more than 10% total biomass loss in 2020 decreased by 8.5% in the case
in which emissions from ships were removed. Likewise, yellow-poplar
(Liriodendron tulipifera), eastern white pine (Pinus strobus), aspen
(Populus spp.), and ponderosa pine (Pinus ponderosa) saw areas with
more then 2% biomass loss reduced by 2.1% to 3.8% in 2020. This 2%
level of biomass loss is important, because a consensus workshop on
ozone effects reported that a 2% annual biomass loss causes harm due to
the potential for compounding effects over multiple years as short-term
negative effects on seedlings affect long-term forest
health.80 81
---------------------------------------------------------------------------

    \79\ Note that while the coordinated strategy does not eliminate
ship emissions, it will be directionally helpful in reducing ship
emissions.
    \80\ Prasad A.M, Iverson L.R. (2003). Little's range and FIA
importance value database for 135 eastern U.S. tree species.
Northeastern Research Station, USDA Forest Service, Delaware, Ohio.
[online] Retrieved on March 19, 2009, from http://www.fs.fed.us/ne/
delaware/4153/global/littlefia/index.html.
    \81\ Heck W.W., Cowling E.B. (1997) The need for a Long Term
Cumulative Secondary Ozone Standard--an Ecological Perspective. Air
and Waste Management Association, EM, 23-33.
---------------------------------------------------------------------------

(3) Nitrogen and Sulfur Deposition
(a) Current Levels
    Over the past two decades, the EPA has undertaken numerous efforts
to reduce nitrogen and sulfur deposition across the U.S. Analyses of
long-term monitoring data for the U.S. show that deposition of both
nitrogen and sulfur compounds has decreased over the last 17 years
although many areas continue to be negatively impacted by deposition.
Deposition of inorganic nitrogen and sulfur species routinely measured
in the U.S. between 2004 and 2006 were as high as 9.6 kg N/ha/yr and
21.3 kg S/ha/yr. The data shows that reductions were more substantial
for sulfur compounds than for nitrogen compounds. These numbers are
generated by the U.S. national monitoring network and they likely
underestimate nitrogen deposition because NH3 is not
measured. In the eastern U.S., where data are most abundant, total
sulfur deposition decreased by about 36% between 1990 and 2005 while
total nitrogen deposition decreased by 19% over the same time
frame.\82\
---------------------------------------------------------------------------

    \82\ U.S. EPA. U.S. EPA's 2008 Report on the Environment (Final
Report). U.S. Environmental Protection Agency, Washington, DC, EPA/
600/R-07/045F (NTIS PB2008-112484).
---------------------------------------------------------------------------

(b) Projected Levels
    The emissions reductions that result from the coordinated strategy
will significantly reduce the annual total sulfur and nitrogen
deposition occurring in sensitive U.S. ecosystems including forests,
wetlands, lakes, streams, and estuaries. For sulfur deposition,
adopting the coordinated strategy will result in reductions ranging
from 5% to 20% in 2020 along the entire Atlantic and Gulf coasts with
higher levels of reduction, exceeding 25%, occurring in the near-land
coastal waters of the U.S. In a few land areas on the Atlantic and Gulf
coasts, such as the southern parts of the States of Louisiana, Texas,
and Florida, 2020 sulfur deposition reductions will be much higher,
i.e., over 30%. Along the Pacific Coast, sulfur deposition reductions
will exceed 25% in the entire Southern California area, and the Pacific
Northwest. For a map of 2020 sulfur reductions and additional
information on these impacts see Section 2.4.3 of the RIA.
    Overall, nitrogen deposition reductions in 2020 resulting from the
coordinated strategy described in this action are less than sulfur
deposition reductions. Nitrogen deposition reductions will range from
3% to 7% along the entire Atlantic, Pacific and Gulf Coasts. As with
sulfur deposition reductions, a few areas such as the southern parts of
the States of Louisiana, Texas, and Florida will experience larger
reductions of nitrogen up to 9%. The Pacific coastal waters will see
higher nitrogen reductions, exceeding 20% in some instances. See
Section 2.4.3 of the RIA for a map and additional information on
nitrogen deposition impacts.

(4) Visibility
(a) Current Levels
    As mentioned in Section II.C.1, millions of people live in
nonattainment areas for the PM2.5 NAAQS. These populations,
as well as large numbers of individuals who travel to these areas, are
likely to experience visibility impairment. In addition, while
visibility trends have improved in mandatory class I Federal areas, the
most recent data show that these areas continue to suffer from
visibility impairment. In summary, visibility impairment is experienced
throughout the U.S., in multi-State regions, urban areas, and remote
mandatory class I Federal areas.
(b) Projected Levels
    The air quality modeling conducted for the coordinated strategy was
also used to project visibility conditions in 133 mandatory class I
Federal areas across the U.S. in 2020 and 2030. The results indicate
that improvements in visibility due to OGV emissions reductions will
occur in all 133 mandatory class I Federal areas in the future,
although all areas will continue to have annual average deciview levels
above background in 2020 and 2030.\83\ The average visibility on the 20
percent worst days at these scenic locales is projected to improve by
0.22 deciviews, or 1.4 percent in 2020 and by 0.43 deciviews or 2.7% in
2030.
---------------------------------------------------------------------------

    \83\ The level of visibility impairment in an area is based on
the light-extinction coefficient and a unit less visibility index,
called a ``deciview'', which is used in the valuation of visibility.
The deciview metric provides a scale for perceived visual changes
over the entire range of conditions, from clear to hazy. Under many
scenic conditions, the average person can generally perceive a
change of one deciview. The higher the deciview value, the worse the
visibility. Thus, an improvement in visibility is a decrease in
deciview value.
---------------------------------------------------------------------------

    The greatest improvements in visibilities will occur in coastal
areas. For instance, the Agua Tibia Wilderness area (near Los Angeles)
will see a 9% improvement (2.17 DV) in 2020 and a 17% improvement (4.6
DV) in 2030 as a result of the emission reductions from the coordinated
strategy. National parks and national wilderness areas in other parts
of the country will also see improvements. For example, in 2030 the
Swanquarter National Wildlife Refuge (North Carolina) will have a 5%
improvement in visibility (1.11 DV) and Acadia National Park (Maine)
will have a 6% improvement (1.27 DV) with the coordinated strategy.
Even inland mandatory class I Federal areas are projected to see
improvements as a result of the controls from the coordinated strategy.
For example in 2030, the Grand Canyon National Park, located in the
State of Arizona, will see a 54% improvement in visibility (0.42 DV)
with the coordinated strategy. For the table which contains the full
visibility results over the 133 analyzed areas see Section <IP_ADDRESS> of
the RIA.

D. Emissions From Ships With Category 3 Engines

(1) Overview
    This section describes the contribution of Category 3 vessels to
national emission inventories of NOX, PM2.5, and
SO2. A Category 3 vessel has a Category 3 propulsion engine.
Emissions from a Category 3 vessel include the emissions from both the
propulsion and auxiliary engines on that vessel. Propulsion and
auxiliary engine emissions were estimated separately to account for
differences in emission factors, engine size and load, and activity.
    We estimate that in 2009, Category 3 vessels will contribute almost
913,000 tons (10 percent) to the national mobile source NOX
inventory, about 71,000 tons (24 percent) to the mobile source diesel
PM2.5 inventory, and nearly 597,000 tons (80 percent) to the
mobile source SO2 inventory. Expressed as a percentage of
all anthropogenic emissions, Category 3 vessels contribute 6 percent to
the national NOX inventory, 3 percent to the national
PM2.5 inventory, and 11 percent to the total SO2
inventory in 2009. In 2030, absent the strategy discussed in this rule,
these vessels will contribute about 2.1 million tons (40 percent) to
the mobile source NOX inventory, 168,000 tons (75 percent)
to the mobile source diesel PM2.5 inventory, and about 1.4
million tons (95 percent) to the mobile source SO2
inventory. Expressed as a percentage of all anthropogenic emissions,
Category 3 vessels will contribute 19 percent to the national
NOX inventory, 5 percent to the national PM2.5
inventory, and 15 percent to the total SO2 inventory in
2030. Under this strategy, by 2030, annual NOX emissions
from these vessels will be reduced by 1.2 million tons,
PM2.5 emissions by 143,000 tons, and SO2
emissions by 1.3 million tons.\84\
---------------------------------------------------------------------------

    \84\ These emission inventory reductions include reductions from
ships operating within the 24 nautical mile regulatory zone off the
California Coastline, beginning with the effective date of the
Coordinated Strategy program elements. The California regulation
contains a provision that would sunset the requirements of the rule
if the Federal program achieves equivalent emission reductions. See
http://www.arb.ca.gov/regact/2008/fuelogv08/fro13.pdf at 13 CCR
2299.2(j)(1).
---------------------------------------------------------------------------

    Each sub-section below discusses one of the three affected
pollutants, including expected emission reductions that will result
from the combination of the proposed CAA NOX standards along
with the ECA designation through amendment to MARPOL Annex VI and
related fuel standards. Table II-2 summarizes the impacts of these
reductions for 2020 and 2030 on a national basis. Chapter 3 of the RIA
also presents regional emissions inventories, such as those for the
Great Lakes. Table II-3 provides the estimated 2030 NOX
emission reductions (and PM reductions) for the coordinated strategy
compared to the Locomotive and Marine rule, Clean Air Nonroad Diesel
(CAND) program, and the Heavy-Duty Highway rule. Further details on our
inventory estimates are available in Chapter 3 of the RIA. Note that
the inventories presented here do not consider the exemption of Great
Lakes steamships from the final fuel sulfur standards. This change to
the program is not expected to have a significant impact on national
inventory estimates. We intend to follow up with a more detailed study
of the impacts of the emission control program on Great Lakes carriers
which may provide information that will help us refine our Great Lakes
emission inventories.
    As described in Chapter 3 of the RIA, the Category 3 vessel
emission inventories presented in this section are estimated by
combining two sets of emissions inventories, one for U.S. port areas
and one for operation on the open ocean. With regard to operation on
the open ocean, it was necessary to specify an outer boundary of the
modeling domain; otherwise, emissions from ships operating as far away
as Asia or Europe would be included in the U.S. emission inventory. For
simplicity, we set the outer boundary for inventory modeling roughly
equivalent to the U.S. Exclusive Economic Zone (EEZ). It consists of
the area that extends 200 nautical miles (nm) from the official U.S.
baseline, which is recognized as the low-water line along the coast as
marked on the official U.S. nautical charts in accordance with the
articles of the Law of the Sea. The U.S. region was then clipped to the
boundaries of the U.S. EEZ. While this area will exclude emissions that
occur outside the 200 nm boundary but that are transported to the U.S.
landmass, it has the advantage of corresponding to an area in which the
United States has a clear environmental interest. This area also
corresponds well to the CMAQ modeling domain for most coasts.

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

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

(2) NOX Emission Reductions
    In 2009, annual emissions from Category 3 marine vessels will total
about 913,000 tons. Earlier Tier 1 NOX engine standards
became effective in 2000, but the reductions due to the Tier 1
standards are offset by the growth in this sector, resulting in
increased NOX emissions of 1.4 million tons and 2.1 million
tons in 2020 and 2030, respectively.
    As shown in Table II-2, the coordinated strategy will reduce annual
NOX emissions from the current national inventory baseline
by 409,000 tons in 2020 and 1,181,000 tons in 2030.
    As shown in Table II-3, the 2030 NOX reductions for the
coordinated strategy will exceed those for the other two nonroad rules.
(3) PM2.5 Emissions Reductions
    In 2009, annual emissions from Category 3 marine vessels will total
about 71,000 tons. By 2030, these engines, absent the coordinated
strategy, would contribute about 168,000 tons.
    As shown in Table II-2, the coordinated strategy will reduce annual
PM2.5 emissions by 94,000 tons in 2020 and 143,000 tons in
2030. As seen in Table II-3, the 2030 PM2.5 emission
reduction will be larger than any of the reductions achieved with other
recent rules.
(4) SO2 Emissions Reductions
    In 2009, annual emissions from Category 3 marine vessels will total
about 597,000 tons. By 2030, these engines, absent the coordinated
strategy, will contribute about 1.4 million tons.
    As shown in Table II-2 the coordinated strategy will reduce annual
SO2 emissions by 877,000 tons in 2020 and 1.3 million tons
in 2030.

III. Engine Standards

    This section details the emission standards, implementation dates,
and other major requirements being finalized under the Clean Air Act. A
discussion of the technological feasibility of the finalized
NOX standards follows the description of the proposed
program.
    Other elements of our coordinated strategy to control emissions
from ships are discussed in subsequent sections. Provisions related to
our Clean Air Act fuel controls are described in Section IV. Section V
summarizes the U.S. and Canada's recent proposal to amend MARPOL Annex
VI to designate much of the U.S. and Canadian coasts as an Emission
Control Area.\85\ Finally, provisions revising our Clean Air Act test
procedures and related certification requirements, provisions to
implement MARPOL Annex VI through APPS, and various changes we are
making to our Category 1 and 2 (marine diesel engines with per cylinder
displacement less than 30 liters per cylinder) marine diesel engine
program are described in Section VI.
---------------------------------------------------------------------------

    \85\ The ECA proposal and associated Technical Support Document
can be found at http://www.epa.gov/otaq/oceanvessels.htm. France has
since joined the ECA proposal on behalf of the Saint Pierre and
Miquelon archipelago.
---------------------------------------------------------------------------

A. What Category 3 Marine Engines Are Covered?

    Consistent with our existing marine diesel emission control
program, the engine emission standards being finalized will apply to
any new marine diesel engine with per-cylinder displacement at or above
30 liters installed on a vessel flagged or registered in the United
States.
    With regard to marine diesel engines on foreign vessels that enter
U.S. ports, we are retaining our current approach and not applying this
Clean Air Act program to those engines. This is appropriate because
engines on foreign vessels are subject to the same NOX
limits through MARPOL Annex VI, and the United States can enforce
compliance pursuant to Annex VI and the recent amendments to the Act to
Prevent Pollution from Ships (33 U.S.C. 1901 et seq.). At the same
time, however, the effectiveness of this approach is contingent on the
designation of U.S. coasts as an ECA

pursuant to MARPOL Annex VI, since the Annex VI Tier III NOX
limits are geographic in scope and apply only if an ECA has been
adopted. We anticipate that MARPOL Annex VI will be amended to include
the North American ECA proposal. However, if the proposed amendment is
not adopted in a timely manner by IMO, we will reconsider whether
additional action is necessary to control harmful emissions from all
vessels affecting U.S. air quality. Section V contains a description of
the ECA designation process.
    The combination of this Clean Air Act program, MARPOL Annex VI, and
APPS will apply comparable emission standards to the vast majority of
vessels entering U.S. ports or operating in U.S. waters.\86\ Most
significantly, these vessels will be required to meet the
NOX limits described below. As described later in this
Section III and in Section VI, there will be some minor differences
between the finalized Clean Air Act program and the requirements that
apply under MARPOL Annex VI. Nevertheless, with respect to U.S. air
quality, these differences will have a negligible effect on emissions
from foreign vessels.
---------------------------------------------------------------------------

    \86\ Certain public vessels such as military vessels and foreign
vessels in innocent passage may be exempt.
---------------------------------------------------------------------------

B. What Standards Are We Finalizing for Newly Manufactured Engines?

    This subsection details the emission standards (and implementation
dates) we are finalizing for freshly manufactured (i.e., new) Category
3 engines on U.S. vessels. As described in Section III.C, we believe
the standards will be challenging to manufacturers, yet ultimately
feasible and cost-effective within the finalized lead time. These
standards, along with other parts of our program, are the outcome of
our work with stakeholders to resolve the challenges associated with
applying advanced diesel engine technology to Category 3 engines to
achieve significant NOX reductions.
(1) NOX Standards
    We are finalizing new Tier 2 and Tier 3 NOX emission
standards for Category 3 marine diesel engines. Our existing Tier 1
NOX standards for Category 3 engines were dependent on the
rated speed of the engine for speeds between 130 revolutions per minute
(rpm) and 2,000 rpm. Fixed standards applied for lower and higher
speeds. Thus, the standards were expressed as an equation that applies
for speeds between 130 rpm and 2,000 rpm, along with fixed values that
were calculated from the equation for 130 rpm and 2,000 rpm that apply
for lower and higher speeds. This was done to account for the fact that
brake-specific NOX emissions are inherently higher for lower
speed engines (and lower for higher speed engines). Note that this same
approach is used by the IMO for the same technical reasons. We are
continuing this approach for Tier 2 and Tier 3, as shown in Table III-
1.

                           Table III-1--NOX Emission Standards for Category 3 Engines
                                                    [g/kW-hr]
----------------------------------------------------------------------------------------------------------------
                                                      Less than                                       Over 2,000
                                                       130 RPM            130-2,000  RPM \a\             RPM
----------------------------------------------------------------------------------------------------------------
Tier 1................................     \b\ 2004         17.0  45.0[middot]n(-0.20)                       9.8
Tier 2................................         2011         14.4  44.0[middot]n(-0.23)                       7.7
Tier 3................................         2016          3.4  9.0[middot]n(-0.20)                        2.0
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Applicable standards are calculated from n (maximum in-use engine speed in RPM), rounded to one decimal
  place.
\b\ Tier 1 NOX standards applied for engines originally manufactured after 2004, and also to certain earlier
  engines.

    Our analysis, which is described in the RIA, shows that these
standards will give the greatest degree of emission control achievable
considering compliance costs, lead time, and other relevant factors.
The technological bases are also discussed briefly below.
    Note that other important provisions related to compliance with
these standards are described in Section VI. This includes provisions
to ensure effective control of NOX emissions over a broad
range of operating conditions.
(a) Tier 2 NOX Limits
    We are finalizing the proposed Tier 2 NOX emission
standards for Category 3 marine diesel engines. In-cylinder emission
control technology for Category 3 marine engines has progressed
substantially in recent years. Significant reductions can be achieved
in the near term with little or no impact on overall vessel
performance. These technologies include traditional engine-out controls
such as electronically-controlled high-pressure common-rail fuel
systems, turbocharger optimization, compression-ratio changes, and
electronically-controlled exhaust valves. We are setting a near-term
NOX emission standard requiring a reduction of approximately
20 percent below the current Tier 1 standard beginning 2011.
(b) Tier 3 NOX Limits
    While the Tier 2 standards will achieve modest reductions quickly,
the finalized Tier 3 standards are intended to achieve much greater
emission reductions through the use of more advanced emission control
technology. These standards will achieve reductions of about 80 percent
from the current Tier 1 standards. As explained in the RIA, we
evaluated the possibility of requiring the Tier 3 limits on an earlier
schedule than 2016. However, we found that a schedule requiring Tier 3
limits prior to 2016 had significant feasibility issues, and are
therefore finalizing the 2016 implementation date for Tier 3 standards.
Under the finalized approach, manufacturers of Category 3 engines will
have about the same amount of lead time allowed manufacturers for
smaller diesel marine engines and for locomotives.
(2) PM and SOX Standards
    We are not establishing new engine standards for PM or
SOX emissions. We intend to rely instead on the use of
cleaner fuels as described in Section IV and V. SOX
emissions and the majority of the direct PM emissions from Category 3
marine engines operated on residual fuels are a direct result of fuel
quality, most notably the sulfur in the fuel, and engine-based PM
controls are not currently feasible for engines using these higher
sulfur fuels. Other components of residual fuel, such as ash and heavy
metals, also contribute directly to PM.
    Using cleaner distillate fuel is the most effective means to
achieve significant PM and SOX reductions for

Category 3 engines. We are finalizing requirements to substantially
reduce the sulfur content of fuel purchased in the U.S. for use in an
ECA. This complements Annex VI which requires that fuels used in ECAs
around the world have sulfur levels no higher than 1,000 ppm. This
sulfur limit is expected to necessitate the use of distillate fuel
which will result not only in reductions in sulfate PM emissions, but
also reductions in organic PM and metallic ash particles in the
exhaust.
    Even though the sulfur limit is much lower than current levels, it
is not clear if this fuel sulfur level would be low enough to allow
Category 3 engines to be equipped with the catalytic PM filters similar
to those being used by trucks today. If we were to require technology
that needs lower sulfur fuel, such as 15 ppm, ship operators would need
to have access to this fuel around the world and at this time, it is
not clear if 15 ppm sulfur fuel could be made available globally.
Operating on higher sulfur fuel, such as for outside of our waters,
could otherwise result in damage to the PM control equipment. In any
case, the 1,000 ppm sulfur fuel requirement alone will eliminate 85
percent of PM emissions from ships operating in ECAs.
    To further our understanding of PM emissions from ships, we are
requiring engine manufacturers to measure and report PM emissions even
though we are not finalizing a PM standard. The information gathered
will help support our efforts as we continue to evaluate the
feasibility of achieving further PM reductions. It will also help us to
better characterize the PM emission rates associated with operating
Category 3 engines on distillate fuel. If we determine that further PM
reductions are feasible or that a specific PM limit is necessary to
ensure anticipated reductions in PM emissions from ships, we may
propose PM standards for Category 3 engines in the future.
(3) HC and CO Standards
    We are finalizing HC and CO standards of 2.0 g/kW-hr and 5.0 g/kW-
hr, respectively. Emission control technologies for Category 3 marine
engines have been concentrated on reducing NOX and PM
emissions, but these emission standards will prevent increases in
emissions of HC and CO that might otherwise occur as a result of use of
certain technologies for controlling NOX, such as those that
significantly degrade combustion efficiency.
(4) CO2 Standards
    We are not adopting CO2 standards for marine diesel
engines at this time. Marine diesel engines are included in other
ongoing Agency actions, including our Advance Notice of Proposed
Rulemaking (ANPRM) for mobile sources (73 FR 44353, July 30, 2008) and
our Greenhouse Gas Reporting Rule (74 FR 16448, April 10, 2009). In
addition, EPA is participating in the U.S. Government delegation to
IMO, which is currently engaged in negotiations for an international
program to address greenhouse emissions from ships.

C. Are the Standards Feasible?

    We have analyzed a variety of technologies available for
NOX reduction in the Category 3 marine sector. As described
in more detail in our RIA, we are projecting that marine diesel engine
manufacturers will choose to use in-cylinder, or engine design-based
emission control technologies to achieve the NOX reductions
required to meet the final Tier 2 standard.
    The in-cylinder, or engine-out, NOX emissions of a
diesel engine can be controlled by utilizing engine design and
calibration parameters (e.g., fuel delivery and valve timing) to limit
the formation of NOX. NOX formation rate has a
strong exponential relationship to combustion temperature. Therefore,
high temperatures result in high NOX formation
rates.87 88 Any changes to engine design and calibration
which can reduce the peak temperature realized during combustion will
also reduce NOX emissions. Many of the approaches and
technologies for reducing in-cylinder NOX emissions are
discussed in our RIA.
---------------------------------------------------------------------------

    \87\ Flynn, P., et al., ``Minimum Engine Flame Temperature
Impacts on Diesel and Spark-Ignition Engine NOX
Production'', SAE 2000-01-1177, 2000.
    \88\ Heywood, John B., ``Internal Combustion Engine
Fundamentals'', McGraw-Hill, 1988.
---------------------------------------------------------------------------

    To achieve the 80 percent NOX reductions required to
meet the final Tier 3 standard, we believe many manufacturers will
choose selective catalytic reduction (SCR) exhaust aftertreatment
technology. SCR is a commonly-used technology for meeting stricter
NOX emissions standards in diesel applications worldwide.
Stationary power plants fueled with coal, diesel and natural gas have
used SCR for three decades as a means of controlling NOX
emissions, and European heavy-duty truck manufacturers are currently
using this technology to meet Euro 5 emissions limits. To a lesser
extent, SCR has been introduced on diesel engines in the U.S. market,
but the applications have been limited to marine ferryboat and
stationary electrical power generation demonstration projects in
California and several of the Northeast States. SCR systems are
currently being designed and developed for use on ocean-going vessels
worldwide, and we project that SCR will continue to be a viable
technology for control of Category 3 NOX emissions.
    When operating in the ECA, SCR units would be active, meaning that
urea would be injected into the exhaust to facilitate catalytic
reduction of NOX emissions. When outside of the ECA, the
unit would likely be inactive, meaning that urea would not be injected
into the exhaust. When the SCR unit is inactive, the exhaust flow could
either continue to pass through the SCR unit or be diverted around the
catalyst. Under the MARPOL NOX Technical Code, a means for
monitoring the use of urea must be provided which must include
``sufficient information to allow a ready means of demonstrating that
the consumption of such additional substances is consistent with
achieving compliance with the applicable NOX limit.'' In
addition, where a NOX reducing device, such as SCR, is used,
one of the options for providing verification of compliance with the
NOX standard is through direct measurement and monitoring of
NOX emissions. A more detailed discussion of SCR technology
can be found in our RIA.
    SCR is not the only approach under consideration for meeting the
Tier 3 standards. Manufacturers may choose a combination of other in-
cylinder technologies, such fuel-water emulsification, direct water
injection, intake air humidification, or exhaust gas recirculation
(EGR) to reduce NOX emissions and meet the final standards.
These ``in-cylinder'' approaches could be calibrated and applied in one
manner to achieve Tier 3 NOX levels when operating with an
ECA, and then adjusted, or re-calibrated, in another manner to achieve
Tier 2 NOX levels when operating outside an ECA. This is
discussed in more detail in the RIA.
    Another technology, which is currently under investigation, is the
use of an exhaust gas cleaning unit (EGCS) to reduce NOX
emissions. One significant technological issue that must be addressed
is the prevention of nitrates from being introduced into the water. In
a typical diesel exhaust gas mixture, NOX is composed of
roughly 5-10% NO2, with the majority of the remainder in the
form of NO. NO2 is soluble in water, and therefore may be
removed by the water in the scrubber. It is possible to treat the
exhaust upstream of the scrubber to convert

more of the NOX to NO2, thereby facilitating the
use of a scrubber to remove NO2. However, we are concerned
that this would add to nitrogen loading of the water in which the ship
is operating. As discussed in Section II.B.1, nitrogen loading can lead
to serious water quality impacts. This issue is addressed in the IMO
EGCS guidelines by limiting the amount of nitrates that may be removed
by the scrubber, and washed overboard. However, a scrubber design may
be acceptable if it removes nitrates from the wash water, which in turn
are disposed of properly, or prevents nitrates from forming in the wash
water. One manufacturer has stated that their unique EGCS design
converts NOX to nitrogen (N2), rather than
nitrates. This is discussed in more detail in the RIA.

IV. Fuel Standards

A. Background

    EPA is finalizing standards for fuel manufactured or distributed in
the U.S. that are consistent with those recently adopted as amendments
to MARPOL Annex VI. As amended, Annex VI includes revised fuel sulfur
standards for use in engines onboard ships, and it also set more
stringent fuel sulfur limits for ``any fuel oil used onboard ships * *
* operating within an Emission Control Area'' (Annex VI, Regulation
14).
    Under the Annex, the process by which an Emission Control Area
(ECA) is to be designated is through amendment of the Annex. The U.S.
and Canadian governments have submitted a proposal to amend MARPOL
Annex VI to designate an ECA to include waters off much of the U.S. and
Canada. Specifically, the proposed ECA includes the waters off of the
contiguous 48 States, Southeastern Alaska, and the Main Hawaiian
Islands, extending to a distance of 200 nautical miles from the
coastline. This amendment was considered at the July 2009 Marine
Environment Protection Committee (MEPC 59), and we expect that the
amendment will be adopted in March 2010, at MEPC 60. If this amendment
is not adopted in a timely manner by IMO, we intend to take
supplemental action to control emissions from vessels that affect U.S.
air quality.
    EPA is in this notice finalizing fuel sulfur limits under section
211(c) of the Clean Air Act that match the limits that apply under
Annex VI in ECAs. The adoption of such standards will: (1) Allow for
the production and sale of up to 1,000 ppm sulfur fuel for use in
Category 3 marine vessels; and (2) forbid the production and sale of
fuel oil above 1,000 ppm sulfur for use in the waters within an ECA and
ECA associated areas (per 40 CFR 1043.20) except as allowed under 40
CFR Part 1043, as described below.89 90
---------------------------------------------------------------------------

    \89\ Per 40 CFR 1043.20, ``ECA associated areas'' are U.S.
internal waters that are navigable from the ECA. This term does not
include internal waters that are shoreward of ocean waters that are
not part of an emission control area. Though the outer limits of the
sulfur limitation are the same as for the proposed ECA, the sulfur
limitation in this final rule is not dependent on adoption of the
ECA.
    \90\ For the purpose of the discussion in this section with
regard to the CAA fuel standards in 40 CFR 80, ``Category 3 vessel''
refers to a commercial vessel with a Category 3 propulsion engine;
``Category 2 vessel'' refers to a commercial or recreational vessel
with a Category 2 propulsion engine; and ``Category 1 vessel''
refers to a commercial or recreational vessel with only Category 1
or smaller engines. The fuel provisions being finalized today apply
to all of the engines on a given vessel.
---------------------------------------------------------------------------

    There are a few exceptions that will allow for the use of fuel
greater than 1,000 ppm sulfur in an ECA. First, as an alternative to
using lower sulfur fuel, Annex VI allows for the use of approaches,
such as exhaust gas scrubbers, that can achieve equivalent emission
reductions even when the fuel is operating on high sulfur residual
fuel. In the event that a vessel is using an alternative device,
procedure, or compliance method, provided they achieve equivalent
emissions reductions, fuel oil above 1,000 ppm sulfur may be purchased
in the U.S. for use in an ECA and ECA associated areas. This is
discussed in more detail in Section V of this preamble. As discussed
further in Section VI.B.5, existing steamships operating exclusively on
the Great Lakes are not subject to the 1,000 ppm sulfur requirement,
and vessels that have been granted temporary relief on the basis of
serious economic hardship are also not subject to the standard. These
three exceptions are all set out in the regulations at 40 CFR Part
1043.
    The majority of vessels with a Category 3 propulsion engine operate
on high-sulfur, heavy fuel oil (HFO) (also known as residual, or
bunker, fuel). Due to their use of heavy fuel, these marine diesel
engines have very high PM and SO2 emissions. Sulfur in the
fuel is emitted from engines primarily as SO2; however a
small fraction is emitted as sulfur trioxide (SO3) which
immediately forms sulfate and is emitted as PM by the engine. In
addition, much of the SO2 emitted from the engine reacts in
the atmosphere to form secondary PM. Reductions in residual fuel sulfur
levels will lead to significant sulfate PM and SO2 emission
reductions which will provide dramatic environmental and public health
benefits. However, in most cases, fuels that meet the long-term fuel
sulfur standards will likely be distillate fuels, rather than HFO. In
addition to reductions in sulfate PM, switching from HFO to distillate
fuel may reduce black carbon emissions, fine particle counts, organic
carbon, and metallic ash particles. Further information on these
impacts as well as a discussion of the technological feasibility of
fuel switching, or using alternative approaches, is discussed in
Section V.
    HFO sold for use by these vessels is currently not subject to any
EPA sulfur limits (as it is not regulated by our current sulfur
program) and generally has very high levels of sulfur. The finalized
modifications to our existing diesel fuel program prohibit the
production and sale of this fuel for use in an ECA associated area, and
fuel sold for use in such areas will not be allowed to exceed a sulfur
content of 1,000 ppm, except as allowed under 40 CFR Part 1043. In a
complementary fashion, the amendment to MARPOL Annex VI designating the
North American ECA will ensure that fuel used in an ECA, including fuel
purchased in another country but used within the North American ECA,
also either meets a 1,000 ppm sulfur limit or meets required emissions
limits through the use of alternative devices, procedures, or
compliance methods, provided they achieve equivalent emissions
reductions (equivalents). Under our finalized regulations, fuel sold
for use by Category 3 vessels without equivalents in an ECA and ECA
associated areas will be allowed to have a sulfur content as high as
this 1,000 ppm sulfur limit (except as otherwise allowed under 40 CFR
Part 1043), while fuel sold for use in Category 1 (marine diesel
engines up to 7 liters per cylinder displacement) and Category 2
(marine diesel engines from 7 to 30 liters per cylinder) vessels will
continue to be subject to the nonroad, locomotive, and marine \91\
(NRLM) diesel fuel sulfur requirements. In the event that the North
American ECA is not approved in a timely manner, we will revisit the
standards being finalized here in that context.
---------------------------------------------------------------------------

    \91\ For the purposes of this final rule (and the final 40 CFR
Part 80 regulations), the term ``marine'' as it is used here refers
to Category 1 and 2 marine diesel engines unless otherwise stated.
---------------------------------------------------------------------------

B. Diesel Fuel Standards Prior to This Final Rule

    The Nonroad Diesel program (finalized on June 29, 2004 (69 FR
38958)) reduces the sulfur content of NRLM diesel fuel from
uncontrolled levels down to a maximum sulfur level of 15 ppm. Refiners
and importers are

required to produce or import all NRLM diesel fuel at a sulfur level of
15 ppm or less by June 1, 2014. The main compliance mechanism of the
diesel sulfur program is the Designate and Track (D&T) provisions,
which allows NRLM diesel fuel to be distinguished from similar products
(e.g., heating oil) and yet provides a means for diesel fuel to be
fungibly transported through the fuel production and distribution
system. Under D&T, refiners and importers are required to designate the
type and sulfur level of each batch of fuel produced or imported. As
this fuel is transferred through the distribution system, product
transfer documents (PTDs) must be exchanged each time the batch changes
custody. Along with PTDs, other required elements of D&T include
quarterly and annual reporting, fuel pump labeling, and recordkeeping.
    The Nonroad Diesel program also contains certain provisions to ease
refiners' transition to the lower sulfur standards and to enable the
efficient distribution of all diesel fuels. These provisions, as
discussed more below in Section IV.B.2, include special provisions for
qualified small refiners, transmix processors, and entities in the fuel
distribution system.
(1) Scope of the Nonroad Diesel Fuel Program
    The sulfur standards finalized by the Nonroad Diesel rule apply to
all the diesel fuel that is produced and sold for use in NRLM diesel
applications (all fuel used in NRLM diesel engines, except for fuels
heavier than a No. 2 distillate used in Category 2 and 3 marine engines
\92\ and any fuel that is exempted for national security or other
reasons). While the Nonroad Diesel rule did not set sulfur standards
for other distillate fuels (such as jet fuel, heating oil, kerosene,
and No. 4 fuel oil), it did implement provisions to prevent the
inappropriate use of heating oil and other higher sulfur distillate
fuels in NRLM and locomotive and marine (LM) diesel applications. Sale
of distillate fuels for use in nonroad, locomotive, or marine diesel
engines will generally be prohibited unless the fuel meets the diesel
fuel sulfur standards of 40 CFR Part 80.\93\ The regulated fuels under
our diesel fuel sulfur program include those fuels listed in the
regulations at 40 CFR 80.2(qqq).
---------------------------------------------------------------------------

    \92\ Category 3 marine engines frequently are designed to use
residual fuels and include special fuel handling equipment to use
the residual fuel.
    \93\ For the purposes of the diesel sulfur program, the term
heating oil basically refers to any No. 1 or No. 2 distillate other
than jet fuel, kerosene, and diesel fuel used in highway or NRLM
applications. For example, heating oil includes fuel which is
suitable for use in furnaces and similar applications and is
commonly or commercially known or sold as heating oil, fuel oil, or
other similar trade names.
---------------------------------------------------------------------------

    The sulfur standards do not apply to: (1) No. 1 distillate fuel
used to power aircraft; (2) Number 4, 5, and 6 fuels (e.g., residual
fuels or residual fuel blends, intermediate fuel oil (IFO) Heavy Fuel
Oil Grades 30 and higher), used for stationary source purposes; (3) any
distillate fuel with a T-90 distillation point greater than 700 [deg]F,
when used in Category 2 or 3 marine diesel engines (this includes
Number 4, 5, and 6 fuels (e.g., IFO Heavy Fuel Oil Grades 30 and
higher), including fuels meeting the American Society for Testing and
Materials (ASTM) specifications DMB, DMC, and RMA-10 and heavier); and
(4) any fuel for which a national security or research and development
exemption has been approved or fuel that is exported from the U.S. The
criterion that any distillate fuel with a T-90 greater than 700 [deg]F
will not be subject to the sulfur standards when used in Category 2 or
3 marine engines was intended to exclude fuels heavier than No. 2
distillate, including blends containing residual fuel. In addition,
residual fuel was not subject to the sulfur standards.
    While many marine diesel engines use No. 2 distillate, ASTM
specifications for marine fuels identify four kinds of marine
distillate fuels: DMX, DMA, DMB, and DMC. DMX is a special light
distillate intended mainly for use in emergency engines. DMA (also
called marine gas oil, or ``MGO'') is a general purpose marine
distillate that contains no trace of residual fuel. These fuels can be
used in all marine diesel engines but are primarily used by Category 1
engines. DMX and DMA fuels intended for use in any marine diesel engine
are subject to EPA's fuel sulfur standards.
    DMB, also called marine diesel oil, is not typically used with
Category 1 engines, but is used for Category 2 and 3 engines. DMB is
allowed to have a trace of residual fuel, which can be high in sulfur.
This contamination with residual fuel usually occurs due to the
distribution process, when distillate is brought on board a vessel via
a barge that has previously contained residual fuel, or using the same
supply lines as are used for residual fuel. DMB is produced when fuels
such as DMA are brought on board the vessel in this manner. EPA's fuel
sulfur standards do apply to the distillate that is used to produce the
DMB, for example the DMA distillate, up to the point that it becomes
DMB. However, DMB itself is not subject to the EPA fuel sulfur
standards when it is used in Category 2 or 3 engines.
    DMC is a grade of marine fuel that may contain some residual fuel
and is often a residual fuel blend. This fuel is similar to No. 4
diesel, and can be used in Category 2 and Category 3 marine diesel
engines. DMC is produced by blending a distillate fuel with residual
fuel, for example at a location downstream in the distribution system.
EPA's fuel sulfur standards apply to the distillate that is used to
produce the DMC, up to the point that it is blended with the residual
fuel to produce DMC. However, DMC itself is not subject to the EPA fuel
sulfur standards when it is used in Category 2 or 3 marine engines.
    Residual fuel was not previously covered by the sulfur content
standards as it is not a distillate fuel. Residual fuel is typically
designated by the prefix RM (e.g., RMA, RMB, etc.). These fuels are
also identified by their nominal viscosity (e.g., RMA10, RMG35, etc.).
Most residual fuels require treatment by an onboard purifier-clarifier
centrifuge system, although RMA and RMB do not require this.
    The distillation criterion adopted by EPA, T-90 greater than 700
[deg]F, was designed to identify those fuels that are not subject to
the sulfur standards when used in Category 2 or 3 marine diesel
engines. It is intended to exclude DMB, DMC, and other heavy
distillates or blends, when used in Category 2 or 3 marine diesel
engines. We are not amending this provision in this action. However,
under this final rule, all of these fuels, and any other diesel fuels
or fuel oils, will be subject to a 1,000 ppm sulfur limit if they are
produced or sold for use in an ECA, except as otherwise allowed under
40 CFR Part 1043.
(2) Flexibilities
    Compliance flexibilities were provided in the nonroad diesel sulfur
regulations for qualified small refiners (69 FR 39047; Section IV.B.1)
and for transmix processors (69 FR 39045; Section IV.A.3.d). Small
refiners were provided, among other flexibility options, additional
time for compliance with the 15 ppm NRLM standard, until June 1, 2014.
Transmix processors, who distill off-specification interface mixtures
of petroleum products from pipeline systems into gasoline and
distillate fuel, have a simple refinery configuration that does not
make it cost-effective for them to install and operate a hydrotreater
to reduce distillate fuel sulfur content. As a result, transmix
processors were provided with the flexibility to continue to produce
all of their NRLM diesel fuel to meet the 500 ppm sulfur standard until
June 1, 2014, and all of their LM diesel fuel to meet a 500 ppm sulfur
limit indefinitely. The

latter flexibility also allows for an outlet for off-spec fuel that may
be produced in the distribution system.
    The D&T provisions, first established to distinguish highway from
nonroad 500 ppm fuel, were thus continued beyond 2014 to ensure that
500 ppm NRLM could be distinguished from similar fuel (e.g., heating
oil that has a sulfur level of 500 ppm). In 2014 and beyond, D&T is
essential to ensure that heating oil is not being inappropriately
shifted downstream of the refiner into the NRLM and LM diesel fuel
markets, circumventing the NRLM standards (as mentioned above in
Section IV.B.1). Provisions in the Nonroad Diesel rule to ensure that
heating oil is not used in NRLM applications include the use of a fuel
marker to distinguish heating oil from NRLM and LM diesel fuel, dye
solvent yellow 124, which is added to heating oil at the terminal
level. The D&T provisions also provided parties in the diesel fuel
industry with inherent flexibility. D&T maximizes the efficiency of the
distribution system by allowing for fungible distribution of physically
similar products, and minimizing the need for product segregation.
Under D&T, diesel fuel with similar sulfur levels can be fungibly
shipped up to the point of distribution from a terminal (where off-
highway diesel fuels must be dyed red, pursuant to Internal Revenue
Service (IRS) requirements, to indicate its tax exempt status).
(3) Northeast/Mid-Atlantic Area
    In the Northeast, heating oil is distributed in significant
quantities. Discussions with terminal operators in the Northeast (and
other representatives of heating oil users and distributors) during the
development of the Nonroad Diesel rule revealed concerns that the
heating oil marker requirement would represent a significant burden on
terminal operators and users of heating oil given the large volume of
heating oil used in the Northeast. These parties suggested that if EPA
prohibited the sale and use of diesel fuel produced by those utilizing
the flexibilities described above, this area could be exempted from the
marker requirement.
    Thus, the Northeast/Mid-Atlantic (NE/MA) area was developed (69 FR
39063, Section IV.D.1.b.ii; see also 40 CFR 80.510(g) for the specific
States and counties that comprise the NE/MA area). As there would be no
way to distinguish heating oil from 500 ppm NRLM and 500 ppm LM diesel
fuel in 2014 and beyond without the fuel marker, these fuel types are
not allowed to be produced/imported, distributed and/or sold in the NE/
MA area during this time period (500 ppm NRLM diesel fuel may not be
produced/imported, distributed and/or sold in the NE/MA area after
2012).
    Similarly, high sulfur NRLM (HSNRLM) produced through the use of
credits is not allowed in Alaska. However, EPA-approved small refiners
in Alaska may produce HSNRLM diesel fuel. To receive this approval, a
small refiner must provide EPA with a compliance plan showing how their
HSNRLM diesel fuel will be segregated from all other distillate fuels
through its distribution to end-users.
(4) Nonroad Diesel Program Transition Schedule
    The transition to lower sulfur diesel fuel for NRLM equipment is
depicted in Figure VI-1 below. The transition for urban (areas served
by the Federal Aid Highway System) and rural Alaska are shown below in
Figure VI-2.
BILLING CODE 6560-50-P

[GRAPHIC] [TIFF OMITTED] TR30AP10.101

[GRAPHIC] [TIFF OMITTED] TR30AP10.102

BILLING CODE 6560-50-C

C. Applicability

    Assuming adoption of an amendment to MARPOL Annex VI establishing a
U.S. ECA, pursuant to Annex VI, the fuel used in that ECA cannot exceed
1,000 ppm sulfur beginning January 1, 2015.\94\ As mentioned above, we
are incorporating a similar 1,000 ppm sulfur limit into our CAA
regulations at 40 CFR Part 80 through both a prohibition on the
production and sale of fuel oil above 1,000 ppm sulfur for use in any
marine vessels (Categories 1, 2, and 3) in an ECA and ECA associated
areas except as allowed under 40 CFR Part 1043, and an allowance for
the production and use of 1,000 ppm sulfur fuel to be used in Category
3 marine vessels. Fuel produced and sold for use in any engine on
Category 1 and Category 2 marine vessels will continue to be subject to
the existing diesel sulfur requirements which are more stringent than
those being finalized in this action for Category 3 marine vessels. We
requested comment on whether or not Category 1 and 2 engines installed
on Category 3 marine vessels should be allowed to use 1,000 ppm sulfur
fuel. To reduce burden that could potentially be caused by requiring
that these engines burn 15 ppm diesel fuel (which could result in a
vessel needing to carry three different types of fuel onboard), we are
finalizing that Category 1 and 2 auxiliary engines installed on
Category 3 marine vessels will be allowed to use 1,000 ppm fuel.
---------------------------------------------------------------------------

    \94\ Annex VI, Regulation 14 (located in the rulemaking docket,
EPA-HQ-OAR-2007-0121-0107).
---------------------------------------------------------------------------

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

D. Fuel Sulfur Standards

    As discussed above in Section IV.C, in addition to the prohibition
on the sale of fuel greater than 1,000 ppm sulfur for use in marine
vessels (except as allowed under 40 CFR Part 1043) operating within an
ECA and ECA associated areas, we are also finalizing the allowance of
the production, distribution, and sale of 1,000 ppm sulfur ECA marine
fuel, which we discuss more in this section.
    Prior to this action, and pending the establishment of the North
American ECA, the kind of fuel produced and sold for use by Category 3
marine vessels had uncontrolled sulfur levels as it was not subject to
the NRLM sulfur limits. This was reflected in the regulations by
exempting these kinds of fuel from the definition of NRLM diesel fuel
and the NRLM sulfur limits (40 CFR 80.2(nnn)). The combined effect of
Annex VI and these regulations is to require that any fuel sold for use
in a Category 3 marine vessel operating in an ECA be 1,000 ppm sulfur
or lower, except as allowed under 40 CFR Part 1043. Fuel oil used or
sold for use in Category 3 marine vessels in an ECA and ECA associated
areas will therefore go from uncontrolled, high sulfur levels to no
higher than 1,000 ppm sulfur (except as otherwise allowed under 40 CFR
Part 1043). Under Annex VI, fuel with sulfur levels greater than 1,000
ppm cannot be used in a marine vessel without sulfur abatement
technology operating in an ECA, no matter where the fuel is purchased.
Consistent with this, the finalized section 211(c) controls will
prohibit the production and sale of any fuel for use in an ECA and ECA
associated areas that is above 1,000 ppm sulfur, except as allowed
under 40 CFR Part 1043.
    The requirements for 1,000 ppm sulfur fuel oil will apply to the
North Sea, the Baltic Sea, and any other ECAs established around the
world, so this fuel will be produced by refiners in other countries.
Under EPA's NRLM program prior to this final rule, 1,000 ppm sulfur
fuel would have been subject to the 15 ppm NRLM sulfur limit in 2014
and later. If EPA were to require that fuel produced, distributed, and
sold for use for Category 3 vessels in the North American ECA and ECA
associated areas meet the 15 ppm sulfur standard after 2014, we believe
that Category 3 vessel owners would simply purchase 1,000 ppm sulfur
fuel elsewhere to be used here in the North American ECA. This could be
an extremely inefficient process for ship owners. It would also mean a
loss of sales for U.S. refiners of fuel that these Category 3 vessel
owners purchase. These impacts would add to the costs and burdens of
the program with no corresponding environmental benefit. Therefore, we
believe that it is reasonable to allow U.S. refiners and importers to
produce 1,000 ppm sulfur fuel for use by Category 3 vessels. Thus, we
are finalizing a new fuel sulfur standard of 1,000 ppm for fuel
produced, distributed, and sold for use in Category 3 marine vessels.
While we expect use of this fuel to be concentrated in the area of the
North American ECA and ECA associated areas (and any other ECA), we are
allowing its use by Category 3 marine vessels in all locations, to
encourage its general use. After 2014, no fuel above 15 ppm can be used
in Category 1 or Category 2 vessels.
    We note that the combination of the Annex VI ECA provisions and the
modifications proposed in this action for the diesel sulfur program
will achieve very significant benefits compared to the existing
program. The production and use of 1,000 ppm ECA marine fuel, as well
as 15 ppm NRLM diesel fuel, will replace much higher sulfur fuel usage,
and there is no additional benefit to be gained by requiring the sale
of 15 ppm sulfur diesel fuel for use by Category 3 vessels as a
practical matter because we believe Category 3 vessels would simply
purchase 1,000 ppm sulfur fuel elsewhere. In order to incorporate these
modifications into our existing program under the Clean Air Act, we
needed to create a new fuel designation for allowable fuel under our
program.
(1) Amendments to the Diesel Fuel Sulfur Program
    We are prohibiting the production, distribution, and sale or offer
for sale of any fuel for use in any marine diesel vessels (Categories
1, 2, and 3) operating in the North American ECA and ECA associated
areas that is greater than 1,000 ppm sulfur, except as otherwise
allowed under 40 CFR Part 1043. We are also finalizing a sulfur
standard of 1,000 ppm for fuel produced, distributed, and sold or
offered for sale for use in Category 3 marine vessels operating in

an ECA and ECA associated areas. To simplify the existing diesel fuel
sulfur program, we are also eliminating the 500 ppm LM diesel fuel
standard once the 1,000 ppm ECA marine fuel standard becomes effective.
Under the diesel sulfur program prior to this final rule, 500 ppm LM
diesel fuel could be produced by transmix processors indefinitely, and
could be used by locomotives and marine vessels that do not require 15
ppm. The original intent of allowing for this fuel was to serve as an
outlet for interface and downgraded diesel fuel post-2014 that would
otherwise not meet the 15 ppm sulfur standard. However, we believe that
the 1,000 ppm sulfur ECA marine fuel can now serve as this outlet. We
believe that transmix generated near the coasts would have ready access
to marine applications, and transmix generated in the mid-continent
could be shipped via rail or fuel barge to markets on the coasts.
    Elimination of the 500 ppm LM diesel fuel standard will simplify
the diesel sulfur program such that sulfur can serve as the
distinguishing factor for fuels available for use after 2014 (the
designated products under the diesel fuel program will thus be: 15 ppm
motor vehicle, nonroad, locomotive, and marine (MVNRLM) diesel fuel,
heating oil, and 1,000 ppm ECA marine fuel). With this approach,
beginning in 2014, only 15 ppm NRLM diesel fuel can be used in
locomotive and Category 1/Category 2 marine diesel applications (and
1,000 ppm ECA marine fuel could be used in Category 3 marine vessels).
Further, this will help to streamline the D&T program as there will no
longer be a need for a fuel marker to distinguish 500 ppm LM diesel
fuel from heating oil. Below, we discuss the aspects of D&T that we are
changing, which we believe will greatly simplify the diesel sulfur
program.
(a) Compliance and Implementation
(i) Northeast/Mid-Atlantic Area and the Fuel Marker
    With the elimination of the 500 ppm LM designation in 2014, parties
in the fuel production and distribution industry will still be required
to register and designate their products and adhere to PTD, fuel pump
labeling, and recordkeeping requirements. But we believe that the
tracking portion of D&T can be simplified. Annual reporting was
required under Sec.  80.601 for D&T through June 30, 2015 (the final
annual report is due August 31, 2015). The final reporting period was
set to ensure that heating oil was not being inappropriately shifted
into the 500 ppm LM diesel fuel pool. However, with the elimination of
this fuel designation, the final annual reporting period will instead
be July 1, 2013 through May 31, 2014, with the report due to EPA on
August 31, 2014.
    As stated in the preamble to the proposed rule, we believe that the
elimination of the 500 ppm LM diesel fuel designation will also,
beginning June 1, 2014, negate the need for the heating oil marker and
the NE/MA area. After 2014, the heating oil marker requirement in the
diesel sulfur program prior to this final rule was for the sole purpose
of distinguishing heating oil from 500 ppm LM diesel fuel, to prevent
heating oil from swelling the 500 ppm LM diesel fuel pool. Also, as
there is no marker requirement for heating oil in the NE/MA area, the
diesel sulfur program did not allow for 500 ppm LM diesel fuel to be
produced, distributed, or purchased for use in the NE/MA area after
2012. As also noted in the proposed rule, without 500 ppm LM diesel
fuel there is no need for the heating oil marker; fuel designations and
sulfur level could serve as the distinguishing factor between the
available fuels (15 ppm MVNRLM diesel fuel, 1,000 ppm ECA marine fuel,
and heating oil). Further, there is no need for the NE/MA area without
the heating oil marker. Thus, we are finalizing to remove the NE/MA
area designation and the heating oil marker requirement.
(ii) PTDs and Labeling
    We are finalizing new PTD language for the 1,000 ppm ECA marine
fuel designation at regulation Sec.  80.590. As stated in regulation
Sec.  80.590(a)(7)(vii), we are adding the following statement to PTDs
accompanying 1,000 ppm sulfur ECA marine fuel: ``1,000 ppm sulfur
(maximum) ECA Marine Fuel. For use in Category 3 marine vessels only.
Not for use in engines not installed on Category 3 marine vessels.''
    Appendix V of Annex VI also includes language that is required on
bunker delivery notes. Compliance requirements of this action, such as
PTDs, are not intended to supplant or replace requirements of Annex VI
(and we encourage regulated entities to consult Annex VI to ensure that
they are fully aware of all requirements that must be met in addition
to EPA's requirements). However, if a party's bunker delivery note also
contains the information required under our regulations for PTDs, we
will consider the bunker delivery note to also suffice as a PTD.
    We are also finalizing new pump labeling language for the 1,000 ppm
sulfur ECA marine fuel designation at regulation Sec.  80.574. Diesel
fuel pump labels required under the existing diesel sulfur regulations
must be prominently displayed in the immediate area of each pump stand
from which diesel fuel is offered for sale or dispensing. However, we
understand that there may be cases where it is not feasible to affix a
label to a fuel pump stand due to space constraints (such as diesel
fuel pumps at marinas) or where there is no pump stand, thus the
current regulations allow for alternative labeling with EPA approval.
Previously approved alternative labeling has included the use of
permanent placards in the immediate vicinity of the fuel pump; and we
will also allow other reasonable alternatives to labeling for
situations where pump labeling may not be feasible. As stated in
regulation Sec.  80.574, we are replacing the 500 ppm LM diesel fuel
pump label language with the following fuel pump label language for
1,000 ppm sulfur ECA marine fuel: ``1,000 ppm SULFUR ECA MARINE FUEL
(1,000 ppm Sulfur Maximum). For use in Category 3 marine vessels only.
Warning--Federal law prohibits use in any engine that is not installed
on a Category 3 marine vessel; use of fuel oil with a sulfur content
greater than 1,000 ppm in an ECA is prohibited, except as allowed by 40
CFR Part 1043.''
    Under this program, we are also eliminating MVNRLM diesel fuel
labeling requirements from EPA's regulations. In 2014 and beyond, EPA
will not require ``visible evidence'' of red dye in off-road fuels;
however this requirement still exists in IRS's taxation regulations to
denote that off-road fuels are untaxed. EPA's required label for 15 ppm
NRLM diesel fuel (instead of one 15 ppm MVNRLM diesel fuel label) is
mainly to denote that 15 ppm NRLM will be dyed red, while 15 ppm MV
diesel fuel will not. Further, after October 1, 2014, all MVNRLM diesel
fuel available for purchase and/or distribution will be 15 ppm. We
believe that it is not appropriate for EPA to retain a labeling
requirement for MVNRLM diesel fuel given the fact that the red dye
provision is no longer EPA's requirement. Please note, however, that
marketers and wholesale purchaser-consumers are still free to continue
to label their pump stands to help with consumer awareness. Labeling
will continue to be required for heating oil and, as proposed above,
for 1,000 ppm sulfur ECA marine fuel.
    Additionally, EPA will consult with IRS regarding handling labels
in IRS's regulations at Title 26 of the Code of Federal Regulations.

(b) Timing of the Standard
    Currently, all refiners and importers are required to produce all
of their NRLM diesel fuel to meet the 15 ppm standard beginning June 1,
2014. To allow transition time for the distribution system, terminals
are allowed until August 1, 2014 to begin dispensing 15 ppm NRLM diesel
fuel, retailers and wholesale purchaser-consumers are allowed until
October 1, 2014, and end-users are allowed until December 1, 2014. To
be consistent with the existing diesel program, we are allowing
refiners to begin producing 1,000 ppm sulfur ECA marine fuel beginning
June 1, 2014, and downstream parties will follow the current NRLM
transition schedule (August, October, and December). We believe that
following the same transition schedule as the existing diesel sulfur
program would best facilitate the availability of 1,000 ppm ECA marine
fuel for purchase and use by the Annex VI January 1, 2015 date.
(2) Proposed Alternative Options
    We identified two potential alternatives in the proposed rule to
the changes to the existing diesel fuel sulfur program discussed above:
The creation of an expanded NE/MA area and the retention of the 500 ppm
LM diesel fuel designation. We requested comment on these alternative
options, as well as any additional alternative options. We received a
comment stating that the 500 ppm sulfur designation should be retained
because, the commenter stated, Category 3 engines can use both 500 ppm
and 1,000 ppm sulfur fuel. Another commenter who supported the
elimination of this fuel category noted that if it is determined that
the 500 ppm LM designation is necessary for the locomotive industry, it
would support the concept of an expanded NE/MA area as a secondary
option.

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

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

 Table IV-1--Technical Amendments to the Diesel Fuel Sulfur Regulations
------------------------------------------------------------------------
                  Section                       Description of change
------------------------------------------------------------------------
80.525(a)-(d).............................  Removal of the term ``motor
                                             vehicle'' from this
                                             section.
80.551(f).................................  Correction of printing
                                             error.
80.561....................................  Correction of typographical
                                             error in title.
80.570(a) and (b).........................  Amended to correct date
                                             (``November 30, 2010''
                                             instead of ``September 30,
                                             2010''.
80.593....................................  Correction of typographical
                                             error in introductory text.
80.599(e)(4)..............................  Correction of printing error
                                             in definition of terms
                                             ``1MV15I'' and
                                             ``NPMV15I''.
80.600(a)(12).............................  Amended to correct date
                                             (``May 31, 2014'' instead
                                             of ``June 1, 2014'').
80.600(i).................................  Amended to remove duplicate
                                             sentence.
80.601(b)(3)(x)...........................  Amended to correct dates
                                             (``August 31'' instead of
                                             ``August 1'').
80.612(b).................................  Amended to fix typographical
                                             error in paragraph.
------------------------------------------------------------------------

V. Emission Control Areas for U.S. Coasts

    The finalized Clean Air Act standards described above are part of a
coordinated strategy for ensuring that all ships that affect U.S. air
quality will be required to meet stringent NOX and fuel
sulfur requirements. Another component of this strategy consists of
pursuing ECA designation for U.S. and Canadian coasts in accordance
with Annex VI of MARPOL. ECA designation will ensure that all ships,
foreign-flagged and domestic, are required to meet stringent
NOX and fuel sulfur requirements while operating within 200
nautical miles of most U.S. coasts. This section describes what an ECA
is, the process for obtaining ECA designation at the International
Maritime Organization, and summarizes the U.S. and Canadian proposal
for an amendment to MARPOL Annex VI designating most U.S. and Canadian
coasts as an ECA (referred to as the ``North American ECA''), submitted
to IMO on March 27, 2009.\95\
---------------------------------------------------------------------------

    \95\ Proposal to Designate an Emission Control Area for Nitrogen
Oxides, Sulphur Oxides and Particulate Matter, Submitted by the
United States and Canada. IMO Document MEPC59/6/5, 27 March 2009. A
copy of this document can be found at http://www.epa.gov/otaq/regs/
nonroad/marine/ci/mepc-59-eca-proposal.pdf.
---------------------------------------------------------------------------

    This section also discusses technological approaches to comply with
the fuel standards. These approaches include switching to lower sulfur
fuel and equivalents, such as exhaust gas cleaning units. We also
discuss how emissions from foreign-flagged ships may be covered should
approval of the U.S. ECA be delayed.

A. What Is an ECA?

(1) What Emissions Standards Apply in an ECA?
    MARPOL Annex VI contains international standards to control air
emissions from ships. The NOX and SOX/PM programs
each contain two sets of standards. The global standards for the sulfur
content of fuel and NOX emissions from engines apply to
ships at all times. In recognition that some areas may require further
control, Annex VI also contains more stringent NOX and
SOX/PM geographic-based standards that apply to ships
operating in designated Emission Control Areas. Once a North American
ECA is designated through amendment to MARPOL Annex VI, the
requirements will be enforceable for most vessels through the Act to
Prevent Pollution from Ships (see Section VI.B).
    The current global fuel sulfur (S) limit is 45,000 ppm \96\ S and
will tighten to 35,000 ppm S in 2012. Depending on a 2018 fuel
availability review, the MARPOL Annex VI global fuel sulfur limit will
be further reduced to 5,000 ppm S as early as 2020. In contrast, ships
operating in designated ECAs are subject to a fuel sulfur limit of
15,000 ppm S. The ECA limit is reduced to 10,000 ppm S in July 2010 and
1,000 ppm S in 2015. In addition, Tier 3 NOX standards will
apply to new engines operating in ECAs beginning in 2016. These Tier 3
NOX standards represent an 80 percent reduction in
NOX beyond current Tier 1 standards and are anticipated to
require the use of aftertreatment technology such as SCR. We are
adopting similar Tier 3 standards as part of our Clean Air Act program
(see Section III).
---------------------------------------------------------------------------

    \96\ Note that MARPOL Annex VI expresses these standards in
units of % (m/m) sulfur. 10,000 ppm S equals 1 percent S.
---------------------------------------------------------------------------

    There are currently two ECAs in effect today, exclusively
controlling SOX; thus they are called Sulfur Emission
Control Areas, or SECAs. The first SECA was designated to control the
emissions of SOX in the Baltic Sea area and entered into
force in May 2005. The second SECA was designated to control the
emissions of SOX in the North Sea area and entered into
force in November 2006.

(2) What Is the Process for Obtaining ECA Designation?
    A proposal to amend Annex VI to designate an ECA can be submitted
by a party to Annex VI. A party is a country that ratified Annex VI.
The proposal for amendment must be approved by the Parties to MARPOL
Annex VI; this would take place at a meeting of the Marine Environment
Protection Committee (MEPC). The U.S. deposited its Instrument of
Ratification with the IMO on October 8, 2008. Annex VI entered into
force for the U.S. on January 8, 2009, making the U.S. eligible to
apply for an ECA.
    The criteria and procedures for ECA designation are set out in
Appendix III to MARPOL Annex VI. A proposal to designate an ECA must
demonstrate a need to prevent, reduce, and control emissions of
SOX, PM, and/or NOX from ships operating in that
area. The specific criteria are summarized below:
     A delineation of the proposed area of application;
     A description of the areas at risk on land and at sea,
from the impacts of ship emissions;
     An assessment of the contribution of ships to ambient
concentrations of air pollution or to
     Adverse environmental impacts;
     Relevant information pertaining to the meteorological
conditions in the proposed area of
     Application to the human populations and environmental
areas at risk;
     Description of ship traffic in the proposed ECA;
     Description of the control measures taken by the proposing
Party or Parties;
     Relative costs of reducing emissions from ships compared
with land-based controls; and
     An assessment of the economic impacts on shipping engaged
in international trade.
    An amendment to designate an ECA must be adopted by the Parties to
Annex VI, as an amendment to Annex VI. The proposal to amend Annex VI
was approved at MEPC 59, and circulated for adoption. The earliest
possible adoption date is at MEPC 60, which will take place in March
2010 entering into force as early as August 2012.

B. U.S. Emission Control Area Designation

    EPA worked with the U.S. Coast Guard, State Department, the
National Oceanic and Atmospheric Administration and other agencies to
develop the analysis supporting ECA designation for U.S. coasts
contained in the U.S. and Canadian submittal to IMO. In addition, we
collaborated with Environment Canada and the California Air Resources
Board. In developing the ECA proposal, EPA consulted with stakeholders
including representatives from the shipping industry, ports, master
mariners, environmental interests and representatives from State and
local governments. EPA began conducting outreach in advance of this
year's ECA proposal; in fact we have been engaged with this industry
for many years with regards to the development of an Emission Control
Area for the United States. Stakeholders also had the opportunity to
comment on the strategy we announced in the Advance Notice of Proposed
Rulemaking (ANPRM) for the Category 3 Marine Diesel Engine Rule,
published on December 7, 2007. In the ANPRM, EPA outlined an approach
to regulating emissions from both new and existing vessels using a
framework that aligns with MARPOL Annex VI, including applying the
standards for Emission Control Areas along U.S. coasts.
    The proposal for ECA designation that the USG submitted to IMO
earlier this year is for a combined U.S./Canada ECA submission. This
approach has several advantages. First, the emission reductions within
a Canadian ECA will lead to air quality improvements in the U.S.
Second, a joint ECA helps minimize any competitive issues between U.S.
and Canadian ports, such as in the Puget Sound area, which could arise
from ECA standards. Third, IMO encourages a joint submittal where there
is a common interest in emission reductions on neighboring waters. In
addition, France has since joined the ECA proposal on behalf of the
Saint Pierre and Miquelon archipelago.
(1) What Areas Would Be Covered in a North American ECA?
    The area included in the North American ECA submittal to IMO for
ECA designation generally extends 200 nautical miles from the coastal
baseline, except where this distance would enter the Exclusive Economic
Zones (EEZ) of a neighboring country. This area would include the
Pacific Coast, the Atlantic/Gulf Coast and the Southeastern Hawaiian
Islands. On the Pacific Coast, the ECA would be bounded in the north
such that it includes the approaches into Anchorage, Alaska, but not
the Aleutian Islands or points north. It would continue contiguously to
the south including the Pacific coasts of Canada and the U.S., with its
southernmost boundary at the point where California meets the border
with Mexico. In the Atlantic/Gulf Coast, the ECA would be bounded in
the west by the border of Texas with Mexico and continue contiguously
to the east around the peninsula of Florida and north up the Atlantic
coasts of the U.S. and Canada and would be bounded in the north by the
60th North parallel. The Southeastern Hawaiian Islands that were
included in the ECA submittal are Hawaii, Maui, Oahu, Molokai, Niihau,
Kauai, Lanai, and Kahoolawe.
    Not included in the ECA submittal were the Pacific U.S.
territories, smaller Hawaiian Islands, the U.S. territories of Puerto
Rico and the U.S. Virgin Islands, Western Alaska including the Aleutian
Islands, and the U.S. and Canadian Arctic. The U.S. and Canada did not
make a determination or imply that these areas suffer no adverse impact
from shipping. Rather, we concluded that information must be gathered
to properly assess these areas. If further information supports the
need for an ECA designation in any of these areas, we would submit a
future, proposal for ECA designation of these areas.
BILLING CODE 6560-50-P

[GRAPHIC] [TIFF OMITTED] TR30AP10.103

BILLING CODE 6560-50-C
    We are currently performing the analyses necessary to support an
ECA designation for Puerto Rico and the U.S. Virgin Islands and will be
engaging stakeholders as part of that effort. That outreach will
include neighboring countries, shipping companies, environmental
organizations, and other stakeholders. Puerto Rico has a population of
4 million people, sees significant shipping traffic and experiences the
highest asthma rate in the United States. Addressing the impact of ship
emissions on Puerto Rico

and U.S. Virgin Islands is a top priority for the Agency. We plan to
complete the appropriate analysis and stakeholder outreach regarding an
ECA designation for these U.S. territories such that the U.S. with any
interested Caribbean neighbors could make a proposal to the IMO in
advance of MEPC 61 with the intent to see the ECA adopted at MEPC 62
(July 2011) and enter into force 28 months later (December 2013). In
this way, we can be confident that there will be ample time for
consideration and adoption of such an ECA well in advance of January 1,
2015 when the 1,000 ppm fuel sulfur standard enters into effect.
    Establishing the ECA boundary for Puerto Rico and the U.S. Virgin
Islands would require vessels operating in this area to meet Tier 3
NOX requirements that become effective in 2016. EPA will
remove the Tier 3 NOX exemption from applying to Puerto Rico
and the U.S. Virgin Islands through an appropriate rule amendment once
the Caribbean ECA boundary is established.
(2) What Analyses Were Performed in Support of a North American ECA?
    We performed a comprehensive analysis to estimate the degree of
human health risk and environmental degradation that is posed by air
emissions from ships operating in their ports and along our coasts. To
evaluate the risk to human populations, state-of-the-art assessment
tools were used to apply widely accepted methods with advanced computer
modeling techniques. The analyses incorporated detailed ship traffic
data, the most recent emissions estimates, detailed observed
meteorological data, current scientific understanding of exhaust plume
behavior (both physical dispersion and photochemical reaction) and the
latest epidemiologic databases of health effects attributable to
pollutant exposure levels to estimate the current impacts of shipping
on human health and the environment. In addition, sulfate and nitrate
deposition modeling was performed to assess the impacts of nitrogen
nutrient loading and acidification on U.S. ecosystems.
    Two contrasting future scenarios were evaluated: One in which ships
continue to operate with current emissions performance while operating
in the specified area, and one in which ships comply with ECA
standards. The analysis demonstrated that ECA designation for U.S.
coasts could save thousands of lives each year, relieve millions of
acute respiratory symptoms, and benefit many of the most sensitive
ecosystems. This analysis is consistent with, and incorporated in, the
benefits estimates presented in Section VIII.

C. Technological Approaches To Comply With Fuel Standards

    When operating within the ECA, all ships would have to comply with
the 0.1 percent fuel sulfur limit beginning in 2015 and vessels built
after December 31, 2015 would have to comply with the Tier 3
NOX limits described above. This section describes how ships
would comply with the fuel standards. Approaches for compliance with
the NOX standards are discussed in Section 3 above.
(1) Fuel Switching
    As discussed above, the MARPOL Annex VI fuel sulfur limit for ships
operating in an ECA is 15,000 ppm today and reduces to 10,000 ppm in
July 2010 and further to 1,000 ppm in 2015. We anticipate that the
1,000 ppm fuel sulfur limit, beginning in 2015, will likely result in
the use of distillate fuel for operation in ECAs. This would require
the vessel to switch from a higher sulfur fuel to 1,000 ppm S fuel
before entering the ECA. The practical implications of fuel switching
are discussed below.
    Currently, the majority of ocean-going vessels use residual fuel
(also called HFO or IFO) in their main propulsion engines, as this fuel
is relatively inexpensive and has a good energy density. This fuel is
relatively dense (``heavy'') and is created as a refining by-product
from typical petroleum distillation. Residual fuels typically are
composed of heavy, residuum hydrocarbons and can contain various
contaminants such as heavy metals, water and sulfur compounds. It is
these sulfur compounds that cause the SOX emissions when the
fuel is combusted. If the vessel does not employ the use of a sulfur
scrubber or other technology, it will most likely operate on a marine
distillate fuel while in an ECA in order to meet the sulfur emission
requirements.
    The sulfur in marine fuel is primarily emitted as SO2;
however, a small fraction (about 2 percent) is converted to
SO3. SO3 almost immediately forms sulfate and is
emitted as direct PM by the engine. Consequently, emissions of
SO2 and sulfate PM are very high for engines operating on
residual fuel. Switching from high sulfur residual fuel to lower sulfur
distillate fuel results in large reductions in SO2 and
sulfate PM emissions. In addition to high sulfur levels, residual fuel
contains relatively high concentrations of low volatility, high
molecular weight organic compounds and metals. Organic compounds that
contribute to PM can be present either as a nucleation aerosol or as a
material adsorbed on the surfaces of agglomerated elemental carbon soot
particles and metallic ash particles. The sulfuric acid aerosol in the
exhaust provides a nucleus for agglomeration of organic compounds.
Operation on higher volatility distillate fuel reduces both nucleation
and adsorption of organic compounds into particulate matter. Therefore,
in addition to direct sulfate PM reductions, switching from residual
fuel to distillate fuel reduces organic PM and metallic ash particles
in the exhaust.
    In the majority of vessels which operate on residual fuel, marine
distillate fuel is still used for operation during routine maintenance,
prior to and immediately after engine shut-down, or in emergencies.
Standard procedures today have been established to ensure that this
operational fuel switchover is performed safely and efficiently.
Mainly, in order for the vessel to completely switch between residual
and distillate fuel, the fuel pumps and wetted lines will need to be
completely purged by the new fuel to ensure that the ship is burning
the correct fuel for the area. This purging will vary from ship to ship
due to engine capacity, design, operation, and efficiency. Provided the
ship has separate service tanks for distillate and residual fuel (most,
if not all, vessels do), fuel switching time should be limited only by
maximum allowable rate of fuel temperature change. Additionally, for a
longer operation period such as would occur while in an ECA, we
investigated several other fuel switching topics to ensure that vessels
would not have long-term issues from operating on the marine distillate
fuels.
    Marine distillate fuels are similar in composition and structure to
other petroleum-based middle distillate fuels such as diesel and No. 2
heating oil, but they have a much lower allowable sulfur content than
residual fuels. This lower sulfur content means that by combusting
marine distillate fuel in their propulsion engines, vessels operating
within the ECA would meet the stricter SOX requirements.
However, sulfur content is not the only difference between the marine
residual and distillate fuels; they also have different densities,
viscosities, and other specification limits.
    The maritime industry has analyzed the differences between residual
and distillate fuel compositions to address any potential issues that
could arise from switching operation of a Category 3 engine from
residual fuel to distillate fuel. The results from this research has

evolved into routine operational switching procedures that ensure a
safe and efficient way for the Category 3 engines to switch operation
between the residual and distillate fuels. Engine manufacturers, fuel
suppliers, the American Bureau of Shipping, and the U.S. Coast Guard
have provided guidance on fuel switching
procedures.97 98 99 100 101 A brief summary of the fuel
differences, as well as any potential issues and their usual solutions,
is presented below.
---------------------------------------------------------------------------

    \97\ MAN B&W Diesel, ``Operation on Low-Sulphur Fuels; Two-
Stroke Engines,'' 2004.
    \98\ Wartsila, ``Low Sulphur Guidelines,'' January 9, 2006.
    \99\ American Petroleum Institute, ``Technical Considerations of
Fuel Switching Practices,'' API Technical Issues Workgroup, June 3,
2009.
    \100\ American Bureau of Shipping, ``ABS Notes: Use of Low-
Sulphur Marine Fuel for Main and Auxiliary Diesel Engines,'' Fuel
Oil Piping, EWZ-001-02-P04-W007, Attachment G--Revision 1.
    \101\ United States Coast Guard, ``Avoiding Propulsion Loss from
Fuel Switching: American Petroleum Institute, Technical
Considerations,'' Marine Safety Alert 03-09, June 16, 2009.
---------------------------------------------------------------------------

(a) Fuel Density
    Due to its chemical composition, residual fuel has a slightly
higher density than marine distillates. Using a less dense fuel could
affect the ballast of a ship at sea and would have to require
compensation. Therefore, when beginning to operate on the distillate
fuel, the vessel operator would have to pay attention to the vessel's
ballast and may have to compensate for any changes that may occur. We
anticipate that these procedures would be similar to operating the
vessel with partially-full fuel tanks.
    Another consideration when switching to a lower density fuel is the
change in volumetric energy content. Distillate fuel has a lower energy
density content on a per gallon basis when compared to the residual
fuel; however, per ton, distillate fuel's energy density is larger than
the residual fuel. This means that when switching from residual fuel to
distillate fuel, if the vessel's tanks are volumetrically limited
(i.e., the tanks can only hold a set quantity of fuel gallons), the
distance a vessel can travel on the distillate fuel may be slightly
shorter than the distance the vessel could travel on the residual fuel
due to the lower volumetric energy content of distillate fuel, which
could require compensation. This distance reduction would be
approximately 5 percent and would only be of concern while the vessel
was operating on the distillate fuel (i.e., while in the U.S. ECA) as
the majority of the time the vessel will be operating on the residual
fuel. However, if the vessel is limited by weight (draft), the higher
energy content per ton of fuel would provide an operational advantage.
(b) Kinematic Viscosity
    Residual fuel's kinematic viscosity is much higher than marine
distillate fuel's viscosity. Viscosity is the ``thickness'' of the
fuel. If this parameter is lowered from the typical value used within a
pump, some issues could arise. If a distillate fuel is used in a system
that typically operates on residual fuel, the decrease in viscosity
could cause problems with high-pressure fuel injection pumps due to the
increased potential for internal leakage of the thinner fuel through
the clearances in the pumping elements. Internal leakage is part of the
design of a fuel pump and is used in part to lubricate the pumping
elements. However, if this leakage rate is too high, the fuel pump
could produce less than optimal fuel injection pressures. If the
distillate fuel's lower viscosity becomes an issue, it is possible to
cool the fuel and increase the viscosity above 2 centistokes, which is
how most vessels operate today during routine fuel switchovers.
(c) Flash Point
    Flash point is the temperature at which the vapors off the fuel
ignite with an outside ignition source. This can be a safety concern if
the owner/operator uses an onroad diesel fuel rather than a designated
``marine distillate'' fuel for operation because marine fuels have a
specified minimum flash point of 60 [deg]C (140 [deg]F) to ensure
onboard safety, whereas onroad diesel has a minimum specified flash
point of 52 [deg]C (125.6 [deg]F). However, since most distillate fuels
are created in the same fashion, typical flash points of onroad diesel
are above 60 [deg]C (140 [deg]F), and would meet the marine fuel
specification for this property. Bunker suppliers ensure that marine
fuels meet a minimum flash point of 60 [deg]C (140 [deg]F) through fuel
testing as designated on the bunker delivery note.
(d) Lubricity
    Lubricity is the ability of the fuel to lubricate the engine/pump
during operation. Fuels with higher viscosity and high sulfur content
tend to have very good lubricity without the use of specific lubricity-
improving additives. Refining processes that lower fuel sulfur levels
and their viscosities can also remove some of the naturally-occurring
lubricating compounds. Severe hydrotreating of fuel to obtain ultra-low
sulfur levels can result in poor fuel lubricity. Therefore, refineries
commonly add lubricity improvers to ultra-low sulfur diesel. This will
most likely become a concern when very low levels of sulfur are present
in the fuel and/or the fuel has been hydrotreated to reduce sulfur,
e.g., if ultra-low sulfur highway diesel (ULSD) is used in the engine.
Several groups have conducted studies on this subject, and for some
systems where fuel lubricity has become an issue, lubricity additives
can be utilized or the owner/operator can install a lubricating system
for the fuel pump.
(e) Lube Oil
    Lube oils are used to neutralize acids formed in combustion, most
commonly sulfuric acids created from sulfur in the fuel. The quantity
of acid-neutralizing additives in lube oil should match the total
sulfur content of the fuel. If excessive amounts of these additives are
used, they may create deposits on engine components. Marine engine
manufacturers have recommended that lube oil only needs to be adjusted
if the fuel is switched for more than one week, but the oil feed rate
may need to be reduced as well as engine operating power. Additional
research has been conducted in this area and several oil companies have
been working to create a lubricating oil that would be compatible with
several different types of fuel.
(f) Asphaltenes
    Asphaltenes are heavy, non-volatile, aromatic compounds which are
contained naturally in some types of crude oil. Asphaltenes may
precipitate out of the fuel solution when a fuel rich in carbon
disulfide, such as residual fuel, is mixed with a lighter hydrocarbon
fuel, such as n-pentane or n-heptane found in some distillate fuels.
When these heavy aromatic compounds fall out of the fuel solution, they
can clog filters, create deposition along the fuel lines/combustion
chamber, seize the fuel injection pump, or cause other system troubles.
This risk can be minimized through onboard test kits and by purchasing
distillate and residual fuel from the same refiner. However, according
to the California Air Resources Board, the formation of asphaltenes is
not seen as an issue based on data from previous maritime rules.
    As can be seen, if vessel operators choose to operate on marine
distillate fuel while in the ECA, some prudence is required. However,
as described above, issues that could arise with switching between
residual and distillate fuel are addressed through changes to operating
procedures. To conduct a successful switchover between the residual and
marine

distillate fuels, vessel operators will need to keep the above issues
in mind and follow the engine manufacturer's standard fuel switching
procedure.
(g) Boilers
    Steamships operate through the use of steam produced by boilers. In
addition, boilers are often used on diesel-propelled ships for
auxiliary power. Many of these boilers are designed to operate on heavy
fuel oil. As such, the fuel must be heated and the system optimized to
atomize heavy fuel oil and then mix it with air for combustion. To
operate these systems on distillate fuel, certain modifications to the
boiler may be necessary to the burner and fuel systems. These
modifications are more likely to be necessary for older boilers. First,
as with diesel engines, residual fuel needs to be heated to flow
through the pumps. Distillate fuel does not. In addition, the fuel
pumps and injection nozzles must be matched to the viscosity and
lubricity of the fuel. Second, the fuel burners and air mixing system
must be matched to the fuel. In modern boilers, burners generally are
able to operate on distillate fuel and heavy fuel oil. The air mixing
generally needs to be reduced when using distillate fuel which
evaporates easier. The control system must be adjusted so that the main
burner does not accidently re-ignite after a flame-out. If the boiler
loses its ignition source (flame) too high of a mass of fuel may be
vaporized for the boiler to be safely re-lighted. In this case, the
boiler should be purged before relighting the flame. Third, proper
monitoring of the boiler operation will optimize flame supervision and
minimize the risk of problems when operating on distillate fuel.
(2) Equivalents
    Regulation 4 of Annex VI allows for alternative devices,
procedures, or compliance methods if they are ``at least as effective
in terms of emissions reductions as that required by this Annex.'' As
an alternative to operating on lower sulfur fuel, an exhaust gas
cleaning device may be used to remove SOX and PM emissions
from the exhaust. These devices are colloquially known as
SOX scrubbers. This section describes the technological
feasibility of SOX scrubbers and how they may be used to
achieve equivalent emission reductions as fuel switching.
    SOX scrubbers are capable of removing up to 95 percent
of SOX from ship exhaust using the ability of seawater to
absorb SOX. SOX scrubbers have been widely used
in stationary source applications, where they are a well-established
SOX reduction technology. In these applications, lime or
caustic soda are typically used to neutralize the sulfuric acid in the
washwater. While SOX scrubbers are not widely used on ocean-
going vessels, there have been prototype installations to demonstrate
their viability in this application such as the Krystallon systems
installed on the P&O ferry Pride of Kent and the Holland America Line
cruise ship the ms Zaandam. These demonstrations have shown scrubbers
can replace and fit into the space occupied by the exhaust silencer
units and can work well in marine applications.
    There are two main scrubber technologies. The first is an open-loop
design which uses seawater as exhaust washwater and discharges the
treated washwater back to the sea. Such open-loop designs are also
referred to as seawater scrubbers. In a seawater scrubber, the exhaust
gases are brought into contact with seawater, either through spraying
seawater into the exhaust stream or routing the exhaust gases through a
water bath. The SO2 in the exhaust reacts with oxygen to
produce sulfur trioxide which then reacts with water to form sulfuric
acid. The sulfuric acid in the water then reacts with carbonate and
other salts in the seawater to form sulfates which may be removed from
the exhaust. The washwater is then treated to remove solids and raise
the pH prior to discharge back to the sea. The solids are collected as
sludge and held for proper disposal ashore.
    A second type of SOX scrubber which uses a closed-loop
design is also feasible for use on marine vessels. In a closed loop
system, fresh water is used as washwater, and caustic soda is injected
into the washwater to neutralize the sulfur in the exhaust. A small
portion of the washwater is bled off and treated to remove sludge,
which is held and disposed of at port, as with the open-loop design.
The treated effluent is held onboard or discharged at open sea.
Additional fresh water is added to the system as needed. While this
design is not completely closed-loop, it can be operated in zero
discharge mode for periods of time.
    Exhaust gas scrubbers can achieve reductions in particulate matter
as well. By removing sulfur from the exhaust, the scrubber removes most
of the direct sulfate PM. Sulfates are a large portion of the PM from
ships operating on high sulfur fuels. By reducing the SOX
emissions, the scrubber will also control much of the secondary PM
formed in the atmosphere from SOX emissions. However, simply
mixing alkaline water in the exhaust does not necessarily remove much
of the carbonaceous PM, ash, or metals in the exhaust. While
SO2 associates with the washwater, particles can only be
washed out of the exhaust through direct contact with the water. In
simple scrubber designs, much of the mass of particles can reside in
gas bubbles and escape out the exhaust.
    Manufacturers have been improving their scrubber designs to address
carbonaceous soot and other fine particles. Finer water sprays, longer
mixing times, and turbulent action would be expected to directionally
reduce PM emissions through contact impactions. One scrubber design
uses an electric charge on the water to attract particles in the
exhaust to the water. In another design, demisters are used that help
effectively wash out PM from the exhaust stream. In either of these
designs, however, the systems would be effective at removing
SO2 from the exhaust even if the additional hardware needed
for non-sulfate PM reduction were not used.
    Annex VI does not present specific exhaust gas limits that are
deemed to be equivalent to the primary standard of operating on lower
sulfur fuel. Prior to the recent amendments to Annex VI, Regulation 14
included a limit of 6 g/kW-hr SO2 as an alternative to the
15,000 ppm sulfur limit for sulfur emission control areas. Under the
amended requirements, the specific SO2 limit was removed and
more general language on equivalents was included.
    IMO has developed guidelines for the use of exhaust gas cleaning
systems (EGCS) such as SOX scrubbers as an alternative to
operating on lower sulfur fuel.\102\ These guidelines include a table
of SO2 limits intended to correspond with various fuel
sulfur levels. Based on the methodology that was used to determine the
SO2 limit of 6.0 g/kW-hr for existing ECAs, the
corresponding limit is 0.4 g/kW-hr SO2 for a 1,000 ppm fuel
sulfur limit. This limit is based on an assumed fuel consumption rate
of 200 g/kW-hr and the assumption that all sulfur in the fuel is
converted to SO2 in the exhaust. The IMO guidelines also
allow for an alternative approach of basing the limit on a ratio of
SO2 to CO2. This has the advantage of being
easier to measure during in-use monitoring. In addition, this ratio
holds more constant at lower loads than a brake-specific limit, which
would approach infinity as power approaches zero. For the existing
15,000 ppm fuel sulfur limit in ECAs, a SO2 (ppm)/
CO2 (%) limit of 65 was

developed. The equivalent limit for a 1,000 ppm fuel sulfur level is
4.0 SO2 (ppm)/CO2 (%).
---------------------------------------------------------------------------

    \102\ International Maritime Organization, ``2009 Guidelines for
Exhaust Gas Cleaning Systems,'' Resolution MEPC.184(59), Adopted on
17 July 2009, MEPC 59/24/Add.1/Annex 9.
---------------------------------------------------------------------------

    It is our intent that the IMO guidelines will be used by the U.S.
Government in making the determination whether an EGCS meets the
requirements of MARPOL Annex VI, Regulation 4. We are currently working
with the U.S. Coast Guard on developing the U.S. Government process for
approving equivalents. It is not yet clear if a request for an
equivalent determination will be made to EPA or the U.S. Coast Guard.
To prevent multiple requests from having to be made, today's
regulations require such a request to be made to EPA only. This could
change as a result of the discussions between EPA and the U.S. Coast
Guard. If so, we will update the regulatory text accordingly.
    Scrubbers are effective at reducing SO2 emissions and
sulfate PM emissions from the exhaust. However, as discussed above, the
effectiveness of the scrubber at removing PM emissions other than
sulfates is dependent on the scrubber design. In addition to sulfate PM
reductions, switching from residual fuel to distillate fuel results in
reductions in organic PM and metallic ash particles in the exhaust. We
expect that ECGS designs will achieve similar PM reductions as fuel
switching; however, if this turns out to not be the case, we will
address this issue, as appropriate, through further action.
    Water-soluble components of the exhaust gas such as SO2,
SO3, and NO2 form sulfates and nitrates that are
dissolved into the discharge water. Scrubber washwater also includes
suspended solids, heavy metals, hydrocarbons and polycyclic aromatic
hydrocarbons (PAH). Before the scrubber water is discharged, there are
several approaches that may be used to process the scrubber water to
remove solid particles. Heavier particles may be trapped in a settling
or sludge tank for disposal. The removal process may include cyclone
technology similar to that used to separate water from residual fuel
prior to delivery to the engine. However, depending on particle size
distribution and particle density, settling tanks and hydrodynamic
separation may not effectively remove all suspended solids. Other
approaches include filtration and flocculation techniques.
Flocculation, which is used in many waste water treatment plants,
refers to adding a chemical agent to the water that will cause the fine
particles to aggregate so that they may be filtered out. Sludge
separated from the scrubber water would be stored on board until it is
disposed of at proper facilities.
    The IMO guidelines for the use of exhaust gas cleaning devices such
as SOX scrubbers include recommended monitoring and water
discharge practices. The washwater should be continuously monitored for
pH, PAHs and turbidity. Further, the IMO guidance include
specifications for these same items, as well as nitrate content when
washwater is discharged in ports, harbors or estuaries. Finally, the
IMO guidance recommends that washwater residue (sludge) be delivered
ashore to adequate reception facilities and not discharged to the sea
or burned on board.
    Any discharges directly into waters of the United States may be
subject to Clean Water Act or other U.S. regulation. To the extent that
the air pollution control technology results in a wastewater discharge,
such discharge will require a permit under the Clean Water Act's
National Pollutant Discharge Elimination System (NPDES) permit program.
For example, the NPDES Vessel General Permit in Section 2.2.26 contains
conditions for Exhaust Gas Scrubber Washwater Discharge. Also, the Act
to Prevent Pollution for Ships may apply to such discharge.

D. ECA Designation and Foreign-Flagged Vessels

    In our previous marine diesel engine rulemakings, EPA did not
extend our Clean Air Act standards to engines on vessels flagged by
other countries. In our 2003 rule, many States and localities expressed
concern about the high levels of emissions from ocean-going vessels. We
examined our position and concluded that no change was necessary at
that time because the Tier 1 standards we adopted for Category 3
engines on U.S. vessels were the same as those contained in MARPOL
Annex VI. We indicated we would re-examine this issue in our current
rulemaking and would also review the progress made by the international
community toward the adoption of new more stringent international
standards that reflect the application of advanced emission control
technologies.
    We received comments from a broad range of interested parties on
the Advanced Notice of Proposed Rulemaking (ANPRM) for this rulemaking.
Generally, those commenters remained concerned about the contribution
of ocean-going vessels to air quality problems. Many took the position
that EPA should cover engines on foreign-flagged OGV under Clean Air
Act section 213 since they account for the vast majority of OGV
emissions in the United States and because of their perception, at the
time these comments were submitted, that the international process to
set stringent standards was stalled.
    In the Notice of Proposed Rulemaking (NPRM) for this rulemaking, we
provided background on EPA's past statements with regard to the
application of our Clean Air Act section 213 standards to engines on
foreign-flagged vessels, and summarized comments we received on this
issue in response to our ANPRM. Because the NOX standards
adopted in the amendments to Annex VI are comparable in stringency and
timing to our final CAA NOX standards, we did not believe it
necessary to extend our Clean Air Act Tier 2 and 3 standards to engines
on foreign-flagged vessels. Therefore, we did not seek to resolve the
issue of whether section 213 of the Act allows us to set standards for
engines on foreign-flagged vessels. However, we stated that our
proposed decision rested on the timely adoption of an amendment to
Annex VI designating the U.S. coastal waters as an ECA, since the most
stringent of the NOX standards will be applicable in such
areas. We maintain the position we expressed in the NPRM, particularly
in light of the recent approval, and circulation for adoption, of the
North American ECA. If the amendment designating a U.S. ECA is not
timely adopted by the Parties to IMO, we will revisit this issue.
    EPA received a number of comments in response to the NPRM on the
issue of whether EPA should or could address emissions from engines on
foreign-flagged vessels. Most commenters reiterate their positions as
stated in comments received on the ANPRM.\103\ Environmental group
commenters who previously expressed their position that EPA has
authority--and even obligation--within the Clean Air Act to regulate
foreign-flagged vessels, maintain that position and recognize that
application of the new standards to all vessels, including those that
are foreign-flagged, is necessary to achieve the new standards' public
health and environmental benefits. While some commenters accept EPA's
position that it will revisit this issue without delay in

the event that a U.S. ECA designation is not timely adopted by the
Parties to the IMO,\104\ others are concerned about the potential for
delay within the IMO and, thus, urge EPA to commence a parallel
rulemaking as a backstop to that potential delay.\105\ Still others
find EPA's reliance on an ECA designation to be insufficient and
suggest that EPA should presently assert authority and extend this
rule's application to foreign-flagged vessels.\106\ That suggestion
also includes a concern that too much reliance on the IMO for authority
to regulate foreign-flagged vessels could expose a gap wherein ships
that are flagged in nations that are not parties to Annex VI would go
unregulated in U.S. waters.\107\ To close that gap, the commenter
recommends direct application of CAA standards to all foreign-flagged
vessels. That concern echoes industry commenters' calls for equal
application of the standards to all vessels in U.S. waters to ensure a
``level playing field'' and ``uniform treatment of the entire merchant
fleet.'' \108\
---------------------------------------------------------------------------

    \103\ Ohio Environmental Council, Earth Day Coalition, Marsh
Area Regional Council, Ohio League of Conservation Voters, OAR-2007-
0121-0314; Northeast States for Coordinated Air Use Management, OAR-
2007-0121-0227; American Lung Association with Environmental Defense
Fund, OAR-2007-0121-0366 and OAR-2007-0121-0227; Santa Barbara Air
Pollution Control District, OAR-2007-0121-0231; Clean Air Task
Force, OAR-2007-0121-0264 and OAR-2007-0121-0227; South Coast Air
Quality Management District, OAR-2007-0121-0309 and OAR-2007-0121-
0232.
    \104\ Ohio Environmental Council, Earth Day Coalition, Marsh
Area Regional Council, Ohio League of Conservation Voters, OAR-2007-
0121-0314; Northeast States for Coordinated Air Use Management, OAR-
2007-0121-0227; American Lung Association with Environmental Defense
Fund, OAR-2007-0121-0366 and OAR-2007-0121-0227.
    \105\ Santa Barbara Air Pollution Control District, OAR-2007-
0121-0231.
    \106\ Clean Air Task Force, OAR-2007-0121-0264 and OAR-2007-
0121-0227; South Coast Air Quality Management District, OAR-2007-
0121-0309 and OAR-2007-0121-0232; Earthjustice, Friends of the
Earth, and Center for Biological Diversity, OAR-2007-0121-0320.
    \107\ Earthjustice, Friends of the Earth, and Center for
Biological Diversity, OAR-2007-0121-0320.
    \108\ World Shipping Council, OAR-2007-0121-0227 and OAR-2007-
0121-0325; Marine Engineers Beneficial Association, OAR-2007-0121-
0259.
---------------------------------------------------------------------------

    We appreciate the comments we received and are committed to
revisiting the issue if the U.S. ECA proposal is not timely adopted.
However, we continue to believe we need not revisit this issue at this
time given that foreign-flagged vessels will be subject to standards
under APPS that are comparable to those for U.S.-flagged vessels under
section 213 of the CAA. The issue of whether EPA is compelled to cover
foreign-flagged vessels under section 213 of the CAA was raised in
Bluewater v. EPA, 372 F.3d 404 (DC Cir. 2004), a challenge to EPA's
decision in 2003 not to revisit the issue of whether foreign-flagged
vessels may and should be covered by nonroad emissions standards issued
under section 213 of the CAA. In finding Bluewater's claim to be
premature, the Bluewater court referred back to its determination in
Engine Mfrs. Ass'n v. EPA, 88 F.3d at 1086-87, that ``new nonroad
engine'' as used in 213(a)(3) is ambiguous and reiterated EPA's
undisputed finding that there would be no significant loss of emission
reductions by not revisiting the issue. We do not believe circumstances
have changed to call into question the Bluewater court's finding as
applied to today's setting. In fact, the only changed circumstances
further support EPA's decision not to revisit the issue. Since issuance
of the 2003 final rule and the court's decision in Bluewater, Annex VI
has entered into force, and the United States has become a Party to
Annex VI and has successfully negotiated significant new emission and
fuel standards. In addition, Congress has adopted amendments to the Act
to Prevent Pollution from Ships to implement both the original and
amended Annex VI requirements. Therefore, given that foreign-flagged
vessels are subject to the original and new Annex VI NOX and
fuel requirements under the operation of APPS, we do not believe it is
currently necessary to address whether EPA may or should cover foreign-
flagged vessels under section 213 of the CAA. See South Coast v. EPA,
554 F.3d 1076, 1081 (DC Cir. 2009) (``Deferring resolution of the issue
until it will have an effect remains reasonable and the petitioners'
objection therefore remains premature.'').
    However, as noted above, we are committed to revisiting this issue
if the proposed ECA, within which the most stringent NOX and
fuel requirements are applicable, is not timely adopted. Meetings to
discuss adoption of the U.S.-proposed ECA are scheduled shortly after
this rule is finalized, and thus, taking into consideration the lead
times adopted, little time is lost in not revisiting this issue in this
rulemaking. We also note that ships that are flagged in nations that
are not a Party to Annex VI are subject to Annex VI requirements in
U.S. waters under the Act to Prevent Pollution from Ships. Our
regulations to implement the requirements of Annex VI with respect to
such vessels make clear the applicability of those provisions to such
vessels.

VI. Certification and Compliance Program

    This section describes the regulatory changes being finalized for
the CAA Category 3 engine compliance program. In general, these changes
are being finalized to ensure that the benefits of the standards are
realized in-use and throughout the useful life of these engines, and to
incorporate lessons learned over the last few years from the existing
test and compliance program.
    The most obvious change is that we are applying the plain language
regulations of 40 CFR part 1042 to Category 3 engines. These part 1042
regulations were adopted in 2008 for Category 1 and Category 2 engines
(73 FR 25098, May 6, 2008). They were structured to contain the
provisions that are specific to marine engines and vessels in part
1042, and apply the parts 1065 and 1068 for other provisions not
specific to marine engines. This approach is not intended to
significantly change the compliance program from the program currently
applicable to Category 3 engines under 40 CFR part 94, except as
specifically noted in this notice. These plain language regulations
supersede the regulations in part 94 for Category 3 engines beginning
with the 2011 model year. See Section VI.E for additional discussion of
the transition from part 94 to part 1042.
    The changes from the existing programs are described below along
with other notable aspects of the compliance program. These changes are
necessary to implement the new standards as well as to implement the
Annex VI program as required under the amendments to the Act to Prevent
Pollution from Ships.
    Finally, we are also including several changes and clarifications
to the compliance program that are not specific to Category 3 engines.
Some of these apply only for marine diesel engines below 30 liters per
cylinder displacement.

A. Compliance Provisions for Category 3 Engines

    In general, we are retaining the certification and compliance
provisions adopted with the Tier 1 standards for Category 3 engines.
These include testing, durability, labeling, maintenance, prohibited
acts, etc. However, we believe additional testing and compliance
provisions will be necessary for new standards requiring more advanced
technology and more sophisticated emission control systems. These
changes, as well as other modifications to our certification and
compliance provisions for Category 3 engines, are discussed below.
    Our certification process is similar to the process specified in
the Annex VI NOX Technical Code (NTC) for pre-certification.
However, the Clean Air Act specifies certain requirements for our
certification program that are different from the NTC requirements. The
EPA approach differs most significantly from the NTC in three areas.
First, the NTC allows but does not require certification of engines
before installation (known as pre-certification

under the NTC), while EPA does require it. Second, we include various
provisions to hold the engine manufacturer responsible for the
durability of emission controls, while the NTC holds the engine
manufacturer liable only before the engine is placed into service.
Finally, we specify broader temperature ranges and allow manufacturers
less discretion in setting engine parameters for testing, with the goal
of adopting test procedures that represent a wide range of normal in-
use operation. We believe the regulations in this final rule are
sufficiently consistent with NTC that manufacturers can continue to use
a single harmonized compliance strategy to certify under both systems.
(1) Testing
    We are largely continuing the testing requirements that currently
apply for Category 3 engines with a few exceptions.
(a) General Test Procedures
    We are applying the general engine testing procedures of 40 CFR
part 1065 to Category 3 engines. This is part of our ongoing initiative
to update the content, organization and writing style of our
regulations. For each engine sector for which we have recently
promulgated standards (such as smaller marine diesel engines), we refer
to one common set of test procedures in part 1065. This is because we
recognized that a single set of test procedures would allow for
improvements to occur simultaneously across engine sectors. A single
set of test procedures is easier to understand than trying to
understand many different sets of procedures, and it is easier to move
toward international test procedure harmonization if we only have one
set of test procedures.
    These procedures replace those currently published in parts 92 and
94 and are fundamentally similar to those procedures. The primary
differences are related to tighter tolerances to reduce test-to-test
variability. In most cases, a manufacturer should be able to comply
with 1065 using its current test equipment. Nevertheless, full
compliance with part 1065 would take some effort on the part of
manufacturers. As such, we are including some flexibility to make a
gradual transition from the part 92 and 94 procedures. For several
years, manufacturers will be able to optionally use the part 1065
procedures. Part 1065 procedures will generally be required for any new
testing by 2016 (except as noted below). This is very similar to the
allowance already provided with respect to Category 1 and Category 2
engines.
    Several manufacturers raised in their comments general objections
to applying the 1065 test procedures. However, since we proposed to
allow Category 3 manufacturers to submit data collected using the test
equipment, test fuels, and procedures specified in the NOX
Technical Code, we believe that the requirement should be finalized as
proposed. The procedures in 1065 will still be the official test
procedures, however, and manufacturers will be liable with respect to
any test results from 1065 testing. We do not believe this allowance
will have any effect on the stringency of the standards, or how
manufacturers design and produce their engines.
(b) Test Fuel
    Appropriate test procedures need to represent in-use operating
conditions as much as possible, including specification of test fuels
consistent with the fuels that compliant engines will use over their
lifetimes. Our Part 94 regulations allow Category 3 engine testing
using distillate fuel, even though many vessels with these engines
currently use less expensive residual fuel. This provision is
consistent with the specifications of the NOX Technical
Code. We are continuing this approach for Tier 2 and Tier 3. Our
primary reason for continuing this approach is that we expect these
Category 3 engines will generally be required to use distillate fuels
in areas that will affect U.S. air quality for most of their
operational lives. (We expect this because we expect IMO to approve our
proposal to amend Annex VI to designate the U.S. coastal waters as an
ECA.) However, since these engines will not be required to use low-
sulfur or ultra low-sulfur fuel, we are also adding an explicit
requirement that a high-sulfur distillate test fuel be used for both
Tier 2 and Tier 3 testing. Our testing regulations (40 CFR 1065.703)
are being revised to specify that high-sulfur diesel test fuels contain
800 to 2,500 ppm sulfur. This will be lower than the prior
specification of 2,000 to 4,000 ppm. This will allow manufacturers to
test with fuels near the ultimate in-use limit of 1,000 ppm.
(c) Testing Catalyst-Equipped Engines
    In our existing programs that require compliance with catalyst-
based engines (such as the Category 1 & 2 engine program), we have
required manufacturers to test prototype engines equipped with
prototype catalyst systems. However, it is not clear that this approach
would be practical for Category 3 engines. These are problematic
because of their size and because they tend to be a least partially
custom built on a vessel by vessel basis. Requiring a manufacturer to
construct a full-scale catalyst system for each certification test
would be extremely expensive.
    We are finalizing an optional special certification procedure to
address this concern. The provisions are in Sec.  1042.655 of the
finalized regulations. The emission-data engine must be tested in the
specified manner to verify that the engine-out emissions comply with
the Tier 2 standards. The catalyst material must be tested under
conditions that accurately represent actual engine conditions for the
test points. This catalyst testing may be performed on a benchscale.
Manufacturers must include a detailed engineering analysis describing
how the test data collected for the engine and catalyst material
demonstrate that all engines in the family will meet all applicable