[Federal Register: May 1, 2006 (Volume 71, Number 83)]
[Rules and Regulations]
[Page 25705-25726]
[DOCID:fr01my06-8]

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Part III

Environmental Protection Agency

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40 CFR Part 80

Technical Amendments to the Highway and Nonroad Diesel Regulations;
Final Rule and Proposed Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2006-0224; FRL-8161-9]
RIN 2060-AN78

Technical Amendments to the Highway and Nonroad Diesel
Regulations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action to correct, amend, and
revise certain provisions of the Highway Diesel Rule, and the Nonroad
Diesel Rule. This action corrects additional errors and omissions from
the previous rules, and it makes minor changes to the regulations to
assist entities with regulatory compliance. This action also makes
technical amendments that resulted from discussions with various diesel
stakeholders. These technical amendments will: provide a temporary
increase in the sulfur testing tolerance, revise the designate and
track provisions to account for non-petroleum diesel fuels (i.e.,
biodiesel) and fuel that meets the California Air Resources Board's
diesel fuel standards, and amend the alternative defense provisions to
account for conductivity additives and red dye. This action is intended
to help facilitate compliance with the diesel fuel regulations and
ensure a smooth transition to ultra low sulfur diesel fuel.

DATES: This direct final rule is effective on June 30, 2006 without
further notice, unless we receive adverse comments by May 31, 2006. If
adverse comments are received, EPA will publish a timely withdrawal in
the Federal Register informing the public that this rule will not take
effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2006-0224, by one of the following methods:
     http://www.regulations.gov: Follow the on-line

instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>.
     Mail: EPA-HQ-OAR-2006-0224, Environmental Protection
Agency, Mailcode: 6102T, 1200 Pennsylvania Ave., NW., Washington, DC
20460.
     Hand Delivery: EPA/DC, EPA West, Room B102, 1301
Constitution Ave., NW., Washington, DC. 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-
2006-0224. EPA's policy is that all comments will be included in the
public docket without change and may be made available online at http://www.regulations.gov
, including any personal information provided,

unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site is an ``anonymous

access'' system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment. If you
send an e-mail comment directly to EPA without going through http://www.regulations.gov
 your e-mail address will be automatically captured

and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit. If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses. For additional instructions on submitting comments, go to
section 1.B of the SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the http://www.regulations.gov
 index. Although listed in the index, some

information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the Air Docket, EPA/

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

FOR FURTHER INFORMATION CONTACT: Tia Sutton, U.S. EPA, National Vehicle
and Fuels Emission Laboratory, Assessment and Standards Division, 2000
Traverwood Dr., Ann Arbor MI 48105; telephone<PHONE_NUMBER>, fax (734)
214-4816, e-mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does This Action Apply to Me?

    This action will affect companies and persons that produce, import,
distribute, or sell highway and/or nonroad diesel fuel. Affected
Categories and entities include the following:

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                                 NAICS code
           Category                 \a\                   Examples of potentially affected entities
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Industry......................       324110  Petroleum refiners.
Industry......................       422710  Diesel fuel marketers and distributors.
Industry......................       484220  Diesel fuel carriers.
----------------------------------------------------------------------------------------------------------------
a North American Industry Classification System (NAICS).

    This list is not intended to be exhaustive, but rather provides a
guide regarding entities likely to be affected by this action. To
determine whether particular activities may be affected by this action,
you should carefully examine the regulations. You may direct questions
regarding the applicability of this action as noted in FOR FURTHER
INFORMATION CONTACT.

B. How Can I Get Copies of This Document?

    1. Docket. EPA has established an official public docket for this
action under Air Docket No. EPA-HQ-OAR-2006-0224. The official public
docket

consists of the documents specifically referenced in this action, any
public comments received, and other information related to this action.
Although a part of the official docket, the public docket does not
include Confidential Business Information (CBI) or other information
restricted from disclosure by statute. The official public docket is
the collection of materials that is available for public viewing at the
Air Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301
Constitution Ave., NW, Washington, DC. The EPA Docket Center Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the Air
Docket is<PHONE_NUMBER>.
    2. Electronic Access. This direct final rule is available
electronically from the EPA Internet Web site. This service is free of
charge, except for any cost incurred for internet connectivity. The
electronic version of this final rule is made available on the date of
publication on the primary web site listed below. The EPA Office of
Transportation and Air Quality also publishes Federal Register notices
and related documents on the secondary Web site listed below.
     a. http://www.epa.gov/docs/fedrgstr/EPA-AIR (either select desired

date or use Search features).
    b. http://www.epa.gov/otaq (look in What's New or under the

specific rulemaking topic).
    Please note that due to differences between the software used to
develop the documents and the software into which the document may be
downloaded, format changes may occur.

C. Why Is EPA Proposing a Direct Final Rule?

    EPA is publishing this rule without prior proposal because we view
this action as noncontroversial and anticipate no adverse comment.
However, in the ``Proposed Rules'' section of this Federal Register
publication, we are publishing a separate document that will serve as
the proposal for the provisions in this direct final rule if adverse
comments are filed. If EPA receives adverse comment on one or more
distinct amendment, paragraph, or section of this rulemaking, or
receives a request for a hearing within the time frame described above,
we will publish a timely withdrawal in the Federal Register indicating
which provisions are being withdrawn due to adverse comment. We will
address all public comments received in a subsequent final rule based
on the proposed rule. We will not institute a second comment period on
this action. Any parties interested in commenting must do so at this
time. Any distinct amendment, paragraph, or section of this rulemaking
for which we do not receive adverse comment will become effective as
indicated in the DATES section above, notwithstanding any adverse
comment on any other distinct amendment, paragraph, or section of this
rule.

D. How and to Whom Do I Submit Comments?

    You may submit comments on this direct final rule as described in
this section. You should note that we are also publishing a notice of
proposed rulemaking in the ``Proposed Rules'' section of this Federal
Register, which matches the substance of this direct final rule. Your
comments on this direct final rule will be considered to also be
applicable to that notice of proposed rulemaking. You may submit
comments electronically, by mail, by facsimile, or through hand
delivery/courier. To ensure proper receipt by EPA, identify the
appropriate docket identification number in the subject line on the
first page of your comment. Please ensure that your comments are
submitted within the specified comment period. Comments received after
the close of the comment period will be marked ``late.'' EPA is not
required to consider these late comments.
    1. Electronically. If you submit an electronic comment as
prescribed below, EPA recommends that you include your name, mailing
address, and an e-mail address or other contact information in the body
of your comment. Also include this contact information on the outside
of any disk or CD ROM and in any other accompanying materials to ensure
that you can be identified as the submitter of the comment. It is EPA's
policy that we will not edit your comment, and any identifying or
contact information provided will allow EPA to contact you if we cannot
read your comment due to technical difficulties or need further
information on the substance of your comment. If EPA cannot contact you
in these circumstances, we may not be able to consider your comment.
Contact information provided in the body of the comment will be
included as part of the comment placed in the official public docket
and made available in EPA's electronic public docket.
    i. EPA dockets. Your use of EPA's electronic public docket to
submit comments to EPA electronically is EPA's preferred method for
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket
 and follow the online instructions for submitting comments.

Once in the system, select ``search,'' and then key in Docket ID No.
EPA-HQ-OAR-2006-0224. The system is an ``anonymous access'' system,
which means EPA will not know your identity, e-mail address, or other
contact information unless you provide it in the body of your comment.
    ii. Disk or CD ROM. You may submit comments on a disk or CD ROM
that you mail to the mailing address identified in ADDRESSES above.
These electronic submissions will be accepted in WordPerfect or ASCII
file format. Avoid the use of special characters and any form of
encryption.
    2. By Mail. Send two copies of your comments to: Air Docket,
Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR-
2006-0224.
    3. By Hand Delivery or Courier. Deliver your comments to: EPA
Docket Center, Room B102, EPA West Building, 1301 Constitution Avenue,
NW., Washington, DC, Attention Air Docket ID No. EPA-HQ-OAR-2006-0224.
Such deliveries are only accepted during the Docket's normal hours of
operation as identified above.
    4. By Facsimile. Fax your comments to:<PHONE_NUMBER>, Attention
Docket ID No. EPA-HQ-OAR-2006-0224.

II. Summary of Rule

    The Highway Diesel rule, published on January 18, 2001 (66 FR
5002), is a comprehensive national program that will greatly reduce
emissions from diesel engines by integrating engine and fuel controls
as a system to gain the greatest air quality benefits. The Nonroad
Diesel Rule was subsequently published on June 29, 2004 (69 FR 38958).
The Nonroad Diesel Rule took a similar approach, covering nonroad
diesel equipment and fuel to further the goal of decreasing harmful
emissions. In 2005, we published two additional direct final
rulemakings (70 FR 40889 was published on July 15, 2005 and 70 FR 70498
was published on November 22, 2005) to make technical amendments to
those rules. We have chosen to publish a third action to correct
additional errors and omissions from the previous rules, and to make
minor changes to the regulations to assist entities in complying with
our diesel fuel rules. In addition, discussions with stakeholders
throughout the diesel fuel industry identified a need for additional
changes to the regulations such as: (1) Providing a temporary increase
in the sulfur

testing tolerance; (2) revising the designate and track provisions to
account for non-petroleum diesel fuels (i.e., biodiesel) and fuel that
meets the California Air Resources Board's diesel fuel standards; and,
(3) amending the alternative defense provisions to account for
conductivity additives and red dye. This action will make all of these
changes and additions to further ensure compliance with EPA's diesel
fuel regulations.

III. Final Rulemaking Changes to Sulfur Test Tolerance

    This action adopts a temporary change to the adjustment factor
associated with the testing tolerance for measurement of diesel fuel
sulfur for ULSD. Section 80.580(d) specifies that an adjustment factor
of negative two ppm shall be applied to the test results, to account
for test variability for testing of motor vehicle diesel fuel or NRLM
diesel fuel identified as subject to the 15 ppm sulfur standard of
Sec.  80.510(b) or Sec.  80.520(a)(1). The temporary change is to allow
an adjustment factor of negative three ppm for the sulfur tolerance for
a period of two years.
    The approach being considered leaves intact the 2 ppm sulfur
adjustment factor for addressing lab-to-lab test variability long term;
reflecting the very positive results of our round robin testing
program. It also makes no change to the 15 ppm fuel sulfur cap for in-
use diesel fuel starting June 1, 2006 at the refinery, nor the fuel
sulfur cap at the retail outlet. However, it would allow an additional
1 ppm (3 ppm total) testing tolerance for the first 2 years of the
program; reflecting the results of our round robin testing program
which indicated that not everyone was yet capable of meeting the 2 ppm
requirement. This temporary change to the adjustment factor would
further help to facilitate the transition to ULSD by eliminating
concerns associated with the impact of test method variability on the
sulfur level at the refinery gate during the initial implementation of
the ULSD program. This ensures that fuel that is compliant with the 15
ppm sulfur requirement is not inappropriately deemed to be noncompliant
simply because of the variability in the test. This specific change
ensures that laboratories have the time necessary to obtain new
instrumentation, tighten their internal quality assurance/quality
control (QA/QC) procedures, and train their staff on these new
instruments and procedures. It would also give them time to establish a
track record on which they can base confidence in both their
measurements and those of their customers and suppliers. At the same
time, its temporary nature assures that no one will use it to relax
their production targets.
    With the Nonroad Diesel rule (69 FR 38958, June 29, 2004), EPA
adopted a performance-based test method approach. For 15 ppm sulfur
Nonroad, Locomotive, and Marine (NRLM) and Motor Vehicle (MV) diesel
fuel, under the performance-based approach, any test method could be
approved for use in a specific laboratory by meeting certain precision
and accuracy criteria as specified in Sec.  80.584. Qualification or
approval is maintained as long as that laboratory follows the
appropriate quality control procedures as specified in Sec.  80.585(e).
    We included a two ppm downstream adjustment to account for the
anticipated reproducibility, or lab-to-lab variability, of the test
methods that will be used to measure the sulfur content of ULSD. This
would allow fuel that actually met the 15 ppm standard not to be
inappropriately considered noncompliant by EPA. Parties could not
measure above 15 ppm without taking on risk that due to test
reproducibility EPA might consider the fuel to be noncompliant.
    Subsequent to the Nonroad Diesel rule, concerns continued to be
expressed based on testing by the American Society of Testing and
Materials (ASTM) that actual reproducibility might be greater than the
2 ppm downstream adjustment. The concern was that refiners might have
to reduce the sulfur level of their diesel fuel production to account
for test reproducibility greater than 2 ppm. While acknowledging the
ASTM test program results, we also highlighted several shortcomings of
the ASTM program for the purpose of estimating what reproducibility
might be once the ULSD program began. Consequently, we committed to
conduct a round-robin test program with industry and to adjust the
downstream test tolerance if necessary based on the result. This
rulemaking follows up on that commitment.
    The round robin testing program required participating laboratories
to first qualify their measurement methods by meeting the accuracy and
precision requirements of Sec.  80.584 for each individual test method
that it wanted to use on a lab-specific basis. The round robin testing
program included ten fuel samples that were provided to the
laboratories; five in July 2005 and five in August 2005. The
laboratories were required to use two different calibration curves when
measuring the fuel sulfur content, their in-house curve and a curve
generated from National Institute of Standards and Technology (NIST)
Standard Reference Materials (SRMs) provided by EPA. The test methods
that were used in the round robin testing program were ASTM D 2622,
ASTM D 3120, ASTM D 5453, ASTM D 7039, and a non-voluntary consensus
standards body (VCSB) Energy Dispersive X-ray Fluorescence method.
There were 129 laboratories that participated using 149 instruments.
    Typically, laboratory calibrations for measurement of ULSD fuel are
done by either using calibration standards that are prepared in the
laboratory by preparing a gravimetric stock solution and then
performing serial dilutions or by purchasing calibration standards from
a variety of calibration standard suppliers. This provides for a
plethora of calibration standards and can bias lab-to-lab variability.
During our round robin test program, we wanted to account for this
variability, so in addition to having the laboratories measure the
blind fuel samples using their own in-house calibration curve, we asked
them to measure the blind fuel samples using a calibration curve
generated from four recently available NIST SRMs that were provided by
EPA for the test program. The purpose here was to determine the
contribution of calibration curve bias to reproducibility, or lab-to-
lab variability, which can be determined when all of the labs are using
identical, highly accurate, calibration standards. These SRMs are
available to the general public for purchase at a reasonable price and
there is a large supply. The results of the test program showed that
for the most widely used method, D 5453 and the best performer, D 7039,
calibration curve bias accounted for a 0.75 ppm increase in lab-to-lab
variability on average when the fuel sulfur content is at or near 15
ppm.
    The results led us to the conclusion that the 2 ppm adjustment
factor is indeed appropriate. However the results also indicated that
an additional 1 ppm on a temporary basis could be appropriate. For the
newest test methods (ASTM D 5453 and ASTM D 7039) when laboratories
used NIST standards coupled with appropriate test procedures,
reproducibility was less than 2 ppm for 15 ppm sulfur in diesel fuel.
The conclusions that we drew from the round robin testing program were
that:
     Older methods struggled with meeting the reproducibility
requirement.
     Newer test methods are fully capable.
     Qualification of the test laboratory is important to the
ability of the

laboratories to validate their reproducibility.
     With any method, proper QA/QC procedures, including
periodic use of calibration check standards are important.
    The results of the round robin testing also indicated that some
laboratories are still having difficulty. EPA believes that this is
likely the result of using older test methods, improper staff training,
older test equipment, inadequate calibration standards, and improper
QA/QC. To the extent that laboratories were qualified prior to the
start of the testing and the quality control practices were continued,
there was a greater likelihood the testing facilities were able to meet
the testing tolerance requirements. We continue to believe that with
newer equipment coupled with best practices for quality control,
laboratory-to-laboratory reproducibility can meet the 2 ppm compliance
margin and thus lead to greater assurance that in-use compliance will
not be a challenge.
    The approach that EPA is finalizing today provides greater
assurance that refineries do not need to expend the resources to
produce even lower sulfur fuel to compensate for uncertainty associated
with the test variability at the start of the program which will not
exist after the transition period. By allowing a 3 ppm temporary
compliance margin, laboratories downstream of the refinery will have
greater assurance that their procedures are adequate without fear of
compliance challenges. Without the appropriate adjustment factor to
address test variability, refiners expressed concern that they would
have had to lower the sulfur level of the diesel fuel they produced
unnecessarily to account for greater test uncertainty. They also stated
that this would cause them to operate their refineries in a way that
might constrain fuel supply. The temporary nature of the modified
adjustment factor focuses on the fact that EPA continues to believe
that improvements in reproducibility are forthcoming. The two year
adjustment factor increase allows time for the industry to transition
to the improved test procedures and instrumentation while minimizing
the potential for supply disruptions associated with the need to
downgrade fuel that could have potentially been noncompliant based on
test method variability. This should not lead to an increase in fuel
sulfur levels above the 15 ppm cap at any point in the distribution
system as parties would risk being found in noncompliance by EPA should
they release fuel with a measured sulfur level greater than 15 ppm. The
purpose of the downstream adjustment factor is simply to ensure that
fuel actually meeting the 15 ppm cap is not rejected by pipelines or
otherwise treated as noncompliant due to concerns with testing
variability.
    After the two-year period (through October 14, 2008) all entities
responsible for measuring fuel sulfur levels and ensuring that the
sulfur content of the fuel is at or below 15 ppm sulfur will have a
maximum sulfur testing adjustment factor of negative two ppm. This
should provide all ULSD refiners, distributors and marketers sufficient
time to procure new instrumentation if necessary, improve their QA/QC
procedures, and train personnel to improve their testing to less than
the 2 ppm allowed.

IV. Amendments to the Designate and Track Requirements Regarding Non-
Petroleum Diesel Fuel

    Biodiesel blenders recently made us aware of several issues with
respect to how biodiesel is treated within the context of the designate
and track (D&T) provisions under EPA's diesel program. They stated that
100 percent biodiesel (B100) and high concentration biodiesel blends do
not necessarily meet the specifications for either 1D or
2D diesel fuel, and requested that EPA amend the regulations
to provide accurate designations for these fuels. Similar to the
existing provisions for 1D 15 ppm diesel fuel, they stated
that B100 and high concentration biodiesel blends designated as 15 ppm
highway diesel fuel should be exempted from the anti-downgrading
requirements. Finally, they stated that the regulations as currently
written would compel numerous biodiesel blenders downstream of the
terminal to comply with the D&T registration and reporting
requirements. They related that this would represent a substantial
unanticipated burden for these parties and questioned whether it was
necessary to meet EPA's regulatory goals.

A. Background

    Biodiesel is manufactured primarily for blending into petroleum-
based diesel fuel. Biodiesel blends manufactured for use
interchangeably with 100 percent petroleum-based diesel fuel typically
contain up to 20 percent biodiesel (B20).\1\ Most biodiesel has
inherently very low sulfur content. Consequently, it is anticipated
that to facilitate distribution of a single grade of B100 which can be
blended into multiple distillate fuel grades (e.g. highway diesel,
nonroad diesel, heating oil) most, if not all, B100 will be designated
as 15 ppm diesel fuel by the manufacturer. As a result of the tax
incentives made available for biodiesel blenders by the Jobs Act of
2004 and extended by the Energy Policy Act (EPAct) of 2005, the
interest in blending biodiesel in growing. Biodiesel blenders are
eligible for a tax credit for the volume of biodiesel that is blended
into petroleum-based diesel for fuel use. The Internal Revenue Service
(IRS) requires that to receive the tax credit, the biodiesel blend must
contain at least one tenth of one percent petroleum based diesel fuel
(referred to as B99.9).\2\ To become eligible for this tax credit,
upstream parties sometimes manufacture B99.9 for use downstream to
produce finished biodiesel blends.
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    \1\ 2 percent biodiesel (B2) and 5 percent biodiesel (B5) are
common biodiesel blends.
    \2\ Internal Revenue Bulletin 2005-35, August 29, 2005.
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    B100 and B99.9 meet the IRS definition of an ``excluded liquid''
and thus are not subject to federal fuel excise taxes.\3\ At the point
where an excluded liquid is blended with a sufficient quantity of
petroleum-based diesel fuel so that the final fuel blend contains at
least 4 percent normal paraffins, such liquid ceases to be an excluded
liquid, and the volume of previously excluded liquid becomes subject to
federal fuel excise taxes. Thus, parties downstream of the terminal
where fuel taxes are normally assessed such as bulk plant operators,
tank truck operators, centrally fueled fleets, and retail operators
could take custody of B100 or B99.9 on which highway taxes have not yet
been assessed for use in blending into petroleum-based diesel fuel.
Under current EPA regulations, all parties that take custody of diesel
fuel on which taxes have not been assessed would need to comply with
the designate and track registration and reporting requirements.
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    \3\ 26 CFR 4081-1(b) states the an excluded liquid contains less
than 4 percent normal paraffins.
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B. Amendments Made by This Rule

    To accommodate B100 and high concentration biodiesel blends that do
not satisfy the specifications for either 1D or 2D
diesel fuel, this rule amends the regulations to add a designation for
non-petroleum based diesel fuel and high concentration blends of non-
petroleum diesel fuel. Any diesel fuel that is composed of at least 80
percent non petroleum diesel fuel (such as biodiesel) can be designated
as non-

petroleum (NP) diesel.\4\ We have included 80 percent blends in the
definition of NP diesel because we are aware that 20 percent petroleum
based diesel is sometimes blended into B100 during winter to improve
its cold temperature performance. B99.9 and B80 are used for the same
purposes as B100, either as a finished fuel or for the later
manufacture of biodiesel blends for use as finished fuel. Similar to
1D fuel, we agree that it is not appropriate to apply the
anti-downgrading requirements for 15 ppm highway diesel fuel to NP
diesel fuel since this would interfere with its intended purpose of NP
diesel as a blend component into all grades of diesel fuel (including
500 ppm highway diesel fuel). Consequently, this rule amends the
regulations to exempt fuel designated as NP diesel from the anti-
downgrading requirements.
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    \4\ It is also likely that non-petroleum diesel fuels other than
biodiesel will not satisfy the specifications for 1D or
2D diesel fuel.
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    We agree that it is not necessary to include facilities downstream
of the terminal in the D&T system if the only action that would cause
them to be included is that they handle a tax-excluded liquid. The
purpose of the D&T requirements is to maintain the integrity of the
distillate sulfur requirements for petroleum refiners. Once highway
taxes have been assessed on such fuels and red dye or marker is added
(if required \5\), typically before the fuel leaves the terminal, there
is no potential for inappropriate shifting from one pool to another.\6\
For most, if not all, of the parties that take custody of an excluded
liquid such as B100 or B99.9 downstream of the terminal, these are the
only fuels that they handle on which highway diesel taxes have yet to
be assessed. For such parties, EPA can rely on the presence or absence
of red dye and marker to evaluate whether any inappropriate shifting
has taken place.
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    \5\ Outside of the Northeast Mid-Atlantic Area, the marker
solvent yellow 124 must be added to heating oil beginning June 1,
2007 and to locomotive and marine diesel fuel from June 1, 2010-May
31, 2012 before the fuel leaves the terminal.
    \6\ For example, from the nonroad diesel pool into the 500 ppm
highway diesel pool during the highway program's temporary
compliance option, or from the heating oil pool into the high sulfur
NRLM pool while the NRLM program's small refiner and credit
provisions remain effective.
---------------------------------------------------------------------------

    This rule exempts parties from the D&T registration and reporting
requirements if: (1) The only diesel fuel that the entity delivers or
receives on which taxes have not been assessed pursuant to IRS code (26
CFR part 48) is an excluded liquid pursuant to IRS code 26 CFR 48.4081-
1(b), and (2) the entity does not transfer such excluded liquid to a
facility which delivers or receives other diesel fuel on which taxes
have not been assessed. The second provision is necessary to ensure
that all volumes reported under the D&T provisions can be accounted for
when EPA audits compliance with these requirements. In most cases, this
second provision will be moot since the parties for which this
exemption is being crafted are biodiesel blenders and typically do not
further distribute B100.
    Table IV-1, below, contains a summary of the amendments to the D&T
provisions made by this action to accomplish the goals outlined above.
These amendments will reduce the compliance burden for a number of
required parties while maintaining the environmental benefits of the
program.

      Table IV-1.--Summary of Amendments to the Designate and Track
            Requirements Regarding Non-Petroleum Diesel Fuel
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           Section                            Description
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80.2.........................  Amended the definition of heating oil to
                                reflect that it can contain NP diesel.
                                Added a definition for NP diesel.
80.520.......................  Amended the standards and dye
                                requirements to reflect that diesel fuel
                                can be designated as NP diesel.
80.590.......................  Amended the product transfer document
                                requirements to reflect that diesel fuel
                                can be designated as NP diesel.
80.597.......................  Amended the D&T provisions to exempt a
                                facility from registration if: (1) The
                                only diesel fuel that the entity
                                delivers or receives on which taxes have
                                not been assessed pursuant to IRS code
                                (26 CFR part 48) is an excluded liquid
                                pursuant to IRS code 26 CFR 4081-1(b),
                                and (2) The entity does not transfer
                                such excluded liquid to a facility which
                                delivers or receives other diesel fuel
                                on which taxes have not been assessed.
80.598.......................  Amended the diesel fuel designation
                                requirements so that diesel fuel can be
                                designated as NP diesel.
80.599.......................  Amended the manner in which compliance
                                with the anti-downgrading requirement is
                                evaluated to exempt diesel fuel
                                designated as NP from the requirements.
80.600.......................  Amended the recordkeeping requirements
                                under the designate and track provisions
                                to: (1) Reflect that diesel fuel can be
                                designated as NP diesel, and (2) clarify
                                that facilities that are exempt from the
                                registration requirements under the D&T
                                provisions (per the amendment to Sec.
                                80.597) do not need to identify the EPA
                                entity or facility registration number
                                to which fuel composed entirely of an
                                excluded liquid was distributed.
80.601.......................  Amended the reporting requirements under
                                the D&T provisions to clarify that
                                facilities that are exempted from the
                                registration requirements (per the
                                amendments to Sec.   80.597) are not
                                subject to these reporting requirements.
------------------------------------------------------------------------

V. Amendments to the Designate and Track Requirements Regarding
California Diesel

    California refiners and distributors of diesel fuel requested that
EPA consider exempting diesel fuel that meets the State of California
requirements for highway diesel fuel (known as California Air Resource
Board diesel, or ``California diesel'') from the designate and track
requirements under EPA's diesel program while such California diesel
fuel is in the State of California. They stated that because the State
of California will require that California diesel meet a 15 ppm sulfur
specification by June 1, 2006, the D&T provisions to prevent the
inappropriate shifting of higher sulfur diesel fuel into the California
diesel pool are not needed for California diesel while it is in the
State of California. It was stated that California diesel which enters
the 49 states could be incorporated into the D&T system so as to
maintain the integrity of the system. It was also requested that the
D&T requirements be amended to accommodate cases where California
diesel is shipped via pipeline to a terminal outside of California to
be distributed by tank truck back into the State of California.
    The State of California's diesel fuel program does not contain the
temporary compliance option for highway diesel fuel, or the small
refiner and credit provisions that exist under the federal program. At
the time of its introduction, California diesel became mandatory for
use in both highway vehicles and nonroad equipment. Beginning January
2007, the State of California requires that California diesel meeting a
15 ppm sulfur specification be used in intrastate locomotives and
marine engines.

Consequently, we agree that the concerns which led us to implement the
D&T requirements do not exist with respect to California diesel while
it is in the State of California. Therefore, this action amends the D&T
regulations so that facilities which handle California diesel while it
is within the State of California are not subject to the associated
registration, volume balance, and reporting requirements.
    Under this amendments, a pipeline that ships California diesel to a
terminal outside of California will continue to be subject to all of
the D&T requirements except for the volume balance requirements for
highway diesel fuel. Such pipeline facilities will not need to identify
the specific facilities from which they received the California diesel
that enters the 49 states. The terminal within the 49 states that
receives California diesel must redesignate the fuel as federal 15 ppm
sulfur highway diesel fuel (ULSD) or segregate the California diesel
fuel it receives for redistribution back into the State of California.
Refiners and importers of diesel fuel in the State of California will
continue to be subject to the federal sulfur testing requirements. This
rule contains various amendments (listed below in table V-1) to ensure
that the integrity of the D&T system is maintained.
    Table V-1, below, contains a summary of the regulatory amendments
made by this action to implement the approach outlined above. We expect
that these amendments will reduce compliance burdens for California
refiners and distributors while preserving the environmental benefits
of the clean diesel program.

      Table V-1.--Summary of Amendments to the Designate and Track
  Requirements Regarding Diesel Fuel That Meets California's Standards
------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
80.597(c)(1)(iv)..................  Added to clarify that facilities
                                     that ship California diesel outside
                                     of California are required to
                                     register under the designate and
                                     track provisions.
80.598(b)(2)(iii),                  Added new designation for California
 80.598(b)(3)(iv).                   diesel fuel.
80.598(b)(9)(xvi).................  Added new section which specifies
                                     that California diesel shipped
                                     outside of California must either
                                     be redesignated as 15 ppm MVNRLM of
                                     segregated for delivery back into
                                     California by tank truck.
80.599(b)(2), 80.599(e)(2)........  Amended definitions of MV15I and
                                     2MV15I to include CA
                                     diesel received pursuant to new
                                     section 80.617(b)(1).
80.600(b)(1)(i)(E),                 Added to specify that records must
 80.600(b)(1)(ii)(I).                be maintained regarding transfers
                                     of California diesel fuel out of
                                     the State of California under Sec.
                                      80.617(b).
80.600(n).........................  Added to clarify that records do not
                                     need to be maintained re the
                                     specific facilities to which taxed
                                     or dyed California diesel fuel (or
                                     taxed or dyed 15 ppm MVNRLM) is
                                     delivered.
80.601(a)(1)(i), 80.601(a)(2)(i)..  Amended reporting requirements to
                                     include fuel designated as
                                     California diesel that is
                                     distributed outside of California.
80.616............................  Added exemption provisions for
                                     California diesel within the State
                                     of California.
80.617............................  Added provisions on how to handle
                                     California diesel distributed
                                     outside the State of California.
------------------------------------------------------------------------

VI. Amendments to the Alternative Defense Provisions Regarding the Use
of Conductivity Additives and Red Dye With a Sulfur Content That
Exceeds 15 ppm

Conductivity Additives

    EPA's diesel program provides for the use of additives with a
sulfur content greater than 15 ppm in diesel fuel that is subject to
the 15 ppm sulfur standard. Under such circumstances, the party that
blends the additive is responsible for ensuring that the finished fuel
is compliant with the 15 ppm sulfur standard. If a violation of the 15
ppm standard is discovered, EPA will require that all parties that had
custody of the fuel provide affirmative defenses to presumptive
liability to demonstrate that they did not cause or contribute to the
violation. For blenders of additives with a sulfur content greater than
15 ppm, such affirmative defenses typically include a post-additization
sulfur test on the fuel batch which shows that the finished diesel fuel
is compliant with the 15 ppm sulfur standard. Certain diesel fuel
additives are typically injected as the fuel is being delivered into a
tank truck. The cost of post-additization sulfur testing could be
significant under these circumstances and could discourage the
injection of additives with a sulfur content that exceeds 15 ppm as the
fuel is delivered into the tank truck. This might force more
additization to take place upstream at the refiner when possible or in
the terminal storage tank.
    The final Highway and Nonroad Diesel rules projected that
manufacturers of additives for use in diesel fuel subject to the 15 ppm
sulfur standard would reformulate such additives where needed and
practicable to have a sulfur content of less than 15 ppm. During the
rulemaking process, we learned that important safety additives used to
increase the electrical conductivity of diesel fuel can not currently
be reformulated to have a sulfur content of less than 15 ppm.
Conductivity (static dissipater) additives are often injected as the
fuel is delivered into the tank truck although they are sometimes added
to the terminal tank. They are typically not added at the refinery
because of concerns that the additives might contaminate jet fuel
during shipment by pipeline.
    Concerns related to fires caused by the discharge of static
electricity during the transfer of diesel fuel are primarily focused on
instances where a tank truck that previously contained gasoline is
subsequently loaded with diesel fuel.\7\ Under such a circumstance, a
flammable mixture of gasoline and air is likely to exist in the tank
truck compartment.\8\ Static electricity is generated during the
transfer of diesel fuel into the tank truck compartment, which unless
properly managed, can serve as an ignition source for this flammable
mixture. The risk of fuel fires caused by static electric discharge can
be mitigated by employing procedural safeguards and by the use of
additives that increase the electrical conductivity of the fuel. Such
procedural safeguards include: Bonding and grounding the tank truck to
allow a safe pathway for the discharge of static electricity,
controlling fuel flow rate and splashing to limit the generation of
static electricity, and allowing sufficient time for the static charge
that does accumulate to dissipate prior to completing the refueling
procedure. Conductivity additives decrease the

extent to which a static charge can accumulate and the time needed for
the charge that does accumulate to dissipate.
---------------------------------------------------------------------------

    \7\ Such sequential loading is referred to as switch loading.
    \8\ Because the flash point of diesel fuel is much higher than
that of gasoline, it is much less likely for a flammable diesel/air
mixture to exist under typical ambient conditions.
---------------------------------------------------------------------------

    To facilitate the use of conductivity additives, the Nonroad Diesel
final rule included alternative affirmative defense provisions for over
15 ppm sulfur conductivity additives that contribute no more than 0.05
ppm sulfur to the finished fuel blend (Sec.  80.614). Under these
alternative affirmative defense provisions, additive blenders use a
sulfur test prior to additization and volume accounting reconciliation
(VAR) of the amount of additive injected into a volume of diesel over a
compliance period to demonstrate that the sulfur contribution from the
additive did not cause the finished fuel blend to exceed 15 ppm sulfur.
We limited the use of these alternative defense provisions to
conductivity additives that contribute no more than 0.05 ppm sulfur to
the finished fuel blend for two reasons. First, the information
available to us at the time indicated that the corresponding additive
treatment rate would be adequate to meet the conductivity needs for all
in-use fuels. Second, we wished to provide an upper limit on the
potential sulfur contribution from such additives so that their sulfur
content could not increase.
    Certain fuel distributors recently related that to maintain safe
operation during the transfer of 500 ppm diesel fuel they currently
employ both procedural safeguards and add conductivity additives at a
concentration that results in a sulfur contribution to the finished
fuel in excess of the 0.05 ppm. They further stated that the limited
number of conductivity tests on batches of early production 15 ppm
diesel fuel indicates that the processes used to remove sulfur also
tends to reduce the natural conductivity of the fuel. This could lead
to increased concerns regarding protecting against fires caused by
static discharge during the loading of petroleum tank trucks with ULSD.
It was requested that to ensure a smooth transition to ULSD, EPA amend
the criteria under which the alternative affirmative defense provisions
can be used to allow the use of conductivity additives that contribute
up to 0.4 ppm sulfur to the finished fuel blend. This corresponds to
the maximum treatment rate recommended by a manufacturer of
conductivity additives.
    We believe that in order to facilitate the safe operation of tank
truck loading facilities, it is appropriate to provide as much
flexibility as possible for blenders of conductivity additives under
the ULSD program. Thus, this rule provides that the alternative
affirmative defense provisions may be used by blenders of conductivity
additives that contribute no more than 0.4 ppm to the finished fuel. We
expect that this change will allow the alternative defense provisions
to be used under the most extreme circumstances, when treating diesel
fuel batches during wintertime conditions (when static electricity
concerns are heightened) that have extremely low conductivity and are
also relatively unresponsive to the effects of conductivity improver
additives. We continue to believe that in most cases the treatment rate
of conductivity additive that will be needed will be much lower than
that provided for under these amended alternative affirmative defense
provisions.

Red Dye

    The Internal Revenue Service (IRS) requires that red dye be added
to nonroad diesel fuel prior to leaving the terminal to indicate its
non-tax status. The D&T provisions under EPA's diesel program only
apply up to the point where taxes are assessed as the fuel leaves the
terminal. After this point, EPA's diesel program relies on the
presence/absence of red dye to differentiate highway diesel fuel from
nonroad diesel fuel. The success of both the IRS fuel excise tax
program and EPA's clean diesel programs is dependant on the continued
use of red dye.
    Manufacturers of red dye recently related that their efforts to
reformulate their additive to reduce the sulfur content below 15 ppm
have not been fully successful and that it is currently unclear how
this can be accomplished. Our review of the information which they
provided indicates that reformulating red dye to meet a 15 ppm
specification is currently not feasible.
    Information provided by additive manufactures indicates that the
use of red dye to meet IRS requirements should result in a contribution
to the sulfur content of the finished fuel of no more than 0.04 ppm.
Based on the above discussion, we believe that it is appropriate to
allow the use of the alternative VAR-based affirmative defense
provisions by blenders of red dye into diesel fuel subject to the 15
ppm sulfur standard provided that the use of red dye contributes no
more than 0.04 ppm to the finished fuel blend. This rule amends the
regulations to make this allowance.

Summary of the Amendments

    The amendments made by this action regarding the use of the
alternative defense provisions by blenders of greater than 15 ppm
conductivity additives and red dye are summarized in the following
table VI-1. For these alternative defense provisions to apply, it will
continue to be necessary for the blender to have a sulfur test prior to
additization which shows that the sulfur contribution from the additive
will not cause the sulfur content of the finished fuel to exceed 15
ppm. Thus, these amendments will not have a negative impact on the
environmental benefits of the ULSD program or on the sulfur sensitive
diesel engine emissions control equipment on which these benefits
depend. We intend to revisit the need for these alternative affirmative
defenses should it become practical in the future to manufacture
conductivity additives and/or red dye with a sulfur content of less
than 15 ppm.

Table VI-1.--Summary of Amendments to the Alternative Defense Provisions
                 for Conductivity Additives and Red Dye
------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
80.591............................  Amended product transfer document
                                     requirements in keeping with
                                     applicability of alternative
                                     defense provisions for red dye.
80.614............................  Amended alternative defense
                                     provisions so that they may be used
                                     by blenders of red dye that
                                     contributes no more than 0.04 ppm
                                     to the finished fuel and
                                     conductivity additives that
                                     contribute no more than 0.4 ppm to
                                     the finished fuel.
------------------------------------------------------------------------

VII. Correction of Errors and Omissions From the Highway and Nonroad
Diesel Regulations and Other Clarifications

    Following the publication of the Highway and Nonroad Diesel rules,
as well as the two subsequent rulemakings, we discovered additional
errors and clarifications that we are addressing in this action. Some
of these items are merely grammar corrections, typographical errors,
and minor clarification edits. This action also includes more
substantive amendments that we believe will assist regulated entities
in compliance with the diesel sulfur rules. These include: The
allowance for early motor vehicle diesel credits to be traded across
Credit Trading Areas, the assignment of Puerto Rico and the U.S. Virgin
Islands to CTA 1, the allowance of shorter statements on product
transfer documents (with EPA approval), and the clarification that
approved small refiners who have elected to use the ``gas-for-diesel''
small refiner option (Sec. Sec.  80.553 and 80.554) may designate 15
ppm diesel fuel as motor vehicle diesel fuel or nonroad, locomotive,
and marine diesel fuel.
    The table below details the various clarifications and other
corrections that are being made through this action:

------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
Subpart I.........................  Revised title to reflect the fact
                                     that the provisions of this subpart
                                     are applicable to motor vehicle,
                                     nonroad, locomotive and marine
                                     diesel fuel.
80.502(b).........................  Added definition to allow for the
                                     aggregation of refineries with
                                     truck loading terminals.
80.502(f).........................  Added to clarify that Alaska and
                                     Hawaii are in PADD V, and to assign
                                     the U.S. Virgin Islands and Puerto
                                     Rico to PADD VI.
80.527(c).........................  Amended to clarify that the anti-
                                     downgrading provisions begin
                                     October 15, 2006.
80527(c)(4), 80.527(e)(2).........  Revised to clarify the anti-
                                     downgrading provisions as they
                                     apply to retailers and wholesale
                                     purchaser-consumers.
80.531(a)(5)(i)-(ii) and (v)......  Amended to clarify that Puerto Rico
                                     and the U.S. Virgin Islands are
                                     assigned to CTA 1.
80.531(c)(5) and (d)(2), and        Amended to allow cross-CTA trading
 80.532.                             for early motor vehicle diesel fuel
                                     credits.
80.533 section heading,             The section heading was revised to
 80.533(d)(2) and (e).               better describe the purpose and
                                     objectives of this provision.
                                     Paragraphs were also amended to
                                     clarify that calculations of NRLM
                                     baselines should only be calculated
                                     using 2D distillates, to
                                     state that these provisions apply
                                     to ``produced or imported'' fuel,
                                     and for consistency with the
                                     revisions made to section
                                     80.554(d).
80.535............................  Revised to state a refiner must
                                     submit its NRLM early credit
                                     generation intent letter at least
                                     30 days prior to the date that it
                                     begins generating early credits.
80.551(f).........................  This provision was inadvertently
                                     omitted during the printing of a
                                     prior rulemaking.
80.553............................  Amended to state that at least 95
                                     percent of the diesel fuel that a
                                     small refiner produces must be
                                     produced to meet the 15 ppm sulfur
                                     standard.
80.554(d).........................  Amended to better reflect the intent
                                     of the small refiner ``gas-for-
                                     diesel'' option.
80.570(e), 80.571(f), 80.572(f),    Revised to state ``EPA'' instead of
 80.573(c), and 80.574(d).           ``the Administrator.''
80.590(a)(7)......................  Amended to allow entities to use
                                     shorter statements regarding diesel
                                     fuel classifications on PTDs (with
                                     EPA approval).
80.590(i).........................  Added to cover the situation where
                                     some small amount of potentially
                                     off-spec ULSD, or ``interface
                                     ULSD'', may be transferred by a
                                     pipeline due to batch sequencing
                                     and pipeline batch cutting methods.
80.592(b)(7)-(b)(7)(i)............  Amended to state ``compliance
                                     period'' rather than ``calendar
                                     year''.
80.592(f).........................  Added to state recordkeeping
                                     requirements for the situation
                                     where a refinery is aggregated with
                                     a truck loading terminal.
80.593............................  Amended to reflect the fact that
                                     this section is applicable to
                                     importers as well as refiners.
80.595............................  Revised the section heading to
                                     better describe the purpose and
                                     objectives of this provision.
80.597(c)(1) and (c)(2)...........  Revised to clarify that only
                                     entities delivering or receiving
                                     the fuels in 80.597(c)(1)(i)-(iii)
                                     must register.
80.598(a)(3)(iv)..................  Amended to clarify that small
                                     refiners who elect to produce NRLM
                                     to meet the 15 ppm standard in 2006
                                     may designate 15 ppm fuel as MV or
                                     NRLM fuel beginning June 1, 2006
                                     (as stated in Sec.   80.554(d)).
80.598(b)(9)(iv) & (b)(9)(vii)(A).  Amended to state ``2006'' rather
                                     than ``2007''.
80.600............................  Various sections amended to address
                                     recordkeeping for the situation
                                     where a refinery is aggregated with
                                     a truck loading terminal.
80.601(a)(iv)-(v).................  Amended to clarify volume balance
                                     requirements.
80.601(b)(4) and 80.601(f)........  Added to state reporting
                                     requirements for the situation
                                     where a refinery is aggregated with
                                     a truck loading terminal.
80.602(g).........................  Added to address recordkeeping for
                                     the situation where a refinery is
                                     aggregated with a truck loading
                                     terminal.
------------------------------------------------------------------------

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
Executive Order. The Order defines ``significant regulatory action'' as
one that is likely to result in a rule that may:
     Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
     Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
     Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or,
     Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
    It has been determined that this rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and is
therefore not subject to OMB review. This final rule simply corrects
errors and omissions, provides a temporary increase in the sulfur
testing tolerance, revises the designate

and track provisions to account for non-petroleum diesel fuels (i.e.,
biodiesel) and fuel that meets the California Air Resources Board's
diesel fuel standards, and amends the alternative defense provisions to
account for conductivity additives and red dye. There are no new costs
associated with this rule. Therefore, this final rule is not subject to
the requirements of Executive Order 12866. A Final Regulatory Support
Document was prepared in connection with the original regulations for
the Highway Diesel Rule and the Nonroad Diesel Rule as promulgated on
January 18, 2001 and June 29, 2004, respectively, and we have no reason
to believe that our analyses in the original rulemakings were
inadequate. The relevant analyses are available in the docket for the
January 18, 2001 rulemaking (A-99-061) and the June 29, 2004 rulemaking
(OAR-2003-0012 and A-2001-28) and at the following internet address:
http://www.epa.gov/cleandiesel. The original action was submitted to

the Office of Management and Budget for review under Executive Order
12866.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden,
as it simply corrects errors and omissions, provides a temporary
increase in the sulfur testing tolerance, revises the designate and
track provisions to account for non-petroleum diesel fuels (i.e.,
biodiesel) and fuel that meets the California Air Resources Board's
diesel fuel standards, and amends the alternative defense provisions to
account for conductivity additives and red dye. However, the Office of
Management and Budget (OMB) has previously approved the information
collection requirements contained in the existing regulations of the
Highway Diesel Rule (66 FR 5002, January 18, 2001) and the Nonroad
Diesel Rule (69 FR 38958, June 29, 2004) under the provisions of the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB
control number 2060-0308 (EPA ICR 1718). A copy of the OMB
approved Information Collection Request (ICR) may be obtained from
Susan Auby, Collection Strategies Division; U.S. Environmental
Protection Agency (2822T), 1200 Pennsylvania Avenue, NW., Washington,
DC 20460 or by calling<PHONE_NUMBER>.
    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Analyses

    EPA has determined that it is not necessary to prepare a regulatory
flexibility analysis in connection with this direct final rule. For
purposes of assessing the impacts of this final rule on small entities,
a small entity is defined as: (1) A small business as defined by the
Small Business Administration's (SBA) size standards 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
today's final rule on small entities, EPA has concluded that this
action will not have a significant economic impact on a substantial
number of small entities. This final rule will not impose additional
regulatory burden on small entities. This direct final rule merely
corrects errors and omissions, provides a temporary increase in the
sulfur testing tolerance, revises the designate and track provisions to
account for non-petroleum diesel fuels (i.e., biodiesel) and fuel that
meets the California Air Resources Board's diesel fuel standards, and
amends the alternative defense provisions to account for conductivity
additives and red dye.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective, or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the final rule an explanation of why that
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of the UMRA a
small government agency plan. The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant Federal
intergovernmental mandates, and informing, educating, and advising
small governments on compliance with the regulatory requirements.
    This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments or the private sector. The rule imposes no enforceable
duties on any of these governmental entities. Nothing in the rule would
significantly or uniquely affect small governments. EPA has determined
that this rule contains no federal mandates that may result in
expenditures of more than $100 million to the private sector in any
single year. This direct final rule merely corrects errors and
omissions, provides a temporary increase in the sulfur testing
tolerance, revises the designate and track provisions to account for
non-petroleum diesel fuels (i.e., biodiesel) and fuel that meets the
California Air Resources Board's diesel fuel standards, and amends the
alternative defense provisions to account for conductivity additives
and red dye.
    Thus, this rule is not subject to the requirements of sections 202
and 205 of the UMRA.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' are defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
    Under Section 6 of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, imposes substantial direct
compliance costs, and is not required by statute. However, if the
Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the regulation, these restrictions do not apply. EPA also
may not issue a regulation that has federalism implications and that
preempts State law, unless the Agency consults with State and local
officials early in the process of developing the regulation.
    Section 4 of the Executive Order contains additional requirements
for rules that preempt State or local law, even if those rules do not
have federalism implications (i.e., the rules 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). Those
requirements include providing all affected State and local officials
notice and an opportunity for appropriate participation in the
development of the regulation. If the preemption is not based on
express or implied statutory authority, EPA also must consult, to the
extent practicable, with appropriate State and local officials
regarding the conflict between State law and Federally protected
interests within the agency's area of regulatory responsibility.
    This rule does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This direct final rule simply
corrects errors and omissions, provides a temporary increase in the
sulfur testing tolerance, revises the designate and track provisions to
account for non-petroleum diesel fuels (i.e., biodiesel) and fuel that
meets the California Air Resources Board's diesel fuel standards, and
amends the alternative defense provisions to account for conductivity
additives and red dye. Although Section 6 of Executive Order 13132 did
not apply to the Highway Diesel Rule (66 FR 5002) or the Nonroad Diesel
Rule (69 FR 38958), EPA did consult with representatives of various
State and local governments in developing these rules. For this direct
final action, EPA consulted with representatives of the California Air
Resources Board and the Western States Petroleum Association (WSPA) for
the amendments made which will affect refiners and distributors in
California.

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

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' This direct final rule does
not have tribal implications as specified in Executive Order 13175.
This rule does not have tribal implications. It will not have
substantial direct effects on tribal governments, on the relationship
between the Federal government and Indian tribes, or on the
distribution of power and responsibilities between the Federal
government and Indian tribes, as specified in Executive Order 13175.
This rule does not uniquely affect the communities of Indian Tribal
Governments. Further, no circumstances specific to such communities
exist that would cause an impact on these communities beyond those
discussed in the other sections of this rule. This direct final rule
merely corrects errors and omissions, provides a temporary increase in
the sulfur testing tolerance, revises the designate and track
provisions to account for non-petroleum diesel fuels (i.e., biodiesel)
and fuel that meets the California Air Resources Board's diesel fuel
standards, and amends the alternative defense provisions to account for
conductivity additives and red dye. Thus, Executive Order 13175 does
not apply to this rule.

G. Executive Order 13045: Children's Health Protection

    Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, the Agency must evaluate the environmental health
or safety effects of the planned rule on children, and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
    This rule is not subject to the Executive Order because it is not
economically significant, and does not involve decisions on
environmental health or safety risks that may disproportionately affect
children.

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

    This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (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. This
direct final rule simply corrects errors and omissions, provides a
temporary increase in the sulfur testing tolerance, revises the
designate and track provisions to account for non-petroleum diesel
fuels (i.e., biodiesel) and fuel that meets the California Air
Resources Board's diesel fuel standards, and amends the alternative
defense provisions to account for conductivity additives and red dye.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C.
272 note) directs EPA to use voluntary consensus standards in its
regulatory activities unless doing so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (such as 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 direct final rule does not involve technical standards. This
direct final rule merely corrects errors and omissions, provides a
temporary increase in the sulfur testing tolerance, revises the
designate and track provisions to account for non-petroleum diesel
fuels (i.e., biodiesel) and fuel that meets the California Air
Resources Board's diesel fuel standards, and amends the alternative
defense provisions to account for conductivity additives and red dye.
Thus, we have determined that the requirements of the NTTAA do not
apply.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801, et seq., as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996,
generally provides that before a rule may take effect, the agency
promulgating the rule must submit a rule report, which includes a copy
of the rule, to Congress and the Comptroller General of the United
States. We will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States before publication of the
rule in the Federal Register. A major rule cannot take effect until 60
days after it is published in the Federal Register. This action is not
a ``major rule'' as defined by 5 U.S.C. 804(2) and will become
effective June 30, 2006.

IX. Statutory Provisions and Legal Requirements

    The statutory authority for this action comes from sections 211(c)
and (i) of the Clean Air Act as amended 42 U.S.C. 7545(c) and (i). This
action is a rulemaking subject to the provisions of Clean Air Act
section 307(d). See 42 U.S.C. 7606(d)(1). Additional support for the
procedural and enforcement related aspects of the rule comes from
sections 144(a) and 301(a) of the Clean Air Act. 42 U.S.C. 7414(a) and
7601(a).

List of Subjects in 40 CFR Part 80

    Environmental protections, Fuel additives, Imports, Labeling, Motor
vehicle pollution, Penalties, Reporting and recordkeeping requirements.

    Dated: April 20, 2006.
Stephen L. Johnson,
Administrator.

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

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

0
1. The authority citation for part 80 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7545 and 7601(a).

0
2. Section 80.2 is amended by revising paragraph (ccc) and adding
paragraph (sss) to read as follows:

Sec.  80.2  Definitions.

* * * * *
    (ccc) Heating Oil 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, and
similar trade names, and that is not jet fuel, kerosene, or MVNRLM
diesel fuel.
* * * * *
    (sss) Non-petroleum diesel (NP diesel) means a diesel fuel that
contains at least 80 percent mono-alkyl esters of long chain fatty
acids derived from vegetable oils or animal fats.

0
3. Subpart Heading I is revised to read as follows:

Subpart I--Motor Vehicle, Nonroad, Locomotive, and Marine Diesel
Fuel

0
4. Section 80.502 is amended by adding new paragraphs (b)(1)(iii),
(d)(1), (d)(2) and (f), to read as follows:

Sec.  80.502  What definitions apply for purposes of this subpart?

* * * * *
    (b) * * *
    (1) * * *
    (iii) Situations where a refinery is aggregated with a truck
loading terminal.
    (A) Where a refinery is aggregated with a truck loading terminal,
diesel fuel or other product subject to the requirements of this
subpart I produced by such refinery and distributed over the truck
terminal rack must be included in refinery batches that may be based on
shipments to a truck terminal rack tank or on the total volumes
delivered to tanker trucks for a period not to exceed 1 calendar month
per batch.
    (B) Where a refinery is aggregated with a truck loading terminal,
diesel fuel or other product subject to the requirements of this
subpart I that were imported or produced by another refinery, and that
are distributed through the refinery or truck terminal rack, must be
treated as previously designated fuel for which the aggregated facility
is responsible for all applicable balance and downgrade requirements
under Sec. Sec.  80.527, 80.598, 80.599 and related recordkeeping and
reporting requirements like any other distributor downstream from the
refiner or importer.
* * * * *
    (d) * * *
    (1) In the case of aggregated facilities consisting of a refinery
and a truck loading terminal, a batch may be defined by one of the
following methods:
    (i) The sum of the deliveries from the truck loading terminal rack
to trucks for periods not to exceed 1 month;
    (ii) Each individual truck or truck compartment; or
    (iii) For refineries with ``certification tanks'' where testing is
performed and ``rack tanks'' that feed the truck loading terminal rack,
each transfer from the certification tank to the rack tank. If this
method of determining a batch is selected, it must be the sole method
used and must be performed such that no double-counting or
undercounting of volumes occurs.
    (2) [Reserved.]
    (f) Definition of PADD. For the purposes of this subpart only, the
following definitions of PADDs apply:
    (1) The following States are included in PADD I:

Connecticut
Delaware
District of Columbia
Florida
Georgia
Maine
Maryland
Massachusetts
New Hampshire
New Jersey
New York
North Carolina
Pennsylvania
Rhode Island
South Carolina
Vermont
Virginia
West Virginia

    (2) The following States are included in PADD II:

Illinois
Indiana
Iowa
Kansas
Kentucky
Michigan
Minnesota
Missouri
Nebraska
North Dakota
Ohio
Oklahoma

South Dakota
Tennessee
Wisconsin

    (3) The following States are included in PADD III:

Alabama
Arkansas
Louisiana
Mississippi
New Mexico
Texas

    (4) The following States are included in PADD IV:

Colorado
Idaho
Montana
Utah
Wyoming

    (5) The following States are included in PADD V:

Alaska
Arizona
California
Hawaii
Nevada
Oregon
Washington

    (6) The following areas are included in PADD VI:

U.S. Virgin Islands
Commonwealth of Puerto Rico

0
5. Section 80.520 is amended by revising paragraph (b)(2) introductory
text to read as follows:

Sec.  80.520  What are the standards and dye requirements for motor
vehicle diesel fuel?

* * * * *
    (b) * * *
    (2) Until June 1, 2010, any 1D or 2D distillate,
or NP diesel fuel that does not show visible evidence of dye solvent
red 164 shall be considered to be motor vehicle diesel fuel and subject
to all the requirements of this subpart for motor vehicle diesel fuel,
except for distillate fuel designated or classified as any of the
following:
* * * * *

0
6. Section 80.527 is amended by revising paragraph (c) introductory
text, (c)(3), (c)(4), and (e)(2) to read as follows:

Sec.  80.527  Under what conditions may motor vehicle diesel fuel
subject to the 15 ppm sulfur standard be downgraded to motor vehicle
diesel fuel subject to the 500 ppm sulfur standard?

* * * * *
    (c) Downgrading limitation. The provisions of this section apply
beginning October 15, 2006.
* * * * *
    (3) Compliance with the limitation of paragraph (c)(1) of this
section applies separately for the compliance periods of October 15,
2006 through May 31, 2007; June 1, 2007 through June 30, 2008; July 1,
2008 through June 30, 2009; July 1, 2009 through May 31, 2010.
    (4) Except as provided in paragraph (e) of this section, compliance
with the limitation of paragraph (c)(1) of this section shall be as
calculated under Sec.  80.599(e).
* * * * *
    (e) * * *
    (2) A retailer or wholesale purchaser-consumer who does not sell,
offer for sale, or dispense motor vehicle diesel fuel subject to the 15
ppm sulfur standard under Sec.  80.520(a)(1) must comply with the
downgrading limitations of paragraph (c) of this section, such that it
may not downgrade a volume of motor vehicle diesel fuel, designated as
subject to the 15 ppm sulfur standard, for more than 20% of the total
volume of motor vehicle diesel fuel that it sells, offers for sale, or
dispenses in any compliance period.
* * * * *

0
7. Section 80.531 is amended by revising paragraphs (a)(5)(i),
(a)(5)(ii), and (d)(2), and by adding paragraphs (a)(5)(v) and (c)(5)
to read as follows:

Sec.  80.531  How are motor vehicle diesel fuel credits generated?

    (a) * * *
    (5) * * *
    (i) PADDs I, II, III and IV, as described in Sec.  80.502(f) except
as provided in paragraph (a)(5)(iv) of this section. The CTAs shall be
designated as CTA 1, 2, 3, and 4, respectively, and correspond to PADDs
I, II, III, and IV, respectively;
    (ii) CTA 5 shall correspond to PADD V, as described in Sec.
80.502(f), except as provided in paragraphs (a)(5)(iii) and (iv) of
this section;
* * * * *
    (v) The U.S. territories specified in Sec.  80.502(f)(6) shall be
included in CTA 1.
* * * * *
    (c) * * *
    (5) Credit transfers for early credits. For early credits generated
under Sec.  80.531(c), credits may be used in any of the CTAs 1 through
5 that were generated in any of the CTAs 1 through 7 to achieve
compliance with the volume limit in Sec.  80.503(a)(3);
* * * * *
    (d) * * *
    (2) Credits generated under paragraphs (b) and (c) of this section
shall be generated separately by CTA as defined in paragraph (a)(5) of
this section and must be designated by CTA of generation, and by the
refiner and refinery, or by importer and port of import, as applicable,
except as provided under paragraph (c)(5) of this section.
* * * * *

0
8. Section 80.532 is amended by revising paragraph (d)(1)(i) to read as
follows:

Sec.  80.532  How are motor vehicle diesel fuel credits used and
transferred?

* * * * *
    (d) * * *
    (1) * * *
    (i) The motor vehicle diesel fuel credits were generated in the
same CTA as the CTA in which motor vehicle diesel fuel credits are used
to achieve compliance, except as provided in Sec.  80.531(c)(5);
* * * * *

0
9. Section 80.533 is amended as follows:
0
a. By revising the section heading.
0
b. By adding a new paragraph (c)(2)(iii).
0
c. By revising paragraph (d)(2).
0
d. By adding introductory text to paragraph (e).
0
e. By revising paragraph (e)(1).
0
f. By revising paragraph (f).
0
g. By revising paragraph (g).
0
h. By revising paragraph (h).
0
i. By adding a new paragraph (i).

Sec.  80.533  How does a refiner or importer apply for a motor vehicle
or non-highway baseline for the generation of NRLM credits or the use
of the NRLM small refiner compliance options?

* * * * *
    (c) * * *
    (2) * * *
    (iii) For purposes of a total diesel baseline volume for use in
determining compliance with the provisions of Sec.  80.554(d), the
baseline volumes of motor vehicle diesel fuel produced during the
calendar years beginning January 1, 1998 and 1999 (per Sec. Sec.
80.595(a) and 80.596(a)); and the baseline volumes of non-highway
diesel fuel produced during the three calendar years beginning January
1, 2003, 2004, and 2005. This shall be calculated as stated under
paragraph (f) of this section.
* * * * *
    (d) * * *
    (2) Under paragraph (c)(2)(ii) of this section, BMV
equals the average annual volume of motor vehicle diesel fuel produced
or imported during the period from January 1, 2006 through December 31,
2008.
* * * * *
    (e) Calculation of the Non-highway Baseline, BNRLM. For
purposes of this paragraph (e), BMV shall only include the
average annual volume of 2D distillate fuel.

    (1) Under paragraphs (c)(2)(i) and (c)(2)(iii) of this section,
BNRLM equals the average annual volume of all 2D
distillate produced or imported from January 1, 2003 through December
31, 2005, less BMV as determined in paragraph (d)(1) of this
section.
* * * * *
    (f) Calculation of the Total Diesel Baseline, BMVNRLM.
BMVNRLM equals the sum of BMV (as calculated
under Sec.  80.596) plus BNRLM (as calculated under
paragraph (e)(1) of this section).
    (g)(1) Applications submitted under paragraphs (c)(2)(i) and
(c)(2)(iii) of this section must be postmarked by February 28, 2006.
    (2) Applications submitted under paragraph (c)(2)(ii) of this
section must be postmarked by February 28, 2009.
    (h)(1) For applications submitted under paragraphs (c)(2)(i) and
(c)(2)(iii) of this section, EPA will notify refiners or importers by
June 1, 2006 of approval of the baselines for each of the refiner's
refineries or importer's import facilities or of any deficiencies in
the refiner's or importer's application.
    (2) For applications submitted under paragraph (c)(2)(ii) of this
section, EPA will notify refiners or importers by June 1, 2009
regarding approval of the baselines for each of the refiner's
refineries or importer's import facilities of any deficiencies in the
refiner's or importer's application.
    (i) If at any time the motor vehicle baseline or non-highway
baseline submitted in accordance with the requirements of this section
is determined to be incorrect, EPA will notify the refiner or importer
of the corrected baseline and any compliance calculations made on the
basis of that baseline will have to be adjusted retroactively.

0
10. Section 80.535 is amended by revising paragraphs (a)(1)(i) and
(c)(1)(i) to read as follows:

Sec.  80.535  How are NRLM diesel fuel credits generated?

    (a) * * *
    (1) * * *
    (i) The refiner or importer notifies EPA of its intention to
generate credits and the period during which it will generate credits.
This notification must be received by EPA at least 30 calendar days
prior to the date it begins generating credits under this section.
* * * * *
    (c) * * *
    (1) * * *
    (i) The refiner or importer notifies EPA of its intention to
generate credits and the period during which it will generate credits.
This notification must be received by EPA at least 30 calendar days
prior to the date it begins generating credits under this section.
* * * * *

0
11. Section 80.551 is amended by adding paragraph (f) to read as
follows:

Sec.  80. 551  How does a refiner obtain approval as a small refiner
under this subpart?

* * * * *
    (f) Approval of small refiner status for refiners who apply under
Sec.  80.550(e) will be based on all information submitted under
paragraph (c) of this section, except as provided in Sec.  80.550(e).
* * * * *

0
12. Section 80.553 is amended by revising paragraphs (b) and (d) to
read as follows:

Sec.  80.553  Under what conditions may the small refiner gasoline
sulfur standards be extended for a small refiner of motor vehicle
diesel fuel?

* * * * *
    (b) As part of its application, the refiner must submit an
application for a motor vehicle diesel fuel baseline in accordance with
the provisions of Sec. Sec.  80.595 and 80.596. The application must
also include information, as provided in Sec.  80.594, demonstrating
that starting no later than June 1, 2006, 95 percent of the motor
vehicle diesel fuel produced by the refiner will comply with the 15 ppm
sulfur content standard under Sec.  80.520(a)(1), and that the volume
of motor vehicle diesel fuel produced will comply with the volume
requirements of paragraph (e) of this section.
* * * * *
    (d) Beginning June 1, 2006, and continuing through December 31,
2010, 95 percent of the motor vehicle diesel fuel produced by a refiner
that has received an extension of its small refiner gasoline sulfur
standards under this section must be accurately designated under Sec.
80.598 as meeting the 15 ppm sulfur content standard under Sec.
80.520(a)(1).
* * * * *

0
13. Section 80.554 is amended by revising paragraphs (d)(1)(i),
(d)(1)(ii), and (d)(3)(i) to read as follows:

Sec.  80.554  What compliance options are available to NRLM diesel fuel
small refiners?

* * * * *
    (d) * * *
    (1) * * *
    (i) From June 1, 2006 until the expiration of the refiner's small
refiner gasoline sulfur standards (through December 31, 2007 or 2010)
95 percent of the total MVNRLM diesel fuel produced by the refiner must
be accurately designated under Sec.  80.598(a) as meeting the 15 ppm
sulfur standard of Sec.  80.510(b).
    (ii) The refiner must produce MVNRLM diesel fuel each year or
partial year under paragraph (d)(1)(i) of this section at a volume that
is equal to or greater than 85 percent of BMVNRLM, as
defined in Sec.  80.533, calculated on an annual basis.
* * * * *
    (3)(i) If the refiner fails to produce the necessary volume of 15
ppm sulfur MVNRLM diesel fuel by June 1, 2006 and every year thereafter
through the deadlines specified under paragraph (d)(1)(i) of this
section, the refiner must report this in its annual report under Sec.
80.604, and the adjustment of gasoline sulfur standards under paragraph
(d)(2)(i) of this section will be considered void as of January 1,
2004.
* * * * *

0
14. Section 80.570 is amended by revising paragraph (e) to read as
follows:

Sec.  80.570  What labeling requirements apply to retailers and
wholesale purchaser-consumers of diesel fuel beginning June 1, 2006?

* * * * *
    (e) Alternative labels to those specified in paragraphs (a) through
(c) of this section may be used as approved by EPA.

0
15. Section 80.571 is amended by revising paragraph (f) to read as
follows:

Sec.  80.571  What labeling requirements apply to retailers and
wholesale purchaser-consumers of NRLM diesel fuel or heating oil
beginning June 1, 2007?

* * * * *
    (f) Alternative labels to those specified in paragraphs (a) through
(d) of this section may be used as approved by EPA.

0
16. Section 80.572 is amended by revising paragraph (f) to read as
follows:

Sec.  80.572  What labeling requirements apply to retailers and
wholesale purchaser-consumers of NR and NRLM diesel fuel and heating
oil beginning June 1, 2010?

* * * * *
    (f) Alternative labels to those specified in paragraphs (a) through
(d) of this section may be used as approved by EPA.

0
17. Section 80.573 is amended by revising paragraph (c) to read as
follows:

Sec.  80.573  What labeling requirements apply to retailers and
wholesale purchaser-consumers of NRLM diesel fuel and heating oil
beginning June 1, 2012?

* * * * *

    (c) Alternative labels to those specified in paragraph (a) of this
section may be used as approved by EPA.

0
18. Section 80.574 is amended by revising paragraph (d) to read as
follows:

Sec.  80.574  What labeling requirements apply to retailers and
wholesale purchaser-consumers of NRLM diesel fuel, or heating oil
beginning June 1, 2014?

* * * * *
    (d) Alternative labels to those specified in paragraphs (a) and (b)
of this section may be used as approved by EPA.

0
19. Section 80.580 is amended by revising paragraph (d) to read as
follows:

Sec.  80.580  What are the sampling and testing methods for sulfur?

* * * * *
    (d) Adjustment factor for downstream test results. (1) Except as
specified in paragraph (d)(1)(i) of this section, an adjustment factor
of negative two ppm sulfur shall be applied to the test results from
any testing of motor vehicle diesel fuel or NRLM diesel fuel downstream
of the refinery or import facility, to account for test variability,
but only for testing of motor vehicle diesel fuel or NRLM diesel fuel
identified as subject to the 15 ppm sulfur standard of Sec.  80.510(b)
or Sec.  80.520(a)(1).
    (i) Prior to October 15, 2008 an adjustment factor of negative
three ppm sulfur shall be applied to the test results, to account for
test variability, but only for testing of motor vehicle diesel fuel or
NRLM diesel fuel identified as subject to the 15 ppm sulfur standard of
Sec.  80.510(b) or Sec.  80.520(a)(1).
    (ii) [Reserved.]
    (2) In addition to the adjustment factor provided in paragraph
(d)(1)(i) of this section, prior to September 1, 2006, an adjustment
factor of negative 7 ppm shall be applied to the test results from any
testing of motor vehicle diesel fuel downstream of the refinery or
import facility, to facilitate the transition to ULSD fuel, but only
for testing of motor vehicle diesel fuel identified as subject to the
15 ppm sulfur standard of Sec.  80.520(a)(1).
    (3) In addition to the adjustment factor provided in paragraph
(d)(1)(i) of this section, prior to October 15, 2006, an adjustment
factor of negative 7 ppm shall be applied to the test results from any
testing of motor vehicle diesel fuel at any retail outlet or wholesale
purchaser-consumer facility, to facilitate the transition to ULSD fuel,
but only for testing of motor vehicle diesel fuel identified as subject
to the 15 ppm sulfur standard of Sec.  80.520(a)(1).
* * * * *

0
20. Section 80.581 is amended by revising paragraph (c)(1) to read as
follows:

Sec.  80.581  What are the batch testing and sample retention
requirements for motor vehicle and NRLM diesel fuel?

* * * * *
    (c)(1) Any refiner who produces motor vehicle or NRLM diesel fuel
using computer-controlled in-line blending equipment, including the use
of an on-line analyzer test method that is approved under the
provisions of Sec.  80.580, and who, subsequent to the production of
the diesel fuel batch tests a composited sample of the batch under the
provisions of Sec.  80.580 for purposes of designation and reporting,
is exempt from the requirement of paragraph (b) of this section to
obtain the test result required under this section prior to the diesel
fuel leaving the refinery, provided that the refiner obtains approval
from EPA. The requirement of this paragraph (c)(1) that the in-line
blending equipment must include an on-line analyzer test method that is
approved under the provisions of Sec.  80.580 is effective beginning
June 1, 2006.
* * * * *

0
21. Section 80.590 is amended by revising paragraphs (a)(7)
introductory text and (a)(7)(i), and by adding paragraph (i) to read as
follows:

Sec.  80.590  What are the product transfer document requirements for
motor vehicle diesel fuel, NRLM diesel fuel, heating oil and other
distillates?

    (a) * * *
    (7) For transfers of title or custody from one facility to another
in the distribution system where diesel fuel or distillates are taxed,
dyed or marked, and for any subsequent transfers (except when such fuel
is dispensed into motor vehicles or nonroad, locomotive, or marine
equipment), an accurate statement on the product transfer document of
the applicable fuel uses and classifications, as follows (however, in
instances where space is constrained, substantially similar language
may be used following approval from EPA):
    (i) Undyed 15 ppm sulfur diesel fuel. For the period from June 1,
2006 and beyond, ``15 ppm sulfur (maximum) Undyed Ultra-Low Sulfur
Diesel Fuel. For use in all diesel vehicles and engines.'' From June 1,
2006 through May 31, 2010, the product transfer document must also
state whether the diesel fuel is 1D or 2D, or NP
diesel.
* * * * *
    (i) Pipeline Ticketing. For the case where a pipeline delivers a
batch of ULSD to another facility that contains slight amounts of
another type of fuel from a preceding or following batch, a clear
statement must be included on the PTD denoting this. When this occurs,
the receiving facility must handle the fuel appropriately (e.g.,
redesignate or downgrade any amount of fuel in that batch that does not
meet the applicable sulfur standard), in accordance with the provisions
of Sec. Sec.  80.527 and 80.599.

0
22. Section 80.591 is amended by revising paragraphs (b)(3), (b)(4)(i),
(b)(4)(ii), and (b)(4)(iii) to read as follows:

Sec.  80.591  What are the product transfer document requirements for
additives to be used in diesel fuel?

* * * * *
    (b) * * *
    (3) If the additive package contains a static dissipater additive
and/or red dye having a sulfur content greater than 15 ppm, a statement
must be included which accurately describes the contents of the
additive package pursuant to one of the following choices:
    (i) ``This diesel fuel additive contains a static dissipater
additive having a sulfur content greater than 15 ppm.''
    (ii) ``This diesel fuel additive contains red dye having a sulfur
content greater than 15 ppm.''
    (iii) ``This diesel fuel additive contains a static dissipater
additive and red dye having a sulfur content greater than 15 ppm.''
    (4) * * *
    (i) The additive package's maximum sulfur concentration.
    (ii) The maximum recommended concentration in volume percent for
use of the additive package in diesel fuel.
    (iii) The contribution to the sulfur level of the fuel, in ppm,
that would result if the additive package is used at the maximum
recommended concentration.
* * * * *

0
23. Section 80.592 is amended by adding a new paragraph (f) to read as
follows:

Sec.  80.592  What records must be kept by entities in the motor
vehicle diesel fuel and diesel fuel additive distribution systems?

* * * * *
    (f) Additional records to be kept by aggregated facilities
consisting of a refinery and a truck loading terminal. In addition to
the records required by paragraph (a) of this section, such aggregated
facilities must also keep the following records beginning June 1, 2006:
    (1) The following information for each batch of motor vehicle
diesel fuel

produced by the refinery and sent over the aggregated facility's truck
rack:
    (i) The batch volume;
    (ii) The batch number, assigned under the batch numbering
procedures under Sec. Sec.  80.65(d)(3) and 80.502(d)(1);
    (iii) The date of receipt or import;
    (iv) A record designating the batch as motor vehicle diesel fuel
meeting the 500 ppm sulfur standard or as motor vehicle diesel fuel
meeting the 15 ppm sulfur standard; and,
    (v) A record indicating the volumes that were either taxed, dyed,
or dyed and marked.
    (2) Volume reports for all motor vehicle diesel fuel from external
sources (i.e., from another refiner or importer), as described in Sec.
80.601(f)(2), sent over the aggregated facility's truck rack.

0
24. Section 80.595 is amended by revising the section heading to read
as follows:

Sec.  80.595  How does a small or GPA refiner apply for a motor vehicle
diesel fuel volume baseline for the purpose of extending their gasoline
sulfur standards?

* * * * *

0
25. Section 80.597 is amended by revising paragraphs (c)(1)
introductory text, and (c)(2) introductory text, and adding paragraphs
(c)(1)(iv) and (c)(5) to read as follows:

Sec.  80.597  What are the registration requirements?

* * * * *
    (c) Entity registration. (1) Except as prescribed in paragraph
(c)(5) of this section, each entity as defined in Sec.  80.502 that
intends to deliver or receive custody of any of the following fuels
from June 1, 2006 through May 31, 2010 must register with EPA by
December 31, 2005 or six months prior to commencement of producing,
importing, or distributing any distillate listed in paragraphs
(c)(1)(i) through (c)(1)(iii) of this section:
* * * * *
    (iv) Fuel designated as California Diesel fuel under Sec.  80.598
on which taxes have not been assessed and red dye has not been added
(if required) pursuant to IRS code (26 CFR part 48) and that is
delivered by pipeline to a terminal outside of the State of California
pursuant to the provisions of Sec.  80.617(b).
    (2) Except as prescribed in paragraph (c)(5) of this section, each
entity as defined in Sec.  80.502 that intends to deliver or receive
custody of any of the following fuels from June 1, 2007 through May 31,
2014 must register with EPA by December 31, 2005 or six months prior to
commencement of producing, importing, or distributing any distillate
listed in paragraph (c)(1) of this section:
* * * * *
    (5) Exceptions for Excluded Liquids. An entity that would otherwise
be required to register pursuant to the requirements of paragraphs
(c)(1) and (c)(2) of this section is exempted from the registration
requirements under this section provided that:
    (i) The only diesel fuel or heating oil that the entity delivers or
receives on which taxes have not been assessed or which is not received
dyed pursuant to Internal Revenue Service (IRS) code 26 CFR part 48 is
an excluded liquid as defined pursuant to IRS code 26 CFR 4081-1(b).
    (ii) The entity does not transfer the excluded liquid to a facility
which delivers or receives diesel fuel other than an excluded liquid on
which taxes have not been assessed pursuant to IRS code (26 CFR part
48).
* * * * *

0
26. Section 80.598 is amended as follows:
0
a. By adding paragraph (a)(2)(v)(C).
0
b. By revising paragraph (a)(3)(iv).
0
c. By revising paragraph (a)(3)(vi).
0
d. By adding paragraphs (b)(2)(iii) and (b)(2)(iv).
0
e. By adding paragraphs (b)(3)(iv) and (b)(3)(v).
0
f. By adding paragraph (b)(4)(iv).
0
g. By adding paragraph (b)(9)(xvi).

Sec.  80.598  What are the designation requirements for refiners,
importers, and distributors?

    (a) * * *
    (2) * * *
    (v) * * *
    (C) NP diesel (NP).
    (3) * * *
    (iv) Prior to June 1, 2009 all 15 ppm sulfur MVNRLM diesel fuel
must be designated as motor vehicle diesel fuel. A refiner that has
been approved as a NRLM diesel fuel small refiner under Sec.  80.551(g)
and has elected to use the compliance option specified under Sec.
80.554(d) may also designate 15 ppm sulfur MVNRLM fuel as NRLM diesel
fuel beginning June 1, 2006.
* * * * *
    (vi) Beginning June 1, 2014, any distillate fuel having a sulfur
content greater than 15 ppm may not be designated as MVNRLM diesel
fuel.
    (b) * * *
    (2) * * *
    (iii) Fuel that meets the requirements specified in Sec.  80.616
which is transferred by a pipeline facility to a terminal facility
outside of the State of California pursuant to Sec.  80.617(b) may be
designated as California diesel fuel. Such fuel must subsequently be
redesignated by the receiving terminal as either 1D or
2D 15 ppm motor vehicle diesel fuel, or segregated for
delivery by tank truck to a retail or wholesale purchaser consumer
facility inside the State of California pursuant to Sec.  80.617(b)(2).
    (iv) NP 15 ppm sulfur motor vehicle diesel fuel.
    (3) * * *
    (iv) Fuel that meets the requirements specified in Sec.  80.616
that is transferred by a pipeline facility to a terminal facility
outside of the State of California pursuant to Sec.  80.617(b) may be
designated as California diesel fuel. Such fuel must either be
redesignated by the receiving terminal as either 1D or
2D 15 ppm motor vehicle diesel fuel as prescribed in paragraph
(b)(9)(xvi) of this section, or segregated for delivery by tank truck
to a retail or wholesale purchaser consumer facility inside the State
of California pursuant to Sec.  80.617(b)(2).
    (v) NP 15 ppm sulfur motor vehicle diesel fuel.
    (4) * * *
    (iv) NP 500 ppm sulfur motor vehicle diesel fuel.
* * * * *
    (9) * * *
    (xvi) Fuel designated as California diesel fuel under paragraph
(b)(3)(iv) of this section that is received by a terminal facility
pursuant to the provisions of Sec.  80.617(b)(1) must be redesignated
as either 1D or 2D 15 ppm motor vehicle diesel fuel
as prescribed in paragraph (b)(9)(xvi) of this section, or segregated
for delivery by tank truck to a retail or wholesale purchaser consumer
facility inside the State of California pursuant to Sec.  80.617(b)(2).
* * * * *

0
27. Section 80.599 is amended as follows:
0
a. By revising paragraph (b)(2).
0
b. By revising paragraph (e)(2).
0
c. By revising paragraph (e)(4).
0
d. By revising paragraph (e)(5).
0
e. By adding a new paragraph (h).

Sec.  80.599  How do I calculate volume balances for designation
purposes?

* * * * *
    (b) * * *
    (2) Calculate the motor vehicle diesel fuel received, as follows:

MVI = MV15I + MV500I

Where:

MV15I = the total volume of all the batches of fuel
designated as 15 ppm sulfur motor vehicle diesel fuel received for
the compliance period. Any motor vehicle diesel fuel produced by or
imported into

the facility shall also be included in this volume. Any untaxed and
undyed California diesel fuel received by a terminal pursuant to
Sec.  80.617 (b)(1) shall be included in this volume.
MV500I = the total volume of all batches of fuel
designated as 500 ppm sulfur motor vehicle diesel fuel received for
the compliance period. Any motor vehicle diesel fuel produced by or
imported into the facility shall also be included in this volume.

* * * * *
    (e) * * *
    (2) The volume of 2D 15 ppm sulfur motor vehicle delivered
must meet the following requirement:

(2MV15O + 2MV15INVCHG) >= 0.8 *
2MV15I

Where:

2MV15O = the total volume of fuel delivered
during the compliance period that is designated as 2D 15
ppm sulfur motor vehicle diesel fuel.
2MV15INVCHG = the total volume of diesel fuel
designated as 2D 15 ppm sulfur motor vehicle diesel fuel in
inventory at the end of the compliance period minus the total volume
of 2D 15 ppm sulfur motor vehicle diesel fuel in inventory
at the beginning of the compliance period, and accounting for any
corrections in inventory due to volume swell or shrinkage,
difference in measurement calibration between receiving and
delivering meters, and similar matters, where corrections that
increase inventory are defined as positive.
2MV15I = the total volume of fuel received
during the compliance period that is designated as 2D 15
ppm sulfur motor vehicle diesel fuel. Any untaxed and undyed
California diesel fuel received by a terminal pursuant to Sec.
80.617(b)(1) shall be included in this volume.

* * * * *
    (4) The following calculation may be used to account for wintertime
blending of kerosene and the blending of non-petroleum diesel:

2MV500O < = 2MV500I +
2MV500P - 2MV500INVCHG + 0.2 *
(1MV15I + 2MV15I +
NPMV15I)

Where:

1MV15I the total volume of fuel received during
the compliance period that is designated as 1D 15 ppm
sulfur motor vehicle diesel fuel. Any motor vehicle diesel fuel
produced by or imported into the facility shall not be included in
this volume.
NPMV15I is the total volume of fuel received during the
compliance period that is designated as NP15 ppm sulfur motor
vehicle diesel fuel. Any motor vehicle diesel fuel produced by or
imported into the facility shall not be included in this volume.
1MV15P = the total volume of fuel produced by or
imported into the facility during the compliance period that was
designated as 1D 15 ppm sulfur motor vehicle diesel fuel
when it was delivered.

    (5) The following calculation may be used to account for wintertime
blending of kerosene, the blending of non-petroleum diesel, and/or
changes in the facility's volume balance of motor vehicle diesel fuel
resulting from a temporary shift of 500 ppm sulfur NRLM diesel fuel to
500 ppm sulfur motor vehicle diesel fuel during the compliance period:

2MV500O < 2MV500I +
2MV500P - 2MV500INVCHG + 0.2 *
2MV15I + 1MV15B +
2NRLM500S + NPB

Where:

1MV15B = the total volume of fuel received
during the compliance period that is designated as 1D 15
ppm sulfur motor vehicle diesel fuel and that the facility can
demonstrate they blended into 2D 500 ppm sulfur motor
vehicle diesel fuel. Any motor vehicle diesel fuel produced by or
imported into the facility shall not be included in this volume.
2MV500P = the total volume of fuel produced by
or imported into the facility during the compliance period that was
designated as 2MV 500 ppm sulfur motor vehicle diesel fuel
when it was delivered.
2NRLM500S = the total volume of 2D 500
ppm sulfur NRLM diesel fuel that the facility can demonstrate they
redesignated as 2D 500 ppm sulfur motor vehicle diesel fuel
during the compliance period.
NPB = the total volume of fuel received during the
compliance period that is designated as NP15 ppm sulfur motor
vehicle diesel fuel, and/or NP500 ppm sulfur motor vehicle diesel
fuel which the facility can demonstrate they blended into
2D 500 ppm sulfur motor vehicle diesel fuel.

* * * * *
    (h) Additional requirements for aggregated facilities consisting of
a refinery and a truck loading terminal. In addition to the volume
balance requirements required by paragraphs (a) through (g) of this
section, aggregated facilities consisting of a refinery and a truck
loading terminal are responsible for balance calculations on the volume
difference between the total volume of diesel fuel sold over the truck
loading terminal rack and the production volume from the batch reports.
Mathematically, the difference will be the volume of fuel received from
external sources and passed through to another facility.

0
28. Section 80.600 is amended as follows:
0
a. By revising paragraphs (a)(1)(v) and (a)(1)(vi).
0
b. By adding new paragraphs (a)(1)(vii), (a)(1)(viii), and (a)(1)(ix).
0
c. By revising paragraphs (a)(3)(ii) and (a)(3)(iii).
0
d. By adding a new paragraph (a)(3)(iv).
0
e. By revising paragraphs (a)(4)(i) and (a)(4)(ii).
0
f. By adding a new paragraph (a)(4)(iii).
0
g. By revising paragraph (b)(1)(i)(D).
0
h. By adding new paragraphs (b)(1)(i)(E), (b)(1)(i)(F), (b)(1)(i)(G),
and (b)(1)(i)(H).
0
i. By revising paragraphs (b)(1)(ii)(G) and (b)(1)(ii)(H).
0
j. By adding new paragraphs (b)(1)(ii)(I), (b)(1)(ii)(J),
(b)(1)(ii)(K), and (b)(1)(ii)(L).
0
k. By revising paragraphs (b)(1)(iii)(B) and (b)(1)(iii)(C).
0
l. By adding a new paragraph (b)(1)(iii)(D).
0
m. By revising paragraphs (b)(1)(iv)(A) and (b)(1)(iv)(B).
0
n. By adding a new paragraph (b)(1)(iv)(C).
0
o. By revising paragraphs (b)(1)(v)(A) and (b)(1)(v)(B).
0
p. By adding a new paragraph (b)(1)(v)(C).
0
q. By revising paragraphs (b)(1)(vi)(A) and (b)(1)(vi)(B).
0
r. By adding a new paragraph (b)(1)(vi)(C).
0
s. By revising paragraphs (b)(1)(vii)(B) and (b)(1)(vii)(C).
0
t. By adding a new paragraph (b)(1)(vii)(D).
0
u. By revising paragraphs (b)(1)(viii)(A) and (b)(1)(viii)(B).
0
v. By adding a new paragraph (b)(1)(viii)(C).
0
w. By adding new paragraphs (n) and (o).

Sec.  80.600  What records must be kept for purposes of the designate
and track provisions?

    (a) * * *
    (1) * * *
    (v) 2D 500 ppm sulfur motor vehicle diesel fuel;
    (vi) 500 ppm sulfur NRLM diesel fuel;
    (vii) NP 15 ppm sulfur motor vehicle diesel fuel;
    (viii) NP 500 ppm sulfur motor vehicle diesel fuel; or,
    (ix) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
* * * * *
    (3) * * *
    (ii) 500 ppm sulfur LM diesel fuel;
    (iii) Heating oil; or
    (iv) Exempt distillate fuels such as fuels that are covered by a
national

security exemption under Sec.  80.606, fuels that are used for purposes
of research and development pursuant to Sec.  80.607, and fuels used in
the U.S. Territories pursuant to Sec.  80.608 (including additional
identifying information).
    (4) * * *
    (i) 500 ppm sulfur NRLM diesel fuel;
    (ii) Heating oil; or
    (iii) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (D) 2D 500 ppm sulfur motor vehicle diesel fuel;
    (E) California diesel fuel as defined in Sec.  80.616 which is
transferred out of the State of California pursuant to the provisions
of Sec.  80.617(b);
    (F) NP 15 ppm sulfur motor vehicle diesel fuel;
    (G) NP 500 ppm sulfur motor vehicle diesel fuel; or
    (H) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (ii) * * *
    (G) High sulfur NRLM diesel fuel;
    (H) Heating oil;
    (I) California diesel fuel as defined in Sec.  80.616 which is
transferred out of the State of California pursuant to the provisions
of Sec.  80.617(b);
    (J) NP 15 ppm sulfur motor vehicle diesel fuel;
    (K) NP 500 ppm sulfur motor vehicle diesel fuel; or
    (L) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (iii) * * *
    (B) 500 ppm sulfur LM diesel fuel;
    (C) Heating oil; or
    (D) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (iv) * * *
    (A) 500 ppm sulfur NRLM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (v) * * *
    (A) 500 ppm sulfur LM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (vi) * * *
    (A) High sulfur NRLM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (vii) * * *
    (B) 500 ppm sulfur LM diesel fuel;
    (C) Heating oil; or
    (D) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
    (viii) * * *
    (A) 500 ppm sulfur NRLM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a
national security exemption under Sec.  80.606, fuels that are used for
purposes of research and development pursuant to Sec.  80.607, and
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including
additional identifying information).
* * * * *
    (n) Notwithstanding the provisions of paragraphs (b)(2) and (b)(3)
of this section, for batches of 15 ppm sulfur motor vehicle diesel fuel
or California diesel fuel under Sec.  80.617(b) on which taxes have
been paid per Section 4082 of the Internal Revenue Code (26 U.S.C.
4082), and 15 ppm sulfur NRLM diesel fuel or California diesel fuel
under Sec.  80.617(b) into which red dye has been added per Section
4082 of the Internal Revenue Code (26 U.S.C. 4082), records are not
required to be maintained separately for each entity or facility to
whom fuel was delivered.
    (o) In addition to the requirements of Sec. Sec.  80.592 and
80.602, the following recordkeeping requirements shall apply to
aggregated facilities consisting of a refinery and truck loading
terminal:
    (1) Any aggregated facility consisting of a refinery and truck
loading terminal shall maintain records of the following information
for each batch of distillate fuel produced by the refinery and sent
over the aggregated facility's truck loading terminal rack:
    (i) The batch volume;
    (ii) The batch number, assigned under the batch numbering
procedures under Sec. Sec.  80.65(d)(3) and 80.502(d)(1);
    (iii) The date of production;
    (iv) A record designating the batch as distillate fuel meeting
either the 500 ppm or 15 ppm sulfur standard; and,
    (v) A record indicating the volumes that were either taxed, dyed,
or dyed and marked.
    (2) Volume reports for all distillate fuel from external sources
(i.e., from another refiner or importer), as described in Sec.
80.601(f)(2), sent over the aggregated facility's truck rack.

0
29. Section 80.601 is amended as follows:
0
a. By revising paragraph (a) introductory text.
0
b. By revising paragraph (a)(1)(i).
0
c. By revising paragraph (a)(2)(i).
0
d. By revising paragraphs (a)(4)(v) and (a)(4)(vi).
0
e. By revising paragraph (b) introductory text.
0
f. By adding a new paragraph (b)(4).
0
g. By adding a new paragraph (f).

Sec.  80.601  What are the reporting requirements for purposes of the
designate and track provisions?

    (a) Quarterly compliance period reports. Beginning February 28,
2007 and continuing through August 31, 2010, each entity required to
register under Sec.  80.597 and to maintain records under Sec.  80.600
must report the following information separately for each of its
facilities to the Administrator as specified in paragraph (d)(1) of
this section except as provided in paragraph (e) of this section.
    (1) * * *
    (i) Beginning with the first compliance period and continuing up to
and including the compliance period that starts April 1, 2007, fuel
designated as 15 ppm or 500 ppm motor vehicle diesel fuel, or
California diesel fuel as defined in Sec.  80.616 which is distributed
outside the State of California pursuant to Sec.  80.617(b).
* * * * *

    (2) * * *
    (i) Beginning with the first compliance period and continuing up to
and including the compliance period that starts April 1, 2007, fuel
designated as 15 ppm or 500 ppm motor vehicle diesel fuel, or
California diesel fuel as defined in Sec.  80.616 which is distributed
outside the State of California pursuant to Sec.  80.617(b).
* * * * *
    (4) * * *
    (v) The volume balance under Sec. Sec.  80.599(b)(4) and
80.598(b)(9)(vi).
    (vi) Beginning with the compliance period starting June 1, 2007,
the volume balance under Sec. Sec.  80.599(c)(2) and
80.598(b)(9)(viii)(A).
    (b) Annual reports. Beginning August 31, 2007, all entities
required to register under Sec.  80.597 and to maintain records for
batches of fuel under Sec.  80.600 must report the following
information separately for each of its facilities to the Administrator
on an annual basis, as specified in paragraph (d)(2) of this section
except as provided in paragraph (e) of this section.
* * * * *
    (4) In the case of aggregated facilities consisting of a refinery
and truck loading terminal, the results of annual compliance
calculations under Sec.  80.598 for any distillate fuel received from
an external source on which taxes have not been assessed and is not
dyed and/or marked that the refinery will be handing off to another
party, rather than selling over the truck loading terminal rack.
* * * * *
    (f) Additional requirements for aggregated facilities consisting of
a refinery and a truck loading terminal. In addition to the reporting
requirements listed by paragraphs (a) through (e) of this section, as
applicable, such aggregated facilities are also subject to the
following requirements:
    (1) Batch reports. Reports containing the requirements detailed in
Sec. Sec.  80.592(f) and 80.600(m), must be submitted for all
distillate produced by the refinery and sent over the truck loading
terminal rack.
    (2) Quarterly volume reports. Reports detailing the quarterly
totals of all designations, including whether the fuel was taxed or
contained red dye (or red dye and the yellow marker), that left the
truck loading terminal rack must be submitted for all distillate
received from an external source or produced by the refinery.
    (3) Quarterly hand-off reports.
    (i) Reports detailing the quarterly totals of all designations of
fuel received from external refiner/importer sources, if any.