[Federal Register Volume 77, Number 195 (Tuesday, October 9, 2012)]
[Proposed Rules]
[Pages 61313-61326]
[FR Doc No: 2012-23714]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0223; FRL 9733-4 ]

Regulation of Fuels and Fuel Additives: Modifications to
Renewable Fuel Standard and Diesel Sulfur Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: 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.

DATES: 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.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2012-0223, by the following methods:
     www.regulations.gov: Follow the on-line instructions for
submitting comments.
     Email<EMAIL_ADDRESS>Attention Air and Radiation
Docket ID EPA-HQ-OAR-2012-0223.
     Fax:<PHONE_NUMBER>.
     Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-
2012-0223, Environmental Protection Agency, Mailcode: 6406J, 1200
Pennsylvania Ave. NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center, EPA/DC, EPA West, Room
3334, 1301 Constitution Ave. NW., Washington, DC, 20460, Attention Air
and Radiation Docket, ID No. EPA-HQ-OAR-2012-0223. Such deliveries are
only accepted during the Docket's normal hours of operation, and
special arrangements should be made for deliveries of boxed
information.
    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
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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: Kristien Knapp, Office of
Transportation and Air Quality, Mail Code: 6405J, U.S. Environmental
Protection Agency, 1200 Pennsylvania Avenue NW., 20460; telephone
number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose

    EPA is proposing to amend provisions in the renewable fuel standard
(RFS) and diesel sulfur fuel programs. The RFS amendment would change
the definition of home heating oil, and the diesel sulfur amendments
would provide additional flexibility for transmix processors who
produce locomotive and marine diesel fuel, and allow solvent yellow 124
marker to transition out of the distribution system. EPA is proposing
these amendments under section 211 of the Clean Air Act.

B. Summary of Today's Rule

Amended Definition of Home Heating Oil
    EPA proposes 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). This
amendment will expand the scope of renewable fuels that can generate
Renewable Identification Numbers (``RINs'') as ``home heating oil'' to
include fuel oil that will be used to generate heat to warm buildings
or other facilities where people live, work, recreate, or conduct other
activities. This 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
would not be approved for RIN generation under the amended definition
of heating oil. The proposed amendment would not modify, limit, or
change fuel included in the current definition of heating oil at 40 CFR
80.2(ccc).
Diesel Transmix Amendments
    The proposed diesel transmix amendments would reinstate an
allowance for transmix processors to produce 500 ppm sulfur diesel fuel
for use in older technology locomotive and marine diesel outside of the
Northeast Mid-Atlantic Area after 2014. EPA's ocean-going vessels rule
forbade this allowance beginning 2014, because a new stream of diesel
fuel for ocean-going vessels, containing up to 1000 ppm sulfur, was
introduced at that time, which we believed would provide a suitable
outlet for transmix distillate product. Transmix processors stated that
they were not aware of the changes to the 500-ppm LM transmix
provisions until after they were finalized, and that the ocean-going
vessels market would not be a viable outlet for their distillate
product. Based on additional input that we received from transmix
processors and other stakeholders in the fuel distribution system
during our consideration of the petition, EPA believed that it would be
appropriate to extend the 500-ppm diesel transmix flexibility beyond
2014. EPA finalized a settlement agreement and this DFR and NPRM are in
accord with the settlement agreement. Our analysis indicates that
extending this flexibility beyond 2014 will have a neutral or net
beneficial effect on overall emissions.
Yellow Marker Amendments
    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.
    Specifically, the regulations as currently written do not provide
any transition time for unmarked LM fuel delivered from a truck loading
rack beginning June 1, 2012 to work its way through the fuel
distribution system downstream of the truck loading rack. The proposed
yellow marker amendments will allow 500 ppm LM diesel fuel at any point
in the fuel distribution and end use system to contain more than 0.10
milligrams per liter of SY 124 through November 30, 2012. This
regulatory change would allow marked LM diesel fuel to transition
normally through the LM fuel distribution and use system. Today's
proposed rule would also amend the regulation to clarify the transition
of the solvent yellow 124 marker out of heating oil beginning June 1,
2014. After December 1, 2014, EPA proposed to no longer have any
requirements with respect to the use of the SY 124 marker.

C. Costs and Benefits

    These three sets of proposed amendments attempt to provide new
opportunities for RIN generation under the RFS program and necessary
flexibilities and transition periods for those affected by EPA's
transmix and marker requirements. Therefore, EPA believes that these
amendments would impose no new direct costs or burdens on regulated
entities beyond the minimal costs associated with reporting and
recordkeeping requirements. At the same time, EPA does not believe that
any of these amendments will adversely impact emissions.

II. Why is EPA issuing a proposed rule?

    This document proposes to amend the definition of heating oil in 40
CFR 80.1401 in the renewable fuel standard (RFS) program that was
promulgated under section 211(o) of the Clean Air Act. This amendment
would expand the scope of fuels that can generate 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 document also proposes amendments to the
diesel sulfur program to provide additional flexibility to transmix
processors to produce locomotive and marine (LM) diesel fuel.
Specifically, we are proposing to reinstate an allowance for transmix
processors to produce 500 ppm sulfur diesel fuel for use in older
technology locomotive and marine diesel outside of the Northeast Mid-
Atlantic Area (``NEMA''). We are also requesting comment on extending
this allowance to the NEMA. These proposed amendments to the diesel
transmix provisions are expected to result in reduced compliance costs
for transmix processors and users of LM diesel fuel while having a
neutral or positive environmental impact. Lastly, this document
proposes 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.
    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.
    We will address all public comments in any subsequent final rule
based on this proposed rule. We will not institute a second comment
period on this action. Any parties interested in commenting must do so
at this time. For further information about commenting on this rule,
see the ADDRESSES section of this document.

III. Does this action apply to me?

    Entities potentially affected by this action include those involved
with the production, distribution and sale of transportation fuels,
including gasoline and diesel fuel, or renewable fuels such as ethanol
and biodiesel, as well as those involved with the production,
distribution and sale of other fuel oils that are not transportation
fuel. Regulated categories and entities affected by this action
include:

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                                         NAICS codes
               Category                      \a\        SIC codes \b\                      Examples of potentially regulated parties
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Industry.............................          324110            2911  Petroleum refiners, importers.
Industry.............................          325193            2869  Ethyl alcohol manufacturers.
Industry.............................          325199            2869  Other basic organic chemical manufacturers.
Industry.............................         Various         Various  Transmix Processors
Industry.............................          424690            5169  Chemical and allied products merchant wholesalers.
Industry.............................          424710            5171  Petroleum bulk stations and terminals.
Industry.............................          424720            5172  Petroleum and petroleum products merchant wholesalers.
Industry.............................          454319            5989  Other fuel dealers.
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\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could be potentially regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your entity is regulated by this action, you should carefully examine
the applicability criteria of Part 80, subparts D, E and F of title 40
of the Code of Federal Regulations. If you have any question regarding
applicability of this action to a particular entity, consult the person
in the preceding FOR FURTHER INFORMATION CONTACT section above.

IV. What should I consider as I prepare my comments for EPA?

    A. Submitting information claimed as CBI. Do not submit this
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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.
    B. Tips for Preparing Your Comments. When submitting comments,
remember to:
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use of profanity or personal threats.
     Make sure to submit your comments by the comment period
deadline identified.
    C. Docket Copying Costs. You may be charged a reasonable fee for
photocopying docket materials, as provided in 40 CFR part 2.

V. Renewable Fuel Standard Program Amendments

A. Amended Definition of Heating Oil

    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).
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    \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.
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    The RFS2 program requires the production and use of renewable fuel
to replace or reduce the quantity of fossil fuel present in
transportation fuel. Under EPA's RFS program this is accomplished by
providing for the generation of RINs by producers or importers of
qualified renewable fuel. RINs are transferred to the producers or
importers of gasoline and diesel transportation fuel who then use the
RINs to demonstrate compliance with their renewable fuel volume
obligations. RINs also serve the function of credits under the RFS
program.
    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.
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    \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).
    \3\ See CAA sections 211(o)(1)(A) and (o)(5)(E).
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    EPA addressed the provision for additional renewable fuels in the
RFS2 rulemaking, specifically addressing the category of ``home heating
oil.'' EPA determined that this term was ambiguous, and defined it by
incorporating the existing definition of heating oil at 40 CFR
80.2(ccc). EPA stated that:

    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 Sec.  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\
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    \4\ 75 FR 14670, 14687 (March 26, 2010).

    The existing definition of heating oil at 40 CFR Sec.  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
Sec.  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 Sec.  80.2(ccc), and would not modify or limit
the fuel included in the current definition.
    EPA believes this expansion of the scope of the home heating oil
provision is appropriate and authorized under CAA section 211(o). As
EPA described in the RFS2 final rule, Congress did not define the term
``home heating oil,'' and it does not have a fixed or definite
commercial meaning. In the RFS2 final rulemaking, EPA focused on
whether the provision was limited to heating oil actually used in
homes. EPA noted that the term home heating oil is usually used in the
industry to refer to a type of fuel, and not to one specific use for
the fuel. Given this more specific usage of the term, and the practical
barriers that would arise if the term was defined as fuel actually used
to heat homes, EPA defined the scope of home heating oil by identifying
those types of fuel oils that are typically used to heat homes. EPA
determined this was a reasonable interpretation of an ambiguous
statutory provision that simplified implementation and administration
of the Act and promoted achievement of the goals of the RFS program.
    In the RFS2 rulemaking, EPA focused on the kinds of fuel oils that
can be used to heat homes. The expansion of the definition proposed in
this rulemaking would address two types of fuel oils not included in
the current definition of heating oil. First, the proposed definition
would include additional fuel oils that are actually used to heat
homes, even if they do not meet the current definition of heating oil.
This is clearly within the scope of the statutory provision for home
heating oil.
    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\
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    \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.''
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    In the proposed amended definition, qualifying fuel oils would be
used for heating places where people live, work, or recreate, and not
just their homes. It focuses more on what is getting heated--people--
and not where the people are located. EPA believes this is a reasonable
interpretation of the phrase ``home heating oil,'' while recognizing
that it is not an obvious interpretation. This interpretation
recognizes the ambiguity of the phrase used by Congress, which is not
defined and does not have a clear and definite commercial meaning. It
gives reasonable meaning to the term home heating oil, by limiting the
additional fuel oils to fuel oils when used for heating of facilities
that people will occupy, and excluding fuel oils when used for other
purposes such as generation of energy used in the manufacture of
products. It also focuses on the aspect of home that is important
here--the heating of people--recognizing that EPA has already
determined that fuel oil can be included in the scope of home heating
oil even if it is not actually used to heat a home. This interpretation
will also promote the purposes of the EISA and the RFS program. It will
promote the purposes of the EISA in that it will increase the
production and use of renewable fuels by introducing new sources of
fuel producers to the RFS program. It will specifically promote the RFS
programmatic goals by facilitating the generation of RINs for renewable
fuels that reduce emissions of greenhouse gases compared to fossil
fuels. For example, EPA has received information from Envergent
Technologies (an alliance of Ensyn and Honeywell) that such an expanded
definition of heating oil would result in nearly immediate production
of 3.5 million gallons from their existing facilities, with an
additional projected production of up to 45 million gallons per year
within 24 months following regulatory action. Based on this information
from Envergent Technologies, application of the expanded definition of
heating oil to the entire industry would result in the production of
many more million additional gallons of renewable fuel. Although EPA
believes the expanded definition in the regulations of ``heating oil''
would be a reasonable interpretation of the intent of Congress to allow
additional renewable fuel to count towards the volume mandates if it is
produced from renewable biomass and is used to replace or reduce the
quantity of fossil fuel present in home heating oil, EPA invites
comment on this interpretation.

    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.

B. Lifecycle Greenhouse Gas Assessment of the Amended Definition of
Heating Oil

    EPA has also evaluated whether any revisions would need to be made
to Table 1 to 40 CFR 80.1426 that lists the applicable D codes for each
fuel pathway for use in generating RINs in the RFS2 regulations in
light of the additional fuel oils included in the expanded definition
of heating oil. As discussed below, EPA has determined that the
applicable D code entries for heating oil in Table 1 to 40 CFR 80.1426
would continue to be appropriate and would not need to be revised in
light of the expanded definition of heating oil.
    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.
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    \6\ See Table 1 to 40 CFR 80.1426.
---------------------------------------------------------------------------

    The fuel pathways consist of fuel type, feedstock, and production
process requirements. GHG emissions are assessed at all points
throughout the lifecycle pathway. For instance, emissions associated
with sowing and harvesting of feedstocks and in the production,
distribution and use of the renewable fuel are examples of what are
accounted for in the GHG assessment. A full accounting of emissions is
then compared with the petroleum baseline emissions for the
transportation fuel being replaced. The lifecycle GHG emissions
determination is one factor used to determine compliance with the
regulations.
    There are currently several fuel pathways that list heating oil as
a fuel type with various types of feedstock and production processes
used, qualifying the heating oil pathways as either biomass-based
diesel, advanced, or cellulosic. The determinations for these different
pathways were based on the current definition of heating oil. The
pathways also include several types of distillate product including
diesel fuel, jet fuel and heating oil.
    The lifecycle calculations and threshold determinations are based
on the GHG emissions associated with production of the fuel and
processing of the feedstock. Converting biomass feedstocks such as
triglycerides (if oils are used as feedstock) or hemi-cellulose,
cellulose, lignin, starches, etc. (if solid biomass feedstock is used)
into heating oil products and can be accomplished through either a
biochemical or thermochemical process converting those molecules into a
fuel product. The existing heating oil pathways were based on the
current definition of the fuel, and were based on a certain level of
processing to produce 1, 2, or a non-petroleum diesel
blend and the related energy use and GHG emissions that were part of
the lifecycle determination for those fuel pathways.
    The main difference between the current definition of heating oil,
which refers to 1, 2, or a non-petroleum diesel
blend, and the expanded definition that is proposed in this rulemaking
is that the expanded definition would include heavier types of fuel oil
with larger molecules. Based on the type of conversion process,
producing these heavier fuel oil products versus the 1,
2, or a non-petroleum diesel blend would affect the amount of
energy used and therefore the GHG emissions from the process. There are
two main paths for producing a fuel oil product from biomass. In one
the biomass is converted into a biocrude which is further refined into
lighter products. In this case producing a heavier fuel oil product
would require less processing energy and have lower GHG emissions than
converting the same feedstock into a 1, 2, or non-
petroleum diesel blend.
    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    Based on these considerations, EPA believes the GHG emissions
associated with producing the fuel oil included in the expanded
definition would be the same or lower than the GHG emissions associated
with producing 1, 2, or non-petroleum diesel blend.
Therefore, EPA believes the prior life cycle analysis for heating oil
would support applying the existing pathways for fuel oil in the RFS2
regulations to the expanded definition of heating oil. All of the
pathways currently applicable to heating oil under Table 1 to 40 CFR
80.1426 would apply to the expanded definition of heating oil. EPA
invites comments whether there are any other factors to consider in
addition to the reasons discussed above for extending the lifecycle
analysis already conducted for heating oil in the final rulemaking for
fuel oils under the expanded definition of heating oil.
    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.

 C. Additional Registration, Reporting, Product Transfer Document and
Recordkeeping Requirements

1. Additional Requirements for the Amended Definition of Heating Oil
    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 expansion of the definition raises this same issue but
in a more significant way. While the proposed expansion of the
definition includes some limited physical characteristics that fuel
oils would need to meet in order to qualify for generating RINs, it
does not provide sufficient specificity to differentiate between those
fuels oils used to heat buildings for climate control for human comfort
and those used to generate process heat or other purposes. Therefore,
for eligible fuel oils other than those qualifying under the existing
definition in 40 CFR 80.2(ccc), EPA is proposing that the renewable
fuel producer or importer have adequate documentation to demonstrate
that the fuel oil volume for which RINs were generated was used to heat
buildings for climate control for human comfort and meets the expanded
definition of heating oil in order to generate RINs.
    EPA recognizes that under the current definition of heating oil no
tracking or other documentation of end use is required, and some
heating oils that meet the current definition could end up being used
for other purposes. However, in all cases the heating oil under the
current definition has to have the physical or other characteristics
that tie it to the type of fuel oil used to heat homes. In addition,
because these fuel oils would qualify to generate RINs under the RFS
program, it will likely lead to their use for heating of buildings, and
not for generation of process heat. For the fuel oils included in the
expanded definition, the tie to home heating oil would not be the
physical characteristics of the fuel oil but instead its actual usage
for heating for the purposes of climate control for human comfort.
    In order to verify that the fuel oils are actually used to generate
heat for climate control purposes, EPA is proposing the following
registration, recordkeeping, product transfer document (PTD) and
reporting requirements. These proposed requirements would not apply to
fuels qualifying under existing 40 CFR 80.2(ccc) of the regulations. We
are also proposing that if RINs are generated for fuel oils under the
expansion of the scope of home heating oil in today's rule, and those
fuel oils are designated for but not actually used to generate heat for
climate control purposes, but for some other purpose, all parties
involved in either the generation, assignment, transfer or use of that
RIN, including the end user of that fuel oil, are subject to and liable
for violations of the RFS2 regulations and the CAA.
    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.
a. Registration
    For the purpose of registration, EPA is proposing to allow the
producer of the expanded fuel oil types to establish their facility's
baseline volume in the same manner as all other producers under the RFS
program, e.g., based on the facility's permitted capacity or actual
peak capacity. Additionally though, we are proposing to require
producers of the expanded fuel oil types to submit affidavits in
support of their registration, including a statement that the fuel will
be used for the purposes of heating interior spaces of homes or
buildings to control ambient climate for human comfort, and no other
purpose. We also propose to require that producers submit secondary
affidavits from the existing end users to verify that the fuel is
actually being used for a qualifying purpose. We are also proposing new
reporting, product transfer documents (PTD), and recordkeeping
requirements discussed below that will be used as a means for
verification that the qualifying fuel is being used in an approved
application. We believe these requirements are necessary to assure
confidence that the fuel used to generate RINs is actually used for a
qualifying purpose because these types of fuel have not previously been
used as heating oil, and are not readily identifiable by their physical
characteristics. Without such safeguards, EPA could not be confident
that the fuel is used as heating oil, and end users might not have
adequate notice that the fuel must be used as heating oil. EPA believes
these requirements will place a small burden on producers and end
users, and greatly benefit the integrity of the program.
    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.
b. Reporting, Product Transfer Documents and Recordkeeping Requirements
    For the purpose of continued verification after registration, EPA
is proposing additional requirements for reporting in Sec.
80.1451(b)(1)(ii)(T), PTDs in Sec.  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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.

D. Additional Requirement for RIN Generation

    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 Sec.  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).

VI. Amendments Related to Transmix

    The final regulations for the nonroad diesel program were published
in the Federal Register on June 24, 2004 (69 FR 38958). The provisions
in the nonroad diesel rule related to transmix processors were modified
by the Category 3 Marine diesel final rule that was published on April
30, 2010 (75 FR 22896). This action proposes additional amendments to
the requirements for diesel fuel produced by transmix processors. Below
is a table listing the provisions that we are proposing to amend. The
following sections provide a discussion of these proposed amendments
and of additional potential changes to the diesel transmix provisions
that we are considering.

------------------------------------------------------------------------
Proposed amendments to the  diesel
          program section                        Description
------------------------------------------------------------------------
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.
80.572(d).........................  Amended to extend 500ppm LM diesel
                                     fuel label past 2012.
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.
------------------------------------------------------------------------

A. Consideration of Extending the Diesel Transmix Provisions Outside of
the Northeast Mid-Atlantic Area and Alaska Beyond 2014

    Batches of different fuel products commonly abut each other as they
are shipped in sequence by pipeline. When the mixture between two
adjacent products is not compatible with either product, it is removed
from the pipeline and segregated as transmix. Transmix typically is
gathered for reprocessing at the end of the fuel distribution system
far from a refinery. In addition to the long transportation distances
to return transmix to a refinery for reprocessing, incorporating
transmix into a refinery's feed also presents technical and logistical
refining process challenges that typically make refinery reprocessing
an unattractive option. Thus, transmix processers provide a valuable
service in maintaining an efficient fuel distribution system. Transmix
processing facilities handle very low volumes of fuel compared to a
refinery and hence are limited to the use of a simple distillation
tower and additional blendstocks to manufacture finished fuels. There
is currently no desulfurization equipment which has been demonstrated
to be suitable for application at a transmix processor facility. The
cost of installing and operating a currently available desulfurization
unit is too high in relation to the small volume of distillate fuel
produced at transmix processing facilities. Some products shipped by
pipeline such as jet fuel and heating oil are subject to relatively
high sulfur specifications (e.g., maximum 3,000 ppm for jet fuel). The
presence of such high sulfur products in multi product pipelines and
consequently in transmix constrains the ability of transmix processors
to produce a low sulfur distillate product.
    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    Our analysis indicates that extending the 500-ppm LM flexibility
beyond 2014 would have a neutral or net beneficial effect on overall
emissions. The use of 500-ppm LM from transmix would be limited to
older technology engines that do not possess sulfur-sensitive emission
control technology. We believe that the proposed 500-ppm LM segregation
and other associated requirements would prevent misfueling of sulfur-
sensitive engines.
    To evaluate the environmental consequences of extending the diesel
transmix provisions, we compared the potential increase in sulfate
particulate matter (PM) from the use of 500 ppm LM from transmix in
older engines to the additional transportation emissions associated
with shipment to the Category 3 (C3) marine market which might be
deferred by allowing continued access to the 500 ppm LM market. Markets
for locomotive and marine diesel tend to be nearer to transmix
processing facilities than markets for C3 marine diesel. Therefore,
extending the diesel transmix provisions would result in a reduction in
nitrogen oxides (NOX), volatile organic compounds (VOCs),
carbon monoxide (CO), as well as PM emissions that would otherwise be
associated with transporting transmix distillate product to the more
distant C3 market.
    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \22\ There is no ability to ship transmix distillate product to
the C3 marine diesel market by pipeline.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

B. Proposed Diesel Transmix Provisions

    Industry stakeholders suggested alternative enforcement mechanisms
to support the extended flexibility which would not necessitate
reinstating and expanding the designate-and-track and fuel marker
provisions that were retired by the C3 marine final rule. Reinstatement
and expansion of these provisions would likely place an unacceptable
burden on a large number of stakeholders, most of whom would not handle
500-ppm LM. The suggested alternative enforcement mechanism would
impose minimal additional reporting and recordkeeping burdens only on
the parties that produce, handle, and use 500-ppm LM. We believe that
this alternative enforcement approach would meet the Agency's goals of
ensuring that the pool of 500-ppm LM is limited to transmix distillate
and that 500-ppm LM is not used in sulfur-sensitive emissions control
equipment.
    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
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    \27\ 500 ppm LM diesel fuel is shipped by a short dedicated
pipeline from a product terminal to a locomotive refueling facility.
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    To provide an additional safeguard to ensure that volume of 500 ppm
LM diesel fuel does not swell inappropriately, the volume increase
during any single pipeline shipment must be limited to 2 volume percent
or less. This limitation on volume swell to 2 volume percent or less is
consistent with the limitation in 40 CFR 80.599(b)(5) regarding the
allowed swell in volume during the shipment of highway diesel fuel for
the purposes of the determination of compliance with the now expired
volume balance requirements under 40 CFR 80.598(b)(9)(vii)(B). Industry
did not object to this requirement, and therefore, we believe that
limiting the volume swell of 500 ppm LM diesel fuel during shipment by
pipeline to 2 volume percent or less should provide sufficient
flexibility.
    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.

C. Consideration of Extending the Diesel Transmix Provisions To Include
the Northeast Mid-Atlantic Area

    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.
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    \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.
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    Transmix processors and other fuel distributors in the NEMA area
stated that they were concerned that the changing state heating oil
specifications would impact their ability to market transmix distillate
product beginning in 2012 and increasingly over time. They requested
that EPA extend the 500-ppm LM flexibility to the NEMA area by 2012 to
lessen the impact on the fuel distribution system of complying with
more stringent federal and state distillate sulfur standards. They
stated that the enforcement mechanisms proposed above for use outside
of the NEMA area after 2014 could apply equally well within the NEMA
area beginning in 2012. They also stated that extending the proposed
flexibility to inside the NEMA would not have an adverse environmental
impact because of the potential to defer significant additional
transportation emissions to the more distant C3 marine market.
    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.
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    \29\ Prior to 2014, parties outside of the NEMA area who
distribute 500-ppm LM would be covered by the existing compliance
assurance requirements.
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    Similar to our analysis for outside of the NEMA area, our analysis
of the potential environmental consequences of extending the diesel
transmix flexibility to include the NEMA area indicates the effect on
emissions would be neutral or positive. We also agree that the
compliance assurance requirements that we are proposing for outside of
the NEMA area could be applied within the NEMA area. A substantial
fraction of the transmix processing industry markets fuel within the
NEMA area. Thus, the potential cost reduction to industry and
additional time to prepare for a transition to other markets for
transmix distillate product that would be afforded by an extension of
the proposed provisions to the NEMA would be significant.
    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.

VII. Amendments Related to the Marker Requirements for Locomotive and
Marine Fuel

    We also propose to amend the regulatory provisions regarding the
transition in the fuel marker requirements for 500-ppm LM diesel fuel
in 2012 to address an oversight in the original rulemaking where the
regulations failed to incorporate provisions described in the
rulemaking preamble. Today's proposed rule would amend the regulatory
provisions regarding the transition in the fuel marker requirements for
heating oil in 2014 to provide improved clarity.
    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.
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    \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).
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    A number of locomotive and marine wholesale purchaser-consumers
have taken custody of marked 500-ppm LM diesel fuel that they will not
be able to consume prior to June 1, 2012. A number of fuel suppliers
also have inventories of 500-ppm LM diesel fuel on hand that they may
not be able to sell to LM diesel fuel users because such users are
concerned about clearing their tanks of marked LM diesel fuel by June
1, 2012. We are proposing to allow marked 500-ppm LM diesel fuel to
transition normally through the fuel distribution and use system,
consistent with the original intent of the nonroad diesel rule
preamble. Today's proposed rule would allow 500-ppm LM diesel fuel at
any point in the fuel distribution and end use system to contain more
than 0.10 milligrams per liter of SY 124 through November 30, 2012.
    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.
    Today's proposed rule would also amend the regulation to clarify
the transition of the solvent yellow 124 marker out of heating oil
beginning June 1, 2014. Specifically, today's proposal would amend the
regulations to clarify that after December 1, 2014, EPA will no longer
have any requirements with respect to the use of the solvent yellow 124
marker. This is consistent with the intent expressed in our original
nonroad diesel fuel rulemaking. We do not believe these proposed
changes will adversely impact emissions.

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    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.

B. Paperwork Reduction Act

    The information collection requirements in this notice of proposed
rulemaking and direct final rule have been submitted for approval to
the Office of Management and Budget (OMB) under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. The Information Collection Request (ICR)
document prepared by EPA related to the amended heating oil definition
has been assigned EPA ICR number 2462.01 and the ICR document prepared
by EPA for diesel fuel produced by transmix producers has been assigned
EPA ICR number 2463.01. Supporting statements for these proposed ICRs
have been placed in the docket. The proposed information collections
are described in the following paragraphs.
    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).
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    \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.
---------------------------------------------------------------------------

    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).
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    \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.
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    The proposed amendments to the fuel marker requirements for
locomotive and marine diesel fuel in today's proposed rule do not
contain any new recordkeeping and reporting requirements.
    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 are listed in 40 CFR part 9.
    To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, EPA has established a public docket for
this rule, which includes the ICRs described above, under Docket ID
number EPA-HQ-OAR-2012-0223. Submit any comments related to the ICR to
EPA and OMB. See the ADDRESSES section at the beginning of this notice
for where to submit comments to EPA. Send comments to OMB at the Office
of Information and Regulatory Affairs, Office of Management and Budget,
725 17th Street NW., Washington, DC 20503, Attention: Desk Office for
EPA. Since OMB is required to make a decision concerning the ICR
between 30 and 60 days after October 9, 2012, a comment to OMB is best
assured of having its full effect if OMB receives it by November 8,
2012.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) 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 action on small
entities, I certify that this proposed rule will not have a significant
economic impact on a substantial number of small entities. This
proposed rule will not impose any new requirements on small entities.
The relatively minor corrections and modifications this proposed rule
makes to the final RFS2 regulations do not impact small entities. The
proposed amendments to the diesel transmix provisions would lessen the
regulatory burden on all affected tranmix processors and provide a
source of lower cost locomotive and marine diesel fuel to consumers. We
continue to be interested in the potential impacts of the rule on small
entities and welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    This proposed rule does not contain a Federal mandate that may
result in expenditures of $100 million or more for State, local, and
tribal governments, in the aggregate, or the private sector in any one
year. We have determined that this action will not result in
expenditures of $100 million or more for the above parties and thus,
this rule is not subject to the requirements of sections 202 or 205 of
UMRA.
    This proposed rule is also not subject to the requirements of
section 203 of UMRA because it contains no regulatory requirements that
might significantly or uniquely affect small governments. It only
applies to gasoline, diesel, and renewable fuel producers, importers,
distributors and marketers and makes relatively minor corrections and
modifications to the RFS2 and diesel sulfur regulations.

E. Executive Order 13132 (Federalism)

    This action does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This action only applies to
gasoline, diesel, and renewable fuel producers, importers, distributors
and marketers and makes relatively minor corrections and modifications
to the RFS2 and diesel sulfur regulations. Thus, Executive Order 13132
does not apply to this action.
    In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this proposed action
from State and local officials.

F. Executive Order 13175 (Consultation and Coordination With Indian
Tribal Governments)

    This proposed rule does not have tribal implications, as specified
in Executive Order 13175 (65 FR 67249 (November 9, 2000)). It applies
to gasoline, diesel, and renewable fuel producers, importers,
distributors and marketers. This action makes relatively minor
corrections and modifications to the RFS and diesel sulfur regulations,
and does not impose any enforceable duties on communities of Indian
tribal governments. Thus, Executive Order 13175 does not apply to this
action. Nonetheless, EPA specifically solicits additional comment on
this proposed action from tribal officials.

G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks

    EPA interprets EO 13045 (62 FR 19885 (April 23, 1997)) as applying
only to those regulatory actions that concern health or safety risks,
such that the analysis required under section 5-501 of the EO has the
potential to influence the regulation. This action is not subject to EO
13045 because it does not establish an environmental standard intended
to mitigate health or safety risks.

H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

    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.

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, 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. NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    Executive Order (EO) 12898 (59 FR 7629 (February 16, 1994))
establishes Federal executive policy on environmental justice. Its main
provision directs Federal agencies, to the greatest extent practicable
and permitted by law, to make environmental justice part of their
mission by identifying and addressing, as appropriate,
disproportionately high and adverse human health or environmental
effects of their programs, policies, and activities on minority
populations and low-income populations in the United States.
    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\
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    \34\ See section VI and VII of today's notice for details of
this analysis.
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IX. Statutory Provisions and Legal Authority

    Statutory authority for the rule finalized today can be found in
section 211 of the Clean Air Act, 42 U.S.C. 7545. Additional support
for the procedural and compliance related aspects of today's rule,
including the recordkeeping requirements, come from Sections 114, 208,
and 301(a) of the Clean Air Act, 42 U.S.C. 7414, 7542, and 7601(a).

List of Subjects in 40 CFR Part 80

    Environmental protection, Administrative practice and procedure,
Agriculture, Air pollution control, Confidential business information,
Diesel fuel, Transmix, Energy, Forest and forest products, Fuel
additives, Gasoline, Imports, Labeling, Motor vehicle pollution,
Penalties, Petroleum, Reporting and recordkeeping requirements.

    Dated: September 17, 2012.
Lisa P. Jackson,
Administrator.
[FR Doc. 2012-23714 Filed 10-5-12; 8:45 am]
BILLING CODE P