Amendments Related to Global Marine Fuel, 69335-69341 [2019-27158]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 84, Number 243 (Wednesday, December 18, 2019)]
[Rules and Regulations]
[Pages 69335-69341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27158]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2018-0638; FRL-10003-29-OAR]
RIN 2060-AU74


Amendments Related to Global Marine Fuel

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is amending its 
diesel fuel regulations to allow fuel suppliers to distribute 
distillate diesel fuel that complies with the sulfur standard that 
applies internationally for ships instead of the fuel standards that 
otherwise apply to distillate diesel fuel in the United States. The 
affected fuel may not be used in the United States' Emission Control 
Areas.

DATES: This final rule is effective on December 18, 2019.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2018-0638. All documents in the docket are 
listed on the www.regulations.gov website. 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, is not placed on the internet 
and will be publicly available only in hard copy form. Publicly 
available docket materials are available either electronically in 
www.regulations.gov or in hard copy at Air and Radiation Docket and 
Information Center, EPA Docket Center, EPA/DC, EPA WJC West Building, 
1301 Constitution Ave. NW, Room 3334, 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: Robert Anderson, Office of 
Transportation and Air Quality, Environmental Protection Agency, (734) 
214-4280; [email protected].

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    This action relates to companies that produce and distribute 
distillate diesel fuel. Categories and entities that might be affected 
include the following:

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                                    Category                                      NAICS code \a\         Examples of potentially affected entities
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Industry.......................................................................            324110  Petroleum refineries (including importers).
                                                                                           424710  Petroleum bulk stations and terminals.
                                                                                           493190  Other warehousing and storage-bulk petroleum storage.
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\a\ North American Industry Classification System (NAICS).

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely covered by these rules. 
This table lists the types of entities that we are aware may be 
regulated by this action. Other types of entities not listed in the 
table could also be regulated. To determine whether your activities are 
regulated by this action, you should carefully examine the 
applicability criteria in the referenced regulations. You may direct 
questions regarding the applicability of this action to the persons 
listed in the preceding FOR FURTHER INFORMATION CONTACT section.

B. What is the Agency's authority for taking this action?

    EPA adopted sulfur standards for marine diesel fuel under Clean Air 
Act authority (42 U.S.C. 7401-7671q). The amendments in this rule are 
covered by that same authority.

C. What is the effective date of this action?

    Section 553(d)(1) of the Administrative Procedure Act, 5 U.S.C. 
553(d)(1), provides that final rules shall not become effective until 
30 days after publication in the Federal Register ``except . . . a 
substantive rule which grants or recognizes an exemption or relieves a 
restriction.'' The purpose of this provision is to ``give affected 
parties a reasonable time to adjust their behavior before the final 
rule takes effect.'' Omnipoint Corp. v. Fed. Commc'n Comm'n, 78 F.3d 
620, 630 (D.C. Cir. 1996); see also United States v. Gavrilovic, 551 
F.2d 1099, 1104 (8th Cir. 1977) (quoting legislative history). However, 
when the agency grants or recognizes an exemption or relieves a 
restriction, affected parties do not need a reasonable time to adjust 
because the effect is not adverse. EPA is issuing this final rule under 
Clean Air Act section 307(d), which states ``The provisions of section 
553 through 557. . . of Title 5 shall not, except as expressly provided 
in this section, apply to actions to which this subsection applies.'' 
42 U.S.C. 7607(d)(1). Thus, section 553(d) of the Administrative 
Procedures Act does not apply to this rule. EPA is nevertheless acting 
consistently with the policies underlying APA section 553(d) in making 
the regulations contained in this final rule effective upon publication 
in the Federal Register. The regulatory amendments to 40 CFR part 80, 
subpart I, conditionally exempt distillate marine diesel fuel from the 
prohibition against distributing

[[Page 69336]]

distillate diesel fuel that exceeds the sulfur content limits for ultra 
low-sulfur diesel (ULSD) fuel and Emission Control Area (ECA) marine 
fuel. This action will allow for distribution of distillate diesel fuel 
used as global marine fuel that complies with the 5,000 ppm \1\ global 
fuel sulfur content limit contained in MARPOL Annex VI, which goes into 
effect on January 1, 2020; this fuel may not be used in the U.S. ECAs. 
Accordingly, it is in keeping with the policy underlying the 
Administrative Procedures Act for the regulatory amendments to 40 CFR 
part 80, subpart I, to take effect upon publication in the Federal 
Register.
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    \1\ The MARPOL Annex VI global fuel sulfur limit is set at 0.50% 
m/m; for ease of discussion and consistency with our 40 CFR part 80 
program, this rule refers to the global sulfur limit as 5,000 ppm.
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I. Background

    The United States ratified Annex VI to the International Convention 
for the Prevention of Pollution from Ships (MARPOL Annex VI) and became 
a Party to this Protocol effective January 2009. To address ship sulfur 
oxides (SOX) and particulate matter (PM) emissions, the 
Annex contains limits on the sulfur content of fuel used in global 
shipping. The sulfur content limit is currently 35,000 ppm, decreasing 
to 5,000 ppm beginning January 1, 2020. This sulfur limit is not as 
stringent as the limit that applies in designated Emission Control 
Areas (ECAs), currently set at 1,000 ppm, but is more stringent than 
the current global limit and is expected to lead to significant health 
and welfare benefits globally.\2\
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    \2\ Designated ECAs for the United States include the North 
American ECA and the U.S. Caribbean Sea ECA. More specific 
descriptions may be found in EPA fact sheets: ``Designation of North 
American Emission Control Area to Reduce Emissions from Ships,'' 
EPA-420-F-10-015, March 2010, https://www.epa.gov/regulations-emissions-vehicles-and-engines/designation-north-american-emission-control-area-marine; and ``Designation of Emission Control Area to 
Reduce Emissions from Ships in the U.S. Caribbean,'' EPA-420-F-11-
024, July 2011, https://www.epa.gov/regulations-emissions-vehicles-and-engines/designation-us-caribbean-emission-control-area-marine.
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    The U.S. refining industry has indicated to EPA that they are well 
positioned to supply fuel meeting this new 2020 global marine fuel 
standard, for use outside of ECA boundaries.\3\ They will do this by 
providing compliant distillate- or residual-type fuel; blended fuel may 
be residual or distillate. However, as explained below, they also 
expressed a concern that existing provisions in our Clean Air Act (CAA) 
diesel fuel regulations may prevent them from distributing compliant 
fuel in the United States. We therefore need to amend the CAA fuel 
regulations at 40 CFR part 80 to allow distribution in the United 
States of distillate fuel meeting the 2020 global marine fuel standard, 
for use outside of ECA boundaries. These amendments will help 
facilitate smooth implementation of the 2020 global marine fuel 
standard.
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    \3\ See, for example, the website for the Coalition for American 
Energy Security at https://americanenergysecurity.com.
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II. Technical Discussion

    There are two broad categories of marine fuel: Distillate fuel and 
residual fuel. The International Organization for Standardization (ISO) 
distinguishes these fuel types based on their kinematic viscosity (see 
ISO 8217:2017(E)): Residual fuel ranges from 10 to 700 mm\2\/s at 50 
[deg]C while distillate fuel ranges from 1,400 to 11,000 mm\2\/s at 40 
[deg]C, meaning that residual fuel is much less viscous than distillate 
fuel. Residual fuel also has a higher sulfur content, as it is the 
residue of the refining process. The ISO fuel specifications note that 
while sulfur content is defined by the purchaser, it is generally 
subject to a maximum value of 15,000 ppm for distillate fuel. There is 
no maximum sulfur limit that applies when selling residual fuel, and 
the sulfur content can be 35,000 ppm or more. MARPOL Annex VI requires 
any fuel used onboard a ship to not exceed 35,000 ppm when the ship is 
operating outside of designated ECAs, and this global marine fuel has 
consistently been residual fuel, not distillate fuel. Beginning in 
2020, however, the lower sulfur content of global marine fuel means 
that compliant fuel can be distillate, residual, or blends of both. ISO 
does not currently have specifications for blended fuel, however they 
have issued ISO/PAS 23263 (2019-09), ``Considerations for fuel 
suppliers and users regarding marine fuel quality in view of the 
implementation of maximum 0.50% sulfur in 2020.'' \4\ This document 
``defines general requirements that apply to all 0.50 mass % sulfur (S) 
fuels and confirms the applicability of ISO 8217 for those fuels.''
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    \4\ In the introduction to this document, ISO notes that it was 
not possible to review the international fuel specifications 
contained in ISO 8217:2017, and that ISO/PAS 23263 (2019-09) was 
developed to assist in the transition to the 2020 global fuel sulfur 
standard.
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    Our CAA fuel program, contained in 40 CFR part 80, defines 
distillate fuel based on the T90 value of the fuel; this is the 
temperature at which 90 percent volume of the fuel evaporates. 
According to our regulations, distillate fuel has a T90 value below 700 
[deg]F. Marine distillate fuel sold or distributed in the United States 
under the CAA program has been subject to an EPA-established 15 ppm 
sulfur limit since 2012; see 40 CFR 80.510(c). In contrast, ECA marine 
fuel, both distillate and residual, sold or distributed in the United 
States has been subject to a 1,000 ppm sulfur limit since June 2014. 
See 40 CFR 80.510(k). This date was meant to facilitate availability of 
ECA fuel prior to the January 1, 2015, effective date of the 1,000 ppm 
fuel sulfur limit that would apply in our ECAs. Our CAA program does 
not contain requirements for residual fuel that is not ECA fuel.
    When the United States ratified MARPOL Annex VI in 2008, we did not 
revise our CAA fuel program to address the global fuel standards, for 
two reasons. First, the international global marine standards were set 
at 45,000 ppm until 2012, when it would decrease to 35,000 ppm. Ship 
owners were expected to use lower-cost residual fuel to comply with 
those limits, which was not covered by our CAA program, and there were 
no regulatory requirements for distributing it. Second, the 2020 global 
marine fuel sulfur limit was subject to an IMO availability review to 
be completed by 2018, making it premature to adopt the 5,000 ppm limit 
in 2010, when we modified our CAA fuel program to incorporate the ECA 
program. The availability review was completed early, in 2016, and the 
IMO's Marine Environment Protection Committee (MEPC) confirmed the 2020 
effective date.\5\
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    \5\ Annex VI included a provision in Regulation 14.8-10 
requiring an availability review, and that provision contemplated 
the possibility as a result of the study that parties may delay the 
effective date of the 2020 global marine fuel standard to 2025. The 
review was carried out early, in 2016, and the Parties affirmed the 
feasibility of meeting the 2020 marine fuel standard and decided not 
to delay the standard. MEPC 70/18, 11 November 2016, Report of the 
Marine Environment Protection Committee on its Seventieth Session, 
para 5.55.3: [the Committee] ``agreed to the date of 1 January 2020 
as the effective date of implementation for ships to comply with the 
0.50% m/m Sulphur content of fuel oil requirement, as set out in 
regulation 14.1.3 of MARPOL Annex VI . . .''
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    Distillate fuel is expected to play a significant role in meeting 
the 2020 global marine fuel standard, either as pure distillate fuel or 
as a component of blended fuel. This is due to the relatively high cost 
of removing sulfur from low-value residual fuel. U.S. fuel suppliers 
have informed EPA that they expect to meet the international 
requirement by providing either distillate fuel or distillate/residual 
blends; the blended fuel might have a T90 value below 700 [deg]F. But, 
absent amendment, EPA's existing regulations preclude the distribution 
in the United States of distillate fuel above the ECA

[[Page 69337]]

fuel sulfur limit. This limitation would hinder the ability of U.S. 
refiners to supply compliant 2020 global marine fuel to ships engaged 
in international transportation, because they would be limited to 
providing only fuel with a T90 at or above 700 [deg]F. This means that 
a ship wishing to purchase fuel in the United States would be able to 
buy only 5,000 ppm residual fuel--if it is available; otherwise, the 
ship would be limited to purchasing higher-price ECA fuel or delaying 
its fuel purchase to the next port of call to avoid that additional 
cost. In addition, U.S. fuel providers wishing to participate in the 
global fuel market would be faced with exporting 2020 distillate global 
marine fuel with the higher T90 value for distribution elsewhere, which 
would lead to inefficiencies and increased costs, as well as loss of 
some portion of the U.S. share of the global fuel market.
    In sum, removing the restriction on the distribution of distillate 
fuel between 1,000 ppm and 5,000 ppm in the United States, for use 
outside of ECA boundaries, will provide greater flexibility for U.S. 
fuel suppliers participating in the global marine fuel market, which 
could reduce fuel costs in that the ship operator would not be faced 
with either purchasing more expensive ECA fuel or going to another 
country to purchase fuel. This change, requested by U.S. refiners, will 
also provide a level playing field for all potential U.S. suppliers--
those that supply distillate or blends as well as residual fuel. Such 
clarity will aid them in finalizing their fuel supply and distribution 
plans.

III. Final Action

    This action amends the regulations at 40 CFR part 80, subpart I, to 
allow for distribution of distillate diesel fuel that complies with the 
5,000 ppm global sulfur standard contained in Annex VI to the 
International Convention for the Prevention of Pollution from Ships 
(MARPOL Annex VI).
    This action includes several regulatory changes to accommodate the 
supply and distribution of distillate diesel fuel as global marine 
fuel. Primarily we are conditionally exempting distillate diesel fuel 
from the prohibition against distributing distillate diesel fuel that 
exceeds the ULSD and ECA marine fuel sulfur standards. This exemption 
includes several conditions. (1) The fuel must not exceed 0.50 weight 
percent (0.50% m/m, which is 5,000 ppm) sulfur; (2) fuel manufacturers 
must designate the fuel as global marine fuel; (3) product transfer 
documents accompanying the fuel must identify it as global marine fuel; 
(4) global marine fuel must be segregated from other fuel that is 
subject to the diesel fuel standards in 40 CFR part 80, subpart I; (5) 
the fuel may not be used in any vehicles, engines, or equipment 
operating in the United States (including vessels operating in an ECA 
or ECA-associated area); and (6) manufacturers and distributors must 
meet conventional recordkeeping requirements. These changes largely 
mirror what we currently require for the manufacturers and distributors 
of home heating oil, which is another class of distillate fuel not 
subject to diesel fuel standards under 40 CFR part 80. The conditions 
imposed on home heating oil and the conditions we are including in this 
final rule are designed to prevent higher sulfur distillate fuel from 
being diverted into markets that are subject to 15 ppm ULSD standard or 
the 1,000 ppm ECA marine standard. The conditions that apply for 
distribution of global marine fuel include basic designation, PTD, 
segregation and recordkeeping requirements. These conditions are 
similar to those previously adopted for distribution of heating oil. 
The conditions for distribution of global marine fuel also require the 
fuel to meet a 5,000 ppm sulfur limit. This condition is designed to 
ensure that the exempted fuel will be used consistent with its 
designation as global marine fuel. This reduces the potential for 
higher sulfur global marine fuel to be improperly diverted to the ULSD 
and ECA marine fuel markets.
    As noted above, the narrow set of amendments in this rule are 
intended to remove a regulatory obstacle to the distribution and sale 
in the United States of marine fuel that meets MARPOL Annex VI global 
sulfur standard of 5,000 ppm sulfur. In the future, after we have a 
better understanding of the nature of the fuel made available to comply 
with the 2020 global marine fuel standard (i.e., whether it is mostly 
distillate fuel, blended fuel, or residual fuel), we may consider a 
supplemental rule to address any additional implementation questions 
with respect to residual fuel.

IV. Economic and Environmental Impacts

    The purpose of the amendments is to ensure that U.S. refiners can 
permissibly distribute distillate marine fuel up to the 5,000 ppm 
sulfur limit, which will facilitate smooth implementation of the 2020 
global marine fuel standard. This is likely to reduce the costs of 
compliant fuel for ships, although the savings impacts are impossible 
to estimate without knowledge of the grades of fuel that will be made 
available for this emerging market beginning in January 2020 and their 
prices. While there are minor recordkeeping costs for fuel suppliers 
associated with the exemption described in Section III, there are no 
requirements to reduce the sulfur content of global marine fuel beyond 
what is already required by Annex VI.
    With respect to environmental and health impacts, the amendments to 
the CAA fuel regulations are not expected to alter the benefits of 
EPA's coordinated strategy to reduce emissions from large marine diesel 
engines and their fuel. This is because the coordinated strategy 
relies, in part, on the stringent international fuel sulfur limits that 
apply in United States ECAs, which include the coasts of the 
continental United States, the main Hawaiian Islands, southeastern 
portions of Alaska (U.S. portions of the North American ECA), and the 
Commonwealth of Puerto Rico and the U.S. Virgin Islands (U.S. Caribbean 
Sea ECA). The ECA fuel sulfur requirements for the North American and 
U.S. Caribbean Sea ECAs went into force in August 2012 and January 
2014, respectively, one year after they were designated by amendment to 
MARPOL Annex VI.\6\ The global fuel sulfur program may provide 
additional air quality benefits, for example, in those areas of the 
United States where the ECA is narrow, such as southern Florida, or in 
areas that are not covered by the ECA, such as Guam and western and 
northern Alaska. Note however that those benefits would be a 
consequence of the MARPOL Annex VI global sulfur requirements and would 
therefore accrue with or without the amendments in this final rule.
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    \6\ See MEPC.190(60) for the amendments to Annex VI designating 
the North American Emission Control Area, entry into force 1 August 
2011; and MEPC.202(62), designating the U.S. Caribbean Sea Emission 
Control Area, entry into force on 1 January 2013. Note that the ECA 
sulfur limits became enforceable one year after entry into force of 
the relevant amendments.
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V. Response to Comments

    We received several comments on the proposed provisions for global 
marine fuel.\7\ Commenters generally supported our proposal and agreed 
with our rationale to avoid unintended limitations on the supply and 
distribution of distillate global marine fuel.\8\ These commenters 
noted that EPA

[[Page 69338]]

did not intend to limit options for compliance with the 2020 global 
marine fuel standards when it codified the ULSD and ECA marine fuel 
standards in 40 CFR part 80. We appreciate comments in support of our 
proposed provisions for global marine fuel and are finalizing in this 
action provisions to allow under our CAA regulations for the supply and 
distribution of distillate marine fuel meeting the 2020 global marine 
fuel standards.
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    \7\ See 84 FR 46909 (September 6, 2019).
    \8\ See public comments from American Fuel & Petrochemical 
Manufacturers (EPA-HQ-OAR-2018-0638-0020), American Petroleum 
Institute (EPA-HQ-OAR-2018-0026), Coalition for American Energy 
Security (EPA-HQ-OAR-2018-0638-0029), National Association of Clean 
Air Agencies (EPA-HQ-OAR-2018-0638-0025), State of Maine Department 
of Environmental Protection (EPA-HQ-OAR-2018-0638-0034), and the 
Truck and Engine Manufacturers Association (EPA-HQ-OAR-2018-0638-
0033).
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    One commenter argued that the proposed rule was not in accordance 
with the requirements of Annex VI.\9\ They contend that Annex VI does 
not create caps or standards for fuel--instead equivalent measures such 
as scrubbers are allowed to be used to achieve the same sulfur 
reductions and that EPA's proposal would effectively set a cap on 
distillate marine fuel.
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    \9\ See public comments from Eversheds Sutherland (EPA-HQ-OAR-
2018-0638-0031).
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    As noted in the proposal, we are not setting a 0.50 weight percent 
sulfur standard on global marine fuel under the CAA, Annex VI, or the 
Act to Prevent Pollution from Ships (APPS), which is the authority for 
implementing and enforcing MARPOL Annex VI requirements in the United 
States. We already have sulfur limits established under the CAA that 
apply to all distillate marine fuel. This action provides an exemption 
to the sulfur limits established under the CAA so parties can supply 
and distribute distillate marine fuel for meeting the 2020 global 
marine fuel standard. Without this action, parties could not 
permissibly supply and distribute such fuel within the United States, 
which as other commenters noted, could have adverse effects on global 
marine fuel supply.
    We do not believe this rulemaking would unnecessarily limit the 
opportunities for parties to offer fuel that exceeds the 2020 global 
marine fuel standard, such as for vessels with installed scrubbers. As 
stated in the proposal,\10\ we believe the Annex VI global marine fuel 
standard of 3.50 weight percent that has been in place for some time 
was met almost exclusively with residual fuel. We believe it is 
unlikely that parties would refine a distillate fuel with greater than 
0.50 weight percent (5,000 ppm) sulfur content to use in vessels with 
scrubbers when substantially cheaper residual fuel with higher sulfur 
levels are available for use. This rule does not preclude the 
availability of such fuel for vessels with scrubbers installed. 
Blenders at any point in the distribution system would be able to mix 
distillate fuel and residual fuel such that the blended fuel has more 
than 5,000 ppm sulfur, as long as the blended fuel has a T90 
distillation point above 700 [deg]F, since the mixture would be 
residual fuel according to the definitions in 40 CFR part 80.
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    \10\ See 84 FR 46910 (September 6, 2019).
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    One commenter noted that EPA staff claimed the proposed rule was 
needed so EPA can enforce the 2020 global marine fuel standard.\11\ The 
commenter argued that the proposed rule is not needed to enforce the 
2020 global marine fuel standard and that EPA, the U.S. Coast Guard, 
and Department of Justice can enforce the 2020 standard under APPS.
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    \11\ See public comments from Eversheds Sutherland (EPA-HQ-OAR-
2018-0638-0031).
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    We agree with the commenter that this rule is not necessary to 
enforce distillate marine fuel requirements under the CAA or take 
enforcement actions related to the Annex VI standards under APPS. The 
purpose of this action is to allow parties to supply and distribute 
distillate global marine fuel under the CAA and is unrelated to our 
authority to enforce global marine fuel standards under APPS. We 
consider such comments related to enforcement of MARPOL Annex VI under 
APPS outside the scope of this final rule. However, we note that in 
addition to allowing distribution of distillate marine fuel to meet the 
2020 global marine fuel standards, the amendments will help to avoid 
contamination of the distillate marine fuel subject to a sulfur 
standard by exempting distillate marine fuel used to meet the 2020 
global marine fuel standards.
    One commenter argued that the proposed rule is outside the scope of 
EPA's authority to impose regulatory requirements and standards under 
the CAA and APPS.\12\ The commenter noted that nothing in the CAA or 
APPS provides EPA with the authority to regulate the sulfur content of 
fuel used entirely outside the United States. The commenter also 
suggested that EPA staff suggested EPA's proposal was intending to 
establish requirements under APPS. Finally, the commenter suggested 
that EPA's proposal exceeds any authority granted to it under MARPOL.
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    \12\ See public comments from Eversheds Sutherland (EPA-HQ-OAR-
2018-0638-0031).
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    We disagree with the commenter's suggestion that EPA lacks 
authority to propose an exemption to existing regulatory requirements 
under the CAA. We have imposed standards and requirements for all 
distillate marine fuel introduced into commerce in the United States 
under CAA section 211 at 40 CFR part 80, subpart I.\13\ This action 
does not impose new standards under the CAA as the commenter suggests. 
As noted in the proposal \14\ and in public comments from other 
stakeholders,\15\ this rule is necessary to allow parties to supply and 
distribute distillate 2020 global marine fuel that, prior to this 
amendment, was prohibited under previous rulemakings limiting 
distribution of distillate marine fuel with sulfur content exceeding 
standards under 40 CFR part 80. We are not taking this action under 
APPS or IMO Annex VI, so comments related to our authority under APPS 
or IMO Annex VI are outside the scope of this action.
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    \13\ See 66 FR 5134 (January 18, 2001) and 69 FR 39164 (June 29, 
2004).
    \14\ See 84 FR 46919 (September 6, 2019).
    \15\ See public comments from American Fuel & Petrochemical 
Manufacturers (EPA-HQ-OAR-2018-0638-0020), American Petroleum 
Institute (EPA-HQ-OAR-2018-0026), Coalition for American Energy 
Security (EPA-HQ-OAR-2018-0638-0029), National Association of Clean 
Air Agencies (EPA-HQ-OAR-2018-0638-0025), State of Maine Department 
of Environmental Protection (EPA-HQ-OAR-2018-0638-0034), and the 
Truck and Engine Manufacturers Association (EPA-HQ-OAR-2018-0638-
0033).
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    One commenter contended that the proposed rule was overly complex 
because it imposed designation and documentation requirements (through 
PTDs) for distillate global marine fuel instead of simply excluding all 
fuel used as bunker fuel outside of U.S. waters from the 40 CFR part 80 
diesel fuel standards.\16\ The commenter pointed to EPA's treatment of 
stationary distillate fuel and exported distillate fuel as examples of 
cases where EPA has excluded fuel from the diesel fuel standards of 40 
CFR part 80. We disagree that the rule is overly complex. The exemption 
for 2020 distillate global marine fuel functions in the same way that 
other exemptions to the diesel fuel standards function under the 
regulations at 40 CFR part 80, subpart I. This includes identifying the 
fuel as exempt (using designations on PTDs), ensuring that the fuel is 
segregated from fuel that is subject to the diesel sulfur standards, 
and keeping records to demonstrate that the fuel was appropriately 
designated and distributed as allowed under the regulations. Other 
exemptions to the diesel fuel standards of 40 CFR part 80, subpart I, 
also require that such fuel is used for the purpose that the fuel is 
exempt (or prohibit the use of such fuel for a different purpose).\17\ 
In the case of

[[Page 69339]]

exports specifically, parties must designate the distillate fuel for 
export (see 40 CFR 80.598(a)(2)) on PTDs (see 40 CFR 80.590(a)(6) or 
(b)(2)) and keep records of such designations and PTDs (see 40 CFR 
80.592(a)(1) and 80.602(a)(1)). We imposed these provisions on exports 
in prior rulemakings to help ensure that exported distillate fuel did 
not contaminate distillate fuel that is subject to diesel fuel 
standards. We have the same concerns with distillate global marine fuel 
since parties could distribute such fuel with distillate fuel subject 
to the diesel fuel standards. Therefore, we are imposing necessary and 
reasonable conditions for parties claiming an exemption for distillate 
global marine fuel consistent with how we currently treat exempted fuel 
under 40 CFR part 80, subpart I.
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    \16\ See public comments from Eversheds Sutherland (EPA-HQ-OAR-
2018-0638-0031).
    \17\ For example, 40 CFR 80.501(b) excludes a fuel only if the 
fuel is exported. If the fuel is not exported and instead used as 
diesel fuel in the United States, such fuel would be subject to 
applicable diesel fuel requirements under EPA's regulations.
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    One commenter suggested that EPA's proposal misinterpreted its 40 
CFR part 80 regulations by noting that distribution of distillate 
marine fuel containing more than 1,000 ppm sulfur content could not be 
supplied and distributed as global marine fuel.\18\ The commenter 
pointed to substitute PTD language requirements for high-sulfur fuel 
used in marine vessels under MARPOL Annex VI, Regulations 3 and 4 as an 
example of how EPA misinterpreted its regulations to limit the sulfur 
content of distillate marine fuel. The commenter also suggested that 
the classification of a distillate fuel determines whether the fuel is 
subject to EPA's diesel fuel requirements. The commenter states that 
since EPA staff recognized that distillate fuel is sometimes not 
subject to EPA's requirements (e.g., distillate fuel used for power 
generation), that EPA's regulations at 40 CFR part 80 do not cover 
high-sulfur distillate fuel used in marine engines.
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    \18\ See public comments from Eversheds Sutherland (EPA-HQ-OAR-
2018-0638-0031).
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    We also disagree with the suggestion that because stationary 
distillate fuel does not have to meet the diesel fuel standards of 40 
CFR part 80, a category of distillate marine fuel is not subject to the 
diesel fuel requirements under 40 CFR part 80 and that a fuel is only 
subject to the regulation if a party classifies the fuel as a fuel that 
is subject to the regulatory requirements. While the regulatory 
provisions in 40 CFR part 80 may not cover all distillate products, the 
regulations clearly apply to distillate fuel intended for use, made 
available for use, and used in marine engines. The regulations at 40 
CFR 80.2(aaa) and (ppp) broadly define both distillate fuel and 
locomotive or marine (LM) diesel fuel. Furthermore, the regulation at 
40 CFR 80.501 clearly specifies that marine diesel fuel and other types 
of distillate fuel are subject to the provisions of 40 CFR part 80, 
subpart I.\19\ These definitions and the regulations that cover which 
types of fuel are subject to our regulations are not based solely on 
how the fuel is classified, as suggested by the commenter, but also on 
how the fuel is intended for use, made available for use, and 
ultimately used. For example, the definitions of ``marine diesel fuel'' 
and ``ECA marine fuel'' make clear that the definition covers the 
specified fuel ``used, intended for use, or made available for use'' 
(40 CFR 80.2(ppp) and (ttt)). Thus, claiming that a distillate fuel was 
intended for use in stationary internal combustion engines and then 
making that fuel available for use or using that fuel in a marine 
engine would still subject that fuel to the marine diesel fuel 
requirements. The regulations at 40 CFR part 80 require that such fuel 
must either meet the appropriate diesel sulfur standard or be exempted 
from the applicable standards, subject to certain conditions.
---------------------------------------------------------------------------

    \19\ See 40 CFR 80.501(a)(2) and (6).
---------------------------------------------------------------------------

    We also disagree that the allowance of substitute language for 
high-sulfur fuel used in marine vessels under MARPOL Annex VI, 
Regulations 3 and 4 implies that distillate marine fuel containing more 
than 1,000 ppm is exempt from the regulations at 40 CFR part 80, 
subpart I. First, for a party to use the substitute PTD language for 
marine fuel at 40 CFR 80.590(b)(5)-(7), the party and the fuel would 
need to be subject to the provisions under 40 CFR part 80, subpart I. 
Second, the commenter misunderstands that these language provisions are 
in place for residual fuel (which is covered under the regulations at 
40 CFR part 80 when used as ECA marine fuel) to demonstrate that they 
are not subject to diesel fuel and ECA marine standards and can only be 
used in vessels that can lawfully use that fuel. That does not mean 
that the fuel and parties that supply and distribute such fuel are not 
subject to the requirements or exempt from diesel fuel standards.
    Two commenters asked EPA to clarify whether residual fuel would be 
affected by the proposed provisions.\20\ These commenters suggested 
minor revisions to the definition of global marine fuel and the 
proposed regulations to clarify EPA's intent to apply the exemption 
provisions only to distillate fuel already subject to 40 CFR part 80 
requirements. As noted in the proposal \21\ and in Section II of this 
preamble, 40 CFR part 80, subpart I, does not impose new standards on 
residual fuel, which makes an exemption unnecessary. We do not intend 
to introduce residual fuel regulations as part of this action. We agree 
with commenters' suggestions to clarify the scope of the proposed 
changes to 40 CFR part 80, subpart I, and have made corresponding 
changes to the regulations in response to these comments.
---------------------------------------------------------------------------

    \20\ See public comments from American Petroleum Institute (EPA-
HQ-OAR-2018-0638-0026) and Eversheds Sutherland (EPA-HQ-OAR-2018-
0031).
    \21\ See 84 FR 46910 (September 6, 2019).
---------------------------------------------------------------------------

    One commenter asked for clarification on when designation and 
segregation would apply to distillate global marine fuel.\22\ In this 
action we are finalizing the proposed condition that, for distillate 
global marine fuel to be exempt from the diesel sulfur requirements, 
the distillate global marine fuel would need to be designated as global 
marine fuel and segregated from fuel subject to the regulatory 
requirement from the point of production to the point where the fuel is 
supplied to marine vessels that would use the fuel. The same commenter 
asked for clarification that 2020-compliant fuel is allowed and that 
distillate fuel with sulfur content above 5,000 ppm could be sold as 
bunker fuel.\23\ As discussed above, this rule would not preclude the 
sale or distribution of residual fuel used to meet the 2020 standard, 
and we do not expect production of distillate marine fuel with sulfur 
content above 5,000 ppm, as it would be too costly.
---------------------------------------------------------------------------

    \22\ See public comments from Eversheds Sutherland (EPA-HQ-OAR-
2018-0638-0031).
    \23\ Id.
---------------------------------------------------------------------------

    Commenters also requested that EPA complete this action in a timely 
manner to avoid disruption in the supply and distribution of distillate 
global marine fuel ahead of the January 1, 2020 implementation date for 
the global marine fuel sulfur standard.\24\ Commenters noted that 
failure to modify the regulations to allow for the supply and 
distribution of distillate global marine fuel would have significant 
cost impacts and send signals of uncertainty to parties wishing to 
supply and distribute product to meet the demand for distillate global 
marine fuel in the United States. We appreciate the need to provide 
regulatory certainty and believe it is in the public interest to

[[Page 69340]]

allow parties to supply and distribute distillate global marine fuel 
ahead of the January 1, 2020, implementation deadline. We are therefore 
making the regulatory changes for distillate global marine fuel 
effective on the date this action is published in the Federal Register.
---------------------------------------------------------------------------

    \24\ See public comments from American Petroleum Institute (EPA-
HQ-OAR-2018-0638-0026) and American Fuel and Petrochemical 
Manufacturers (EPA-HQ-OAR-2018-0638-0020).
---------------------------------------------------------------------------

VI. Statutory and Executive Order Reviews

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

    This action is not a significant regulatory action and was 
therefore not submitted to the Office of Management and Budget (OMB) 
for review.

B. Executive Order 13771: Reducing Regulations and Controlling 
Regulatory Costs

    This action is not an Executive Order 13771 regulatory action 
because this action is not significant under Executive Order 12866.

C. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden 
under the PRA. OMB has previously approved the information collection 
activities contained in the existing regulations and has assigned OMB 
control number 2060-0308. We believe this action does not impose any 
new information collection burden as this action will provide clarity 
and additional flexibility to U.S. fuel suppliers providing distillate 
global marine fuel.

D. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. In 
making this determination, the impact of concern is any significant 
adverse economic impact on small entities. An agency may certify that a 
rule will not have a significant economic impact on a substantial 
number of small entities if the rule relieves regulatory burden, has no 
net burden, or otherwise has a positive economic effect on the small 
entities subject to the rule. This action will provide clarity and 
additional flexibility to U.S. fuel suppliers providing distillate 
global marine fuel. We have therefore concluded that this action will 
have no adverse regulatory impact for any directly regulated small 
entities.

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments. The action imposes no enforceable duty on any state, 
local, or tribal governments or the private sector.

F. 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.

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

    This action does not have tribal implications as specified in 
Executive Order 13175. This rule will be implemented at the Federal 
level and affects suppliers of global marine fuel. Thus, Executive 
Order 13175 does not apply to this action.

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

    This action is not subject to Executive Order 13045 because it is 
not economically significant as defined in Executive Order 12866. This 
action's assessment of the environmental impact of the rule contained 
in Section IV shows that the rule will have no adverse impact. This 
action will therefore not affect children's health.

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

    This action is not subject to Executive Order 13211, because it is 
not a significant regulatory action under Executive Order 12866.

J. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

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

    EPA believes that this action does not have disproportionately high 
and adverse human health or environmental effects on minority 
populations, low income populations, and/or indigenous peoples, as 
specified in Executive Order 12898 (59 FR 7629, February 16, 1994). As 
discussed in Section IV, we do not expect this action to alter the 
benefits of EPA's coordinated strategy to reduce emissions from large 
marine diesel engines and their fuels.

L. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 80

    Environmental protection, Fuel additives, Gasoline, Greenhouse 
gases, Imports, Labeling, Motor vehicle pollution, Penalties, Reporting 
and recordkeeping requirements.

    Dated: December 10, 2019.
Andrew R. Wheeler,
Administrator.

    For the reasons set forth above, EPA is amending 40 CFR part 80 as 
follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

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


0
2. Section 80.2 is amended by adding paragraph (aa) to read as follows:


Sec.  80.2  Definitions.

* * * * *
    (aa) Global marine fuel means diesel fuel, distillate fuel, or 
residual fuel used, intended for use, or made available for use in 
steamships or Category 3 marine vessels while the vessels are operating 
outside the boundaries of an Emission Control Area (ECA). Global marine 
fuel is subject to the provisions of the International Convention for 
the Prevention of Pollution from Ships (MARPOL) Annex VI. Note that 
this part regulates global marine fuel only if it qualifies as a 
distillate fuel.
* * * * *

0
3. Section 80.501 is amended by redesignating paragraphs (a)(6) and (7) 
as paragraphs (a)(7) and (8), adding a new paragraph (a)(6), and 
revising paragraph (b) to read as follows:


Sec.  80.501  What fuel is subject to the provisions of this subpart?

    (a) * * *
    (6) Distillate global marine fuel.
* * * * *
    (b) Excluded fuel. The provisions of this subpart do not apply to--
    (1) Distillate fuel that is designated for export outside the 
United States in accordance with Sec.  80.598, identified for export by 
a transfer document as

[[Page 69341]]

required under Sec.  80.590, and that is exported.
    (2) Residual global marine fuel.

0
4. Section 80.590 is amended by revising the section heading and 
paragraph (a) introductory text and adding paragraph (a)(7)(viii) to 
read as follows:


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

    (a) This paragraph (a) applies on each occasion that any person 
transfers custody or title to MVNRLM diesel fuel, heating oil, 
distillate global marine fuel, or ECA marine fuel (including 
distillates used or intended to be used as MVNRLM diesel fuel, heating 
oil, global marine fuel, or ECA marine fuel) except when such fuel is 
dispensed into motor vehicles or nonroad equipment, locomotives, marine 
diesel engines or steamships or Category 3 vessels. Note that 40 CFR 
part 1043 specifies requirements for documenting fuel transfers to 
certain marine vessels. For all fuel transfers subject to this 
paragraph (a), the transferor must provide to the transferee documents 
which include the following information:
* * * * *
    (7) * * *
    (viii) Distillate global marine fuel. ``For use only in steamships 
or Category 3 marine vessels operating outside the boundaries of an 
Emission Control Area (ECA), consistent with MARPOL Annex VI.''
* * * * *

0
5. Section 80.598 is amended by revising paragraphs (a)(2)(i)(G) and 
(b)(8)(iii) to read as follows:


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

    (a) * * *
    (2) * * *
    (i) * * *
    (G) Exempt distillate fuels such as distillate global marine fuels 
under Sec.  80.605, fuels that are covered by a national security 
exemption under Sec.  80.606, fuels that are used for purposes of 
research and development pursuant to Sec.  80.607, and fuels used in 
the U.S. Territories pursuant to Sec.  80.608 (including additional 
identifying information).
* * * * *
    (b) * * *
    (8) * * *
    (iii) Exempt distillate fuels such as distillate global marine 
fuels under Sec.  80.605, fuels that are covered by a national security 
exemption under Sec.  80.606, fuels that are used for purposes of 
research and development pursuant to Sec.  80.607, and fuels used in 
the U.S. Territories pursuant to Sec.  80.608 (including additional 
identifying information).
* * * * *

0
6. Amend Sec.  80.602 by revising the section heading and paragraphs 
(a) and (b)(4)(i) to read as follows:


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

    (a) Records that must be kept by parties in the NRLM diesel fuel, 
ECA marine fuel, distillate global marine fuel and diesel fuel additive 
production, importation, and distribution systems. Beginning June 1, 
2007, or June 1, 2006, if that is the first period credits are 
generated under Sec.  80.535, any person who produces, imports, sells, 
offers for sale, dispenses, distributes, supplies, offers for supply, 
stores, or transports nonroad, locomotive or marine diesel fuel, or ECA 
marine fuel (beginning June 1, 2014) subject to the provisions of this 
subpart, must keep all the records specified in this paragraph (a). The 
recordkeeping requirements for distillate global marine fuel in this 
paragraph (a) start January 1, 2020.
    (1) The applicable product transfer documents required under 
Sec. Sec.  80.590 and 80.591.
    (2) For any sampling and testing for sulfur content for a batch of 
NRLM diesel fuel produced or imported and subject to the 15 ppm sulfur 
standard or any sampling and testing for sulfur content of any fuel 
subject to the provisions of this subpart as part of a quality 
assurance testing program, and any sampling and testing for cetane 
index, aromatics content, marker solvent yellow 124 content or dye 
solvent red 164 content of NRLM diesel fuel, ECA marine fuel, NRLM 
diesel fuel additives or heating oil:
    (i) The location, date, time and storage tank or truck 
identification for each sample collected;
    (ii) The name and title of the person who collected the sample and 
the person who performed the testing; and
    (iii) The results of the tests for sulfur content (including, where 
applicable, the test results with and without application of the 
adjustment factor under Sec.  80.580(d)), for cetane index or aromatics 
content, dye solvent red 164, marker solvent yellow 124 (as 
applicable), and the volume of product in the storage tank or container 
from which the sample was taken.
    (3) The actions the party has taken, if any, to stop the sale or 
distribution of any NRLM diesel fuel, distillate global marine fuel, or 
ECA marine fuel found not to be in compliance with the sulfur standards 
specified in this subpart, and the actions the party has taken, if any, 
to identify the cause of any noncompliance and prevent future instances 
of noncompliance.
    (b) * * *
    (4) * * *
    (i) NRLM diesel fuel, NR diesel fuel, LM diesel fuel, distillate 
global marine fuel, ECA marine fuel, or heating oil, as applicable.
* * * * *

0
7. Section 80.605 is added to read as follows:


Sec.  80.605  Global marine fuel exemption.

    (a) The standards of this subpart do not apply to distillate global 
marine fuel that is produced, imported, sold, offered for sale, 
supplied, offered for supply, stored, dispensed, or transported for use 
in steamships or Category 3 marine vessels when operating outside of 
ECA boundaries.
    (b) The exempt fuel must meet all the following conditions:
    (1) It must not exceed 0.50 weight percent sulfur (5.0[middot]10\3\ 
ppm).
    (2) It must be accompanied by product transfer documents as 
required under Sec.  80.590.
    (3) It must be designated as specified under Sec.  80.598.
    (4) It must be segregated from non-exempt fuel at all points in the 
distribution system.
    (5) It may not be used in any vehicles, engines, or equipment other 
than those referred to in paragraph (a) of this section.
    (c) Fuel not meeting the conditions specified in paragraph (b) of 
this section is subject to the standards, requirements, and 
prohibitions that apply for MVNRLM diesel fuel. Similarly, any person 
who produces, imports, sells, offers for sale, supplies, offers for 
supply, stores, dispenses, or transports distillate global marine fuel 
without meeting the recordkeeping requirements under Sec.  80.602 may 
not claim the fuel is exempt from the standards, requirements, and 
prohibitions that apply for MVNRLM diesel fuel.

[FR Doc. 2019-27158 Filed 12-17-19; 8:45 am]
BILLING CODE 6560-50-P