[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Rules and Regulations]
[Pages 75868-75880]
[FR Doc No: 2012-30960]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0223; FRL-9763-7]

Regulation of Fuels and Fuel Additives: Modifications to the
Transmix Provisions Under the Diesel Sulfur Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is amending the requirements under EPA's diesel sulfur
program related to the sulfur content of locomotive and marine (LM)
diesel fuel produced by transmix processors and pipeline facilities.
These amendments will reinstate the ability of locomotive and marine
diesel fuel produced from transmix by transmix processors and pipeline
operators to meet a maximum 500 parts per million (ppm) sulfur standard
outside of the Northeast Mid-Atlantic Area and Alaska and expand this
ability to within the Northeast Mid-Atlantic Area provided that: the
fuel is used in older technology locomotive and marine engines that do
not require 15 ppm sulfur diesel fuel, and the fuel is kept segregated
from other fuel. These amendments will provide significant regulatory
relief for transmix processors and pipeline operators to allow the
petroleum distribution system to function efficiently while continuing
to transition the market to virtually all ultra-low sulfur diesel fuel
(ULSD, i.e. 15 ppm sulfur diesel fuel) and the environmental benefits
it provides.

DATES: This rule is effective on February 25, 2013 without further
notice.

ADDRESSES: EPA established a docket for this action under Docket ID No.
EPA-HQ-OAR-2012-0223. All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information may not be publicly available, (e.g., CBI or other
information whose disclosure is restricted by statute). Certain other
material, such as copyrighted material, will be publicly available only
in hard copy. Publicly available docket materials are available either
electronically in www.regulations.gov or in hard copy at the Air and
Radiation Docket and Information Center, EPA, EPA West, Room 3334, 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 (202)
566-1744, and the telephone number for the Air Docket is (202) 566-
1742. You may be charged a reasonable fee for photocopying docket
materials, as provided in 40 CFR part 2.

FOR FURTHER INFORMATION CONTACT: Jeffrey A. Herzog, Office of
Transportation and Air Quality, National Vehicle and Fuel Emissions
Laboratory, Environmental Protection Agency, 2000 Traverwood Drive, Ann
Arbor, Michigan, 48105; telephone number:<PHONE_NUMBER>; fax number:
(734) 214-4816; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose

    EPA is issuing a final rule to amend provisions in the diesel
sulfur fuel programs. The diesel sulfur amendments provide necessary
flexibility for transmix processors and pipeline operators who produce
locomotive and marine diesel fuel. EPA is taking this action under
section 211 of the Clean Air Act.

B. Summary of Today's Rule

    The diesel transmix amendments will reinstate an allowance for
transmix processors and pipeline operators to produce 500 ppm sulfur
diesel fuel for use in older technology locomotive and marine diesel
outside of the Northeast Mid-Atlantic (NEMA) Area and Alaska

after 2014.\1\ These provisions were originally put in place as a
necessary flexibility to address feasibility and cost issues associated
with handling of the transmix volume generated in the pipeline
distribution system. These provisions allowed the fuel distribution
system to continue to function while transitioning to ULSD. The
technology to economically reduce the sulfur content of transmix
distillate product to 15 ppm at transmix processor and pipeline
facilities did not exist, and any alternative measures of disposing of
transmix were likewise deemed infeasible or cost prohibitive as the
market was then configured. Thus, in order to implement the ULSD
regulations, an outlet for the consumption of transmix distillate
product was necessary. With no outlet, transmix would build up in
storage tanks and pipelines would need to cease operations. When the
ULSD standards were expanded to nonroad, locomotive, and marine (NRLM)
diesel fuel, this would have removed the sole outlet in most areas of
the country. Consequently, the transmix flexibility was finalized.
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    \1\ The NEMA area is defined in 40 CFR 80.510(g)(1) as follows:
North Carolina, Virginia, Maryland, Delaware, New Jersey,
Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire,
Maine, Washington DC, New York (except for the counties of
Chautauqua, Cattaraugus, and Allegany), Pennsylvania (except for the
counties of Erie, Warren, McKean, Potter, Cameron, Elk, Jefferson,
Clarion, Forest, Venango, Mercer, Crawford, Lawrence, Beaver,
Washington, and Greene), and the eight eastern-most counties of West
Virginia (Jefferson, Berkeley, Morgan, Hampshire, Mineral, Hardy,
Grant, and Pendleton).
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    EPA's ocean-going vessels rule, however, removed this allowance
beginning 2014 to streamline our ULSD compliance provisions and avoid
additional complications that would otherwise result from adding a new
stream of diesel, containing up to 1,000 ppm sulfur, for category 3
(C3) marine. EPA believed at the time that this new 1,000 ppm sulfur
product could provide a suitable outlet for transmix distillate
product. Thus, we believed that it was possible to remove the transmix
flexibility. Transmix processors stated that they were not aware of the
changes to the 500-ppm LM transmix provisions until after they were
finalized, and that the C3 marine market would not be a viable outlet
for their distillate product. Not only are most locations for refueling
C3 marine vessels not located near transmix facilities, but C3 marine
terminals also do not lend themselves easily to the receipt of small
batches of transmix distillate product by tank truck. It might be
possible over time to modify C3 terminals and fueling operations to
receive transmix, but such changes were not within their control. Until
such time, the locomotive and marine diesel market remained the only
viable market.
    On June 29, 2010, EPA received a petition from a group of transmix
processors requesting that the Agency reconsider and reverse the 2014
sunset date for the 500-ppm LM transmix flexibility. Based on
additional input that we received from transmix processors and other
stakeholders in the fuel distribution system during our consideration
of the petition, EPA believed that it would be appropriate to extend
the 500-ppm diesel transmix flexibility for older locomotive and marine
engines beyond 2014 for reasons discussed below. On October 9, 2012,
EPA published in the Federal Register a Direct Final Rule (DFR) and
parallel Notice of Proposed Rule (NPRM).\2\ The DFR and NPRM also
included other provisions not relevant to this final rule. The DFR was
withdrawn on this issue due to the receipt of a negative comment.\3\
Based on EPA's consideration of the comments on the NPRM, EPA is
finalizing the proposal to extend the 500-ppm transmix flexibility
outside of the NEMA area and Alaska beyond 2014.
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    \2\ Regulation of Fuels and Fuel Additives: Modifications to
Renewable Fuel Standard and Diesel Sulfur Programs, Direct final
rule, 77 FR 61281, October 9, 2012. Regulation of Fuels and Fuel
Additives: Modifications to Renewable Fuel Standard and Diesel
Sulfur Programs, Notice of Proposed Rule, 77 FR 61313, October 9,
2012.
    \3\ Regulation of Fuels and Fuel Additives: Modifications to
Renewable Fuel Standard and Diesel Sulfur Programs, Withdrawal of
direct final rule, 77 FR 72746, December 6, 2012.
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    In response to industry input, EPA also requested comments in the
NPRM on whether the 500-ppm transmix flexibility should be extended to
the NEMA area. Based on EPA's consideration of the comments we
received, we are extending the transmix flexibility to within the NEMA
area beginning with the effective date of this final rule.
    Comments on the NPRM stated that the regulations did not provide
adequate certainty that pipeline operators as well as transmix
processors may produce 500 ppm LM from transmix. Based on these
comments we are amending the regulations to provide clarity regarding
EPA's long standing policy that pipeline operators as well as transmix
processors may take advantage of the 500-ppm LM transmix flexibility.

C. Costs and Benefits

    The flexibilities promulgated in this rule will provide a feasible
and cost effective means for the continued operation of the fuel
distribution system under our ULSD program regulations as the
locomotive and marine market transitions to equipment that require the
use of ULSD and until such time as alternative methods of treatment or
disposal for transmix can be developed. These amendments will impose no
new direct costs or burdens on regulated entities beyond the minimal
costs associated with reporting and recordkeeping requirements. These
amendments will provide significant regulatory relief for transmix
processors and pipeline operators to allow the petroleum distribution
system to function efficiently while continuing to transition the
market to virtually all ultra-low sulfur diesel fuel (ULSD, i.e. 15 ppm
sulfur diesel fuel) and the environmental benefits it provides.

II. Does this action apply to me?

    Entities potentially affected by this action include those involved
with the production, distribution and sale of diesel fuel. Regulated
categories and entities affected by this action include:

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                                                                                Examples of
          Category                   NAICS codes \a\                SIC codes \b\          potentially regulated
                                                                                parties
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Industry....................  324110......................  2911........................  Petroleum refiners.
Industry....................  Various.....................  Various.....................  Transmix processors.
Industry....................  486910......................  4613........................  Refined petroleum
                                                                                product pipelines.
Industry....................  424710......................  5171........................  Petroleum bulk
                                                                                stations and
                                                                                terminals.
Industry....................  424720......................  5172........................  Petroleum and
                                                                                petroleum products
                                                                                merchant wholesalers.
Industry....................  454319......................  5989........................  Other fuel dealers.
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\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

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

III. Amendments to the Diesel Transmix Provisions

    The final regulations for the nonroad diesel program were published
in the Federal Register on June 24, 2004.\4\ The provisions in the
nonroad diesel rule related to diesel fuel produced from transmix by
transmix processors and pipeline operators were modified by the C3
Marine diesel final rule that was published on April 30, 2010.\5\ This
action further amends the requirements for diesel fuel produced from
transmix by transmix processors and pipeline operators. Below is a
table listing the provisions that we are amending. The following
sections provide a discussion of these amendments.
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    \4\ 69 FR 38958 (June 24, 2004).
    \5\ 75 FR 22896 (April 30, 2010).

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Proposed  amendments to the diesel program           Description
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Section:
80.511(b)(4)..............................  Amended to allow for the
                                             production and sale of 500
                                             ppm locomotive and marine
                                             (LM) diesel fuel produced
                                             from transmix past 2014.
80.513 (entire section)...................  Amended to allow for the
                                             production and sale of 500
                                             ppm LM diesel fuel produced
                                             from transmix outside the
                                             NEMA area and Alaska past
                                             2014, to extend this
                                             flexibility to within the
                                             NEMA area, and to provide
                                             additional clarity
                                             regarding the production of
                                             500 ppm LM from transmix by
                                             pipeline operators.
80.572(d).................................  Amended to extend 500ppm LM
                                             diesel fuel label past
                                             2012.
80.597(d)(3)(ii)..........................  Amended to include 500 ppm
                                             LM diesel fuel in the list
                                             of fuels that an entity may
                                             deliver or receive custody
                                             of past June 1, 2014.
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A. Extension of the Diesel Transmix Provisions Outside of the Northeast
Mid-Atlantic Area and Alaska Beyond 2014

    Batches of different fuel products commonly abut each other as they
are shipped in sequence by pipeline. When the mixture between two
adjacent products is not compatible with either product, it is removed
from the pipeline and segregated as transmix. Transmix primarily is
gathered for reprocessing at the end of the pipeline distribution
system and downstream from any refinery that might possibly be able to
desulfurize the transmix. Transmix is also sometimes gathered at
intermediate points in the pipeline distribution system. In addition to
the long and inefficient transportation distances to return transmix to
a refinery for reprocessing, incorporating transmix into a refinery's
feed also presents technical and logistical refining process challenges
that typically make refinery reprocessing infeasible. In particular,
refineries are not set up to safely receive small batches of feedstock
by truck, crude towers are not designed to safely handle the large
swings in distillation range of their feed that would accompany the
introduction of transmix to the tower, and other locations in the
refinery (such as hydrodesulfurization units) are not designed to
safely receive additional feedstock. Thus, transmix processors and
pipeline facilities that produce diesel fuel from transmix are
necessary to dispose of transmix and maintain an efficient fuel
distribution system. However, they can only do so if they can find a
market that can utilize the transmix they produce.
    Transmix processing facilities handle an average of 5,000 barrels
per day of transmix compared to an average of 125,000 barrels per day
of crude oil for diesel fuel refineries. The low volumes handled by
transmix processors as well as other constraints mean that transmix
processors are limited to the use of a simple distillation tower and
additional blendstocks to manufacture finished fuels. Pipeline transmix
gathering facilities handle even lower volumes of fuel. Such facilities
manufacture diesel fuel from the transmix that results from the
interface between batches of ULSD and jet fuel. The presence of diesel
fuel in the mixture results in the transmix not meeting the stringent
quality specifications for jet fuel (e.g., distillation and additive
requirements unique to jet fuel). Because this transmix does not
contain gasoline, a finished distillate fuel from the transmix can be
produced without the need for further distillation. However, the high
sulfur contribution from jet fuel (e.g., maximum 3,000 ppm for jet
fuel) and other high sulfur products in multi-product pipelines results
in this transmix not meeting the 15 ppm sulfur specification for ULSD.
There is currently no desulfurization equipment which has been
demonstrated to be suitable for application at a transmix processor or
pipeline transmix gathering facility. The cost of installing and
operating a currently available desulfurization unit is too high in
relation to the small volume of distillate fuel produced at such
facilities. Without an outlet for the transmix, it would build up and
could eventually force a shutdown of pipeline operations until an
outlet could be found.
    The engine emission standards finalized in the rulemakings for new
nonroad, locomotive, and Category 1 & 2 (C1 & C2) marine engines
necessitate the use of sulfur-sensitive emissions control equipment
which requires 15 ppm sulfur diesel fuel to function properly.\6\
Accordingly, the nonroad rule required that nonroad, locomotive and
marine (NRLM) diesel fuel must meet a 15 ppm sulfur standard in
parallel with the introduction of new sulfur-sensitive emission control
technology to NRLM equipment. Beginning June 1, 2014, the nonroad
diesel rule required that all NRLM diesel fuel produced by refiners and
importers must meet a 15 ppm sulfur standard. The nonroad diesel rule
included special provisions to allow the continued use of 500 ppm
sulfur locomotive and marine diesel fuel produced from transmix by
transmix processors and pipeline operators beyond 2014 in older
technology engines as long as such engines remained in the in-use
fleet. These provisions along with other now

expired flexibilities in the diesel program were designed to provide a
feasible and cost effective means for the continued operation of the
fuel distribution system under our ULSD program regulations as the
locomotive and marine market transitioned to equipment that required
the use of ULSD and until such time as alternative methods of treatment
or disposal of transmix could be developed.\7\ The 500-ppm LM diesel
transmix provisions were limited to areas outside of the Northeast Mid-
Atlantic area and Alaska because it was judged that the heating oil
market in these areas would provide a sufficient outlet for transmix
distillate in these areas. In addition, the disposition of transmix in
Alaska is not a concern since there are no refined product pipelines in
Alaska. Excluding the NEMA area and Alaska allowed us to exempt the
NEMA area and Alaska from the fuel marker provisions that are a part of
the compliance assurance regime. The continuation of the 500-ppm LM
diesel transmix provisions beyond 2014 (finalized in the nonroad rule)
was supported by ongoing recordkeeping, reporting, and fuel marker
provisions that were established to facilitate enforcement during the
phase-in of the diesel sulfur program.\8\
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    \6\ Control of Emissions of Air Pollution from Nonroad Diesel
Engines and Fuel, Final Rule, 69 FR 38958, June 24, 2004. Control of
Emissions of Air Pollution From Locomotive and Marine Compression-
Ignition Engines Less Than 30 Liters per Cylinder; Republication,
Final Rule, 73 FR 37096, June 30, 2008.
    \7\ As discussed in the original nonroad diesel rulemaking, as
LM equipment is retired from service, the market for 500 ppm LM will
gradually diminish and eventually disappear. Given the long lifetime
of LM equipment (in many cases 40 years or more), we anticipate that
a market for 500 ppm LM will remain for a significant amount of
time. This phase-out time will allow transmix processors and
pipeline operators to either transition their >15 ppm sulfur
distillate product to other markets (e.g. C3 marine, heating oil,
process heat, export), develop a means to desulfurize fuel at their
facilities, or to implement other alternatives to dispose of
transmix.
    \8\ This included the now-completed phase-in of 15 ppm highway
diesel fuel and 15 ppm nonroad diesel fuel as well as the phase-out
of the small refiner and credits provisions for LM diesel fuel that
will be completed in 2014.
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    In the development of the proposed requirements for Category 3 (C3)
marine engines, EPA worked with industry to evaluate how the
enforcement provisions for the new 1,000-ppm C3 marine diesel fuel to
be introduced in June of 2014 could be incorporated into existing
diesel program provisions.\9\ Our assessment based on input from
industry at the time indicated that incorporating the new C3 marine
fuel into the diesel program enforcement mechanisms while preserving
the 500-ppm diesel transmix flexibility could not be accomplished
without retaining significant existing regulatory burdens (``designate
and track'' and fuel marker requirements) and introducing new burdens
on a broad number of regulated parties. We also believed that the new
C3 marine diesel market would provide a sufficient outlet for transmix
distillate product in place of the 500 ppm LM diesel market. Thus, we
believed the 500-ppm LM diesel transmix flexibility would no longer be
needed after 2014. Hence, we requested comment on whether we should
eliminate the 500-ppm LM transmix provisions in parallel with the
implementation of the C3 marine diesel sulfur requirement. This
approach allowed for a significant reduction in the regulatory burden
on a large number of industry stakeholders through the retirement of
the diesel program's designate-and-track and fuel marker requirements.
All of the comments that we received on the proposed rule were
supportive of the approach. Consequently, we finalized the approach in
the C3 marine final rule that was published on April 30, 2010.\10\
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    \9\ Control of Emissions From New Marine Compression-Ignition
Engines at or Above 30 Liters per Cylinder; Proposed Rule, 74 FR
44442 (August 28, 2009).
    \10\ Control of Emissions From New Marine Compression-Ignition
Engines at or Above 30 Liters per Cylinder; Final Rule, 75 FR 22896
(April 30, 2010).
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    EPA received a petition from a group of transmix processors on June
29, 2010, requesting that the Agency reconsider and reverse the 2014
sunset date for the 500-ppm LM transmix flexibility.\11\ A parallel
petition for judicial review was filed with the U.S. Court of Appeals,
D.C. Circuit.\12\ The transmix processors stated that they were not
aware of the changes to the 500-ppm LM transmix provisions until after
they were finalized. The petitioners also stated that they believe that
the C3 marine market would not be a viable outlet for their distillate
product. Not only are most locations for refueling C3 marine vessels
not located near transmix facilities, but C3 marine terminals also do
not lend themselves easily to the receipt of small batches of transmix
distillate product by tank truck. It might be possible over time to
modify C3 terminals and fueling operations to receive transmix, but
such changes were not within their control. Until such time the
locomotive and marine diesel market remained the only viable market.
Based on the additional input that we received from transmix processors
and other stakeholders in the fuel distribution system during our
consideration of the petition and the comments on the NPRM, EPA
believes that it is appropriate to reinstate the 500-ppm diesel
transmix flexibility beyond 2014.\13\
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    \11\ ``Petition to Reconsider Final Rule: Control of Emissions
from New Marine Compression Ignition Engines at or Above 30 Liters
per Cylinder; Final Rule,'' 75 FR 22,896 (April 30, 2010), Letter to
EPA Administrator Lisa Jackson dated June 29, 2010, from Chet
Thompson of Crowell and Moring LLP, on behalf of Allied Energy
Company, Gladieux Trading and Marketing, Insight Equity Acquisition
Partners, LP, Liquid Titan, LLC, and Seaport Refining and
Environmental, LLC.
    \12\ Petition for Review, United States Court of Appeals for the
District of Columbia Circuit, Petitioners, Allied Energy Company,
Gladieux Trading and Marketing, Insight Equity Acquisition Partners,
LP, LiquidTitan, LLC, and Seaport Refining and Environmental LLC, v.
Respondent, U.S. Environmental Protection Agency, Case 10-1146,
Document 1252640, Filed 06/29/2010.
    \13\ See Section IV of today's notice for our summary and
analysis of comments.
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    These amendments will provide significant regulatory relief for
transmix processors and pipeline operators to allow the petroleum
distribution system to function efficiently while contributing to
transition the market to virtually all ultra-low sulfur diesel fuel
(ULSD, i.e. 15 ppm sulfur diesel fuel) and the environmental benefits
it provides. Reinstating this transmix flexibility will provide a
feasible and cost effective means for the continued operation of the
fuel distribution system under our ULSD program regulations as the
locomotive and marine market transitioned to equipment that required
the use of ULSD and until such time as alternative methods of treatment
or disposal for transmix can be developed. As the locomotive and marine
engine fleet turns over to equipment that require the use of ULSD, this
flexibility will naturally phase out.\14\ Providing additional time for
transmix processors and pipeline operators will allow them to develop
other markets for transmix, including perhaps the C3 marine market,
export, or perhaps treatment technology. Therefore, extending this
flexibility would reduce the overall burden on industry of compliance
with EPA's diesel sulfur program and facilitate a smoother transition
of the entire market to ULSD. EPA will consider removing the 500-ppm
transmix flexibility when it appears that it no longer serves a
purpose.
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    \14\ The useful life of LM engines can exceed 40 years. In the
2011 edition of ``Railroad Facts,'' the Association of American
Railroads reported that in 2010 approximately 35% of the locomotive
fleet was at least 21 years old.
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B. Expansion of the Diesel Transmix Provisions To Include the Northeast
Mid-Atlantic Area

    The nonroad diesel rule specified that the small diesel refiner,
credit, and transmix provisions would not apply in the Northeast Mid-
Atlantic area. Hence, all LM diesel fuel shipped from refineries,
transmix processors, and importers for use in the NEMA area was
required to meet a 15-ppm sulfur standard beginning June 1, 2012 when

the 15-ppm standard becomes effective for large refiners and
importers.\15\ This approach allowed the NEMA area to be exempted from
fuel marker provisions that are a component of the compliance assurance
provisions associated with the small diesel refiner, credit, and
transmix provisions. As discussed previously a significant factor in
the decision made in the nonroad diesel rule to exclude the NEMA from
the diesel transmix provisions was our assessment that the heating oil
market provided a sufficient outlet for transmix distillate product in
this area. Since the publication of the nonroad diesel rule in 2004, a
number of states in the NEMA area have moved towards implementing a 15-
ppm sulfur standard for heating oil. A significant fraction of heating
oil in the area will be subject to a 15-ppm sulfur standard beginning
in 2012, and it is likely that other states will adopt a 15-ppm sulfur
standard for heating oil in the following years.
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    \15\ LM diesel fuel in terminals located in the NEMA area is
subject to a 15-ppm sulfur standard beginning August 1, 2012. LM
diesel fuel at retailers and wholesale purchaser consumers must meet
a 15-ppm sulfur standard beginning October 1, 2012.
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    Transmix processors and other fuel distributors in the NEMA area
stated that they were concerned that the changing state heating oil
specifications would impact their ability to market transmix distillate
product beginning in 2012. They requested that EPA extend the 500-ppm
LM flexibility to the NEMA area by 2012 to lessen the impact on the
fuel distribution system of complying with more stringent federal and
state distillate sulfur standards. Consequently, we requested comment
in the NPRM on expanding the 500-ppm LM transmix flexibility to include
the NEMA area. Based on our review of the comments on the NPRM, today's
final rule expands the 500-ppm transmix flexibility to include the NEMA
area beginning on the effective date of today's rule.\16\
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    \16\ See Section IV in today's notice for the summary and
analysis of comments.
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    Allowing 500-ppm LM from transmix to be used outside of the NEMA
area after 2014 reinstates a flexibility that was withdrawn by the C3
marine final rule. Allowing 500-ppm LM to be used inside the NEMA area
provides flexibility that was previously not included in EPA's diesel
program to offset a portion of the flexibility lost with the transition
to ultra-low sulfur heating oil in the NEMA. This will serve to allow
the ULSD and ultra-low sulfur heating oil provisions to continue to be
successfully implemented and maintain the integrity of the petroleum
distribution system. Otherwise, as in the discussion for outside the
NEMA above, without a practical outlet for the sale/disposal of
transmix, the pipeline distribution system which provides much of the
fuel to the NEMA could not continue to function.
    Expanding the transmix flexibility to the NEMA area will provide
significant regulatory relief for transmix processors and pipeline
operators to allow the petroleum distribution system to function
efficiently while continuing to transition the market to virtually all
ultra-low sulfur diesel fuel (ULSD, i.e. 15 ppm sulfur diesel fuel) and
the environmental benefits it provides. The same compliance assurance
requirements that we are finalizing for use outside of the NEMA area
will be applied within the NEMA area. A substantial fraction of the
transmix processing industry markets fuel within the NEMA area. Thus,
the additional time to prepare for a transition to other markets for
transmix distillate product that is afforded by the extension of the
500-ppm LM transmix flexibility to the NEMA is particularly
significant.

C. Transmix Flexibility Emission Effects

    It is difficult to assess the environmental consequences of the
diesel transmix provisions finalized by today's action because it is
difficult to know how the market would function without today's action.
Based on the feedback received, desulfurization of transmix at either
transmix facilities or refineries is not currently viable and the C3
marine and other potential markets are not set up to handle the receipt
and use of transmix. Thus, while it is possible to assess the emission
impacts associated with the use of transmix in lieu of ULSD in
locomotive and marine applications, it is difficult to know what the
baseline for comparison would be, as all other options at present
appear infeasible. Nevertheless, in order to provide an estimate of the
potential emission impacts we have conservatively modeled a base case
where we assume, as in the C3 marine final rule, that the diesel
transmix could in fact be consumed in the C3 market. Other possible
assumptions (e.g., export, shipped to a refinery for reprocessing)
would only add transport distance, increasing the emissions in the base
case.
    Thus, to evaluate the environmental consequences of the diesel
transmix provisions finalized by today's notice, we compared the
potential increase in emissions of sulfate particulate matter (PM) and
sulfur dioxide (SO2) from the use of 500 ppm LM from
transmix in older engines to the additional transportation emissions
associated with shipment of transmix to the Category 3 (C3) marine
market which might be avoided by allowing continued access to the 500
ppm LM market. Markets for locomotive and marine diesel tend to be
nearer to transmix processing facilities than markets for C3 marine
diesel.\17\ Therefore, the diesel transmix provisions in today's rule
will result in a reduction in nitrogen oxides (NOX),
volatile organic compounds (VOCs), carbon monoxide (CO), PM, and toxics
as well as other emissions that would otherwise be associated with
transporting diesel transmix to the more distant markets.
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    \17\ Transmix processing facilities are located at downstream
locations on refined petroleum product pipelines. Such pipeline
locations are typically not located close to the coasts where a C3
market exists. A number of such locations are located in the center
of the United States. Locomotive refueling facilities are located
throughout the United States and C2 marine refueling locations are
located on navigable rivers as well as on the coasts.
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    We estimate that approximately 450 million gallons of distillate
fuel per year is produced from transmix.\18\ However, some of this
transmix distillate product would continue to be used as heating oil
regardless of whether the diesel transmix provisions were finalized as
long at some of that market remained higher than 15 ppm. Given that
today's rule includes provisions to expand the transmix flexibility to
the NEMA area where the majority of heating oil is used, we estimate
that as much as 337 million gallons per year of transmix distillate
product might be used in older LM engines initially, and then decline
over time as the locomotive and marine diesel fleet transitions to
engines requiring ULSD.\19\ An estimated 6,994 million gallons of
diesel fuel was estimated to be used in locomotive and marine engines
in 2004.\20\ Thus, the volume of transmix distillate product that may
be used in LM engines represents at most 4.8% of the total diesel fuel
use in such engines. Although some batches of diesel transmix may
approach the 500 ppm sulfur limit, the average sulfur content

is considerably less. Comments on the NPRM stated that the sulfur
content of diesel transmix is often 100 ppm to 200 ppm. Based on these
comments, we have assumed for this analysis that the sulfur content of
diesel transmix will average about 150 ppm. When burned in non-catalyst
equipped engines, the vast majority (approximately 98 percent) of
sulfur in diesel fuel comes out of the exhaust as SO2, with
the remainder coming out as H2SO4 (sulfate PM).
Thus, as shown in Table 1, SO2 emissions from locomotive and
marine diesel engines would be expected to rise nationwide by
approximately 321 tons, and sulfate PM emissions by about 26 tons.
---------------------------------------------------------------------------

    \18\ Based on information provided by transmix processors, we
estimate that approximately 750 million gallons per year of transmix
is produced annually, approximately 60% of the transmix-derived
product is distillate fuel, and the remainder is gasoline.
    \19\ We estimate that approximately 50 percent of diesel
transmix is produced by pipelines that serve the NEMA area. We
believe that it is reasonable to assume that 50 percent of the
diesel transmix within the NEMA area will continue to be used as
heating oil despite access to the LM market. Thus, we estimate that
25 percent of all diesel transmix will continue to be used in
heating oil.
    \20\ Regulatory Impact Analysis: Control of Emissions of Air
Pollution from Locomotive Engines and Marine Compression-Ignition
Engines Less Than 30 Liters per Cylinder, EPA420-R-08-001, February
2008.
---------------------------------------------------------------------------

    At the same time, emissions from highway diesel engines would be
expected to decline due to the reduced distances associated with
transporting diesel transmix to locomotive and marine diesel terminals
instead of C3 marine terminals. Based on an assessment of the locations
of potential C3 marine outlets as opposed to locomotive and marine
outlets, and based on comments we received on the proposal, we estimate
that allowing the use of transmix in the locomotive and marine diesel
market would decrease trucking distances by an average of approximately
250 miles (one way). In reality trucking distances and associated
emissions could be considerably higher in order to reach a refinery
that might be reconfigured to process transmix, or to be exported.
Based on an assumed capacity for a transport truck of 8,000 gallons of
transmix distillate, and EPA's emission factors for transport trucks,
as shown in Table 1, allowing diesel transmix to continue to be burned
in the older locomotive and marine applications thereby resulting in
deferred additional truck transport of transmix distillate would
decrease nationwide emissions of NOX by 194 tons, VOC by 19
tons, CO by 58 tons, PM2.5 by 7 tons, SO2 by less
than one ton, and small reductions in various air toxic emissions.\21\
---------------------------------------------------------------------------

    \21\ The deferred additional truck transport would also avoid
the production of 47,380 tons of CO2 emissions. An
additional 4,220 thousand gallons of diesel fuel would be consumed
to support the increased truck transport with an associated increase
in diesel fuel costs of 17 million dollars.

                                                      Table 1--Nationwide Annual Emissions Effects
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Transmix
                                                                    Emissions                         Net emissions                        flexibility
                                                                effects from use  Emission effects   effects of the     ULSD programs       emissions
                                                                 of TDP instead     from avoided        transmix          emissions        effects as
                                                                of ULSD in older  transport of TDP     flexibility     effects (short     percentage of
                                                                   LM engines       (short tons)      (short tons)          tons)       emission effects
                                                                  (short tons)                                                          of ULSD programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOX...........................................................                 0             - 194             - 194       - 4,023,162           - 0.005
VOC...........................................................                 0              - 19              - 19         - 160,350           - 0.012
CO............................................................                 0              - 58              - 58       - 1,912,706           - 0.003
PM............................................................              + 26               - 7              + 19         - 264,492           + 0.007
SO2...........................................................             + 321            - 0.35             + 321         - 516,269           + 0.062
Benzene.......................................................                 0            - 0.19            - 0.19           - 2,330           - 0.008
Formaldehyde..................................................                 0            - 1.45            - 1.45          - 16,816           - 0.009
Acetaldehyde..................................................                 0            - 0.53            - 0.53           - 6,887           - 0.008
1,3-Butadiene.................................................                 0            - 0.11            - 0.11             - 882           - 0.012
Acrolein......................................................                 0            - 0.06            - 0.06             - 200           - 0.030
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As can be seen from Table 1, the diesel transmix provisions being
finalized today provide on balance small reductions in emissions of
NOX, VOC, CO, and toxics and small net increases in PM and
SO2. These emission effects will decline over time as the
potential market for 500 ppm LM diminishes and eventually disappears.
Since this final rule is taking an action to allow the ULSD program to
be feasibly implemented, the emissions effects of this action must be
viewed in the context of the overall ULSD regulations that this FRM is
part of. As further shown in Table 1, the net emission impacts of all
pollutants of this action is very small and we believe will have a very
small impact in comparison to the benefits of the entire ULSD program
that is enabled by today's action. The annual emissions reductions
achieved by EPA's ULSD regulations are enormous compared to the effects
of this rulemaking. Thus, the clean diesel programs will be providing
very large emissions benefits which are little affected by the transmix
flexibility. This transmix flexibility was judged to be a necessary
component of the clean diesel program when it was finalized. Therefore,
it is appropriate that the transmix flexibility be reinstated and
expanded to the NEMA area. The use of 500 ppm LM from transmix would be
limited to older technology engines that do not possess sulfur-
sensitive emissions control technology. We believe that the 500 ppm LM
segregation and other associated requirements would prevent misfueling
of sulfur-sensitive engines.

D. Compliance Assurance Provisions

    Industry stakeholders suggested alternative enforcement mechanisms
to support the extended flexibility which would not necessitate
reinstating and expanding the designate-and-track and fuel marker
provisions that were retired by the C3 marine final rule. Reinstatement
and expansion of these provisions would likely place an unacceptable
burden on a large number of stakeholders, most of whom would not handle
500 ppm LM. The suggested alternative enforcement mechanism would
impose minimal additional reporting and recordkeeping burdens only on
the parties that produce, handle, and use 500 ppm LM. We believe that
this alternative enforcement approach (which we proposed in the NPRM)
will meet the Agency's goals of ensuring that the pool of 500 ppm LM is
limited to transmix distillate and that 500 ppm LM is not used in
sulfur-sensitive emissions control equipment.\22\
---------------------------------------------------------------------------

    \22\ See Section IV in today's notice for the summary and
analysis of comments.
---------------------------------------------------------------------------

    The compliance assurance provisions that we are finalizing to
support the extension of the diesel transmix flexibility outside the
NEMA area and Alaska beyond 2014 and the expansion of the flexibility
to within the NEMA area are similar to those that were used to support
the small refiner flexibilities in Alaska during the phase-in of EPA's
diesel sulfur program.\23\ In addition to

registering as a refiner and certifying that each batch of fuel
complies with the fuel quality requirements for 500 ppm LM diesel fuel,
producers of 500 ppm transmix distillate product would be required to
submit a compliance plan for approval by EPA. This compliance plan
would provide details on how the 500 ppm LM would be segregated through
to the ultimate consumer and its use limited to the legacy LM fleet.
The plan would be required to identify the entities that would handle
the fuel and the means of segregation. We believe that it is
appropriate to limit the number of entities that would be allowed to
handle the fuel between the producer and the ultimate consumer in order
to facilitate EPA's compliance assurance activities.\24\ Based on
conversations with transmix processors, we believe that specifying that
no more than 4 separate entities handle the fuel between the producer
and the ultimate consumer would not hinder the ability to distribute
the fuel.\25\ The plan would need to identify the ultimate consumers
and include information on how the product would be prevented from
being used in sulfur-sensitive equipment.
---------------------------------------------------------------------------

    \23\ See 40 CFR 80.554(a)(4).
    \24\ An entity is defined as any company that takes custody of
500 ppm LM diesel fuel.
    \25\ In most cases, fewer entities would take custody of the
product. In many cases, only a single entity (a tank truck operator)
would be in the distribution chain between the transmix processor
and the ultimate consumer. However, we understand that as many as 4
separate entities may handle the product between the producer and
ultimate consumer if it is shipped by pipeline: the tank truck
operator to ship the product from the producer to the pipeline, the
pipeline operator, the product terminal that receives the fuel from
the pipeline, and another tank truck operator to ship the product to
the ultimate consumer from the terminal.
---------------------------------------------------------------------------

    We understand that some transmix processors currently rely on
shipment by pipeline to reach the 500 ppm locomotive diesel market.\26\
As a result, the regulations allow 500 ppm LM to be shipped by pipeline
provided that it does not come into contact with distillate products
that have a sulfur content greater than 15 ppm. The compliance plan
would need to include information from the pipeline operator regarding
how this segregation would be maintained. Discussions with transmix
processors indicate that this requirement would not limit their ability
to ship 500 ppm LM by pipeline. If 500 ppm LM was shipped by pipeline
abutting 15 ppm diesel, the volume of 500 ppm LM delivered would likely
be slightly greater than that which was introduced into the pipeline as
a consequence of cutting the pipeline interface between the two fuel
batches into the 500 ppm LM batch. This small increase in 500 ppm LM
volume would be acceptable.
---------------------------------------------------------------------------

    \26\ 500 ppm LM diesel fuel is shipped by a short dedicated
pipeline from a product terminal to a locomotive refueling facility.
---------------------------------------------------------------------------

    To provide an additional safeguard to ensure that volume of 500 ppm
LM diesel fuel does not swell inappropriately, the volume increase
during any single pipeline shipment must be limited to 2 volume percent
or less. This limitation on volume swell to 2 volume percent or less is
consistent with the limitation in 40 CFR 80.599 (b)(5) regarding the
allowed swell in volume during the shipment of highway diesel fuel for
the purposes of the determination of compliance with the now expired
volume balance requirements under 40 CFR 80.598(b)(9)(vii)(B). Industry
did not object to this requirement, and therefore, we believe that
limiting the volume swell of 500 ppm LM diesel fuel during shipment by
pipeline to 2 volume percent or less should provide sufficient
flexibility.
    Product transfer documents (PTDs) for 500 ppm LM diesel are
required to indicate that the fuel must be distributed in compliance
with the approved compliance assurance plan. Entities in the
distribution chain for 500 ppm LM diesel fuel are required to keep
records on the volumes of the 500 ppm that they receive from and
deliver to each other entity. Based on input from fuel distributors,
keeping these records will be a minimal additional burden, as discussed
in section IV. Such entities are also required to keep records on how
the fuel was transported and segregated. We would typically expect that
the volumes of 500 ppm LM delivered would be equal to or less than
those received unless shipment by pipeline occurred. Some minimal
increase in 500 ppm LM volume would be acceptable due to differences in
temperature between when the shipped and received volumes were measured
and interface cuts during shipment by pipeline. Entities that handle
500 ppm LM are required to calculate a balance of 500 ppm LM received
versus delivered/used on an annual basis. If the volume of fuel
delivered/dispensed is greater than that received, EPA would expect
that the records would indicate the cause. If an entity's evaluation of
their receipts and deliveries of 500 ppm LM fuel indicated
noncompliance with the product segregation requirements, the custodian
would be required to notify EPA. All entities in the 500 ppm LM
distribution chain are required to maintain the specified records for 5
years and provide them to EPA upon request.

IV. Summary and Analysis of Comments

Need for the Proposed Flexibility

    Comments from transmix processors and pipeline operators support
allowing 500 ppm diesel fuel to be produced from transmix for use in
older LM engines outside of the NEMA area and Alaska after 2014, and
the expansion of this flexibility to within the NEMA area. These
commenters stated that access to the 500 ppm LM market is critical due
to the limited alternative markets for transmix distillate product and
the need for such a market to maintain the flow of products through
pipelines. Some transmix processors stated that the C3 marine market is
not a viable outlet for their distillate product due to the long
shipping distances and limited ability of many C3 terminals to receive
shipments by tank truck. Transmix processors and pipeline operators
stated that there would be significant negative consequences if they
were not allowed additional time to produce 500 ppm LM diesel fuel.
Some transmix processors stated that their only alternative may be to
shut down. In such a case, transmix would need to be trucked long
distance to refineries for reprocessing. They also stated that
pipelines could be in jeopardy of shutting down if transmix could not
be cleared in a timely manner from storage facilities in the system.
They noted that this could result in disruptions to the fuel supply.
One pipeline operator and transmix processor stated that lack of access
to the 500 ppm LM market for transmix distillate product could create
barriers to the continued shipment of jet fuel (with sulfur content as
high as 3000 ppm) by pipeline. This is because jet fuel is the only
high sulfur product shipped by the pipeline operator, and if the
operator bars jet fuel from its system the pipeline's transmix
processors may be able to produce distillate product that meets a 15
ppm sulfur specification. If the pipeline operator were able to produce
a 15 ppm sulfur transmix distillate product, the pipeline's transmix
processing facilities would no longer need to use the 500-ppm LM
transmix flexibility, since the fuel could readily be sold into the
highway and NRLM markets. The commenter stated, however, that
eliminating jet fuel transportation by pipeline would increase
transport-related emissions, costs, and safety risks of alternative
transportation of jet fuel.
Response
    We agree with comments that transmix processors, pipelines, and the
fuel distribution system as a whole need

additional time to produce 500 ppm LM diesel fuel from transmix.
Providing additional time will help avoid potential fuel supply
disruptions and reduce the overall burden of EPA's diesel sulfur
program as transmix processors and pipeline operators adjust to the
continued reduction in outlets for >15ppm diesel fuel.
    The 500-ppm LM transmix flexibility that was originally included in
the diesel program was necessary to allow the ULSD program to be
feasibly implemented and enable the large national emissions reductions
that it provided. The C3 final rule discontinued the 500-ppm LM
flexibility because the information available to us at the time
indicated that this would not have a significant negative impact on the
handling of transmix in the distribution system. We also believed at
the time that continuing the flexibility after 2014 would unacceptably
increase compliance burdens given the introduction of C3 marine fuel.
Since that time, we received input from transmix processors and
pipeline operators that discontinuing this flexibility could have
substantial negative impacts on their operations and the fuel
distribution system as a whole. We have also been able to develop an
alternative enforcement mechanism contained in this final rule which
can effectively control the production and distribution of 500 ppm LM
from transmix while resulting in a minimal compliance burden. Had we
had this information when the C3 rule was finalized, we would not have
discontinued the 500-ppm transmix flexibility in the C3 marine final
rule.

Expansion of the Proposed Flexibility to Within the NEMA Area

    Commenters who support expanding the transmix flexibility to the
NEMA area stated that the ability to market transmix distillate product
as heating oil is being progressively reduced by the adoption by states
of a 15 ppm sulfur standard for heating oil. They claim that not
allowing the use of 500 ppm LM in the NEMA area creates significant
costs and transportation overhead, and complexity, as well as increased
transportation-related emissions, to move the fuel outside the area.
One pipeline stated that some of the largest volume processors are
located in the NEMA area.
Response
    When we finalized the original transmix flexibility, we concluded
that the heating oil market would provide a sufficient outlet for
transmix distillate product within the NEMA area. This allowed us to
not extend the 500ppm LM transmix flexibility to within the NEMA area
at the time, which allowed us to avoid imposing the marker provisions
in the NEMA. Since that time, several states in the NEMA area have
begun implementing a 15 ppm sulfur standard for heating oil, which is
substantially limiting the ability to market transmix distillate
product as heating oil. Given this development and the availability of
an appropriate enforcement mechanism for use in the NEMA area, the same
rationale that supports the need for reinstating the transmix
flexibility inside the NEMA areas applies for expanding it outside of
the NEMA area. Not only is it costly and inefficient to ship transmix
outside of the NEMA area, but if no suitable market can be found the
distribution of fuel to the NEMA area could be severely constrained.
This would be particularly a concern during times when the market is
already experiencing disruptions (e.g., following hurricanes).

Duration of the Flexibility

    Commenters that supported the proposed flexibility stated that EPA
should not set an expiration date for the flexibility at this time.
However, the Engine Manufacturers Association (EMA) stated that EPA
should commit to review whether to sunset the 500-ppm provisions as
part of any future rulemaking associated with either heating oil or the
C3 marine sulfur requirements.
Response
    We acknowledge that it is unclear when turnover of the LM fleet to
equipment that requires 15 ppm fuel will render the 500-ppm LM transmix
flexibility no longer useful. We agree that EPA should consider
removing the flexibility when it appears that it no longer serves a
purpose. However, we do not believe that it is appropriate or necessary
to commit to a specific timeline when such a review will take place. LM
equipment lasts for many years, and the location of such older
equipment in relation to the transmix facilities will have to factor
into any consideration of whether the provision remains to be useful.
EPA will continue to monitor fleet turn over and stakeholder
perceptions regarding when it would be appropriate to retire the 500-
ppm LM transmix flexibility.

Compliance Assurance

    Commenters that supported the proposal stated that the same
enforcement mechanisms proposed for use outside the NEMA area and
Alaska could be applied within the NEMA area.
    EMA stated that although they did not object to the adoption of the
envisioned transmix flexibility, they have concerns about its
implementation. EMA stated that it was concerned that its members could
experience increased in-use emissions compliance liability associated
with misfueling equipment which requires the use of 15 ppm sulfur
diesel fuel. EMA stated that EPA should shield engine manufacturers,
vehicles, and equipment that require 15 ppm diesel from potential
liability resulting from defect reporting, emissions warranty
obligations, and emission-recall requirements arising from, or in
connection with misfueling with 500 ppm diesel.
    EMA stated that sufficient infrastructure must be in place to
segregate 500 ppm from 15 ppm and sufficient training of parties that
handle 500 ppm must be conducted. EMA further stated that if the
required infrastructure and training are not in place, then only 15 ppm
diesel fuel should be allowed. EMA stated that 500 ppm LM must be
identified and tracked to help ensure that it is only used only in
engines that do not require 15 ppm diesel fuel. EMA also stated that
the SY-124 marker should be used to identify 500 ppm LM diesel to help
prevent misfueling. EMA stated that EPA should eliminate the incentive
to misfuel by eliminating the accessibility and/or potential financial
benefit of using higher sulfur fuels.
    EMA stated that EPA should ensure adequate review and approval of
transmix fuel distribution compliance plans to assure the availability
of 15 ppm diesel fuel for those engines that need it. EMA states that
compliance plan approval documents should include information regarding
enforcement penalties associated with misfueling.
Response
    We believe that the enforcement mechanisms we are finalizing will
provide an appropriate level of assurance that 500 ppm LM will not
infiltrate the 15 ppm diesel fuel distribution system and not be used
to misfuel engines which require the use of 15 ppm fuel. The compliance
plan required to be submitted by producers of 500 ppm LM will provide
details on how 500 ppm LM will be segregated through to the ultimate
consumer and that its use is limited to the legacy LM fleet. The
compliance plan must demonstrate that the end users of 500 ppm LM will
also have access to 15 ppm diesel fuel for use in those engines

that require the use of 15 ppm diesel fuel.
    The compliance plan is required to identify the entities that will
handle the fuel and the means of segregation. The product transfer
documents for 500 ppm LM that are required to be retained by all
parties in the fuel distribution system will provide information on the
use restrictions for the fuel. EPA approvals of compliance plans will
include information regarding the enforcement penalties associated with
misfueling. Given the rather limited and contained nature of the
refueling infrastructure for LM applications in comparison to other
highway and nonroad diesel applications, we believe these provisions
will be entirely feasible and sufficient.
    We do not believe that requiring the use of the SY 124 maker in 500
ppm LM after 2014 would be useful in helping to prevent the misfueling
of engines that require the use of 15 ppm diesel fuel. The SY124 marker
is not visible in itself. Hence, its presence would not serve as a
visible warning to help deter misfueling. In any event, parties do not
typically see the fuel as it is being dispensed into a fuel tank. Given
that an analytical test would be required to detect the marker, it is
more appropriate to test the sulfur content of the fuel. The SY 124
marker requirements for 500 ppm LM diesel fuel that were effective from
June 1, 2010 through May 31, 2012, were put in place to help ensure
that 500 ppm LM from larger refiners did not inappropriately shift into
the limited 500 ppm NR diesel fuel pool from small refiners, credit
users, and transmix processors. These marker requirements were
discontinued because 500 ppm LM could no longer be produced by larger
refiners after May 31, 2012. The marker requirements for 500 ppm LM
were never intended to help prevent the misfueling of LM equipment that
requires the use of 15 ppm diesel fuel with 500 ppm LM.
    We disagree with EMA's comments that EPA should take additional
actions to shield engine manufacturers, vehicles, and equipment that
require 15 ppm diesel from potential liability resulting from defect
reporting, emissions warranty obligations, and emission-recall
requirements arising from, or in connection with misfueling with 500
ppm diesel. EPA has a long history of including flexibilities in its
diesel program to allow the limited use of higher sulfur fuels in older
vehicles and equipment that are not sulfur sensitive. The mechanisms
designed to assign culpability and the consequences for misfueling are
long established and are functioning adequately. Hence, we believe that
providing such a blanket waiver of liability is neither necessary nor
appropriate.

Emission Impacts

    Transmix processors stated that EPA significantly underestimated
the potential increase in emissions from additional truck transport of
transmix distillate product if the envisioned flexibility is not
finalized. One transmix processor in the NEMA area stated that they are
currently shipping their transmix distillate product over 800 miles to
find a market, greatly exceeding the 150 miles assumed by EPA in its
analysis. They also noted the sulfur content for transmix distillate
product is often in the range of 100 to 200 ppm, which is substantially
lower that the assumed average sulfur content in EPA's emissions
analysis. They stated that EPA underestimated the environmental
benefits of implementation the proposed transmix flexibility by at
least 40%.
    A comment from a private individual was opposed to extending the
date beyond which 500 ppm LM diesel fuel could be sold. This commenter
stated that although the envisioned transmix flexibility might be
environmentally beneficial on a national basis, the emissions would
shift from one locale to another, affecting different people. The
commenter stated that extending the use of 500 ppm LM would have
substantial adverse health effects. The commenter stated that five
minute exposures to sulfur dioxide, which is produced from sulfur in
diesel when it is combusted, can trigger asthma attacks, which can be
fatal. In addition, the commenter stated that relatively short term
exposures to PM2.5, which is also produced from combustion
of diesel, can have adverse health impacts including death.
Response
    The Agency is very concerned about the localized impacts of
emissions. However, we do not believe that there are potential
localized impacts from the transmix flexibility that warrant not
finalizing this action. In addition, not finalizing this action would
subject the fuel distribution system to the disruption and burden
resulting from the absence of sufficient flexibility for disposal of
diesel transmix. The commenter states that the transmix flexibility
will result in a shift of emissions from one area to another. Under the
scenario we evaluated, we note that NOX, VOC, PM,
SO2, CO, and toxics emissions will be avoided on our
roadways by avoiding the need to transport transmix distillate product
by truck to distant markets or transmix to refinery processing
facilities, while at the same time sulfate PM and SO2
emissions may be increased slightly from the locomotive and marine
applications along our rail lines and waterways where the transmix
distillate is burned.\27\ In the case of both the small emissions
increases and decreases, these emissions impacts will be distributed
over the broad areas where such equipment operates. The small changes
in emission levels are expected to have very minimal effect on
pollutant concentrations in any particular area. The increased
concentrations resulting from these changes are likely to be
overwhelmingly offset by the significant decreases in pollutant
emissions (as a result of the ULSD program) in areas dominated by
diesel engine sources, such as locations downwind of marine ports and
rail lines. Studies in those locations report peak SO2
concentrations below the National Ambient Air Quality Standard for
SO2 and well below the level at which respiratory symptoms
are observed in some individuals with asthma.28, 29
Furthermore, the diesel transmix flexibility, as in the original
Nonroad, Locomotive, and Marine diesel final rulemaking was necessary
to allow the distribution system to function while providing ULSD
product. Without it the emission benefits of the ULSD program could not
be achieved. When the diesel transmix provisions are viewed in light of
the broader ULSD regulations of which they are a part, EPA is confident
that any small increase in local SO2 or PM emissions from
the burning of transmix will be more than offset by the overall
emissions reductions resulting from EPA's ULSD program.\30\ Thus, even
in areas where this transmix distillate product will be burned, the
clean diesel program will be providing very large emission benefits. As
the locomotive and marine engines fleet progressively turns over to
engines that require the use of 15 ppm diesel fuel, the use of 500 ppm
LM will gradually diminish and eventually disappear. EPA intends to
evaluate in a later action

when the 500 ppm LM flexibility is no longer useful and should be
retired.
---------------------------------------------------------------------------

    \27\ See Section III.C in today's rule for a discussion of the
emissions effects of the transmix flexibility.
    \28\ Ault, A.P.; Gaston, C.J.; Wang, Y.; Dominguez, G.;
Thiemens, M.H.; Prather, K.A. (2010) Characterization of the single
particle mixing state of individual ship plume events measured at
the Port of Los Angeles. Environ Sci Technol 44: 1954-1961.
    \29\ Vutukuru, S.; Dabdub, D. (2008) Modeling the effects of
ship emissions on coastal air quality: A case study of southern
California. Atmos Environ 42: 3751-3764.
    \30\ See Section III.C. of today's notice for a discussion of
the small emissions effects of the transmix flexibility in
comparison to the emissions benefits from the ULSD program.
---------------------------------------------------------------------------

    The generation of transmix is a necessary consequence of the
transportation of the cleaner fuel required by those regulations within
the current fuel transportation system, and allowing it to be utilized
in nearby locomotive and marine diesel applications is preferable to
subjecting the market to supply disruptions or at a minimum requiring
further transportation of fuel through methods that would increase
transportation-related emissions.

Due Process

    A private individual stated that although extending the date beyond
which 500 ppm LM diesel fuel could be sold may be environmentally
beneficial on a national basis, the shift of emissions from one locale
to another associated with the flexibility means that the pollution
will affect different people. The commenter stated that such a shift in
emissions is unconstitutional, claiming it violates both substantive
and procedural due process. The commenter stated that procedural due
process requires more notice than a direct final rule in the Federal
Register, which the commenter states almost no one reads. Moreover, the
commenter states that substantive due process does not allow the
federal government to authorize the killing of U.S. citizens for the
``convenience'' of a small group of corporations that own transmix
processing facilities.
Response
    We disagree with the comment that EPA's action is not
constitutional by violating substantive due process. The commenter
makes no attempt to justify the statement that EPA is violating
substantive due process, and provides no legal support for such a
statement. EPA is acting well within its authority under Title II of
the Clean Air Act to develop and implement a diesel fuel program.
Obviously, EPA is not authorizing the killing of U.S. citizens, and, as
discussed above, the clean diesel program, which this final rule
supports, actually reduces harmful emissions from diesel engines.
    We further disagree that EPA has not provided sufficient procedural
due process. EPA published a proposed rule in parallel with the direct
final rule that was withdrawn due to a negative comment. EPA's
publication of proposed rules in the Federal Register follows the
procedure laid out in the Clean Air Act and provides adequate legal
notice under the Federal Register Act. Publication of proposed EPA
rules in the Federal Register has been the normal method of providing
notice for decades, and those wishing to know of EPA proposals are best
served if EPA continues to use this approach consistently. EPA is
taking this final action based on our consideration of the comments
received on that proposed rule.

Effect of Rule on Analyses Under Other Laws

    A private individual stated that the proposed regulatory change
would adversely impact many analyses under the National Environmental
Policy Act (NEPA), State NEPAs, the Endangered Species Act, the
National Historic Preservation Act, and various State laws which have
assumed the use of 15 ppm sulfur LM diesel fuel. The comment claims
that many of these analyses assume that 15 ppm sulfur will be used in
locomotives and marine engines outside of NEMA and that the analyses
will be incorrect. As an example, the commenter states that the
Environmental Report for the proposed Amber Energy coal transferring
facility at Port Morrow, Oregon, assumes that the locomotives and tugs
will use 15 ppm sulfur diesel fuel. The commenter states that if EPA
approves this rule, that analysis will be wrong.
    Another commenter representing transmix facilities, responding to
the previous commenter, stated that the previous comment was general
and unsupported and pointed to no specific analysis where 15 ppm sulfur
is assumed, nor did it quantify any net reductions in air pollution
that would occur. The commenter also stated that the previous commenter
did not reference analytical assumptions or whether any analysis is
based on use of 15 ppm sulfur in engines not otherwise required to use
such fuel. The commenter notes that CAA rulemakings are exempt from
NEPA and states that the previous commenter does not identify a
specific nexus between the regulatory action and the Endangered Species
Act or the National Historic Preservation Act. The commenter also
states that in the specific example provided in the earlier comment,
the facility mentioned is currently at the proposal stage and a
decision has been made to conduct an Environmental Assessment for the
facility under NEPA. The commenter stated that they believe that no
final regulatory analysis has been completed that is dependent on the
use of 15 ppm sulfur diesel.
Response
    EPA believes it is unlikely that the use of limited volumes of 500
ppm diesel fuel produced from transmix would have a substantial effect
on NEPA or other analyses, or that it would even be possible to predict
what volumes of such fuel would be used in a specific local area, for
the purposes of such an analysis. As discussed in section III.C., EPA's
analysis of the potential emission impacts nationwide shows no
significant impacts. Given the relatively small volume of diesel fuel
produced by transmix compared to the total volume of diesel fuel used
in locomotives or marine engines, it is unlikely that any single NEPA
analysis would reach different conclusions. However, EPA notes that
both NEPA and the Endangered Species Act, at a minimum, provide for
reconsideration of significant new information where appropriate. To
the extent that any analysis may have assumed the use of 15 ppm sulfur
LM diesel fuel, it may be appropriate to review the analysis to
determine whether any effect resulting from potential use of limited
volumes of 500 ppm diesel fuel produced from transmix should be
considered. As the second commenter notes, it is not clear that any
final regulatory analysis has depended on use of 15 ppm LM diesel fuel
and would be affected by this final rule. The use of such fuel may
occur for reasons unrelated to this rule, such as an agreement that
newer locomotives would be used in connection with the project.
    EPA also agrees with the second commenter that actions under the
CAA are not subject to NEPA and that the initial commenter has provided
no context or support for his allegations regarding any nexus between
this action and analysis under the NEPA, the Endangered Species Act,
the National Historic Preservation Act, or the ``various State laws''
referred to without citation by that commenter. In any case, as EPA
notes above, the factual circumstances for this rule do not indicate
any significant effect on any air pollution concentrations, and the
commenter provides no information regarding the effect of this rule on
interests affected by the other statutes.

Regulations Related to the Production of 500 ppm From Transmix by
Pipeline Operators

    A pipeline operator stated that the current rulemaking does not
provide certainty that pipelines can produce 500 ppm LM diesel and
distribute that fuel to their customers without requiring the transmix
to be moved to or through transmix processor facilities.

Response
    Pipeline processors produce 500 ppm LM from the interface mixture
between batches of ULSD and higher sulfur distillates (i.e. jet fuel
and heating oil). The production of such 500 ppm fuel by pipeline
operators does not require the use of a distillation tower used by
transmix processors to separate gasoline from distillate fuel.
    We agree that the regulations should be amended to provide clarity
that pipeline operators as well as transmix processors can produce 500
ppm LM from transmix. This was EPA's intent when the original 500 ppm
LM transmix flexibility was finalized in the nonroad diesel rulemaking
and has been EPA's policy since. However, the regulatory text was
primarily focused on the production of 500 ppm LM by transmix
processors.

V. Statutory and Executive Order Reviews

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

    Under Executive Order (EO) 12866 (58 FR 51735 (October 4, 1993)),
this action is not a ``significant regulatory action.'' Accordingly,
the Office of Management and Budget (OMB) waived review of this action
under Executive Orders 12866 and 13563 (76 FR 3821 (January 21, 2011)).

B. Paperwork Reduction Act

    The information collection requirements in this rule will be
submitted for approval to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
information collection requirements are not enforceable until OMB
approves them.
    The reporting requirements apply to transmix processors and
pipeline operators who produce diesel fuel from transmix (all of whom
are refiners) and other parties (such as carriers or distributors) in
the distribution chain who handle diesel fuel produced from transmix.
The collected data will permit EPA to: (1) Process compliance plans
from producers of diesel fuel from transmix; and (2) Ensure that diesel
fuel made from transmix meets the standards required under the
regulations at 40 CFR Part 80, and that the associated benefits to
human health and the environment are realized. We estimate that 25
producers of diesel fuel from transmix and 150 other parties may be
subject to the proposed information collection. We estimate an annual
reporting burden of 28 hours per producer of diesel fuel from transmix
(respondent) and 8 hours per other party (respondent); considering all
respondents (producers of diesel fuel from transmix and other parties)
who would be subject to the proposed information collection, the annual
reporting burden, per respondent, would be 11 hours. Burden means the
total time, effort, or financial resources expended by persons to
generate, maintain, retain, or disclose or provide information to or
for a Federal agency. This includes the time needed to review the
instructions; develop, acquire, install, and utilize technology and
systems for the purpose of collecting, validating, and verifying
information, processing and maintaining information, and disclosing and
providing information; adjust the existing ways to comply with any
previously applicable instructions and requirements; train personnel to
be able to respond to a collection of information; search data sources;
complete and review the collection of information; and transit or
otherwise disclose the information. Burden is as defined at 5 CFR
1320.3(b).
    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. When this ICR is
approved by OMB, the Agency will publish a technical amendment to 40
CFR part 9 in the Federal Register to display the OMB control number
for the approved information collection requirements contained in this
final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of
a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
    After considering the economic impacts of this action on small
entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. This final
rule will not impose any new requirements on small entities. The
amendments to the diesel transmix provisions would lessen the
regulatory burden on all affected transmix processors and provide a
source of lower cost locomotive and marine diesel fuel to consumers.

D. Unfunded Mandates Reform Act

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

E. Executive Order 13132 (Federalism)

    This action does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This action only applies to diesel
fuel producers, distributors, and marketers and makes relatively minor
modifications to the diesel sulfur regulations. Thus, Executive Order
13132 does not apply to this action.

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

    This rule does not have tribal implications, as specified in
Executive Order 13175 (65 FR 67249 (November 9, 2000)). It applies to
diesel fuel producers, distributors, and marketers. This action makes
relatively minor modifications to the diesel sulfur regulations, and
does not impose any

enforceable duties on communities of Indian tribal governments. Thus,
Executive Order 13175 does not apply to this action.

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

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

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

    This action is not subject to Executive Order 13211 (66 FR 28355
(May 22, 2001), because it is not a significant regulatory action under
Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. Sec.  272
note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so will be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. NTTAA directs EPA to
provide Congress, through OMB, explanations when the Agency decides not
to use available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.

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

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
Federal executive policy on environmental justice. Its main provision
directs Federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
    EPA has determined that this final rule will not have
disproportionately high and adverse human health or environmental
effects on minority or low-income populations. In the case of both the
small emissions increases and decreases, these emissions impacts will
be distributed over the broad areas where such equipment operates. The
small changes in emission levels are expected to have very minimal
effect on pollutant concentrations in any particular area.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et. seq., as added 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 each House of the Congress and to the Comptroller
General of the United States. EPA 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
prior to 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).

VI. Statutory Provisions and Legal Authority

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

List of Subjects in 40 CFR Part 80

    Environmental protection, Administrative practice and procedure,
Air pollution control, Confidential business information, Diesel Fuel,
Transmix, Energy, Labeling, Motor vehicle pollution, Penalties,
Petroleum, Reporting and recordkeeping requirements.

    Dated: December 14, 2012.
Lisa P. Jackson,
Administrator.
    For the reasons set forth in the preamble, 40 CFR part 80 is
amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

    Authority:  42 U.S.C. 7414, 7521, 7542, 7545, and 7601(a).

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

0
2. Section 80.511 is amended by revising paragraph (b)(4) to read as
follows:

Sec.  80.511  What are the per-gallon and marker requirements that
apply to NRLM diesel fuel, ECA marine fuel, and heating oil downstream
of the refiner or importer?

* * * * *
    (b) * * *
    (4) Except as provided in paragraphs (b)(5) through (8) of this
section, the per-gallon sulfur standard of Sec.  80.510(c) shall apply
to all NRLM diesel fuel beginning August 1, 2014 for all downstream
locations other than retail outlets or wholesale purchaser-consumer
facilities, shall apply to all NRLM diesel fuel beginning October 1,
2014 for retail outlets and wholesale purchaser-consumer facilities,
and shall apply to all NRLM diesel fuel beginning December 1, 2014 for
all locations. This paragraph (b)(4) does not apply to LM diesel fuel
produced from transmix that is sold or intended for sale in areas other
than in the area listed in Sec.  80.510(g)(2) (i.e. Alaska), as
provided by Sec.  80.513(f).
* * * * *

0
3. Section 80.513 is amended as follows:
0
a. By revising the section heading.
0
b. By revising the introductory text.
0
c. By revising paragraphs (d) and (e).
0
d. By adding new paragraphs (f), (g), and (h).

Sec.  80.513  What provisions apply to transmix processing facilities
and pipelines that produce diesel fuel from pipeline interface?

    For purposes of this section, transmix means a mixture of finished
fuels, such as pipeline interface, that no longer meets the
specifications for a fuel that can be used or sold without further
processing or handling. For the purposes of this section, pipeline
interface means the mixture between different fuels that abut each
other during shipment by pipeline. This section applies to refineries
(or other facilities) that produce diesel fuel from transmix by
distillation or other refining processes but do not produce diesel fuel
by processing crude oil and to pipelines that produce diesel fuel from
transmix.

This section only applies to the volume of diesel fuel produced from
transmix by a transmix processor using these processes, and to the
diesel fuel volume produced by a pipeline operator from transmix. This
section does not apply to any diesel fuel volume produced by the
blending of blendstocks.
* * * * *
    (d) From June 1, 2010 through May 31, 2014, NRLM diesel fuel
produced by a transmix processor or a pipeline facility that produces
diesel fuel from transmix is subject to the standards under Sec.
80.510(a). This paragraph (d) does not apply to NRLM diesel fuel that
is sold or intended for sale in the areas listed in Sec.  80.510(g)(1)
or (g)(2).
    (e) From June 1, 2014 and beyond, NRLM diesel fuel produced by a
transmix processor and a pipeline facility that produces diesel fuel
from transmix is subject to the standards of Sec.  80.510(c).
    (f) From February 25, 2013 through May 31, 2014, LM diesel fuel
produced by a transmix processor or a pipeline facility that produces
diesel fuel from transmix that is sold or intended for sale in the area
listed in Sec.  80.510(g)(1) is subject to the standards of Sec.
80.510(a) provided that the conditions in paragraph (h) of this section
are satisfied. Diesel fuel produced from transmix that does not meet
the conditions in paragraph (h) of this section is subject to the
sulfur standard in Sec.  80.510(c).
    (g) Beginning June 1, 2014, LM diesel fuel produced by a transmix
processor or a pipeline facility that produces diesel fuel from
transmix is subject to the sulfur standard of Sec.  80.510(a), provided
that the conditions in paragraph (h) of this section are satisfied.
Diesel fuel produced from transmix that does not meet the conditions in
paragraph (h) of this section is subject to the sulfur standard in
Sec.  80.510(c).
    (h) The following conditions must be satisfied to allow the
production of 500 ppm LM under paragraphs (f) and (g) of this section.
    (1) The fuel must be produced from transmix.
    (2) The fuel must not be sold or intended for sale in the area
listed in Sec.  80.510(g)(2) (i.e., Alaska).
    (3) A facility producing 500 ppm LM diesel fuel must obtain
approval from the Administrator for a compliance plan. The compliance
plan must detail how the facility will segregate any 500 ppm LM diesel
fuel produced subject to the standards under Sec.  80.510(a) from the
producer through to the ultimate consumer from fuel having other
designations. The compliance plan must demonstrate that the end users
of 500 ppm LM will also have access to 15 ppm diesel fuel for use in
those engines that require the use of 15 ppm diesel fuel. The
compliance plan must identify the entities that handle the 500 ppm LM
through to the ultimate consumer. No more than 4 separate entities
shall handle the 500 ppm LM between the producer and the ultimate
consumer. The compliance plan must also identify all ultimate consumers
to whom the refiner supplies the 500 ppm LM diesel fuel. The compliance
plan must detail how misfueling of 500 ppm LM into vehicles or
equipment that require the use of 15 ppm diesel fuel will be prevented.
    (i) Producers of 500 ppm LM diesel fuel must be registered with EPA
under Sec.  80.597 prior to the distribution of any 500 ppm LM diesel
fuel.
    (ii) Producers of 500 ppm LM must initiate a PTD that meets the
requirements in paragraph (h)(3)(iii) of this section.
    (iii) All transfers of 500 ppm LM diesel fuel must be accompanied
by a PTD that clearly and accurately states the fuel designation; the
PTD must also meet all other requirements of Sec.  80.590.
    (iv) Batches of 500 ppm LM may be shipped by pipeline provided that
such batches do not come into physical contact in the pipeline with
batches of other distillate fuel products that have a sulfur content
greater than 15 ppm.
    (v) The volume of 500 ppm LM shipped via pipeline under paragraph
(h)(3)(iv) of this section may swell by no more than 2% upon delivery
to the next party. Such a volume increase may only be due to volume
swell due to temperature differences when the volume was measured or
due to normal pipeline interface cutting practices notwithstanding the
requirement under paragraph (h)(3)(iv) of this section.
    (vi) Entities that handle 500 ppm LM must calculate the balance of
500 ppm LM received versus the volume delivered and used on an annual
basis.
    (vii) The records required in this section must be maintained for
five years, by each entity that handles 500 ppm LM and be made
available to EPA upon request.
    (4) All parties that take custody of 500 ppm LM must segregate the
product from other fuels and observe the other requirements in the
compliance plan approved by EPA pursuant to paragraph (h)(3) of this
section.

0
4. Section 80.572 is amended by revising the section heading and
paragraph (d) to read as follows:

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

* * * * *
    (d) From June 1, 2010 through September 30, 2012 and from February
25, 2013 and thereafter, for pumps dispensing LM diesel fuel subject to
the 500 ppm sulfur standard of Sec.  80.510(a):
LOW SULFUR LOCOMOTIVE AND MARINE DIESEL FUEL (500 ppm Sulfur Maximum)
WARNING
    Federal law prohibits use in nonroad engines or in highway vehicles
or engines.
* * * * *

0
5. Section 80.597 is amended by adding paragraph (d)(3)(ii) to read as
follows:

Sec.  80.597  What are the registration requirements?

* * * * *
    (d) * * *
    (3) * * *
    (ii) Fuel designated as 500 ppm LM diesel fuel.
* * * * *
[FR Doc. 2012-30960 Filed 12-21-12; 4:15 pm]
BILLING CODE P


MEMORANDUM  SEQ CHAPTER \h \r 1

TO:		Bruce Moore, EPA/OAQPS/SPPD/FIG

FROM:	David Hendricks, EC/R, Inc.

DATE:	December 19, 2014

SUBJECT:	Summary of the September 25, 2014, Meeting with the American
Petroleum Institute (API) and the U.S. Environmental Protection Agency
to Discuss the Proposed Reconsideration of Additional Provisions of the
Crude Oil and Natural Gas Production, Transmission and Distribution NSPS

I.	INTRODUCTION

The API requested this meeting with the EPA to discuss the comments API
submitted on the proposed amendments to the Crude Oil and Natural Gas
Production, Transmission and Distribution NSPS (40 CFR Part 60, subpart
OOOO).  This meeting summary will be available in the docket for this
rulemaking (Docket ID No. EPA-HQ-OAR-2010-0505).  The proposed rule was
published in the Federal Register on July 17, 2014 (79 FR 41752).

II.	ATTENDEES

The following is a list of participants in the meeting.

U.S. Environmental Protection Agency

David Cozzie

Bruce Moore

Chris Frantz

Matthew Witosky

API and Member Organizations

Jenny Yang, ConocoPhillips

Matt Todd, API

John Wagner, API

Becky Keogh, BHP Billiton

Grover Campbell, Devon Energy

Jim Cooper, Chesapeake Energy

Manish Singh, Oxy

Jeff Adams, BP

Angela Zivkovich, Anadarko Petroleum

Tom Monahan, XTO

Jason Zapalac, Anadarko Petroleum

Amanda San Miguel, Marathon Oil

Kenyatta Miles, Shell

Jim Sewell, Shell

Shankar Ananthakrishna, Chevron

EC/R Incorporated

David Hendricks (by phone)

III.	SUMMARY OF DISCUSSION

Bruce Moore opened the meeting by stating that the proposed rule is
currently in the post-proposal period and the EPA can answer clarifying
questions from the group, but cannot provide any responses to comments
on the proposed rules.

The API discussed each of the comments they submitted to the EPA on the
proposal and further clarified their position. The topics discussed
include the following:

Storage vessel applicability issues related to §60.5365

Clarification of well completion and production related to §60.5375

Clarification of the standards applicable to new, modified and
reconstructed storage vessels related to §60.5395

Exceptions to the equipment leak standards under §60.5401

Clarification of when control devices must be operational under
§§60.5412(d)(3) and 60.5417(h)(1)(i)

Definition of responsible official under §60.5430

Definition of low pressure gas well under §60.5430

Use of LEL meters to determine when to operate a separator

The point at which the production stage begins

Suitability of electronic spark ignition for combustion devices

Miscellaneous technical corrections

The EPA thanked the attendees for providing this information and stated
that they will review the submitted comments to respond to these issues.

E C/R Incorporated	Providing Environmental Technical Support Since 1989

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