[Federal Register Volume 70, Number 197 (Thursday, October 13, 2005)]
[Proposed Rules]
[Pages 59690-59704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-20519]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 69

[OAR-2004-0229; FRL-7982-6]
RIN 2060-AJ72


Control of Air Pollution From Motor Vehicles and Nonroad Diesel 
Engines: Alternative Low-Sulfur Diesel Fuel Transition Program for 
Alaska

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing an implementation date of June 1, 2010 for 
the sulfur, cetane and aromatics requirements for highway, nonroad, 
locomotive and marine diesel fuel produced or imported for, distributed 
to, or used in the rural areas of Alaska. As of the implementation 
date, diesel fuel used in these applications would

[[Page 59691]]

have to meet a 15 ppm (maximum) sulfur content standard. This action 
would allow full implementation of the programs for highway and nonroad 
diesel fuels in Alaska while providing some limited additional leadtime 
for development of any necessary changes to the fuel distribution 
system in rural Alaska. This additional leadtime is appropriate given 
the circumstances of the rural areas, including the expected delay in 
time before use of new diesel engines requiring sulfur controlled 
diesel fuel. In 2010 highway and nonroad fuel in rural Alaska would be 
regulated according to the implementation schedule of fuel property 
standards applicable in the rest of the U.S., providing the full 
environmental benefits of these programs to rural Alaska as well. 
Locomotive and marine diesel fuel used in rural areas of Alaska would 
meet the 15ppm standard two years earlier than the rest of the U.S., so 
that all NRLM diesel fuel in rural areas of Alaska would meet the 15ppm 
standard in 2010. EPA is not proposing changes to or reopening the 
diesel fuel rules as they apply to the other areas of Alaska. We have 
not received any information that would warrant such action, and the 
State has not requested such action. This proposal is consistent with 
the State's request and comments on the NRLM rule.

DATES: Comments must be received on or before January 11, 2006. 
However, since we do not plan to hold a public hearing on this proposed 
rule, any requests for a public hearing must be received on or before 
November 14, 2005. Requests for a public hearing must be made to the 
person identified in the FOR FURTHER INFORMATION CONTACT section.

ADDRESSES: Submit your comments, identified by Docket ID No. OAR-2004-
0229, by one of the following methods:
    A. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the on-line instructions for submitting comments.
    B. Agency Website: http://www.epa.gov/edocket. EDOCKET, EPA's 
electronic public docket and comment system, is EPA's preferred method 
for receiving comments. Follow the on-line instructions for submitting 
comments.
    C. E-mail: <a href="/cdn-cgi/l/email-protection#95f4b8f4fbf1b8e7b8d1faf6fef0e1d5f0e5f4bbf2fae3"><span class="__cf_email__" data-cfemail="a2c38fc3ccc68fd08fe6cdc1c9c7d6e2c7d2c38cc5cdd4">[email protected]</span></a>, Attention Docket ID No. OAR-
2004-0229, Fax: 202-566-0805.
    D. Mail: Attention Docket ID No. OAR-2004-0229, Air Docket, 
Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460.
    E. Hand Delivery: EPA Docket Center, (EPA/DC) EPA West, Room B102, 
1301 Constitution Ave., NW., Washington, DC., Attention Docket ID No. 
OAR-2004-0229. Such deliveries are only accepted during the Docket's 
normal hours of operation from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. Special arrangements should be made 
for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. OAR-2004-0229. 
EPA's policy is that all comments received will be included in the 
public docket without change and may be made available online at http://www.epa.gov/edocket, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through EDOCKET, regulations.gov, or e-
mail. The EPA EDOCKET and the federal regulations.gov websites are 
``anonymous access'' systems, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through EDOCKET or regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit EDOCKET on-line or see the Federal Register of May 31, 
2002 (67 FR 38102). For additional instructions on submitting comments, 
go to Unit I of the SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the EDOCKET index 
at http://www.epa.gov/edocket. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in EDOCKET or in hard 
copy at the HQ EPA Docket Center, Air Docket, EPA West, Room B102, 1301 
Constitution Ave., NW, Washington, DC. This Docket Facility is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The Docket telephone number is (202) 566-1742. The Public 
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744.

FOR FURTHER INFORMATION CONTACT: David Korotney, Assessment and 
Standards Division, Office of Transportation and Air Quality, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; telephone number: (734) 214-4507; fax number: (734) 214-4051; e-
mail address: <a href="/cdn-cgi/l/email-protection#462d2934293228233f682227302f220623362768212930"><span class="__cf_email__" data-cfemail="305b5f425f445e55491e5451465954705540511e575f46">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Does This Action Apply to Me?

    You will be regulated by this action if you produce, import, 
distribute, or sell diesel fuel for use in the rural areas of Alaska. 
The following table gives some examples of entities that may have to 
follow the regulations. But because these are only examples, you should 
carefully examine the regulations in 40 CFR part 80. If you have 
questions, call the person listed in the FOR FURTHER INFORMATION 
CONTACT section of this preamble:

------------------------------------------------------------------------
                                                         NAICS     SIC
      Examples of potentially regulated entities         codes    codes
                                                          \a\      \b\
------------------------------------------------------------------------
Petroleum Refiners....................................    32411     2911
Petroleum Bulk Stations, Terminals,...................    42271     5171
Petroleum and Products Wholesalers....................    42272     5172
Diesel Fuel Trucking..................................    48422     4212
                                                          48423     4213
Diesel Service Stations...............................    44711    5541
                                                          44719
------------------------------------------------------------------------
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

What Should I Consider as I Prepare My Comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through 
EDOCKET, regulations.gov or e-mail. Clearly mark the part or all of the 
information that you claim to be CBI. For CBI information in a disk or 
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as 
CBI and then identify electronically within the disk or CD ROM the 
specific information that is

[[Page 59692]]

claimed as CBI. In addition to one complete version of the comment that 
includes information claimed as CBI, a copy of the comment that does 
not contain the information claimed as CBI must be submitted for 
inclusion in the public docket. If you submit the copy that does not 
contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM 
clearly that it does not contain CBI. Information so marked will not be 
disclosed except in accordance with procedures set forth in 40 CFR part 
2. If you have any questions about CBI or the procedures for claiming 
CBI, please consult the person identified in the FOR FURTHER 
INFORMATION CONTACT section.
    2. Tips for Preparing Your Comments. When submitting comments, 
remember to:
    a. Identify the rulemaking by docket number and other identifying 
information (subject heading, Federal Register date and page number).
    b. Follow directions--The agency may ask you to respond to specific 
questions or organize comments by referencing a Code of Federal 
Regulations (CFR) part or section number.
    c. Explain why you agree or disagree; suggest alternatives and 
substitute language for your requested changes.
    d. Describe any assumptions and provide any technical information 
and/or data that you used.
    e. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    f. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    g. Explain your views as clearly as possible, avoiding the use of 
profanity or personal threats.
    h. Make sure to submit your comments by the comment period deadline 
identified.

How Can I Get Copies of This Document and Other Related Information?

    Docket. EPA has established an official public docket for this 
action under Docket ID No. OAR-2004-0229. The official public docket 
consists of the documents specifically referenced in this action, any 
public comments received, and other information related to this action. 
Although a part of the official docket, the public docket does not 
include Confidential Business Information (CBI) or other information 
whose disclosure is restricted by statute. The official public docket 
is the collection of materials that is available for public viewing at 
the Air Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102, 
1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Reading 
Room is (202) 566-1742, and the telephone number for the Air Docket is 
(202) 566-1742.
    Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the ``Federal Register'' 
listings at http://www.epa.gov/fedrgstr/. An electronic version of the 
public docket is available through EPA's electronic public docket and 
comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the 
index listing of the contents of the official public docket, and to 
access those documents in the public docket that are available 
electronically. Once in the system, select ``search,'' then key in the 
appropriate docket identification number.
    Certain types of information will not be placed in the EPA Dockets. 
Information claimed as CBI and other information whose disclosure is 
restricted by statute, which is not included in the official public 
docket, will not be available for public viewing in EPA's electronic 
public docket. EPA's policy is that copyrighted material will not be 
placed in EPA's electronic public docket but will be available only in 
printed, paper form in the official public docket. To the extent 
feasible, publicly available docket materials will be made available in 
EPA's electronic public docket. When a document is selected from the 
index list in EPA Dockets, the system will identify whether the 
document is available for viewing in EPA's electronic public docket. 
Although not all docket materials may be available electronically, you 
may still access any of the publicly available docket materials through 
the docket facility identified above.
    For public commenters, it is important to note that EPA's policy is 
that public comments, whether submitted electronically or in paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and without change, unless the comment 
contains copyrighted material, CBI, or other information whose 
disclosure is restricted by statute. When EPA identifies a comment 
containing copyrighted material, EPA will provide a reference to that 
material in the version of the comment that is placed in EPA's 
electronic public docket. The entire printed comment, including the 
copyrighted material, will be available in the public docket.
    Public comments submitted on computer disks that are mailed or 
delivered to the docket will be transferred to EPA's electronic public 
docket. Public comments that are mailed or delivered to the Docket will 
be scanned and placed in EPA's electronic public docket. Where 
practical, physical objects will be photographed, and the photograph 
will be placed in EPA's electronic public docket along with a brief 
description written by the docket staff.
    For additional information about EPA's electronic public docket 
visit EPA Dockets online or see 67 FR 38102, May 31, 2002.

Outline of This Preamble

I. Background
    A. How Was Alaska Treated in the Highway Diesel Rule?
    B. How Was Alaska Treated in the NRLM Diesel Rule?
    C. Alaska's Highway Submission and Comments to NRLM Proposal
II. What Is EPA Proposing?
    A. Highway Diesel Fuel
    B. Nonroad, Locomotive, and Marine Diesel Fuel
    C. Summary of Proposed Sulfur Standards for Alaska
III. Why Are We Proposing a June 1, 2010 Effective Date for Rural 
Areas of Alaska?
    A. Highway Diesel Fuel
    1. Ensure an Adequate Supply (Either Through Production or 
Imports) of 15 ppm Sulfur Diesel Fuel To Meet the Demand of Any 2007 
or Later Model Year Vehicles
    2. Ensure Sufficient Retail Availability of Low Sulfur Fuel for 
New Vehicles in Alaska
    3. Address the Growth of Supply and Availability Over Time as 
More New Vehicles Enter the Fleet
    4. Include Measures To Ensure Segregation of the 15 ppm Fuel and 
Avoid Contamination and Misfueling
    5. Ensure Enforceability
    B. NRLM Diesel Fuel
IV. What is the Emissions Impact of Today's Proposal?

[[Page 59693]]

V. Public Participation
    A. How and to Whom Do I Submit Comments?
    B. Will There Be a Public Hearing?
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Federalism
    F. Consultation and Coordination With Indian Tribal Governments
    G. Protection of Children From Environmental Health & Safety 
Risks
    H. Actions that Significantly Affect Energy Supply, 
Distribution, or Use
    I. National Technology Transfer and Advancement Act
VII. Statutory Provisions and Legal Authority

I. Background

A. How Was Alaska Treated in the Highway Diesel Rule?

    The nationwide implementation dates (including all of Alaska) for 
highway diesel fuel at 40 CFR 80.500 et seq. (66 FR 5002, January 18, 
2001) are shown in Table I.A-1.

Table IA-1.--Federal Implementation Dates for Highway Diesel Fuel 15 ppm
                                Standard
------------------------------------------------------------------------
                 Date                           Applicable parties
------------------------------------------------------------------------
June 1, 2006..........................  Refiners and importers.
July 15, 2006.........................  Downstream facilities except
                                         retailers and wholesale-
                                         purchaser consumers.
September 1, 2006.....................  Retailers and wholesale-
                                         purchaser consumers.
------------------------------------------------------------------------

    These implementation dates begin the transition of the nation to 
ultra-low sulfur (15 ppm sulfur, maximum) highway diesel fuel from the 
current low sulfur (500 ppm sulfur, maximum) diesel fuel.\1\ Until 
2010, at least 80 percent of each refiner's production (or imports) 
must meet the 15 ppm sulfur standard, with the remaining 20 percent or 
less meeting the 500 ppm sulfur standard-that is, the 80/20 Temporary 
Compliance Option. Exceptions are made for EPA-approved small refiners, 
which may produce all their highway fuel to the 500 ppm sulfur standard 
until later years, and refiners and importers that obtain early use 
credits, which would allow them to produce or import more than 20 
percent of their diesel fuel to the 500 ppm sulfur standard until 2010. 
However, because of the sensitivity of the 2007 and later model year 
highway engines and emission control systems to fuel with high sulfur 
content, those engines may not be fueled with diesel fuel having a 
sulfur content of greater than 15 ppm. This requires that all 500 ppm 
sulfur highway diesel fuel (i.e., from the 80/20 Temporary Compliance 
Option, credit-trading, or by EPA-approved small refiners) be 
segregated from the 15 ppm sulfur highway diesel fuel and labeled for 
use, and dispensed, only in 2006 and earlier highway vehicles and 
engines.
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    \1\ Alaska was granted an exemption from the 500 ppm standard 
until June 1, 2006.
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    Since the beginning of the 500 ppm highway diesel fuel program in 
1993, we have granted Alaska exemptions from both the 500 ppm highway 
diesel fuel sulfur standard and the nonhighway dye provisions of 40 CFR 
80.29 because of its unique geographical, meteorological, air quality, 
and economic factors.\2\ We granted temporary exemptions for areas of 
the State served by the Federal Aid Highway System (the urban areas), 
and a permanent exemption for the remaining areas (the rural areas).
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    \2\ Under Section 211(i)(4) of the Clean Air Act, the States of 
Alaska and Hawaii may be exempted from the 500 ppm sulfur content 
standard (and cetane, automatics and dye requirements) of Section 
211(i). Copies of information regarding Alaska's petition for 
exemption under Section 211(i)(4), subsequent requests by Alaska, 
public comments received, and actions by EPA are available in public 
docket A-96-26.
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    On December 12, 1995, Alaska submitted a petition for a permanent 
exemption for all areas of the State served by the Federal Aid Highway 
System, that is, those areas previously covered only by a temporary 
exemption. While considering that petition, we started work on a 
nationwide rule to consider more stringent highway diesel fuel 
requirements for sulfur content. In our subsequent highway diesel final 
rule (66 FR 5002, January 18, 2001) the highway engine emission 
standards were applied fully in Alaska, and the permanent exemption for 
rural Alaska from the 500 ppm sulfur standard of 40 CFR 80.29 
terminates upon the implementation date of the new 15 ppm sulfur 
standard in 2006. However, based on factors unique to Alaska, we 
provided the State with: (1) an extension of the temporary exemption 
from the 500 ppm sulfur standard in the urban areas until the 
implementation date of the new 15 ppm sulfur standard for highway 
diesel fuel in 2006, (2) an opportunity to request an alternative 
implementation plan for the 15 ppm sulfur diesel fuel program, and (3) 
a permanent exemption from the diesel fuel dye provisions. In that 
rule, our goal was to establish a mechanism whereby modifications could 
be made, as appropriate, for transitioning Alaska to the ultra-low 
sulfur (15 ppm sulfur maximum) highway diesel fuel program in a manner 
that minimizes costs while still ensuring that model year 2007 and 
later highway vehicles and engines receive the 15 ppm sulfur diesel 
fuel they need.

B. How Was Alaska Treated in the NRLM Diesel Rule?

    The nationwide implementation date for nonroad, locomotive, and 
marine (NRLM) diesel fuel at 40 CFR 80.500 et seq. (69 FR 38958, June 
29, 2004) is June 1, 2007 for refiners and importers. This 
implementation date begins the first step of a two-step program of 
transitioning the nation to 15 ppm sulfur NRLM diesel fuel from 
uncontrolled non-highway diesel fuel. In this first step beginning in 
2007, all NRLM diesel fuel produced or imported must meet the 500 ppm 
sulfur standard and applicable cetane or aromatic standard. Facilities 
downstream of the refiners and importers must meet the 500ppm standard 
on other dates depending on their location and type of facility, as 
shown below:

                Table I.B-1.--Federal Implementation Dates for NRLM Diesel Fuel 500 ppm Standard
----------------------------------------------------------------------------------------------------------------
 Implementation date for urban Alaska      Implementation date for all other
      and Northeast/Mid-Atlantic                         areas                         Applicable parties
----------------------------------------------------------------------------------------------------------------
June 1, 2007..........................  June 1, 2007                            Refiners and importers.

[[Page 59694]]

 
August 1, 2007........................  August 1, 2010                          Downstream facilities except
                                                                                 retailers and wholesale-
                                                                                 purchaser consumers.
October 1, 2007.......................  October 1, 2010                         Retailers and wholesale-
                                                                                 purchaser consumers.
December 1, 2007......................  December 1, 2010                        All facilities including farm
                                                                                 tanks and construction facility
                                                                                 tanks.
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    For most of the U.S. until June 1, 2010, NRLM diesel fuel with 
uncontrolled sulfur content (and uncontrolled aromatics content and 
cetane index) can be produced by EPA-approved small refiners/importers 
and refiners/importers using early use credits. Until 2010 there is no 
restriction in the use of this NRLM diesel fuel having uncontrolled 
sulfur levels in NRLM engines. However, under the regulations applying 
to the nation as a whole, other diesel fuel with uncontrolled sulfur 
levels (i.e., all fuel meeting the definition of heating oil) must be 
segregated from the NRLM diesel fuel, dyed with a yellow marker and red 
dye, and is prohibited from being used in NRLM engines and equipment.
    The NRLM rule requires that heating oil be segregated and marked 
with a yellow marker and red dye to distinguish it from small refiner 
or credit-using high sulfur NRLM diesel fuel (40 CFR 80.510). However, 
the NRLM rule determined that a dye requirement would impose a 
significant challenge to Alaska's unique distribution system. That 
State's distribution system cannot easily handle another fuel type that 
must be segregated, and the same transfer and storage facilities must 
accommodate jet fuel that must not be contaminated by dye. Therefore 
the rule exempted Alaska from the dye and marker requirements, but in 
exchange precluded the use of credits and constrained the flexibility 
granted to small refiners.\3\
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    \3\ For the small refiner flexibilities to be used in Alaska a 
refiner must first obtain approval from the Administrator for a 
compliance plan (40 CFR 80.554(a)(4)).
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    Step two of the nationwide NRLM diesel fuel program implements the 
15 ppm sulfur standard for nonroad diesel fuel beginning on June 1, 
2010 for refiners and importers. Locomotive and marine diesel fuel 
produced or imported continues to be subject to the 500 ppm sulfur 
standard until June 1, 2012. The downstream implementation dates for 
this second step are shown in Tables I.B-2 and I.B-3.

                  Table I.B-2.--Federal Implementation Dates for NR Diesel Fuel 15 ppm Standard
----------------------------------------------------------------------------------------------------------------
 Implementation date for urban Alaska      Implementation date for all other
      and Northeast/Mid-Atlantic                         areas                         Applicable parties
----------------------------------------------------------------------------------------------------------------
June 1, 2010..........................  June 1, 2010..........................  Refiners and importers.
August 1, 2010........................  August 1, 2014........................  Downstream facilities except
                                                                                 retailers and wholesale-
                                                                                 purchaser consumers.
October 1, 2010.......................  October 1, 2014.......................  Retailers and wholesale-
                                                                                 purchaser consumers.
December 1, 2010......................  December 1, 2014......................  All facilities including farm
                                                                                 tanks and construction facility
                                                                                 tanks.
----------------------------------------------------------------------------------------------------------------


                  Table I.B-3.--Federal Implementation Dates for LM Diesel Fuel 15 ppm Standard
----------------------------------------------------------------------------------------------------------------
 Implementation date for urban Alaska      Implementation date for all other
      and Northeast/Mid-Atlantic                         areas                         Applicable parties
----------------------------------------------------------------------------------------------------------------
June 1, 2012..........................  June 1, 2012..........................  Refiners and importers.
August 1, 2012........................  n/a...................................  Downstream facilities except
                                                                                 retailers and wholesale-
                                                                                 purchaser consumers.
October 1, 2012.......................  n/a...................................  Retailers and wholesale-
                                                                                 purchaser consumers.
December 1, 2012......................  n/a...................................  All facilities including farm
                                                                                 tanks and construction facility
                                                                                 tanks.
----------------------------------------------------------------------------------------------------------------

    EPA-approved small refiners/importers and refiners/importers using 
early use credits may produce or import nonroad diesel fuel that meets 
the 500 ppm sulfur standard until June 1, 2014. However, the early-use 
credit provisions do not apply to Alaska. In addition, because of the 
sensitivity to fuel sulfur content of the 2011 and later model year 
nonroad engines and emission control systems that will be certified to 
the Tier 4 emission standards, those engines are prohibited from being 
fueled with diesel fuel having a sulfur content greater than 15 ppm.
    Alaska submitted its suggested modification to the Agency for 
highway diesel fuel in rural Alaska on June 12, 2003, after publication 
of our NRLM proposal but before we had completed development of the 
final NRLM rule. This Alaska submission covered only highway diesel 
used in rural areas. Urban areas of Alaska were addressed in a previous 
submission \4\ for highway fuel and in Alaska's comments on the NRLM 
proposed rule, and in both cases the State of Alaska requested that 
urban areas adhere to the federal fuel sulfur standards and 
implementation schedule. The provisions for NRLM diesel fuel in urban 
Alaska were finalized in the NRLM final rule, and they require that 
NRLM in urban areas meet the same requirements as the contiguous 48 
states.
---------------------------------------------------------------------------

    \4\ Letter from Michele Brown, Commissioner, Alaska Department 
of Environmental Conservation, to Jeffrey R. Holmstead, Assistant 
Administrator of the EPA's Office of Air and Radiation, April 1, 
2002.
---------------------------------------------------------------------------

    The NRLM final rule stated that our original proposal to 
permanently exempt all NRLM diesel fuel in rural Alaska from the sulfur 
content standards was inconsistent with the

[[Page 59695]]

action requested by the state. Under normal circumstances this would 
have meant that the NRLM final rule would have included imposition of 
the sulfur content standards on all NRLM diesel fuel in rural Alaska, 
along with all the associated labeling, recordkeeping, and reporting 
requirements. However, we deferred this action until now to coordinate 
the NRLM and highway sulfur standards. Thus, the NRLM final rule 
indicated that we would issue a supplemental proposal (i.e., today's 
proposal) to address the comments submitted by the State for NRLM 
diesel fuel in the rural areas, as well as the State's suggestion of an 
alternative implementation plan for highway diesel fuel in the rural 
areas. However, the NRLM final rule did require that 2011 model year 
and later nonroad engines in rural areas, which will be manufactured to 
operate on 15 ppm sulfur diesel fuel, must be fueled with 15 ppm diesel 
fuel (40 CFR 69.51(f)).

C. Alaska's Highway Submission and Comments to NRLM Proposal

    On June 12, 2003, Alaska submitted its suggested modifications to 
implementation of the highway diesel fuel sulfur standards in Alaska. 
In its plan, the State indicated that the rural areas do not need the 
15 ppm sulfur diesel fuel in the early stage of the highway diesel 
program. (The rural areas are those areas not served by the Federal Aid 
Highway System--which includes the marine highway system--as defined by 
the State of Alaska.) The rural areas could use more time to plan the 
switch to 15 ppm sulfur diesel fuel, and would be less impacted if we 
implemented a one-step transition to 15 ppm sulfur rather than a two-
step transition which would have required a minimum of 80% of each 
refinery's highway diesel to meet the 15 ppm standard in 2006, with the 
remainder meeting the 500 ppm standard. The State requested that the 
rural areas be exempt from the nationwide program from 2006 to 2010, 
and join the nationwide program in 2010 when all highway diesel fuel 
must meet the 15 ppm standard. Thus, the rural areas would switch from 
uncontrolled to 15 ppm sulfur for all highway diesel fuel in 2010 along 
with the rest of the nation. However, since all 2007 and later model 
year highway diesel vehicles will need 15 ppm sulfur diesel fuel, fuel 
meeting this standard would have to be made available in rural 
communities that obtain one or more 2007 or later model year highway 
vehicle prior to 2010. This approach would provide rural Alaska more 
time to transition to the low sulfur fuel program in a manner that 
minimizes costs while still ensuring that the 2007 and later model year 
highway vehicles receive the low sulfur diesel fuel they need.
    On September 15, 2003, Alaska submitted its comments to the May 23, 
2003 NRLM proposal. In those comments, Alaska asked us to bring the 
NRLM diesel fuel requirements for Alaska in line with the State's 
recommendations for highway diesel fuel, as described above. The State 
indicated the importance of avoiding segregation of rural Alaska's fuel 
stream. Since the State previously requested June 2010 to be the 
deadline for conversion of highway diesel fuel in the rural areas, it 
requested June 2010 to also be the deadline for conversion of all NRLM 
diesel fuel in the rural areas. This request included an acceleration 
of the 15 ppm standard applicable to locomotive and marine diesel fuel 
produced in or imported to rural Alaska from the June 2012 date in the 
final NRLM rule to June 2010.
    Although it is outside the scope of today's proposal, Alaska also 
commented that in the NRLM final rule we should capture marine engines, 
locomotive engines, and more engine sizes under the 15 ppm sulfur 
standard, and that we should allow the State to continue to use dye-
free diesel fuel. Alaska also requested our financial and technical 
assistance to perform a health study of diesel exhaust exposure in 
rural Alaska because of concern about exposure to diesel exhaust from 
village electric power generators.\5\
---------------------------------------------------------------------------

    \5\ In the June 29, 2004 NRLM final rule, we applied the 15 ppm 
sulfur content standard to locomotive and marine diesel fuel, but 
not until June 1, 2012, and we exempted Alaska from the dye and 
marker requirements.
---------------------------------------------------------------------------

II. What Is EPA Proposing?

A. Highway Diesel Fuel

    We are proposing today to delay the implementation dates for the 
requirements of 40 CFR 80.500 et seq. for highway diesel fuel produced 
or imported for, distributed to, or used in the rural areas of Alaska. 
We are proposing that the rural areas of Alaska would join the rest of 
Alaska and the nation in implementing the 15 ppm sulfur content 
standard for highway diesel fuel upon the implementation dates of the 
nationwide program in 2010.\6\ The proposed implementation dates for 
our highway diesel fuel requirements in the rural areas of Alaska are 
shown in table II.A-1.
---------------------------------------------------------------------------

    \6\ Canada also requires 15 ppm sulfur highway diesel fuel 
beginning June 1, 2006, and in October 2004 proposed that its NRLM 
diesel fuel meet a 500 ppm limit beginning June 1, 2007, its nonroad 
diesel fuel meet the 15 ppm sulfur limit beginning June 1, 2010, and 
that its locomotive and marine diesel fuel meet the 15 ppm sulfur 
limit beginning June 1, 2012. If finalized as proposed, the sulfur 
requirements for highway and NRLM diesel fuel in Canada would be 
harmonized with those of the U.S., and today's proposal would have 
rural Alaska catch up to the requirements in both the U.S. and 
Canada on June 1, 2010.

 Table II.A-1.--Proposed Implementation Dates for Highway Diesel Fuel 15
                      ppm Standard in Rural Alaska
------------------------------------------------------------------------
            Date                          Applicable parties
------------------------------------------------------------------------
June 1, 2010................  Refiners and importers.
August 1, 2010..............  Downstream facilities except retailers and
                               wholesale-purchaser consumers.
October 1, 2010.............  Retailers and wholesale-purchaser
                               consumers.
December 1, 2010............  All facilities including farm tanks and
                               construction facility tanks.
------------------------------------------------------------------------

    The dates shown in Table II.A-1 are slightly different than the 
downstream dates that mark the end of the Temporary Compliance Option 
applicable to the nation as a whole. We are proposing the above dates 
for highway diesel fuel because they would be more consistent with the 
downstream implementation dates associated with NRLM, as described in 
Section II.B below.
    Prior to the dates shown in Table II.A-1, rural areas of Alaska 
would continue to be exempt from the sulfur standards. However, because 
of the sensitivity of the 2007 and later model year highway engines and 
emission control systems to fuel sulfur content, we would still require 
that diesel fuel used in those vehicles and engines meet the 15 ppm 
sulfur content standard. This is the same refueling requirement that 
applies in the 2006-2010 timeframe

[[Page 59696]]

for urban areas of Alaska and in all areas of the rest of the nation.
    To fully implement this transition program for rural Alaska, we are 
proposing to extend the current exemption from the 500 ppm sulfur 
standard of 40 CFR 80.29 until the proposed implementation dates in 
2010. In the absence of this proposed extension, highway diesel fuel in 
the rural areas of Alaska would be required to meet the 500 ppm sulfur 
standard of 40 CFR 80.29 beginning in 2006, when the current exemption 
expires, regardless of the proposed exclusion under 40 CFR 80.500 et 
al. Under today's proposal, highway diesel fuel in rural Alaska could 
remain at uncontrolled sulfur levels until the proposed implementation 
dates in 2010.
    We are not proposing changes to the implementation schedule of the 
highway diesel fuel requirements as they apply to the urban areas of 
Alaska, and are not reopening the provisions of the highway 
requirements previously adopted for urban areas. We have not received 
any information that would warrant such reopening, and the State did 
not request such a change and indicated the urban areas should be 
subject to the national implementation schedule for highway diesel 
fuel. We agree with the State's reasoning that urban areas of Alaska 
may not only have a large number of 2007+ model year highway vehicles 
in the 2006-2010 timeframe, but also that urban areas have the means 
for distributing, storing, and segregating highway diesel fuel meeting 
with 15 ppm sulfur standard.

B. Nonroad, Locomotive and Marine Diesel Fuel

    In the nonroad, locomotive and marine (NRLM) diesel final rule, we 
covered urban Alaska along with the rest of the nation, but held off on 
finalizing any provisions for rural Alaska so they could be aligned 
with the provisions for the highway diesel program in rural Alaska. We 
are proposing today that NRLM diesel fuel produced or imported for, 
distributed to, or used in the rural areas of Alaska be subject to the 
requirements of 40 CFR 80.500 et seq., but not until 2010. Thus, during 
the first step of the nationwide program from June 1, 2007 until June 
1, 2010, NRLM diesel fuel in rural Alaska could remain at uncontrolled 
sulfur levels. Beginning June 1, 2010, nonroad diesel fuel in rural 
Alaska would join the rest of Alaska and the nation in implementing the 
nonroad diesel fuel requirements of 40 CFR 80.500 et seq. However, due 
to the unique circumstances in rural Alaska which limit the number of 
grades of diesel fuel that can be stored and distributed, we propose 
that the 15 ppm standard applicable to locomotive and marine fuel (LM) 
be moved forward to 2010 to be consistent with the implementation 
schedule for nonroad (NR) diesel fuel. In this way, there will only be 
a single grade of NRLM diesel fuel in rural areas in 2010 and 2011 
instead of the two separate grades (i.e. 15 ppm and 500 ppm) that will 
exist elsewhere in the U.S. The proposed initial implementation dates 
for NRLM diesel fuel sulfur standards are shown in Table II.B-1. We 
request comment on the delay of the NR requirements until 2010, and 
also the acceleration of the LM 15 ppm sulfur standard to 2010 instead 
of 2012.

Table II.B-1.--Proposed Implementation Dates for NRLM Diesel Fuel 15 ppm
                        Standard in Rural Alaska
------------------------------------------------------------------------
            Date                          Applicable parties
------------------------------------------------------------------------
June 1, 2010................  Refiners and importers.
August 1, 2010..............  Downstream facilities except retailers and
                               wholesale- purchaser consumers.
October 1, 2010.............  Retailers and wholesale-purchaser
                               consumers.
December 1, 2010............  All facilities including farm tanks and
                               construction facility tanks.
------------------------------------------------------------------------

    Since the urban areas of Alaska would follow the nationwide 
schedule for sulfur standards, some LM fuel meeting only the 500 ppm 
standard would be available in these areas in the 2010-2012 timeframe 
when nonroad engines requiring 15 ppm fuel will be available. Due to 
the potential for misfueling, 2011+ nonroad engines are prohibited from 
using LM fuel meeting only the 500 ppm sulfur standard. Also, heating 
oil will remain uncontrolled for sulfur content in all areas of Alaska, 
and would not be permitted to be used in any 2007 or later model year 
highway vehicles or engines, or in any 2011 model year nonroad engines 
or equipment. Finally, in order to coordinate with engine and fuel 
requirements being proposed for stationary internal combustion engines, 
2011+ stationary engines will also be prohibited from using fuel above 
the 15 ppm sulfur standard. All diesel fuel used in engines covered by 
the stationary internal combustion engine standards will also be 
subject to the requirements of 40 CFR 80.500 et seq. following the 
implementation schedule applicable to NRLM fuel.
    We are not proposing changes to the implementation schedule of the 
NRLM diesel fuel requirements as they apply to the urban areas of 
Alaska, and are not reopening the provisions of the NRLM requirements 
previously adopted for urban areas. We have not received any 
information that would warrant such reopening, and the State did not 
request such a change and indicated the urban areas should be subject 
to the national diesel fuel implementation schedule. We agree with the 
State that urban areas have the means for distributing, storing, and 
segregating NRLM diesel fuel meeting the 500 ppm standard in 2006 and 
the 15 ppm standard in 2010.

C. Summary of Proposed Sulfur Standards for Alaska

    Table II.C-1 shows all of the existing federal and proposed Alaskan 
sulfur standards for highway and NRLM diesel fuel. Note that Alaska 
must still ensure that 2007 and later highway engines and 2011 and 
later nonroad engines are only fueled with fuel meeting the 15 ppm 
standard.

   Table II.C-1.--Summary of Existing Federal and Proposed Alaskan Sulfur Standards for Diesel Production and
                                           Imports (Parts per Million)
----------------------------------------------------------------------------------------------------------------
               Area                     Fuel     Before 2006      2006      2007-2009    2010-2011      2012+
----------------------------------------------------------------------------------------------------------------
Federal...........................  HW.........          500   15[Dagger]   15[Dagger]           15           15
Urban Alaska......................  HW.........         none   15[Dagger]   15[Dagger]           15           15

[[Page 59697]]

 
Rural Alaska......................  HW.........         none         none         none   15[dagger]           15
-----------------------------------
Federal...........................  NR.........         none         none  500[dagger]   15[dagger]           15
Urban Alaska......................  NR.........         none         none  500[dagger]   15[dagger]           15
Rural Alaska......................  NR.........         none         none         none   15[dagger]           15
-----------------------------------
Federal...........................  LM.........         none         none  500[dagger]          500   15[dagger]
Urban Alaska......................  LM.........         none         none  500[dagger]          500   15[dagger]
Rural Alaska......................  LM.........         none         none         none   15[dagger]          15
----------------------------------------------------------------------------------------------------------------
[dagger] Refinery gate standard begins on June 1 of the first applicable year
[Dagger] Temporary Compliance Option in effect: Up to 20% of a refinery's production may exceed the 15 ppm
  standard so long as it meets the 500ppm standard, is segregated from 15ppm, and is not used in MY2007+
  engines.

III. Why Are We Proposing a June 1, 2010 Effective Date for Rural Areas 
of Alaska?

    Rural Alaska represents a rather unique situation. The majority of 
distillate fuel used in rural Alaska is for stationary sources such as 
power generation and home heating. The State estimates that highway 
vehicles consume only about one percent of the distillate fuel in the 
rural areas. ``Heating oil'' consumes approximately 95 percent (about 
50 percent for heating and 45 percent for electricity generation) and 
marine engines consume the remaining four percent. There is no 
significant consumption of other nonroad or locomotive diesel fuel in 
rural Alaska. Thus, in rural Alaska, only a very small proportion of 
the distillate fuel used is currently regulated for sulfur content (and 
aromatics content and/or cetane index).\7\ A single grade of fuel is 
generally distributed to rural Alaska. In order to ensure the fuel can 
be used in the arctic conditions, the fuel is usually Jet A (which has 
a pour point of -50 degrees) that has been downgraded. If the 
nationwide requirements were followed, either multiple grades of arctic 
grade fuel would need to be transported and stored, or a single grade 
of fuel meeting the 15 ppm standard would need to be used. For multiple 
fuel grades, the limited transportation and storage capabilities in 
rural Alaska would force communities to build additional infrastructure 
to handle the additional grades. For a single grade meeting the 15 ppm 
standard, these small communities would be forced to pay a premium for 
fuel that is only required for a very small number of engines in the 
2006-2010 timeframe. Both approaches represent significant economic 
hardship for the many rural communities consisting primarily of 
subsistence economies.
---------------------------------------------------------------------------

    \7\ Personal communication from Ron King, Alaska Department of 
Environmental Conservation. July 2, 2002.
---------------------------------------------------------------------------

    Our goal is to allow Alaska to transition to the low sulfur fuel 
programs in a manner that minimizes costs while still ensuring that the 
small number of model year 2007 and later highway vehicles and engines, 
and the small number of model year 2011 and later nonroad engines and 
equipment certified to the Tier 4 nonroad standards beginning with the 
2011 model year, receive the 15 ppm sulfur diesel fuel they need. By 
coordinating the transition of both highway and NRLM fuels to 15 ppm in 
2010, rural communities can make individual decisions about retaining 
only one grade of diesel fuel (e.g., ultra low) or build additional 
storage tanks to handle two grades of fuel that retains space heating 
and power generation production with high sulfur diesel fuel. In 
addition, requiring rural areas to provide 15 ppm diesel fuel for all 
NRLM applications beginning in 2010, rather than exempting them 
permanently, \8\ helps those rural areas to avoid the temptation for 
misfueling that may arise as the number of 2011+ engines increases and 
rural communities are faced with the choice of either building 
additional tankage or storing only 15 ppm fuel.
---------------------------------------------------------------------------

    \8\ The permanent exemption under the existing regulations would 
still require all 2011+ nonroad engines to be fueled with 15 ppm 
fuel.
---------------------------------------------------------------------------

A. Highway Diesel Fuel

    Under the highway diesel rule, at least 80 percent of a refinery's 
highway diesel fuel production (except for that produced by small 
refiners approved by EPA under 40 CFR 80.550-553), must meet the ultra-
low sulfur content standard (15 ppm sulfur, maximum) by 2006 (see Table 
I.A-1). The remaining highway diesel fuel must meet the low sulfur 
content standard (500 ppm sulfur, maximum) and may not be used in 2007 
and later model year highway diesel vehicles. These nationwide 
standards and deadlines apply to Alaska, including the rural areas. 
Since the current fuel supply in rural Alaska is primarily high sulfur, 
these nationwide requirements for highway fuel would cause the highway 
fuel supply in rural Alaska to switch to the 15 ppm sulfur diesel fuel, 
and possibly some to the 500 ppm sulfur diesel fuel, in 2006.
    As previously discussed, Alaska has been exempt from the sulfur and 
dye provisions of 40 CFR 80.29 since the beginning of the 500 ppm 
highway diesel fuel program in 1993 because of its unique geographical, 
meteorological, air quality, and economic factors. The rural areas have 
been permanently exempt, and the urban areas have been temporarily 
exempt. When we finalized the 15 ppm sulfur content standard for 
highway diesel fuel, we recognized the factors unique to Alaska and 
provided the State with: (1) An extension of the temporary exemption 
for the urban areas from the 500 ppm sulfur standard until the 
implementation date of the new 15 ppm sulfur standard for highway 
diesel fuel in 2006, (2) an opportunity to request an alternative 
implementation plan for the 15 ppm sulfur diesel fuel program, and (3) 
a permanent exemption from the diesel fuel dye provisions. As stated in 
that rule and in today's proposal, our goal is to allow Alaska to 
transition to the 15 ppm sulfur standard for highway diesel fuel in a 
manner that minimizes costs while still ensuring that model year 2007 
and later highway vehicles and engines receive the 15 ppm sulfur diesel 
fuel they need. In its subsequent request for an alternative 
implementation plan for the rural areas, the State indicated that the 
rural areas will have few if any model year 2007 and later highway 
vehicles in the early stage of the highway diesel program, and thus 
will need little if any 15 ppm sulfur diesel fuel in this timeframe. 
The State also indicated that rural areas could use

[[Page 59698]]

more time to plan the switch to 15 ppm sulfur diesel fuel, and would be 
less impacted if we implemented a one-step transition to 15 ppm sulfur 
rather than a two-step transition.
    There are about 600 highway diesel vehicles in the rural areas of 
Alaska, and their average age is about 18 years. Many replacement 
vehicles are typically pre-owned, and only about five to 15 new diesel 
vehicles are brought into the rural areas each year.\9\ Thus, most of 
the approximately 250 rural area villages may not obtain their first 
2007 or later model year diesel highway vehicle for some time.
---------------------------------------------------------------------------

    \9\ Diesel vehicle registration data (12,000 pound and greater, 
unladed weight) as of October 1998 provided by the State of Alaska.
---------------------------------------------------------------------------

    According to the State, the fuel storage and barge infrastructure 
in rural Alaska is currently designed for one grade of diesel fuel. Jet 
fuel is distributed, downgraded (and sometimes mixed with <greek-i>1 
diesel), sold, and used as <greek-i>1 diesel because it meets arctic 
specifications. This fuel is primarily high sulfur. The efficiency and 
cost effectiveness of this system discourages the introduction of a 
small volume of a specialty fuel, such as low or ultra-low sulfur 
highway diesel fuel. However, the rural hub communities with jet 
service still have to import jet fuel untainted by dye for aviation 
purposes. The fuel storage tanks in the rural communities are owned and 
maintained by the communities, thus, any requirement for new tankage or 
additional tank maintenance will fall directly on the rural 
communities, which have a subsistence economy.
    We agree with the State that a 2010 implementation date in rural 
Alaska is justified. We expect only a very small demand for the 15 ppm 
sulfur fuel in rural Alaska between 2006 and 2010 because of the very 
small number of 2007 and later highway diesel vehicles expected to 
enter the rural Alaska market during those years. Requiring the rural 
areas to comply with the nationwide requirements for 15 ppm fuel \10\ 
during the first step of the highway program (2006-2010) would cause 
significant burden on rural Alaska's distribution system and 
communities without corresponding environmental benefits. We also agree 
that 2010 is an appropriate time to implement a sulfur content 
requirement for highway diesel fuel in the rural areas. The number of 
2007 and later highway vehicles, and thus the benefits of the 15 ppm 
sulfur diesel fuel will be increasing. Extending the lead time for 
sulfur-controlled diesel fuel by an additional four years (from 2006 to 
2010) should be adequate for the distributors and rural communities to 
make decisions on the most economical way to transition to sulfur-
controlled highway diesel fuel, and to make any necessary capital 
improvements. Finally, 2010 marks the points at which both the 
Temporary Compliance Provision for highway diesel fuel ends and the 
requirement for 15ppm nonroad diesel fuel begins. Distribution of 
diesel fuel to meet demand will thus be made more efficient if the same 
sulfur standards apply everywhere. As a result 2010 represents an ideal 
year in which to transition rural Alaska to 15 ppm fuel in a single 
step.
---------------------------------------------------------------------------

    \10\ The first step of the nationwide highway program would 
require only 80% of each refinery's production to meet the 15 ppm 
standard; the rest must meet a 500 ppm standard.
---------------------------------------------------------------------------

    We are not proposing to require 500 ppm sulfur highway diesel fuel 
between June 1, 2006 and June 1, 2010 as a transition to 15 ppm sulfur 
highway diesel fuel. Such an interim step would create the same burden 
to Alaska's distribution system and rural communities as requiring 15 
ppm sulfur highway diesel fuel on June 1, 2006. As discussed in more 
detail below, the primary burden of requiring low sulfur highway diesel 
fuel in rural Alaska is not the source of the low-sulfur diesel fuel, 
or whether it meets the 500 or 15 ppm sulfur standard, but the 
distribution and storage tank constraints associated with an additional 
fuel type and the associated economic burden of increased fuel costs 
imposed on communities having subsistence economies. If we imposed a 
500 ppm sulfur content standard on June 1, 2006 as a transition to 15 
ppm sulfur highway diesel fuel, rural Alaska would not get the relief 
intended by today's proposal.
    As discussed in the January 18, 2001 Federal Register notice, any 
revisions to the final rule for highway diesel fuel in Alaska would, at 
a minimum, have to: (1) Ensure an adequate supply (either through 
production or imports) of 15 ppm fuel to meet the demand of any 2007 or 
later model year vehicles, (2) ensure sufficient retail availability of 
low sulfur fuel for new vehicles in Alaska, (3) address the growth of 
supply and availability over time as more new vehicles enter the fleet, 
(4) include measures to ensure segregation of the 15 ppm fuel and avoid 
contamination and misfueling, and (5) ensure enforceability. We believe 
that the provisions proposed in this notice meet these criteria, as 
discussed below.
1. Ensure an Adequate Supply (Either Through Production or Imports) of 
15 ppm Sulfur Diesel Fuel To Meet the Demand of Any 2007 or Later Model 
Year Vehicles
    Alaska has nearly 9,000 highway diesel vehicles. The fuel provided 
to those vehicles in the areas served by the Federal Aid Highway 
System--approximately 8,400 vehicles--must meet the requirements of the 
highway rule, regardless of today's proposal. At least 80 percent of 
that fuel produced or imported, except that which is produced or 
imported by a small refiner having EPA approval under 40 CFR 80.550-
553, must meet the 15 ppm sulfur standard beginning June 1, 2006. The 
remainder of that fuel must meet the 500 ppm sulfur standard.
    Consumption of highway diesel fuel in the rural areas is about 
seven percent of highway diesel fuel consumption in Alaska (assuming 
the same average vehicle consumption throughout the state). Consumption 
of highway diesel fuel by the five to 15 new vehicles per year from 
2007 through 2010 (for a total of 20 to 60 model year 2007 and later 
vehicles by the end of 2010) will be much smaller--less than one 
percent of the highway diesel fuel consumption in Alaska. Thus, 
production or imports of 15 ppm sulfur diesel fuel for the model year 
2007 and later highway vehicles in the rural areas until June 1, 2010 
under today's proposal should not be a challenge, and is less than what 
would be required under the current regulations.
    The significant challenge in the rural areas is the distribution 
and storage infrastructure, which is currently designed to handle only 
one type of distillate fuel. The highway diesel rule would require 
changes to the distribution and storage infrastructure to handle the 
additional fuel type, or a shift to 15 ppm sulfur diesel fuel for all 
purposes, to occur by July 15, 2006. However, under today's proposal, 
changes to the distribution and storage infrastructure, or a shift to 
15 ppm sulfur diesel fuel for all purposes, would not be required to 
occur in the rural areas until October 1, 2010. Thus, this proposal 
would grant the rural area fuel distributors and villages four 
additional years to make the necessary changes, but they would still 
have to supply the required 15 ppm sulfur fuel to all 2007 and later 
model year highway vehicles and engines.
    Supplying 15 ppm sulfur diesel fuel for 2007 and later model year 
diesel vehicles until October 1, 2010 can be accomplished several ways. 
A village not having any 2007 or later model year

[[Page 59699]]

diesel vehicles or engines would not have a need for the new fuel and/
or infrastructure changes until October 1, 2010. When a village obtains 
one or more 2007 or later model year highway vehicles or engines, 15 
ppm sulfur fuel could be shipped in 55 gallon drums, or the fuel 
infrastructure can be changed to handle a second diesel fuel type, or 
the village could shift to 15 ppm sulfur fuel for all purposes.
    The first option--using 55 gallon drums--would likely have 
additional transportation costs for shipping the new fuel for the 2007 
and later model year diesel vehicles, but the volume would be very low 
(only 20 to 60 of those vehicles by the end of 2010 distributed among 
the approximate 250 villages in rural Alaska). Thus, the overall 
incremental cost of diesel fuel in rural Alaska would be negligible on 
average.
    The second option (changing the fuel infrastructure to handle the 
additional fuel type) probably has the most cost impact because the 
distributors would need to split their barge deliveries into multiple 
fuel types, and the villages would need to have multiple storage, 
handling, and delivery systems. All of these distribution modifications 
will cost money. The need to have multiple fuel types will likely 
impact the consumer by increasing the cost for all fuel, not just the 
15 ppm diesel.
    The third option (switching all diesel uses to 15 ppm sulfur) would 
avoid any incremental transportation, storage and delivery systems 
costs, but may incur the higher cost of the 15 ppm sulfur fuel for all 
purposes in the villages. This probable higher fuel cost would be 
imposed on heating and electricity generation, which accounts for all 
but about five percent of the distillate consumption in the villages.
    Under today's proposal, it is possible that all of the above 
options, or a combination of these options, might be found prior to 
December 1, 2010 among the villages that need the fuel. In any case, we 
believe an adequate supply of 15 ppm sulfur diesel fuel for all 2007 
and later model year vehicles and engines in the rural areas should 
present no significant challenge in this time period.
2. Ensure Sufficient Retail Availability of Low Sulfur Fuel for New 
Vehicles in Alaska
    Sufficient retail availability \11\ is not an issue if adequate 
supply is provided to rural Alaska. Fuel deliveries to rural Alaska are 
made to village tank farms (typically one tank farm per village). Some 
villages have no separate consumer tanks and pumps. In such cases the 
villagers withdraw the fuel directly from the tank farm. In villages 
having one or more optional refueling locations, those pumps are filled 
directly from the village tank farm. Presumably, any fuel deliveries in 
55 gallon drums would be delivered either to the village tank farm or 
directly to the vehicle owners.
---------------------------------------------------------------------------

    \11\ For the purpose of this discussion concerning rural Alaska, 
we assume that retail availability means availability to the end 
user (e.g. diesel vehicle or engine owner/operator).
---------------------------------------------------------------------------

3. Address the Growth of Supply and Availability Over Time as More New 
Vehicles Enter the Fleet
    Under today's proposal, all diesel fuel for 2007 and later model 
year highway diesel vehicles and engines in the rural areas must meet 
the 15 ppm sulfur standard, as it is required nationwide. As previously 
discussed, the demand from 2007 and later model year diesel vehicles in 
the rural areas is expected to be very low--between 20 and 60 vehicles 
from late 2006 to December 1, 2010, the proposed implementation date by 
which all highway diesel fuel in the rural area retail facilities would 
have to meet the 15 ppm sulfur content standard. Whether the small 
volume of fuel that would be needed for these vehicles prior to 
December 1, 2010 is distributed and stored in 55 gallon drums, in 
segregated tanks, or in village tanks from which diesel fuel for all 
purposes is withdrawn, incremental increases to that small volume for a 
few additional new vehicles should present no significant challenge.
4. Include Measures To Ensure Segregation of the 15 ppm Fuel and Avoid 
Contamination and Misfueling
    All segregation and contamination avoidance measures that apply 
nationwide to highway diesel fuel, except for the dye requirements, 
would be applicable under today's proposal to any diesel fuel used in 
the rural areas between 2006 and December 1, 2010 in 2007 and later 
model year highway vehicles and engines. We believe that Alaska can 
meet these requirements and no additional measures beyond these will be 
needed. Beyond 2010, all diesel fuel meeting the 15 ppm standard must 
be segregated from all other diesel fuel.
5. Ensure Enforceability
    All quality assurance measures (including testing and sampling) and 
enforcement provisions that apply nationwide to highway diesel fuel, 
except for the dye requirements, would be applicable under today's 
proposal to any diesel fuel used in the rural areas between 2006 and 
December 1, 2010 in 2007 and later model year highway vehicles and 
engines. We do not believe that any additional measures beyond these 
will be needed.

B. NRLM Diesel Fuel

    As discussed above, today's proposal would require 15 ppm sulfur 
highway diesel fuel in retail facilities in the rural areas by December 
1, 2010. In its comments on the NRLM proposal, the State also asked 
that we apply the nationwide NRLM fuel requirements to the rural areas 
beginning in 2010 (except for the dye and marker requirements). This 
approach allows for the coordination of the highway and NRLM diesel 
fuel requirements in the rural areas. Given the significant 
distribution limitations in rural areas, this is a critical need.
    With one exception, today's proposal would apply the nationwide 
NRLM standards and implementation deadlines to diesel fuel produced or 
imported for, distributed to, or used in rural Alaska beginning June 1, 
2010. The one exception is that locomotive and marine diesel fuel would 
be required to meet the 15 ppm sulfur standard in 2010 instead of 2012.
    We believe that imposing the 15 ppm standard on all NRLM diesel 
fuel in rural Alaska, rather than allowing the current exemption to 
continue indefinitely, is both warranted and feasible. First, all NRLM 
fuel in urban areas, and all highway diesel fuel, will meet the 15 ppm 
standard by 2010. Given the limited ability of the distribution system 
for handling multiple grades, much if not all of the NRLM diesel fuel 
that would end up in the rural areas may meet the 15 ppm standard even 
under the existing regulations. Second, because 2011+ nonroad engines 
will represent an increasing fraction of the nonroad fleet beginning in 
2010, under the existing indefinite exemption rural communities will be 
faced with the decision about when their NRLM fuel should be switched 
entirely to 15 ppm. There may be a temptation to misfuel 2011+ engines 
in order to avoid having to make this switch. If misfueling occurs, the 
environmental benefits of the 2011+ nonroad engines may be lost. 
Finally, there are logistical and economic benefits for coordinating 
the implementation of highway and NRLM 15 ppm sulfur standards in urban 
and rural areas of Alaska and with the rest of the nation. We believe 
that these benefits exceed the costs in rural Alaska.
    The NRLM final rule exempts all areas in Alaska from the red dye 
and yellow marker requirements, and the

[[Page 59700]]

related segregation requirements that would otherwise apply for fuels 
meeting the same sulfur, aromatics and/or cetane standards. Thus, in 
rural Alaska prior to June 1, 2010, uncontrolled highway and non-
highway diesel fuels could continue to be commingled. Beginning June 1, 
2010, the highway and NRLM diesel fuels could continue to be allowed to 
be commingled if they both met the 15 ppm sulfur standard and 
applicable aromatics and/or cetane standards, thus eliminating the need 
for segregation. The market would determine on a case-by-case basis 
whether to supply segregated or commingled distillate fuel for highway, 
NR, LM, and heating oil applications.

IV. What Is the Emissions Impact of Today's Proposal?

    The flexibility offered by today's proposal would not increase 
diesel emissions over current levels, but would likely result in a 
delay of some sulfate emission reduction benefits in the rural areas of 
Alaska until low sulfur diesel fuel becomes available to consumers in 
those areas starting in 2010. The sulfate emissions of pre-2007 model 
year highway vehicles and engines and of all marine engines in rural 
Alaska would remain at current levels for as long as high sulfur diesel 
fuel is used, but not later than December 1, 2010.
    The State of Alaska previously indicated that there are 
approximately 600 diesel highway vehicles distributed throughout the 
approximate 250 villages and communities. This averages to less than 
three diesel vehicles per village, although the actual numbers may vary 
considerably between the smallest and largest villages. We believe that 
the sulfate emission reductions from the small number of pre-2007 model 
year diesel highway vehicles that would be delayed until December 1, 
2010 by today's proposal would be very small. The villages would 
receive the full emission reduction benefits from the 2007 and later 
model year diesel highway vehicles, because they would be fueled with 
15 ppm sulfur diesel fuel, but their numbers will be very small.
    We do not know the number of NRLM equipment and engines in rural 
Alaska. However, we do know that the consumption of distillate fuel in 
the rural areas by marine engines is about four percent, and is 
negligible for other nonroad and locomotive engines (if any). Thus, the 
sulfate emission benefits from NRLM sources are almost entirely from 
marine engines and would be delayed as long as high sulfur diesel fuel 
is used, but no later than December 1, 2010. At that time, given the 
distribution limitations in rural Alaska, ULSD may also be used much 
more broadly in locomotive, marine, heating, and power generation 
services. If this were the case, there would be significantly greater 
sulfate PM benefits than strictly required.
    As in previous actions to grant Alaska exemptions from the current 
500 ppm sulfur standard, we would not base any vehicle or engine recall 
on emissions exceedences caused by the use of high sulfur fuel (greater 
than 500 ppm sulfur for pre-2007 model year vehicles and engines; 
greater than 15 ppm sulfur for 2007 and later vehicles and engines) in 
rural Alaska during the period prior to the proposed implementation 
dates of this notice. Our in-use testing goals are to establish whether 
representative engines, when properly maintained and used, will meet 
emission standards for their useful lives. These goals are consistent 
with the requirements for recall outlined in Section 207(c)(1) of the 
CAA. Further, manufacturers may have a reasonable basis for denying 
emission related warranties where damage or failures are caused by the 
use of high sulfur fuel in rural Alaska.
    The Engine Manufacturers Association commented in previous actions 
to grant Alaska sulfur exemptions that the level of protection provided 
to engine manufacturers falls short of what they believe is reasonable 
and necessary. It asserted that the use of high sulfur diesel fuel by 
an engine should raise a ``rebuttable presumption'' that the fuel has 
caused the engine failure, and that EPA should have the burden of 
rebutting that presumption. It also asserted that the emissions 
warranty is a regulatory requirement under Section 207, that only EPA 
has the authority to exclude claims based on the use of high sulfur 
diesel fuel.
    We understand and concur with the manufacturers' concerns about in-
use testing of engines operated in an area exempt from fuel sulfur 
requirements, or in the case of today's proposal, engines operated in 
an area with an implementation date later than that of the rest of the 
country. Consequently, we affirm that, for recall purposes, we would 
not seek to conduct or cause the in-use testing of engines we know have 
been exposed to high sulfur fuels in rural Alaska. We would likely 
screen any engines used in our testing program to see if they have been 
operated in rural Alaska. We believe we can readily obtain sufficient 
samples of engines without testing engines operated in rural Alaska. In 
reviewing the warranty concerns of the Engine Manufacturers Association 
associated with previous actions to grant sulfur exemptions, we have 
determined that our position regarding warranties, as previously stated 
and described above, is consistent with section 207(a) and (b) of the 
CAA and does not require any new or amended regulatory language to 
implement.

V. Public Participation

    We request comment on all aspects of this proposal. This section 
describes how you can participate in this process.

A. How and to Whom Do I Submit Comments?

    We are opening a formal comment period by publishing this document. 
We will accept comments for the period indicated under DATES above. If 
you have an interest in the program described in this document, we 
encourage you to comment on any aspect of this rulemaking. We request 
comment on various topics throughout this proposal. Your comments will 
be most useful if you include appropriate and detailed supporting 
rationale, data, and analysis. If you disagree with parts of the 
proposed program, we encourage you to suggest and analyze alternate 
approaches to meeting the air quality goals described in this proposal. 
You should send all comments, except those containing proprietary 
information, to our Air Docket (see ADDRESSES) before the end of the 
comment period.
    You may submit comments electronically, by mail, or through hand 
delivery/courier. To ensure proper receipt by EPA, identify the 
appropriate docket identification number in the subject line on the 
first page of your comment. Please ensure that your comments are 
submitted within the specified comment period. Comments received after 
the close of the comment period will be marked ``late.'' EPA is not 
required to consider these late comments. Please follow the 
instructions in Section I.B. Do not use EPA Dockets or e-mail to submit 
CBI or information protected by statute.

B. Will There Be a Public Hearing?

    We do not plan to hold a public hearing on this proposed rule. If 
you would like to request a public hearing, you must make that request 
to the person identified in the FOR FURTHER INFORMATION CONTACT section 
no later than 30 days after publication. If a request for public 
hearing is made by this date, we will publish the date and location in 
a separate Federal Register notice.

[[Page 59701]]

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866, (58 FR 51735 (October 4, 1993)) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to 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 or 
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 
the Executive Order.''
    It has been determined that this rule does not meet any of the 
criteria above, and thus is not a ``significant regulatory action'' 
under the terms of Executive Order 12866 and is therefore not subject 
to OMB review.

B. Paperwork Reduction Act

    The Paperwork Reduction Act stipulates that every federal agency 
must obtain approval from the Office of Management and Budget (OMB) 
before collecting the same or similar information from 10 or more 
members of the public. If the Environmental Protection Agency decides 
to gather information, the appropriate program office must prepare an 
Information Collection Request (ICR) and submit it to OMB for approval. 
An ICR describes the information to be collected, gives the reason the 
information is needed, and estimates the time and cost for the public 
to answer the request.
    OMB has previously approved the ICRs contained in the existing 
regulations at 40 CFR 80.500 et seq. and has assigned OMB control 
number 2060-0308 and EPA ICR numbers 1718.03 (dyeing of tax exempt 
diesel fuel), 1718.04 (motor vehicle diesel fuel), and 1718.05 (NRLM 
diesel fuel). A copy of the OMB approved ICRs may be obtained from 
Susan Auby, Collection Strategies Division; U.S. Environmental 
Protection Agency (2822T); 1200 Pennsylvania Ave., NW., Washington, DC 
20460 or by calling (202) 566-1672.
    Today's proposed rule would not establish any new requirements for 
highway diesel fuel sold in Alaska, but instead would only delay the 
requirements for 15ppm fuel from 2006 to 2010 in rural areas of Alaska. 
Since the burden of reporting would be exactly the same in rural Alaska 
after 2010 under today's proposed rule as it is under the requirements 
of the final rule for highway diesel sulfur, the previously approved 
ICR for highway diesel fuel still applies to rural Alaska. Thus no new 
ICR or amended ICR is required for highway fuel.
    The requirements for NRLM diesel fuel in rural Alaska as proposed 
in today's action are new, in that the NRLM final rule did not finalize 
the sulfur standards for rural Alaska (although it did impose the 
requirement that all 2011 and later engines in rural Alaska must use 
diesel fuel meeting the 15ppm sulfur standard). However, these new 
requirements for NRLM diesel fuel in rural Alaska do not require a new 
or amended ICR. The approved ICR for the nonroad final rule (ICR number 
1718.05; OMB Control Number 2060-0308) already covers all U.S. states, 
including rural Alaska. For instance, this ICR made additions to the 
existing fuels regulations applicable to diesel fuel, where ``diesel 
fuel'' was explicitly defined as fuel sold in any state or territory of 
the U.S. In addition, the product transfer documents required in the 
nonroad final rule explicitly included those used to identify fuel for 
use in Alaska. Finally, the calculation of total information collection 
costs associated with the nonroad final rule represented maximum costs 
and included all areas of Alaska. As a result the existing ICR 
generated for the nonroad final rule remains applicable under the 
actions being proposed in today's action.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, a small entity is defined as: (1) A small business that meets 
the definitions based on the Small Business Administration's (SBA) size 
standards; (2) a small governmental jurisdiction that is a government 
of a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    In determining whether a rule has a significant economic impact on 
a substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' 5 U.S.C. 603 
and 604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule.
    Today's proposed rule applies a delayed implementation date for 
ultra-low sulfur highway diesel fuel in rural Alaska compared to the 
existing regulations and extends this same deadline to NRLM diesel fuel 
in rural Alaska to bring those areas in line with the national 
standards. Since this proposed rule would delay the 15 ppm highway 
sulfur standard in rural areas, the regulatory burden is effectively 
relieved in this respect. As a result this

[[Page 59702]]

proposed rule would not have an adverse economic impact on small 
entities in rural areas which distribute, store, or using highway 
diesel fuel.
    Regarding NRLM diesel fuel, the requirements in today's action are 
new in that rural areas of Alaska were not covered by the 15 ppm sulfur 
standard in the NRLM final rule. As stated in that rule, it was our 
intention to add the 15 ppm requirement to rural Alaska at the time of 
the NRLM final rule, but we deferred that action so that it could be 
coordinated with our actions on highway diesel fuel in rural Alaska.
    Even though the NRLM sulfur standards proposed in this rule are 
new, they do not impose a significant economic impact on a substantial 
number of small entities. Within the approximately 250 rural area 
villages in Alaska, their unique circumstances limit the number of 
grades of diesel fuel that can be stored and distributed. The 
efficiency and cost effectiveness of the rural distribution and storage 
system discourages the introduction of a small volume of a specialty 
fuel, such that these communities must generally choose between using a 
single fuel for all diesel applications, or purchasing extra storage 
and distribution equipment. The latter approach is generally more 
expensive and would only be pursued if the dual storage and 
distribution system would be needed long term. However, the number of 
2011+ model year nonroad and marine engines in these rural communities 
will increase after 2010, requiring a greater and greater proportion of 
the fuel to meet the 15 ppm standard. Thus in the long term, dual 
segregated storage and distribution capacity would become superfluous. 
In addition, since the highway fuel used in rural areas will already be 
required to meet the 15 ppm sulfur standard by 2010, many rural 
communities would simply switch entirely to diesel fuel meeting the 15 
ppm standard for all their diesel applications at this time to avoid 
the need to install additional segregated storage and distribution 
capacity. This proposal's requirement that all NRLM diesel fuel used in 
rural areas meet the 15 ppm standard starting in 2010 is therefore 
unlikely to create an additional economic burden for most rural areas.
    Therefore, after considering the economic impacts of today's 
proposed rule on small entities, I certify that this action will not 
have a significant economic impact on a substantial number of small 
entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    Today's proposal contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector. It would impose no enforceable duty 
on any State, local or tribal governments or the private sector, and 
does not contain a Federal mandate that may result in expenditures of 
$100 million or more for State, local, and tribal governments, in the 
aggregate, or the private sector in any one year. Rather, this proposal 
relieves burden by applying a delayed implementation date for ultra-low 
sulfur highway, nonroad, locomotive and marine diesel fuel in rural 
Alaska compared to the existing regulations and the rest of the 
country. Thus, today's rule is not subject to the requirements of 
sections 202 and 205 of the UMRA.

E. Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This proposed rule does not have federalism implications. It will 
not have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. This proposed rule simply 
applies a delayed implementation date for low sulfur highway diesel 
fuel in the rural areas of Alaska, and provides for inclusion of rural 
Alaska in the nationwide nonroad, locomotive and marine (NRLM) diesel 
fuel program but with a delayed implementation date. Thus, Executive 
Order 13132 does not apply to this rule. Although section 6 of 
Executive Order 13132 does not apply to this rule, EPA did consult with 
representatives of the State of Alaska, who spent much time getting 
feedback from the rural communities about our highway and proposed NRLM 
diesel fuel requirements. In fact, this proposed rule is the direct 
result of, and is consistent with, State submittals to EPA of an 
alternative implementation plan for low sulfur highway diesel fuel in 
rural Alaska, and comments to the proposed NRLM diesel rule as it 
relates to rural Alaska, as mentioned previously in this preamble. 
Nevertheless, in the spirit of Executive Order 13132, and consistent 
with EPA policy to promote communications between EPA and State and 
local governments, EPA specifically solicits comment on this proposed 
rule from State and local officials.

F. Consultation and Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by

[[Page 59703]]

tribal officials in the development of regulatory policies that have 
tribal implications.''
    This proposed rule does not have tribal implications as specified 
in Executive Order 13175. The regulations that this proposed rule 
amends will be implemented at the Federal level and impose compliance 
costs only on diesel fuel producers, importers, distributors, retailers 
and consumers of diesel fuel. This proposed rule relates to the 
standards and deadlines that apply specifically to the rural areas of 
Alaska, and tribal governments in the rural areas of Alaska will be 
affected only to the extent they purchase and use diesel fuel.
    Nevertheless, tribal officials were consulted by State 
representatives early in the process of developing this proposed 
regulation to permit them to have meaningful and timely input into its 
development. State representatives spent much time getting feedback 
from the rural communities, including tribal representatives, about our 
highway and proposed NRLM diesel fuel requirements. That feedback was 
considered in the State's submittals to EPA of an alternative 
implementation plan for low sulfur highway diesel fuel in rural Alaska, 
and comments to the proposed NRLM diesel rule as it relates to rural 
Alaska, as mentioned previously in this preamble. EPA specifically 
solicits additional comment on this proposed rule from tribal 
officials.

G. Protection of Children From Environmental Health & Safety Risks

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 F.R. 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under E.O. 12866, and (2) concerns an environmental health 
or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, the Agency must evaluate the environmental health or 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This proposed rule is not subject to the Executive Order because it 
is not economically significant as defined in E.O. 12866, and because 
the Agency does not have reason to believe the environmental health or 
safety risks addressed by this action present a disproportionate risk 
to children. This proposed action would affect only highway diesel fuel 
sold in rural areas of Alaska which have unique meteorological 
conditions and sparse populations that make environmental health and 
safety risks extremely small.
    The public is invited to submit or identify peer-reviewed studies 
and data, of which the agency may not be aware, that assessed results 
of early life exposure to the sulfur-based emissions (primarily SO\2\) 
that are proposed for regulation in today's action.

H. Actions That Significantly Affect Energy Supply, Distribution, or 
Use

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355 (May 22, 2001)) because it is not a 
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law No. 104-113, 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards. This 
proposed rulemaking does not involve technical standards. Therefore, 
EPA is not considering the use of any voluntary consensus standards.

VII. Statutory Provisions and Legal Authority

    Statutory authority for the proposal is found in sections 211(c) 
and 211(i) of the CAA, which allow EPA to regulate fuels that either 
contribute to air pollution which endangers public health or welfare or 
which impair emission control equipment which is in general use or has 
been in general use. 42 U.S.C. 7545 (c) and (i). Additional support for 
the procedural and enforcement-related aspects of fuel controls, 
including record keeping requirements, comes from sections 114(a) and 
301(a) of the CAA. 42 U.S.C. 7414(a) and 7601(a).

List of Subjects in 40 CFR Part 69

    Environmental protection, Air pollution control.

    Dated: October 4, 2005.
Stephen L. Johnson,
Administrator.
    For the reasons set forth in the preamble, we propose to amend part 
69 of title 40 of the Code of Federal Regulations as follows:

PART 69--SPECIAL EXEMPTIONS FROM THE REQUIREMENTS OF THE CLEAN AIR 
ACT

    1. The authority citation for part 69 continues to read as follows:

    Authority: 42 U.S.C. 7545(c), (g) and (i), and 7625-1.

    2. Section 69.51 is revised to read as follows:


Sec.  69.51  Motor vehicle diesel fuel.

    (a) Definitions. (1) Areas accessible by the Federal Aid Highway 
System are the geographical areas of Alaska designated by the State of 
Alaska as being accessible by the Federal Aid Highway System.
    (2) Areas not accessible by the Federal Aid Highway System are all 
other geographical areas of Alaska.
    (b) Diesel fuel that is designated for use only in Alaska and is 
used only in Alaska, is exempt from the sulfur standard of 40 CFR 
80.29(a)(1) and the dye provisions of 40 CFR 80.29(a)(3) and 80.29(b) 
until the implementation dates of 40 CFR 80.500, provided that:
    (1) The fuel is segregated from nonexempt diesel fuel from the 
point of such designation; and
    (2) On each occasion that any person transfers custody or title to 
the fuel, except when it is dispensed at a retail outlet or wholesale 
purchaser-consumer facility, the transferor must provide to the 
transferee a product transfer document stating:

    ``This diesel fuel is for use only in Alaska. It is exempt from 
the federal low sulfur standards applicable to highway diesel fuel 
and red dye requirements applicable to non-highway diesel fuel only 
if it is used in Alaska.''

    (c) Beginning on the implementation dates under 40 CFR 80.500, 
motor vehicle diesel fuel that is designated for use in areas of Alaska 
accessible by the Federal Aid Highway System, or is used in areas of 
Alaska accessible by the Federal Aid Highway System, is subject to the 
applicable provisions of 40 CFR part 80, subpart I, except as provided 
under 40 CFR 69.52(c), (d), and (e) for commingled motor vehicle and 
non-motor vehicle diesel fuel.
    (d) From the implementation dates of 40 CFR 80.500 until the 
implementation dates specified in paragraph (e) of this section, motor 
vehicle diesel fuel that is

[[Page 59704]]

designated for use in areas of Alaska not accessible by the Federal Aid 
Highway System, and is used in areas of Alaska not accessible by the 
Federal Aid Highway System, is exempt from the sulfur standard of 40 
CFR 80.29(a)(1), the dye provisions of 40 CFR 80.29(a)(3) and 40 CFR 
80.29(b), and the motor vehicle diesel fuel standards under 40 CFR 
80.520 and associated requirements, provided that:
    (1) The exempt fuel is not used in 2007 and later model year 
highway vehicles and engines,
    (2) The exempt fuel is segregated from nonexempt highway diesel 
fuel from the point of such designation; and
    (3) On each occasion that any person transfers custody or title to 
the exempt fuel, except when it is dispensed at a retail outlet or 
wholesale purchaser-consumer facility, the transferor must provide to 
the transferee a product transfer document stating:

    ``This fuel is for use only in those areas of Alaska not 
accessible by the FAHS''.

    (4) The exempt fuel must meet the labeling requirements under Sec.  
80.570, except the following language shall be substituted for the 
language on the labels:

``HIGH SULFUR DIESEL FUEL (may be greater than 15 Sulfur ppm)

WARNING

    Federal Law prohibits use in model year 2007 and later highway 
diesel vehicles and engines. Its use may damage these vehicles and 
engines.''

    (e) Beginning on the following implementation dates, motor vehicle 
diesel fuel that is designated for use in areas of Alaska not 
accessible by the Federal Aid Highway System, or is used in areas of 
Alaska not accessible by the Federal Aid Highway System, is subject to 
the applicable provisions of 40 CFR part 80, subpart I, except as 
provided under 40 CFR 69.52(c), (d), and (e) for commingled motor 
vehicle and non-motor vehicle diesel fuel:
    (1) June 1, 2010 for diesel fuel produced or imported by any 
refiner or importer,
    (2) August 1, 2010 at all downstream locations, except at retail 
facilities and wholesale-purchaser consumers,
    (3) October 1, 2010 at retail facilities and wholesale-purchaser 
consumers, and
    (4) December 1, 2010 at all locations.
    3. Section 69.52 is amended as follows:
    a. By adding paragraph (a)(4).
    b. By revising paragraphs (c)(1) and (c)(2).
    c. By revising paragraphs (f) and (g).
    d. By adding paragraph (h).


Sec.  69.52  Non-motor vehicle diesel fuel.

    (a) * * *
    (4) Heating oil has the meaning given in 40 CFR 80.2.
* * * * *
    (c) * * *
    (1) NRLM diesel fuel and heating oil referred to in paragraphs (b) 
and (g) of this section are exempt from the red dye requirements, and 
the presumptions associated with the red dye requirements, under 40 CFR 
80.520(b)(2) and 80.510(d)(5), (e)(5), and (f)(5).
    (2) NRLM diesel fuel and heating oil referred to in paragraphs (b) 
and (g) of this section are exempt from the marker solvent yellow 124 
requirements, and the presumptions associated with the marker solvent 
yellow 124 requirements, under 40 CFR 80.510(d) through (f).
* * * * *
    (f) Non-motor vehicle diesel fuel and heating oil that is intended 
for use and used only in areas of Alaska not accessible by the Federal 
Aid Highway System, are excluded from the applicable provisions of 40 
CFR Part 80, Subpart I and 40 CFR Part 60, Subpart IIII until the 
implementation dates specified in paragraph (g) of this section, except 
that:
    (1) All model year 2011 and later nonroad and stationary diesel 
engines and equipment must be fueled only with diesel fuel that meets 
the specifications for NR fuel in 40 CFR 80.510(b) or (c);
    (2) The following language shall be added to any product transfer 
document: ``This fuel is for use only in those areas of Alaska not 
accessible by the FAHS;'' and
    (3) Pump labels for such fuel that does not meet the specifications 
of 40 CFR 80.510(b) or 80.510(c) shall contain the following language:

``HIGH SULFUR DIESEL FUEL (may be greater than 15 Sulfur ppm)

WARNING

    Federal Law prohibits use in model year 2007 and later highway 
diesel vehicles and engines, or in model year 2011 and later nonroad 
diesel engines and equipment. Its use may damage these vehicles and 
engines.''

    (g) NRLM standards. (1) Beginning on the following implementation 
dates, NRLM diesel fuel that is used or intended for use in areas of 
Alaska not accessible by the Federal Aid Highway System is subject to 
the provisions of 40 CFR part 80, subpart I, except as provided in 
paragraphs (c), (d), (e), and (g)(2) of this section:
    (i) June 1, 2010 or diesel fuel produced or imported by any refiner 
or importer,
    (ii) August 1, 2010 at all downstream locations, except at retail 
facilities and wholesale-purchaser consumers,
    (iii) October 1, 2010 at retail facilities and wholesale-purchaser 
consumers, and
    (iv) December 1, 2010 at all locations.
    (2) The per-gallon sulfur content standard for all LM diesel fuel 
shall be 15 ppm maximum.
    (3) Diesel fuel used in new stationary internal combustion engines 
regulated under 40 CFR Part 60 Subpart IIII shall be subject to the 
fuel-related provisions of that subpart beginning December 1, 2010.
    (h) Alternative labels to those specified in paragraphs (e)(3) and 
(f)(2) of this section may be used as approved by the Administrator.

[FR Doc. 05-20519 Filed 10-12-05; 8:45 am]
BILLING CODE 6560-50-P


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