------------------------------------------------------------------------
1997 Ozone Standard: counties within the             293     131,977,890
 57 areas currently designated as
 nonattainment (as of 4/3/09)...........
2008 Ozone Standard: additional counties             227      41,285,262
 that would not meet the 2008 NAAQS \b\.
                                         -------------------------------
    Total...............................             520     173,263,152
------------------------------------------------------------------------
Notes:
\a\ Population numbers are from 2000 census data.
\b\ Attainment designations for the 2008 ozone NAAQS have not yet been
  made. Nonattainment for the 2008 Ozone NAAQS will be based on three
  years of air quality data from later years. Also, the county numbers
  in this row include only the counties with monitors violating the 2008
  Ozone NAAQS. The numbers in this table may be an underestimate of the
  number of counties and populations that will eventually be included in
  areas with multiple counties designated nonattainment.

(b) Projected Levels (Including Ozone Welfare)
    States with 8-hour ozone nonattainment areas are required to take
action to bring those areas into compliance in the future. Based on the
final rule designating and classifying 8-hour ozone nonattainment areas
for the 1997 standard (69 FR 23951, April 30, 2004), most 8-hour ozone
nonattainment areas will be required to attain the ozone NAAQS in the
2007 to 2013 time frame and then maintain the NAAQS thereafter. Many of
these nonattainment areas will need to adopt additional emission
reduction programs, and the NOX and VOC reductions that
would result from the combination of the proposed CAA NOX
standards along with ECA designation through amendment to MARPOL Annex
VI would be particularly important for these states. In addition, EPA's
revision of the ozone NAAQS was completed with the final rule published
on March 27, 2008. The ozone NAAQS revision in 2008 started the process
for nonattainment areas to be designated under that standard. While EPA
is not relying on the 2008 standard for purposes of justifying this
rule, the emission reductions from this rulemaking will also be helpful
to states for the more stringent ozone NAAQS.
    EPA has already adopted many emission control programs that are
expected to reduce ambient ozone levels and assist in reducing the
number of areas that fail to achieve the ozone NAAQS. Even so, our air
quality modeling projects that in 2020, with all current controls but
excluding the reductions achieved through the coordinated strategy, up
to 50 counties with a population of almost 50 million may not attain
the 2008 ozone standard of 0.075 ppm. These numbers do not account for
those areas that are close to (e.g., within 10 percent of) the 2008
ozone standard. These areas, although not violating the standards, will
also benefit from the additional reductions from this rule ensuring
long-term maintenance of the ozone NAAQS.

    These air quality modeling results suggest that the proposed
emission reductions would improve both the average and population-
weighted average ozone concentrations for the U.S. in 2020 and 2030. In
addition, the air quality modeling shows that on average the
coordinated program described in this action would help bring counties
closer to ozone attainment as well as assist counties whose ozone
concentrations are within 10 percent below the standard. For example,
in projected nonattainment counties, on a population-weighted basis,
the 8-hour ozone design value will on average decrease by 0.5 ppb in
2020 and 1.6 ppb in 2030.\79\ The air quality modeling methodology and
the projected reductions are discussed in more detail in Chapter 2 of
the draft RIA.
---------------------------------------------------------------------------

    \79\ Note that the 2030 projections are based on a 100 nm ECA so
are an underestimate of likely changes to ozone design values.
Additional detail on the air quality modeling is included in Chapter
2 of the draft RIA.
---------------------------------------------------------------------------

    It should be noted that even though our air quality modeling
predicts important reductions in nationwide ozone levels, four counties
(of 661 that have monitored data) are expected to experience an
increase in their ozone design values in 2030. There are two counties
in southern California, Orange County and San Bernardino County, and
two counties in Washington, Clallam County and Clark County, which
would experience 8-hour ozone design value increases due to the
NOX disbenefits which occur in these VOC-limited ozone
nonattainment areas. Briefly, NOX reductions at certain
times and in some areas can lead to increased ozone levels. The air
quality modeling methodology (Section 2.4.5), the projected reductions
(Section 2.4), and the limited NOX disbenefits (Section
<IP_ADDRESS>.2), are discussed in more detail in Chapter 2 of the draft RIA.
(c) Case Study of Shipping Emissions and Ozone Impacts on Forests
    The section below attempts to estimate the impacts of the
coordinated strategy on ecological impacts through a case study.
    Assessing the impact of ground-level ozone on forests in the
eastern United States involves understanding the risk/effect of tree
species to ozone ambient concentrations and accounting for the
prevalence of those species within the forest. As a way to quantify the
risk/effect of particular plants to ground-level ozone, scientists have
developed ozone-exposure/tree-response functions by exposing tree
seedlings to different ozone levels and measuring reductions in growth
as ``biomass loss''.\80\
---------------------------------------------------------------------------

    \80\ Chappelka, AH, Samuelson, LJ. (1998). Ambient ozone effects
on forest trees of the Eastern United States: a review. New
Phytologist, 139, 91-108.
---------------------------------------------------------------------------

    With knowledge of the distribution of sensitive species and the
level of ozone at particular locations, it is possible to estimate a
``biomass loss'' for each species across their range. EPA performed an
analysis for 2020 in which we examined biomass loss with and without
ship emissions to determine the benefit of reducing these emissions on
sensitive tree species in the eastern half of the U.S.\81\ The biomass
loss attributable to shipping appears to range from 0-6.5% depending on
the particular species. The most sensitive species in the U.S. to ozone
related biomass loss is black cherry (Prunus serotina); the area of its
range with more than 10% total biomass loss in 2020 decreased by 8.5%
in the case in which emissions from ships were removed. Likewise,
yellow-poplar (Liriodendron tulipifera), eastern white pine (Pinus
strobus), aspen (Populus spp.), and ponderosa pine (Pinus ponderosa)
saw areas with more then 2% biomass loss reduced by 2.1% to 3.8% in
2020. This 2% level of biomass loss is important, because a consensus
workshop on ozone effects reported that a 2% annual biomass loss causes
harm due to the potential for compounding effects over multiple years
as short-term negative effects on seedlings affect long-term forest
health.82, 83
---------------------------------------------------------------------------

    \81\ Note that while the coordinated strategy does not eliminate
ship emissions, it will be directionally helpful in reducing ship
emissions.
    \82\ Prasad, A.M, Iverson L.R. (2003). Little's range and FIA
importance value database for 135 eastern US tree species.
Northeastern Research Station, USDA Forest Service, Delaware, Ohio.
[online] Retrieved on March 19, 2009 from http://www.fs.fed.us/ne/
delaware/4153/global/littlefia/index.html.
    \83\ Heck W.W., Cowling E.B. (1997) The need for a Long Term
Cumulative Secondary Ozone Standard--an Ecological Perspective. Air
and Waste Management Association, EM, 23-33.
---------------------------------------------------------------------------

(3) Nitrogen and Sulfur Deposition
(a) Current Levels
    Modeling conducted by the EPA for the coordinated strategy shows
that in 2020 ships would add significant amounts to sulfur deposition
in sensitive ecological areas across the U.S., ranging from 10% to more
than 25% of total sulfur deposition along the entire Atlantic, Gulf of
Mexico, and Pacific coastal areas of the U.S. This same level of impact
would extend inland for hundreds of kilometers, affecting thousands of
sensitive ecological areas. This deposition would contribute to the
serious problem acidification causes in terrestrial and aquatic
ecosystems.
    Nitrogen deposition contributes to both acidification and nutrient
enrichment. In 2020, ships would contribute a significant percentage of
the annual U.S. total nitrogen deposition to many terrestrial and
aquatic areas within the U.S. that are potentially sensitive to excess
nitrogen. The contribution from ships would range from about 9% to more
than 25% along the entire U.S. Atlantic, Pacific and Gulf of Mexico
coastal regions. See the draft RIA for more information and detailed
maps on sulfur and nitrogen deposition.
(b) Projected Levels
    The emissions reductions that would result from the combination of
the proposed CAA NOX standards along with ECA designation
through amendment to MARPOL Annex VI and related proposed fuel
standards would significantly reduce the annual total sulfur and
nitrogen deposition occurring in sensitive U.S. ecosystems including
forests, wetlands, lakes, streams, and estuaries. For sulfur
deposition, adopting the coordinated strategy would result in
reductions ranging from 5% to 20% along the entire Atlantic and Gulf
coasts with higher levels of reduction, exceeding 25%, occurring in the
near-land coastal waters of the U.S. In a few land areas on the
Atlantic and Gulf coasts, such as the southern parts of the States of
Louisiana, Texas, and Florida, 2020 sulfur deposition reductions would
be much higher, i.e., over 30%. Along the Pacific Coast, sulfur
deposition reductions would exceed 25% in the entire Southern
California area, and the Pacific Northwest. For a map of 2020 sulfur
reductions and additional information on these impacts see Section
2.4.3 of the draft RIA.
    Overall, nitrogen deposition reductions in 2020 resulting from the
coordinated strategy described in this action are less than sulfur
deposition reductions. Nitrogen deposition reductions would range from
3% to 7% along the entire Atlantic, Pacific and Gulf Coasts. As with
sulfur deposition reductions, a few areas such as the southern parts of
the States of Louisiana, Texas, and Florida would experience larger
reductions of nitrogen up to 9%. The Pacific coastal waters would see
higher nitrogen reductions, exceeding 20% in some instances. See
Section 2.4.3 of the draft RIA for a map and additional information on
nitrogen deposition impacts.

(4) Visibility
(a) Current Levels
    As of March 12, 2008, over 88 million people live in nonattainment
areas for the 1997 PM2.5 NAAQS. These populations, as well
as large numbers of individuals who travel to these areas, are likely
to experience visibility impairment. In addition, while visibility
trends have improved in mandatory class I Federal areas, the most
recent data show that these areas continue to suffer from visibility
impairment. In summary, visibility impairment is experienced throughout
the U.S., in multi-state regions, urban areas, and remote mandatory
class I Federal areas.
(b) Projected Levels
    The air quality modeling conducted for the coordinated strategy
also was used to project visibility conditions in 133 mandatory class I
Federal areas across the U.S. in 2020 and 2030. The results indicate
that improvements in visibility due to OGV emissions reductions would
occur in all 133 class I Federal areas in the future, although all
areas would continue to have annual average deciview levels above
background in 2020 and 2030.\84\ The average visibility on the 20
percent worst days at these scenic locales is projected to improve by
0.21 deciviews, or 1.2 percent.
---------------------------------------------------------------------------

    \84\ The level of visibility impairment in an area is based on
the light-extinction coefficient and a unit less visibility index,
called a ``deciview'', which is used in the valuation of visibility.
The deciview metric provides a scale for perceived visual changes
over the entire range of conditions, from clear to hazy. Under many
scenic conditions, the average person can generally perceive a
change of one deciview. The higher the deciview value, the worse the
visibility. Thus, an improvement in visibility is a decrease in
deciview value.
---------------------------------------------------------------------------

    The greatest improvements in visibilities would occur in coastal
areas. For instance, the Agua Tibia Wilderness area (near Los Angeles)
would see a 9% improvement (2.17 DV) in 2020 as a result of the
emission reductions from the coordinated strategy. National parks and
national wilderness areas in other parts of the country would also see
improvements. For example, the Cape Romain National Wildlife Refuge
(South Carolina) would have a 5% improvement in visibility (1.16 DV)
and Acadia National Park (Maine) would have a 4% improvement (0.76 DV)
with a 200 nm ECA. Other areas would experience important benefits as
well due to the contribution of OGVs to visibility impairment. For
example, in 2002, about 3% of visibility impairment in southern
Florida's Everglades National Park was due to international shipping
(0.61 DV), and this will double to 6% (1.35 DV) by 2020. Even in inland
class I Federal areas, international shipping activity is contributing
to visibility degradation. In 2020, about 2.5% (0.28 DV) of visibility
degradation in the Grand Canyon National Park located in the state of
Arizona will be from international shipping, while almost 6% (0.81 DV)
of visibility degradation in the State of Washington's North Cascades
National Park would be from international shipping emissions. For the
table which contains the full visibility results over the 133 analyzed
areas see Section <IP_ADDRESS> of the draft RIA.

D. Emissions From Ships With Category 3 Engines

(1) Overview
    This section describes the contribution of Category 3 vessels to
national emission inventories of NOX, PM2.5, and
SO2. A Category 3 vessel has a Category 3 propulsion engine.
Emissions from a Category 3 vessel include the emissions from both the
propulsion and auxiliary engines on that vessel. Propulsion and
auxiliary engine emissions were estimated separately to account for
differences in emission factors, engine size and load, and activity.
    We estimate that in 2009, Category 3 vessels will contribute almost
913,000 tons (10 percent) to the national mobile source NOX
inventory, about 71,000 tons (24 percent) to the mobile source diesel
PM2.5 inventory, and nearly 597,000 tons (80 percent) to the
mobile source SO2 inventory. Expressed as a percentage of
all anthropogenic emissions, Category 3 vessels contribute 6 percent to
the national NOX inventory, 3 percent to the national
PM2.5 inventory, and 11 percent to the total SO2
inventory in 2009. In 2030, absent the strategy discussed in this
proposal, these vessels will contribute about 2.1 million tons (40
percent) to the mobile source NOX inventory, 168,000 tons
(75 percent) to the mobile source diesel PM2.5 inventory,
and about 1.4 million tons (95 percent) to the mobile source
SO2 inventory. Expressed as a percentage of all
anthropogenic emissions, Category 3 vessels will contribute 19 percent
to the national NOX inventory, 5 percent to the national
PM2.5 inventory, and 15 percent to the total SO2
inventory in 2030. Under this strategy, by 2030, annual NOX
emissions from these vessels would be reduced by 1.2 million tons,
PM2.5 emissions by 143,000 tons, and SO2
emissions by 1.3 million tons.\85\
---------------------------------------------------------------------------

    \85\ These emission inventory reductions include reductions from
ships operating within the 24 nautical mile regulatory zone off the
California Coastline, beginning with the effective date of the
Coordinated Strategy program elements. The California regulation
contains a provision that would sunset the requirements of the rule
if the Federal program achieves equivalent emission reductions. See
http://www.arb.ca.gov/regact/2008/fuelogv08/fro13.pdf at 13 CCR
2299.2(j)(1).
---------------------------------------------------------------------------

    Each sub-section below discusses one of the three affected
pollutants, including expected emission reductions that would result
from the combination of the proposed CAA NOX standards along
with the ECA designation through amendment to MARPOL Annex VI and
related proposed fuel standards. Table II-2 summarizes the impacts of
these reductions for 2020 and 2030. Table II-3 provides the estimated
2030 NOX emission reductions (and PM reductions) for the
coordinated strategy compared to the Locomotive and Marine rule, Clean
Air Nonroad Diesel (CAND) program, and the Heavy-Duty Highway rule.
Further details on our inventory estimates are available in Chapter 3
of the draft RIA.
    As described in Chapter 3 of the draft RIA, the ocean-going vessel
emission inventories presented in this section are estimated by
combining two sets of emissions inventories, one for U.S. port areas
and one for operation on the open ocean. With regard to operation on
the open ocean, it was necessary to specify an outer boundary of the
modeling domain; otherwise, emissions from ships operating as far away
as Asia or Europe would be included in the U.S. emission inventory. For
simplicity, we set the outer boundary for inventory modeling roughly
equivalent to the U.S. Exclusive Economic Zone (EEZ). It consists of
the area that extends 200 nautical miles (nm) from the official U.S.
baseline, which is recognized as the low-water line along the coast as
marked on the official U.S. nautical charts in accordance with the
articles of the Law of the Sea. The U.S. region was then clipped to the
boundaries of the U.S. EEZ. While this area will exclude emissions that
occur outside the 200 nm boundary but that are transported to the U.S.
landmass, it has the advantage of corresponding to an area in which the
United States has a clear environmental interest. This area also
corresponds well to the CMAQ modeling domain for most coasts.

 Table II-2--Estimated National (50 State) Reductions in Emissions From
                Category 3 Commercial Marine Vessels \a\
------------------------------------------------------------------------
    Pollutant [short tons]          2020                  2030
------------------------------------------------------------------------
NOX:
    NOX Emissions without           1,361,000                  2,059,000
     Coordinated Strategy....
    NOX Emissions with                952,000                    878,000
     Coordinated Strategy....
    NOX Reductions Resulting          409,000                  1,181,000
     from Coordinated
     Strategy................
Direct PM2.5:
    PM2.5 Emissions without           110,000                    168,000
     Coordinated Strategy....
    PM2.5 Emissions with               16,000                     25,000
     Coordinated Strategy....
    PM2.5 Reductions                   94,000                    143,000
     Resulting from
     Coordinated Strategy....
SO2:
    SO2 Emissions without             928,000                  1,410,000
     Coordinated Strategy....
    SO2 Emissions with                 51,000                     78,000
     Coordinated Strategy....
    SO2 Reductions Resulting          877,000                  1,332,000
     from Coordinated
     Strategy................
------------------------------------------------------------------------
Notes:
\a\ Emissions are included within 200 nautical miles of the U.S.
  coastline.

   Table II-3--Projected 2030 Emissions Reductions From Recent Mobile
                      Source Rules (Short Tons) \a\
------------------------------------------------------------------------
                  Rule                          NOX            PM2.5
------------------------------------------------------------------------
Category 3 Marine Proposal..............       1,181,000         143,000
Locomotive and Marine...................         795,000          27,000
Clean Air Nonroad Diesel................         738,000         129,000
Heavy-Duty Highway......................       2,600,000         109,000
------------------------------------------------------------------------
Notes:
\a\ Locomotive and Marine Rule (73 FR 25098, May 6, 2008); Clean Air
  Nonroad Diesel Rule (69 FR 38957, June 29, 2004); Heavy-Duty Highway
  Rule (66 FR 5001, January 18, 2001).

(2) NOX Emission Reductions
    In 2009, annual emissions from Category 3 commercial \86\ marine
vessels will total about 913,000 tons. Earlier Tier 1 NOX
engine standards became effective in 2000, but the reductions due to
the Tier 1 standards are offset by the growth in this sector, resulting
in increased NOX emissions of 1.4 million tons and 2.1
million tons in 2020 and 2030, respectively.
---------------------------------------------------------------------------

    \86\ These engines are included within EPA's commercial marine
category to differentiate them from recreational marine engines.
---------------------------------------------------------------------------

    As shown in Table II-2, the coordinated strategy would reduce
annual NOX emissions from the current national inventory
baseline by 409,000 tons in 2020 and 1,181,000 tons in 2030.
    As shown in Table II-3, the 2030 NOX reductions for the
coordinated strategy would exceed those for the other two nonroad
rules.
(3) PM2.5 Emissions Reductions
    In 2009, annual emissions from Category 3 commercial marine vessels
will total about 71,000 tons. By 2030, these engines, absent the
coordinated strategy, would contribute about 168,000 tons.
    As shown in Table II-2, the coordinated strategy would reduce
annual PM2.5 emissions by 94,000 tons in 2020 and 143,000
tons in 2030. As seen in Table II-3, the 2030 PM2.5 emission
reduction would be larger than any of the reductions achieved with
other recent rules.
(4) SO2 Emissions Reductions
    In 2009, annual emissions from Category 3 commercial marine vessels
will total about 597,000 tons. By 2030, these engines, absent the
coordinated strategy, would contribute about 1.4 million tons.
    As shown in Table II-2 the coordinated strategy would reduce annual
SO2 emissions by 877,000 tons in 2020 and 1.3 million tons
in 2030.

III. Engine Standards

    This section details the emission standards, implementation dates,
and other major requirements being proposed under the Clean Air Act. A
detailed discussion of the technological feasibility of the proposed
NOX standards follows the description of the proposed
program.
    Other elements of our coordinated strategy to control emissions
from OGV are discussed in subsequent sections. Provisions related to
our Clean Air Act fuel controls are described in Section IV. Section V
summarizes the U.S. and Canada's recent proposal to amend MARPOL Annex
VI to designate much of the U.S. and Canadian coasts as an Emission
Control Area.\87\ Finally, provisions revising our Clean Air Act test
procedures and related certification requirements, provisions to
implement MARPOL Annex VI through APPS, and various changes we are
considering to our Categories 1 and 2 (marine diesel engines with per
cylinder displacement less than 30 liters per cylinder) marine diesel
engine program are described in Section VI.
---------------------------------------------------------------------------

    \87\ The ECA proposal and associated Technical Support Document
can be found at http://www.epa.gov/otaq/oceanvessels.htm
---------------------------------------------------------------------------

A. What Category 3 Marine Engines are Covered?

    Consistent with our existing marine diesel emission control
program, the proposed engine emission standards would apply to any new
marine diesel engine with per cylinder displacement at or above 30
liters installed on a vessel flagged or registered in the United
States.
    With regard to marine diesel engines on foreign vessels that enter
U.S. ports, we are proposing to retain our current approach and not
apply this Clean Air Act program to those engines. This is appropriate
because engines on foreign vessels are subject to the same
NOX limits through MARPOL Annex VI, and the United States
can enforce compliance pursuant to Annex VI and the recent amendments
to the Act to Prevent Pollution from Ships (33 USC

1901 et seq.). At the same time, however, the effectiveness of this
approach is contingent on the designation of U.S. coasts as an ECA
pursuant to MARPOL Annex VI, since the Annex VI Tier III NOX
limits are geographic in scope and apply only in designated ECAs. We
anticipate that MARPOL Annex VI will be amended to include the U.S. and
Canadian government proposal. If, however, the proposed amendment is
not adopted in a timely manner by IMO, we intend to take supplemental
action to control harmful emissions from all vessels affecting U.S. air
quality. Section V contains a description of the ECA designation
process and further discussion of the application of the Act to engines
on foreign vessels if ECA designation is delayed or not approved.
    The combination of this Clean Air Act program, MARPOL Annex VI, and
APPS will apply comparable emission standards to the vast majority of
vessels entering U.S. ports or operating in U.S. waters.\88\ Most
significantly, these vessels will be required to meet the
NOX limits described below. As is described later in this
Section III and in Section VI, there would be some minor differences
between the proposed Clean Air Act program and the requirements that
apply under MARPOL Annex VI. Nevertheless, with respect to U.S. air
quality, these differences would have a negligible effect on emissions
from foreign vessels.
---------------------------------------------------------------------------

    \88\ Certain foreign public vessels such as military vessels and
foreign vessels in innocent passage may be exempt.
---------------------------------------------------------------------------

    Although we are not proposing standards for existing engines on
vessels already in the U.S. fleet, we are seeking comment on a
programmatic alternative that would help reduce emissions from those
engines. This Voluntary Marine Verification Program is described in
Section IX.

B. What Standards are we Proposing for Freshly Manufactured Engines?

    This subsection details the emission standards (and implementation
dates) we are proposing for freshly manufactured (i.e., new) Category 3
engines on U.S. vessels. As described in Section III.C, we believe the
proposed standards will be challenging to manufacturers, yet ultimately
feasible and cost-effective within the proposed lead time. These
standards, along with other parts of our program, are the outcome of
our work with stakeholders to resolve the challenges associated with
applying advanced diesel engine technology to Category 3 engines to
achieve significant NOX reductions.
(1) NOX Standards
    We are proposing new NOX emission standards for Category
3 marine diesel engines. Our existing Tier 1 NOX standards
for Category 3 engines are dependent on the rated speed of the engine
for speeds between 130 revolutions per minute (rpm) and 2000 rpm. Fixed
standards apply for lower and higher speeds. Thus, the standards are
expressed as an equation that applies for speeds between 130 rpm and
2000 rpm, along with fixed values that are calculated from the equation
for 130 rpm and 2000 rpm that apply for lower and higher speeds. This
was done to account for the fact that brake-specific NOX
emissions are inherently higher for lower speed engines (and lower for
higher speed engines). Note that this same approach is used by the IMO
for the same technical reasons. We are proposing to continue this
approach for Tier 2 and Tier 3, as shown in Table III-1.

                  Table III-1--Proposed NOX Emission Standards for Category 3 Engines (g/kW-hr)
----------------------------------------------------------------------------------------------------------------
                                                                   Less than<PHONE_NUMBER> RPM
                                                                        RPM             \a\        Over 2000 RPM
----------------------------------------------------------------------------------------------------------------
Tier 1..........................................        \b\ 2004            17.0   45.0 [middot]             9.8
                                                                                n(-0.20)
Tier 2..........................................            2011            14.4   44.0 [middot]             7.7
                                                                                n(-0.23)
Tier 3..........................................            2016             3.4    9.0 [middot]             2.0
                                                                                n(-0.20)
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Applicable standards are calculated from n (maximum in-use engine speed in RPM), rounded to one decimal
  place.
\b\ Tier 1 NOX standards apply for engines originally manufactured after 2004, and proposed to also to certain
  earlier engines.

    Our analysis, which is described in the draft RIA, shows that these
standards will give the greatest degree of emission control achievable
considering compliance costs, lead time, and other relevant factors.
The technological bases are also discussed briefly below.
    Note that other important provisions related to compliance with
these standards are described in Section VI. This includes provisions
to ensure effective control of NOX emissions over a broad
range of operating conditions.
(a) Tier 2 NOX Limits
    We are proposing new Tier 2 NOX emission standards for
Category 3 marine diesel engines. In-cylinder emission control
technology for Category 3 marine engines has progressed substantially
in recent years. Significant reductions can be achieved in the near
term with little or no impact on overall vessel performance. These
technologies include traditional engine-out controls such as
electronically-controlled high-pressure common-rail fuel systems,
turbocharger optimization, compression-ratio changes, and
electronically-controlled exhaust valves. We are setting a near-term
NOX emission standard requiring a reduction of approximately
20 percent below the current Tier 1 standard beginning 2011.
(b) Tier 3 NOX Limits
    While the Tier 2 standards will achieve modest reductions quickly,
the proposed Tier 3 standards are intended to achieve much greater
emission reductions through the use of advanced aftertreatment such as
selective catalytic reduction (SCR). These standards would achieve
reductions of about 80 percent from the current Tier 1 standards. As
explained in Section IX.B below regarding regulatory alternatives, we
evaluated the possibility of requiring the Tier 3 limits on an earlier
schedule than 2016. However, we found that a schedule requiring Tier 3
limits prior to 2016 had significant feasibility issues, and are
therefore proposing the 2016 implementation date for Tier 3 standards.
Under the proposed approach, manufacturers of Category 3 engines will
have about the same amount of lead time allowed manufacturers for
smaller marine engines and locomotives.

(2) PM and SOX Standards
    We are not proposing new engine standards for PM or SOX
emissions. We intend to rely instead on the use of cleaner fuels as
described in Section IV and V. SOX emissions and the
majority of the direct PM emissions from Category 3 marine engines
operated on residual fuels are a direct result of fuel quality, most
notably the sulfur in the fuel, and engine-based PM controls are not
currently feasible for engines using these fuels. Other components of
residual fuel, such as ash and heavy metals, also contribute directly
to PM.
    Using cleaner distillate fuel is the most effective means to
achieve significant PM and SOX reductions for Category 3
engines. We are proposing substantial reductions in the sulfur content
of fuel purchased in the U.S. for use in an ECA. This complements Annex
VI which requires that fuels used in ECAs around the world have sulfur
levels below 1,000 ppm. This sulfur limit is expected to necessitate
the use of distillate fuel which will result not only in reductions in
sulfate PM emissions, but also reductions in organic PM and metallic
ash particles in the exhaust.
    Even though the sulfur limit is much lower than current levels, it
is not clear if this fuel sulfur level would be low enough to allow
Category 3 engines to be equipped with the catalytic PM filters similar
to those being used by trucks today. If we were to require technology
that needs lower sulfur fuel, such as 15 ppm, ship operators would need
to have access to this fuel around the world. Operating on higher
sulfur fuel, such as for outside of our waters, could otherwise result
in damage to the PM control equipment. At this time, it is not clear if
15 ppm sulfur fuel could be made available around the world. In any
case, the 1,000 ppm sulfur fuel requirement alone will eliminate 85
percent of PM emissions from ships operating in ECAs.
    To further our understanding of PM emissions from ships, we are
proposing to require engine manufacturers to measure and report PM
emissions even though we are not proposing a PM standard. The
information gathered will help support our efforts as we continue to
evaluate the feasibility of achieving further PM reductions through
engine-based controls. It will also help us to better characterize the
PM emission rates associated with operating Category 3 engines on
distillate fuel. If we determine that further PM reductions are
feasible or that a specific PM limit is necessary to ensure anticipated
reductions in PM emissions from ships, we may propose PM standards for
Category 3 engines in the future.
(3) HC and CO Standards
    We are proposing HC and CO standards of 2.0 g/kW-hr and 5.0 g/kW-
hr, respectively. Emission control technologies for C3 marine engines
have been concentrated on reducing NOX and PM emissions, but
these emission standards will prevent increases in emissions of HC and
CO that might otherwise occur as a result of use of certain
technologies for controlling NOX, such as those that
significantly degrade combustion efficiency.
(4) CO2 Standards
    We are not proposing to adopt CO2 standards for marine
diesel engines at this time. Marine diesel engines are included in
other ongoing Agency actions, including our Advance Notice of Proposed
Rulemaking (ANPRM) for mobile sources (73 FR 44353, July 30, 2008) and
our Greenhouse Gas Reporting Rule (74 FR 16448, April 10, 2009). In
addition, EPA is participating in the U.S. Government delegation to
IMO, which is currently engaged in negotiations for an international
program to address greenhouse emissions from ships.

C. Are the Standards Feasible?

    We have analyzed a variety of technologies available for
NOX reduction in the Category 3 marine sector. As described
in more detail in our draft RIA, we are projecting that marine diesel
engine manufacturers will choose to use in-cylinder, or engine design-
based emission control technologies to achieve the 15 to 20 percent
NOX reductions required to meet the proposed Tier 2
standard. To achieve the 80 percent NOX reductions required
to meet the proposed Tier 3 standard, we believe many manufacturers
will choose SCR exhaust aftertreatment technology. In addition,
manufacturers may choose a combination of other in-cylinder
technologies, such fuel-water emulsification, direct water injection,
intake air humidification, or exhaust gas recirculation (EGR) to reduce
NOX emissions and meet the proposed standards. These ``in-
cylinder'' approaches could be calibrated and applied in one manner to
achieve Tier 3 NOX levels when operating with an ECA, and
then adjusted, or re-calibrated, in another manner to achieve Tier 2
NOX levels when operating outside an ECA.
    The in-cylinder, or engine-out, NOX emissions of a
diesel engine can be controlled by utilizing engine design and
calibration parameters (e.g., fuel delivery and valve timing) to limit
the formation of NOX. NOX formation rate has a
strong exponential relationship to combustion temperature. Therefore,
high temperatures result in high NOX formation
rates.89 90 Any changes to engine design and calibration
which can reduce the peak temperature realized during combustion will
also reduce NOX emissions. Many of the approaches and
technologies for reducing in-cylinder NOX emissions are
discussed in our draft RIA.
---------------------------------------------------------------------------

    \89\ Flynn, P., et al, ``Minimum Engine Flame Temperature
Impacts on Diesel and Spark-Ignition Engine NOX
Production'', SAE 2000-01-1177, 2000.
    \90\ Heywood, John B., ``Internal Combustion Engine
Fundamentals'', McGraw-Hill, 1988.
---------------------------------------------------------------------------

    SCR is a commonly-used technology for meeting stricter
NOX emissions standards in diesel applications worldwide.
Stationary power plants fueled with coal, diesel and natural gas have
used SCR for three decades as a means of controlling NOX
emissions, and European heavy-duty truck manufacturers are currently
using this technology to meet Euro 5 emissions limits. To a lesser
extent, SCR has been introduced on diesel engines in the U.S. market,
but the applications have been limited to marine ferryboat and
stationary electrical power generation demonstration projects in
California and several of the Northeast states. SCR systems are
currently being designed and developed for use on ocean-going vessels
worldwide, and we project that SCR will continue to be a viable
technology for control of Category 3 NOX emissions. A more
detailed discussion of SCR technology can be found in our draft RIA.

IV. Fuel Standards

A. Background

    EPA is proposing emissions standards for Category 3 (C3) engines
that are consistent with those recently adopted as amendments to MARPOL
Annex VI. As amended, Annex VI includes revised fuel sulfur standards
for use in engines onboard ships, and it also set more stringent fuel
sulfur limits for ``any fuel oil used onboard ships * * * operating
within an Emission Control Area'' (Annex VI, Regulation 14).
    Under the Annex, the process by which an Emission Control Area
(ECA) is to be designated is through amendment of the Annex. The U.S.
and Canadian governments have submitted a proposal to amend MARPOL
Annex VI to designate an ECA to include much of the U.S. and Canadian
coastlines. Specifically, the proposed ECA would

include the entire coastline for the contiguous 48 states, Southeastern
Alaska, and the Main Hawaiian Islands, extending to a distance of 200
nautical miles from the coastline. We anticipate that this amendment
will be considered at the next Marine Environment Protection Committee
(MEPC 59) which is scheduled for July 2009. We expect that the
amendment will be adopted in March 2010, at MEPC 60. This approval date
is roughly three months after the intended date for promulgation of the
final rule.
    EPA is in this notice proposing fuel sulfur limits under section
211(c) of the Clean Air Act that match the limits that apply under
Annex VI in ECAs. The adoption of such standards would: (1) Forbid the
production and sale of fuel oil above 1,000 ppm sulfur for use in the
waters within the proposed ECA (as well as internal U.S. waters); \91\
and (2) allow for the production and sale of up to 1,000 ppm sulfur
fuel for use in C3 marine vessels.\92\
---------------------------------------------------------------------------

    \91\ For the purposes of this proposal, the term ``ECA'' as it
is used in this Section IV refers to both the area of the proposed
ECA and internal U.S. waters. Though the outer limits of the
proposed sulfur limitation are the same as for the proposed ECA, the
sulfur limitation in this proposal is not dependent on MEPC approval
of the ECA.
    \92\ For the purpose of the discussion in this section,
``Category 3 vessel'' refers to a commercial vessel with a Category
3 propulsion engine; ``Category 2 vessel'' refers to a commercial or
recreational vessel with a Category 2 propulsion engine; and
``Category 1 vessel'' refers to a commercial or recreational vessel
with only Category 1 or smaller engines. The proposed fuel
provisions here apply to all of the engines on a given vessel.
---------------------------------------------------------------------------

    The majority of vessels with a C3 propulsion engine operate on
high-sulfur, heavy fuel oil (HFO) (also known as residual, or bunker,
fuel). Due to their use of heavy fuel, these marine diesel engines have
very high PM and SO2 emissions. Sulfur in the fuel is
emitted from engines primarily as SO2; however a small
fraction is emitted as sulfur trioxide (SO3) which
immediately forms sulfate and is emitted as PM by the engine. In
addition, much of the SO2 emitted from the engine reacts in
the atmosphere to form secondary PM. Reductions in residual fuel sulfur
levels would lead to significant sulfate PM and SO2 emission
reductions which would provide dramatic environmental and public health
benefits. However, in most cases, fuels that meet the long-term fuel
sulfur standards will likely be distillate fuels, rather than HFO. In
addition to reductions in sulfate PM, switching from HFO to distillate
fuel may reduce black carbon emissions, fine particle counts, organic
carbon, and metallic ash particles.
    HFO sold for use by these vessels is currently not subject to any
EPA sulfur limits (as it is not regulated by our current sulfur
program) and generally has very high levels of sulfur. The proposed
modifications to our existing diesel fuel program will prohibit the
production and sale of this fuel for use in an ECA. Instead, fuel sold
for use in an ECA would not be allowed to exceed a sulfur content of
1,000 ppm. In a complementary fashion, the amendment to MARPOL Annex VI
designating the U.S. ECA will ensure that fuel used in an ECA,
including fuel purchased in another country but used within the U.S.
ECA, also meets a 1,000 ppm sulfur limit. Under our proposed
regulations, fuel sold for use by C3 vessels in the U.S. ECA will be
allowed to have a sulfur content as high as this 1,000 ppm sulfur
limit, while fuel sold for use in Category 1 (C1; marine diesel engines
up to 7 liters per cylinder displacement) and Category 2 (C2; marine
diesel engines from 7 to 30 liters per cylinder) vessels would continue
to be subject to the nonroad, locomotive, and marine \93\ (NRLM) diesel
fuel sulfur requirements. In the event that the U.S. ECA is not
approved in a timely manner, we will revisit the standards being
proposed here in that context.
---------------------------------------------------------------------------

    \93\ For the purposes of this proposal (and the proposed 40 CFR
Part 80 regulations), the term ``marine'' as it is used here refers
to Category 1 and 2 marine diesel engines unless otherwise stated.
---------------------------------------------------------------------------

B. Current Diesel Fuel Standards

    The Nonroad Diesel program (finalized on June 29, 2004 (69 FR
38958)) reduces the sulfur content of NRLM diesel fuel from
uncontrolled levels down to a maximum sulfur level of 15 ppm. Refiners
and importers are required to produce or import all NRLM diesel fuel at
a sulfur level of 15 ppm or less by June 1, 2014. The main compliance
mechanism of the diesel sulfur program is the Designate and Track (D&T)
provisions, which allows NRLM diesel fuel to be distinguished from
similar products (e.g., heating oil) and yet provides a means for
diesel fuel to be fungibly transported through the fuel production and
distribution system. Under D&T, refiners and importers are required to
designate the type and sulfur level of each batch of fuel produced or
imported. As this fuel is transferred through the distribution system,
product transfer documents (PTDs) must be exchanged each time the batch
changes custody. Along with PTDs, other required elements of D&T
include quarterly and annual reporting, fuel pump labeling, and
recordkeeping.
    The Nonroad Diesel program also contains certain provisions to ease
refiners' transition to the lower sulfur standards and to enable the
efficient distribution of all diesel fuels. These provisions, as
discussed more below in Section IV.B.2, include special provisions for
qualified small refiners, transmix processors, and entities in the fuel
distribution system.
(1) Scope of the Nonroad Diesel Fuel Program
    The sulfur standards finalized by the Nonroad Diesel rule apply to
all the diesel fuel that is produced and sold for use in NRLM diesel
applications (all fuel used in NRLM diesel engines, except for fuels
heavier than a No. 2 distillate used in Category 2 and 3 marine engines
\94\ and any fuel that is exempted for national security or other
reasons). While the Nonroad Diesel rule did not set sulfur standards
for other distillate fuels (such as jet fuel, heating oil, kerosene,
and No. 4 fuel oil), it did implement provisions to prevent the
inappropriate use of heating oil and other higher sulfur distillate
fuels in NRLM and locomotive and marine (LM) diesel applications. Sale
of distillate fuels for use in nonroad, locomotive, or marine diesel
engines will generally be prohibited unless the fuel meets the diesel
fuel sulfur standards of 40 CFR Part 80.\95\ The regulated fuels under
our diesel fuel sulfur program include those fuels listed in the
regulations at 40 CFR 80.2(qqq).
---------------------------------------------------------------------------

    \94\ Category 3 marine engines frequently are designed to use
residual fuels and include special fuel handling equipment to use
the residual fuel.
    \95\ For the purposes of the diesel sulfur program, the term
heating oil basically refers to any No. 1 or No. 2 distillate other
than jet fuel, kerosene, and diesel fuel used in highway or NRLM
applications. For example, heating oil includes fuel which is
suitable for use in furnaces and similar applications and is
commonly or commercially known or sold as heating oil, fuel oil, or
other similar trade names.
---------------------------------------------------------------------------

    The current sulfur standards do not apply to: (1) No. 1 distillate
fuel used to power aircraft; (2) Number 4, 5, and 6 fuels (e.g.,
residual fuels or residual fuel blends, intermediate fuel oil (IFO)
Heavy Fuel Oil Grades 30 and higher), used for stationary source
purposes; (3) any distillate fuel with a T-90 distillation point
greater than 700 [deg]F, when used in Category 2 or 3 marine diesel
engines (this includes Number 4, 5, and 6 fuels (e.g., IFO Heavy Fuel
Oil Grades 30 and higher), including fuels meeting the American Society
for Testing and Materials (ASTM) specifications DMB, DMC, and RMA-10
and heavier); and (4) any fuel for which a national security or
research and development exemption has been approved or fuel that is
exported from

the U.S. The criterion that any distillate fuel with a T-90 greater
than 700 [deg]F will not be subject to the sulfur standards when used
in Category 2 or 3 marine engines was intended to exclude fuels heavier
than No. 2 distillate, including blends containing residual fuel. In
addition, residual fuel is not subject to the sulfur standards.
    While many marine diesel engines use No. 2 distillate, ASTM
specifications for marine fuels identify four kinds of marine
distillate fuels: DMX, DMA, DMB, and DMC. DMX is a special light
distillate intended mainly for use in emergency engines. DMA (also
called marine gas oil, or ``MGO'') is a general purpose marine
distillate that contains no trace of residual fuel. These fuels can be
used in all marine diesel engines but are primarily used by Category 1
engines. DMX and DMA fuels intended for use in any marine diesel engine
are subject to EPA's fuel sulfur standards.
    DMB, also called marine diesel oil, is not typically used with
Category 1 engines, but is used for Category 2 and 3 engines. DMB is
allowed to have a trace of residual fuel, which can be high in sulfur.
This contamination with residual fuel usually occurs due to the
distribution process, when distillate is brought on board a vessel via
a barge that has previously contained residual fuel, or using the same
supply lines as are used for residual fuel. DMB is produced when fuels
such as DMA are brought on board the vessel in this manner. EPA's
sulfur standards do apply to the distillate that is used to produce the
DMB, for example the DMA distillate, up to the point that it becomes
DMB. However, DMB itself is not subject to the EPA sulfur standards
when it is used in Category 2 or 3 engines.
    DMC is a grade of marine fuel that may contain some residual fuel
and is often a residual fuel blend. This fuel is similar to No. 4
diesel, and can be used in Category 2 and Category 3 marine diesel
engines. DMC is produced by blending a distillate fuel with residual
fuel, for example at a location downstream in the distribution system.
EPA's sulfur standards apply to the distillate that is used to produce
the DMC, up to the point that it is blended with the residual fuel to
produce DMC. However, DMC itself is not subject to the EPA sulfur
standards when it is used in Category 2 or 3 marine engines.
    Residual fuel is not covered by the sulfur content standards as it
is not a distillate fuel. Residual fuel is typically designated by the
prefix RM (e.g., RMA, RMB, etc.). These fuels are also identified by
their nominal viscosity (e.g., RMA10, RMG35, etc.). Most residual fuels
require treatment by an onboard purifier-clarifier centrifuge system,
although RMA and RMB do not require this.
    The distillation criterion adopted by EPA, T-90 greater than 700
[deg]F, was designed to identify those fuels that are not subject to
the sulfur standards when used in Category 2 or 3 marine diesel
engines. It is intended to exclude DMB, DMC, and other heavy
distillates or blends, when used in Category 2 or 3 marine diesel
engines. We are not proposing to amend this provision in this action.
However, under this proposal, all of these fuels, and any other diesel
fuels or fuel oils, would be subject to a 1,000 ppm sulfur limit if
they are produced or sold for use in an ECA.
(2) Flexibilities
    Compliance flexibilities were provided in the nonroad diesel sulfur
regulations for qualified small refiners (69 FR 39047; Section IV.B.1)
and for transmix processors (69 FR 39045; Section IV.A.3.d). Small
refiners were provided, among other flexibility options, additional
time for compliance with the 15 ppm NRLM standard, until June 1, 2014.
Transmix processors, who distill off-specification interface mixtures
of petroleum products from pipeline systems into gasoline and
distillate fuel, have a simple refinery configuration that does not
make it cost-effective for them to install and operate a hydrotreater
to reduce distillate fuel sulfur content. As a result, transmix
processors were provided with the flexibility to continue to produce
all of their NRLM diesel fuel to meet the 500 ppm sulfur standard until
June 1, 2014, and all of their LM diesel fuel to meet a 500 ppm sulfur
limit indefinitely. The latter flexibility also allows for an outlet
for off-spec fuel that may be produced in the distribution system.
    The D&T provisions, first established to distinguish highway from
nonroad 500 ppm fuel, were thus continued beyond 2014 to ensure that
500 ppm NRLM could be distinguished from similar fuel (e.g., heating
oil that has a sulfur level of 500 ppm). In 2014 and beyond, D&T is
essential to ensure that heating oil is not being inappropriately
shifted downstream of the refiner into the NRLM and LM diesel fuel
markets, circumventing the NRLM standards (as mentioned above in
Section IV.B.1). Provisions in the Nonroad Diesel rule to ensure that
heating oil is not used in NRLM applications include the use of a fuel
marker to distinguish heating oil from NRLM and LM diesel fuel, dye
solvent yellow 124, which is added to heating oil at the terminal
level. The D&T provisions also provided parties in the diesel fuel
industry with inherent flexibility. D&T maximizes the efficiency of the
distribution system by allowing for fungible distribution of physically
similar products, and minimizing the need for product segregation.
Under D&T, diesel fuel with similar sulfur levels can be fungibly
shipped up to the point of distribution from a terminal (where off-
highway diesel fuels must be dyed red, pursuant to Internal Revenue
Service (IRS) requirements, to indicate its tax exempt status).
(3) Northeast/Mid-Atlantic Area
    In the Northeast, heating oil is distributed in significant
quantities. Discussions with terminal operators in the Northeast (and
other representatives of heating oil users and distributors) during the
development of the Nonroad Diesel rule revealed concerns that the
heating oil marker requirement would represent a significant burden on
terminal operators and users of heating oil given the large volume of
heating oil used in the Northeast. These parties suggested that if EPA
prohibited the sale and use of diesel fuel produced by those utilizing
the flexibilities described above, this area could be exempted from the
marker requirement.
    Thus, the Northeast/Mid-Atlantic (NE/MA) area was developed (69 FR
39063, Section IV.D.1.b.ii; see also 40 CFR 80.510(g) for the specific
states and counties that comprise the NE/MA area). As there would be no
way to distinguish heating oil from 500 ppm NRLM and 500 ppm LM diesel
fuel in 2014 and beyond without the fuel marker, these fuel types are
not allowed to be produced/imported, distributed and/or sold in the NE/
MA area during this time period (500 ppm NRLM diesel fuel may not be
produced/imported, distributed and/or sold in the NE/MA area after
2012).
    Similarly, high sulfur NRLM (HSNRLM) produced through the use of
credits is not allowed in Alaska. However, EPA-approved small refiners
in Alaska may produce HSNRLM diesel fuel. To receive this approval, a
small refiner must provide EPA with a compliance plan showing how their
HSNRLM diesel fuel will be segregated from all other distillate fuels
through its distribution to end-users.
(4) Nonroad Diesel Program Transition Schedule
    The transition to lower sulfur diesel fuel for NRLM equipment is
depicted in Figure VI-1 below. The transition for urban (areas served
by the Federal Aid

Highway System) and rural Alaska are shown below in Figure VI-2.

                                                        Highway and Nonroad Diesel Fuel Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Who                             Covered fuel            2006     2007     2008     2009     2010     2011     2012     2013     2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Highway diesel fuel.........        80% 15 ppm/20% 500 ppm
                                                      100% 15 ppm (including small refiner fuel)
                                          --------------------------------------------------------------------------------------------------------------
Large Refiners/Importers.................                    NR                       500      500      500       15       15       15       15       15
Large Refiners/Importers.................                    LM                       500      500      500      500      500       15       15       15
                                            NRLM w/credits (not in NE/MA or AK)        HS       HS       HS      500      500      500      500       15
Small Refiners...........................  NRLM (not in NE/MA, w/approval in AK)       HS       HS       HS      500      500      500      500       15
Transmix Processor & In-use..............         NR (not in NE/MA or AK)              HS       HS       HS      500      500      500      500       15
Transmix Processor & In-use..............         LM (not in NE/MA or AK)              HS       HS       HS      500      500      500      500      500
2006 dates for HW diesel fuel: June 1 for refiners/importers, September 1 for downstream parties, and October 15 for retailers and wholesale purchaser-
 consumers.
2010 dates for HW diesel fuel: As of the following dates, all HW diesel fuel must meet the 15 ppm standard--June 1 for refiners/importers, October 1 for
 downstream parties, and December 1 for retailers and wholesale purchaser-consumers (WPCs).
2007 dates for NRLM diesel fuel: June 1 for refiners, downstream requirements for NE/MA area* only (August 1 for terminals, October 1 for retailers/
 WPCs, and December 1 for in-use).
2010+ dates for NRLM diesel fuel: June 1 for refiners, August 1 for terminals, October 1 for retailers/WPCs, and December 1 for in-use.
** Anti-downgrading provisions begin October 15, 2006 **
*NOTE--No small refiner or credit NRLM can be used in the NE/MA area. Thus, the large refiner NRLM standard is also the in-use standard in the NE/MA
 area.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Figure IV-1 Highway, Nonroad, Locomotive, and Marine Diesel Fuel Sulfur Standards

------------------------------------------------------------------------

-------------------------------------------------------------------------
Urban AK (areas served by the FAHS)
HW--
     pre-2006: HS/uncontrolled.
     2006: 6/1/06--refiners to 15; 9/1/06--pipelines & terminals
     to 15; 10/15/06--retail & WPC to 15.
NRLM--
     pre-2007: HS/uncontrolled.
     2007: 6/1/07--refiners to 500; 8/1/07--pipelines &
     terminals to 500; 10/1/07--retail & WPC to 500; 12/1/07--in-use,
     farm & construction tanks to 500 (note--urban AK is on same
     downstream schedule as NE/MA).
     2010: 6/1/10--refiners to 15 NR; 8/1/10--pipelines &
     terminals to 15 NR; 10/1/10--retail & WPC to 15 NR; 12/1/10--in-
     use, farm & construction tanks to 15 NR.
     2012: 6/1/12--refiners to 15 LM; 8/1/12--pipelines &
     terminals to 15 LM; 10/1/12--retail & WPC to 15 LM; 12/1/12--in-
     use, farm & construction tanks to 15 LM.
**Urban AK is on the same schedule as the main HW & NR diesel programs
 (except they're on the same downstream schedule as the NE/MA for NRLM
 in 2007); permanently exempt from dye & marker requirements **.
Rural AK
HW--
     pre-2010: HS/uncontrolled.
     2010: 6/1/10--refiners to 15 HW; 8/1/10--pipelines &
     terminals to 15 HW; 10/1/10--retail & WPC to 15 HW; 12/1/10--in-
     use, farm & construction tanks to 15 HW.
NRLM--
     pre-2010: HS/uncontrolled.
     2010: 6/1/10--refiners to 15 NRLM; 8/1/10--pipelines &
     terminals to 15 NRLM; 10/1/10--retail & WPC to 15 NRLM; 12/1/10--in-
     use, farm & construction tanks to 15 NRLM.
** Downstream transition dates are same for HW & NRLM in rural AK;
 permanent exemption from dye & marker requirements **.
General Note--credit & transmix fuel cannot be used in any area of AK;
 small refiner fuel can be used with approval (and only if properly
 labeled and segregated).
------------------------------------------------------------------------
Figure IV-2 Highway, Nonroad, Locomotive, and Marine Diesel Fuel Sulfur
  Standards for Alaska

C. Applicability

    Assuming adoption of an amendment to MARPOL Annex VI establishing a
U.S. ECA, the fuel used in that ECA cannot exceed 1,000 ppm sulfur
beginning January 1, 2015.\96\ As mentioned above, we are proposing to
incorporate a similar 1,000 ppm sulfur limit into our CAA regulations
at 40 CFR Part 80 through both a prohibition on the production and sale
of fuel oil above 1,000 ppm sulfur for use in any marine vessels (C1,
C2, and C3) in the area of the U.S. ECA, and an allowance for the
production and use of 1,000 ppm sulfur fuel to be used in any engine on
C3 marine vessels. We are proposing that fuel produced and sold for use
in any engine on C1 and C2 marine vessels would continue to be subject
to the existing diesel sulfur requirements which are more stringent
than those being proposed in this action for C3 marine vessels;
however, we request comment on whether engines on C2 marine vessels
should also be allowed to use 1,000 ppm ECA fuel similar to those on C3
marine vessels.
---------------------------------------------------------------------------

    \96\ Annex VI, Regulation 14 (located in the rulemaking docket,
EPA-HQ-OAR-2007-0121-0107).
---------------------------------------------------------------------------

    Discussions with stakeholders in the diesel fuel production and
distribution industry have indicated that they anticipate that most (if
not all) fuel oil that could meet a 1,000 ppm sulfur standard would be
considered a distillate or diesel fuel, because at a

1,000 ppm sulfur level it is nearly impossible for fuel to have a T-90
distillation point at or above 700 [deg]F (i.e., be considered residual
fuel). As discussed in Section IV.B.1, fuel with a T-90 less than 700
[deg]F would be required to meet the standards of our existing diesel
sulfur program which, in 2014 and beyond, is 15 ppm. We believe that
because of the limits on the sulfur content of fuel used in ECAs, the
existing diesel fuel sulfur program should be revised to allow for the
production, distribution, purchase, and use of 1,000 ppm sulfur fuel
oil for use in engines on C3 marine vessels. Therefore, we are
proposing a new 1,000 ppm sulfur category for fuel oil produced and
purchased for use in any engine on a C3 marine vessels (called ``ECA
marine fuel''). This proposed fuel sulfur requirement would largely
supplement the existing diesel fuel sulfur requirements and would
harmonize EPA's diesel sulfur program with the requirements of Annex
VI. Under this proposed action, owners of Category 3 marine vessels
would be able to purchase and use 1,000 ppm sulfur fuel, which will
allow those vessels to comply with the sulfur limits in the U.S. ECA
(and any other ECA worldwide) and in U.S. internal waters.

D. Fuel Sulfur Standards

    As discussed above in Section IV.C, in addition to the prohibition
on the sale of fuel greater than 1,000 ppm sulfur for use in any marine
vessel operating within the U.S. ECA, we are also proposing the
allowance of the production, distribution, and sale of 1,000 ppm sulfur
ECA marine fuel, which we discuss more in this section.
    Prior to this action and, pending the establishment of the North
American ECA, the kind of fuel produced and sold for use by C3 marine
vessels had uncontrolled sulfur levels as it was not subject to the
NRLM sulfur limits. This was reflected in the regulations by exempting
these kinds of fuel from the definition of NRLM diesel fuel and the
NRLM sulfur limits (40 CFR 80.2(nnn)). The combined effect of Annex VI
and these regulations is to require that any fuel sold for use in any
engine on a C3 marine vessel operating in an ECA be 1,000 ppm sulfur or
lower. Fuel oil used or sold for use in C3 marine vessels in an ECA
will therefore go from uncontrolled, high sulfur levels to no higher
than 1,000 ppm sulfur. Under Annex VI, fuel with sulfur levels greater
than 1,000 ppm cannot be used in a marine vessel operating in an ECA,
no matter where the fuel is purchased. Consistent with this, the
proposed section 211(c) controls would prohibit the production and sale
of any fuel for use in the U.S. ECA that is above 1,000 ppm sulfur.
    The requirements for 1,000 ppm sulfur fuel oil apply to the North
Sea, the Baltic Sea, and any other ECAs established around the world,
so this fuel will be produced by refiners in other countries. Under
EPA's current NRLM program, this 1,000 ppm sulfur fuel would be subject
to the 15 ppm NRLM sulfur limit in 2014 and later. If EPA were to
require that fuel produced, distributed, and sold for use for C3
vessels in the U.S. ECA meet the 15 ppm sulfur standard after 2014, we
believe that C3 vessel owners would simply purchase 1,000 ppm sulfur
fuel elsewhere to be used here in the U.S. ECA. This could be an
extremely inefficient process for ship owners. It would also mean a
loss of sales for U.S. refiners of fuel that these C3 vessel owners
purchase. These impacts would add to the costs and burdens of the
program with no corresponding environmental benefit. Therefore, we
believe that it is reasonable to allow U.S. refiners and importers to
produce 1,000 ppm sulfur fuel for use by C3 vessels. Thus, we are
proposing and requesting comment on a new fuel sulfur standard of 1,000
ppm for fuel produced, distributed, and sold for use in C3 marine
vessels. While we would expect use of this fuel to be concentrated in
the area of the U.S. ECA (and any other ECA) and U.S. internal waters,
we are allowing its use by C3 marine vessels in all locations, to
encourage its general use. We are proposing that after 2014, no fuel
above 15 ppm could be used in C1 or C2 vessels; however, we request
comment on whether or not C2 vessels should be treated similarly to C3
vessels.
    We note that the combination of the Annex VI ECA provisions and the
modifications proposed in this action for the diesel sulfur program
will achieve very significant benefits compared to the existing
program. The production and use of 1,000 ppm ECA marine fuel, as well
as 15 ppm NRLM diesel fuel, will replace much higher sulfur fuel usage,
and there is no additional benefit to be gained by requiring the sale
of 15 ppm sulfur diesel fuel for use by C3 vessels as a practical
matter because we believe C3 vessels will simply purchase 1,000 ppm
sulfur fuel elsewhere. In order to incorporate these modifications into
our existing program under the Clean Air Act, we need to create a new
fuel designation for allowable fuel under our program.
(1) Proposed Amendments to the Existing Diesel Fuel Sulfur Program
    We are proposing to prohibit the production, distribution, and sale
or offer for sale of any fuel for use in any marine diesel vessels (C1,
C2, and C3) operating in the U.S. ECA that is greater than 1,000 ppm
sulfur. We are also proposing and requesting comment on allowing a
sulfur limitation of 1,000 ppm for fuel produced, distributed, and sold
or offered for sale for use in C3 marine vessels. To simplify the
existing diesel fuel sulfur program, we are also proposing to eliminate
the 500 ppm LM diesel fuel standard once the 1,000 ppm standard becomes
effective. Under the existing diesel sulfur program, 500 ppm LM diesel
fuel can be produced by transmix processors indefinitely, and can only
be used by locomotives and marine vessels that do not require 15 ppm.
The original intent of allowing for this fuel was to serve as an outlet
for interface and downgraded diesel fuel post-2014 that would otherwise
not meet the 15 ppm sulfur standard. However, we believe that the 1,000
ppm sulfur ECA marine fuel could now serve as this outlet. We believe
that transmix generated near the coasts would have ready access to
marine applications, and transmix generated in the mid-continent could
be shipped via rail to markets on the coasts, and we request comment on
this.
    Elimination of the 500 ppm LM diesel fuel standard would simplify
the diesel sulfur program such that sulfur could serve as the
distinguishing factor for fuels available for use after 2014 (the
designated products under the diesel fuel program would thus be: 15 ppm
motor vehicle, nonroad, locomotive, and marine (MVNRLM) diesel fuel,
heating oil, and 1,000 ppm ECA marine fuel). With this proposed
approach, beginning in 2014, only 15 ppm NRLM diesel fuel could be used
in locomotive and C1/C2 marine diesel applications (and 1,000 ppm ECA
marine fuel could be used in any engine on C3 marine vessels). Further,
this would help to streamline the D&T program as there would no longer
be a need for a fuel marker to distinguish 500 ppm LM diesel fuel from
heating oil. Below, we discuss the aspects of D&T that we are proposing
to change, which we believe will greatly simplify the diesel sulfur
program.
(a) Compliance and Implementation
(i) Northeast/Mid-Atlantic Area and the Fuel Marker
    With the proposed elimination of the 500 ppm LM designation in
2014, parties in the fuel production and distribution industry would
still be

required to register and designate their products and adhere to PTD,
fuel pump labeling, and recordkeeping requirements. But we believe that
the tracking portion of D&T can be simplified. Currently, annual
reporting is required under Sec.  80.601 for D&T through June 30, 2015
(the final annual report is due August 31, 2015). This final reporting
period is to ensure that heating oil is not being inappropriately
shifted into the 500 ppm LM diesel fuel pool. However, with the
proposed elimination of this fuel designation, we request comment on
ending D&T annual reporting in 2014, rather than 2015. Under such a
scenario, the final annual reporting period would instead be July 1,
2013 through May 31, 2014, with the report due to EPA on August 31,
2014.
    We believe that the proposed elimination of the 500 ppm LM diesel
fuel designation would also, beginning June 1, 2014, negate the need
for the heating oil marker and the NE/MA area. After 2014, the heating
oil marker requirement in the existing diesel sulfur program is for the
sole purpose of distinguishing heating oil from 500 ppm LM diesel fuel,
to prevent heating oil from swelling the 500 ppm LM diesel fuel pool.
Also, as there is no marker requirement for heating oil in the NE/MA
area, the diesel sulfur program currently does not allow for 500 ppm LM
diesel fuel to be produced, distributed, or purchased for use in the
NE/MA area after 2012. However, if 500 ppm LM diesel fuel did not
exist, there would no longer be a need for the heating oil marker; fuel
designations and sulfur level could serve as the distinguishing factor
between the available fuels (15 ppm MVNRLM diesel fuel, 1,000 ppm ECA
marine fuel, and heating oil). Further, there would not be a need for
the NE/MA area if there were no heating oil marker.
(ii) PTDs and Labeling
    We are proposing new PTD language for the 1,000 ppm ECA marine fuel
designation at draft regulation Sec.  80.590. As stated in draft
regulation Sec.  80.590(a)(7)(vii), we are proposing that the following
statement be added to PTDs accompanying 1,000 ppm sulfur ECA marine
fuel: ``1,000 ppm sulfur (maximum) ECA Marine Fuel. For use in Category
3 marine vessels only. Not for use in engines not installed on C3
marine vessels.''
    Appendix V of Annex VI also includes language that is required on
bunker delivery notes. Compliance requirements of this action, such as
PTDs, are not intended to supplant or replace requirements of Annex VI
(and we encourage regulated entities to consult Annex VI to ensure that
they are fully aware of all requirements that must be met in addition
to EPA's requirements). However, if a party's bunker delivery note also
contains the information required under our regulations for PTDs, we
would consider the bunker delivery note to also suffice as a PTD.
    We are also proposing new pump labeling language for the 1,000 ppm
sulfur ECA marine fuel designation at regulation Sec.  80.574. Diesel
fuel pump labels required under the existing diesel sulfur regulations
must be prominently displayed in the immediate area of each pump stand
from which diesel fuel is offered for sale or dispensing. However, we
understand that there may be cases where it is not feasible to affix a
label to a fuel pump stand due to space constraints (such as diesel
fuel pumps at marinas) or where there is no pump stand, thus the
current regulations allow for alternative pump labels with EPA
approval. Previously approved alternative fuel pump labels have
included the use of permanent placards in the immediate vicinity of the
fuel pump; we request comment on other possible alternative labeling
schemes for situations where pump labeling may not be feasible. As
stated in draft regulation Sec.  80.574, we are proposing to replace
the 500 ppm LM diesel fuel pump label language with the following fuel
pump label language for 1,000 ppm sulfur ECA marine fuel: ``1,000 ppm
SULFUR ECA MARINE FUEL (1,000 ppm Sulfur Maximum). For use in Category
3 marine vessels only. WARNING--Federal law prohibits use in any engine
that is not installed on a C3 marine vessel; use of fuel oil with a
sulfur content greater than 1,000 ppm in the U.S. Emission Control Area
and all U.S. internal waters is illegal.'' We also request comment on
whether or not fuel pumps are (or can be) used to fuel C3 marine
vessels; and if they are not used, if PTDs or some other documentation
is a more appropriate mechanism to convey the fuel sulfur level to a C3
marine vessel operator.
    Under this program, we are also proposing to eliminate MVNRLM
diesel fuel labeling requirements from EPA's regulations. In 2014 and
beyond, EPA will not require ``visible evidence'' of red dye in off-
road fuels; however this requirement still exists in IRS's taxation
regulations to denote that off-road fuels are untaxed. EPA's required
label for 15 ppm NRLM diesel fuel (instead of one 15 ppm MVNRLM diesel
fuel label) is mainly to denote that 15 ppm NRLM will be dyed red,
while 15 ppm MV diesel fuel will not. Further, after October 1, 2014,
all MVNRLM diesel fuel available for purchase and/or distribution will
be 15 ppm. We believe that it is not appropriate for EPA to retain a
labeling requirement for MVNRLM diesel fuel given the fact that the red
dye provision is no longer EPA's requirement. Please note, however,
that if MVNRLM labeling requirements were removed from EPA's
regulations, marketers and wholesale purchaser-consumers would still be
free to continue to label their pump stands to help with consumer
awareness. Labeling will continue to be required for heating oil and,
as proposed above, for ECA marine fuel.
    Additionally, if labeling requirements for MVNRLM diesel fuel were
to be removed from EPA's regulations, EPA would consult with IRS
regarding handling labels in IRS's regulations at Title 26 of the Code
of Federal Regulations.
(b) Timing of the Standard
    Currently, all refiners and importers are required to produce all
of their NRLM diesel fuel to meet the 15 ppm standard beginning June 1,
2014. To allow transition time for the distribution system, terminals
are allowed until August 1, 2014 to begin dispensing 15 ppm NRLM diesel
fuel, retailers and wholesale purchaser-consumers are allowed until
October 1, 2014, and end-users are allowed until December 1, 2014. To
be consistent with the existing diesel program, we are proposing to
allow refiners to begin producing 1,000 ppm sulfur ECA marine fuel
beginning June 1, 2014, and downstream parties would follow the current
NRLM transition schedule (August, October, and December). We believe
that following the same transition schedule as the existing diesel
sulfur program would best facilitate the availability of 1,000 ppm ECA
marine fuel for purchase and use by the Annex VI January 1, 2015 date.
We request comment on the concept of a transition period of June 1-
December 1, 2014 for the 1,000 ppm sulfur standard.
(2) Alternative Options
    We have identified two potential alternatives to the proposed
changes to the existing diesel fuel sulfur program, above. We request
comment on any related aspects of these alternative options, as well as
any additional alternative options.
(a) Creation of Expanded NE/MA Area
    While the proposal of a 1,000 ppm sulfur standard is to incorporate
the benefits of this more stringent standard for fuel used in engines
on C3 marine vessels into our current diesel program

and harmonize the current program with Annex VI, our intent is to do so
with the least amount of impact on the existing diesel sulfur program,
so we believe that this rulemaking also presents us with an opportunity
to simplify the designate and track requirements.
    We request comment on an alternative to the proposed general
program: to expand the NE/MA area to cover all coastlines that border
the proposed U.S. ECA. This alternative would keep the requirements of
the diesel sulfur program largely the same as the existing program.
Further, this option would allow for 500 ppm LM diesel fuel to continue
to be utilized by the locomotive industry (and the marine industry) in
the mid-continent (outside the expanded NE/MA area) and to serve as an
outlet for off-spec and transmix diesel fuel. As discussed above in
Section IV.B.3, under our current diesel fuel sulfur program, 500 ppm
LM diesel fuel cannot be used in the NE/MA area (or Alaska) after 2012.
Under the ``expanded NE/MA'' area option, designate and track would be
simplified in the expanded NE/MA area as the only distillate fuels
available would be 15 ppm MVNRLM diesel fuel, heating oil, and 1,000
ppm ECA marine fuel. The reduction in types of fuel available for use
in this area would also allow for sulfur level to serve as the
distinguishing factor, and no additional markers or dyes would be
necessary to differentiate fuels in this area.
    The creation of an expanded NE/MA area, however, would mean that an
additional mechanism to distinguish 500 ppm LM diesel fuel from 1,000
ppm ECA marine fuel would still be needed in non-NE/MA areas.
    We request comment on the creation of an expanded NE/MA area.
(b) Retention of 500 ppm LM Diesel Fuel Standard
    Another alternative to the option of replacing the 500 ppm LM
diesel fuel standard with the 1,000 ppm sulfur standard would be to
retain the 500 ppm LM diesel fuel standard such that both 500 ppm LM
diesel fuel and 1,000 ppm ECA marine fuel would be available. Under
such an option, sulfur would not be able to serve as the distinguishing
factor to maintain segregation of 1,000 ppm fuel from other EPA
distillate categories. The fuel marker would still be needed to
distinguish 500 ppm LM from heating oil.
    This option would allow for 500 ppm LM diesel fuel to still be
utilized by the locomotive and marine industries (for those engines not
requiring 15 ppm sulfur diesel fuel) and also serve as an outlet for
off-spec and transmix diesel fuel. However, this option would not serve
to streamline D&T, and 500 ppm LM diesel fuel would not necessarily be
needed along the coastlines (as 1,000 ppm sulfur fuel would be
available for use by C3 marine vessels). We request comment on the
option of retaining the 500 ppm LM diesel fuel standard nationwide
along with the proposed 1,000 ppm ECA marine fuel sulfur standard.
    We request comment on the proposed program and alternative options,
the proposed prohibition on the sale of fuel above 1,000 ppm sulfur for
use in all marine vessels operating in the U.S. ECA and U.S. internal
waters, and any related compliance aspects.

E. Technical Amendments to the Current Diesel Fuel Sulfur Program
Regulations

    Following publication of the technical amendments to the Highway
and Nonroad Diesel Regulations (71 FR 25706, May 1, 2006), we
discovered additional errors and clarifications within the diesel
regulations at 40 CFR part 80, Subpart I that we are addressing in this
action. These items are merely typographical/printing errors and
grammar corrections. A list of the changes that we propose making to
Subpart I is below in Table IV-1. We welcome comments on any of these
proposed amendments to the regulations.

   Table IV-1--Proposed Technical Amendments to the Diesel Fuel Sulfur
                               Regulations
------------------------------------------------------------------------
                  Section                       Description of change
------------------------------------------------------------------------
80.525(a)-(d).............................  Removal of the term ``motor
                                             vehicle'' from this
                                             section.
80.551(f).................................  Correction of printing
                                             error.
80.561....................................  Correction of typographical
                                             error in title.
80.593....................................  Correction of typographical
                                             error in introductory text.
80.599(e)(4)..............................  Correction of printing error
                                             in definition of terms
                                             ``1MV15I'' and
                                             ``NPMV15I''.
80.600(a)(12).............................  Amended to correct date
                                             (``May 31, 2014'' instead
                                             of ``June 1, 2014'').
80.600(i).................................  Amended to remove duplicate
                                             sentence.
80.601(b)(3)(x)...........................  Amending to correct dates
                                             (``August 31'' instead of
                                             ``August 1'').
80.612(b).................................  Amended to fix typographical
                                             error in paragraph.
------------------------------------------------------------------------

V. Emission Control Areas for U.S. Coasts

    The proposed Clean Air Act standards described above are part of a
coordinated strategy for ensuring that all ships that affect U.S. air
quality will be required to meet stringent NOX and fuel
sulfur requirements. Another component of this strategy consists of
pursuing ECA designation for U.S. and Canadian coasts in accordance
with Annex VI of MARPOL. ECA designation will ensure that all ships,
foreign-flagged and domestic, are required to meet stringent
NOX and fuel sulfur requirements while operating within 200
nautical miles of most U.S. coasts. This section describes what an ECA
is, the process for obtaining ECA designation at the International
Maritime Organization, and summarizes the U.S. and Canadian proposal
for an amendment to MARPOL Annex VI designating most U.S. and Canadian
coasts as an ECA (referred to as the ``U.S./Canada ECA'' or the ``North
American ECA''), submitted to IMO on March 27, 2009.\97\ We also
discuss how emissions from foreign OGV may be covered should approval
of the U.S. ECA be delayed.
---------------------------------------------------------------------------

    \97\ Proposal to Designate an Emission Control Area for Nitrogen
Oxides, Sulphur Oxides and Particulate Matter, Submitted by the
United States and Canada. IMO Document MEPC59/6/5, 27 March, 2009. A
copy of this document can be found at http://www.epa.gov/otaq/regs/
nonroad/marine/ci/mepc-59-eca-proposal.pdf
---------------------------------------------------------------------------

A. What is an ECA?

(1) What Emissions Standards Apply in an ECA?
    MARPOL Annex VI contains international standards to control air
emissions from ships. The NOX and SOX/PM programs
each contain two sets of standards. The global standards for the sulfur
content of fuel and NOX emissions from engines apply to
ships at all times. In recognition that some areas may require further
control, Annex VI also contains more stringent NOX and
SOX/PM geographic-based standards that apply to ships
operating in designated Emission Control Areas.

    The current global fuel sulfur (S) limit is 45,000 ppm\98\ S and
will tighten to 35,000 ppm S in 2012. Depending on a 2018 fuel
availability review, the MARPOL Annex VI global fuel sulfur limit will
be further reduced to 5,000 ppm S as early as 2020. In contrast, ships
operating in designated ECAs are subject to a fuel sulfur limit of
15,000 ppm S. The ECA limit is reduced to 10,000 ppm S in March 2010
and 1,000 ppm S in 2015. In addition, Tier 3 NOX standards
will apply to new engines operating in ECAs beginning in 2016. These
Tier 3 NOX standards represent an 80% reduction in
NOX beyond current Tier 1 standards and are anticipated to
require the use of aftertreatment technology such as SCR. We are
proposing to adopt similar Tier 3 standards as part of our Clean Air
Act program (see Section III).
---------------------------------------------------------------------------

    \98\ Note that MARPOL Annex VI expresses these standards in
units of % (m/m) sulfur. 10,000 ppm S equals 1 percent S.
---------------------------------------------------------------------------

    There are currently two ECAs in effect today, exclusively
controlling SOX; thus they are called Sulfur Emission
Control Areas, or SECAs. The first SECA was designated to control the
emissions of SOX in the Baltic Sea area and entered into
force in May 2005. The second SECA was designated to control the
emissions of SOX in the North Sea area and entered into
force in November 2006.
(2) What is the Process for Obtaining ECA Designation?
    A proposal to amend Annex VI to designate an ECA can be submitted
by a party to Annex VI. A party is a country that ratified Annex VI.
The proposal for amendment must be approved by the Parties to MARPOL
Annex VI; this would take place at a meeting of the Marine Environment
Protection Committee (MEPC). The U.S. deposited its Instrument of
Ratification with the IMO on October 8, 2008. Annex VI entered into
force for the U.S. on January 8, 2009, making the U.S. eligible to
apply for an ECA.
    The criteria and procedures for ECA designation are set out in
Appendix III to MARPOL Annex VI. A proposal to designate an ECA must
demonstrate a need to prevent, reduce, and control emissions of
SOX, PM, and/or NOX from ships operating in that
area. The specific criteria are summarized below:
     A delineation of the proposed area of application;
     A description of the areas at risk on land and at sea,
from the impacts of ship emissions;
     An assessment of the contribution of ships to ambient
concentrations of air pollution or to
     Adverse environmental impacts;
     Relevant information pertaining to the meteorological
conditions in the proposed area of
     Application to the human populations and environmental
areas at risk;
     Description of ship traffic in the proposed ECA;
     Description of the control measures taken by the proposing
Party or Parties;
     Relative costs of reducing emissions from ships compared
with land-based controls; and
     An assessment of the economic impacts on shipping engaged
in international trade.
    An amendment to designate an ECA must be adopted by the Parties to
Annex VI, as an amendment to Annex VI. Assuming the USG proposal to
amend Annex VI is considered at MEPC 59, the earliest possible adoption
date is the following MEPC meeting, MEPC 60, which is anticipated to
take place in March 2010. Given the MARPOL amendment acceptance process
and the lead time specified in the regulations, an ECA adopted on this
timeline could be expected to enter into force as early as August 2012.

B. U.S. Emission Control Area Designation

    EPA worked with the U.S. Coast Guard, State Department, the
National Oceanic and Atmospheric Administration and other agencies to
develop the analysis supporting ECA designation for U.S. coasts
contained in the U.S. and Canadian submittal to IMO. In addition, we
collaborated with Environment Canada. As a result, the proposal for ECA
designation that was submitted to IMO was for a combined U.S./Canada
ECA submission. This approach has several advantages. First, the
emission reductions within a Canadian ECA will lead to air quality
improvements in the U.S. Second, a joint ECA helps minimize any
competitive issues between U.S. and Canadian ports, such as in the
Puget Sound area, that could arise from ECA standards. Third, IMO
encourages a joint submittal where there is a common interest in
emission reductions on neighboring waters.
(1) What Areas Would Be Covered in a U.S./Canada ECA?
    The area included in the U.S. and Canadian submittal to IMO for ECA
designation generally extends 200 nautical miles from the coastal
baseline, except where this distance goes beyond the Exclusive Economic
Zones (EEZ) of the U.S. and Canada, in which case the ECA would be
limited by the boundary of the applicable EEZ. This area would include
the Pacific Coast, the Atlantic/Gulf Coast and the Southeastern
Hawaiian Islands. On the Pacific Coast, the ECA would be bounded in the
north such that it includes the approaches into Anchorage, Alaska, but
not the Aleutian Islands or points north. It would continue
contiguously to the south including the Pacific coasts of Canada and
the U.S., with its southernmost boundary at the point where California
meets the border with Mexico. In the Atlantic/Gulf Coast, the ECA would
be bounded in the west by the border of Texas with Mexico and continue
contiguously to the east around the peninsula of Florida and north up
the Atlantic coasts of the U.S. and Canada and would be bounded in the
north by the 60th North parallel. The Southeastern Hawaiian Islands
that were included in the ECA submittal are Hawaii, Maui, Oahu,
Molokai, Niihau, Kauai, Lanai, and Kahoolawe.

[GRAPHIC] [TIFF OMITTED] TP28AU09.000

    Not included in the ECA submittal were the Pacific U.S.
territories, smaller Hawaiian Islands, the U.S. territories of Puerto
Rico and the U.S. Virgin Islands, Western Alaska including the Aleutian
Islands, and the U.S. and Canadian Arctic. The U.S. and Canada did not
make a determination or imply that these areas suffer no adverse impact
from shipping. Further information must be gathered to properly assess
these areas. If further information supports the need for expansion of
the ECA to other U.S. or Canada areas, we would submit a future,
supplemental

proposal for ECA designation of these areas.
(2) What Analyses Were Performed in Support of a U.S./Canada ECA?
    We performed a comprehensive analysis to estimate the degree of
human health risk and environmental degradation that is posed by air
emissions from ships operating in their ports and along our coasts. To
evaluate the risk to human populations, state-of-the-art assessment
tools were used to apply widely accepted methods with advanced computer
modeling techniques. The analyses incorporated detailed ship traffic
data, the most recent emissions estimates, detailed observed
meteorological data, current scientific understanding of exhaust plume
behavior (both physical dispersion and photochemical reaction) and the
latest epidemiologic databases of health effects attributable to
pollutant exposure levels to estimate the current impacts of shipping
on human health and the environment. In addition, sulfate and nitrate
deposition modeling was performed to assess the impacts of nitrogen
nutrient loading and acidification on U.S. ecosystems.
    Two contrasting future scenarios were evaluated: one in which ships
continue to operate with current emissions performance while operating
in the specified area, and one in which ships comply with ECA
standards. The analysis demonstrated that ECA designation for U.S.
coasts could save thousands of lives each year, relieve millions of
acute respiratory symptoms, and benefit many of the most sensitive
ecosystems. This analysis is consistent with, and incorporated in, the
benefits estimates presented in Section VIII.

C. Technological Approaches To Comply With ECA Standards

    When operating within the ECA, all ships would have to comply with
the 0.1% fuel sulfur limit and vessels built after December 31, 2015
would have to comply with the Tier 3 NOX limits described
above. This section describes how ships would comply with these
requirements.
(1) How Will Ships Comply With the ECA NOX Standards?
    Ships constructed beginning in 2016 will have to comply with the
MARPOL Annex VI Tier III NOX limits. These are equivalent to
the Tier 3 NOX limits we are proposing in this action under
our Clean Air Act authority. These standards are geographic in nature,
in that they apply to any vessel built beginning in 2016 while it is
operating in an ECA. Once a U.S./Canada ECA is designated through
amendment to MARPOL Annex VI, the requirements will be enforceable for
most vessels through the Act to Prevent Pollution from Ships (see
Section VI.B).
    As explained in Section III, we anticipate that SCR would be the
most likely approach to meet these NOX limits. When
operating in the ECA, SCR units would be active, meaning that urea
would be injected into the exhaust to facilitate catalytic reduction of
NOX emissions. When outside of the ECA, the unit would
likely be inactive, meaning that urea would not be injected into the
exhaust. When the SCR unit is inactive, the exhaust flow could either
continue to pass through the SCR unit or be diverted around the
catalyst.
    Under the MARPOL NOX Technical Code, a means for
monitoring the use of urea must be provided which must include
``sufficient information to allow a ready means of demonstrating that
the consumption of such additional substances is consistent with
achieving compliance with the applicable NOX limit.'' In
addition, where an NOX reducing device, such as SCR, is
used, one of the options for providing verification of compliance with
the NOX standard is through direct measurement and
monitoring of NOX emissions.
    When operating in an ECA, as discussed below, it is anticipated
that vessels will operate on lower sulfur fuel than outside the ECA.
Therefore, lower sulfur fuel will primarily be used when the SCR unit
is active. However, ship operators may use an exhaust gas scrubber as
an alternative to lower sulfur fuel to meet the SOX/PM ECA
requirement. In this case, the SCR unit would likely be optimized for
operation on higher sulfur fuel, with the SOX scrubber
situated downstream of the SCR unit.
(2) How Will Ships Comply With the ECA Fuel Sulfur Standards?
    As discussed above, the MARPOL Annex VI fuel sulfur limit for ships
operating in an ECA is 15,000 ppm today and reduces to 10,000 ppm in
March 2010 and further to 1,000 ppm in 2015. We anticipate that the
1,000 ppm fuel sulfur limit, beginning in 2015, will likely result in
the use of distillate fuel for operation in ECAs. This would require
the vessel to switch from a higher sulfur fuel to 1,000 ppm S fuel
before entering the ECA. The practical implications of fuel switching
are discussed below. As an alternative to operating on lower sulfur
fuel, an exhaust gas cleaning device may be used to remove sulfur from
the exhaust. These devices, which are colloquially known as
SOX scrubbers, are also discussed below.
(a) Fuel Switching
    Currently, the majority of ocean-going vessels use residual fuel
(also called HFO or IFO) in their main propulsion engines, as this fuel
is relatively inexpensive and has a good energy density. This fuel is
relatively dense (`heavy') and is created as a refining by-product from
typical petroleum distillation. Residual fuels typically are composed
of heavy, residuum hydrocarbons and can contain various contaminants
such as heavy metals, water and sulfur compounds. It is these sulfur
compounds that cause the SOX emissions when the fuel is
combusted. If the vessel does not employ the use of a sulfur scrubber
or other technology, it will most likely operate on a marine distillate
fuel while in an ECA in order to meet the sulfur emission requirements.
    The sulfur in marine fuel is primarily emitted as SO2;
however, a small fraction (about 2 percent) is converted to
SO3. SO3 almost immediately forms sulfate and is
emitted as direct PM by the engine. Consequently, emissions of
SO2 and sulfate PM are very high for engines operating on
residual fuel. Switching from high sulfur residual fuel to lower sulfur
distillate fuel results in large reductions in SO2 and
sulfate PM emissions. In addition to high sulfur levels, residual fuel
contains relatively high concentrations of low volatility, high
molecular weight organic compounds and metals. Organic compounds that
contribute to PM can be present either as a nucleation aerosol or as a
material adsorbed on the surfaces of agglomerated elemental carbon soot
particles and metallic ash particles. The sulfuric acid aerosol in the
exhaust provides a nucleus for agglomeration of organic compounds.
Operation on higher volatility distillate fuel reduces both nucleation
and adsorption of organic compounds into particulate matter. Therefore,
in addition to direct sulfate PM reductions, switching from residual
fuel to distillate fuel reduces organic PM and metallic ash particles
in the exhaust.
    In the majority of vessels which operate on residual fuel, marine
distillate fuel is still used for operation during routine maintenance,
prior to and immediately after engine shut-down, or in emergencies.
Standard procedures today have been established to ensure that this
operational fuel switchover is performed safely and efficiently.
Mainly, in order for the vessel to completely switch between residual
and distillate fuel, the fuel

pumps and wetted lines will need to be completely purged by the new
fuel to ensure that the ship is burning the correct fuel for the area.
This purging will vary from ship to ship due to engine capacity,
design, operation, and efficiency. Provided the ship has separate
service tanks for distillate and residual fuel (most, if not all,
vessels do), fuel switching time should be limited only by maximum
allowable rate of fuel temperature change. Additionally, for a longer
operation period such as would occur while in an ECA, we investigated
several other fuel switching topics to ensure that vessels would not
have long-term issues from operating on the marine distillate fuels.
    Marine distillate fuels are similar in composition and structure to
other petroleum-based middle distillate fuels such as diesel and No. 2
heating oil, but they have a much lower allowable sulfur content than
residual fuels. This lower sulfur content means that by combusting
marine distillate fuel in their propulsion engines, vessels operating
within the ECA would meet the stricter SOX requirements.
However, sulfur content is not the only difference between the marine
residual and distillate fuels; they also have different densities,
viscosities, and other specification limits.
    The maritime industry has analyzed the differences between residual
and distillate fuel compositions to address any potential issues that
could arise from switching operation of a C3 engine from residual fuel
to distillate fuel. The results from this research has evolved into
routine operational switching procedures that ensure a safe and
efficient way for the C3 engines to switch operation between the
residual and distillate fuels. A brief summary of the fuel differences,
as well as any potential issues and their usual solutions, is presented
below.
(i) Fuel Density
    Due to its chemical composition, residual fuel has a slightly
higher density than marine distillates. Using a less dense fuel could
affect the ballast of a ship at sea and would have to require
compensation. Therefore, when beginning to operate on the distillate
fuel, the vessel operator would have to pay attention to the vessel's
ballast and may have to compensate for any changes that may occur. We
anticipate that these procedures would be similar to operating the
vessel with partially-full fuel tanks.
    Another consideration when switching to a lower density fuel is the
change in volumetric energy content. Distillate fuel has a lower energy
density content on a per gallon basis when compared to the residual
fuel; however, per ton, distillate fuel's energy density is larger than
the residual fuel. This means that when switching from residual fuel to
distillate fuel, if the vessel's tanks are volumetrically limited
(i.e., the tanks can only hold a set quantity of fuel gallons), the
distance a vessel can travel on the distillate fuel may be slightly
shorter than the distance the vessel could travel on the residual fuel
due to the lower volumetric energy content of distillate fuel, which
could require compensation. This distance reduction would be
approximately 5% and would only be of concern while the vessel was
operating on the distillate fuel (i.e., while in the U.S. ECA) as the
majority of the time the vessel will be operating on the residual fuel.
However, if the vessel is limited by weight, the higher energy content
per ton of fuel would provide an operational advantage.
(ii) Kinematic Viscosity
    Residual fuel's kinematic viscosity is much higher than marine
distillate fuel's viscosity. Viscosity is the `thickness' of the fuel.
If this parameter is lowered from the typical value used within a pump,
some issues could arise. If a distillate fuel is used in a system that
typically operates on residual fuel, the decrease in viscosity could
cause problems with high-pressure fuel injection pumps due to the
increased potential for internal leakage of the thinner fuel through
the clearances in the pumping elements. Internal leakage is part of the
design of a fuel pump and is used in part to lubricate the pumping
elements. However, if this leakage rate is too high, the fuel pump
could produce less than optimal fuel injection pressures. If the
distillate fuel's lower viscosity becomes an issue, it is possible to
cool the fuel and increase the viscosity above 2 centistokes, which is
how most vessels operate today during routine fuel switchovers.
(iii) Flash Point
    Flash point is the temperature at which the vapors off the fuel
ignite with an outside ignition source. This can be a safety concern if
the owner/operator uses an onroad diesel fuel rather than a designated
`marine distillate' fuel for operation because marine fuels have a
specified minimum flash point of 60 [deg]F (15.6 [deg]C) to ensure
onboard safety, whereas onroad diesel has a minimum specified flash
point of 52 [deg]F (11.1 [deg]C). However, since most distillate fuels
are created in the same fashion, typical flash points of onroad diesel
are above 60 [deg]F (15.6 [deg]C), and would meet the marine fuel
specification for this property. If the flash point of the fuel being
used on-board the vessel becomes a concern, the operator/bunker
supplier would have to ensure that the vessel is obtaining fuel with a
minimum flash point of 60 [deg]F (15.6 [deg]C) via the bunker delivery
note or through fuel testing.
(iv) Lubricity
    Lubricity is the ability of the fuel to lubricate the engine/pump
during operation. Fuels with higher viscosity and high sulfur content
tend to have very good lubricity without the use of specific lubricity-
improving additives. Refining processes that lower fuel sulfur levels
and their viscosities can also remove some of the naturally-occurring
lubricating compounds. Severe hydrotreating of fuel to obtain ultra-low
sulfur levels can result in poor fuel lubricity. Therefore, refineries
commonly add lubricity improvers to ultra-low sulfur diesel. This will
most likely become a concern when very low levels of sulfur are present
in the fuel and/or the fuel has been hydrotreated to reduce sulfur,
e.g., if ultra-low sulfur highway diesel (ULSD) is used in the engine.
Several groups have conducted studies on this subject, and for some
systems where fuel lubricity has become an issue, lubricity additives
can be utilized or the owner/operator can install a lubricating system
for the fuel pump.
(v) Lube Oil
    Lube oils are used to neutralize acids formed in combustion, most
commonly sulfuric acids created from sulfur in the fuel. The quantity
of acid-neutralizing additives in lube oil should match the total
sulfur content of the fuel. If excessive amounts of these additives are
used, they may create deposits on engine components. Marine engine
manufacturers have recommended that lube oil only needs to be adjusted
if the fuel is switched for more than one week, but the oil feed rate
may need to be reduced as well as engine operating power. Additional
research has been conducted in this area and several oil companies have
been working to create a lubricating oil that would be compatible with
several different types of fuel.
(vi) Asphaltenes
    Asphaltenes are heavy, non-volatile, aromatic compounds which are
contained naturally in some types of crude oil. Asphaltenes may
precipitate out of the fuel solution when a fuel rich in carbon
disulfide, such as residual fuel, is mixed with a lighter hydrocarbon
fuel, such as n-pentane or

n-heptane found in some distillate fuels. When these heavy aromatic
compounds fall out of the fuel solution, they can clog filters, create
deposition along the fuel lines/combustion chamber, seize the fuel
injection pump, or cause other system troubles. This risk can be
minimized through onboard test kits and by purchasing distillate and
residual fuel from the same refiner. However, according to the
California Air Resources Board, the formation of asphaltenes is not
seen as an issue based on data from previous maritime rules.
    As can be seen, if vessel operators choose to operate on marine
distillate fuel while in the ECA, some prudence is required. However,
as described above, any issues that could arise with switching between
residual and distillate fuel are minimal and can be addressed through
changes to operating procedures. To conduct a successful switchover
between the residual and marine distillate fuels, vessel operators will
need to keep the above issues in mind and follow the engine
manufacturer's standard fuel switching procedure.
(b) SOX Scrubber
    Annex VI allows for alternative compliance strategies in including
the use of exhaust gas cleaning systems (EGCS). EGCS systems used today
for sulfur control are commonly known as SOX scrubbers. This
section describes the technological feasibility of scrubbers and how
scrubbers may be used to achieve equivalent emission reductions as fuel
switching.
    SOX scrubbers are capable of removing up to 95 percent
of SOX from ship exhaust using the ability of seawater to
absorb SOX. SOX scrubbers have been widely used
in stationary source applications, where they are a well-established
SOX reduction technology. In these applications, lime or
caustic soda are typically used to neutralize the sulfuric acid in the
washwater. While SOX scrubbers are not widely used on ocean-
going vessels, there have been prototype installations to demonstrate
their viability in this application such as the Krystallon systems
installed on the P&O ferry Pride of Kent and the Holland America Line
cruise ship the ms Zaandam. These demonstrations have shown scrubbers
can replace and fit into the space occupied by the exhaust silencer
units and can work well in marine applications.
    There are two main scrubber technologies. The first is an open-loop
design which uses seawater as exhaust washwater and discharges the
treated washwater back to the sea. Such open-loop designs are also
referred to as seawater scrubbers. In a seawater scrubber, the exhaust
gases are brought into contact with seawater, either through spraying
seawater into the exhaust stream or routing the exhaust gases through a
water bath. The SO2 in the exhaust reacts with oxygen to
produce sulfur trioxide which then reacts with water to form sulfuric
acid. The sulfuric acid in the water then reacts with carbonate and
other salts in the seawater to form sulfates which may be removed from
the exhaust. The washwater is then treated to remove solids and raise
the pH prior to discharge back to the sea. The solids are collected as
sludge and held for proper disposal ashore.
    A second type of SOX scrubber which uses a closed-loop
design is also feasible for use on marine vessels. In a closed loop
system, fresh water is used as washwater, and caustic soda is injected
into the washwater to neutralize the sulfur in the exhaust. A small
portion of the washwater is bled off and treated to remove sludge,
which is held and disposed of at port, as with the open-loop design.
The treated effluent is held onboard or discharged at open sea.
Additional fresh water is added to the system as needed. While this
design is not completely closed-loop, it can be operated in zero
discharge mode for periods of time.
    Exhaust gas scrubbers can achieve reductions in particulate matter
as well. By removing sulfur from the exhaust, the scrubber removes most
of the direct sulfate PM. Sulfates are a large portion of the PM from
ships operating on high sulfur fuels. By reducing the SOX
emissions, the scrubber will also control much of the secondary PM
formed in the atmosphere from SOX emissions. However, simply
mixing alkaline water in the exhaust does not necessarily remove much
of the carbonaceous PM, ash, or metals in the exhaust. While
SO2 associates with the washwater, particles can only be
washed out of the exhaust through direct contact with the water. In
simple scrubber designs, much of the mass of particles can reside in
gas bubbles and escape out the exhaust.
    Manufacturers have been improving their scrubber designs to address
carbonaceous soot and other fine particles. Finer water sprays, longer
mixing times, and turbulent action would be expected to directionally
reduce PM emissions through contact impactions. One scrubber design
uses an electric charge on the water to attract particles in the
exhaust to the water. In another design, demisters are used that help
effectively wash out PM from the exhaust stream. In either of these
designs, however, the systems would be effective at removing
SO2 from the exhaust even if the additional hardware needed
for non-sulfate PM reduction were not used.
    Annex VI does not present specific exhaust gas limits that are
deemed to be equivalent to the primary standard of operating on lower
sulfur fuel. Prior to the recent amendments to Annex VI, Regulation 13
included a limit of 6 g/kW-hr SO2 as an alternative to the
15,000 ppm sulfur limit for sulfur emission control areas. Under the
amended requirements, the specific SO2 limit was removed and
more general language on alternative approaches was included.
Specifically, Regulation 4 of MARPOL Annex VI now states ``The
Administration of a Party may allow any fitting, material, appliance or
apparatus to be fitted in a ship or other procedures, alternative fuel
oils, or compliance methods used as a alternative to that required by
this Annex if such fitting, material, appliance or apparatus or other
procedures, alternative fuel oils, or compliance methods are at least
as effective in terms of emissions reductions as that required by this
Annex, including any of the standards set forth in regulations 13 and
14.''
    IMO is developing guidelines for the use of exhaust gas cleaning
devices such as SOX scrubbers as an alternative to operating
on lower sulfur fuel.\99\ These draft guidelines include a table of
SO2 limits intended to correspond with various fuel sulfur
levels. Based on the methodology that was used to determine the
SO2 limit of 6.0 g/kW-hr for existing ECAs, the
corresponding limit is 0.4 g/kW-hr SO2 for a 1,000 ppm fuel
sulfur limit. This limit is based on an assumed fuel consumption rate
of 200 g/kW-hr and the assumption that all sulfur in the fuel is
converted to SO2 in the exhaust. The draft IMO guidelines
also allow for an alternative approach of basing the limit on a ratio
of SO2 to CO2. This has the advantage of being
easier to measure during in-use monitoring. In addition, this ratio
holds more constant at lower loads than a brake-specific limit, which
would approach infinity as power approaches zero. For the existing
15,000 ppm fuel sulfur limit in ECAs, a SO2 (ppm)/
CO2(%) limit of 65 was developed. The equivalent limit for a

1,000 ppm fuel sulfur level is 4.0 SO2 (ppm)/
CO2(%).
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    \99\ ``Proposed amendments for resolution MEPC.170(57)--
Guidelines for Exhaust Gas Cleaning Systems,'' Submitted by the
Institute of Marine Engineering, Science and Technology, to the 59th
session of the Marine Environment Protection Committee,
International Maritime Organization, MEPC 59/10/5, April 10, 2009.
---------------------------------------------------------------------------

    Scrubbers are effective at reducing SO2 emissions and
sulfate PM emissions from the exhaust. However, as discussed above, the
effectiveness of the scrubber at removing PM emissions other than
sulfates is dependent on the scrubber design. In addition to sulfate PM
reductions, switching from residual fuel to distillate fuel results in
reductions in organic PM and metallic ash particles in the exhaust. As
such, consideration should be given to non-sulfate PM when making the
determination that using a given ECGS design is ``at least as
effective'' as operating on lower sulfur fuel to control PM emissions.
    We would not consider an exhaust gas scrubber to be an acceptable
control strategy for reducing NOX emissions. In a typical
diesel exhaust gas mixture, NOX is composed of roughly 5-10%
NO2, with the majority of the remainder in the form of NO.
NO2 is soluble in water, and therefore may be removed by the
water in the scrubber. It is possible to treat the exhaust upstream of
the scrubber to convert more of the NOX to NO2,
thereby facilitating the use of a scrubber to remove NO2.
However, we are concerned that this would add to nitrogen loading of
the water in which the ship is operating. As discussed in Section
II.B.1, nitrogen loading can lead to serious water quality impacts. The
issue of NOX scrubbing is addressed in the draft IMO EGCS
guidelines by limiting the amount of NOX that may be removed
by the scrubber.
    Water-soluble components of the exhaust gas such as SO2,
SO3, and NO2 form sulfates and nitrates that are
dissolved into the discharge water. Scrubber washwater also includes
suspended solids, heavy metals, hydrocarbons and polycyclic aromatic
hydrocarbons (PAH). Before the scrubber water is discharged, there are
several approaches that may be used to process the scrubber water to
remove solid particles. Heavier particles may be trapped in a settling
or sludge tank for disposal. The removal process may include cyclone
technology similar to that used to separate water from residual fuel
prior to delivery to the engine. However, depending on particle size
distribution and particle density, settling tanks and hydrodynamic
separation may not effectively remove all suspended solids. Other
approaches include filtration and flocculation techniques.
Flocculation, which is used in many waste water treatment plants,
refers to adding a chemical agent to the water that will cause the fine
particles to aggregate so that they may be filtered out. Sludge
separated from the scrubber water would be stored on board until it is
disposed of at proper facilities.
    The draft IMO guidelines for the use of exhaust gas cleaning
devices such as SOX scrubbers include recommended monitoring
and water discharge practices. The washwater should be continuously
monitored for pH, PAHs and turbidity. Further, the IMO guidance include
specifications for these same items, as well as nitrate content when
washwater is discharged in ports, harbors or estuaries. Finally, the
IMO guidance recommends that washwater residue (sludge) be delivered
ashore to adequate reception facilities and not discharged to the sea
or burned on board. Also note that any discharges directly into waters
of the United States may be subject to the Clean Water Act or other
U.S. regulation.

D. ECA Designation and Foreign-Flagged Vessels

    In our previous marine diesel engine rulemakings, EPA did not
extend our Clean Air Act standards to engines on vessels flagged by
other countries. In our 2003 rule, many states and localities expressed
concern about the high levels of emissions from ocean-going vessels. We
examined our position and concluded that no change was necessary at
that time because the Tier 1 standards we adopted for Category 3
engines on U.S. vessels were the same as those contained in MARPOL
Annex VI. We indicated we would re-examine this issue in our current
rulemaking and would also review the progress made by the international
community toward the adoption of new more stringent international
standards that reflect the application of advanced emission control
technologies.
    We received comments from a broad range of interested parties on
the Advance Notice of Proposed Rulemaking (ANPRM) for this rulemaking.
Generally, these commenters remain concerned about the contribution of
ocean-going vessels to their air quality. Many took the position that
EPA should cover engines on foreign-flagged OGV under Clean Air Act
section 213 since they account for the vast majority of OGV emissions
in the United States and because of their perception, at the time these
comments were submitted, that the international process to set
stringent standards was stalled.
    In this section, we provide background on EPA's past statements
with regard to the application of our Clean Air Act section 213
standards to engines on foreign-flagged vessels, and summarize comments
we received on this issue in response to our ANPRM. Because the
NOX standards adopted in the amendments to Annex VI are
comparable in stringency and timing to our proposed CAA NOX
standards, we do not believe it is necessary to extend our Clean Air
Act Tier 2 and 3 standards to engines on foreign-flagged vessels at
this time. Therefore, this proposal does not seek to resolve the issue
of whether section 213 of the Act allows us to set standards for
engines on foreign-flagged vessels. However, as further explained
below, our decision rests on the timely adoption of an amendment to
Annex VI designating the U.S. coastal waters as an ECA, since the most
stringent of the NOX standards will be applicable in such
areas. If the amendment designating a U.S. ECA is not timely adopted by
the Parties to IMO, we will revisit this issue.
    We request comments on all aspects of this discussion.
(1) What Is EPA's Current Approach for Engines on Foreign-Flagged
Vessels?
    Section 213 of the Clean Air Act (42 U.S.C. 7547) authorizes
regulation of ``new nonroad engine[s]'' and ``new nonroad vehicle[s].''
Because Title II of the Clean Air Act does not define either ``new
nonroad engine'' or ``new nonroad vehicle,'' our early interpretations
of these terms with regard to our other nonroad programs were
reasonably modeled after the statutory definitions of ``new motor
vehicle engine'' and ``new motor vehicle'' found in section 216(3) of
the CAA.\100\ Those early interpretations focused on engines and
vehicles freshly built or imported.
---------------------------------------------------------------------------

    \100\ Proposed Rule, 56 FR 45,866 at 45867 (1991); Final Rule 59
FR 86969, 86971 (1994); see Engine Manufacturers Assoc. v. EPA, 88
F.3d 1075, 1087 (D.C.Cir. 1996).
---------------------------------------------------------------------------

    Similarly, in our first phase of marine diesel emission standards
(our 1999 rule), we modeled our definitions of ``new'' marine engine
and vessel after the existing ``new nonroad engine'' and ``new nonroad
vehicle'' regulatory definitions.\101\ We also referred to Department
of the Treasury rulings on the meaning of ``import'' for customs
purposes.\102\ Specifically, Treasury rulings for marine engines and
vessels include as imports only those marine engines and vessels
intended to remain in the United States permanently. Because engines on
foreign-flagged

vessels were only entering U.S. ports temporarily, with no intention to
remain permanently, we declined to treat those engines and vessels as
imported and, thus, we determined that these engines are not ``new''
marine engines or vessels for purposes of section 213 of the CAA.
Therefore, in that first rulemaking for diesel marine engines, we did
not apply the CAA program to engines on foreign-flagged vessels.
---------------------------------------------------------------------------

    \101\ Control of Emissions of Air Pollution From New Marine
Compression-Ignition Engines at or Above 37 kW; Final Rule, 64 FR
73300 (December 29, 1999).
    \102\ Control of Emissions of Air Pollution From New Marine
Compression-Ignition Engines at or Above 37 kW; Final Rule, 64 FR
73300 (December 29, 1999) at 73302, discussing American Customs
Brokerage Co., Inc., a/c Astral Corp. v. United States, 375 F.Supp.
1360, 1366 (Cust.Ct. 1974).
---------------------------------------------------------------------------

    In our subsequent rulemaking to establish Clean Air Act emission
standards for Category 3 engines,\103\ we re-examined this background
to re-consider the issue of whether engines on foreign-flagged vessels
should be included within the scope of our Clean Air Act standards.
Because the NOX standards we adopted in that rule were near-
term standards that were equivalent to the then-MARPOL Annex I
NOX standards, and because we adopted a regulatory deadline
to consider an additional tier of NOX standards (which are
the subject of the current rulemaking), we deferred making a decision
on whether we have the discretion to set standards for such engines
until the present rulemaking. We decided that even if we have the
discretion to interpret ``new marine engine'' to include engines on
foreign-flagged vessels, it would be appropriate not to exercise such
discretion at that time since the near-term standards that we would be
adopting in that rule already applied to foreign-flagged vessels
through Annex VI. We explained that foreign-flagged vessels were
expected to comply with the current MARPOL standards whether or not
they were also subject to the equivalent Clean Air Act standards and,
consequently, no significant emission reductions would be achieved by
treating foreign-flagged vessels as ``new'' for purposes of the near-
term standards in that final rule. However, we also indicated that we
would consider, in the subsequent rulemaking, whether we need to
resolve under what circumstances we may or should define new nonroad
engine and vessel to include foreign-flagged engines and vessels. As
part of that determination, we indicated we would also assess the
progress made by the international community toward adopting new more
stringent international consensus standards that reflect advanced
emission-control technologies.
---------------------------------------------------------------------------

    \103\ Control of Emissions of Air Pollution From New Marine
Compression-Ignition Engines at or Above 30 Liters/Cylinder; Final
Rule, 68 FR 9746 at 9759 (February 28, 2003).
---------------------------------------------------------------------------

    Accordingly, we raised this issue in our 2007 ANPRM,\104\
indicating that we would evaluate whether we should re-define new
nonroad engines and vessels to include foreign-flagged engines and
vessels. Likewise, we indicated that as part of that evaluation, we
would also assess the progress made by the international community
toward the adoption of new more stringent international standards that
reflect advanced emission-control technologies.
---------------------------------------------------------------------------

    \104\ Control of Emissions From New Marine Compression-Ignition
Engines at or Above 30 Liters per Cylinder: Advanced Notice of
Proposed Rulemaking, 72 FR 69522 at 69545 (December 7, 2007).
---------------------------------------------------------------------------

(2) Is EPA Proposing To Change the Current Approach to Engines on
Foreign-Flagged Vessels?
    Since the ANPRM was published, the International Maritime
Organization adopted amendments to MARPOL Annex VI. These amendments,
adopted in October 2008, contain stringent new tiers of NOX
emission limits for marine diesel engines as well as new fuel sulfur
limits.\105\ These requirements are applicable in the United States to
both domestic and foreign-flagged vessels through operation of the Act
to Prevent Pollution from Ships (APPS), as amended in 2008.\106\
Amendments to the Act to Prevent Pollution from Ships were adopted in
2008 specifically to provide the statutory mechanism to enforce the
Annex VI requirements on domestic and foreign-flagged vessels and to
enforce the ECA requirements once a U.S. ECA is designated under Annex
VI.
---------------------------------------------------------------------------

    \105\ Resolution MEPC.176(58), ``Amendments to the Annex of the
Protocol of 1997 to Amend the International Convention for the
Prevention of Pollution from Ships, 1973, As Modified by the
Protocol of 1978 Relating Thereto,'' MEPC 58/23/Add.1 Annex 13,
October 10, 2008.
    \106\ 33 U.S.C. 1901-1912.
---------------------------------------------------------------------------

    The most stringent of the new Annex VI standards requires engines
to meet Tier III NOX standards. Under the Annex, these
requirements would apply in designated ECAs. At the time the amendments