

[Federal Register: May 1, 2006 (Volume 71, Number 83)]
[Rules and Regulations]               
[Page 25705-25726]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01my06-8]                         


[[Page 25705]]

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Part III





Environmental Protection Agency





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40 CFR Part 80



Technical Amendments to the Highway and Nonroad Diesel Regulations; 
Final Rule and Proposed Rule


[[Page 25706]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2006-0224; FRL-8161-9]
RIN 2060-AN78

 
Technical Amendments to the Highway and Nonroad Diesel 
Regulations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action to correct, amend, and 
revise certain provisions of the Highway Diesel Rule, and the Nonroad 
Diesel Rule. This action corrects additional errors and omissions from 
the previous rules, and it makes minor changes to the regulations to 
assist entities with regulatory compliance. This action also makes 
technical amendments that resulted from discussions with various diesel 
stakeholders. These technical amendments will: provide a temporary 
increase in the sulfur testing tolerance, revise the designate and 
track provisions to account for non-petroleum diesel fuels (i.e., 
biodiesel) and fuel that meets the California Air Resources Board's 
diesel fuel standards, and amend the alternative defense provisions to 
account for conductivity additives and red dye. This action is intended 
to help facilitate compliance with the diesel fuel regulations and 
ensure a smooth transition to ultra low sulfur diesel fuel.

DATES: This direct final rule is effective on June 30, 2006 without 
further notice, unless we receive adverse comments by May 31, 2006. If 
adverse comments are received, EPA will publish a timely withdrawal in 
the Federal Register informing the public that this rule will not take 
effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2006-0224, by one of the following methods:
     http://www.regulations.gov: Follow the on-line 

instructions for submitting comments.
     E-mail: a-and-r-Docket@epa.gov.
     Fax: (202) 566-1741.
     Mail: EPA-HQ-OAR-2006-0224, Environmental Protection 
Agency, Mailcode: 6102T, 1200 Pennsylvania Ave., NW., Washington, DC 
20460.
     Hand Delivery: EPA/DC, EPA West, Room B102, 1301 
Constitution Ave., NW., Washington, DC. Such deliveries are only 
accepted during the Docket's normal hours of operation, and special 
arrangements should be made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2006-0224. EPA's policy is that all comments will be included in the 
public docket without change and may be made available online at http://www.regulations.gov
, including any personal information provided, 

unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site is an ``anonymous 

access'' system, which means EPA will not know your identity or contact 
information unless you provide it in the body of your comment. If you 
send an e-mail comment directly to EPA without going through http://www.regulations.gov
 your e-mail address will be automatically captured 

and included as part of the comment that is placed in the public docket 
and made available on the Internet. If you submit an electronic 
comment, EPA recommends that you include your name and other contact 
information in the body of your comment and with any disk or CD-ROM you 
submit. If EPA cannot read your comment due to technical difficulties 
and cannot contact you for clarification, EPA may not be able to 
consider your comment. Electronic files should avoid the use of special 
characters, any form of encryption, and be free of any defects or 
viruses. For additional instructions on submitting comments, go to 
section 1.B of the SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the http://www.regulations.gov
 index. Although listed in the index, some 

information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in http://www.regulations.gov or in hard copy at the Air Docket, EPA/

DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. 
The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding holidays. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding holidays. 
The telephone number for the Public Reading Room is (202) 566-1744, and 
the telephone number for the telephone number for the Air Docket is 
(202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Tia Sutton, U.S. EPA, National Vehicle 
and Fuels Emission Laboratory, Assessment and Standards Division, 2000 
Traverwood Dr., Ann Arbor MI 48105; telephone (734) 214-4018, fax (734) 
214-4816, e-mail sutton.tia@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does This Action Apply to Me?

    This action will affect companies and persons that produce, import, 
distribute, or sell highway and/or nonroad diesel fuel. Affected 
Categories and entities include the following:

----------------------------------------------------------------------------------------------------------------
                                 NAICS code
           Category                 \a\                   Examples of potentially affected entities
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Industry......................       324110  Petroleum refiners.
Industry......................       422710  Diesel fuel marketers and distributors.
Industry......................       484220  Diesel fuel carriers.
----------------------------------------------------------------------------------------------------------------
a North American Industry Classification System (NAICS).

    This list is not intended to be exhaustive, but rather provides a 
guide regarding entities likely to be affected by this action. To 
determine whether particular activities may be affected by this action, 
you should carefully examine the regulations. You may direct questions 
regarding the applicability of this action as noted in FOR FURTHER 
INFORMATION CONTACT.

B. How Can I Get Copies of This Document?

    1. Docket. EPA has established an official public docket for this 
action under Air Docket No. EPA-HQ-OAR-2006-0224. The official public 
docket

[[Page 25707]]

consists of the documents specifically referenced in this action, any 
public comments received, and other information related to this action. 
Although a part of the official docket, the public docket does not 
include Confidential Business Information (CBI) or other information 
restricted from disclosure by statute. The official public docket is 
the collection of materials that is available for public viewing at the 
Air Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 
Constitution Ave., NW, Washington, DC. The EPA Docket Center Public 
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.
    2. Electronic Access. This direct final rule is available 
electronically from the EPA Internet Web site. This service is free of 
charge, except for any cost incurred for internet connectivity. The 
electronic version of this final rule is made available on the date of 
publication on the primary web site listed below. The EPA Office of 
Transportation and Air Quality also publishes Federal Register notices 
and related documents on the secondary Web site listed below.
     a. http://www.epa.gov/docs/fedrgstr/EPA-AIR (either select desired 

date or use Search features).
    b. http://www.epa.gov/otaq (look in What's New or under the 

specific rulemaking topic).
    Please note that due to differences between the software used to 
develop the documents and the software into which the document may be 
downloaded, format changes may occur.

C. Why Is EPA Proposing a Direct Final Rule?

    EPA is publishing this rule without prior proposal because we view 
this action as noncontroversial and anticipate no adverse comment. 
However, in the ``Proposed Rules'' section of this Federal Register 
publication, we are publishing a separate document that will serve as 
the proposal for the provisions in this direct final rule if adverse 
comments are filed. If EPA receives adverse comment on one or more 
distinct amendment, paragraph, or section of this rulemaking, or 
receives a request for a hearing within the time frame described above, 
we will publish a timely withdrawal in the Federal Register indicating 
which provisions are being withdrawn due to adverse comment. We will 
address all public comments received in a subsequent final rule based 
on the proposed rule. We will not institute a second comment period on 
this action. Any parties interested in commenting must do so at this 
time. Any distinct amendment, paragraph, or section of this rulemaking 
for which we do not receive adverse comment will become effective as 
indicated in the DATES section above, notwithstanding any adverse 
comment on any other distinct amendment, paragraph, or section of this 
rule.

D. How and to Whom Do I Submit Comments?

    You may submit comments on this direct final rule as described in 
this section. You should note that we are also publishing a notice of 
proposed rulemaking in the ``Proposed Rules'' section of this Federal 
Register, which matches the substance of this direct final rule. Your 
comments on this direct final rule will be considered to also be 
applicable to that notice of proposed rulemaking. You may submit 
comments electronically, by mail, by facsimile, or through hand 
delivery/courier. To ensure proper receipt by EPA, identify the 
appropriate docket identification number in the subject line on the 
first page of your comment. Please ensure that your comments are 
submitted within the specified comment period. Comments received after 
the close of the comment period will be marked ``late.'' EPA is not 
required to consider these late comments.
    1. Electronically. If you submit an electronic comment as 
prescribed below, EPA recommends that you include your name, mailing 
address, and an e-mail address or other contact information in the body 
of your comment. Also include this contact information on the outside 
of any disk or CD ROM and in any other accompanying materials to ensure 
that you can be identified as the submitter of the comment. It is EPA's 
policy that we will not edit your comment, and any identifying or 
contact information provided will allow EPA to contact you if we cannot 
read your comment due to technical difficulties or need further 
information on the substance of your comment. If EPA cannot contact you 
in these circumstances, we may not be able to consider your comment. 
Contact information provided in the body of the comment will be 
included as part of the comment placed in the official public docket 
and made available in EPA's electronic public docket.
    i. EPA dockets. Your use of EPA's electronic public docket to 
submit comments to EPA electronically is EPA's preferred method for 
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket
 and follow the online instructions for submitting comments. 

Once in the system, select ``search,'' and then key in Docket ID No. 
EPA-HQ-OAR-2006-0224. The system is an ``anonymous access'' system, 
which means EPA will not know your identity, e-mail address, or other 
contact information unless you provide it in the body of your comment.
    ii. Disk or CD ROM. You may submit comments on a disk or CD ROM 
that you mail to the mailing address identified in ADDRESSES above. 
These electronic submissions will be accepted in WordPerfect or ASCII 
file format. Avoid the use of special characters and any form of 
encryption.
    2. By Mail. Send two copies of your comments to: Air Docket, 
Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR-
2006-0224.
    3. By Hand Delivery or Courier. Deliver your comments to: EPA 
Docket Center, Room B102, EPA West Building, 1301 Constitution Avenue, 
NW., Washington, DC, Attention Air Docket ID No. EPA-HQ-OAR-2006-0224. 
Such deliveries are only accepted during the Docket's normal hours of 
operation as identified above.
    4. By Facsimile. Fax your comments to: (202) 566-1741, Attention 
Docket ID No. EPA-HQ-OAR-2006-0224.

II. Summary of Rule

    The Highway Diesel rule, published on January 18, 2001 (66 FR 
5002), is a comprehensive national program that will greatly reduce 
emissions from diesel engines by integrating engine and fuel controls 
as a system to gain the greatest air quality benefits. The Nonroad 
Diesel Rule was subsequently published on June 29, 2004 (69 FR 38958). 
The Nonroad Diesel Rule took a similar approach, covering nonroad 
diesel equipment and fuel to further the goal of decreasing harmful 
emissions. In 2005, we published two additional direct final 
rulemakings (70 FR 40889 was published on July 15, 2005 and 70 FR 70498 
was published on November 22, 2005) to make technical amendments to 
those rules. We have chosen to publish a third action to correct 
additional errors and omissions from the previous rules, and to make 
minor changes to the regulations to assist entities in complying with 
our diesel fuel rules. In addition, discussions with stakeholders 
throughout the diesel fuel industry identified a need for additional 
changes to the regulations such as: (1) Providing a temporary increase 
in the sulfur

[[Page 25708]]

testing tolerance; (2) revising the designate and track provisions to 
account for non-petroleum diesel fuels (i.e., biodiesel) and fuel that 
meets the California Air Resources Board's diesel fuel standards; and, 
(3) amending the alternative defense provisions to account for 
conductivity additives and red dye. This action will make all of these 
changes and additions to further ensure compliance with EPA's diesel 
fuel regulations.

III. Final Rulemaking Changes to Sulfur Test Tolerance

    This action adopts a temporary change to the adjustment factor 
associated with the testing tolerance for measurement of diesel fuel 
sulfur for ULSD. Section 80.580(d) specifies that an adjustment factor 
of negative two ppm shall be applied to the test results, to account 
for test variability for testing of motor vehicle diesel fuel or NRLM 
diesel fuel identified as subject to the 15 ppm sulfur standard of 
Sec.  80.510(b) or Sec.  80.520(a)(1). The temporary change is to allow 
an adjustment factor of negative three ppm for the sulfur tolerance for 
a period of two years.
    The approach being considered leaves intact the 2 ppm sulfur 
adjustment factor for addressing lab-to-lab test variability long term; 
reflecting the very positive results of our round robin testing 
program. It also makes no change to the 15 ppm fuel sulfur cap for in-
use diesel fuel starting June 1, 2006 at the refinery, nor the fuel 
sulfur cap at the retail outlet. However, it would allow an additional 
1 ppm (3 ppm total) testing tolerance for the first 2 years of the 
program; reflecting the results of our round robin testing program 
which indicated that not everyone was yet capable of meeting the 2 ppm 
requirement. This temporary change to the adjustment factor would 
further help to facilitate the transition to ULSD by eliminating 
concerns associated with the impact of test method variability on the 
sulfur level at the refinery gate during the initial implementation of 
the ULSD program. This ensures that fuel that is compliant with the 15 
ppm sulfur requirement is not inappropriately deemed to be noncompliant 
simply because of the variability in the test. This specific change 
ensures that laboratories have the time necessary to obtain new 
instrumentation, tighten their internal quality assurance/quality 
control (QA/QC) procedures, and train their staff on these new 
instruments and procedures. It would also give them time to establish a 
track record on which they can base confidence in both their 
measurements and those of their customers and suppliers. At the same 
time, its temporary nature assures that no one will use it to relax 
their production targets.
    With the Nonroad Diesel rule (69 FR 38958, June 29, 2004), EPA 
adopted a performance-based test method approach. For 15 ppm sulfur 
Nonroad, Locomotive, and Marine (NRLM) and Motor Vehicle (MV) diesel 
fuel, under the performance-based approach, any test method could be 
approved for use in a specific laboratory by meeting certain precision 
and accuracy criteria as specified in Sec.  80.584. Qualification or 
approval is maintained as long as that laboratory follows the 
appropriate quality control procedures as specified in Sec.  80.585(e).
    We included a two ppm downstream adjustment to account for the 
anticipated reproducibility, or lab-to-lab variability, of the test 
methods that will be used to measure the sulfur content of ULSD. This 
would allow fuel that actually met the 15 ppm standard not to be 
inappropriately considered noncompliant by EPA. Parties could not 
measure above 15 ppm without taking on risk that due to test 
reproducibility EPA might consider the fuel to be noncompliant.
    Subsequent to the Nonroad Diesel rule, concerns continued to be 
expressed based on testing by the American Society of Testing and 
Materials (ASTM) that actual reproducibility might be greater than the 
2 ppm downstream adjustment. The concern was that refiners might have 
to reduce the sulfur level of their diesel fuel production to account 
for test reproducibility greater than 2 ppm. While acknowledging the 
ASTM test program results, we also highlighted several shortcomings of 
the ASTM program for the purpose of estimating what reproducibility 
might be once the ULSD program began. Consequently, we committed to 
conduct a round-robin test program with industry and to adjust the 
downstream test tolerance if necessary based on the result. This 
rulemaking follows up on that commitment.
    The round robin testing program required participating laboratories 
to first qualify their measurement methods by meeting the accuracy and 
precision requirements of Sec.  80.584 for each individual test method 
that it wanted to use on a lab-specific basis. The round robin testing 
program included ten fuel samples that were provided to the 
laboratories; five in July 2005 and five in August 2005. The 
laboratories were required to use two different calibration curves when 
measuring the fuel sulfur content, their in-house curve and a curve 
generated from National Institute of Standards and Technology (NIST) 
Standard Reference Materials (SRMs) provided by EPA. The test methods 
that were used in the round robin testing program were ASTM D 2622, 
ASTM D 3120, ASTM D 5453, ASTM D 7039, and a non-voluntary consensus 
standards body (VCSB) Energy Dispersive X-ray Fluorescence method. 
There were 129 laboratories that participated using 149 instruments.
    Typically, laboratory calibrations for measurement of ULSD fuel are 
done by either using calibration standards that are prepared in the 
laboratory by preparing a gravimetric stock solution and then 
performing serial dilutions or by purchasing calibration standards from 
a variety of calibration standard suppliers. This provides for a 
plethora of calibration standards and can bias lab-to-lab variability. 
During our round robin test program, we wanted to account for this 
variability, so in addition to having the laboratories measure the 
blind fuel samples using their own in-house calibration curve, we asked 
them to measure the blind fuel samples using a calibration curve 
generated from four recently available NIST SRMs that were provided by 
EPA for the test program. The purpose here was to determine the 
contribution of calibration curve bias to reproducibility, or lab-to-
lab variability, which can be determined when all of the labs are using 
identical, highly accurate, calibration standards. These SRMs are 
available to the general public for purchase at a reasonable price and 
there is a large supply. The results of the test program showed that 
for the most widely used method, D 5453 and the best performer, D 7039, 
calibration curve bias accounted for a 0.75 ppm increase in lab-to-lab 
variability on average when the fuel sulfur content is at or near 15 
ppm.
    The results led us to the conclusion that the 2 ppm adjustment 
factor is indeed appropriate. However the results also indicated that 
an additional 1 ppm on a temporary basis could be appropriate. For the 
newest test methods (ASTM D 5453 and ASTM D 7039) when laboratories 
used NIST standards coupled with appropriate test procedures, 
reproducibility was less than 2 ppm for 15 ppm sulfur in diesel fuel. 
The conclusions that we drew from the round robin testing program were 
that:
     Older methods struggled with meeting the reproducibility 
requirement.
     Newer test methods are fully capable.
     Qualification of the test laboratory is important to the 
ability of the

[[Page 25709]]

laboratories to validate their reproducibility.
     With any method, proper QA/QC procedures, including 
periodic use of calibration check standards are important.
    The results of the round robin testing also indicated that some 
laboratories are still having difficulty. EPA believes that this is 
likely the result of using older test methods, improper staff training, 
older test equipment, inadequate calibration standards, and improper 
QA/QC. To the extent that laboratories were qualified prior to the 
start of the testing and the quality control practices were continued, 
there was a greater likelihood the testing facilities were able to meet 
the testing tolerance requirements. We continue to believe that with 
newer equipment coupled with best practices for quality control, 
laboratory-to-laboratory reproducibility can meet the 2 ppm compliance 
margin and thus lead to greater assurance that in-use compliance will 
not be a challenge.
    The approach that EPA is finalizing today provides greater 
assurance that refineries do not need to expend the resources to 
produce even lower sulfur fuel to compensate for uncertainty associated 
with the test variability at the start of the program which will not 
exist after the transition period. By allowing a 3 ppm temporary 
compliance margin, laboratories downstream of the refinery will have 
greater assurance that their procedures are adequate without fear of 
compliance challenges. Without the appropriate adjustment factor to 
address test variability, refiners expressed concern that they would 
have had to lower the sulfur level of the diesel fuel they produced 
unnecessarily to account for greater test uncertainty. They also stated 
that this would cause them to operate their refineries in a way that 
might constrain fuel supply. The temporary nature of the modified 
adjustment factor focuses on the fact that EPA continues to believe 
that improvements in reproducibility are forthcoming. The two year 
adjustment factor increase allows time for the industry to transition 
to the improved test procedures and instrumentation while minimizing 
the potential for supply disruptions associated with the need to 
downgrade fuel that could have potentially been noncompliant based on 
test method variability. This should not lead to an increase in fuel 
sulfur levels above the 15 ppm cap at any point in the distribution 
system as parties would risk being found in noncompliance by EPA should 
they release fuel with a measured sulfur level greater than 15 ppm. The 
purpose of the downstream adjustment factor is simply to ensure that 
fuel actually meeting the 15 ppm cap is not rejected by pipelines or 
otherwise treated as noncompliant due to concerns with testing 
variability.
    After the two-year period (through October 14, 2008) all entities 
responsible for measuring fuel sulfur levels and ensuring that the 
sulfur content of the fuel is at or below 15 ppm sulfur will have a 
maximum sulfur testing adjustment factor of negative two ppm. This 
should provide all ULSD refiners, distributors and marketers sufficient 
time to procure new instrumentation if necessary, improve their QA/QC 
procedures, and train personnel to improve their testing to less than 
the 2 ppm allowed.

IV. Amendments to the Designate and Track Requirements Regarding Non-
Petroleum Diesel Fuel

    Biodiesel blenders recently made us aware of several issues with 
respect to how biodiesel is treated within the context of the designate 
and track (D&T) provisions under EPA's diesel program. They stated that 
100 percent biodiesel (B100) and high concentration biodiesel blends do 
not necessarily meet the specifications for either 1D or 
2D diesel fuel, and requested that EPA amend the regulations 
to provide accurate designations for these fuels. Similar to the 
existing provisions for 1D 15 ppm diesel fuel, they stated 
that B100 and high concentration biodiesel blends designated as 15 ppm 
highway diesel fuel should be exempted from the anti-downgrading 
requirements. Finally, they stated that the regulations as currently 
written would compel numerous biodiesel blenders downstream of the 
terminal to comply with the D&T registration and reporting 
requirements. They related that this would represent a substantial 
unanticipated burden for these parties and questioned whether it was 
necessary to meet EPA's regulatory goals.

A. Background

    Biodiesel is manufactured primarily for blending into petroleum-
based diesel fuel. Biodiesel blends manufactured for use 
interchangeably with 100 percent petroleum-based diesel fuel typically 
contain up to 20 percent biodiesel (B20).\1\ Most biodiesel has 
inherently very low sulfur content. Consequently, it is anticipated 
that to facilitate distribution of a single grade of B100 which can be 
blended into multiple distillate fuel grades (e.g. highway diesel, 
nonroad diesel, heating oil) most, if not all, B100 will be designated 
as 15 ppm diesel fuel by the manufacturer. As a result of the tax 
incentives made available for biodiesel blenders by the Jobs Act of 
2004 and extended by the Energy Policy Act (EPAct) of 2005, the 
interest in blending biodiesel in growing. Biodiesel blenders are 
eligible for a tax credit for the volume of biodiesel that is blended 
into petroleum-based diesel for fuel use. The Internal Revenue Service 
(IRS) requires that to receive the tax credit, the biodiesel blend must 
contain at least one tenth of one percent petroleum based diesel fuel 
(referred to as B99.9).\2\ To become eligible for this tax credit, 
upstream parties sometimes manufacture B99.9 for use downstream to 
produce finished biodiesel blends.
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    \1\ 2 percent biodiesel (B2) and 5 percent biodiesel (B5) are 
common biodiesel blends.
    \2\ Internal Revenue Bulletin 2005-35, August 29, 2005.
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    B100 and B99.9 meet the IRS definition of an ``excluded liquid'' 
and thus are not subject to federal fuel excise taxes.\3\ At the point 
where an excluded liquid is blended with a sufficient quantity of 
petroleum-based diesel fuel so that the final fuel blend contains at 
least 4 percent normal paraffins, such liquid ceases to be an excluded 
liquid, and the volume of previously excluded liquid becomes subject to 
federal fuel excise taxes. Thus, parties downstream of the terminal 
where fuel taxes are normally assessed such as bulk plant operators, 
tank truck operators, centrally fueled fleets, and retail operators 
could take custody of B100 or B99.9 on which highway taxes have not yet 
been assessed for use in blending into petroleum-based diesel fuel. 
Under current EPA regulations, all parties that take custody of diesel 
fuel on which taxes have not been assessed would need to comply with 
the designate and track registration and reporting requirements.
---------------------------------------------------------------------------

    \3\ 26 CFR 4081-1(b) states the an excluded liquid contains less 
than 4 percent normal paraffins.
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B. Amendments Made by This Rule

    To accommodate B100 and high concentration biodiesel blends that do 
not satisfy the specifications for either 1D or 2D 
diesel fuel, this rule amends the regulations to add a designation for 
non-petroleum based diesel fuel and high concentration blends of non-
petroleum diesel fuel. Any diesel fuel that is composed of at least 80 
percent non petroleum diesel fuel (such as biodiesel) can be designated 
as non-

[[Page 25710]]

petroleum (NP) diesel.\4\ We have included 80 percent blends in the 
definition of NP diesel because we are aware that 20 percent petroleum 
based diesel is sometimes blended into B100 during winter to improve 
its cold temperature performance. B99.9 and B80 are used for the same 
purposes as B100, either as a finished fuel or for the later 
manufacture of biodiesel blends for use as finished fuel. Similar to 
1D fuel, we agree that it is not appropriate to apply the 
anti-downgrading requirements for 15 ppm highway diesel fuel to NP 
diesel fuel since this would interfere with its intended purpose of NP 
diesel as a blend component into all grades of diesel fuel (including 
500 ppm highway diesel fuel). Consequently, this rule amends the 
regulations to exempt fuel designated as NP diesel from the anti-
downgrading requirements.
---------------------------------------------------------------------------

    \4\ It is also likely that non-petroleum diesel fuels other than 
biodiesel will not satisfy the specifications for 1D or 
2D diesel fuel.
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    We agree that it is not necessary to include facilities downstream 
of the terminal in the D&T system if the only action that would cause 
them to be included is that they handle a tax-excluded liquid. The 
purpose of the D&T requirements is to maintain the integrity of the 
distillate sulfur requirements for petroleum refiners. Once highway 
taxes have been assessed on such fuels and red dye or marker is added 
(if required \5\), typically before the fuel leaves the terminal, there 
is no potential for inappropriate shifting from one pool to another.\6\ 
For most, if not all, of the parties that take custody of an excluded 
liquid such as B100 or B99.9 downstream of the terminal, these are the 
only fuels that they handle on which highway diesel taxes have yet to 
be assessed. For such parties, EPA can rely on the presence or absence 
of red dye and marker to evaluate whether any inappropriate shifting 
has taken place.
---------------------------------------------------------------------------

    \5\ Outside of the Northeast Mid-Atlantic Area, the marker 
solvent yellow 124 must be added to heating oil beginning June 1, 
2007 and to locomotive and marine diesel fuel from June 1, 2010-May 
31, 2012 before the fuel leaves the terminal.
    \6\ For example, from the nonroad diesel pool into the 500 ppm 
highway diesel pool during the highway program's temporary 
compliance option, or from the heating oil pool into the high sulfur 
NRLM pool while the NRLM program's small refiner and credit 
provisions remain effective.
---------------------------------------------------------------------------

    This rule exempts parties from the D&T registration and reporting 
requirements if: (1) The only diesel fuel that the entity delivers or 
receives on which taxes have not been assessed pursuant to IRS code (26 
CFR part 48) is an excluded liquid pursuant to IRS code 26 CFR 48.4081-
1(b), and (2) the entity does not transfer such excluded liquid to a 
facility which delivers or receives other diesel fuel on which taxes 
have not been assessed. The second provision is necessary to ensure 
that all volumes reported under the D&T provisions can be accounted for 
when EPA audits compliance with these requirements. In most cases, this 
second provision will be moot since the parties for which this 
exemption is being crafted are biodiesel blenders and typically do not 
further distribute B100.
    Table IV-1, below, contains a summary of the amendments to the D&T 
provisions made by this action to accomplish the goals outlined above. 
These amendments will reduce the compliance burden for a number of 
required parties while maintaining the environmental benefits of the 
program.

      Table IV-1.--Summary of Amendments to the Designate and Track
            Requirements Regarding Non-Petroleum Diesel Fuel
------------------------------------------------------------------------
           Section                            Description
------------------------------------------------------------------------
80.2.........................  Amended the definition of heating oil to
                                reflect that it can contain NP diesel.
                                Added a definition for NP diesel.
80.520.......................  Amended the standards and dye
                                requirements to reflect that diesel fuel
                                can be designated as NP diesel.
80.590.......................  Amended the product transfer document
                                requirements to reflect that diesel fuel
                                can be designated as NP diesel.
80.597.......................  Amended the D&T provisions to exempt a
                                facility from registration if: (1) The
                                only diesel fuel that the entity
                                delivers or receives on which taxes have
                                not been assessed pursuant to IRS code
                                (26 CFR part 48) is an excluded liquid
                                pursuant to IRS code 26 CFR 4081-1(b),
                                and (2) The entity does not transfer
                                such excluded liquid to a facility which
                                delivers or receives other diesel fuel
                                on which taxes have not been assessed.
80.598.......................  Amended the diesel fuel designation
                                requirements so that diesel fuel can be
                                designated as NP diesel.
80.599.......................  Amended the manner in which compliance
                                with the anti-downgrading requirement is
                                evaluated to exempt diesel fuel
                                designated as NP from the requirements.
80.600.......................  Amended the recordkeeping requirements
                                under the designate and track provisions
                                to: (1) Reflect that diesel fuel can be
                                designated as NP diesel, and (2) clarify
                                that facilities that are exempt from the
                                registration requirements under the D&T
                                provisions (per the amendment to Sec.
                                80.597) do not need to identify the EPA
                                entity or facility registration number
                                to which fuel composed entirely of an
                                excluded liquid was distributed.
80.601.......................  Amended the reporting requirements under
                                the D&T provisions to clarify that
                                facilities that are exempted from the
                                registration requirements (per the
                                amendments to Sec.   80.597) are not
                                subject to these reporting requirements.
------------------------------------------------------------------------

V. Amendments to the Designate and Track Requirements Regarding 
California Diesel

    California refiners and distributors of diesel fuel requested that 
EPA consider exempting diesel fuel that meets the State of California 
requirements for highway diesel fuel (known as California Air Resource 
Board diesel, or ``California diesel'') from the designate and track 
requirements under EPA's diesel program while such California diesel 
fuel is in the State of California. They stated that because the State 
of California will require that California diesel meet a 15 ppm sulfur 
specification by June 1, 2006, the D&T provisions to prevent the 
inappropriate shifting of higher sulfur diesel fuel into the California 
diesel pool are not needed for California diesel while it is in the 
State of California. It was stated that California diesel which enters 
the 49 states could be incorporated into the D&T system so as to 
maintain the integrity of the system. It was also requested that the 
D&T requirements be amended to accommodate cases where California 
diesel is shipped via pipeline to a terminal outside of California to 
be distributed by tank truck back into the State of California.
    The State of California's diesel fuel program does not contain the 
temporary compliance option for highway diesel fuel, or the small 
refiner and credit provisions that exist under the federal program. At 
the time of its introduction, California diesel became mandatory for 
use in both highway vehicles and nonroad equipment. Beginning January 
2007, the State of California requires that California diesel meeting a 
15 ppm sulfur specification be used in intrastate locomotives and 
marine engines.

[[Page 25711]]

Consequently, we agree that the concerns which led us to implement the 
D&T requirements do not exist with respect to California diesel while 
it is in the State of California. Therefore, this action amends the D&T 
regulations so that facilities which handle California diesel while it 
is within the State of California are not subject to the associated 
registration, volume balance, and reporting requirements.
    Under this amendments, a pipeline that ships California diesel to a 
terminal outside of California will continue to be subject to all of 
the D&T requirements except for the volume balance requirements for 
highway diesel fuel. Such pipeline facilities will not need to identify 
the specific facilities from which they received the California diesel 
that enters the 49 states. The terminal within the 49 states that 
receives California diesel must redesignate the fuel as federal 15 ppm 
sulfur highway diesel fuel (ULSD) or segregate the California diesel 
fuel it receives for redistribution back into the State of California. 
Refiners and importers of diesel fuel in the State of California will 
continue to be subject to the federal sulfur testing requirements. This 
rule contains various amendments (listed below in table V-1) to ensure 
that the integrity of the D&T system is maintained.
    Table V-1, below, contains a summary of the regulatory amendments 
made by this action to implement the approach outlined above. We expect 
that these amendments will reduce compliance burdens for California 
refiners and distributors while preserving the environmental benefits 
of the clean diesel program.

      Table V-1.--Summary of Amendments to the Designate and Track
  Requirements Regarding Diesel Fuel That Meets California's Standards
------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
80.597(c)(1)(iv)..................  Added to clarify that facilities
                                     that ship California diesel outside
                                     of California are required to
                                     register under the designate and
                                     track provisions.
80.598(b)(2)(iii),                  Added new designation for California
 80.598(b)(3)(iv).                   diesel fuel.
80.598(b)(9)(xvi).................  Added new section which specifies
                                     that California diesel shipped
                                     outside of California must either
                                     be redesignated as 15 ppm MVNRLM of
                                     segregated for delivery back into
                                     California by tank truck.
80.599(b)(2), 80.599(e)(2)........  Amended definitions of MV15I and
                                     2MV15I to include CA
                                     diesel received pursuant to new
                                     section 80.617(b)(1).
80.600(b)(1)(i)(E),                 Added to specify that records must
 80.600(b)(1)(ii)(I).                be maintained regarding transfers
                                     of California diesel fuel out of
                                     the State of California under Sec.
                                      80.617(b).
80.600(n).........................  Added to clarify that records do not
                                     need to be maintained re the
                                     specific facilities to which taxed
                                     or dyed California diesel fuel (or
                                     taxed or dyed 15 ppm MVNRLM) is
                                     delivered.
80.601(a)(1)(i), 80.601(a)(2)(i)..  Amended reporting requirements to
                                     include fuel designated as
                                     California diesel that is
                                     distributed outside of California.
80.616............................  Added exemption provisions for
                                     California diesel within the State
                                     of California.
80.617............................  Added provisions on how to handle
                                     California diesel distributed
                                     outside the State of California.
------------------------------------------------------------------------

VI. Amendments to the Alternative Defense Provisions Regarding the Use 
of Conductivity Additives and Red Dye With a Sulfur Content That 
Exceeds 15 ppm

Conductivity Additives

    EPA's diesel program provides for the use of additives with a 
sulfur content greater than 15 ppm in diesel fuel that is subject to 
the 15 ppm sulfur standard. Under such circumstances, the party that 
blends the additive is responsible for ensuring that the finished fuel 
is compliant with the 15 ppm sulfur standard. If a violation of the 15 
ppm standard is discovered, EPA will require that all parties that had 
custody of the fuel provide affirmative defenses to presumptive 
liability to demonstrate that they did not cause or contribute to the 
violation. For blenders of additives with a sulfur content greater than 
15 ppm, such affirmative defenses typically include a post-additization 
sulfur test on the fuel batch which shows that the finished diesel fuel 
is compliant with the 15 ppm sulfur standard. Certain diesel fuel 
additives are typically injected as the fuel is being delivered into a 
tank truck. The cost of post-additization sulfur testing could be 
significant under these circumstances and could discourage the 
injection of additives with a sulfur content that exceeds 15 ppm as the 
fuel is delivered into the tank truck. This might force more 
additization to take place upstream at the refiner when possible or in 
the terminal storage tank.
    The final Highway and Nonroad Diesel rules projected that 
manufacturers of additives for use in diesel fuel subject to the 15 ppm 
sulfur standard would reformulate such additives where needed and 
practicable to have a sulfur content of less than 15 ppm. During the 
rulemaking process, we learned that important safety additives used to 
increase the electrical conductivity of diesel fuel can not currently 
be reformulated to have a sulfur content of less than 15 ppm. 
Conductivity (static dissipater) additives are often injected as the 
fuel is delivered into the tank truck although they are sometimes added 
to the terminal tank. They are typically not added at the refinery 
because of concerns that the additives might contaminate jet fuel 
during shipment by pipeline.
    Concerns related to fires caused by the discharge of static 
electricity during the transfer of diesel fuel are primarily focused on 
instances where a tank truck that previously contained gasoline is 
subsequently loaded with diesel fuel.\7\ Under such a circumstance, a 
flammable mixture of gasoline and air is likely to exist in the tank 
truck compartment.\8\ Static electricity is generated during the 
transfer of diesel fuel into the tank truck compartment, which unless 
properly managed, can serve as an ignition source for this flammable 
mixture. The risk of fuel fires caused by static electric discharge can 
be mitigated by employing procedural safeguards and by the use of 
additives that increase the electrical conductivity of the fuel. Such 
procedural safeguards include: Bonding and grounding the tank truck to 
allow a safe pathway for the discharge of static electricity, 
controlling fuel flow rate and splashing to limit the generation of 
static electricity, and allowing sufficient time for the static charge 
that does accumulate to dissipate prior to completing the refueling 
procedure. Conductivity additives decrease the

[[Page 25712]]

extent to which a static charge can accumulate and the time needed for 
the charge that does accumulate to dissipate.
---------------------------------------------------------------------------

    \7\ Such sequential loading is referred to as switch loading.
    \8\ Because the flash point of diesel fuel is much higher than 
that of gasoline, it is much less likely for a flammable diesel/air 
mixture to exist under typical ambient conditions.
---------------------------------------------------------------------------

    To facilitate the use of conductivity additives, the Nonroad Diesel 
final rule included alternative affirmative defense provisions for over 
15 ppm sulfur conductivity additives that contribute no more than 0.05 
ppm sulfur to the finished fuel blend (Sec.  80.614). Under these 
alternative affirmative defense provisions, additive blenders use a 
sulfur test prior to additization and volume accounting reconciliation 
(VAR) of the amount of additive injected into a volume of diesel over a 
compliance period to demonstrate that the sulfur contribution from the 
additive did not cause the finished fuel blend to exceed 15 ppm sulfur. 
We limited the use of these alternative defense provisions to 
conductivity additives that contribute no more than 0.05 ppm sulfur to 
the finished fuel blend for two reasons. First, the information 
available to us at the time indicated that the corresponding additive 
treatment rate would be adequate to meet the conductivity needs for all 
in-use fuels. Second, we wished to provide an upper limit on the 
potential sulfur contribution from such additives so that their sulfur 
content could not increase.
    Certain fuel distributors recently related that to maintain safe 
operation during the transfer of 500 ppm diesel fuel they currently 
employ both procedural safeguards and add conductivity additives at a 
concentration that results in a sulfur contribution to the finished 
fuel in excess of the 0.05 ppm. They further stated that the limited 
number of conductivity tests on batches of early production 15 ppm 
diesel fuel indicates that the processes used to remove sulfur also 
tends to reduce the natural conductivity of the fuel. This could lead 
to increased concerns regarding protecting against fires caused by 
static discharge during the loading of petroleum tank trucks with ULSD. 
It was requested that to ensure a smooth transition to ULSD, EPA amend 
the criteria under which the alternative affirmative defense provisions 
can be used to allow the use of conductivity additives that contribute 
up to 0.4 ppm sulfur to the finished fuel blend. This corresponds to 
the maximum treatment rate recommended by a manufacturer of 
conductivity additives.
    We believe that in order to facilitate the safe operation of tank 
truck loading facilities, it is appropriate to provide as much 
flexibility as possible for blenders of conductivity additives under 
the ULSD program. Thus, this rule provides that the alternative 
affirmative defense provisions may be used by blenders of conductivity 
additives that contribute no more than 0.4 ppm to the finished fuel. We 
expect that this change will allow the alternative defense provisions 
to be used under the most extreme circumstances, when treating diesel 
fuel batches during wintertime conditions (when static electricity 
concerns are heightened) that have extremely low conductivity and are 
also relatively unresponsive to the effects of conductivity improver 
additives. We continue to believe that in most cases the treatment rate 
of conductivity additive that will be needed will be much lower than 
that provided for under these amended alternative affirmative defense 
provisions.

Red Dye

    The Internal Revenue Service (IRS) requires that red dye be added 
to nonroad diesel fuel prior to leaving the terminal to indicate its 
non-tax status. The D&T provisions under EPA's diesel program only 
apply up to the point where taxes are assessed as the fuel leaves the 
terminal. After this point, EPA's diesel program relies on the 
presence/absence of red dye to differentiate highway diesel fuel from 
nonroad diesel fuel. The success of both the IRS fuel excise tax 
program and EPA's clean diesel programs is dependant on the continued 
use of red dye.
    Manufacturers of red dye recently related that their efforts to 
reformulate their additive to reduce the sulfur content below 15 ppm 
have not been fully successful and that it is currently unclear how 
this can be accomplished. Our review of the information which they 
provided indicates that reformulating red dye to meet a 15 ppm 
specification is currently not feasible.
    Information provided by additive manufactures indicates that the 
use of red dye to meet IRS requirements should result in a contribution 
to the sulfur content of the finished fuel of no more than 0.04 ppm. 
Based on the above discussion, we believe that it is appropriate to 
allow the use of the alternative VAR-based affirmative defense 
provisions by blenders of red dye into diesel fuel subject to the 15 
ppm sulfur standard provided that the use of red dye contributes no 
more than 0.04 ppm to the finished fuel blend. This rule amends the 
regulations to make this allowance.

Summary of the Amendments

    The amendments made by this action regarding the use of the 
alternative defense provisions by blenders of greater than 15 ppm 
conductivity additives and red dye are summarized in the following 
table VI-1. For these alternative defense provisions to apply, it will 
continue to be necessary for the blender to have a sulfur test prior to 
additization which shows that the sulfur contribution from the additive 
will not cause the sulfur content of the finished fuel to exceed 15 
ppm. Thus, these amendments will not have a negative impact on the 
environmental benefits of the ULSD program or on the sulfur sensitive 
diesel engine emissions control equipment on which these benefits 
depend. We intend to revisit the need for these alternative affirmative 
defenses should it become practical in the future to manufacture 
conductivity additives and/or red dye with a sulfur content of less 
than 15 ppm.

Table VI-1.--Summary of Amendments to the Alternative Defense Provisions
                 for Conductivity Additives and Red Dye
------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
80.591............................  Amended product transfer document
                                     requirements in keeping with
                                     applicability of alternative
                                     defense provisions for red dye.
80.614............................  Amended alternative defense
                                     provisions so that they may be used
                                     by blenders of red dye that
                                     contributes no more than 0.04 ppm
                                     to the finished fuel and
                                     conductivity additives that
                                     contribute no more than 0.4 ppm to
                                     the finished fuel.
------------------------------------------------------------------------


[[Page 25713]]

VII. Correction of Errors and Omissions From the Highway and Nonroad 
Diesel Regulations and Other Clarifications

    Following the publication of the Highway and Nonroad Diesel rules, 
as well as the two subsequent rulemakings, we discovered additional 
errors and clarifications that we are addressing in this action. Some 
of these items are merely grammar corrections, typographical errors, 
and minor clarification edits. This action also includes more 
substantive amendments that we believe will assist regulated entities 
in compliance with the diesel sulfur rules. These include: The 
allowance for early motor vehicle diesel credits to be traded across 
Credit Trading Areas, the assignment of Puerto Rico and the U.S. Virgin 
Islands to CTA 1, the allowance of shorter statements on product 
transfer documents (with EPA approval), and the clarification that 
approved small refiners who have elected to use the ``gas-for-diesel'' 
small refiner option (Sec. Sec.  80.553 and 80.554) may designate 15 
ppm diesel fuel as motor vehicle diesel fuel or nonroad, locomotive, 
and marine diesel fuel.
    The table below details the various clarifications and other 
corrections that are being made through this action:

------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
Subpart I.........................  Revised title to reflect the fact
                                     that the provisions of this subpart
                                     are applicable to motor vehicle,
                                     nonroad, locomotive and marine
                                     diesel fuel.
80.502(b).........................  Added definition to allow for the
                                     aggregation of refineries with
                                     truck loading terminals.
80.502(f).........................  Added to clarify that Alaska and
                                     Hawaii are in PADD V, and to assign
                                     the U.S. Virgin Islands and Puerto
                                     Rico to PADD VI.
80.527(c).........................  Amended to clarify that the anti-
                                     downgrading provisions begin
                                     October 15, 2006.
80527(c)(4), 80.527(e)(2).........  Revised to clarify the anti-
                                     downgrading provisions as they
                                     apply to retailers and wholesale
                                     purchaser-consumers.
80.531(a)(5)(i)-(ii) and (v)......  Amended to clarify that Puerto Rico
                                     and the U.S. Virgin Islands are
                                     assigned to CTA 1.
80.531(c)(5) and (d)(2), and        Amended to allow cross-CTA trading
 80.532.                             for early motor vehicle diesel fuel
                                     credits.
80.533 section heading,             The section heading was revised to
 80.533(d)(2) and (e).               better describe the purpose and
                                     objectives of this provision.
                                     Paragraphs were also amended to
                                     clarify that calculations of NRLM
                                     baselines should only be calculated
                                     using 2D distillates, to
                                     state that these provisions apply
                                     to ``produced or imported'' fuel,
                                     and for consistency with the
                                     revisions made to section
                                     80.554(d).
80.535............................  Revised to state a refiner must
                                     submit its NRLM early credit
                                     generation intent letter at least
                                     30 days prior to the date that it
                                     begins generating early credits.
80.551(f).........................  This provision was inadvertently
                                     omitted during the printing of a
                                     prior rulemaking.
80.553............................  Amended to state that at least 95
                                     percent of the diesel fuel that a
                                     small refiner produces must be
                                     produced to meet the 15 ppm sulfur
                                     standard.
80.554(d).........................  Amended to better reflect the intent
                                     of the small refiner ``gas-for-
                                     diesel'' option.
80.570(e), 80.571(f), 80.572(f),    Revised to state ``EPA'' instead of
 80.573(c), and 80.574(d).           ``the Administrator.''
80.590(a)(7)......................  Amended to allow entities to use
                                     shorter statements regarding diesel
                                     fuel classifications on PTDs (with
                                     EPA approval).
80.590(i).........................  Added to cover the situation where
                                     some small amount of potentially
                                     off-spec ULSD, or ``interface
                                     ULSD'', may be transferred by a
                                     pipeline due to batch sequencing
                                     and pipeline batch cutting methods.
80.592(b)(7)-(b)(7)(i)............  Amended to state ``compliance
                                     period'' rather than ``calendar
                                     year''.
80.592(f).........................  Added to state recordkeeping
                                     requirements for the situation
                                     where a refinery is aggregated with
                                     a truck loading terminal.
80.593............................  Amended to reflect the fact that
                                     this section is applicable to
                                     importers as well as refiners.
80.595............................  Revised the section heading to
                                     better describe the purpose and
                                     objectives of this provision.
80.597(c)(1) and (c)(2)...........  Revised to clarify that only
                                     entities delivering or receiving
                                     the fuels in 80.597(c)(1)(i)-(iii)
                                     must register.
80.598(a)(3)(iv)..................  Amended to clarify that small
                                     refiners who elect to produce NRLM
                                     to meet the 15 ppm standard in 2006
                                     may designate 15 ppm fuel as MV or
                                     NRLM fuel beginning June 1, 2006
                                     (as stated in Sec.   80.554(d)).
80.598(b)(9)(iv) & (b)(9)(vii)(A).  Amended to state ``2006'' rather
                                     than ``2007''.
80.600............................  Various sections amended to address
                                     recordkeeping for the situation
                                     where a refinery is aggregated with
                                     a truck loading terminal.
80.601(a)(iv)-(v).................  Amended to clarify volume balance
                                     requirements.
80.601(b)(4) and 80.601(f)........  Added to state reporting
                                     requirements for the situation
                                     where a refinery is aggregated with
                                     a truck loading terminal.
80.602(g).........................  Added to address recordkeeping for
                                     the situation where a refinery is
                                     aggregated with a truck loading
                                     terminal.
------------------------------------------------------------------------

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
     Have an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
     Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
     Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or,
     Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    It has been determined that this rule is not a ``significant 
regulatory action'' under the terms of Executive Order 12866 and is 
therefore not subject to OMB review. This final rule simply corrects 
errors and omissions, provides a temporary increase in the sulfur 
testing tolerance, revises the designate

[[Page 25714]]

and track provisions to account for non-petroleum diesel fuels (i.e., 
biodiesel) and fuel that meets the California Air Resources Board's 
diesel fuel standards, and amends the alternative defense provisions to 
account for conductivity additives and red dye. There are no new costs 
associated with this rule. Therefore, this final rule is not subject to 
the requirements of Executive Order 12866. A Final Regulatory Support 
Document was prepared in connection with the original regulations for 
the Highway Diesel Rule and the Nonroad Diesel Rule as promulgated on 
January 18, 2001 and June 29, 2004, respectively, and we have no reason 
to believe that our analyses in the original rulemakings were 
inadequate. The relevant analyses are available in the docket for the 
January 18, 2001 rulemaking (A-99-061) and the June 29, 2004 rulemaking 
(OAR-2003-0012 and A-2001-28) and at the following internet address: 
http://www.epa.gov/cleandiesel. The original action was submitted to 

the Office of Management and Budget for review under Executive Order 
12866.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden, 
as it simply corrects errors and omissions, provides a temporary 
increase in the sulfur testing tolerance, revises the designate and 
track provisions to account for non-petroleum diesel fuels (i.e., 
biodiesel) and fuel that meets the California Air Resources Board's 
diesel fuel standards, and amends the alternative defense provisions to 
account for conductivity additives and red dye. However, the Office of 
Management and Budget (OMB) has previously approved the information 
collection requirements contained in the existing regulations of the 
Highway Diesel Rule (66 FR 5002, January 18, 2001) and the Nonroad 
Diesel Rule (69 FR 38958, June 29, 2004) under the provisions of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB 
control number 2060-0308 (EPA ICR 1718). A copy of the OMB 
approved Information Collection Request (ICR) may be obtained from 
Susan Auby, Collection Strategies Division; U.S. Environmental 
Protection Agency (2822T), 1200 Pennsylvania Avenue, NW., Washington, 
DC 20460 or by calling (202) 566-1672.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Analyses

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this direct final rule. For 
purposes of assessing the impacts of this final rule on small entities, 
a small entity is defined as: (1) A small business as defined by the 
Small Business Administration's (SBA) size standards at 13 CFR 121.201; 
(2) a small governmental jurisdiction that is a government of a city, 
county, town, school district or special district with a population of 
less than 50,000; and (3) a small organization that is any not-for-
profit enterprise which is independently owned and operated and is not 
dominant in its field. After considering the economic impacts of 
today's final rule on small entities, EPA has concluded that this 
action will not have a significant economic impact on a substantial 
number of small entities. This final rule will not impose additional 
regulatory burden on small entities. This direct final rule merely 
corrects errors and omissions, provides a temporary increase in the 
sulfur testing tolerance, revises the designate and track provisions to 
account for non-petroleum diesel fuels (i.e., biodiesel) and fuel that 
meets the California Air Resources Board's diesel fuel standards, and 
amends the alternative defense provisions to account for conductivity 
additives and red dye.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective, or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
Administrator publishes with the final rule an explanation of why that 
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector. The rule imposes no enforceable 
duties on any of these governmental entities. Nothing in the rule would 
significantly or uniquely affect small governments. EPA has determined 
that this rule contains no federal mandates that may result in 
expenditures of more than $100 million to the private sector in any 
single year. This direct final rule merely corrects errors and 
omissions, provides a temporary increase in the sulfur testing 
tolerance, revises the designate and track provisions to account for 
non-petroleum diesel fuels (i.e., biodiesel) and fuel that meets the 
California Air Resources Board's diesel fuel standards, and amends the 
alternative defense provisions to account for conductivity additives 
and red dye.
    Thus, this rule is not subject to the requirements of sections 202 
and 205 of the UMRA.

[[Page 25715]]

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' are defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under Section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, imposes substantial direct 
compliance costs, and is not required by statute. However, if the 
Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the regulation, these restrictions do not apply. EPA also 
may not issue a regulation that has federalism implications and that 
preempts State law, unless the Agency consults with State and local 
officials early in the process of developing the regulation.
    Section 4 of the Executive Order contains additional requirements 
for rules that preempt State or local law, even if those rules do not 
have federalism implications (i.e., the rules will not have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government). Those 
requirements include providing all affected State and local officials 
notice and an opportunity for appropriate participation in the 
development of the regulation. If the preemption is not based on 
express or implied statutory authority, EPA also must consult, to the 
extent practicable, with appropriate State and local officials 
regarding the conflict between State law and Federally protected 
interests within the agency's area of regulatory responsibility.
    This rule does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This direct final rule simply 
corrects errors and omissions, provides a temporary increase in the 
sulfur testing tolerance, revises the designate and track provisions to 
account for non-petroleum diesel fuels (i.e., biodiesel) and fuel that 
meets the California Air Resources Board's diesel fuel standards, and 
amends the alternative defense provisions to account for conductivity 
additives and red dye. Although Section 6 of Executive Order 13132 did 
not apply to the Highway Diesel Rule (66 FR 5002) or the Nonroad Diesel 
Rule (69 FR 38958), EPA did consult with representatives of various 
State and local governments in developing these rules. For this direct 
final action, EPA consulted with representatives of the California Air 
Resources Board and the Western States Petroleum Association (WSPA) for 
the amendments made which will affect refiners and distributors in 
California.

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

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This direct final rule does 
not have tribal implications as specified in Executive Order 13175. 
This rule does not have tribal implications. It will not have 
substantial direct effects on tribal governments, on the relationship 
between the Federal government and Indian tribes, or on the 
distribution of power and responsibilities between the Federal 
government and Indian tribes, as specified in Executive Order 13175. 
This rule does not uniquely affect the communities of Indian Tribal 
Governments. Further, no circumstances specific to such communities 
exist that would cause an impact on these communities beyond those 
discussed in the other sections of this rule. This direct final rule 
merely corrects errors and omissions, provides a temporary increase in 
the sulfur testing tolerance, revises the designate and track 
provisions to account for non-petroleum diesel fuels (i.e., biodiesel) 
and fuel that meets the California Air Resources Board's diesel fuel 
standards, and amends the alternative defense provisions to account for 
conductivity additives and red dye. Thus, Executive Order 13175 does 
not apply to this rule.

G. Executive Order 13045: Children's Health Protection

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

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

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001) because it is not likely to have a significant 
adverse effect on the supply, distribution or use of energy. This 
direct final rule simply corrects errors and omissions, provides a 
temporary increase in the sulfur testing tolerance, revises the 
designate and track provisions to account for non-petroleum diesel 
fuels (i.e., biodiesel) and fuel that meets the California Air 
Resources Board's diesel fuel standards, and amends the alternative 
defense provisions to account for conductivity additives and red dye.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C. 
272 note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless doing so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (such as materials specifications, test 
methods, sampling procedures, and business practices) that are 
developed or adopted by voluntary consensus standards bodies. NTTAA 
directs EPA to provide Congress,

[[Page 25716]]

through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.
    This direct final rule does not involve technical standards. This 
direct final rule merely corrects errors and omissions, provides a 
temporary increase in the sulfur testing tolerance, revises the 
designate and track provisions to account for non-petroleum diesel 
fuels (i.e., biodiesel) and fuel that meets the California Air 
Resources Board's diesel fuel standards, and amends the alternative 
defense provisions to account for conductivity additives and red dye. 
Thus, we have determined that the requirements of the NTTAA do not 
apply.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801, et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally provides that before a rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to Congress and the Comptroller General of the United 
States. We will submit a report containing this rule and other required 
information to the U.S. Senate, the U.S. House of Representatives, and 
the Comptroller General of the United States before publication of the 
rule in the Federal Register. A major rule cannot take effect until 60 
days after it is published in the Federal Register. This action is not 
a ``major rule'' as defined by 5 U.S.C. 804(2) and will become 
effective June 30, 2006.

IX. Statutory Provisions and Legal Requirements

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

List of Subjects in 40 CFR Part 80

    Environmental protections, Fuel additives, Imports, Labeling, Motor 
vehicle pollution, Penalties, Reporting and recordkeeping requirements.

    Dated: April 20, 2006.
Stephen L. Johnson,
Administrator.


0
For the reasons set out in the preamble, title 40, chapter I, of the 
Code of Federal Regulations is amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

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


0
2. Section 80.2 is amended by revising paragraph (ccc) and adding 
paragraph (sss) to read as follows:


Sec.  80.2  Definitions.

* * * * *
    (ccc) Heating Oil means any 1, 2, or non-
petroleum diesel blend that is sold for use in furnaces, boilers, 
stationary diesel engines, and similar applications and which is 
commonly or commercially known or sold as heating oil, fuel oil, and 
similar trade names, and that is not jet fuel, kerosene, or MVNRLM 
diesel fuel.
* * * * *
    (sss) Non-petroleum diesel (NP diesel) means a diesel fuel that 
contains at least 80 percent mono-alkyl esters of long chain fatty 
acids derived from vegetable oils or animal fats.

0
3. Subpart Heading I is revised to read as follows:

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

0
4. Section 80.502 is amended by adding new paragraphs (b)(1)(iii), 
(d)(1), (d)(2) and (f), to read as follows:


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

* * * * *
    (b) * * *
    (1) * * *
    (iii) Situations where a refinery is aggregated with a truck 
loading terminal.
    (A) Where a refinery is aggregated with a truck loading terminal, 
diesel fuel or other product subject to the requirements of this 
subpart I produced by such refinery and distributed over the truck 
terminal rack must be included in refinery batches that may be based on 
shipments to a truck terminal rack tank or on the total volumes 
delivered to tanker trucks for a period not to exceed 1 calendar month 
per batch.
    (B) Where a refinery is aggregated with a truck loading terminal, 
diesel fuel or other product subject to the requirements of this 
subpart I that were imported or produced by another refinery, and that 
are distributed through the refinery or truck terminal rack, must be 
treated as previously designated fuel for which the aggregated facility 
is responsible for all applicable balance and downgrade requirements 
under Sec. Sec.  80.527, 80.598, 80.599 and related recordkeeping and 
reporting requirements like any other distributor downstream from the 
refiner or importer.
* * * * *
    (d) * * *
    (1) In the case of aggregated facilities consisting of a refinery 
and a truck loading terminal, a batch may be defined by one of the 
following methods:
    (i) The sum of the deliveries from the truck loading terminal rack 
to trucks for periods not to exceed 1 month;
    (ii) Each individual truck or truck compartment; or
    (iii) For refineries with ``certification tanks'' where testing is 
performed and ``rack tanks'' that feed the truck loading terminal rack, 
each transfer from the certification tank to the rack tank. If this 
method of determining a batch is selected, it must be the sole method 
used and must be performed such that no double-counting or 
undercounting of volumes occurs.
    (2) [Reserved.]
    (f) Definition of PADD. For the purposes of this subpart only, the 
following definitions of PADDs apply:
    (1) The following States are included in PADD I:

Connecticut
Delaware
District of Columbia
Florida
Georgia
Maine
Maryland
Massachusetts
New Hampshire
New Jersey
New York
North Carolina
Pennsylvania
Rhode Island
South Carolina
Vermont
Virginia
West Virginia

    (2) The following States are included in PADD II:

Illinois
Indiana
Iowa
Kansas
Kentucky
Michigan
Minnesota
Missouri
Nebraska
North Dakota
Ohio
Oklahoma

[[Page 25717]]

South Dakota
Tennessee
Wisconsin

    (3) The following States are included in PADD III:

Alabama
Arkansas
Louisiana
Mississippi
New Mexico
Texas

    (4) The following States are included in PADD IV:

Colorado
Idaho
Montana
Utah
Wyoming

    (5) The following States are included in PADD V:

Alaska
Arizona
California
Hawaii
Nevada
Oregon
Washington

    (6) The following areas are included in PADD VI:

U.S. Virgin Islands
Commonwealth of Puerto Rico


0
5. Section 80.520 is amended by revising paragraph (b)(2) introductory 
text to read as follows:


Sec.  80.520  What are the standards and dye requirements for motor 
vehicle diesel fuel?

* * * * *
    (b) * * *
    (2) Until June 1, 2010, any 1D or 2D distillate, 
or NP diesel fuel that does not show visible evidence of dye solvent 
red 164 shall be considered to be motor vehicle diesel fuel and subject 
to all the requirements of this subpart for motor vehicle diesel fuel, 
except for distillate fuel designated or classified as any of the 
following:
* * * * *

0
6. Section 80.527 is amended by revising paragraph (c) introductory 
text, (c)(3), (c)(4), and (e)(2) to read as follows:


Sec.  80.527  Under what conditions may motor vehicle diesel fuel 
subject to the 15 ppm sulfur standard be downgraded to motor vehicle 
diesel fuel subject to the 500 ppm sulfur standard?

* * * * *
    (c) Downgrading limitation. The provisions of this section apply 
beginning October 15, 2006.
* * * * *
    (3) Compliance with the limitation of paragraph (c)(1) of this 
section applies separately for the compliance periods of October 15, 
2006 through May 31, 2007; June 1, 2007 through June 30, 2008; July 1, 
2008 through June 30, 2009; July 1, 2009 through May 31, 2010.
    (4) Except as provided in paragraph (e) of this section, compliance 
with the limitation of paragraph (c)(1) of this section shall be as 
calculated under Sec.  80.599(e).
* * * * *
    (e) * * *
    (2) A retailer or wholesale purchaser-consumer who does not sell, 
offer for sale, or dispense motor vehicle diesel fuel subject to the 15 
ppm sulfur standard under Sec.  80.520(a)(1) must comply with the 
downgrading limitations of paragraph (c) of this section, such that it 
may not downgrade a volume of motor vehicle diesel fuel, designated as 
subject to the 15 ppm sulfur standard, for more than 20% of the total 
volume of motor vehicle diesel fuel that it sells, offers for sale, or 
dispenses in any compliance period.
* * * * *

0
7. Section 80.531 is amended by revising paragraphs (a)(5)(i), 
(a)(5)(ii), and (d)(2), and by adding paragraphs (a)(5)(v) and (c)(5) 
to read as follows:


Sec.  80.531  How are motor vehicle diesel fuel credits generated?

    (a) * * *
    (5) * * *
    (i) PADDs I, II, III and IV, as described in Sec.  80.502(f) except 
as provided in paragraph (a)(5)(iv) of this section. The CTAs shall be 
designated as CTA 1, 2, 3, and 4, respectively, and correspond to PADDs 
I, II, III, and IV, respectively;
    (ii) CTA 5 shall correspond to PADD V, as described in Sec.  
80.502(f), except as provided in paragraphs (a)(5)(iii) and (iv) of 
this section;
* * * * *
    (v) The U.S. territories specified in Sec.  80.502(f)(6) shall be 
included in CTA 1.
* * * * *
    (c) * * *
    (5) Credit transfers for early credits. For early credits generated 
under Sec.  80.531(c), credits may be used in any of the CTAs 1 through 
5 that were generated in any of the CTAs 1 through 7 to achieve 
compliance with the volume limit in Sec.  80.503(a)(3);
* * * * *
    (d) * * *
    (2) Credits generated under paragraphs (b) and (c) of this section 
shall be generated separately by CTA as defined in paragraph (a)(5) of 
this section and must be designated by CTA of generation, and by the 
refiner and refinery, or by importer and port of import, as applicable, 
except as provided under paragraph (c)(5) of this section.
* * * * *

0
8. Section 80.532 is amended by revising paragraph (d)(1)(i) to read as 
follows:


Sec.  80.532  How are motor vehicle diesel fuel credits used and 
transferred?

* * * * *
    (d) * * *
    (1) * * *
    (i) The motor vehicle diesel fuel credits were generated in the 
same CTA as the CTA in which motor vehicle diesel fuel credits are used 
to achieve compliance, except as provided in Sec.  80.531(c)(5);
* * * * *

0
9. Section 80.533 is amended as follows:
0
a. By revising the section heading.
0
b. By adding a new paragraph (c)(2)(iii).
0
c. By revising paragraph (d)(2).
0
d. By adding introductory text to paragraph (e).
0
e. By revising paragraph (e)(1).
0
f. By revising paragraph (f).
0
g. By revising paragraph (g).
0
h. By revising paragraph (h).
0
i. By adding a new paragraph (i).


Sec.  80.533  How does a refiner or importer apply for a motor vehicle 
or non-highway baseline for the generation of NRLM credits or the use 
of the NRLM small refiner compliance options?

* * * * *
    (c) * * *
    (2) * * *
    (iii) For purposes of a total diesel baseline volume for use in 
determining compliance with the provisions of Sec.  80.554(d), the 
baseline volumes of motor vehicle diesel fuel produced during the 
calendar years beginning January 1, 1998 and 1999 (per Sec. Sec.  
80.595(a) and 80.596(a)); and the baseline volumes of non-highway 
diesel fuel produced during the three calendar years beginning January 
1, 2003, 2004, and 2005. This shall be calculated as stated under 
paragraph (f) of this section.
* * * * *
    (d) * * *
    (2) Under paragraph (c)(2)(ii) of this section, BMV 
equals the average annual volume of motor vehicle diesel fuel produced 
or imported during the period from January 1, 2006 through December 31, 
2008.
* * * * *
    (e) Calculation of the Non-highway Baseline, BNRLM. For 
purposes of this paragraph (e), BMV shall only include the 
average annual volume of 2D distillate fuel.

[[Page 25718]]

    (1) Under paragraphs (c)(2)(i) and (c)(2)(iii) of this section, 
BNRLM equals the average annual volume of all 2D 
distillate produced or imported from January 1, 2003 through December 
31, 2005, less BMV as determined in paragraph (d)(1) of this 
section.
* * * * *
    (f) Calculation of the Total Diesel Baseline, BMVNRLM. 
BMVNRLM equals the sum of BMV (as calculated 
under Sec.  80.596) plus BNRLM (as calculated under 
paragraph (e)(1) of this section).
    (g)(1) Applications submitted under paragraphs (c)(2)(i) and 
(c)(2)(iii) of this section must be postmarked by February 28, 2006.
    (2) Applications submitted under paragraph (c)(2)(ii) of this 
section must be postmarked by February 28, 2009.
    (h)(1) For applications submitted under paragraphs (c)(2)(i) and 
(c)(2)(iii) of this section, EPA will notify refiners or importers by 
June 1, 2006 of approval of the baselines for each of the refiner's 
refineries or importer's import facilities or of any deficiencies in 
the refiner's or importer's application.
    (2) For applications submitted under paragraph (c)(2)(ii) of this 
section, EPA will notify refiners or importers by June 1, 2009 
regarding approval of the baselines for each of the refiner's 
refineries or importer's import facilities of any deficiencies in the 
refiner's or importer's application.
    (i) If at any time the motor vehicle baseline or non-highway 
baseline submitted in accordance with the requirements of this section 
is determined to be incorrect, EPA will notify the refiner or importer 
of the corrected baseline and any compliance calculations made on the 
basis of that baseline will have to be adjusted retroactively.

0
10. Section 80.535 is amended by revising paragraphs (a)(1)(i) and 
(c)(1)(i) to read as follows:


Sec.  80.535  How are NRLM diesel fuel credits generated?

    (a) * * *
    (1) * * *
    (i) The refiner or importer notifies EPA of its intention to 
generate credits and the period during which it will generate credits. 
This notification must be received by EPA at least 30 calendar days 
prior to the date it begins generating credits under this section.
* * * * *
    (c) * * *
    (1) * * *
    (i) The refiner or importer notifies EPA of its intention to 
generate credits and the period during which it will generate credits. 
This notification must be received by EPA at least 30 calendar days 
prior to the date it begins generating credits under this section.
* * * * *

0
11. Section 80.551 is amended by adding paragraph (f) to read as 
follows:


Sec.  80. 551  How does a refiner obtain approval as a small refiner 
under this subpart?

* * * * *
    (f) Approval of small refiner status for refiners who apply under 
Sec.  80.550(e) will be based on all information submitted under 
paragraph (c) of this section, except as provided in Sec.  80.550(e).
* * * * *

0
12. Section 80.553 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec.  80.553  Under what conditions may the small refiner gasoline 
sulfur standards be extended for a small refiner of motor vehicle 
diesel fuel?

* * * * *
    (b) As part of its application, the refiner must submit an 
application for a motor vehicle diesel fuel baseline in accordance with 
the provisions of Sec. Sec.  80.595 and 80.596. The application must 
also include information, as provided in Sec.  80.594, demonstrating 
that starting no later than June 1, 2006, 95 percent of the motor 
vehicle diesel fuel produced by the refiner will comply with the 15 ppm 
sulfur content standard under Sec.  80.520(a)(1), and that the volume 
of motor vehicle diesel fuel produced will comply with the volume 
requirements of paragraph (e) of this section.
* * * * *
    (d) Beginning June 1, 2006, and continuing through December 31, 
2010, 95 percent of the motor vehicle diesel fuel produced by a refiner 
that has received an extension of its small refiner gasoline sulfur 
standards under this section must be accurately designated under Sec.  
80.598 as meeting the 15 ppm sulfur content standard under Sec.  
80.520(a)(1).
* * * * *

0
13. Section 80.554 is amended by revising paragraphs (d)(1)(i), 
(d)(1)(ii), and (d)(3)(i) to read as follows:


Sec.  80.554  What compliance options are available to NRLM diesel fuel 
small refiners?

* * * * *
    (d) * * *
    (1) * * *
    (i) From June 1, 2006 until the expiration of the refiner's small 
refiner gasoline sulfur standards (through December 31, 2007 or 2010) 
95 percent of the total MVNRLM diesel fuel produced by the refiner must 
be accurately designated under Sec.  80.598(a) as meeting the 15 ppm 
sulfur standard of Sec.  80.510(b).
    (ii) The refiner must produce MVNRLM diesel fuel each year or 
partial year under paragraph (d)(1)(i) of this section at a volume that 
is equal to or greater than 85 percent of BMVNRLM, as 
defined in Sec.  80.533, calculated on an annual basis.
* * * * *
    (3)(i) If the refiner fails to produce the necessary volume of 15 
ppm sulfur MVNRLM diesel fuel by June 1, 2006 and every year thereafter 
through the deadlines specified under paragraph (d)(1)(i) of this 
section, the refiner must report this in its annual report under Sec.  
80.604, and the adjustment of gasoline sulfur standards under paragraph 
(d)(2)(i) of this section will be considered void as of January 1, 
2004.
* * * * *

0
14. Section 80.570 is amended by revising paragraph (e) to read as 
follows:


Sec.  80.570  What labeling requirements apply to retailers and 
wholesale purchaser-consumers of diesel fuel beginning June 1, 2006?

* * * * *
    (e) Alternative labels to those specified in paragraphs (a) through 
(c) of this section may be used as approved by EPA.

0
15. Section 80.571 is amended by revising paragraph (f) to read as 
follows:


Sec.  80.571  What labeling requirements apply to retailers and 
wholesale purchaser-consumers of NRLM diesel fuel or heating oil 
beginning June 1, 2007?

* * * * *
    (f) Alternative labels to those specified in paragraphs (a) through 
(d) of this section may be used as approved by EPA.

0
16. Section 80.572 is amended by revising paragraph (f) to read as 
follows:


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

* * * * *
    (f) Alternative labels to those specified in paragraphs (a) through 
(d) of this section may be used as approved by EPA.

0
17. Section 80.573 is amended by revising paragraph (c) to read as 
follows:


Sec.  80.573  What labeling requirements apply to retailers and 
wholesale purchaser-consumers of NRLM diesel fuel and heating oil 
beginning June 1, 2012?

* * * * *

[[Page 25719]]

    (c) Alternative labels to those specified in paragraph (a) of this 
section may be used as approved by EPA.

0
18. Section 80.574 is amended by revising paragraph (d) to read as 
follows:


Sec.  80.574  What labeling requirements apply to retailers and 
wholesale purchaser-consumers of NRLM diesel fuel, or heating oil 
beginning June 1, 2014?

* * * * *
    (d) Alternative labels to those specified in paragraphs (a) and (b) 
of this section may be used as approved by EPA.

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


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

* * * * *
    (d) Adjustment factor for downstream test results. (1) Except as 
specified in paragraph (d)(1)(i) of this section, an adjustment factor 
of negative two ppm sulfur shall be applied to the test results from 
any testing of motor vehicle diesel fuel or NRLM diesel fuel downstream 
of the refinery or import facility, to account for test variability, 
but only for testing of motor vehicle diesel fuel or NRLM diesel fuel 
identified as subject to the 15 ppm sulfur standard of Sec.  80.510(b) 
or Sec.  80.520(a)(1).
    (i) Prior to October 15, 2008 an adjustment factor of negative 
three ppm sulfur shall be applied to the test results, to account for 
test variability, but only for testing of motor vehicle diesel fuel or 
NRLM diesel fuel identified as subject to the 15 ppm sulfur standard of 
Sec.  80.510(b) or Sec.  80.520(a)(1).
    (ii) [Reserved.]
    (2) In addition to the adjustment factor provided in paragraph 
(d)(1)(i) of this section, prior to September 1, 2006, an adjustment 
factor of negative 7 ppm shall be applied to the test results from any 
testing of motor vehicle diesel fuel downstream of the refinery or 
import facility, to facilitate the transition to ULSD fuel, but only 
for testing of motor vehicle diesel fuel identified as subject to the 
15 ppm sulfur standard of Sec.  80.520(a)(1).
    (3) In addition to the adjustment factor provided in paragraph 
(d)(1)(i) of this section, prior to October 15, 2006, an adjustment 
factor of negative 7 ppm shall be applied to the test results from any 
testing of motor vehicle diesel fuel at any retail outlet or wholesale 
purchaser-consumer facility, to facilitate the transition to ULSD fuel, 
but only for testing of motor vehicle diesel fuel identified as subject 
to the 15 ppm sulfur standard of Sec.  80.520(a)(1).
* * * * *

0
20. Section 80.581 is amended by revising paragraph (c)(1) to read as 
follows:


Sec.  80.581  What are the batch testing and sample retention 
requirements for motor vehicle and NRLM diesel fuel?

* * * * *
    (c)(1) Any refiner who produces motor vehicle or NRLM diesel fuel 
using computer-controlled in-line blending equipment, including the use 
of an on-line analyzer test method that is approved under the 
provisions of Sec.  80.580, and who, subsequent to the production of 
the diesel fuel batch tests a composited sample of the batch under the 
provisions of Sec.  80.580 for purposes of designation and reporting, 
is exempt from the requirement of paragraph (b) of this section to 
obtain the test result required under this section prior to the diesel 
fuel leaving the refinery, provided that the refiner obtains approval 
from EPA. The requirement of this paragraph (c)(1) that the in-line 
blending equipment must include an on-line analyzer test method that is 
approved under the provisions of Sec.  80.580 is effective beginning 
June 1, 2006.
* * * * *

0
21. Section 80.590 is amended by revising paragraphs (a)(7) 
introductory text and (a)(7)(i), and by adding paragraph (i) to read as 
follows:


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

    (a) * * *
    (7) For transfers of title or custody from one facility to another 
in the distribution system where diesel fuel or distillates are taxed, 
dyed or marked, and for any subsequent transfers (except when such fuel 
is dispensed into motor vehicles or nonroad, locomotive, or marine 
equipment), an accurate statement on the product transfer document of 
the applicable fuel uses and classifications, as follows (however, in 
instances where space is constrained, substantially similar language 
may be used following approval from EPA):
    (i) Undyed 15 ppm sulfur diesel fuel. For the period from June 1, 
2006 and beyond, ``15 ppm sulfur (maximum) Undyed Ultra-Low Sulfur 
Diesel Fuel. For use in all diesel vehicles and engines.'' From June 1, 
2006 through May 31, 2010, the product transfer document must also 
state whether the diesel fuel is 1D or 2D, or NP 
diesel.
* * * * *
    (i) Pipeline Ticketing. For the case where a pipeline delivers a 
batch of ULSD to another facility that contains slight amounts of 
another type of fuel from a preceding or following batch, a clear 
statement must be included on the PTD denoting this. When this occurs, 
the receiving facility must handle the fuel appropriately (e.g., 
redesignate or downgrade any amount of fuel in that batch that does not 
meet the applicable sulfur standard), in accordance with the provisions 
of Sec. Sec.  80.527 and 80.599.

0
22. Section 80.591 is amended by revising paragraphs (b)(3), (b)(4)(i), 
(b)(4)(ii), and (b)(4)(iii) to read as follows:


Sec.  80.591  What are the product transfer document requirements for 
additives to be used in diesel fuel?

* * * * *
    (b) * * *
    (3) If the additive package contains a static dissipater additive 
and/or red dye having a sulfur content greater than 15 ppm, a statement 
must be included which accurately describes the contents of the 
additive package pursuant to one of the following choices:
    (i) ``This diesel fuel additive contains a static dissipater 
additive having a sulfur content greater than 15 ppm.''
    (ii) ``This diesel fuel additive contains red dye having a sulfur 
content greater than 15 ppm.''
    (iii) ``This diesel fuel additive contains a static dissipater 
additive and red dye having a sulfur content greater than 15 ppm.''
    (4) * * *
    (i) The additive package's maximum sulfur concentration.
    (ii) The maximum recommended concentration in volume percent for 
use of the additive package in diesel fuel.
    (iii) The contribution to the sulfur level of the fuel, in ppm, 
that would result if the additive package is used at the maximum 
recommended concentration.
* * * * *

0
23. Section 80.592 is amended by adding a new paragraph (f) to read as 
follows:


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

* * * * *
    (f) Additional records to be kept by aggregated facilities 
consisting of a refinery and a truck loading terminal. In addition to 
the records required by paragraph (a) of this section, such aggregated 
facilities must also keep the following records beginning June 1, 2006:
    (1) The following information for each batch of motor vehicle 
diesel fuel

[[Page 25720]]

produced by the refinery and sent over the aggregated facility's truck 
rack:
    (i) The batch volume;
    (ii) The batch number, assigned under the batch numbering 
procedures under Sec. Sec.  80.65(d)(3) and 80.502(d)(1);
    (iii) The date of receipt or import;
    (iv) A record designating the batch as motor vehicle diesel fuel 
meeting the 500 ppm sulfur standard or as motor vehicle diesel fuel 
meeting the 15 ppm sulfur standard; and,
    (v) A record indicating the volumes that were either taxed, dyed, 
or dyed and marked.
    (2) Volume reports for all motor vehicle diesel fuel from external 
sources (i.e., from another refiner or importer), as described in Sec.  
80.601(f)(2), sent over the aggregated facility's truck rack.

0
24. Section 80.595 is amended by revising the section heading to read 
as follows:


Sec.  80.595  How does a small or GPA refiner apply for a motor vehicle 
diesel fuel volume baseline for the purpose of extending their gasoline 
sulfur standards?

* * * * *

0
25. Section 80.597 is amended by revising paragraphs (c)(1) 
introductory text, and (c)(2) introductory text, and adding paragraphs 
(c)(1)(iv) and (c)(5) to read as follows:


Sec.  80.597  What are the registration requirements?

* * * * *
    (c) Entity registration. (1) Except as prescribed in paragraph 
(c)(5) of this section, each entity as defined in Sec.  80.502 that 
intends to deliver or receive custody of any of the following fuels 
from June 1, 2006 through May 31, 2010 must register with EPA by 
December 31, 2005 or six months prior to commencement of producing, 
importing, or distributing any distillate listed in paragraphs 
(c)(1)(i) through (c)(1)(iii) of this section:
* * * * *
    (iv) Fuel designated as California Diesel fuel under Sec.  80.598 
on which taxes have not been assessed and red dye has not been added 
(if required) pursuant to IRS code (26 CFR part 48) and that is 
delivered by pipeline to a terminal outside of the State of California 
pursuant to the provisions of Sec.  80.617(b).
    (2) Except as prescribed in paragraph (c)(5) of this section, each 
entity as defined in Sec.  80.502 that intends to deliver or receive 
custody of any of the following fuels from June 1, 2007 through May 31, 
2014 must register with EPA by December 31, 2005 or six months prior to 
commencement of producing, importing, or distributing any distillate 
listed in paragraph (c)(1) of this section:
* * * * *
    (5) Exceptions for Excluded Liquids. An entity that would otherwise 
be required to register pursuant to the requirements of paragraphs 
(c)(1) and (c)(2) of this section is exempted from the registration 
requirements under this section provided that:
    (i) The only diesel fuel or heating oil that the entity delivers or 
receives on which taxes have not been assessed or which is not received 
dyed pursuant to Internal Revenue Service (IRS) code 26 CFR part 48 is 
an excluded liquid as defined pursuant to IRS code 26 CFR 4081-1(b).
    (ii) The entity does not transfer the excluded liquid to a facility 
which delivers or receives diesel fuel other than an excluded liquid on 
which taxes have not been assessed pursuant to IRS code (26 CFR part 
48).
* * * * *

0
26. Section 80.598 is amended as follows:
0
a. By adding paragraph (a)(2)(v)(C).
0
b. By revising paragraph (a)(3)(iv).
0
c. By revising paragraph (a)(3)(vi).
0
d. By adding paragraphs (b)(2)(iii) and (b)(2)(iv).
0
e. By adding paragraphs (b)(3)(iv) and (b)(3)(v).
0
f. By adding paragraph (b)(4)(iv).
0
g. By adding paragraph (b)(9)(xvi).


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

    (a) * * *
    (2) * * *
    (v) * * *
    (C) NP diesel (NP).
    (3) * * *
    (iv) Prior to June 1, 2009 all 15 ppm sulfur MVNRLM diesel fuel 
must be designated as motor vehicle diesel fuel. A refiner that has 
been approved as a NRLM diesel fuel small refiner under Sec.  80.551(g) 
and has elected to use the compliance option specified under Sec.  
80.554(d) may also designate 15 ppm sulfur MVNRLM fuel as NRLM diesel 
fuel beginning June 1, 2006.
* * * * *
    (vi) Beginning June 1, 2014, any distillate fuel having a sulfur 
content greater than 15 ppm may not be designated as MVNRLM diesel 
fuel.
    (b) * * *
    (2) * * *
    (iii) Fuel that meets the requirements specified in Sec.  80.616 
which is transferred by a pipeline facility to a terminal facility 
outside of the State of California pursuant to Sec.  80.617(b) may be 
designated as California diesel fuel. Such fuel must subsequently be 
redesignated by the receiving terminal as either 1D or 
2D 15 ppm motor vehicle diesel fuel, or segregated for 
delivery by tank truck to a retail or wholesale purchaser consumer 
facility inside the State of California pursuant to Sec.  80.617(b)(2).
    (iv) NP 15 ppm sulfur motor vehicle diesel fuel.
    (3) * * *
    (iv) Fuel that meets the requirements specified in Sec.  80.616 
that is transferred by a pipeline facility to a terminal facility 
outside of the State of California pursuant to Sec.  80.617(b) may be 
designated as California diesel fuel. Such fuel must either be 
redesignated by the receiving terminal as either 1D or 
2D 15 ppm motor vehicle diesel fuel as prescribed in paragraph 
(b)(9)(xvi) of this section, or segregated for delivery by tank truck 
to a retail or wholesale purchaser consumer facility inside the State 
of California pursuant to Sec.  80.617(b)(2).
    (v) NP 15 ppm sulfur motor vehicle diesel fuel.
    (4) * * *
    (iv) NP 500 ppm sulfur motor vehicle diesel fuel.
* * * * *
    (9) * * *
    (xvi) Fuel designated as California diesel fuel under paragraph 
(b)(3)(iv) of this section that is received by a terminal facility 
pursuant to the provisions of Sec.  80.617(b)(1) must be redesignated 
as either 1D or 2D 15 ppm motor vehicle diesel fuel 
as prescribed in paragraph (b)(9)(xvi) of this section, or segregated 
for delivery by tank truck to a retail or wholesale purchaser consumer 
facility inside the State of California pursuant to Sec.  80.617(b)(2).
* * * * *

0
27. Section 80.599 is amended as follows:
0
a. By revising paragraph (b)(2).
0
b. By revising paragraph (e)(2).
0
c. By revising paragraph (e)(4).
0
d. By revising paragraph (e)(5).
0
e. By adding a new paragraph (h).


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

* * * * *
    (b) * * *
    (2) Calculate the motor vehicle diesel fuel received, as follows:

MVI = MV15I + MV500I

Where:

MV15I = the total volume of all the batches of fuel 
designated as 15 ppm sulfur motor vehicle diesel fuel received for 
the compliance period. Any motor vehicle diesel fuel produced by or 
imported into

[[Page 25721]]

the facility shall also be included in this volume. Any untaxed and 
undyed California diesel fuel received by a terminal pursuant to 
Sec.  80.617 (b)(1) shall be included in this volume.
MV500I = the total volume of all batches of fuel 
designated as 500 ppm sulfur motor vehicle diesel fuel received for 
the compliance period. Any motor vehicle diesel fuel produced by or 
imported into the facility shall also be included in this volume.

* * * * *
    (e) * * *
    (2) The volume of 2D 15 ppm sulfur motor vehicle delivered 
must meet the following requirement:

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

Where:

2MV15O = the total volume of fuel delivered 
during the compliance period that is designated as 2D 15 
ppm sulfur motor vehicle diesel fuel.
2MV15INVCHG = the total volume of diesel fuel 
designated as 2D 15 ppm sulfur motor vehicle diesel fuel in 
inventory at the end of the compliance period minus the total volume 
of 2D 15 ppm sulfur motor vehicle diesel fuel in inventory 
at the beginning of the compliance period, and accounting for any 
corrections in inventory due to volume swell or shrinkage, 
difference in measurement calibration between receiving and 
delivering meters, and similar matters, where corrections that 
increase inventory are defined as positive.
2MV15I = the total volume of fuel received 
during the compliance period that is designated as 2D 15 
ppm sulfur motor vehicle diesel fuel. Any untaxed and undyed 
California diesel fuel received by a terminal pursuant to Sec.  
80.617(b)(1) shall be included in this volume.

* * * * *
    (4) The following calculation may be used to account for wintertime 
blending of kerosene and the blending of non-petroleum diesel:

2MV500O < = 2MV500I + 
2MV500P - 2MV500INVCHG + 0.2 * 
(1MV15I + 2MV15I + 
NPMV15I)

Where:

1MV15I the total volume of fuel received during 
the compliance period that is designated as 1D 15 ppm 
sulfur motor vehicle diesel fuel. Any motor vehicle diesel fuel 
produced by or imported into the facility shall not be included in 
this volume.
NPMV15I is the total volume of fuel received during the 
compliance period that is designated as NP15 ppm sulfur motor 
vehicle diesel fuel. Any motor vehicle diesel fuel produced by or 
imported into the facility shall not be included in this volume.
1MV15P = the total volume of fuel produced by or 
imported into the facility during the compliance period that was 
designated as 1D 15 ppm sulfur motor vehicle diesel fuel 
when it was delivered.

    (5) The following calculation may be used to account for wintertime 
blending of kerosene, the blending of non-petroleum diesel, and/or 
changes in the facility's volume balance of motor vehicle diesel fuel 
resulting from a temporary shift of 500 ppm sulfur NRLM diesel fuel to 
500 ppm sulfur motor vehicle diesel fuel during the compliance period:

2MV500O < 2MV500I + 
2MV500P - 2MV500INVCHG + 0.2 * 
2MV15I + 1MV15B + 
2NRLM500S + NPB

Where:

1MV15B = the total volume of fuel received 
during the compliance period that is designated as 1D 15 
ppm sulfur motor vehicle diesel fuel and that the facility can 
demonstrate they blended into 2D 500 ppm sulfur motor 
vehicle diesel fuel. Any motor vehicle diesel fuel produced by or 
imported into the facility shall not be included in this volume.
2MV500P = the total volume of fuel produced by 
or imported into the facility during the compliance period that was 
designated as 2MV 500 ppm sulfur motor vehicle diesel fuel 
when it was delivered.
2NRLM500S = the total volume of 2D 500 
ppm sulfur NRLM diesel fuel that the facility can demonstrate they 
redesignated as 2D 500 ppm sulfur motor vehicle diesel fuel 
during the compliance period.
NPB = the total volume of fuel received during the 
compliance period that is designated as NP15 ppm sulfur motor 
vehicle diesel fuel, and/or NP500 ppm sulfur motor vehicle diesel 
fuel which the facility can demonstrate they blended into 
2D 500 ppm sulfur motor vehicle diesel fuel.

* * * * *
    (h) Additional requirements for aggregated facilities consisting of 
a refinery and a truck loading terminal. In addition to the volume 
balance requirements required by paragraphs (a) through (g) of this 
section, aggregated facilities consisting of a refinery and a truck 
loading terminal are responsible for balance calculations on the volume 
difference between the total volume of diesel fuel sold over the truck 
loading terminal rack and the production volume from the batch reports. 
Mathematically, the difference will be the volume of fuel received from 
external sources and passed through to another facility.

0
28. Section 80.600 is amended as follows:
0
a. By revising paragraphs (a)(1)(v) and (a)(1)(vi).
0
b. By adding new paragraphs (a)(1)(vii), (a)(1)(viii), and (a)(1)(ix).
0
c. By revising paragraphs (a)(3)(ii) and (a)(3)(iii).
0
d. By adding a new paragraph (a)(3)(iv).
0
e. By revising paragraphs (a)(4)(i) and (a)(4)(ii).
0
f. By adding a new paragraph (a)(4)(iii).
0
g. By revising paragraph (b)(1)(i)(D).
0
h. By adding new paragraphs (b)(1)(i)(E), (b)(1)(i)(F), (b)(1)(i)(G), 
and (b)(1)(i)(H).
0
i. By revising paragraphs (b)(1)(ii)(G) and (b)(1)(ii)(H).
0
j. By adding new paragraphs (b)(1)(ii)(I), (b)(1)(ii)(J), 
(b)(1)(ii)(K), and (b)(1)(ii)(L).
0
k. By revising paragraphs (b)(1)(iii)(B) and (b)(1)(iii)(C).
0
l. By adding a new paragraph (b)(1)(iii)(D).
0
m. By revising paragraphs (b)(1)(iv)(A) and (b)(1)(iv)(B).
0
n. By adding a new paragraph (b)(1)(iv)(C).
0
o. By revising paragraphs (b)(1)(v)(A) and (b)(1)(v)(B).
0
p. By adding a new paragraph (b)(1)(v)(C).
0
q. By revising paragraphs (b)(1)(vi)(A) and (b)(1)(vi)(B).
0
r. By adding a new paragraph (b)(1)(vi)(C).
0
s. By revising paragraphs (b)(1)(vii)(B) and (b)(1)(vii)(C).
0
t. By adding a new paragraph (b)(1)(vii)(D).
0
u. By revising paragraphs (b)(1)(viii)(A) and (b)(1)(viii)(B).
0
v. By adding a new paragraph (b)(1)(viii)(C).
0
w. By adding new paragraphs (n) and (o).


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

    (a) * * *
    (1) * * *
    (v) 2D 500 ppm sulfur motor vehicle diesel fuel;
    (vi) 500 ppm sulfur NRLM diesel fuel;
    (vii) NP 15 ppm sulfur motor vehicle diesel fuel;
    (viii) NP 500 ppm sulfur motor vehicle diesel fuel; or,
    (ix) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
* * * * *
    (3) * * *
    (ii) 500 ppm sulfur LM diesel fuel;
    (iii) Heating oil; or
    (iv) Exempt distillate fuels such as fuels that are covered by a 
national

[[Page 25722]]

security exemption under Sec.  80.606, fuels that are used for purposes 
of research and development pursuant to Sec.  80.607, and fuels used in 
the U.S. Territories pursuant to Sec.  80.608 (including additional 
identifying information).
    (4) * * *
    (i) 500 ppm sulfur NRLM diesel fuel;
    (ii) Heating oil; or
    (iii) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (D) 2D 500 ppm sulfur motor vehicle diesel fuel;
    (E) California diesel fuel as defined in Sec.  80.616 which is 
transferred out of the State of California pursuant to the provisions 
of Sec.  80.617(b);
    (F) NP 15 ppm sulfur motor vehicle diesel fuel;
    (G) NP 500 ppm sulfur motor vehicle diesel fuel; or
    (H) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (ii) * * *
    (G) High sulfur NRLM diesel fuel;
    (H) Heating oil;
    (I) California diesel fuel as defined in Sec.  80.616 which is 
transferred out of the State of California pursuant to the provisions 
of Sec.  80.617(b);
    (J) NP 15 ppm sulfur motor vehicle diesel fuel;
    (K) NP 500 ppm sulfur motor vehicle diesel fuel; or
    (L) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (iii) * * *
    (B) 500 ppm sulfur LM diesel fuel;
    (C) Heating oil; or
    (D) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (iv) * * *
    (A) 500 ppm sulfur NRLM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (v) * * *
    (A) 500 ppm sulfur LM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (vi) * * *
    (A) High sulfur NRLM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (vii) * * *
    (B) 500 ppm sulfur LM diesel fuel;
    (C) Heating oil; or
    (D) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
    (viii) * * *
    (A) 500 ppm sulfur NRLM diesel fuel;
    (B) Heating oil; or
    (C) Exempt distillate fuels such as fuels that are covered by a 
national security exemption under Sec.  80.606, fuels that are used for 
purposes of research and development pursuant to Sec.  80.607, and 
fuels used in the U.S. Territories pursuant to Sec.  80.608 (including 
additional identifying information).
* * * * *
    (n) Notwithstanding the provisions of paragraphs (b)(2) and (b)(3) 
of this section, for batches of 15 ppm sulfur motor vehicle diesel fuel 
or California diesel fuel under Sec.  80.617(b) on which taxes have 
been paid per Section 4082 of the Internal Revenue Code (26 U.S.C. 
4082), and 15 ppm sulfur NRLM diesel fuel or California diesel fuel 
under Sec.  80.617(b) into which red dye has been added per Section 
4082 of the Internal Revenue Code (26 U.S.C. 4082), records are not 
required to be maintained separately for each entity or facility to 
whom fuel was delivered.
    (o) In addition to the requirements of Sec. Sec.  80.592 and 
80.602, the following recordkeeping requirements shall apply to 
aggregated facilities consisting of a refinery and truck loading 
terminal:
    (1) Any aggregated facility consisting of a refinery and truck 
loading terminal shall maintain records of the following information 
for each batch of distillate fuel produced by the refinery and sent 
over the aggregated facility's truck loading terminal rack:
    (i) The batch volume;
    (ii) The batch number, assigned under the batch numbering 
procedures under Sec. Sec.  80.65(d)(3) and 80.502(d)(1);
    (iii) The date of production;
    (iv) A record designating the batch as distillate fuel meeting 
either the 500 ppm or 15 ppm sulfur standard; and,
    (v) A record indicating the volumes that were either taxed, dyed, 
or dyed and marked.
    (2) Volume reports for all distillate fuel from external sources 
(i.e., from another refiner or importer), as described in Sec.  
80.601(f)(2), sent over the aggregated facility's truck rack.

0
29. Section 80.601 is amended as follows:
0
a. By revising paragraph (a) introductory text.
0
b. By revising paragraph (a)(1)(i).
0
c. By revising paragraph (a)(2)(i).
0
d. By revising paragraphs (a)(4)(v) and (a)(4)(vi).
0
e. By revising paragraph (b) introductory text.
0
f. By adding a new paragraph (b)(4).
0
g. By adding a new paragraph (f).


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

    (a) Quarterly compliance period reports. Beginning February 28, 
2007 and continuing through August 31, 2010, each entity required to 
register under Sec.  80.597 and to maintain records under Sec.  80.600 
must report the following information separately for each of its 
facilities to the Administrator as specified in paragraph (d)(1) of 
this section except as provided in paragraph (e) of this section.
    (1) * * *
    (i) Beginning with the first compliance period and continuing up to 
and including the compliance period that starts April 1, 2007, fuel 
designated as 15 ppm or 500 ppm motor vehicle diesel fuel, or 
California diesel fuel as defined in Sec.  80.616 which is distributed 
outside the State of California pursuant to Sec.  80.617(b).
* * * * *

[[Page 25723]]

    (2) * * *
    (i) Beginning with the first compliance period and continuing up to 
and including the compliance period that starts April 1, 2007, fuel 
designated as 15 ppm or 500 ppm motor vehicle diesel fuel, or 
California diesel fuel as defined in Sec.  80.616 which is distributed 
outside the State of California pursuant to Sec.  80.617(b).
* * * * *
    (4) * * *
    (v) The volume balance under Sec. Sec.  80.599(b)(4) and 
80.598(b)(9)(vi).
    (vi) Beginning with the compliance period starting June 1, 2007, 
the volume balance under Sec. Sec.  80.599(c)(2) and 
80.598(b)(9)(viii)(A).
    (b) Annual reports. Beginning August 31, 2007, all entities 
required to register under Sec.  80.597 and to maintain records for 
batches of fuel under Sec.  80.600 must report the following 
information separately for each of its facilities to the Administrator 
on an annual basis, as specified in paragraph (d)(2) of this section 
except as provided in paragraph (e) of this section.
* * * * *
    (4) In the case of aggregated facilities consisting of a refinery 
and truck loading terminal, the results of annual compliance 
calculations under Sec.  80.598 for any distillate fuel received from 
an external source on which taxes have not been assessed and is not 
dyed and/or marked that the refinery will be handing off to another 
party, rather than selling over the truck loading terminal rack.
* * * * *
    (f) Additional requirements for aggregated facilities consisting of 
a refinery and a truck loading terminal. In addition to the reporting 
requirements listed by paragraphs (a) through (e) of this section, as 
applicable, such aggregated facilities are also subject to the 
following requirements:
    (1) Batch reports. Reports containing the requirements detailed in 
Sec. Sec.  80.592(f) and 80.600(m), must be submitted for all 
distillate produced by the refinery and sent over the truck loading 
terminal rack.
    (2) Quarterly volume reports. Reports detailing the quarterly 
totals of all designations, including whether the fuel was taxed or 
contained red dye (or red dye and the yellow marker), that left the 
truck loading terminal rack must be submitted for all distillate 
received from an external source or produced by the refinery.
    (3) Quarterly hand-off reports.
    (i) Reports detailing the quarterly totals of all designations of 
fuel received from external refiner/importer sources, if any.
    (ii) Reports detailing the quarterly totals of all undesignated 
fuel received from external refiner/importer sources that entered the 
designate and track system.

0
30. Section 80.602 is amended by adding a new paragraph (g) to read as 
follows:


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

* * * * *
    (g) Additional records to be kept by aggregated facilities 
consisting of a refinery and a truck loading terminal. In addition to 
the applicable records required by paragraphs (a) through (f) of this 
section, such aggregated facilities must also keep the following 
records:
    (1) The following information for each batch of motor vehicle 
diesel fuel produced by the refinery and sent over the aggregated 
facility's truck rack:
    (i) The batch volume;
    (ii) The batch number, assigned under the batch numbering 
procedures under Sec. Sec.  80.65(d)(3) and 80.502(d)(1);
    (iii) The date of production;
    (iv) A record designating the batch as one of the following:
    (A) NRLM diesel fuel, NR diesel fuel, LM diesel fuel, or heating 
oil, as applicable.
    (B) Meeting the 500 ppm sulfur standard of Sec.  80.510(a) or the 
15 ppm sulfur standard of Sec.  80.510(b) and (c) or other applicable 
standard.
    (C) Dyed or undyed with visible evidence of solvent red 164.
    (D) Marked or unmarked with solvent yellow 124.
    (2) Hand-off reports for all distillate fuel from external sources 
(i.e., from another refiner or importer), as described in Sec.  
80.601(f)(2).

0
31. Section 80.614 is amended as follows:
0
a. By revising the section heading.
0
b. By revising the introductory text.
0
c. By revising paragraph (a).
0
d. By revising paragraph (b).
0
e. By revising paragraph (d).
0
f. By revising paragraph (e).
0
g. By revising paragraphs (f)(1) introductory text and (f)(1)(i).
0
h. By revising paragraph (f)(1)(ii).
0
i. By revising paragraphs (f)(1)(iii), (f)(1)(iv), (f)(1)(v), 
(f)(1)(vi), (f)(1)(vii) introductory text, (f)(1)(vii)(D), and 
(f)(1)(iii).
0
j. By revising paragraphs (f)(2) introductory text and (f)(2)(i).
0
k. By revising paragraphs (f)(2)(iii), (f)(2)(iv), (f)(2)(vi), and 
(f)(2)(vii).
0
l. By revising paragraphs (f)(5) and (f)(6)(i), (f)(6)(ii), 
(f)(6)(iii), and (f)(6)(iv).
0
m. By revising paragraphs (f)(7) introductory text and (f)(7)(i), 
(f)(7)(ii), and (f)(7)(iii).


Sec.  80.614  What are the alternative defense requirements in lieu of 
Sec.  80.613(a)(1)(vi)?

    Any person who blends a MVNRLM diesel fuel additive package into 
MVNRLM diesel fuel subject to the 15 ppm sulfur standards of Sec.  
80.510(b) or (c) or Sec.  80.520(a) which contains a static dissipater 
additive that has a sulfur content greater than 15 ppm but whose 
contribution to the sulfur content of the MVNRLM diesel fuel is less 
than 0.4 ppm at its maximum recommended concentration, and/or red dye 
that has a sulfur content greater than 15 ppm but whose contribution to 
the sulfur content of the MVNRLM diesel fuel is less than 0.04 ppm at 
its maximum recommended concentration, and which contains no other 
additives with a sulfur content greater than 15 ppm must establish all 
the following in order to use this section as an alternative to the 
defense element under Sec.  80.613(a)(1)(vi):
    (a)(1) The blender of the additive package has a sulfur content 
test result for the MVNRLM diesel fuel prior to blending of the 
additive package that indicates that the additive package, when added, 
will not cause the MVNRLM diesel fuel sulfur content to exceed 15 ppm 
sulfur.
    (2) In cases where the storage tank that contains MVNRLM diesel 
fuel prior to additization contains multiple fuel batches, the blender 
of the additive package must have sulfur test results on each batch of 
MVNRLM diesel fuel that was added to the storage tank during the 
current and previous volumetric accounting reconciliation (VAR) 
periods, which indicates that the additive package, when added to the 
component MVNRLM diesel fuel batch in the storage tank with the highest 
sulfur level would not cause that component batch to exceed 15 ppm 
sulfur.
    (b) The VAR standard is attained as determined under the provisions 
of this section. The VAR reconciliation standard is attained when the 
actual concentration of the additive package used per the VAR formula 
record under paragraph (f) of this section is less than the 
concentration that would have caused any batch of MVNRLM diesel fuel to 
exceed a sulfur content of 15 ppm given the maximum sulfur test result 
on any MVNRLM diesel fuel batch described in paragraph (a) of this 
section that is additized with the additive package during the VAR 
period.
* * * * *

[[Page 25724]]

    (d) If more than one additive package containing a static 
dissipater additive and/or red dye is used during a VAR period, then a 
separate VAR formula record must be created for MVNRLM diesel fuel 
additized for each of the additive packages used. In such cases, the 
amount of the each additive package used must be accurately and 
separately measured, either through the use of a separate storage tank, 
a separate meter, or some other measurement system that is able to 
accurately distinguish its use.
    (e) Recorded volumes of MVNRLM diesel fuel and the additive package 
must be expressed to the nearest gallon (or smaller units), except that 
additive package volumes of five gallons or less must be expressed to 
the nearest tenth of a gallon (or smaller units). However, if the 
blender's equipment cannot accurately measure to the nearest tenth of a 
gallon, then such volumes must be rounded upward to the next higher 
gallon for purposes of determining compliance with this section.
    (f) * * *
    (1) Automated blending facilities. In the case of an automated 
additive package blending facility, for each VAR period, for each 
storage system for an additive package containing a static dissipater 
additive and/or red dye, and each additive package in that storage 
system, the following must be recorded:
    (i)(A) The manufacturer and commercial identifying name of the 
package being reconciled, the maximum recommended treatment level, the 
potential contribution to the sulfur content of the finished fuel that 
might result when the additive package is used at its maximum 
recommended treatment level, the intended treatment level, and the 
contribution to the sulfur content of the finished fuel that would 
result when the additive package is used at its intended treatment 
level. The intended treatment level is the treatment level that the 
additive injection equipment is set to.
    (B) The maximum recommended treatment level and the intended 
treatment level must be expressed in terms of gallons of the additive 
package per thousand gallons of MVNRLM diesel fuel, and expressed to 
four significant figures. If the additive package storage system which 
is the subject of the VAR formula record is a proprietary system under 
the control of a customer, this fact must be indicated on the record.
    (ii) The total volume of the additive package blended into MVNRLM 
diesel fuel, in accordance with one of the following methods, as 
applicable.
    (A) For a facility which uses in-line meters to measure usage, the 
total volume of additive package measured, together with supporting 
data which includes one of the following: the beginning and ending 
meter readings for each meter being measured, the metered batch volume 
measurements for each meter being measured, or other comparable metered 
measurements. The supporting data may be supplied on the VAR formula 
record or in the form of computer printouts or other comparable VAR 
supporting documentation.
    (B) For a facility which uses a gauge to measure the inventory of 
the additive package storage tank, the total volume of additive package 
shall be calculated from the following equation:

Additive package volume = (A) - (B) + (C) - (D)

Where:

A = Initial additive package inventory of the tank
B = Final additive package inventory of the tank
C = Sum of any additions to additive package inventory
D = Sum of any withdrawals from additive package inventory for 
purposes other than the additization of MVNRLM diesel fuel.

    (C) The value of each variable in the equation in paragraph 
(f)(1)(ii)(B) of this section must be separately recorded on the VAR 
formula record. In addition, a list of each additive package addition 
included in variable C and a list of each additive package withdrawal 
included in variable D must be provided, either on the formula record 
or as VAR supporting documentation.
    (iii) The total volume of MVNRLM diesel fuel to which the additive 
package has been added, together with supporting data which includes 
one of the following: the beginning and ending meter measurements for 
each meter being measured, the metered batch volume measurements for 
each meter being measured, or other comparable metered measurements. 
The supporting data may be supplied on the VAR formula record or in the 
form of computer printouts or other comparable VAR supporting 
documentation.
    (iv) The actual concentration of the additive package, calculated 
as the total volume of the additive package added (pursuant to 
paragraph (f)(1)(ii) of this section), divided by the total volume of 
MVNRLM diesel fuel (pursuant to paragraph (f)(1)(iii) of this section). 
The concentration must be calculated and recorded to 4 significant 
figures.
    (v) A list of each additive package concentration rate set for the 
additive package that is the subject of the VAR record, together with 
the date and description of each adjustment to any initially set 
concentration. The concentration adjustment information may be supplied 
on the VAR formula record or in the form of computer printouts or other 
comparable VAR supporting documentation. No concentration setting is 
permitted above the maximum recommended concentration supplied by the 
additive manufacturer, except as described in paragraph (f)(1)(vii) of 
this section.
    (vi) The dates of the VAR period, which shall be no longer than 
thirty-one days. If the VAR period is contemporaneous with a calendar 
month, then specifying the month will fulfill this requirement; if not, 
then the beginning and ending dates and times of the VAR period must be 
listed. The times may be supplied on the VAR formula record or in 
supporting documentation. Any adjustment to any additive package 
concentration rate initially set in the VAR period shall terminate that 
VAR period and initiate a new VAR period, except as provided in 
paragraph (f)(1)(vii) of this section.
    (vii) The concentration setting for the additive package injector 
may be changed from the concentration initially set in the VAR period 
without terminating that VAR period, provided that:
* * * * *
    (D) If the correction is initiated only to rectify an equipment 
malfunction, and the amount of additive package used in this procedure 
is not added to MVNRLM diesel fuel within the compliance period, then 
this amount is subtracted from the additive package volume listed on 
the VAR formula record. In such a case, the addition of this amount of 
additive must be reflected in the following VAR period.
    (viii) The measured sulfur level for each batch of MVNRLM diesel 
fuel to which the additive package is added during each VAR period. In 
cases where the storage tank that contains MVNRLM diesel fuel prior to 
additization contains multiple fuel batches, a measured sulfur level on 
each batch added to the storage tank during the current and previous 
VAR periods must be recorded.
    (2) Non-automated facilities. In the case of a facility in which 
hand blending or any other non-automated method is used to blend the 
additive packages, for each additive package and for each batch of 
MVNRLM diesel fuel to which the additive package is being added, the 
following shall be recorded:
    (i) The manufacturer and commercial identifying name of the 
additive package being reconciled, the maximum recommended treatment 
level, the potential contribution to the sulfur content of the finished 
fuel that might

[[Page 25725]]

result when the additive package is used at its maximum recommended 
treatment level, the intended treatment level, and the contribution to 
the sulfur content of the finished fuel that would result when the 
additive package is used at its intended treatment level.
    (A) The maximum recommended treatment level and the intended 
treatment level must be expressed in terms of gallons of additive 
package per thousand gallons of MVNRLM diesel fuel, and expressed to 
four significant figures.
    (B) If the additive package storage system which is the subject of 
the VAR formula record is a proprietary system under the control of a 
customer, this fact must be indicated on the record.
* * * * *
    (iii) The volume of added additive package.
    (iv) The volume of the MVNRLM diesel fuel to which the additive 
package has been added.
* * * * *
    (vi) The actual additive package concentration, calculated as the 
volume of added additive package (pursuant to paragraph (f)(1)(ii)(B) 
of this section), divided by the volume of MVNRLM diesel fuel (pursuant 
to paragraph (f)(1)(iii) of this section). The concentration must be 
calculated and recorded to four significant figures.
    (vii) The measured sulfur level for each batch of MVNRLM diesel 
fuel to which the additive package is added during each VAR period. In 
cases where the storage tanks that contains MVNRLM diesel fuel prior to 
additization contains multiple fuel batches, a measured sulfur level on 
each batch added to the storage tank during the current and previous 
VAR periods must be recorded.
* * * * *
    (5) Calibration requirements for automated blending facilities. 
Automated static dissipater additive package blenders must calibrate 
their additive package equipment at least once in each calendar half 
year, with the acceptable calibrations being no less than one hundred 
twenty days apart, except that calibrations may be closer in time so 
long as at least two calibrations meet the requirements to be in 
separate halves of the calendar year and no less than 120 days apart. 
Equipment recalibration is also required each time the static 
dissipater additive package is changed, unless written documentation 
indicates that the new additive package has the same viscosity as the 
previous additive package. Additive package change calibrations may be 
used to satisfy the semiannual requirement provided that the 
calibrations occur in the appropriate half calendar year and are no 
less than one hundred twenty days apart.
    (6) * * *
    (i) For all automated additive package blending facilities, 
documentation reflecting performance of the calibrations required by 
paragraph (f)(5) of this section, and any associated adjustments of the 
automated additive package injection equipment;
    (ii) For all blending facilities that blend an additive package 
containing a static dissipater additive and/or red dye, product 
transfer documents for all such additive packages, and MVNRLM diesel 
fuel transferred into or out of the facility that is additized with an 
additive package containing a static dissipater additive and/or red 
dye;
    (iii) For all automated additive package blending facilities that 
use an additive package containing a static dissipater additive and/or 
red dye, documentation establishing the brands (if known) of the MVNRLM 
diesel fuel which is the subject of the VAR formula record; and
    (iv) For all hand blenders of an additive package that contains a 
static dissipater additive and/or red dye, the documentation, if in the 
party's possession, supporting the volumes of MVNRLM diesel fuel and 
additive package reported on the VAR formula record.
    (7) Document retention and availability. All blenders of an 
additive package that contains a static dissipater additive and/or red 
dye shall retain the documents required under this section for a period 
of five years from the date the VAR formula records and supporting 
documentation are created, and shall deliver them upon request to the 
EPA Administrator or the Administrator's authorized representative.
    (i) Except as provided in paragraph (f)(7)(iii) of this section, 
automated additive package blender facilities and hand-blender 
facilities which are terminals, which physically blend an additive 
packages that contains a static dissipater additive and/or red dye into 
MVNRLM diesel fuel, must make immediately available to EPA, upon 
request, the preceding twelve months of VAR formula records plus the 
preceding two months of VAR supporting documentation.
    (ii) Except as provided in paragraph (f)(7)(iii) of this section, 
other hand-blending additive package facilities which physically blend 
additive package that contains a static dissipater additive and/or red 
dye into MVNRLM diesel fuel must make immediately available to EPA, 
upon request, the preceding two months of VAR formula records and VAR 
supporting documentation.
    (iii) Facilities which have centrally maintained records at other 
locations, or have customers who maintain their own records at other 
locations for their proprietary additive package injection systems, and 
which can document this fact to the Agency, may have until the start of 
the next business day after the EPA request to supply VAR supporting 
documentation, or longer if approved by the Agency.
* * * * *

0
32. A new Sec.  80.616 is added to subpart I to read as follows:


Sec.  80.616  What are the enforcement exemptions for California diesel 
distributed within the State of California?

    (a) For the purpose of this section, ``California diesel fuel'' is 
defined as any diesel fuel physically within the State of California 
that satisfies all requirements of Title 13, California Code of 
Regulations, Sections 2281-2285, and is sold, intended for sale, or 
made available for sale as a motor fuel in the State of California, 
subsequent to May 31, 2006.
    (b) Any retailer or wholesale purchaser-consumer of California 
diesel fuel is, with regard to such diesel fuel, exempt from the 
labeling requirements contained in Sec. Sec.  80.570, 80.571, 80.572, 
80.573, and 80.574.
    (c)(1) Any refiner, importer, or distributor of California diesel 
fuel is, with regard to such diesel fuel, exempt from the product 
transfer requirements of Sec.  80.590, provided that the product 
transfer document contains the following statement:
    ``California diesel fuel. Maximum 15 ppm sulfur.''
    (2) Product codes may be used to satisfy this product transfer 
document requirement.
    (d) Any refiner, importer, or distributor of California diesel fuel 
is, with regard to such diesel fuel, exempt from the designation 
requirements of Sec.  80.598, provided that:
    (1) The refiner, importer, or distributor does not transfer custody 
of the California diesel fuel to facility outside the State of 
California;
    (2) The fuel is intended to be sold or made available for sale in 
the State of California; and
    (3) The PTD requirements in paragraph (f) of the section are 
satisfied.
    (e) Any refiner, importer, or distributor of California diesel fuel 
is, with regard to such diesel fuel, exempt from the volume balance 
requirements of Sec.  80.599.

[[Page 25726]]

    (f) Any refiner, importer, or distributor of California diesel fuel 
is, with regard to such diesel fuel, exempt from the recordkeeping 
requirements under designate and track provisions of Sec.  80.600.
    (g) Any refiner, importer, or distributor of California diesel fuel 
is, with regard to such diesel fuel, exempt from the reporting 
requirements for the purposes of the designate and track provisions of 
Sec.  80.601.
    (h) Any refiner, importer, or distributor of California diesel fuel 
is, with regard to such diesel fuel, exempt from the recordkeeping 
requirements for entities in the MV or NRLM diesel fuel and diesel fuel 
additive production, importation, and distribution systems of 
Sec. Sec.  80.592 and 80.602 except those relating to sampling and 
testing, under Sec. Sec.  80.581, 80.584, 80.585, and 80.586.
    (i) Any refiner or importer of California diesel fuel is, with 
regard to such diesel fuel, exempt from the annual reporting 
requirements for NRLM diesel under Sec.  80.604.

0
33. A new Sec.  80.617 is added to subpart I to read as follows:


Sec.  80.617  How may California diesel fuel be distributed or sold 
outside of the State of California?

    California diesel may be distributed or sold outside of the State 
of California provided the provisions of either paragraph (a) or (b) of 
this section are satisfied:
    (a) Distribution of taxed or dyed California diesel fuel. 
California diesel fuel that is distributed from a truck loading 
terminal after such diesel has been taxed or dyed may be distributed or 
sold outside of the State of California, provided that it is 
accompanied by a Product Transfer Document that states: ``California 
diesel fuel. Maximum 15 ppm sulfur.''; or
    (b) Distribution of untaxed and undyed diesel California diesel 
fuel. California diesel may be distributed or sold outside of the State 
of California without having been dyed or taxed provided that the 
requirements of either paragraph (b)(1) or (b)(2) of this section are 
satisfied. (Note that the requirements of IRS code 26 CFR part 48 along 
with other applicable requirements outside of this 40 CFR part 80 
subpart I must also be satisfied.)
    (1)(i) Prior to shipment outside the State of California, the 
California diesel fuel meets all requirements of Sec.  80.616 and meets 
all of the requirements of 40 CFR part 80, subpart I that are not 
exempted under this section;
    (ii) The California diesel fuel is shipped out of the state via 
pipeline;
    (iii) The pipeline shipping the California diesel out of state 
maintains the California diesel fuel designation while the product is 
in the pipeline's custody;
    (iv) The pipeline provides a product transfer document that clearly 
indicates that the product is designated as California diesel fuel;
    (v) Upon delivery into the terminal, the terminal receiving the 
California diesel fuel redesignates it as motor vehicle diesel meeting 
the 15 ppm sulfur standard; and
    (vi) The terminal includes the volumes of California diesel fuel 
redesignated as motor vehicle diesel fuel in the total volume of motor 
vehicle diesel designated meeting the 15 ppm sulfur standard received 
by the terminal, per the volume balance and anti-downgrading equations 
for motor vehicle diesel fuel found in Sec.  80.599(b) and (e).
    (2)(i) The California diesel fuel is delivered via pipeline to a 
terminal outside the State of California that has a tank dedicated to 
the receipt of California diesel fuel and which intends to distribute 
the diesel fuel from the dedicated tank back into the State of 
California;
    (ii) The terminal must maintain the designation of the diesel fuel 
as ``California diesel fuel'' and not redesignate it to another 
product;
    (iii) The product transfer documents for California diesel fuel 
distributed by a terminal outside of the state of California must 
indicate ``California diesel fuel. Maximum 15 ppm sulfur.''; and,
    (iv) Any volume of California diesel fuel distributed by a terminal 
outside the state of California must be taxed or dyed and must be 
excluded from the terminal's volume balance equations under Sec.  
80.599.

[FR Doc. 06-3930 Filed 4-28-06; 8:45 am]

BILLING CODE 6560-50-P
