make 

this calculation for all your offset 

engines for which you will transfer 

offsets under this paragraph (b)(1)(ii), 

then round the result to determine the 

total number of available powerweighted allowances. For example, if 

you generate engine offsets for 75 500-

kW engines, you may generate up to 

37,500 kW-engines of power-weighted 

allowances. You may apply this to 375 

100-kW engines or any other 

combination that totals 37,500 kWengines. 

(2) You may decline to use the offsets. 

If you decline, the engine manufacturer 

may use the provisions of 

§ 1039.104(a)(1). 

(c) Limitation on offsets for engines 

above 560 kW. For engines above 560 

kW, you must track how many engines 

you install in generator sets and how 

many you install in other applications 

under the provisions of this section. 

Offsets from generator-set engines may 

be used only for generator-set engines. 

Offsets from engines for other 

applications may be used only for other 

applications besides generator sets. 

(d) Reporting. When you submit your 

first annual report under § 1039.625(g), 

include the following additional 

information related to the engines you 

use to generate offsets under this 

section: 

(1) The name of each engine family 

involved. 

(2) The number of engines from each 

power category. 

(3) The maximum engine power of 

each engine. 

(4) For engines above 560 kW, 

whether you use engines certified to the 

standards for generator-set engines. 

(e) In-use fuel. If the engine 

manufacturer certifies using ultra lowsulfur diesel fuel, you must take steps 

to ensure that the in-use engines in the 

family will use diesel fuel with a sulfur 

concentration no greater than 15 ppm. 

For example, selling equipment only 

into applications where the operator 

commits to a central-fueling facility 

with ultra low-sulfur diesel fuel 

throughout its lifetime would meet this 

requirement.

§ 1039.630 What are the economic 

hardship provisions for equipment 

manufacturers? 

If you qualify for the economic 

hardship provisions specified in 40 CFR 

1068.255, we may approve your 

hardship application subject to the 

following additional conditions: 

(a) You must show that you have used 

up the allowances to produce 

equipment with exempted engines 

under § 1039.625. 

(b) You may produce equipment 

under this section for up to 12 months 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39243

total (or 24 months total for smallvolume manufacturers).

§ 1039.635 What are the hardship 

provisions for engine manufacturers? 

If you qualify for the hardship 

provisions specified in 40 CFR 

1068.245, we may approve a period of 

delayed compliance for up to one model 

year total (or two model years total for 

small-volume manufacturers). If you 

qualify for the hardship provisions 

specified in 40 CFR 1068.250 for smallvolume manufacturers, we may approve 

a period of delayed compliance for up 

to two model years total.

§ 1039.640 What special provisions apply 

to branded engines? 

The following provisions apply if you 

identify the name and trademark of 

another company instead of your own 

on your emission control information 

label, as provided by § 1039.135(c)(2): 

(a) You must have a contractual 

agreement with the other company that 

obligates that company to take the 

following steps: 

(1) Meet the emission warranty 

requirements that apply under 

§ 1039.120. This may involve a separate 

agreement involving reimbursement of 

warranty-related expenses. 

(2) Report all warranty-related 

information to the certificate holder. 

(b) In your application for 

certification, identify the company 

whose trademark you will use and 

describe the arrangements you have 

made to meet your requirements under 

this section. 

(c) You remain responsible for 

meeting all the requirements of this 

chapter, including warranty and defectreporting provisions.

§ 1039.645 What special provisions apply 

to engines used for transportation 

refrigeration units? 

Manufacturers may choose to use the 

provisions of this section for engines 

used in transportation refrigeration 

units (TRUs). The operating restrictions 

and characteristics in paragraph (f) of 

this section define engines that are not 

used in TRUs. All provisions of this part 

apply for TRU engines, except as 

specified in this section. 

(a) You may certify engines under this 

section with the following special 

provisions: 

(1) The engines are not subject to the 

transient emission standards of subpart 

B of this part. 

(2) The steady-state emission 

standards in subpart B of this part apply 

for emissions measured over the steadystate test cycle described in paragraph 

(b) of this section instead of the 

otherwise applicable duty cycle 

described in § 1039.505. 

(b) Measure steady-state emissions 

using the procedures specified in 

§ 1039.505, except for the duty cycles, 

as follows:

(1) The following duty cycle applies 

for discrete-mode testing:

TABLE 1 OF § 1039.645.—DISCRETE-MODE CYCLE FOR TRU ENGINES

Mode number Engine speed 1 Observed 

torque 2

Weighting 

factors 

1 ........................ Maximum test speed ........................................................................................................................ 75 0.25 

2 ........................ Maximum test speed ........................................................................................................................ 50 0.25 

3 ........................ Intermediate test speed ................................................................................................................... 75 0.25 

4 ........................ Intermediate test speed ................................................................................................................... 50 0.25 

1Speed terms are defined in 40 CFR part 1065. 

2The percent torque is relative to the maximum torque at the given engine speed. 

(2) The following duty cycle applies 

for ramped-modal testing:

TABLE 2 OF § 1039.645.—RAMPED-MODAL CYCLE FOR TRU ENGINES

RMC

mode 

Time in mode 

(seconds) Engine speed 1 Torque(percent) 2 3

1a Steady-state ........................................................ 290 Intermediate Speed ................................................. 75. 

1b Transition ............................................................ 20 Intermediate Speed ................................................. Linear Transition. 

2a Steady-state ........................................................ 280 Intermediate Speed ................................................. 50. 

2b Transition ............................................................ 20 Linear Transition ...................................................... Linear Transition. 

3a Steady-state ........................................................ 280 Maximum Test Speed ............................................. 75. 

3b Transition ............................................................ 20 Maximum Test Speed ............................................. Linear Transition. 

4 Steady-state .......................................................... 290 Maximum Test Speed ............................................. 50 

1Speed terms are defined in 40 CFR part 1065. 

2The percent torque is relative to the maximum torque at the commanded engine speed. 

3Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the 

torque setting of the current mode to the torque setting of the next mode, and simultaneously command a similar linear progression for engine 

speed if there is a change in speed setting. 

(c) Engines certified under this 

section must be certified in a separate 

engine family that contains only TRU 

engines. 

(d) You must do the following for 

each engine certified under this section: 

(1) State on the emission control 

information label: ‘‘THIS ENGINE IS 

CERTIFIED TO OPERATE ONLY IN 

TRANSPORTATION REFRIGERATION 

UNITS. INSTALLING OR USING THIS 

ENGINE IN ANY OTHER 

APPLICATION MAY BE A VIOLATION 

OF FEDERAL LAW SUBJECT TO CIVIL 

PENALTY.’’. 

(2) State in the emission-related 

installation instructions all steps 

necessary to ensure that the engine will 

operate only in the modes covered by 

the test cycle described in this section. 

(3) Keep records to document the 

destinations and quantities of engines 

produced under this section.

(e) All engines certified under this 

section must comply with NTE 

standards, as described in § 1039.101 or 

§ 1039.102 for the applicable model 

year, except that the NTE standards are 

not limited with respect to operating 

speeds and loads. In your application 

39244 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

for certification, certify that all the 

engines in the engine family comply 

with the not-to-exceed emission 

standards for all normal operation and 

use. The deficiency provisions of 

§ 1039.104(d) do not apply to these 

engines. This paragraph (e) applies 

whether or not the engine would 

otherwise be subject to NTE standards. 

(f) An engine is not considered to be 

used in a TRU if any of the following 

is true: 

(1) The engine is installed in any 

equipment other than refrigeration units 

for railcars, truck trailers, or other 

freight vehicles. 

(2) The engine operates in any mode 

not covered by the test cycle described 

in this section, except as follows: 

(i) The engine may operate briefly at 

idle. Note, however, that TRU engines 

must meet NTE emission standards 

under any type of operation, including 

idle, as described in paragraph (e) of 

this section. 

(ii) The engine may have a minimal 

amount of transitional operation 

between two allowable modes. As an 

example, a thirty-second transition 

period would clearly not be considered 

minimal. 

(iii) The engine as installed may 

experience up to a 2-percent decrease in 

load at a given setpoint over any 10-

minute period, and up to a 15-percent 

decrease in load at a given setpoint over 

any 60-minute period. 

(3) The engine is sold in a 

configuration that allows the engine to 

operate in any mode not covered by the 

test cycle described in this section. For 

example, this section does not apply to 

an engine sold without a governor 

limiting operation only to those modes 

covered by the test cycle described in 

this section. 

(4) The engine is subject to Tier 3 or 

earlier standards, or phase-out Tier 4 

standards.

§ 1039.650 [Reserved]

§ 1039.655 What special provisions apply 

to engines sold in Guam, American Samoa, 

or the Commonwealth of the Northern 

Mariana Islands? 

(a) The prohibitions in 

§ 1068.101(a)(1) do not apply to an 

engine if the following conditions are 

met: 

(1) The engine is intended for use and 

will be used in Guam, American Samoa, 

or the Commonwealth of the Northern 

Mariana Islands. 

(2) The engine meets the latest 

applicable emission standards in 40 

CFR 89.112. 

(3) You meet all the requirements of 

§ 1039.260. 

(b) If you introduce an engine into 

commerce in the United States under 

this section, you must meet the labeling 

requirements in 40 CFR 89.110, but add 

the following statement instead of the 

compliance statement in 40 CFR 

89.110(b)(10):

THIS ENGINE DOES NOT COMPLY WITH 

U.S. EPA TIER 4 EMISSION 

REQUIREMENTS. IMPORTING THIS 

ENGINE INTO THE UNITED STATES OR 

ANY TERRITORY OF THE UNITED STATES 

EXCEPT GUAM, AMERICAN SAMOA, OR 

THE COMMONWEALTH OF THE 

NORTHERN MARIANA ISLANDS MAY BE 

A VIOLATION OF FEDERAL LAW SUBJECT 

TO CIVIL PENALTY.

(c) Introducing into commerce an 

engine exempted under this section in 

any state or territory of the United States 

other than Guam, American Samoa, or 

the Commonwealth of the Northern 

Mariana Islands, throughout its lifetime, 

violates the prohibitions in 40 CFR 

1068.101(a)(1), unless it is exempt 

under a different provision.

§ 1039.660 What special provisions apply 

to Independent Commercial Importers? 

Under § 1039.801, certain engines are 

considered to be new engines when they 

are imported into the United States, 

even if they have previously been used 

outside the country. Independent 

Commercial Importers may use the 

provisions of 40 CFR part 89, subpart G, 

and 40 CFR 89.906(b) to receive a 

certificate of conformity for engines 

meeting all the requirements of this part 

1039.

Subpart H—Averaging, Banking, and 

Trading for Certification

§ 1039.701 General provisions. 

(a) You may average, bank, and trade 

(ABT) emission credits for purposes of 

certification as described in this subpart 

to show compliance with the standards 

of this part. Participation in this 

program is voluntary. 

(b) Section 1039.740 restricts the use 

of emission credits to certain averaging 

sets. 

(c) The definitions of Subpart I of this 

part apply to this subpart. The following 

definitions also apply: 

(1) Actual emission credits means 

emission credits you have generated 

that we have verified by reviewing your 

final report. 

(2) Averaging set means a set of 

engines in which emission credits may 

be exchanged only with other engines in 

the same averaging set. 

(3) Broker means any entity that 

facilitates a trade of emission credits 

between a buyer and seller. 

(4) Buyer means the entity that 

receives emission credits as a result of 

a trade. 

(5) Reserved emission credits means 

emission credits you have generated 

that we have not yet verified by 

reviewing your final report. 

(6) Seller means the entity that 

provides emission credits during a 

trade. 

(7) Standard means the emission 

standard that applies under subpart B of 

this part for engines not participating in 

the ABT program of this subpart. 

(8) Trade means to exchange emission 

credits, either as a buyer or seller. 

(d) You may not use emission credits 

generated under this subpart to offset 

any emissions that exceed an FEL or 

standard. This applies for all testing, 

including certification testing, in-use 

testing, selective enforcement audits, 

and other production-line testing. 

However, if emissions from an engine 

exceed an FEL or standard (for example, 

during a selective enforcement audit), 

you may use emission credits to 

recertify the engine family with a higher 

FEL that applies only to future 

production. 

(e) Engine families that use emission 

credits for one or more pollutants may 

not generate positive emission credits 

for another pollutant. 

(f) Emission credits may be used in 

the model year they are generated or in 

future model years. Emission credits 

may not be used for past model years. 

(g) You may increase or decrease an 

FEL during the model year by amending 

your application for certification under 

§ 1039.225. The new FEL may apply 

only to engines you have not already 

introduced into commerce. Each 

engine’s emission control information 

label must include the applicable FELs.

§ 1039.705 How do I generate and 

calculate emission credits? 

The provisions of this section apply 

separately for calculating emission 

credits for NOX, NOX+NMHC, or PM. 

(a) Calculate positive emission credits 

for an engine family that has an FEL 

below the otherwise applicable 

standard. Calculate negative emission 

credits for an engine family that has an 

FEL above the otherwise applicable 

standard. 

(b) For each participating engine 

family, calculate positive or negative 

emission credits relative to the 

otherwise applicable emission standard. 

Round calculated emission credits to 

the nearest kilogram (kg), using 

consistent units throughout the 

following equation:

Emission credits (kg) = (Std ¥ FEL) ×

(Volume) × (AvgPR) × (UL) × (10¥3)

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39245

Where:

Std = the emission standard, in grams per 

kilowatt-hour, that applies under subpart 

B of this part for engines not 

participating in the ABT program of this 

subpart (the ‘‘otherwise applicable 

standard’’). 

FEL = the family emission limit for the 

engine family, in grams per kilowatthour. 

Volume = the number of engines eligible to 

participate in the averaging, banking, 

and trading program within the given 

engine family during the model year, as 

described in paragraph (c) of this section. 

AvgPR = the average maximum engine power 

of all the engine configurations within an 

engine family, calculated on a salesweighted basis, in kilowatts. 

UL = the useful life for the given engine 

family, in hours.

(c) In your application for 

certification, base your showing of 

compliance on projected production 

volumes for engines whose point of first 

retail sale is in the United States. As 

described in § 1039.730, compliance 

with the requirements of this subpart is 

determined at the end of the model year 

based on actual production volumes for 

engines whose point of first retail sale 

is in the United States. Do not include 

any of the following engines to calculate 

emission credits: 

(1) Engines exempted under subpart G 

of this part or under 40 CFR part 1068. 

(2) Exported engines. 

(3) Engines not subject to the 

requirements of this part, such as those 

excluded under § 1039.5. 

(4) [Reserved] 

(5) Any other engines, where we 

indicate elsewhere in this part 1039 that 

they are not to be included in the 

calculations of this subpart.

§ 1039.710 How do I average emission 

credits? 

(a) Averaging is the exchange of 

emission credits among your engine 

families. You may average emission 

credits only within the same averaging 

set. 

(b) You may certify one or more 

engine families to an FEL above the 

applicable standard, subject to the FEL 

caps and other provisions in subpart B 

of this part, if you show in your 

application for certification that your 

projected balance of all emission-credit 

transactions in that model year is greater 

than or equal to zero. 

(c) If you certify an engine family to 

an FEL that exceeds the otherwise 

applicable standard, you must obtain 

enough emission credits to offset the 

engine family’s deficit by the due date 

for the final report required in 

§ 1039.730. The emission credits used to 

address the deficit may come from your 

other engine families that generate 

emission credits in the same model 

year, from emission credits you have 

banked, or from emission credits you 

obtain through trading.

§ 1039.715 How do I bank emission 

credits? 

(a) Banking is the retention of 

emission credits by the manufacturer 

generating the emission credits for use 

in averaging or trading in future model 

years. You may use banked emission 

credits only within the averaging set in 

which they were generated. 

(b) In your application for 

certification, designate any emission 

credits you intend to bank. These 

emission credits will be considered 

reserved credits. During the model year 

and before the due date for the final 

report, you may redesignate these 

emission credits for averaging or 

trading. 

(c) You may use banked emission 

credits from the previous model year for 

averaging or trading before we verify 

them, but we may revoke these emission 

credits if we are unable to verify them 

after reviewing your reports or auditing 

your records. 

(d) Reserved credits become actual 

emission credits only when we verify 

them in reviewing your final report.

§ 1039.720 How do I trade emission 

credits? 

(a) Trading is the exchange of 

emission credits between 

manufacturers. You may use traded 

emission credits for averaging, banking, 

or further trading transactions. Traded 

emission credits may be used only 

within the averaging set in which they 

were generated. 

(b) You may trade actual emission 

credits as described in this subpart. You 

may also trade reserved emission 

credits, but we may revoke these 

emission credits based on our review of 

your records or reports or those of the 

company with which you traded 

emission credits. 

(c) If a negative emission credit 

balance results from a transaction, both 

the buyer and seller are liable, except in 

cases we deem to involve fraud. See 

§ 1039.255(e) for cases involving fraud. 

We may void the certificates of all 

engine families participating in a trade 

that results in a manufacturer having a 

negative balance of emission credits. 

See § 1039.745.

§ 1039.725 What must I include in my 

application for certification? 

(a) You must declare in your 

application for certification your intent 

to use the provisions of this subpart for 

each engine family that will be certified 

using the ABT program. You must also 

declare the FELs you select for the 

engine family for each pollutant for 

which you are using the ABT program. 

Your FELs must comply with the 

specifications of subpart B of this part, 

including the FEL caps. FELs must be 

expressed to the same number of 

decimal places as the applicable 

standards. 

(b) Include the following in your 

application for certification: 

(1) A statement that, to the best of 

your belief, you will not have a negative 

balance of emission credits for any 

averaging set when all emission credits 

are calculated at the end of the year. 

(2) Detailed calculations of projected 

emission credits (positive or negative) 

based on projected production volumes. 

If your engine family will generate 

positive emission credits, state 

specifically where the emission credits 

will be applied (for example, to which 

engine family they will be applied in 

averaging, whether they will be traded, 

or whether they will be reserved for 

banking). If you have projected negative 

emission credits for an engine family, 

state the source of positive emission 

credits to offset the negative emission 

credits. Describe whether the emission 

credits are actual or reserved and 

whether they will come from averaging, 

banking, trading, or a combination of 

these. Identify from which of your 

engine families or from which 

manufacturer the emission credits will 

come.

§ 1039.730 What ABT reports must I send 

to EPA? 

(a) If any of your engine families are 

certified using the ABT provisions of 

this subpart, you must send an end-ofyear report within 90 days after the end 

of the model year and a final report 

within 270 days after the end of the 

model year. We may waive the 

requirement to send the end-of year 

report, as long as you send the final 

report on time. 

(b) Your end-of-year and final reports 

must include the following information 

for each engine family participating in 

the ABT program: 

(1) Engine-family designation. 

(2) The emission standards that would 

otherwise apply to the engine family. 

(3) The FEL for each pollutant. If you 

changed an FEL during the model year, 

identify each FEL you used and 

calculate the positive or negative 

emission credits under each FEL. Also, 

describe how the applicable FEL can be 

identified for each engine you 

produced. For example, you might keep 

a list of engine identification numbers 

that correspond with certain FEL values. 

39246 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(4) The projected and actual 

production volumes for the model year 

with a point of retail sale in the United 

States. If you changed an FEL during the 

model year, identify the actual 

production volume associated with each 

FEL. 

(5) Maximum engine power for each 

engine configuration, and the salesweighted average engine power for the 

engine family. 

(6) Useful life. 

(7) Calculated positive or negative 

emission credits for the whole engine 

family. Identify any emission credits 

that you traded, as described in 

paragraph (d)(1) of this section. 

(c) Your end-of-year and final reports 

must include the following additional 

information: 

(1) Show that your net balance of 

emission credits from all your engine 

families in each averaging set in the 

applicable model year is not negative. 

(2) State whether you will reserve any 

emission credits for banking. 

(3) State that the report’s contents are 

accurate. 

(d) If you trade emission credits, you 

must send us a report within 90 days 

after the transaction, as follows: 

(1) As the seller, you must include the 

following information in your report: 

(i) The corporate names of the buyer 

and any brokers. 

(ii) A copy of any contracts related to 

the trade. 

(iii) The engine families that 

generated emission credits for the trade, 

including the number of emission 

credits from each family. 

(2) As the buyer, you must include the 

following information in your report: 

(i) The corporate names of the seller 

and any brokers. 

(ii) A copy of any contracts related to 

the trade. 

(iii) How you intend to use the 

emission credits, including the number 

of emission credits you intend to apply 

to each engine family (if known). 

(e) Send your reports electronically to 

the Designated Compliance Officer 

using an approved information format. 

If you want to use a different format, 

send us a written request with 

justification for a waiver. 

(f) Correct errors in your end-of-year 

report or final report as follows: 

(1) You may correct any errors in your 

end-of-year report when you prepare the 

final report, as long as you send us the 

final report by the time it is due. 

(2) If you or we determine within 270 

days after the end of the model year that 

errors mistakenly decrease your balance 

of emission credits, you may correct the 

errors and recalculate the balance of 

emission credits. You may not make 

these corrections for errors that are 

determined more than 270 days after the 

end of the model year. If you report a 

negative balance of emission credits, we 

may disallow corrections under this 

paragraph (f)(2). 

(3) If you or we determine anytime 

that errors mistakenly increase your 

balance of emission credits, you must 

correct the errors and recalculate the 

balance of emission credits.

§ 1039.735 What records must I keep? 

(a) You must organize and maintain 

your records as described in this 

section. We may review your records at 

any time. 

(b) Keep the records required by this 

section for eight years after the due date 

for the end-of-year report. You may use 

any appropriate storage formats or 

media, including paper, microfilm, or 

computer diskettes. 

(c) Keep a copy of the reports we 

require in § 1039.725 and § 1039.730. 

(d) Keep the following additional 

records for each engine you produce 

that generates or uses emission credits 

under the ABT program: 

(1) Engine family designation. 

(2) Engine identification number. 

(3) FEL and useful life.

(4) Maximum engine power. 

(5) Build date and assembly plant. 

(6) Purchaser and destination. 

(e) We may require you to keep 

additional records or to send us relevant 

information not required by this section.

§ 1039.740 What restrictions apply for 

using emission credits? 

The following restrictions apply for 

using emission credits: 

(a) Averaging sets. Emission credits 

may be exchanged only within an 

averaging set. For Tier 4 engines, there 

are two averaging sets—one for engines 

at or below 560 kW and another for 

engines above 560 kW. 

(b) Emission credits from earlier tiers 

of standards. (1) For purposes of ABT 

under this subpart, you may not use 

emission credits generated from engines 

subject to emission standards under 40 

CFR part 89, except as specified in 

§ 1039.102(d)(1) or the following table:

If the maximum power of the credit-generating engine is . . . And it was certified to the following standards under 40 CFR 

part 89 . . . 

Then you 

may use 

those banked 

credits for the 

following Tier 

4 engines 

. . . 

(i) kW < 19 ................................................................................... Tier 2 ........................................................................................... kW < 19 

(ii) 19 ≤ kW < 37 .......................................................................... Tier 2 ........................................................................................... kW ≥ 19 

(iii) 37 ≤ kW ≤ 560 ....................................................................... Tier 3 ........................................................................................... kW ≥ 19 

(iv) kW > 560 ............................................................................... Tier 2 ........................................................................................... kW ≥ 19 

(2) Emission credits generated from 

marine engines certified under the 

provisions of 40 CFR part 89 may not be 

used under this part. 

(3) See 40 CFR part 89 for other 

restrictions that may apply for using 

emission credits generated under that 

part. 

(c) NOX and NOX+NMHC emission 

credits. You may use NOX emission 

credits without adjustment to show 

compliance with NOX+NMHC 

standards. You may use NOX+NMHC 

emission credits to show compliance 

with NOX standards, but you must 

adjust the NOX+NMHC emission credits 

downward by twenty percent when you 

use them, as shown in the following 

equation:

NOX emission credits = (0.8) × (NOX+NMHC 

emission credits).

(d) Other restrictions. Other sections 

of this part specify additional 

restrictions for using emission credits 

under certain special provisions.

§ 1039.745 What can happen if I do not 

comply with the provisions of this subpart? 

(a) For each engine family 

participating in the ABT program, the 

certificate of conformity is conditional 

upon full compliance with the 

provisions of this subpart during and 

after the model year. You are 

responsible to establish to our 

satisfaction that you fully comply with 

applicable requirements. We may void 

the certificate of conformity for an 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39247

engine family if you fail to comply with 

any provisions of this subpart. 

(b) You may certify your engine 

family to an FEL above an applicable 

standard based on a projection that you 

will have enough emission credits to 

offset the deficit for the engine family. 

However, we may void the certificate of 

conformity if you cannot show in your 

final report that you have enough actual 

emission credits to offset a deficit for 

any pollutant in an engine family. 

(c) We may void the certificate of 

conformity for an engine family if you 

fail to keep records, send reports, or give 

us information we request. 

(d) You may ask for a hearing if we 

void your certificate under this section 

(see § 1039.820).

Subpart I—Definitions and Other 

Reference Information

§ 1039.801 What definitions apply to this 

part? 

The following definitions apply to 

this part. The definitions apply to all 

subparts unless we note otherwise. All 

undefined terms have the meaning the 

Act gives to them. The definitions 

follow: 

Act means the Clean Air Act, as 

amended, 42 U.S.C. 7401–7671q. 

Adjustable parameter means any 

device, system, or element of design that 

someone can adjust (including those 

which are difficult to access) and that, 

if adjusted, may affect emissions or 

engine performance during emission 

testing or normal in-use operation. This 

includes, but is not limited to, 

parameters related to injection timing 

and fueling rate. You may ask us to 

exclude a parameter that is difficult to 

access if it cannot be adjusted to affect 

emissions without significantly 

degrading engine performance, or if you 

otherwise show us that it will not be 

adjusted in a way that affects emissions 

during in-use operation. 

Aftertreatment means relating to a 

catalytic converter, particulate filter, or 

any other system, component, or 

technology mounted downstream of the 

exhaust valve (or exhaust port) whose 

design function is to reduce emissions 

in the engine exhaust before it is 

exhausted to the environment. Exhaustgas recirculation (EGR) is not 

aftertreatment. 

Aircraft means any vehicle capable of 

sustained air travel above treetop 

heights. 

Auxiliary emission-control device

means any element of design that senses 

temperature, motive speed, engine RPM, 

transmission gear, or any other 

parameter for the purpose of activating, 

modulating, delaying, or deactivating 

the operation of any part of the 

emission-control system. 

Brake power means the usable power 

output of the engine, not including 

power required to fuel, lubricate, heat, 

or cool the engine or to operate 

aftertreatment devices. 

Calibration means the set of 

specifications and tolerances specific to 

a particular design, version, or 

application of a component or assembly 

capable of functionally describing its 

operation over its working range. 

Certification means obtaining a 

certificate of conformity for an engine 

family that complies with the emission 

standards and requirements in this part. 

Certified emission level means the 

highest deteriorated emission level in an 

engine family for a given pollutant from 

either transient or steady-state testing. 

Compression-ignition means relating 

to a type of reciprocating, internalcombustion engine that is not a sparkignition engine. 

Constant-speed engine means an 

engine whose certification is limited to 

constant-speed operation. Engines 

whose constant-speed governor function 

is removed or disabled are no longer 

constant-speed engines. 

Constant-speed operation means 

engine operation with a governor that 

controls engine speed to a reference 

speed. There are two kinds of constantspeed governors. An isochronous 

governor changes reference speed 

temporarily during a load change, then 

returns it to the original reference speed 

after the engine stabilizes. Isochronous 

governors typically allow speed changes 

up to 1.0 percent. A speed-droop 

governor has a fixed reference speed at 

zero load and allows the reference speed 

to decrease as load increases. With 

speed-droop governors, speed typically 

decreases 3 to 10 percent below the 

reference speed at zero load, such that 

the minimum reference speed occurs 

near the engine’s point of maximum 

power. 

Crankcase emissions means airborne 

substances emitted to the atmosphere 

from any part of the engine crankcase’s 

ventilation or lubrication systems. The 

crankcase is the housing for the 

crankshaft and other related internal 

parts. 

Critical emission-related component

means any of the following components: 

(1) Electronic control units, 

aftertreatment devices, fuel-metering 

components, EGR-system components, 

crankcase-ventilation valves, all 

components related to charge-air 

compression and cooling, and all 

sensors and actuators associated with 

any of these components. 

(2) Any other component whose 

primary purpose is to reduce emissions. 

Designated Compliance Officer means 

the Manager, Engine Programs Group 

(6405–J), U.S. Environmental Protection 

Agency, 1200 Pennsylvania Ave., NW., 

Washington, DC 20460. 

Designated Enforcement Officer

means the Director, Air Enforcement 

Division (2242A), U.S. Environmental 

Protection Agency, 1200 Pennsylvania 

Ave., NW.,Washington, DC 20460. 

Deteriorated emission level means the 

emission level that results from 

applying the appropriate deterioration 

factor to the official emission result of 

the emission-data engine. 

Deterioration factor means the 

relationship between emissions at the 

end of useful life and emissions at the 

low-hour test point, expressed in one of 

the following ways: 

(1) For multiplicative deterioration 

factors, the ratio of emissions at the end 

of useful life to emissions at the lowhour test point. 

(2) For additive deterioration factors, 

the difference between emissions at the 

end of useful life and emissions at the 

low-hour test point. 

Discrete-mode means relating to the 

discrete-mode type of steady-state test 

described in § 1039.505. 

Emission-control system means any 

device, system, or element of design that 

controls or reduces the regulated 

emissions from an engine. 

Emission-data engine means an 

engine that is tested for certification. 

This includes engines tested to establish 

deterioration factors. 

Emission-related maintenance means 

maintenance that substantially affects 

emissions or is likely to substantially 

affect emission deterioration. 

Engine configuration means a unique 

combination of engine hardware and 

calibration within an engine family. 

Engines within a single engine 

configuration differ only with respect to 

normal production variability. 

Engine family has the meaning given 

in § 1039.230. 

Engine manufacturer means the 

manufacturer of the engine. See the 

definition of ‘‘manufacturer’’ in this 

section. 

Engine used in a locomotive means 

either an engine placed in the 

locomotive to move other equipment, 

freight, or passenger traffic; or an engine 

mounted on the locomotive to provide 

auxiliary power. 

Equipment manufacturer means a 

manufacturer of nonroad equipment. All 

nonroad equipment manufacturing 

entities under the control of the same 

person are considered to be a single 

nonroad equipment manufacturer. 

39248 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(Note: In § 1039.626, the term 

‘‘equipment manufacturer’’ has a 

narrower meaning, which applies only 

to that section.) 

Excluded means relating to an engine 

that either: 

(1) Has been determined not to be a 

nonroad engine, as specified in 40 CFR 

1068.30; or 

(2) Is a nonroad engine that, according 

to § 1039.5, is not subject to this part 

1039. 

Exempted means relating to an engine 

that is not required to meet otherwise 

applicable standards. Exempted engines 

must conform to regulatory conditions 

specified for an exemption in this part 

1039 or in 40 CFR part 1068. Exempted 

engines are deemed to be ‘‘subject to’’

the standards of this part, even though 

they are not required to comply with the 

otherwise applicable requirements. 

Engines exempted with respect to a 

certain tier of standards may be required 

to comply with an earlier tier of 

standards as a condition of the 

exemption; for example, engines 

exempted with respect to Tier 4 

standards may be required to comply 

with Tier 3 standards. 

Exhaust-gas recirculation means a 

technology that reduces emissions by 

routing exhaust gases that had been 

exhausted from the combustion 

chamber(s) back into the engine to be 

mixed with incoming air before or 

during combustion. The use of valve 

timing to increase the amount of 

residual exhaust gas in the combustion 

chamber(s) that is mixed with incoming 

air before or during combustion is not 

considered exhaust-gas recirculation for 

the purposes of this part.

Family emission limit (FEL) means an 

emission level declared by the 

manufacturer to serve in place of an 

otherwise applicable emission standard 

under the ABT program in subpart H of 

this part. The family emission limit 

must be expressed to the same number 

of decimal places as the emission 

standard it replaces. The family 

emission limit serves as the emission 

standard for the engine family with 

respect to all required testing. 

Fuel system means all components 

involved in transporting, metering, and 

mixing the fuel from the fuel tank to the 

combustion chamber(s), including the 

fuel tank, fuel tank cap, fuel pump, fuel 

filters, fuel lines, carburetor or fuelinjection components, and all fuelsystem vents. 

Fuel type means a general category of 

fuels such as diesel fuel or natural gas. 

There can be multiple grades within a 

single fuel type, such as high-sulfur or 

low-sulfur diesel fuel. 

Generator-set engine means an engine 

used primarily to operate an electrical 

generator or alternator to produce 

electric power for other applications. 

Good engineering judgment means 

judgments made consistent with 

generally accepted scientific and 

engineering principles and all available 

relevant information. See 40 CFR 1068.5 

for the administrative process we use to 

evaluate good engineering judgment. 

High-sulfur diesel fuel means one of 

the following: 

(1) For in-use fuels, high-sulfur diesel 

fuel means a diesel fuel with a 

maximum sulfur concentration greater 

than 500 parts per million. 

(2) For testing, high-sulfur diesel fuel

has the meaning we give in 40 CFR part 

1065. 

Hydrocarbon (HC) means the 

hydrocarbon group on which the 

emission standards are based for each 

fuel type. For alcohol-fueled engines, 

HC means total hydrocarbon equivalent 

(THCE). For all other engines, HC means 

nonmethane hydrocarbon (NMHC). 

Identification number means a unique 

specification (for example, a model 

number/serial number combination) 

that allows someone to distinguish a 

particular engine from other similar 

engines. 

Intermediate test speed has the 

meaning we give in 40 CFR 1065.515. 

Low-hour means relating to an engine 

with stabilized emissions and represents 

the undeteriorated emission level. This 

would generally involve less than 300 

hours of operation. 

Low-sulfur diesel fuel means one of 

the following: 

(1) For in-use fuels, low-sulfur diesel

fuel means a diesel fuel with a 

maximum sulfur concentration of 500 

parts per million. 

(2) For testing, low-sulfur diesel fuel

has the meaning we give in 40 CFR part 

1065. 

Manufacture means the physical and 

engineering process of designing, 

constructing, and assembling a nonroad 

engine or a piece of nonroad equipment. 

Manufacturer has the meaning given 

in section 216(1) of the Act. In general, 

this term includes any person who 

manufactures an engine, vehicle, or 

piece of equipment for sale in the 

United States or otherwise introduces a 

new nonroad engine into commerce in 

the United States. This includes 

importers who import engines, 

equipment, or vehicles for resale. (Note: 

In § 1039.626, the term ‘‘equipment 

manufacturer’’ has a narrower meaning, 

which applies only to that section.) 

Marine engine means a nonroad 

engine that someone installs or intends 

to install on a marine vessel. This does 

not include portable auxiliary engines 

for which the fueling, cooling and 

exhaust systems are not integral parts of 

the vessel. There are two kinds of 

marine engines: 

(1) Propulsion marine engine means a 

marine engine that moves a vessel 

through the water or directs the vessel’s 

movement. 

(2) Auxiliary marine engine means a 

marine engine not used for propulsion. 

Marine vessel has the meaning given 

in 1 U.S.C. 3, which generally includes 

all nonroad equipment used as a means 

of transportation on water. 

Maximum engine power has the 

meaning given in § 1039.140. Note that 

§ 1039.230 generally disallows grouping 

engines from different power categories 

in the same engine family. 

Maximum test speed has the meaning 

we give in 40 CFR 1065.515. 

Maximum test torque has the meaning 

we give in 40 CFR 1065.1001. 

Model year means one of the 

following things: 

(1) For freshly manufactured 

equipment and engines (see definition 

of ‘‘new nonroad engine,’’ paragraph 

(1)), model year means one of the 

following: 

(i) Calendar year. 

(ii) Your annual new model 

production period if it is different than 

the calendar year. This must include 

January 1 of the calendar year for which 

the model year is named. It may not 

begin before January 2 of the previous 

calendar year and it must end by 

December 31 of the named calendar 

year. 

(2) For an engine that is converted to 

a nonroad engine after being placed into 

service as a motor-vehicle engine or a 

stationary engine, model year means the 

calendar year in which the engine was 

originally produced (see definition of 

‘‘new nonroad engine,’’ paragraph (2)). 

(3) For a nonroad engine excluded 

under § 1039.5 that is later converted to 

operate in an application that is not 

excluded, model year means the 

calendar year in which the engine was 

originally produced (see definition of 

‘‘new nonroad engine,’’ paragraph (3)). 

(4) For engines that are not freshly 

manufactured but are installed in new 

nonroad equipment, model year means 

the calendar year in which the engine is 

installed in the new nonroad equipment 

(see definition of ‘‘new nonroad 

engine,’’ paragraph (4)). 

(5) For imported engines: 

(i) For imported engines described in 

paragraph (5)(i) of the definition of 

‘‘new nonroad engine,’’ model year has 

the meaning given in paragraphs (1) 

through (4) of this definition. 

(ii) For imported engines described in 

paragraph (5)(ii) of the definition of 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39249

‘‘new nonroad engine,’’ model year has 

the meaning given in 40 CFR 89.602 for 

independent commercial importers. 

Motor vehicle has the meaning we 

give in 40 CFR 85.1703(a). In general, 

motor vehicle means any vehicle that 

EPA deems to be capable of safe and 

practical use on streets or highways. 

New nonroad engine means any of the 

following things: 

(1) A freshly manufactured nonroad 

engine for which the ultimate purchaser 

has never received the equitable or legal 

title. This kind of engine might 

commonly be thought of as ‘‘brand 

new.’’ In the case of this paragraph (1), 

the engine becomes new when it is fully 

assembled for the first time. The engine 

is no longer new when the ultimate 

purchaser receives the title or the 

product is placed into service, 

whichever comes first. 

(2) An engine originally manufactured 

as a motor-vehicle engine or a stationary 

engine that is later intended to be used 

in a piece of nonroad equipment. In this 

case, the engine is no longer a motorvehicle or stationary engine and 

becomes a ‘‘new nonroad engine’’. The 

engine is no longer new when it is 

placed into nonroad service. 

(3) A nonroad engine that has been 

previously placed into service in an 

application we exclude under § 1039.5, 

where that engine is installed in a piece 

of equipment that is covered by this part 

1039. The engine is no longer new when 

it is placed into nonroad service covered 

by this part 1039. For example, this 

would apply to a marine diesel engine 

that is no longer used in a marine 

vessel. 

(4) An engine not covered by 

paragraphs (1) through (3) of this 

definition that is intended to be 

installed in new nonroad equipment. 

The engine is no longer new when the 

ultimate purchaser receives a title for 

the equipment or the product is placed 

into service, whichever comes first. This 

generally includes installation of used 

engines in new equipment. 

(5) An imported nonroad engine, 

subject to the following provisions:

(i) An imported nonroad engine 

covered by a certificate of conformity 

issued under this part that meets the 

criteria of one or more of paragraphs (1) 

through (4) of this definition, where the 

original engine manufacturer holds the 

certificate, is new as defined by those 

applicable paragraphs. 

(ii) An imported nonroad engine 

covered by a certificate of conformity 

issued under this part, where someone 

other than the original engine 

manufacturer holds the certificate (such 

as when the engine is modified after its 

initial assembly), becomes new when it 

is imported. It is no longer new when 

the ultimate purchaser receives a title 

for the engine or it is placed into 

service, whichever comes first. 

(iii) An imported nonroad engine that 

is not covered by a certificate of 

conformity issued under this part at the 

time of importation is new, but only if 

it was produced on or after the dates 

shown in the following table. This 

addresses uncertified engines and 

equipment initially placed into service 

that someone seeks to import into the 

United States. Importation of this kind 

of new nonroad engine (or equipment 

containing such an engine) is generally 

prohibited by 40 CFR part 1068.

APPLICABILITY OF EMISSION STANDARDS FOR NONROAD DIESEL ENGINES

Maximum engine power Initial date of emission standards 

kW < 19 ......................... January 1, 2000. 

19 ≤ kW < 37 ................ January 1, 1999. 

37 ≤ kW < 75 ................ January 1, 1998. 

75 ≤ kW < 130 .............. January 1, 1997. 

130 ≤ kW ≤ 560 ............ January 1, 1996. 

kW > 560 ....................... January 1, 2000. 

New nonroad equipment means either 

of the following things: 

(1) A nonroad piece of equipment for 

which the ultimate purchaser has never 

received the equitable or legal title. The 

product is no longer new when the 

ultimate purchaser receives this title or 

the product is placed into service, 

whichever comes first. 

(2) An imported nonroad piece of 

equipment with an engine not covered 

by a certificate of conformity issued 

under this part at the time of 

importation and manufactured after the 

requirements of this part start to apply 

(see § 1039.1). 

Noncommercial fuel means a 

combustible product that is not 

marketed as a commercial fuel, but is 

used as a fuel for nonroad engines. For 

example, this includes methane that is 

produced and released from landfills or 

oil wells, or similar unprocessed fuels 

that are not intended to meet any 

otherwise applicable fuel specifications. 

See § 1039.615 for provisions related to 

engines designed to burn 

noncommercial fuels. 

Noncompliant engine means an 

engine that was originally covered by a 

certificate of conformity, but is not in 

the certified configuration or otherwise 

does not comply with the conditions of 

the certificate. 

Nonconforming engine means an 

engine not covered by a certificate of 

conformity that would otherwise be 

subject to emission standards. 

Nonmethane hydrocarbon means the 

difference between the emitted mass of 

total hydrocarbons and the emitted mass 

of methane. 

Nonroad means relating to nonroad 

engines or equipment that includes 

nonroad engines. 

Nonroad engine has the meaning we 

give in 40 CFR 1068.30. In general this 

means all internal-combustion engines 

except motor vehicle engines, stationary 

engines, engines used solely for 

competition, or engines used in aircraft. 

This part does not apply to all nonroad 

engines (see § 1039.5). 

Nonroad equipment means a piece of 

equipment that is powered by one or 

more nonroad engines.

Official emission result means the 

measured emission rate for an emissiondata engine on a given duty cycle before 

the application of any deterioration 

factor, but after the applicability of 

regeneration adjustment factors. 

Opacity means the fraction of a beam 

of light, expressed in percent, which 

fails to penetrate a plume of smoke, as 

measured by the procedure specified in 

§ 1039.501. 

Oxides of nitrogen has the meaning 

we give in 40 CFR part 1065. 

Particulate trap means a filtering 

device that is designed to physically 

trap all particulate matter above a 

certain size. 

Piece of equipment means any 

vehicle, vessel, or other type of 

equipment using engines to which this 

part applies. 

Placed into service means put into 

initial use for its intended purpose. 

Point of first retail sale means the 

location at which the initial retail sale 

occurs. This generally means an 

equipment dealership, but may also 

include an engine seller or distributor in 

cases where loose engines are sold to 

the general public for uses such as 

replacement engines. 

Power category means a specific range 

of maximum engine power that defines 

the applicability of standards. For 

example, references to the 56–130 kW 

power category and 56 ≤ kW

< 130 include all engines with 

maximum engine power at or above 56 

kW but below 130 kW. Also references 

to 56–560 kW power categories or 56 ≤

kW ≤ 560 include all engines with 

maximum engine power at or above 56 

kW but at or below 560 kW, even 

though these engines span multiple 

power categories. Note that in some 

cases, FEL caps are based on a subset of 

a power category. The power categories 

are defined as follows: 

(1) Engines with maximum power 

below 19 kW. 

39250 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(2) Engines with maximum power at 

or above 19 kW but below 56 kW. 

(3) Engines with maximum power at 

or above 56 kW but below 130 kW. 

(4) Engines with maximum power at 

or above 130 kW but at or below 560 

kW. 

(5) Engines with maximum power 

above 560 kW. 

Ramped-modal means relating to the 

ramped-modal type of steady-state test 

described in § 1039.505. 

Rated speed means the maximum 

full-load governed speed for governed 

engines and the speed of maximum 

power for ungoverned engines. 

Revoke means to terminate the 

certificate or an exemption for an engine 

family. If we revoke a certificate or 

exemption, you must apply for a new 

certificate or exemption before 

continuing to introduce the affected 

engines into commerce. This does not 

apply to engines you no longer possess. 

Round means to round numbers 

according to NIST Special Publication 

811(incorporated by reference in 

§ 1039.810), unless otherwise specified. 

Scheduled maintenance means 

adjusting, repairing, removing, 

disassembling, cleaning, or replacing 

components or systems periodically to 

keep a part or system from failing, 

malfunctioning, or wearing prematurely. 

It also may mean actions you expect are 

necessary to correct an overt indication 

of failure or malfunction for which 

periodic maintenance is not 

appropriate. 

Small-volume engine manufacturer

means a small business engine 

manufacturer that had engine families 

certified to meet the requirements of 40 

CFR part 89 before 2003 (40 CFR part 

89, revised as of July 1, 2002), had 

annual U.S.-directed production of no 

more than 2,500 units in 2002 and all 

earlier calendar years, and has 1000 or 

fewer employees. For manufacturers 

owned by a parent company, the 

production limit applies to the 

production of the parent company and 

all its subsidiaries and the employee 

limit applies to the total number of 

employees of the parent company and 

all its subsidiaries. 

Spark-ignition means relating to a 

gasoline-fueled engine or any other type 

of engine with a spark plug (or other 

sparking device) and with operating 

characteristics significantly similar to 

the theoretical Otto combustion cycle. 

Spark-ignition engines usually use a 

throttle to regulate intake air flow to 

control power during normal operation. 

Steady-state means relating to 

emission tests in which engine speed 

and load are held at a finite set of 

essentially constant values. Steady-state 

tests are either discrete-mode tests or 

ramped-modal tests. 

Sulfur-sensitive technology means an 

emission-control technology that 

experiences a significant drop in 

emission-control performance or 

emission-system durability when an 

engine is operated on low-sulfur fuel 

(i.e., fuel with a sulfur concentration of 

300 to 500 ppm) as compared to when 

it is operated on ultra low-sulfur fuel 

(i.e., fuel with a sulfur concentration 

less than 15 ppm). Exhaust-gas 

recirculation is not a sulfur-sensitive 

technology. 

Suspend means to temporarily 

discontinue the certificate or an 

exemption for an engine family. If we 

suspend a certificate, you may not 

introduce into commerce engines from 

that engine family unless we reinstate 

the certificate or approve a new one. If 

we suspend an exemption, you may not 

introduce into commerce engines that 

were previously covered by the 

exemption unless we reinstate the 

exemption. 

Test engine means an engine in a test 

sample. 

Test sample means the collection of 

engines selected from the population of 

an engine family for emission testing. 

This may include testing for 

certification, production-line testing, or 

in-use testing. 

Tier 1 means relating to the Tier 1 

emission standards, as shown in 40 CFR 

89.112. 

Tier 2 means relating to the Tier 2 

emission standards, as shown in 40 CFR 

89.112. 

Tier 3 means relating to the Tier 3 

emission standards, as shown in 40 CFR 

89.112. 

Tier 4 means relating to the Tier 4 

emission standards, as shown in 

§ 1039.101 and § 1039.102. This 

includes the emission standards that are 

shown in § 1039.101 and § 1039.102 that 

are unchanged from Tier 2 or Tier 3 

emission standards. 

Total hydrocarbon means the 

combined mass of organic compounds 

measured by the specified procedure for 

measuring total hydrocarbon, expressed 

as a hydrocarbon with a hydrogen-tocarbon mass ratio of 1.85:1. 

Total hydrocarbon equivalent means 

the sum of the carbon mass 

contributions of non-oxygenated 

hydrocarbons, alcohols and aldehydes, 

or other organic compounds that are 

measured separately as contained in a 

gas sample, expressed as exhaust 

hydrocarbon from petroleum-fueled 

engines. The hydrogen-to-carbon ratio of 

the equivalent hydrocarbon is 1.85:1. 

Ultimate purchaser means, with 

respect to any new nonroad equipment 

or new nonroad engine, the first person 

who in good faith purchases such new 

nonroad equipment or new nonroad 

engine for purposes other than resale. 

Ultra low-sulfur diesel fuel means one 

of the following: 

(1) For in-use fuels, ultra low-sulfur 

diesel fuel means a diesel fuel with a 

maximum sulfur concentration of 15 

parts per million. 

(2) For testing, ultra low-sulfur diesel 

fuel has the meaning we give in 40 CFR 

part 1065. 

United States means the States, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the 

Commonwealth of the Northern Mariana 

Islands, Guam, American Samoa, and 

the U.S. Virgin Islands. 

Upcoming model year means for an 

engine family the model year after the 

one currently in production. 

U.S.-directed production volume

means the number of engine units, 

subject to the requirements of this part, 

produced by a manufacturer for which 

the manufacturer has a reasonable 

assurance that sale was or will be made 

to ultimate purchasers in the United 

States. 

Useful life means the period during 

which the engine is designed to 

properly function in terms of reliability 

and fuel consumption, without being 

remanufactured, specified as a number 

of hours of operation or calendar years, 

whichever comes first. It is the period 

during which a new nonroad engine is 

required to comply with all applicable 

emission standards. See § 1039.101(g).

Variable-speed engine means an 

engine that is not a constant-speed 

engine. 

Void means to invalidate a certificate 

or an exemption ab initio. If we void a 

certificate, all the engines introduced 

into commerce under that engine family 

for that model year are considered 

noncompliant, and you are liable for 

each engine introduced into commerce 

under the certificate and may face civil 

or criminal penalties or both. This 

applies equally to all engines in the 

engine family, including engines 

introduced into commerce before we 

voided the certificate. If we void an 

exemption, all the engines introduced 

into commerce under that exemption 

are considered uncertified (or 

nonconforming), and you are liable for 

each engine introduced into commerce 

under the exemption and may face civil 

or criminal penalties or both. You may 

not introduce into commerce any 

additional engines using the voided 

exemption. 

Volatile liquid fuel means any fuel 

other than diesel or biodiesel that is a 

liquid at atmospheric pressure and has 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39251

a Reid Vapor Pressure higher than 2.0 

pounds per square inch. 

We (us, our) means the Administrator 

of the Environmental Protection Agency 

and any authorized representatives.

§ 1039.805 What symbols, acronyms, and 

abbreviations does this part use? 

The following symbols, acronyms, 

and abbreviations apply to this part:

CFR Code of Federal Regulations. 

CO carbon monoxide. 

CO2 carbon dioxide. 

EPA Environmental Protection Agency. 

FEL Family Emission Limit. 

g/kW-hr grams per kilowatt-hour. 

HC hydrocarbon. 

kW kilowatts. 

NIST National Institute of Standards and 

Technology. 

NMHC nonmethane hydrocarbons. 

NOX oxides of nitrogen (NO and NO2). 

NTE not-to-exceed 

PM particulate matter. 

rpm revolutions per minute. 

SAE Society of Automotive Engineers. 

SEA Selective enforcement audit. 

THC total hydrocarbon. 

THCE total hydrocarbon equivalent. 

TRU transportation refrigeration unit. 

U.S.C. United States Code.

§ 1039.810 What materials does this part 

reference? 

Documents listed in this section have 

been incorporated by reference into this 

part. The Director of the Federal 

Register approved the incorporation by 

reference as prescribed in 5 U.S.C. 

552(a) and 1 CFR part 51. Anyone may 

inspect copies at the U.S. EPA, Air and 

Radiation Docket and Information 

Center, 1301 Constitution Ave., NW., 

Room B102, EPA West Building, 

Washington, DC 20460 or at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html.

(a) NIST material. Table 1 of this 

section lists material from the National 

Institute of Standards and Technology 

that we have incorporated by reference. 

The first column lists the number and 

name of the material. The second 

column lists the sections of this part 

where we reference it. Anyone may 

purchase copies of these materials from 

the Government Printing Office, 

Washington, DC 20402 or download 

them from the Internet at http://

physics.nist.gov/Pubs/SP811/. Table 1 

follows:

TABLE 1 OF § 1039.810.—NIST 

MATERIALS

Document number and name Part 1039

reference 

NIST Special Publication 

811, Guide for the Use of 

the International System of 

Units (SI), 1995 Edition ..... 1039.801 

(b) SAE material. Table 2 of this 

section lists material from the Society of 

Automotive Engineering that we have 

incorporated by reference. The first 

column lists the number and name of 

the material. The second column lists 

the sections of this part where we 

reference it. Anyone may purchase 

copies of these materials from the 

Society of Automotive Engineers, 400 

Commonwealth Drive, Warrendale, PA 

15096. Table 2 follows:

TABLE 2 OF § 1039.810.—SAE 

MATERIALS

Document number and name Part 1039

reference 

SAE J1930, Electrical/Electronic Systems Diagnostic 

Terms, Definitions, Abbreviations, and Acronyms, 

revised May 1998 ............. 1039.135 

§ 1039.815 What provisions apply to 

confidential information? 

(a) Clearly show what you consider 

confidential by marking, circling, 

bracketing, stamping, or some other 

method. 

(b) We will store your confidential 

information as described in 40 CFR part 

2. Also, we will disclose it only as 

specified in 40 CFR part 2. This applies 

both to any information you send us and 

to any information we collect from 

inspections, audits, or other site visits. 

(c) If you send us a second copy 

without the confidential information, 

we will assume it contains nothing 

confidential whenever we need to 

release information from it. 

(d) If you send us information without 

claiming it is confidential, we may make 

it available to the public without further 

notice to you, as described in 40 CFR 

2.204.

§ 1039.820 How do I request a hearing? 

(a) You may request a hearing under 

certain circumstances, as described 

elsewhere in this part. To do this, you 

must file a written request, including a 

description of your objection and any 

supporting data, within 30 days after we 

make a decision. 

(b) For a hearing you request under 

the provisions of this part, we will 

approve your request if we find that 

your request raises a substantial factual 

issue. 

(c) If we agree to hold a hearing, we 

will use the procedures specified in 40 

CFR part 1068, subpart G.

Appendix I to Part 1039—[Reserved] 

Appendix II to Part 1039—Steady-State Duty 

Cycles for Constant-Speed Engines 

(a) The following duty cycle applies for 

discrete-mode testing of constant-speed 

engines:

D2 mode

number Engine speed 1 Torque

(percent) 2

Weighting

factors 

1 ........................ Maximum test speed ................................................................................................................ 100 0.05 

2 ........................ Maximum test speed ................................................................................................................ 75 0.25 

3 ........................ Maximum test speed ................................................................................................................ 50 0.30 

4 ........................ Maximum test speed ................................................................................................................ 25 0.30 

5 ........................ Maximum test speed ................................................................................................................ 10 0.10 

1 Maximum test speed is defined in 40 CFR part 1065. 

2Except as noted in § 1039.505, the percent torque is relative to maximum test torque. 

(b) The following duty cycle applies for 

ramped-modal testing of constant-speed 

engines:

39252 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

RMC mode 

Time in 

mode

(seconds) 

Engine speed Torque

(percent) 1 2

1a Steady-state ........................................................ 53 Engine Governed ..................................................... 100. 

1b Transition ............................................................ 20 Engine Governed ..................................................... Linear transition. 

2a Steady-state ........................................................ 101 Engine Governed ..................................................... 10. 

2b Transition ............................................................ 20 Engine Governed ..................................................... Linear transition. 

3a Steady-state ........................................................ 277 Engine Governed ..................................................... 75. 

3b Transition ............................................................ 20 Engine Governed ..................................................... Linear transition. 

4a Steady-state ........................................................ 339 Engine Governed ..................................................... 25. 

4b Transition ............................................................ 20 Engine Governed ..................................................... Linear transition. 

5 Steady-state .......................................................... 350 Engine Governed ..................................................... 50. 

1The percent torque is relative to maximum test torque. 

2Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the 

torque setting of the current mode to the torque setting of the next mode. 

Appendix III to Part 1039—Steady-State 

Duty Cycles for Variable-Speed Engines With 

Maximum Power Below 19 kW 

(a) The following duty cycle applies for 

discrete-mode testing of variable-speed 

engines with maximum power below 19 kW:

G2 mode

number Engine speed 1

Observed 

torque

(percent) 2

Weighting

factors 

1 ........................ Maximum test speed ................................................................................................................ 100 0.09

2 ........................ Maximum test speed ................................................................................................................ 75 0.20

3 ........................ Maximum test speed ................................................................................................................ 50 0.29

4 ........................ Maximum test speed ................................................................................................................ 25 0.30

5 ........................ Maximum test speed ................................................................................................................ 10 0.07

6 ........................ Idle ............................................................................................................................................ 0 0.05

1Speed terms are defined in 40 CFR part 1065. 

2The percent torque is relative to the maximum torque at the commanded test speed. 

(b) The following duty cycle applies for 

ramped-modal testing of variable-speed 

engines with maximum power below 19 kW:

RMC

mode 

Time in 

mode

(seconds) 

Engine speed 1 3 Torque

(percent) 2 3

1a Steady-state ....................................... 41 Warm Idle ................................................................................ 0. 

1b Transition ............................................ 20 Linear transition ....................................................................... Linear transition. 

2a Steady-state ....................................... 135 Maximum Test Speed .............................................................. 100. 

2b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear transition. 

3a Steady-state ....................................... 112 Maximum Test Speed .............................................................. 10. 

3b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear transition. 

4a Steady-state ....................................... 337 Maximum Test Speed .............................................................. 75. 

4b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear transition. 

5a Steady-state ....................................... 518 Maximum Test Speed .............................................................. 25. 

5b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear transition. 

6a Steady-state ....................................... 494 Maximum Test Speed .............................................................. 50. 

6b Transition ............................................ 20 Linear transition ....................................................................... Linear transition. 

7 Steady-state ......................................... 43 Warm Idle ................................................................................ 0. 

1Speed terms are defined in 40 CFR part 1065. 

2The percent torque is relative to the maximum torque at the commanded engine speed. 

3Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the 

torque setting of the current mode to the torque setting of the next mode, and simultaneously command a similar linear progression for engine 

speed if there is a change in speed setting. 

Appendix IV to Part 1039—Steady-State 

Duty Cycles for Variable-Speed Engines With 

Maximum Power at or Above 19 kW 

(a) The following duty cycle applies for 

discrete-mode testing of variable-speed 

engines with maximum power at or above 19 

kW:

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39253

C1 mode

number Engine speed 1

Observed 

torque

(percent) 2

Weighting

factors 

1 ........................ Maximum test speed ................................................................................................................ 100 0.15

2 ........................ Maximum test speed ................................................................................................................ 75 0.15

3 ........................ Maximum test speed ................................................................................................................ 50 0.15

4 ........................ Maximum test speed ................................................................................................................ 10 0.10

5 ........................ Intermediate test speed ............................................................................................................ 100 0.10

6 ........................ Intermediate test speed ............................................................................................................ 75 0.10

7 ........................ Intermediate test speed ............................................................................................................ 50 0.10

8 ........................ Idle ............................................................................................................................................ 0 0.15

1Speed terms are defined in 40 CFR part 1065. 

2The percent torque is relative to the maximum torque at the commanded test speed. 

(b) The following duty cycle applies for 

ramped-modal testing of variable-speed 

engines with maximum power at or above 19 

kW:

RMC Mode 

Time in 

mode

(seconds) 

Engine

speed 1 3

Torque

(percent) 2 3

1a Steady-state ....................................... 126 Warm Idle ................................................................................ 0. 

1b Transition ............................................ 20 Linear Transition 2 .................................................................... Linear Transition. 

2a Steady-state ....................................... 159 Intermediate Speed ................................................................. 100. 

2b Transition ............................................ 20 Intermediate Speed ................................................................. Linear Transition. 

3a Steady-state ....................................... 160 Intermediate Speed ................................................................. 50. 

3b Transition ............................................ 20 Intermediate Speed ................................................................. Linear Transition. 

4a Steady-state ....................................... 162 Intermediate Speed ................................................................. 75. 

4b Transition ............................................ 20 Linear Transition ...................................................................... Linear Transition. 

5a Steady-state ....................................... 246 Maximum Test Speed .............................................................. 100. 

5b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear Transition. 

6a Steady-state ....................................... 164 Maximum Test Speed .............................................................. 10. 

6b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear Transition. 

7a Steady-state ....................................... 248 Maximum Test Speed .............................................................. 75. 

7b Transition ............................................ 20 Maximum Test Speed .............................................................. Linear Transition. 

8a Steady-state ....................................... 247 Maximum Test Speed .............................................................. 50. 

8b Transition ............................................ 20 Linear Transition ...................................................................... Linear Transition. 

9 Steady-state ......................................... 128 Warm Idle ................................................................................ 0. 

1Speed terms are defined in 40 CFR part 1065. 

2The percent torque is relative to the maximum torque at the commanded engine speed. 

3Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the 

torque setting of the current mode to the torque setting of the next mode, and simultaneously command a similar linear progression for engine 

speed if there is a change in speed setting. 

Appendix V to Part 1039 [Reserved]

Appendix VI to Part 1039—Nonroad 

Compression-ignition Composite Transient 

Cycle

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

1 ........................ 0 0

2 ........................ 0 0

3 ........................ 0 0

4 ........................ 0 0

5 ........................ 0 0

6 ........................ 0 0

7 ........................ 0 0

8 ........................ 0 0

9 ........................ 0 0

10 ...................... 0 0

11 ...................... 0 0

12 ...................... 0 0

13 ...................... 0 0

14 ...................... 0 0

15 ...................... 0 0

16 ...................... 0 0

17 ...................... 0 0

18 ...................... 0 0

19 ...................... 0 0

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

20 ...................... 0 0

21 ...................... 0 0

22 ...................... 0 0

23 ...................... 0 0

24 ...................... 1 3

25 ...................... 1 3

26 ...................... 1 3

27 ...................... 1 3

28 ...................... 1 3

29 ...................... 1 3

30 ...................... 1 6

31 ...................... 1 6

32 ...................... 2 1

33 ...................... 4 13

34 ...................... 7 18

35 ...................... 9 21

36 ...................... 17 20

37 ...................... 33 42

38 ...................... 57 46

39 ...................... 44 33

40 ...................... 31 0

41 ...................... 22 27

42 ...................... 33 43

43 ...................... 80 49

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

44 ...................... 105 47

45 ...................... 98 70

46 ...................... 104 36

47 ...................... 104 65

48 ...................... 96 71

49 ...................... 101 62

50 ...................... 102 51

51 ...................... 102 50

52 ...................... 102 46

53 ...................... 102 41

54 ...................... 102 31

55 ...................... 89 2

56 ...................... 82 0

57 ...................... 47 1

58 ...................... 23 1

59 ...................... 1 3

60 ...................... 1 8

61 ...................... 1 3

62 ...................... 1 5

63 ...................... 1 6

64 ...................... 1 4

65 ...................... 1 4

66 ...................... 0 6

67 ...................... 1 4

39254 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

68 ...................... 9 21

69 ...................... 25 56

70 ...................... 64 26

71 ...................... 60 31

72 ...................... 63 20

73 ...................... 62 24

74 ...................... 64 8

75 ...................... 58 44

76 ...................... 65 10

77 ...................... 65 12

78 ...................... 68 23

79 ...................... 69 30

80 ...................... 71 30

81 ...................... 74 15

82 ...................... 71 23

83 ...................... 73 20

84 ...................... 73 21

85 ...................... 73 19

86 ...................... 70 33

87 ...................... 70 34

88 ...................... 65 47

89 ...................... 66 47

90 ...................... 64 53

91 ...................... 65 45

92 ...................... 66 38

93 ...................... 67 49

94 ...................... 69 39

95 ...................... 69 39

96 ...................... 66 42

97 ...................... 71 29

98 ...................... 75 29

99 ...................... 72 23

100 .................... 74 22

101 .................... 75 24

102 .................... 73 30

103 .................... 74 24

104 .................... 77 6

105 .................... 76 12

106 .................... 74 39

107 .................... 72 30

108 .................... 75 22

109 .................... 78 64

110 .................... 102 34

111 .................... 103 28

112 .................... 103 28

113 .................... 103 19

114 .................... 103 32

115 .................... 104 25

116 .................... 103 38

117 .................... 103 39

118 .................... 103 34

119 .................... 102 44

120 .................... 103 38

121 .................... 102 43

122 .................... 103 34

123 .................... 102 41

124 .................... 103 44

125 .................... 103 37

126 .................... 103 27

127 .................... 104 13

128 .................... 104 30 

129 .................... 104 19 

130 .................... 103 28 

131 .................... 104 40 

132 .................... 104 32 

133 .................... 101 63 

134 .................... 102 54 

135 .................... 102 52 

136 .................... 102 51 

137 .................... 103 40 

138 .................... 104 34 

139 .................... 102 36 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

140 .................... 104 44 

141 .................... 103 44 

142 .................... 104 33 

143 .................... 102 27 

144 .................... 103 26 

145 .................... 79 53 

146 .................... 51 37 

147 .................... 24 23 

148 .................... 13 33 

149 .................... 19 55 

150 .................... 45 30 

151 .................... 34 7 

152 .................... 14 4 

153 .................... 8 16 

154 .................... 15 6 

155 .................... 39 47 

156 .................... 39 4 

157 .................... 35 26 

158 .................... 27 38 

159 .................... 43 40 

160 .................... 14 23 

161 .................... 10 10 

162 .................... 15 33 

163 .................... 35 72 

164 .................... 60 39 

165 .................... 55 31 

166 .................... 47 30 

167 .................... 16 7 

168 .................... 0 6 

169 .................... 0 8 

170 .................... 0 8 

171 .................... 0 2 

172 .................... 2 17 

173 .................... 10 28 

174 .................... 28 31 

175 .................... 33 30 

176 .................... 36 0 

177 .................... 19 10 

178 .................... 1 18 

179 .................... 0 16 

180 .................... 1 3 

181 .................... 1 4 

182 .................... 1 5 

183 .................... 1 6 

184 .................... 1 5 

185 .................... 1 3 

186 .................... 1 4 

187 .................... 1 4 

188 .................... 1 6 

189 .................... 8 18 

190 .................... 20 51 

191 .................... 49 19 

192 .................... 41 13 

193 .................... 31 16 

194 .................... 28 21 

195 .................... 21 17 

196 .................... 31 21 

197 .................... 21 8 

198 .................... 0 14 

199 .................... 0 12 

200 .................... 3 8 

201 .................... 3 22 

202 .................... 12 20 

203 .................... 14 20 

204 .................... 16 17 

205 .................... 20 18 

206 .................... 27 34 

207 .................... 32 33 

208 .................... 41 31 

209 .................... 43 31 

210 .................... 37 33 

211 .................... 26 18 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

212 .................... 18 29 

213 .................... 14 51 

214 .................... 13 11 

215 .................... 12 9 

216 .................... 15 33 

217 .................... 20 25 

218 .................... 25 17 

219 .................... 31 29 

220 .................... 36 66 

221 .................... 66 40 

222 .................... 50 13 

223 .................... 16 24 

224 .................... 26 50 

225 .................... 64 23 

226 .................... 81 20 

227 .................... 83 11 

228 .................... 79 23 

229 .................... 76 31 

230 .................... 68 24 

231 .................... 59 33 

232 .................... 59 3 

233 .................... 25 7 

234 .................... 21 10 

235 .................... 20 19 

236 .................... 4 10 

237 .................... 5 7 

238 .................... 4 5 

239 .................... 4 6 

240 .................... 4 6 

241 .................... 4 5 

242 .................... 7 5 

243 .................... 16 28 

244 .................... 28 25 

245 .................... 52 53 

246 .................... 50 8 

247 .................... 26 40 

248 .................... 48 29 

249 .................... 54 39 

250 .................... 60 42 

251 .................... 48 18 

252 .................... 54 51 

253 .................... 88 90 

254 .................... 103 84 

255 .................... 103 85 

256 .................... 102 84 

257 .................... 58 66 

258 .................... 64 97 

259 .................... 56 80 

260 .................... 51 67 

261 .................... 52 96 

262 .................... 63 62 

263 .................... 71 6 

264 .................... 33 16 

265 .................... 47 45 

266 .................... 43 56 

267 .................... 42 27 

268 .................... 42 64 

269 .................... 75 74 

270 .................... 68 96 

271 .................... 86 61 

272 .................... 66 0 

273 .................... 37 0 

274 .................... 45 37 

275 .................... 68 96 

276 .................... 80 97 

277 .................... 92 96 

278 .................... 90 97 

279 .................... 82 96 

280 .................... 94 81 

281 .................... 90 85 

282 .................... 96 65 

283 .................... 70 96 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39255

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

284 .................... 55 95 

285 .................... 70 96 

286 .................... 79 96 

287 .................... 81 71 

288 .................... 71 60 

289 .................... 92 65 

290 .................... 82 63 

291 .................... 61 47 

292 .................... 52 37 

293 .................... 24 0 

294 .................... 20 7 

295 .................... 39 48 

296 .................... 39 54 

297 .................... 63 58 

298 .................... 53 31 

299 .................... 51 24 

300 .................... 48 40 

301 .................... 39 0 

302 .................... 35 18 

303 .................... 36 16 

304 .................... 29 17 

305 .................... 28 21 

306 .................... 31 15 

307 .................... 31 10 

308 .................... 43 19 

309 .................... 49 63 

310 .................... 78 61 

311 .................... 78 46 

312 .................... 66 65 

313 .................... 78 97 

314 .................... 84 63 

315 .................... 57 26 

316 .................... 36 22 

317 .................... 20 34 

318 .................... 19 8 

319 .................... 9 10 

320 .................... 5 5 

321 .................... 7 11 

322 .................... 15 15 

323 .................... 12 9 

324 .................... 13 27 

325 .................... 15 28 

326 .................... 16 28 

327 .................... 16 31 

328 .................... 15 20 

329 .................... 17 0 

330 .................... 20 34 

331 .................... 21 25 

332 .................... 20 0 

333 .................... 23 25 

334 .................... 30 58 

335 .................... 63 96 

336 .................... 83 60 

337 .................... 61 0 

338 .................... 26 0 

339 .................... 29 44 

340 .................... 68 97 

341 .................... 80 97 

342 .................... 88 97 

343 .................... 99 88 

344 .................... 102 86 

345 .................... 100 82 

346 .................... 74 79 

347 .................... 57 79 

348 .................... 76 97 

349 .................... 84 97 

350 .................... 86 97 

351 .................... 81 98 

352 .................... 83 83 

353 .................... 65 96 

354 .................... 93 72 

355 .................... 63 60 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

356 .................... 72 49 

357 .................... 56 27 

358 .................... 29 0 

359 .................... 18 13 

360 .................... 25 11 

361 .................... 28 24 

362 .................... 34 53 

363 .................... 65 83 

364 .................... 80 44 

365 .................... 77 46 

366 .................... 76 50 

367 .................... 45 52 

368 .................... 61 98 

369 .................... 61 69 

370 .................... 63 49 

371 .................... 32 0 

372 .................... 10 8 

373 .................... 17 7 

374 .................... 16 13 

375 .................... 11 6 

376 .................... 9 5 

377 .................... 9 12 

378 .................... 12 46 

379 .................... 15 30 

380 .................... 26 28 

381 .................... 13 9 

382 .................... 16 21 

383 .................... 24 4 

384 .................... 36 43 

385 .................... 65 85 

386 .................... 78 66 

387 .................... 63 39 

388 .................... 32 34 

389 .................... 46 55 

390 .................... 47 42 

391 .................... 42 39 

392 .................... 27 0 

393 .................... 14 5 

394 .................... 14 14 

395 .................... 24 54 

396 .................... 60 90 

397 .................... 53 66 

398 .................... 70 48 

399 .................... 77 93 

400 .................... 79 67 

401 .................... 46 65 

402 .................... 69 98 

403 .................... 80 97 

404 .................... 74 97 

405 .................... 75 98 

406 .................... 56 61 

407 .................... 42 0 

408 .................... 36 32 

409 .................... 34 43 

410 .................... 68 83 

411 .................... 102 48 

412 .................... 62 0 

413 .................... 41 39 

414 .................... 71 86 

415 .................... 91 52 

416 .................... 89 55 

417 .................... 89 56 

418 .................... 88 58 

419 .................... 78 69 

420 .................... 98 39 

421 .................... 64 61 

422 .................... 90 34 

423 .................... 88 38 

424 .................... 97 62 

425 .................... 100 53 

426 .................... 81 58 

427 .................... 74 51 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

428 .................... 76 57 

429 .................... 76 72 

430 .................... 85 72 

431 .................... 84 60 

432 .................... 83 72 

433 .................... 83 72 

434 .................... 86 72 

435 .................... 89 72 

436 .................... 86 72 

437 .................... 87 72 

438 .................... 88 72 

439 .................... 88 71 

440 .................... 87 72 

441 .................... 85 71 

442 .................... 88 72 

443 .................... 88 72 

444 .................... 84 72 

445 .................... 83 73 

446 .................... 77 73 

447 .................... 74 73 

448 .................... 76 72 

449 .................... 46 77 

450 .................... 78 62 

451 .................... 79 35 

452 .................... 82 38 

453 .................... 81 41 

454 .................... 79 37 

455 .................... 78 35 

456 .................... 78 38 

457 .................... 78 46 

458 .................... 75 49 

459 .................... 73 50 

460 .................... 79 58 

461 .................... 79 71 

462 .................... 83 44 

463 .................... 53 48 

464 .................... 40 48 

465 .................... 51 75 

466 .................... 75 72 

467 .................... 89 67 

468 .................... 93 60 

469 .................... 89 73 

470 .................... 86 73 

471 .................... 81 73 

472 .................... 78 73 

473 .................... 78 73 

474 .................... 76 73 

475 .................... 79 73 

476 .................... 82 73 

477 .................... 86 73 

478 .................... 88 72 

479 .................... 92 71 

480 .................... 97 54 

481 .................... 73 43 

482 .................... 36 64 

483 .................... 63 31 

484 .................... 78 1 

485 .................... 69 27 

486 .................... 67 28 

487 .................... 72 9 

488 .................... 71 9 

489 .................... 78 36 

490 .................... 81 56 

491 .................... 75 53 

492 .................... 60 45 

493 .................... 50 37 

494 .................... 66 41 

495 .................... 51 61 

496 .................... 68 47 

497 .................... 29 42 

498 .................... 24 73 

499 .................... 64 71 

39256 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

500 .................... 90 71 

501 .................... 100 61 

502 .................... 94 73 

503 .................... 84 73 

504 .................... 79 73 

505 .................... 75 72 

506 .................... 78 73 

507 .................... 80 73 

508 .................... 81 73 

509 .................... 81 73 

510 .................... 83 73 

511 .................... 85 73 

512 .................... 84 73 

513 .................... 85 73 

514 .................... 86 73 

515 .................... 85 73 

516 .................... 85 73 

517 .................... 85 72 

518 .................... 85 73 

519 .................... 83 73 

520 .................... 79 73 

521 .................... 78 73 

522 .................... 81 73 

523 .................... 82 72 

524 .................... 94 56 

525 .................... 66 48 

526 .................... 35 71 

527 .................... 51 44 

528 .................... 60 23 

529 .................... 64 10 

530 .................... 63 14 

531 .................... 70 37 

532 .................... 76 45 

533 .................... 78 18 

534 .................... 76 51 

535 .................... 75 33 

536 .................... 81 17 

537 .................... 76 45 

538 .................... 76 30 

539 .................... 80 14 

540 .................... 71 18 

541 .................... 71 14 

542 .................... 71 11 

543 .................... 65 2 

544 .................... 31 26 

545 .................... 24 72 

546 .................... 64 70 

547 .................... 77 62 

548 .................... 80 68 

549 .................... 83 53 

550 .................... 83 50 

551 .................... 83 50 

552 .................... 85 43 

553 .................... 86 45 

554 .................... 89 35 

555 .................... 82 61 

556 .................... 87 50 

557 .................... 85 55 

558 .................... 89 49 

559 .................... 87 70 

560 .................... 91 39 

561 .................... 72 3 

562 .................... 43 25 

563 .................... 30 60 

564 .................... 40 45 

565 .................... 37 32 

566 .................... 37 32 

567 .................... 43 70 

568 .................... 70 54 

569 .................... 77 47 

570 .................... 79 66 

571 .................... 85 53 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

572 .................... 83 57 

573 .................... 86 52 

574 .................... 85 51 

575 .................... 70 39 

576 .................... 50 5 

577 .................... 38 36 

578 .................... 30 71 

579 .................... 75 53 

580 .................... 84 40 

581 .................... 85 42 

582 .................... 86 49 

583 .................... 86 57 

584 .................... 89 68 

585 .................... 99 61 

586 .................... 77 29 

587 .................... 81 72 

588 .................... 89 69 

589 .................... 49 56 

590 .................... 79 70 

591 .................... 104 59 

592 .................... 103 54 

593 .................... 102 56 

594 .................... 102 56 

595 .................... 103 61 

596 .................... 102 64 

597 .................... 103 60 

598 .................... 93 72 

599 .................... 86 73 

600 .................... 76 73 

601 .................... 59 49 

602 .................... 46 22 

603 .................... 40 65 

604 .................... 72 31 

605 .................... 72 27 

606 .................... 67 44 

607 .................... 68 37 

608 .................... 67 42 

609 .................... 68 50 

610 .................... 77 43 

611 .................... 58 4 

612 .................... 22 37 

613 .................... 57 69 

614 .................... 68 38 

615 .................... 73 2 

616 .................... 40 14 

617 .................... 42 38 

618 .................... 64 69 

619 .................... 64 74 

620 .................... 67 73 

621 .................... 65 73 

622 .................... 68 73 

623 .................... 65 49 

624 .................... 81 0 

625 .................... 37 25 

626 .................... 24 69 

627 .................... 68 71 

628 .................... 70 71 

629 .................... 76 70 

630 .................... 71 72 

631 .................... 73 69 

632 .................... 76 70 

633 .................... 77 72 

634 .................... 77 72 

635 .................... 77 72 

636 .................... 77 70 

637 .................... 76 71 

638 .................... 76 71 

639 .................... 77 71 

640 .................... 77 71 

641 .................... 78 70 

642 .................... 77 70 

643 .................... 77 71 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

644 .................... 79 72 

645 .................... 78 70 

646 .................... 80 70 

647 .................... 82 71 

648 .................... 84 71 

649 .................... 83 71 

650 .................... 83 73 

651 .................... 81 70 

652 .................... 80 71 

653 .................... 78 71 

654 .................... 76 70 

655 .................... 76 70 

656 .................... 76 71 

657 .................... 79 71 

658 .................... 78 71 

659 .................... 81 70 

660 .................... 83 72 

661 .................... 84 71 

662 .................... 86 71 

663 .................... 87 71 

664 .................... 92 72 

665 .................... 91 72 

666 .................... 90 71 

667 .................... 90 71 

668 .................... 91 71 

669 .................... 90 70 

670 .................... 90 72 

671 .................... 91 71 

672 .................... 90 71 

673 .................... 90 71 

674 .................... 92 72 

675 .................... 93 69 

676 .................... 90 70 

677 .................... 93 72 

678 .................... 91 70 

679 .................... 89 71 

680 .................... 91 71 

681 .................... 90 71 

682 .................... 90 71 

683 .................... 92 71 

684 .................... 91 71 

685 .................... 93 71 

686 .................... 93 68 

687 .................... 98 68 

688 .................... 98 67 

689 .................... 100 69 

690 .................... 99 68 

691 .................... 100 71 

692 .................... 99 68 

693 .................... 100 69 

694 .................... 102 72 

695 .................... 101 69 

696 .................... 100 69 

697 .................... 102 71 

698 .................... 102 71 

699 .................... 102 69 

700 .................... 102 71 

701 .................... 102 68 

702 .................... 100 69 

703 .................... 102 70 

704 .................... 102 68 

705 .................... 102 70 

706 .................... 102 72 

707 .................... 102 68 

708 .................... 102 69 

709 .................... 100 68 

710 .................... 102 71 

711 .................... 101 64 

712 .................... 102 69 

713 .................... 102 69 

714 .................... 101 69 

715 .................... 102 64 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39257

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

716 .................... 102 69 

717 .................... 102 68 

718 .................... 102 70 

719 .................... 102 69 

720 .................... 102 70 

721 .................... 102 70 

722 .................... 102 62 

723 .................... 104 38 

724 .................... 104 15 

725 .................... 102 24 

726 .................... 102 45 

727 .................... 102 47 

728 .................... 104 40 

729 .................... 101 52 

730 .................... 103 32 

731 .................... 102 50 

732 .................... 103 30 

733 .................... 103 44 

734 .................... 102 40 

735 .................... 103 43 

736 .................... 103 41 

737 .................... 102 46 

738 .................... 103 39 

739 .................... 102 41 

740 .................... 103 41 

741 .................... 102 38 

742 .................... 103 39 

743 .................... 102 46 

744 .................... 104 46 

745 .................... 103 49 

746 .................... 102 45 

747 .................... 103 42 

748 .................... 103 46 

749 .................... 103 38 

750 .................... 102 48 

751 .................... 103 35 

752 .................... 102 48 

753 .................... 103 49 

754 .................... 102 48 

755 .................... 102 46 

756 .................... 103 47 

757 .................... 102 49 

758 .................... 102 42 

759 .................... 102 52 

760 .................... 102 57 

761 .................... 102 55 

762 .................... 102 61 

763 .................... 102 61 

764 .................... 102 58 

765 .................... 103 58 

766 .................... 102 59 

767 .................... 102 54 

768 .................... 102 63 

769 .................... 102 61 

770 .................... 103 55 

771 .................... 102 60 

772 .................... 102 72 

773 .................... 103 56 

774 .................... 102 55 

775 .................... 102 67 

776 .................... 103 56 

777 .................... 84 42 

778 .................... 48 7 

779 .................... 48 6 

780 .................... 48 6 

781 .................... 48 7 

782 .................... 48 6 

783 .................... 48 7 

784 .................... 67 21 

785 .................... 105 59 

786 .................... 105 96 

787 .................... 105 74 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

788 .................... 105 66 

789 .................... 105 62 

790 .................... 105 66 

791 .................... 89 41 

792 .................... 52 5 

793 .................... 48 5 

794 .................... 48 7 

795 .................... 48 5 

796 .................... 48 6 

797 .................... 48 4 

798 .................... 52 6 

799 .................... 51 5 

800 .................... 51 6 

801 .................... 51 6 

802 .................... 52 5 

803 .................... 52 5 

804 .................... 57 44 

805 .................... 98 90 

806 .................... 105 94 

807 .................... 105 100 

808 .................... 105 98 

809 .................... 105 95 

810 .................... 105 96 

811 .................... 105 92 

812 .................... 104 97 

813 .................... 100 85 

814 .................... 94 74 

815 .................... 87 62 

816 .................... 81 50 

817 .................... 81 46 

818 .................... 80 39 

819 .................... 80 32 

820 .................... 81 28 

821 .................... 80 26 

822 .................... 80 23 

823 .................... 80 23 

824 .................... 80 20 

825 .................... 81 19 

826 .................... 80 18 

827 .................... 81 17 

828 .................... 80 20 

829 .................... 81 24 

830 .................... 81 21 

831 .................... 80 26 

832 .................... 80 24 

833 .................... 80 23 

834 .................... 80 22 

835 .................... 81 21 

836 .................... 81 24 

837 .................... 81 24 

838 .................... 81 22 

839 .................... 81 22 

840 .................... 81 21 

841 .................... 81 31 

842 .................... 81 27 

843 .................... 80 26 

844 .................... 80 26 

845 .................... 81 25 

846 .................... 80 21 

847 .................... 81 20 

848 .................... 83 21 

849 .................... 83 15 

850 .................... 83 12 

851 .................... 83 9 

852 .................... 83 8 

853 .................... 83 7 

854 .................... 83 6 

855 .................... 83 6 

856 .................... 83 6 

857 .................... 83 6 

858 .................... 83 6 

859 .................... 76 5 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

860 .................... 49 8 

861 .................... 51 7 

862 .................... 51 20 

863 .................... 78 52 

864 .................... 80 38 

865 .................... 81 33 

866 .................... 83 29 

867 .................... 83 22 

868 .................... 83 16 

869 .................... 83 12 

870 .................... 83 9 

871 .................... 83 8 

872 .................... 83 7 

873 .................... 83 6 

874 .................... 83 6 

875 .................... 83 6 

876 .................... 83 6 

877 .................... 83 6 

878 .................... 59 4 

879 .................... 50 5 

880 .................... 51 5 

881 .................... 51 5 

882 .................... 51 5 

883 .................... 50 5 

884 .................... 50 5 

885 .................... 50 5 

886 .................... 50 5 

887 .................... 50 5 

888 .................... 51 5 

889 .................... 51 5 

890 .................... 51 5 

891 .................... 63 50 

892 .................... 81 34 

893 .................... 81 25 

894 .................... 81 29 

895 .................... 81 23 

896 .................... 80 24 

897 .................... 81 24 

898 .................... 81 28 

899 .................... 81 27 

900 .................... 81 22 

901 .................... 81 19 

902 .................... 81 17 

903 .................... 81 17 

904 .................... 81 17 

905 .................... 81 15 

906 .................... 80 15 

907 .................... 80 28 

908 .................... 81 22 

909 .................... 81 24 

910 .................... 81 19 

911 .................... 81 21 

912 .................... 81 20 

913 .................... 83 26 

914 .................... 80 63 

915 .................... 80 59 

916 .................... 83 100 

917 .................... 81 73 

918 .................... 83 53 

919 .................... 80 76 

920 .................... 81 61 

921 .................... 80 50 

922 .................... 81 37 

923 .................... 82 49 

924 .................... 83 37 

925 .................... 83 25 

926 .................... 83 17 

927 .................... 83 13 

928 .................... 83 10 

929 .................... 83 8 

930 .................... 83 7 

931 .................... 83 7 

39258 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

932 .................... 83 6 

933 .................... 83 6 

934 .................... 83 6 

935 .................... 71 5 

936 .................... 49 24 

937 .................... 69 64 

938 .................... 81 50 

939 .................... 81 43 

940 .................... 81 42 

941 .................... 81 31 

942 .................... 81 30 

943 .................... 81 35 

944 .................... 81 28 

945 .................... 81 27 

946 .................... 80 27 

947 .................... 81 31 

948 .................... 81 41 

949 .................... 81 41 

950 .................... 81 37 

951 .................... 81 43 

952 .................... 81 34 

953 .................... 81 31 

954 .................... 81 26 

955 .................... 81 23 

956 .................... 81 27 

957 .................... 81 38 

958 .................... 81 40 

959 .................... 81 39 

960 .................... 81 27 

961 .................... 81 33 

962 .................... 80 28 

963 .................... 81 34 

964 .................... 83 72 

965 .................... 81 49 

966 .................... 81 51 

967 .................... 80 55 

968 .................... 81 48 

969 .................... 81 36 

970 .................... 81 39 

971 .................... 81 38 

972 .................... 80 41 

973 .................... 81 30 

974 .................... 81 23 

975 .................... 81 19 

976 .................... 81 25 

977 .................... 81 29 

978 .................... 83 47 

979 .................... 81 90 

980 .................... 81 75 

981 .................... 80 60 

982 .................... 81 48 

983 .................... 81 41 

984 .................... 81 30 

985 .................... 80 24 

986 .................... 81 20 

987 .................... 81 21 

988 .................... 81 29 

989 .................... 81 29 

990 .................... 81 27 

991 .................... 81 23 

992 .................... 81 25 

993 .................... 81 26 

994 .................... 81 22 

995 .................... 81 20 

996 .................... 81 17 

997 .................... 81 23 

998 .................... 83 65 

999 .................... 81 54 

1000 .................. 81 50 

1001 .................. 81 41 

1002 .................. 81 35 

1003 .................. 81 37 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

1004 .................. 81 29 

1005 .................. 81 28 

1006 .................. 81 24 

1007 .................. 81 19 

1008 .................. 81 16 

1009 .................. 80 16 

1010 .................. 83 23 

1011 .................. 83 17 

1012 .................. 83 13 

1013 .................. 83 27 

1014 .................. 81 58 

1015 .................. 81 60 

1016 .................. 81 46 

1017 .................. 80 41 

1018 .................. 80 36 

1019 .................. 81 26 

1020 .................. 86 18 

1021 .................. 82 35 

1022 .................. 79 53 

1023 .................. 82 30 

1024 .................. 83 29 

1025 .................. 83 32 

1026 .................. 83 28 

1027 .................. 76 60 

1028 .................. 79 51 

1029 .................. 86 26 

1030 .................. 82 34 

1031 .................. 84 25 

1032 .................. 86 23 

1033 .................. 85 22 

1034 .................. 83 26 

1035 .................. 83 25 

1036 .................. 83 37 

1037 .................. 84 14 

1038 .................. 83 39 

1039 .................. 76 70 

1040 .................. 78 81 

1041 .................. 75 71 

1042 .................. 86 47 

1043 .................. 83 35 

1044 .................. 81 43 

1045 .................. 81 41 

1046 .................. 79 46 

1047 .................. 80 44 

1048 .................. 84 20 

1049 .................. 79 31 

1050 .................. 87 29 

1051 .................. 82 49 

1052 .................. 84 21 

1053 .................. 82 56 

1054 .................. 81 30 

1055 .................. 85 21 

1056 .................. 86 16 

1057 .................. 79 52 

1058 .................. 78 60 

1059 .................. 74 55 

1060 .................. 78 84 

1061 .................. 80 54 

1062 .................. 80 35 

1063 .................. 82 24 

1064 .................. 83 43 

1065 .................. 79 49 

1066 .................. 83 50 

1067 .................. 86 12 

1068 .................. 64 14 

1069 .................. 24 14 

1070 .................. 49 21 

1071 .................. 77 48 

1072 .................. 103 11 

1073 .................. 98 48 

1074 .................. 101 34 

1075 .................. 99 39 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

1076 .................. 103 11 

1077 .................. 103 19 

1078 .................. 103 7 

1079 .................. 103 13 

1080 .................. 103 10 

1081 .................. 102 13 

1082 .................. 101 29 

1083 .................. 102 25 

1084 .................. 102 20 

1085 .................. 96 60 

1086 .................. 99 38 

1087 .................. 102 24 

1088 .................. 100 31 

1089 .................. 100 28 

1090 .................. 98 3 

1091 .................. 102 26 

1092 .................. 95 64 

1093 .................. 102 23 

1094 .................. 102 25 

1095 .................. 98 42 

1096 .................. 93 68 

1097 .................. 101 25 

1098 .................. 95 64 

1099 .................. 101 35 

1100 .................. 94 59 

1101 .................. 97 37 

1102 .................. 97 60 

1103 .................. 93 98 

1104 .................. 98 53 

1105 .................. 103 13 

1106 .................. 103 11 

1107 .................. 103 11 

1108 .................. 103 13 

1109 .................. 103 10 

1110 .................. 103 10 

1111 .................. 103 11 

1112 .................. 103 10 

1113 .................. 103 10 

1114 .................. 102 18 

1115 .................. 102 31 

1116 .................. 101 24 

1117 .................. 102 19 

1118 .................. 103 10 

1119 .................. 102 12 

1120 .................. 99 56 

1121 .................. 96 59 

1122 .................. 74 28 

1123 .................. 66 62 

1124 .................. 74 29 

1125 .................. 64 74 

1126 .................. 69 40 

1127 .................. 76 2 

1128 .................. 72 29 

1129 .................. 66 65 

1130 .................. 54 69 

1131 .................. 69 56 

1132 .................. 69 40 

1133 .................. 73 54 

1134 .................. 63 92 

1135 .................. 61 67 

1136 .................. 72 42 

1137 .................. 78 2 

1138 .................. 76 34 

1139 .................. 67 80 

1140 .................. 70 67 

1141 .................. 53 70 

1142 .................. 72 65 

1143 .................. 60 57 

1144 .................. 74 29 

1145 .................. 69 31 

1146 .................. 76 1 

1147 .................. 74 22 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39259

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

1148 .................. 72 52 

1149 .................. 62 96 

1150 .................. 54 72 

1151 .................. 72 28 

1152 .................. 72 35 

1153 .................. 64 68 

1154 .................. 74 27 

1155 .................. 76 14 

1156 .................. 69 38 

1157 .................. 66 59 

1158 .................. 64 99 

1159 .................. 51 86 

1160 .................. 70 53 

1161 .................. 72 36 

1162 .................. 71 47 

1163 .................. 70 42 

1164 .................. 67 34 

1165 .................. 74 2 

1166 .................. 75 21 

1167 .................. 74 15 

1168 .................. 75 13 

1169 .................. 76 10 

1170 .................. 75 13 

1171 .................. 75 10 

1172 .................. 75 7 

1173 .................. 75 13 

1174 .................. 76 8 

1175 .................. 76 7 

1176 .................. 67 45 

1177 .................. 75 13 

1178 .................. 75 12 

1179 .................. 73 21 

1180 .................. 68 46 

1181 .................. 74 8 

1182 .................. 76 11 

1183 .................. 76 14 

1184 .................. 74 11 

1185 .................. 74 18 

1186 .................. 73 22 

1187 .................. 74 20 

1188 .................. 74 19 

1189 .................. 70 22 

1190 .................. 71 23 

1191 .................. 73 19 

1192 .................. 73 19 

1193 .................. 72 20 

1194 .................. 64 60 

1195 .................. 70 39 

1196 .................. 66 56 

1197 .................. 68 64 

1198 .................. 30 68 

1199 .................. 70 38 

1200 .................. 66 47 

1201 .................. 76 14 

1202 .................. 74 18 

1203 .................. 69 46 

1204 .................. 68 62 

1205 .................. 68 62 

1206 .................. 68 62 

1207 .................. 68 62 

1208 .................. 68 62 

1209 .................. 68 62 

1210 .................. 54 50 

1211 .................. 41 37 

1212 .................. 27 25 

1213 .................. 14 12 

1214 .................. 0 0 

1215 .................. 0 0 

1216 .................. 0 0 

1217 .................. 0 0 

1218 .................. 0 0 

1219 .................. 0 0 

Time(s) 

Normalized

speed

(percent) 

Normalized

torque

(percent) 

1220 .................. 0 0 

1221 .................. 0 0 

1222 .................. 0 0 

1223 .................. 0 0 

1224 .................. 0 0 

1225 .................. 0 0 

1226 .................. 0 0 

1227 .................. 0 0 

1228 .................. 0 0 

1229 .................. 0 0 

1230 .................. 0 0 

1231 .................. 0 0 

1232 .................. 0 0 

1233 .................. 0 0 

1234 .................. 0 0 

1235 .................. 0 0 

1236 .................. 0 0 

1237 .................. 0 0 

1238 .................. 0 0 

PART 1048—CONTROL OF EMISSIONS 

FROM NEW, LARGE NONROAD 

SPARK-IGNITION ENGINES

■ 89. The authority citation for part 1048 

continues to read as follows:

Authority: 42 U.S.C. 7401–7671(q).

■ 90. Section 1048.125 is amended by 

revising paragraph (a) introductory text 

and paragraph (d) to read as follows:

§ 1048.125 What maintenance instructions 

must I give to buyers? 

(a) Critical emission-related 

maintenance. Critical emission-related 

maintenance includes any adjustment, 

cleaning, repair, or replacement of 

critical emission-related components. 

This may also include additional 

emission-related maintenance that you 

determine is critical if we approve it in 

advance. You may schedule critical 

emission-related maintenance on these 

components if you meet the following 

conditions:

* * * * *

(d) Noncritical emission-related 

maintenance. You may schedule any 

amount of emission-related inspection 

or maintenance that is not covered by 

paragraph (a) of this section, as long as 

you state in the owners manual that 

these steps are not necessary to keep the 

emission-related warranty valid. If 

operators fail to do this maintenance, 

this does not allow you to disqualify 

those engines from in-use testing or 

deny a warranty claim. Do not take 

these inspection or maintenance steps 

during service accumulation on your 

emission-data engines.

* * * * *

■ 91. Section 1048.801 is amended by 

adding a definition for ‘‘Critical 

emission-related component’’ in 

alphabetical order to read as follows:

§ 1048.801 What definitions apply to this 

part?

* * * * *

Critical emission-related component

means any of the following components: 

(1) Electronic control units, 

aftertreatment devices, fuel-metering 

components, EGR-system components, 

crankcase-ventilation valves, all 

components related to charge-air 

compression and cooling, and all 

sensors and actuators associated with 

any of these components. 

(2) Any other component whose 

primary purpose is to reduce emissions.

* * * * *

PART 1051—CONTROL OF EMISSIONS 

FROM RECREATIONAL ENGINES AND 

VEHICLES

■ 92. The authority citation for part 1051 

continues to read as follows:

Authority: 42 U.S.C. 7401–7671(q).

■ 93. Section 1051.125 is amended by 

revising paragraph (a) introductory text 

and paragraph (d) to read as follows:

§ 1051.125 What maintenance instructions 

must I give to buyers? 

(a) Critical emission-related 

maintenance. Critical emission-related 

maintenance includes any adjustment, 

cleaning, repair, or replacement of 

critical emission-related components. 

This may also include additional 

emission-related maintenance that you 

determine is critical if we approve it in 

advance. You may schedule critical 

emission-related maintenance on these 

components if you meet the following 

conditions:

* * * * *

(d) Noncritical emission-related 

maintenance. You may schedule any 

amount of emission-related inspection 

or maintenance that is not covered by 

paragraph (a) of this section, as long as 

you state in the owners manual that 

these steps are not necessary to keep the 

emission-related warranty valid. If 

operators fail to do this maintenance, 

this does not allow you to disqualify 

those engines from in-use testing or 

deny a warranty claim. Do not take 

these inspection or maintenance steps 

during service accumulation on your 

emission-data engines.

* * * * *

■ 94. Section 1051.801 is amended by 

adding a definition for ‘‘Critical 

emission-related component’’ in 

alphabetical order to read as follows:

§ 1051.801 What definitions apply to this 

part?

* * * * *

Critical emission-related component

means any of the following components: 

39260 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(1) Electronic control units, 

aftertreatment devices, fuel-metering 

components, EGR-system components, 

crankcase-ventilation valves, all 

components related to charge-air 

compression and cooling, and all 

sensors and actuators associated with 

any of these components. 

(2) Any other component whose 

primary purpose is to reduce emissions.

* * * * *

PART 1065—TEST PROCEDURES AND 

EQUIPMENT

■ 95. The authority citation for part 1065 

continues to read as follows:

Authority: 42 U.S.C. 7401–7671(q).

■ 96. Section 1065.1 is amended by 

revising paragraph (a) and removing and 

reserving paragraph (b)(6) to read as 

follows:

§ 1065.1 Applicability. 

(a) This part describes the procedures 

that apply to testing that we require for 

the following engines or for equipment 

using the following engines: 

(1) Large nonroad spark-ignition 

engines we regulate under 40 CFR part 

1048. 

(2) Vehicles that we regulate under 40 

CFR part 1051 (i.e., recreational SI 

vehicles) that are regulated based on 

engine testing. See 40 CFR part 1051 to 

determine which vehicles may be 

certified based on engine test data. 

(3) Land-based nonroad compressionignition engines we regulate under 40 

CFR part 1039.

* * * * *

■ 97. Section 1065.10 is amended by 

revising paragraph (c)(3) to read as 

follows:

§ 1065.10 Other test procedures.

* * * * *

(c) * * *

(3) You may ask to use alternate 

procedures that produce measurements 

equivalent to those from the specified 

procedures. If you send us a written 

request showing your procedures are 

equivalent, and we agree that they are 

equivalent, we will allow you to use 

them. You may not use an alternate 

procedure until we approve them, either 

by: telling you directly that you may use 

this procedure; or issuing guidance to 

all manufacturers, which allows you to 

use the alternate procedure without 

additional approval. You may use the 

statistical procedures specified in 40 

CFR 86.1306–07(d) to demonstrate 

equivalence, except that you test for 

equal variances by performing the F-test 

as follows, instead of the method 

specified in § 86.1306–07(d)(5)(iv)(C):

(i) Form the F ratio: F = (Asd/Rsd) 2.

Where:

Asd = the standard deviation of 

measurements with the alternate system. 

Rsd = the standard deviation of 

measurements with the reference system. 

(ii) F must be less than the critical t value, 

Fcrit, at a 90% confidence interval for 

‘‘n-1’’ degrees of freedom. 

(iii) The following table lists 90% 

confidence-interval Fcrit values for n–1 

degrees of freedom. Note that nA 

represents the number of alternate 

system samples, while nR represents the 

number of reference system samples:

nR-1 nA-1 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 

6 ........ ......... 3.055 3.014 2.983 2.958 2.937 2.92 2.905 2.892 2.881 2.871 2.863 2.855 2.848 2.842 2.836 

7 ........ ......... 2.827 2.785 2.752 2.725 2.703 2.684 2.668 2.654 2.643 2.632 2.623 2.615 2.607 2.601 2.595 

8 ........ ......... 2.668 2.624 2.589 2.561 2.538 2.519 2.502 2.488 2.475 2.464 2.455 2.446 2.438 2.431 2.425 

9 ........ ......... 2.551 2.505 2.469 2.440 2.416 2.396 2.379 2.364 2.351 2.340 2.329 2.320 2.312 2.305 2.298 

10 ...... ......... 2.461 2.414 2.377 2.347 2.323 2.302 2.284 2.269 2.255 2.244 2.233 2.224 2.215 2.208 2.201 

11 ...... ......... 2.389 2.342 2.304 2.274 2.248 2.227 2.209 2.193 2.179 2.167 2.156 2.147 2.138 2.13 2.123 

12 ...... ......... 2.331 2.283 2.245 2.214 2.188 2.166 2.147 2.131 2.117 2.105 2.094 2.084 2.075 2.067 2.06 

13 ...... ......... 2.283 2.234 2.195 2.164 2.138 2.116 2.097 2.080 2.066 2.053 2.042 2.032 2.023 2.014 2.007 

14 ...... ......... 2.243 2.193 2.154 2.122 2.095 2.073 2.054 2.037 2.022 2.010 1.998 1.988 1.978 1.97 1.962 

15 ...... ......... 2.208 2.158 2.119 2.086 2.059 2.037 2.017 2.000 1.985 1.972 1.961 1.950 1.941 1.932 1.924 

16 ...... ......... 2.178 2.128 2.088 2.055 2.028 2.005 1.985 1.968 1.953 1.940 1.928 1.917 1.908 1.899 1.891 

17 ...... ......... 2.152 2.102 2.061 2.028 2.001 1.978 1.958 1.940 1.925 1.912 1.900 1.889 1.879 1.87 1.862 

18 ...... ......... 2.130 2.079 2.038 2.005 1.977 1.954 1.933 1.916 1.900 1.887 1.875 1.864 1.854 1.845 1.837 

19 ...... ......... 2.109 2.058 2.017 1.984 1.956 1.932 1.912 1.894 1.878 1.865 1.852 1.841 1.831 1.822 1.814 

20 ...... ......... 2.091 2.040 1.999 1.965 1.937 1.913 1.892 1.875 1.859 1.845 1.833 1.821 1.811 1.802 1.794

* * * * *

■ 98. In § 1065.115, text is added to read 

as follows:

§ 1065.115 Exhaust gas sampling system; 

compression-ignition engines. 

Use one of the following systems and 

procedures to measure emissions from 

compression-ignition engines: 

(a) Full-flow dilution sampling as 

specified in 40 CFR 86.1310. 

(b) Raw-gas sampling during steadystate tests as specified in 40 CFR 89.412 

through 89.418. 

(c) Partial-flow sampling for 

measuring gaseous emission 

constituents during steady-state tests as 

specified in 40 CFR 89.112(c).

■ 99. In § 1065.205, text is added to read 

as follows:

§ 1065.205 Test fuel specifications for 

distillate diesel fuel. 

(a)(1) There are three grades of #2 

diesel fuel specified for use as a test 

fuel. See the standard-setting part to 

determine which grade to use. If the 

standard-setting part does not specify 

which grade to use, use good 

engineering judgment to select the grade 

that represents the fuel on which the 

engines will operate in use. The three 

grades are specified as follows:

Item ASTM test

method No.1

Ultra low

sulfur Low sulfur High sulfur 

(i) Cetane Number ............................................................ ........................... D 613 40–50 40–50 40–50 

(ii) Cetane Index ............................................................... ........................... D 976 40–50 40–50 40–50 

(iii) Distillation range: 

(A) IBP ....................................................................... °C ..................... D 86 171–204 171–204 171–204 

(B) 10 pct. point ......................................................... °C ..................... D 86 204–238 204–238 204–238 

(C) 50 pct. point ......................................................... °C ..................... D 86 243–282 243–282 243–282 

(D) 90 pct. point ......................................................... °C ..................... D 86 293–332 293–332 293–332 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39261

Item ASTM test

method No.1

Ultra low

sulfur Low sulfur High sulfur 

(E) EP ........................................................................ °C ..................... D 86 321–366 321–366 321–366 

(iv) Gravity ......................................................................... °API .................. D 287 32–37 32–37 32–37 

(v) Total sulfur ................................................................... ppm .................. D 2622 7–15 300–500 2000–4000 

(vi) Hydrocarbon composition: 

Aromatics, minimum. (Remainder shall be paraffins, 

naphthenes, and olefins).

pct ..................... D 5186 10 10 10 

(vii) Flashpoint, min ........................................................... °C ..................... D 93 54 54 54 

(viii) Viscosity .................................................................... centistokes ........ D 445 2.0–3.2 2.0–3.2 2.0–3.2 

1All ASTM standards are incorporated by reference in § 1065.1010. 

(2) [Reserved] 

(b) There are no specifications for #1 

diesel fuel. See § 1065.201(d) if your 

engines are designed to operate only on 

#1 diesel fuel.

■ 100. In § 1065.310, text is added to 

read as follows:

§ 1065.310 CVS calibration. 

Use the procedures of 40 CFR 

86.1319–90 to calibrate the CVS.

■ 101. Section 1065.405 is amended by 

revising paragraph (b) to read as follows:

§ 1065.405 Preparing and servicing a test 

engine.

* * * * *

(b) Run the test engine, with all 

emission-control systems operating, 

long enough to stabilize emission levels. 

(1) For SI engines, if you accumulate 

50 hours of operation, you may consider 

emission levels stable without 

measurement. 

(2) For CI engines, if you accumulate 

125 hours of operation, you may 

consider emission levels stable without 

measurement.

* * * * *

■ 102. Section 1065.530 is amended by 

revising paragraph (b)(3)(iii) and adding 

paragraphs (d) and (e) to read as follows:

§ 1065.530 Test cycle validation criteria.

* * * * *

(b) * * * 

(3) * * * 

(iii) For a valid test, make sure the 

feedback cycle’s integrated brake 

kilowatt-hour is within 5 percent of the 

reference cycle’s integrated brake 

kilowatt-hour. Also, ensure that the 

slope, intercept, standard error, and 

coefficient of determination meet the 

criteria in the following tables (you may 

delete individual points from the 

regression analyses, consistent with 

paragraph (e) of this section and good 

engineering judgment):

TABLE 1 OF § 1065.530.—STATISTICAL CRITERIA FOR VALIDATING TEST CYCLES FOR SPARK-IGNITION ENGINES

Speed Torque Power 

1. Slope of the regression line (m) ...... 0.950 to 1.030 ............... 0.830 to 1.030 ................................... 0.880 to 1.030. 

2. Y intercept of the regression line (b) |b| ≤ 50 rpm ................... |b| ≤ 5.0 percent of maximum torque 

from power map.

|b| ≤ 3.0 percent of maximum torque 

from power map. 

3. Standard error of the estimate of Y 

on X (SE).

100 rpm ......................... 15 percent of maximum torque from 

power map.

10 percent of maximum power from 

power map. 

4. Coefficient of determination (r 2) ...... r 2 ≥ 0.970 ...................... r 2 ≥ 0.880 .......................................... r 2 ≥ 0.900. 

TABLE 2 OF § 1065.530.—STATISTICAL CRITERIA FOR VALIDATING TEST CYCLES FOR COMPRESSION-IGNITION ENGINES

Speed Torque Power 

1. Slope of the regression line (m) ...... 0.950 to 1.030 ............... 0.830 to 1.030 (hot); 0.77 to 1.03 

(cold).

0.890 to 1.030 (hot); 0.870 to 1.030 

(cold). 

2. Y intercept of the regression line (b) |b| ≤ 50 rpm ................... |b| ≤ 20 Nm or |b| ≤ 2.0 percent of 

maximum torque from power map, 

whichever is greater.

|b| ≤ 4.0 kW or |b| ≤ 3.0 percent of 

maximum torque from power map, 

whichever is greater. 

3. Standard error of the estimate of Y 

on X (SE).

100 rpm ......................... 13 percent of maximum torque from 

power map.

8 percent of maximum power from 

power map. 

4. Coefficient of determination (r 2) ...... r 2 ≥ 0.970 ...................... r 2 ≥ 0.880 (hot); r 2 ≥ 0.850 (cold); ... r 2 ≥ 0.910 (hot); r 2 ≥ 0.850 (cold). 

* * * * *

(d) Transient testing with constantspeed engines. For constant-speed 

engines with installed governor 

operating over a transient duty cycle, 

the test cycle validation criteria in this 

section apply to engine-torque values 

but not engine-speed values. 

(e) Omissions. You may omit the 

following points from duty cycle 

statistics calculations: 

(1) Feedback torque and power during 

motoring reference commands when 

operator demand is at its minimum. 

(2) Feedback speed and power during 

idle-speed oscillations, if all the 

following are true: 

(i) Reference command is 0% speed 

and 0% torque. 

(ii) Operator demand (i.e., throttle) is 

at its minimum. 

(iii) Absolute value of feedback torque 

is less than the sum of the reference 

torque plus 2% of the maximum 

mapped torque. 

(3) Feedback power and either speed 

or torque for a given point when 

approaching maximum demand, if all 

the following are true: 

(i) Operator demand (i.e., throttle) is 

at its maximum. 

(ii) Either feedback speed is less than 

reference speed or feedback torque is 

less than reference torque, but both are 

not less than their respective reference 

values. 

(4) Feedback power and either speed 

or torque for a given point, when 

approaching minimum demand, if all 

the following are true: 

39262 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(i) Operator demand (i.e., throttle) is 

at its minimum. 

(ii) Either feedback speed is greater 

than 105% of reference speed or 

feedback torque is greater than 105% of 

reference torque, but both are not greater 

than these values.

■ 103. Section 1065.615 is amended by 

revising paragraphs (c), (d), and (e) to 

read as follows:

§ 1065.615 Bag sample calculations.

* * * * *

(c) Calculate total brake work (kW-hr) 

done during the emissions sampling 

period of each segment or mode and 

then weight it by the applicable test 

cycle weighting factors. 

(d) Calculate emissions in g/kW-hr by 

dividing the total weighted mass 

emission rate (g/test) by the total cycleweighted brake work for the test. 

(e) Apply deterioration factors or 

other adjustment factors to the brakespecific emission rate in paragraph (d) 

of this section, as specified in the 

standard-setting part.

■ 104. Section 1065.620 is added to 

subpart G to read as follows:

§ 1065.620 Continuous sample analysis 

and calculations. 

Use the sample analysis procedures 

and calculations of 40 CFR part 86, 

subpart N, for continuous samples.

■ 105. Section 1065.701 is added to 

subpart H to read as follows:

§ 1065.701 Particulate measurements. 

Use the particulate sampling system 

and procedures specified in 40 CFR part 

86, subpart N, to measure particulate 

emissions from compression-ignition 

nonroad engines.

■ 106. Section 1065.910 is revised to 

read as follows:

§ 1065.910 Measurement accuracy and 

precision. 

Measurement systems used for field 

testing have accuracy and precision 

comparable to those of dynamometer 

testing. Measurement systems that 

conform to the provisions of 

§§ 1065.915 through 1065.950 are 

deemed to be in compliance with the 

accuracy and precision requirements of 

paragraph of this section. If you use 

other field testing measurement systems 

you need to have documentation 

indicating that it is comparable to a 

dynamometer system. 

(a) The two systems must be 

calibrated independently to NIST 

traceable standards or equivalent 

national standards for this comparison. 

We may approve the use of other 

standards. Calculations of emissions 

results for this test should be consistent 

with the field testing data reduction 

scheme for both the in-use equipment 

and the dynamometer equipment, and 

each complete test cycle will be 

considered one ‘‘summing interval’’, Si 

as defined in the field-testing data 

reduction scheme. 

(b) While other statistical analyses 

may be acceptable, we recommend that 

the comparison be based on a minimum 

of seven (7) repeats of colocated and 

simultaneous tests. Perform this 

comparison over the applicable steadystate and transient test cycles using an 

engine that is fully warmed up such that 

its coolant temperature is 

thermostatically controlled. If there is 

no applicable transient test cycle, use 

the applicable steady-state cycle. 

Anyone who intends to submit an 

alternative comparison is encouraged to 

first contact EPA Office of 

Transportation and Air Quality, 

Assessment and Standards Division to 

discuss the applicant’s intended 

statistical analysis. The Division may 

provide further guidance specific to the 

appropriate statistical analysis for the 

respective application. 

(c) The following statistical tests are 

suggested. If the comparison is paired, 

it must demonstrate that the alternate 

system passes a two-sided, paired t-test. 

If the test is unpaired, it must 

demonstrate that the alternate system 

passes a two-sided, unpaired t-test. The 

average of these tests for the reference 

system must return results less than or 

equal to the applicable emissions 

standard. The t-test is performed as 

follows, where ‘‘n’’ equals the number 

of tests: 

(1) Calculate the average of the in-use 

system results; this is Iavg. 

(2) Calculate the average of the results 

of the system to which the in-use system 

was Referenced; this is Ravg. 

(3) Calculate the ‘‘n-1’’ standard 

deviations for the in-use and reference 

averages; these are Isd and Rsd 

respectively. Form the F ratio: F = (Isd/

Rsd) 2. F must be less than the critical 

F value, Fcrit at a 95% confidence 

interval for ‘‘n-1’’ degrees of freedom. 

Table 1 of this section lists 95% 

confidence interval Fcrit values for n-1 

degrees of freedom. Note that nA

represents the number of alternate 

system samples, while nR represents the 

number of reference system samples. 

(4) For an unpaired comparison, 

calculate the t-value:

tunpaired = (Iavg ¥ Ravg)/((Isd2 +Rsd2)/n)1⁄2

(5) For a paired comparison, calculate 

the ‘‘n-1’’ standard deviation (squared) 

of the differences, di, between the paired 

results, where ‘‘i’’ represents the ith test 

of n number of tests:

SD2 = (Sdi

2 ¥ ((Sdi)2/n))/(n-1)

(6) For a paired comparison, calculate 

the t-value: 

tpaired = (Iavg ¥ Ravg)/(SD2/n)1⁄2

(d) The absolute value of t must be 

less than the critical t value, tcrit at a 

95% confidence interval for ‘‘n-1’’

degrees of freedom.

TABLE 1 OF § 1065.910—95% CONFIDENCE INTERVAL CRITICAL F VALUES FOR F-TEST

nR–1 nI–1 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 

6 ........ ......... 4.284 4.207 4.147 4.099 4.06 4.027 4 3.976 3.956 3.938 3.922 3.908 3.896 3.884 3.874 

7 ........ ......... 3.866 3.787 3.726 3.677 3.637 3.603 3.575 3.55 3.529 3.511 3.494 3.48 3.467 3.455 3.445 

8 ........ ......... 3.581 3.5 3.438 3.388 3.347 3.313 3.284 3.259 3.237 3.218 3.202 3.187 3.173 3.161 3.15 

9 ........ ......... 3.374 3.293 3.23 3.179 3.137 3.102 3.073 3.048 3.025 3.006 2.989 2.974 2.96 2.948 2.936 

10 ...... ......... 3.217 3.135 3.072 3.02 2.978 2.943 2.913 2.887 2.865 2.845 2.828 2.812 2.798 2.785 2.774 

11 ...... ......... 3.095 3.012 2.948 2.896 2.854 2.818 2.788 2.761 2.739 2.719 2.701 2.685 2.671 2.658 2.646 

12 ...... ......... 2.996 2.913 2.849 2.796 2.753 2.717 2.687 2.66 2.637 2.617 2.599 2.583 2.568 2.555 2.544 

13 ...... ......... 2.915 2.832 2.767 2.714 2.671 2.635 2.604 2.577 2.554 2.533 2.515 2.499 2.484 2.471 2.459 

14 ...... ......... 2.848 2.764 2.699 2.646 2.602 2.565 2.534 2.507 2.484 2.463 2.445 2.428 2.413 2.4 2.388 

15 ...... ......... 2.79 2.707 2.641 2.588 2.544 2.507 2.475 2.448 2.424 2.403 2.385 2.368 2.353 2.34 2.328 

16 ...... ......... 2.741 2.657 2.591 2.538 2.494 2.456 2.425 2.397 2.373 2.352 2.333 2.317 2.302 2.288 2.276 

17 ...... ......... 2.699 2.614 2.548 2.494 2.45 2.413 2.381 2.353 2.329 2.308 2.289 2.272 2.257 2.243 2.23 

18 ...... ......... 2.661 2.577 2.51 2.456 2.412 2.374 2.342 2.314 2.29 2.269 2.25 2.233 2.217 2.203 2.191 

19 ...... ......... 2.628 2.544 2.477 2.423 2.378 2.34 2.308 2.28 2.256 2.234 2.215 2.198 2.182 2.168 2.155 

20 ...... ......... 2.599 2.514 2.447 2.393 2.348 2.31 2.278 2.25 2.225 2.203 2.184 2.167 2.151 2.137 2.124 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39263

TABLE 2 OF § 1065.910.—95% CONFIDENCE INTERVAL CRITICAL T VALUES FOR T-TEST

n-1 tcrit

6 ................................................ 2.45 

7 ................................................ 2.36 

8 ................................................ 2.31 

9 ................................................ 2.26 

10 .............................................. 2.23 

11 .............................................. 2.20 

12 .............................................. 2.18 

13 .............................................. 2.16 

14 .............................................. 2.14 

15 .............................................. 2.13 

16 .............................................. 2.12 

17 .............................................. 2.11 

18 .............................................. 2.10 

19 .............................................. 2.09 

TABLE 2 OF § 1065.910.—95% CONFIDENCE INTERVAL CRITICAL T VALUES FOR T-TEST—Continued

n-1 tcrit

20 .............................................. 2.09 

■ 107. Section 1065.1001 is amended by 

adding the definition for ‘‘Operator 

demand’’ in alphabetical order to read as 

follows:

§ 1065.1001 Definitions.

* * * * *

Operator demand means an engine 

operator’s input to control engine 

output. The operator may be a person, 

a governor, or other controller that 

mechanically or electronically signals 

an input that demands engine output. 

Input may be an accelerator pedal or 

signal, a throttle-control lever or signal, 

a fuel lever or signal, a speed lever or 

signal, or a governor setpoint or signal. 

Output means engine power, P, which 

is the product of engine speed, ’’, and 

engine torque, T.

* * * * *

■ 108. Section 1065.1010 is amended by 

revising the entry for ASTM D 86–01 and 

by adding the following entries to Table 

1 in alphanumeric order to read as 

follows:

§ 1065.1010 Reference materials. 

(a) * * *

TABLE 1 OF § 1065.1010.—ASTM MATERIALS

Document number and name Part 1065

reference 

ASTM D 86–01, Standard Test Method for Distillation of Petroleum Products at Atmospheric Pressure ............................. 1065.205, 1065.210 

* * * * * * * 

ASTM D 93–02a, Standard Test Methods for Flash Point by Pensky-Martens Closed Cup Tester ...................................... 1065.205 

ASTM D 287–92, (Reapproved 2000), Standard Test Method for API Gravity of Crude Petroleum and Petroleum Products (Hydrometer Method) ................................................................................................................................................... 1065.205 

* * * * * * * 

ASTM D 445–03, Standard Test Method for Kinematic Viscosity of Transparent and Opaque Liquids (and the Calculation of Dynamic Viscosity) .................................................................................................................................................... 1065.205 

ASTM D 613–03b, Standard Test Method for Cetane Number of Diesel Fuel Oil ................................................................. 1065.205 

ASTM D 976–91 (Reapproved 2000), Standard Test Methods for Calculated Cetane Index of Distillate Fuels .................. 1065.205 

* * * * * * * 

ASTM D 2622–03, Standard Test Method for Sulfur in Petroleum Products by Wavelength Dispersive X-ray Fluorescence Spectrometry ............................................................................................................................................................. 1065.205 

* * * * * * * 

ASTM D 5186–03, Standard Test Method for Determination of the Aromatic Content and Polynuclear Aromatic Content 

of Diesel Fuels and Aviation Turbine Fuels By Supercritical Fluid Chromatography ......................................................... 1065.205 

* * * * *

PART 1068—GENERAL COMPLIANCE 

PROVISIONS FOR NONROAD 

PROGRAMS

■ 109. The authority citation for part 86 

continues to read as follows:

Authority: 42 U.S.C. 7401–7671(q).

■ 110. Section 1068.1 is amended by 

revising paragraphs (a), (b)(5), and (d) 

and adding paragraph (e) to read as 

follows:

§ 1068.1 Does this part apply to me? 

(a) The provisions of this part apply 

to everyone with respect to the 

following engines and to equipment 

using the following engines (including 

owners, operators, parts manufacturers, 

and persons performing maintenance). 

(1) Large nonroad spark-ignition 

engines we regulate under 40 CFR part 

1048. 

(2) Recreational SI engines and 

vehicles that we regulate under 40 CFR 

part 1051 (such as snowmobiles and offhighway motorcycles). 

(3) Land-based nonroad diesel engines 

that we regulate under 40 CFR part 

1039. 

(b) * * * 

(5) Land-based nonroad diesel engines 

that we regulate under 40 CFR part 89.

* * * * *

(d) Paragraph (a)(1) of this section 

identifies the parts of the CFR that 

define emission standards and other 

requirements for particular types of 

engines and vehicles. This part 1068 

refers to each of these other parts 

generically as the ‘‘standard-setting 

part.’’ For example, 40 CFR part 1051 is 

always the standard-setting part for 

snowmobiles. Follow the provisions of 

the standard-setting part if they are 

different than any of the provisions in 

this part. 

(e)(1) The provisions of §§ 1068.30, 

1068.310, and 1068.320 apply for 

stationary spark-ignition engines built 

on or after January 1, 2004, and for 

stationary compression-ignition engines 

built on or after January 1, 2006. 

(2) The provisions of §§ 1068.30 and 

1068.235 apply for the types of engines 

listed in paragraph (a) of this section 

beginning January 1, 2004, where they 

are used solely for competition.

■ 111. Section 1068.5 is amended by 

revising paragraphs (a) and (e) to read as 

follows:

§ 1068.5 How must manufacturers apply 

good engineering judgment? 

(a) You must use good engineering 

judgment for decisions related to any 

requirements under this chapter. This 

includes your applications for 

certification, any testing you do to show 

that your certification, production-line, 

and in-use engines comply with 

39264 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

requirements that apply to them, and 

how you select, categorize, determine, 

and apply these requirements.

* * * * *

(e) If you disagree with our 

conclusions, you may file a request for 

a hearing with the Designated Officer as 

described in subpart G of this part. In 

your request, specify your objections, 

include data or supporting analysis, and 

get your authorized representative’s 

signature. If we agree that your request 

raises a substantial factual issue, we will 

hold the hearing according to subpart F 

of this part.

■ 112. Section 1068.10 is amended by 

revising the section heading to read as 

follows:

§ 1068.10 What provisions apply to 

confidential information?

■ 113. Section 1068.25 is amended by 

revising paragraph (b) to read as follows:

§ 1068.25 What information must I give to 

EPA?

* * * * *

(b) You must establish and maintain 

records, perform tests, make reports and 

provide additional information that we 

may reasonably require under section 

208 of the Act (42 U.S.C. 7542). This 

also applies to engines we exempt from 

emission standards or prohibited acts.

■ 114. A new § 1068.27 is added to read 

as follows:

§ 1068.27 May EPA conduct testing with 

my production engines? 

If we request it, you must make a 

reasonable number of production-line 

engines available for a reasonable time 

so we can test or inspect them for 

compliance with the requirements of 

this chapter.

■ 115. Section 1068.30 is amended by 

revising the definitions for ‘‘Act’’, 

‘‘Certificate holder’’, ‘‘Emission-related 

defect’’, ‘‘Engine-based’’, ‘‘Engine 

manufacturer’’, ‘‘Equipment-based’’, 

‘‘Equipment manufacturer’’, 

‘‘Manufacturer’’, ‘‘Nonroad engine’’, 

‘‘Operating hours’’, and ‘‘Ultimate 

purchaser’’, and ‘‘U.S.-directed 

production volume’’ and adding 

definitions for ‘‘Aftertreatment’’ and in 

alphabetical order to read as follows:

§ 1068.30 What definitions apply to this 

part?

* * * * *

Act means the Clean Air Act, as 

amended, 42 U.S.C. 7401–7671q. 

Aftertreatment means relating to a 

catalytic converter, particulate filter, or 

any other system, component, or 

technology mounted downstream of the 

exhaust valve (or exhaust port) whose 

design function is to reduce emissions 

in the engine exhaust before it is 

exhausted to the environment. Exhaustgas recirculation (EGR) is not 

aftertreatment.

* * * * *

Certificate holder means a 

manufacturer (including importers) with 

a currently valid certificate of 

conformity for at least one engine family 

in a given model year.

* * * * *

Emission-related defect means a 

defect in design, materials, or 

workmanship (in an emission-control 

device or vehicle component or system) 

that affects an emission-related 

component, parameter, or specification 

that is identified in Appendix I or 

Appendix II of this part. Using an 

incorrect emission-related component is 

an emission-related defect.

* * * * *

Engine-based means having emission 

standards in units of grams of pollutant 

per kilowatt-hour, and which apply to 

the engine. Emission standards are 

either engine-based or equipment-based. 

Engine manufacturer means the 

manufacturer that is subject to the 

certification requirements of the 

standard-setting part. For vehicles and 

equipment subject to this part and 

regulated under vehicle-based or 

equipment-based standards, the term 

engine manufacturer in this part 

includes vehicle and equipment 

manufacturers. 

Equipment-based means having 

emission standards that apply to the 

equipment in which an engine is used, 

without regard to how the emissions are 

measured. Where equipment-based 

standards apply, we require that the 

equipment be certified, rather than just 

the engine. Emission standards are 

either engine-based or equipment-based. 

Equipment manufacturer means any 

company manufacturing a piece of 

equipment (such as a vehicle).

Manufacturer has the meaning given 

in section 216(1) of the Act (42 U.S.C. 

7550(1)). In general, this term includes 

any person who manufactures an engine 

or vehicle for sale in the United States 

or otherwise introduces a new engine or 

vehicle into commerce in the United 

States. This includes importers that 

import new engines or new equipment 

into the United States for resale. It also 

includes secondary engine 

manufacturers, as described in 

§ 1068.255.

* * * * *

Nonroad engine means: 

(1) Except as discussed in paragraph 

(2) of this definition, a nonroad engine 

is any internal combustion engine: 

(i) In or on a piece of equipment that 

is self-propelled or serves a dual 

purpose by both propelling itself and 

performing another function (such as 

garden tractors, off-highway mobile 

cranes and bulldozers); or 

(ii) In or on a piece of equipment that 

is intended to be propelled while 

performing its function (such as 

lawnmowers and string trimmers); or 

(iii) That, by itself or in or on a piece 

of equipment, is portable or 

transportable, meaning designed to be 

and capable of being carried or moved 

from one location to another. Indicia of 

transportability include, but are not 

limited to, wheels, skids, carrying 

handles, dolly, trailer, or platform. 

(2) An internal combustion engine is 

not a nonroad engine if: 

(i) The engine is used to propel a 

motor vehicle, an aircraft, or equipment 

used solely for competition, or is subject 

to standards promulgated under section 

202 of the Act (42 U.S.C. 7521); or 

(ii) The engine is regulated by a 

federal New Source Performance 

Standard promulgated under section 

111 of the Act (42 U.S.C. 7411); or 

(iii) The engine otherwise included in 

paragraph (1)(iii) of this definition 

remains or will remain at a location for 

more than 12 consecutive months or a 

shorter period of time for an engine 

located at a seasonal source. A location 

is any single site at a building, structure, 

facility, or installation. Any engine (or 

engines) that replaces an engine at a 

location and that is intended to perform 

the same or similar function as the 

engine replaced will be included in 

calculating the consecutive time period. 

An engine located at a seasonal source 

is an engine that remains at a seasonal 

source during the full annual operating 

period of the seasonal source. A 

seasonal source is a stationary source 

that remains in a single location on a 

permanent basis (i.e., at least two years) 

and that operates at that single location 

approximately three months (or more) 

each year. This paragraph (2)(iii) does 

not apply to an engine after the engine 

is removed from the location. 

Operating hours means: 

(1) For engine storage areas or 

facilities, times during which people 

other than custodians and security 

personnel are at work near, and can 

access, a storage area or facility. 

(2) For other areas or facilities, times 

during which an assembly line operates 

or any of the following activities occurs: 

(i) Testing, maintenance, or service 

accumulation. 

(ii) Production or compilation of 

records. 

(iii) Certification testing. 

(iv) Translation of designs from the 

test stage to the production stage. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39265

(v) Engine manufacture or assembly.

* * * * *

Ultimate purchaser means the first 

person who in good faith purchases a 

new nonroad engine or new piece of 

equipment for purposes other than 

resale.

* * * * *

U.S.-directed production volume

means the number of engine units, 

subject to the requirements of this part, 

produced by a manufacturer for which 

the manufacturer has a reasonable 

assurance that sale was or will be made 

to ultimate purchasers in the United 

States.

* * * * *

■ 116. Section 1068.101 is amended by 

revising paragraphs (a) and (b) to read as 

follows:

§ 1068.101 What general actions does this 

regulation prohibit?

* * * * *

(a) The following prohibitions and 

requirements apply to manufacturers of 

new engines and manufacturers of 

equipment containing these engines, 

except as described in subparts C and D 

of this part: 

(1) Introduction into commerce. You 

may not sell, offer for sale, or introduce 

or deliver into commerce in the United 

States or import into the United States 

any new engine or equipment after 

emission standards take effect for that 

engine or equipment, unless it has a 

valid certificate of conformity for its 

model year and the required label or tag. 

You also may not take any of the actions 

listed in the previous sentence with 

respect to any equipment containing an 

engine subject to this part’s provisions, 

unless the engine has a valid and 

appropriate certificate of conformity and 

the required engine label or tag. For 

purposes of this paragraph (a)(1), an 

appropriate certificate of conformity is 

one that applies for the same model year 

as the model year of the equipment 

(except as allowed by § 1068.105(a)), 

covers the appropriate category of 

engines (such as locomotive or CI 

marine), and conforms to all 

requirements specified for equipment in 

the standard-setting part. The 

requirements of this paragraph (a)(1) 

also cover new engines you produce to 

replace an older engine in a piece of 

equipment, unless the engine qualifies 

for the replacement-engine exemption 

in § 1068.240. We may assess a civil 

penalty up to $31,500 for each engine in 

violation. 

(2) Reporting and recordkeeping. This 

chapter requires you to record certain 

types of information to show that you 

meet our standards. You must comply 

with these requirements to make and 

maintain required records (including 

those described in § 1068.501). You may 

not deny us access to your records or 

the ability to copy your records if we 

have the authority to see or copy them. 

Also, you must give us the required 

reports or information without delay. 

Failure to comply with the requirements 

of this paragraph is prohibited. We may 

assess a civil penalty up to $31,500 for 

each day you are in violation. 

(3) Testing and access to facilities.

You may not keep us from entering your 

facility to test engines or inspect if we 

are authorized to do so. Also, you must 

perform the tests we require (or have the 

tests done for you). Failure to perform 

this testing is prohibited. We may assess 

a civil penalty up to $31,500 for each 

day you are in violation. 

(b) The following prohibitions apply 

to everyone with respect to the engines 

to which this part applies: 

(1) Tampering. You may not remove 

or disable a device or element of design 

that may affect an engine’s emission 

levels. This restriction applies before 

and after the engine is placed in service. 

Section 1068.120 describes how this 

applies to rebuilding engines. For a 

manufacturer or dealer, we may assess 

a civil penalty up to $31,500 for each 

engine in violation. For anyone else, we 

may assess a civil penalty up to $3,150 

for each engine in violation. This 

prohibition does not apply in any of the 

following situations: 

(i) You need to repair an engine and 

you restore it to proper functioning 

when the repair is complete. 

(ii) You need to modify an engine to 

respond to a temporary emergency and 

you restore it to proper functioning as 

soon as possible.

(iii) You modify a new engine that 

another manufacturer has already 

certified to meet emission standards and 

recertify it under your own engine 

family. In this case you must tell the 

original manufacturer not to include the 

modified engines in the original engine 

family. 

(2) Defeat devices. You may not 

knowingly manufacture, sell, offer to 

sell, or install, an engine part if it 

bypasses, impairs, defeats, or disables 

the engine’s control the emissions of 

any pollutant. We may assess a civil 

penalty up to $3,150 for each part in 

violation. 

(3) Stationary engines. For an engine 

that is excluded from any requirements 

of this chapter because it is a stationary 

engine, you may not move it or install 

it in any mobile equipment, except as 

allowed by the provisions of this 

chapter. You may not circumvent or 

attempt to circumvent the residencetime requirements of paragraph (2)(iii) 

of the nonroad engine definition in 

§ 1068.30. We may assess a civil penalty 

up to $31,500 for each day you are in 

violation. 

(4) Competition engines. For an 

uncertified engine or piece of 

equipment that is excluded or exempted 

from any requirements of this chapter 

because it is to be used solely for 

competition, you may not use it in a 

manner that is inconsistent with use 

solely for competition. We may assess a 

civil penalty up to $31,500 for each day 

you are in violation. 

(5) Importation. You may not import 

an uncertified engine or piece of 

equipment if it is defined to be new in 

the standard-setting part and it is built 

after emission standards start to apply 

in the United States. We may assess a 

civil penalty up to $31,500 for each day 

you are in violation. Note the following: 

(i) The definition of new is broad for 

imported engines; uncertified engines 

and equipment (including used engines 

and equipment) are generally 

considered to be new when imported. 

(ii) Engines that were originally 

manufactured before applicable EPA 

standards were in effect are generally 

not subject to emission standards. 

(6) Warranty. You must meet your 

obligation to honor your emissionrelated warranty under § 1068.115 and 

to fulfill any applicable responsibilities 

to recall engines under § 1068.505. 

Failure to meet these obligations is 

prohibited. We may assess a civil 

penalty up to $31,500 for each engine in 

violation.

* * * * *

■ 117. Section 1068.105 is amended by 

revising paragraph (c) and adding 

introductory text to read as follows:

§ 1068.105 What other provisions apply to 

me specifically if I manufacture equipment 

needing certified engines? 

This section describes general 

provisions that apply to equipment 

manufacturers. See the standard-setting 

part for any requirements that apply for 

certain applications.

* * * * *

(c) Attaching a duplicate label. If you 

obscure the engine’s label, you must do 

four things to avoid violating 

§ 1068.101(a)(1): 

(1) Send a request for duplicate labels 

in writing with your company’s 

letterhead to the engine manufacturer. 

Include the following information in 

your request: 

(i) Identify the type of equipment and 

the specific engine and equipment 

models needing duplicate labels. 

(ii) Identify the engine family (from 

the original engine label). 

39266 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

(iii) State the reason that you need a 

duplicate label for each equipment 

model. 

(iii) Identify the number of duplicate 

labels you will need. 

(2) Permanently attach the duplicate 

label to your equipment by securing it 

to a part needed for normal operation 

and not normally requiring replacement. 

Make sure an average person can easily 

read it. 

(3) Destroy any unused duplicate 

labels if you find that you will not need 

them. 

(4) Keep the following records for at 

least eight years after the end of the 

model year identified on the engine 

label: 

(i) Keep a copy of your written 

request. 

(ii) Keep drawings or descriptions that 

show how you apply the duplicate 

labels to your equipment. 

(iii) Maintain a count of those 

duplicate labels you use and those you 

destroy.

* * * * *

■ 118. Section 1068.110 is amended by 

revising paragraphs (b), (c), (d), and (e) 

to read as follows:

§ 1068.110 What other provisions apply to 

engines in service?

* * * * *

(b) Certifying aftermarket parts. As 

the manufacturer or rebuilder of an 

aftermarket engine part, you may—but 

are not required to—certify according to 

§ 85.2114 of this chapter that using the 

part will not cause engines to fail to 

meet emission standards. Whether you 

certify or not, you must keep any 

information showing how your parts or 

service affect emissions. 

(c) Compliance with standards. We 

may test engines and equipment to 

investigate compliance with emission 

standards and other requirements. We 

may also require the manufacturer to do 

this testing.

(d) Defeat devices. We may test 

engines and equipment to investigate 

potential defeat devices. We may also 

require the manufacturer to do this 

testing. If we choose to investigate one 

of your designs, we may require you to 

show us that it does not have a defeat 

device. To do this, you may have to 

share with us information regarding test 

programs, engineering evaluations, 

design specifications, calibrations, onboard computer algorithms, and design 

strategies. It is a violation of the Act for 

anyone to make, install or use defeat 

devices. See § 1068.101(b)(2) and the 

standard-setting part. 

(e) Warranty and maintenance.

Owners are responsible for properly 

maintaining their engines; however, 

owners may make warranty claims 

against the manufacturer for emissionrelated parts, as described in § 1068.115. 

The warranty period begins when the 

engine is first placed into service. See 

the standard-setting part for specific 

requirements. It is a violation of the Act 

for anyone to disable emission controls; 

see § 1068.101(b)(1) and the standardsetting part.

■ 119. Section 1068.120 is amended by 

revising paragraphs (b)(2), (c), (d), (f), 

and (h) to read as follows:

§ 1068.120 What requirements must I 

follow to rebuild engines?

* * * * *

(b) * * * 

(2) Unscheduled maintenance that 

occurs commonly within the useful life 

period. For example, replacing a water 

pump is not rebuilding an engine. 

(c) For maintenance or service that is 

not rebuilding, you may not make 

changes that might increase emissions 

of any pollutant, but you do not need to 

keep any records. 

(d) If you rebuild an engine or engine 

system, you must have a reasonable 

technical basis for knowing that the 

rebuilt engine’s emission-control system 

performs as well as, or better than, it 

performs in its certified configuration. 

Identify the model year of the resulting 

engine configuration. You have a 

reasonable basis if you meet two main 

conditions: 

(1) Install parts—new, used, or 

rebuilt—so a person familiar with 

engine design and function would 

reasonably believe that the engine with 

those parts will control emissions of all 

pollutants at least to the same degree as 

with the original parts. For example, it 

would be reasonable to believe that 

parts performing the same function as 

the original parts (and to the same 

degree) would control emissions to the 

same degree as the original parts. 

(2) Adjust parameters or change 

design elements only according to the 

original engine manufacturer’s 

instructions. Or, if you differ from these 

instructions, you must have data or 

some other technical basis to show you 

should not expect in-use emissions to 

increase.

* * * * *

(f) If the rebuilt engine replaces 

another certified engine in a piece of 

equipment, you must rebuild it to a 

certified configuration of the same 

model year as, or a later model year 

than, the engine you are replacing.

* * * * *

(h) When you rebuild an engine, 

check, clean, adjust, repair, or replace 

all emission-related components (listed 

in Appendix I of this part) as needed 

according to the original manufacturer’s 

recommended practice. In particular, 

replace oxygen sensors, replace the 

catalyst if there is evidence of 

malfunction, clean gaseous fuel system 

components, and replace fuel injectors 

(if applicable), unless you have a 

reasonable technical basis for believing 

any of these components do not need 

replacement.

* * * * *

■ 120. Section 1068.125 is amended by 

revising paragraphs (a)(1)(iv), (b)(3), and 

(e)(2) to read as follows:

§ 1068.125 What happens if I violate the 

regulations? 

(a) * * * 

(1) * * * 

(iv) Your history of compliance with 

Title II of the Act (42 U.S.C. 7401–7590).

* * * * *

(b) * * * 

(3) We will not pursue an 

administrative penalty for a particular 

violation if either of the following two 

conditions is true: 

(i) We are separately prosecuting the 

violation under this subpart. 

(ii) We have issued a final order for 

a violation, no longer subject to judicial 

review, for which you have already paid 

a penalty.

* * * * *

(e) * * * 

(2) In addition, if you do not pay the 

full amount of a penalty on time, you 

must then pay more to cover interest, 

enforcement expenses (including 

attorney’s fees and costs for collection), 

and a quarterly nonpayment penalty for 

each quarter you do not pay. The 

quarterly nonpayment penalty is 10 

percent of your total penalties plus any 

unpaid nonpayment penalties from 

previous quarters.

■ 121. Section 1068.201 is amended by 

revising the introductory text and 

paragraph (i) to read as follows:

§ 1068.201 Does EPA exempt or exclude 

any engines from the prohibited acts? 

We may exempt new engines from 

some or all of the prohibited acts or 

requirements of this part under 

provisions described in this subpart. We 

may exempt an engine already placed in 

service in the United States from the 

prohibition in § 1068.101(b)(1) if the 

exemption for engines used solely for 

competition applies (see § 1068.235). In 

addition, see § 1068.1 and the standardsetting parts to determine if other 

engines are excluded from some or all 

of the regulations in this chapter.

* * * * *

(i) If you want to take an action with 

respect to an exempted or excluded 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39267

engine that is prohibited by the 

exemption or exclusion, such as selling 

it, you need to certify the engine. We 

will issue a certificate of conformity if 

you send us an application for 

certification showing that you meet all 

the applicable requirements from the 

standard-setting part. Also, in some 

cases, we may allow manufacturers to 

modify the engine as needed to make it 

identical to engines already covered by 

a certificate. We would base such an 

approval on our review of any 

appropriate documentation. These 

engines must have emission control 

information labels that accurately 

describe their status.

■ 122. Section 1068.210 is amended by 

revising paragraphs (d)(5)(iv) and 

(e)(3)(iv) to read as follows:

§ 1068.210 What are the provisions for 

exempting test engines?

* * * * *

(d) * * * 

(5) * * * 

(iv) Ownership and control of the 

engines involved in the test. 

(e) * * * 

(3) * * *

(iv) The statement ‘‘THIS ENGINE IS 

EXEMPT UNDER 40 CFR 1068.210 OR 

1068.215 FROM EMISSION 

STANDARDS AND RELATED 

REQUIREMENTS.’’.

* * * * *

■ 123. Section 1068.215 is amended by 

revising paragraphs (b), (c)(3)(iii), and 

(c)(3)(iv) to read as follows:

§ 1068.215 What are the provisions for 

exempting manufacturer-owned engines?

* * * * *

(b) An engine may be exempt without 

a request if it is a nonconforming engine 

under your ownership and control and 

you operate it to develop products, 

assess production methods, or promote 

your engines in the marketplace. You 

may not loan, lease, sell, or use the 

engine to generate revenue, either by 

itself or in a piece of equipment. 

(c) * * * 

(3) * * * 

(iii) Engine displacement, engine 

family identification (as applicable), and 

model year of the engine or whom to 

contact for further information. 

(iv) The statement ‘‘THIS ENGINE IS 

EXEMPT UNDER 40 CFR 1068.210 OR 

1068.215 FROM EMISSION 

STANDARDS AND RELATED 

REQUIREMENTS.’’.

■ 124. Section 1068.220 is amended by 

revising paragraphs (b) and (e)(3) to read 

as follows:

§ 1068.220 What are the provisions for 

exempting display engines?

* * * * *

(b) A nonconforming display engine 

will be exempted if it is used only for 

displays in the interest of a business or 

the general public. This exemption does 

not apply to engines displayed for 

private use, private collections, or any 

other purpose we determine is 

inappropriate for a display exemption.

* * * * *

(e) * * * 

(3) Engine displacement, engine 

family identification (as applicable), and 

model year of the engine or whom to 

contact for further information.

* * * * *

■ 125. Section 1068.225 is amended by 

adding paragraph (d) to read as follows:

§ 1068.225 What are the provisions for 

exempting engines for national security?

* * * * *

(d) Add a legible label, written in 

block letters in English, to each engine 

exempted under this section. The label 

must be permanently secured to a 

readily visible part of the engine needed 

for normal operation and not normally 

requiring replacement, such as the 

engine block. This label must include at 

least the following items: 

(1) The label heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Your corporate name and 

trademark. 

(3) Engine displacement, engine 

family identification (as applicable), and 

model year of the engine or whom to 

contact for further information. 

(4) The statement ‘‘THIS ENGINE 

HAS AN EXEMPTION FOR NATIONAL 

SECURITY UNDER 40 CFR 1068.225.’’.

■ 126. Section 1068.230 is amended by 

revising paragraph (c) to read as follows:

§ 1068.230 What are the provisions for 

exempting engines for export?

* * * * *

(c) Label each exempted engine and 

shipping container with a label or tag 

showing the engine is not certified for 

sale or use in the United States. These 

labels need not be permanently attached 

to the engines. The label must include 

at least the statement ‘‘THIS ENGINE IS 

SOLELY FOR EXPORT AND IS 

THEREFORE EXEMPT UNDER 40 CFR 

1068.230 FROM U.S. EMISSION 

STANDARDS AND RELATED 

REQUIREMENTS.’’.

■ 127. Section 1068.235 is amended by 

revising paragraph (c) to read as follows:

§ 1068.235 What are the provisions for 

exempting engines used solely for 

competition?

* * * * *

(c) If you modify an engine under 

paragraph (b) of this section, you must 

destroy the original emission label. If 

you loan, lease, sell, or give one of these 

engines to someone else, you must tell 

the new owner (or operator, if 

applicable) in writing that it may be 

used only for competition.

■ 128. Section 1068.240 is revised to 

read as follows:

§ 1068.240 What are the provisions for 

exempting new replacement engines? 

(a) You are eligible for the exemption 

for new replacement engines only if you 

are a certificate holder. 

(b) The prohibitions in 

§ 1068.101(a)(1) do not apply to an 

engine if all the following conditions 

apply: 

(1) You produce a new engine to 

replace an engine already placed in 

service in a piece of equipment.

(2) The engine being replaced was 

manufactured before the emission 

standards that would otherwise apply to 

the new engine took effect. 

(3) You determine that you do not 

produce an engine certified to meet 

current requirements that has the 

appropriate physical or performance 

characteristics to repower the 

equipment. If the engine being replaced 

was made by a different company, you 

must make this determination also for 

engines produced by this other 

company. 

(4) You or your agent takes possession 

of the old engine or confirms that the 

engine has been destroyed. 

(5) You make the replacement engine 

in a configuration identical in all 

material respects to the engine being 

replaced (or that of another certified 

engine of the same or later model year). 

This requirement applies only if the old 

engine was certified to emission 

standards less stringent than those in 

effect when you produce the 

replacement engine. 

(c) If the engine being replaced was 

not certified to any emission standards 

under this chapter, add a permanent 

label with your corporate name and 

trademark and the following language:

THIS ENGINE DOES NOT COMPLY WITH 

U.S. EPA NONROAD EMISSION 

REQUIREMENTS. SELLING OR 

INSTALLING THIS ENGINE FOR ANY 

PURPOSE OTHER THAN TO REPLACE A 

NONROAD ENGINE BUILT BEFORE 

JANUARY 1, [Insert appropriate year 

reflecting when the earliest tier of standards 

began to apply to engines of that size and 

type] MAY BE A VIOLATION OF FEDERAL 

LAW SUBJECT TO CIVIL PENALTY.

(d) If the engine being replaced was 

certified to emission standards less 

stringent than those in effect when you 

produce the replacement engine, add a 

permanent label with your corporate 

name and trademark and the following 

language:

39268 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

THIS ENGINE DOES NOT COMPLY WITH 

U.S. EPA NONROAD EMISSION 

REQUIREMENTS. SELLING OR 

INSTALLING THIS ENGINE FOR ANY 

PURPOSE OTHER THAN TO REPLACE A 

NONROAD ENGINE BUILT BEFORE 

JANUARY 1, [Insert appropriate year 

reflecting when the next tier of emission 

standards began to apply] MAY BE A 

VIOLATION OF FEDERAL LAW SUBJECT 

TO CIVIL PENALTY.

(e) The provisions of this section may 

not be used to circumvent emission 

standards that apply to new engines 

under the standard-setting part.

■ 129. Section 1068.245 is amended by 

revising paragraphs (a) introductory text 

and (e) to read as follows:

§ 1068.245 What temporary provisions 

address hardship due to unusual 

circumstances? 

(a) After considering the 

circumstances, we may permit you to 

introduce into commerce engines or 

equipment that do not comply with 

emission-related requirements for a 

limited time if all the following 

conditions apply:

* * * * *

(e) We may include reasonable 

additional conditions on an approval 

granted under this section, including 

provisions to recover or otherwise 

address the lost environmental benefit 

or paying fees to offset any economic 

gain resulting from the exemption. For 

example, in the case of multiple tiers of 

emission standards, we may require that 

you meet the standards from the 

previous tier.

* * * * *

■ 130. Section 1068.250 is amended by 

revising paragraphs (d)(2), (d)(4), and (j) 

to read as follows:

§ 1068.250 What are the provisions for 

extending compliance deadlines for smallvolume manufacturers under hardship?

* * * * *

(d) * * * 

(2) Describe your current and 

projected financial status, with and 

without the burden of complying fully 

with the applicable regulations in this 

chapter.

* * * * *

(4) Identify the engineering and 

technical steps you have taken or those 

you plan to take to comply with 

regulations in this chapter.

* * * * *

(j) We will approve extensions of up 

to one model year. We may review and 

revise an extension as reasonable under 

the circumstances.

* * * * *

■ 131. Section 1068.255 is amended by 

revising paragraph (c) introductory text 

to read as follows:

§ 1068.255 What are the provisions for 

exempting engines for hardship for 

equipment manufacturers and secondary 

engine manufacturers?

* * * * *

(c) Secondary engine manufacturers.

As a secondary engine manufacturer, 

you may ask for approval to produce 

exempted engines under this section for 

up to 12 months. We may require you 

to certify your engines to compliance 

levels above the emission standards that 

apply. For example, the in the case of 

multiple tiers of emission standards, we 

may require you to meet the standards 

from the previous tier.

* * * * *

■ 132. A new § 1068.260 is added to 

subpart C to read as follows:

§ 1068.260 What are the provisions for 

temporarily exempting engines for 

delegated final assembly? 

(a) Shipping an engine separately 

from an aftertreatment component that 

you have specified as part of its certified 

configuration will not be a violation of 

the prohibitions in § 1068.101(a)(1), if 

you do all the following: 

(1) Apply for and receive a certificate 

of conformity for the engine and its 

emission-control system before 

shipment. 

(2) Provide installation instructions in 

enough detail to ensure that the engine 

will be in its certified configuration if 

someone follows these instructions. 

(3) Have a contractual agreement with 

an equipment manufacturer obligating 

the equipment manufacturer to 

complete the final assembly of the 

engine so it is in its certified 

configuration when installed in the 

equipment. This agreement must also 

obligate the equipment manufacturer to 

provide the affidavits and cooperate 

with the audits required under 

paragraph (a)(6) of this section. 

(4) Include the cost of all 

aftertreatment components in the cost of 

the engine. 

(5) Ship the aftertreatment 

components directly to the equipment 

manufacturer, or arrange for separate 

shipment by the component 

manufacturer directly to the equipment 

manufacturer. 

(6) Take appropriate additional steps 

to ensure that all engines will be in their 

certified configuration when installed 

by the equipment manufacturer. At a 

minimum do the following: 

(i) Obtain annual affidavits from every 

equipment manufacturer to whom you, 

your distributors, or your dealers sell 

engines under this section. The 

affidavits must list the part numbers of 

the aftertreatment devices that 

equipment manufacturers install on 

each engine they purchase from you, 

your distributors, or your dealers under 

this section. 

(ii) If you sell more than 50 engines 

per model year under this section, you 

must annually audit four equipment 

manufacturers to whom you sell engines 

under this section. To select individual 

equipment manufacturers, divide all the 

affected equipment manufacturers into 

quartiles based on the number of 

engines they buy from you; select a 

single equipment manufacturer from 

each quartile each model year. Vary the 

equipment manufacturers you audit 

from year to year, though you may 

repeat an audit in a later model year if 

you find or suspect that a particular 

equipment manufacturer is not properly 

installing aftertreatment devices. If you 

sell engines to fewer than 16 equipment 

manufacturers under the provisions of 

this section, you may instead set up a 

plan to audit each equipment 

manufacturer on average once every 

four model years. Audits must involve 

the assembling companies’ facilities, 

procedures, and production records to 

monitor their compliance with your 

instructions, must include investigation 

of some assembled engines, and must 

confirm that the number of 

aftertreatment devices shipped were 

sufficient for the number of engines 

produced. Where an equipment 

manufacturer is not located in the 

United States, you may conduct the 

audit at a distribution or port facility in 

the United States. You must keep 

records of these audits and provide a 

report describing any uninstalled or 

improperly installed aftertreatment 

components to us within 90 days of the 

audit. 

(iii) If you sell up to 50 engines per 

model year under this section, you must 

conduct audits as described in 

paragraph (a)(6)(ii) of this section or 

propose an alternative plan for ensuring 

that equipment manufacturers properly 

install aftertreatment devices. 

(7) Describe the following things in 

your application for certification: 

(i) How you plan to use the provisions 

of this section. 

(ii) A detailed plan for auditing 

equipment manufacturers, as described 

in paragraph (a)(6) of this section. 

(iii) All other steps you plan to take 

under paragraph (a)(6) of this section. 

(8) Keep records to document how 

many engines you produce under this 

exemption. Also, keep records to 

document your contractual agreements 

under paragraph (a)(3) of this section. 

Keep all these records for five years after 

the end of the model year and make 

them available to us upon request. 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39269

(9) Make sure the engine has the 

emission control information label we 

require under the standard-setting part. 

Apply an additional temporary label or 

tag in a way that makes it unlikely that 

the engine will be installed in 

equipment other than in its certified 

configuration. The label or tag must 

identify the engine as incomplete and 

include a clear statement that failing to 

install the aftertreatment device, or 

otherwise bring the engine into its 

certified configuration, is a violation of 

federal law subject to civil penalty. 

(b) An engine you produce under this 

section becomes new when it is fully 

assembled, except for aftertreatment 

devices, for the first time. Use this date 

to determine the engine’s model year. 

(c) Once the equipment manufacturer 

takes possession of an engine exempted 

under this section, the exemption 

expires and the engine is subject to all 

the prohibitions in 40 CFR 1068.101. 

(d) You must notify us within 15 days 

if you find from an audit or another 

source that an equipment manufacturer 

has failed to meet its obligations under 

this section. 

(e) We may suspend, revoke, or void 

an exemption under this section, as 

follows: 

(1) We may suspend or revoke your 

exemption for the entire engine family 

if we determine that any of the engines 

are not in their certified configuration 

after installation in the equipment, or if 

you fail to comply with the 

requirements of this section. If we 

suspend or revoke the exemption for 

any of your engine families under this 

paragraph (d), this exemption will not 

apply for future certificates unless you 

demonstrate that the factors causing the 

nonconformity do not apply to the other 

engine families. We may suspend or 

revoke the exemption for shipments to 

a single facility where final assembly 

occurs. 

(2) We may void your exemption for 

the entire engine family if you 

intentionally submit false or incomplete 

information or fail to keep and provide 

to EPA the records required by this 

section. 

(f) You are liable for the in-use 

compliance of any engine that is exempt 

under this section. It is also a violation 

of § 1068.101(b)(1) for any person to 

complete assembly of the exempted 

engine without complying fully with the 

installation instructions.

■ 133. Section 1068.305 is amended by 

revising paragraphs (a) and (e) to read as 

follows:

§ 1068.305 How do I get an exemption or 

exclusion for imported engines? 

(a) Complete the appropriate EPA 

declaration form before importing any 

nonconforming engine. These forms are 

available on the Internet at http://

www.epa.gov/OTAQ/imports/ or by 

phone at 202–564–9660.

* * * * *

(e) Meet the requirements specified 

for the appropriate exemption in this 

part or the standard-setting part, 

including any labeling requirements 

that apply.

■ 134. Section 1068.310 is revised to 

read as follows:

§ 1068.310 What are the exclusions for 

imported engines? 

If you show us that your engines 

qualify under one of the paragraphs of 

this section, we will approve your 

request to import such excluded 

engines. You must have our approval to 

import an engine under paragraph (a) of 

this section. You may, but are not 

required to request our approval to 

import the engines under paragraph (b) 

or (c) of this section. The following 

engines are excluded:

(a) Engines used solely for 

competition. Engines that you 

demonstrate will be used solely for 

competition are excluded from the 

restrictions on imports in § 1068.301(b), 

but only if they are properly labeled. 

See the standard-setting part for 

provisions related to this demonstration. 

Section 1068.101(b)(4) prohibits anyone 

from using these excluded engines for 

purposes other than competition. 

(b) Stationary engines. The definition 

of nonroad engine in 40 CFR 1068.30 

does not include certain engines used in 

stationary applications. Such engines 

are not subject to the restrictions on 

imports in § 1068.301(b), but only if 

they are properly labeled. Section 

1068.101 restricts the use of stationary 

engines for non-stationary purposes. 

(c) Other engines. The standardsetting parts may exclude engines used 

in certain applications. For example, 

engines used in aircraft and very small 

engines used in hobby vehicles are 

generally excluded. Engines used in 

underground mining are excluded if 

they are regulated by the Mine Safety 

and Health Administration.

■ 135. Section 1068.315 is amended by 

revising the introductory text and 

paragraph (a) and adding paragraph 

(f)(1)(iii) to read as follows:

§ 1068.315 What are the permanent 

exemptions for imported engines? 

We may approve a permanent 

exemption from the restrictions on 

imports under § 1039.301(b) under the 

following conditions: 

(a) National security exemption. You 

may import an engine under the 

national security exemption in 

§ 1068.225, but only if it is properly 

labeled.

* * * * *

(f) * * * 

(1) * * * 

(iii) Land-based nonroad diesel 

engines (see part 1039 of this chapter).

* * * * *

■ 136. Section 1068.320 is amended by 

revising the section heading and 

paragraphs (a) introductory text and (b) 

to read as follows:

§ 1068.320 How must I label an imported 

engine with an exclusion or a permanent 

exemption? 

(a) For engines imported under 

§ 1068.310(a) or (b), you must place a 

permanent label or tag on each engine. 

If no specific label requirements in the 

standard-setting part apply for these 

engines, you must meet the following 

requirements:

* * * * *

(b) On the engine label or tag, do the 

following: 

(1) Include the heading ‘‘EMISSION 

CONTROL INFORMATION’’. 

(2) Include your full corporate name 

and trademark. 

(3) State the engine displacement (in 

liters) and rated power. If the engine’s 

rated power is not established, state the 

approximate power rating accurately 

enough to allow a determination of 

which standards would otherwise 

apply. 

(4) State: ‘‘THIS ENGINE IS EXEMPT 

FROM THE REQUIREMENTS OF 

[identify the part referenced in 40 CFR 

1068.1(a) that would otherwise apply], 

AS PROVIDED IN [identify the 

paragraph authorizing the exemption 

(for example, ‘‘40 CFR 1068.315(a)’’)]. 

INSTALLING THIS ENGINE IN ANY 

DIFFERENT APPLICATION MAY BE A 

VIOLATION OF FEDERAL LAW 

SUBJECT TO CIVIL PENALTY.’’.

* * * * *

■ 137. Section 1068.325 is amended by 

revising the introductory text and 

paragraphs (a) and (b) and adding 

paragraph (f) to read as follows:

§ 1068.325 What are the temporary 

exemptions for imported engines? 

If we approve a temporary exemption 

from the restrictions on importing an 

engine under § 1039.301(b), you may 

import it under the conditions in this 

section. We may ask the U.S. Customs 

Service to require a specific bond 

amount to make sure you comply with 

the requirements of this subpart. You 

39270 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

may not sell or lease one of these 

engines while it is in the United States. 

You must eventually export the engine 

as we describe in this section unless you 

get a certificate of conformity for it or 

it qualifies for one of the permanent 

exemptions in § 1068.315. Section 

1068.330 specifies an additional 

temporary exemption allowing you to 

import certain engines you intend to sell 

or lease. 

(a) Exemption for repairs or 

alterations. You may temporarily import 

a nonconforming engine under bond 

solely to repair or alter it or the 

equipment in which it is installed. You 

may operate the engine and equipment 

in the United States only as necessary 

to repair it, alter it, or ship it to or from 

the service location. Export the engine 

directly after servicing is complete. 

(b) Testing exemption. You may 

temporarily import a nonconforming 

engine under bond for testing if you 

follow the requirements of § 1068.210. 

You may operate the engine in the 

United States only to allow testing. This 

exemption expires one year after you 

import the engine, unless we approve an 

extension. The engine must be exported 

before the exemption expires.

* * * * *

(f) Delegated assembly exemption.

You may import a nonconforming 

engine for final assembly, as described 

in § 1068.260.

■ 138. Section 1068.335 is amended by 

revising paragraph (a) to read as follows:

§ 1068.335 What are the penalties for 

violations? 

(a) All imported engines. Unless you 

comply with the provisions of this 

subpart, importation of nonconforming 

engines violates sections 203 and 213(d) 

of the Act (42 U.S.C. 7522 and 7547(d)). 

You may then have to export the 

engines, or pay civil penalties, or both. 

The U.S. Customs Service may seize 

unlawfully imported engines.

* * * * *

■ 139. Section 1068.401 is revised to 

read as follows:

§ 1068.401 What is a selective 

enforcement audit? 

(a) We may conduct or require you to 

conduct emission tests on your 

production engines in a selective 

enforcement audit. This requirement is 

independent of any requirement for you 

to routinely test production-line 

engines. 

(b) If we send you a signed test order, 

you must follow its directions and the 

provisions of this subpart. We may tell 

you where to test the engines. This may 

be where you produce the engines or 

any other emission testing facility. 

(c) If we select one or more of your 

engine families for a selective 

enforcement audit, we will send the test 

order to the person who signed the 

application for certification or we will 

deliver it in person. 

(d) If we do not select a testing 

facility, notify the Designated Officer 

within one working day of receiving the 

test order where you will test your 

engines. 

(e) You must do everything we require 

in the audit without delay.

■ 140. Section 1068.410 is amended by 

revising paragraphs (e)(1), (g), and (i) to 

read as follows:

§ 1068.410 How must I select and prepare 

my engines?

* * * * *

(e) * * *

(1) We may adjust or require you to 

adjust idle speed outside the physically 

adjustable range as needed until the 

engine has stabilized emission levels 

(see paragraph (f) of this section). We 

may ask you for information needed to 

establish an alternate minimum idle 

speed.

* * * * *

(g) Damage during shipment. If 

shipping an engine to a remote facility 

for testing under a selective enforcement 

audit makes necessary an adjustment or 

repair, you must wait until after the 

initial emission test to do this work. We 

may waive this requirement if the test 

would be impossible or unsafe, or if it 

would permanently damage the engine. 

Report to us, in your written report 

under § 1068.450, all adjustments or 

repairs you make on test engines before 

each test.

* * * * *

(i) Retesting after invalid tests. You 

may retest an engine if you determine 

an emission test is invalid under the 

standard-setting part. Explain in your 

written report reasons for invalidating 

any test and the emission results from 

all tests. If you retest an engine and, 

within ten days after testing, ask to 

substitute results of the new tests for the 

original ones, we will answer within ten 

days after we receive your information.

■ 141. Section 1068.415 is amended by 

revising paragraphs (d) and (e) to read as 

follows:

§ 1068.415 How do I test my engines?

* * * * *

(d) Accumulate service on test 

engines at a minimum rate of 6 hours 

per engine during each 24-hour period. 

The first 24-hour period for service 

accumulation begins when you finish 

preparing an engine for testing. The 

minimum service accumulation rate 

does not apply on weekends or 

holidays. You may ask us to approve a 

lower service accumulation rate. Plan 

your service accumulation to allow 

testing at the rate specified in paragraph 

(c) of this section. Select engine 

operation for accumulating operating 

hours on your test engines to represent 

normal in-use engine operation for the 

engine family. 

(e) Test engines in the same order you 

select them.

■ 142. Section 1068.445 is amended by 

revising paragraph (a)(1) to read as 

follows:

§ 1068.445 When may EPA revoke my 

certificate under this subpart and how may 

I sell these engines again? 

(a) * * *

(1) You do not meet the reporting 

requirements under this subpart.

* * * * *

■ 143. Section 1068.450 is amended by 

revising paragraph (e) to read as follows:

§ 1068.450 What records must I send to 

EPA?

* * * * *

(e) We may post test results on 

publicly accessible databases and we 

will send copies of your reports to 

anyone from the public who asks for 

them. We will not release information 

about your sales or production volumes, 

which is all we will consider 

confidential.

■ 144. Section 1068.501 is revised to 

read as follows:

§ 1068.501 How do I report engine 

defects? 

This section addresses your 

responsibility to investigate and report 

emission-related defects in design, 

materials, or workmanship. The 

provisions of this section do not limit 

your liability under this part or the 

Clean Air Act. For example, selling an 

engine that does not conform to your 

application for certification is a 

violation of § 1068.101(a)(1), 

independent of the requirements of this 

section. 

(a) General provisions. As an engine 

manufacturer, you must investigate in 

certain circumstances whether engines 

that have been introduced into 

commerce in the United States have 

incorrect, improperly installed, or 

otherwise defective emission-related 

components or systems. You must also 

send us reports as specified by this 

section. 

(1) This section addresses defects for 

any of the following emission-related 

components, or systems containing the 

following components: 

(i) Electronic control units, 

aftertreatment devices, fuel-metering 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39271

components, EGR-system components, 

crankcase-ventilation valves, all 

components related to charge-air 

compression and cooling, and all 

sensors associated with any of these 

components. 

(ii) Any other component whose 

primary purpose is to reduce emissions. 

(iii) Any other component whose 

failure might increase emissions of any 

pollutant without significantly 

degrading engine performance.

(2) The requirements of this section 

relate to defects in any of the 

components or systems identified in 

paragraph (a)(1) of this section if the 

defects might affect any of the 

parameters or specifications in 

Appendix II of this part or might 

otherwise affect an engine’s emissions 

of any pollutant. 

(3) For the purposes of this section, 

defects do not include damage to 

emission-related components or systems 

(or maladjustment of parameters) caused 

by owners improperly maintaining or 

abusing their engines. 

(4) The requirements of this section 

do not apply to emission control 

information labels. Note however, that 

§ 1068.101(a)(1) prohibits the sale of 

engines without proper labels, which 

also applies to misprinted labels. 

(5) You must track the information 

specified in paragraph (b)(1) of this 

section. You must assess this data at 

least every three months to evaluate 

whether you exceed the thresholds 

specified in paragraphs (e) and (f) of this 

section. Where thresholds are based on 

a percentage of engines in the engine 

family, use actual sales figures for the 

whole model year when they become 

available. Use projected sales figures 

until the actual sales figures become 

available. You are not required to collect 

additional information other than that 

specified in paragraph (b)(1) of this 

section before reaching a threshold for 

an investigation specified in paragraph 

(e) of this section. 

(6) You may ask us to allow you to 

use alternate methods for tracking, 

investigating, reporting, and correcting 

emission-related defects. In your 

request, explain and demonstrate why 

you believe your alternate system will 

be at least as effective in the aggregate 

in tracking, identifying, investigating, 

evaluating, reporting, and correcting 

potential and actual emissions-related 

defects as the requirements in this 

section. In this case, provide all 

available data necessary to demonstrate 

why an alternate system is appropriate 

for your engines and how it will result 

in a system at least as effective as that 

required under this section. 

(7) If we determine that emissionrelated defects result in a substantial 

number of properly maintained and 

used engines not conforming to the 

regulations of this chapter during their 

useful life, we may order you to conduct 

a recall of your engines (see § 1068.505). 

(8) Send all reports required by this 

section to the Designated Officer. 

(9) This section distinguishes between 

defects and possible defects. A possible 

defect exists anytime there is an 

indication that an emission-related 

component or system might have a 

defect, as described in paragraph (b)(1) 

of this section. 

(b) Investigation of possible defects.

Investigate possible defects as follows: 

(1) If the number of engines that have 

a possible defect, as defined by this 

paragraph (b)(1), exceeds a threshold 

specified in paragraph (e) of this 

section, you must conduct an 

investigation to determine if an 

emission-related component or system 

is actually defective. You must classify 

an engine component or system as 

having a possible defect if any of the 

following sources of information shows 

there is a significant possibility that a 

defect exists: 

(i) A warranty claim is submitted for 

the component, whether this is under 

your emission-related warranty or any 

other warranty. 

(ii) Your quality-assurance procedures 

suggest that a defect may exist. 

(iii) You receive any other 

information for which good engineering 

judgment would indicate the 

component or system may be defective, 

such as information from dealers, fieldservice personnel, hotline complaints, 

or engine diagnostic systems. 

(2) If the number of shipped 

replacement parts for any individual 

component is high enough that good 

engineering judgment would indicate a 

significant possibility that a defect 

exists, you must conduct an 

investigation to determine if it is 

actually defective. Note that this 

paragraph (b)(2) does not require datatracking or recording provisions related 

to shipment of replacement parts. 

(3) Your investigation must be 

prompt, thorough, consider all relevant 

information, follow accepted scientific 

and engineering principles, and be 

designed to obtain all the information 

specified in paragraph (d) of this 

section. 

(4) Your investigation needs to 

consider possible defects that occur 

only within the useful life period, or 

within five years after the end of the 

model year, whichever is longer. 

(5) You must continue your 

investigation until you are able to show 

that there is no emission-related defect 

or you obtain all the information 

specified for a defect report in 

paragraph (d) of this section. Send us an 

updated defect report anytime you have 

significant additional information. 

(6) If a component with a possible 

defect is used in additional engine 

families or model years, you must 

investigate whether the component may 

be defective when used in these 

additional engine families or model 

years, and include these results in any 

defect report you send under paragraph 

(c) of this section. 

(7) If your initial investigation 

concludes that the number of engines 

with a defect is fewer than any of the 

thresholds specified in paragraph (f) of 

this section, but other information later 

becomes available that may show that 

the number of engines with a defect 

exceeds a threshold, then you must 

resume your investigation. If you 

resume an investigation, you must 

include the information from the earlier 

investigation to determine whether to 

send a defect report. 

(c) Reporting defects. You must send 

us a defect report in either of the 

following cases: 

(1) Your investigation shows that the 

number of engines with a defect exceeds 

a threshold specified in paragraph (f) of 

this section. Send the defect report 

within 21 days after the date you 

identify this number of defective 

engines. See paragraph (h) of this 

section for reporting requirements that 

apply if the number of engines with a 

defect does not exceed any of the 

thresholds in paragraph (f) of this 

section. 

(2) You know there are emissionrelated defects for a component or 

system in a number of engines that 

exceeds a threshold specified in 

paragraph (f) of this section, regardless 

of how you obtain this information. 

Send the defect report within 21 days 

after you learn that the number of 

defects exceeds a threshold. 

(d) Contents of a defect report.

Include the following information in a 

defect report: 

(1) Your corporate name and a person 

to contact regarding this defect. 

(2) A description of the defect, 

including a summary of any engineering 

analyses and associated data, if 

available. 

(3) A description of the engines that 

have the defect, including engine 

families, models, and range of 

production dates. 

(4) An estimate of the number and 

percentage of each class or category of 

affected engines that have the defect, 

and an explanation of how you 

39272 Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 

determined this number. Describe any 

statistical methods you used under 

paragraph (g)(6) of this section. 

(5) An estimate of the defect’s impact 

on emissions, with an explanation of 

how you calculated this estimate and a 

summary of any emission data 

demonstrating the impact of the defect, 

if available. 

(6) A description of your plan for 

addressing the defect or an explanation 

of your reasons for not believing the 

defects must be addressed. 

(e) Thresholds for conducting a defect 

investigation. You must begin a defect 

investigation based on the following 

number of engines that may have the 

defect: 

(1) For engines with maximum engine 

power at or below 560 kW: 

(i) For engine families with annual 

sales below 500 units: 50 or more 

engines.

(ii) For engine families with annual 

sales from 500 to 50,000 units: more 

than 10.0 percent of the total number of 

engines in the engine family. 

(iii) For engine families with annual 

sales above 50,000 units: 5,000 or more 

engines. 

(2) For engines with maximum engine 

power greater than 560 kW: 

(i) For engine families with annual 

sales below 250 units: 25 or more 

engines. 

(ii) For engine families with annual 

sales at or above 250 units: more than 

10.0 percent of the total number of 

engines in the engine family. 

(f) Thresholds for filing a defect 

report. You must send a defect report 

based on the following number of 

engines that have the defect: 

(1) For engines with maximum engine 

power at or below 560 kW: 

(i) For engine families with annual 

sales below 1,000 units: 20 or more 

engines. 

(ii) For engine families with annual 

sales from 1,000 to 50,000 units: more 

than 2.0 percent of the total number of 

engines in the engine family. 

(iii) For engine families with annual 

sales above 50,000 units: 1,000 or more 

engines. 

(2) For engines with maximum engine 

power greater than 560 kW: 

(i) For engine families with annual 

sales below 150 units: 10 or more 

engines. 

(ii) For engine families with annual 

sales from 150 to 750 units: 15 or more 

engines. 

(iii) For engine families with annual 

sales above 750 units: more than 2.0 

percent of the total number of engines 

in the engine family. 

(g) How to count defects. (1) Track 

defects separately for each model year 

and engine family as much as possible. 

If information is not identifiable by 

model year or engine family, use good 

engineering judgment to evaluate 

whether you exceed a threshold in 

paragraph (e) or (f) of this section. 

Consider only your U.S.-directed 

production volume. 

(2) Within an engine family, track 

defects together for all components or 

systems that are the same in all material 

respects. If multiple companies 

separately supply a particular 

component or system, treat each 

company’s component or system as 

unique. 

(3) If a possible defect is not attributed 

to any specific part of the engine, 

consider the complete engine a distinct 

component for evaluating whether you 

exceed a threshold in paragraph (e) of 

this section. 

(4) If you correct defects before they 

reach the ultimate purchaser as a result 

of your quality-assurance procedures, 

count these against the investigation 

thresholds in paragraph (e) of this 

section unless you routinely check 

every engine in the engine family. Do 

not count any corrected defects as actual 

defects under paragraph (f) of this 

section. 

(5) Use aggregated data from all the 

different sources identified in paragraph 

(b)(1) of this section to determine 

whether you exceed a threshold in 

paragraphs (e) and (f) of this section. 

(6) If information is readily available 

to conclude that the possible defects 

identified in paragraph (b)(1) of this 

section are actual defects, count these 

toward the reporting thresholds in 

paragraph (f) of this section. 

(7) During an investigation, use 

appropriate statistical methods to 

project defect rates for engines that you 

are not otherwise able to evaluate. For 

example, if 75 percent of the 

components replaced under warranty 

are available for evaluation, it would be 

appropriate to extrapolate known 

information on failure rates to the 

components that are unavailable for 

evaluation. Take steps as necessary to 

prevent bias in sampled data. Make 

adjusted calculations to take into 

account any bias that may remain. 

(h) Investigation reports. Once you 

trigger an investigation threshold under 

paragraph (e) of this section, you must 

report your progress and conclusions. In 

your reports, include the information 

specified in paragraph (d) of this 

section, or explain why the information 

is not relevant. Send us the following 

reports: 

(1) While you are investigating, send 

us mid-year and end-of-year reports to 

describe the methods you are using and 

the status of the investigation. Send 

these status reports no later than June 30 

and December 31 of each year. 

(2) If you find that the number of 

components or systems with an 

emission-related defect exceeds a 

threshold specified in paragraph (f) of 

this section, send us a report describing 

your findings within 21 days after the 

date you reach this conclusion. 

(3) If you find that the number of 

components or systems with an 

emission-related defect does not exceed 

any of the thresholds specified in 

paragraph (f) of this section, send us a 

final report supporting this conclusion. 

For example, you may exclude warranty 

claims that resulted from misdiagnosis 

and you may exclude defects caused by 

improper maintenance, improper use, or 

misfueling. Send this report within 21 

days after the date you reach this 

conclusion. 

(i) Future production. If you identify 

a design or manufacturing defect that 

prevents engines from meeting the 

requirements of this part, you must 

correct the defect as soon as possible for 

future production of engines in every 

family affected by the defect. This 

applies without regard to whether you 

are required to conduct a defect 

investigation or submit a defect report 

under this section.

■ 145. Section 1068.505 is amended by 

revising paragraphs (a) and (e) and 

adding paragraph (f) to read as follows:

§ 1068.505 How does the recall program 

work? 

(a) If we make a determination that a 

substantial number of properly 

maintained and used engines do not 

conform to the regulations of this 

chapter during their useful life, you 

must submit a plan to remedy the 

nonconformity of your engines. We will 

notify you of our determination in 

writing. Our notice will identify the 

class or category of engines affected and 

describe how we reached our 

conclusion. If this happens, you must 

meet the requirements and follow the 

instructions in this subpart. You must 

remedy at your expense noncompliant 

engines that have been properly 

maintained and used, as described in 

§ 1068.510(a)(7). You may not transfer 

this expense to a dealer or equipment 

manufacturer through a franchise or 

other agreement.

* * * * *

(e) You may ask us to allow you to 

conduct your recall differently than 

specified in this subpart, consistent 

with section 207(c) of the Act (42 U.S.C. 

7541(c)). 

(f) You may do a voluntary recall 

under § 1068.535, unless we have made 

Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004 / Rules and Regulations 39273

the determination described in 

§ 1068.535(a).

■ 146. Section 1068.510 is amended by 

revising paragraph (a)(7) to read as 

follows:

§ 1068.510 How do I prepare and apply my 

remedial plan? 

(a) * * * 

(7) The proper maintenance or use 

you will specify, if any, as a condition 

to be eligible for repair under the 

remedial plan. Describe how these 

specifications meet the provisions of 

paragraph (e) of this section. Describe 

how the owners should show they meet 

your conditions.

* * * * *

■ 147. Section 1068.530 is amended by 

revising the introductory text to read as 

follows:

§ 1068.530 What records must I keep? 

We may review your records at any 

time, so it is important that you keep 

required information readily available. 

Keep records associated with your recall 

campaign for three years after you send 

the last report we require under 

§ 1068.525(b). Organize and maintain 

your records as described in this 

section.

* * * * *

■ 148. Appendix I to part 1068 is 

amended by removing paragraph IV and 

revising the introductory text to read as 

follows: 

Appendix I to Part 1068—EmissionRelated Components 

This appendix specifies emissionrelated components that we refer to for 

describing such things as emissionrelated warranty or requirements related 

to rebuilding engines.

[FR Doc. 04–11293 Filed 6–28–04; 8:45 am] 

BILLING CODE 6560–50–P