The NTE standards and test procedures are being finalized to help ensure that nonroad diesel emissions are controlled over the wide range of speed and load combinations commonly experienced in use. EPA has similar NTE standards for highway heavy duty diesel engines, compression ignition marine engines, and nonroad spark ignition engines. The NTE requirements supplement the existing steady state test as well as the new transient test which is also being finalized today.

The NTE standards and test procedures which we proposed, and which we are finalizing, are derived from similar NTE standards and test procedures which EPA adopted for highway heavy duty diesel engines. In the proposal, we requested comment on an alternative NTE test procedure approach ( see 68 FR 28369, May 23, 2003). As discussed in the proposal, the two NTE approaches would result in the same overall level of emission control, but the implementation of each approach from an in use measurement and data gathering perspective are quite different. We have decided not to finalize this alternative approach. This decision is based primarily on our belief that nonroad engine manufacturers will more easily transfer the knowledge and experience gained from the highway NTE implementation ( which begins in 2007) to the nonroad program if the two programs have similar requirements. For additional discussion regarding our decision to not finalize the alternative approach, please see the Summary and Analysis of Comments.

The NTE requirements establish an area ( the " NTE zone" or " NTE control area") under the torque curve of an engine where emissions must not exceed a specified value for any of the regulated pollutants. 87 An illustrative NTE zone is shown in Figure III. J 1. 167 Figure III. J 1: Example NTE Control Area Note: PM Carve Out region only applies for engines with a PM standard or FEL greater than or equal to 0.05 g/ bhp hr The NTE standard applies during any conditions that could reasonably be expected to be seen by that engine in normal operation and use, within certain broad ranges of real ambient conditions. The NTE requirements will help to ensure emission benefits over the full range of in use operating conditions. The NTE being finalized today for nonroad contains the same basic provisions as the highway NTE. This NTE control area is defined in the same manner as the highway NTE control area, and is therefore a subset of the engine's possible speed and load operating range. The NTE standard applies to emissions sampled during a time duration as small as 30 seconds. The NTE standard requirements for nonroad diesel engines are summarized below and specified in the regulations at 40 CFR 1039.101 and 40 CFR 1039.515. These requirements will take effect as early as 2011, as shown in shown in table III. J 1. The NTE standard applies to engines at the time of certification as well as in use throughout the useful life of the engine. 168 Table III. J 1.   NTE Standard Implementation Schedule Power Category NTE Implementation Model Yeara < 25 hp 2013 25 75 hp 2013b 75 175 hp 2012 175 750 hp 2011 > 750 hp 2011 Notes:

a The NTE applies for each power category once Tier 4 standards are implemented,

such that all engines in a given power category are required to meet NTE standards.

b The NTE standard would apply in 2012 for any engines in the 50 75 hp range which choose not to comply with the proposed 2008 transitional PM standard.

The NTE test procedure can be run in nonroad equipment during field operation or in an emissions testing laboratory using an appropriate dynamometer. The test itself does not involve a specific operating cycle of any specific length; rather, it involves nonroad equipment operation of any type which could reasonably be expected to occur in normal nonroad equipment operation that could occur within the bounds of the NTE control area. The nonroad engine is operated under conditions that may reasonably be expected to be encountered in normal operation and use, including operation under steady state or transient conditions and under varying ambient conditions. Emissions are averaged over a minimum time of thirty seconds and then compared to the applicable emission standard. The NTE standard applies over a wide range of ambient conditions, including up to an altitude of 5,500 feet above sea level at ambient temperatures as high as 86 deg. F, and at sea level up to ambient temperatures as high as 100 deg. F. The specific temperature and altitude conditions under which the NTE applies, as well as the methodology for correcting emissions results for temperature and/ or humidity, are specified in the regulations.

For new nonroad diesel engines subject to the NTE standards, we will require that manufacturers state in their application for certification that they are able to meet the NTE standards under all conditions that may reasonably be expected to occur in normal equipment operation and use. Manufacturers will have to maintain a detailed description of any testing, engineering analysis, and other information that forms the basis for their statement. We believe that there is a variety of information that a manufacturer could use as a reasonable basis for a statement that engines are expected to meet NTE standards. For example, a reasonable basis could include data from laboratory steady state and transient test cycle operation, a robust engine emissions map derived from laboratory testing ( e. g., an emissions map of similar resolution to the engine's base fuel injection timing map) and technical analysis relying on good engineering judgment which are sufficient, in combination, to project emissions levels under NTE conditions 169 reasonably expected to be encountered in normal operation and use. Data generated from in use nonroad equipment testing to determine emission levels could, at the manufacturer's option, also be part of this combination. However, a reasonable basis for the manufacturer's statement does not require in use emissions test data. This statement could reasonably be based solely on laboratory test data, analysis, and other information reasonably sufficient to support a conclusion that the engine will meet the NTE under conditions reasonably expected to be encountered in normal vehicle operation and use. If a manufacturer has relevant in use nonroad emissions test data, it should be taken into consideration by the manufacturer in developing the basis for its statement.

In addition, as we proposed, we are finalizing a transition period during which a manufacturer could apply for an NTE deficiency for a nonroad diesel engine family. The NTE deficiency provisions would allow the Administrator to accept a nonroad diesel engine as compliant with the NTE standards even though some specific requirements are not fully met. We are finalizing these NTE deficiency provisions because we believe that, despite the best efforts of manufacturers, for the first few model years it is possible some manufacturers may have technical problems that are limited in nature but cannot be remedied in time to meet production schedules. We are not limiting the number of NTE deficiencies a manufacturer can apply for during the first three model years for which the NTE applies. For the fourth through the seventh model year after which the NTE standards are implemented, a manufacturer could apply for no more than three NTE deficiencies per engine family. Within an engine family, NTE deficiencies must be applied for on an engine model or power rating basis; however, the same deficiency when applied to multiple ratings or models counts as a single deficiency within an engine family. No deficiency may be applied for or granted after the seventh model year. The NTE deficiency provision will only be considered for failures to meet the NTE requirements. EPA will not consider an application for a deficiency for failure to meet the FTP or supplemental transient standards.

Similar to the 2007 highway HD rule, we are also finalizing a provision which would allow a manufacturer to exclude defined regions of the NTE engine control zone from NTE compliance if the manufacturer could demonstrate that the engine, when installed in a specified nonroad equipment applications( s), is not capable of operating in such regions. We have also finalized a provision which would allow a manufacturer to petition the Agency to limit testing in a defined region of the NTE engine control zone during NTE testing. This optional provision would require the manufacturer to provide the Agency with in use operation data which the manufacturer could use to define a single, continuous region of the NTE control zone. This single area of the control zone must be specified such that operation within the defined region accounts for 5 percent or less of the total in use operation of the engine, based on the supplied data. Further, to protect against " gaming" by manufacturers, the defined region must generally be elliptical or rectangular in shape, and share a boundary with the NTE control zone. If approved by EPA, the regulations then disallow testing with sampling periods in which operation within the defined region constitutes more than 5.0 percent of the time weighted operation within the sampling period. 170 The NTE numerical standard is a function of FTP emission standards contained in today's final rule, which standards are described in section II. As with the NTE standards we have established for the 2007 highway rule, the nonroad NTE standard is determined as a multiple of the engine families' underlying FTP emission standard. In addition, as with the 2007 highway standard, the multiple is either 1.25 or 1.5, depending on the emission pollutant type and the value of the FTP standard ( or the engine families' FEL). These multipliers are based on EPA's assessment of the technological feasibility of the NTE standard, and our assessment that as the underlying FTP standard becomes more stringent, the NTE multiplier should increase ( from 1.25 to 1.5). The FTP standard or FEL thresholds for the NTE standard's 1.25x multiplier and the 1.5x multiplier are specified for each regulated emission in table III. J 2.

Table III. J 2.   Thresholds for Applying NTE Standard of 1.25xFTP standard vs. 1.5x FTP Standard Emission Apply 1.25x NTE when... Apply 1.5x when...

NOX NOX std or FEL  1.9 g/ bhp hr NOX std or FEL< 1.9 g/ bhp hr NMHC NOX std or FEL  1.9 g/ bhp hr NOX std or FEL< 1.9 g/ bhp hr NOX+ NMHC NMHC+ NOX std or FEL  2.0 g/ bhp hr NMHC+ NOX std or FEL< 2.0 g/ bhp hr PM PM std or FEL  0.05 g/ bhp hr PM std or FEL< 0.05 g/ bhp hr CO All stds or FELs No stds or FELs For example, beginning in 2011, the NTE standard for engines meeting a FTP PM standard of 0.01 g/ bhp hr and a FTP NO X standard of 0.30 g/ bhp hr would be 0.02 g/ bhp hr PM and 0.45 g/ bhp hr NO X. In the NPRM, we proposed a NO X threshold value of 1.5 g/ bhp hr as the value at which the NTE multiplier would switch from 1.5 to 1.25.

We proposed this NO X emission threshold level ( 1.5 g/ bhp hr) primarily because it is the same value as we finalized for the highway NTE. As shown in table III. J 2, we have finalized a threshold value of 1.9 g/ bhp hr NO X for nonroad engines. We have finalized this higher NO X threshold based on the differences in the emission performance of NO X control technologies between highway and nonroad diesel engines. Specifically, nonroad diesel NO X standards have traditionally been higher than the equivalent highway NO X standard due primarily to the effectiveness of charge air cooling and the lack of ram air for nonroad applications. For example, the nonroad Tier 3 NMHC+ NO X standards are higher than the 2004 heavy duty highway standards ( e. g., 3.0 g/ bhp hr vs. 2.5 g/ bhp hr), and the Tier 4 NO X standard is higher than the 2007 heavy duty highway standard ( e. g., 0.3 g/ bhp hr vs. 0.2 g/ bhp hr). We expect that the nonroad Tier 3 standard for engines above 100 hp will require NO X levels of approximately 2.5 g/ bhp hr and we expect that for the 2004 highway heavy duty standards, NO X levels are approximately 2 g/ bhp hr. In both cases, these emission levels are the building blocks for the next set of EPA standards ( e. g., Tier 4 for nonroad and 2007 for highway). Because the nonroad Tier 171 3 NO X emission levels are expected to be approximately 25 percent greater than the 2004 highway level ( 2.5 vs 2), we believe that the NTE NO X multiplier threshold for nonroad should be 25 percent greater for nonroad as compared to highway. For these reasons, we have finalized a NO X multiplier threshold of 1.9 g/ bhp hr, which is 25 percent greater than the highway multiplier threshold.

In addition, as proposed, we are finalizing a number of specific engine operating conditions during which the nonroad NTE standard would not apply. The exact criteria for these conditions are defined in the regulations, but in summary: the NTE does not apply during engine start up conditions; the NTE does not apply during very cold engine intake air temperatures for EGR equipped engines during which the engine may require an engine protection strategy; and, finally, for engines equipped with NO X and/ or NMHC aftertreatment ( such as a NO X adsorber), the NTE does not apply during warm up conditions for the exhaust emission control device. Finally, while we did not propose this, we are finalizing the NTE PM carve out provisions for engines which will not require PM filters. The PM only carve out is a sub region of the NTE zone in which the NTE PM standard does not apply. Figure III. J 1 contains an illustration of the PM carve out. This is a region of high engine speed and low engine torque during which engineout PM emissions are difficult to control to levels below the PM NTE standard. The dimensions of the PM carve out are specified in the regulations. For engines equipped with a PM filter, compliance with the PM NTE standard in this region is achievable due to the highly efficient PM reduction capabilities of the CDPF technology. However, for engines in the under 25 hp category, for which we have established Tier 4 emission standards that do not require the use of a PM filter, PM control in this sub region of the NTE zone with conventional PM reduction technologies may not be achievable. Therefore, as we allowed with highway heavy duty engines certifying to the 0.1 g/ bhp hr standard, we have created a PM carve out for nonroad engines that use in cylinder PM control technologies. Specifically, the PM carve out applies to engines meeting a PM standard or FEL greater than or equal to 0.05 g/ bhp hr.

K. Investigating and Reporting Emission Related Defects In 40 CFR part 1068, subpart F, we are adopting defect reporting requirements that obligate manufacturers to tell us when they learn that emission control systems are defective and to conduct investigations under certain circumstances to determine if an emission related defect is present. Under these defect reporting requirements, manufacturers must track available warranty claims and any other available information from dealers, hotlines, diagnostic reports, or fieldservice personnel to identify possible defects. If the number of possible defects exceeds certain thresholds, they must investigate future warranty claims and other information to establish whether these are actual defects.

We believe the investigation requirement in this rule will allow both EPA and the engine manufacturers to fully understand the significance of any unusually high rates of warranty claims for systems or parts that may have an impact on emissions. In the past, defect reports were submitted based on a very low threshold with the same threshold applicable to all size engine 172 families and with little information about the full extent of the problem. The new approach should result in fewer overall defect reports being submitted by manufacturers than would otherwise be required under the old defect reporting requirements because the number of defects triggering the submission requirement rises with the engine family size. The new approach may trigger some additional reports for small volume families, but the percentage based approach will ensures that investigations and reports correspond to issues that are likely to be significant.

Part 1068, subpart F, is intended to require manufacturers to use information we would expect them to keep in the normal course of business. We believe in most cases manufacturers will not be required to institute new programs or activities to monitor product quality or performance. A manufacturer that does not keep warranty or replacement part information may ask for our approval to use an alternate defect reporting methodology that is at least as effective in identifying and tracking possible emission related defects as the requirements of 40 CFR 1068.501. Thus manufacturers will have the flexibility to develop defect tracking and reporting programs that work better for their standard business practices. However, until we approve such a request, the thresholds and procedures of subpart F continue to apply.

Manufacturers may also ask for our approval to use an alternate defect reporting methodology when the requirements of 40 CFR 1068.501 can be demonstrated to be highly impractical or unduly burdensome. In such cases, we will generally allow alternate methodologies that are at least as effective in identifying, correcting, and informing EPA of possible emissionrelated defects as the requirements of 40 CFR 1068.501. We expect this flexibility to be useful in special circumstances such as when new models of very large engines are introduced for the first time. In this situation, it may be appropriate to allow an alternate defect reporting method because the high cost of these engines often makes it impractical to build and test large numbers of prototype engines. The initial production of these engines can have similar defect rates to the high levels often associated with prototype engines. While we are concerned about such defects and want to be kept informed about them, it is not clear that our basic program would be the best way to address these defects. In such cases, we believe it may be more appropriate for manufacturers to propose an alternative approach that consolidates reports on a regular interval, such as quarterly, and identifies obvious early life defects without a formal tracking process. In general, we would encourage manufacturers to propose an alternate approach to ensure that these defects are properly addressed while minimizing the associated burden.

Issues related to parts shipments received the most attention from commenters who pointed out that the proposed requirement to track shipments of all emission related components was overly burdensome and not likely to reveal useful information. We have concluded that it is not appropriate to use parts shipments as a quantitative indicator to evaluate whether manufacturers exceed the threshold that would trigger an investigation. We generally agree with manufacturers concerns that parts shipments data would be too difficult to evaluate, for example, because parts are often shipped for stocking purposes, parts are installed in compliant and noncompliant products ( such as exported engines), and part shipments are generally not identifiable by model year. The final rule therefore requires manufacturers to pursue a defect 173 investigation if the number of shipped parts is higher than the manufacturer would expect based on historical shipment levels, specifications for scheduled maintenance, or other factors.

We have modified the proposed thresholds to address concerns that manufacturers would be required to investigate and report defects too frequently. For engines under 750 hp, we are adopting investigation thresholds of 10 percent of total production or 50 engines, whichever is greater, for any single engine family in one model year. Similarly, we are adopting defectreporting thresholds of 2 percent of total production or 20 engines, whichever is greater. For engines over 750 hp, the same percentage thresholds apply, but we are extending the percentage values down to smaller engine families to reflect their disproportionate contribution to total emissions. For these engines, the absolute thresholds are 25 engines for investigations and 10 or 15 engines for defects ( see table III. K 1). We believe these thresholds adequately balance the desire to document emission related defects without imposing an unreasonable reporting burden. Also, we believe this approach to adopting thresholds adequately addresses reporting requirements for aftertreatment and non aftertreatment components.

Table III. K 1.   Investigation and Defect Reporting Thresholds for Varying Sizes of Engine Families1 Engine Size Investigation Threshold Defect reporting Threshold

750 hp less than 500: 50 500 50,000: 10 %

50,000+: 5,000 less than 1,000: 20 1,000 50,000: 2 %

50,000+: 1,000 > 750 hp less than 250: 25 250+: 10 % less than 150: 10 150 750: 15 750+: 2 %

Notes:

1 For varying sizes of engine families, based on sales per family in a given model year.

EMA also expressed concern about the existing regulatory language in 40 CFR 1068.501( b)( 3), which states that manufacturers must " consider defects that occur within the useful life period, or within five years after the end of the model year, whichever is longer." However, this provision has no effect on the diesel engines subject to the Tier 4 standards being adopted today, since they all have useful lives of at least five years. We recognize that this issue may be relevant to engine categories that do not have five year useful lives, such as small SI engines, and will consider these concerns in our future regulation of such engines. 174 When manufacturers start an investigation, they must consider any available information that would help them evaluate whether any of the possible defects that contributed to triggering the investigation threshold would lead them to conclude that these were actual defects. Otherwise, manufacturers are expected to look prospectively at any possible defects and attempt to determine whether these are actual defects. Also, during an investigation, manufacturers should use appropriate statistical methods to project defect rates if they are unable to collect information to evaluate possible defects, taking steps as necessary to prevent bias in sampled data ( or making adjusted calculations to take into account any bias that may remain). For example, if 75 percent of the components replaced under warranty are available for evaluation, it would be appropriate to extrapolate known information on failure rates to the components that are unavailable for evaluation.

The second threshold in 40 CFR 1068.501 specifies when a manufacturer must report that there is an emission related defect. This threshold involves a smaller number of engines because each possible occurrence has been screened to confirm that it is in fact an emission related defect. In counting engines to compare with the defect reporting threshold, the manufacturer generally considers a single engine family and model year. Where information cannot be differentiated by engine family and model year, the manufacturer must use good engineering judgment to evaluate whether the information leads to a conclusion that the number of defects exceeds the applicable thresholds. However, when a defect report is required, the manufacturer must report all occurrences of the same defect in all engine families and all model years.

If the number of engines with a specific defect is found to be less than the threshold for submitting a defect report, but information such as warranty data later indicates that there may be additional defective engines, all the information must be considered in determining whether the threshold for submitting a defect report has been met. If a manufacturer has actual knowledge from any source that the threshold for submitting a defect report has been met, a defect report must be submitted even if the trigger for investigating has not yet been met. For example, if manufacturers receive from their dealers, technical staff or other field personnel information showing conclusively that there is a recurring emission related defect, they must submit a defect report.

If manufacturers trigger the threshold to start an investigation, they must promptly and thoroughly investigate whether their parts are defective, collecting specific information to prepare a report describing their conclusions. Manufacturers must send the report if an investigation concludes that the number of actual defects did not exceed reporting thresholds. Manufacturers must also send these as status reports twice annually during an investigation. After investigating for several months, or perhaps a couple years, it may become clear that the problems that triggered the investigation will never show enough actual defects to trigger a defect report. In this case, the manufacturer would send us a report justifying this conclusion. 175 In general, we believe this updated approach to defect reporting will decrease the number of defect reports submitted by manufacturers overall while significantly improving their quality and their value to both EPA and the manufacturer.

Note that misbuilds are a special type of emission related defect. An engine that is not built consistent with its application for certification violates the prohibited act of introducing into commerce engines that are not covered by a certificate of conformity.

L. Compliance with the Phase In Provisions In section II we described the NO X and NMHC standards phase in schedule, which is intended to allow engine manufacturers to phase in their new advanced technology engines, while they phase out existing engines. This phase in requirement is based on percentages of a manufacturer's production for the U. S. market. We recognize, however, that manufacturers need to plan for compliance well in advance of the start of production, and that actual production volumes for any one model year may differ from their projections. On the other hand, we believe that it would be inappropriate and infeasible to base compliance solely on a manufacturer's projections. That could encourage manufacturers to overestimate their production of complying phase in engines, and could result in significantly lower emission benefits during the phase in. In response to these concerns, we proposed to initially only require nonroad diesel manufacturers to project compliance with the phase in based on their projected production volumes, provided that they made up any deficits ( in terms of percent of production) the following year. We received no comments on this issue and are finalizing it as proposed.

Because we expect that a manufacturer making a good faith projection of sales would not be very far off of the actual production volumes, we are limiting the size of the deficit that would be allowed, as in the highway program. In all cases, the manufacturer would be required to produce at least 25% of its production in each phase in power category as " phase in" engines ( meeting the NO X and NMHC standards or demonstrating compliance through use of ABT credits) in the phase in years ( after factoring in any adjustments for early introduction engine credits; see section III. M). This minimum required production level would be 20% for the 75 175 hp category if a manufacturer exercises the option to comply with a reduced phase in schedule in lieu of using banked Tier 2 ABT credits, as discussed in section III. A. 1. b. Another important restriction is that manufacturers would not be allowed to have a deficit in the year immediately preceding the completion of the phase in to 100%. This would help ensure that manufacturers are able to make up the deficit. Since they could not produce more than 100% low NO X engines after the final phase in year, it would not be possible to make up a deficit from this year. These provisions are identical to those adopted in the highway HDDE program.

We are also finalizing the proposed " split family" allowance for the phase in years. This provision, which is similar to a provision of the highway program, allows manufacturers to certify engine families to both the phase in and phase out standards. Manufacturers choosing this option must assign at the end of the model year specific numbers of engines to the phase in and phase out 176 categories. All engines in the family must be labeled with the same NO X and PM FELs, which apply for all compliance testing, and must meet all other requirements that apply to phase in engines. Engines assigned to the phase out category may generate emission credits relative to the phase out standards.

M. Incentive Program for Early or Very Low Emission Engines We believe that it is appropriate and beneficial to provide voluntary incentives for manufacturers to introduce engines emitting at very low levels early. Such inducements may help pave the way for greater and/ or more cost effective emission reductions from future engines and vehicles. To encourage early introduction of low emission engines, the proposal contained provisions to allow engine manufacturers to benefit from producing engines certified to the final ( aftertreatment based) Tier 4 standards prior to the 2011 model year, by being allowed to make fewer engines certified to these standards once the Tier 4 program takes effect, a concept that we are terming " engine offsets" to avoid confusion with ABT program credits. The number of offsets that could be generated would depend on the degree to which the engines are able to meet, or perform better than, the final Tier 4 standards. Commenters generally supported this approach, as long EPA ensures that compliance requirements for these engines are enforced.

However, one equipment manufacturer submitted comments suggesting that we should adopt a program that would provide incentives for equipment manufacturers to use the early Tier 4 engines in their equipment. For an early low emission engine program to be successful, we agree that it is important to provide incentives to both the engine manufacturer and the equipment manufacturer, who may incur added cost to install and market the advanced engine in the equipment. As was pointed out in comments, the proposed program did not provide clear incentives to equipment manufacturers to use the ( presumably more expensive) early low emission engines. Therefore, we are adding such provisions. Section III. B. 2. e describes these early Tier 4 engine incentive provisions under which equipment manufacturers can earn increased allowance flexibilities. Under those provisions, the engine manufacturer's incentive to produce the lowemitting engines will come from customers' demand for them, and from the fact that the engine manufacturer can earn ABT program credits for these engines in the same way as without these incentive provisions. If the equipment manufacturer does not wish to earn the increased allowance flexibilities, then the engine manufacturer would be allowed to use the provisions of the incentive program for early low emission engines described below in this subsection, though to do so would require the forfeiture of any ABT credits earned by the subject engines, essentially to avoid double counting, as explained below. This engine manufacturer incentive program is being adopted as proposed, except for engines above 750 hp, for which the proposed program requires some adjustment to account for the approach we are taking to final standards.

As discussed in section II. A. 4, the final rule does not phase in standards for engines above 750 hp as proposed, and instead adopts application specific standards in 2011 and 2015. The 2011 standards are not based on advanced aftertreatment except for NO X on engines above 1200 hp used in generator sets. To avoid overcomplication of the incentive program, which might 177 discourage its use, we are not separating over and under 1200 hp generator set engines into separate groups for these provisions. Instead, any of these engines that meet the 2015 standards before 2015 can earn offsets. We are, however, separating the generator set engines and nongenerator set engines above 750 hp into separate groups, because we are deferring setting a NO X standard for the latter that is based on use of advanced aftertreatment technology.

Table III. M 1 summarizes the requirements and available offsets for engine manufacturers in this program. As the purpose of the incentive is to encourage the introduction of clean technology engines earlier than required, we require that the emission standard levels actually be met, and met early, by qualifying engines to earn the early introduction offsets. The regulations specify that the standards must be met without the use of ABT credits and actual production of the engines must begin by September 1 preceding the first model year when the standards would otherwise be applicable. Also, to avoid double counting, as explained in the proposal, the early engines can earn either the engine offsets or the ABT emission credit, but not both. Note that this is different than the approach taken in the early Tier 4 engine incentive program for equipment manufacturers described in section III. B. 2. e, where incentives for both the engine manufacturer ( ABT credits) and the equipment manufacturer ( allowance flexibilities) are needed to ensure successful early introduction of clean engines. Because 15 ppm sulfur diesel fuel will be available on a widespread basis in time for 2007 ( due to the requirements for on highway heavy duty engines), we are allowing engine manufacturers to begin certifying engines to the very low emission levels required to be eligible for this incentive program, beginning with the 2007 model year. 178 Table III. M 1.   Program for Early Introduction of Clean Engines Category Engine Group Must Meet a Per Engine Offset Early PM only b 25 75 hp 0.02 g/ bhp hr PM 1.5 to 1 PM only 75 750 hp 0.01 g/ bhp hr PM Early Engine b 25 75 hp 0.02 / 3.5 g/ bhp hr PM / NMHC+ NO X 1.5 to 1 75 750 hp 0.01 / 0.30 / 0.14 g/ bhp hr PM / NO X / NMHC > 750 hp generator set 0.02 / 0.50 / 0.14 g/ bhp hr PM / NO X / NMHC > 750 hp nongenerator set 0.03 / 2.6 / 0.14 g/ bhp hr PM / NO X / NMHC Low NO X Engine > 25 hp as above for Early Engine, except must meet 0.15 g/ bhp hr NO X standard 2 to 1 Notes:

a All engines must also meet the Tier 4 crankcase emissions requirements. Engines must certify using all test and other requirements ( such as NRTC and NTE) otherwise required for final Tier 4 standards.

b Offsets must be earned prior to the start of phase in requirements in applicable engine groups ( prior to 2013 for 25 75 hp engines, prior to 2012 for 75 175 hp engines, prior to 2011 for 175 750 hp engines, prior to 2015 for > 750 hp engines).

For any engines being certified under this program before the 2011 model year using 15 ppm sulfur certification fuel, the manufacturer would have to meet the requirements described in section III. D, including demonstrating that the engine would indeed be fueled with 15 ppm sulfur fuel in the field. We expect this would occur through selling such engines into fleet applications, such as municipal maintenance fleets, large construction company fleets, or any such well managed centrally fueled fleet. While obtaining a reliable supply of 15 ppm maximum sulfur diesel fuel prior to the 2011 model year will be possible, it will require some effort by nonroad diesel machine operators. We therefore believe it is necessary and appropriate to provide a greater incentive for early introduction of clean diesel technology. Thus, as proposed, we would count one early engine ( that is, an engine meeting the final Tier 4 standards) as offsetting 1.5 engines later. This means that fewer clean diesel engines than otherwise required may enter the market in later years, but, more importantly, it means that emission reductions would be realized earlier than under our base 179 program. We believe that providing incentives for early emission reductions is a worthwhile goal for this program, because improving air quality is an urgent need in many parts of the country as explained in section I, and because the early learning opportunity with new technologies can help to ensure a smooth transition to Tier 4 standards.

We are providing this early introduction offset for engines over 25 hp that meet all of today's Tier 4 emissions standards ( NO X, PM, and NMHC) in the applicable engine category. We are also providing this early introduction offset to engines that pull ahead compliance with only the PM standard. However, a PM only early engine would offset only the PM standard for an offsetusing engine. For engines in power categories with a percentage phase in, this would correspond ( during the phase in years) to offset use for " phase out" engines ( those required to meet the new Tier 4 standard for PM but not for NO X or NMHC). Engines using the PM only offset would be subject to the other applicable Tier 4 emission standards, including applicable transient and NTE standards ( see Section III. F) and crankcase requirements. The applicable PM standard and requirements for these PM only offset using engines would be those of Tier 3 ( Tier 2 for 25 50 hp engines). PM only offsets would not offset engines required to meet other Tier 4 standards such as the phase in NO X and NMHC standards ( since there is no reason for PM offsets to offset emissions of other pollutants). Tier 4 engines between 25 and 75 hp certified to the 2008 PM standard would not participate in this program, nor would engines below 25 hp, because they do not have advanced aftertreatment based standards.

An important aspect of the early incentive provision is that it must be done on an engine count basis. That is, a diesel engine meeting new standards early would count as 1.5 such diesel engines later. This contrasts with a provision done on an engine percentage basis which would count one percent of diesel engines early as 1.5 percent of diesel engines later. Basing the incentive on an engine count alleviates any possible influence of fluctuations in engine sales in different model years.

Another important aspect of this program is that it is limited to engines sold prior to the 2013 model year for engines between 25 and 75 hp, prior to the 2012 model year for engines between 75 and 175 hp, and prior to the 2011 model year for engines between 175 and 750 hp. In other words, as in the highway program, nonroad diesel engines sold during the transitional " phase in" model years would not be considered " early" introduction engines and would therefore be ineligible to generate early introduction offsets. However, such engines and vehicles would still be able to generate ABT credits. Because the engines over 750 hp engines have no percent ofproduction phase in provisions, we are allowing offsets for early engines in any model year prior to 2015. For the same reason, there is no PM only offset for these engines. As with the phase in itself, and for the same reasons, an early introduction engine could only be used to offset requirements for engines in the same engine group ( 25 75 hp, 75 175 hp, 175 750 hp, > 750 hp generator sets, and > 750 hp non generator sets) as the offset generating engine.

As a further incentive to introduce clean engines and vehicles early, we are also adopting the proposed provision that gives engine manufacturers an early introduction offset equal to two 88 We also required that highway vehicles be labeled on the dashboard. Given the type of equipment using nonroad CI engines, we are not adopting any dashboard requirement here.

180 engines during or after the phase in years for engines with NO X levels well below the final Tier 4 NO X standard. This incentive applies for diesel engines achieving a 0.15 g/ bhp hr NO X standard level ( one half of the aftertreatment based standard for most engines) while also meeting the NMHC and PM standards. Due to the extremely low emission levels to which these engines and vehicles would need to certify, we believe that the double engine count offset is appropriate.

In the NPRM we asked for comment on whether or not we should extend the existing Blue Sky program that encourages the early introduction of engines with emission levels ( as measured on a transient test) about 40% lower than the Tier 2 standards levels. See 68 FR at 28483. We received comments both for and against doing so, but no commenter provided substantive arguments or information. Given the very low emissions levels being adopted in Tier 4, we have decided not to extend the existing Blue Sky Series program, because it does not encourage engines emitting at such low emission levels.

N. Labeling and Notification Requirements As explained in section II, the emissions standards will make it necessary for manufacturers to employ exhaust emission control devices that require very low sulfur fuel ( less than 15 ppm) to ensure proper operation. This action restricts the sulfur content of diesel fuel used in these engines. However, the 2008 emissions standards would be achievable with less sensitive technologies and thus it could be appropriate for those engines to use diesel fuel with up to 500 ppm sulfur. There could be situations in which vehicles requiring either 15 ppm fuel or 500 ppm may be accidentally or purposely misfueled with higher sulfur fuel. Any of these misfueling events could seriously degrade the emission performance of sulfur sensitive exhaust emission control devices, or perhaps destroy their functionality altogether.

In the highway rule, we adopted a requirement that heavy duty vehicle manufacturers notify each purchaser that the vehicle must be fueled only with the applicable low sulfur diesel fuel. We also required that diesel vehicles be equipped by the manufacturer with labels near the refueling inlet to indicate that low sulfur fuel is required. We are adopting similar requirements here. 88 Specifically, manufacturers will be required to notify each purchaser that the nonroad engine must be fueled only with the applicable low sulfur diesel fuel, and ensure that the equipment is labeled near the refueling inlet to indicate that low sulfur fuel is required. We believe that these measures would help owners find and use the correct fuel and would be sufficient to address misfueling concerns. Thus, more costly provisions, such as fuel inlet restrictors, should not be necessary.

In general, beginning in model year 2011, nonroad engines will be required to use the Ultra Low Sulfur diesel fuel ( with less than 15 ppm sulfur). Thus, the default label will state " ULTRA LOW SULFUR FUEL ONLY." The labeling requirements for earlier model year Tier 4 engines are specified in § 1039.104( e). Some new labeling requirements for earlier model year Tier 3 181 engines are specified in 40 CFR 89.330( e). These requirements for earlier years generally require that engines and equipment be labeled consistent with the sulfur of the test fuel used for their certification. So where the engine is certified using Low Sulfur diesel fuel ( with less than 500 ppm sulfur), the required label will state " LOW SULFUR FUEL ONLY." See section III. D and the regulatory text for the other specific requirements related to labeling the earlier model years.

O. General Compliance 1. Good engineering judgment The process of testing engines and preparing an application for certification requires the manufacturer to make a variety of judgments. This includes, for example, selecting test engines, operating engines between tests, and developing deterioration factors. EPA has the authority to evaluate whether a manufacturer's use of engineering judgment is reasonable. The regulations describe the methodology we use to address any concerns related to how manufacturers use good engineering judgment in cases where the manufacturer has such discretion ( see 40 CFR 1068.5). If we find a problem with a manufacturer's use of engineering judgment, we will take into account the degree to which any error in judgment was deliberate or in bad faith. If manufacturers object to a decision we make under this provisions, they are entitled to a hearing. This subpart is consistent with provisions already adopted for light duty highway vehicles, marine diesel engines, industrial spark ignition engines, and recreational vehicles.

2. Replacement engines In the proposal we included a provision allowing manufacturers to sell a new, noncompliant engine intended to replace an engine that fails in service. The proposed language closely mirrored the existing provisions in 40 CFR 89.1003( b)( 7), except that it specified that manufacturers could produce new, noncompliant replacement engines if no engine from any manufacturer were available with the appropriate physical or performance characteristics. Manufacturers objected to this provision and requested that the final regulations follow the language in 40 CFR part 89, in which the manufacturer of the new engine confirm that no appropriate engine is available from its product line ( or that of the manufacturer of the original engine, if that were a different company). We agree that the language from 40 CFR part 89 is appropriate, but we note two things to address remaining concerns that manufacturers could potentially use the replacement engine provisions to produce large numbers of noncompliant products. First, we are including a specific statement in the regulations that manufacturers may not use the replacement engine exemption to circumvent the regulations. Second, we plan to use the data collection provision under 40 CFR 1068.205( d) to ask manufacturers to report the number of engines they sell under the replacement engine exemption. Rather than adopting a specific data reporting requirement, we believe this more flexible approach is most appropriate to allow us to get information to evaluate how manufacturers are using the exemption without imposing reporting requirements that may involve more or less information than is actually needed. 182 3. Warranty We are modifying 40 CFR 1068.115 regarding engine manufacturers' warranty obligations by removing paragraph ( b). This paragraph addresses specific circumstances under which manufacturers may not deny emission related warranty claims, while paragraph ( a) of this section addresses the circumstances under which manufacturers may deny such claims. As described in our Summary and Analysis of Comments related to our November 8, 2002 final rule ( 67 FR 68242), we intended to adopt 40 CFR1068.115 without this paragraph. We wanted to remove paragraph ( b) because we agreed with a comment pointing out that publishing both paragraphs leaves ambiguous which provision applies if a situation applies that is not on either list. Since neither list can be comprehensive, we believe the provisions in paragraph ( a) describing when manufacturers may deny warranty claims appropriately addresses the issue. As a result, paragraph ( b) was inadvertently adopted as part of the November 2002 final rule.

4. Separate catalyst shipment We are adopting provisions that will allow engine manufacturers to ship engines to equipment manufacturers where the engine manufacturer had not yet installed the aftertreatment or otherwise included it as part of the engine shipment. This allows the engine manufacturer to ship the engine without the aftertreatment; for example, in cases where it would be impractical to install aftertreatment devices on the engine before shipment or even ship products with the aftertreatment devices uninstalled along with the engine; or where shipping it already installed would require it to be disassembled and reinstalled when the engine was placed in the equipment. Today's final rule requires that the components be included in the price of the engine and that the engine manufacturer provide sufficiently detailed and clear instructions so that the equipment manufacturer can readily install the engine and its ancillary components in a configuration covered under the certificate of conformity held by the engine manufacturer. We are also requiring that the engine manufacturer have a contractual agreement obligating the equipment manufacturer to complete the final assembly into a certified configuration. The engine manufacturer must ship any components directly to the equipment manufacturer or arrange for their shipment from a component supplier. The engine manufacturer must tag the engines and keep records. The engine manufacturer must obtain annual affidavits from each equipment manufacturer as to the parts and part numbers that the equipment manufacturer installed on each engine and must conduct a limited number of audits of equipment manufacturers' facilities, procedures, and production records to monitor adherence to the instructions it provided. Where an equipment manufacturer is located outside of the U. S., the audits may be conducted at U. S. port of distribution facilities.

The rule also contains various provisions establishing responsibility for proper installation. Where the engines are not in a certified configuration when installed in nonroad equipment because the equipment manufacturer used improper emission control devices or failed to install the shipped parts or failed to install the devices correctly, then both the engine manufacturer and the installer have responsibility. For the engine maker, the exemption is void for those engines that are not in their certified configuration after installation. We may also suspend or revoke the exemption for 183 future engines where appropriate, or void the exemption for the entire engine family. The installer is also liable. We may find the equipment manufacturer to be in violation of the tampering prohibitions at 40 CFR 1068.101( b)( 1) for the improper installation, which could subject it to substantial civil penalties. In any event, the engine manufacturer remains liable for the in use compliance of the engine as installed. For example, it has responsibility for the emission related warranty, including for the aftertreatment, and is responsible for any potential recall liability. However, if noncompliance of the in use engines stems from improper installation of the aftertreatment, then the tampering that occurred by the installer may remove recall liability. Where the engine manufacturer had complied with the regulations and the failure was solely due to the equipment manufacturer's actions, we would not be inclined to revoke or suspend the exemption or to void the exemption for the entire engine family. We may deny the exemption for future model years if the engine manufacturer does not take action to address the factors causing the nonconformity. On the other hand, if the manufacturer failed to comply, had shipped improper parts, had provided instructions that led to improperly installed parts, or had otherwise contributed to the installation of engines in an uncertified configuration, we might suspend, revoke, or void the exemption for the engine family. In this case, the engine manufacturer would be subject to substantial civil penalties.

P. Other Issues We are also making other minor changes to the compliance program. These changes are summarized in table III. Q 1 below. For more information about these changes, you should read the NPRM and Summary and Analysis of Comments for this rulemaking. We believe that these changes are straightforward and noncontroversial. 184 Table III. Q 1.   Regulatory Changes Issue Regulatory provision Applicability to alcohol fueled engines § § 1039.101, 1039.107 Prohibited controls § 1039.115 Emission related maintenance instructions § 1039.125 Engine installation instructions § 1039.130 Engines labels § § 1039.20, 1039.135, 1068.320 Engine family definition § 1039.230 Test engine selection § 1039.235 Deterioration factors § 1039.240 Engines that use noncommercial fuels § 1039.615 Use of good engineering judgment § 1068.5 Separate shipment of aftertreatment § 1068.260 Exemptions 40 CFR 1068 Subpart C Importing engines 40 CFR 1068 Subpart D Hearings 40 CFR 1068 Subpart G Q. Highway Engines We are changing the diesel engine/ vehicle labeling requirements in 40 CFR 86.007 35 to be consistent with the new pump labels. This change corrects a mistake in the proposal that would have resulted in confusion for highway vehicle operators. ( We received no comment on this issue.)

R. Changes That Affect Other Engine Categories We are making some minor changes to the regulations in 40 CFR parts 1048 and 1051 for nonroad spark ignition engines over 19 kW and recreational vehicles, respectively. We are also changing several additional provisions in 40 CFR parts 1065 and 1068, which define test procedures and compliance provisions for these same categories of engines. See the regulatory text for the specific changes. The proposed rule included most of these changes. To the extent there were comments on any of these changes, those issues are addressed elsewhere in this document or in the Summary and Analysis of Comments. 185 ! In 40 CFR 1048.125 and 40 CFR 1051.125, we are correcting the provisions related to critical emission related maintenance to allow manufacturers to do maintenance during service accumulation for durability testing, as long as their maintenance steps meet the specified criteria ensuring that in use engines will undergo those maintenance procedures.

! In 40 CFR 1068.27, we clarify that manufacturers must make available a reasonable number of production line engines so we can test or inspect them if we make such a request.

! We are changing the definition of nonroad engine to explicitly exclude aircraft engines. This is consistent with our longstanding interpretation of the Clean Air Act. Clarifying the definition this way allows us to more clearly specify the applicability of the fuel requirements to nonroad engines in this final rule.

! We are adding a provision directing equipment manufacturers to request duplicate labels from engine manufacturers and keep appropriate records if the original label is obscured in the final installation. The former approach under 40 CFR part 1068 was to require equipment manufacturers to make their own duplicate labels as needed. We intend to amend 40 CFR parts 1048 and 1051 to correspond with this change.

! As described above in section III, we are revising the criteria manufacturers would use to show that they may use the replacement engine exemption under 40 CFR 1068.240. We also clarify that we may require manufacturers to report to us how many engines they sell in given year under the replacement engine exemption.

! As described above and in the Summary and Analysis of Comments, we are adding a provision in 40 CFR 1068.260 to allow manufacturers to ship aftertreatment devices directly from the component supplier to the equipment manufacturer. This regulatory section includes several provisions to ensure that the equipment manufacturer installs the aftertreatment device in a way that brings the engine to its certified configuration.

! As described above, we are modifying the defect reporting requirements in 40 CFR 1068.501.

! While most of the changes being adopted for part 1065 will only affect diesel nonroad engines, we are also making minor changes that will also apply for SI engines. These changes, however, are generally limited to clarifications, corrections, and options. They will not affect the stringency of the standards or create new burdens for manufacturers. 186 IV. Our Program for Controlling Nonroad, Locomotive and Marine Diesel Fuel Sulfur We are finalizing today a two step sulfur standard for nonroad, locomotive and marine ( NRLM) diesel fuel that will achieve significant, cost effective sulfate PM and SO 2 emission reductions. These emission reductions will, by themselves, provide dramatic environmental and public health benefits which far outweigh the cost of meeting the standards necessary to achieve them. In addition, the final sulfur standards for nonroad diesel fuel will enable advanced high efficiency emission control technology to be applied to nonroad engines. As a result, these nonroad fuel sulfur standards, coupled with our program for more stringent emission standards for new nonroad engines and equipment, will also achieve dramatic NO X and PM emission reductions. Sulfur significantly inhibits or impairs the function of the diesel exhaust emission control devices which will generally be necessary for nonroad diesel engines to meet the emission standards finalized today. With the 15 ppm sulfur standard for nonroad diesel fuel, we have concluded that this emission control technology will be available for model year 2011 and later nonroad diesel engines to achieve the NO X and PM emission standards adopted today. The benefits of today's program also include the sulfate PM and SO 2 reductions achieved by establishing the same standard for the sulfur content of locomotive and marine diesel fuel.

The sulfur requirements established under today's program are similar to the sulfur limits established for highway diesel fuel in prior rulemakings   500 ppm in 1993 ( 55 FR 34120, August 21, 1990) and 15 ppm in 2006 ( 66 FR 5002, January 18, 2001). Beginning June 1, 2007, refiners will be required to produce NRLM diesel fuel with a maximum sulfur content of 500 ppm. Then, beginning June 1, 2010, the sulfur content will be reduced for nonroad diesel fuel to a maximum of 15 ppm. The sulfur content of locomotive and marine diesel fuel will be reduced to 15 ppm beginning June 1, 2012. The program contains certain provisions to ease refiners' transition to the lower sulfur standards and to enable the efficient distribution of all diesel fuels. These provisions include the 2012 date for locomotive and marine diesel fuel, early credits for refiners and importers and special provisions for small refiners, transmix processors, and entities in the fuel distribution system.

In general, the comments we received during the public comment period supported the proposed program. Adjustments we have made to the proposed program will make the final program even stronger, both in terms of our ability to enforce it and the environmental and public health benefits that it will achieve. In particular, today's final program contains provisions to smooth the refining industry's transition to the low sulfur fuel requirements, encourage earlier introduction of cleaner burning fuel, maintain the fuel distribution system's flexibility to fungibly distribute similar products, and provide an outlet for off specification distillate product, all while maintaining, and even enhancing, the health and environmental benefits of today's program.

The first adjustment that we made to the proposed program was to move from the " refiner baseline" approach discussed in the proposal to a " designate and track" approach. Under the proposed refiner baseline approach, any refiner or importer could choose to fungibly distribute its 187 500 ppm sulfur NRLM and highway diesel fuels without adding red dye to the NRLM at the refinery gate. However, the refiners' production would then be subject to a non highway distillate baseline, established as a percentage of its total distillate fuel production volume. While EPA preferred this approach in the proposal, we decided not to finalize it because we concluded that it would have unnecessarily constrained refiners' ability to meet market demands. It would have encouraged them to dye 500 ppm sulfur NRLM at the refinery gate, resulting in an additional grade of diesel fuel and, consequently, an added burden to the distribution system. Furthermore, we were concerned that it would have created a trend that could reduce the volume of 15 ppm sulfur highway diesel fuel and potential options to remove the market constraints could have increased the possibility for reduced volume.

In place of the refiner baseline approach, we are finalizing a designate and track approach. The final designate and track approach is a modified version of the designate and track approach discussed in the proposal. As finalized it now allows us to enforce the program through the entire distribution system. In essence, the final designate and track approach requires refiners and importers to designate the volumes of diesel fuel they produce and/ or import. Refiners/ importers will identify whether their diesel fuel is highway or NRLM and the applicable sulfur level. They may then mix and fungibly ship highway and NRLM diesel fuels that meet the same sulfur specification without dyeing their NRLM diesel fuel at the refinery gate. The designations will follow the fuel through the distribution system with limits placed on the ability of downstream parties to change the designation. These limits are designed to restrict the inappropriate sale of 500 ppm sulfur NRLM diesel fuel into the highway market , the inappropriate sale of heating oil into the NRLM market, the inappropriate sale of 500 ppm sulfur LM into the nonroad market, and to implement the downgrading restrictions that apply to 15 ppm sulfur highway diesel fuel. The designate and track approach includes record keeping and reporting requirements for all parties in the fuel distribution system, associated with tracking designated fuel volumes through each custodian in the distribution chain until the fuel exits the terminal. The program also includes enforcement and compliance assurance provisions to enable the Agency to rapidly and accurately review for discrepancies the large volume of data collected on fuel volume hand offs. The bulk of the designate and track provisions end May 31, 2010 when all highway diesel fuel must meet the 15 ppm sulfur standard. However, as discussed below, scaled back designate and track provisions continue beyond 2010 for purposes of enforcing against heating oil being used in the NRLM market and to enforce against 500 ppm LM diesel fuel being used in the nonroad market.

The second adjustment that we made to the proposed NRLM diesel fuel program was to establish a 15 ppm sulfur standard at the refinery gate for locomotive and marine ( LM) diesel fuel 89 While today's program does not establish more stringent emission standards for locomotive or marine diesel engines, the Agency intends in the near future to initiate a rulemaking to adopt new emission standards for locomotive and marine engines based on the use of high efficiency exhaust emission control technology like that required for the nonroad standards adopted in today's rule. An advanced notice of proposed rulemaking ( ANPRM) for this rule is published elsewhere in today's Federal Register [ INSERT DATE OF PUBLICATION].

188 in addition to nonroad ( NR) diesel fuel. 89 We are finalizing this standard for several reasons as discussed below.

While we are finalizing a 15 ppm sulfur standard for locomotive and marine diesel fuel, we are doing so in a manner that responds to the primary concerns raised in comments regarding the need for an outlet for off specification product. We are setting a refinery gate standard of 15 ppm sulfur beginning June 1, 2012, two years later than for nonroad diesel fuel. We are also continuing to provide an outlet for off specification product generated in the distribution system, thereby affording the opportunity to reduce reprocessing and transportation costs. We are leaving the downstream standard for LM diesel fuel at 500 ppm sulfur. In this way the LM diesel fuel pool may remain an outlet for off specification distillate product and interface/ transmix material.

In developing the provisions of the NRLM diesel fuel program adopted today, we identified several principles that we want the program to achieve. Specifically, as described in more detail below, we believe the fuel program   1) Achieves the greatest reduction in sulfate PM and SO 2 emissions from nonroad, locomotive, and marine diesel engines as early as practicable;

2) Provides for a smooth transition of the NRLM diesel fuel pool to 15 ppm sulfur;

3) Ensures that 15 ppm sulfur diesel fuel is produced and distributed widely for use in all 2011 and later model year nonroad diesel engines;

4) Ensures that the fuel program's requirements are enforceable and verifiable.

5) Enables the efficient distribution of all diesel fuels; and 6) Maintains the benefits and program integrity of the highway diesel fuel program.

The remainder of this section covers several topics. In section IV. A, we discuss the fuel that is covered by today's program, the standards that apply for refiners and importers ( for both steps of the program), and the standards that apply for downstream entities. In section IV. B, we address the various hardship provisions that we are including in today's program. In section IV. C, we describe the special provisions that apply in the State of Alaska and the Territories. Next, in 90 Category 3 marine engines frequently are designed to use residual fuels and include special fuel handling equipment to use the residual fuel.

91 For the purposes of this final rule, 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, nonroad, locomotive, or marine applications. For example, heating oil includes fuel which is suitable for use in furnaces, boilers,

stationary diesel engines and similar applications and is commonly or commercially known or sold as heating oil, fuel oil, or other similar trade names.

189 section IV. D, we describe the design of the designate and track provisions of the NRLM diesel fuel program for compliance purposes and how it differs from what we proposed. In section IV. E, we discuss the impact of today's program on state NRLM diesel fuel programs. In sections IV. F and G, we discuss the technological feasibility of the NRLM diesel fuel standards adopted today and the impacts of today's program on lubricity and other fuel properties. Finally, in section IV. H, we discuss the steps the Agency will take to streamline the refinery air permitting process for the equipment that refiners may need to install to meet today's NRLM diesel fuel standards..

Analyses supporting the design and cost of the fuel program are located in chapters 5, 7, and 8 of the RIA. Section V of this preamble discusses the details of the additional compliance and enforcement provisions affecting NRLM diesel fuel and explains various additional elements of the program.

A. Nonroad, Locomotive and Marine Diesel Fuel Quality Standards 1. What Fuel Is Covered by this Program?

The fuel covered by today's final rule is generally the same as the fuel that was covered by the proposal. We have not expanded or reduced the pool of diesel fuel that will be subject to the lower sulfur standards. However, the second step of the program now includes the same ultra low sulfur standard for locomotive and marine diesel fuel as for nonroad diesel fuel.

Specifically, the sulfur standards finalized under today's program apply to all the diesel fuel that is used in nonroad, locomotive, and marine diesel applications   fuel not already covered by the previous standards for highway diesel fuel. This includes all fuel used in nonroad, locomotive, and marine diesel engines, except for fuels heavier than a No. 2 distillate used in Category 2 and 3 marine engines90 and any fuel that is exempted for national security or other reasons. While we are not adopting sulfur standards for other distillate fuels ( such as jet fuel, heating oil, kerosene, and No. 4 fuel oil) we are adopting provisions to prevent the inappropriate use of these other fuels. Use of distillate fuels in nonroad, locomotive, or marine diesel engines will generally be prohibited unless they meet the fuel sulfur standards finalized today. 91 The program includes several provisions, as described below in section IV. D, to ensure that heating oil and other higher sulfur distillate fuels will not be used in nonroad, locomotive, or marine applications. 190 The regulated fuels under today's program include the following:

1) Any No. 1 and 2 distillate fuels used, intended for use, or made available for use in nonroad, locomotive, or marine diesel engines. Fuels under this category include those meeting the American Society for Testing and Materials ( ASTM) D 975 or D 396 specifications for grades No. 1 D and No. 2 D. Fuels meeting ASTM DMX and DMA specifications would be covered;

2) Any No. 1 distillate fuel ( e. g., kerosene) added to such No. 2 diesel fuel, e. g., to improve its cold flow properties;

3) Any other fuel used in nonroad, locomotive, or marine diesel engines or blended with diesel fuel for use in such engines. Fuels under this category include nondistillate fuels such as biodiesel and certain specialty fuel grades such as JP 5, JP 8, and F76 if used in a nonroad, locomotive, or marine diesel engine, except when a national security or research and development exemption has been approved. See V. A. 1. and 2.

On the other hand, the sulfur standards do not apply to   1) No. 1 distillate fuel used to power aircraft;

2) No. 1 or No. 2 distillate fuel used for stationary source purposes, such as to power stationary diesel engines, industrial boilers, or for heating;

3) Number 4, 5, and 6 fuels ( e. g., residual fuels or residual fuel blends, IFO Heavy Fuel Oil Grades 30 and higher), used for stationary source purpose ;

4) Any distillate fuel with a T 90 distillation point greater than 700F, 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), as well as fuels meeting ASTM specifications DMB, DMC, and RMA 10 and heavier; and 5) Any fuel for which a national security or research and development exemption has been approved or fuel that is exported from the U. S. ( see section V. A. 1. and 2).

It is useful to clarify what marine diesel fuels are covered by the sulfur standards. As with nonroad and locomotive diesel fuel, our basic approach is that the standards apply to any diesel or distillate fuel used or intended for use in marine diesel engines. However, the fuel used by marine diesel engines spans a wide variety of fuels, ranging from No. 1 and 2 diesel fuel to residual fuel and residual fuel blends used in the largest engines. It is not EPA's intention to cover all such fuels, and EPA has adopted an objective criteria to identify those marine fuels subject to regulation and those that are not. Any distillate fuel with a T 90 greater than 700F will not be subject to the 191 sulfur standards when used in Category 2 or 3 marine engines. This criteria is designed 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 MGO) is a general purpose marine distillate that is to contain no traces 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 the 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 will apply to the distillate that is used to produce the DMB, for example the DMA distillate, up to the point that it becomes DMB. DMB itself is not subject to the 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 standards will 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. DMC itself is not subject to the sulfur standards when it is used in Category 2 or 3 marine engines.

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 a purifier clarifier centrifuge system, although RMA and RMB do not require this. For the purpose of this rule, we consider all RM grade fuel as residual fuel. Residual fuel is not covered by the sulfur content standards as it is not a distillate fuel.

The distillation criteria adopted by EPA, T 90 greater than 700F, is 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.

Hence, the fuel that refiners and importers are required to produce to the more stringent sulfur standards include those No. 1 and No. 2 diesel fuels as well as similar distillate or nondistillate fuels that are intended or made available for use in NRLM diesel engines. Furthermore, 192 the sulfur standard also covers any fuel that is blended with or substituted for No. 1 or No. 2 diesel fuel for use in nonroad, locomotive, or marine diesel engines. For instance, as required under the highway diesel fuel program, in those situations where the same batch of kerosene is distributed for two purposes ( e. g., kerosene to be used for heating and to improve the cold flow of No. 2 NRLM diesel fuel), or where a batch distributed just for heating is later distributed for blending with No. 2 diesel fuel, that batch of kerosene must meet the standards adopted today for NRLM diesel fuel. The purpose of this requirement is to ensure that fuels like jet fuel, kerosene, and/ or military specification fuels meet the diesel fuel sulfur standards adopted under today's program when they are used in nonroad, locomotive, or marine diesel engines.

2. Standards and Deadlines for Refiners and Importers The NRLM diesel fuel program adopted today is a two step approach to reduce the sulfur content of NRLM diesel fuel from uncontrolled levels down to 15 ppm sulfur. While we received several comments supporting a single step down to 15 ppm sulfur, the vast majority of commenters, especially most refiners and engine manufacturers, supported the two step approach. We are finalizing the two step approach primarily because it achieves the greatest reduction in sulfate PM and SO 2 emissions from nonroad, locomotive, and marine diesel engines as early as practicable. By starting with an initial step of 500 ppm sulfur we can achieve significant emission reductions and associated health and welfare benefits from the current fleet of equipment as soon as possible. As discussed in section VI, the health related benefits of the fuel standards finalized today, even without the engine standards, amount to more than $ 28 billion in 2030, while the projected costs, after taking into account engine maintenance benefits amount to just $ 0.7 billion.

In addition, the two step approach encourages a more smooth and orderly transition by the refining industry to 15 ppm sulfur NRLM diesel fuel, by providing more time for refiners to develop the most cost effective approaches, finance them, and then implement the necessary refinery modifications.

Finally, by waiting until 2010 to drop to the 15 ppm sulfur standard for NR diesel fuel, the two step approach harmonizes with the highway diesel fuel program by delaying the implementation of the 15 ppm sulfur standard for NR diesel fuel until the end of the phase in period for 15 ppm sulfur highway diesel fuel. The 2010 date also harmonizes with the date 15 ppm nonroad fuel is needed to enable the nonroad engines standards finalized today. The second step to 15 ppm sulfur for the LM diesel fuel is set for 2012. On balance we believe that the advantages of the two step approach outweigh those of a single step down to 15 ppm.

As discussed in section IV. C, below, later deadlines for meeting the 500 and 15 ppm sulfur standards apply to refineries covered by special hardship provisions as well as transmix processors. 92 Off specification fuel here refers to 15 ppm diesel fuel that becomes contaminated such that it no longer meets the 15 ppm sulfur cap. In most cases, off specification 15 ppm sulfur diesel fuel is expected to easily meet a 500 ppm sulfur cap.

193 a. The First Step to 500 ppm Sulfur NRLM Diesel Fuel Under today's program, NRLM diesel fuel produced by refiners or imported into the U. S. by importers must meet a 500 ppm sulfur standard beginning June 1, 2007. Refiners and importers may comply by either producing such fuel at or below 500 ppm sulfur, or they may comply by obtaining credits as discussed in section IV. D below.

We believe that the adopted level of 500 ppm sulfur is appropriate for several reasons. First, the reduction to 500 ppm sulfur is significant environmentally. The 500 ppm sulfur level achieves approximately 90 percent of the sulfate PM and SO 2 benefits otherwise achievable by going all the way to 15 ppm sulfur. Second, because this first step is only to 500 ppm sulfur, it also allows for a short lead time for implementation, enabling the environmental benefits to begin accruing as soon as possible. Third, it is consistent with the current specification for highway diesel fuel, a grade which may remain for highway purposes until 2010. As such, adopting the same 500 ppm sulfur level for NRLM diesel fuel helps to avoid issues and costs associated with more grades of fuel in the distribution system during this initial step of the program.

b. The Second Step to 15 ppm Sulfur NRLM Diesel Fuel We are finalizing a second step of sulfur control down to 15 ppm sulfur for all NRLM. This second step provides additional important direct sulfate PM and SO 2 emission reductions and associated health benefits. As discussed in the RIA, the health related benefits for this second step of fuel control by itself are greater than the associated cost. Furthermore, the second step for nonroad diesel fuel is essential to enable the application of high efficiency exhaust emission control technologies to nonroad diesel engines beginning with the 2011 model year as discussed in Section II of this preamble.

In the proposal, the second step of the program only applied to nonroad diesel fuel, while locomotive and marine diesel fuel could remain at 500 ppm sulfur. We also sought comment on finalizing the 15 ppm sulfur standard for LM diesel fuel in 2010 along with nonroad diesel fuel, as well as delaying it until as late as 2012 to allow for an additional outlet for any off specification product a refinery might produce as it shifts all of its distillate production to 15 ppm sulfur. 92 We are finalizing the 15 ppm sulfur standard for locomotive and marine diesel fuel, along with nonroad diesel fuel, for several reasons. First, it will provide important health and welfare benefits from the additional sulfate PM and SO 2 emission reductions as early as possible. Second, it is technologically feasible, as it is for nonroad diesel fuel. Third, the benefits outweigh the costs and the costs do not otherwise warrant delaying this second step for locomotive and marine. As 194 shown in chapter 8 of the RIA, the costs for the increment of LM diesel fuel going from 500 to 15 ppm sulfur is just $ 0.20 billion in 2030. Fourth, it will simplify the fuel distribution system and overall design of the fuel program. For example, the addition of a marker to locomotive and marine diesel fuel after 2012 is no longer necessary to successfully enforce the program. Finally, it will allow refiners to coordinate plans to reduce the sulfur content of all of their off highway diesel fuel at one time.

Our primary reason in the NPRM for leaving locomotive and marine diesel fuel at the 500 ppm sulfur specification was to preserve an outlet for off specification product that may be created in the distribution system through contamination of 15 ppm sulfur diesel fuel with higher sulfur distillates and for off specification batches of fuel that are produced by refineries during the first couple years of the 15 ppm sulfur program ( when they are still perfecting their production processes). However, we have concluded that it is not necessary to leave the standard for all locomotive and marine diesel fuel at the 500 ppm sulfur specification to address these concerns. Setting a 15 ppm sulfur standard for refiners and importers in 2012, but maintaining a downstream standard for locomotive and marine diesel fuel at 500 ppm sulfur and allowing off specification product to continue to be sold into this market accomplishes the same goal.

In addition, controlling the sulfur content of NRLM diesel fuel from uncontrolled levels to 15 ppm is clearly a cost effective fuel control program. While the incremental cost effectiveness from 500 ppm sulfur to 15 ppm sulfur is less cost effective, the benefits of this second step outweigh the costs, the concerns about a market for off specification product have been addressed, and other factors discussed above support the reasonableness of this approach. The body of evidence strongly supports the view that controlling sulfur in NRLM fuel to 15 ppm, through a two step process, is quite reasonable in light of the emissions reductions achieved, taking costs into consideration.

Implementation of today's rule will reduce the sulfur level of almost all distillate fuel to a 15 ppm maximum sulfur level. In addition to the small refiner, hardship, and other provisions adopted in this rule, EPA is adopting several provisions that will help ensure a smooth transition to the second step of 15 ppm sulfur diesel fuel. First, refiners and importers of locomotive and marine diesel fuel, a small segment of the entire distillate pool, will be required to meet a 15 ppm sulfur standard starting June 1, 2012, two years later than for nonroad diesel fuel. Second, 500 ppm sulfur diesel fuel generated in the distribution system through contamination of 15 ppm sulfur fuel can be marketed in the nonroad, locomotive and marine market until June 2014, and in the locomotive and marine market after that date. Third, 500 ppm sulfur diesel fuel produced by transmix processors from contaminated downstream diesel fuel can also be marketed to the nonroad, locomotive and marine markets, under the same schedule. While today's rule does not contain an end date for the downstream distribution of 500 ppm sulfur locomotive and marine fuel, we will review the appropriateness of allowing this flexibility based on experience gained from implementation of the 15 ppm sulfur NRLM diesel fuel standard. We expect to conduct such an evaluation in 2011. 93 In some cases the off specification product can not be added to the adjoining products because of the applicable sulfur standards. In other cases, the off specification product, called transmix, must be re processed before it can be used.

195 When EPA adopted a 15 ppm sulfur standard for highway diesel fuel, we included several provisions to ensure a smooth transition to 15 ppm sulfur highway fuel. One provision was a temporary compliance option, with an averaging, banking and trading component. In a similar manner, the 2012 deadline for 15 ppm sulfur LM fuel, the last, relatively small segment of diesel fuel, will help ensure that the entire pool of diesel fuel is smoothly transitioned to the 15 ppm sulfur level over a short period of time. ( See section 8.3 of the summary and analysis of comments.)

EPA is also adopting two provisions aimed at smoothing the transition of the distribution system to ultra low sulfur diesel fuel. These provisions are designed to accommodate offspecification fuel generated in the distribution system, such as through the mixing that occurs at product interfaces. This off specification material generally cannot be added in any significant quantity to either of the adjoining products that produced the interface. 93 Under today's program, as discussed in more detail in section A. 3, below, off specification material that is generated in the distribution system may be distributed as 500 ppm NRLM diesel fuel from June 1, 2010 through May 31, 2014 and as 500 ppm LM from June 1, 2014 and beyond. Furthermore, as discussed in section IV. C, below, transmix processors, which are facilities that process transmix by separating it into its components ( e. g., separating gasoline from diesel fuel), are treated as a separate class of refiners. One hundred percent of the diesel fuel they produce from transmix may be sold as high sulfur NRLM until June 1, 2010, 500 ppm sulfur NRLM until June 1, 2014, and 500 ppm sulfur LM diesel fuel after June 1, 2014.

These provisions provide refiners and importers with a similar degree of flexibility for offspecification product as the proposal which held the sulfur standard for all locomotive and marine diesel fuel at 500 ppm indefinitely. If off specification product is produced, there is a temporary outlet for it. If providing the off specification product to a locomotive and marine market is difficult under this final rule, such that a refiner will choose to re process it, then the refiner would have been in the same position under the proposal. Furthermore, these provisions provide the refining industry an alternative to reprocessing the off specification material created in the distribution system, which preserves refining capacity for the production of new fuel volume, helping to maintain overall diesel fuel supply.

As with the 500 ppm sulfur standard under the first step of today's program, refiners and importers may comply with the 15 ppm sulfur standard by either producing NRLM diesel fuel containing no more than 15 ppm sulfur or by obtaining sulfur credits ( until June 1, 2014), as described below. 94 The Effect of Cetane Number Increase Due to Additives on NOX Emissions from Heavy Duty Highway Engines, Final Technical Report, February 2003, EPA420 R 03 002.

196 c. Cetane Index or Aromatics Standard Currently, in addition to containing no more than 500 ppm sulfur, highway diesel fuel must meet a minimum cetane index level of 40 or, as an alternative, contain no more than 35 volume percent aromatics. Today's program extends this cetane index/ aromatics content specification to NRLM diesel fuel.

One refining company commented that EPA should not implement the cetane index and aromatic requirements in the proposed rule since the impacts are weak or nonexistent for engines to be used in the future. In addition, the commenter stated that the vast majority of diesel fuel already meets the EPA cetane index/ aromatics specification for highway diesel fuel and that there is nothing in the RIA that either demonstrates the benefits or supports the need for such a requirement. The commenter also stated that EPA should not set a requirement simply because the ASTM standard has a cetane number specification for a particular fuel.

Low cetane levels are associated with increases in NO X and PM emissions from current nonroad diesel engines. 94 Thus, we expect that extending the cetane index specification to NRLM diesel fuel will directionally lead to a reduction in these emissions from the existing fleet. However, because the vast majority of NRLM diesel fuel already meets the specification, the NO X and PM emission reductions will be small. At the same time, the refining/ production costs associated with extending the cetane index specification to NRLM diesel fuel are negligible as current NRLM diesel fuel already meets a more stringent ASTM specification.

ASTM already recommends a cetane number specification of 40 for NRLM diesel fuel, which is, in general, more stringent than the similar 40 cetane index specification. Because of this, the vast majority of current NRLM diesel fuel already meets the EPA cetane index/ aromatics specification for highway diesel fuel. Thus, the cetane index specification will impact only a few refiners and there will be little overall cost associated with producing fuel to meet the cetane/ aromatic requirement. In fact, as discussed in chapter 5.9 of the RIA, compliance with the sulfur standards adopted today is expected to result in a small cetane increase as increases in cetane correlate with decreases in sulfur, leaving little or no further control to meet the standard.

While the emissions benefits and refining/ production costs of extending the specification to NRLM diesel fuel may be small, the extension will reduce costs by giving refiners and distributors the ability to fungibly distribute highway and NRLM diesel fuels of like sulfur content. For that small fraction of NRLM diesel fuel today that does not meet the cetane index or aromatics specification, the requirement will eliminate the need for refiners and fuel distributors to separately distribute fuels of different cetane/ aromatics specifications. Requiring NRLM diesel fuel to meet this cetane index specification thus gives fuel distributors certainty in being able to combine shipments of highway and NRLM diesel fuels. Perhaps more importantly, it can also give engine 197 manufacturers and end users the confidence they need that their fuel will meet the minimum cetane or maximum aromatics standard. Given the inherent difficulty in segregating two otherwise identical fuels, were we not to carry over these standards to NRLM, lower cetane NRLM could easily find its way into current highway engines. If not designed for this lower cetane fuel, these engines could have elevated emission levels and performance problems.

Overall, we believe that there will be a small reduction in NO X and PM emissions from current engines and the economic benefits from more efficient fuel distribution will likely exceed the cost of raising the cetane level for the small volume of NRLM diesel fuel that does not already meet the cetane index or aromatics content specification.

3. Standards, Deadlines, and Flexibilities for Fuel Distributors The first years of the NRLM diesel fuel program include various flexibilities to smooth the refining and distribution industry's transition to 15 ppm sulfur fuel. These flexibilities include a 2012 deadline for production of 15 ppm sulfur locomotive and marine diesel fuel, credit provisions, small refiner provisions, hardship provisions, and downstream off specification fuel provisions. As a result, during the transition years, we are not able to simply enforce the sulfur standards downstream based on a single sulfur level of the new standard. From June 1, 2007 through May 31, 2010, both 500 ppm sulfur diesel fuel and high sulfur diesel fuel can be produced, distributed, and sold for use in NRLM diesel engines. From June 1, 2010 through May 31, 2014, both 15 ppm sulfur and 500 ppm sulfur diesel fuel can be produced, distributed, and sold for use in NRLM diesel engines. Beyond June 1, 2014, both 15 ppm sulfur and 500 ppm sulfur diesel fuel that is produced from fuel product downgrade and transmix in the distribution system can be distributed and sold for use in locomotive and marine diesel engines. As these transition flexibilities expire, however, we are able to streamline our downstream enforcement provisions.

a. Standards and Deadlines from June 1, 2007 through May 31, 2010 As soon as the program begins on June 1, 2007, all NRLM diesel fuel must be designated or classified and must comply with the designation or classification stated on its product transfer document ( PTD), pump label, or other documentation. In other words, if the fuel is intended for sale as NRLM diesel fuel and is labeled as 500 ppm sulfur diesel fuel, then beginning June 1, 2007, it must comply with the 500 ppm sulfur standard. Similarly, if fuel is intended for sale as NRLM diesel fuel and is labeled as 15 ppm sulfur, then beginning June 1, 2010 ( or June 1, 2009 under the early credit provisions), it must comply with the 15 ppm sulfur standard.

Beginning June 1, 2010, all NRLM diesel fuel produced or imported is required to meet at least a 500 ppm sulfur limit. In order to allow for a smooth and orderly transition to 500 ppm sulfur NRLM diesel fuel in the distribution system, and allow any remaining high sulfur fuel to be sold, we are providing parties downstream of refineries time to turnover their NRLM tanks to 500 ppm sulfur diesel fuel. At the terminal level, all NRLM diesel fuel must meet at least the 500 ppm sulfur standard beginning August 1, 2010. At any wholesale purchaser consumer facilities and any 95 A bulk plant is a secondary distributor of refined petroleum products. They typically receive fuel from terminals and distribute fuel in bulk by truck to end users. Consequently, while for highway fuel, bulk plants often serve the role of a fuel distributor, delivering fuel to retail stations, for nonroad fuel,

they often serve the role of the retailer, delivering fuel directly to the end user.

96 By December 1, 2010, all NRLM diesel fuel, including fuel in end user tanks, must comply with at least the 500 ppm sulfur standard.

97 By December 1, 2014, all NR diesel fuel, including fuel in end user tanks, must comply with at least the 15 ppm sulfur standard.

198 retail stations carrying NRLM diesel fuel, including bulk plants that serve as retailers, all diesel fuel must meet the 500 ppm sulfur standard beginning October 1, 2010.95 Thus, beginning October 1, 2010, high sulfur ( greater than 500 ppm sulfur) NRLM diesel fuel may no longer legally exist in the fuel distribution system. 96 Although we expect that most NRLM diesel fuel in the distribution system will be subject to the 500 ppm sulfur standard during the period from June 1, 2007 through May 31, 2010, based on its designation or classification, some of the 500 ppm sulfur NRLM diesel fuel may be mixed with high sulfur NRLM diesel fuel. Since the blended product will likely no longer meet the 500 ppm sulfur standard, it must be re designated and labeled as high sulfur NRLM diesel fuel. Similarly, fuel that results from blending 500 ppm sulfur NRLM diesel fuel and heating oil must be re designated and labeled as heating oil.

b. Standards and Deadlines from June 1, 2010 through May 31, 2014 Beginning June 1, 2010, most NR diesel fuel will be required to meet the 15 ppm sulfur standard, and beginning June 1, 2012, most LM diesel fuel will be required to meet the 15 ppm sulfur standard. However, some production of 500 ppm sulfur NRLM diesel fuel may continue through May 31, 2014. As with the delayed downstream compliance dates for the 500 ppm sulfur standard under the first step of today's program, parties downstream of refineries will be allowed additional time to turnover their tanks to 15 ppm sulfur NR diesel fuel. Specifically, at the terminal level, all NR diesel fuel will be required to meet the 15 ppm sulfur standard beginning August 1, 2014. At any wholesale purchaser consumer facilities and retail stations carrying all NR diesel fuel, including bulk plants serving as retailers, NR diesel fuel must meet the 15 ppm sulfur standard beginning October 1, 2014. Thus, beginning October 1, 2014, 500 ppm sulfur NR diesel fuel may no longer legally exist in the fuel distribution system. 97 Like the first step to 500 ppm sulfur, prior to these 2014 downstream deadlines all NRLM diesel fuel would still be designated or classified with respect to sulfur level and required to meet the designation or classification stated on its PTD, pump label, or other documentation. 98 Segregated interface refers to the mixing zone between two batches of fuel that abut each other in the pipeline, where the volume in the mixing zone can not be cut into either of the fuel batches, but can still meet another fuel product specification without reprocessing, provided that it is drawn off of the pipeline separately and segregated.

199 c. Sulfur Standard for NRLM Diesel Fuel Beginning June 1, 2014 As discussed above, all refiners will be required to produce and importers will be required to import only 15 ppm sulfur NRLM diesel fuel by June 1, 2014. However, we will continue to allow 500 ppm sulfur diesel fuel to be sold into the LM diesel fuel markets beyond 2014. The LM diesel fuel markets are expected to provide a valuable outlet for higher sulfur distillate fuel produced in the distribution system, at least through the early years of the program. Consequently, beyond 2014, both 15 ppm sulfur and 500 ppm sulfur LM diesel fuel may continue to exist in the distribution system, and each fuel must comply with the designation stated on its PTD, pump label, or other documentation.

d. Interface/ Transmix Flexibility for Fuel Distributors As described above, today's program provides flexibility to the distribution system by allowing interface/ transmix material generated within the distribution system to be sold into the NRLM diesel fuel markets. Specifically, any fuel interface/ transmix generated in the fuel distribution system may be sold as 1) high sulfur NRLM diesel fuel or heating oil from June 1, 2007 through May 31, 2010; 2) 500 ppm sulfur NRLM diesel fuel or heating oil from June 1, 2010 through May 31, 2014; or 3) 500 ppm sulfur LM diesel fuel or heating oil after June 1, 2014.

Hence, beginning June 1, 2014, interface/ transmix material exceeding 15 ppm sulfur may only be sold into the LM diesel fuel or heating oil markets. As discussed above, the downstream standard for LM diesel fuel will be 500 ppm sulfur. However, heating oil may not be shifted into the LM markets. Parties in the distribution system receiving diesel fuel with a sulfur content greater than 15 ppm sulfur must maintain records and report to EPA information demonstrating that they did not shift heating oil into the LM markets, as discussed in section IV. D.

The generation of greater than 15 ppm sulfur distillate fuel from pipeline interface/ transmix cannot be avoided due to the physical realities of a multi product fuel distribution system. Such fuel first appears at the terminus of the pipeline distribution system; at terminals due to the generation of segregated interface, or at transmix processing facilities. 98 In areas where there is a strong demand for heating oil, much of this pipeline generated off specification fuel can be sold into the heating oil market, just as it is today. However, in many areas of the country the demand 99 As mentioned above, the Agency intends in the near future to initiate a rulemaking to adopt new emission standards for locomotive and marine engines. An advanced notice of proposed rulemaking ( ANPRM) for this rule is published elsewhere in today's Federal Register [ INSERT DATE OF PUBLICATION]. While we are not finalizing a sunset date for this downgrade provision in today's final rule, we are evaluating the appropriateness of establishing a sunset date on this provision in the context of the subsequent engine standards rule. We also intend to review the appropriateness of any sunset provision in light of experience gained from implementation of the 15 ppm sulfur NRLM diesel fuel standard. We would conduct such an evaluation in 2011.

100 Although, as mentioned above, the Agency intends in the near future to initiate a rulemaking to adopt new emission standards for locomotive and marine engines. An advanced notice of proposed rulemaking ( ANPRM) for this rule is published elsewhere in today's Federal Register [ INSERT 200 for heating oil would not be sufficient to accommodate distillate fuel exceeding 15 ppm sulfur that is generated in the pipeline. Therefore, such fuel would need to be returned to a refinery for reprocessing to meet a 15 ppm sulfur standard. In addition, some refiners may be reluctant to accept such material for reprocessing given the impact this would have on their refinery operations. More importantly, because such material appears at the terminus of the pipeline distribution system and often where no access to pipeline or marine shipment is available, it would have to be shipped back to a refinery by truck, or rail if available, at additional cost.

As discussed in chapter 7 of the RIA, fuel generated from such interface/ transmix will typically meet a 500 ppm sulfur standard. Therefore, allowing the continued use of such 500 ppm sulfur diesel fuel in locomotive and marine engines could reduce the burden on the fuel distribution industry by lowering costs. Our cost estimates of marketing such fuel include additional shipping charges for situations where there is not a local locomotive or marine market ( see section VI of this preamble). 99 Allowing the continued sale of 500 ppm sulfur diesel fuel into the locomotive and marine markets without requiring it to be reprocessed will also help preserve refining capacity for the overall diesel fuel production. Therefore, this provision also serves to address lingering concerns expressed by some refiners regarding the impacts of the 15 ppm sulfur standard for highway and NRLM diesel fuel on overall diesel fuel supply.

Downstream generated 500 ppm sulfur diesel fuel may only be used in nonroad engines until December 1, 2014, due to concerns regarding enforceability and the increased potential for misfueling of nonroad equipment ( equipment with advanced emission controls). Beginning with the 2011 model year, such equipment will require the use of 15 ppm sulfur diesel fuel to operate properly. The same concerns do not exist regarding the continued use of such 500 ppm sulfur diesel fuel in locomotive and marine engines for three reasons. First, locomotive and marine engines are not currently required to be equipped with the sulfur sensitive emissions aftertreatment that will start being used on nonroad equipment in 2011.100 Second, locomotive and marine DATE OF PUBLICATION].

201 markets are centrally fueled to a much greater extent than nonroad markets, and thus enforceability is not as significant of an issue. Finally, we believe the program's designate and track provisions discussed below will be sufficient to enforce the limits on production and use of 500 ppm sulfur diesel fuel.

It is difficult to project exactly how much of this downstream generated downgraded fuel could be segregated and shipped to LM markets. However, it is clear that this provision represents an important flexibility for the distribution system. In fact, it provides virtually the same flexibility as provided by the proposal to handle off specification product. In both cases, use of the flexibility is dependent on the ability to segregate the interface and transport it to available LM markets. While today's rule does not contain an end date for the downstream distribution of 500 ppm sulfur locomotive and marine fuel, we will review the appropriateness of allowing this flexibility based on experience gained from implementation of the 15 ppm sulfur NRLM diesel fuel standard. We expect to conduct such an evaluation in 2011.

A summary of the NRLM sulfur levels and final deadlines for refiners, importers, terminals, and other downstream parties is shown in table IV 1 below.

Table IV 1.   500 ppm Sulfur and 15 ppm Sulfur NRLM Final Compliance Dates Refiners and Importers Credit,

Small Refiner Terminals Bulk Plants,

Wholesale Purchaser

Consumers and Retail Outlets Other Locations 500 ppm NRLM June 1, 2007 June 1, 2010 August 1, 2010 October 1, 2010 December 1, 2010 15 ppm NR June 1, 2010 June 1, 2014 August 1, 2014 October 1, 2014 December 1, 2014 15 ppm LM June 1, 2012 June 1, 2014

4. Diesel Sulfur Credit Banking and Trading Provisions Today's final program includes provisions for refiners and importers to generate early credits for the production of 500 ppm sulfur NRLM diesel fuel prior to June 1, 2007 and for the production of 15 ppm sulfur NRLM diesel fuel prior to June 1, 2010. These credit banking and trading provisions will provide implementation flexibility by facilitating a somewhat smoother transition at the start of the program in 2007, with some refineries/ import facilities complying early, others on time, and others a little later. These credit banking and trading provisions may 101 We are not adopting specific provisions to generate credits for early production of LM diesel fuel prior to June 1, 2012. The difference in start date between 2010 and 2012 already provides additional flexibility to producers of LM diesel fuel, and setting separate credit generation periods for NR and LM diesel fuel would unnecessarily complicate the compliance assurance provisions.

202 also facilitate some of the environmental benefits of the program being achieved earlier than otherwise required, and may increase the overall environmental benefits of the program. As discussed below, overall benefits will accrue if refiners produce 500 ppm earlier in lieu of high sulfur NRLM and then bank those credits to continue producing 500 ppm sulfur NR diesel fuel in 2010 or 500 ppm LM diesel fuel in 2012 in lieu of 15 ppm. 101 Specifically, credits generated under the NRLM diesel fuel program may be banked and later used to delay compliance with either the 500 ppm sulfur NRLM standard that begins in 2007, the 15 ppm sulfur NR standard that begins in 2010, or the 15 ppm sulfur LM standard that begins in 2012. Credits may also be traded within companies such that credits generated at one refinery/ import facility in a given company may be traded to another refinery/ import facility within that same company. In addition, refiners or importers may purchase credits generated by other refiners or importers to meet the program requirements. Finally, and perhaps most importantly, individual refineries/ import facilities may be able to use credits to permit the continued sale of otherwise off specification product at the beginning of the program's second step when they are still adjusting their operations for consistent production/ importation of NRLM diesel fuel that is subject to the new sulfur standards.

a. Credit Generation from June 1, 2006 through May 31, 2007 Credits may be generated under today's program to allow for the production of high sulfur NRLM diesel fuel after June 1, 2007. A refiner or importer may obtain credit for early production/ importation of fuel meeting the 500 ppm sulfur standard that they designate as NRLM diesel fuel, from June 1, 2006 through May 31, 2007. In addition, small refiners may also generate credits for the early production of 500 ppm sulfur diesel fuel that they designate as NRLM diesel fuel. As described in section IV. B, below, small refiners are not required to produce any 500 ppm sulfur NRLM diesel fuel until June 1, 2010. Those small refiners who choose to comply with the 500 ppm sulfur standard earlier than required, that is before June 1, 2010, may generate credits for any volume of diesel fuel they produce from June 1, 2007 through May 31, 2010 and designate as NRLM. Credits for the early production of 500 ppm sulfur fuel ( including by small refineries) are fungible, may be banked for future use, or traded to any other refiner or importer nationwide. In order to ensure that these early credits are real and not merely shifts from the highway market, both early credits and small refinery credits will be subject to a limit determined by the following formula:

Credit HS = ( Vol 15 + Vol 500)  Vol hwy 102 For the purposes of this rule, credits are labeled on the basis of their use in order to follow the convention used in the highway diesel rule. A high sulfur credit is generated through the production of one gallon of 500 ppm sulfur NRLM diesel fuel and allows the production of one gallon of high sulfur NRLM diesel fuel.

203 Credit HS Limit = ( Vol 15 + Vol 500)  Base hwy Where: Credit 500 Limit = Limit for 500 ppm NRLM credits Credit HS = High Sulfur NRLM credits102 Vol 15 = Volume of 15 ppm sulfur diesel fuel produced and designated as highway or NRLM Vol 500 = Volume of 500 ppm sulfur diesel fuel produced and designated as highway or NRLM Base hwy = 2003 2005 highway diesel fuel baseline volume Vol hwy = Volume of diesel fuel produced and designated as highway If the excess production is 15 ppm sulfur diesel fuel instead of 500 ppm sulfur diesel fuel, then the refiner will have the option of generating 500 ppm sulfur credits under the highway diesel fuel program. Credit may not be earned under both programs for a given volume of 500 ppm sulfur or 15 ppm sulfur diesel fuel.

b. Credit Generation from June 1, 2009 through May 31, 2010 In addition to allowing credit for the early production of 500 ppm sulfur NRLM diesel fuel, today's program also allows credit for the early production of 15 ppm sulfur NRLM diesel fuel. Specifically, refiners and importers may obtain credit for early production/ importation of fuel meeting the 15 ppm sulfur standard and that they designate as NRLM from June 1, 2009 through May 31, 2010. In addition, small refiners, which are not required to produce any 15 ppm sulfur NRLM diesel fuel until June 1, 2014, may also generate credits for the early production of any volume of 15 ppm sulfur diesel fuel that they designate as NRLM from June 1, 2010 through December 31, 2013. Again, these early credits are fungible, may be banked for future use, or traded to any other refinery or importer nationwide. However, in order to ensure these credits are real and not merely shifts from the highway market, credits for the early production or importation of 15 ppm sulfur fuel will be subject to a limit determined by the following formula:

Credit 500 = Vol 15  Vol 15hwy Credit 500 Limit = Vol 15  Base 15hwy Where: Credit 500 Limit = Limit for 500 ppm sulfur NRLM credits 204 Vol 15 = Volume of 15 ppm sulfur diesel fuel produced and designated as highway or NRLM Base 15hwy = 2006 2008 15 ppm sulfur highway diesel fuel baseline volume Hence, to generate credits, a refiner or importer's highway diesel fuel volume for the compliance period must be greater than or equal to the baseline volume. That is, a refiner or importer may only generate credits for " new" volumes of 15 ppm sulfur diesel fuel that it produces. If their highway diesel fuel volume were to drop below the baseline volume, that would likely indicate a shift in production from the highway market to generate 15 ppm sulfur NRLM diesel fuel credits.

c. Credit Use There are two ways in which refiners or importers may use high sulfur NRLM credits under the NRLM diesel fuel program. First, credits may be used during the period from June 1, 2007 through May 31, 2010 to continue to produce high sulfur NRLM diesel fuel. Any high sulfur NRLM diesel fuel that is produced, however, must be designated and labeled as such for tracking purposes throughout the distribution system and be dyed red at the refinery gate.

The second way in which refiners and importer could use high sulfur NRLM credits is by banking them for use during the June 1, 2010 through May 31, 2014 period. Credits used in this manner would provide a net environmental benefit, since they were generated by reducing the sulfur level from approximately 3000 ppm to less than 500 ppm ( a net change of 2500 ppm sulfur), but when used only allow the sulfur level to increase from 15 ppm to 500 ppm ( a net change of less than 500 ppm sulfur). 500 ppm sulfur credits generated from the early production of 15 ppm sulfur NRLM diesel fuel may also be used from June 1, 2010 through May 31, 2014. Thus, during this period, when the 15 ppm sulfur standard is in effect for nonroad diesel fuel, refiners/ importers may use either high sulfur credits or 500 ppm sulfur credits to continue producing/ importing 500 ppm sulfur nonroad diesel fuel. Any 500 ppm sulfur diesel fuel that is produced, however, must be appropriately designated and labeled for tracking purposes throughout the distribution system, and cannot be sold for use in 2011 and later model year nonroad engines. From June 1, 2012, when the 15 ppm sulfur standard for LM diesel fuel becomes effective, through May 31, 2014, refiners/ importers may use either high sulfur credits or 500 ppm sulfur credits to continue producing/ importing 500 ppm sulfur NRLM diesel fuel. All credits expire after May 31, 2014. Hence, beginning June 1, 2014, all NRLM diesel fuel produced by refiners or imported in the U. S. will be subject to the 15 ppm sulfur standard, except LM diesel fuel produced by transmix processors from transmix can continue to meet the 500 ppm sulfur limit.

We proposed that all credits would expire May 31, 2012, however we are finalizing an expiration date of May 31, 2014 based on the comments we received. The additional two years that we are now allowing for credit use 1) will provide a longer period for refiners to sell off 205 specification fuel instead of having to reprocess it, 2) is an environmentally neutral change to the overall program, and 3) is now consistent with the end date for small refiner flexibility.

While credits can be generated and traded nationwide, they are restricted from use in certain parts of the country under the provisions of this final rule. As discussed in section IV. D, we are avoiding the burden to terminals of adding marker to heating oil in those areas of the country where demand for heating oil is expected to continue to remain high after today's final rule. The NRLM diesel fuel sulfur standards will be enforced based on sulfur level in these areas, not through the refinery designation and marker provisions. Consequently, in the area defined in section IV. D comprising most of the Northeast and Mid Atlantic region of the country, as well as in the State of Alaska, many of the fuel program's flexibilities, including refiners' ability to use credits, are not allowed. Refiners and importers may not use credits to produce or import diesel fuel with a sulfur content greater than 500 ppm beginning June 1, 2007 or 15 ppm beginning June 1, 2010, for sale or distribution in this Northeast/ Mid Atlantic area or the State of Alaska. However, credits generated in these areas can be sold to other refiners and/ or importers for use outside these areas.

B. Hardship Relief Provisions for Qualifying Refiners As in our gasoline sulfur and highway diesel fuel sulfur programs, today's program contains the following hardship relief provisions to provide regulatory flexibility to challenged refiners: ° Small refiner hardship for qualifying small refiners; ° General hardship for any refiner experiencing either  1) extreme unforeseen circumstances such as natural disaster or acts of God; or 2) extreme hardship circumstances such as financial or technical hardship.

Similar provisions have proved invaluable for some refiners in the recent implementation of the gasoline sulfur standards, as well as for refiners' planning for the highway diesel standards. The details of these provisions are discussed below.

1. Hardship Provisions for Qualifying Small Refiners As in previous fuel rulemakings, our justification for including provisions specific to small refiners is that, in general, small refiners generally have a degree of hardship in complying with the standards compared to other refiners. In the NPRM, we proposed flexibilities/ transition provisions, or " hardship provisions" ( these terms are equivalent), for small refiners. We are adopting the provisions that were proposed for small refiners virtually unchanged, and including similar provisions for the treatment of locomotive and marine fuel.

a. Regulatory Process and Justification for Small Refiner Relief In developing our NRLM diesel fuel sulfur program, we evaluated the environmental need as well as the technical and financial ability of refiners to meet the 500 and 15 ppm sulfur standards 206 as expeditiously as possible. We believe it is feasible and necessary for the vast majority of the program to be implemented in the established time frame to achieve the air quality benefits as soon as possible. Based on information available from small refiners and others, we believe that refiners classified as small generally face unique circumstances with regard to compliance with environmental programs, compared to larger refiners. Consequently, as discussed below, we are finalizing several special provisions for refiners that qualify as " small refiners" to reduce the disproportionate burden that today's program will have on them.

Small refiners generally lack the resources that are available to large refining companies, including those large companies that own small capacity refineries, to raise capital for investing in desulfurization equipment, such as shifting of internal funds, securing of financing, or selling of assets. Small refiners are also likely to have more difficulty in competing for engineering and construction resources needed for the installation of the desulfurization equipment which will likely be required to meet the standards finalized in this action.

Because small refiners are more likely to face adverse circumstances with regard to regulatory compliance than larger refiners, we are finalizing interim provisions that will provide additional time for refineries owned by small refiners to meet the sulfur standards. This approach will allow the overall program to begin as early as possible, avoiding the need for delay in order to address the ability of small refiners to comply.

i. Regulatory Flexibility Process for Small Refiners As explained in the discussion of our compliance with the Regulatory Flexibility Act ( RFA) in section X. C of this preamble, and in the Final Regulatory Flexibility Analysis in chapter 11 of the RIA, we considered the impacts of today's regulations on small businesses. Most of our analysis of small business impacts was performed as part of the Small Business Advocacy Review ( SBAR) Panel convened by EPA, pursuant to the RFA as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 ( SBREFA). The Panel's final report is available in the rulemaking public docket ( Docket A 2001 28, Document No. II A 172).

For the SBREFA process, EPA conducted outreach, fact finding, and analysis of the potential impacts of the proposed nonroad regulations on small businesses. Based on these discussions and analyses by all panel members, the Panel concluded that small refiners in general would likely experience a significant and disproportionate financial burden in reaching the objectives of the proposed nonroad diesel fuel sulfur program.

One indication of the disproportionate burden on small refiners is the relatively high cost per gallon projected for producing NRLM diesel fuel under today's program. Refinery modeling of refineries owned by refiners likely to qualify as small refiners, and of refineries owned by other non small refiners, indicates significantly higher refining costs for small refiners. Specifically, we project that without special provisions, refining costs for small refiners on average would be about 207 two cents per gallon higher than for other refiners in the same PADD to meet the 15 ppm sulfur standard.

The Panel also noted that the burden imposed on small refiners by the proposed sulfur standards may vary from refiner to refiner. Thus, the Panel recommended more than one type of burden mitigation so that most, if not all, small refiners could benefit. We considered the issues raised during the SBREFA process, and discussed them in the NPRM, and have decided to finalize each of the provisions recommended by the Panel. A discussion of the comments we received regarding small refiners and terminal operators, and our responses to those comments, can be found in section X. C of this preamble, and also the Summary and Analysis of Comments.

ii. Rationale for Small Refiner Regulatory Flexibility Provisions Generally, we structured the small refiner provisions to reduce the burden on small refiners while expeditiously achieving air quality benefits and ensuring that the availability of 15 ppm sulfur NR diesel fuel will coincide with the introduction of 2011 model year nonroad diesel engines and equipment. We believe the special provisions for small refiners are necessary and appropriate for several reasons.

First, the compliance schedule for today's program, combined with special relief provisions for small refiners, will achieve the air quality benefits of the program as soon as possible, while helping to ensure that small refiners will have adequate time to raise capital for new or upgraded fuel desulfurization equipment. Most small refiners have limited additional sources of income beyond refinery earnings for financing and typically do not have the financial backing that larger and generally more integrated companies have. Therefore, additional time to accumulate capital internally or to secure capital financing from lenders can be central to their ability to comply.

Second, we recognize that while the sulfur levels in today's program can be achieved using conventional refining technologies, new technologies are also being developed that may reduce the capital and/ or operating costs of sulfur removal. Thus, we believe that providing small refiners some additional time to allow for new technologies to be proven out by other refiners will have the added benefit of reducing the risks faced by small refiners. The added time will likely enable small refiners to benefit from the lower costs of these improvements in desulfurization technology ( e. g., better catalyst technology or lower pressure hydrotreater technology). This will help to offset the disproportionate financial burden that may be imposed upon small refiners.

Finally, providing small refiners more time to comply will spread out the availability of engineering and construction resources. Most refiners will need to install additional processing equipment to meet the NRLM diesel fuel sulfur requirements. We anticipate that there may be significant competition for technology services, engineering resources, and construction management and labor. In addition, as has been the experience in gasoline sulfur control, vendors will be more likely to contract their services with the larger refiners first, as their projects will offer larger profits for the vendors. Temporarily delaying compliance for small refiners will spread out 208 the demand for these resources and may help reduce cost premiums for everyone caused by limited engineering and construction supply.

We discuss below the provisions that we are finalizing to minimize the degree of hardship imposed upon small refiners by this program. With these provisions we are confident in going forward with the 500 ppm sulfur standard for NRLM diesel fuel in 2007 and the 15 ppm sulfur standard for NR diesel fuel in 2010 and for LM diesel fuel in 2012, for the rest of the industry. The provisions for small refiners will allow these refiners to continue to produce higher sulfur NRLM fuel until June 1, 2010, and similarly, will allow for the production of 500 ppm nonroad NRLM fuel until June 1, 2014. Without small refiner relief, we would have to consider delaying the overall program until the burden of the program on many small refiners was diminished, which would delay the air quality benefits of the overall program. By providing temporary relief to small refiners, we are able to adopt a program that expeditiously reduces NRLM diesel fuel sulfur levels in a feasible manner for the industry as a whole.

The four year leadtime from which begins in 2010 for small refiners for locomotive and marine diesel fuel is identical to the relief that was supported by small refiners for nonroad diesel fuel. We believe that this relief is necessary and adequate to reduce the burden on small entities while still achieving our air quality goals. Small refineries vary considerably in their markets for NRLM diesel fuels. Consequently, the proposal to control nonroad diesel fuel to 15 ppm sulfur impacted small refiners with significant nonroad market shares, but left those with significant locomotive and marine market shares relatively untouched. With control of all NRLM diesel fuel to 15 ppm sulfur in this final rule, all small refiners of NRLM diesel fuel will face similar challenges, and therefore the same four year lead time from 2010 proposed for those small refiners impacted by nonroad fuel control alone is also appropriate when the standards are expanded to all NRLM. In essence, while more small refiners face the challenge of desulfurizing all of their diesel fuel to the 15 ppm sulfur standard, the magnitude of this challenge is not any greater. Furthermore, providing additional relief ( beyond 2014) to small refiners would undermine the program by further delaying air quality benefits. The 2014 deadline for all small refiner diesel fuel to 15 ppm sulfur will also simplify the fuel program and it will allow small refiners the ability to coordinate their plans to reduce the sulfur content of all off highway diesel fuel at the same time.