Source: https://www.federalregister.gov/documents/2012/10/09/2012-23714/regulation-of-fuels-and-fuel-additives-modifications-to-renewable-fuel-standard-and-diesel-sulfur
Timestamp: 2018-07-21 06:40:02
Document Index: 111431196

Matched Legal Cases: ['art 2', '§\u200980', '§\u200980', '§\u200980', '§\u200980', '§\u200980', '§\u200980', '§\u200980', 'art 80']

Written comments must be received on or before November 8, 2012, or 30 days from the date of the public hearing, if a public hearing is requested. A request for a public hearing must be received by October 24, 2012. If a public hearing is requested, we will publish a notice in the Federal Register announcing the date and location of the hearing at least 14 days prior to the hearing.
61313-61326 (14 pages)
FRL 9733-4
V. Renewable Fuel Standard Program Amendments
C. Additional Registration, Reporting, Product Transfer Document and Recordkeeping Requirements
A. Consideration of Extending the Diesel Transmix Provisions Outside of the Northeast Mid-Atlantic Area and Alaska Beyond 2014
C. Consideration of Extending the Diesel Transmix Provisions To Include the Northeast Mid-Atlantic Area
VII. Amendments Related to the Marker Requirements for Locomotive and Marine Fuel
https://www.federalregister.gov/d/2012-23714 https://www.federalregister.gov/d/2012-23714
EPA is proposing to amend the definition of heating oil in the Renewable Fuel Standard (RFS) program under section 211(o) of the Clean Air Act. This amendment would expand the scope of renewable fuels that can generate Renewable Identification Numbers (RINs) as heating oil to include fuel oil produced from qualifying renewable biomass that would be used to generate heat to warm buildings or other facilities where people live, work, recreate, or conduct other activities. Fuel oils used to generate process heat, power, or other functions would not be included in the amended definition. Producers or importers of fuel oil that meets the amended definition of heating oil would be allowed to generate RINs, provided that the fuel oil meets the other requirements specified in the RFS regulations. This proposed amendment would not modify or limit fuel included in the current definition of heating oil. We are also proposing amendments to the diesel sulfur program to provide additional flexibility for transmix processors that produce locomotive and marine diesel fuel. Specifically, we are proposing to reinstate an allowance for transmix processors to produce 500 parts per million (ppm) sulfur diesel fuel for use in older technology locomotive and marine diesel outside of the Northeast Mid-Atlantic Area. We are also requesting comment on extending this allowance to outside of the Northeast Mid-Atlantic Area. These proposed amendments to the diesel transmix provisions are expected to result in reduced compliance costs for transmix processors and users of locomotive and marine diesel fuel while having a neutral or positive environmental impact. EPA is also proposing to amend the fuel marker requirements for 500 ppm sulfur locomotive and marine (LM) diesel fuel to address an oversight in the original rulemaking where the regulations failed to incorporate provisions described in the rulemaking preamble to allow for solvent yellow 124 marker to transition out of the distribution system.
Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2012-0223, by the following methods:
Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-2012-0223, Environmental Protection Agency, Mailcode: 6406J, 1200 Pennsylvania Ave. NW., Washington, DC 20460.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2012-0223. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through www.regulations.gov or email. The www.regulations.gov Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to EPA without going through www.regulations.gov your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
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The proposed yellow marker amendments address an oversight in EPA's original nonroad diesel rulemaking. In that rulemaking, the regulations failed to incorporate provisions described in the rulemaking preamble. The preamble made clear that EPA intended to allow 500 ppm locomotive marine (LM) diesel fuel containing greater than 0.10 milligrams per liter of Solvent Yellow 124 (SY124) time to transition out of the fuel distribution system. However, the regulations are not consistent with the preamble and did not provide this same allowance.
We are publishing a separate document that will serve as a direct final rule in the “Rules and Regulations” section of this Federal Register. The direct final rule amends the definition of heating oil and allows transmix processors to produce locomotive and marine diesel fuel. The direct final rule does not attempt to extend the transmix allowance to the NEMA; we request comments on that issue only in this document. If we receive no adverse comment on the direct final rule, or any portion of the direct final rule, by the date provided in the DATES section above, the amendments to the definition of heating oil and the amendments to the diesel transmix provisions that apply outside the NEMA will become final. If EPA receives relevant adverse comment on the direct final rule, any portion of the direct final rule, or a hearing request, we will publish a timely withdrawal of the direct final rule or the portion receiving adverse comments in the Federal Register.
Industry Various Various Transmix Processors
A. Submitting information claimed as CBI. Do not submit this information to EPA through www.regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.
EPA is issuing this proposed rule to amend the definition of heating oil in 40 CFR 80.1401 in the renewable fuel standard (“RFS” or “RFS2”) program promulgated under section 211(o) of the Clean Air Act (CAA).[1] This amendment would expand the scope of renewable fuels that can generate Renewable Identification Numbers (RINs) as “home heating oil” to include fuel oil that would be used to generate heat to warm buildings or other facilities where people live, work, recreate, or conduct other activities. This proposed rule would allow producers or importers of fuel oil that meets the amended definition of heating oil to generate RINs, provided that other requirements specified in the regulations are met. Fuel oils used to generate process heat, power, or other functions will not be approved for RIN generation under the amended definition of heating oil, as these fuels are not within the scope of “home heating oil” as that term is used in the Energy Independence and Security Act of 2007 (“EISA”), for the RFS program. The proposed amendment would not modify or limit fuel included in the current definition of heating oil at 40 CFR 80.2(ccc).
Congress provided that EPA could also establish provisions for the generation of credits by producers of certain renewable fuel that was not used in transportation fuel, called “additional renewable fuel.” [2] Additional renewable fuel is defined as fuel that is produced from renewable biomass and that is used to replace or reduce the quantity of fossil fuel present in home heating oil or jet fuel.[3] In essence, additional renewable fuel has to meet all of the requirements applicable to qualify it as renewable fuel under the regulations, with the only difference being that it is blended into or is home heating oil or jet fuel. This does not change the volume requirements of the statute itself, however this can provide an important additional avenue for parties to generate RINs for use by obligated parties, thus promoting the overall cost-effective production and use of renewable fuels.
EISA uses the term “home heating oil” in the definition of “additional renewable fuel.” The statute does not clarify whether the term should be interpreted to refer only to heating oil actually used in homes, or to all fuel of a type that can be used in homes. We note that the term `home heating oil' is typically used in industry in the latter manner, to refer to a type of fuel, rather than a particular use of it, and the term is typically used interchangeably in industry with heating oil, heating fuel, home heating fuel, and other terms depending on the region and market. We believe this broad interpretation based on typical industry usage best serves the goals and purposes of the statute. If EPA interpreted the term to apply only to heating oil actually used in homes, we would necessarily require tracking of individual gallons from production through ultimate [use] in homes in order to determine eligibility of the fuel for RINs. Given the fungible nature of the oil delivery market, this would likely be sufficiently difficult and potentially expensive so as to discourage the generation of RINs for renewable fuels used as home heating oil. This problem would be similar to that which arose under RFS1 for certain renewable fuels (in particular biodiesel) that were produced for the highway diesel market but were also suitable for other markets such as heating oil and non-road applications where it was unclear at the time of fuel production (when RINs are typically generated under the RFS program) whether the fuel would ultimately be eligible to generate RINs. Congress eliminated the complexity with regards to non-road applications in RFS2 by making all fuels used in both motor vehicle and nonroad applications subject to the renewable fuel standard program. We believe it best to interpret the Act so as to also avoid this type of complexity in the heating oil context. Thus, under today's regulations, RINs may be generated for renewable fuel used as `heating oil,' as defined in existing EPA regulations at § 80.2(ccc). In addition to simplifying implementation and administration of the Act, this interpretation will best realize the intent of EISA to reduce or replace the use of fossil fuels.[4]
The existing definition of heating oil at 40 CFR § 80.2(ccc) means “any #1, #2, or non-petroleum diesel blend that is sold for use in furnaces, boilers, stationary diesel engines, and similar applications and which is commonly or commercially known or sold as heating oil, fuel oil, or similar trade names, and that is not jet fuel, kerosene, or [Motor Vehicle, Nonroad, Locomotive, and Marine (MVNRLM)] diesel fuel.” The existing definition of non-petroleum diesel at 40 CFR 80.2(sss) means a diesel that contains at least 80 percent mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats. Thus, in order to generate RINs for home heating oil that is a non-petroleum diesel blend, the fuel must contain at least 80 percent mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, as well as meeting all other requirements of the RFS2 regulations. Since the promulgation of the RFS2 final rule, we have received a number of requests from producers to consider expanding the scope of the home heating oil provision to include additional fuel oils that are produced from qualifying renewable biomass but do not meet the regulatory definition of heating oil because they are not #1 or #2 diesel and do not contain at least 80 percent mono-alkyl esters. Parties raising this issue have suggested that limiting “home heating oil” to the fuel types defined in 40 CFR 80.2(ccc) disqualifies certain types of renewable fuel oils that could be used for home heating and that this limitation does not align with our reasoning in the preamble to take a broad interpretation of the term “home heating oil” in CAA section 211(o).
EPA has considered this issue further and is proposing to revise the definition of heating oil in the RFS program to expand the scope of fuels that can generate RINs as heating oil. EPA is proposing to revise the definition such that RINs also may be generated by renewable fuel that is fuel oil and is used to heat interior spaces of homes or buildings to control ambient climate for human comfort. This would not include fuel oils used to generate process heat, power, or other functions. The fuel oil would be used to generate heat to warm buildings or other facilities where people live, work, recreate, or conduct other activities. The fuel oil would only be used in heating applications, where the sole purpose of the fuel's use is for heating and not for any other combined use such as process energy use. We are proposing to amend the existing definition of heating oil in 40 CFR § 80.1401 to include fuel oils that are used in this way. This is in addition to the fuel oils currently included in the definition of heating oil at 40 CFR § 80.2(ccc), and would not modify or limit the fuel included in the current definition.
Second, the proposed definition would include fuel oils that are used to heat facilities other than homes to control ambient climate for human comfort. Under the current definition of heating oil, a fuel oil meets the definition based on its physical properties and its use in furnaces, boilers, stationary diesel engines, and similar applications, not whether it is actually used to heat a home. The basic decision made in the RFS2 final rulemaking was to allow RIN generation for the group of fuel oils that are typically used for home heating purposes. Under the current definition the relationship of the fuel oil to heating homes is that the fuel oil is of the type that is typically used for and can be used for that purpose.[5]
For the text of the proposed regulatory changes please see the direct final rule, located in the “Rules and Regulations” section of this Federal Register.
Under the RFS program, EPA must assess lifecycle greenhouse gas (GHG) emissions to determine which fuel pathways meet the GHG reduction thresholds for the four required renewable fuel categories. The RFS program requires a 20% reduction in lifecycle GHG emissions for conventional renewable fuel (except for grandfathered facilities and volumes), a 50% reduction for biomass-based diesel or advanced biofuel, and a 60% reduction for cellulosic biofuel. For the final RFS2 rule, EPA assessed the lifecycle greenhouse gas emissions of multiple renewable fuel pathways and classified pathways based on these GHG thresholds, as compared to the EISA statutory baseline.[6] In addition, EPA has added several pathways since the final rule was published. Expanding the definition of heating oil does not affect these prior analyses.
In the other type of process the compounds in the biomass are changed into a set of intermediary products, such as hydrogen (H) and carbon monoxide (CO).[7] These compounds are then either catalytically or biochemically converted into the fuel product. In this case, the vast majority of the energy is associated with breaking down the feedstock into the set of intermediary compounds. The process used and the energy needed for it does not vary based on the type of fuel that is then produced from these intermediary compounds. The type of fuel could affect the type of catalyst or biological process used to change the intermediary compounds into the fuel product, but based on EPA calculations and assessments developed as part of the RFS2 rulemaking,[8] this will have no real impact on the energy used or the GHG emissions associated with converting the biomass into a different fuel product.
An important issue to address is how to implement such an expanded definition. As EPA recognized in the RFS2 rulemaking, fuel oils end up being used in a variety of different uses, where the fuel producer may have little knowledge at the time of production as to eventual use of the fuel. This is especially the case where the fuel oil is distributed in a fungible distribution system. EPA addressed this in the RSF2 rulemaking by defining home heating oil as a type of fuel with certain characteristics, irrespective of where it was used. This approach avoided the need to track the fuel to its actual use, and including the characteristics of the fuel in its definition in 40 CFR 80.1401 was adequate to retain a close tie to the concept underlying home heating oil.
The proposed registration requirements are detailed in the registration section in 40 CFR 80.1450(b)(1)(ix) in the direct final rule located in the “Rules and Regulations” section of this Federal Register.
For the purpose of continued verification after registration, EPA is proposing additional requirements for reporting in § 80.1451(b)(1)(ii)(T), PTDs in § 80.1453(d), and recordkeeping in 40 CFR 80.1454(b), for the expanded fuel oil types.
The proposed reporting, PTD, and recordkeeping requirements will help ensure that the expanded fuel oil types that are used to generate RINs are actually used in a qualifying application. For reporting, producers would be required to file quarterly reports with EPA that identify certain information about the volume of fuel oil produced and used as heating oil. The additional reporting requirements would stipulate that the producer of fuel oils submit affidavits to EPA reporting the total quantity of the fuel oils produced, the total quantity of the fuel oils sold to end users, and the total quantity of fuel oils sold to end users for which RINs were generated. Additionally, affidavits from each end user would need to be obtained by the producer and reported to EPA, describing the total quantity of fuel oils received from the producer, the total amount of fuel oil used for qualifying purposes, the date the fuel oil was received from the producer, the blend level of the fuel oil, quantity of assigned RINs received with the renewable fuel, and quantity of assigned RINs that the end user separated from the renewable fuel, if applicable.[9] The additional product transfer document requirement associated with the expanded definition of heating oil would require that a PTD must be prepared and maintained between the fuel oil producer and the final end user for the legal transfer of title or custody of a specific volume of fuel oil that is designated for use, and is actually used, only for the purpose of heating interior spaces of buildings to control ambient climate for human comfort. This additional PTD requirement would require that the PTD used to transfer ownership or custody of the renewable fuel must contain the statement: “This volume of renewable fuel is designated and intended to be used to heat interior spaces of homes or buildings to control ambient climate for human comfort. Do NOT use for process heat or any other purpose, pursuant to 40 CFR 80.1460(g).” EPA believes that this PTD requirement will help to ensure that each gallon of fuel oil that is transferred from the producer to the end user is used for qualifying purposes under the expanded definition of heating oil. If the fuel oil is sent to the end user, but the fuel oil is not actually used to generate heat for climate control purposes, but for some other non-qualifying purpose, then the RINs that were generated for that fuel oil would need to be immediately retired and reported under 40 CFR 80.1451. The additional recordkeeping requirement we are proposing would require that producers keep copies of the contracts which describe the fuel oil under contract with each end user. Consistent with existing regulations, producers are required to maintain all documents and records submitted for registration, reporting, and PTDs as part of the producer's recordkeeping requirements. EPA believes the producer's maintenance of these records will allow for continued tracking and verification that the end use of the fuel oil is in compliance with the expanded definition of heating oil.
The proposed reporting, PTD, and recordkeeping requirements are detailed in the direct final rule located in the “Rules and Regulations” section of this Federal Register. EPA invites comments for any other factors to consider regarding these additional requirements for registration, reporting, PTDs, and recordkeeping.
We are also proposing to amend the regulatory text that describes the general requirements for how RINs are generated and assigned to batches of renewable fuel by renewable fuel producers and importers. This would explicitly clarify a requirement that always existed: That producers and importer of renewable fuel who generate RINs must comply with the registration requirements of 40 CFR § 80.1450, the reporting requirements of 40 CFR 80.1451, the recordkeeping requirements of 40 CFR 80.1454, and all other applicable regulations of this subpart M. This is a generally applicable requirement—not specific to fuel meeting the definition of home heating oil. See amended section 80.1426(a)(1)(iii).
Proposed amendments to the diesel program section
80.511(b)(4) Amended to allow for the production and sale of 500-ppm locomotive and marine (LM) diesel fuel produced from transmix past 2014.
80.513 (entire section) Amended to allow for the production and sale of 500-ppm LM diesel fuel produced from transmix past 2014.
80.597(d)(3)(ii) Amended to include 500-ppm LM diesel fuel in the list of fuels that an entity may deliver or receive custody of past June 1, 2014.
The engine emissions standards finalized in the nonroad diesel rulemaking for new nonroad, locomotive, and Category 1 & 2 (C1 & C2) marine engines necessitates the use of sulfur-sensitive emissions control equipment which requires 15-ppm sulfur diesel fuel to function properly.[10] Accordingly, the nonroad rule required that nonroad, locomotive and marine (NRLM) diesel fuel must meet a 15-ppm sulfur standard in parallel with the introduction of new sulfur-sensitive emissions control technology to NRLM equipment. Beginning June 1, 2014, the nonroad diesel rule required that all NRLM diesel fuel produced by refiners and importers must meet a 15-ppm sulfur standard. The nonroad diesel rule included special provisions to allow the continued use of 500-ppm sulfur locomotive and marine (LM) diesel fuel produced from transmix beyond 2014 in older technology engines as long as such engines remained in the in-use fleet. These provisions along with other now expired flexibilities in the diesel program were designed to minimize and postpone the impacts on transmix processors of transitioning to a condition where all highway, nonroad, locomotive, and marine diesel engines can only operate on 15-ppm diesel fuel.[11] The 500-ppm LM diesel transmix provisions were limited to areas outside of the Northeast Mid-Atlantic Area (NEMA) and Alaska because it was judged that the heating oil market in these areas would provide a sufficient outlet for transmix distillate in these areas.[12] Excluding the NEMA area and Alaska also allowed us to exempt the NEMA area and Alaska from the fuel marker provisions that are a part of the compliance assurance regime. The continuation of the 500-ppm LM diesel transmix provisions beyond 2014 (finalized in the nonroad rule) was supported by ongoing recordkeeping, reporting, and fuel marker provisions that were established to facilitate enforcement during the phase in of the diesel sulfur program.[13]
In the development of the proposed requirements for Category 3 (C3) marine engines, EPA worked with industry to evaluate how the enforcement provisions for the new 1,000-ppm C3 marine diesel fuel to be introduced in June of 2014 could be incorporated into existing diesel program provisions.[14] Our assessment based on input from industry at the time indicated that incorporating the new C3 marine fuel into the diesel program enforcement mechanisms while preserving the 500-ppm diesel transmix flexibility could not be accomplished without retaining significant existing burdens and introducing new burdens on a broad number of regulated parties. We also concluded that the new C3 marine diesel market would provide a sufficient outlet for transmix processors distillate product in place of the 500-ppm LM diesel market. Thus, we believed the 500-ppm LM diesel transmix flexibility would no longer be needed after 2014. Hence, we requested comment on whether we should eliminate the 500-ppm LM transmix provisions in parallel with the implementation of the C3 marine diesel sulfur requirement. This approach allowed for a significant reduction in the regulatory burden on a large number of industry stakeholders through the retirement of the diesel program's designate-and-track and fuel marker requirements. All of the comments that we received on the proposed rule were supportive of the approach. Consequently, we finalized the approach in the C3 marine final rule that was published on April 30, 2010.[15]
EPA received a petition from a group of transmix processors on June 29, 2010, requesting that the Agency reconsider and reverse the 2014 sunset date for the 500-ppm LM transmix flexibility.[16] A parallel petition for regulatory review was filed with the U.S. Court of Appeals, DC Circuit.[17] The transmix processors stated that they were not aware of the changes to the 500-ppm LM transmix provisions until after they were finalized. The petitioners also stated that they believe that the C3 marine market would not be a viable outlet for their distillate product given the increased distribution costs compared to the 500-ppm LM market. Based on the additional input that we received from transmix processors and other stakeholders in the fuel distribution system during our consideration of the petition, EPA believes that while the increased costs for transportation of transmix distillate product could be accommodated, there is no compelling reason not to extend the 500 ppm diesel transmix flexibility beyond 2014 if such costs can be avoided or deferred without affecting the benefits from the diesel sulfur program. A settlement agreement has been finalized between EPA and the petitioners under which EPA would propose regulatory changes to reintroduce the 500-ppm LM transmix diesel flexibility for legacy LM equipment.[18] The proposed amendments to the diesel transmix provisions contained in today's action are in accord with the settlement agreement.
Although some batches of transmix distillate product may approach the 500 ppm sulfur limit, we estimate that the average sulfur content of transmix distillate product would be no more than 300 ppm.[19] We estimate that approximately 500 million gallons of distillate fuel per year is produced from transmix.[20] Assuming that all of the transmix distillate product would be used as 500 ppm LM in older engines, we estimate that an additional 70 tons of sulfate PM would be produced annually compared to the use of 15 ppm diesel fuel.[21] We believe that a substantial fraction of transmix distillate product would be used as heating oil and C3 diesel fuel regardless of whether the diesel transmix provisions are extended. Also, as the older LM engines are retired from service, the size of the potential 500 ppm LM market will diminish until all LM engines must use 15 ppm diesel fuel. Therefore, assuming that all transmix distillate product would be used as 500 ppm LM provides an upper bound estimate of the potential impact on PM emissions.
We estimate on average that transmix processors would need to ship their transmix distillate product an additional 150 miles by tank truck to reach the C3 Emission Control Area (ECA) marine market as compared to the 500 ppm LM market.[22] This would result in an additional 80 tons of PM emissions annually. Thus, the PM emissions associated with transport to the C3 marine market are roughly equal to the increased sulfate PM emissions associated with the continued use of 500 ppm LM. We estimate that the increased transport distances could also result in an additional 2,200 tons of NOX, 220 tons of VOC, and 650 tons of CO annually. Based on the above discussion, we believe that the proposed extension of the 500 ppm LM provisions beyond 2014 outside the NEMA area and Alaska would have a neutral or positive environmental impact.
The extension of the 500-ppm LM transmix flexibility would defer additional transportation costs and provide a lower-cost fuel for use in older LM engines for many years to come given that the useful life of LM engines can exceed 40 years.[23] Therefore, extending this flexibility would reduce the overall burden on industry of compliance with EPA's diesel sulfur program. Providing additional time for transmix processors to evaluate how the C3 ECA marine market will develop after 2014 would also facilitate a smoother transition for transmix processors from the 500-ppm LM market as it gradually disappears due to fleet turnover.
The compliance assurance provisions that we are proposing to support the extension of the diesel transmix flexibility are similar to those that were used to support the small refiner flexibilities in Alaska during the phase-in of EPA's diesel sulfur program.[24] In addition to registering as a refiner and certifying that each batch of fuel complies with the fuel quality requirements for 500-ppm LM diesel fuel, producers of 500-ppm transmix distillate product would be required to submit a compliance plan for approval by EPA. This compliance plan would provide details on how the 500-ppm LM would be segregated through to the ultimate consumer and its use limited to the legacy LM fleet. The plan would be required to identify the entities that would handle the fuel and the means of segregation. We believe that it is appropriate to limit the number of entities that would be allowed to handle the fuel between the producer and the ultimate consumer in order to facilitate EPA's compliance assurance activities.[25] Based on conversations with transmix processors, we believe that specifying that no more than 4 separate entities handle the fuel between the producer and the ultimate consumer would not hinder the ability to distribute the fuel.[26] The plan would need to identify the ultimate consumers and include information on how the product would be prevented from being used in sulfur-sensitive equipment.
We understand that some transmix processors currently rely on shipment by pipeline to reach the 500-ppm locomotive diesel market.[27] We are proposing that 500-ppm LM could be shipped by pipeline provided that it does not come into contact with distillate products that have a sulfur content greater than 15 ppm. The compliance plan would need to include information from the pipeline operator regarding how this segregation would be maintained. Discussions with transmix processors indicate that this requirement would not limit their ability to ship 500-ppm LM by pipeline. If 500-ppm LM was shipped by pipeline abutting 15-ppm diesel, the volume of 500-ppm LM delivered would likely be slightly greater than that which was introduced into the pipeline as a consequence of cutting the pipeline interface between the two fuel batches into the 500-ppm LM batch. This small increase in 500-ppm LM volume would be acceptable.
Product transfer documents (PTDs) for 500-ppm LM diesel would be required to indicate that the fuel must be distributed in compliance with the approved compliance assurance plan. Entities in the distribution chain for 500-ppm LM diesel fuel would be required to keep records on the volumes of the 500-ppm that they receive from and deliver to each other entity. Based on input from fuel distributors, keeping these records will be a minimal additional burden, as discussed in section X.B. Such entities would also be required to keep records on how the fuel was transported and segregated. We would typically expect that the volumes of 500-ppm LM delivered would be equal to or less than those received unless shipment by pipeline occurred. Some minimal increase in 500-ppm LM volume would be acceptable due to differences in temperature between when the shipped and received volumes were measured and interface cuts during shipment by pipeline. Entities that handle 500-ppm LM would be required to calculate a balance of 500-ppm LM received versus delivered/used on an annual basis. If the volume of fuel delivered/dispensed is greater than that received, EPA would expect that the records would indicate the cause. EPA requests comment on whether it is appropriate to set an upper limit on the potential volume increase due to pipeline shipment and temperature swell, and if 2 percent would be an appropriate upper limit. If an entity's evaluation of their receipts and deliveries of 500-ppm LM fuel indicated noncompliance with the product segregation requirements, the custodian would be required to notify EPA. All entities in the 500-ppm LM distribution chain would be required to maintain the specified records for 5 years and provide them to EPA upon request.
The nonroad diesel rule specified that the small diesel refiner, credit, and transmix provisions would not apply in the Northeast Mid-Atlantic (NEMA) area. Hence, all LM diesel fuel shipped from refineries, transmix processors, and importers for use in the NEMA Area must meet a 15-ppm sulfur standard beginning June 1, 2012 when the 15-ppm standard becomes effective for large refiners and importers.[28] This approach allowed the NEMA area to be exempted from fuel marker provisions that are a component of the compliance assurance provisions associated with the small diesel refiner, credit, and transmix provisions. As discussed previously a significant factor in the decision made in the nonroad diesel rule to exclude the NEMA from the diesel transmix provisions was our assessment that the heating oil market would provide a sufficient outlet for transmix distillate product in this area. Since the publication of the nonroad diesel rule in 2004, a number of states in the NEMA area have moved towards implementing a 15-ppm sulfur standard for heating oil. A significant fraction of heating oil in the area will be subject to a 15-ppm sulfur standard beginning in 2012, and it is likely that other states will adopt a 15-ppm sulfur standard for heating oil in the following years.
The proposed provisions that would allow 500-ppm LM from transmix to be used outside of the NEMA area after 2014 would reinstate a flexibility that was withdrawn by the C3 marine final rule. Allowing 500-ppm LM to be used inside the NEMA area would provide more flexibility than was previously included in EPA's diesel program. We believe that extending the 500-ppm transmix flexibility to include the NEMA area will reduce distribution costs for their distillate product from transmix processors. Consequently, we are requesting comment on applying the proposed 500-ppm LM transmix provisions discussed above to the NEMA area beginning June 2012.[29] Given the current transition in the NEMA area to the use of 15-ppm sulfur heating oil, it would be most useful to industry if the proposed flexibility could become effective as soon as possible.
The implementation of the 1,000-ppm sulfur C3 marine fuel requirements in 2014 would provide another outlet for transmix distillate product in the NEMA area to replace the disappearing above-15-ppm sulfur heating oil market. We request comment on whether, if we were to extend the 500-ppm LM transmix flexibility to inside the NEMA area, such an extension should be limited to the time period until the C3 marine fuel requirements becomes effective.
The preamble in the nonroad diesel final rule stated that EPA intended to allow 500-ppm LM diesel fuel containing greater than 0.10 milligrams per liter of solvent yellow 124 (SY124) to be present at any location in the fuel distribution system (up to and including retail and wholesale-purchaser-consumer storage tanks) until September 30, 2012.[30] Although it was not explicitly stated in the preamble, it was implied that additional time would be allowed for marked 500-ppm LM to transition from the fuel tanks connected to locomotive and marine engines, consistent with the approach taken regarding the implementation of more stringent diesel fuel sulfur standards. However, the nonroad diesel regulations are not consistent with the preamble and do not provide the allowance for marked 500-ppm LM diesel fuel to transition from fuel distribution and end-user tanks. 40 CFR 80.510(e) requires that all 500-ppm LM diesel fuel delivered from a truck loading rack located outside of the Northeast Mid-Atlantic (NEMA) area and Alaska must contain at least 6 mg/liter of SY124 through May 31, 2012. However, the regulatory text at 40 CFR 80.510(f) requires that beginning June 1, 2012, any diesel fuel that contains 0.10 mg/liter of SY124 must be designated as heating oil. Thus, the regulations as currently written do not provide any transition time for marked LM fuel that is present the distribution system as of May 31, 2012 to work its way through the fuel distribution system downstream of the truck loading rack and through the tanks connected to locomotive and marine engines.
We are proposing to implement a single transition date applicable at all points in the fuel distribution and use system rather than a separate date applicable through retail and wholesale-purchaser-consumer (WPC) facilities and another date applicable at all locations including the tanks attached to locomotive and marine equipment because we believe that a stepped compliance schedule is not necessary and a single transition date provides the most flexibility for regulated parties. We expect that the marker will typically transition out of retailer and WPC LM diesel storage tanks well in advance of November 30, 2012. We further expect that users of LM diesel fuel can coordinate with retail and WPC facilities regarding deliveries of marked 500-ppm LM diesel fuel to ensure that the fuel in storage tanks attached to LM equipment is in compliance by November 30, 2012.
Under Executive Order 12866 (58 CFR 51735 (October 4, 1993), this action is a “significant regulatory action.” Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821 (January 21, 2011) and any changes made in response to OMB recommendations have been documented in the docket for this action.
This action contains recordkeeping and reporting (registration and product transfer documentation) that may affect parties who produce or import renewable fuels subject to the proposed revised definition of heating oil. EPA expects that very few parties will be subject to additional recordkeeping and reporting. We estimate that up to 11 parties (i.e., RIN generators, consisting of up to 10 producers and one importer) may be subject to the proposed information collection over the next several years.[31] We estimate an annual reporting burden of 21 hours per respondent and an annual recordkeeping burden of 24 hours, yielding a total per respondent burden of 45 hours.[32] 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 the instructions; develop, acquire, install, and utilize technology and systems for the purpose 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 transit or otherwise disclose the information. Burden is as defined at 5 CFR 1320.3(b).
This action also contains provisions related to diesel fuel that is produced by transmix processors. We have proposed reporting requirements that would apply to transmix processors (all of whom are refiners) and other parties (such as carriers or distributors) in the distribution chain who handle diesel fuel produced by transmix producers. The collected data will permit EPA to: (1) Process compliance plans from transmix producers; and (2) Ensure that diesel fuel made from transmix meets the standards required under the regulations at 40 CFR part 80, and that the associated benefits to human health and the environment are realized. We estimate that 25 transmix processors and 150 other parties may be subject to the proposed information collection.[33] We estimate an annual reporting burden of 28 hours per transmix processor (respondent) and 8 hours per other party (respondent); considering all respondents (transmix producers and other parties) who would be subject to the proposed information collection, the annual reporting burden, per respondent, would be 11 hours. 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 the instructions; develop, acquire, install, and utilize technology and systems for the purpose 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 transit or otherwise disclose the information. Burden is as defined at 5 CFR 1320.3(b).
This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. We have concluded that this rule is not likely to have adverse energy effects because we do not anticipate adverse energy effects related to the additional generation of RINs for home heating oil or the reduced regulatory burden for transmix processors. This proposed rule would facilitate the use of 500-ppm sulfur locomotive and marine (LM) diesel fuel, which contains the SY 124 marker that is already in the fuel distribution and use system consistent with EPA's original intent. Today's action will avoid the potential need to remove marked 500-ppm LM diesel fuel from the system for reprocessing, and the associated increased costs and potential disruption to the supply of LM diesel fuel.
EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. These amendments would not relax the control measures on sources regulated by the RFS regulations and therefore would not cause emissions increases from these sources. We have determined that proposed amendments to the diesel transmix provisions and marker provisions for locomotive and marine diesel fuel under the diesel sulfur program would have a neutral or positive impact on diesel vehicle emissions.[34]
1. The Energy Independence and Security Act (EISA) of 2007 amended section 211(o) of the Clean Air Act (CAA), which was originally added by the Energy Policy Act (EPAct) of 2005.
2. “EISA changed the definition of `renewable fuel' to require that it be made from feedstocks that qualify as `renewable biomass.' EISA's definition of the term `renewable biomass' limits the types of biomass as well as the types of land from which the biomass may be harvested.” Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program, 75 FR 14670, 14681 (March 26, 2010).
5. This is different from other renewable fuels in the RFS program, which are defined in terms of their use as transportation fuel or jet fuel. See 40 CFR 80.1401, definitions of “renewable fuel” and “transportation fuel.”
6. See Table 1 to 40 CFR 80.1426.
7. This describes the Fischer-Tropsch process. Other processes rely on forming different sets of compounds from the biomass, and then producing the fuel product from the set of compounds.
8. “Regulation of Fuel and Fuel Additives; Changes to Renewable Fuel Standard Program,” 75 FR 14670, available at http://www.gpo.gov/fdsys/pkg/FR-2010-03-26/pdf/2010-3851.pdf. See also, EPA's summary factsheet, “EPA Lifecycle Analysis of Greenhouse Gas Emissions from Renewable Fuels,” available at http://www.epa.gov/otaq/renewablefuels/420f10006.pdf.
9. EPA does not expect that the expanded definition of home heating oil will result in an obligation on home owners or small businesses. Based on our analysis of the market, qualifying fuel oil is expected to be used in large industrial settings or apartment buildings, not in individual homes. Therefore, EPA anticipates that the information it is requiring would be readily available and producible by these entities.
10. Control of Emissions of Air Pollution from Nonroad Diesel Engines and Fuel, Final Rule, 69 FR 38958 (June 24, 2004).
11. As discussed in the original nonroad diesel rulemaking, as LM equipment is retired from service, the market for 500 ppm LM will gradually diminish and eventually disappear. Given the long lifetime of LM equipment (in many cases 40 years or more), we anticipate that a market for 500 ppm LM will remain for a significant amount of time. This phase-out time will also allow transmix processors to transition to their >15ppm sulfur distillate product to other markets (C3 marine, heating oil, process heat). It may also allow sufficient time for the introduction of desulfurization equipment that is suitable for use at transmix processing facilities.
12. The NEMA area is defined in 40 CFR 80.510(g)(1) as follows: (1) Northeast/Mid-Atlantic Area, which includes the following States and counties, through May 31, 2014: North Carolina, Virginia, Maryland, Delaware, New Jersey, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, Maine, Washington DC, New York (except for the counties of Chautauqua, Cattaraugus, and Allegany), Pennsylvania (except for the counties of Erie, Warren, McKean, Potter, Cameron, Elk, Jefferson, Clarion, Forest, Venango, Mercer, Crawford, Lawrence, Beaver, Washington, and Greene), and the eight eastern-most counties of West Virginia (Jefferson, Berkeley, Morgan, Hampshire, Mineral, Hardy, Grant, and Pendleton).
13. This included the now-completed phase-in of 15 ppm highway diesel fuel and 15 ppm nonroad diesel fuel as well as the phase-out of the small refiner and credits provisions for LM diesel fuel that will be completed in 2014.
14. Control of Emissions From New Marine Compression-Ignition Engines at or Above 30 Liters per Cylinder; Proposed Rule, 74 FR 44442 (August 28, 2009).
15. Control of Emissions From New Marine Compression-Ignition Engines at or Above 30 Liters per Cylinder; Final Rule, April 30, 2010, 75 FR 22896.
16. Petition to Reconsider Final Rule: Control of Emissions from New Marine Compression Ignition Engines at or Above 30 Liters per Cylinder; Final Rule, 75 FR 22,896 (April 30, 2010), Letter to EPA Administrator Lisa Jackson dated June 29, 2010, from Chet Thompson of Crowell and Moring LLP, on behalf of Allied Energy Company, Gladieux Trading and Marketing, Insight Equity Acquisition Partners, LP, Liquid Titan, LLC, and Seaport Refining and Environmental, LLC.
17. Petition for Review, Allied Energy Company, Gladieux Trading and Marketing, Insight Equity Acquisition Partners, LP, LiquidTitan, LLC, and Seaport Refining and Environmental LLC, v. Respondent; U.S. Environmental Protection Agency, United States Court of Appeals for the District of Columbia Circuit, Case 10-1146, Document 1252640, Filed 06/29/2010.
18. Notice of Proposed Settlement Agreement, Request for Public Comment, 76 FR 56194 (September 12, 2011).
19. This is based on our review of data on the sulfur levels of transmix distillate product from various transmix processors.
20. Based on information provided by transmix processors, we estimate that approximately 750 million gallons per year of transmix is produced annually and that 2/3 of the transmix-derived product is distillate fuel and 1/3 is gasoline.
21. Sulfate PM was converted to PM2.5 to allow a comparison with PM2.5 from increased fuel transport emissions.
22. There is no ability to ship transmix distillate product to the C3 marine diesel market by pipeline.
23. In the 2011 edition of “Railroad Facts,” the Association of American Railroads reported that in 2010 approximately 35% of the locomotive fleet was at least 21 years old.
24. See 40 CFR 80.554(a)(4).
25. An entity is defined as any company that takes custody of 500-ppm LM diesel fuel.
26. In most cases, fewer entities would take custody of the product. In many cases, only a single entity (a tank truck operator) would be in the distribution chain between the transmix processor and the ultimate consumer. However, we understand that as many as 4 separate entities may handle the product between the producer and ultimate consumer if it is shipped by pipeline: the tank truck operator to ship the product from the producer to the pipeline, the pipeline operator, the product terminal that receives the fuel from the pipeline, and another tank truck operator to ship the product to the ultimate consumer from the terminal.
27. 500 ppm LM diesel fuel is shipped by a short dedicated pipeline from a product terminal to a locomotive refueling facility.
28. LM diesel fuel in terminals located in the NEMA area is subject to a 15-ppm sulfur standard beginning August 1, 2012. LM diesel fuel at retailers and wholesale purchaser consumers must meet a 15-ppm sulfur standard beginning October 1, 2012.
29. Prior to 2014, parties outside of the NEMA area who distribute 500-ppm LM would be covered by the existing compliance assurance requirements.
30. “Control of Emissions for Air Pollution From Nonroad Diesel Engines and Fuel; Final Rule,” Section V.C.1.c., The Period From June 1, 2012 Through May 31, 2014, 69 FR 39083, 39084 (June 29, 2004).
31. We project that the number of effected parties will remain essentially constant over time.
32. This includes the time to train staff, formulate and transmit responses, and other miscellaneous compliance related activities.
33. This is based on current transmix production. Although the total volume of transmix produced in the fuel distribution system may decline in parallel with the projected decrease in overall petroleum-based fuel use, we anticipate that the number of transmix processors will remain essentially constant since their number is dependent on the configuration of the petroleum-based fuel distribution system.
34. See section VI and VII of today's notice for details of this analysis.
[FR Doc. 2012-23714 Filed 10-5-12; 8:45 am]