Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23241

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Hydrocarbons,

Intergovernmental relations, Ozone,

Reporting and recordkeeping

requirements.

Authority: 42 U.S.C. 7401 et seq.

Dated: April 15, 1998.

David A. Ullrich,

Acting Regional Administrator, Region V.

[FR Doc. 98–11278 Filed 4–27–98; 8:45 am]

BILLING CODE 6560–50–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 69 and 80

[FRL–5999–6]

State of Alaska Petition for Exemption

From Diesel Fuel Sulfur Requirement

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: On March 14, 1994, EPA

granted the State of Alaska a waiver

from the requirements of EPA’s lowsulfur diesel fuel program for motor

vehicles, permanently exempting

Alaska’s remote areas and providing a

temporary exemption for areas of Alaska

served by the Federal Aid Highway

System. The exemption applied to

certain requirements in section 211(i)

and (g) of the Clean Air Act, as

implemented in EPA’s regulations. On

December 12, 1995, the Governor of

Alaska petitioned EPA to permanently

exempt the areas covered by the

temporary exemption. In this document,

EPA is proposing to grant Alaska’s

petition for a permanent exemption for

areas of Alaska served by the Federal

Aid Highway System.

This proposed rulemaking, if

finalized, is not expected to have a

significant impact on the ability of

Alaska’s communities to attain the

National Ambient Air Quality Standards

for carbon monoxide and particulate

matter, due to the limited contribution

of emissions from diesel motor vehicles

in those areas and the sulfur level

currently found in motor vehicle diesel

fuel used in Alaska. However, if

circumstances change such that the

exemption is no longer appropriate

under Section 325 based on

consideration of the factors relevant

under that section, EPA could withdraw

this exemption in the future after public

notice and comment.

DATES: EPA will conduct a public

hearing on today’s proposal May 21,

1998, if one is requested by May 12,

1998. If a hearing is held, comments on

this proposal must be submitted on or

before June 22, 1998. If no hearing is

held, comments must be submitted on

or before May 28, 1998. For additional

information on the public hearing see

Supplementary Information.

ADDRESSES: Comments should be

submitted in duplicate to Mr. Richard

Babst, Environmental Engineer, Fuels

Implementation Group, Fuels and

Energy Division (6406–J), 401 M Street

S.W., Washington, D.C. 20460.

Public Hearing: A public hearing, if

held, will be at the Anchorage Federal

Building, room 135, in Anchorage,

Alaska.

Docket: Copies of information

relevant to this petition are available for

inspection in public docket A–96–26 at

the Air Docket of the EPA, first floor,

Waterside Mall, room M–1500, 401 M

Street S.W., Washington, D.C. 20460,

(202) 260–7548, between the hours of

8:00 a.m. to 5:30 p.m. Monday through

Friday. A duplicate public docket has

been established at EPA Alaska

Operations Office—Anchorage, Federal

Building, Room 537, 222 W. Seventh

Avenue, #19, Anchorage, AK 99513–

7588, and is available from 8:00 a.m. to

5:00 p.m. Monday through Friday. A

reasonable fee may be charged for

copying docket materials.

FOR FURTHER INFORMATION CONTACT: Mr.

Richard Babst, Environmental Engineer,

Fuels Implementation Group, Fuels and

Energy Division (6406–J), 401 M Street

S.W., Washington, D.C. 20460, (202)

564–9473.

SUPPLEMENTARY INFORMATION:

Public Hearing Information

Anyone wishing to testify at the

public hearing scheduled for May 21,

1998, should notify Richard Babst by

telephone at (202) 564–9473, by fax at

(202) 565–2085, or by Internet message

at babst.richard@epa.gov. If the above

contact person fails to receive any

requests for testifying on this proposal

by May 12, 1998, the hearing will be

canceled without further notification.

Persons interested in determining if the

hearing has been canceled should

contact the person named above after

May 12, 1998.

The public hearing, if held, will begin

at 9:00 a.m and continue until all

interested parties have had an

opportunity to testify. A sign-up sheet

will be available at a registration table

the morning of the hearing for

scheduling testimony for those who

have not previously notified the contact

person listed above. Testimonies will be

scheduled on a first come, first serve

basis. EPA suggests that approximately

25 to 50 copies of the statement or

material to be presented be brought to

the hearing for distribution to the

audience. In addition, EPA would find

it helpful to receive an advance copy of

any statement or material to be

presented at the hearing in order to give

EPA staff adequate time to review the

material before the hearing. Such

advance copies should be submitted to

the contact person listed above.

The hearing will be conducted

informally and technical rules of

evidence will not apply. Because a

public hearing is designed to give

interested parties an opportunity to

participate in the proceeding, there are

no adversary parties as such. Statements

by participants will not be subject to

cross examination by other participants.

A written transcript of the hearing will

be placed in the public docket for

review. Anyone desiring to purchase a

copy of the transcript should make

individual arrangements with the court

reporter recording the proceeding. The

EPA Presiding Officer is authorized to

strike from the record statements which

he deems irrelevant or repetitious and to

impose reasonable limits on the

duration of the statement of any

witness. EPA asks that persons who

testify attempt to limit their testimony

to ten minutes, if possible.

The Administrator will base her final

decision with regard to Alaska’s petition

for exemption from the diesel fuel sulfur

content requirement on the record of the

public hearing, if held, and on any other

relevant written submissions and other

pertinent information. This information

will be available for public inspection at

the EPA Air Docket, Docket No. A–96–

26 (see ADDRESSES). For more

information on public participation, see

SUPPLEMENTARY INFORMATION: VII. Public

Participation.

Table of Contents

I. Regulated Entities

II. Electronic Copies of Rulemaking

Documents

III. Background

IV. Petition for Exemption

V. Comments Received and Other Issues

VI. Decision for Permanent Exemption

VII. Public Participation

VIII. Statutory Authority

IX. Administrative Designation and

Regulatory Analysis

X. Compliance With the Regulatory

Flexibility Act

XI. Paperwork Reduction Act

XII. Unfunded Mandates Act

I. Regulated Entities

Entities potentially regulated by this

action are refiners, marketers,

distributors, retailers and wholesale

purchaser-consumers of diesel fuel for
23242 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

1Section 211(i)(4) mistakenly refers to

exemptions under section 324 of the Act (‘‘Vapor

Recovery for Small Business Marketers of

Petroleum Products’’). The proper reference is to

section 325, and Congress clearly intended to refer

to section 325, as shown by the language used in

section 211(i)(4), and the United States Code

citation used in section 806 of the Clean Air Act

Amendments of 1990, Public Law No. 101–549.

Section 806 of the Amendments, which added

paragraph (i) to section 211 of the Act, used 42

U.S.C. 7625–1 as the United States Code

designation for section 324. This is the proper

designation for section 325 of the Act. Also see 136

Cong. Rec. S17236 (daily ed. October 26, 1990)

(statement of Sen. Murkowski).

use in the state of Alaska. Regulated

categories and entities include:

Category Examples of regulated entities

Industry ............................... Petroleum distributors, marketers, retailers (service station owners and operators), wholesale purchaser consumers (fleet managers who operate a refueling facility to refuel motor vehicles).

Individuals ........................... Any owner or operator of a diesel motor vehicle.

Federal Government ........... Federal facilities, including military bases which operate a refueling facility to refuel motor vehicles.

This table is not intended to be

exhaustive, but rather provides a guide

for readers regarding entities likely to be

regulated by this action. This table lists

the types of entities that EPA is now

aware could potentially be regulated by

this action. Other types of entities not

listed in the table could also be

regulated. To determine whether your

facility is regulated by this action, you

should carefully examine the criteria

contained in §§ 80.29 and 80.30 of title

40 of the Code of Federal Regulations as

modified by today’s action. If you have

questions regarding the applicability of

this action to a particular entity, consult

one of the persons listed in the

preceding FOR FURTHER INFORMATION

CONTACT section.

II. Electronic Copies of Rulemaking

Documents

The preamble and regulatory language

are also available electronically from the

EPA Internet Web site. This service is

free of charge, except for any cost you

already incur for Internet connectivity.

An electronic version is made available

on the day of publication on the primary

Web site listed below. The EPA Office

of Mobile Sources also publishes these

notices on the secondary Web site listed

below.

http://www.epa.gov/docs/fedrgstr/EPAAIR/(either select desired date or use

Search feature)

http://www.epa.gov/OMSWWW/(look

in What’s New or under the specific

rulemaking topic)

Please note that due to differences

between the software used to develop

the document and the software into

which the document may be

downloaded, changes in format, page

length, etc. may occur.

III. Background

Section 211(i)(1) of the Act prohibits

the manufacture, sale, supply, offering

for sale or supply, dispensing, transport,

or introduction into commerce of motor

vehicle diesel fuel which contains a

concentration of sulfur in excess of 0.05

percent by weight, or which fails to

meet a cetane index minimum of 40

beginning October 1, 1993. Section

211(i)(2) requires the Administrator to

promulgate regulations to implement

and enforce the requirements of

paragraph (1), and authorizes the

Administrator to require that diesel fuel

not intended for motor vehicles be dyed

in order to segregate that fuel from

motor vehicle diesel fuel. Section

211(i)(4) provides that the States of

Alaska and Hawaii may seek an

exemption from the requirements of

subsection 211(i) in the same manner as

provided in section 325 1 of the Act, and

requires the Administrator to take final

action on any petition filed under this

subsection, which seeks exemption from

the requirements of section 211(i),

within 12 months of the date of such

petition.

Section 325 of the Act provides that

upon application by the Governor of

Guam, American Samoa, the Virgin

Islands, or the Commonwealth of the

Northern Mariana Islands, the

Administrator may exempt any person

or source, or class of persons or sources,

in such territory from any requirement

of the Act, with some specific

exceptions. Such exemption may be

granted if the Administrator finds that

compliance with such requirement is

not feasible or is unreasonable due to

unique geographical, meteorological, or

economic factors of such territory, or

such other local factors as the

Administrator deems significant.

IV. Petition for Exemption

On February 12, 1993, the Honorable

Walter J. Hickel, then Governor of the

State of Alaska, submitted a petition to

exempt motor vehicle diesel fuel in

Alaska from subsections (1) and (2) of

section 211(i), except the minimum

cetane index requirement of 40.

Subsection (1) prohibits motor vehicle

diesel fuel from having a sulfur

concentration greater than 0.05 percent

by weight, or failing to meet a minimum

cetane index of 40. Subsection (2)

requires the Administrator to

promulgate regulations to implement

and enforce the requirements of

subsection (1), and authorizes the

Administrator to require that diesel fuel

not intended for motor vehicles be dyed

in order to segregate that diesel fuel

from motor vehicle diesel fuel. The

petition requested that the

Environmental Protection Agency (EPA)

temporarily exempt motor vehicle diesel

fuel manufactured for sale, sold,

supplied, or transported within the

Federal Aid Highway System from

meeting the sulfur content requirement

specified in section 211(i) until October

1, 1996. The petition also requested a

permanent exemption from such

requirements for those areas of Alaska

not reachable by the Federal Aid

Highway System. The petition was

based on geographical, meteorological,

air quality, and economic factors unique

to the State of Alaska.

The petition was granted on March

22, 1994 (59 FR 13610) and applied to

all persons in Alaska subject to section

211(i) and related provisions in section

211(g) of the Act and EPA’s low-sulfur

requirement for motor vehicle diesel

fuel in 40 CFR 80.29. Persons in

communities served by the Federal Aid

Highway System were exempt from

compliance with the diesel fuel sulfur

content requirement until October 1,

1996. Persons in communities that are

not served by the Federal Aid Highway

System were permanently exempt from

compliance with the diesel fuel sulfur

content requirement. Both the

permanent and temporary exemptions

apply to all persons who manufacture,

sell, supply, offer for sale or supply,

dispense, transport, or introduce into

commerce, in the State of Alaska, motor

vehicle diesel fuel. Alaska’s exemptions

do not apply to the minimum cetane

requirement for motor vehicle diesel

fuel.

On December 12, 1995, the Honorable

Governor Tony Knowles, Governor of

the State of Alaska, petitioned the

Administrator for a permanent

exemption for all areas of the state
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23243

2EPA independently verified these statements

and estimates based on statistics from the Federal

Highway Administration and the Department of

Energy. These statistics show that the proportion of

jet fuel consumption compared to total distillate

consumption is approximately 65 percent for

Alaska, compared to approximately 26 percent for

the United States. The per-capita consumption of jet

fuel is approximately 26.6 barrels per year for

Alaska, compared to approximately 2.1 barrels per

year for the United States. The proportion of diesel

fuel consumption for highway use compared to

total distillate consumption is approximately three

percent for Alaska, compared to approximately 29

percent for the United States. The per-capita

consumption of diesel fuel for highway use is

approximately 1.2 barrels per year for Alaska,

compared to approximately 2.3 barrels per year for

the United States.

3The cloud point defines the temperature at

which cloud or haze or wax crystals appears in the

fuel. The purpose of the cloud point specification

is to ensure a minimum temperature above which

fuel lines and other engine parts are not plugged by

solids that form in the fuel. This specification is

designated by the American Society for Testing and

Materials (ASTM) in its ‘‘Standard Specification for

D975–96 Diesel Fuel Oils’’, and varies by area of the

country and by month of the year based on

historical temperature records. Alaska has the most

stringent cloud point specification in the United

States. For example in January, Alaska’s cloud point

specification is ¥56°F, ¥26°F, and ¥2°F for the

northern (above 62° latitude), southern (below 62°

latitude), and Aleutian Islands plus southeastern

coast region, respectively. In contrast, the most

stringent cloud point specification in January in the

lower-48 states is ¥29°F for Minnesota. For the

State of Washington, from which some imported

distillate is imported into Alaska, the January cloud

point specification is +19.4°F and 0°F for the

western and eastern parts of the State, respectively.

4 ‘‘PM10 Emission Inventories for the Mendenhall

Valley and Eagle River Areas,’’ prepared for the U.S.

Environmental Protection Agency, Region X, by

Engineering-Science, February 1988.

served by the Federal Aid Highway

System, that is, those areas covered only

by the temporary exemption. On August

19, 1996, EPA extended the temporary

exemption until October 1, 1996 (61 FR

42812), to give ample time for the

agency to consider comments to that

petition that were subsequently

submitted. Today’s proposed decision

addresses EPA’s final action on the

petition submitted on December 12,

1995. EPA proposes to grant the petition

for a permanent exemption for all areas

of the state served by the Federal Aid

Highway System. This proposed

permanent exemption, when combined

with the previously granted permanent

exemption for all areas of the state not

served by the Federal Aid Highway

System, would effectively provide the

entire state of Alaska a permanent

exemption. While this exemption would

be permanent, EPA would reserve the

right to withdraw it in the future after

public notice and comment if

circumstances change such that the

exemption is no longer appropriate

under section 325 based on

consideration of the factors relevant

under that section.

The following subsections summarize

the state’s support for the exemption as

provided for in the petition and

rationale for the agency’s proposed rule

to grant the exemption. Comments

received by the agency, subsequent

submittals by Alaska, and additional

rationale for the agency’s rule to grant

the permanent exemption are provided

in section V.

A. Geography and Location of the State

of Alaska

Alaska is about one-fifth as large as

the combined area of the lower 48-

states. Because of its extreme northern

location, rugged terrain and sparse

population, Alaska relies on barges to

deliver a large percentage of its

petroleum products. No other state

relies on this type of delivery system to

the extent Alaska does.

Only 35 percent of Alaska’s

communities are served by the Federal

Aid Highway System, which is a

combination of road and marine

highways. The remaining 65 percent of

Alaska’s communities are served by

barge lines and are referred to as ‘‘offhighway’’ or ‘‘remote’’ communities.

Although barge lines can directly access

some off-highway communities, those

communities that are not located on a

navigable waterway are served by a twostage delivery system: over water by

barge line and then over land to reach

the community.

Because of the State’s high latitude, it

experiences seasonal extremes in the

amount of daily sunlight and

temperature, which in turn affects the

period of time during which

construction can occur, and, ultimately,

the cost of construction in Alaska.

According to the petition, Alaska’s

extreme northern location places it in a

unique position to fuel transcontinental

cargo flights between Europe, Asia, and

North America. Roughly 75 percent of

all air transit freight between Europe

and Asia lands in Anchorage, as does

that between Asia and the United States.

The result is a large market for jet fuel

(Jet-A kerosene) produced by local

refiners, which decreases the relative

importance of highway diesel fuel to

these refiners. Based on State tax

revenue receipts and estimates by

Alaska’s refiners, diesel fuel

consumption for highway use represents

roughly five percent of total Alaska

distillate fuel consumption.2

B. Climate, Meteorology and Air Quality

Alaska’s climate is colder than that of

the other 49 states. The extremely low

temperatures experienced in Alaska

during the winter imposes a more severe

fuel specification requirement for diesel

fuel in Alaska than in the rest of the

country. This specification, known as a

‘‘cloud point’’ specification 3

significantly affects vehicle start-up and

other engine operations. Alaska has the

most severe cloud point specification

for diesel fuel in the U.S. at ¥56°F.

Because Alaska experiences extremely

low temperatures in comparison to the

other 49 states, and the cloud point

specifications for diesel fuel in the

lower 49 states are not as severe, most

diesel fuel used in Alaska is produced

by refiners located in Alaska. Jet-A

kerosene meets the same cloud point

specification as No. 1 diesel fuel (which

is marketed primarily during the winter

in Alaska, as opposed to No. 2 diesel

fuel which is marketed primarily in the

summer) and is commonly mixed with

or used as a substitute for No. 1 diesel

fuel. However, because Jet-A kerosene

can have a sulfur content as high as 0.3

percent, the motor vehicle diesel fuel

sulfur requirement of 0.05 percent

would generally prohibit using Jet-A

kerosene from being used as a fuel for

motor vehicles.

Ice formation on the navigable waters

during the winter months restricts fuel

delivery to off-highway areas served by

barge lines. Therefore, fuel is generally

only delivered to these areas between

the months of May and October. This

further restricts the ability of fuel

distributors in Alaska to supply

multiple grades of petroleum products

to these communities.

The only violations of national

ambient air quality standards in Alaska

have been for carbon monoxide (CO)

and particulate matter (PM10). CO

violations have only been recorded in

the State’s two largest communities:

Anchorage and Fairbanks. PM10

violations have only been recorded in

two rural communities, Mendenhall

Valley of Juneau and Eagle River in

Anchorage. The most recent PM10

inventories for these two communities

show that these violations are largely

the result of fugitive dust from paved

and unpaved roads, and that diesel

motor vehicles are responsible for less

than one percent of the overall PM10

being emitted within the borders of each

of these areas 4. Moreover, Eagle River

has not had a violation of the PM10

standard since 1986. Mendenhall Valley

has initiated efforts for road paving to be

implemented to control road dust. The

sulfur content of diesel fuel is not

expected to have a significant impact on

ambient PM10 or CO levels in any of

these areas because of the minimal

contribution by diesel motor vehicles to

PM10 in these areas and the insignificant
23244 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

effect of diesel fuel sulfur content on CO

emissions.

Finally, EPA recognizes that the

primary purpose of reducing the sulfur

content of motor vehicle diesel fuel is to

reduce vehicle particulate emissions.

Additional benefits cited in the final

rule (55 FR 34120, August 21, 1990)

include a reduction in sulfur dioxide

(SO2) emissions and the ability to use

exhaust after-treatment devices on

diesel fueled vehicles, which would

result in some reduction of HC and CO

exhaust emissions. The use of highsulfur diesel fuel may cause plugging or

increased particulate sulfate emissions

in diesel vehicles equipped with trap

systems or oxidation catalysts, and

could impair the ability of oxidation

catalysts to reduce HC and CO exhaust

emissions. However, any increase in

sulfate particulate emissions would

likely have an insignificant effect on

ambient PM10 levels in Alaska since

current diesel motor vehicle

contributions to PM10 emissions are

minimal. Also, the lower sulfur

requirement for motor vehicle diesel

fuel will have no impact on the

attainment prospects of Fairbanks and

Anchorage with respect to CO, since

reducing sulfur content has no direct

affect on CO emissions. Since Alaska is

in attainment with the ozone and SO2

national ambient air quality standards,

there is currently no concern for

reducing HC or SO2 emissions.

The Agency recognizes that granting

this exemption means Alaska will

forego the potential benefits to its air

quality resulting from the use of lowsulfur diesel fuel. However, EPA

believes that the potential benefits to

Alaska’s air quality are minimal and are

far outweighed by the increased costs

resulting from factors unique to Alaska

to communities served by the Federal

Aid Highway System.

C. Economic Factors

In complying with the section 211(i)

sulfur requirement, refiners have the

option to invest in the process

modifications necessary to produce lowsulfur diesel fuel for use in motor

vehicles, or not invest in the process

modifications and only supply diesel

fuel for off-highway purposes (e.g.,

heating, generation of electricity, nonroad vehicles). Most of Alaska’s refiners

indicated that local refineries would

choose to exit the market for highway

diesel fuel if an exemption from the

low-sulfur requirement is not granted.

This is because of limited refining

capabilities, the small size of the market

for highway diesel fuel in Alaska, and

the costs that would be incurred to

produce low-sulfur diesel fuel.

Demand for Jet-A kerosene, which is

also sold as No. 1 diesel fuel because it

meets Alaska’s winter cloud point

specification, accounts for about half of

Alaska’s distillate consumption and

dominates refiner planning. A survey of

the refiners in Alaska, conducted by the

State, revealed that it would cost over

$100,000,000 in construction and

process modifications to refine Alaska

North Slope (ANS) crude into diesel

fuel that would meet the 0.05 percent

sulfur requirement to meet the demand

for highway diesel fuel. Among the

reasons for the high cost include the

construction costs in Alaska, which are

25 to 65 percent higher than costs in the

lower 48 states, and the cost of

modifying the fuel production process

itself. The petition states that because

there is such a small demand for

highway diesel fuel in Alaska, the costs

that would be incurred to comply with

section 211(i)’s sulfur requirement are

excessive in light of the expected

benefits. Without an exemption from

having to meet this requirement, most

refiners would choose to exit the market

for highway diesel fuel.

Whether low-sulfur diesel fuel is

produced in Alaska or imported from

the lower-48 states or Canada, there

remains the problem of segregating the

two fuels for transport to communities

along the FAHS accessible only by

navigable waterways and subsequent

storage of the fuels in those

communities. Fuel is delivered to these

communities only between the months

of May and October due to ice formation

which blocks waterways leading to

these communities for much of the

remainder of the year. The fuel supplied

to these communities during the

summer months must last through the

winter and spring months until

resupply can occur. Additionally, the

existing fuel storage facilities limit the

number of fuel types that can be stored

for use in these communities. The cost

of constructing separate storage facilities

and providing separate tanks for

transport of low-sulfur diesel fuel for

motor vehicles could be significant.

This is largely due to the high cost of

construction in Alaska relative to the

lower 48 states, and the constraints

inherent in distributing fuel in Alaska.

One alternative to constructing separate

storage facilities is to supply only lowsulfur diesel fuel to these communities.

However, the result would require use

of the higher cost, low-sulfur diesel fuel

for all diesel fuel needs. This would

greatly increase the already high cost of

living in these communities, since a

large percentage of distillate

consumption in these communities is

for off-highway uses, such as operating

diesel powered electrical generators.

D. Environmental Factors

Information provided to EPA by the

State of Alaska indicates that refiners

supply and distribute standard diesel

fuel in the summer which has a sulfur

content of approximately 0.3 percent by

weight, and supply and distribute Jet-A

kerosene in the winter as an Arcticgrade diesel, which has a sulfur content

between 0.065 and 0.11 percent by

weight from Alaskan refiners, and 0.03

percent by weight from one refiner in

the lower-48 states. Thus, the reported

level of sulfur in motor vehicle diesel

fuel used in Alaska is below the current

ASTM sulfur specification which allows

up to 0.5 percent by weight. Therefore,

in general, the impact of not requiring

the low-sulfur motor vehicle diesel fuel

program in Alaska is not as significant

as it would be if the current fuel

approached the ASTM allowable sulfur

content level.

Although the State’s largest

communities, Fairbanks and Anchorage,

are CO nonattainment areas, granting

this exemption is not expected to have

any significant impact on ambient CO

levels because the sulfur content in

diesel fuel does not significantly affect

CO emissions. Two rural communities

are designated nonattainment areas with

respect to particulate matter (PM10);

however, diesel motor vehicle exhaust

is responsible for less than one percent

of the overall PM10 being emitted within

the borders of these two areas where

fugitive dust is reported to be the most

significant problem. Thus, EPA believes

that granting a permanent exemption to

communities served by the Federal Aid

Highway System will not have a

significant impact on the ability of any

of these communities to meet the

current national ambient air quality

standards.

V. Comments Received and Other

Issues

This section addresses issues and

comments that EPA needed more time

to consider at the time of the August 19,

1996 extension of the temporary

exemption for areas served by the

Federal Aid Highway System.

A. Availability of Arctic-Grade, LowSulfur Diesel Fuel From Out-of-State

Refiners

In a letter to the Alaska Department of

Environmental Conservation of July 20,

1995, the Clean Air Coalition suggested

that importing low-sulfur diesel fuel is

a low cost option to comply with the

low-sulfur highway diesel fuel

requirement, since highway diesel fuel
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23245

5British Columbia is the Canadian Province

directly north of the State of Washington, and

directly south and east of Southeast Alaska. Directly

north of British Columbia and east of the interior

of Alaska is the Canadian Province of Yukon, which

does not require low-sulfur motor vehicle diesel

fuel.

6For an independent ‘‘snap-shot’’ assessment of

the price difference between low and high sulfur

diesel fuel, EPA looked at one time-period, the

weeks of August 1 through August 29, 1997. From

summary statistics published in ‘‘The Oil Daily’’ for

that time period, EPA calculated the difference

between the average price of low-sulfur diesel fuel

and the average price of high-sulfur diesel fuel. This

calculated price difference was 0.79 and 1.16 cents

per gallon for the Gulf Coast and New York areas,

respectively. The Oil Daily also provides summary

statistics for the Los Angeles area, but not for highsulfur fuel, which apparently is not distributed in

Los Angeles.

7EPA calculated that if jet fuel were included in

the total distillate sales, the estimate for on-road

uses in Southeast Alaska would be eight percent,

which is consistent with earlier estimates by the

Alaska Department of Environmental Conservation

that motor vehicle use of total distillates is

approximately five percent statewide.

is such a small part of the diesel fuel

market in Alaska. It also noted that

Southeast Alaska already imports lowsulfur diesel fuel from Puget Sound.

Although the 1995 staff report from

the Low-Sulfur Diesel Task Force agreed

that some low-sulfur diesel fuel is being

imported to Southeast Alaska, generally

from the Puget Sound area, an October

13, 1997 letter to EPA from the Alaska

Department of Environmental

Conservation, indicated that much of

this ‘‘low-sulfur’’ diesel fuel may not

comply with the Federal sulfur

requirements for motor vehicle diesel

fuel. Much of the ‘‘low-sulfur’’ fuel

being imported is, in fact, downgraded

Jet-A kerosene. The letter explains that

in Southeast Alaska, jet fuel is a

significant portion of the distillate

market, but tank storage is limited.

Because of this storage limitation and

the very specific requirements for jet

fuel, two of the three major distributors

surveyed by the Alaska Department of

Environmental Conservation purchase

only Jet-A kerosene to supply all their

customers for aviation and other uses,

including motor vehicles. But even if

some diesel fuel being imported to

Southeast Alaska is actually low-sulfur

motor vehicle fuel rather than Jet-A

kerosene, it would not be arctic grade.

In Southeast Alaska, the climate is mild

enough to use the same fuel that is

refined for the Seattle area.

Consequently, the fuel being imported

into Southeast Alaska either does not

meet the Federal sulfur requirements for

motor vehicles, or is not arctic grade, or

both.

The Low-Sulfur Diesel Task Force

also investigated the potential for

importing low-sulfur motor vehicle

diesel fuel from British Columbia,

which has required low-sulfur diesel

fuel as of April 15, 1995.5 The task force

concluded that Canada does not appear

to be a significant source of low-sulfur

highway diesel fuel to Alaska. In

support of this contention, Alaska’s

December 12, 1995 Petition for

Exemption stated that the British

Columbia Ministry of Environment

reported supplies of low-sulfur diesel in

British Columbia ‘‘will remain tight’’.

The Petition also stated that, based on

discussions with Alaska refiners,

‘‘Canadian fuel does not seem to be

available for Alaska’’, and one Alaska

refiner reported that diesel fuel ‘‘is sold

from Alaska into the Yukon Territory

and northern British Columbia.’’ The

petition concludes that ‘‘sufficient

Canadian fuel is not available to meet

Alaska’s diesel fuel needs for an arcticgrade low-sulfur diesel fuel.’’

EPA believes, based on the

information provided, that adequate

supplies of arctic-grade low-sulfur

diesel fuel are not likely to be available

for import into Alaska. Even if U.S.

refiners in the lower-48 states wanted to

enter this market, they would have to

confront the similar problem that would

be encountered by the Alaskan refiners

of changing or modifying the refineries

to produce low-sulfur arctic-grade motor

vehicle diesel fuel, or Jet-A kerosene

that meets the Federal motor vehicle

sulfur requirement. The Alaskan

refiners, which produce significant

amounts of Jet-A kerosene, apparently

have already concluded that the small

highway diesel market in Alaska is too

small for such changes and

modifications to be economical.

Economic feasibility directly relates to

availability, since EPA does not have

authority to require refiners to enter or

remain in the motor vehicle diesel fuel

market in Alaska. Finally, Canada is not

a likely source of imports, because its

refiners apparently do not have the

capacity to export low-sulfur diesel fuel

to Alaska.

B. Cost of Importing Low-Sulfur Diesel

Fuel

In letters to the Alaska Department of

Environmental Conservation of July,

1995 and October 30, 1995, the Clean

Air Coalition suggested that Alaskan

refineries and fuel distributors have not

documented that there will be any

increase to the consumer in complying

with the low-sulfur requirement, and

that increasing imports is a viable

alternative to fuel produced in-state.

The Clean Air Coalition noted that it

costs five cents a gallon to import the

fuel, and companies already import a

significant amount of fuel to sell

alongside fuel produced in-state. It

further noted that Southeast Alaska

already imports low-sulfur diesel from

Puget Sound with no additional costs to

consumers.

The 1995 staff report of the LowSulfur Diesel Task Force indicated that

diesel fuel being shipped to Southeast

Alaska is not segregated in shipping

barges, and the same fuel that is sold for

non-road uses, such as heating oil, is

also sold as motor vehicle diesel fuel.

The distributors buy the fuel that has

the lowest cost. The report noted that

low-sulfur diesel fuel can vary from six

cents more expensive to three cents less

expensive per gallon than high sulfur

fuel.6

Alaska’s December 12, 1995 Petition

for Exemption indicates the cost of

transporting diesel fuel to Alaska

depends on the destination. In

Southeast Alaska the transportation

costs would not increase by using lowsulfur diesel fuel because fuel is already

imported to that area. However, the

shipping costs would increase for other

areas which currently obtain their fuel

from in-state refineries. For example,

the shipping cost for low-sulfur diesel

fuel from the Puget Sound area to

Anchorage would be approximately four

cents per gallon, according to one

distributor.

In its September 3, 1997 submittal of

information to EPA, the Alaska

Department of Environmental

Conservation said it surveyed three

major distributors in Southeast Alaska.

Two of these distributors indicated they

provide only low-sulfur diesel fuel (they

downgrade Jet-A kerosene to sell as

diesel fuel), but it does not meet the

0.05 percent low sulfur motor vehicle

diesel fuel requirement. Excluding

distillate sold as jet fuel, an estimated

23 percent of diesel fuel is sold for onroad uses.7 These distributors indicated

the price difference between the lowsulfur (Jet-A kerosene) and high-sulfur

diesel fuels vary from one to four cents

per gallon. Consequently, for these two

distributors because of the lack of

separate storage capacity, the estimated

price increase for non-motor vehicle

users in Juneau is $92,000 to $368,000

per year. In its October 13, 1997 letter

to EPA, the Alaska Department of

Environmental Conservation verified

that the ‘‘low-sulfur’’ diesel fuel being

imported into Southeast Alaska is Jet-A

kerosene, which tends to be more

expensive than low-sulfur motor vehicle

diesel fuel but does not necessarily meet

the Federal sulfur requirements.

In evaluating the cost of importing

low-sulfur diesel fuel, EPA has
23246 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

considered two principle components of

importation costs: (1) The cost of the

fuel to be imported, and (2) the shipping

costs. These components are discussed

separately, as follows.

The cost of the fuel to be imported is

difficult to assess because of the limited

information. The 1995 Staff Report of

the Low-Sulfur Diesel Task Force

indicated that low-sulfur diesel fuel can

vary from six cents more expensive to

three cents less expensive per gallon

than high-sulfur diesel fuel. Two major

fuel distributors for Southeast Alaska

recently estimated the difference in cost

between low-sulfur diesel fuel and highsulfur diesel fuel to be one to four cents

per gallon. The actual costs could be

even higher. As indicated by these two

distributors, the low-sulfur diesel fuel

they import is downgraded Jet-A

kerosene, which is arctic grade but does

not necessarily meet the low-sulfur

motor vehicle requirements.

One would ordinarily presume that if

the diesel fuel meeting the low-sulfur

requirements cost less, it would be the

fuel of choice for the importers.

However, according to the October 13,

1997 letter from the Alaska Department

of Environmental Conservation, the

distributors import the more expensive

Jet-A kerosene for all uses because

limited storage prevents segregation

among the intended uses. Thus, while

importing low-sulfur motor vehicle

diesel fuel could reduce the cost of the

fuel, this cost reduction would

apparently be more than offset by the

increased cost associated with

segregated storage. Further, that fuel

which is currently refined and

distributed as low-sulfur motor vehicle

diesel fuel is not arctic grade.

Consequently, increased costs would

be incurred if arctic grade low-sulfur

motor vehicle diesel fuel were required.

Further, this does not mean that refiners

in the lower-48 states will produce the

required low-sulfur fuel, or if they did

produce it that they would necessarily

sell it based on current market prices

(see the previous Subsection A.

Availability of arctic-grade, low sulfur

diesel fuel from out-of-state refiners).

EPA understands that diesel fuel is

currently shipped to Southeast Alaska,

primarily from the Puget Sound area.

Thus, any cost increase due to shipping

low-sulfur diesel fuel to Southeast

Alaska would be the cost associated

with segregating the low-sulfur motor

vehicle diesel fuel from the highersulfur diesel fuel designated for nonmotor vehicle uses. This can be

accomplished either by separate tanks

on the shipping vessels, or by making

separate trips for the low-sulfur diesel

fuel designated for motor vehicle use.

EPA believes that this cost would be

either zero or minimal.

Increased shipping costs to other

areas of Alaska may be more than

minimal. For areas that already receive

imported distillate, current shipping

cost estimates are for shipments of nonsegregated distillate, of which only

about five percent is intended for

highway use. Similarly as with

Southeast Alaska, the low-sulfur

requirement would require either

segregated or separate shipments for

motor vehicle diesel fuel, but EPA

believes that this cost increase would be

either zero or minimal. For areas that

are now served by in-state refineries,

low-sulfur diesel fuel for motor vehicles

would have to be imported, thereby

adding shipping costs. The Alaska Clean

Air Coalition noted that it currently

costs five cents a gallon to import fuel.

One distributor estimated a cost of four

cents per gallon for shipping imported

fuel from Puget Sound to Anchorage.

This analysis may be purely academic,

however, in refiners in the lower-48

states decide to not produce the

required low-sulfur arctic grade diesel

fuel because of the small motor vehicle

diesel market in Alaska.

C. Costs of Storing and Distributing LowSulfur Diesel Fuel

The Alaska Center for the

Environment, in a letter of June 19, 1996

to the EPA, commented that Canada

experienced no increase in distribution

costs after requiring low-sulfur diesel

fuel. This information was reportedly

obtained from a January 11, 1995

meeting with the Alaska Department of

Environmental Conservation. The

implication of this comment is that

distribution costs projected for lowsulfur diesel fuel in Alaska may be

overstated.

The 1995 staff report of the LowSulfur Diesel Task Force indicated that

the increase in distribution costs for

low-sulfur diesel fuel can vary widely.

For Southeast Alaska the increase in

distribution cost would likely be zero.

For other areas of the state, three

distributors that provided data indicated

a five, seven and twenty cents-pergallon increase in distribution costs for

low-sulfur diesel fuel.

Similarly, the December 12, 1995

Petition for Exemption indicated the

cost increase would vary depending on

the location. It indicated that fuel

segregation is the major contributor to

distribution costs because the highway

diesel market is less than five percent of

the distillate market. Distributors

‘‘cannot be expected’’ to import and

supply low-sulfur distillate for the other

95 percent of the market. According to

the petition, distribution costs are likely

to be higher in Kodiak and other lower

volume distribution locations, which

would have to recover the increased

cost of tank and piping additions or

modifications over a small volume of

fuel. One distributor in Kodiak stated

that its cost increase might be as high as

20 cents-per-gallon. In contrast, one

distributor in Anchorage indicated it

would not have to build a new tank for

low-sulfur diesel, and reported it would

have no increase in distribution cost.

In its August 5, 1997 submittal to

EPA, the Alaska Department of

Environmental Conservation estimated

that if low-sulfur diesel fuel were

required for highway vehicles, even if

only during the summer, the

distribution cost increases would range

from five to twenty cents per gallon. In

its September 3, 1997 submittal of

information to EPA, the Alaska

Department of Environmental

Conservation said it surveyed three

major distributors in Southeast Alaska.

One of these distributors indicated it

imports both high and low sulfur

(downgraded Jet-A kerosene) diesel fuel

into Southeast Alaska, but it mixes the

two together because it does not have

separate storage facilities. The other two

distributors indicated they provide only

low-sulfur diesel (downgraded Jet-A

kerosene), but it does not meet the 0.05

percent low sulfur diesel fuel

requirement. Thus, if low-sulfur diesel

fuel were required for motor vehicles,

these distributors would have to either

provide for separate storage, or purchase

complying diesel fuel for all uses.

In a January 27, 1998 telephone

conversation, the Alaska Department of

Environmental Conservation indicated

that cost is not the only factor in

considering expansion of fuel storage

capacity. It cited an example of the

difficulties Mapco has had in expanding

its storage capacity at an Anchorage

tank farm. Mapco has been trying

unsuccessfully for four years to get the

necessary permits, but has not been able

to overcome the Alaska Department of

Conservation requirements, the coastal

zone management requirements, and

objections by the adjacent residential

neighborhood.

In its October 13, 1997 letter to EPA,

the Alaska Department of

Environmental Conservation indicated

that it is not ‘‘completely reasonable [to

compare] British Columbia’s experience

with implementation of low sulfur

diesel, because British Columbia is less

remote and does not have the same

climate as Alaska.’’ The interior of

Alaska borders Yukon, and considering

geography and climate, it would be

more appropriate to compare to Yukon’s
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23247

8 ‘‘PM10 Emission Inventories for the Mendenhall

Valley and Eagle River Areas,’’ prepared for the U.S.

Environmental Protection Agency, Region X, by

Engineering-Science, February 1988.

experience. But Yukon does not require

low-sulfur motor vehicle diesel fuel.

Considering the available information,

EPA believes that storage and

distribution costs would likely increase,

and the extent would depend on the

area and the distributor. Those costs

could likely range from zero or minimal

to very high (e.g., in Kodiak).

D. Alternative Fuel or Fuel Standard

In a letter of July 20, 1995 to the

Alaska Department of Environmental

Conservation, the Clean Air Coalition

proposed three alternatives to a

permanent statewide exemption to the

low sulfur diesel fuel requirement. The

first suggested alternative is to exclude

Southeast Alaska from any exemption.

This area already imports low-sulfur

diesel for transportation, power

generation and home use from Puget

Sound with no additional cost to

consumers. The second suggested

alternative is to require Alaska to import

low-sulfur diesel in the summer months

only, and ‘‘allow’’ Alaska to use ‘‘winter

diesel’’ in the colder months. The third

suggested alternative is to require

Alaska to use ‘‘winter diesel’’ yearround, even though the ‘‘winter diesel’’

does not ‘‘fully meet Clean Air Act

standards.’’ It notes that Chevron

produces a ‘‘winter diesel fuel’’ with

0.03 percent sulfur content, and other

companies sell it with a sulfur content

from 0.65 to 0.10 percent. EPA

presumes that this ‘‘winter diesel’’ is JetA kerosene, which meets the stringent

Alaskan winter diesel fuel cloud point

specification of ¥56° F, and

consequently is commonly mixed with,

or used as a substitute for, No. 1 diesel

fuel in Alaska.

In a letter of April 23, 1996 to the

EPA, the Alaska Center for the

Environment proposed the same three

alternatives to a permanent statewide

exemption of the low-sulfur diesel fuel

requirement. The letter also references

the staff report of the Low-Sulfur Diesel

Task Force in noting that the sulfur

content of Alaskan Jet-A kerosene

contains from 0.03 to 0.09 percent

sulfur, and that requiring Jet-A kerosene

year-round would simply result in the

importation of Jet-A kerosene increasing

from the current 13 percent to 21

percent.

Alternative 1: Exclude Southeast Alaska

In support of the alternative that

Southeast Alaska be excluded from any

exemption, the Clean Air Coalition

stated that Southeast Alaska already

imports low-sulfur diesel for

transportation, power generation and

home use from Puget Sound with no

additional cost to consumers. In its

August 5, 1997 submittal to EPA, the

Alaska Department of Environmental

Conservation stated that diesel fuel for

all uses is imported to Southeast Alaska

from the lower 48 states by barge, and

on-road and non-road diesel is not

segregated. Currently, market price

determines whether high or low-sulfur

diesel is distributed. If low-sulfur diesel

were required for highway use, either

separate storage may be needed to

segregate the highway fuel, or citizens

using diesel for home heating would

have to bear any associated price

increases for all the diesel fuel to meet

the low-sulfur requirement. In the latter

case, the Alaska Department of

Environmental Conservation estimated

that if a five cent per gallon increase

occurs, home heating costs could

increase $430,000 per year.

In its September 3, 1997 submittal of

information to EPA, the Alaska

Department of Environmental

Conservation indicated it surveyed three

major distributors in Southeast Alaska.

One of these distributors indicated it

imports both high and low sulfur

(downgraded Jet-A kerosene) diesel fuel

into Southeast Alaska, but it mixes the

two together because it does not have

separate storage facilities. The other two

distributors indicated they provide only

low-sulfur diesel (downgraded Jet-A

kerosene) to sell as diesel fuel. These

distributors indicated the price

difference between the low and highsulfur diesel fuels vary from one to four

cents per gallon. In its October 13, 1997

letter to EPA, the Alaska Department of

Environmental Conservation clarified

that these two distributors import only

Jet-A kerosene because jet fuel is a large

portion of their market and they are

unable to segregate that fuel because of

lack of storage facilities. Thus, they

purchase the generally more expensive

Jet-A kerosene to supply all users of

distillate.

The Alaska Department of

Environmental Conservation also raised

an equity issue. Southeast Alaska

residents would be required to bear the

cost of any increases due to the lowsulfur requirements, while residents in

other areas of the state would be

exempted. Finally, the Department of

Environmental Conservation stated that

Southeast Alaska does not have a major

highway system—transport of goods and

freight between towns occurs by water

or air.

After considering the issues raised,

EPA concluded the expected air quality

benefits associated with excluding

Southeast Alaska from the exemption

would be negligible or minimal, and

EPA is concerned about the potential for

cost increases, not only for motor

vehicle uses, but also for other uses, as

discussed below.

First EPA considered the impact of an

exemption from the motor vehicle diesel

fuel sulfur requirements on air quality

benefits in Southeast Alaska. All parties

generally agree that Southeast Alaska

already imports a low-sulfur fuel for

some of its market. Also, the portion of

fuel that is used for motor vehicles is

relatively small. To the extent Southeast

Alaska is currently importing low-sulfur

diesel fuel that already meets the

Federal requirements for motor vehicles,

no additional air quality benefits would

result from requiring low-sulfur diesel

for motor vehicle use. To the extent

Southeast Alaska is currently importing

low-sulfur non-complying diesel fuel

(e.g., Jet-A kerosene with sulfur content

above 0.05 percent by weight), minimal

air quality benefits would result from

requiring that fuel to meet the 0.05

percent sulfur requirement. To the

extent Southeast Alaska is currently

importing high-sulfur diesel fuel,

requiring the use of low-sulfur highway

diesel fuel would likely result in a

certain amount of reduced per-vehicle

emissions.

The only national ambient air quality

standards nonattainment area in

Southeast Alaska is the Mendenhall

Valley in Juneau for PM10, where diesel

truck exhaust, brake wear and tire wear

combined contribute less than one

percent to the PM10 inventory.8 By

contrast, the largest sources of PM10 in

Mendenhall Valley are fugitive and

windblown dust which account for 89

percent of the annual inventory. This

means that the maximum reduction in

PM10 that can be achieved by totally

eliminating all motor vehicle diesel

emissions is only one percent. Lowsulfur motor vehicle diesel fuel meeting

the Federal sulfur content requirement

would eliminate only a portion of that

one percent. Consequently, EPA

believes that the air quality benefits of

reducing motor vehicle diesel exhaust

by requiring low-sulfur diesel fuel for

motor vehicles would be negligible. (For

discussion on localized environmental

impacts see Subsection E: Local

environmental effects. Also, EPA is not

addressing future requirements,

including for the new national ambient

air quality standard for PM2.5, in this

proposed rule—see Subsection H: New

National Ambient Air Quality

Standards).

The Clean Air Coalition raised the

issue that secondary air quality benefits
23248 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

9According to its September 3, 1997 submittal to

EPA, the Alaska Department of Environmental

Conservation stated that the two major distributors

in Southeast Alaska that they surveyed and that

import only Jet-A kerosene indicated on-road uses

of diesel fuel account for only 23 percent of their

diesel fuel sales, excluding that which is intended

for use by jets. Thus, excluding use by jets, nonroad uses of diesel fuel account for more than three

times the volume of diesel fuel that is used on-road.

of low-sulfur highway diesel fuel could

be significant. Because distillate fuel

shipments in Southeast Alaska are

generally not segregated by end-use, a

requirement for low-sulfur highway

diesel fuel might spill over into the

distillates transported for non-highway

uses, such as for heating and electrical

generation. EPA agrees that there could be

secondary air quality benefits to

requiring low-sulfur diesel fuel in

Southeast Alaska, however, EPA does

not know the extent of that potential

impact. If suppliers and distributors in

Southeast Alaska elect in-full or in-part

to not segregate diesel fuel by end-use

in response to the motor vehicle lowsulfur diesel fuel requirement, except

possibly for Jet-A kerosene, they would

have to supply the more restrictive lowsulfur motor vehicle diesel fuel for the

non-motor vehicle uses. The air quality

benefits—primarily reduced particulate

emissions—would depend on the

change in proportion of the non-motor

vehicle diesel fuel that would meet the

motor vehicle low-sulfur diesel fuel

requirement, the change in sulfur

content between the diesel fuel that is

currently distributed and that which

would be distributed under a motor

vehicle low-sulfur diesel fuel

requirement, and the change in

emissions between the current and the

motor vehicle low-sulfur diesel fuel for

the various non-motor vehicle diesel

combustion sources. Such diesel

sources include, but are not limited to,

utility diesel electrical power

generators, small diesel electrical power

generators (e.g., for construction and

remote sites, backup generators for

businesses, hospitals and homes, etc.),

construction and farm vehicles (e.g.,

road graders, bull-dozers, farm tractors,

etc.), construction and farm equipment

(e.g., air compressors, harvesters, etc.)

and heaters (e.g., industrial boilers,

home furnaces, kerosene heaters, etc.).

Since fugitive and windblown dust

account for 89 percent of the annual

PM10 inventory, the maximum that total

emissions from all petroleum products

(including diesel fuel, bunker fuel, fuel

oil, kerosene, gasoline, etc.) can

contribute is only 11 percent of the

annual inventory. Assuming a best case

scenario in which all petroleum fuels

(not just the motor vehicle diesel fuels)

were to meet the Federal sulfur content

requirement for motor vehicle diesel

fuel, only a portion of the 11 percent of

the annual inventory of PM10 would be

eliminated.

Considering the cost impact of

requiring low-sulfur highway diesel

fuel, market price and storage facilities

determines whether high or low-sulfur

diesel is distributed to Southeast

Alaska. To the extent Southeast Alaska

is currently importing low-sulfur diesel

that meets the Federal sulfur content

requirement for motor vehicle diesel

fuel, no additional costs would result

from requiring low-sulfur diesel for

motor vehicle use. To the extent

Southeast Alaska is currently importing

diesel fuel that does not meet the

Federal sulfur content requirement, EPA

assumes that the current market results

in the lowest overall fuel cost and that

higher overall fuel costs would result

from requiring low-sulfur diesel for

motor vehicle use. Even though lowsulfur motor vehicle diesel fuel (nonarctic grade) would normally be priced

less than Jet-A kerosene in the typical

market, apparently this lower cost

would not offset the anticipated cost of

modifying or expanding the available

storage facilities in Southeast Alaska to

provide for segregated storage.

Consequently, the low-sulfur

requirement for motor vehicle diesel

fuel is likely to result in higher fuel

costs.

These higher fuel costs would likely

be passed on to consumers. If segregated

storage is provided only for Jet-A

kerosene and not for motor vehicle fuel,

citizens using the unsegregated lowsulfur motor vehicle fuel for home

heating, electricity and other non-road

uses would also have to bear the

associated price increase. Because nonroad applications of diesel fuel use

significantly higher quantities of the

fuel,9 this overall cost to homeowners

and businesses could be significant. Because of the lack of significant air

quality and cost benefits of excluding

Southeast Alaska from the exemption,

EPA has rejected this alternative.

However, EPA may revisit this

alternative in the future if the

exemption that is promulgated

subsequent to this proposal is no longer

appropriate under § 325 based on

consideration of the factors relevant

under that section.

Alternative 2: Exclude the Summer

Seasons From the Exemption

This alternative is designed to achieve

some benefits for Alaska by requiring

the use of low-sulfur diesel fuel for at

least part of the year, but to avoid the

unique requirements and constraints

associated with Alaska’s arctic climate

during the winter. In its August 5, 1997

submittal to EPA, the Alaska

Department of Environmental

Conservation stated that importing lowsulfur diesel fuel only during the

summer months is problematic. Alaskan

refiners cannot produce low-sulfur

diesel fuel and thus would be cut out of

the market, and distributors would need

additional storage to segregate the lowsulfur diesel fuel, even though

segregation might only be necessary for

part of the year. EPA previously concluded in this

proposed rule that requiring low-sulfur

highway diesel fuel in Alaska is not

expected to have a significant impact on

ambient PM10 or CO levels in Alaska, or

Alaska’s prospects for attainment with

the national ambient air quality

standards (see Subsection IV.B: Climate,

Meteorology and Air Quality).

Consequently, requiring low-sulfur

highway diesel fuel in Alaska for only

part of the year would also not be

expected to have a significant impact on

ambient PM10 or CO levels in Alaska, or

Alaska’s prospects for attainment with

the national ambient air quality

standards. (For discussion on localized

environmental impacts—see Subsection

E: Local environmental effects. EPA is

not addressing future requirements in

this proposed rule, including for the

new national ambient air quality

standard for PM2.5—see Subsection H:

New National Ambient Air Quality

Standards.)

However, costs would arise from

either segregated shipping, storage and

distribution for the diesel fuel intended

for highway use during the summer

season, or refining costs associated with

producing unsegregated low-sulfur

distillate for all distillate uses, except

possibly for jet fuel, in Alaska during

the summer season. This cost is not well

defined, but based on the limited

available information, seems to range

from zero to significant depending on

the specific location within Alaska. (See

Section IV.C: Economic Factors and

Section V.C: Costs of Storing and

Distributing Low-Sulfur Diesel Fuel.)

Also, there are non-economic barriers to

expanding storage capacity (see

Subsection V.C: Costs of Storing and

Distributing Low-Sulfur Diesel Fuel). The cost of expanded storage capacity

would have to be borne not only by

distributors and wholesalers, but also

retailers, individual businesses that

store distillate fuels for their own use,

and individuals that store distillate fuels

for their own use. Alaska’s unique

climate and geographical conditions

cause supply disruptions, especially

during the winter season. To account for

the supply disruptions, communities,

businesses, and individuals in Alaska,

perhaps except in Southeast Alaska,
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23249

10 The summer season in Alaska is approximately

three to four months duration. Since motor vehicle

use of distillate is less than five percent, only one

to two percent of the distillate would then be used

for motor vehicles during the summer season.

11 EPA looked at the weeks of August 1 thru

August 29, 1997 of ‘‘The Oil Daily’’ and calculated

the difference between the average price of lowsulfur diesel fuel and the average price of Jet fuel.

For this time period, jet fuel cost more than lowsulfur diesel fuel by 2.55, 2.78, and 2.00 cents per

gallon for the Gulf Coast, New York, and Los

Angeles areas, respectively.

need to stock winter supplies during the

summer and transition season.

Consequently, they are taking delivery

of summer and winter supplies at the

same time during part of the year.

Additional storage would be needed to

segregate the regulated low-sulfur fuel

used in the summer season from the

unregulated higher-sulfur fuel needed

for the winter season. As noted earlier

in this proposed rule, low-sulfur diesel

fuel as currently produced does not

meet the ‘‘cloud point’’ specification

required for Alaska’s cold temperatures,

and if used during the winter season,

would significantly affect engine startup and operation.

Other existing seasonally driven fuels

programs (particularly in the lower 48

states) such as oxygenated gasoline for

control of carbon monoxide (CO) during

winter seasons and low-volatility

gasoline for control of volatile organic

compounds (VOCs) during summer

seasons, rely on refineries and

distribution systems that are oriented

primarily, or in large part, to supplying

gasoline for motor vehicles. This

distribution system has adequate storage

for transitioning between seasons, and

since supply disruptions generally do

not occur in the lower 48 states, there

is no need to supply and stock fuel for

the winter season.

Another confounding factor in Alaska

is only less than five percent of Alaska’s

refining and distribution systems are

oriented to supplying highway diesel

fuel, and Alaska’s highway diesel fuel is

not segregated from distillates intended

for other uses, such as heating and

power generation. Assuming that

distributors would supply low-sulfur

diesel only for motor vehicle use under

this alternative, the distribution and

storage costs would be spread out

among only one to two percent of the

distillate flowing through the system. 10

Assuming that distributors would

supply low-sulfur diesel for all distillate

uses in the summer season under this

alternative, except possibly jet fuel, the

higher cost of the low-sulfur diesel fuel

would be forced on the non-highway

users of the distillate, as well as the

additional cost of segregating that fuel

from the winter supplies.

Another consideration is the

administrative and enforcement burden

of such a seasonal program. The need to

stock winter fuel during the summer

and transition seasons might conflict

with a regulatory requirement that only

low-sulfur diesel be sold for highway

use during the summer season. Any

regulatory accommodation to allow for

stocking of fuel for the winter would

complicate enforcement of the summertime requirement. For an enforcement

agency to determine whether a violation

has occurred and to subsequently

prosecute the violator, the agency would

have to determine and subsequently

prove that a summer-time sale or

distribution of non-complying distillate

is intended for highway use rather than

for other uses such as heating or power

generation, and that it is intended for

use during the summer season.

For all of the above reasons, EPA

rejects the alternative of requiring lowsulfur highway diesel fuel only in the

summer. However, EPA may revisit this

alternative in the future if the

exemption that is promulgated

subsequent to this proposal is no longer

appropriate under § 325 based on

consideration of the factors relevant

under that section.

Alternative 3: Require ‘‘Winter Diesel’’

Year-Round

This alternative is intended to take

advantage of the generally lower sulfur

content of Jet-A kerosene and its ability

to serve as an arctic-grade motor vehicle

diesel fuel during the winter season.

The staff report of the Low-Sulfur Diesel

Task Force states that Jet-A kerosene has

a sulfur content specification of 0.3

percent. It tends to have lower sulfur

content than standard diesel fuel, but

generally does not meet the regulatory

requirement for low-sulfur highway

diesel of 0.05 percent maximum. For

example from the high-sulfur North

Slope crude, Mapco produces Jet-A

kerosene with 0.09 percent sulfur. As

the North Slope crude supplies dwindle

over time, the sulfur content of that

crude is expected to increase. Chevron

imports Jet-A kerosene with 0.03

percent sulfur.

EPA previously concluded in Section

IV.B. of this proposed rule that requiring

low-sulfur highway diesel fuel in Alaska

is not expected to have a significant

impact on ambient PM10 or CO levels in

Alaska, or Alaska’s prospects for

attainment with the national ambient air

quality standards. Since Jet-A kerosene

has a sulfur content requirement that is

less stringent than that of motor vehicle

diesel fuel, requiring Jet-A kerosene in

Alaska would also have little or no

impact on Alaska meeting the national

ambient air quality standards.

Another disadvantage to this

alternative is the potential for higher

costs of fuel for heating and power

generation in areas not served by jet

traffic. EPA believes that jet fuel

generally costs more than regular diesel

fuel. 11 Except when used during the

winter for general distillate fuel uses,

Jet-A kerosene may be segregated from

regular diesel fuel in some areas served

by jet traffic because of the unique

requirements for jet fuel and its higher

cost.

However, in areas not served by jet

traffic, EPA assumes that the higher cost

Jet-A kerosene is not typically used,

except possibly during the winter

season as an arctic-grade distillate. This

alternative of requiring Jet-A kerosene

for motor vehicles would result in either

the higher cost of segregated shipping,

storage and distribution, which would

be passed on to the consumers of the JetA kerosene for use in motor vehicles, or

the higher cost of the Jet-A kerosene for

unsegregated shipping and storage,

which would be passed on to consumers

of the fuel for all distillate uses,

including heating and power generation.

As previously addressed, the increased

cost of segregated shipping, storage and

distribution varies widely depending on

the specific location within the state.

Based on some estimates by the Alaska

Department of Environmental

Conservation, the costs of segregated

shipping, storage and distribution for

non-road use could be significant.

For all of the above reasons, EPA

rejects the alternative of requiring Jet-A

kerosene year-round.

E. Local Environmental Effects

In a letter to the Alaska Department of

Environmental Conservation of July 20,

1995, the Alaska Clean Air Coalition

stated that Anchorage has a significant

problem with a wintertime ‘‘brown

cloud’’ when snow covers the ground,

although it indicated that it hadn’t yet

studied the components of that ‘‘brown

cloud.’’ It also pointed out that the

proportion of total particulates that are

caused by diesel engines are expected to

rise over the next 20 years as other

sources of pollution decline, and that

diesel particulate emissions from motor

vehicle engines increase to twice the

federal standard for motor vehicle

engines if high-sulfur fuel is used with

engines that are equipped with catalytic

converters.

The Alaska Clean Air Coalition

indicates it is concerned not only with

the local health impacts of PM10, but

also that of PM2.5, at levels below the

national air quality standards. It
23250 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

12 ‘‘Particulate Air Pollution and Respiratory

Disease in Anchorage, Alaska’’, Gordian, Ozkaynak,

Sue, Morris, and Spengler, Environmental Health

Perspectives, vol. 104, number 3, March 1996.

submitted a copy of a 1996 study 12

showing correlation between respiratory

health effects in Anchorage and CO and

PM10 at ambient levels below the

national ambient air quality standards.

This study showed that winter

concentrations of CO were significantly

associated with bronchitis and upper

respiratory illness, and with automobile

exhaust emissions. In a March 11, 1997

letter to EPA, the Alaska Clean Air

Coalition references the above study and

indicated that ‘‘local officials’’ have

found a highly significant correlation

between CO and PM2.5, but no

significant relationship between PM10

and PM2.5. Besides the health problems

associated with PM10, which in

Anchorage typically comes from

reentrained road materials, ‘‘healthy’’

Anchorage workers and their families

have more bronchitis and upper

respiratory infection during carbon

monoxide ‘‘episodes’’, which are linked

to vehicle exhaust during the winter.

In a June 19, 1996 letter to the EPA,

the Alaska Clean Air Coalition stated

that it believes some neighborhoods

have much higher diesel exposure than

the existing emissions inventory

indicates. Attached to this letter were

April 25, 1994 and August 11, 1995

letters to the Alaska Department of

Environmental Conservation, and a

written version of an oral testimony at

the Anchorage School District Budget

Hearing Meeting of January 19, 1995, in

which the University Area Community

Council of Anchorage stated that it had

received complaints about diesel fumes.

Residents near a transportation facility,

at which diesel buses are started early

in the mornings and warmed up for

lengthy periods of time, complained of

diesel fumes entering their homes prior

to 6:00 am during clear, cold

temperature inversion days.

EPA has concluded that low-sulfur

diesel fuel would not significantly

mitigate localized impacts in Alaska,

and therefore, has determined that the

issue of localized impacts does not form

a basis for denying Alaska’s Petition for

exemption. Considering localized

impacts on the scale of a town or city,

EPA already concluded in Section IV.B.

of this Proposed rule that the sulfur

content of diesel fuel is not expected to

have a significant impact on ambient

PM10 or CO levels in Alaska, or Alaska’s

prospects for attainment with the

national ambient air quality standards

for PM10 or CO. This is because of the

minimal contribution by motor vehicles,

and likely insignificant contribution of

petroleum fuel combustion by nonmotor vehicle sources, to PM10 in areas

with PM10 attainment problems, and the

insignificant effect of diesel fuel sulfur

content on CO emissions.

Considering localized impacts on the

micro-scale level of one intersection or

several blocks, EPA believes there could

be some impacts, such as the example

presented by the Alaska Clean Air

Coalition. While EPA believes that such

impacts might range from minimal to

significant in these micro scale areas,

EPA also believes that requiring lowsulfur diesel will not effectively mitigate

the exposure risk to the elevated

ambient levels of diesel exhaust in these

areas.

Even if EPA decided to require lowsulfur diesel fuel for motor vehicles

(that is, to deny Alaska’s Petition for

Exemption), any existing micro-scale

hot spot and its associated total health

impact would substantially be

unaffected. While the localized ambient

PM10 and PM2.5 levels might be

mitigated to some extent by the use of

low-sulfur diesel fuel, the remaining

levels of localized ambient PM10 and

PM2.5 would still be a health concern.

Further, the localized ambient levels of

CO and other toxics would not be

mitigated by the use of low-sulfur diesel

fuel. Alternatively, reducing the amount

of total diesel exhaust in these microscale areas would significantly reduce

the total health impact.

Localized hot spots typically result

from high rates of emissions

concentrated in a small area, such as

emissions from a large number of

vehicles in one intersection or parking

area, over a time frame that is short

enough to not allow for effective

dispersal of those emissions under the

prevailing meteorological conditions.

This underlying problem can be most

effectively addressed by reducing the

number of vehicles (or number of

vehicles running) in the localized area,

or by reducing the amount of time the

vehicles spend (or the time the vehicles

spend running) in the localized area.

Such mitigation measures might include

traffic control measures to limit, or bans

to eliminate, vehicle traffic in those

areas, or restrictions on engine idling

while parked.

Such measures are most effectively

addressed at the local level by the

communities, businesses and local and

state governments. In the example

provided by the Alaska Clean Air

Coalition, the October 13, 1997 letter to

EPA from the Alaska Department of

Environmental Conservation indicates

that the Municipality of Anchorage is

working on addressing this issue.

It has located monitors in the vicinity

and it is working with local agencies to

explore options to help alleviate or

resolve the problem. In addition, some

changes were made to the ventilation

system of the building that had the

greatest number of complaints.

F. Year 2004 and Later Engines

On October 21, 1997 (62 FR 54693),

EPA promulgated new combined

emission standards for HC and NOX for

2004 and later heavy-duty diesel motor

vehicle engines. These standards are

more stringent than the 1998 to 2003

individual emissions standards for HC

and NOX, and are expected to achieve

a 50 percent reduction in NOX

emissions. A secondary effect of these

standards may be a decrease in

particulate emission levels. As with

engines currently marketed, the engine

manufacturers are expected to design

their future engines and emission

control systems considering the diesel

fuel sulfur content requirement that

became effective in 1993 (no greater

than 0.05 percent sulfur by weight).

However, EPA subsequently

permanently exempted that requirement

in Alaska for areas not served by the

Federal Aid Highway System (FAHS),

and temporarily exempted that

requirement for areas served by the

FAHS until October 1, 1998; thus, old

and current technology engines have

been, and are now, operating in Alaska

using higher sulfur diesel fuel. New

technology (low NOX) engines will be

operated using higher sulfur diesel fuel

in the areas not served by the FAHS,

because of the existing permanent

exemption. If EPA now grants Alaska a

permanent exemption from the diesel

fuel low-sulfur requirement in the areas

served by the FAHS, the new

technology (low NOX) engines in Alaska

would be operated on diesel fuel with

a higher sulfur content throughout the

state. One engine manufacturer cited

three concerns if this situation were to

occur.

The first concern of operating the new

technology (low NOX) engines using

high-sulfur fuel is the same concern as

operating current technology engines on

high-sulfur fuel: condensation of

sulfuric acids on the cylinder walls of

the engine, thereby causing increased

piston ring and cylinder liner wear. This

increased wear would require more

frequent replacement of the piston rings

and cylinder liners, and more frequent

oil change intervals. If the piston rings

and cylinder liners are not replaced

often enough, the sulfuric acids could

migrate past the piston rings into the

crankcase. This would cause increased

wear of other critical engine
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23251

components, such as the main bearings.

This situation would require more

frequent major engine overhauls.

The second concern of operating new

technology (low NOX) engines using

high-sulfur diesel fuel is its impact on

exhaust gas recirculation (EGR) systems.

EGR systems are likely to be extensively

used on the engines designed to meet

the 2004 and later NOX requirement.

Without EGR, sulfur in the exhaust is

not a significant problem because the

temperature of the exhaust system is

typically high enough to prevent

condensation of the sulfuric acids.

However, if some of the exhaust is

directed back into the engine intake,

which is the strategy of EGR systems,

condensation of the sulfuric acids could

occur on the walls of the EGR

components and the air intake system.

It may be possible to prevent sulfuric

acid damage to the EGR system through

the use of exotic materials in the EGR

components, which can withstand the

sulfuric acids. Alternatively, increased

maintenance could mitigate the impact

of the sulfuric acids by periodically

replacing the components of the EGR

and air intake system most susceptible

to acid damage.

The third concern of operating new

(low NOX) technology engines using

high-sulfur fuel is its impact on exhaust

after-treatment emission control

devices, such as catalytic converters.

Sulfur in fuel can render the catalyst

ineffective, allowing exhaust pollutants

to pass through the catalyst.

Catalytic converters may be used for

NOX control on some engines designed

to meet the 2004 and later emission

standards, although such catalysts have

not yet been perfected for use on heavyduty diesel engines. If they are perfected

and used, and if EPA grants Alaska an

exemption to the low-sulfur diesel fuel

requirement, they would likely be

rendered ineffective on those engines

operated in Alaska using high-sulfur

diesel fuel. This would impact the NOX

and particulate emission levels

produced by those engines in Alaska,

but would not likely affect the operation

or durability of those engines. Increased

NOX emissions are not an issue in

Alaska, since Alaska has no areas in

non-attainment with the NAAQS for

ozone. While Alaska does have two

designated non-attainment areas for

PM10, diesel-fueled motor vehicles

contribute less than one percent to the

PM10 emissions in those areas.

In conclusion, while using highersulfur diesel fuel in new technology

(low-NOX) diesel engines may increase

certain maintenance costs for owners

and operators of those engines,

depending on the engine-specific

technology and materials used, EPA

believes that those potential costs would

be mitigated to some extent by the lower

cost of the higher-sulfur diesel fuel and

would be much less than the total

potential costs of requiring low-sulfur

diesel fuel in Alaska. Further, EPA

believes that the potential air quality

benefits that would be forgone by

allowing the use of higher-sulfur diesel

fuel in new technology (low NOX)

engines are insignificant in Alaska.

Therefore, based on the concerns about

operating new technology (low NOX)

engines on higher sulfur diesel fuel,

EPA concludes that granting Alaska’s

petition is appropriate under section

325.

G. Manufacturers Emissions Warranty

and Recall Liability

The Engine Manufacturers

Association (EMA) submitted comments

on April 10, 1996, to the docket for

previous Federal Register Notices

related to Alaska’s Petition for

Exemption (this Proposed rule uses that

same docket), and to EPA concerning

warranty and recall liability. The EMA

stated that 1994 and later heavy-duty

diesel engines that are designed to meet

the 1994 emissions standards with the

use of low-sulfur diesel fuel, and which

are operated on high sulfur diesel fuel,

will not comply with those 1994

emission standards. Consequently, if

EPA grants Alaska an exemption from

meeting the sulfur requirement for

highway diesel fuel, EPA should also

include a corresponding exemption for

heavy-duty diesel engine manufacturers

and the users of the vehicles in which

these engines are placed. The heavyduty diesel engine manufacturers

should be exempted from any liability

for ensuring that their 1994 and later

model year product lines meet the 1994

and later model year emission standards

for engines sold and used in Alaska.

They should also be exempted from the

warranty requirements of secton 207 of

the Clean Air Act, and from liability

(including fines and recalls) for any

engine affected by the fuel exemption.

Users of vehicles in which 1994 and

later model year heavy-duty engines are

placed should be exempted from

tampering liability in the exempted

territory. Finally, the exemption should

allow either the continued use of 1991

type heavy-duty diesel engine

technology or the use of 1994 type

heavy-duty diesel engines with the

after-treatment device removed.

In support of its position, the EMA

offered the following explanation. In

promulgating the 1994 and later heavy

duty engine emission standards, EPA

recognized that, for several reasons, a

reduction in diesel fuel sulfur content

was required by the engine

manufacturers in order to enable their

engines to meet the 1994 0.10 g/bhp-hr

particulate emission standard. First, fuel

sulfur contributes to diesel engine

emissions. Approximately two percent

of the sulfur in the fuel is directly

emitted as sulfate particulates, which

cannot be controlled by engine

modifications since the combustion

process does not remove any sulfur or

change its form into a non-particulate

substance. Second, catalyzed aftertreatment devices are much more

effective in the removal of the soluble

organic fraction of particulates than

non-catalyzed devices. However, some

catalysts react with the SO2 in the

exhaust and form additional sulfates,

such that total particulates have been

found to be higher with an oxidation

catalyst or a catalyzed trap than without

such after-treatment device when highsulfur diesel fuel is used. Third,

prolonged use of high-sulfur diesel fuel

in vehicles equipped with oxidation

catalysts will render the catalytic device

inoperative, and thus impair the

emissions control equipment. There is

also a concern that using a high sulfur

content fuel over a long period of time

may have a tendency to cause plugging

of ceramic monolith-type filters, which

could lead to more serious engine

malfunction and warranty claims.

On October 9, 1996, EPA received a

similar comment on behalf of the EMA.

In this comment, the EMA concerns are

reiterated, and EPA is urged to provide

a corresponding exemption to the

Alaska exemption for catalyzed engines

that would allow the owners to remove

the catalysts, allow the manufacturers to

sell the engines without the catalyst

installed, and limit the manufacturer’s

obligation to warrant the emissions

performance of such engines. The

comment states that vehicle owners are

already experiencing engine failures

directly resulting from catalyst plugging,

and this problem will be worse in cold

weather. The comment also argues that

in areas where high sulfur diesel fuel is

permitted, the owners of catalyzed

engines are not achieving the particulate

matter reductions for which their

engines are designed, and it makes no

sense for EPA to require the costly

emission technology that actually has an

adverse environmental impact.

In its August 5, 1997 submittal to

EPA, the Alaska Department of

Environmental Conservation noted that

it had recent discussions with industry.

Those discussions indicated that some

vehicles have been experiencing

problems at extreme cold temperatures

on the North Slope, but industry
23252 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

13This subsection makes it unlawful for any

person to introduce or cause or allow the

introduction into any motor vehicle of diesel fuel

which they know or should know contains a

concentration of sulfur in excess of 0.05 percent (by

weight). It would clearly be impossible to hold

persons liable for misfueling with diesel fuel with

a sulfur content higher than 0.05 percent by weight,

when such fuel is permitted to be sold or dispensed

for use in motor vehicles. The proposed exemptions

would include exemptions from this prohibition,

but not include the prohibitions in section 211(g)(2)

relating to the minimum cetane index or alternative

aromatic levels.

attributes these problems to temperature

and not the sulfur content of the fuel.

Information collected by EPA from

several heavy-duty engine

manufacturers demonstrates that

catalyst plugging is mainly a cold

temperature problem and not a highsulfur fuel issue. For example, Cummins

Engine Company attests that plugging is

more a function of cold temperature

operation than it is of fuel sulfur levels.

Additionally, data from other heavyduty engine manufacturers further

supports this statement. The EPA is also

aware that the majority of the plugged

catalyst problems have been eliminated.

A letter to EPA of September 19, 1997,

on behalf of the EMA, indicated that the

immediate problems that led to EMA’s

request for possible enforcement

discretion regarding the removal of

catalytic converters because of the

plugging problem have been resolved.

However, EMA and its members

continue to ‘‘have concerns regarding

the use of high-sulfur fuel.’’

Accordingly, EPA sees no need for an

exemption that allows the removal of

catalysts in the field, or that permits

manufacturers to introduce into

commerce catalyzed-engines without

catalysts, or that limits a manufacturer’s

obligation to warrant the emissions

performance of an engine.

H. New National Ambient Air Quality

Standards

EPA has recently promulgated more

stringent national ambient air quality

standards (NAAQS) for ozone and

particulate matter. However, EPA has

not yet published guidance for

implementation of those standards, and

EPA does not have the air quality

monitoring data for Alaska by which to

base its likely attainment status,

especially for PM2.5. Consequently, it is

not possible for EPA to address the

impact of today’s proposed rule on the

ability of Alaska to attain the new

NAAQS. EPA is therefore setting aside

the issue of attainment with the new

NAAQS in today’s rule. EPA reserves

the right to revisit this issue in the

future, after public notice and comment,

if the exemption is no longer

appropriate under section 325 based on

consideration of the factors relevant

under that section.

I. Status of Certain Marine Highway

Communities

In granting both a permanent and a

temporary exemption in its March 22,

1994 Notice, EPA distinguished

between those areas served by the

Federal Aid Highway System and those

not served by the Federal Aid Highway

System. Areas not served by the Federal

Aid Highway System were deemed to be

remote areas and qualified for the

permanent exemption. Areas served by

the Federal Aid Highway System,

including the Marine Highway System,

were qualified only for the temporary

exemption. In letters of February 9, 1995

and April 12, 1995, the Alaska

Department of Environmental

Conservation requested that EPA

consider certain communities served by

the Marine Highway System, and one

served only by a barge line, on the

Alaska Peninsula, Kodiak Island and the

Aleutian Islands to be remote

communities and subject to the

permanent exemption. It indicated that

these communities have few vehicles

(all but three have an average daily

traffic of 499 vehicles or less) and

highway diesel fuel sales amount to

only a small fraction of total diesel fuel

sales (e.g., only about one percent or

less). EPA decided to not address this

issue in today’s proposed rule because

today’s proposed rule to effectively

grant a statewide permanent exemption

makes this issue moot. However, if EPA

reconsiders or withdraws its decision to

grant a permanent exemption for areas

served by the Federal Aid Highway

System, this issue may need to be

addressed at that time.

VI. Decision for Permanent Exemption

In this notice, the Agency is

proposing to grant a permanent

exemption from the diesel fuel sulfur

content requirement of 0.05 percent by

weight to those areas in Alaska served

by the Federal Aid Highway System. For

the same reasons, the Agency also is

proposing to grant a permanent

exemption from those provisions of

section 211(g)(2) 13 of the Act that

prohibit the fueling of motor vehicles

with high-sulfur diesel fuel. Sections

211(g) and 211(i) both restrict the use of

high-sulfur motor vehicle diesel fuel.

Further, consistent with the March 22,

1994 Notice of Final Decision (59 FR

13610), dyeing diesel fuel to be used in

nonroad applications will be

unnecessary in Alaska as long as the

diesel fuel has a minimum cetane index

of 40. The motor vehicle diesel fuel

regulations, codified at 40 CFR 80.29,

provide that any diesel fuel which does

not show visible evidence of the dye

solvent red 164 shall be considered to

be available for use in motor vehicles

and subject to the sulfur and cetane

index requirements. The Alaska

Department of Environmental

Conservation and various refiners in

Alaska have indicated to EPA that all

diesel fuel manufactured for sale and

marketed in Alaska, for use in both

motor vehicle and nonroad applications,

meets the minimum cetane requirement

for motor vehicle diesel fuel.

Today’s proposed rule would exempt

diesel fuel in Alaska from the sulfur

requirement. Therefore, as long as the

diesel fuel in Alaska has a minimum

cetane index of 40, dyeing diesel fuel to

be used in nonroad applications will be

unnecessary in Alaska. However, in the

event high-sulfur diesel fuel is shipped

from Alaska to the lower-48 states, it

would be necessary for the shipping

facility to add dye to the noncomplying

fuel before it is introduced into

commerce in the lower-48 states. In

addition, supporting documentation

(e.g., product transfer documents) must

clearly indicate the fuel may not comply

with the sulfur standard for motor

vehicle diesel fuel and is not to be used

as a motor vehicle fuel. Conversely, EPA

will not require high-sulfur diesel fuel

to be dyed if it is being shipped from the

lower-48 states to Alaska, but

supporting documentation must

substantiate that the fuel is only for

shipment to Alaska and that it may not

comply with the sulfur standard for

motor vehicle diesel fuel.

EPA will assume that all diesel fuel

found in any state, except in the state of

Alaska, is intended for sale in any state

and subject to the diesel fuel standards,

unless the supporting documentation

clearly substantiates the fuel is to be

shipped only to Alaska. The

documentation should further clearly

state that the fuel may not comply with

the Federal diesel fuel standards. If such

product enters the market of any state,

other than Alaska (e.g., is on route to or

at a dispensing facility in a state other

than Alaska), and is found to exceed the

applicable sulfur content standard, all

parties will be presumed liable, as set

forth in the regulations. However, EPA

will consider this evidence in

determining whether a party caused the

violation.

With regard to the storage of diesel

fuel in any state other than Alaska, a

refiner or transporter will not be held

liable for diesel fuel that does not

comply with the applicable sulfur

content standard and dye requirement if

it can show that the diesel fuel is truly
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules 23253

14 58 FR 51736 (October 4, 1993)

15 Id. at section 3(f)(1)-(4).

being stored and is not being sold,

offered for sale, supplied, offered for

supply, transported or dispensed.

However, once diesel fuel leaves a

refinery or transporter facility, a party

can no longer escape liability by

claiming that the diesel fuel was simply

in storage. Although diesel fuel may

temporarily come to rest at some point

after leaving a refinery or transporter

facility, the intent of the regulations is

to cover all diesel fuel being distributed

in the marketplace. Once diesel fuel

leaves a refinery or shipping facility it

is in the marketplace and as such is in

the process of being sold, supplied,

offered for sale or supply, or

transported.

The basis for today’s proposed rule is

that compliance with the motor vehicle

sulfur requirement in Alaska for areas

served by the Federal Aid Highway

System is unreasonable because it

would create an economic burden for

refiners, distributors and consumers of

diesel fuel. This economic burden is

created by unique meteorological

conditions in Alaska and a set of unique

distillate product demands in the state.

As a result of these conditions, it is

reasonable to not mandate that lowsulfur motor vehicle diesel fuel be

available for use in Alaska for areas

served by the Federal Aid Highway

System.

In the August 19, 1996 Notice of Final

Decision (61 FR 42812), the EPA

believed that a 24-month continuation

of the temporary exemption for areas

served by the Federal Aid Highway

System from the diesel fuel sulfur

content requirement was reasonable and

appropriate so that the Agency could

consider recent comments on the state’s

petition. A permanent exemption was

not appropriate at that time because

EPA had not yet verified all relevant

information and comments submitted

by other interested parties.

Alaska’s December 12, 1995 petition

included a compilation of information

provided by a Task Force (in which an

EPA representative participated) that

was established after the February 12,

1993 petition to further evaluate the

conditions as described in that earlier

petition. These conditions included: the

availability of arctic-grade low-sulfur

diesel fuel from out-of-state refiners, the

costs associated with importing the fuel,

and the costs of storing and distributing

the fuel to areas on the highway system.

The conditions and factors that were

identified in the initial petition were

expanded upon in the task force review.

At that time the Agency believed there

were several issues that merited further

consideration prior to making a final

decision to act on the state’s request for

a permanent exemption. These issues

included consideration of an alternative

fuel standard or fuel, local

environmental effects, manufacturers

emissions warranty and recall liability,

and the impact of EPA possibly

tightening motor vehicle emission

standards for model year 2004 and later

heavy-duty engines (which EPA

subsequently promulgated in 1997).

The comments and other issues that

are summarized in this notice were

subsequently considered by the Agency,

prior to issuing this proposed rule on

the State’s request for a permanent

exemption.

VII. Public Participation

Following the August 27, 1993

publication of EPA’s proposed decision

to grant the first exemption from the

low-sulfur diesel fuel requirements

requested by Alaska, there was a thirty

day comment period, during which

interested parties could request a

hearing or submit comments on the

proposal. The Agency received no

request for a hearing. Comments were

received both in support of the proposal

to grant the exemption and expressing

concerns over the impact of granting the

exemption. These comments were

considered in the Agency’s decision to

grant the initial temporary exemption.

The Agency received Alaska’s request

for a permanent exemption for the

Federal Aid Highway System areas in

December of 1995. Since that time, the

Agency has received comments on the

petition from the Alaska Center for the

Environment, the Alaska Clean Air

Coalition, and the Engine Manufacturers

of America. EPA believed the issues

raised by the comments that were

submitted and possible tightening of

heavy-duty motor vehicle engine

standards in 2004 necessitated further

consideration before the Agency made a

decision on Alaska’s request for a

permanent waiver.

The Agency is publishing this action

as a proposed rule to allow interested

parties an additional opportunity to

request a hearing or to submit

comments. The comment period will

close May 28, 1998, unless the Agency

receives a request to testify at a public

hearing by May 12, 1998. If EPA

receives a request to testify at a public

hearing, the comment period will be

extended until 30 days after the public

hearing. Any adverse comments

received by the close of the comment

period will be addressed in a

subsequent final rule that will be

published in the Federal Register.

VIII. Statutory Authority

Authority for the action in this

proposed rule is in sections 211 (42

U.S.C. 7545) and 325(a)(1) (42 U.S.C.

7625-1(a)(1)) of the Clean Air Act, as

amended.

IX. Administrative Designation and

Regulatory Analysis

Under Executive Order 12866 14, the

Agency must determine whether a

regulation is ‘‘significant’’ and therefore

subject to OMB review and the

requirements of the Executive Order.

The Order defines ‘‘significant

regulatory action’’ as one that is likely

to result in a rule that may:

(1) Have an annual effect on the

economy of $100 million or more, or

adversely affect in a material way the

economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local or tribal governments of

communities;

(2) Create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency;

(3) Materially alter the budgetary

impact of entitlements, grants, user fees,

or loan programs or the rights and

obligations of recipients thereof, or

(4) Raise novel legal or policy issues

arising out of legal mandates, the

President’s priorities, or the principles

set forth in this Executive Order. 15

It has been determined that this

proposed rule is not a ‘‘significant

regulatory action’’ under the terms of

Executive Order 12866 and is therefore

not subject to OMB review.

X. Compliance With the Regulatory

Flexibility Act

The Regulatory Flexibility Act, 5

U.S.C. 601–612, requires that Federal

Agencies examine the impacts of their

regulations on small entities. The act

requires an Agency to prepare a

regulatory flexibility analysis in

conjunction with notice and comment

rulemaking, unless the Agency head

certifies that the rule will not have a

significant impact on a substantial

number of small entities. 5 U.S.C.

605(b).

Today’s proposed action to make

permanent the temporary exemption of

the low-sulfur diesel fuel requirements

in the State of Alaska, will not result in

any additional economic burden on any

of the affected parties, including small

entities involved in the oil industry, the

automotive industry and the automotive

service industry. EPA is not imposing

any new requirements on regulated
23254 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Proposed Rules

entities, but instead is continuing an

exemption from a requirement, which

makes it less restrictive and less

burdensome.

Therefore, the Administrator certifies

that this proposed rule will not have a

significant impact on a substantial

number of small entities, and that a

regulatory flexibility analysis is not

necessary in connection with this

proposed rule.

XI. Paperwork Reduction Act

The Paperwork Reduction Act of

1980, 544 U.S.C. 3501 et seq., and

implementing regulations, 5 CFR part

1320, do not apply to this action as it

does not involve the collection of

information as defined therein.

XII. Unfunded Mandates Act

Under section 202 of the Unfunded

Mandates Reform Act of 1995, EPA

must prepare a budgetary impact

statement to accompany any proposed

or final rule that includes a federal

mandate with estimated costs to the

private sector of $100 million or more,

or to state, local, or tribal governments

of $100 million or more in the aggregate.

Under section 205, EPA must select the

most cost-effective and least

burdensome alternative that achieves

the objectives of the rule and is

consistent with statutory requirements.

Section 203 requires EPA to establish a

plan for informing and advising any

small governments that may be

significantly or uniquely impacted by

the rule.

EPA has determined that this

proposed rule imposes no new federal

requirements and does not include any

federal mandate with costs to the

private sector or to state, local, or tribal

governments. Therefore, the

Administrator certifies that this

proposed rule does not require a

budgetary impact statement.

List of Subjects

40 CFR Part 69

Air pollution control, Alaska.

40 CFR Part 80

Environmental protection, Diesel fuel,

Fuel additives, Gasoline, Imports,

Labeling, Motor vehicle pollution,

Penalties, Reporting and recordkeeping

requirements.

Dated: April 14, 1998.

Carol M. Browner,

Administrator.

For the reasons set out in the

preamble, title 40, chapter I of the Code

of Federal Regulations is proposed to be

amended as follows:

PART 69—SPECIAL EXEMPTIONS

FROM REQUIREMENTS OF THE

CLEAN AIR ACT

1. The authority citation for part 69 is

revised to read as follows:

Authority: 42 U.S.C. 7545(1) and (g), 7625–

1.

2. Subpart E consisting of § 69.51 is

added to read as follows:

Subpart E—Alaska

Sec.

69.51 Exemptions.

Subpart E—Alaska

§ 69.51 Exemptions.

(a) Persons in the state of Alaska,

including but not limited to, refiners,

importers, distributors, resellers,

carriers, retailers or wholesale

purchaser-consumers may manufacture,

introduce into commerce, sell, offer for

sale, supply, dispense, offer for supply,

or transport diesel fuel, which fails to

meet the sulfur concentration or dye

requirements of 40 CFR 80.29, in the

state of Alaska if the fuel is used only

in the state of Alaska.

(b) Persons outside the state of Alaska,

including but not limited to, refiners,

importers, distributors, resellers,

carriers, retailers or wholesale

purchaser-consumers may manufacture,

introduce into commerce, sell, offer for

sale, supply, offer for supply, or

transport diesel fuel, which fails to meet

the sulfur concentration or dye

requirements of § 80.29, outside the

state of Alaska if the fuel is:

(1) Used only in the state of Alaska;

and

(2) Accompanied by supporting

documentation that clearly substantiates

the fuel is for use only in the state of

Alaska and does not comply with the

Federal sulfur standard applicable to

motor vehicle diesel fuel.

PART 80—REGULATION OF FUELS

AND FUEL ADDITIVES

1. The authority citation for part 80

continues to read as follows:

Authority: Sec. 114, 211, and 301(a) of the

Clean Air Act, as amended (42 U.S.C. 7414,

7545 and 7601(a)).

2. Section 80.29 is amended by

revising paragraph (a)(1) introductory

text to read as follows:

§ 80.29 Controls and prohibitions on

diesel fuel quality.

(a) Prohibited activities. (1) Beginning

October 1, 1993, no person, including

but not limited to, refiners, importers,

distributors, resellers, carriers, retailers

or wholesale purchaser-consumers,

shall manufacture, introduce into

commerce, sell, offer for sale, supply,

dispense, offer for supply or transport

any diesel fuel for use in motor vehicles,

except as provided in 40 CFR 69.51,

unless the diesel fuel:

* * * * *

[FR Doc. 98–10710 Filed 4–27–98; 8:45 am]

BILLING CODE 6560–50–U

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 70

[FRL–6005–1]

Operating Permits Program; Notice of

Availability of Draft Rules; Extension

of Comment Period

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Extension of comment period

for notice of availability of draft rules.

SUMMARY: On March 25, 1998, EPA

published a notice in the Federal

Register announcing opportunity for

public review and comment on portions

of the draft preamble and all but two

sections of draft revisions to the

operating permits regulations in 40 CFR

part 70. (The remaining portions of the

preamble and regulations will be made

available at a later date.) The public

review period for that notice ends April

24, 1998. This action extends the public

review period for that notice until May

26, 1998.

DATES: Comments on the draft preamble

and regulatory revisions must be

received by May 26, 1998.

ADDRESSES: The draft preamble and

regulatory revisions are available in

EPA’s Air Docket number A–93–50 as

items VI–A–5 and VI–A–4, respectively.

This docket is available for public

inspection and copying between 8:30

a.m. and 5:30 p.m., Monday through

Friday, at the address listed below. A

reasonable fee may be charged for

copying. The address of the EPA air

docket is: EPA Air Docket (6102),

Attention: Docket Number A–93–50,

Room M–1500, Waterside Mall, 401 M

Street SW, Washington, DC, 20460.

Requests for material may be made by

telephone at 202–260–7548.

The drafts may also be downloaded

from the Internet at: http://

www.epa.gov/ttn/oarpg/t5pgm.html.

Comments on the materials referenced

in today’s notice must be mailed (in

duplicate if possible) to: EPA Air Docket

(6102), Attention: Docket No. A–93–50,

at the above address. Please identify

comments as concerning today’s notice

of availability of items VI–A–4 and VI–

A–5.