Document ID: EPA-HQ-OAR-2004-0229-0011
Agency: epa
Document Type: Rule
Title: Control of Air Pollution From Motor Vehicles and Nonroad Diesel Engines: Alternative Low-Sulfur Diesel Fuel Transition Program for Alaska
Posted Date: 2006-06-06T12:04:47Z

[Federal Register: June 6, 2006 (Volume 71, Number 108)]
[Rules and Regulations]               
[Page 32450-32464]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn06-7]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 69

[EPA-HQ-OAR-2004-0229; FRL-8178-3]
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: Final rule.

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SUMMARY: This final rule will implement the requirements for sulfur, 
cetane and aromatics for highway, nonroad, locomotive and marine diesel 
fuel produced in, imported into, and distributed or used in the rural 
areas of Alaska. Beginning June 1, 2010, diesel fuel used in these 
applications must meet a 15 ppm (maximum) sulfur content standard. This 
rule will assist the implementation of the programs for highway and 
nonroad diesel fuels in Alaska and provide some limited additional lead 
time for development of any necessary changes to the fuel distribution 
system in Alaska's rural areas. We believe this additional lead time is 
appropriate given the circumstances in the rural areas. In 2010, 
highway and nonroad fuel in rural Alaska will be required to meet the 
15 ppm sulfur standard, providing the full environmental benefits of 
these programs to rural Alaska as well. In addition, fuel used by 
engines in rural Alaska covered by the new source performance standard 
(NSPS) for new stationary diesel engines will also be required to meet 
the 15 ppm sulfur standard in 2010.

DATES: This final rule is effective on July 6, 2006.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2004-0229. All documents in the docket are listed on the 
http://www.regulations.gov Web site. Although listed in the index, some 

information is not publicly available, e.g., 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 through http://www.regulations.gov
 or in hard copy at the Air Docket, EPA/DC, EPA 

West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Jeff Herzog or Tia Sutton, Assessment 
and Standards Division, Office of Transportation and Air Quality, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; fax number: (734) 214-4816; telephone numbers: (734) 214-4227 or 
(734) 214-4018, respectively; e-mail addresses: 
Herzog.jeff@epa.gov or Sutton.tia@epa.gov, respectively.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does This Action Apply to Me?

    You are regulated by this rule 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 must follow the regulations. 
However, 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:

------------------------------------------------------------------------
  Examples of potentially regulated
              entities                 NAICS codes \a\    SIC codes \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.

    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/
 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.

[[Page 32451]]

    Certain types of information are not included in the EPA Dockets. 
Information claimed as CBI as well as other information, the disclosure 
of which is restricted by statute, is not available for public viewing 
in EPA's electronic public docket. EPA's policy is that copyrighted 
material is not to be placed in EPA's electronic public docket but is 
available only in printed, paper form in the official public docket. To 
the extent feasible, public docket materials are available in EPA's 
electronic public docket. When a document is selected from the index 
list in EPA Dockets, the system identifies 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.
    It is EPA's policy that public comments, whether submitted 
electronically or on paper, are available, without change, for public 
viewing in EPA's electronic public docket as EPA receives them, unless 
the comment contains copyrighted material, CBI, or other information 
the disclosure of which is restricted by statute. When EPA identifies a 
comment containing copyrighted material, we provide a reference to that 
material in the version of the comment in EPA's electronic public 
docket. The entire printed comment, including the copyrighted material, 
will be available in the public docket.
    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

II. Background
    A. How Was Alaska Treated in the Highway Diesel Rule?
    B. How Was Alaska Treated in the NRLM Diesel Rule?
    C. Alaska's Submission and Comments in Response to NRLM Proposal
    D. How Was Alaska Treated in the NSPS for New Stationary Diesel 
Engines?
III. What Is EPA Specifying for Rural Areas of Alaska?
    A. Highway Diesel Fuel
    B. Nonroad, Locomotive, Marine and Stationary Engine Diesel Fuel
    C. Summary of Sulfur Standards for Alaska
IV. Why Are We Specifying 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 
Model Year 2007 or Later 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 To 
Avoid Contamination and Misfueling
    5. Ensure Enforceability
    B. NRLM and Stationary Diesel Fuel
V. Transition Dates for Urban Areas of Alaska
VI. What Is the Emissions Impact of This Rule?
VII. 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. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Congressional Review Act
VIII. Statutory Provisions and Legal Authority

II. Background

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

    The nationwide implementation dates (including those for all of 
Alaska) for highway diesel fuel at 40 CFR 80.500 et seq. are shown in 
Table II.A-1. (See 66 FR 5002, January 18, 2001; also see Revisions to 
Motor Vehicle Diesel Fuel Sulfur Transition Provisions and Technical 
Amendments to the Highway Diesel, Nonroad Diesel, and Tier 2 Gasoline 
Programs (70 FR 70498, November 22, 2005).)

 Table II.A-1.--Federal Implementation Dates for Highway Diesel Fuel 15
                              ppm Standard
------------------------------------------------------------------------
                  Date                          Applicable parties
------------------------------------------------------------------------
June 1, 2006...........................  Refiners and importers.
September 1, 2006......................  Downstream facilities except
                                          retailers and wholesale-
                                          purchaser consumers.
October 15, 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\ 
Nationwide, 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--this 
is commonly referred to as 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 model year 2007 and later highway engines and 
emission control systems to fuel with high sulfur content, those 
engines must not be fueled with diesel fuel having a sulfur content 
greater than 15 ppm. This requires that all 500 ppm sulfur highway 
diesel fuel (i.e., fuel from the 80/20 Temporary Compliance Option, 
credit-trading, or EPA-approved small refiners) be segregated from the 
15 ppm sulfur highway diesel fuel, labeled for its specific use, and 
dispensed, only in 2006 and earlier highway vehicles and engines. 
Labeling requirements and instructions are discussed at length in a 
later section of this rule.
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    \1\ Alaska was granted an exemption from the 500 ppm standard 
until June 1, 2006.
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    From the beginning of the 500 ppm highway diesel fuel program in 
1993, Alaska was exempted from both the 500 ppm highway diesel fuel 
sulfur standard and the non-highway dye provisions of 40 CFR 80.29 
because of its unique geographical, meteorological, air quality, and 
economic factors.\2\ We granted temporary exemptions for the urban 
areas of the State served by the

[[Page 32452]]

Federal Aid Highway System, and a permanent exemption for the remaining 
State-defined 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, aromatics 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 action 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 the temporary 
exemption. While considering that petition, we began work on a 
nationwide rule to impose more stringent requirements for the sulfur 
content in highway diesel fuel. In the subsequent highway diesel final 
rule (66 FR 5002, January 18, 2001), we applied the complete highway 
engine emission standards in Alaska. The permanent exemption from the 
500 ppm sulfur standard of 40 CFR 80.29 for rural Alaska terminates on 
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 minimum cost 
mechanism to make appropriate modifications for transitioning Alaska to 
the ultra-low sulfur (15 ppm sulfur maximum) highway diesel fuel 
program, 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 of new sulfur requirements for 
nonroad, locomotive, and marine (NRLM) diesel fuel at 40 CFR 80.500 et 
seq. (69 FR 38958, June 29, 2004) begins June 1, 2007 for refiners and 
importers. This implementation date begins the first step of a two-step 
program of transitioning the nation from uncontrolled sulfur levels in 
non-highway diesel fuel to15 ppm sulfur NRLM diesel fuel. In this first 
step, beginning in 2007, all NRLM diesel fuel produced in or imported 
into the U.S. must meet the 500 ppm sulfur standard and applicable 
cetane or aromatic standards. Facilities downstream of the refiners and 
importers must meet the 500 ppm standard on subsequent dates depending 
on location and facility type, as shown below:

                Table II.B-1.--Federal Implementation Dates for NRLM Diesel Fuel 500 ppm Standard
----------------------------------------------------------------------------------------------------------------
 Implementation date for urban
   Alaska and Northeast/Mid-     Implementation date                       Applicable parties
           Atlantic              for all other areas
----------------------------------------------------------------------------------------------------------------
June 1, 2007..................  June 1, 2007.........  Refiners and importers.*
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.
----------------------------------------------------------------------------------------------------------------
* Other than small refiners and those with early-use credits.

    Until June 1, 2010, EPA-approved small refiners/importers and 
refiners/importers with early-use credits can produce NRLM uncontrolled 
sulfur content diesel fuel (also uncontrolled aromatics content and 
cetane index), in most of the U.S. (the areas contained in the 
Northeast/Mid-Atlantic Exclusion Area, as defined in 40 CFR 
80.510(g)(1)). Until 2010, there is no restriction on the use of this 
EPA-approved small refiner/importer NRLM uncontrolled sulfur content 
diesel fuel in NRLM engines. Nevertheless, according to this rule, as 
it applies nationwide, other uncontrolled sulfur content diesel fuel 
(i.e., all fuel meeting the definition of heating oil) must be 
segregated from NRLM diesel fuel, dyed with a yellow marker and red 
dye, and must not be used in NRLM engines and equipment.
    As previously stated, 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 NRLM high sulfur content diesel 
fuel (40 CFR 80.510). However, in that rule, we determined that a dye 
requirement would impose a significant challenge to Alaska's unique 
distribution system, which cannot easily handle another fuel grade that 
must be segregated. Apart from that challenge, 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 
refined 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 II.B-2.--Federal Implementation Dates for NR Diesel Fuel 15 ppm Standard
----------------------------------------------------------------------------------------------------------------
 Implementation date for urban
   Alaska and Northeast/Mid-     Implementation date                       Applicable parties
           Atlantic              for all other areas
----------------------------------------------------------------------------------------------------------------
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.

[[Page 32453]]

December 1, 2010..............  December 1, 2014 All
                                 facilities including
                                 farm tanks and
                                 construction
                                 facility tanks .
----------------------------------------------------------------------------------------------------------------
* Other than small refiners and those with early-use credits.

                 Table II.B-3.--Federal Implementation Dates for LM Diesel Fuel 15 ppm Standard
----------------------------------------------------------------------------------------------------------------
 Implementation date for urban
   Alaska and Northeast/Mid-     Implementation date                       Applicable parties
           Atlantic              for all other areas
----------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------
* Other than small refiners and those with early-use credits.

    Nationally, EPA-approved small refiners/importers and refiners/
importers, except in Alaska, with early-use credits, as noted above, 
may produce or import nonroad diesel fuel that meets the 500 ppm sulfur 
standard until June 1, 2014. While the early-use credit provisions do 
not apply to Alaska, nevertheless, EPA-approved small refiner/importers 
in Alaska may produce 500 ppm sulfur content diesel fuel for all 
approved uses until June 1, 2014. In addition, because of the 
sensitivity to fuel sulfur content of the model year 2011 and later 
nonroad engines and emission control systems that will be certified to 
the Tier 4 emission standards, those engines must not be fueled with 
diesel fuel having a sulfur content greater than 15 ppm.
    Alaska submitted its suggested modification of the highway diesel 
rule for rural Alaska to the Agency on June 12, 2003, after publication 
of our NRLM proposal but before we had completed the final NRLM rule. 
This suggested modification covered only highway diesel for use 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. 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, 
finalized in the NRLM final rule, require that NRLM in urban areas meet 
the same requirements as the contiguous 48 states.
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    \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.
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    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 action requested by the 
State. As such, this would have imposed the NRLM sulfur content 
standards on all diesel fuel in rural Alaska, including all the 
associated labeling, recordkeeping, and reporting requirements. 
However, we deferred imposing the sulfur content standards, along with 
the labeling and recordkeeping, in order to coordinate the NRLM with 
highway sulfur standards. This rule addresses those issues from the 
NRLM final rule raised by the State for NRLM diesel fuel in the rural 
areas, as well as the State's suggestion for an alternative 
implementation plan for highway diesel fuel in the rural areas.

C. Alaska's Submission and Comments in Response to NRLM Proposal

    On June 12, 2003, Alaska submitted its suggested modifications to 
the implementation of the highway diesel fuel sulfur standards in 
Alaska. In its plan, the State indicated that the rural areas will 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.) If we implement a one-step, rather 
than a two-step, transition to 15 ppm sulfur, the rural areas will have 
more time to plan the switch to 15 ppm sulfur diesel fuel, which would 
lessen the overall impact. The two-step transition would have required 
a minimum of 80 percent 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. 
Nevertheless, since all model year 2007 and later highway diesel 
vehicles must use 15 ppm sulfur diesel fuel, fuel meeting this standard 
must be available in rural communities, in which, prior to 2010, there 
is one or more model year 2007 or later highway vehicles. This approach 
provides rural Alaska more time to transition to the low sulfur fuel 
program in a manner that minimizes costs while still ensuring that the 
model year 2007 and later 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 
made the following three requests, stressing the need to avoid the 
segregation of rural Alaska's fuel stream: (1) The State previously 
requested that June 2010 be the deadline for conversion to highway 
diesel fuel in the rural areas of Alaska; (2) it further requested that 
June 2010 be the deadline for conversion of all NRLM diesel fuel to 15 
ppm sulfur content in the rural areas; and, (3) it requested that the 
15 ppm standard applicable to locomotive and marine diesel fuel 
produced in, imported into, and distributed or used within rural Alaska

[[Page 32454]]

be moved up to June 2010, from the June 2012 date in the final 
nationwide NRLM rule.
    Although it was outside the scope of this rule, Alaska also 
suggested that we capture marine engines, locomotive engines, and more 
engine sizes under the 15 ppm sulfur standard in the NRLM final rule, 
and that we 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\
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    \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.
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D. How Was Alaska Treated in the NSPS for New Stationary Diesel Engines

    On July 11, 2005, EPA proposed a new source performance standard 
(NSPS) applicable to stationary compression-ignition (i.e., diesel) 
engines manufactured on or after April 1, 2006 and modified or 
reconstructed after July 11, 2005 (70 FR 39869). The proposed standards 
mirrored in many ways the standards promulgated for nonroad CI engines, 
including requiring non-emergency engines to meet standards likely to 
require sulfur-sensitive aftertreatment beginning in 2011. In addition, 
the proposed NSPS included a requirement that all engines subject to 
the NSPS must use diesel fuel meeting the 500 ppm sulfur standard 
beginning October 1, 2007 and meeting the 15 ppm sulfur standard 
beginning October 1, 2010.\6\
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    \6\ For purposes of this preamble, we are simplifying the 
discussion of the fuel provisions of the NSPS for stationary 
engines. There are different regulations, for example, for 
stationary engines with displacement greater than 30 liters per 
cylinder. The regulations promulgated in this rule exempt all 
regulated stationary engines in rural Alaska from the fuel 
provisions of the NSPS until December 1, 2010, after which time all 
of the provisions of the NSPS, including those particular 
regulations not discussed in the preamble, apply.
---------------------------------------------------------------------------

    EPA received comment from entities in Alaska requesting that EPA 
allow similar exemptions for diesel fuel used by stationary engines in 
rural Alaska as were expected to be proposed for NRLM fuel in rural 
Alaska. EPA subsequently proposed such exemptions in the proposal for 
this rule. The final NSPS rule as not yet been completed, but it is 
expected to reference this issue and discuss EPA's agreement with the 
commenters. The exemptions in this final rule are intended to resolve 
these concerns.

III. What Is EPA Specifying for Rural Areas of Alaska?

A. Highway Diesel Fuel

    With this rule, we are delaying the implementation dates for the 
requirements of 40 CFR 80.500 et seq. for highway diesel fuel produced 
in, imported into, and distributed or used within the rural areas of 
Alaska. We are also specifying that the rural areas of Alaska join the 
rest of Alaska and the nation in implementing the 15 ppm sulfur content 
standard for highway diesel fuel on the final implementation date of 
the nationwide program in 2010.\7\ These provisions were proposed in 
the Notice of Proposed Rulemaking (NPRM) for this rule, which published 
in the Federal Register on October 13, 2005 (70 FR 59690), and are 
being finalized today. The implementation dates for our highway diesel 
fuel requirements in the rural areas of Alaska are shown in table 
III.A-1.
---------------------------------------------------------------------------

    \7\ 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 will be 
harmonized with those of the U.S., and this rule will have rural 
Alaska catch up to the requirements in both the U.S. and Canada on 
June 1, 2010.

   Table III.A-1.--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 III.A-1 are slightly different from the 
downstream dates that mark the end of the nationwide Temporary 
Compliance Option. We specified the above dates for highway diesel fuel 
because they are more consistent with the downstream implementation 
dates associated with NRLM, as described in section III.B below.
    Prior to the dates shown in Table III.A-1, rural areas of Alaska 
will continue to be exempt from the sulfur standards. However, that 
exemption, notwithstanding, we require that diesel fuel used in model 
year 2007 and later vehicles and engines meet the 15 ppm sulfur content 
standard, because emission control systems on those engines are 
sensitive to fuel sulfur content. The same fueling requirement applies 
nationwide, including the urban areas of Alaska, in the 2006-2010 time 
frame.
    To fully implement the transition program for rural Alaska, we are 
extending the current exemption from the 500 ppm sulfur standard of 40 
CFR 80.29 until the implementation dates in 2010. Had we not included 
this 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. However, under this 
rule, highway diesel fuel sulfur content will remain uncontrolled in 
rural Alaska until the implementation dates in 2010.
    In its comments to the proposal for this rule, the State expressed 
concern regarding how the implementation schedule may adversely impact 
the villages in rural Alaska. That is, that the rule sets out distinct 
transition dates for different applicable parties, including refiners 
and importers; downstream facilities; retailers and wholesale 
purchasers; and tank farms, including construction facility tanks. The 
State's concern was that in a typical Alaskan village, many of these 
designations either do not exist or may all be included in a combined 
entity. For example, there may be a village or villages in which fuel 
is pumped from a barge into a tank from which villagers purchase fuel. 
Thus, it is arguable that retail customers in such a rural village 
could be forced into compliance as early

[[Page 32455]]

as August 1, 2010, when in fact the last seasonal fuel barge typically 
doesn't arrive until October. Regarding this concern and for this rule, 
we accept, as a single entity, any legally recognized combination 
(defined above as a ``combined entity'') of the downstream parties as 
listed in the above implementation table. The compliance date for the 
``combined entity'' is to be that date on which the ``party or member 
of the entity'' listed at the latest date on the implementation 
schedule is to be in compliance. For example, in cases where there may 
be no combined entity, each party is expected to be in compliance 
according to the schedule. On the other hand, there may be cases in 
which all the downstream parties, including retail sales, are combined 
into single entities. In these cases, the compliance date for the 
entities would be December 1, 2010.

B. Nonroad, Locomotive, and Marine and Stationary Engine 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 
finalizing any provisions for rural Alaska so they could be coordinated 
with those for the highway diesel program in rural Alaska. This rule 
specifies that NRLM diesel fuel produced in, imported into, and 
distributed or used within the rural areas of Alaska is not subject to 
the requirements of 40 CFR 80.500 et seq., until 2010. Thus, during the 
first step of the nationwide program from June 1, 2007 until June 1, 
2010, NRLM diesel fuel sulfur content will remain uncontrolled in rural 
Alaska. Beginning June 1, 2010, nonroad diesel fuel in rural Alaska 
will join the rest of Alaska and the nation in implementing the nonroad 
diesel fuel requirements of 40 CFR 80.500 et seq. Also, due to the 
unique circumstances in rural Alaska which limit the number of grades 
of diesel fuel that can be stored and distributed, this rule further 
specifies that the 15 ppm sulfur standard applicable to locomotive and 
marine fuel (LM) be moved forward to 2010 to be implemented at the same 
time as the 15 ppm sulfur standard for nonroad (NR) diesel fuel. In 
this way, there will only be one 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 be present elsewhere in the U.S. The 
implementation dates for the NRLM diesel fuel sulfur standards in rural 
Alaska are shown in Table II.B-1. All of the provisions noted above 
that are being finalized in this rule were proposed on October 13, 2005 
(70 FR 59690).

    Table III.B-1.--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.
------------------------------------------------------------------------

    Similarly, diesel fuel used in engines covered by the NSPS for 
diesel stationary engines in rural Alaska is exempt from the 
requirements of 40 CFR 80.510 until December 1, 2010. Beginning on 
December 1, 2010, all diesel fuel used in engines covered by the 
stationary internal combustion engine NSPS (i.e., all stationary diesel 
engines manufactured on or after April 1, 2006 and all stationary 
diesel engines modified or reconstructed after July 11, 2005) is 
subject to the requirements of 40 CFR part 60, which is expected to 
refer to the provisions of 40 CFR 80.510, as they apply to nonroad 
engines.
    Since the urban areas of Alaska will follow the nationwide schedule 
for sulfur standards, some 500 ppm LM fuel will likely be available in 
these areas in the 2010-2012 timeframe, during which time nonroad and 
stationary engines requiring 15 ppm fuel will also likely be present. 
We remind all those who will be handling both 500 ppm and 15 ppm sulfur 
content fuel that model year 2011 nonroad and stationary engines are 
prohibited from using the 500 ppm sulfur content LM fuel. We wish to 
further stress that although heating oil will remain uncontrolled for 
sulfur content in all areas of Alaska, it must not be used in any model 
year 2007 or later highway vehicles or engines, or in any model year 
2011 or later nonroad or stationary engines or equipment.

C. Summary of Sulfur Standards for Alaska

    Table III.C-1 shows the Federal and Alaskan sulfur standards for 
highway and NRLM diesel fuel. Note that Alaska must ensure that model 
year 2007 and later highway engines and model year 2011 and later 
nonroad and stationary source engines are only fueled with fuel meeting 
the 15 ppm standard.

        Table III.C-1.--Summary of Federal and Alaskan Sulfur Standards for Diesel Production and Imports
                                               [Parts per million]
----------------------------------------------------------------------------------------------------------------
                                                          Before
               Area                        Fuel            2006       2006    2007-2009  2010-2011  2012[dagger]
----------------------------------------------------------------------------------------------------------------
Federal..........................   HW................        500   [dagger]   [Dagger]         15           15
                                                                   [Dagger]1         15
                                                                           5
Urban Alaska.....................  HW.................       none   [dagger]   [Dagger]         15           15
                                                                   [Dagger]1         15
                                                                           5
Rural Alaska.....................  HW.................       none       none       none   [dagger]           15
                                                                                                15
Federal..........................   NR................       none       none   [dagger]   [dagger]           15
                                                                                    500         15
Urban Alaska.....................  NR.................       none       none   [dagger]   [dagger]           15
                                                                                    500         15
Rural Alaska.....................  NR.................       none       none       none   [dagger]           15
                                                                                                15
Federal..........................   LM................       none       none   [dagger]        500   [dagger]15
                                                                                    500
Urban Alaska.....................  LM.................       none       none   [dagger]        500   [dagger]15
                                                                                    500
Rural Alaska.....................  LM.................       none       none       none   [dagger]          15
                                                                                                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 500 ppm standard, is segregated from 15 ppm, and is not used in MY2007 and
  later engines.

[[Page 32456]]

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

    Rural Alaska represented 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 estimated 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 five 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 (as 
well as aromatics content and/or cetane index).\8\ A single grade of 
fuel is generally distributed to rural Alaska. It is usually downgraded 
Jet A (which has a pour point of -50 degrees) in order to ensure the 
fuel is usable in arctic conditions. If we had followed the nationwide 
requirements, either multiple grades of arctic grade fuel would have 
had to be transported and stored for multiple uses, or else a single 
grade of fuel meeting the 15 ppm standard would have had to be used by 
everyone. The limited transportation and storage capabilities in rural 
Alaska would have forced communities to build additional infrastructure 
to handle multiple fuel grades. In order to provide a single grade of 
fuel meeting the 15 ppm standard, these small communities would have 
been forced to pay a premium for a fuel that was required for only a 
very small number of engines in the 2006 to 2010 timeframe. Either 
approach could have caused significant economic hardship for the many 
rural communities which have primarily subsistence economies.
---------------------------------------------------------------------------

    \8\ 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 and 
stationary engines and equipment certified to the Tier 4 nonroad 
standards beginning with the model year 2011, receive the 15 ppm sulfur 
content diesel fuel they need. By coordinating the transition to 15 ppm 
of highway, NRLM, and regulated stationary engine fuels in 2010, rural 
communities can make individual decisions about whether to use only one 
grade of diesel fuel (e.g., ultra low) or build additional storage 
tanks to handle two grades, one of which would be high sulfur fuel, to 
be used for space heating and unregulated power generation. In 
addition, requiring rural areas to provide 15 ppm diesel fuel for all 
NRLM and regulated stationary applications beginning in 2010, rather 
than exempting them permanently,\9\ helps them avoid the temptation to 
misfuel that may arise as the number of model year 2011 and later 
engines increases and they are faced with the choice of either building 
additional tankage or using only 15 ppm fuel.
---------------------------------------------------------------------------

    \9\ The permanent exemption under the existing regulations still 
requires all model year 2011 and later 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 80.550-80.553), 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 must not be used 
in model year 2007 and later highway diesel vehicles. These nationwide 
standards and deadlines apply to all of Alaska, including the rural 
areas. Since the current fuel supply in rural Alaska is primarily high 
sulfur, these nationwide requirements for highway fuel would have 
caused the highway fuel supply in rural Alaska to switch to 15 ppm 
sulfur diesel fuel, and possibly some to 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 are 
permanently exempt, and the urban areas are 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 this rule, 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 stages of the highway diesel 
program, and thus would need little, if any, 15 ppm sulfur diesel fuel 
during that time. The State also indicated that rural areas need more 
time to plan the switch to 15 ppm sulfur diesel fuel. We have reduced 
the overall impact of this fuel switch by implementing a one-step, 
rather than a two-step, transition to 15 ppm sulfur.
    There are about 600 highway diesel vehicles with an average age of 
about 18 years in the rural areas of Alaska. Many replacement vehicles 
are typically pre-owned, and only about five to 15 new diesel vehicles 
are brought into the rural areas each year.\10\ Thus, most of the 
approximately 250 rural area villages likely won't obtain their first 
model year 2007 or later diesel highway vehicle for some time after 
2007.
---------------------------------------------------------------------------

    \10\ 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, usually a high sulfur content fuel, is downgraded, distributed, 
(and sometimes mixed with 1 diesel), sold, and used as 
1 diesel because it meets arctic specifications. 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 must continue to import jet fuel untainted 
by dye for aviation purposes. In the rural areas, fuel storage tanks 
are owned, operated, and maintained by the communities. Thus, any new 
tankage or additional tank maintenance would have fallen directly on 
those rural communities, most of which have subsistence economies.
    We agree with the State that a 2010 implementation date for rural 
Alaska is justified. We expect that the demand for 15 ppm sulfur 
content fuel will be very low in rural Alaska between 2006 and 2010, 
because very few model year 2007 and later highway diesel vehicles are 
expected there during those years.

[[Page 32457]]

Requiring the rural areas to comply with the nationwide requirements 
for 15 ppm fuel \11\ during the first step of the highway program 
(2006-2010) would have imposed a significant economic burden on 
Alaska's rural communities to expand their distribution and storage 
systems without providing 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. As the number 
of model year 2007 and later highway vehicles increases, the 
environmental benefits from using 15 ppm sulfur diesel fuel will also 
increase. Extending the lead time for sulfur-controlled diesel fuel by 
an additional four years (from 2006 to 2010) is 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 
point in time at which both the Temporary Compliance Option (TCO) for 
highway diesel fuel ends and the requirement for 15 ppm nonroad diesel 
fuel begins. Distribution of diesel fuel to meet demand is obviously 
more efficient if the same sulfur standards apply everywhere. As a 
result, 2010 is an ideal year in which to transition rural Alaska to 15 
ppm fuel in a single step.
---------------------------------------------------------------------------

    \11\ 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 do not require the use of 500 ppm sulfur highway diesel fuel as 
a transition to 15 ppm fuel between June 1, 2006 and June 1, 2010. Such 
an interim step would have created the same burden on 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 issue of requiring low sulfur highway diesel fuel in rural 
Alaska was not whether there was a source of the low-sulfur diesel 
fuel, nor whether the fuel might meet the 500 ppm or 15 ppm sulfur 
standard. The issue was that most of the distribution systems, 
including the storage tanks, were designed to handle a single fuel 
grade. To have required an additional fuel grade would have imposed an 
unreasonable economic burden on communities already functioning under 
subsistence economies. If we had imposed a transition of 500 ppm to 15 
ppm sulfur content highway diesel fuel on June 1, 2006, rural Alaska 
would not have the relief provided by this rule.
    Based on a comment received in response to our NPRM, we learned 
that there are, in fact, marine facilities in some of the State-defined 
rural areas of Western Alaska, particularly along the Pribilof and 
Aleutian islands, which can handle more than one grade of fuel. Under 
the regulations, small refiners/importers with access to such 
facilities could continue to supply 500 ppm sulfur content fuel to such 
marine facilities until June 1, 2014. We remind those who handle both 
500 ppm and 15 ppm sulfur content fuels that they must be kept 
segregated, properly labeled, and sold only to legal end-users.
    As discussed in the January 18, 2001 Federal Register notice, any 
revisions to the final rule for highway diesel fuel in Alaska, must as 
a minimum: (1) Ensure an adequate supply (either through production or 
imports) of 15 ppm fuel to meet the demand of any model year 2007 or 
later 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. As 
discussed below, we believe the provisions in this rule meet these 
criteria.
1. Ensure an Adequate Supply (Either Through Production or Imports) of 
15 ppm Sulfur Diesel Fuel To Meet the Demand of Any Model Year 2007 or 
Later Vehicles
    Alaska has nearly 9000 highway diesel vehicles. The fuel provided 
to those vehicles in the areas served by the Federal Aid Highway 
System--approximately 8400 vehicles--must meet the requirements of the 
highway rule, regardless of this rule. Other than diesel fuel produced 
or imported by an EPA-approved small refiner/importer under 40 CFR 
80.550-80.553, at least 80 percent of the fuel produced or imported 
into Alaska, 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, under 
this rule, the production or importation of 15 ppm sulfur diesel fuel 
until June 1, 2010 for the model year 2007 and later highway vehicles 
in the rural areas should not be a challenge.
    The significant challenge in the rural areas is the distribution 
and storage infrastructure, which is currently designed to handle only 
one grade of distillate fuel. The highway diesel rule would have 
required changes to that infrastructure in order to handle an 
additional grade, including a shift to 15 ppm sulfur diesel fuel for 
all purposes, to occur by September 1, 2006. However, under this rule, 
changes to the distribution and storage infrastructure, or a shift to 
15 ppm sulfur diesel fuel for all purposes, will not be required in 
rural areas until October 1, 2010. Thus, this rule grants the fuel 
distributors and villages in rural areas an additional four years to 
make the necessary changes. However, they are still required to supply 
15 ppm sulfur fuel to all model year 2007 and later highway vehicles 
and engines.
    Supplying 15 ppm sulfur diesel fuel for model year 2007 and later 
diesel vehicles until October 1, 2010 can be accomplished several ways. 
A village fwith no model year 2007 or later diesel vehicles or engines 
will not need the new fuel and/or infrastructure changes until October 
1, 2010. Nevertheless, if someone in a rural village does purchase or 
otherwise operate one or more model year 2007 or later highway vehicles 
or engines, 15 ppm sulfur fuel must be supplied by some means. One 
suggestion is to ship the fuel in 55-gallon drums; another is to modify 
the fuel infrastructure in order to handle a second fuel grade. A third 
option is for the village to shift to 15 ppm sulfur content fuel for 
all of its fuel needs.
    The first option--using 55-gallon drums--will likely have 
additional transportation costs for shipping the new fuel for the model 
year 2007 and later diesel vehicles, but the volume will likely be low 
(only 20 to 60 of those vehicles by the end of 2010 distributed among 
the approximate 250 villages in rural Alaska). Thus, we expect that on 
average, the overall incremental cost of using this 55-gallon drums to 
supply diesel fuel to rural Alaska will be negligible.
    The second option (changing the fuel infrastructure to handle the 
additional fuel grade) will likely have the highest cost impact because 
the distributors would need to split their barge deliveries into 
multiple fuel grades, and a village would need multiple storage, 
handling, and delivery systems. These modifications will cost money. If 
a village were to choose this option, we

[[Page 32458]]

expect the choice would likely impact consumers by increasing the cost 
of all fuels, not just the 15 ppm diesel.
    While the third option (switching all uses to 15 ppm sulfur diesel) 
would avoid any incremental transportation, storage, and delivery 
systems costs, nevertheless the 15 ppm sulfur fuel will likely cost 
more than the higher sulfur fuel. Over the short term, this higher fuel 
cost may be significant, especially compared to option one, in that 
heating and electricity generation accounts for about 95%, on average, 
of the distillate consumption in a village.
    Under this rule, it is possible that all of the above options, or 
some combination of them, will be found prior to December 1, 2010 among 
the villages that need the fuel. In any case, during this time period, 
we believe an adequate supply of 15 ppm sulfur diesel fuel for all 
model year 2007 and later vehicles and engines in the rural areas will 
not present a significant challenge.
2. Ensure Sufficient Retail Availability of Low Sulfur Fuel for New 
Vehicles in Alaska
    Sufficient retail availability \12\ 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). In 
some cases, where villages have no separate consumer tanks, pumps, or 
separate filling stations, the villagers withdraw fuel directly from 
the tank farm. In villages with refueling locations other than the 
village tank farm, the pumps are, nevertheless, usually filled directly 
from the village tank farm. Presumably, fuel deliveries in 55-gallon 
drums will be delivered either to the village tank farm or directly to 
the vehicle owners.
---------------------------------------------------------------------------

    \12\ 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 this rule, and as required nationwide, all diesel fuel for 
model year 2007 and later highway diesel vehicles and engines in the 
rural areas must meet the 15 ppm sulfur content standard. As previously 
discussed, we expect that from as few as 20 to as many as 60 model year 
2007 and later diesel vehicles will arrive in Alaska between late 2006 
and December 1, 2010, the date by which all highway diesel fuel in the 
rural area retail facilities must meet the 15 ppm sulfur content 
standard. Likewise, we expect that the demand for 15 ppm sulfur content 
diesel fuel will be very low for these vehicles in the rural areas. 
Nevertheless, regardless of whether the small volume of this fuel for 
these vehicles prior to December 1, 2010 is stored in 55 gallon drums, 
in segregated tanks, or in village tanks, storing the additional 
incremental volume for a few new vehicles will present no significant 
challenge.
4. Include Measures To Ensure Segregation of the 15 ppm Fuel and Avoid 
Contamination and Misfueling
    Under this rule, between 2006 and December 1, 2010, all segregation 
and contamination avoidance measures that apply nationwide to highway 
diesel fuel, except for the dye requirements, are applicable to diesel 
fuel used in model year 2007 and later highway vehicles and engines in 
the rural areas of Alaska. We do not believe any measures beyond these 
are necessary. After 2010, all diesel fuel meeting the 15 ppm standard 
must be segregated from all other diesel fuel. After June 1, 2010 and 
until December 1, 2014, it is incumbent upon all fuel handlers, 
especially those handling both 15 ppm sulfur content fuel and 500 ppm 
sulfur content fuel produced and/or distributed by EPA-approved small 
refiners, to assure that the 15 ppm sulfur content fuel is segregated 
from the small refiner fuel and that both fuels are dispensed to 
appropriate and legal end-users, are properly labeled, and carry 
appropriate transfer documents for all custody transfers other than 
retail sales.
5. Ensure Enforceability
    Under this rule, between 2006 and December 1, 2010, all quality 
assurance measures (including testing and sampling) and enforcement 
provisions that apply nationwide to highway diesel fuel, except for the 
dye requirements, are applicable to any diesel fuel used in model year 
2007 and later highway vehicles and engines in the rural areas of 
Alaska. We do not believe that any additional measures beyond these are 
necessary.

B. NRLM and Stationary Diesel Fuel

    As discussed above, under this rule, 15 ppm sulfur content highway 
diesel fuel must be in retail facilities in the rural areas by December 
1, 2010. In comments on the NRLM proposal, the State 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 allowed us to coordinate the highway, NRLM, and regulated 
stationary diesel fuel requirements in the rural areas. Given the 
significant distribution limitations in rural areas, this was a 
critical need.
    This rule specifies one exception to the nationwide NRLM standards 
and implementation deadlines in effect for diesel fuel produced in, 
imported into, and distributed or used within rural Alaska, beginning 
June 1, 2010. This exception is that locomotive and marine diesel fuel 
will also be required to meet the 15 ppm sulfur content standard on 
June 1, 2010 rather than in 2012.
    Rather than allowing the current exemption to continue 
indefinitely, we believe that imposing the 15 ppm standard on all NRLM 
and regulated stationary diesel fuel in rural Alaska is both warranted 
and feasible. First, all highway diesel fuel, as well as all NRLM 
diesel fuel and all diesel fuel for regulated stationary engines in 
urban areas, must 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 in the rural areas will likely 
meet the 15 ppm standard even under the existing regulations. Second, 
we expect that the model year 2011 and later nonroad and stationary 
engines will represent an increasing fraction of the nonroad and 
stationary fleet beginning in 2010. Under the indefinite exemption, 
rural communities would have had to decide when to switch their NRLM 
fuel to only 15 ppm sulfur content fuel. Under those conditions, there 
may have been a temptation to misfuel model year 2011 and later model 
year engines in order to avoid making this switch. If misfueling had 
occurred for this or any other reason the environmental benefits of the 
model year 2011 and later nonroad and stationary engines would be 
compromised. In addition, while pre-2007 highway engines and pre-2011 
nonroad and stationary engines are not sensitive to high sulfur fuels, 
the direct environmental benefits from using lower sulfur fuel, 
including reduced sulfur dioxide and diesel sulfate particulate, would 
be lost if there were an indefinite exemption. In summary, there are 
logistical and economic benefits for coordinating the implementation of 
highway, NRLM, and stationary 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.
    In response to our proposal, we received a comment expressing 
concern about whether an EPA-approved small refiner's status will be 
affected by the June 1, 2010 NRLM rule as we have described its 
implementation. That is, whether an EPA-approved small refiner

[[Page 32459]]

can produce, import, or otherwise distribute 500 ppm NRLM diesel fuel 
for general use in other than model year 2007 and later diesel vehicles 
and engines between June 1, 2010 and mid-2014. As stated previously in 
this rule, ``EPA-approved small refiners * * * may produce or import 
diesel fuel that meets the 500 ppm sulfur standard until June 1, 
2014.'' It should also be clear that until June 1, 2014 EPA-approved 
small refiners can distribute or otherwise sell 500 ppm sulfur content 
NRLM diesel fuel for use in pre-model year 2007 diesel vehicles and 
engines as well as for heating and, if the engine is unregulated, 
electrical generation. However, along with all other rules and 
restrictions that apply to small refiners, we stress that the small 
refiner 500 ppm sulfur content NRLM diesel fuel can only be sold to 
appropriate and legal end-users and must be properly labeled and 
segregated from all other fuels after June 1, 2010.
    The NRLM final rule exempts all areas in Alaska from the red dye 
and yellow marker requirements, and any 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 can be commingled. To 
eliminate the need for segregation, beginning June 1, 2010, highway and 
NRLM diesel fuels may be commingled if both meet the 15 ppm sulfur 
standard as well as applicable aromatics and/or cetane standards. The 
market will determine whether segregated or commingled distillate fuel 
for highway, NRLM, and heating oil are available in any given area.

V. Transition Dates for Urban Areas of Alaska

    As stated above in section II.A., under the final highway diesel 
rule, provisions were provided for the transition of the distribution 
system from 500 ppm diesel fuel to 15 ppm diesel fuel. These provisions 
were recently modified such that refiners are required to begin 
producing 15 ppm highway diesel fuel on June 1, 2006, while 
distributors are allowed until September 1, and retail outlets and 
wholesale purchaser-consumers until October 15. A comment was received 
from the State of Alaska that the current language of the regulations 
would essentially require that all parties downstream of the refinery 
in Alaska would have to transition to a 500 ppm standard by June 1 
since they are currently exempted from the 500 ppm standard and are at 
a higher sulfur level. This was clearly not the intent of the final 
highway diesel rule. The intent was for fuel distributors in Alaska to 
have the same transition period as distributors in the rest of the 
country. Therefore, distributors would be allowed to remain at high 
sulfur until September 1 and retail outlets and wholesale purchaser-
consumers would be allowed to remain at high sulfur until October 15. 
This final rule is making this change to be consistent with the 
original intent of the highway diesel rule.

VI. What Is the Emissions Impact of This Rule?

    The flexibility offered by this rule will not increase diesel 
emissions over current levels, but will likely delay some sulfate 
emission reduction benefits in rural Alaska until 2010, when low sulfur 
diesel fuel is more widely used. The sulfate emissions of pre-model 
year 2007 highway vehicles and engines and of all marine engines in 
rural Alaska will likely remain at current levels until December 1, 
2010. Accordingly, where low sulfur fuel is available, sulfate 
emissions will be reduced.
    The State of Alaska reported that there are approximately 600 
diesel highway vehicles distributed among approximately 250 villages or 
rural communities. That is an average of fewer than three diesel 
vehicles per village, although the absolute numbers likely vary 
considerably between the smallest and largest villages. We believe that 
if 15 ppm sulfur content fuel is available for this small number of 
pre-model year 2007 diesel highway vehicles, the sulfate emission 
reductions will, nevertheless, be very small. On the other hand, the 
villages will receive the full emission reduction benefits from any 
model year 2007 and later diesel highway vehicles fueled with 15 ppm 
sulfur content diesel fuel that may be present. Once again, we don't 
expect many of these late-model vehicles will be present in the rural 
areas, so the emissions reduction benefits will be limited.
    We do not know the actual 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 
that the fuel used for other nonroad and locomotive engines is 
negligible. We also know that fuel used for power generation 
constitutes about 45 percent of total fuel used, but we do not know how 
many new stationary engines regulated under the NSPS will be installed 
in rural Alaska prior to 2010, given the long life of such engines. 
Thus, sulfate emission benefits, primarily from marine and new 
stationary engines, will be delayed as long as high sulfur diesel fuel 
is used, for the most part, 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 
unregulated power generation services. If this is the case, there will 
be significantly greater sulfate PM benefits than strictly required. 
Nevertheless, there is at least one EPA-approved small refiner in 
Alaska that can produce, import, and distribute 500 ppm sulfur content 
fuel for all uses other than highway use in Alaska or in model year 
2007 and later diesel vehicles and engines, between December 1, 2010 
and June 1, 2014. Accordingly, to the extent this 500 ppm sulfur 
content fuel is used by legal end-users, rather than the 15 ppm sulfur 
content that would otherwise be used, the sulfate emissions benefit 
will be reduced by a smaller amount. Nevertheless, we expect the net 
difference will be quite small. Ultimately there will be benefits in 
terms of reduced PM (including sulfate PM), HC, sulfur dioxide, and 
NOX emissions from highway, nonroad, and stationary engines 
meeting the new standards, and required to use 15 ppm fuel.
    As in previous exemptions from the 500 ppm sulfur standard, we will 
not order any vehicle or engine recalls based on emissions exceedances 
caused by the use of high sulfur fuel (greater than 500 ppm sulfur for 
pre-model year 2007 vehicles and engines; greater than 15 ppm sulfur 
for model year 2007 and later vehicles and engines) in rural Alaska 
during the period prior to the implementation dates of this rule. Our 
testing goal is to establish whether properly maintained and operated 
engines will meet emission standards during their useful lives. This is 
consistent with the requirements for recall specified in section 
207(c)(1) of the CAA. Further, manufacturers may have a reasonable 
basis for denying emission related warranties where damages or failures 
are caused by the use of high sulfur fuel in rural Alaska.
    In a comment to a previous proposal to grant Alaska a sulfur 
exemption, the Engine Manufacturers Association expressed concern 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 in an engine should raise a `` `rebuttable 
presumption' '' that the fuel caused the engine to fail, and that the 
EPA should have the burden of rebutting that presumption. It also

[[Page 32460]]

asserted that an emissions warranty is a regulatory requirement under 
section 207, according to which, only the 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 as in the case of this rule, engines operated in an 
area with an implementation date later than that for the rest of the 
country. Consequently, we affirm that, for recall purposes, we will not 
seek to conduct or otherwise cause the in-use testing of engines we 
know have been exposed to high sulfur fuels in rural Alaska. We believe 
we can readily obtain the necessary number of engines for our testing 
program by screening-out engines that were operated in rural Alaska. 
Having reviewed the warranty concerns of the Engine Manufacturers 
Association regarding previous sulfur exemptions, we believe, as 
previously stated, that our position regarding warranties is consistent 
with section 207(a) and (b) of the CAA and does not require any new or 
amended regulatory language for implementation.
    The additional changes that this rule is making to clarify that 
fuel distributors and retailers and wholesale purchaser-consumers in 
urban Alaska will follow the same transition period as the rest of the 
country will not have any emissions impacts. These additions merely 
ensure that the original intent of the highway diesel rule transition 
period is reflected in the regulations.

VII. 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 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 previously approved the ICRs contained in the existing 
regulations at 40 CFR 80.500 et seq. and assigned OMB control number 
2060-0308 and EPA ICR numbers 1718.03 (dying 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.
    This rule does not establish any new requirements for highway 
diesel fuel sold in Alaska, but instead only delays the requirements 
for 15 ppm fuel from 2006 to 2010 in rural areas of Alaska. Under this 
rule, reporting requirements in rural Alaska after 2010 will be exactly 
the same as they are under the final highway diesel sulfur rule. The 
previously approved ICR for highway diesel fuel applies to rural 
Alaska. Thus no new ICR or amended ICR is required for highway fuel.
    As the NRLM final rule did not finalize the sulfur standards for 
rural Alaska, the requirements in this rule for NRLM diesel fuel in 
rural Alaska are new. Nevertheless, according to the NRLM rule, all 
model year 2011 and later engines in rural Alaska must use fuel meeting 
the 15 ppm diesel fuel sulfur content 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) covers all U.S. states, 
including rural Alaska. For example, the aforementioned nonroad ICR 
made an addition to the existing diesel fuel regulations by explicitly 
defining ``diesel fuel'' as fuel sold in any state or territory of the 
U.S. In addition, product transfer documents, as required in the 
nonroad final rule, explicitly include those to be 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 nonroad final rule ICR is applicable for this rule.
    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

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule.
    For purposes of assessing the impacts of this rule on small 
entities, a small entity is defined as: (1) A small business as defined 
by the Small Business Administrations' regulations at 13 CFR 121.201; 
(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.
    After considering the economic impacts of this final rule on small

[[Page 32461]]

entities, EPA has concluded that this action will not have a 
significant economic impact on a substantial number of small entities.
    This rule delays the implementation date for ultra-low sulfur 
highway diesel fuel in rural Alaska compared to the existing 
regulations and extends the same deadline to NRLM diesel fuel in rural 
Alaska to bring those areas in line with the national standards. Since 
this rule delays the 15 ppm highway sulfur standard in rural areas, the 
regulatory burden is effectively relieved.
    Regarding NRLM diesel fuel in Alaska, the requirements in this rule 
are new in that rural areas of Alaska need not switch to the15 ppm 
diesel fuel sulfur content standard as specified in the NRLM final 
rule. It was our stated intention in that rule that all of Alaska, 
including the rural areas, switch to 15 ppm sulfur diesel fuel content 
fuel at the time specified in the NRLM final rule. However, as 
previously explained, we deferred that action in order to coordinate 
the implementation of highway and NRLM diesel fuel in rural Alaska.
    Even though the NRLM sulfur standards in this rule are new, they do 
not impose a significant economic impact on a significant number of 
small entities. The distribution and storage system limits the number 
of grades of diesel fuel that can be stored and distributed within the 
approximately 250 rural area villages in Alaska. This discourages the 
introduction of a small volume of a specialty fuel, generally forcing 
these communities to 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 likely be 
pursued only if the equipment would be needed in the long term. On the 
other hand, we believe that after 2010 an increasingly greater 
proportion of the fuel inventory in an average rural village will need 
to meet the 15 ppm standard, as the number of model year 2011 and later 
stationary, nonroad and marine engines in these villages is expected to 
increase. Thus, in the long term, segregated storage and distribution 
capacity would become unnecessary. In addition, since the highway fuel 
in rural areas will already be 15 ppm sulfur standard diesel fuel by 
2010, we believe many rural communities will simply switch to 15 ppm 
sulfur standard diesel for all uses, rather than install additional 
storage and distribution capacity. This rule'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 rural areas.
    Lastly, the additional changes that this rule is making to clarify 
that fuel distributors and retailers and wholesale purchaser-consumers 
in urban Alaska will follow the same transition period as the rest of 
the country (following the request from the State of Alaska) will not 
have any emissions impacts. These additions merely ensure that the 
original intent of the highway diesel rule transition period is 
reflected in the regulations.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a 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 an explanation with the final rule of why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory rules with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    This rule 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 imposes no enforceable duty on 
any State, local, or tribal governments or on the private sector, and 
does not contain a Federal mandate that results in expenditures of $100 
million or more for State, local, and tribal governments, in the 
aggregate, or for the private sector in any one year. Rather, this 
rule: (1) 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; and, (2) clarifies that fuel distributors and retailers and 
wholesale purchaser-consumers in urban Alaska will follow the same 
transition period as the rest of the country, as was the intent of the 
highway diesel final rule. Thus, this 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 rule does not have federalism implications. It does 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 rule simply applies a delayed 
implementation date for low sulfur highway diesel fuel in the rural 
areas of Alaska, and provides a delayed implementation date for 
inclusion of rural Alaska in the nationwide nonroad, locomotive and 
marine (NRLM) diesel fuel program. 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 gathering feedback from the rural 
communities about our highway and NRLM diesel fuel requirements. In 
fact, this rule is an alternative implementation plan for low sulfur 
highway diesel fuel in rural Alaska that resulted directly from, and is 
consistent with State submittals to EPA, as well as with comments to 
the

[[Page 32462]]

proposed NRLM diesel rule as it relates to rural Alaska, as previously 
mentioned 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, we specifically solicited 
comment on this 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 tribal officials in the development of regulatory 
policies that have tribal implications.''
    This rule does not have tribal implications as specified in 
Executive Order 13175. The regulations this 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 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 that 
they or their constituents purchase and use diesel fuel.
    We specifically solicited additional comment on this rule from 
tribal officials. Also, in order for tribal officials to provide us 
with meaningful and timely input, State representatives consulted with 
them early in the process of developing this regulation. State 
representatives spent much time gathering feedback about our highway 
and NRLM diesel fuel requirements from representatives of both rural 
and tribal communities. The State gave full consideration to that 
feedback in their request to EPA for an alternative implementation plan 
for low sulfur highway diesel fuel in rural Alaska. Likewise, the State 
gave full consideration to that feedback in their comments to the 
proposed NRLM diesel rule as it relates to rural Alaska, as mentioned 
previously in this preamble.

G. Protection of Children From Environmental Health & Safety Risks

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, 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.
    We do not believe this rule presents disproportionate environmental 
health or safety risks to children, nor do we believe it is 
economically significant. Therefore, this rule is not subject to 
Executive Order 12866. This rule will 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 highly unlikely and it clarifies the dates of the 
transition period for distributors and retailers/wholesale purchaser-
consumers in urban Alaska.
    We invited the public to submit or identify peer-reviewed studies 
and data that assessed results of early-life exposure to the sulfur-
based emissions (primarily SO2) addressed by this rule, of 
which we may not have been aware.

H. Executive Order 13211: 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 104-113, section 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 did not consider using any voluntary consensus standards.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective July 6, 2006.

VIII. Statutory Provisions and Legal Authority

    The statutory procedural authority under which this rule is being 
promulgated is found in section 307(d) of the Clean Air Act and section 
4 of the Administrative Procedure Act. Statutory authority for this 
rule is also found in sections 211(c) and 211(i) of the CAA, which 
directs 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 recordkeeping 
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: May 25, 2006.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, part 69 of title 40 of the 
Code of Federal Regulations is amended as follows:

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

0
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.

0
2. Section 69.51 is revised to read as follows:

[[Page 32463]]

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), the dye provisions of 40 CFR 80.29(a)(3) and (b) and the 
motor vehicle diesel fuel standards and dye provisions under 40 CFR 
80.520 and associated requirements until the implementation dates of 40 
CFR 80.500 for refiners and importers, until September 1, 2006 for all 
downstream parties other than retailers and wholesale purchaser-
consumers, and until October 15, 2006 for retailers and wholesale 
purchaser-consumers, provided that:
    (1) The fuel is segregated from nonexempt diesel fuel from the 
point of such designation;
    (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.''; 
and,
    (3) After June 1, 2006 and prior to the implementation dates 
specified above, diesel fuel represented by a downstream party as 
meeting the 500 ppm sulfur standard or the 15 ppm sulfur standard for 
highway diesel fuel shall be subject to and must meet such standard.
    (c) Beginning on the implementation dates specified in paragraph 
(b) of this section, 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 specified in paragraph (b) of 
this section, until the implementation dates specified in paragraph (e) 
of this section, motor vehicle diesel fuel that is 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 (b), and the 
motor vehicle diesel fuel standards and dye provisions under 40 CFR 
80.520 and associated requirements, provided that:
    (1) The exempt fuel is not used in model year 2007 and later 
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 
outlets and wholesale-purchaser consumers;
    (3) October 1, 2010 for:
    (i) Retail outlets and wholesale-purchaser consumers, or
    (ii) Downstream locations which include retail outlets and 
wholesale-purchaser consumers; and,
    (4) December 1, 2010 at all locations.

0
3. Section 69.52 is amended as follows:
0
a. By adding a new paragraph (a)(4).
0
b. By revising paragraphs (c)(1) and (c)(2).
0
c. By revising paragraph (f).
0
d. By revising paragraph (g).
0
e. By adding a new 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 
and stationary diesel engines and equipment. Its use may damage 
these vehicles and engines.''

    (g) NRLM and stationary engine 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

[[Page 32464]]

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 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 EPA.

[FR Doc. 06-5053 Filed 6-5-06; 8:45 am]

BILLING CODE 6560-50-P