Regulation of Fuels and Fuel Additives: Modifications to Renewable Fuel Standard and Diesel Sulfur Programs, 61313-61326 [2012-23714]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 77, Number 195 (Tuesday, October 9, 2012)]
[Proposed Rules]
[Pages 61313-61326]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23714]


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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0223; FRL 9733-4 ]


Regulation of Fuels and Fuel Additives: Modifications to 
Renewable Fuel Standard and Diesel Sulfur Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: EPA is proposing to amend the definition of heating oil in the 
Renewable Fuel Standard (RFS) program under section 211(o) of the Clean 
Air Act. This amendment would expand the scope of renewable fuels that 
can generate Renewable Identification Numbers (RINs) as heating oil to 
include fuel oil produced from qualifying renewable biomass that would 
be used to generate heat to warm buildings or other facilities where 
people live, work, recreate, or conduct other activities. Fuel oils 
used to generate process heat, power, or other functions would not be 
included in the amended definition. Producers or importers of fuel oil 
that meets the amended definition of heating oil would be allowed to 
generate RINs, provided that the fuel oil meets the other requirements 
specified in the RFS regulations. This proposed amendment would not 
modify or limit fuel included in the current definition of heating oil. 
We are also proposing amendments to the diesel sulfur program to 
provide additional flexibility for transmix processors that produce 
locomotive and marine diesel fuel. Specifically, we are proposing to 
reinstate an allowance for transmix processors to produce 500 parts per 
million (ppm) sulfur diesel fuel for use in older technology locomotive 
and marine diesel outside of the Northeast Mid-Atlantic Area. We are 
also requesting comment on extending this allowance to outside of the 
Northeast Mid-Atlantic Area. These proposed amendments to the diesel 
transmix provisions are expected to result in reduced compliance costs 
for transmix processors and users of locomotive and marine diesel fuel 
while having a neutral or positive environmental impact. EPA is also 
proposing to amend the fuel marker requirements for 500 ppm sulfur 
locomotive and marine (LM) diesel fuel to address an oversight in the 
original rulemaking where the regulations failed to incorporate 
provisions described in the rulemaking preamble to allow for

[[Page 61314]]

solvent yellow 124 marker to transition out of the distribution system.

DATES: Written comments must be received on or before November 8, 2012, 
or 30 days from the date of the public hearing, if a public hearing is 
requested. A request for a public hearing must be received by October 
24, 2012. If a public hearing is requested, we will publish a notice in 
the Federal Register announcing the date and location of the hearing at 
least 14 days prior to the hearing.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2012-0223, by the following methods:
     www.regulations.gov: Follow the on-line instructions for 
submitting comments.
     Email: a-and-r-docket@epa.gov, Attention Air and Radiation 
Docket ID EPA-HQ-OAR-2012-0223.
     Fax: 731-214-4051.
     Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-
2012-0223, Environmental Protection Agency, Mailcode: 6406J, 1200 
Pennsylvania Ave. NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center, EPA/DC, EPA West, Room 
3334, 1301 Constitution Ave. NW., Washington, DC, 20460, Attention Air 
and Radiation Docket, ID No. EPA-HQ-OAR-2012-0223. 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-
2012-0223. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
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 www.regulations.gov or email. The 
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 email comment 
directly to EPA without going through www.regulations.gov your email 
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 
information about EPA's public docket visit the EPA Docket Center 
homepage at https://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the 
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 www.regulations.gov or in hard copy at the Air and 
Radiation Docket and Information Center, EPA, EPA West, Room 3334, 1301 
Constitution Ave. NW., Washington, DC. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Public Reading Room is (202) 
566-1744, and the telephone number for the Air Docket is (202) 566-
1742.

FOR FURTHER INFORMATION CONTACT: Kristien Knapp, Office of 
Transportation and Air Quality, Mail Code: 6405J, U.S. Environmental 
Protection Agency, 1200 Pennsylvania Avenue NW., 20460; telephone 
number: (202) 343-9949; fax number: (202) 343-2800; email address: 
knapp.kristien@epa.gov.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose

    EPA is proposing to amend provisions in the renewable fuel standard 
(RFS) and diesel sulfur fuel programs. The RFS amendment would change 
the definition of home heating oil, and the diesel sulfur amendments 
would provide additional flexibility for transmix processors who 
produce locomotive and marine diesel fuel, and allow solvent yellow 124 
marker to transition out of the distribution system. EPA is proposing 
these amendments under section 211 of the Clean Air Act.

B. Summary of Today's Rule

Amended Definition of Home Heating Oil
    EPA proposes to amend the definition of heating oil in 40 CFR 
80.1401 in the renewable fuel standard (``RFS'' or ``RFS2'') program 
promulgated under section 211(o) of the Clean Air Act (CAA). This 
amendment will expand the scope of renewable fuels that can generate 
Renewable Identification Numbers (``RINs'') as ``home heating oil'' to 
include fuel oil that will be used to generate heat to warm buildings 
or other facilities where people live, work, recreate, or conduct other 
activities. This rule would allow producers or importers of fuel oil 
that meets the amended definition of heating oil to generate RINs, 
provided that other requirements specified in the regulations are met. 
Fuel oils used to generate process heat, power, or other functions 
would not be approved for RIN generation under the amended definition 
of heating oil. The proposed amendment would not modify, limit, or 
change fuel included in the current definition of heating oil at 40 CFR 
80.2(ccc).
Diesel Transmix Amendments
    The proposed diesel transmix amendments would reinstate an 
allowance for transmix processors to produce 500 ppm sulfur diesel fuel 
for use in older technology locomotive and marine diesel outside of the 
Northeast Mid-Atlantic Area after 2014. EPA's ocean-going vessels rule 
forbade this allowance beginning 2014, because a new stream of diesel 
fuel for ocean-going vessels, containing up to 1000 ppm sulfur, was 
introduced at that time, which we believed would provide a suitable 
outlet for transmix distillate product. Transmix processors stated that 
they were not aware of the changes to the 500-ppm LM transmix 
provisions until after they were finalized, and that the ocean-going 
vessels market would not be a viable outlet for their distillate 
product. Based on additional input that we received from transmix 
processors and other stakeholders in the fuel distribution system 
during our consideration of the petition, EPA believed that it would be 
appropriate to extend the 500-ppm diesel transmix flexibility beyond 
2014. EPA finalized a settlement agreement and this DFR and NPRM are in 
accord with the settlement agreement. Our analysis indicates that 
extending this flexibility beyond 2014 will have a neutral or net 
beneficial effect on overall emissions.
Yellow Marker Amendments
    The proposed yellow marker amendments address an oversight in EPA's 
original nonroad diesel rulemaking. In that rulemaking, the regulations 
failed to incorporate provisions described in the rulemaking

[[Page 61315]]

preamble. The preamble made clear that EPA intended to allow 500 ppm 
locomotive marine (LM) diesel fuel containing greater than 0.10 
milligrams per liter of Solvent Yellow 124 (SY124) time to transition 
out of the fuel distribution system. However, the regulations are not 
consistent with the preamble and did not provide this same allowance.
    Specifically, the regulations as currently written do not provide 
any transition time for unmarked LM fuel delivered from a truck loading 
rack beginning June 1, 2012 to work its way through the fuel 
distribution system downstream of the truck loading rack. The proposed 
yellow marker amendments will allow 500 ppm LM diesel fuel at any point 
in the fuel distribution and end use system to contain more than 0.10 
milligrams per liter of SY 124 through November 30, 2012. This 
regulatory change would allow marked LM diesel fuel to transition 
normally through the LM fuel distribution and use system. Today's 
proposed rule would also amend the regulation to clarify the transition 
of the solvent yellow 124 marker out of heating oil beginning June 1, 
2014. After December 1, 2014, EPA proposed to no longer have any 
requirements with respect to the use of the SY 124 marker.

C. Costs and Benefits

    These three sets of proposed amendments attempt to provide new 
opportunities for RIN generation under the RFS program and necessary 
flexibilities and transition periods for those affected by EPA's 
transmix and marker requirements. Therefore, EPA believes that these 
amendments would impose no new direct costs or burdens on regulated 
entities beyond the minimal costs associated with reporting and 
recordkeeping requirements. At the same time, EPA does not believe that 
any of these amendments will adversely impact emissions.

II. Why is EPA issuing a proposed rule?

    This document proposes to amend the definition of heating oil in 40 
CFR 80.1401 in the renewable fuel standard (RFS) program that was 
promulgated under section 211(o) of the Clean Air Act. This amendment 
would expand the scope of fuels that can generate RINs as home heating 
oil to include fuel oil that would be used to generate heat to warm 
buildings or other facilities where people live, work, recreate, or 
conduct other activities. This document also proposes amendments to the 
diesel sulfur program to provide additional flexibility to transmix 
processors to produce locomotive and marine (LM) diesel fuel. 
Specifically, we are proposing to reinstate an allowance for transmix 
processors to produce 500 ppm sulfur diesel fuel for use in older 
technology locomotive and marine diesel outside of the Northeast Mid-
Atlantic Area (``NEMA''). We are also requesting comment on extending 
this allowance to the NEMA. These proposed amendments to the diesel 
transmix provisions are expected to result in reduced compliance costs 
for transmix processors and users of LM diesel fuel while having a 
neutral or positive environmental impact. Lastly, this document 
proposes to amend the fuel marker requirements for 500 ppm sulfur 
locomotive and marine (LM) diesel fuel to address an oversight in the 
original rulemaking where the regulations failed to incorporate 
provisions described in the rulemaking preamble to allow for solvent 
yellow 124 marker to transition out of the distribution system.
    We are publishing a separate document that will serve as a direct 
final rule in the ``Rules and Regulations'' section of this Federal 
Register. The direct final rule amends the definition of heating oil 
and allows transmix processors to produce locomotive and marine diesel 
fuel. The direct final rule does not attempt to extend the transmix 
allowance to the NEMA; we request comments on that issue only in this 
document. If we receive no adverse comment on the direct final rule, or 
any portion of the direct final rule, by the date provided in the DATES 
section above, the amendments to the definition of heating oil and the 
amendments to the diesel transmix provisions that apply outside the 
NEMA will become final. If EPA receives relevant adverse comment on the 
direct final rule, any portion of the direct final rule, or a hearing 
request, we will publish a timely withdrawal of the direct final rule 
or the portion receiving adverse comments in the Federal Register.
    We will address all public comments in any subsequent final rule 
based on this proposed rule. We will not institute a second comment 
period on this action. Any parties interested in commenting must do so 
at this time. For further information about commenting on this rule, 
see the ADDRESSES section of this document.

III. Does this action apply to me?

    Entities potentially affected by this action include those involved 
with the production, distribution and sale of transportation fuels, 
including gasoline and diesel fuel, or renewable fuels such as ethanol 
and biodiesel, as well as those involved with the production, 
distribution and sale of other fuel oils that are not transportation 
fuel. Regulated categories and entities affected by this action 
include:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         NAICS codes
               Category                      \a\        SIC codes \b\                      Examples of potentially regulated parties
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry.............................          324110            2911  Petroleum refiners, importers.
Industry.............................          325193            2869  Ethyl alcohol manufacturers.
Industry.............................          325199            2869  Other basic organic chemical manufacturers.
Industry.............................         Various         Various  Transmix Processors
Industry.............................          424690            5169  Chemical and allied products merchant wholesalers.
Industry.............................          424710            5171  Petroleum bulk stations and terminals.
Industry.............................          424720            5172  Petroleum and petroleum products merchant wholesalers.
Industry.............................          454319            5989  Other fuel dealers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

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

[[Page 61316]]

IV. What should I consider as I prepare my comments for EPA?

    A. Submitting information claimed as CBI. Do not submit this 
information to EPA through www.regulations.gov or email. Clearly mark 
the part or all of the information that you claim to be CBI. For CBI 
information in a disk or CD ROM that you mail to EPA, mark the outside 
of the disk or CD ROM as CBI and then identify electronically within 
the disk or CD ROM the specific information that is claimed as CBI. In 
addition to one complete version of the comment that includes 
information claimed as CBI, a copy of the comment that does not contain 
the information claimed as CBI must be submitted for inclusion in the 
public docket. Information so marked will not be disclosed except in 
accordance with procedures set forth in 40 CFR part 2.
    B. Tips for Preparing Your Comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.
    C. Docket Copying Costs. You may be charged a reasonable fee for 
photocopying docket materials, as provided in 40 CFR part 2.

V. Renewable Fuel Standard Program Amendments

A. Amended Definition of Heating Oil

    EPA is issuing this proposed rule to amend the definition of 
heating oil in 40 CFR 80.1401 in the renewable fuel standard (``RFS'' 
or ``RFS2'') program promulgated under section 211(o) of the Clean Air 
Act (CAA).\1\ This amendment would expand the scope of renewable fuels 
that can generate Renewable Identification Numbers (RINs) as ``home 
heating oil'' to include fuel oil that would be used to generate heat 
to warm buildings or other facilities where people live, work, 
recreate, or conduct other activities. This proposed rule would allow 
producers or importers of fuel oil that meets the amended definition of 
heating oil to generate RINs, provided that other requirements 
specified in the regulations are met. Fuel oils used to generate 
process heat, power, or other functions will not be approved for RIN 
generation under the amended definition of heating oil, as these fuels 
are not within the scope of ``home heating oil'' as that term is used 
in the Energy Independence and Security Act of 2007 (``EISA''), for the 
RFS program. The proposed amendment would not modify or limit fuel 
included in the current definition of heating oil at 40 CFR 80.2(ccc).
---------------------------------------------------------------------------

    \1\ The Energy Independence and Security Act (EISA) of 2007 
amended section 211(o) of the Clean Air Act (CAA), which was 
originally added by the Energy Policy Act (EPAct) of 2005.
---------------------------------------------------------------------------

    The RFS2 program requires the production and use of renewable fuel 
to replace or reduce the quantity of fossil fuel present in 
transportation fuel. Under EPA's RFS program this is accomplished by 
providing for the generation of RINs by producers or importers of 
qualified renewable fuel. RINs are transferred to the producers or 
importers of gasoline and diesel transportation fuel who then use the 
RINs to demonstrate compliance with their renewable fuel volume 
obligations. RINs also serve the function of credits under the RFS 
program.
    Congress provided that EPA could also establish provisions for the 
generation of credits by producers of certain renewable fuel that was 
not used in transportation fuel, called ``additional renewable fuel.'' 
\2\ Additional renewable fuel is defined as fuel that is produced from 
renewable biomass and that is used to replace or reduce the quantity of 
fossil fuel present in home heating oil or jet fuel.\3\ In essence, 
additional renewable fuel has to meet all of the requirements 
applicable to qualify it as renewable fuel under the regulations, with 
the only difference being that it is blended into or is home heating 
oil or jet fuel. This does not change the volume requirements of the 
statute itself, however this can provide an important additional avenue 
for parties to generate RINs for use by obligated parties, thus 
promoting the overall cost-effective production and use of renewable 
fuels.
---------------------------------------------------------------------------

    \2\ ``EISA changed the definition of `renewable fuel' to require 
that it be made from feedstocks that qualify as `renewable biomass.' 
EISA's definition of the term `renewable biomass' limits the types 
of biomass as well as the types of land from which the biomass may 
be harvested.'' Regulation of Fuels and Fuel Additives: Changes to 
Renewable Fuel Standard Program, 75 FR 14670, 14681 (March 26, 
2010).
    \3\ See CAA sections 211(o)(1)(A) and (o)(5)(E).
---------------------------------------------------------------------------

    EPA addressed the provision for additional renewable fuels in the 
RFS2 rulemaking, specifically addressing the category of ``home heating 
oil.'' EPA determined that this term was ambiguous, and defined it by 
incorporating the existing definition of heating oil at 40 CFR 
80.2(ccc). EPA stated that:

    EISA uses the term ``home heating oil'' in the definition of 
``additional renewable fuel.'' The statute does not clarify whether 
the term should be interpreted to refer only to heating oil actually 
used in homes, or to all fuel of a type that can be used in homes. 
We note that the term `home heating oil' is typically used in 
industry in the latter manner, to refer to a type of fuel, rather 
than a particular use of it, and the term is typically used 
interchangeably in industry with heating oil, heating fuel, home 
heating fuel, and other terms depending on the region and market. We 
believe this broad interpretation based on typical industry usage 
best serves the goals and purposes of the statute. If EPA 
interpreted the term to apply only to heating oil actually used in 
homes, we would necessarily require tracking of individual gallons 
from production through ultimate [use] in homes in order to 
determine eligibility of the fuel for RINs. Given the fungible 
nature of the oil delivery market, this would likely be sufficiently 
difficult and potentially expensive so as to discourage the 
generation of RINs for renewable fuels used as home heating oil. 
This problem would be similar to that which arose under RFS1 for 
certain renewable fuels (in particular biodiesel) that were produced 
for the highway diesel market but were also suitable for other 
markets such as heating oil and non-road applications where it was 
unclear at the time of fuel production (when RINs are typically 
generated under the RFS program) whether the fuel would ultimately 
be eligible to generate RINs. Congress eliminated the complexity 
with regards to non-road applications in RFS2 by making all fuels 
used in both motor vehicle and nonroad applications subject to the 
renewable fuel standard program. We believe it best to interpret the 
Act so as to also avoid this type of complexity in the heating oil 
context. Thus, under today's regulations, RINs may be generated for 
renewable fuel used as `heating oil,' as defined in existing EPA 
regulations at Sec.  80.2(ccc). In addition to simplifying 
implementation and administration of the Act, this interpretation 
will best realize the intent of EISA to reduce or replace the use of 
fossil fuels.\4\
---------------------------------------------------------------------------

    \4\ 75 FR 14670, 14687 (March 26, 2010).

    The existing definition of heating oil at 40 CFR Sec.  80.2(ccc) 
means ``any 1, 2,

[[Page 61317]]

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, or 
similar trade names, and that is not jet fuel, kerosene, or [Motor 
Vehicle, Nonroad, Locomotive, and Marine (MVNRLM)] diesel fuel.'' The 
existing definition of non-petroleum diesel at 40 CFR 80.2(sss) means a 
diesel that contains at least 80 percent mono-alkyl esters of long 
chain fatty acids derived from vegetable oils or animal fats. Thus, in 
order to generate RINs for home heating oil that is a non-petroleum 
diesel blend, the fuel must contain at least 80 percent mono-alkyl 
esters of long chain fatty acids derived from vegetable oils or animal 
fats, as well as meeting all other requirements of the RFS2 
regulations. Since the promulgation of the RFS2 final rule, we have 
received a number of requests from producers to consider expanding the 
scope of the home heating oil provision to include additional fuel oils 
that are produced from qualifying renewable biomass but do not meet the 
regulatory definition of heating oil because they are not 1 or 
2 diesel and do not contain at least 80 percent mono-alkyl 
esters. Parties raising this issue have suggested that limiting ``home 
heating oil'' to the fuel types defined in 40 CFR 80.2(ccc) 
disqualifies certain types of renewable fuel oils that could be used 
for home heating and that this limitation does not align with our 
reasoning in the preamble to take a broad interpretation of the term 
``home heating oil'' in CAA section 211(o).
    EPA has considered this issue further and is proposing to revise 
the definition of heating oil in the RFS program to expand the scope of 
fuels that can generate RINs as heating oil. EPA is proposing to revise 
the definition such that RINs also may be generated by renewable fuel 
that is fuel oil and is used to heat interior spaces of homes or 
buildings to control ambient climate for human comfort. This would not 
include fuel oils used to generate process heat, power, or other 
functions. The fuel oil would be used to generate heat to warm 
buildings or other facilities where people live, work, recreate, or 
conduct other activities. The fuel oil would only be used in heating 
applications, where the sole purpose of the fuel's use is for heating 
and not for any other combined use such as process energy use. We are 
proposing to amend the existing definition of heating oil in 40 CFR 
Sec.  80.1401 to include fuel oils that are used in this way. This is 
in addition to the fuel oils currently included in the definition of 
heating oil at 40 CFR Sec.  80.2(ccc), and would not modify or limit 
the fuel included in the current definition.
    EPA believes this expansion of the scope of the home heating oil 
provision is appropriate and authorized under CAA section 211(o). As 
EPA described in the RFS2 final rule, Congress did not define the term 
``home heating oil,'' and it does not have a fixed or definite 
commercial meaning. In the RFS2 final rulemaking, EPA focused on 
whether the provision was limited to heating oil actually used in 
homes. EPA noted that the term home heating oil is usually used in the 
industry to refer to a type of fuel, and not to one specific use for 
the fuel. Given this more specific usage of the term, and the practical 
barriers that would arise if the term was defined as fuel actually used 
to heat homes, EPA defined the scope of home heating oil by identifying 
those types of fuel oils that are typically used to heat homes. EPA 
determined this was a reasonable interpretation of an ambiguous 
statutory provision that simplified implementation and administration 
of the Act and promoted achievement of the goals of the RFS program.
    In the RFS2 rulemaking, EPA focused on the kinds of fuel oils that 
can be used to heat homes. The expansion of the definition proposed in 
this rulemaking would address two types of fuel oils not included in 
the current definition of heating oil. First, the proposed definition 
would include additional fuel oils that are actually used to heat 
homes, even if they do not meet the current definition of heating oil. 
This is clearly within the scope of the statutory provision for home 
heating oil.
    Second, the proposed definition would include fuel oils that are 
used to heat facilities other than homes to control ambient climate for 
human comfort. Under the current definition of heating oil, a fuel oil 
meets the definition based on its physical properties and its use in 
furnaces, boilers, stationary diesel engines, and similar applications, 
not whether it is actually used to heat a home. The basic decision made 
in the RFS2 final rulemaking was to allow RIN generation for the group 
of fuel oils that are typically used for home heating purposes. Under 
the current definition the relationship of the fuel oil to heating 
homes is that the fuel oil is of the type that is typically used for 
and can be used for that purpose.\5\
---------------------------------------------------------------------------

    \5\ This is different from other renewable fuels in the RFS 
program, which are defined in terms of their use as transportation 
fuel or jet fuel. See 40 CFR 80.1401, definitions of ``renewable 
fuel'' and ``transportation fuel.''
---------------------------------------------------------------------------

    In the proposed amended definition, qualifying fuel oils would be 
used for heating places where people live, work, or recreate, and not 
just their homes. It focuses more on what is getting heated--people--
and not where the people are located. EPA believes this is a reasonable 
interpretation of the phrase ``home heating oil,'' while recognizing 
that it is not an obvious interpretation. This interpretation 
recognizes the ambiguity of the phrase used by Congress, which is not 
defined and does not have a clear and definite commercial meaning. It 
gives reasonable meaning to the term home heating oil, by limiting the 
additional fuel oils to fuel oils when used for heating of facilities 
that people will occupy, and excluding fuel oils when used for other 
purposes such as generation of energy used in the manufacture of 
products. It also focuses on the aspect of home that is important 
here--the heating of people--recognizing that EPA has already 
determined that fuel oil can be included in the scope of home heating 
oil even if it is not actually used to heat a home. This interpretation 
will also promote the purposes of the EISA and the RFS program. It will 
promote the purposes of the EISA in that it will increase the 
production and use of renewable fuels by introducing new sources of 
fuel producers to the RFS program. It will specifically promote the RFS 
programmatic goals by facilitating the generation of RINs for renewable 
fuels that reduce emissions of greenhouse gases compared to fossil 
fuels. For example, EPA has received information from Envergent 
Technologies (an alliance of Ensyn and Honeywell) that such an expanded 
definition of heating oil would result in nearly immediate production 
of 3.5 million gallons from their existing facilities, with an 
additional projected production of up to 45 million gallons per year 
within 24 months following regulatory action. Based on this information 
from Envergent Technologies, application of the expanded definition of 
heating oil to the entire industry would result in the production of 
many more million additional gallons of renewable fuel. Although EPA 
believes the expanded definition in the regulations of ``heating oil'' 
would be a reasonable interpretation of the intent of Congress to allow 
additional renewable fuel to count towards the volume mandates if it is 
produced from renewable biomass and is used to replace or reduce the 
quantity of fossil fuel present in home heating oil, EPA invites 
comment on this interpretation.

[[Page 61318]]

    For the text of the proposed regulatory changes please see the 
direct final rule, located in the ``Rules and Regulations'' section of 
this Federal Register.

B. Lifecycle Greenhouse Gas Assessment of the Amended Definition of 
Heating Oil

    EPA has also evaluated whether any revisions would need to be made 
to Table 1 to 40 CFR 80.1426 that lists the applicable D codes for each 
fuel pathway for use in generating RINs in the RFS2 regulations in 
light of the additional fuel oils included in the expanded definition 
of heating oil. As discussed below, EPA has determined that the 
applicable D code entries for heating oil in Table 1 to 40 CFR 80.1426 
would continue to be appropriate and would not need to be revised in 
light of the expanded definition of heating oil.
    Under the RFS program, EPA must assess lifecycle greenhouse gas 
(GHG) emissions to determine which fuel pathways meet the GHG reduction 
thresholds for the four required renewable fuel categories. The RFS 
program requires a 20% reduction in lifecycle GHG emissions for 
conventional renewable fuel (except for grandfathered facilities and 
volumes), a 50% reduction for biomass-based diesel or advanced biofuel, 
and a 60% reduction for cellulosic biofuel. For the final RFS2 rule, 
EPA assessed the lifecycle greenhouse gas emissions of multiple 
renewable fuel pathways and classified pathways based on these GHG 
thresholds, as compared to the EISA statutory baseline.\6\ In addition, 
EPA has added several pathways since the final rule was published. 
Expanding the definition of heating oil does not affect these prior 
analyses.
---------------------------------------------------------------------------

    \6\ See Table 1 to 40 CFR 80.1426.
---------------------------------------------------------------------------

    The fuel pathways consist of fuel type, feedstock, and production 
process requirements. GHG emissions are assessed at all points 
throughout the lifecycle pathway. For instance, emissions associated 
with sowing and harvesting of feedstocks and in the production, 
distribution and use of the renewable fuel are examples of what are 
accounted for in the GHG assessment. A full accounting of emissions is 
then compared with the petroleum baseline emissions for the 
transportation fuel being replaced. The lifecycle GHG emissions 
determination is one factor used to determine compliance with the 
regulations.
    There are currently several fuel pathways that list heating oil as 
a fuel type with various types of feedstock and production processes 
used, qualifying the heating oil pathways as either biomass-based 
diesel, advanced, or cellulosic. The determinations for these different 
pathways were based on the current definition of heating oil. The 
pathways also include several types of distillate product including 
diesel fuel, jet fuel and heating oil.
    The lifecycle calculations and threshold determinations are based 
on the GHG emissions associated with production of the fuel and 
processing of the feedstock. Converting biomass feedstocks such as 
triglycerides (if oils are used as feedstock) or hemi-cellulose, 
cellulose, lignin, starches, etc. (if solid biomass feedstock is used) 
into heating oil products and can be accomplished through either a 
biochemical or thermochemical process converting those molecules into a 
fuel product. The existing heating oil pathways were based on the 
current definition of the fuel, and were based on a certain level of 
processing to produce 1, 2, or a non-petroleum diesel 
blend and the related energy use and GHG emissions that were part of 
the lifecycle determination for those fuel pathways.
    The main difference between the current definition of heating oil, 
which refers to 1, 2, or a non-petroleum diesel 
blend, and the expanded definition that is proposed in this rulemaking 
is that the expanded definition would include heavier types of fuel oil 
with larger molecules. Based on the type of conversion process, 
producing these heavier fuel oil products versus the 1, 
2, or a non-petroleum diesel blend would affect the amount of 
energy used and therefore the GHG emissions from the process. There are 
two main paths for producing a fuel oil product from biomass. In one 
the biomass is converted into a biocrude which is further refined into 
lighter products. In this case producing a heavier fuel oil product 
would require less processing energy and have lower GHG emissions than 
converting the same feedstock into a 1, 2, or non-
petroleum diesel blend.
    In the other type of process the compounds in the biomass are 
changed into a set of intermediary products, such as hydrogen (H) and 
carbon monoxide (CO).\7\ These compounds are then either catalytically 
or biochemically converted into the fuel product. In this case, the 
vast majority of the energy is associated with breaking down the 
feedstock into the set of intermediary compounds. The process used and 
the energy needed for it does not vary based on the type of fuel that 
is then produced from these intermediary compounds. The type of fuel 
could affect the type of catalyst or biological process used to change 
the intermediary compounds into the fuel product, but based on EPA 
calculations and assessments developed as part of the RFS2 
rulemaking,\8\ this will have no real impact on the energy used or the 
GHG emissions associated with converting the biomass into a different 
fuel product.
---------------------------------------------------------------------------

    \7\ This describes the Fischer-Tropsch process. Other processes 
rely on forming different sets of compounds from the biomass, and 
then producing the fuel product from the set of compounds.
    \8\ ``Regulation of Fuel and Fuel Additives; Changes to 
Renewable Fuel Standard Program,'' 75 FR 14670, available at https://www.gpo.gov/fdsys/pkg/FR-2010-03-26/pdf/2010-3851.pdf. See also, 
EPA's summary factsheet, ``EPA Lifecycle Analysis of Greenhouse Gas 
Emissions from Renewable Fuels,'' available at https://www.epa.gov/otaq/renewablefuels/420f10006.pdf.
---------------------------------------------------------------------------

    Based on these considerations, EPA believes the GHG emissions 
associated with producing the fuel oil included in the expanded 
definition would be the same or lower than the GHG emissions associated 
with producing 1, 2, or non-petroleum diesel blend. 
Therefore, EPA believes the prior life cycle analysis for heating oil 
would support applying the existing pathways for fuel oil in the RFS2 
regulations to the expanded definition of heating oil. All of the 
pathways currently applicable to heating oil under Table 1 to 40 CFR 
80.1426 would apply to the expanded definition of heating oil. EPA 
invites comments whether there are any other factors to consider in 
addition to the reasons discussed above for extending the lifecycle 
analysis already conducted for heating oil in the final rulemaking for 
fuel oils under the expanded definition of heating oil.
    For the text of the proposed regulatory changes please see the 
direct final rule, located in the ``Rules and Regulations'' section of 
this Federal Register.

 C. Additional Registration, Reporting, Product Transfer Document and 
Recordkeeping Requirements

1. Additional Requirements for the Amended Definition of Heating Oil
    An important issue to address is how to implement such an expanded 
definition. As EPA recognized in the RFS2 rulemaking, fuel oils end up 
being used in a variety of different uses, where the fuel producer may 
have little knowledge at the time of production as to eventual use of 
the fuel. This is especially the case where the fuel oil is distributed 
in a fungible distribution system. EPA addressed this in the RSF2 
rulemaking by defining home heating oil as a type of fuel with certain 
characteristics, irrespective of where it was used. This approach 
avoided the need to track the fuel to its actual use,

[[Page 61319]]

and including the characteristics of the fuel in its definition in 40 
CFR 80.1401 was adequate to retain a close tie to the concept 
underlying home heating oil.
    The proposed expansion of the definition raises this same issue but 
in a more significant way. While the proposed expansion of the 
definition includes some limited physical characteristics that fuel 
oils would need to meet in order to qualify for generating RINs, it 
does not provide sufficient specificity to differentiate between those 
fuels oils used to heat buildings for climate control for human comfort 
and those used to generate process heat or other purposes. Therefore, 
for eligible fuel oils other than those qualifying under the existing 
definition in 40 CFR 80.2(ccc), EPA is proposing that the renewable 
fuel producer or importer have adequate documentation to demonstrate 
that the fuel oil volume for which RINs were generated was used to heat 
buildings for climate control for human comfort and meets the expanded 
definition of heating oil in order to generate RINs.
    EPA recognizes that under the current definition of heating oil no 
tracking or other documentation of end use is required, and some 
heating oils that meet the current definition could end up being used 
for other purposes. However, in all cases the heating oil under the 
current definition has to have the physical or other characteristics 
that tie it to the type of fuel oil used to heat homes. In addition, 
because these fuel oils would qualify to generate RINs under the RFS 
program, it will likely lead to their use for heating of buildings, and 
not for generation of process heat. For the fuel oils included in the 
expanded definition, the tie to home heating oil would not be the 
physical characteristics of the fuel oil but instead its actual usage 
for heating for the purposes of climate control for human comfort.
    In order to verify that the fuel oils are actually used to generate 
heat for climate control purposes, EPA is proposing the following 
registration, recordkeeping, product transfer document (PTD) and 
reporting requirements. These proposed requirements would not apply to 
fuels qualifying under existing 40 CFR 80.2(ccc) of the regulations. We 
are also proposing that if RINs are generated for fuel oils under the 
expansion of the scope of home heating oil in today's rule, and those 
fuel oils are designated for but not actually used to generate heat for 
climate control purposes, but for some other purpose, all parties 
involved in either the generation, assignment, transfer or use of that 
RIN, including the end user of that fuel oil, are subject to and liable 
for violations of the RFS2 regulations and the CAA.
    For the text of the proposed regulatory changes please see the 
direct final rule, located in the ``Rules and Regulations'' section of 
this Federal Register.
a. Registration
    For the purpose of registration, EPA is proposing to allow the 
producer of the expanded fuel oil types to establish their facility's 
baseline volume in the same manner as all other producers under the RFS 
program, e.g., based on the facility's permitted capacity or actual 
peak capacity. Additionally though, we are proposing to require 
producers of the expanded fuel oil types to submit affidavits in 
support of their registration, including a statement that the fuel will 
be used for the purposes of heating interior spaces of homes or 
buildings to control ambient climate for human comfort, and no other 
purpose. We also propose to require that producers submit secondary 
affidavits from the existing end users to verify that the fuel is 
actually being used for a qualifying purpose. We are also proposing new 
reporting, product transfer documents (PTD), and recordkeeping 
requirements discussed below that will be used as a means for 
verification that the qualifying fuel is being used in an approved 
application. We believe these requirements are necessary to assure 
confidence that the fuel used to generate RINs is actually used for a 
qualifying purpose because these types of fuel have not previously been 
used as heating oil, and are not readily identifiable by their physical 
characteristics. Without such safeguards, EPA could not be confident 
that the fuel is used as heating oil, and end users might not have 
adequate notice that the fuel must be used as heating oil. EPA believes 
these requirements will place a small burden on producers and end 
users, and greatly benefit the integrity of the program.
    The proposed registration requirements are detailed in the 
registration section in 40 CFR 80.1450(b)(1)(ix) in the direct final 
rule located in the ``Rules and Regulations'' section of this Federal 
Register.
b. Reporting, Product Transfer Documents and Recordkeeping Requirements
    For the purpose of continued verification after registration, EPA 
is proposing additional requirements for reporting in Sec.  
80.1451(b)(1)(ii)(T), PTDs in Sec.  80.1453(d), and recordkeeping in 40 
CFR 80.1454(b), for the expanded fuel oil types.
    The proposed reporting, PTD, and recordkeeping requirements will 
help ensure that the expanded fuel oil types that are used to generate 
RINs are actually used in a qualifying application. For reporting, 
producers would be required to file quarterly reports with EPA that 
identify certain information about the volume of fuel oil produced and 
used as heating oil. The additional reporting requirements would 
stipulate that the producer of fuel oils submit affidavits to EPA 
reporting the total quantity of the fuel oils produced, the total 
quantity of the fuel oils sold to end users, and the total quantity of 
fuel oils sold to end users for which RINs were generated. 
Additionally, affidavits from each end user would need to be obtained 
by the producer and reported to EPA, describing the total quantity of 
fuel oils received from the producer, the total amount of fuel oil used 
for qualifying purposes, the date the fuel oil was received from the 
producer, the blend level of the fuel oil, quantity of assigned RINs 
received with the renewable fuel, and quantity of assigned RINs that 
the end user separated from the renewable fuel, if applicable.\9\ The 
additional product transfer document requirement associated with the 
expanded definition of heating oil would require that a PTD must be 
prepared and maintained between the fuel oil producer and the final end 
user for the legal transfer of title or custody of a specific volume of 
fuel oil that is designated for use, and is actually used, only for the 
purpose of heating interior spaces of buildings to control ambient 
climate for human comfort. This additional PTD requirement would 
require that the PTD used to transfer ownership or custody of the 
renewable fuel must contain the statement: ``This volume of renewable 
fuel is designated and intended to be used to heat interior spaces of 
homes or buildings to control ambient climate for human comfort. Do NOT 
use for process heat or any other purpose, pursuant to 40 CFR 
80.1460(g).'' EPA believes that this PTD requirement will help to 
ensure that each gallon of fuel oil that is transferred from the 
producer to the end user is used for qualifying purposes under the 
expanded definition of heating oil. If the fuel oil is sent to the end 
user, but the fuel oil is not actually

[[Page 61320]]

used to generate heat for climate control purposes, but for some other 
non-qualifying purpose, then the RINs that were generated for that fuel 
oil would need to be immediately retired and reported under 40 CFR 
80.1451. The additional recordkeeping requirement we are proposing 
would require that producers keep copies of the contracts which 
describe the fuel oil under contract with each end user. Consistent 
with existing regulations, producers are required to maintain all 
documents and records submitted for registration, reporting, and PTDs 
as part of the producer's recordkeeping requirements. EPA believes the 
producer's maintenance of these records will allow for continued 
tracking and verification that the end use of the fuel oil is in 
compliance with the expanded definition of heating oil.
---------------------------------------------------------------------------

    \9\ EPA does not expect that the expanded definition of home 
heating oil will result in an obligation on home owners or small 
businesses. Based on our analysis of the market, qualifying fuel oil 
is expected to be used in large industrial settings or apartment 
buildings, not in individual homes. Therefore, EPA anticipates that 
the information it is requiring would be readily available and 
producible by these entities.
---------------------------------------------------------------------------

    The proposed reporting, PTD, and recordkeeping requirements are 
detailed in the direct final rule located in the ``Rules and 
Regulations'' section of this Federal Register. EPA invites comments 
for any other factors to consider regarding these additional 
requirements for registration, reporting, PTDs, and recordkeeping.

D. Additional Requirement for RIN Generation

    We are also proposing to amend the regulatory text that describes 
the general requirements for how RINs are generated and assigned to 
batches of renewable fuel by renewable fuel producers and importers. 
This would explicitly clarify a requirement that always existed: That 
producers and importer of renewable fuel who generate RINs must comply 
with the registration requirements of 40 CFR Sec.  80.1450, the 
reporting requirements of 40 CFR 80.1451, the recordkeeping 
requirements of 40 CFR 80.1454, and all other applicable regulations of 
this subpart M. This is a generally applicable requirement--not 
specific to fuel meeting the definition of home heating oil. See 
amended section 80.1426(a)(1)(iii).

VI. Amendments Related to Transmix

    The final regulations for the nonroad diesel program were published 
in the Federal Register on June 24, 2004 (69 FR 38958). The provisions 
in the nonroad diesel rule related to transmix processors were modified 
by the Category 3 Marine diesel final rule that was published on April 
30, 2010 (75 FR 22896). This action proposes additional amendments to 
the requirements for diesel fuel produced by transmix processors. Below 
is a table listing the provisions that we are proposing to amend. The 
following sections provide a discussion of these proposed amendments 
and of additional potential changes to the diesel transmix provisions 
that we are considering.

------------------------------------------------------------------------
Proposed amendments to the  diesel
          program section                        Description
------------------------------------------------------------------------
80.511(b)(4)......................  Amended to allow for the production
                                     and sale of 500-ppm locomotive and
                                     marine (LM) diesel fuel produced
                                     from transmix past 2014.
80.513 (entire section)...........  Amended to allow for the production
                                     and sale of 500-ppm LM diesel fuel
                                     produced from transmix past 2014.
80.572(d).........................  Amended to extend 500ppm LM diesel
                                     fuel label past 2012.
80.597(d)(3)(ii)..................  Amended to include 500-ppm LM diesel
                                     fuel in the list of fuels that an
                                     entity may deliver or receive
                                     custody of past June 1, 2014.
------------------------------------------------------------------------

A. Consideration of Extending the Diesel Transmix Provisions Outside of 
the Northeast Mid-Atlantic Area and Alaska Beyond 2014

    Batches of different fuel products commonly abut each other as they 
are shipped in sequence by pipeline. When the mixture between two 
adjacent products is not compatible with either product, it is removed 
from the pipeline and segregated as transmix. Transmix typically is 
gathered for reprocessing at the end of the fuel distribution system 
far from a refinery. In addition to the long transportation distances 
to return transmix to a refinery for reprocessing, incorporating 
transmix into a refinery's feed also presents technical and logistical 
refining process challenges that typically make refinery reprocessing 
an unattractive option. Thus, transmix processers provide a valuable 
service in maintaining an efficient fuel distribution system. Transmix 
processing facilities handle very low volumes of fuel compared to a 
refinery and hence are limited to the use of a simple distillation 
tower and additional blendstocks to manufacture finished fuels. There 
is currently no desulfurization equipment which has been demonstrated 
to be suitable for application at a transmix processor facility. The 
cost of installing and operating a currently available desulfurization 
unit is too high in relation to the small volume of distillate fuel 
produced at transmix processing facilities. Some products shipped by 
pipeline such as jet fuel and heating oil are subject to relatively 
high sulfur specifications (e.g., maximum 3,000 ppm for jet fuel). The 
presence of such high sulfur products in multi product pipelines and 
consequently in transmix constrains the ability of transmix processors 
to produce a low sulfur distillate product.
    The engine emissions standards finalized in the nonroad diesel 
rulemaking for new nonroad, locomotive, and Category 1 & 2 (C1 & C2) 
marine engines necessitates the use of sulfur-sensitive emissions 
control equipment which requires 15-ppm sulfur diesel fuel to function 
properly.\10\ Accordingly, the nonroad rule required that nonroad, 
locomotive and marine (NRLM) diesel fuel must meet a 15-ppm sulfur 
standard in parallel with the introduction of new sulfur-sensitive 
emissions control technology to NRLM equipment. Beginning June 1, 2014, 
the nonroad diesel rule required that all NRLM diesel fuel produced by 
refiners and importers must meet a 15-ppm sulfur standard. The nonroad 
diesel rule included special provisions to allow the continued use of 
500-ppm sulfur locomotive and marine (LM) diesel fuel produced from 
transmix beyond 2014 in older technology engines as long as such 
engines remained in the in-use fleet. These provisions along with other 
now expired flexibilities in the diesel program were designed to 
minimize and postpone the impacts on transmix processors of 
transitioning to a condition where all highway, nonroad, locomotive, 
and marine diesel engines can only operate on 15-ppm diesel fuel.\11\ 
The 500-ppm LM diesel transmix

[[Page 61321]]

provisions were limited to areas outside of the Northeast Mid-Atlantic 
Area (NEMA) and Alaska because it was judged that the heating oil 
market in these areas would provide a sufficient outlet for transmix 
distillate in these areas.\12\ Excluding the NEMA area and Alaska also 
allowed us to exempt the NEMA area and Alaska from the fuel marker 
provisions that are a part of the compliance assurance regime. The 
continuation of the 500-ppm LM diesel transmix provisions beyond 2014 
(finalized in the nonroad rule) was supported by ongoing recordkeeping, 
reporting, and fuel marker provisions that were established to 
facilitate enforcement during the phase in of the diesel sulfur 
program.\13\
---------------------------------------------------------------------------

    \10\ Control of Emissions of Air Pollution from Nonroad Diesel 
Engines and Fuel, Final Rule, 69 FR 38958 (June 24, 2004).
    \11\ As discussed in the original nonroad diesel rulemaking, as 
LM equipment is retired from service, the market for 500 ppm LM will 
gradually diminish and eventually disappear. Given the long lifetime 
of LM equipment (in many cases 40 years or more), we anticipate that 
a market for 500 ppm LM will remain for a significant amount of 
time. This phase-out time will also allow transmix processors to 
transition to their >15ppm sulfur distillate product to other 
markets (C3 marine, heating oil, process heat). It may also allow 
sufficient time for the introduction of desulfurization equipment 
that is suitable for use at transmix processing facilities.
    \12\ The NEMA area is defined in 40 CFR 80.510(g)(1) as follows: 
(1) Northeast/Mid-Atlantic Area, which includes the following States 
and counties, through May 31, 2014: North Carolina, Virginia, 
Maryland, Delaware, New Jersey, Connecticut, Rhode Island, 
Massachusetts, Vermont, New Hampshire, Maine, Washington DC, New 
York (except for the counties of Chautauqua, Cattaraugus, and 
Allegany), Pennsylvania (except for the counties of Erie, Warren, 
McKean, Potter, Cameron, Elk, Jefferson, Clarion, Forest, Venango, 
Mercer, Crawford, Lawrence, Beaver, Washington, and Greene), and the 
eight eastern-most counties of West Virginia (Jefferson, Berkeley, 
Morgan, Hampshire, Mineral, Hardy, Grant, and Pendleton).
    \13\ This included the now-completed phase-in of 15 ppm highway 
diesel fuel and 15 ppm nonroad diesel fuel as well as the phase-out 
of the small refiner and credits provisions for LM diesel fuel that 
will be completed in 2014.
---------------------------------------------------------------------------

    In the development of the proposed requirements for Category 3 (C3) 
marine engines, EPA worked with industry to evaluate how the 
enforcement provisions for the new 1,000-ppm C3 marine diesel fuel to 
be introduced in June of 2014 could be incorporated into existing 
diesel program provisions.\14\ Our assessment based on input from 
industry at the time indicated that incorporating the new C3 marine 
fuel into the diesel program enforcement mechanisms while preserving 
the 500-ppm diesel transmix flexibility could not be accomplished 
without retaining significant existing burdens and introducing new 
burdens on a broad number of regulated parties. We also concluded that 
the new C3 marine diesel market would provide a sufficient outlet for 
transmix processors distillate product in place of the 500-ppm LM 
diesel market. Thus, we believed the 500-ppm LM diesel transmix 
flexibility would no longer be needed after 2014. Hence, we requested 
comment on whether we should eliminate the 500-ppm LM transmix 
provisions in parallel with the implementation of the C3 marine diesel 
sulfur requirement. This approach allowed for a significant reduction 
in the regulatory burden on a large number of industry stakeholders 
through the retirement of the diesel program's designate-and-track and 
fuel marker requirements. All of the comments that we received on the 
proposed rule were supportive of the approach. Consequently, we 
finalized the approach in the C3 marine final rule that was published 
on April 30, 2010.\15\
---------------------------------------------------------------------------

    \14\ Control of Emissions From New Marine Compression-Ignition 
Engines at or Above 30 Liters per Cylinder; Proposed Rule, 74 FR 
44442 (August 28, 2009).
    \15\ Control of Emissions From New Marine Compression-Ignition 
Engines at or Above 30 Liters per Cylinder; Final Rule, April 30, 
2010, 75 FR 22896.
---------------------------------------------------------------------------

    EPA received a petition from a group of transmix processors on June 
29, 2010, requesting that the Agency reconsider and reverse the 2014 
sunset date for the 500-ppm LM transmix flexibility.\16\ A parallel 
petition for regulatory review was filed with the U.S. Court of 
Appeals, DC Circuit.\17\ The transmix processors stated that they were 
not aware of the changes to the 500-ppm LM transmix provisions until 
after they were finalized. The petitioners also stated that they 
believe that the C3 marine market would not be a viable outlet for 
their distillate product given the increased distribution costs 
compared to the 500-ppm LM market. Based on the additional input that 
we received from transmix processors and other stakeholders in the fuel 
distribution system during our consideration of the petition, EPA 
believes that while the increased costs for transportation of transmix 
distillate product could be accommodated, there is no compelling reason 
not to extend the 500 ppm diesel transmix flexibility beyond 2014 if 
such costs can be avoided or deferred without affecting the benefits 
from the diesel sulfur program. A settlement agreement has been 
finalized between EPA and the petitioners under which EPA would propose 
regulatory changes to reintroduce the 500-ppm LM transmix diesel 
flexibility for legacy LM equipment.\18\ The proposed amendments to the 
diesel transmix provisions contained in today's action are in accord 
with the settlement agreement.
---------------------------------------------------------------------------

    \16\ Petition to Reconsider Final Rule: Control of Emissions 
from New Marine Compression Ignition Engines at or Above 30 Liters 
per Cylinder; Final Rule, 75 FR 22,896 (April 30, 2010), Letter to 
EPA Administrator Lisa Jackson dated June 29, 2010, from Chet 
Thompson of Crowell and Moring LLP, on behalf of Allied Energy 
Company, Gladieux Trading and Marketing, Insight Equity Acquisition 
Partners, LP, Liquid Titan, LLC, and Seaport Refining and 
Environmental, LLC.
    \17\ Petition for Review, Allied Energy Company, Gladieux 
Trading and Marketing, Insight Equity Acquisition Partners, LP, 
LiquidTitan, LLC, and Seaport Refining and Environmental LLC, v. 
Respondent; U.S. Environmental Protection Agency, United States 
Court of Appeals for the District of Columbia Circuit, Case 10-1146, 
Document 1252640, Filed 06/29/2010.
    \18\ Notice of Proposed Settlement Agreement, Request for Public 
Comment, 76 FR 56194 (September 12, 2011).
---------------------------------------------------------------------------

    Our analysis indicates that extending the 500-ppm LM flexibility 
beyond 2014 would have a neutral or net beneficial effect on overall 
emissions. The use of 500-ppm LM from transmix would be limited to 
older technology engines that do not possess sulfur-sensitive emission 
control technology. We believe that the proposed 500-ppm LM segregation 
and other associated requirements would prevent misfueling of sulfur-
sensitive engines.
    To evaluate the environmental consequences of extending the diesel 
transmix provisions, we compared the potential increase in sulfate 
particulate matter (PM) from the use of 500 ppm LM from transmix in 
older engines to the additional transportation emissions associated 
with shipment to the Category 3 (C3) marine market which might be 
deferred by allowing continued access to the 500 ppm LM market. Markets 
for locomotive and marine diesel tend to be nearer to transmix 
processing facilities than markets for C3 marine diesel. Therefore, 
extending the diesel transmix provisions would result in a reduction in 
nitrogen oxides (NOX), volatile organic compounds (VOCs), 
carbon monoxide (CO), as well as PM emissions that would otherwise be 
associated with transporting transmix distillate product to the more 
distant C3 market.
    Although some batches of transmix distillate product may approach 
the 500 ppm sulfur limit, we estimate that the average sulfur content 
of transmix distillate product would be no more than 300 ppm.\19\ We 
estimate that approximately 500 million gallons of distillate fuel per 
year is produced from transmix.\20\ Assuming that all of the transmix 
distillate product would be used as 500 ppm LM in older engines, we 
estimate that an additional 70 tons of sulfate PM would be produced 
annually compared to the use of 15 ppm

[[Page 61322]]

diesel fuel.\21\ We believe that a substantial fraction of transmix 
distillate product would be used as heating oil and C3 diesel fuel 
regardless of whether the diesel transmix provisions are extended. 
Also, as the older LM engines are retired from service, the size of the 
potential 500 ppm LM market will diminish until all LM engines must use 
15 ppm diesel fuel. Therefore, assuming that all transmix distillate 
product would be used as 500 ppm LM provides an upper bound estimate of 
the potential impact on PM emissions.
---------------------------------------------------------------------------

    \19\ This is based on our review of data on the sulfur levels of 
transmix distillate product from various transmix processors.
    \20\ Based on information provided by transmix processors, we 
estimate that approximately 750 million gallons per year of transmix 
is produced annually and that \2/3\ of the transmix-derived product 
is distillate fuel and \1/3\ is gasoline.
    \21\ Sulfate PM was converted to PM2.5 to allow a 
comparison with PM2.5 from increased fuel transport 
emissions.
---------------------------------------------------------------------------

    We estimate on average that transmix processors would need to ship 
their transmix distillate product an additional 150 miles by tank truck 
to reach the C3 Emission Control Area (ECA) marine market as compared 
to the 500 ppm LM market.\22\ This would result in an additional 80 
tons of PM emissions annually. Thus, the PM emissions associated with 
transport to the C3 marine market are roughly equal to the increased 
sulfate PM emissions associated with the continued use of 500 ppm LM. 
We estimate that the increased transport distances could also result in 
an additional 2,200 tons of NOX, 220 tons of VOC, and 650 
tons of CO annually. Based on the above discussion, we believe that the 
proposed extension of the 500 ppm LM provisions beyond 2014 outside the 
NEMA area and Alaska would have a neutral or positive environmental 
impact.
---------------------------------------------------------------------------

    \22\ There is no ability to ship transmix distillate product to 
the C3 marine diesel market by pipeline.
---------------------------------------------------------------------------

    The extension of the 500-ppm LM transmix flexibility would defer 
additional transportation costs and provide a lower-cost fuel for use 
in older LM engines for many years to come given that the useful life 
of LM engines can exceed 40 years.\23\ Therefore, extending this 
flexibility would reduce the overall burden on industry of compliance 
with EPA's diesel sulfur program. Providing additional time for 
transmix processors to evaluate how the C3 ECA marine market will 
develop after 2014 would also facilitate a smoother transition for 
transmix processors from the 500-ppm LM market as it gradually 
disappears due to fleet turnover.
---------------------------------------------------------------------------

    \23\ In the 2011 edition of ``Railroad Facts,'' the Association 
of American Railroads reported that in 2010 approximately 35% of the 
locomotive fleet was at least 21 years old.
---------------------------------------------------------------------------

B. Proposed Diesel Transmix Provisions

    Industry stakeholders suggested alternative enforcement mechanisms 
to support the extended flexibility which would not necessitate 
reinstating and expanding the designate-and-track and fuel marker 
provisions that were retired by the C3 marine final rule. Reinstatement 
and expansion of these provisions would likely place an unacceptable 
burden on a large number of stakeholders, most of whom would not handle 
500-ppm LM. The suggested alternative enforcement mechanism would 
impose minimal additional reporting and recordkeeping burdens only on 
the parties that produce, handle, and use 500-ppm LM. We believe that 
this alternative enforcement approach would meet the Agency's goals of 
ensuring that the pool of 500-ppm LM is limited to transmix distillate 
and that 500-ppm LM is not used in sulfur-sensitive emissions control 
equipment.
    The compliance assurance provisions that we are proposing to 
support the extension of the diesel transmix flexibility are similar to 
those that were used to support the small refiner flexibilities in 
Alaska during the phase-in of EPA's diesel sulfur program.\24\ In 
addition to registering as a refiner and certifying that each batch of 
fuel complies with the fuel quality requirements for 500-ppm LM diesel 
fuel, producers of 500-ppm transmix distillate product would be 
required to submit a compliance plan for approval by EPA. This 
compliance plan would provide details on how the 500-ppm LM would be 
segregated through to the ultimate consumer and its use limited to the 
legacy LM fleet. The plan would be required to identify the entities 
that would handle the fuel and the means of segregation. We believe 
that it is appropriate to limit the number of entities that would be 
allowed to handle the fuel between the producer and the ultimate 
consumer in order to facilitate EPA's compliance assurance 
activities.\25\ Based on conversations with transmix processors, we 
believe that specifying that no more than 4 separate entities handle 
the fuel between the producer and the ultimate consumer would not 
hinder the ability to distribute the fuel.\26\ The plan would need to 
identify the ultimate consumers and include information on how the 
product would be prevented from being used in sulfur-sensitive 
equipment.
---------------------------------------------------------------------------

    \24\ See 40 CFR 80.554(a)(4).
    \25\ An entity is defined as any company that takes custody of 
500-ppm LM diesel fuel.
    \26\ In most cases, fewer entities would take custody of the 
product. In many cases, only a single entity (a tank truck operator) 
would be in the distribution chain between the transmix processor 
and the ultimate consumer. However, we understand that as many as 4 
separate entities may handle the product between the producer and 
ultimate consumer if it is shipped by pipeline: the tank truck 
operator to ship the product from the producer to the pipeline, the 
pipeline operator, the product terminal that receives the fuel from 
the pipeline, and another tank truck operator to ship the product to 
the ultimate consumer from the terminal.
---------------------------------------------------------------------------

    We understand that some transmix processors currently rely on 
shipment by pipeline to reach the 500-ppm locomotive diesel market.\27\ 
We are proposing that 500-ppm LM could be shipped by pipeline provided 
that it does not come into contact with distillate products that have a 
sulfur content greater than 15 ppm. The compliance plan would need to 
include information from the pipeline operator regarding how this 
segregation would be maintained. Discussions with transmix processors 
indicate that this requirement would not limit their ability to ship 
500-ppm LM by pipeline. If 500-ppm LM was shipped by pipeline abutting 
15-ppm diesel, the volume of 500-ppm LM delivered would likely be 
slightly greater than that which was introduced into the pipeline as a 
consequence of cutting the pipeline interface between the two fuel 
batches into the 500-ppm LM batch. This small increase in 500-ppm LM 
volume would be acceptable.
---------------------------------------------------------------------------

    \27\ 500 ppm LM diesel fuel is shipped by a short dedicated 
pipeline from a product terminal to a locomotive refueling facility.
---------------------------------------------------------------------------

    To provide an additional safeguard to ensure that volume of 500 ppm 
LM diesel fuel does not swell inappropriately, the volume increase 
during any single pipeline shipment must be limited to 2 volume percent 
or less. This limitation on volume swell to 2 volume percent or less is 
consistent with the limitation in 40 CFR 80.599(b)(5) regarding the 
allowed swell in volume during the shipment of highway diesel fuel for 
the purposes of the determination of compliance with the now expired 
volume balance requirements under 40 CFR 80.598(b)(9)(vii)(B). Industry 
did not object to this requirement, and therefore, we believe that 
limiting the volume swell of 500 ppm LM diesel fuel during shipment by 
pipeline to 2 volume percent or less should provide sufficient 
flexibility.
    Product transfer documents (PTDs) for 500-ppm LM diesel would be 
required to indicate that the fuel must be distributed in compliance 
with the approved compliance assurance plan. Entities in the 
distribution chain for 500-ppm LM diesel fuel would be required to keep 
records on the volumes of the 500-ppm that they receive from and 
deliver to each other entity. Based on input from fuel distributors, 
keeping

[[Page 61323]]

these records will be a minimal additional burden, as discussed in 
section X.B. Such entities would also be required to keep records on 
how the fuel was transported and segregated. We would typically expect 
that the volumes of 500-ppm LM delivered would be equal to or less than 
those received unless shipment by pipeline occurred. Some minimal 
increase in 500-ppm LM volume would be acceptable due to differences in 
temperature between when the shipped and received volumes were measured 
and interface cuts during shipment by pipeline. Entities that handle 
500-ppm LM would be required to calculate a balance of 500-ppm LM 
received versus delivered/used on an annual basis. If the volume of 
fuel delivered/dispensed is greater than that received, EPA would 
expect that the records would indicate the cause. EPA requests comment 
on whether it is appropriate to set an upper limit on the potential 
volume increase due to pipeline shipment and temperature swell, and if 
2 percent would be an appropriate upper limit. If an entity's 
evaluation of their receipts and deliveries of 500-ppm LM fuel 
indicated noncompliance with the product segregation requirements, the 
custodian would be required to notify EPA. All entities in the 500-ppm 
LM distribution chain would be required to maintain the specified 
records for 5 years and provide them to EPA upon request.

C. Consideration of Extending the Diesel Transmix Provisions To Include 
the Northeast Mid-Atlantic Area

    The nonroad diesel rule specified that the small diesel refiner, 
credit, and transmix provisions would not apply in the Northeast Mid-
Atlantic (NEMA) area. Hence, all LM diesel fuel shipped from 
refineries, transmix processors, and importers for use in the NEMA Area 
must meet a 15-ppm sulfur standard beginning June 1, 2012 when the 15-
ppm standard becomes effective for large refiners and importers.\28\ 
This approach allowed the NEMA area to be exempted from fuel marker 
provisions that are a component of the compliance assurance provisions 
associated with the small diesel refiner, credit, and transmix 
provisions. As discussed previously a significant factor in the 
decision made in the nonroad diesel rule to exclude the NEMA from the 
diesel transmix provisions was our assessment that the heating oil 
market would provide a sufficient outlet for transmix distillate 
product in this area. Since the publication of the nonroad diesel rule 
in 2004, a number of states in the NEMA area have moved towards 
implementing a 15-ppm sulfur standard for heating oil. A significant 
fraction of heating oil in the area will be subject to a 15-ppm sulfur 
standard beginning in 2012, and it is likely that other states will 
adopt a 15-ppm sulfur standard for heating oil in the following years.
---------------------------------------------------------------------------

    \28\ LM diesel fuel in terminals located in the NEMA area is 
subject to a 15-ppm sulfur standard beginning August 1, 2012. LM 
diesel fuel at retailers and wholesale purchaser consumers must meet 
a 15-ppm sulfur standard beginning October 1, 2012.
---------------------------------------------------------------------------

    Transmix processors and other fuel distributors in the NEMA area 
stated that they were concerned that the changing state heating oil 
specifications would impact their ability to market transmix distillate 
product beginning in 2012 and increasingly over time. They requested 
that EPA extend the 500-ppm LM flexibility to the NEMA area by 2012 to 
lessen the impact on the fuel distribution system of complying with 
more stringent federal and state distillate sulfur standards. They 
stated that the enforcement mechanisms proposed above for use outside 
of the NEMA area after 2014 could apply equally well within the NEMA 
area beginning in 2012. They also stated that extending the proposed 
flexibility to inside the NEMA would not have an adverse environmental 
impact because of the potential to defer significant additional 
transportation emissions to the more distant C3 marine market.
    The proposed provisions that would allow 500-ppm LM from transmix 
to be used outside of the NEMA area after 2014 would reinstate a 
flexibility that was withdrawn by the C3 marine final rule. Allowing 
500-ppm LM to be used inside the NEMA area would provide more 
flexibility than was previously included in EPA's diesel program. We 
believe that extending the 500-ppm transmix flexibility to include the 
NEMA area will reduce distribution costs for their distillate product 
from transmix processors. Consequently, we are requesting comment on 
applying the proposed 500-ppm LM transmix provisions discussed above to 
the NEMA area beginning June 2012.\29\ Given the current transition in 
the NEMA area to the use of 15-ppm sulfur heating oil, it would be most 
useful to industry if the proposed flexibility could become effective 
as soon as possible.
---------------------------------------------------------------------------

    \29\ Prior to 2014, parties outside of the NEMA area who 
distribute 500-ppm LM would be covered by the existing compliance 
assurance requirements.
---------------------------------------------------------------------------

    Similar to our analysis for outside of the NEMA area, our analysis 
of the potential environmental consequences of extending the diesel 
transmix flexibility to include the NEMA area indicates the effect on 
emissions would be neutral or positive. We also agree that the 
compliance assurance requirements that we are proposing for outside of 
the NEMA area could be applied within the NEMA area. A substantial 
fraction of the transmix processing industry markets fuel within the 
NEMA area. Thus, the potential cost reduction to industry and 
additional time to prepare for a transition to other markets for 
transmix distillate product that would be afforded by an extension of 
the proposed provisions to the NEMA would be significant.
    The implementation of the 1,000-ppm sulfur C3 marine fuel 
requirements in 2014 would provide another outlet for transmix 
distillate product in the NEMA area to replace the disappearing above-
15-ppm sulfur heating oil market. We request comment on whether, if we 
were to extend the 500-ppm LM transmix flexibility to inside the NEMA 
area, such an extension should be limited to the time period until the 
C3 marine fuel requirements becomes effective.

VII. Amendments Related to the Marker Requirements for Locomotive and 
Marine Fuel

    We also propose to amend the regulatory provisions regarding the 
transition in the fuel marker requirements for 500-ppm LM diesel fuel 
in 2012 to address an oversight in the original rulemaking where the 
regulations failed to incorporate provisions described in the 
rulemaking preamble. Today's proposed rule would amend the regulatory 
provisions regarding the transition in the fuel marker requirements for 
heating oil in 2014 to provide improved clarity.
    The preamble in the nonroad diesel final rule stated that EPA 
intended to allow 500-ppm LM diesel fuel containing greater than 0.10 
milligrams per liter of solvent yellow 124 (SY124) to be present at any 
location in the fuel distribution system (up to and including retail 
and wholesale-purchaser-consumer storage tanks) until September 30, 
2012.\30\ Although it was not explicitly stated in the preamble, it was 
implied that additional time would be allowed for marked 500-ppm LM to 
transition from the fuel tanks connected to locomotive and marine 
engines, consistent with the approach taken regarding the 
implementation of more stringent diesel fuel sulfur standards. However, 
the nonroad diesel regulations are not consistent with the preamble

[[Page 61324]]

and do not provide the allowance for marked 500-ppm LM diesel fuel to 
transition from fuel distribution and end-user tanks. 40 CFR 80.510(e) 
requires that all 500-ppm LM diesel fuel delivered from a truck loading 
rack located outside of the Northeast Mid-Atlantic (NEMA) area and 
Alaska must contain at least 6 mg/liter of SY124 through May 31, 2012. 
However, the regulatory text at 40 CFR 80.510(f) requires that 
beginning June 1, 2012, any diesel fuel that contains 0.10 mg/liter of 
SY124 must be designated as heating oil. Thus, the regulations as 
currently written do not provide any transition time for marked LM fuel 
that is present the distribution system as of May 31, 2012 to work its 
way through the fuel distribution system downstream of the truck 
loading rack and through the tanks connected to locomotive and marine 
engines.
---------------------------------------------------------------------------

    \30\ ``Control of Emissions for Air Pollution From Nonroad 
Diesel Engines and Fuel; Final Rule,'' Section V.C.1.c., The Period 
From June 1, 2012 Through May 31, 2014, 69 FR 39083, 39084 (June 29, 
2004).
---------------------------------------------------------------------------

    A number of locomotive and marine wholesale purchaser-consumers 
have taken custody of marked 500-ppm LM diesel fuel that they will not 
be able to consume prior to June 1, 2012. A number of fuel suppliers 
also have inventories of 500-ppm LM diesel fuel on hand that they may 
not be able to sell to LM diesel fuel users because such users are 
concerned about clearing their tanks of marked LM diesel fuel by June 
1, 2012. We are proposing to allow marked 500-ppm LM diesel fuel to 
transition normally through the fuel distribution and use system, 
consistent with the original intent of the nonroad diesel rule 
preamble. Today's proposed rule would allow 500-ppm LM diesel fuel at 
any point in the fuel distribution and end use system to contain more 
than 0.10 milligrams per liter of SY 124 through November 30, 2012.
    We are proposing to implement a single transition date applicable 
at all points in the fuel distribution and use system rather than a 
separate date applicable through retail and wholesale-purchaser-
consumer (WPC) facilities and another date applicable at all locations 
including the tanks attached to locomotive and marine equipment because 
we believe that a stepped compliance schedule is not necessary and a 
single transition date provides the most flexibility for regulated 
parties. We expect that the marker will typically transition out of 
retailer and WPC LM diesel storage tanks well in advance of November 
30, 2012. We further expect that users of LM diesel fuel can coordinate 
with retail and WPC facilities regarding deliveries of marked 500-ppm 
LM diesel fuel to ensure that the fuel in storage tanks attached to LM 
equipment is in compliance by November 30, 2012.
    Today's proposed rule would also amend the regulation to clarify 
the transition of the solvent yellow 124 marker out of heating oil 
beginning June 1, 2014. Specifically, today's proposal would amend the 
regulations to clarify that after December 1, 2014, EPA will no longer 
have any requirements with respect to the use of the solvent yellow 124 
marker. This is consistent with the intent expressed in our original 
nonroad diesel fuel rulemaking. We do not believe these proposed 
changes will adversely impact emissions.

VIII. Statutory and Executive Order Reviews

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

    Under Executive Order 12866 (58 CFR 51735 (October 4, 1993), this 
action is a ``significant regulatory action.'' Accordingly, EPA 
submitted this action to the Office of Management and Budget (OMB) for 
review under Executive Orders 12866 and 13563 (76 FR 3821 (January 21, 
2011) and any changes made in response to OMB recommendations have been 
documented in the docket for this action.

B. Paperwork Reduction Act

    The information collection requirements in this notice of proposed 
rulemaking and direct final rule have been submitted for approval to 
the Office of Management and Budget (OMB) under the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. The Information Collection Request (ICR) 
document prepared by EPA related to the amended heating oil definition 
has been assigned EPA ICR number 2462.01 and the ICR document prepared 
by EPA for diesel fuel produced by transmix producers has been assigned 
EPA ICR number 2463.01. Supporting statements for these proposed ICRs 
have been placed in the docket. The proposed information collections 
are described in the following paragraphs.
    This action contains recordkeeping and reporting (registration and 
product transfer documentation) that may affect parties who produce or 
import renewable fuels subject to the proposed revised definition of 
heating oil. EPA expects that very few parties will be subject to 
additional recordkeeping and reporting. We estimate that up to 11 
parties (i.e., RIN generators, consisting of up to 10 producers and one 
importer) may be subject to the proposed information collection over 
the next several years.\31\ We estimate an annual reporting burden of 
21 hours per respondent and an annual recordkeeping burden of 24 hours, 
yielding a total per respondent burden of 45 hours.\32\ Burden means 
the total time, effort, or financial resources expended by persons to 
generate, maintain, retain, or disclose or provide information to or 
for a Federal agency. This includes the time needed to review the 
instructions; develop, acquire, install, and utilize technology and 
systems for the purpose of collecting, validating, and verifying 
information, processing and maintaining information, and disclosing and 
providing information; adjust the existing ways to comply with any 
previously applicable instructions and requirements; train personnel to 
be able to respond to a collection of information; search data sources; 
complete and review the collection of information; and transit or 
otherwise disclose the information. Burden is as defined at 5 CFR 
1320.3(b).
---------------------------------------------------------------------------

    \31\ We project that the number of effected parties will remain 
essentially constant over time.
    \32\ This includes the time to train staff, formulate and 
transmit responses, and other miscellaneous compliance related 
activities.
---------------------------------------------------------------------------

    This action also contains provisions related to diesel fuel that is 
produced by transmix processors. We have proposed reporting 
requirements that would apply to transmix processors (all of whom are 
refiners) and other parties (such as carriers or distributors) in the 
distribution chain who handle diesel fuel produced by transmix 
producers. The collected data will permit EPA to: (1) Process 
compliance plans from transmix producers; and (2) Ensure that diesel 
fuel made from transmix meets the standards required under the 
regulations at 40 CFR part 80, and that the associated benefits to 
human health and the environment are realized. We estimate that 25 
transmix processors and 150 other parties may be subject to the 
proposed information collection.\33\ We estimate an annual reporting 
burden of 28 hours per transmix processor (respondent) and 8 hours per 
other party (respondent); considering all respondents (transmix 
producers and other parties) who would be subject to the proposed 
information collection, the annual reporting burden, per respondent, 
would be 11 hours. Burden

[[Page 61325]]

means the total time, effort, or financial resources expended by 
persons to generate, maintain, retain, or disclose or provide 
information to or for a Federal agency. This includes the time needed 
to review the instructions; develop, acquire, install, and utilize 
technology and systems for the purpose of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transit or otherwise disclose the information. Burden is as defined 
at 5 CFR 1320.3(b).
---------------------------------------------------------------------------

    \33\ This is based on current transmix production. Although the 
total volume of transmix produced in the fuel distribution system 
may decline in parallel with the projected decrease in overall 
petroleum-based fuel use, we anticipate that the number of transmix 
processors will remain essentially constant since their number is 
dependent on the configuration of the petroleum-based fuel 
distribution system.
---------------------------------------------------------------------------

    The proposed amendments to the fuel marker requirements for 
locomotive and marine diesel fuel in today's proposed rule do not 
contain any new recordkeeping and reporting requirements.
    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 are listed in 40 CFR part 9.
    To comment on the Agency's need for this information, the accuracy 
of the provided burden estimates, and any suggested methods for 
minimizing respondent burden, EPA has established a public docket for 
this rule, which includes the ICRs described above, under Docket ID 
number EPA-HQ-OAR-2012-0223. Submit any comments related to the ICR to 
EPA and OMB. See the ADDRESSES section at the beginning of this notice 
for where to submit comments to EPA. Send comments to OMB at the Office 
of Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street NW., Washington, DC 20503, Attention: Desk Office for 
EPA. Since OMB is required to make a decision concerning the ICR 
between 30 and 60 days after October 9, 2012, a comment to OMB is best 
assured of having its full effect if OMB receives it by November 8, 
2012.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's (SBA) regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of this action on small 
entities, I certify that this proposed rule will not have a significant 
economic impact on a substantial number of small entities. This 
proposed rule will not impose any new requirements on small entities. 
The relatively minor corrections and modifications this proposed rule 
makes to the final RFS2 regulations do not impact small entities. The 
proposed amendments to the diesel transmix provisions would lessen the 
regulatory burden on all affected tranmix processors and provide a 
source of lower cost locomotive and marine diesel fuel to consumers. We 
continue to be interested in the potential impacts of the rule on small 
entities and welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    This proposed rule does not contain a Federal mandate that may 
result in expenditures of $100 million or more for State, local, and 
tribal governments, in the aggregate, or the private sector in any one 
year. We have determined that this action will not result in 
expenditures of $100 million or more for the above parties and thus, 
this rule is not subject to the requirements of sections 202 or 205 of 
UMRA.
    This proposed rule is also not subject to the requirements of 
section 203 of UMRA because it contains no regulatory requirements that 
might significantly or uniquely affect small governments. It only 
applies to gasoline, diesel, and renewable fuel producers, importers, 
distributors and marketers and makes relatively minor corrections and 
modifications to the RFS2 and diesel sulfur regulations.

E. Executive Order 13132 (Federalism)

    This action does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This action only applies to 
gasoline, diesel, and renewable fuel producers, importers, distributors 
and marketers and makes relatively minor corrections and modifications 
to the RFS2 and diesel sulfur regulations. Thus, Executive Order 13132 
does not apply to this action.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed action 
from State and local officials.

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

    This proposed rule does not have tribal implications, as specified 
in Executive Order 13175 (65 FR 67249 (November 9, 2000)). It applies 
to gasoline, diesel, and renewable fuel producers, importers, 
distributors and marketers. This action makes relatively minor 
corrections and modifications to the RFS and diesel sulfur regulations, 
and does not impose any enforceable duties on communities of Indian 
tribal governments. Thus, Executive Order 13175 does not apply to this 
action. Nonetheless, EPA specifically solicits additional comment on 
this proposed action from tribal officials.

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

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

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

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211 (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. We have concluded that this rule is not 
likely to have adverse energy effects because we do not anticipate 
adverse energy effects related to the additional

[[Page 61326]]

generation of RINs for home heating oil or the reduced regulatory 
burden for transmix processors. This proposed rule would facilitate the 
use of 500-ppm sulfur locomotive and marine (LM) diesel fuel, which 
contains the SY 124 marker that is already in the fuel distribution and 
use system consistent with EPA's original intent. Today's action will 
avoid the potential need to remove marked 500-ppm LM diesel fuel from 
the system for reprocessing, and the associated increased costs and 
potential disruption to the supply of LM diesel fuel.

I. National Technology Transfer and Advancement Act

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

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

    Executive Order (EO) 12898 (59 FR 7629 (February 16, 1994)) 
establishes Federal executive policy on environmental justice. Its main 
provision directs Federal agencies, to the greatest extent practicable 
and permitted by law, to make environmental justice part of their 
mission by identifying and addressing, as appropriate, 
disproportionately high and adverse human health or environmental 
effects of their programs, policies, and activities on minority 
populations and low-income populations in the United States.
    EPA has determined that this proposed rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment. These amendments would not relax the control measures on 
sources regulated by the RFS regulations and therefore would not cause 
emissions increases from these sources. We have determined that 
proposed amendments to the diesel transmix provisions and marker 
provisions for locomotive and marine diesel fuel under the diesel 
sulfur program would have a neutral or positive impact on diesel 
vehicle emissions.\34\
---------------------------------------------------------------------------

    \34\ See section VI and VII of today's notice for details of 
this analysis.
---------------------------------------------------------------------------

IX. Statutory Provisions and Legal Authority

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

List of Subjects in 40 CFR Part 80

    Environmental protection, Administrative practice and procedure, 
Agriculture, Air pollution control, Confidential business information, 
Diesel fuel, Transmix, Energy, Forest and forest products, Fuel 
additives, Gasoline, Imports, Labeling, Motor vehicle pollution, 
Penalties, Petroleum, Reporting and recordkeeping requirements.

    Dated: September 17, 2012.
Lisa P. Jackson,
Administrator.
[FR Doc. 2012-23714 Filed 10-5-12; 8:45 am]
BILLING CODE P