[Federal Register: November 22, 2005 (Volume 70, Number 224)]
[Rules and Regulations]
[Page 70498-70513]
[DOCID:fr22no05-11]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[OAR-2005-0153; FRL-7996-9]
RIN 2060-AJ71

Control of Air Pollution From New Motor Vehicles; Revisions to
Motor Vehicle Diesel Fuel Sulfur Transition Provisions; and Technical
Amendments to the Highway Diesel, Nonroad Diesel, and Tier 2 Gasoline
Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: The highway diesel fuel sulfur program, finalized in 2001, is
resulting in the nationwide transition in 2006 of most diesel fuel from
low-sulfur diesel (LSD) to ultra-low sulfur diesel (ULSD). Some in the
diesel fuel production and distribution industries indicated that they
may be unable to complete the transition to ULSD by the current
deadlines at the very furthest reaches of the distribution system. In
response, today's action makes limited changes to the transition
provisions for entities in the highway diesel distribution system.
These changes finely balance the concerns of the fuel industry and the
critical need for ULSD to be available for 2007 diesel vehicles and
engines. The impacts of the recent hurricanes along the Gulf Coast of
the U.S. are not a contributing factor in taking today's action, and
there is no change in the June 1, 2006 start date for refiners to be
producing ULSD (15 ppm sulfur).
    In today's action, we extend the ULSD implementation dates for
terminals and retail outlets by 45 days. Thus, terminals will have
until September 1, 2006 (vs. July 15) and retailers will have until
October 15, 2006 (vs. September 1) to complete their transitions to
ULSD. We also provide that downstream of the refinery fuel with a
sulfur content slightly higher than 15 ppm may temporarily be sold as
ULSD. In addition, we extend the beginning of the restriction on how
much ULSD can be downgraded to higher sulfur fuel by 15 days, to
October 15, 2006 to be consistent with the end of the new transition
dates. The rule also includes corrections to the recordkeeping and
reporting requirements under the highway diesel program and also
includes several minor amendments to the highway diesel sulfur, nonroad
diesel sulfur, and gasoline sulfur programs to correct errors or
omissions in the regulations.

DATES: This direct final rule is effective on January 6, 2006 without
further notice, unless we receive adverse comments by December 22, 2005
or receive a request for a public hearing by December 7, 2005.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. OAR-2005-0153. All documents in the docket are listed in the
EDOCKET index at http://www.epa.gov/edocket. Although listed in the

index, some information is not publicly available, i.e., Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available either electronically in EDOCKET or in hard copy at the Air
Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW.,
Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30
p.m., Monday through Friday, excluding legal holidays. The telephone
number for the Public Reading Room is<PHONE_NUMBER>, and the telephone
number for the Air Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Tad Wysor, Assessment and Standards
Division, U.S. EPA, National Vehicle and Fuels Emission Laboratory,
2000 Traverwood, Ann Arbor, MI 48105; telephone<PHONE_NUMBER>, fax
(734) 214-4816, e-mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: We do not expect to hold a public hearing,
however, if we receive such request we will publish information related
to the timing and location of the hearing and the timing of a new
deadline for public comments. If we receive adverse comment or a
request for a hearing, we will withdraw the amendment, paragraph or
section of the direct final rule receiving such comment or hearing
request, and such withdrawn amendment, paragraph or section will

not take effect. Any distinct amendment, paragraph, or section of
today's rulemaking for which we do not receive adverse comment or
request for hearing will become effective on the date set out in the
``DATES'' section of today's preamble.

Does This Action Apply to Me?

    This action will affect you if you produce or distribute motor
vehicle diesel fuel or gasoline. The table below gives an example of
entities that may have to comply with the regulations. However, since
this is only an example, you should carefully examine these and other
existing regulations in 40 CFR part 80. If you have any questions,
please call the person listed in the FOR FURTHER INFORMATION CONTACT
section above.

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                                  NAICS codes
            Category                   a        SIC codes b                          Examples of potentially regulated industries
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Industry.......................        324110          2911  Petroleum refiners.
Industry.......................        422710          5171  Diesel and gasoline fuel marketers and distributors.
                                       422720          5172
Industry.......................        484220          4212  Diesel and gasoline fuel carriers.
                                       484230         4213
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Notes:
a North American Industry Classification System (NAICS).
b Standard Industrial Classification (SIC) system code.

How Can I Obtain Copies of This Document and Other Related Information?

    Docket: EPA has established an official public docket for this
action under Docket ID No. OAR-2500-0153 at http://www.epa.gov/edocket.

The official public docket consists of the documents specifically
referenced in this action, any public comments received, and other
information related to this action. Although a part of the official
docket, the public docket does not include Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. The official public docket is the collection of materials
that is available for public viewing at the Air Docket in the EPA
Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave.,
NW., Washington, DC. The EPA Docket Center Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Reading Room is<PHONE_NUMBER>,
and the telephone number for the Air Docket is<PHONE_NUMBER>.
    Electronic Access: You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/.

    An electronic version of the public docket is available through
EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.epa.gov/edocket/ to view public comments,

access the index listing of the contents of the official public docket,
and to access those documents in the public docket that are available
electronically. Although not all docket materials may be available
electronically, you may still access any of the publicly available
docket materials through the docket facility identified above. Once in
the system, select ``search,'' then key in the appropriate docket
identification number.

I. Amendments to the Highway ULSD Transition Provisions

    In 2001, EPA published the final rule for the Heavy-Duty Engine and
Diesel Fuel program. 66 FR 5002 (January 18, 2001). This rule,
developed through extensive interaction with the diesel engine
industry, refiners producing diesel fuel, diesel fuel distributors,
states, and non-governmental organizations, will result in very large
reductions in emissions from on-road trucks and buses. The health
benefits of the program will far exceed the economic costs. All major
stakeholders are supportive of the overall program.
    Key to the success of the program will be the near-total removal of
sulfur from all diesel fuel used in highway diesel engines. Ultra-Low
Sulfur Diesel (ULSD) fuel is a critical complement to the stringent new
emission standards coming into effect for these engines during the same
time period. These engine emission standards will require diesel engine
manufacturers to introduce new emission control systems which will rely
on the exclusive use of ULSD to maintain operability and effectiveness.
    The highway diesel fuel sulfur program will result in the
nationwide production and distribution of ULSD fuel, diesel fuel that
is subject to a sulfur level of 15 parts per million (ppm) or less.
This fuel will replace current Low Sulfur Diesel (LSD) fuel used in
highway vehicles, which is subject to a 500 ppm sulfur standard.
Together, the stringent engine emission standards and the stringent
diesel fuel sulfur standards combine to represent a major step toward
reducing the major public health concerns associated with emissions
from on-highway diesel trucks and buses.\1\
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    \1\ The highway diesel sulfur program will be followed by the
nonroad diesel sulfur program, issued in 2004. 69 FR 38958 (June 29,
2004). The nonroad program will require LSD to be produced for use
in nonroad diesel engines beginning in 2007. ULSD will be produced
for use in nonroad diesel engines beginning in 2000, during the same
time period when new stringent emissions standards will go into
effect for new nonroad engines.
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    The nationwide system that produces and distributes diesel fuel is
complex and efficient, and these characteristics are reflected in the
diesel sulfur program. The major segments of the industry are the
producers (refiners and importers); companies operating fuel pipelines
and other means of transporting fuel, and distribution terminals; fuel
wholesalers and tank truck operators; and retailers and ``wholesale
purchaser-consumers'' (WPCs). All segments of the system are involved
in the transition from current diesel fuel to the widespread
availability of ULSD fuel, and each of the entities involved is
affected by provisions of the rule.
     Refining companies have been upgrading their refineries in
order to remove most of the sulfur from diesel fuel and be ready to
introduce ULSD highway fuel into the distribution system no later than
June 1, 2006.
     Pipeline and terminal operators are in the process of
adding, upgrading, or making operational changes for equipment that
handles diesel fuel, including piping, valves, and storage tanks. As
ULSD begins to flow through the downstream distribution system,
pipelines and terminals will either completely transition from LSD to
ULSD, use separate capability to distribute ULSD to their downstream
customers, or carefully manage sequential shipments of these products.

     Retail and WPC facilities represent the final segment of
the distribution system. These entities will also need to turn over
their higher sulfur diesel fuel supplies and make operational
adjustments to be able to supply ULSD to the ultimate consumers.
    The next sections of this preamble describe the technical and
logistical issues facing the diesel fuel industry during the 2006
transition to ULSD highway fuel, including some concerns raised
recently as we near the beginning of the implementation of the program.
In today's action, we implement limited revisions to the transition
provisions of the highway diesel sulfur rule. These changes are
designed to address transition issues concerning various segments of
the diesel fuel industry and help facilitate the successful nationwide
transition to ULSD fuel.
    Although the recent hurricanes along the Gulf Coast of the U.S.
caused serious damage to a number of refineries, and the aftermath of
the storms has continued to affect the petroleum industry, these events
are not a contributing factor in taking today's action. Based on the
confidential information provided to us, as well as conversations with
the affected refiners, the impacts of the hurricanes on the refineries
appear to be temporary, and we do not expect to see any general
impediments to the successful widespread production of ULSD by June 1,
2006. To the extent that individual refineries may have experienced
temporary delays that might impact their ULSD start-up schedules (due
to direct impacts of the hurricanes or indirect impacts on their
contractors and suppliers), there are provisions in the existing
highway diesel program that allow EPA to consider cases of ``extreme,
unusual, and unforeseen circumstances'' (40 CFR 80.561). We will
address these cases under these provisions on a refinery-by-refinery
basis.
    As described below, this rule focuses on providing a limited amount
of additional time for entities in the diesel fuel distribution system
to flush higher sulfur fuel out of the system during the transition to
ULSD. This rule does not affect the start date by which refiners need
to be producing ULSD under the highway diesel program--June 1, 2006. In
fact, although EPA has taken several actions in response to the
hurricanes, none of these actions affects the start date of the
program.

A. The Existing ULSD Transition Provisions

    In developing the highway diesel sulfur program, EPA recognized
several practical considerations inherent in successfully changing over
most of the nation's highway diesel fuel from LSD to ULSD before the
introduction of new highway diesel engines designed to operate
exclusively on ULSD fuel. The overall program, finalized in early 2001,
provided long lead times for the diesel fuel refining and distribution
industries to prepare for compliance in 2006. Incorporated in the
program was a set of provisions carefully designed, with extensive
input from industry and others, to ensure the smooth nationwide
completion of the transition to ULSD.
    After the formal beginning of the program on June 1, 2006 and
during the next few years, the opportunity for refiners and importers
to produce and market 500 ppm highway diesel fuel will be significantly
limited. As of June 1, 2006, at least 80 percent of the highway diesel
fuel that refiners produce or importers introduce must meet the 15 ppm
sulfur standard. The remaining 20 percent can continue to be produced
to a 500 ppm sulfur standard.\2\ The 2005 refiner pre-compliance report
data provided by refiners indicate that about 90 percent of the highway
diesel fuel produced or imported will meet the 15 ppm sulfur standard
beginning June 1, 2006, well above the 80 percent requirement. Thus,
the vast majority of all highway diesel fuel produced by refiners or
introduced by importers will have reached ULSD levels by that date.
Even before the June 1, 2006 refinery gate deadline for the ULSD
requirement, we expect that several refiners will have begun
introducing some volumes of ULSD into the distribution system. Starting
June 1, 2006, if fuel is designated and marketed as ULSD, it must meet
the ULSD standards.
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    \2\ Such 500 ppm fuel can only be used in model year 2006 and
earlier highway diesel engines.
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    As very low sulfur diesel fuel begins to enter the distribution
system, pipelines and terminals, and in some cases retailers and WPCs,
will start to turn over their existing supplies of LSD fuel to ULSD.
The transition will accelerate after June 1, 2006 as large volumes of
ULSD enter the system. During this transition, all parts of the
downstream distribution system, from pipelines through terminals,
retailers, and wholesale purchaser consumers (WPCs), must designate
their fuel for sulfur content. This will start to affect downstream
entities as soon as refiners designate their fuel at the refinery gate
as ULSD. If a downstream entity receives ULSD and designates it as
ULSD, it is subject to the 15 ppm sulfur standard. If the downstream
entity re-designates it as LSD, it is subject to the 500 ppm sulfur
standard. Under the existing diesel sulfur program, the downstream
compliance dates in the regulations are based on the expectation that
the transition to ULSD will be completed at the terminal stage by July
15, 2006, and at the retail and WPC stage by September 1, 2006.
    These July 15 and September 1 downstream transition dates for the
terminal and retail levels do not themselves restrict the relative
volumes of LSD and ULSD present in the distribution system downstream
of the refiner and importer. Another provision of the regulations, the
``anti-downgrading'' provision, provides the assurance that downstream
entities in the system will begin providing the vast majority of the
highway diesel fuel as ULSD. This provision establishes the date after
which no more than 20 percent of the ULSD highway fuel received by a
downstream entity can be re-designated, or downgraded, to 500 ppm
highway diesel fuel.\3\
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    \3\ There are no restrictions on the volume of ULSD highway fuel
that may be downgraded to heating oil, or nonroad, locomotive, and
marine diesel fuel.
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    By limiting the volume of 15 ppm highway diesel fuel that can be
downgraded to 500 ppm highway fuel, the program helps to ensure that
the vast majority of highway diesel fuel that is marketed after that
date will be ULSD and that ULSD will be available in all parts of the
country for the engines that need it. Without the anti-downgrading
limitation, terminals, retailers, and others in the distribution system
could continue to blend 15 ppm highway fuel with 500 ppm highway fuel
and simply market the fuel as 500 ppm highway fuel. This would have the
potential to interfere with the successful implementation of the ULSD
highway program by slowing the transition and reducing the volumes of
ULSD available at the retail level. In the highway diesel rule, the
anti-downgrading requirements were to take effect on June 1, 2006.
However, this date was extended to October 1, 2006 in the recent
Nonroad Diesel final rule in recognition of the need for mixing of the
15 ppm and 500 ppm fuel as the distribution system is flushed out.\4\
The 20 percent downgrading limitation continues until May 31, 2010,
after which downgrading is no longer a concern given that all highway
diesel fuel must be ULSD.
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    \4\ In the nonroad diesel rule, EPA concluded that it would be
appropriate to have a single anti-downgrading date for all entities
in the distribution system rather than set separate dates for
terminals and retailers. Furthermore, the date was extended beyond
the September 1 retail date in response to industry concerns that in
some cases the final transition may take longer.

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    Although the July 15 and September 1 downstream transition dates
for the terminal and retail levels do not themselves restrict the
relative volumes of LSD and ULSD, we expect that ULSD will become the
predominant highway diesel fuel in most parts of the fuel distribution
system well before the implementation of the anti-downgrading
requirement. First, the pre-compliance reports compiled to date
indicate that beginning June 1, 2006 most distributors will only be
able to obtain ULSD or fuel being blended down to ULSD. Second, we
expect that refiners will be motivated to bring ULSD to retail as soon
as possible so that they can begin to recoup their capital investments
through the sale of ULSD. Finally, fuel distributors will need to begin
blending down much of their highway diesel fuel to ULSD specifications
before the implementation date for the anti-downgrading requirements in
order to be in compliance with the anti-downgrading specifications once
they become effective. As a result, terminals and retail facilities
will begin insisting on delivery of ULSD from their suppliers as soon
as possible. Therefore, while the anti-downgrading provision ensures a
date-certain for the final completion of the transition, the July 15
and September 1 implementation dates for terminals and retailers/WPCs
are important milestones in the transition to ULSD.

B. Recent Concerns About the Transition

    All segments of the diesel fuel production and distribution system
have been actively taking steps to prepare for the nationwide
transition to ULSD fuel. The primary elements of the program are
designed to work together to result in a relatively quick and efficient
large scale shift from LSD to ULSD throughout the system. These
elements include:
     The leadtime provided since the rule was published in
2001,
     The requirement that refiners produce the vast majority of
fuel as ULSD by June 1, 2006,
     The sequential implementation dates for refiners/
importers, terminals, and retailers, and
     The beginning of the anti-downgrading requirements.
    In developing the highway diesel rule, each of these elements was
evaluated individually and in combination, and the program was designed
to maximize the efficiency and effectiveness of the transition to ULSD
fuel. All information available to us continues to indicate that these
elements will combine to result in a smooth transition to ULSD in most
if not all cases, and no one has expressed concerns about completing
the transition for the large bulk of diesel fuel.
    However, in recent months, some in the industry have expressed a
degree of uncertainty in their ability to complete the transition by
the current deadlines in the very farthest reaches of some of the more
complex parts of the distribution system. These parts of the system can
involve long pipelines, secondary pipeline systems, and several points
where the flow of fuel is interrupted by temporary storage in break-out
tanks. For these parts of the system, the process of completely
blending down the fuel to 15 ppm levels in all the intermediate tanks
presents somewhat greater challenges than do less complex systems.
    At the same time, the amount of time available to complete the ULSD
transition and ensure the widespread availability of the fuel has been
balanced with the absolute need for ULSD to be available for use in
model year 2007 diesel engines and vehicles. Over the past four years,
the engine and vehicle manufacturers have worked hard and have made
substantial financial investments to develop sophisticated emission
control systems to meet the 2007 emission standards, with the
expectation that these systems would only be exposed to ULSD sulfur
levels. Thus, the success of the new emission control standards for
these engines hinges on the widespread availability of ULSD in time for
the coordinated launch of 2007 model year engines and vehicles.
Recognizing that transition times that are too long would interfere
with the introduction of the new model year 2007 diesel engines
designed to operate on ULSD, EPA incorporated this balance in the
design of the highway diesel program. The appropriate transition time
was the subject of many substantial comments on the proposed rule.
    EPA has re-evaluated this balance in light of the uncertainties
that have been expressed. We are aware of no information that
definitively shows that problems in the distribution system will in
fact develop during the transition. In fact, the broad consensus is
that for the vast majority of the country, the existing provision of
the program should be sufficient. Still, we believe that limited
additional flexibility for entities downstream of the refineries would
help to address the potential problems that might be faced by certain
limited portions of the distribution system. Today's action will
facilitate the thorough changeover of diesel fuel and increase the
certainty that ULSD will be available on time for use in 2007 engines
and vehicles in all parts of the country.
    In considering an appropriate degree of additional flexibility for
the distribution system as described in the next section, we held
extensive consultations with the associations representing the heavy-
duty and light-duty engine manufacturing industries, as well as
meetings with individual companies. Based on these meetings, we have
concluded that it is critical that the end of any additional downstream
transition flexibility occur no later than October 15, 2006. We know of
several instances in which extending the transition period until
October 15 will indeed impact scheduled launch dates for Model Year
2007 engines. It is our understanding that, given the strong assurance
that 15 ppm fuel will be broadly available by October 15, these
companies are willing to delay their vehicle or engine introductions.
However, any further delays would have significant impacts on their
ability to launch their 2007 model year product lines and would be
considered unacceptable. The actions we are taking today, as discussed
next, balance the needs of both the fuel distribution and diesel engine
manufacturing entities.

C. Actions EPA Is Taking to Ease the Transition to ULSD

    EPA is taking three actions to address the transition concerns that
have been raised and to facilitate the smooth transition across the
country to ULSD highway fuel. First, in response to concerns raised by
the diesel fuel production and distribution industries, EPA is
extending by 45 days the dates in the regulations that identify when
the transition is expected to be completed by downstream entities. This
would now be September 1, 2006 for terminals and all entities upstream
of terminals (and downstream of refiner and importer origination
facilities), and October 15 for retailers and WPCs.\5\ Second, for
consistency with this change of dates, EPA is also extending the
deadline for meeting the anti-downgrading requirements until October
15, 2006. This will mean that prior to that date entities can
redesignate the ULSD highway fuel received from the refinery to LSD
highway fuel without restriction, but after that date the ability to
redesignate

ULSD as 500 ppm highway fuel will be significantly restricted.
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    \5\ The change in the implementation date applies only to the
sulfur standard of 40 CFR 80.520(a), not the dye requirements of 40
CFR 80.520(b). We do not believe that a similar delay in the
implementation date for the dye requirements is needed or would be
of value to entities in the distribution system.
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    Together, we expect that these changes will ensure that even the
most remote parts of the distribution system will have sufficient time
to transition to ULSD in an orderly way. With this additional time, all
entities in the distribution system will be better able to learn how
the system is responding as large volumes of very low sulfur fuel begin
to flow, while still having sufficient time to react as necessary based
on what they and others learn. Thus, they will be in a better position
to complete the flushing of LSD from the system while minimizing
capital expenditures for temporary measures otherwise needed only
during the transition. Based on confidential conversations with engine
and vehicle manufacturers, any extension beyond October 25 would have a
serious impact on the introduction of new MY 2007 highway diesel
engines.
    With these changes, the expected end of the transition for retail
outlets and the anti-downgrading date are now aligned. Thus, the date
established in today's action for the end of the additional retail
transition flexibility (October 15, 2006) is now supported by the
beginning of the anti-downgrading restriction on the same date. This
alignment will help encourage retail entities to plan the transition of
their diesel fuel so that not only will all ULSD they sell by October
15, 2006 be 15 ppm, but also the vast majority of all highway fuel they
sell will be ULSD under the anti-downgrading provision.\6\ \7\
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    \6\ Under the existing program, these aspects of the program
were not aligned. After the end of the retail transition period,
September 1, 2006, and before the anti-downgrading date of October
1, 2006, retailers that wished to sell 15 ppm fuel as ULSD would
have been able to downgrade as much of that fuel as they wished,
which might have unnecessarily slowed the overall transition.
    \7\ Some entities have indicated that their recordkeeping
systems may not readily allow for a mid-month start to a compliance
period. Therefore, we would allow them to maintain the original
October 1, 2006 date at their option.
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    Finally, the third action EPA is taking to facilitate the
transition to ULSD is to temporarily allow diesel fuel at a sulfur
level of 22 ppm to be distributed downstream of the refinery as ULSD
during this extended transition period.\8\ The existing program
provides for a 2 ppm adjustment for sulfur test results of downstream
diesel fuel, to account for testing variability. Today's revision
temporarily allows an additional downstream adjustment of 7 ppm--to
account for downstream sulfur contamination that may occur as the
system transitions to ULSD--for a total adjustment of 9 ppm. This
temporary increase applies for the same additional 45 days noted above,
expiring before the expected introduction of new 2007 model year
highway diesel engines.
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    \8\ Currently, a downstream batch of ULSD with test results of
17 ppm is treated as in compliance with the 15 ppm sulfur standard.
Under this temporary revision, a downstream batch of ULSD with test
results of 24 ppm would be in compliance with the sulfur standard
for ULSD. In both cases, this downstream adjustment only applies to
testing of diesel fuel after it leaves the refinery, it does not
apply to a refiner's or importer's fuel.
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    This additional adjustment factor is designed to help the
transition by making it more likely that fuel will be classified by
downstream entities as ULSD as early as possible, and that it will stay
classified as ULSD throughout the distribution system. This will make
it easier for the points near the end of the distribution system to
keep the ULSD classification for the diesel fuel they receive as ULSD.
During the transition to ULSD fuel, entities in the distribution system
may find themselves in possession of fuel with test results slightly
above 15 ppm sulfur, and we believe it will be beneficial if they are
temporarily able to continue treating this fuel as ULSD during this
transition period. This will reduce the perceived need for entities
near the end of the distribution system to downgrade ULSD to 500 ppm
LSD because of concern over liability from low level contamination
remaining in the system. Reducing the need to downgrade will maximize
the volume of highway fuel distributed as ULSD, which will help to
ensure a timely transition to ULSD.

II. Amendments To Ensure the Enforceability of the Highway Diesel
Program

    As discussed in the previous section on the amendments to the ULSD
transition provisions, the benefits of the highway diesel program
depend on ensuring that beginning October 15, 2006 the predominant fuel
available at retail for use in highway diesel engines meets a 15 ppm
sulfur standard. The highway diesel program's Temporary Compliance
Option (TCO) provides that up to 20 percent of highway diesel fuel
produced by a refiner or introduced by an importer may continue to meet
a 500 ppm sulfur standard until June 1, 2010.\9\ Beginning December 1,
2010, all fuel used in any highway diesel engine must meet a 15 ppm
sulfur standard.
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    \9\ Such 500 ppm fuel can only be used in model year 2006 and
earlier highway diesel engines.
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    The nonroad diesel program requires that beginning June 1, 2007,
diesel fuel produced for use in nonroad, locomotive, and marine diesel
engines (NRLM diesel fuel) must meet a 500 ppm sulfur standard.\10\ The
nonroad program also provides for the generation of early credits for
the production of 500 ppm NRLM diesel fuel beginning June 1, 2006.
Thus, from June 1, 2006 through December 1, 2010, we expect that there
will be both 500 ppm NRLM and 500 ppm highway diesel fuel in the diesel
fuel distribution system. While 500 ppm highway diesel fuel may be used
in highway or nonroad engines or other suitable distillate fuel
applications without restriction, the nonroad rule closely controls how
much 500 ppm diesel fuel that is designated as NRLM may be shifted for
use in highway vehicles, in order to maintain the integrity of the
highway program (by ensuring the production of 15 ppm diesel fuel).
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    \10\ The nonroad program includes small refiner and credit
provisions that provide for the limited production of high sulfur
(>500 ppm) NRLM diesel fuel until June 1, 2010.
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    In the 1993 highway diesel rule, EPA generally required that any
diesel fuel that does not show visible evidence of red dye would be
subject to all of the requirements applicable to highway diesel fuel.
To comply with this requirement, refiners add a visible trace of red
dye to non-highway diesel fuel prior to it leaving the refinery gate.
If this requirement were maintained, there would be no difficulty in
differentiating 500 ppm highway diesel fuel from other diesel fuel.
During the development of the nonroad diesel rule, fuel distributors
requested that EPA provide that 500 ppm NRLM fuel not be subject to the
refinery gate red dye requirement. This would allow for the fungible
shipment of 500 ppm NRLM and 500 ppm highway diesel until the point in
the distribution system where NRLM diesel fuel must be dyed red to
indicate its non-tax status (that is, prior to leaving the
terminal).\11\ Commenters stated that there would be a substantial
savings in fuel distribution costs if the two grades of 500 ppm diesel
fuel could be fungibly mixed until they leave the terminal.\12\
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    \11\ Pursuant to Internal Revenue Service Requirements (26
U.S.C. 4082).
    \12\ This is primarily due to the reduced need for segregated
storage tanks prior to leaving the terminal.
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    In considering this request from distributors in the nonroad diesel
rule, EPA recognized that in the absence of the refinery gate red dye
provisions, 500 ppm sulfur highway diesel fuel allowed under the
highway diesel fuel program's TCO and 500 ppm NRLM diesel fuel would be
physically the same up to the point where the NRLM leaves the terminal
and is dyed for tax purposes. Therefore, maintaining the benefits and
integrity of the highway diesel fuel

program required some means of differentiating highway diesel fuel from
NRLM diesel fuel throughout the distribution system. For example, if a
refiner produced all 500 ppm sulfur fuel and designated it as NRLM
diesel fuel, that refiner would have no obligation to produce any 15
ppm sulfur highway diesel fuel. Without an effective way of limiting
the use in the highway market of 500 ppm sulfur diesel fuel produced as
NRLM diesel fuel, much more 500 ppm sulfur fuel could find its way into
the highway market than would otherwise happen under the highway
program. This in turn could displace 15 ppm sulfur diesel fuel that
would have otherwise been produced. This series of events would
circumvent the intent of the highway program's TCO and sacrifice some
of the resulting particulate matter (PM) and sulfur dioxide
(SO2) emission benefits of the overall highway diesel
program. If this occurred to any significant degree, it could also
undermine the integrity of the highway program by threatening the
widespread availability of 15 ppm sulfur diesel fuel nationwide for the
vehicles that will need it.
    In lieu of the refinery gate red dye requirement, commenters
suggested that EPA adopt accounting provisions to ensure that 500 ppm
NRLM diesel fuel is not inappropriately shifted into the highway diesel
market downstream of the refinery. Working cooperatively with industry,
we developed provisions that require the designation of fuel and the
tracking and balancing of fuel volumes, as well as related
recordkeeping and reporting concerning the fuels received and
delivered. Among other things, this allows for the fungible shipment of
500 ppm highway and 500 ppm NRLM diesel fuel up to the point where such
fuel leaves the terminal, while controlling the shift of NRLM fuel into
the highway market. In the nonroad diesel final rule, we promulgated
such accounting provisions allowing for the removal of the dye
requirement and fungible distribution of 500 ppm diesel fuel. These
provisions are part of the designation and tracking requirements
adopted in the nonroad diesel rule.
    We intended that the removal of the dye requirement for 500 ppm
NRLM diesel fuel coincide with the implementation date for the
downstream limitations on redesignating 500 ppm NRLM as 500 ppm highway
fuel. By linking these dates, the integrity of the highway diesel
program would be protected by the dye requirement for 500 ppm NRLM
until its removal, and by the related designate and track requirements
thereafter. However, the date specified in the regulatory text for the
removal of the dye requirement for 500 ppm diesel fuel designated as
NRLM was set earlier than the effective date for the requirements that
restrict the ability to redesignate 500 ppm NRLM as 500 ppm highway
diesel fuel. The effective date for the removal of the refinery gate
red dye requirement for 500 ppm NRLM is June 1, 2006, whereas the
effective date for the requirements that restrict the ability to
redesignate 500 ppm NRLM as 500 ppm highway diesel fuel is June 1,
2007. Thus, for the period of June 1, 2006 through June 1, 2007, when
refiners can produce 500 ppm NRLM for early credit, there is a ``gap''
in the designate and track regulations, resulting in the lack of
effective regulatory requirements to prevent the misdirection of non-
highway 500 ppm diesel fuel into the highway diesel market.

A. Description of Today's Action

    Today's action amends the diesel fuel program to require that
beginning June 1, 2006, any entity that receives and/or distributes 15
ppm or 500 ppm highway diesel fuel must demonstrate compliance with the
requirements limiting the redesignation of 500 ppm NRLM to 500 ppm
highway fuel. Each entity that distributes and/or receives 15 ppm and/
or 500 ppm highway diesel fuel after that date will be required to
demonstrate compliance with these requirements during each quarterly
compliance period beginning June 1, 2006. Each such entity will also
have to report to EPA on the volume of 15 ppm and 500 ppm highway
diesel fuel that they receive and distribute, broken down by exchange
partner.
    As discussed in the next section, we believe that the approach we
are establishing today will be effective in closing the unintended gap
in the designate and track regulations. In addition, it has advantages
over several other approaches that we evaluated. The next section
describes each of the options we evaluated and also describes
provisions we are including to mitigate any negative impact of this
change on entities that distribute diesel fuel.

B. Evaluation of Options

    In evaluating how best to resolve this regulatory gap in the
designate and track regulations, EPA evaluated three options. One
option we evaluated would require that all undyed 500 ppm diesel fuel
be designated as motor vehicle (highway) diesel fuel from June 1, 2006
through May 31, 2007. Since all undyed 500 ppm fuel would be considered
highway diesel fuel, there would be no way for refiners to direct 500
ppm NRLM fuel into the highway market, thus helping to maintain the
integrity of the highway diesel program. However, this approach would
need to include the elimination of the NRLM program provisions that
allow the generation of early credits via the sale of 500 ppm NRLM fuel
before June 1, 2007.
    The elimination of the early NRLM credit provisions could
significantly impact refiners planning to generate and/or use early 500
ppm NRLM credits. In addition, such an approach might result in the
shifting of more 500 ppm fuel production to the highway market than
would have otherwise occurred, interfering with the flexibility offered
by the temporary compliance option (TCO) in the highway diesel program.
It is very late in the planning process for any refiners planning to
use any of these flexibilities in the NRLM and highway diesel programs.
Consequently, we do not believe it would be appropriate to pursue this
option.
    Another option we evaluated would address the timing problem by
moving the effective date of the removal of the red dye requirement for
500 ppm NRLM diesel fuel from June 1, 2006 to June 1, 2007. By
requiring that 500 ppm NRLM fuel continue to be dyed at the refinery
gate, the integrity of the highway diesel program would be maintained,
since the dye would prevent NRLM from being diverted into the highway
diesel pool during that period. The serious problem with this approach,
however, is that refiners or importers, as well as pipelines and
terminals, that are planning to ship 500 ppm fuel for the highway and
NRLM markets together would be prevented from doing so. Again,
especially because of the late date, we believe it would be
inappropriate to change the program in ways that may significantly
change diesel fuel production and distribution plans.
    The third option that that we evaluated, and, as described above,
the one we are adopting today, would amend the diesel fuel program to
begin certain designate and track provisions on June 1, 2006. Thus, any
downstream entity that receives and/or distributes 15 ppm or 500 ppm
highway diesel fuel after that date would need to demonstrate, for
these fuels, compliance with the limitations on redesignating 500 ppm
NRLM as 500 ppm highway fuel. We believe that this approach is most
consistent with the express purpose of the provisions of the nonroad
rule--to allow refiners and importers to freely mix 500 ppm highway and
NRLM diesel fuel in the absence of the red dye requirement

while maintaining the integrity of the highway diesel fuel program. We
also believe that this approach will result in the least number of
substantive changes to the existing program.
    Members of the fuel industry have noted that some fuel distributors
may have to establish reporting systems earlier than they had planned.
However, we have assessed the additional reporting and recordkeeping
requirements of this action and we have concluded that the additional
resources some entities may need to expend in response to today's
action will be relatively modest and the available lead time should be
sufficient. However, in response to industry concerns expressed about
these unanticipated requirements, today's action contains two
provisions to help mitigate these concerns. First, as mentioned above,
the new, earlier hand-off reporting requirements will be limited to 15
ppm and 500 ppm highway diesel fuel transfers for the first four
quarterly compliance periods (i.e., no new reporting will be required
for NRLM fuel.) Second, today's action allows entities to partially
consolidate their designate and track requirements during the first
year of the highway diesel program. Thus, the highway diesel volume
balance and hand-off reporting requirements for the first two quarterly
compliance periods may be combined, as may those of the third and
fourth compliance periods. Although some entities may need to establish
reporting systems earlier than they had anticipated, this provision
reduces the reporting burden considerably for the first year.
    Finally, EPA received four additional suggestions that, on further
consideration, we believe would be unworkable. One of these was to make
use of the existing anti-downgrade provisions to restrict the shifting
of 500 ppm NRLM into the highway diesel pool during the first year of
the program until the D&T requirement originally intended for this
purpose becomes effective. However, in order for the anti-downgrade
provision to conceivably accomplish the purpose of closing the gap in
the highway diesel fuel program, the intended purposes of the
provisions would be largely lost. For example, the most straightforward
of four options that refiners and importers have to demonstrate that
they are meeting the downgrading restrictions would need to be
eliminated during the first year, since it could allow significant
shifting of 500 ppm fuel into the highway diesel pool. In addition, as
described above, the issues of inconsistent dates (June 1, 2006 vs.
October 15, 2006 \13\) and lack of reporting requirements would also
need to be addressed in any revision of the anti-downgrading
provisions. Overall, we believe that using the anti-downgrading
provisions to resolve the problem is unworkable. In any event, to
modify the anti-downgrade provisions to correct the shortcomings would
have no advantage over the approach being finalized today.
---------------------------------------------------------------------------

    \13\ Today's action moves the compliance date with the anti-
downgrade requirements forward from October 1, 2006 to October 15,
2006. See section I in today's preamble.
---------------------------------------------------------------------------

    The second concept suggested to us would have some characteristics
of the approach we are adopting in this rule. However, instead of
requiring that the highway fuel volume balance and hand-off reporting
begin on June 1, 2006, this concept would introduce a new provision
that would require a balance of NRLM fuel and associated reporting
during that first year of the program. While this concept would have
the possible benefit of limiting attention to the pool of fuel most
likely to create problems for the program--that is 500 ppm NRLM
produced for early credit purposes, it has other major problems.
    For example, downgrades or losses from the 500 NRLM pool would
result in noncompliance. More importantly, 500 ppm from other pools
(e.g., jet fuel) would not be prevented from entering the highway pool.
Further, a volume balance is not otherwise required for NRLM fuel under
the designate and track regulations. Thus, this approach would
represent a significant and yet temporary change to the program;
requiring the establishment of recordkeeping and reporting requirements
now that would have no use later. We do not believe the concept
represents a workable alternative to the approach we are adopting.
    A third suggestion was that perhaps the approach we are finalizing
could be limited only to those facilities that handle 500 ppm NRLM.
However, we have concluded that such a concept would not be adequately
enforceable. This is because without highway fuel balance requirements
and hand-off reports, it would not always be possible to trace the
complete line of hand-offs and demonstrate whether any 500 ppm NRLM
fuel entered the highway market. Further, it would likely suffer from
confusion caused by new facilities that entered into the 500 ppm NRLM
market as the June 1, 2007 start date for the NRLM diesel program
neared and thus began to be subject to the balance and reporting
requirements. We believe that this concept would be an unworkable
substitute for the approach we have finalized.
    A final suggestion was to avoid specific new designate and track
requirements by simply introducing a clear prohibition against
inappropriate shifts of undyed 500 ppm NRLM fuel into the highway
diesel pool. However, without associated tracking and reporting, EPA
would have difficulty identifying where instances of non-compliance
might be occurring. Although it was suggested that violations would
likely be few and that EPA could depend on entities informing EPA of
potential violations by their competitors, we believe that this would
create too much uncertainty for all parties, including EPA. Further, we
are concerned that this uncertainty might embolden some entities to
stretch the boundaries of the program requirements. For example, an
entity might sell substantial amounts of 500 ppm nonroad as highway
fuel or other inappropriate actions. Without a clear highway diesel
fuel balance requirement and reporting, we would have limited ability
to demonstrate that such actions were ``inappropriate.'' On balance, we
believe that the addition of modest new volume balance and reporting
requirements between June 1, 2006 and June 1, 2007 represent a
necessary component of the program.
    We are making several changes to the regulations in order to
implement the actions discussed above. In general, this is accomplished
by adding 4 earlier quarterly reporting periods and one

earlier annual reporting period covering the period June 1, 2006 to
June 1, 2007, as well as allowing some of the reports to be combined.
The volume balance and hand-off compliance and reporting requirements
for non-highway designated diesel fuels are not affected by today's
action.
    The following table II-1 lists each of the regulatory provisions
that are revised in today's action relating to the actions discussed
above.

 Table II-1.--Summary of Amendments To Ensure the Enforceability of the
                         Highway Diesel Program
------------------------------------------------------------------------
         Section                            Description
------------------------------------------------------------------------
80.597...................  Amended to require registration if an entity
                            intends to deliver or receive custody of any
                            designated fuels by June 1, 2006. In
                            addition to supporting the implementation of
                            the highway volume balance and hand-off
                            requirements in 2006, this amendment is also
                            needed to support compliance with current
                            product transfer document requirements under
                            section 80.590.
80.599...................  Amended to add 4 quarterly compliance periods
                            covering June 1, 2006-September 30, 2007,
                            October 1, 2006-December 31, 2006, January
                            1, 2007-March 31, 2007, and April 1, 2007-
                            May 31, 2007, and one annual compliance
                            period covering June 1, 2006-May 31, 2007.
                            Amended to define MV500BINV as the volume of
                            fuel designated as 500 ppm motor vehicle
                            diesel fuel at the beginning of the program
                            (June 1, 2006).
80.600...................  Amended to require recordkeeping by each
                            facility that receives or distributes 15 ppm
                            or 500 ppm highway diesel fuel beginning
                            June 1, 2006.
80.601...................  Amended to require reporting regarding
                            demonstration of the new compliance periods
                            added to section 80.599 and to limit
                            reporting to the highway volume balance and
                            highway hand-off requirements for the period
                            of June 1, 2006-May 31, 2007. Provides dates
                            by which reports must be submitted.
------------------------------------------------------------------------

III. Amendments to the Registration Requirements for Mobile Facilities

    Parties throughout the fuel production and distribution system use
mobile components (or mobile vessels- i.e., ships/barges, trucks, rail
cars, etc.) to transfer product from one point to another. These are
referred to as mobile facilities by EPA for purposes of registration
and compliance with the designate and track requirements. Questions
have arisen regarding how individual mobile facilities can be
aggregated for registration purposes. To provide clarification on how
such aggregation might take place, today's action amends the provisions
pertaining to the registration of mobile facilities.
    Mobile facilities are sometimes owned by an entity in the fuel
industry who also owns a stationary facility (e.g. terminal) that would
be required to be registered with EPA. However, in most cases, the use
of a mobile facility is obtained through a contract with another party
or entity. Such contracts are often of short duration, and the make-up
of the fleet of individual mobile facilities serving a given fuel
distributor is continually in flux. Given this situation, fuel
distributors stated that requiring every individual mobile facility or
entity owning a fleet of individual mobile facilities to register would
be unworkable. We agree, and therefore, we believe that it is
appropriate to modify the regulations to allow a registered entity to
register the mobile facilities that distribute its fuel. Under the
current regulations, an entity has to register facilities where they
have custody of fuel. For mobile facilities we are allowing an entity
to register a mobile facility where the entity has title to the fuel,
even if it does not have custody. The registration would, however, only
cover the mobile facility for the fuel to which the entity has title.
    A registered entity may register one mobile facility, or multiple
mobile facilities defined by area or component type. Any number of
individual mobile components (i.e. ships/barges, trucks, rail cars)
could be aggregated under a given mobile facility registration.
Specifics regarding the make up of the fleet (e.g. number and identity
of ships/barges) comprising a mobile facility would not need to be
provided to EPA at the time of registration.\14\
---------------------------------------------------------------------------

    \14\ The registration of mobile facilities is also discussed in
the Mobile Facilities Guidance Document, whish can be found on the
Clean Diesel Compliance Help page at (http://www.epa.gov/cleandiesel/comphelp
).

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

    Compliance with the designate and track regulations would be the
responsibility of the entity that registered the mobile facility. In
the event of a designate and track violation, the registered entity
would be still presumed liable. However, compliance with the applicable
fuel sulfur standard would still be the responsibility of both the
registered entity and the owner/operator of the individual mobile
component in which the fuel is located. Further, in the event of the
discovery of non-compliant product, EPA may apply presumptive liability
to the owner of the individual mobile component in which the product is
found, the registered entity, and all parties upstream.
    The allowance of mobile facilities has resulted in changes to the
definition of a facility and the registration and recordkeeping
requirements. We have amended the definition of a facility to include
the situation of a mobile facility, where a registered entity may not
have custody of fuel while it is being transported in a component, but
the entity retains title to the product. This change to the definition
allows an entity to register a mobile component that is transporting
its product as part of the entity's facility. The changes to the
regulations allow for this registration of mobile facilities (Sec.
80.597) and state specifications for additional records that need to be
kept for registered mobile facilities (Sec. Sec.  80.600 and 80.602).
These changes are all noted below in Table III-1.
    As noted above, the registered entity would be presumed liable in
the case of a designate and track violation. We have not made changes
to any of the provisions that deal with standards violations, so all
requirements for meeting the applicable sulfur, dye, and marker
standards remain in place. Thus, any person that could be considered
liable for a prohibited act under Sec.  80.613 (any refiner, importer,
distributor, reseller, carrier, retailer, wholesale purchaser consumer)
who owned, leased, leased, operated, controlled, or supervised a
facility where a violation occurred can be presumed liable if a non-
compliant product is found in a mobile facility.
    With the exception of the changes discussed above and in Table III-
1, there are no additional requirements. Mobile facilities will be
treated similar to all other registered facilities in the designate and
track system.

Table III-1.--Summary of Amendments to the Registration Requirements for
                            Mobile Facilities
------------------------------------------------------------------------
         Section                            Description
------------------------------------------------------------------------
80.502...................  Added additional language to the definitions
                            in paragraph (b) to allow for mobile
                            facilities.
80.597...................  Added paragraph (d)(3)--registration of
                            mobile facilities.
80.600...................  Added additional language on recordkeeping
                            requirements for mobile facilities, and
                            renumbered some paragraphs.
80.602...................  Added additional language on recordkeeping
                            requirements for mobile facilities, and
                            renumbered some paragraphs.
------------------------------------------------------------------------

IV. Miscellaneous Other Technical Amendments to the Highway and Nonroad
Diesel Programs and the Tier 2 Gasoline Program

    After promulgation of the highway diesel, nonroad diesel, and Tier
2 gasoline programs, and subsequent technical amendments, we discovered
several typographical errors. It also became evident that several
additions/deletions were necessary to clarify portions of the
regulations. The amendments contained in today's rule to remedy these
problems are summarized in the following Table IV-1.

    Table IV-1.--Summary of Miscellaneous Technical Amendments to the
   Highway and Nonroad Diesel Programs and the Tier 2 Gasoline Program
------------------------------------------------------------------------
         Section                            Description
------------------------------------------------------------------------
80.215...................  Revised to add Klickitat County to the list
                            of Geographic Phase-In Areas.
80.531...................  Removed and reserved paragraph (c)(2)(ii).
                            This change was inadvertently left out of
                            the regulatory text of the Direct Final Rule
                            published on July 15, 2005 (40 FR 40889)
                            which was intended to allow refiners and
                            importers to generate early credits (June 1,
                            2005 through May 31, 2006) for the entire
                            volume of ULSD delivered into the
                            distribution system rather than the volume
                            delivered to the end user.
80.533...................  Corrected the language in (e)(2) to state
                            ``BNRLM'' instead of ``NRLM''.
80.590...................  Revised to clarify what parties will be
                            affected by the requirement that transferee
                            ID numbers appear on product transfer
                            documents; revised to clarify how parties
                            shall denote the level of the standard on
                            product transfer documents.
80.592...................  Revised to change the cite in (a)(2)(iii)
                            from ``80.580(a)(4)'' to ``80.580(d)''
80.593...................  Revised to correct the section number that is
                            cited in 80.593(a)(7)(i) from ``80.523'' to
                            ``80.598.''
80.599...................  Paragraphs 80.599(b)(4), (b)(5), (e)(2), and
                            (e)(3) were revised to maintain consistency
                            with the symbol conventions in the formulas
                            found in this section.
80.601...................  Revised paragraph (d)(3) to clarify reporting
                            requirements.
80.602...................  Revised paragraph (a)(2)(iii) to correct the
                            cite ``80.580(a)(4)'' to ``80.580(d)''; and
                            revised paragraph (b) to correct the cite
                            ``80.660'' to ``80.560.''
------------------------------------------------------------------------

V. Public Participation

    Because EPA views the provisions of the action as noncontroversial
and does not expect adverse comment, we are proceeding by direct final
rulemaking. If we receive adverse comment on one or more distinct
amendments, paragraphs, or sections of this rulemaking, or receive a
request for hearing within the time frame described above, we will
publish a timely withdrawal in the Federal Register indicating which
provisions will become effective and which provisions are being
withdrawn due to adverse comment. Any distinct amendment, paragraph, or
section of today's rulemaking for which we do not receive adverse
comment will become effective on the date set out above,
notwithstanding any adverse comment on any other distinct amendment,
paragraph, or section of today's rule.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency is required to determine whether this regulatory action would be
``significant'' and therefore subject to review by the Office of
Management and Budget (OMB) and the requirements of the Executive
Order. The order defines a ``significant regulatory action'' as any
regulatory action that is likely to result in a rule that may:
     Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
     Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
     Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or,
     Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
    Pursuant to the terms of Executive Order 12866, EPA has determined
that this final rule is not a ``significant regulatory action''.
Today's action moves the implementation date for certain recordkeeping
and reporting requirements under the highway diesel program from June
1, 2007 to June 1, 2006 for an additional one time cost of $11,570,000
(see sections II and IV.B. in today's preamble). Today's final rule
extends the terminal and retail ULSD implementation dates, and the
effective date of the anti-downgrading requirement, and increases the
downstream sulfur adjustment factor during the transition period to
ULSD (see section I in today's preamble). There are no new costs
associated with these provisions. There are also no new costs
associated with the other miscellaneous technical amendments to the
highway diesel, nonroad diesel, and Tier 2 gasoline programs contained
in today's notice (see section III in today's preamble). Therefore,
this final rule is not subject to the requirements of Executive Order
12866. Final Regulatory Support Documents were prepared in connection
with the original regulations for the Highway Diesel Rule, Nonroad
Diesel Rule, and Tier 2 gasoline rule as promulgated on January 18,
2001, June 29, 2004, and February 10, 2000

respectively, and we have no reason to believe that our analyses in the
original rulemakings were inadequate. The relevant analyses are
available in the docket for the January 18, 2001 rulemaking (A-99-061),
the June 29, 2004 rulemaking (OAR-2003-0012 and A-2001-28) \1\, and the
February 10, 2000 rulemaking (A-97-10), and at the following Internet
addresses: http://www.epa.gov/cleandiesel and http://www.epa.gov/tier2.
The original actions were submitted to the Office of Management and
Budget for review under Executive Order 12866.
---------------------------------------------------------------------------

    \1\ During the course of the Nonroad Rule, the Agency converted
from the legacy docket system to the current electronic docket
system (EDOCKET).
---------------------------------------------------------------------------

B. Paperwork Reduction Act

    The annual information collection burden associated with this
action was accounted for in previously approved ICRs. The provisions of
this direct final rule provide limited additional flexibility to
entities in the highway diesel distribution system during the
transition to ultra-low sulfur diesel fuel in 2006. The other
miscellaneous amendments in today's notice contain technical
corrections and clarifications which do not include any new information
collection requirements. The amendments to the designate and track
provisions under the highway and nonroad diesel programs contained in
section II of today's direct final rule require compliance with these
provisions beginning June 1, 2006. Compliance with these provisions was
previously required beginning June 1, 2007. The annual compliance
burden associated with these provisions is not affected by advancing
the implementation date by one year. This annual burden was accounted
for in the current information collection request for the highway and
nonroad diesel fuel programs. The Office of Management and Budget (OMB)
has previously approved the information collection requirements
contained in the existing highway rule (66 FR 5002, January 18, 2001),
the existing Nonroad Rule (69 FR 38958, June 29, 2004), and the
existing Tier 2 gasoline rule (65 FR 6698, February 10, 2000), under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
The ICRs contained in the highway diesel and nonroad diesel rules were
assigned OMB control number 2060-0308, and EPA ICR number 1718.06. This
ICR is currently being revised to reflect the change in the
implementation date for the pertinent designate and track requirements
from June 1, 2007 to June 1, 2006. The annual compliance burden for the
full designate and track requirement beginning in June 1, 2007 was
estimated at $11,570,000 and 178,000 hours. The designate and track
requirements that today's rule make effective June 1, 2006, are for a
limited subset of designated fuels (highway diesel only), and the
reporting requirements for the initial year (June 1, 2006-May 31, 2007)
were abbreviated by today's rule. Therefore, the annual burden for the
initial year is expected to be somewhat less than that estimated for
following years.
    The ICRs contained in the Tier 2 gasoline rule were assigned OMB
control number 2060-0437, and EPA ICR number 1907.02. A copy of the OMB
approved Information Collection Requests (ICRs) may be obtained from
Susan Auby, Collection Strategies Division; U.S. Environmental
Protection Agency (2822T); 1200 Pennsylvania Ave., NW., Washington, DC
20460 or by calling<PHONE_NUMBER>.
    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility

    EPA has determined that it is not necessary to prepare a regulatory
flexibility analysis in connection with this direct final rule. EPA has
also determined that this rule will not have a significant economic
impact on a substantial number of small entities. For purposes of
assessing the impacts of this final rule on small entities, a small
entity is defined as: (1) A small business that meets the definition
for a small business based on Small Business Administration (SBA) size
standards; (2) a small governmental jurisdiction that is a government
of a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field. The ULSD transition provisions in
today's direct final rule provide limited, temporary flexibility to
entities in the highway diesel distribution system downstream of the
refineries and import facilities. Advancing the implementation date for
certain recordkeeping and reporting requirements under the highway
diesel program as described in section II of today's preamble will
result in additional one year of cost of compliance with these
provisions for all affected fuel distributors, including those that are
small entities. During the rulemaking that resulted in the promulgation
of these provisions, we determined that they would not have a
significant impact on a substantial number of small entities. The other
miscellaneous technical amendments to the highway diesel, nonroad
diesel, and Tier 2 gasoline programs do not impose a significant new
burden to any regulated party.
    Prior to proposing the Highway Rule on June 2, 2000, the Nonroad
Rule on May 23, 2003, and the Tier 2 Gasoline Rule on May 13, 1999 EPA
conducted outreach to small entities and convened Small Business
Advocacy Review (SBAR) panels to obtain the advice and recommendations
of representatives of the small entities that potentially would be
subject to the requirements of the rules (66 FR at 5130, 69 FR at
39155-6, and 69 FR 39155-39162 respectively). For a full description of
the Panel process, the SBAR report, and the initial Regulatory
Flexibility Analyses (in Chapters 8, 11, and 8 respectively) of each
rule's Regulatory Impact Analysis (RIA), refer to the docket for the
Highway Diesel Rule (Public Docket A-99-061), the Nonroad Diesel Rule
(Public Docket OAR-2003-0012 and A-2001-28), and the Tier 2 Gasoline
Rule (Public Docket A-97-10), and the following Internet addresses:
http://www.epa.gov/cleandiesel/ and http://www.epa.gov/tier2/

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``federal mandates'' that
may result

in expenditures to state, local, and tribal governments, in the
aggregate, or to the private sector, of $100 million or more in any one
year. Before promulgating an EPA rule for which a written statement is
needed, section 205 of the UMRA generally requires EPA to identify and
consider a reasonable number of regulatory alternatives and to adopt
the least costly, most cost-effective, or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the final rule an explanation of why such
an alternative was adopted.
    Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed a small government agency plan
under section 203 of the UMRA. The plan must provide for the following:
notifying potentially affected small governments, enabling officials of
affected small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant federal
intergovernmental mandates, and informing, educating, and advising
small governments on compliance with the regulatory requirements.
    This rule contains no federal mandates for state, local, or tribal
governments as defined by the provisions of Title II of the UMRA. The
rule imposes no enforceable duties on any of these governmental
entities. Nothing in the rule would significantly or uniquely affect
small governments. EPA has determined that this rule contains no
federal mandates that may result in expenditures of more than $100
million to the private sector in any single year. The requirements of
UMRA therefore do not apply to this action.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' are defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
    Under Section 6 of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, imposes substantial direct
compliance costs, and is not required by statute. However, if the
Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the regulation, these restrictions do not apply. EPA also
may not issue a regulation that has federalism implications and that
preempts State law, unless the Agency consults with State and local
officials early in the process of developing the regulation.
    Section 4 of the Executive Order contains additional requirements
for rules that preempt State or local law, even if those rules do not
have federalism implications (i.e., the rules will not have substantial
direct effects on the States, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government). Those
requirements include providing all affected State and local officials
notice and an opportunity for appropriate participation in the
development of the regulation. If the preemption is not based on
express or implied statutory authority, EPA also must consult, to the
extent practicable, with appropriate State and local officials
regarding the conflict between State law and Federally protected
interests within the agency's area of regulatory responsibility.
    This rule does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. Although Section 6 of Executive
Order 13132 did not apply to the Highway Rule (66 FR 5002) or the
Nonroad Rule (69 FR 38958), EPA did consult with representatives from
STAPPA/ALAPCO, which represents state and local air pollution
officials.

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

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (59 FR 22951, November 6, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on one or more Indian tribes, on
the relationship between the Federal government and the Indian tribes,
or on the distribution of power and responsibilities between the
Federal government and Indian tribes.''
    This rule does not have tribal implications. It will not have
substantial direct effects on tribal governments, on the relationship
between the Federal government and Indian tribes, or on the
distribution of power and responsibilities between the Federal
government and Indian tribes, as specified in Executive Order 13175.
This rule does not uniquely affect the communities of Indian Tribal
Governments. This rule does not have tribal implications and does not
impose substantial direct compliance costs on Indian tribal
governments. Thus, Executive Order 13175 does not apply to this rule.

G. Executive Order 13045: Children's Health Protection

    Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, Section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
    This rule is not subject to the Executive Order because it is not
economically significant, and does not involve decisions on
environmental health or safety risks that may disproportionately affect
children.

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

    This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the

supply, distribution or use of energy. This direct final rule provides
limited, temporary flexibility to entities in the highway diesel
distribution system downstream of the refineries and import facilities.
Other amendments contained in today's action pertain to ensuring the
enforceability of the highway diesel program. The remaining amendments
in today's final rule provide technical correction and clarification to
the requirements under the highway diesel, the nonroad diesel, and the
Tier 2 gasoline programs.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C.
272 note) directs EPA to use voluntary consensus standards in its
regulatory activities unless doing so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (such as materials specifications, test
methods, sampling procedures, and business practices) that are
developed or adopted by voluntary consensus standards bodies. NTTAA
directs EPA to provide Congress, through OMB, explanations when the
Agency decides not to use available and applicable voluntary consensus
standards.
    This direct final rule does not involve technical standards. Thus,
we have determined that the requirements of the NTTAA do not apply.

J. Congressional Review Act

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

VII. Statutory Provisions and Legal Requirements

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

List of Subjects in 40 CFR Part 80

    Environmental protections, Diesel fuel, Fuel additives, Gasoline,
Motor vehicle Pollution, Penalties, Recordkeeping and reporting
requirements.

    Dated: November 8, 2005.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I, of the
Code of Federal Regulations is amended and set forth below.

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

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

0
2. Section 80.215 is amended in paragraph (a)(2)(i) under the heading
for ``Washington'' by adding a new entry for ``Klickitat'' in
alphabetical order to read as follows:

Sec.  80.215  What is the scope of the geographic phase-in program?

    (a) * * *
    (2) * * *
    (i) * * *
* * * * *
    Washington
* * * * *
    Klickitat
* * * * *

0
3. Section 80.500 is amended by revising paragraphs (b) and (c) to read
as follows:

Sec.  80.500  What are the implementation dates for the motor vehicle
diesel fuel sulfur control program?

* * * * *
    (b) Implementation date for standards applicable to motor vehicle
diesel fuel downstream of the refinery or importer. Except as provided
in paragraphs (c) and (d) of this section, beginning September 1, 2006,
the standards and requirements under Sec.  80.520(a) shall apply to any
motor vehicle diesel fuel at any downstream location.
    (c) Implementation date for standards applicable to motor vehicle
diesel fuel at retail outlets and wholesale purchaser-consumer
facilities. Except as provided in paragraph (d) of this section,
beginning October 15, 2006, the standards and requirements under Sec.
80.520(a) shall apply to any motor vehicle diesel fuel at any retail
outlet or wholesale purchaser-consumer facility.
* * * * *

0
4. Section 80.502 is amended by revising paragraphs (b)(2), and (b)(4)
to read as follows:

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

* * * * *
    (b) * * *
* * * * *
    (2) A refinery or import facility may not be aggregated with
facilities that receive fuel from other refineries or import
facilities, either directly or indirectly. For example, a refinery may
not be aggregated with a terminal that receives any fuel from a common
carrier pipeline. However, a refinery may be aggregated with a pipeline
and terminal that are owned by the same entity and which receive no
fuel from any source other than the refinery. Likewise, a refinery may
not be aggregated with a mobile facility that is also carrying another
entity's fuel; it may however be aggregated with a mobile facility that
does not receive fuel from any source other than the refinery. If a
refinery or import facility is aggregated with other facilities, then
the aggregated facility is treated as a refinery or import facility.
* * * * *
    (4) Mobile components and mobile facilities. (i) Where an entity
maintains custody of diesel fuel in one or more mobile components
(e.g., rail, barge, shipping, or trucking operations), the mobile
components may be aggregated as a single facility. Mobile components
may also be aggregated with a facility from which they receive fuel or
a facility to which they deliver fuel. However, mobile components may
not be aggregated with both a facility from which they receive fuel and
a facility to which they deliver fuel.
    (ii) When an entity maintains title to, but not custody of, diesel
fuel in one or more mobile components, the entity may treat the mobile
component(s) as a facility under this paragraph (b), but only for the
fuel to which the entity has title. In the event that title changes
while a mobile component is in transport (but the fuel physically
remains in the same mobile facility), the original entity that had
title to the fuel continues to be responsible for the

designate and track requirements until custody of the fuel is
transferred from the mobile facility.
* * * * *

Sec.  80.531  [Amended]

0
5. Section 80.531 is amended by removing and reserving paragraph
(c)(2)(ii).

0
6. Section 80.533 is amended by revising paragraph (e)(2) to read as
follows:

Sec.  80.533  How does a refiner or importer apply for a motor vehicle
or non-highway baseline?

* * * * *
    (e) * * *
    (2) Under paragraph (c)(2)(ii) of this section, BNRLM
equals the average annual volume of MVNRLM produced or imported from
January 1, 2006 through December 31, 2008, less BMV as
determined in paragraph (d)(2) of this section.
* * * * *

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

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

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

0
8. Section 80.590 is amended by revising paragraphs (a)(6)(i) and (d)
to read as follows:

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

    (a) * * *
    (6) * * *
    (i) The facility registration number of the transferor and
transferee, for terminals and all parties upstream, under Sec.  80.597,
if any.
* * * * *
    (d) Except for transfers to truck carriers, retailers or wholesale
purchaser-consumers, product codes may be used to convey the
information required under this section if such codes are clearly
understood by each transferee. ``15'', ``500'', or ``greater than 500''
or ``>500'' must appear clearly on the product transfer document, and
may be contained in the product code. If the designation is included in
the code: codes used to convey the statement in paragraphs (a)(7)(i)
and (a)(7)(ii) of this section must contain the number ``15'', codes
used to convey the statement in paragraphs (a)(7)(iii) and (a)(7)(iv)
of this section must contain the number ``500''; codes used to convey
the statement in paragraph (a)(7)(v) of this section must contain the
statement ``greater than 500'' or ``>500''. If another letter, number,
or symbol is being used to convey any of the statements in paragraphs
(a)(7)(i), (a)(7)(ii), (a)(7)(iii), (a)(7)(iv), and/or (a)(7)(v) of
this section, it must be clearly defined and denoted on the product
transfer document.
* * * * *

0
9. Section 80.592 is amended by revising paragraph (a)(2)(iii) to read
as follows:

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

    (a) * * *
    (2) * * *
    (iii) The results of the tests for sulfur content (including, where
applicable, the test results with and without application of the
adjustment factor under Sec.  80.580(d)) and for cetane index or
aromatics content (as applicable), and the volume of product in the
storage tank or container from which the sample was taken.
* * * * *

0
10. Section 80.593 is amended by revising paragraph (a)(7)(i) to read
as follows:

Sec.  80.593  What are the reporting requirements for refiners and
importers of motor vehicle diesel fuel subject to temporary refiner
relief standards?

* * * * *
    (a) * * *
    (7) * * *
    (i) The batch number assigned using the batch numbering conventions
under Sec.  80.65(d)(3) and the appropriate designation under Sec.
80.598.
* * * * *

0
11. Section 80.597 is amended by revising paragraph (c) and adding
paragraph (d)(3) to read as follows:

Sec.  80.597  What are the registration requirements?

* * * * *
    (c) Entity registration. (1) Each entity as defined in Sec.  80.502
that intends to deliver or receive custody of any of the following
fuels from June 1, 2006 through May 31, 2010 must register with EPA by
December 31, 2005 or six months prior to commencement of producing,
importing, or distributing any distillate subject to designation under
Sec.  80.598:
    (i) Fuel designated as 500 ppm sulfur MVNRLM diesel fuel under
Sec.  80.598 on which taxes have not been assessed pursuant to IRS code
(26 CFR part 48).
    (ii) Fuel designated as 15 ppm sulfur MVNRLM diesel fuel under
Sec.  80.598 on which taxes have not been assessed pursuant to IRS code
(26 CFR part 48).
    (iii) Fuel designated as NRLM diesel fuel under Sec.  80.598 that
is undyed pursuant to Sec.  80.520.
    (2) Each entity as defined in Sec.  80.502 that intends to deliver
or receive custody of any of the following fuels from June 1, 2007
through May 31, 2014 must register with EPA by December 31, 2005 or six
months prior to commencement of producing, importing, or distributing
any distillate subject to designation under Sec.  80.598:
    (i) Fuel designated as 500 ppm sulfur MVNRLM diesel fuel under
Sec.  80.598 on which taxes have not been assessed pursuant to IRS code
(26 CFR part 48).
    (ii) Fuel designated as NRLM diesel fuel under Sec.  80.598 that is
undyed pursuant to Sec.  80.520.
    (iii) Fuel designated as heating oil under Sec.  80.598 that is
unmarked pursuant to Sec.  80.510(d) through (f).
    (iv) Fuel designated as LM diesel fuel under Sec.
80.598(a)(2)(iii) that is unmarked pursuant to Sec.  80.510(e).
    (3) Registration shall be on forms prescribed by the Administrator,
and shall include the name, business address, contact name, telephone
number, e-mail address, and type of production, importation, or
distribution activity or activities engaged in by the entity.

    (4) Registration shall include the information required under
paragraph (d) of this section for each facility owned or operated by
the entity that delivers or receives custody of a fuel described in
paragraphs (c)(1) and (c)(2) of this section.
    (d) * * *
    (3) Mobile facilities:
    (i) A description shall be provided in the registration detailing
the types of mobile vessels that will likely be included and the nature
of the operations.
    (ii) Entities may combine all mobile operations into one facility;
or may split the operations by vessel, region, route, waterway, etc.
and register separate mobile facilities for each.
    (iii) The specific vessels need not be identified in the
registration, however information regarding specific vessel contracts
shall be maintained by each registered entity for its mobile
facilities, pursuant to Sec.  80.602(d).
* * * * *

0
12. Section 80.598 is amended by revising paragraph (b)(9)(vi) to read
as follows:

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

    (b) * * *
    (9) * * *
    (vi) Batches or portions of batches received designated as 500 ppm
sulfur NRLM diesel fuel may be re-designated as 500 ppm sulfur motor
vehicle diesel fuel by a truck loading terminal only if the terminal
maintains a neutral or positive balance at the end of each quarterly
compliance period on their motor vehicle diesel fuel volume from June
1, 2006 as calculated in Sec.  80.599(b)(4).
* * * * *

0
13. Section 80.599 is amended by revising the table in the introductory
text in paragraph (a), the table in paragraph (a)(1), and by revising
paragraphs (b)(4), (e)(2), and (e)(3) to read as follows:

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

    (a) * * *

------------------------------------------------------------------------
  Beginning date of quarterly compliance      Ending date of  quarterly
                  period                          compliance period
------------------------------------------------------------------------
June 1, 2006..............................  September 30, 2006.
October 1, 2006...........................  December 31, 2006.
January 1, 2007...........................  March 31, 2007.
April 1, 2007.............................  May 31, 2007.
June 1, 2007..............................  September 30, 2007.
October 1, 2007...........................  December 31, 2007.
January 1, 2008...........................  March 31, 2008.
April 1, 2008.............................  June 30, 2008.
July 1, 2008..............................  September 30, 2008.
October 1, 2008...........................  December 31, 2008.
January 1, 2009...........................  March 31, 2009.
April 1, 2009.............................  June 30, 2009.
July 1, 2009..............................  September 30, 2009.
October 1, 2009...........................  December 31, 2009.
January 1, 2010...........................  March 31, 2010.
April 1, 2010.............................  May 31, 2010.
June 1, 2010..............................  September 30, 2010.
------------------------------------------------------------------------

    (1) * * *

------------------------------------------------------------------------
   Beginning date of  annual compliance         Ending date of annual
                  period                          compliance period
------------------------------------------------------------------------
June 1, 2006..............................  May 31, 2007.
June 1, 2007..............................  June 30, 2008.
July 1, 2008..............................  June 30, 2009.
July 1, 2009..............................  May 31, 2010.
June 1, 2010..............................  June 30, 2011.
July 1, 2011..............................  May 31, 2012.
June 1, 2012..............................  June 30, 2013.
July 1, 2013..............................  May 31, 2014.
June 1, 2014..............................  June 30, 2015.
------------------------------------------------------------------------

* * * * *
    (b) * * *
    (4) The neutral or positive volume balance required for purposes of
compliance with Sec.  80.598(b)(9)(vi) and (b)(9)(vii)(A) means that
the net balance of motor vehicle diesel fuel in inventory as of the end
of the last day of the compliance period (MVNBE) must be
greater than or equal to zero. MVNBE is defined by the following
equation:

MVNBE = MV15BINV + MV500BINV +
[Sigma]MVB

Where:

MV15BINV = the total volume of fuel designated as 15 ppm
sulfur motor vehicle diesel fuel in inventory at the beginning of the
program on June 1, 2006.
MV500BINV = the total volume of fuel designated as 500 ppm
sulfur motor vehicle diesel fuel in inventory at the beginning of the
program on June 1, 2006. Any 2D 500 ppm sulfur MVNRLM in
inventory at the beginning of the program on June 1, 2006 may be
designated as motor vehicle diesel fuel.
[Sigma]MVB = the sum of the balances for motor vehicle diesel fuel for
the current compliance period and previous compliance periods.
* * * * *
    (e) * * *
    (2) The volume of 2D 15 ppm sulfur motor vehicle delivered
must meet the following requirement:

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

Where:

2MV15O = the total volume of fuel delivered during
the compliance period that is designated as 2D 15 ppm sulfur
motor vehicle diesel fuel.
2MV15INVCHG = the total volume of diesel fuel
designated as 2D 15 ppm sulfur motor vehicle diesel fuel in
inventory at the end of the compliance period minus the total volume of
2D 15 ppm sulfur motor vehicle diesel fuel in inventory at the
beginning of the compliance period, and accounting for any corrections
in inventory due to volume swell or shrinkage, difference in
measurement calibration between receiving and delivering meters, and
similar matters, where corrections that increase inventory are defined
as positive.
2MV15I = the total volume of fuel received during
the compliance period that is designated as 2D 15 ppm sulfur
motor vehicle diesel fuel.

    (3) The volume of 2D 500 ppm sulfur motor vehicle diesel
fuel delivered must meet the following requirement:

2MV500O <= 2MV500I -
2MV500INVCHG + 0.2 * 2MV15I

Where:

2MV500O = the total volume of fuel delivered during
the compliance period that is designated as 2D 500 ppm sulfur
motor vehicle diesel fuel.
2MV500I = the total volume of fuel received during
the compliance period that is designated as 2D 500 ppm sulfur
motor vehicle diesel fuel.
2MV500INVCHG = the total volume of diesel fuel
designated as 2D 500 ppm sulfur motor vehicle diesel fuel in
inventory at the end of the compliance period minus the total volume of
2D 500 ppm sulfur motor vehicle diesel fuel in inventory at
the beginning of the compliance period, and accounting for any
corrections in inventory due to volume swell or shrinkage, difference
in measurement calibration between receiving and delivering meters, and
similar matters, where corrections that increase inventory are defined
as positive.
* * * * *

0
14. Section 80.600 is amended by revising paragraphs (b)(1)(i)
introductory text, (b)(1)(i)(C), (b)(1)(i)(D), (b)(3), (i), (j), (k),
and (l), and adding paragraph (m) to read as follows:

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

* * * * *
    (b) * * *
    (1) * * *
    (i) For each facility that receives or distributes 2D 15
ppm sulfur motor vehicle diesel fuel or 2D 500 ppm sulfur
motor vehicle diesel fuel, records for each batch of diesel fuel with
the following designations for which custody is received or delivered
during the time period from June 1, 2006 through May 31, 2007:
* * * * *
    (C) 1D 500 ppm sulfur motor vehicle diesel fuel;
    (D) 2D 500 ppm sulfur motor vehicle diesel fuel; or
* * * * *
    (3) Records that clearly and accurately identify the total volume
in gallons of each designated fuel identified under paragraph (b)(1) of
this section transferred over each of the compliance periods, and over
the periods from June 1, 2006 to the end of each compliance period. The
records shall be maintained separately for each fuel designated under
paragraph (b)(1) of this section, and for each EPA entity and facility
registration number from whom the fuel was received or to whom it was
delivered. For batches of fuel received from facilities without an EPA
facility registration number, any batches of fuel received marked
pursuant to Sec.  80.510(d) or (f) shall be deemed designated as
heating oil, any batches of fuel received marked pursuant to Sec.
80.510(e) shall be deemed designated as heating oil or LM diesel fuel,
any batches of fuel received on which taxes have been paid pursuant to
Section 4082 of the Internal Revenue Code (26 U.S.C. 4082) shall be
deemed designated as motor vehicle diesel fuel, any 500 ppm sulfur
diesel fuel dyed pursuant to Sec.  80.520(b) and not marked pursuant to
Sec.  80.510(d) or (f) shall be deemed designated as NRLM diesel fuel,
and any diesel fuel with less than or equal to 500 ppm sulfur which is
dyed pursuant to Sec.  80.520(b) and not marked pursuant to Sec.
80.510(e) shall be deemed to be NR diesel fuel.
* * * * *
    (i) Additional records that must be kept by mobile facilities.
Additional records that must be kept by mobile facilities. Any
registered mobile facility must keep records of all contracts from any
contracted components (e.g. tank truck, barge, marine tanker, rail car,
etc.) in each of its registered mobile facilities.
    (j) The records required in this section must be made available to
the Administrator or the Administrator's designated representative upon
request.
    (k) Notwithstanding the provisions of this section, product
transfer documents must be maintained under the provisions of
Sec. Sec.  80.590, 80.592, and 80.602.
    (l) The records required in this section must be kept for five
years after they are required to be collected.
    (m) Identifications of fuel designations can be limited to a sub-
designation that accurately identifies the fuel and do not need to also
include the broader designation. For example, NR diesel fuel does not
also need to be designated as NRLM or MVNRLM diesel fuel.

0
15. Section 80.601 is amended as follows:
0
a. By revising paragraphs (a) introductory text, (a)(1), (a)(2), and
(a)(4)(v).
0
b. By revising paragraph (b) introductory text.
0
c. And by revising paragraph (d) introductory text, (d)(1)(i) through
(iv), adding paragraphs (d)(1)(v), (d)(1)(vi), and (d)(1)(vii), and
revising paragraph (d)(3) to read as follows.

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

    (a) Quarterly compliance period reports. Beginning February 28,
2007 and continuing through August 31, 2010, each entity required to
maintain records under Sec.  80.600 must report the following
information separately for each of its facilities to the Administrator
as specified in paragraph (d)(1) of this section except as provided in
paragraph (e) of this section.
    (l) Separately for each fuel designation category specified in
paragraphs (a)(1)(i) and (a)(1)(ii) of this section and separately for
each transferee facility, the total volume in gallons of distillate
fuel designated under Sec.  80.598 for which custody was delivered by
the reporting facility to any other entity or facility, and the EPA
entity and facility registration number(s), as applicable, of the
transferee.
    (i) Beginning with the first compliance period and continuing up to
and including the compliance period that starts April 1, 2007, fuel
designated as 15 ppm or 500 ppm motor vehicle diesel fuel.
    (ii) Beginning with the compliance period that starts June 1, 2007
and continuing up to and including the final reporting period, all fuel
designation categories.
    (2) Separately for each designation category specified in
paragraphs (a)(2)(i) and (a)(2)(ii) of this section and separately for
each transferor facility, the total volume in gallons of distillate
fuel designated under Sec.  80.598 for which custody was received by
the reporting facility, and the EPA entity and facility registration
number(s), as applicable, of the transferor.
    (i) Beginning with the first compliance period and continuing up to
and including the compliance period that starts April 1, 2007, fuel
designated as 15 ppm or 500 ppm motor vehicle diesel fuel.
    (ii) Beginning with the compliance period that starts June 1, 2007
and continuing up to and including the final reporting period, all fuel
designation categories.
* * * * *
    (4) * * *
    (v) Beginning with the compliance period starting June 1, 2007, the
volume balance under Sec.  80.599(c)(2) and Sec.
80.598(b)(9)(viii)(A).
* * * * *
    (b) Annual reports. Beginning August 31, 2007, all entities
required to maintain records for batches of fuel under Sec.  80.600
must report the following information separately for each of its
facilities to the Administrator on an annual basis, as specified in
paragraph (d)(2) of this section except as provided in paragraph (e) of
this section.
* * * * *
    (d) Submission of reports for quarterly and annual compliance
periods.
    (1) * * *
    (i) The reports for the first and second quarterly compliance
periods covering June 1, 2006 to September 30, 2006 and October 1, 2006
to December 31, 2006 respectively shall be submitted by February 28,
2007.
    (ii) The reports for the third and fourth quarterly compliance
periods covering January 1, 2007 to March 31, 2007 and April 1, 2007 to
May 31, 2007 respectively shall be submitted by August 31, 2007.
    (iii) The report for the fifth quarterly compliance period covering
June 1, 2007 to September 30, 2007 shall be submitted by November 30,
2007.
    (iv) The report for the sixth quarterly compliance period covering
October 1, 2007 to December 31, 2007 shall be submitted by February 28,
2008.
    (v) The reports for the quarterly compliance periods beginning with
the first period in 2008 up to and including the first period in 2010
shall be submitted as follows:
    (A) The report for the period covering January 1 to March 31 shall
be submitted by the following May 31.

    (B) The report covering the period covering April 1 to June 30
shall be submitted by the following August 31.
    (C) The report for the period from July 1 to September 30 shall be
submitted by the following November 30.
    (D) The report for the quarterly compliance period from October 1
to December 31 shall be submitted by the following February 28.
    (vi) The report for the quarterly compliance period from April 1,
2010 to May 31, 2010 shall be submitted by August 31, 2010.
    (vii) The report for the last quarterly compliance period from June
1, 2010 to September 30, 2010 shall be submitted by November 30, 2010.
* * * * *
    (3) All reports shall be submitted on forms and following
procedures specified by the Administrator, shall include a statement
that volumes reported to the Administrator under this section are in
substantial agreement to volumes reported to the Internal Revenue
Service (and if these volumes are not in substantial agreement, an
explanation must be included) and shall be signed and certified by a
responsible corporate officer of the reporting entity.
* * * * *

0
16. Section 80.602 is amended by revising paragraphs (a)(2)(iii), (b)
introductory text, (d), and (e), and adding paragraph (f) to read as
follows:

Sec.  80.602  What records must be kept by entities in the NRLM diesel
fuel and diesel fuel additive production, importation, and distribution
systems?

    (a) * * *
    (2) * * *
    (iii) The results of the tests for sulfur content (including, where
applicable, the test results with and without application of the
adjustment factor under Sec.  80.580(d)), for cetane index or aromatics
content, dye solvent red 164, marker solvent yellow 124 (as
applicable), and the volume of product in the storage tank or container
from which the sample was taken.
* * * * *
    (b) Additional records to be kept by refiners and importers of NRLM
diesel fuel. Beginning June 1, 2007, or June 1, 2006, pursuant to the
provisions of Sec.  80.535 or Sec.  80.554(d), any refiner producing
diesel fuel subject to a sulfur standard under Sec.  80.510, Sec.
80.513, Sec.  80.536, Sec.  80.554, Sec.  80.560, or Sec.  80.561, for
each of its refineries, and any importer importing such diesel fuel
separately for each facility, shall keep records that include the
following information for each batch of NRLM diesel fuel or heating oil
produced or imported:
* * * * *
    (d) Additional records that must be kept by mobile facilities. Any
registered mobile facility must keep records of all contracts from any
contracted components (e.g. tank truck, barge, marine tanker, rail car,
etc.) of each of its registered mobile facilities.
    (e) Length of time records must be kept. The records required in
this section shall be kept for five years from the date they were
created, except that records relating to credit transfers shall be kept
by the transferor for five years from the date the credits were
transferred, and shall be kept by the transferee for five years from
the date the credits were transferred, used or terminated, whichever is
later.
    (f) Make records available to EPA. On request by EPA, the records
required in this section must be made available to the Administrator or
the Administrator's representative. For records that are electronically
generated or maintained, the equipment and software necessary to read
the records shall be made available, or if requested by EPA, electronic
records shall be converted to paper documents which shall be provided
to the Administrator's authorized representative.

[FR Doc. 05-22807 Filed 11-21-05; 8:45 am]

BILLING CODE 6560-50-P