6–29–04 Tuesday Vol. 69 No. 124 June 29, 2004

Pages 38795–39310

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1 II Federal Register / Vol. 69, No. 124 / Tuesday, June 29, 2004

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2 III

Contents Federal Register Vol. 69, No. 124

Tuesday, June 29, 2004

Agency for International Development Drug Enforcement Administration NOTICES NOTICES Agency information collection activities; proposals, Reports and guidance documents; availability, etc.: submissions, and approvals, 38877–38879 Controlled substances; importing from Canada and other foreign countries, 38920–38922 Alcohol and Tobacco Tax and Trade Bureau RULES Education Department Alcohol; viticultural area designations: NOTICES Salado Creek, Stanislaus County, CA, 38831–38834 Agency information collection activities; proposals, San Bernabe and San Lucas, Monterey County, CA, submissions, and approvals, 38884–38885 38834–38837 Grants and cooperative agreements; availability, etc.: Postsecondary education— Alcohol, Tobacco, Firearms, and Explosives Bureau Jacob K. Javits Fellowship Program, 38885–38886 NOTICES Agency information collection activities; proposals, submissions, and approvals, 38918–38920 Election Assistance Commission NOTICES Antitrust Modernization Commission Meetings; Sunshine Act, 38886–38887 NOTICES Meetings, 38879 Energy Department See Federal Energy Regulatory Commission Centers for Disease Control and Prevention NOTICES NOTICES Meetings: Agency information collection activities; proposals, Environmental Management Site-Specific Advisory submissions, and approvals, 38897–38898 Board— Oak Ridge Reservation, TN, 38887–38888 Centers for Medicare & Medicaid Services Paducah Gaseous Diffusion Plant, KY, 38887 NOTICES Fusion Energy Sciences Advisory Committee, 38888 Medicare: Medicare drugs and biologicals replacement demonstration, 38898–38906 Environmental Protection Agency RULES Commerce Department Air pollution control; new motor vehicles and engines: See International Trade Administration Nonroad diesel engines and fuel; emission standards, See National Oceanic and Atmospheric Administration 38957–39273 Air quality implementation plans; approval and Committee for the Implementation of Textile Agreements promulgation; various States: NOTICES Maryland, 38848–38850 Cotton, wool, and man-made textiles: Water supply: Hong Kong, 38881–38882 National primary drinking water regulations— India, 38882–38883 Long Term I Enhanced Surface Water Treatment Rule, etc.; corrections and clarification, 38850–38857 Corporation for National and Community Service PROPOSED RULES Air pollution control; new motor vehicles and engines: NOTICES New locomotive engines and new marine compression- Agency information collection activities; proposals, ignition engines less than 30 liters per cylinder, submissions, and approvals, 38883 39275–39289 Air quality implementation plans; approval and Defense Department promulgation; various States: RULES Maryland, 38860 Federal Acquisition Regulation (FAR): NOTICES Performance-based contracting use for services; Agency information collection activities; proposals, incentives submissions, and approvals, 38893–38894 Correction, 38955 Confidential business information and data transfer, 38894– Personnel and general claims and advance decision 38895 requests; settling and processing: Pesticide programs: Procedures, 38843–38848 Risk assessments— NOTICES Zinc Pyrithione, 38895–38897 Agency information collection activities; proposals, submissions, and approvals, 38883–38884 Meetings: Executive Office of the President Defense Business Board, 38884 See Presidential Documents

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Federal Aviation Administration Fish and Wildlife Service RULES PROPOSED RULES Air carrier certification and operations: Endangered and threatened species: Assembly placard requirements, 39291–39294 Beluga sturgeon, 38863–38873 Airworthiness directives: NOTICES Airbus, 38818–38819, 38821–38823 Comprehensive conservation plans; availability, etc.: BAE Systems (Operations) Ltd., 38816–38818 Sacramento River National Wildlife Refuge, CA, 38914– Boeing, 38824–38826 38916 Bombardier, 38812–38813, 38815–38816 Endangered and threatened species permit applications, Empresa Brasileira de Aeronautica, S.A. (EMBRAER), 38916 38819–38821, 38823–38824 Garmin AT, 38827–38829 Food and Drug Administration Short Brothers, 38813–38815, 38826–38827 NOTICES IFR altitudes, 38829–38831 Human drugs: NOTICES Digoxin elixirs; marketing approval extension, 38906 Passenger facility charges; applications, etc: Reports and guidance documents; availability, etc.: Scotts Bluff County Airport Authority, NE, et al [Editorial Public Health Security and Bioterrorism Preparedness Note: This document published at 69 FR 36157 in and Response Act of 2002; implementation— the Table of Contents for the Federal Register of June Prior notice of imported food; compliance policy guide, 28, 2004.] 38906–38907

Federal Emergency Management Agency General Services Administration NOTICES RULES Disaster and emergency areas: Federal Acquisition Regulation (FAR): Illinois, 38911–38912 Performance-based contracting use for services; Indiana, 38912 incentives Iowa, 38912 Correction, 38955 Kentucky, 38912–38913 NOTICES Nebraska, 38913 Acquisition regulations: Ohio, 38913–38914 Sales slip (OF 16) cancelled, 38897 Wisconsin, 38914 Health and Human Services Department Federal Energy Regulatory Commission See Centers for Disease Control and Prevention NOTICES Electric utilities (Federal Power Act): See Centers for Medicare & Medicaid Services Public utilities providing service in California under See Food and Drug Administration sellers’ choice contracts; proceeding initiation and See Indian Health Service refund effective date, 38889 Historic Preservation Advisory Council Meetings: Entergy Services, Inc. et al.; technical conference, 38889– PROPOSED RULES 38890 Semi-annual agenda [Editorial Note: The entry for the semi- Mill River Pipeline L.L.C., 38890 annual agenda was inadvertently omitted in the Table Northern Natural Gas Co.; settlement conference, 38890– of Contents in the Federal Register of June 28, 2004.] 38891 Homeland Security Department Ohio Edison Co., et al.; Summer 2004 Reliability Workshop, 38891 See Federal Emergency Management Agency Off-the-record-communications, 38891–38892 Indian Health Service Reports and guidance documents; availability, etc.: Public utilities and their officers and directors Federal NOTICES Power Act section 305(b) obligations, 38892 Grants and cooperative agreements; availability, etc.: Applications, hearings, determinations, etc.: American Indians/Alaska Natives; Epidemiology Program, Algonquin Gas Transmission Co., 38888–38889 38907–38911 Barclays Bank PLC, 38889 Special Diabetes Program for Indians; correction, 38911 Federal Housing Finance Board Interior Department RULES See Fish and Wildlife Service Federal home loan bank system: See Land Management Bureau Bank business and financial condition disclosure See Minerals Management Service requirements; class of securities registration, 38799– 38811 Internal Revenue Service NOTICES Financial Management Service Agency information collection activities; proposals, See Fiscal Service submissions, and approvals, 38953–38954 Fiscal Service International Trade Administration NOTICES NOTICES Interest rates: Antidumping: Renegotiation Board and prompt payment rates, 38952– Extruded rubber thread from— 38953 Indonesia, 38879–38880

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Heavy forged hand tools, finished or unfinished, with or Personnel Management Office without handles from— NOTICES China, 38880–38881 Agency information collection activities; proposals, Mechanical transfer presses from— submissions, and approvals, 38922–38923 Japan, 38881 Justice Department Presidential Documents See Alcohol, Tobacco, Firearms, and Explosives Bureau ADMINISTRATIVE ORDERS See Drug Enforcement Administration Jerusalem Embassy Act: Suspension of limitations (Presidential Determination Labor Department 2004-36 of June 15, 2004), 38795 See Mine Safety and Health Administration Pakistan; designation as a major non-NATO ally (Presidential Determination 2004-37 of June 16, 2004), Land Management Bureau 38797 NOTICES Resource management plans, etc.: Headwaters Forest Reserve, CA, 38916–38917 Public Debt Bureau See Fiscal Service Minerals Management Service NOTICES Environmental statements; availability, etc.: Research and Special Programs Administration Gulf of Mexico OCS— NOTICES Oil and gas operations, 38917–38918 Pipeline safety: Hazardous liquid transportation— Mine Safety and Health Administration Class location change waiver criteria guidelines; RULES development, 38948–38950 Coal mine safety and health: Waiver petitions— Surface and underground mines— GulfTerra Field Services LLC, 38950–38952 Definitions; technical amendments, 38837–38843 National Aeronautics and Space Administration Securities and Exchange Commission RULES NOTICES Federal Acquisition Regulation (FAR): Investment Company Act of 1940: Performance-based contracting use for services; MMA Praxis Mutual Funds et al., 38924–38925 incentives Self-regulatory organizations; proposed rule changes: Correction, 38955 Municipal Securities Rulemaking Board, 38925–38941 National Association of Securities Dealers, Inc., 38941– National Highway Traffic Safety Administration 38947 PROPOSED RULES Applications, hearings, determinations, etc.: Motor vehicle safety standards: Cleco Corp., 38923 Potential defects; quarterly early warning reports; submission due dates, 38860–38863 Small Business Administration National Oceanic and Atmospheric Administration NOTICES RULES Disaster loan areas: Fishery conservation and management: Indiana, 38948 West Coast States and Western Pacific fisheries— Kentucky, 38948 Pacific Coast groundfish, 38857–38859 Meetings: PROPOSED RULES Regional Fairness Boards— Marine mammals: Region X; Public Roundtable, 38948 Incidental taking— U.S. Navy; operations of Surveillance Towed Array Sensor System Low Frequency Active Sonar, Surface Transportation Board 38873–38876 NOTICES NOTICES Railroad services abandonment: Permits: Union Pacific Railroad Co., 38952 Exempted fishing; correction, Z4-01256

Nuclear Regulatory Commission Textile Agreements Implementation Committee NOTICES See Committee for the Implementation of Textile Meetings; Sunshine Act, 38922 Agreements NOTICES Enforcement actions: Fire protection programs at operating nuclear power Transportation Department plants; policy statement; revision; correction See Federal Aviation Administration [Editorial Note: This entry was inadvertently left out See National Highway Traffic Safety Administration of the Table of Contents in the Federal Register of See Research and Special Programs Administration June 28, 2004.] See Surface Transportation Board

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Treasury Department Part IV See Alcohol and Tobacco Tax and Trade Bureau Transportation Department, Federal Aviation See Fiscal Service Administration, 39291–39294 See Internal Revenue Service RULES Part V Terrorism Risk Insurance Program, 39295–39309 Treasury Department, 39295–39309

Reader Aids Separate Parts In This Issue Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. Part II Environmental Protection Agency, 38957–39273 To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http:// Part III listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change Environmental Protection Agency, 39275–39289 settings); then follow the instructions.

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CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in the Reader Aids section at the end of this issue.

3 CFR Administrative Orders: Presidential Determinations: No. 2004-36 of June 15, 2004 ...... 38795 No. 2004-37 of June 16, 2004 ...... 38797 12 CFR 900...... 38799 998...... 38799 14 CFR 39 (11 documents) ...... 38812, 38813, 38815, 38816, 38818, 38819, 38821, 38823, 38824, 38826, 38827 95...... 38829 121...... 39292 135...... 39292 27 CFR 9 (2 documents) ...... 38831, 38834 30 CFR 56...... 38837 57...... 38837 31 CFR 50...... 39296 32 CFR 282...... 38843 40 CFR 9...... 38958 52...... 38848 69...... 38958 80...... 38958 86...... 38958 89...... 38958 94...... 38958 141...... 38850 142...... 38850 1039...... 38958 1048...... 38958 1051...... 38958 1065...... 38958 1068...... 38958 Proposed Rules: 52...... 38860 92...... 39276 94...... 39276 48 CFR 12...... 38955 49 CFR Proposed Rules: 579...... 38860 50 CFR 660...... 38857 Proposed Rules: 17...... 38863 216...... 38873

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Federal Register Presidential Documents Vol. 69, No. 124

Tuesday, June 29, 2004

Title 3— Presidential Determination No. 2004–36 of June 15, 2004

The President Suspension of Limitations Under the Jerusalem Embassy Act

Memorandum for the Secretary of State

Pursuant to the authority vested in me as President by the Constitution and the laws of the United States, including section 7(a) of the Jerusalem Embassy Act of 1995 (Public Law 104–45) (the ‘‘Act’’), I hereby determine that it is necessary to protect the national security interests of the United States to suspend for a period of 6 months the limitations set forth in sections 3(b) and 7(b) of the Act. My Administration remains committed to beginning the process of moving our embassy to Jerusalem. You are hereby authorized and directed to transmit this determination to the Congress, accompanied by a report in accordance with section 7(a) of the Act, and to publish the determination in the Federal Register. This suspension shall take effect after transmission of this determination and report to the Congress. W THE WHITE HOUSE, Washington, June 15, 2004.

[FR Doc. 04–14839 Filed 6–28–04; 8:45 am] Billing code 4710–10–P

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Presidential Determination No. 2004–37 of June 16, 2004

Designation of the Islamic Republic of Pakistan as a Major Non-NATO Ally

Memorandum for the Secretary of State

Consistent with the authority vested in me by section 517 of the Foreign Assistance Act of 1961, as amended (the ‘‘Act’’), I hereby designate the Islamic Republic of Pakistan as a Major Non-NATO Ally of the United States for the purposes of the Act and the Arms Export Control Act. You are authorized and directed to publish this determination in the Federal Register. W THE WHITE HOUSE, Washington, June 16, 2004.

[FR Doc. 04–14840 Filed 6–28–04; 8:45 am] Billing code 4710–10–P

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Rules and Regulations Federal Register Vol. 69, No. 124

Tuesday, June 29, 2004

This section of the FEDERAL REGISTER discussion contained in this Board. As a ‘‘joint office,’’ OF is not a contains regulatory documents having general SUPPLEMENTARY INFORMATION: separate legal entity. applicability and legal effect, most of which are keyed to and codified in the Code of I. Statutory and Regulatory Background By virtue of their GSE status and the Federal Regulations, which is published under A. The Federal Home Loan Bank (Bank AAA credit rating awarded to Bank 50 titles pursuant to 44 U.S.C. 1510. System) System debt, the Banks are able to B. Bank Securities borrow in the capital markets at C. Current Bank System Disclosure The Code of Federal Regulations is sold by favorable rates. The Banks then pass the Superintendent of Documents. Prices of 1. Bank System Combined Reports new books are listed in the first FEDERAL 2. Individual Bank Annual and Quarterly along that funding advantage to their REGISTER issue of each week. Reports members—and ultimately to D. Exemptions for Bank Securities From consumers—by providing advances the Registration Provisions of the 1933 (secured loans) and other financial FEDERAL HOUSING FINANCE BOARD Act and 1934 Act services to their members (principally, E. Registration Pursuant to the Voluntary depository institutions) at rates that the 12 CFR Parts 900 and 998 Registration Provisions of Section 12(g)(1) of the 1934 Act members generally could not obtain [No. 2004–07] F. Proposed Rule elsewhere. In recent years, the Banks II. Finance Board Findings Supporting have established acquired member asset RIN 3069–AB22 Adoption of the Final Rule (AMA) programs under which the Banks A. Legal Authority To Require Registration acquire certain residential mortgage Registration of Federal Home Loan 1. Authority To Require Enhanced loans from their members and certain Bank Equity Securities Disclosures 2. Authority To Require Registration With eligible housing associates (such as state AGENCY: Federal Housing Finance the SEC housing finance agencies). The AMA Board. B. Reasonable Exercise of Finance Board programs represent a means of Authority advancing the Banks’ housing finance ACTION: Final rule. 1. Benefits of Enhanced Disclosure mission, pursuant to criteria established Generally SUMMARY: The Federal Housing Finance in Finance Board regulations.4 2. Benefits of Disclosures That Are Board (Finance Board) is issuing a final Consistent With Industry Standards The Banks are cooperatives, meaning rule requiring each Federal Home Loan 3. Benefits of Registration With the SEC that only their members may own the Bank (Bank) to register a class of its Versus Registration With the Finance capital stock and share in the profits of equity securities with the Securities and Board the Banks and only their members and Exchange Commission (SEC) under the 4. Costs of SEC Registration certain eligible housing associates may registration provisions of section a. Compliance Costs borrow from or use the other products 12(g)(1) of the Securities Exchange Act b. Liquidity Costs and services provided by the Banks.5 An of 1934 (1934 Act).1 Each Bank shall c. Funding Costs institution that is eligible may become thereafter be required to comply with 5. Resolution of Operational Issues III. Analysis of Final Rule the disclosure requirements of the 1934 a member of a Bank if it satisfies certain IV. Regulatory Analyses statutory and regulatory criteria and Act by preparing and filing with the A. Paperwork Reduction Act SEC the annual, quarterly, and current purchases a specified amount of the B. Regulatory Flexibility Act 6 reports required under that Act, as well Bank’s capital stock. as any other materials required by the I. Statutory and Regulatory Background The Bank System operates under the SEC, including those related to audited A. The Federal Home Loan Bank System supervision of the Finance Board, an financial statements. (Bank System) independent agency created in 1989 DATES: Effective Date: The final rule will within the executive branch of the U.S. be effective on July 29, 2004. The Bank System consists of 12 Banks government.7 The primary duty of the and the Office of Finance (OF). The FOR FURTHER INFORMATION CONTACT: Finance Board is to ensure that the Banks are instrumentalities of the Joseph A. McKenzie, Deputy Chief Banks operate in a financially safe and United States organized under the Economist, Office of Supervision, 202– sound manner. Consistent with that authority of the Federal Home Loan 408–2845, [email protected]; Neil R. duty, the Finance Board is required to Bank Act (Bank Act).2 The Banks also Crowley, Deputy General Counsel, 202– supervise the Banks, ensure that they are ‘‘government sponsored enterprises’’ 408–2990, [email protected]; John carry out their housing finance mission, (GSEs), i.e., federally-chartered but Harry Jorgenson, Of Counsel, 202–408– privately-owned institutions created by and ensure that they remain adequately 2560, [email protected]; John P. Congress to support the financing of capitalized and able to raise funds in the Foley, Senior Attorney-Advisor, Office 8 housing and community lending by capital markets. of General Counsel, 202–408–2932, their members.3 OF is a joint office of [email protected], Federal Housing 4 the Banks created by the Federal Home See 12 CFR part 955. Finance Board, 1777 F Street, NW., 5 Loan Bank Board, which was the See 12 U.S.C. 1426, 1430(a), and 1430b. Washington, DC 20006. 6 See 12 U.S.C. 1424 and 1426; 12 CFR part 925. predecessor agency to the Finance SUPPLEMENTARY INFORMATION: To assist 7 See Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. 101–73, Title readers, below is an outline of the 2 12 U.S.C. 1421 et seq. VII, sec. 702(a), 103 Stat. 413 (codified at 12 U.S.C. 3 See 12 U.S.C. 1422a(a)(3)(B)(ii), 1430(i), and 1422a and 1422b). 1 15 U.S.C. 78a et seq. 1430(j). 8 See 12 U.S.C. 1422a(a)(3)(A) and (B).

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B. Bank Securities Act, subject to certain conditions.17 generally consistent in scope, form, and Among the conditions are that the COs content with the requirements of SEC Each Bank individually issues equity may only be issued through OF as agent Regulations S–X and S–K,20 subject to securities to its members.9 A member is for the Banks jointly, and that the Banks exceptions that the Finance Board has required to purchase and hold stock of shall be jointly and severally liable on approved for certain non-financial its district Bank as a condition both of all COs issued by OF on the Banks’ statement information.21 membership in the Bank and of doing behalf.18 While the Banks may issue The Bank System Combined Reports business with the Bank. Members also debt jointly through OF, a Bank is not also contain discussions of certain non- may acquire stock, often referred to as allowed to issue debt individually in its financial information on an aggregate ‘‘excess stock,’’ in excess of the levels own name. As of March 31, 2004, the Bank System level, such as a description required to maintain membership or to Bank System had $603.0 billion of CO of Bank System businesses, and a support its business with its Bank. bonds (with a maturity of one year or financial discussion and analysis. Until the enactment of the Gramm- more) and $161.9 billion of CO discount Information about each Bank is required Leach-Bliley Act in 1999,10 the Bank notes (with a maturity of less than one to be presented in the Bank System Act authorized the Banks to issue only year) outstanding. Combined Reports as a segment of the one class of stock to their members.11 C. Current Bank System Disclosure Bank System as if Statement of This stock was redeemable in cash at Financial Accounting Standards No. par value six months after a member 1. Bank System Combined Reports 131, titled ‘‘Disclosures about Segments filed a notice to withdraw from the The Finance Board’s regulations of an Enterprise and Related Bank.12 The GLB Act altered the capital currently require OF to prepare and Information’’ (FASB 131), applied to the structure of the Banks. Under the GLB 22 distribute combined annual and Bank System Combined Reports. Act’s amendments to the Bank Act, a quarterly financial reports for the Bank To facilitate OF’s preparation of the Bank may issue one or both of two System (Bank System Combined annual and quarterly Bank System classes of stock. Class A stock is Reports).19 The disclosure in the Bank Combined Reports, the Finance Board’s redeemable at par value six months after System Combined Reports must be regulations require each Bank to provide a member files a notice with the Bank to OF, in such form and within such to redeem the stock, and Class B stock 17 Section 11 of the Bank Act provides three timeframes as the Finance Board or OF is redeemable at par value five years options for raising funds in the capital markets for shall specify, all financial and other after a member files a redemption the Banks. Section 11(a) authorizes the individual information and assistance OF shall notice.13 A Bank also may repurchase, at Banks to issue debt securities, subject to rules and request for that purpose.23 The financial regulations, terms and conditions prescribed by the par value, any excess stock acquired by Finance Board. 12 U.S.C. 1431(a). Section 11(b) statements of the Banks must be audited a member. All stock purchases and authorizes the Finance Board to issue consolidated in accordance with generally accepted redemptions are subject to certain limits debentures, within stated limitations, and upon auditing standards (GAAS) and Federal relating to the Bank’s capital such terms and conditions as the Finance Board government auditing standards.24 adequacy.14 may prescribe, which shall be the joint and several obligations of all of the Banks. See 12 U.S.C. 2. Individual Bank Annual and The GLB Act also required each Bank 1431(b). Section 11(c) authorizes the Finance Board Quarterly Reports to adopt a capital plan in which the to issue secured consolidated bonds, upon such Bank must set forth, among other items, terms and conditions as the Finance Board may Each Bank currently prepares and prescribe, which shall be the joint and several distributes to its members an annual the attributes associated with each class obligations of the Banks. See 12 U.S.C. 1431(c). (or subclass) of stock that the Bank Under section 15 of the Bank Act, obligations of report containing audited financial intends to issue, including each class of the Banks issued with the approval of the Finance statements, a section containing some stock’s par value, dividend rights and Board must state that they are not the obligations level of management discussion and 15 of, and are not guaranteed by, the United States. See analysis, and discussions of other preferences, and liquidation rights. 12 U.S.C. 1435. The Federal Housing Enterprises Until a Bank implements its capital Financial Safety and Soundness Act of 1992 aspects of Bank operations. Each Bank plan, its capital structure, including its provides that none of the housing GSE obligations also distributes unaudited quarterly or authority with regard to issuance of or securities is backed by the full faith and credit semi-annual summary financial reports of the United States. See Pub. L. 102–550, Tit. XIII, to its members, with most of the reports stock, is governed by the Bank Act sec. 1304, 106 Stat. 3944 (Oct. 28, 1992) (codified requirements that were in effect at 12 U.S.C. 4503). Notwithstanding these being brief. The Finance Board’s immediately prior to the passage of the statements, the capital markets often view debt regulations require that any financial GLB Act.16 issued by or on behalf of the Banks as having an statements contained in an annual or implied government guarantee based on the GSE quarterly financial report issued by an The Banks also issue debt securities, status of the Banks, the joint and several liability known as consolidated obligations of the Banks on the COs, and the existence of 20 (COs), to investors throughout the section 11(i) of the Bank Act (12 U.S.C. 1431(i)), SEC Regulation S–K specifies disclosure rules which provides that the Secretary of the Treasury for non-financial items to be included in United States and the rest of the world, is authorized, in his discretion, to purchase up to registration statements, annual reports, and proxy pursuant to section 11(a) of the Bank $4 billion of obligations of the Banks issued under statements. See 17 CFR part 229. Major items section 11. The Secretary’s purchase or sale of such include a description of a registrant’s business, management’s discussion and analysis, and 9 See 12 U.S.C. 1426a(4)(A). obligations would be treated as ‘‘public-debt transactions of the United States.’’ disagreements with accountants. SEC Regulation S– 10 Pub. L. 106–102, 133 Stat. 1338 (Nov. 12, 1999) 18 X, and the SEC’s financial reporting releases, set (GLB Act). See 12 CFR 966.2(b), 966.9, 985.3(a), and 985.6(a). Prior to 2001, the Finance Board issued forth the accounting principles that must be utilized 11 See 12 U.S.C. 1426 (1994). COs pursuant to section 11(c) of the Bank Act in preparing financial statements for inclusion in 12 Id. through OF. The functions currently performed by SEC filings. See 17 CFR part 210. 13 See 12 U.S.C. 1426(a)(4)(A). OF as agent for the Banks with regard to the CO 21 See 12 CFR part 985 Appendix A. 14 See 12 U.S.C. 1426(e)(1) (2004); 12 U.S.C. 1426 issuance are largely identical to the functions it 22 See 12 CFR 985.6(b)(2). (1994); 12 CFR 931.7(b). performed on behalf of the Finance Board when the 23 See 12 CFR 989.3. 15 See 12 U.S.C. 1426(c); 12 CFR 933.2. Finance Board issued the COs. While the Finance 24 See 12 CFR 989.2. OF also distributes various 16 See 12 U.S.C. 1426(a)(6). All of the Banks have Board has retained the authority to issue debt on offering documents to investors in connection with had their capital plans approved by the Finance behalf of the Banks pursuant to section 11(c) of the issuances of Bank System COs. These OF discloure Board, and eight Banks have implemented their Bank Act, it currently does not do so. See 12 CFR documents are modeled on the disclosure capital plans as of the date of the adoption of this 966.2(a). documents that are prepared by issuers of final rule. 19 See 12 CFR 985.6(b). investment grade debt.

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individual Bank be consistent in both registration requirements of that Act.28 other things, that an issuer may register form and content with the financial Because the Banks are instrumentalities any class of equity securities not statements presented in the Bank of the Federal government, both the required to be registered by filing a System Combined Reports prepared by equity and debt securities of the Banks registration statement pursuant to the OF.25 Except for this requirement, there are exempt from the registration provisions of section 12(g).33 is no other Finance Board regulatory requirements of the 1933 Act under this Registration pursuant to section 12(g)(1) requirement that individual Bank provision.29 subjects registrants to the periodic annual or quarterly reports be in scope, Under the 1934 Act, the term disclosure requirements put in place form, or content generally consistent ‘‘exempted securities’’ is defined to under the 1934 Act, as interpreted and with the requirements of SEC include, among other things, administered by the SEC. For the Regulations S–K and S–X. ‘‘government securities.’’ 30 The term reasons discussed in part II below, the While the financial statements in the ‘‘government securities’’ is, in turn, Finance Board has determined, Banks’ annual and quarterly reports are defined to include ‘‘securities which are consistent with the proposed rule, to generally consistent with SEC issued or guaranteed by corporations in require each Bank to register a class of Regulation S–X, the level of discussions which the United States has a direct or its equity securities pursuant to the in these reports of non-financial indirect interest and which are voluntary registration provisions of statement information varies from Bank designated by the Secretary of the section 12(g)(1). to Bank and is not in all cases generally Treasury for exemption as necessary or F. Proposed Rule consistent with 1934 Act disclosure appropriate in the public interest or for standards.26 Thus, the major effect of the protection of investors.’’ 31 The debt In July 2002, the Undersecretary for requiring the Banks to register a class of securities of the Banks have been Domestic Finance of the United States securities with the SEC and subject exempted from the registration Department of the Treasury called on all themselves to an SEC-administered requirements of the 1934 Act as a result GSEs to follow the lead of the Federal 1934 Act periodic disclosure regime of action taken by the Secretary of the Home Loan Mortgage Corporation would be greater disclosure by the Treasury in 1937 pursuant to these (Freddie Mac) and the Federal National Banks at the individual Bank level of provisions. In Release 34–1168, dated Mortgage Association (Fannie Mae) and non-financial statement information, April 28, 1937, the SEC announced that begin working with the SEC to achieve with the attendant benefits discussed the Secretary of the Treasury had a 1934 Act securities disclosure regime below in section II.B. designated for exemption those debt administered by the SEC.34 Shortly securities issued by the Federal Home thereafter, Finance Board staff held a D. Exemptions for Bank Securities From Loan Bank Board (the predecessor number of meetings with Bank System the Registration Provisions of the 1933 agency to the Finance Board) or by the representatives (collectively, the Bank Act and 1934 Act Banks under the authority of section 11 Disclosure Task Force) to discuss SEC The Securities Act of 1933 (the 1933 of the Bank Act.32 The designation registration and related disclosure Act) 27 regulates public offerings of specified that the ‘‘exemption may be requirements. The Finance Board securities and prohibits offers and sales revoked, modified or amended at any subsequently relayed the Banks’ of securities that are not registered with time with respect to securities not principal concerns on registration issues the SEC, subject to certain exemptions issued prior to such time.’’ Outstanding to SEC staff. On December 2, 2002, the for enumerated kinds of securities and Bank COs have been issued under the Finance Board held a public hearing to transactions. The 1934 Act regulates authority of sections 11(a) and 11(c) of consider enhanced Bank disclosure trading in certain securities that are the Bank Act, respectively, and generally and possible Bank registration already issued and outstanding and therefore are included within the scope under the 1934 Act in particular.35 prescribes a robust disclosure regimen of the Secretary of the Treasury’s 1937 Finance Board staff also had numerous for registered entities. designation. By contrast, the Secretary discussions with SEC staff on Since enactment of the Bank Act in of the Treasury has never designated the registration issues. In addition, SEC staff 1932, the Banks have never registered equity securities issued by the Banks as met with several Banks to resolve their debt or equity securities under being exempted under this provision. certain accounting and disclosure issues raised by 1934 Act registration. either the 1933 Act or the 1934 Act. E. Registration Pursuant to the Neither the 1933 Act nor the 1934 Act, After gathering information and Voluntary Registration Provisions of analyses through these various forums, however, exempts the Banks from Section 12(g)(1) of the 1934 Act registration by name or otherwise on September 17, 2003, the Finance provides special status or unique Notwithstanding any exemptions for Board published for comment a exemptions for the Banks, although issuers or securities under the 1933 and proposed rule that would have required there are generally available exemptions 1934 Acts, section 12(g)(1) of the 1934 each Bank to agree to register a class of from registration under those Acts for Act provides a mechanism by which its securities with the SEC under section which the Banks may be eligible. equity securities not otherwise required 12(g) of the 1934 Act within 120 days Under section 3(a)(2) of the 1933 Act, to be registered may nevertheless be of the adoption of the rule as a final securities issued ‘‘by any person registered under provisions of the 1934 rule.36 Registration, and the resulting controlled or supervised by and acting Act. Section 12(g)(1) provides, among periodic disclosure requirements under as an instrumentality of the Government of the United States pursuant to 28 See 15 U.S.C. 77c(a)(2). 33 See 15 U.S.C. 78l(g)(1). 29 authority granted by the Congress of the See 12 U.S.C. 1431(e)(1). See also Fahey v. 34 Fannie Mae subsequently registered its O’Melveny & Myers, 200 F. 2d 420 (9th Cir. 1952), common stock with the SEC under the voluntary United States’’ are exempt from the cert. denied, 345 U.S. 952 (1953); Merrill Lynch, registration provisions of section 12(g) of the 1934 Pierce, Fenner & Smith, SEC No Action Letter, 1986 Act. Freddie Mac has agreed to register, but has not 25 See 12 CFR 989.4. SEC No-Act. LEXIS 2877 (Nov. 5, 1986). done so. 26 See section II.B.2, below, for additional 30 See 15 U.S.C. 78c(a)(12)(A). 35 Testimony and comments submitted at that discussion of the differences between current Bank 31 See 15 U.S.C. 78c(a)(42)(B) (emphasis added). hearing may be located at http://www.fhfb.gov/ disclosures required under Federal securities laws. 32 SEC Exchange Act Release 1168 (April 28, pressroom/PR02_testimony4.htm. 27 15 U.S.C. 77a et seq. 1937) (1937 WL 3510). 36 See 68 FR 54396 (Sept. 17, 2003).

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the 1934 Act, would result in the Banks January 15, 2004. The Finance Board proposed rule as a final rule, in disclosing at the individual Bank level received 24 comment letters on the substantially similar form and subject to more comprehensive information than proposed rule. Commenters included: a date by which all Banks must become currently is provided in individual Bank 11 Banks; one Bank member; five SEC registrants. The Finance Board’s quarterly and annual reports. The major financial institution trade associations findings supporting the adoption of the effect of this new disclosure (with one commenter submitting two final rule are discussed below. requirement would be greater disclosure separate comments); two housing trade of non-financial statement information associations; one nonprofit social A. Legal Authority To Require by the Banks at the individual Bank services organization; one nonprofit Registration level. community development organization; Several commenters stated that the The proposed rule also would have one Congressional Representative Finance Board lacks the legal authority required the Banks to provide to the (forwarding the above-mentioned letters under the Bank Act to require each Bank Finance Board on a concurrent basis from one of the housing trade to register a class of its securities with copies of all disclosure documents filed associations, the social services the SEC under the voluntary registration with the SEC. The proposal expressly organization and the community provisions of section 12(g) of the 1934 provided that it would not limit or development organization); and one law Act.38 The Finance Board’s authority to restrict the Finance Board’s ability to student. adopt the rule at issue involves two carry out its responsibilities under the In general, the commenters supported distinct questions: First, whether the Bank Act, including its responsibility to more comprehensive securities Finance Board may require the Banks to ensure that the Banks operate in a disclosure by the individual Banks, provide enhanced disclosures in financially safe and sound manner and provided such enhanced disclosure furtherance of its mission as the Banks’ are able to raise funds in the capital takes into account the unique structure safety and soundness regulator; and markets. of the Banks. Commenters expressed second, if the authority exists as a The Finance Board cited in the differing views on whether such general matter, whether the Finance SUPPLEMENTARY INFORMATION section of enhanced disclosures should be Board has the authority to require that the proposed rule three bases for overseen by the SEC or the Finance the registration be with the SEC. adoption of the rule.37 First, Board, and on the appropriate process comprehensive, fully transparent for achieving an SEC-administered 1. Authority To Require Enhanced securities disclosure by each Bank disclosure regime. Some commenters Disclosures under an SEC-administered disclosure argued that the Finance Board lacks the As a general proposition, any action regime may help maintain the long-term legal authority to require SEC taken by a federal regulatory agency confidence of the investment registration. Commenters stated that the must be within the scope of the community and the national rating record lacked factual or empirical authority conferred on it by Congress.39 agencies, thereby better securing the evidence supporting the bases for With respect to the Bank System, Bank System’s ability to access the adopting the rule and an analysis of the Congress has vested supervisory capital markets. The SEC establishes the potential costs and benefits of the rule. authority with the Finance Board, best-practices standard for disclosure, The comments, and the Finance Board’s which is charged with ensuring both the has the resources and expertise to responses thereto, are discussed further safety and soundness of the Banks and ensure that individual Bank disclosure in part II of this SUPPLEMENTARY the achievement of their housing documents meet this standard, and INFORMATION section. enhances the credibility of registrants’ II. Finance Board Findings Supporting 38 One commenter requested that the Finance financial statements through its review Adoption of the Final Rule Board seek an advisory opinion from the U.S. of those disclosures. Department of Justice’s Office of Legal Counsel Second, Bank accounting and The Finance Board has carefully (OLC) on this issue. The Board of Directors of the financial statement reporting issues reviewed the issues raised by the Finance Board considered this issue and determined, at its February 11, 2004 meeting, not have become significantly more commenters. The Finance Board’s to seek such an advisory opinion from the OLC. A complex in recent years due to new review encompassed analysis of: the review by Finance Board staff of numerous OLC Financial Accounting Standards Board Finance Board’s legal authority to adopt opinions requested by or covering federal financial (FASB) statements on reporting the rule; the individual Banks’’ current institution regulatory agencies from 1984 to date securities disclosure as compared to the did not reveal any instances in which such an requirements, necessitating more agency requested an opinion on whether the comprehensive and detailed disclosures enhanced disclosure requirements, and agency’s enabling statute allowed it to take an by individual Banks. As noted in the what exceptions to 1934 Act disclosure action relating to its primary statutory mission. proposal, the SEC staff has the extensive requirements might be appropriate due 39 An agency has the power to issue binding to the unique structure of the Banks; the legislative rules only to the extent that Congress has accounting expertise required to review delegated such authority to the agency. See R. this Bank disclosure. effect of enhanced disclosure on market Pierce, Administrative Law Treatise, 4th Ed., § 6.4 Third, Fannie Mae has voluntarily discipline, access to the capital markets, (Pierce), citing United States v. Storer Broadcasting registered its common stock with the and the safe and sound operations of the Co., 351 U.S. 192 (1956); National Broadcasting Co. SEC under section 12(g) of the 1934 Act, Banks; and the potential costs and v. United States, 319 U.S. 190 (1943); National Petroleum Refiners Ass’n v. FTC, 482 F.2d 672 (D.C. and Freddie Mac has agreed to do so benefits of enhanced disclosure under Cir. 1973), cert. denied, 415 U.S. 951 (1974). As upon completion of its restatement of its an SEC-administered, versus a Finance long as the Finance Board’s rule is addressed to, financial statements. The proposal Board-administered, disclosure regime. and reasonably adapted to, the enforcement of the recognized that there may be merit in In conducting this review, the Finance Bank Act, it will have the ‘‘force and effect of law if it be not in conflict with express statutory having the core securities disclosures of Board considered the comments provision.’’ See Pierce, § 6.4 citing Maryland all of the housing GSEs overseen by the received on the proposed rule, as well Casualty Co. v. United States, 251 U.S. 342, 349 same disclosure regulator. as Finance Board staff analyses and (1920). Generally, Congress has authorized federal The proposed rule provided for a 120- other documents included in the agencies to issue binding rules through the use of the notice and comment procedure set forth in day comment period, which closed on administrative record. section 553 of the Administrative Procedure Act Based on this review, the Finance (APA), 5 U.S.C. 551 et seq. See generally Pierce, 37 See 68 FR 54398. Board has determined to adopt the § 6.4, at 341.

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finance mission.40 The Finance Board both the safe and sound operation of the Nowhere, however, does the Bank Act has plenary authority over the Banks, Banks and their continued access to the speak expressly to the issue of Bank which is derived from numerous capital markets through enhanced securities disclosure, either by provisions of the Bank Act.41 disclosures. Accordingly, it is within establishing a unique disclosure regime Congress has given the Finance Board the authority of the Board to require for the Banks or by constraining the broad rulemaking authority to carry out enhanced disclosures. authority of the Finance Board to do so. its oversight responsibilities. As courts have recognized, an agency Moreover, the Bank Act does not Specifically, section 2B(a)(1) of the Bank need not show that a particular action affirmatively exempt the Banks from the Act authorizes the Finance Board ‘‘[t]o is, by itself, crucial to the ability of the registration requirements of the 1934 supervise the Federal Home Loan Banks agency to fulfill its duties.44 If the action Act, as do the chartering statutes for the and to promulgate and enforce such is ‘‘reasonably useful’’ or ‘‘proper’’ other two housing GSEs, Fannie Mae regulations and orders as are necessary within the context of the agency’s and Freddie Mac.46 from time to time to carry out the overall responsibilities, then it may be In considering whether Congress has provisions of [the Bank Act].’’ 42 The adopted pursuant to the authority to addressed the question of the language of that provision includes no issue regulations that are ‘‘necessary’’ to appropriate disclosure regime for the limitations on the authority of the implement other statutory provisions. Banks, we also have reviewed provisions of the 1933 Act and the 1934 Finance Board to regulate the Banks or 2. Authority To Require Registration Act. As discussed in section I.D, above, on its authority to adopt regulations, With the SEC other than that the regulation be Bank securities are not currently necessary to carry out the provisions of The Finance Board has analyzed registered under either the 1933 Act or the Bank Act. The statute leaves to the whether Congress has curtailed the the 1934 Act. The reasons why Bank Finance Board the discretion to agency’s authority to require enhanced securities have not been registered determine what regulations or orders are disclosures. The precise issue before the under those Acts vary. For example, ‘‘necessary’’ to carry out the provisions Finance Board is whether Congress has under the 1933 Act, Bank debt and of the Bank Act. expressed its intent regarding the equity securities are exempted from the The Finance Board’s authority to registration of Bank securities with the registration provisions as securities promulgate regulations is sufficiently SEC. For the reasons outlined below, we issued by a ‘‘government broad to authorize any regulation duly believe that the answer to that question instrumentality.’’ Under the 1934 Act, promulgated by the Finance Board that is no. Bank debt and equity securities are not has the purpose or effect of advancing The Bank Act is a comprehensive generally exempted (although they may the safety or soundness of the Banks or statute that addresses virtually all qualify under a more limited exemption any other of the statutory duties of the aspects of the Bank System. Among or otherwise not be subject to the 1934 Finance Board (as well as implementing other things, the Bank Act provides for Act registration requirements). The any specific provision of the Bank the incorporation of the Banks, their Secretary of the Treasury has designated Act).43 As applied to the instant corporate structure, their capital Bank debt securities as exempt from rulemaking, the intent of the Finance structure, their powers and duties, their registration, but has not so exempted Board in adopting a final rule requiring membership base, their lending and Bank equity securities. the Banks to provide enhanced investment powers, their borrowing This lack of uniformity in how Bank disclosures is to advance or promote authority, their tax status, and the securities are treated suggests that circumstances under which they may be Congress had no intention to establish a liquidated. In a similar fashion, the 40 See U.S.C. 1422a(a)(3). particular disclosure regime for the 41 See 12 U.S.C. 1422b(a)(1) (rulemaking) and Bank Act provides for the creation of the Banks under the federal securities laws. 1422a(a)(3) (statutory duties). Other provisions of Finance Board, confers on it both Although there are certain exemptions the Bank Act that confer supervisory authority on general and specific supervisory from registration that may be available the Finance Board include: Section 2B(a)(2), which responsibilities and powers, and authorizes the Finance Board to suspend or remove to the Banks under various provisions of any officer, director, employee or agent of any Bank generally gives it ‘‘cradle to grave’’ both the 1933 Act and the 1934 Act, 45 or joint office for cause, 12 U.S.C. 1422b(a)(2); supervisory authority over the Banks. none of those exemptions is targeted section 2B(a)(5), which confers administrative specifically toward the Banks. Rather, enforcement powers that are substantially the same 44 See, e.g., Shinn v. Encore Mortgage Services, they are generally available to any issuer as those possessed by other federal financial Inc., 96 F. Supp. 2d 419, 424 (D.N.J. 2000) institution regulators, 12 U.S.C. 1422b(a)(5); and (upholding Office of Thrift Supervision (OTS) rule or type of security that meets the section 20, which authorizes the Finance Board to regulating alternative mortgage transactions as an particular requirements for each examine the Banks and to require reports of appropriate exercise of its authority to ‘‘prescribe exemption. As previously noted, condition of all Banks, and which confers on the such regulations and issue such orders as the Congress has not enacted an express Finance Board examiners the same powers, duties, Director may determine to be necessary for carrying privileges, and obligations as federal bank out this chapter and all other laws within the exemption for Bank securities, as it has examiners have under the Federal Reserve Act and Director’s jurisdiction.’’); Home Mortgage Bank v. done in the Charter Acts of Fannie Mae the National Bank Act, 12 U.S.C. 1440. Ryan, 986 F.2d 372, 377 (10th Cir. 1993) (upholding and Freddie Mac, nor has it conferred 42 See 12 U.S.C. 1422b(a)(1). OTS merger regulation as a ‘‘permissible exercise of 1934 Act jurisdiction over the Banks on 43 See, e.g., Fidelity Federal Savings and Loan OTS’s regulatory responsibility over state-chartered the Finance Board, as it has done with Association v. De La Cuesta, 458 U.S. 141, 159— savings associations’’); Federal Labor Relations 162 (1982) (upholding rule addressing lending Authority v. United States Department of the Navy, respect to the regulators of federally practices of savings associations as within scope of 96 F.2d 747, 752 (3rd Cir. 1992) (upholding the Fair delegation from Congress and in furtherance of the Labor Relations Authority determination that of directorships/appointment of directors), 1431 purposes of the statute); Texas Savings & disclosure of home addresses was ‘‘necessary’’ for (approval/oversight of borrowing), 1440 Community Bankers Association, et al. v. Federal collective bargaining, and stating that ‘‘Congress (examinations), and 1446 (authority to liquidate/ Housing Finance Board, No. 98–50758 (5th Cir. delegated this sort of specific determination to the reorganize). 2000) (upholding Finance Board approval of a Bank FLRA in the Labor Statute.’’). As stated by the 46 Congress has expressly provided that all mortgage loan purchase program); and WFS United States Supreme Court, ‘‘An agency ‘must be securities issued by Fannie Mae and Freddie Mac Financial Inc. v. Dean, 79 F. Supp. 1024, 1026 given ample latitude to adapt [its] rules and polices shall be treated as exempt securities under federal (W.D. Wis. (1999)) (upholding rule addressing to the demands of changing circumstances.’’’ Rust securities laws to the same extent as securities that operating subsidiaries as within delegation of v. Sullivan, 500 U.S. 173, 186–187 (1991). are the direct obligations of the United States. See authority from Congress and consistent with 45 See 12 U.S.C. 1422a (creation), 1422b (general 12 U.S.C. 1723(c) (Fannie Mae’s securities) and 12 advancing purposes of the statute). powers), 1426 (capital standards), 1427 (designation U.S.C. 1455(g) (Freddie Mac’s securities).

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insured depository institutions.47 Based In contrast to the central facts of those since it is through such disclosure that on the absence of any Bank-specific cases, the Finance Board, in requiring market participants gain access to provisions in these laws, and the the Banks to register a class of securities information on the risks faced by the inconsistent treatment generally under the 1934 Act, is not delegating to institution in question. Critical to that afforded to Bank securities, we believe the SEC any of the statutory process is the ability to compare that there is no evidence that Congress responsibilities assigned to the Finance information across similar institutions intended to establish a particular Board by section 2A(a)(3) of the Bank at a point in time and over time. disclosure regime for the Banks Act. The Finance Board remains the sole As is well recognized, public pursuant to the provisions of the federal entity responsible for ensuring that the disclosure is not a replacement for securities laws or the Bank Act. Banks operate in a financially safe and regulatory oversight but is an important In the view of one commenter, the sound manner and that they remain complement to the regulatory and proposal constituted an impermissible adequately capitalized and able to raise supervisory oversight process in delegation of authority by one agency of funds in the capital markets. Instead, ensuring the safe and sound operation its responsibilities to another. That the Finance Board, having determined of a financial institution.51 In this commenter cited several cases as that enhanced disclosure would further respect, the registration rule is supporting the proposition that a federal its duty to ensure the safety and analogous to existing requirements that agency may not delegate statutory soundness of the Banks—a point with Banks and OF annually submit to decision-making authority to an outside which the commenters agree—has accounting audits by an independent entity without express authority from determined further that registration with external auditor.52 The rule also is Congress.48 the SEC under the 1934 Act would be analogous to the Finance Board We do not believe that these cases are the most appropriate means to fulfill the regulation that conditions the controlling in the current rulemaking. In Finance Board’s statutory duties. acceptability of certain investments on each of the cases cited, the courts were By adopting the regulation, the ratings received from a nationally faced with specific delegations of Finance Board is not abdicating its role recognized statistical rating organization authority by Congress to an agency, as Bank supervisor or giving up any (NRSRO).53 which the agency then subdelegated to enforcement power but instead is In several of the cases cited by the a third party. In short, the agency at requiring the Banks to subject commenter, the entity receiving issue was relying on a third party to themselves to a disclosure review by a delegated powers had no independent fulfill the agency’s responsibilities. In specialized outside entity. Rather than authority to act. Here, the SEC’s USTA v. FCC, for instance, the court delegating decision-making authority, authority to accept the Banks as rejected the FCC’s attempt to delegate to the Finance Board is using authority registrants and to oversee disclosure state utility commissions its granted under the Bank Act to direct the comes from the 1934 Act itself, not from responsibility to make determinations Banks to avail themselves of an any power delegated to it by the Finance related to requiring telecommunication established securities registration Board.54 Given the SEC’s well- carriers to open up their infrastructure regime so that the Finance Board may established authority to regulate to competition. Similarly, in NPS v. do its job better. Such action does not securities disclosure, it is reasonable for Stanton, the court rejected the NPS’s violate any explicit prohibition in the the Finance Board to rely on the SEC’s attempt to delegate to an outside entity Bank Act or the 1934 Act, nor is it expertise in this area, absent a specific its responsibilities for managing a contrary to any express intent of expression that Congress did not intend national scenic river. The common Congress. such an outcome. element in the cited cases is that the The ability of the Finance Board to Congress specifically provided that agency had delegated to an outside fulfill its responsibilities as the Banks’ issuers that are not required to register party decision-making authority that a safety and soundness regulator will be under the 1934 Act could avail statute had required it to perform.49 enhanced by improved disclosures that themselves of the benefits of SEC are on a par with disclosures in other disclosure by ‘‘voluntarily’’ registering 47 See section 12(i) of the 1934 Act, codified at businesses, including the other housing their stock, and authorized the SEC to 15 U.S.C. 78l(i). Under section 12(i), certain GSEs.50 The discipline imposed by debt accept such registration.55 One federally insured depository institutions that are subject to the 1934 Act registration requirements and equity investors on the operations must make their 1934 Act disclosure filings with of financial institutions has come to be 51 See, e.g., Basel Committee on Banking the federal banking regulator that supervises their viewed as an important complement to Supervision, Consultative Document: The New Basel Capital Accord Part 4 (April 2003) (Basel II). operations. Section 12(i) requires the banking minimum capital requirements and the agency to adopt substantially similar disclosure 52 See 12 CFR 989.2. regulations as those adopted by the SEC, unless it supervisory review process in ensuring 53 12 CFR 955.3(a) and 956.3. finds that implementation of a regulation is not the safe and sound operation of a 54 In fact, the SEC registration rule appears to be necessary or appropriate in the public interest or for financial institution. Adequate and closer to the use of an outside entity that the D.C. the protection of investors. The agency must consistent disclosure is an important Circuit distinguished as not covered by the non- publish a detailed explanation of the reasons for its delegation doctrine in one of the cases cited by the departure from the 1934 Act rules in the Federal element in achieving market discipline, commenter. USTA v. FCC, 2004 WL 374262. The Register. The number of depository institutions USTA court distinguished the delegation at issue making 1934 Act filings with their banking agency attempted to exercise authority which before it with the facts of U.S. v. Matherson, 367 regulators is rather small. For example, 17 state Congress clearly had not granted it (ETSI Pipeline F. Supp. 779 (E.D.N.Y. 1973), in which the court member banks (out of 949 such banks) made such Project v. Missouri, 484 U.S. 495 (1988)); (ii) a party upheld the regulations by an official of the filings with the Federal Reserve (as of December 31, (unsuccessfully) challenged the constitutionality of Department of the Interior requiring an applicant 2002), and 15 savings associations (out of 928 such the delegation by Congress of decision-making for a permit to drive in a national seashore park to associations) make such filings with the OTS. authority to an agency as lacking sufficient first obtain a permit from one of the neighboring 48 The primary cases cited by the commenter standards (Touby v. United States, 500 U.S. 160 municipalities. The Matherson Court found that the include United States Telecom Ass’n (USTA) v. (1991)); or (iii) the delegation was in violation of the Superintendent’s regulation ‘‘is in no way an FCC, 2004 WL 374262 (D.C. Cir. March 2, 2004); clear terms of the statute in question (Shook v. DC abdication of the Superintendent’s power to and National Park Service (NPS) v. Stanton, 54 F. Financial Responsibility and Management administer the National Seashore. Rather, the Supp. 2d 7 (D.D.C. 1999). Assistance Authority, 132 F.3d 775 (DC Cir. 1998)). instant section merely exemplifies an effort by the 49 Other cases cited by the commenter also are not 50 This point is discussed in greater detail in Superintendent to facilitate an orderly prevention persuasive or applicable to this rule-making. The Section II.B of this SUPPLEMENTARY of erosion on the land.’’ other cases deal with situations in which: (i) An INFORMATION. 55 See 15 U.S.C. 78l(g).

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commenter criticized the Finance determined that there is a reasonable Accord is based on three separate Board’s proposal on the ground that basis to conclude that requiring ‘‘pillars’’ of supervision. The first pillar there was nothing voluntary about the enhanced Bank securities disclosure consists of the minimum regulatory proposal and, therefore, the provisions under an SEC-administered periodic capital requirements for each banking in the 1934 Act governing voluntary disclosure regime under the 1934 Act organization, which will be much the registrations are inapplicable. The will assist the Finance Board in carrying same as the existing Basel capital Finance Board agrees that its rule makes out its primary duty to ensure that the requirements. The second pillar relates registration of securities with the SEC Banks operate in a financially safe and to supervisory review of banking mandatory. However, it does so as a sound manner and that they have access institutions by their regulators, which in requirement stemming from the Bank to capital markets. part entails an assessment of capital Act. References in the proposal to adequacy in light of the overall risks to voluntary registration with the SEC 1. Benefits of Enhanced Disclosure the bank. The third pillar is market simply underscore that those not Generally discipline, which the Basel Committee otherwise required by the federal The benefits of enhanced disclosure expects will complement both the securities laws may register with the have been well documented. A leading minimum capital requirements of Pillar SEC. Thus, there is no inconsistency to study in this area, conducted by staff at 1 and the supervisory review process of say that registration is mandatory under the Federal Reserve Board (FRB Study), Pillar 2 and thereby promote safety and the banking laws while done so in documents how enhanced disclosure of soundness in banks and the financial accordance with the procedures a commercial bank’s business risks and system. The Basel Committee has available to those who are not otherwise financial information can supplement explained that ‘‘the rationale for Pillar 3 subject to 1934 Act registration the existing oversight regime for such is sufficiently strong to warrant the requirements. banks.57 The FRB Study notes that introduction of disclosure requirements The issue of whether voluntary banking regulators have increasingly for banks using the New Accord,’’ and registration under the 1934 Act is accepted the fact that market discipline that it intends ‘‘to encourage market available for disclosures that are can serve as one element of an effective discipline by developing a set of mandated by some other law is a program of bank supervision, and disclosure requirements which will question of interpretation of the discusses in detail how the concepts of allow market participants to assess key securities law. In that regard, the financial disclosure, market discipline, pieces of information on the scope of Finance Board is persuaded by the and bank supervision are interrelated. application, capital, risk exposures, risk views of the SEC. In testimony delivered Briefly stated, the stakeholders of a assessment processes, and hence the before the Committee on Banking, banking institution, by deciding what capital adequacy of the institution.’’ 58 Housing, and Urban Affairs of the return they are willing to accept on their United States Senate on February 10, 2. Benefits of Disclosures That Are investments in a bank’s securities, can Consistent With Industry Standards 2004, by Alan L. Beller, Director of the effectively determine the availability Division of Corporation Finance of the and cost of the bank’s funding and Both the FRB Study and Basel II SEC (the Beller Testimony), Mr. Beller thereby influence the bank’s business demonstrate that market discipline has stated: decisions. This ability to ‘‘discipline’’ a become an accepted element of effective Since at least 1992, the Commission has bank’s risk-taking through market forces bank supervision, particularly with expressed the view that, because the GSEs, is accepted by banking regulators as regard to the adequacy of a banking most prominently Fannie Mae and Freddie contributing to the stability of the institution’s capital. Full and consistent Mac, but also including the Federal Home banking system. The ability of the disclosure is an important element in Loan Banks, sell securities to the public and stakeholders to exert such influence on achieving market discipline because it is have public investors, and do not have the only through such disclosure that ‘‘full faith and credit’’ government backing of a bank, however, depends in large part on whether they can accurately assess market participants can obtain, and government securities, their disclosures assess, information on the risks faced by should comply with the disclosure its financial condition, risks, and requirements of the federal securities laws. earnings prospects, which, in turn, individual financial institutions. * * * [T]he manner by which mandatory depends on the quality and extent of the Moreover, a common and consistent compliance is achieved—including through institution’s financial disclosures. The framework for such disclosure will voluntary registration with the Commission— enhance the ability of market 56 FRB Study notes that this recognition of may be less significant. the value of market discipline as a participants to compare information Thus, the SEC interprets the 1934 Act supplement to the regulatory regime has across similar institutions and over in a way that permits filings under the prompted banking regulators to focus on time. The Office of Federal Housing provisions governing voluntary methods of improving the transparency Enterprise Oversight (OFHEO) made registration, notwithstanding that the of commercial banks’ financial similar observations about the registration is required by some other importance of public disclosure to law or regulation. condition through enhanced disclosure. It also has led the other housing GSEs safety and soundness oversight when it recently adopted disclosure B. Reasonable Exercise of Finance to take steps voluntarily to promote requirements for Fannie Mae and Board Authority market discipline. Freddie Mac.59 Based on its review and analysis of Basel II also underscores the importance of enhanced disclosure. the record, the Finance Board has 58 Basel II will establish new international Basel II, ¶ 757 and ¶ 758. 59 See 68 FR 16715 (April 7, 2003) (adopting 12 56 Beller Testimony at 1 (emphasis added). The standards on bank capital adequacy, and CFR part 1730) (‘‘As users of and participants in the Beller Testimony may be located at http:// is intended to improve the existing financial markets, the success of the Enterprises www.sec.gov/news/testimony/ts021004alb.htm. SEC regulatory capital framework for [i.e., Fannie Mae and Freddie Mac] in meeting their staff recently confirmed to the Finance Board that public policy missions and in maintaining their safe the statements made in that testimony ‘‘continue to commercial banking organizations. The and sound operations is inextricably tied to full and be accurate and to reflect the views of the [SEC] robust disclosure. * * * Full and adequate staff.’’ Letter from Alan Beller to Alicia R. 57 Staff Study 173, Improving Public Disclosure in disclosure of information by the Enterprises Castaneda, Chairman, Federal Housing Finance Banking, Federal Reserve Study Group on regarding their financial conditions and risks is an Board, June 1, 2004, at 1. Disclosure (March 2000). Continued

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At present, the annual or quarterly any deficiencies in internal controls and holding Bank stock may be adversely financial statements prepared by a Bank procedures; and affected by a member’s inability to are required to be consistent, in both • Disclosures of certain accounting- obtain information that permits it to form and content, with the combined related fees and services. evaluate fully its investment. The financial statements prepared by OF for The final rule adopted by the Finance change to all-voluntary membership the entire Bank System.60 The practices Board will lead to the elimination of increases the importance of disclosure among the Banks, however, vary from these deficiencies, resulting in an in maintaining member confidence and Bank to Bank as to the level of detail increase in both the quality and quantity thereby in maintaining adequate Bank that is provided by the annual and of individual Bank disclosures. capitalization. quarterly financial reports of the In addition to facilitating the Finance Moreover, a perception, right or individual Banks. In conjunction with Board’s efforts to ensure the safety and wrong, by the capital markets that non- this rulemaking process, Finance Board soundness of the Banks through SEC reviewed disclosures about the staff has reviewed past quarterly and increased market discipline, disclosures Bank System are less complete than are annual Bank disclosure documents of by the Banks that are consistent with the disclosures of Fannie Mae and several Banks. As a result of that industry standards will help the Freddie Mac also may adversely affect comparison, staff has concluded that the Finance Board in its efforts to ensure the ability of the Bank System to current individual Bank disclosures fall that the Banks remain able to raise compete with the other housing GSEs short, in certain respects, of the funds in the capital markets. When for funding. As described more fully in requirements for 1934 Act-compliant issuing COs in the debt markets, the section I.C.1, above, OF currently financial disclosures. Banks compete primarily against the prepares combined disclosures based on Areas where some of the Banks’ other two housing GSEs, Fannie Mae information provided to it by the 12 current disclosures in annual reports and Freddie Mac. As noted previously, Banks. The quality of the disclosures were found by Finance Board staff to both Fannie Mae and Freddie Mac have made by OF depends, therefore, on the fall short of SEC-administered 1934 Act agreed to register their stock with the quality of the information it receives standards include: SEC under the 1934 Act. Fannie Mae from each of the Banks.63 • A description of Bank businesses has already done so, and Freddie Mac Whether the prospective disparity and operations; has stated that it will do so after it between the quality of the disclosures • The discussions of dividend resolves certain accounting matters. provided by Fannie Mae and Freddie payments, including why dividends are Thus, unless the Finance Board requires Mac and the Banks, respectively, is apt paid in the form of cash or stock, factors the Banks to enhance their disclosures, to affect significantly the ability of the that could cause dividends to increase once Freddie Mac has registered with Banks to raise funds in the capital or decrease, and the interrelationship the SEC, the Banks will be the only markets is difficult to quantify, between advance rates and dividend housing GSEs that are competing for especially before the fact. By requiring payments; funds in the capital markets with the Banks to publish financial • The discussions of selected financial disclosures that are not subject disclosures that are equivalent to those financial data that highlight significant to SEC scrutiny under the 1934 Act. provided by their principal competitors, trends in the institution’s financial This may have negative effects in the Finance Board is eliminating the condition and results of operations; several ways. First, member interest in possibility that the Banks’ access to the • Management discussion and holding Bank stock may be diminished. capital markets will be disadvantaged analysis, particularly with respect to the Members of a Bank must hold a certain because of any perceived differences in risks associated with Bank mortgage level of Bank stock, with the amount of the quality of their financial disclosures. stock that must be purchased assets; 3. Benefits of Registration With the SEC • Qualitative and quantitative determined by the capital plan of each 61 Versus Registration With the Finance disclosures of interest rate, credit, and Bank. However, many Banks permit Board members to buy and hold ‘‘excess’’ operational risks; Many of the commenters raised • Disclosures regarding accounting stock, which is stock beyond what is required to remain a member of, or to questions about the appropriateness of issues; requiring registration by the Banks with • Disclosures about officers and do business with, the Bank. Members directors of the Banks, including may be more reluctant to purchase or hold Bank ‘‘excess’’ stock if they Loan Act that required a federal savings association disclosures about the compensation to become a member of and maintain membership awarded to, earned by, or paid to conclude that they lack adequate in the Bank district in which it maintained its directors and certain senior executive information about the Bank issuer. principal place of business. GLB Act sec. 603. 63 officers; Second, since Bank membership is OF would not be required under the final rule • now voluntary,62 the attractiveness of to register a class of securities with the SEC and, Evaluations of the effectiveness of therefore, would not be subject to SEC oversight. OF is a joint office of the 12 Banks, and was established disclosure controls and procedures, or 61 internal controls and procedures; In the case of the four Banks that have not to facilitate the issuing and servicing of the COs of • implemented their new capital plans, the amount the Banks. OF, like the Banks, is regulated by the CEO and CFO certifications as to of stock that members must hold is determined by Finance Board. As recognized by the SEC, because the accuracy of the content of the Bank’s the Bank Act rules that applied before they were of the structure of the Bank System, there is no annual report, the effectiveness of amended by the GLB Act. issuer tied to the Bank System Combined Reports disclosure controls and procedures, and 62 Both before and after its amendment by the and, therefore, no issuer to register with the SEC. GLB Act, section 6 of the Bank Act required See Beller Testimony, at 7. However, Finance Board members to buy and hold stock to capitalize the regulations require that the Reports prepared by OF important part of the OFHEO’s supervisory Bank. See 12 U.S.C. 1426. Prior to the GLB Act be consistent with SEC Regulations S–K and program. Full disclosure enhances market amendments, section 6 set uniform stock purchase Regulation S–X in scope, form, and content discipline.’’). 68 FR at 16715, 16716 (footnotes requirements applicable to members of each Bank. generally. See 12 CFR 985.6(b)(1). These Reports are omitted). The GLB Act changed the Bank Act by requiring to be filed with, and reviewed by, the Finance 60 See 12 CFR 989.4. OF prepares the combined each Bank to adopt stock purchase requirements for Board. The SEC has requested the opportunity to annual and quarterly financial statements for all its members in its capital plan. In addition, the GLB review the Reports and provide the Finance Board twelve of the Banks, the scope, form, and content Act made membership in the Bank System with whatever comments the SEC may have, and of which must be consistent with the requirements voluntary for all members when it removed the Finance Board intends to provide the SEC with of SEC Regulations S–K and S–X. provisions from section 5(f) of the Home Owners’ this opportunity.

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the SEC. These commenters noted that expertise required to review these types regulator before taking action, including the Finance Board has a much better of disclosures. public release of information on an SEC understanding of the Banks’ business b. While improved disclosure likely enforcement action. SEC officials also than does the SEC and would be better would mean greater transparency and have indicated that in such instances able to tailor disclosure requirements in more effective market discipline the primary regulator often is aware of a manner that will yield the most irrespective of who administers the the underlying issues through its appropriate disclosures from the Banks. disclosure regime, only Bank examination program. Commenters proposed that the Finance disclosures held to the same standards Bank supervision and disclosure Board establish a disclosure regime required of Fannie Mae, Freddie Mac, review are independent, but modeled on section 12(i) of the 1934 and other competitors for funding will complementary, missions. Enhanced Act, which requires various depository enable investors to evaluate potential disclosures, on a par with disclosures in institutions to file their 1934 Act investments without concern that the other businesses, including the other disclosure documents with their information they are reviewing may housing GSEs, should help to promote respective primary Federal banking differ due to inconsistent standards safety and soundness. As previously regulatory agencies.64 The commenters applied from one agency to the next. discussed, the market discipline suggested that, because the SEC’s Investors in equity and debt securities imposed by debt and equity investors on emphasis is on investor protection have become familiar with disclosure the operations of financial institutions while the Finance Board’s emphasis is documents filed with the SEC. has come to be viewed as an important on the Banks’ safety and soundness, Disclosures that diverge from what complement to minimum capital registration with the SEC risks investors have come to expect would requirements and the supervisory subjecting the Banks to conflicting make it difficult for investors to make review process in ensuring the safe and regulatory directives. These commenters meaningful comparisons between the sound operation of a financial cited a disagreement in 1998 between Banks, the other housing GSEs, and institution.66 Adequate and consistent the SEC and bank regulators over the other companies seeking investors. disclosure is an important element in appropriate treatment of a financial Departure from the standard practices achieving market discipline since it is institution’s loan loss reserves as an followed by other market participants— through such disclosure that market example of the problems that may arise. including Fannie Mae and Freddie participants gain access to information After carefully considering the Mac—could lead the markets to draw on the risks faced by the institution in benefits and disadvantages of requiring negative inferences no matter how question. Critical to that process is the disclosures to be filed with the SEC as unwarranted. Only by registering with ability to compare information across opposed to the Finance Board, the the SEC, and therefore submitting to similar institutions at a point in time Finance Board has determined that SEC review, will the Banks be able to and over time. An effective structure for protecting registration with the SEC is appropriate, declare unambiguously that Bank the safety and soundness of the Bank for the reasons set forth below. disclosures comply with 1934 Act System and the interests of investors in a. The SEC is the nation’s functional standards. Bank debt and equity securities requires disclosure regulator. As a matter of c. The unique characteristics of the a regime in which the Finance Board, as national policy, Congress has designated Bank System can be accommodated by safety and soundness regulator, is not the SEC as the securities disclosure the SEC disclosure regime. The Finance the final arbiter for accounting and authority. Since its creation in 1934, the Board recognizes that the Banks are disclosure standards for the Banks. The SEC has been at the forefront of investor different from virtually every other SEC principal responsibility of the Finance protection and is generally recognized registrant because they are cooperatives and they issue debt on a joint and Board is to ensure that the Banks as significantly contributing to the operate in a financially safe and sound integrity of the United States securities several basis. However, the SEC has, as a result of extensive conversations with manner and to keep any unsafe and markets. The rules and regulations that unsound practices from creating unsafe Bank representatives, demonstrated a form the SEC’s disclosure system are and unsound conditions among the willingness and ability to accommodate widely recognized as establishing the Banks. At the same time, the principal the Banks’ unique status where best practices for disclosure, both responsibility of the SEC is to ensure appropriate.65 domestically and internationally. consistent and accurate disclosures for d. The SEC effectively coordinates its SEC staff is the nation’s expert in the the benefit of debt and equity investors. actions with other regulators. For interpretation of disclosure and The SEC is best able to ensure that the instance, the SEC is the regulator accounting rules. This is especially disclosures of the Banks are responsible for reviewing 1934 Act important in light of the changes in appropriately consistent with and on a disclosures of bank holding companies recent years in Bank activities, and the par with those of other SEC registrants. in the United States. The Federal resulting increase in the complexity and This point was made in a ‘‘Joint Report Reserve Board (FRB) is the regulator sophistication of the Banks’ accounting on the Government Securities Market,’’ responsible for the safety and soundness and financial statements. Furthermore, prepared in 1992 by the Department of supervision of bank holding companies. new FASB statements on reporting Treasury, the SEC, and the FRB. requirements, which will result in more In reviewing the coordination of the While issues like the one noted by the comprehensive and detailed disclosures FRB’s and SEC’s roles, respectively, we commenters may arise where the SEC by the Banks, have given rise to found no instance of significant costs and the Finance Board disagree on the interpretive complexities with regard to due to regulatory overlap between the appropriate resolution of a particular accounting and financial reporting. The two agencies. SEC officials have issue, there is no reason to assume that SEC staff has the extensive accounting indicated that it is the SEC’s operating these issues will be insurmountable. policy to contact a registrant’s primary Indeed, in the one example provided 64 As previously noted, section 12(i) explicitly concerning the appropriate treatment of assigns to the respective Federal banking regulatory 65 For a more detailed discussion of the unique agencies responsibility and authority to perform issues presented by the Bank System and the loan loss reserves, the SEC and the bank this function. The Finance Board and the Banks are manner in which the SEC intends to address those not listed in section 12(i). issues, see section II.B.5, below. 66 See, e.g., Basel II.

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regulator were able to resolve the issue achieve parity with that of the SEC, realized. The FMCG estimates are little and, in so doing, developed a better there likely would be no additional more than conjecture and apparently are understanding of each other’s respective compliance costs to the Banks under the based on an unfounded assumption that interests. SEC-administered disclosure regime the SEC would respond more rigorously e. SEC administration of Bank stemming from the preparation and to disclosure issues than would the disclosures could be achieved quickly. submission of the relevant documents. Finance Board. Moreover, the Finance The SEC disclosure standards are well In fact, the compliance costs of SEC- Board is unconvinced that funding established, and the SEC has the administered registration are likely to be sources will be unable or unwilling to personnel in place to administer and somewhat lower than would be the distinguish issues arising at a particular enforce those standards on the Banks. A costs of filing with the Finance Board. Bank from the combined condition of disclosure regime administered and As previously discussed, the SEC has the 12 Banks. Neither the FMCG Study enforced by the SEC could be the resources to review Bank nor any other comment disagrees with implemented quickly, without the need disclosures, unlike the Finance Board. the benefits of enhanced disclosure by for additional staff, and without a direct The SEC does not currently charge a the Banks. To suggest, as the FMCG charge to the Banks. Finance Board staff filing fee for basic 1934 Act periodic Study does, that the Banks will be would not be able to match the SEC disclosure documents, whereas the disadvantaged compared to Freddie Mac staff’s background or its access to Finance Board would recover its and Fannie Mae because the latter two comparative information. Disclosure increased costs of implementing a 1934 GSEs disclose only those events that are review carried out by the Finance Board Act-compliant disclosure regime material to their nationwide operations would likely take longer to implement through higher assessments on the is inconsistent with the stated support as the Finance Board hired additional, Banks. Thus, the costs of an SEC- by the commenters for enhanced highly expert staff. Moreover, regardless administered disclosure regime disclosure at the Bank level. Thus, the of how expert the Finance Board staff compared to the costs of one Finance Board has determined that the would become with 1934 Act disclosure administered by the Finance Board are FMCG Study’s conclusions concerning standards, the limited universe subject likely to be somewhat lower for the the likely increase in liquidity costs to their review would make it difficult Banks. when comparing the disclosure for them to obtain the depth and breadth Compliance costs would be higher alternatives are unpersuasive. of experience of SEC staff. under an SEC-administered disclosure Even assuming that SEC registration regime if (i) disclosures to the Finance will result in a greater need for liquidity 4. Costs of SEC Registration Board would be less robust than what than would be the case if registration A number of commenters cited a would be required by the SEC, or (ii) the were with the Finance Board, the study commissioned by the Banks and Finance Board would review the Finance Board notes that the Banks prepared by First Manhattan Consulting disclosures and follow up on issues already maintain substantial liquidity. Group (FMCG Study),67 which with less vigor (or at least a greater Finance Board staff analysis has attempted to assess the potential willingness to sanction selective non- concluded that aggregate Bank System economic costs and benefits of requiring disclosure) than would the SEC. Neither liquidity is sufficient for a period of Bank registration of a class of securities of these outcomes would be true if interrupted market access as long as 30 with the SEC. The FMCG Study Banks were to register with the Finance days, and may be sufficient for even concluded that the Banks’ compliance, Board, but, even if they were, they longer periods. Thus, there is ample liquidity, and funding costs under an would simply serve to underscore the liquidity in the Bank System to SEC-administered disclosure regime appropriateness of registration with the accommodate the disruptions to market could be significantly higher than SEC. access that the FMCG Study has comparable costs under a Finance b. Liquidity Costs. The FMCG Study hypothesized could result as a result of Board-administered disclosure regime. contended that the Banks could face SEC registration. The Finance Board has reviewed and significantly higher liquidity costs c. Funding Costs. The FMCG Study evaluated the FMCG Study and, for the under an SEC-administered regime than contended that the Banks could face reasons discussed below, has a Finance Board-administered regime, substantially higher funding costs under determined that the FMCG Study’s because SEC registration would increase an SEC-administered regime than under conclusions are unfounded. While the possibility of a future disruption in a Finance Board-administered regime, improving their level of disclosure from Bank System debt issuance, thereby because SEC registration may diminish current levels to 1934 Act disclosure requiring the Banks to substantially the market’s perception of the GSE standards would increase the Banks’ increase their liquidity holdings. The status of the Banks.68 overall compliance costs, those costs FMCG Study conclusions are premised The Finance Board is unconvinced would not be higher under an SEC- on the assumption that SEC registration that SEC registration necessarily will administered disclosure regime than will cause investors to focus more on lead to increased funding costs due to under a Finance Board-administered Bank-level events that are not material a diminution in the Banks’ status as disclosure regime. In addition, there is on a Bank System-wide level. The GSEs. As the FMCG Study no evidence that the Banks’ liquidity FMCG Study concludes that, as a result, acknowledges, Fannie Mae’s debt and funding costs under an SEC- it is reasonable to assume an anticipated spreads compared to Treasury administered disclosure regime would funding disruption of 30 to 60 days and obligations improved slightly after it be higher than those under a Finance a mixed strategy of adding more liquid registered with the SEC. Finance Board Board-administered disclosure regime. assets and purchasing liquidity back-up staff analysis of bond spread data during a. Compliance Costs. Given that any facilities. However, the FMCG Study estimated 68 disclosure regime instituted by the The FMCG Study also noted that several additional liquidity costs based on accounting issues may arise as a result of SEC Finance Board would be designed to worst-case scenarios, not expected registration that are, in the words of FMCG, ‘‘red herring’’ in nature but which may nevertheless raise 67 See Study entitled ‘‘Potential Costs Related to outcomes, and the estimates make no investor concerns. The accounting issues noted in the SEC Registration of the FHL Banks’ Stock,’’ reference to the likelihood that the the FMCG Study have been addressed by the SEC. dated October 15, 2003. worst-case scenarios would ever be See Beller Testimony.

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the period surrounding Fannie Mae’s swaps associated with swapped callable of issues, including those discussed in SEC registration indicated there was no debt; the preparation of Bank System the Beller Testimony. discernible effect on spreads. While Combined Reports rather than reports In its deliberations leading up to there may be many reasons for these that consolidate the financial statements adoption of the final rule, the Finance findings, one possibility is that the of the 12 Banks; the requirement to Board has explored with the SEC markets found the newly disclosed make the certifications required by the whether the SEC’s and the Banks’ information slightly better than they Sarbanes-Oxley Act of 2002 (Sarbanes- resolution of the various accounting and expected or that the increased market Oxley); 69 the requirement to prepare disclosure issues that were raised discipline and regulatory scrutiny annual meeting proxies; and the because of the cooperative nature of the inherent in SEC oversight led the market requirement that certain member Bank System would be changed to view Fannie Mae’s debt more stockholders file an insider trading form unilaterally by the SEC. In favorably. with the SEC each time the stockholder conversations involving representatives Whether enhanced disclosures will conducts a transaction in the registrant’s of the SEC and the Finance Board, SEC affect funding costs will depend on the stock. staff has stated that the SEC has never disclosure. It is possible that funding rescinded a No Action letter, and that, costs will decrease, either because SEC staff testified recently that many absent a change in the facts or investors are reassured by the of these issues have been resolved. For applicable law, recipients of such a availability of disclosures that meet the instance, the SEC does not object to the letter may rely on it even if the SEC same level of scrutiny that other treatment of REFCORP payments as the were to reach a different conclusion companies face or because there may be equivalent of a tax, with the result being when considering the issue at a later unfounded concerns that are allayed that the capitalized obligation would time. In addition, the SEC staff stated through better disclosure. not appear on a Bank’s balance sheet. that it will communicate with the Regardless of the effect on funding The SEC also has agreed that a Bank’s Finance Board before changing any of costs, the Finance Board takes issue stock, though ‘‘puttable’’ (meaning that the SEC’s views as stated in the Beller with any suggestion that it is preferable the stock is, as a general matter, Testimony and reiterated in the letter to withhold information that may cause redeemable), may be treated as equity by from the SEC to the Finance Board concern among funding sources. The the Bank.70 Moreover, the SEC will dated June 1, 2004. The Finance Board responsiveness of funding costs to permit each Bank to include on its has adopted this final rule relying on favorable or unfavorable information is balance sheet as long-term indebtedness the SEC’s staff representations exactly the type of market discipline only the amount of COs for which that concerning the effectiveness of No that financial transparency is meant to Bank is the primary obligor.71 SEC staff Action letters as well as the statements produce. It likely will encourage the has advised that certain other disclosure made by the SEC in the Beller Banks to manage the risks in their requirements and changes to the Banks’ Testimony and subsequent portfolios proactively to maintain low existing accounting policies would not communications with the Finance funding costs, rather than to manage be imposed on the Banks if the Banks Board. The Finance Board will consult them reactively in response to pressure were to register, and has indicated that with the SEC to achieve a satisfactory from the Finance Board. it would continue to work with the resolution of any issue that arises that Banks to determine the appropriateness 5. Resolution of Operational Issues interferes with the Finance Board’s of certain disclosures under the 1934 authority under the Bank Act. Several commenters did not oppose Act.72 The Finance Board understands Commenters proposed varying dates registration with the SEC, but stated that that the SEC will issue to Banks a ‘‘No that would trigger the requirement to the registration date should be delayed Action’’ letter addressing various register, including: 2005; the filing date until operational issues related to the disclosure issues as well as an for the 2005 annual report (2006); 18 unique structure of the Banks are interpretive letter addressing a number months from the effective date of the resolved with the SEC. Several final rule; and 18 months from the later commenters recommended that the 69 Pub. L. 107–204. of (i) the effective date of the final rule, Finance Board and the SEC enter into a 70 SEC staff noted, however, that the SEC will (ii) the effective date of an MOU on Memorandum of Understanding (MOU) continue to have a dialogue with the Banks on the operational issues, or (iii) the resolution to resolve the operational issues, and proper accounting treatment in the event that a of the relevant operational issues. stockholder puts the stock to a Bank. Beller indicated their preferred outcome with Testimony at 7. Commenters stated that if these unique respect to those issues. These 71 See Beller Testimony at 6–7. accounting, regulatory, and economic commenters requested that the MOU 72 Congress has assigned to the SEC the authority issues were not resolved before the relieve the Banks of the registration and responsibility to prescribe the methods to be Banks are required to register with the requirement in the event that the followed in the preparation of financial accounts SEC, the Banks’ access to the capital and the form and content of financial statements to positions reached by the SEC change or be filed under the securities laws. See, e.g., sections markets could be disrupted or delayed. if the SEC takes an action that impairs 7, 19(a), and Schedule A, items (25) and (26) of the Given the successful resolution of the Banks’ access to the capital markets. 1933 Act (15 U.S.C. 77g, 77s(a), 77aa(25) and (26)); many of the issues raised by Some commenters also recommended and sections 3(b), 12(b), and 13(b) of the 1934 Act commenters with the SEC and the (15 U.S.C. 78c(b), 78l(b), and 78m(b)). Subject to that the Banks be parties to, or third- SEC oversight, the Financial Accounting Standards significant period of time that has party beneficiaries of, the MOU. Board (FASB) has been delegated the authority to elapsed since the Finance Board began Examples of operational issues cited set accounting standards to be used by public considering this issue, the Finance by commenters include: the accounting companies. See SEC Policy Statement Reaffirming Board believes that it is appropriate to the Status of FASB as a Designated Private-Sector treatment of Bank joint and several Standard Setter (Release Nos. 33–8221; 34–47743; set a date certain in the final rule by liabilities; the accounting treatment of IC–26028; FR–70), 68 FR 23333 (May 1, 2003). The which registration with the SEC is to be the Banks’ Resolution Funding Banks’ disclosures are required to satisfy the effective. Based on information obtained Corporation (REFCORP) payments; the generally accepted accounting standards from the SEC staff concerning the steps established by FASB. Accordingly, all Finance characterization of Bank stock as Board regulatory interpretations concerning required to have an effective registration ‘‘puttable’’ or ‘‘redeemable;’’ the short- accounting issues are superceded by SEC and FASB of a class of equity securities under the cut hedge accounting treatment for pronouncements on point. 1934 Act, the Finance Board has

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determined that it is appropriate for additional definitions of terms related to to the 1934 Act’s periodic disclosure each Bank to file a registration statement securities disclosures that are used in requirements by registering a class of under the 1934 Act with the SEC by no the final rule: ‘‘GLB Act,’’ meaning the securities with the SEC within 120 days later than June 30, 2005, and have the Gramm-Leach-Bliley Act (Pub. L. 106– of the adoption of a final rule by the registration effective no later than 102 (1999)); ‘‘SEC,’’ meaning the United Finance Board. Lastly, the proposed rule August 29, 2005. These dates may be States Securities and Exchange required each Bank to provide to the extended if the Finance Board Commission; and ‘‘1934 Act,’’ meaning Finance Board, on a concurrent basis, determines, upon a written request by the Securities Exchange Act of 1934 (15 copies of all disclosure documents filed one or more of the Banks, that good U.S.C. 78a et seq.). The Finance Board with the SEC, unless otherwise directed cause exists for extending the deadline received no comments on the proposed by the Finance Board. for registration. addition of these three defined terms to The final rule retains the basic Some commenters noted that bills are § 900.3, and has adopted them as requirements set out in the proposed pending in Congress that could proposed. rule, but revises them so that they are restructure the Bank System’s regulatory now set out more clearly. Paragraph Part 998—Registration of Federal Home regime, and suggested that the Finance (a)(1) of § 998.2 states that each Bank Loan Bank Equity Securities Board delay action on a final rule until shall file a registration statement by no the legislative uncertainties are Section 998.1—Purpose later than June 30, 2005 to register a resolved. However, the Finance Board class of its equity securities pursuant to Section 998.1 of the proposed rule the provisions of section 12(g)(1) of the believes that it has the duty to fulfill the noted that the purpose of new part 998 responsibilities entrusted to it under the 1934 Act. Each Bank shall ensure that is to require each Bank to prepare and its registration statement becomes Bank Act, and, unless and until those publicly distribute certain financial and responsibilities are changed by effective as provided in section 12 no other disclosures. It also noted that the later than August 29, 2005. This will Congress, the Finance Board must disclosure requirements set forth in part continue to conduct business require each Bank to file a Form 10 with 998 did not limit or restrict the Finance the SEC and have the Form 10 become accordingly. It is in furtherance of those Board’s ability to act pursuant to its duties that the Finance Board adopts effective as contemplated by 1934 Act safety and soundness authority. rule 12b–6. A Bank that files a Form 10 this final rule. The final rule retains a description of A few commenters suggested that the and then withdraws it will not be the purposes of the rule, but amplifies deemed in compliance with this Finance Board postpone acting on the on that description by stating that the proposed SEC registration regulation requirement. Thereafter, Banks will be purposes of part 998 are to enhance the required to maintain such registration in until each Bank completes its quality of the financial disclosures conversion to a new capital plan, in effect at all times. Paragraph (a)(2) of provided by each Bank, to promote a § 998.2 states that the Finance Board accordance with the provisions of the greater degree of consistency and GLB Act. The Finance Board recognizes may by order extend the registration uniformity of such disclosures from date for one or more Banks if it that Banks in transition may have some Bank to Bank, to provide a greater unique issues to address in their determines, based on factors presented degree of transparency regarding the in a written request to the Finance registration filings. However, the financial condition of each Bank, and to Finance Board believes that it is best to Board, that good cause exists to do so. conform the disclosure practices of the Paragraph (b) requires Banks to realize the benefits of registration, as Banks to those of other financial comply with periodic disclosure outlined above, as soon as possible, institutions who raise funds in the requirements under the 1934 Act and without waiting for the remaining Banks global debt markets. The Finance Board disclose any other information required to convert. The Finance Board notes that believes that this is a more accurate and by SEC rules, regulations, or the availability of SEC-reviewed complete statement of the purposes of interpretations. These requirements will disclosure documents prior to a capital the securities disclosure regulation. be modified to the extent relief is plan conversion may assist Bank The discussion concerning the granted to the Banks by the SEC in No members in understanding issues Finance Board’s continued authority to Action letters or interpretive letters. related to the implementation of a new require Banks to take steps in addition Paragraph (c) sets forth the general capital plan by their Bank. to those required by part 998, including requirement that Banks provide to the III. Analysis of Final Rule the authority to require additional Finance Board on a concurrent basis disclosures as appropriate, has been set In light of the preceding discussion, copies of all disclosure documents that out in a separate § 998.3, as discussed the Finance Board has determined to are filed with the SEC. below. adopt in substantially similar form the Section 998.3—Reservation of Authority proposed rule as a final rule. The Section 998.2—Registration and Section 998.1(b) of the proposed rule specific provisions of the final rule, Periodic Disclosures explicitly retained the authority of the which amends existing § 900.3 and adds Proposed § 998.2 contained four Finance Board to exercise any other a new part 998, are described in the requirements. First, it required each authority that has been vested in it by following sections. These provisions, Bank to prepare and make public Congress, specifically including the and substantive changes made to disclosures relating to financial authority to require additional language contained in the proposed condition, results of operations, trends disclosures as appropriate. That rule, are discussed below. or uncertainties affecting its business, reservation of authority has been Part 900—General Definitions Applying and management’s assessment of the relocated to a new § 998.3 and revised to All Finance Board Regulations Bank’s business and financial condition. to improve the rule’s clarity. As set forth Second, it required each Bank to satisfy in the final rule, the requirements of Section 900.3 the disclosure requirement by subjecting part 998 do not diminish, or otherwise The final rule amends § 900.3 of the itself to the 1934 Act’s periodic restrict the ability of the Finance Board Finance Board’s regulations, 12 CFR disclosure regime. Third, the proposed to exercise, any and all authority 900.3, to include the following three rule required each Bank to subject itself conferred by the Bank Act to ensure that

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the Banks operate in a financially safe I Accordingly, the Finance Board hereby (2) Notwithstanding paragraph (a)(1) and sound manner, that they carry out amends title 12, chapter IX, Code of of this section, the Finance Board may their housing finance mission, and that Federal Regulations, as follows: by order extend the registration date for they remain adequately capitalized and one or more Banks if it determines, able to raise funds in the capital PART 900—GENERAL DEFINITIONS based on factors presented in a written APPLYING TO ALL FINANCE BOARD markets. Nor do the requirements of part request to the Finance Board, that good REGULATIONS 998 diminish or otherwise restrict the cause exists to do so. Finance Board’s authority to supervise I 1. The authority citation for part 900 (b) Periodic disclosures. Consistent the Banks, to conduct examinations, to continues to read as follows: require reports and other disclosures, with the registration required pursuant and to enforce compliance with Authority: 12 U.S.C. 1422b(a). to paragraph (a) of this section, each applicable laws, rules, orders or I 2. Amend § 900.3 by adding the Bank, after registering a class of equity agreements. following three definitions in securities with the SEC, shall comply alphabetical order: with the periodic disclosure IV. Regulatory Analyses requirements of the 1934 Act by § 900.3 Terms relating to other entities and A. Paperwork Reduction Act concepts used throughout 12 CFR chapter preparing and filing with the SEC such annual, quarterly, and current reports, One commenter stated that the IX. as well as any other materials required Finance Board failed to comply with the * * * * * pursuant to SEC rules, regulations, or requirements of the Paperwork ‘‘GLB Act’’ means the Gramm-Leach- interpretations, including those related Reduction Act of 1995 (PRA) by failing Bliley Act (Pub. L. 106–102 (1999)). to submit the disclosure requirements in * * * * * to audited financial statements, as may the proposed rule to the Office of ‘‘SEC’’ means the United States be required by the SEC under the 1934 Management and Budget (OMB) for Securities and Exchange Commission. Act. review.73 However, as noted in the * * * * * (c) Submission to Finance Board. SUPPLEMENTARY INFORMATION section of ‘‘1934 Act’’ means the Securities Unless otherwise directed by the the proposed rule, the proposed rule Exchange Act of 1934 (15 U.S.C. 78a et Finance Board, each Bank shall provide does not contain any collections of seq.). to the Finance Board on a concurrent information as defined by the PRA, nor * * * * * basis copies of all disclosure documents does the final rule. Under the OMB’s I 3. Add Subchapter M (part 998) to title filed with the SEC. implementing PRA regulation, the term 12, chapter IX, to read as follows: § 998.3 Reservation of authority. ‘‘collection of information’’ includes the Subchapter M—Federal Home Loan Bank collecting of information from Disclosures The requirements of this part do not instrumentalities of the United States diminish, or otherwise restrict the only if the results are to be used for PART 998—REGISTRATION OF ability of the Finance Board to exercise, general statistical purposes.74 Although FEDERAL HOME LOAN BANK EQUITY any and all authority conferred by the the Banks are instrumentalities of the SECURITIES Bank Act to ensure that the Banks United States, the required disclosures will not be used for general statistical Sec. operate in a financially safe and sound purposes, and thus they do not 998.1 Purpose. manner, that they carry out their 998.2 Registration and periodic disclosures. housing finance mission, and that they constitute a ‘‘collection of information’’ 998.3 Reservation of authority. subject to the PRA. Consequently, the remain adequately capitalized and able Finance Board has not submitted any Authority: 12 U.S.C. 1422a(a)(3), to raise funds in the capital markets. 1422b(a)(1). information to the OMB for review. Nor do the requirements of part 998 § 998.1 Purpose. diminish or otherwise restrict the B. Regulatory Flexibility Act The purposes of this part are to Finance Board’s authority to supervise The final rule will apply only to the enhance the quality of the financial the Banks, to conduct examinations, to Banks, which do not come within the disclosures provided by each Bank, to require reports and other disclosures, meaning of ‘‘small entities,’’ as defined promote a greater degree of consistency and to enforce compliance with in the Regulatory Flexibility Act and uniformity of such disclosures from applicable laws, rules, orders or (RFA).75 Therefore, in accordance with Bank to Bank, to provide a greater agreements. section 605(b) of the RFA,76 the Finance degree of transparency regarding the Dated: June 23, 2004. Board hereby certifies that the final rule financial condition of each Bank, and to By the Board of Directors of the Federal will not have a significant economic conform the disclosure practices of the Housing Finance Board. impact on a substantial number of small Banks to those of other financial entities. institutions who raise funds in the Alicia R. Castaneda, Chairman. List of Subjects in 12 CFR Parts 900 and global debt markets. [FR Doc. 04–14696 Filed 6–28–04; 8:45 am] 998 § 998.2 Registration and periodic BILLING CODE 6725–01–P Credit, Federal home loan banks, disclosures. Financial disclosure, Government- (a) Registration. (1) Each Bank shall sponsored enterprises, Records, file a registration statement by no later Reporting and recordkeeping than June 30, 2005 to register a class of requirements, and Securities disclosure. its equity securities pursuant to the provisions of section 12(g)(1) of the 73 See 44 U.S.C. 3501 et seq. 1934 Act. Each Bank shall ensure that 74 See 5 CFR 1320.3(c)(3). its registration statement becomes 75 See 5 U.S.C. 601(6). effective as provided in section 12 no 76 5 U.S.C. 605(b). later than August 29, 2005.

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DEPARTMENT OF TRANSPORTATION Aviation Regulations (14 CFR part 39) to ‘‘significant regulatory action’’ under include an airworthiness directive (AD) Executive Order 12866; (2) is not a Federal Aviation Administration that is applicable to certain Bombardier ‘‘significant rule’’ under DOT Model DHC–8–301, –311, and –315 Regulatory Policies and Procedures (44 14 CFR Part 39 airplanes was published in the Federal FR 11034, February 26, 1979); and (3) [Docket No. 2002–NM–297–AD; Amendment Register on April 26, 2004 (69 FR will not have a significant economic 39–13691; AD 2004–13–09] 22461). That action proposed to require impact, positive or negative, on a determining the modification number of substantial number of small entities RIN 2120–AA64 the angle of attack (AOA) sensor vanes; under the criteria of the Regulatory Airworthiness Directives; Bombardier testing the movement of the affected Flexibility Act. A final evaluation has Model DHC–8–301, –311, and –315 vanes to evaluate sticking against both been prepared for this action and it is Airplanes the upper and the lower vane travel end contained in the Rules Docket. A copy stops; and corrective action, if of it may be obtained from the Rules AGENCY: Federal Aviation necessary. Docket at the location provided under Administration, DOT. the caption ADDRESSES. Comments ACTION: Final rule. Interested persons have been afforded List of Subjects in 14 CFR Part 39 SUMMARY: This amendment adopts a an opportunity to participate in the Air transportation, Aircraft, Aviation new airworthiness directive (AD), making of this amendment. No applicable to certain Bombardier Model safety, Incorporation by reference, comments were submitted in response Safety. DHC–8–301, –311, and –315 airplanes. to the proposal or the FAA’s This AD requires determining the determination of the cost to the public. Adoption of the Amendment modification number of the angle of attack (AOA) sensor vanes; testing the Conclusion I Accordingly, pursuant to the authority movement of the affected vanes to We have determined that air safety delegated to me by the Administrator, evaluate sticking against both the upper and the public interest require the the Federal Aviation Administration and the lower vane travel end stops; and adoption of the rule as proposed. amends part 39 of the Federal Aviation corrective action, if necessary. This Regulations (14 CFR part 39) as follows: action is necessary to prevent an Cost Impact incorrect AOA indication to the stall We estimate that 57 airplanes of U.S. PART 39—AIRWORTHINESS warning system in flight, which could registry will be affected by this AD, that DIRECTIVES result in an inadvertent stall and it will take approximately 1 work hour consequent loss of control of the per airplane to accomplish the proposed I 1. The authority citation for part 39 airplane. This action is intended to inspection to determining the continues to read as follows: address the identified unsafe condition. modification letter, and that the average Authority: 49 U.S.C. 106(g), 40113, 44701. DATES: Effective August 3, 2004. labor rate is $65 per work hour. Based The incorporation by reference of on these figures, the cost impact of the § 39.13 [Amended] certain publications listed in the AD on U.S. operators is estimated to be regulations is approved by the Director $3,705, or $65 per airplane. I 2. Section 39.13 is amended by adding of the Federal Register as of August 3, The cost impact figure discussed the following new airworthiness 2004. above is based on assumptions that no directive: ADDRESSES: The service information operator has yet accomplished any of 2004–13–09 Bombardier, Inc. (Formerly de referenced in this AD may be obtained the requirements of this AD action, and Havilland, Inc.): Amendment 39–13691. from Bombardier, Inc., Bombardier that no operator would accomplish Docket 2002–NM–297–AD. Regional Aircraft Division, 123 Garratt those actions in the future if this AD Applicability: Model DHC–8–301, –311, Boulevard, Downsview, Ontario M3K were not adopted. The cost impact and –315 airplanes, serial numbers 100 1Y5, Canada. This information may be figures discussed in AD rulemaking through 583, inclusive; certificated in any examined at the Federal Aviation actions represent only the time category. Administration (FAA), Transport necessary to perform the specific actions Compliance: Required as indicated, unless actually required by the AD. These accomplished previously. Airplane Directorate, Rules Docket, To prevent an incorrect angle of attack 1601 Lind Avenue, SW., Renton, figures typically do not include incidental costs, such as the time (AOA) indication to the stall warning system Washington; or at the National Archives in flight, which could result in an and Records Administration (NARA). required to gain access and close up, inadvertent stall and consequent loss of For information on the availability of planning time, or time necessitated by control of the airplane, accomplish the this material at NARA, call 202–741– other administrative actions. following: 6030, or go to: http://www.archives.gov/ Regulatory Impact Service Bulletin References federal_register/ The regulations adopted herein will (a) The term ‘‘service bulletin,’’ as used in code_of_federal_regulations/ not have a substantial direct effect on this AD, means the Accomplishment ibr_locations.html. the States, on the relationship between Instructions of Bombardier Alert Service FOR FURTHER INFORMATION CONTACT: Ezra the national Government and the States, Bulletin A8–27–94, Revision ‘A’, dated Sasson, Aerospace Engineer, Systems or on the distribution of power and February 5, 2002. and Flight Test Branch, ANE–172, New responsibilities among the various Note 1: Bombardier Alert Service Bulletin York Aircraft Certification Office, FAA, levels of government. Therefore, it is A8–27–94, Revision ‘A’, references 1600 Stewart Avenue, suite 410, Rosemount Aerospace Alert Service Bulletin determined that this final rule does not 0861CAB–27A–07, dated September 28, Westbury, New York 11590; telephone have federalism implications under 2001, as an additional source of service (516) 228–7320; fax (516) 794–5531. Executive Order 13132. information for testing the AOA sensors. The SUPPLEMENTARY INFORMATION: A For the reasons discussed above, I Rosemount service bulletin is included in the proposal to amend part 39 of the Federal certify that this action (1) is not a Bombardier service bulletin.

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Inspection to Determine Modification Alternative Methods of Compliance cracking; repetitive inspections, as (b) Within 1,000 flight hours or 18 months (i) In accordance with 14 CFR 39.19, the applicable; and corrective actions after the effective date of this AD, whichever Manager, New York Aircraft Certification including the eventual replacement of occurs first, inspect the right and left AOA Office, FAA, is authorized to approve all brackets, which constitutes sensor vanes to determine whether alternative methods of compliance for this terminating action for the repetitive modification (MOD) ‘J’ has been AD. inspections. This action is necessary to incorporated. Instead of inspecting the sensors, a review of airplane maintenance Incorporation by Reference prevent the loss of the balance weight records is acceptable if the MOD level of the (j) Unless otherwise specified in this AD, for the elevator trim tab, which could sensor can be positively determined from the actions shall be done in accordance with result in incorrect trim during takeoff that review. If MOD ‘J’ has been incorporated Bombardier Alert Service Bulletin A8–27–94, and landing, and reduced controllability in both sensors, no further action is required Revision ‘‘A’’, dated February 5, 2002. This of the airplane. This action is intended by this paragraph. incorporation by reference was approved by to address the identified unsafe Movement Tests the Director of the Federal Register in condition. accordance with 5 U.S.C. 552(a) and 1 CFR DATES: (c) For any AOA sensor vane that does not part 51. Copies may be obtained from Effective August 3, 2004. have MOD ‘J’ installed: Prior to further flight Bombardier, Inc., Bombardier Regional The incorporation by reference of following the inspection required by Aircraft Division, 123 Garratt Boulevard, certain publications listed in the paragraph (b) of this AD, do a movement test Downsview, Ontario M3K 1Y5, Canada. regulations is approved by the Director of the AOA sensor vane per the service Copies may be inspected at the FAA, of the Federal Register as of August 3, bulletin. Transport Airplane Directorate, 1601 Lind 2004. (d) If the result of the movement test in Avenue, SW., Renton, Washington; or at the paragraph (c) of this AD is less than 110 ADDRESSES: The service information FAA, New York Aircraft Certification Office, grams, repeat the movement test prior to the referenced in this AD may be obtained 1600 Stewart Avenue, suite 410, Westbury, accumulation of 5,000 flight hours or 24 from Short Brothers, Airworthiness & New York; or at the National Archives and months after accomplishing the initial test, Engineering Quality, P.O. Box 241, Records Administration (NARA). For whichever occurs first. Do the test per the information on the availability of this Airport Road, Belfast BT3 9DZ, service bulletin. material at NARA, call 202–741–6030, or go Northern Ireland. This information may Corrective Action to: http://www.archives.gov/federal_register/ be examined at the Federal Aviation code_of_federal_regulations/ Administration (FAA), Transport (e) If the result of any movement test in _ paragraph (c) or paragraph (d) of this AD is ibr locations.html. Airplane Directorate, Rules Docket, 110 grams or more, replace the AOA sensor Note 2: The subject of this AD is addressed 1601 Lind Avenue, SW., Renton, vane with a reworked MOD ‘J’ sensor vane, in Canadian airworthiness directive CF– Washington; or at the National Archives per the service bulletin, at the applicable 2001–46, dated December 3, 2001. and Records Administration (NARA). time in paragraph (e)(1), (e)(2), or (e)(3) of For information on the availability of Effective Date this AD. this material at NARA, call (202) 741– (1) If the result of the movement test in (k) This amendment becomes effective on 6030, or go to: http://www.archives.gov/ paragraph (c) of this AD is between 110 and August 3, 2004. _ _ _ 169 grams inclusive, replace the sensor vane federal register/code of federal Issued in Renton, Washington, on June 16, _ _ at the earlier of 1,000 flight hours, or 18 regulations/ibr locations.html. 2004. months after accomplishing the movement FOR FURTHER INFORMATION CONTACT: test in paragraph (c) of this AD. Ali Bahrami, Todd Thompson, Aerospace Engineer, (2) If the result of any repeat movement test Acting Manager, Transport Airplane International Branch, ANM–116, FAA, in paragraph (d) of this AD is between 110 Directorate, Aircraft Certification Service. Transport Airplane Directorate, 1601 and 169 grams inclusive, replace the sensor [FR Doc. 04–14319 Filed 6–28–04; 8:45 am] Lind Avenue, SW., Renton, Washington vane at the earlier of 1,000 flight hours or 6 BILLING CODE 4910–13–P months after accomplishing the movement 98055–4056; telephone (425) 227–1175; test in paragraph (d) of this AD. fax (425) 227–1149. (3) If the result of the movement test is 170 SUPPLEMENTARY INFORMATION: A grams or more, replace the sensor vane DEPARTMENT OF TRANSPORTATION proposal to amend part 39 of the Federal within 5 days after the accomplishing the Federal Aviation Administration Aviation Regulations (14 CFR part 39) to movement test in paragraph (c) or paragraph include an airworthiness directive (AD) (d) of this AD. 14 CFR Part 39 that is applicable to all Short Brothers Parts Installation Model SD3–60 series airplanes was (f) As of the effective date of this AD, no [Docket No. 2003–NM–236–AD; Amendment published in the Federal Register on person may install a sensor vane, part 39–13690; AD 2004–13–08] April 22, 2004 (69 FR 21766). That number 861CAB, on any airplane unless action proposed to require inspection of RIN 2120–AA64 MOD ‘‘J’’ has been incorporated. the welded joints of the balance weight Reporting and Parts Modification Airworthiness Directives; Short brackets for the left and right elevator (g) Although the Rosemount service Brothers Model SD3–60 Series trim tabs for cracking; repetitive bulletin contains procedures for sending test Airplanes inspections, as applicable; and findings to the manufacturer, and for sending corrective actions including the removed parts to the manufacturer for AGENCY: Federal Aviation eventual replacement of all brackets, modification, this AD does not require those Administration, DOT. which would constitute terminating actions. ACTION: Final rule. action for the repetitive inspections. Actions Accomplished Per Previous Release Comments of Service Bulletin SUMMARY: This amendment adopts a new airworthiness directive (AD), Interested persons have been afforded (h) Actions accomplished before the applicable to all Short Brothers Model an opportunity to participate in the effective date of this AD per Bombardier Alert Service Bulletin A8–27–94, dated SD3–60 series airplanes. This AD making of this amendment. No October 25, 2001, are considered acceptable requires inspection of the welded joints comments were submitted in response for compliance with the corresponding action of the balance weight brackets for the to the proposal or the FAA’s specified in this AD. left and right elevator trim tabs for determination of the cost to the public.

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Conclusion List of Subjects in 14 CFR Part 39 constitutes terminating action for the repetitive inspections required by paragraph We have determined that air safety Air transportation, Aircraft, Aviation (c)(1) of this AD. and the public interest require the safety, Incorporation by reference, adoption of the rule as proposed. Safety. Corrective Actions if Any Cracking Is Found (d) If any cracking is found during any Cost Impact Adoption of the Amendment inspection required by paragraph (b) or (c) of We estimate that 42 airplanes of U.S. I Accordingly, pursuant to the authority this AD: Before further flight, accomplish the applicable action in paragraph (d)(1) or (d)(2) registry will be affected by this AD, that delegated to me by the Administrator, it will take approximately 12 work of this AD in accordance with the service the Federal Aviation Administration bulletin. hours per airplane to accomplish the amends part 39 of the Federal Aviation required inspections, and that the (1) For airplanes that have accumulated Regulations (14 CFR part 39) as follows: less than 28,800 flight hours and on which average labor rate is $65 per work hour. all cracking on brackets is less than 0.25 inch Based on these figures, the cost impact PART 39—AIRWORTHINESS in length: Repair the affected bracket in of this action on U.S. operators is DIRECTIVES accordance with Part B of the service bulletin estimated to be $32,760, or $780 per (including the additional dye penetrant airplane. I 1. The authority citation for part 39 inspection of the repaired welded joint) and It will take approximately 8 work continues to read as follows: repeat the inspection required by paragraph hours per airplane to accomplish the (b) of this AD at intervals not to exceed 4,800 replacement of the brackets. Required Authority: 49 U.S.C. 106(g), 40113, 44701. flight hours; or replace the bracket in parts will cost approximately $632 per accordance with paragraph (d)(2) of this AD. § 39.13 [Amended] Replacement of the bracket constitutes airplane. Based on these figures, the cost I terminating action for the repetitive impact of this action on U.S. operators 2. Section 39.13 is amended by adding inspections. is estimated to be $48,384, or $1,152 per the following new airworthiness (2) For any airplane on which any cracking airplane. directive: on a bracket is 0.25 inch in length or greater, The cost impact figures discussed 2004–13–08 Short Brothers PLC: and for any airplane that has accumulated above are based on assumptions that no Amendment 39–13690. Docket 2003– 28,800 flight hours or more on which any operator has yet accomplished any of NM–236–AD. cracking of any length is found on a bracket: the requirements of this AD action, and Replace the affected bracket with a new Applicability: All Model SD3–60 series bracket or with a serviceable bracket that has that no operator would accomplish airplanes, certificated in any category. those actions in the future if this AD been inspected in accordance with paragraph Compliance: Required as indicated, unless (b) of this AD. Replacement of the bracket were not adopted. The cost impact accomplished previously. constitutes terminating action for the figures discussed in AD rulemaking To prevent the loss of the balance weight repetitive inspections required by paragraph actions represent only the time for the elevator trim tab, which could result (d)(1) of this AD. necessary to perform the specific actions in incorrect trim during takeoff and landing, actually required by the AD. These and reduced controllability of the airplane, Refitting figures typically do not include accomplish the following: (e) Before further flight following any incidental costs, such as the time Service Bulletin Reference inspection per paragraphs (b) or (c) of this required to gain access and close up, AD; or before further flight following repair (a) The term ‘‘service bulletin,’’ as used in or replacement of a bracket per paragraphs planning time, or time necessitated by this AD, means the Accomplishment (c)(2) or (d) of this AD: Refit the balance other administrative actions. Instructions of Short Brothers Service weights, covers, and trim tabs, in accordance Bulletin SD360–55–20, dated June 26, 2003. Regulatory Impact with the service bulletin. Where the service Initial Inspection bulletin specifies to contact the manufacturer The regulations adopted herein will for disposition of certain conditions while not have a substantial direct effect on (b) Within 2 months after the effective date refitting, obtain further disposition the States, on the relationship between of this AD: Do a dye penetrant inspection for instructions from the Manager, International cracking in the welded joints of the balance Branch, ANM–116, FAA, Transport Airplane the national Government and the States, weight brackets for the left and right elevator or on the distribution of power and Directorate; or the Civil Aviation Authority trim tabs, in accordance with the service (CAA) (or its delegated agent). responsibilities among the various bulletin. levels of government. Therefore, it is Parts Installation determined that this final rule does not Investigative and Corrective Actions if No Cracking Is Found (f) As of the effective date of this AD, no have federalism implications under person may install on any airplane a balance Executive Order 13132. (c) If no cracking is found during the weight bracket unless the welded joint has For the reasons discussed above, I inspection required by paragraph (b) of this been inspected in accordance with paragraph certify that this action (1) is not a AD, do the actions required by paragraphs (b) of this AD. ‘‘significant regulatory action’’ under (c)(1) and (c)(2) of this AD at the applicable compliance times. Alternative Methods of Compliance Executive Order 12866; (2) is not a (1) Repeat the inspection required by (g) In accordance with 14 CFR 39.19, the ‘‘significant rule’’ under DOT paragraph (b) of this AD at intervals not to Manager, International Branch, ANM–116, is Regulatory Policies and Procedures (44 exceed 4,800 flight hours until the bracket is authorized to approve alternative methods of FR 11034, February 26, 1979); and (3) replaced per paragraph (c)(2) or (d) of this compliance for this AD. will not have a significant economic AD. impact, positive or negative, on a (2) Prior to the accumulation of 28,800 Incorporation by Reference substantial number of small entities total flight hours, or within 6 months after (h) Unless otherwise specified in this AD under the criteria of the Regulatory the effective date of this AD, whichever the actions shall be done in accordance with Flexibility Act. A final evaluation has occurs later: Replace any bracket that has not Short Brothers Service Bulletin SD360–55– been replaced per paragraph (d) of this AD 20, dated June 26, 2003. This incorporation been prepared for this action and it is with a new bracket or with a serviceable by reference was approved by the Director of contained in the Rules Docket. A copy bracket that has been inspected in the Federal Register in accordance with 5 of it may be obtained from the Rules accordance with paragraph (b) of this AD. U.S.C. 552(a) and 1 CFR part 51. Copies may Docket at the location provided under Replace in accordance with the service be obtained from Short Brothers, the caption ADDRESSES. bulletin. Replacement of the brackets Airworthiness & Engineering Quality, P.O.

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Box 241, Airport Road, Belfast BT3 9DZ, Boulevard, Downsview, Ontario M3K were not adopted. The cost impact Northern Ireland. Copies may be inspected at 1Y5, Canada. This information may be figures discussed in AD rulemaking the FAA, Transport Airplane Directorate, examined at the Federal Aviation actions represent only the time 1601 Lind Avenue, SW., Renton, Administration (FAA), Transport necessary to perform the specific actions Washington; or at the National Archives and Records Administration (NARA). For Airplane Directorate, Rules Docket, actually required by the AD. These information on the availability of this 1601 Lind Avenue, SW., Renton, figures typically do not include material at NARA, call (202) 741–6030, or go Washington; or at the FAA, New York incidental costs, such as the time to: http://www.archives.gov/federal_register/ Aircraft Certification Office, 1600 required to gain access and close up, code_of_federal_regulations/ Stewart Avenue, suite 410, Westbury, planning time, or time necessitated by ibr_locations.html. New York; or at the National Archives other administrative actions. Note 1: The subject of this AD is addressed and Records Administration (NARA). Regulatory Impact in British airworthiness directive 009–06– For information on the availability of 2003. this material at NARA, call (202) 741– The regulations adopted herein will not have a substantial direct effect on Effective Date 6030, or go to: http://www.archives.gov/ federal_register/ the States, on the relationship between (i) This amendment becomes effective on code_of_federal_regulations/ the national Government and the States, August 3, 2004. ibr_locations.html. or on the distribution of power and Issued in Renton, Washington, on June 16, responsibilities among the various FOR FURTHER INFORMATION CONTACT: 2004. levels of government. Therefore, it is Leung Lee, Aerospace Engineer, Ali Bahrami, determined that this final rule does not Systems and Flight Test Branch, ANE– Acting Manager, Transport Airplane have federalism implications under 172, FAA, New York Aircraft Directorate, Aircraft Certification Service. Executive Order 13132. Certification Office, 1600 Stewart [FR Doc. 04–14321 Filed 6–28–04; 8:45 am] For the reasons discussed above, I Avenue, Westbury, suite 410, New York BILLING CODE 4910–13–P certify that this action (1) is not a 11590; telephone (516) 228–7309; fax ‘‘significant regulatory action’’ under (516) 794–5531. Executive Order 12866; (2) is not a DEPARTMENT OF TRANSPORTATION SUPPLEMENTARY INFORMATION: A ‘‘significant rule’’ under DOT proposal to amend part 39 of the Federal Regulatory Policies and Procedures (44 Federal Aviation Administration Aviation Regulations (14 CFR part 39) to FR 11034, February 26, 1979); and (3) include an airworthiness directive (AD) will not have a significant economic 14 CFR Part 39 that is applicable to certain Bombardier impact, positive or negative, on a Model DHC–8–102, –103, –106, –201, [Docket No. 2001–NM–331–AD; Amendment substantial number of small entities 39–13692; AD 2004–13–10] –202, –301, –311, and –315 airplanes under the criteria of the Regulatory was published in the Federal Register Flexibility Act. A final evaluation has RIN 2120–AA64 on April 1, 2004 (69 FR 17113). That been prepared for this action and it is action proposed to require rework/ contained in the Rules Docket. A copy Airworthiness Directives; Bombardier retrofit of the wardrobe shelf assembly. of it may be obtained from the Rules Model DHC–8–102, –103, –106, –201, Docket at the location provided under –202, –301, –311, and –315 Airplanes Comments the caption ADDRESSES. Interested persons have been afforded AGENCY: Federal Aviation List of Subjects in 14 CFR Part 39 Administration, DOT. an opportunity to participate in the making of this amendment. No Air transportation, Aircraft, Aviation ACTION: Final rule. comments were submitted in response safety, Incorporation by reference, SUMMARY: This amendment adopts a to the proposal or the FAA’s Safety. determination of the cost to the public. new airworthiness directive (AD), Adoption of the Amendment applicable to certain Bombardier Model Conclusion DHC–8–102, –103, –106, –201, –202, I Accordingly, pursuant to the authority The FAA has determined that air –301, –311, and –315 airplanes, that delegated to me by the Administrator, safety and the public interest require the requires rework/retrofit of the wardrobe the Federal Aviation Administration adoption of the rule as proposed. shelf assembly. This action is necessary amends part 39 of the Federal Aviation to prevent the wardrobe shelf and Cost Impact Regulations (14 CFR part 39) as follows: attached equipment separating from the The FAA estimates that 18 airplanes attachment in the event of a hard PART 39—AIRWORTHINESS of U.S. registry will be affected by this DIRECTIVES landing, which could impede the egress AD, that it will take approximately 20 of passengers in the event of an work hours per airplane to accomplish I 1. The authority citation for part 39 emergency evacuation. This action is the required actions, and that the continues to read as follows: intended to address the identified average labor rate is $65 per work hour. Authority: 49 U.S.C. 106(g), 40113, 44701. unsafe condition. Required parts will cost approximately DATES: Effective August 3, 2004. $1,387 per airplane. Based on these § 39.13 [Amended] The incorporation by reference of figures, the cost impact of the AD on I 2. Section 39.13 is amended by adding certain publications listed in the U.S. operators is estimated to be the following new airworthiness regulations is approved by the Director $48,366, or $2,687 per airplane. directive: of the Federal Register as of August 3, The cost impact figure discussed 2004–13–10 Bombardier, Inc. (Formerly de 2004. above is based on assumptions that no Havilland, Inc.): Amendment 39–13692. ADDRESSES: The service information operator has yet accomplished any of Docket 2001–NM–331–AD. referenced in this AD may be obtained the requirements of this AD action, and Applicability: Model DHC–8–102, –103, from Bombardier, Inc., Bombardier that no operator would accomplish –106, –201, –202, –301, –311, and –315 Regional Aircraft Division, 123 Garratt those actions in the future if this AD airplanes, serial numbers 452, 464, 490, 506,

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508 through 531 inclusive, and 535; DEPARTMENT OF TRANSPORTATION International Branch, ANM–116, FAA, certificated in any category. Transport Airplane Directorate, 1601 Compliance: Required as indicated, unless Federal Aviation Administration Lind Avenue, SW., Renton, Washington accomplished previously. 98055–4056; telephone (425) 227–1175; To prevent the wardrobe shelf and attached 14 CFR Part 39 fax (425) 227–1149. equipment separating from the attachment in SUPPLEMENTARY INFORMATION: A the event of a hard landing, which could [Docket No. 2002–NM–208–AD; Amendment 39–13689; AD 2004–13–07] proposal to amend part 39 of the Federal impede the egress of passengers in the event Aviation Regulations (14 CFR part 39) to of an emergency evacuation, accomplish the RIN 2120–AA64 following: include an airworthiness directive (AD) Airworthiness Directives; BAE that is applicable to all BAE Systems Rework/Retrofit Systems (Operations) Limited (Operations) Limited (Jetstream) Model (a) Within 12 months after the effective (Jetstream) Model 4101 Airplanes 4101 airplanes was published in the date of this AD, rework/retrofit the wardrobe Federal Register on March 5, 2004 (69 shelf assembly per the Accomplishment AGENCY: Federal Aviation FR 10385). That action proposed to Instructions of Bombardier Service Bulletin Administration, DOT. require operators to determine the flight 8–25–311, Revision ‘B,’ dated December 15, ACTION: Final rule. cycles accumulated on each component 2000. of the main landing gear and the nose (b) Rework/retrofit of the wardrobe shelf SUMMARY: This amendment adopts a landing gear, and to replace each assembly accomplished before the effective new airworthiness directive (AD), component that reaches its life limit date of this AD per Bombardier Service applicable to all BAE Systems with a serviceable component. That Bulletin 8–25–311, dated December 14, 1999; (Operations) Limited (Jetstream) Model action also proposed to require or Revision ‘A,’ dated February 8, 2000; is 4101 airplanes. This AD requires operators to revise the Airworthiness acceptable for compliance with the operators to determine the flight cycles Limitations section of the Instructions requirements of paragraph (a) of this AD. accumulated on each component of the for Continued Airworthiness to reflect main landing gear (MLG) and the nose Alternative Methods of Compliance the new life limits. landing gear (NLG), and to replace each (c) In accordance with 14 CFR 39.19, the component that reaches its life limit Comments Manager, New York Aircraft Certification with a serviceable component. This AD Office, FAA, is authorized to approve Interested persons have been afforded also requires operators to revise the an opportunity to participate in the alternative methods of compliance (AMOC) Airworthiness Limitations section of the for this AD. making of this amendment. No Instructions for Continued comments were submitted in response Incorporation by Reference Airworthiness in the aircraft to the proposal or the FAA’s (d) Unless otherwise specified in this AD, maintenance manual to reflect the new determination of the cost to the public. the actions shall be done in accordance with life limits. This action is necessary to Bombardier Service Bulletin 8–25–311, prevent failure of certain components of Conclusion Revision ‘B,’ dated December 15, 2000. This the MLG and the NLG, which could We have determined that air safety incorporation by reference was approved by result in failure of either or both landing and the public interest require the the Director of the Federal Register in gears, and consequent damage to the adoption of the rule as proposed. accordance with 5 U.S.C. 552(a) and 1 CFR airplane and injury to passengers or part 51. Copies may be obtained from crewmembers. This action is intended Explanation of Change Made to the Bombardier, Inc., Bombardier Regional to address the identified unsafe Proposed Rule Aircraft Division, 123 Garratt Boulevard, condition. We have revised paragraph (a) the Downsview, Ontario M3K 1Y5, Canada. DATES: Effective August 3, 2004. final rule to include BAE Systems Copies may be inspected at the FAA, The incorporation by reference of (Operations) Limited Service Bulletin Transport Airplane Directorate, 1601 Lind J41–05–001, Revision 3, dated January Avenue, SW., Renton, Washington; or at the certain publications listed in the regulations is approved by the Director 9, 2004, as an additional appropriate FAA, New York Aircraft Certification Office, source of service information for 1600 Stewart Avenue, suite 410, Westbury, of the Federal Register as of August 3, 2004. calculating the total accumulated flight New York; or at the National Archives and cycles. In addition, we have revised Records Administration (NARA). For ADDRESSES: The service information paragraph (f) of the final rule to give information on the availability of this referenced in this AD may be obtained operators credit for accomplishing the material at NARA, call (202) 741–6030, or go from British Aerospace Regional same calculation per two earlier to: http://www.archives.gov/federal_register/ Aircraft American Support, 13850 revisions of Service Bulletin J41–05– code_of_federal_regulations/ Mclearen Road, Herndon, Virginia 001: Revision 1, dated April 10, 2001, ibr_locations.html. 20171. This information may be Revision 2, dated March 15, 2002. Note 1: The subject of this AD is addressed examined at the Federal Aviation in Canadian airworthiness directive CF– Administration (FAA), Transport Cost Impact 2001–17, effective June 15, 2001. Airplane Directorate, Rules Docket, We estimate that 57 airplanes of U.S. 1601 Lind Avenue, SW., Renton, Effective Date registry will be affected by this AD. It Washington; or at the National Archives will take approximately 1 work hour per (e) This amendment becomes effective on and Records Administration (NARA). August 3, 2004. airplane to accomplish the required For information on the availability of determination of the number of flight Issued in Renton, Washington, on June 16, this material at NARA, call (202) 741– cycles, and 1 work hour per airplane to 2004. 6030, or go to: http://www.archives.gov/ accomplish the required revision of the _ Ali Bahrami, federal register/ aircraft maintenance manual. The _ _ _ Acting Manager, Transport Airplane code of federal regulations/ average labor rate is $65 per work hour. _ Directorate, Aircraft Certification Service. ibr locations.html. Based on these figures, the cost impact [FR Doc. 04–14322 Filed 6–28–04; 8:45 am] FOR FURTHER INFORMATION CONTACT: of the AD on U.S. operators is estimated BILLING CODE 4910–13–P Todd Thompson, Aerospace Engineer, to be $7,410, or $130 per airplane.

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The cost impact figure discussed 2004–13–07 BAE Systems (Operations) Continued Airworthiness of the Jetstream above is based on assumptions that no Limited (Formerly British Aerospace 4100 AMM to include the life limits of the operator has yet accomplished any of Regional Aircraft): Amendment 39– components listed in Table 1 and Table 2 of the requirements of this AD action, and 13689. Docket 2002–NM–208–AD. the Accomplishment Instructions of BAE that no operator would accomplish Applicability: All Model Jetstream 4101 Systems (Operations) Limited Service those actions in the future if this AD airplanes, certificated in any category. Bulletin J41–32–078, dated April 12, 2002. Compliance: Required as indicated, unless This may be accomplished by inserting a were not adopted. The cost impact accomplished previously. copy of the service bulletin in the figures discussed in AD rulemaking To prevent failure of certain components of Airworthiness Limitations section of the actions represent only the time the main landing gear and the nose landing Instructions for Continued Airworthiness necessary to perform the specific actions gear, which could result in failure of either until such time as a revision is issued. actually required by the AD. These or both landing gears, and consequent Thereafter, except as provided in paragraph figures typically do not include damage to the airplane and injury to (g) of this AD, no alternative replacement incidental costs, such as the time passengers or crewmembers, accomplish the times may be approved for any affected required to gain access and close up, following: component. planning time, or time necessitated by Determine Flight Cycles for Components Parts Installation other administrative actions. (a) Within 90 days after the effective date (e) As of the effective date of this AD, no of this AD: Determine the number of flight landing gear unit may be installed on any Regulatory Impact cycles accumulated on each landing gear The regulations adopted herein will component listed in Table 1 and Table 2 of airplane unless the accumulated flight cycles not have a substantial direct effect on the Accomplishment Instructions of BAE of all components of that landing gear have been established per paragraph (a) of this AD, the States, on the relationship between Systems (Operations) Limited Service Bulletin J41–32–078, dated April 12, 2002. If and any component that has exceeded its life the national Government and the States, limit has been replaced per paragraph (b) of or on the distribution of power and there are no records or incomplete records for any component, establish the number of this AD. responsibilities among the various flight cycles in accordance with the levels of government. Therefore, it is Actions Accomplished Per Previous Issue of Accomplishment Instructions of BAE Service Bulletin determined that this final rule does not Systems (Operations) Limited Service have federalism implications under Bulletin J41–05–001, Revision 2, dated (f) Calculations of total accumulated flight Executive Order 13132. March 15, 2002; or Revision 3, dated January cycles accomplished per BAE Systems For the reasons discussed above, I 1, 2004. (Operations) Limited Service Bulletin J41– certify that this action (1) is not a Note 1: BAE Systems (Operations) Limited 05–001, Revision 1, dated April 10, 2001; or ‘‘significant regulatory action’’ under Service Bulletin, J41–32–078 refers to BAE BAE Systems (Operations) Limited Service Executive Order 12866; (2) is not a Systems (Operations) J41 Service Information Bulletin J41–05–001, Revision 2, dated March 15, 2002; are considered acceptable ‘‘significant rule’’ under DOT Leaflet 32–15, Issue 1, dated February 15, 2002, as an additional source of service for compliance with the corresponding action Regulatory Policies and Procedures (44 information for establishing the life limits of specified in this AD. FR 11034, February 26, 1979); and (3) landing gear components and for tracking the will not have a significant economic accumulated life of each component. Alternative Methods of Compliance impact, positive or negative, on a (g) In accordance with 14 CFR 39.19, the substantial number of small entities Replace Components Manager, International Branch, ANM–116, under the criteria of the Regulatory (b) Except as provided by paragraph (c) of FAA, Transport Airplane Directorate, is Flexibility Act. A final evaluation has this AD, within 60 days after establishing the authorized to approve alternative methods of been prepared for this action and it is flight cycles per paragraph (a) of this AD: compliance for this AD. contained in the Rules Docket. A copy Replace any landing gear component that has reached the life limit determined by Incorporation by Reference of it may be obtained from the Rules paragraph (a) of this AD, with a serviceable (h) Unless otherwise specified in this AD, Docket at the location provided under component per a method approved by either the actions shall be done in accordance with the caption ADDRESSES. the Manager, International Branch, ANM– BAE Systems (Operations) Limited Service List of Subjects in 14 CFR Part 39 116, Transport Airplane Directorate, FAA; or Bulletin J41–05–001, Revision 2, dated the CAA Civil Aviation Authority (CAA) (or March 15, 2002, or BAE Systems (Operations) Air transportation, Aircraft, Aviation its delegated agent). Doing the actions in Limited Service Bulletin J41–05–001, safety, Incorporation by reference, chapter 32 of the applicable aircraft Revision 3, dated January 9, 2004; and BAE Safety. maintenance manual (AMM) is one approved Systems (Operations) Limited Service method. Thereafter, replace any component Bulletin J41–32–078, dated April 12, 2002; as Adoption of the Amendment that reaches its life limit prior to the applicable. This incorporation by reference accumulation of the applicable number of I Accordingly, pursuant to the authority was approved by the Director of the Federal flight cycles shown in Table 1 and Table 2 Register in accordance with 5 U.S.C. 552(a) delegated to me by the Administrator, of the Accomplishment Instructions of BAE the Federal Aviation Administration and 1 CFR part 51. Copies may be obtained Systems (Operations) Limited Service from British Aerospace Regional Aircraft amends part 39 of the Federal Aviation Bulletin J41–32–078, dated April 12, 2002. American Support, 13850 Mclearen Road, Regulations (14 CFR part 39) as follows: (c) Any component for which the total Herndon, Virginia 20171. Copies may be accumulated life cycles has not been inspected at the FAA, Transport Airplane established, or that has exceeded its life PART 39—AIRWORTHINESS Directorate, 1601 Lind Avenue, SW., Renton, limit, but has not yet been replaced per DIRECTIVES Washington; or at the National Archives and paragraph (b) of this AD, must be replaced Records Administration (NARA). For I 1. The authority citation for part 39 within 72 months after the effective date of information on the availability of this continues to read as follows: this AD, in accordance with BAE Systems material at NARA, call (202) 741–6030, or go Authority: 49 U.S.C. 106(g), 40113, 44701. (Operations) Limited Service Bulletin J41– _ 32–078, dated April 12, 2002. to: http://www.archives.gov/federal register/ code_of_federal_regulations/ § 39.13 [Amended] Revise Aircraft Maintenance Manual ibr_locations.html. I 2. Section 39.13 is amended by adding (d) Within 30 days after the effective date Note 2: The subject of this AD is addressed the following new airworthiness of this AD: Revise the Airworthiness in British airworthiness directive 007–04– directive: Limitations section of the Instructions for 2002.

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Effective Date International Branch, ANM–116, FAA, Cost Impact (i) This amendment becomes effective on Transport Airplane Directorate, 1601 We estimates that 400 Model A319 August 3, 2004. Lind Avenue, SW., Renton, Washington and A320 series airplanes of U.S. Issued in Renton, Washington, on June 16, 98055–4056; telephone (425) 227–2141; registry will be affected by this AD, that 2004. fax (425) 227–1149. it will take approximately 13 work Ali Bahrami, SUPPLEMENTARY INFORMATION: A hours per airplane to accomplish the Acting Manager, Transport Airplane proposal to amend part 39 of the Federal required inspection, and that the Directorate, Aircraft Certification Service. Aviation Regulations (14 CFR part 39) to average labor rate is $65 per work hour. [FR Doc. 04–14320 Filed 6–28–04; 8:45 am] include an airworthiness directive (AD) Based on these figures, the cost impact BILLING CODE 4910–13–P that is applicable to certain Airbus of the AD on U.S. operators is estimated Model A319 and A320 series airplanes to be $338,000, or $845 per airplane, per was published in the Federal Register inspection cycle. The cost impact figure discussed DEPARTMENT OF TRANSPORTATION on April 1, 2004 (69 FR 17103). That above is based on assumptions that no action proposed to require repetitive Federal Aviation Administration operator has yet accomplished any of detailed inspections to detect cracks in the requirements of this AD action, and 14 CFR Part 39 the keel beam side panels, and repair if that no operator would accomplish necessary. Accomplishment of the those actions in the future if this AD [Docket No. 2003–NM–187–AD; Amendment repair ends the repetitive inspections for were not adopted. The cost impact 39–13688; AD 2004–13–06] that repaired area. figures discussed in AD rulemaking RIN 2120–AA64 Comments actions represent only the time necessary to perform the specific actions Airworthiness Directives; Airbus Model Interested persons have been afforded actually required by the AD. These A319 and A320 Series Airplanes an opportunity to participate in the figures typically do not include making of this amendment. Due incidental costs, such as the time AGENCY: Federal Aviation consideration has been given to the required to gain access and close up, Administration, DOT. comments received. planning time, or time necessitated by ACTION: Final rule. Two commenters request that the other administrative actions. SUMMARY: This amendment adopts a notice of proposed rulemaking action Regulatory Impact new airworthiness directive (AD), (NPRM) be revised to reference the The regulations adopted herein will applicable to certain Airbus Model latest service bulletin (i.e., Airbus not have a substantial direct effect on A319 and A320 series airplanes, that Service Bulletin A320–53–1060, the States, on the relationship between requires repetitive detailed inspections Revision 01, dated April 2, 2004). The the national Government and the States, to detect cracks in the keel beam side commenters state that Revision 01 only or on the distribution of power and panels, and repair if necessary. changes the compliance to mandatory. responsibilities among the various Accomplishment of the repair ends the The FAA agrees. Since issuance of the levels of government. Therefore, it is repetitive inspections for that repaired NPRM, the Direction Ge´ne´rale de determined that this final rule does not area. This action is necessary to detect l’Aviation Civile (DGAC), which is the have federalism implications under and correct fatigue cracks on the side airworthiness authority for France, Executive Order 13132. panels of the keel beams, which could classified Revision 01 of Airbus Service For the reasons discussed above, I result in reduced structural integrity of Bulletin A320–53–1060 as mandatory. certify that this action (1) is not a the airplane. This action is intended to No additional work is required for ‘‘significant regulatory action’’ under address the identified unsafe condition. airplanes modified by the original issue Executive Order 12866; (2) is not a DATES: Effective August 3, 2004. of the service bulletin (referenced in the ‘‘significant rule’’ under DOT The incorporation by reference of NPRM as the appropriate source of Regulatory Policies and Procedures (44 certain publications listed in the service information). Therefore, we have FR 11034, February 26, 1979); and (3) regulations is approved by the Director revised the final rule to reference will not have a significant economic of the Federal Register as of August 3, Revision 01 of the service bulletin as the impact, positive or negative, on a 2004. appropriate source of service substantial number of small entities ADDRESSES: The service information information for accomplishing the under the criteria of the Regulatory referenced in this AD may be obtained required actions and added a new Flexibility Act. A final evaluation has from Airbus, 1 Rond Point Maurice paragraph to give credit to operators that been prepared for this action and it is Bellonte, 31707 Blagnac Cedex, France. accomplished the original issue of the contained in the Rules Docket. A copy This information may be examined at service bulletin before the effective date of it may be obtained from the Rules the Federal Aviation Administration of this AD. Docket at the location provided under (FAA), Transport Airplane Directorate, the caption ADDRESSES. Conclusion Rules Docket, 1601 Lind Avenue, SW., List of Subjects in 14 CFR Part 39 Renton, Washington; or at the National After careful review of the available Air transportation, Aircraft, Aviation Archives and Records Administration data, including the comment noted safety, Incorporation by reference, (NARA). For information on the above, we have determined that air Safety. availability of this material at NARA, safety and the public interest require the call (202) 741–6030, or go to: http:// Adoption of the Amendment _ adoption of the rule with the changes www.archives.gov/federal register/ described previously. We have I Accordingly, pursuant to the authority code_of_federal_regulations/ _ determined that these changes will delegated to me by the Administrator, ibr locations.html. neither increase the economic burden the Federal Aviation Administration FOR FURTHER INFORMATION CONTACT: Tim on any operator nor increase the scope amends part 39 of the Federal Aviation Dulin, Aerospace Engineer, of the AD. Regulations (14 CFR part 39) as follows:

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PART 39—AIRWORTHINESS Corrective Actions DEPARTMENT OF TRANSPORTATION DIRECTIVES (d) If any crack is found in ‘‘Area A’’ Federal Aviation Administration I 1. The authority citation for part 39 during any inspection required by this AD, before further flight, repair the affected area continues to read as follows: in accordance with the service bulletin. Once 14 CFR Part 39 Authority: 49 U.S.C. 106(g), 40113, 44701. a repair has been accomplished to ‘‘Area A,’’ [Docket No. 2003–NM–104–AD; Amendment § 39.13 [Amended] the repetitive inspections of ‘‘Area A’’ 39–13698; AD 2004–13–16] required by paragraphs (b) and (c) of this AD I 2. Section 39.13 is amended by adding are no longer required for that side of the keel RIN 2120–AA64 the following new airworthiness beam. directive: Airworthiness Directives; Empresa (e) If any crack is found in ‘‘Area B’’ during Brasileira de Aeronautica S.A. 2004–13–06 Airbus: Amendment 39–13688. any inspection required by this AD, before (EMBRAER) Model EMB–135 and –145 further flight, repair the affected structure per Docket 2003–NM–187–AD. Series Airplanes Applicability: Model A319 and A320 series a method approved by either the Manager, airplanes, certificated in any category; except International Branch, ANM–116, FAA, AGENCY: Federal Aviation those airplanes on which Airbus Transport Airplane Directorate; or the Administration, DOT. Modification 30355 has been incorporated in Direction Generale De L’Aviation Civile ACTION: Final rule. production. (DGAC) (or its delegated agent). Compliance: Required as indicated, unless SUMMARY: Credit for Accomplishing Original Issue of This amendment supersedes accomplished previously. an existing airworthiness directive (AD), To detect and correct fatigue cracks on the Service Bulletin side panels of the keel beams, which could applicable to all EMBRAER Model (f) Actions accomplished before the EMB–135 and –145 series airplanes, that result in reduced structural integrity of the effective date of this AD per Airbus Service airplane, accomplish the following: currently requires repetitive inspections Bulletin A320–53–1060, dated June 19, 2002, of the engine thrust reverser stow/transit Service Bulletin are acceptable for compliance with the switches, and corrective action, if (a) The term ‘‘service bulletin,’’ as used in applicable requirements of this AD. necessary. This amendment continues this AD, means the Accomplishment Alternative Methods of Compliance to require the existing requirements and Instructions of Airbus Service Bulletin A320– identifies the installation of certain new 53–1060, Revision 01, dated April 2, 2004. (g) In accordance with 14 CFR 39.19, the Manager, International Branch, FAA, is transit switches, which constitutes Initial Inspection authorized to approve alternative methods of terminating action for the repetitive (b) Perform a detailed inspection to detect compliance (AMOCs) for this AD. inspections. This action also changes cracks in the keel beam side panels, in the applicability. The actions specified accordance with the service bulletin, at the Incorporation by Reference by this AD are intended to prevent time specified in either paragraph (b)(1) or (h) Unless otherwise specified in this AD, erroneous signals in the Engine (b)(2) of this AD, as applicable. the actions shall be done in accordance with Indicating and Crew Alerting System Note 1: For the purposes of this AD, a Airbus Service Bulletin A320–53–1060, (EICAS) caused by internal corrosion of detailed inspection is defined as: ‘‘An Revision 01, dated April 2, 2004. This the thrust reverser stow/transit intensive visual examination of a specific incorporation by reference was approved by switches, which could result in structural area, system, installation, or the Director of the Federal Register in assembly to detect damage, failure, or uncommanded loss of engine power in irregularity. Available lighting is normally accordance with 5 U.S.C. 552(a) and 1 CFR flight, or unnecessary aborted takeoffs supplemented with a direct source of good part 51. Copies may be obtained from Airbus, on the ground. lighting at intensity deemed appropriate by 1 Rond Point Maurice Bellonte, 31707 DATES: Effective August 3, 2004. the inspector. Inspection aids such as a Blagnac Cedex, France. Copies may be The incorporation by reference of mirror, magnifying lenses, etc., may be used. inspected at the FAA, Transport Airplane certain publications listed in the Surface cleaning and elaborate access Directorate, 1601 Lind Avenue, SW., Renton, regulations is approved by the Director procedures may be required.’’ Washington; or at the National Archives and of the Federal Register as of August 3, (1) For airplanes that have not been Records Administration (NARA). For 2004. inspected per Maintenance Review Board information on the availability of this The incorporation by reference of a (MRB) task 53–31–42: Inspect at the later of material at NARA, call (202) 741–6030, or go certain other publication listed in the the times specified in paragraph (b)(1)(i) and to: http://www.archives.gov/federal_register/ (b)(1)(ii) of this AD. _ _ _ regulations was approved previously by code of federal regulations/ the Director of the Federal Register as of (i) Prior to the accumulation of 24,200 total ibr_locations.html. flight cycles, or 48,400 total flight hours, September 5, 2001 (66 FR 43766, August whichever occurs first. Note 2: The subject of this AD is addressed 21, 2001). in French airworthiness directive 2003– (ii) Within 3,500 flight cycles after the ADDRESSES: The service information 146(B), dated April 16, 2003 (a correction effective date of this AD. referenced in this AD may be obtained (2) For airplanes that have been inspected was issued May 14, 2003). per MRB task 53–31–42: Inspect at the later from Empresa Brasileira de Aeronautica of the times specified in paragraph (b)(2)(i) Effective Date S.A. (EMBRAER), P.O. Box 343—CEP 12.225, Sao Jose dos Campos—SP, and (b)(2)(ii) of this AD. (i) This amendment becomes effective on Brazil. This information may be (i) Within 4,300 flight cycles or 9,600 flight August 3, 2004. hours after the last inspection per MRB task examined at the Federal Aviation 53–31–42, whichever occurs first. Issued in Renton, Washington, on June 16, Administration (FAA), Transport (ii) Within 3,500 flight cycles after the 2004. Airplane Directorate, Rules Docket, effective date of this AD. Ali Bahrami, 1601 Lind Avenue, SW., Renton, Repetitive Inspections Acting Manager, Transport Airplane Washington; or at the National Archives (c) Repeat the detailed inspection required Directorate, Aircraft Certification Service. and Records Administration (NARA). by paragraph (b) of this AD at intervals not [FR Doc. 04–14530 Filed 6–28–04; 8:45 am] For information on the availability of to exceed 4,300 flight cycles or 9,600 flight BILLING CODE 4910–13–P this material at NARA, call (202) 741– hours, whichever occurs first. 6030, or go to: http://www.archives.gov/

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federal_register/ hours per airplane to accomplish, at an PART 39—AIRWORTHINESS code_of_federal_regulations/ average labor rate of $65 per work hour. DIRECTIVES ibr_locations.html. Required parts will cost approximately I FOR FURTHER INFORMATION CONTACT: $194 per airplane. Based on these 1. The authority citation for part 39 Todd Thompson, Aerospace Engineer, figures, the cost impact of the new continues to read as follows: International Branch, ANM–116, FAA, requirements of this AD on U.S. Authority: 49 U.S.C. 106(g), 40113, 44701. Transport Airplane Directorate, 1601 operators is estimated to be $118,260, or Lind Avenue, SW., Renton, Washington $324 per airplane. § 39.13 [Amended] 98055–4056; telephone (425) 227–1175; The cost impact figures discussed I 2. Section 39.13 is amended by fax (425) 227–1149. above are based on assumptions that no removing amendment 39–12394 (66 FR SUPPLEMENTARY INFORMATION: A operator has yet accomplished any of 43766, August 21, 2001), and by adding proposal to amend part 39 of the Federal the requirements of this AD action, and a new airworthiness directive (AD), Aviation Regulations (14 CFR part 39) that no operator would accomplish amendment 39–13698, to read as by superseding AD 2001–17–03, those actions in the future if this AD follows: amendment 39–12394 (66 FR 43766, were not adopted. The cost impact 2004–13–16 Empresa Brasileira de August 21, 2001) which is applicable to figures discussed in AD rulemaking Aeronautica S.A. (EMBRAER): all Empresa Brasileira de Aeronautica actions represent only the time Amendment 39–13698. Docket 2003– S.A. (EMBRAER) Model EMB–135 and necessary to perform the specific actions NM–104–AD. Supersedes AD 2001–17– –145 series airplanes, was published in actually required by the AD. These 03, Amendment 39–12394. the Federal Register on March 5, 2004 figures typically do not include Applicability: Model EMB–135BJ series (69 FR 10360). The action proposed to incidental costs, such as the time airplanes, as listed in EMBRAER Service require installation of certain new required to gain access and close up, Bulletin 145LEG–78–0006, Revision 01, transit switches, which would planning time, or time necessitated by dated January 31, 2003; and Model EMB–135 constitute terminating action for the other administrative actions. and –145 series airplanes, as listed in repetitive inspections of AD 2001–17– EMBRAER Service Bulletin 145–78–0035, 03. That action also proposed to reduce Regulatory Impact Revision 02, dated January 31, 2003; the applicability of AD 2001–17–03. certificated in any category. The regulations adopted herein will Compliance: Required as indicated, unless Editorial Change not have a substantial direct effect on accomplished previously. Paragraph (e)(2) of the proposed AD the States, on the relationship between To prevent erroneous signals in the Engine text erroneously states a replacement the national Government and the States, Indicating and Crew Alerting System (EICAS) interval in terms of ‘‘hours’’ rather than or on the distribution of power and caused by internal corrosion of the thrust ‘‘flight hours.’’ We have corrected this responsibilities among the various reverser stow/transit switches, which could error in the final rule. This change will levels of government. Therefore, it is result in uncommanded loss of engine power neither increase the economic burden determined that this final rule does not in flight, or unnecessary aborted takeoffs on on any operator nor increase the scope have federalism implications under the ground, accomplish the following: of the AD. Executive Order 13132. Restatement of the Requirements of AD 2001–17–03 Comments For the reasons discussed above, I certify that this action (1) is not a Initial and Repetitive Inspections, and Interested persons have been afforded ‘‘significant regulatory action’’ under Corrective Action, if Necessary an opportunity to participate in the making of this amendment. No Executive Order 12866; (2) is not a (a) For Model EMB–135 and –145 series comments were submitted in response ‘‘significant rule’’ under DOT airplanes: Prior to the accumulation of 2,000 total flight hours, or within 400 flight hours to the proposal or the FAA’s Regulatory Policies and Procedures (44 after September 5, 2001 (the effective date of determination of the cost to the public. FR 11034, February 26, 1979); and (3) will not have a significant economic AD 2001–17–03, amendment 39–12394), Conclusion impact, positive or negative, on a whichever occurs later, perform the inspection required by paragraph (b) of this substantial number of small entities We have determined that air safety AD and repeat the inspection at intervals not and the public interest require the under the criteria of the Regulatory to exceed 1,200 flight hours. adoption of the rule as proposed, with Flexibility Act. A final evaluation has (b) For Model EMB–135 and –145 series the editorial change described been prepared for this action and it is airplanes: Inspect each of the six stow/transit previously. contained in the Rules Docket. A copy switches on the #1 and #2 engine thrust of it may be obtained from the Rules reversers by conducting a megohmmeter test Cost Impact Docket at the location provided under to measure insulation resistance according to There are approximately 365 the caption ADDRESSES. the Accomplishment Instructions of airplanes of U.S. registry that will be EMBRAER Service Bulletin 145–78–0029, affected by this AD. List of Subjects in 14 CFR Part 39 dated February 2, 2001. If insulation resistance measures 100 megohms or less, The actions that are currently Air transportation, Aircraft, Aviation required by AD 2001–17–03 and before further flight, replace the switch with safety, Incorporation by reference, a new switch in accordance with the service retained in this AD, take approximately Safety. 1 work hour per airplane to accomplish, bulletin. at an average labor rate of $65 per work Adoption of the Amendment Spares hour. Based on these figures, the cost (c) For Model EMB–135 and –145 series I impact of the previously required Accordingly, pursuant to the authority airplanes: As of September 5, 2001, no actions on U.S. operators is estimated to delegated to me by the Administrator, person shall install, on any airplane, a stow/ be $23,725, or $65 per airplane. the Federal Aviation Administration transit switch part number 83–990–137 or The new actions that are required by amends part 39 of the Federal Aviation 83–990–152 unless it has been inspected in this AD will take approximately 2 work Regulations (14 CFR part 39) as follows: accordance with this AD.

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New Actions Required by This AD DEPARTMENT OF TRANSPORTATION Revision Date shown on Service Bulletin Reference Page No. level shown page on page Federal Aviation Administration (d) The term ‘‘service bulletin,’’ as used in the remainder of this AD, means the 1, 2 ...... 02 ...... Jan. 31, 2003. 14 CFR Part 39 Accomplishment Instructions of the 3–13 ...... Original ...... Oct. 4, 2002. following service bulletins, as applicable: [Docket No. 2003–NM–52–AD; Amendment (1) For Model EMB–135BJ series airplanes: EMBRAER Service Bulletin 145LEG–78– 39–13696; AD 2004–13–14] EMBRAER Service Bulletin 145LEG–78– 0006, Revision 01, dated January 31, 2003, RIN 2120–AA64 0006, Revision 01, dated January 31, 2003; contains the following effective pages: and Airworthiness Directives; Airbus Model (2) For Model EMB–135 and –145 series Revision airplanes: EMBRAER Service Bulletin 145– Date shown on A300 B2 Series Airplanes; Model A300 Page No. level shown B4 Series Airplanes; and Model A300 78–0035, Revision 02, dated January 31, on page page 2003. B4–600, B4–600R, C4 605R Variant F, and F4–600R (Collectively Called Terminating Action 1, 2 ...... 01 ...... Jan. 31, 2003. 3–13 ...... Original ...... Jan. 13, 2003. A300–600) Series Airplanes (e) Install new transit switches having part number 83–990–168, on both engines of the AGENCY: Federal Aviation airplane, at the time indicated in paragraph (1) The incorporation by reference of Administration, DOT. EMBRAER Service Bulletin 145–78–0035, (e)(1) or (e)(2), as applicable, in accordance ACTION: Final rule. with the applicable service bulletin. Revision 02, dated January 31, 2003; and Accomplishment of the new part installation EMBRAER Service Bulletin 145LEG–78– SUMMARY: This amendment adopts a constitutes terminating action for the 0006, Revision 01, dated January 31, 2003; is new airworthiness directive (AD), inspections required by paragraph (a) of this approved by the Director of the Federal applicable to all Airbus Model A300 B2 AD. Register in accordance with 5 U.S.C. 552(a) series airplanes; Model A300 B4 series (1) For airplanes on which the inspection and 1 CFR part 51. airplanes; and Model A300 B4–600, B4– required by paragraph (a) of this AD has been (2) The incorporation by reference of 600R, C4 605R Variant F, and F4–600R accomplished: Within 1,200 flight hours from EMBRAER Service Bulletin 145–78–0029, (collectively called A300–600) series the completion of the last inspection required dated February 2, 2001, was approved by paragraph (a) of this AD, or within 400 airplanes; that requires inspection of the previously by the Director of the Federal label of certain slat friction brakes for flight hours after the effective date of this AD, Register as of September 5, 2001 (66 FR whichever occurs later. correct label wording, and corrective 43766, August 21, 2001). (2) For airplanes on which any inspection actions if necessary. This AD also (3) Copies may be obtained from Empresa required by paragraph (a) of this AD has not provides for optional terminating been accomplished: Prior to the Brasileira de Aeronautica S.A. (EMBRAER), actions for certain repetitive corrective accumulation of 2,000 total flight hours, or P.O. Box 343—CEP 12.225, Sao Jose dos actions. These actions are necessary to within 400 flight hours after the effective Campos—SP, Brazil. Copies may be find and fix incorrect labels on the date of this AD, whichever occurs later. inspected at the FAA, Transport Airplane housings of the slat friction brakes, Directorate, 1601 Lind Avenue, SW., Renton, which may lead to the use of Actions Accomplished per Previous Issue of Washington; or at the National Archives and Service Bulletin unapproved oil in the brakes. Use of Records Administration (NARA). For unapproved oil could affect the (f) Installation of new transit switches information on the availability of this efficiency of the brakes and lead to having part number 83–990–168 on both material at NARA, call (202) 741–6030, or go engines of the airplane accomplished before to: http://www.archives.gov/federal_register/ failure of the brakes to maintain proper the effective date of this AD, in accordance code_of_federal_regulations/ slat orientation in the event of a rupture with EMBRAER Service Bulletin 145–78– ibr_locations.html. of the slat drive shaft, consequent 0035, dated October 4, 2002; EMBRAER uncommanded retraction of the slat, and Service Bulletin 145–78–0035, Revision 01, Note 1: The subject of this AD is addressed reduced controllability of the airplane. dated December 11, 2002; or EMBRAER in Brazilian airworthiness directive 2001–05– This action is intended to address the 03R3, dated April 22, 2003. Service Bulletin 145LEG–78–0006, dated identified unsafe condition. January 13, 2003; as applicable; is considered acceptable for compliance with the Effective Date DATES: Effective August 3, 2004. terminating action required by paragraph (e) (i) This amendment becomes effective on The incorporation by reference of of this AD. August 3, 2004. certain publications listed in the regulations is approved by the Director Alternative Methods of Compliance Issued in Renton, Washington, on June 16, of the Federal Register as of August 3, (g) In accordance with 14 CFR 39.19, the 2004. 2004. Manager, International Branch, ANM–116, Ali Bahrami, ADDRESSES: The service information FAA, Transport Airplane Directorate, is Acting Manager, Transport Airplane authorized to approve alternative methods of referenced in the proposed rule may be Directorate, Aircraft Certification Service. compliance for this AD. obtained from Airbus, 1 Rond Point [FR Doc. 04–14566 Filed 6–28–04; 8:45 am] Maurice Bellonte, 31707 Blagnac Cedex, Incorporation by Reference BILLING CODE 4910–13–P France. This information may be (h) Unless otherwise specified in this AD, examined at the Federal Aviation the actions shall be done in accordance with Administration (FAA), Transport EMBRAER Service Bulletin 145–78–0029, Airplane Directorate, Rules Docket, dated February 2, 2001; EMBRAER Service 1601 Lind Avenue, SW., Renton, Bulletin 145–78–0035, Revision 02, dated Washington; or at the National Archives January 31, 2003; and EMBRAER Service Bulletin 145LEG–78–0006, Revision 01, and Records Administration (NARA). dated January 31, 2003; as applicable. For information on the availability of EMBRAER Service Bulletin 145–78–0035, this material at NARA, call 202–741– Revision 02, dated January 31, 2003, contains 6030, or go to: http://www.archives.gov/ the following effective pages: federal_register/

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code_of_federal_regulations/ neither increase the economic burden amends part 39 of the Federal Aviation ibr_locations.html. on any operator nor increase the scope Regulations (14 CFR part 39) as follows: of the AD. FOR FURTHER INFORMATION CONTACT: Dan PART 39—AIRWORTHINESS Rodina, Aerospace Engineer; Cost Impact DIRECTIVES International Branch, ANM–116, FAA, The FAA estimates that 120 airplanes Transport Airplane Directorate, 1601 of U.S. registry will be affected by this I 1. The authority citation for part 39 Lind Avenue, SW., Renton, Washington AD, that it will take approximately 1 continues to read as follows: 98055–4056; telephone (425) 227–2125; work hour per airplane to accomplish Authority: 49 U.S.C. 106(g), 40113, 44701. fax (425) 227–1149. the required actions, and that the SUPPLEMENTARY INFORMATION: A average labor rate is $65 per work hour. § 39.13 [Amended] proposal to amend part 39 of the Federal Based on these figures, the cost impact I Aviation Regulations (14 CFR part 39) to of the AD on U.S. operators is estimated 2. Section 39.13 is amended by adding include an airworthiness directive (AD) to be $7,800, or $65 per airplane. the following new airworthiness that is applicable to all Airbus Model The cost impact figure discussed directive: A300 B2 series airplanes; Model A300 above is based on assumptions that no 2004–13–14 Airbus: Amendment 39–13696. B4 series airplanes; and Model A300 operator has yet accomplished any of Docket 2003–NM–52–AD. B4–600, B4–600R, C4 605R Variant F, the requirements of this AD action, and Applicability: All Model A300 B2 series and F4–600R (collectively called A300– that no operator would accomplish airplanes; Model A300 B4 series airplanes; 600) series airplanes; was published in those actions in the future if this AD and Model A300 B4–600, B4–600R, C4 605R the Federal Register on March 24, 2004 were not adopted. The cost impact Variant F, and F4–600R (collectively called (69 FR 13763). That action proposed to figures discussed in AD rulemaking A300–600) series airplanes; certificated in require inspection of the label of certain actions represent only the time any category. slat friction brakes for correct label Compliance: Required as indicated, unless necessary to perform the specific actions accomplished previously. wording, and corrective actions if actually required by the AD. These To prevent the possible use of unqualified necessary. That action also provided for figures typically do not include oil in the slat friction brakes, which could optional terminating actions for certain incidental costs, such as the time cause failure of the brakes to maintain proper repetitive corrective actions. required to gain access and close up, slat orientation in the event of a rupture of Comments planning time, or time necessitated by the slat drive shaft, consequent other administrative actions. uncommanded retraction of the slats, and Interested persons have been afforded reduced controllability of the airplane, an opportunity to participate in the Regulatory Impact accomplish the following: making of this amendment. Due The regulations adopted herein will All Operators Telex (AOT) Reference consideration has been given to the not have a substantial direct effect on (a) The term AOT as used in this AD means single comment received. the States, on the relationship between paragraph 4.3, ‘‘Description,’’ of the the national Government and the States, Request To Add Preemptive Brake following, as applicable: or on the distribution of power and Replacement Option (1) For Model A300 B2 and A300 B4 series responsibilities among the various airplanes: Airbus AOT 27A0199, Revision 01, One commenter, an operator, requests levels of government. Therefore, it is dated February 5, 2003. an option be added to allow removal determined that this final rule does not (2) For Model A300 B4–600, B4–600R, C4– and replacement of friction brakes prior have federalism implications under 605R Variant F, and F4–600R (collectively to further flight without performing the Executive Order 13132. called A300–600) series airplanes: Airbus oil replacement/sampling requirements. For the reasons discussed above, I AOT 27A6055, Revision 01, dated February 5, 2003. The commenter states that it has already certify that this action (1) is not a accomplished the specified inspections ‘‘significant regulatory action’’ under Inspection and replaced any suspect brakes on all Executive Order 12866; (2) is not a (b) Within 3 weeks from the effective date its airplanes. ‘‘significant rule’’ under DOT of this AD, perform a general visual The FAA agrees with the commenter. Regulatory Policies and Procedures (44 inspection of the label on the housings of the Paragraph (d)(2) of this AD already FR 11034, February 26, 1979); and (3) slat friction brakes for correct wording, in provides the option to terminate the will not have a significant economic accordance with the applicable AOT. repeat torque verification by replacing impact, positive or negative, on a Accomplishment of the requirements of the brake. We recognize that if the paragraph (d)(2) of this AD prior to further substantial number of small entities flight after accomplishing paragraph (b) replacement specified in paragraph under the criteria of the Regulatory eliminates the requirement for paragraph (c) (d)(2) is performed prior to further flight Flexibility Act. A final evaluation has of this AD. after the inspection required by been prepared for this action and it is Note 1: For the purposes of this AD, a paragraph (b) of this AD, it is not contained in the Rules Docket. A copy general visual inspection is defined as: ‘‘A necessary to perform the requirements of it may be obtained from the Rules visual examination of an interior or exterior of paragraph (c) of this AD. Therefore, Docket at the location provided under area, installation, or assembly to detect paragraphs (b), (c) and (d) have been the caption ADDRESSES. obvious damage, failure, or irregularity. This rewritten to address this concern. level of inspection is made from within List of Subjects in 14 CFR Part 39 touching distance unless otherwise specified. Conclusion Air transportation, Aircraft, Aviation A mirror may be necessary to enhance visual After careful review of the available safety, Incorporation by reference, access to all exposed surfaces in the data, including the comment noted Safety. inspection area. This level of inspection is made under normally available lighting above, the FAA has determined that air Adoption of the Amendment conditions such as daylight, hangar lighting, safety and the public interest require the flashlight, or droplight and may require adoption of the rule with the changes I Accordingly, pursuant to the authority removal or opening of access panels or doors. described previously. The FAA has delegated to me by the Administrator, Stands, ladders, or platforms may be required determined that these changes will the Federal Aviation Administration to gain proximity to the area being checked.’’

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Corrective Actions Directorate, 1601 Lind Avenue, SW., Renton, Brazil. This information may be (c) If the wording of the label is found to Washington; or at the National Archives and examined at the Federal Aviation be incorrect during the inspection required Records Administration (NARA). For Administration (FAA), Transport by paragraph (b) of this AD, prior to further information on the availability of this Airplane Directorate, Rules Docket, flight, remove the label, then perform the material at NARA, call 202–741–6030, or go _ 1601 Lind Avenue, SW., Renton, actions specified in paragraphs (c)(1), (c)(2), to: http://www.archives.gov/federal register/ _ _ _ Washington; or at the National Archives and (c)(3) of this AD in accordance with the code of federal regulations/ _ and Records Administration (NARA). applicable AOT, or perform the actions ibr locations.html. specified in paragraph (d)(2) of this AD. Note 2: The subject of this AD is addressed For information on the availability of (1) Within 500 flight hours after removing in French airworthiness directive 2003– this material at NARA, call (202) 741– the incorrect label, apply a correctly worded 048(B), dated February 5, 2003. 6030, or go to: http://www.archives.gov/ label to the housing. federal_register/ (2) Prior to further flight after removing the Effective Date code_of_federal_regulations/ label, drain the friction brake and refill with (h) This amendment becomes effective on ibr_locations.html. Exxon 2120 oil. August 3, 2004. (3) Prior to further flight after removing the FOR FURTHER INFORMATION CONTACT: Dan label, verify the torque of the friction brake. Issued in Renton, Washington, on June 16, Rodina, Aerospace Engineer; (i) If the torque is within the limits 2004. International Branch, ANM–116, FAA, specified in the applicable AOT, repeat the Ali Bahrami, Transport Airplane Directorate, 1601 torque verification thereafter at intervals not Acting Manager, Transport Airplane Lind Avenue, SW., Renton, Washington to exceed 500 flight hours, until the optional Directorate, Aircraft Certification Service. 98055–4056; telephone (425) 227–2125; terminating actions specified in paragraph (d) [FR Doc. 04–14567 Filed 6–28–04; 8:45 am] fax (425) 227–1149. of this AD have been accomplished. BILLING CODE 4910–13–P (ii) If the torque is not within the limits SUPPLEMENTARY INFORMATION: A specified in the applicable AOT, prior to proposal to amend part 39 of the Federal further flight, replace the friction brake with Aviation Regulations (14 CFR part 39) to DEPARTMENT OF TRANSPORTATION a new brake in accordance with the include an airworthiness directive (AD) applicable AOT. Accomplishment of this Federal Aviation Administration that is applicable to certain EMBRAER replacement terminates the requirement for Model EMB–120 series airplanes was the repetitive torque verification for that 14 CFR Part 39 published in the Federal Register on brake. April 6, 2004 (69 FR 17989). That action Optional Terminating Actions [Docket No. 2003–NM–65–AD; Amendment required a one-time inspection of the 39–13695; AD 2004–13–13] (d) Accomplishment of either paragraph access door ramp of the fueling control (d)(1) or (d)(2) of this AD terminates the RIN 2120–AA64 panel for damage or deformation, and repetitive torque verification required by applicable corrective actions. paragraph (c)(3)(i) of this AD. Airworthiness Directives; Empresa (1) Analyze the oil drained from the Brasileira de Aeronautica S.A. Comments friction brake. (EMBRAER) Model EMB–120 Series Interested persons have been afforded (i) If the oil is Exxon 2120, no further Airplanes an opportunity to participate in the action is required by this AD. making of this amendment. No (ii) If the oil is not Exxon 2120, prior to AGENCY: Federal Aviation comments have been submitted on the further flight, replace the friction brake as Administration, DOT. specified in paragraph (d)(2) of this AD. proposed AD or on the determination of (2) Replace the friction brake with a new ACTION: Final rule. the cost to the public. brake in accordance with the applicable SUMMARY: This amendment adopts a Conclusion AOT. new airworthiness directive (AD), After careful review of the available Analysis of Brake Oil applicable to certain EMBRAER Model data, the FAA has determined that air (e) Although the referenced AOTs EMB–120 series airplanes, that requires safety and the public interest require the describes procedures for submitting oil a one-time inspection of the access door adoption of the rule as proposed. drained from the friction brakes to the brake ramp of the fueling control panel for manufacturer for analysis, this AD does not damage or deformation, and applicable Cost Impact require that the manufacturer be the sole corrective actions. This action is source of such analysis. The FAA estimates that 220 airplanes necessary to prevent inadvertent fuel of U.S. registry will be affected by this Alternative Methods of Compliance transfer in flight due to fuel service AD, that it will take approximately 4 (f) In accordance with 14 CFR 39.19, the personnel not repositioning the defuel work hours per airplane to accomplish Manager, International Branch, ANM–116, valve switch control to the closed each required action, and that the FAA, Transport Airplane Directorate, is position after utilization on the ground, average labor rate is $65 per work hour. authorized to approve alternative methods of which could cause in-flight fuel Required parts will cost approximately compliance for this AD. starvation. This action is intended to $200 per airplane. Based on these Incorporation by Reference address the identified unsafe condition. figures, the cost impact of the AD on (g) The actions shall be done in accordance DATES: Effective August 3, 2004. U.S. operators is estimated to be with Airbus All Operators Telex 27A0199, The incorporation by reference of $101,200, or $460 per airplane. Revision 01, dated February 5, 2003; or certain publications listed in the The cost impact figure discussed Airbus All Operators Telex 27A6055, regulations is approved by the Director above is based on assumptions that no Revision 01, dated February 5, 2003; as of the Federal Register as of August 3, operator has yet accomplished any of applicable. This incorporation by reference 2004. the requirements of this AD action, and was approved by the Director of the Federal ADDRESSES: Register in accordance with 5 U.S.C. 552(a) The service information that no operator would accomplish and 1 CFR part 51. Copies may be obtained referenced in this AD may be obtained those actions in the future if this AD from Airbus, 1 Rond Point Maurice Bellonte, from Empresa Brasileira de Aeronautica were not adopted. The cost impact 31707 Blagnac Cedex, France. Copies may be S.A. (EMBRAER), P.O. Box 343—CEP figures discussed in AD rulemaking inspected at the FAA, Transport Airplane 12.225, Sao Jose dos Campos—SP, actions represent only the time

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necessary to perform the specific actions To prevent inadvertent fuel transfer in information on the availability of this actually required by the AD. These flight due to fuel service personnel not material at NARA, call (202) 741–6030, or go repositioning the defuel valve switch control to: http://www.archives.gov/federal_register/ figures typically do not include _ _ _ incidental costs, such as the time to the closed position after utilization on the code of federal regulations/ ground, which could cause in-flight fuel ibr_locations.html. required to gain access and close up, starvation, accomplish the following: planning time, or time necessitated by Note 2: The subject of this AD is addressed in Brazilian airworthiness directive 2002–12– other administrative actions. Inspection of Existing Ramp and Corrective Actions 02, effective January 6, 2003. Regulatory Impact (a) For airplanes that have a ramp on the Effective Date access door of the fueling control panel: The regulations adopted herein will (e) This amendment becomes effective on Within 1,200 flight hours or 8 months after not have a substantial direct effect on August 3, 2004. the States, on the relationship between the effective date of this AD, whichever the national Government and the States, occurs first, perform a general visual Issued in Renton, Washington, on June 16, or on the distribution of power and inspection of the access door ramp for 2004. damage or deformation; and do all applicable Ali Bahrami, responsibilities among the various corrective actions by accomplishing all the levels of government. Therefore, it is Acting Manager, Transport Airplane actions in accordance with paragraph 2.2.3 of Directorate, Aircraft Certification Service. determined that this final rule does not the Accomplishment Instructions of have federalism implications under EMBRAER Service Bulletin 120–57–0038, [FR Doc. 04–14569 Filed 6–28–04; 8:45 am] Executive Order 13132. dated June 26, 2002. Do the actions per the BILLING CODE 4910–13–P For the reasons discussed above, I service bulletin. Accomplish any applicable certify that this action (1) is not a corrective actions before further flight. ‘‘significant regulatory action’’ under Note 1: For the purposes of this AD, a DEPARTMENT OF TRANSPORTATION Executive Order 12866; (2) is not a general visual inspection is defined as: ‘‘A ‘‘significant rule’’ under DOT visual examination of an interior or exterior Federal Aviation Administration Regulatory Policies and Procedures (44 area, installation, or assembly to detect FR 11034, February 26, 1979); and (3) obvious damage, failure, or irregularity. This 14 CFR Part 39 level of inspection is made from within will not have a significant economic touching distance unless otherwise specified. [Docket No. 2003–NM–126–AD; Amendment impact, positive or negative, on a A mirror may be necessary to enhance visual 39–13697; AD 2004–13–15] substantial number of small entities access to all exposed surfaces in the RIN 2120–AA64 under the criteria of the Regulatory inspection area. This level of inspection is Flexibility Act. A final evaluation has made under normally available lighting Airworthiness Directives; Boeing been prepared for this action and it is conditions such as daylight, hangar lighting, Model 747–400 and –400D Series contained in the Rules Docket. A copy flashlight, or droplight and may require Airplanes of it may be obtained from the Rules removal or opening of access panels or doors. Docket at the location provided under Stands, ladders, or platforms may be required AGENCY: Federal Aviation to gain proximity to the area being checked.’’ the caption ADDRESSES. Administration, DOT. ACTION: Final rule. List of Subjects in 14 CFR Part 39 Modification (b) For airplanes that do not have a ramp SUMMARY: This amendment adopts a Air transportation, Aircraft, Aviation on the access door of the fueling control safety, Incorporation by reference, new airworthiness directive (AD), panel: Within 1,200 flight hours or 8 months applicable to certain Boeing Model 747– Safety. after the effective date of this AD, whichever 400 and –400D series airplanes, that Adoption of the Amendment occurs first, modify the access door by accomplishing all the actions in paragraph requires an inspection to detect missing I Accordingly, pursuant to the authority 2.1.3 of the Accomplishment Instructions of fasteners in the section 42 skin and delegated to me by the Administrator, EMBRAER Service Bulletin 120–57–0038, internal doubler at the cutout for the the Federal Aviation Administration dated June 26, 2002. Do the actions per the ground exhaust valve of the electrical amends part 39 of the Federal Aviation service bulletin. Accomplish any applicable equipment; modification and rework of corrective actions before further flight. Regulations (14 CFR part 39) as follows: the doubler; repetitive inspections of the Alternative Methods of Compliance skin for cracks; and corrective actions if PART 39—AIRWORTHINESS (c) In accordance with 14 CFR 39.19, the necessary; as applicable. This action is DIRECTIVES Manager, International Branch, ANM–116, necessary to detect and correct fatigue cracks in the section 42 skin at the I 1. The authority citation for part 39 FAA, Transport Airplane Directorate, is authorized to approve alternative methods of cutout for the ground exhaust valve of continues to read as follows: compliance for this AD. the electrical equipment, which could Authority: 49 U.S.C. 106(g), 40113, 44701. Incorporation by Reference result in rapid decompression of the § 39.13 [Amended] airplane. This action is intended to (d) The actions shall be done in accordance address the identified unsafe condition. I with EMBRAER Service Bulletin 120–57– 2. Section 39.13 is amended by adding DATES: Effective August 3, 2004. the following new airworthiness 0038, dated June 26, 2002. This incorporation by reference was approved by the Director of The incorporation by reference of directive: the Federal Register in accordance with 5 certain publications listed in the 2004–13–13 Empresa Brasileira de U.S.C. 552(a) and 1 CFR part 51. Copies may regulations is approved by the Director Aeronautica S.A. (EMBRAER): be obtained from Empresa Brasileira de of the Federal Register as of August 3, Amendment 39–13695. Docket 2003– Aeronautica S.A. (EMBRAER), P.O. Box 2004. NM–65–AD. 343—CEP 12.225, Sao Jose dos Campos—SP, ADDRESSES: The service information Brazil. Copies may be inspected at the Applicability: Model EMB–120 series referenced in this AD may be obtained airplanes, serial numbers 120003, 120004, Federal Aviation Administration (FAA), and 120006 through 120358 inclusive; Transport Airplane Directorate, Rules Docket, from Boeing Commercial Airplanes, certificated in any category. 1601 Lind Avenue, SW., Renton, P.O. Box 3707, Seattle, Washington Compliance: Required as indicated, unless Washington; or at the National Archives and 98124–2207. This information may be accomplished previously. Records Administration (NARA). For examined at the Federal Aviation

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Administration (FAA), Transport work hours per airplane to accomplish Adoption of the Amendment Airplane Directorate, Rules Docket, the required modification and rework I 1601 Lind Avenue, SW., Renton, (part 2), at an average labor rate of $65 Accordingly, pursuant to the authority Washington; or at the National Archives per work hour. Based on these figures, delegated to me by the Administrator, and Records Administration (NARA). the cost impact of this modification and the Federal Aviation Administration For information on the availability of rework required by this AD on U.S. amends part 39 of the Federal Aviation this material at NARA, call (202) 741– operators is estimated to be $2,600 per Regulations (14 CFR part 39) as follows: 6030, or go to: http://www.archives.gov/ airplane. PART 39—AIRWORTHINESS _ For Groups 1 through 4 airplanes federal register/ DIRECTIVES code_of_federal_regulations/ listed in Boeing Alert Service Bulletin ibr_locations.html. 747–53A2340, it will take I 1. The authority citation for part 39 approximately 1 work hours per FOR FURTHER INFORMATION CONTACT: continues to read as follows: airplane to accomplish the required Authority: 49 U.S.C. 106(g), 40113, 44701. Candice Gerretsen, Aerospace Engineer, inspection (part 3), at an average labor Airframe Branch, ANM–120S, FAA, rate of $65 per work hour. Based on § 39.13 [Amended] Seattle Aircraft Certification Office, these figures, the cost impact of this I 2. Section 39.13 is amended by adding 1601 Lind Avenue, SW., Renton, inspection required by this AD on U.S. the following new airworthiness Washington 98055–4056; telephone operators is estimated to be $65 per directive: (425) 917–6428; fax (425) 917–6590. airplane, per inspection cycle. SUPPLEMENTARY INFORMATION: A The cost impact figure discussed 2004–13–15 Boeing: Amendment 39–13697. proposal to amend part 39 of the Federal above is based on assumptions that no Docket 2003–NM–126–AD. Aviation Regulations (14 CFR part 39) to operator has yet accomplished any of Applicability: Model 747–400 and 400D include an airworthiness directive (AD) the requirements of this AD action, and series airplanes, as listed in paragraph 1.A., that is applicable to certain Boeing that no operator would accomplish ‘‘Effectivity,’’ of Boeing Alert Service Bulletin Model 747–400 and –400D series those actions in the future if this AD 747–53A2340, Revision 2, dated April 24, 2003; certificated in any category. airplanes was published in the Federal were not adopted. The cost impact Register on April 1, 2004 (69 FR 17073). Compliance: Required as indicated, unless figures discussed in AD rulemaking accomplished previously. That action proposed to require an actions represent only the time To detect and correct fatigue cracks in the inspection to detect missing fasteners in necessary to perform the specific actions section 42 skin at the cutout for the ground the section 42 skin and internal doubler actually required by the AD. These exhaust valve of the electrical equipment, at the cutout for the ground exhaust figures typically do not include which could result in rapid decompression of valve of the electrical equipment; incidental costs, such as the time the airplane, accomplish the following: modification and rework of the doubler; required to gain access and close up, Part 1—Fastener Inspection and Corrective repetitive inspections of the skin for planning time, or time necessitated by Actions if Necessary cracks; and corrective actions if other administrative actions. (a) For Group 1 airplanes listed in Boeing necessary; as applicable. Regulatory Impact Alert Service Bulletin 747–53A2340, Comments Revision 2, dated April 24, 2003: Within 250 The regulations adopted herein will flight cycles or 4 months after the effective Interested persons have been afforded not have a substantial direct effect on date of this AD, whichever occurs later, do an opportunity to participate in the the States, on the relationship between a general visual inspection to detect missing making of this amendment. No the national Government and the States, fasteners in the section 42 skin and internal comments were submitted in response or on the distribution of power and doubler at the cutout for the ground exhaust to the proposal or the FAA’s responsibilities among the various valve of the electrical equipment, per part 1 determination of the cost to the public. levels of government. Therefore, it is of the Accomplishment Instructions of the service bulletin. determined that this final rule does not Conclusion (1) If all fasteners are installed, do the have federalism implications under actions specified in paragraph (b) of this AD The FAA has determined that air Executive Order 13132. at the indicated time. safety and the public interest require the For the reasons discussed above, I (2) If any fastener is missing, before further adoption of the rule as proposed. certify that this action (1) is not a flight, accomplish all applicable corrective Cost Impact ‘‘significant regulatory action’’ under actions (i.e., performing an open hole high Executive Order 12866; (2) is not a frequency (HFEC) inspection for cracks and There are approximately 142 ‘‘significant rule’’ under DOT any applicable repair, oversizing and drilling airplanes of the affected design in the Regulatory Policies and Procedures (44 of holes, and installation of fasteners), in worldwide fleet. The FAA estimates that FR 11034, February 26, 1979); and (3) accordance with part 1 of the Accomplishment Instructions of the service 22 airplanes of U.S. registry will be will not have a significant economic affected by this AD. bulletin, except as required by paragraph (f) impact, positive or negative, on a of this AD. For Group 1 airplanes listed in Boeing substantial number of small entities Alert Service Bulletin 747–53A2340, it under the criteria of the Regulatory Part 2—Modification and Rework will take approximately 1 work hour per Flexibility Act. A final evaluation has (b) For Group 1 and Group 2 airplanes airplane to accomplish the required been prepared for this action and it is listed in Boeing Alert Service Bulletin 747– inspection (part 1), at an average labor contained in the Rules Docket. A copy 53A2340, Revision 2, dated April 24, 2003: rate of $65 per work hour. Based on of it may be obtained from the Rules Before the accumulation of 6,000 total flight cycles, or within 1,500 flight cycles or 24 these figures, the cost impact of this Docket at the location provided under inspection required by this AD on U.S. months after the effective date of this AD, the caption ADDRESSES. whichever occurs later, modify and rework operators is estimated to be $65 per List of Subjects in 14 CFR Part 39 the internal doubler (i.e., performing an open airplane. hole HFEC inspection for cracks and any For Groups 1 and 2 airplanes listed in Air transportation, Aircraft, Aviation applicable repair, oversizing and drilling of Boeing Alert Service Bulletin 747– safety, Incorporation by reference, holes, and installation of fasteners) by 53A2340, it will take approximately 40 Safety. accomplishing all actions specified in part 2

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of the Accomplishment Instructions of the or repair required by this AD, if it is result in reduced structural integrity of service bulletin. Do the actions per the approved by a Boeing Company Designated the vertical stabilizer. This action is service bulletin, except as required by Engineering Representative who has been intended to address the identified paragraph (f) of this AD. Any applicable authorized by the Manager, Seattle ACO, to unsafe condition. repair must be accomplished before further make such findings. For an inspection or flight. repair method to be approved, the approval DATES: Effective August 3, 2004. must specifically reference this AD. The incorporation by reference of a Part 3—Repetitive Inspections and Repair if certain publication listed in the Necessary Incorporation by Reference regulations is approved by the Director (c) At the applicable time specified in (i) Unless otherwise specified in this AD, of the Federal Register as of August 3, paragraph (c)(1) or (c)(2) of this AD, do an the actions shall be done in accordance with 2004. external HFEC inspection of the skin for Boeing Alert Service Bulletin 747–53A2340, ADDRESSES: cracks per part 3 of the Accomplishment Revision 2, dated April 24, 2003. This The service information Instructions of Boeing Alert Service Bulletin incorporation by reference was approved by referenced in this AD may be obtained 747–53A2340, Revision 2, dated April 24, the Director of the Federal Register in from Short Brothers, Airworthiness & 2003. accordance with 5 U.S.C. 552(a) and 1 CFR Engineering Quality, P.O. Box 241, (1) For Group 1 and Group 2 airplanes part 51. Copies may be obtained from Boeing Airport Road, Belfast BT3 9DZ, listed in the service bulletin: Within 10,000 Commercial Airplanes, P.O. Box 3707, Northern Ireland. This information may flight cycles after accomplishing the actions Seattle, Washington 98124–2207. Copies may be examined at the Federal Aviation required by paragraph (b) of this AD, or be inspected at the FAA, Transport Airplane within 1,500 flight cycles or 24 months after Administration (FAA), Transport Directorate, 1601 Lind Avenue, SW., Renton, Airplane Directorate, Rules Docket, the effective date of this AD, whichever Washington; or at the National Archives and occurs later. Records Administration (NARA). For 1601 Lind Avenue, SW., Renton, (2) For Group 3 and Group 4 airplanes information on the availability of this Washington; or at the National Archives listed in the service bulletin: Before the material at NARA, call (202) 741–6030, or go and Records Administration (NARA). accumulation of 15,000 total flight cycles, or to: http://www.archives.gov/federal_register/ For information on the availability of within 1,500 flight cycles or 24 months after code_of_federal_regulations/ this material at NARA, call (202) 741– the effective date of this AD, whichever ibr_locations.html. 6030, or go to: http://www.archives.gov/ occurs later. federal_register/ (d) If no crack is detected during the Effective Date code_of_federal_regulations/ external HFEC inspection required by (j) This amendment becomes effective on _ paragraph (c) of this AD, repeat the external August 3, 2004. ibr locations.html. HFEC inspection thereafter at intervals not to FOR FURTHER INFORMATION CONTACT: exceed 5,000 flight cycles. Issued in Renton, Washington, on June 17, Todd Thompson, Aerospace Engineer, (e) If any crack is detected during the 2004. International Branch, ANM–116, FAA, external HFEC inspection required by Ali Bahrami, paragraph (c) of this AD, before further flight, Transport Airplane Directorate, 1601 repair per part 3 of the Accomplishment Acting Manager, Transport Airplane Lind Avenue, SW., Renton, Washington Instructions of Boeing Alert Service Bulletin Directorate, Aircraft Certification Service. 98055–4056; telephone (425) 227–1175; 747–53A2340, Revision 2, dated April 24, [FR Doc. 04–14568 Filed 6–28–04; 8:45 am] fax (425) 227–1149. 2003, except as required by paragraph (f) of BILLING CODE 4910–13–P SUPPLEMENTARY INFORMATION: A this AD. Repeat the external HFEC inspection proposal to amend part 39 of the Federal in the unrepaired areas thereafter at intervals not to exceed 5,000 flight cycles. Aviation Regulations (14 CFR part 39) to DEPARTMENT OF TRANSPORTATION include an airworthiness directive (AD) Exception to Service Bulletin Actions Federal Aviation Administration that is applicable to all Short Brothers (f) If any discrepancy is found during any Model SD3–60 SHERPA series airplanes inspection required by this AD, and the 14 CFR Part 39 was published in the Federal Register bulletin specifies to contact Boeing for an on March 25, 2004 (69 FR 15266). That alternate repair: Before further flight, repair [Docket No. 2003–NM–200–AD; Amendment action proposed to require repetitive per a method approved by the Manager, 39–13703; AD 2004–13–21] inspections and torque tests for Seattle Aircraft Certification Office (ACO), FAA; or per data meeting the type RIN 2120–AA64 discrepancies of certain bolts and rivets; certification basis of the airplane approved and related investigative and corrective by a Boeing Company Designated Airworthiness Directives; Short actions. Engineering Representative who has been Brothers Model SD3–60 SHERPA Comments authorized by the Manager, Seattle ACO, to Series Airplanes make such findings. For a repair method to Interested persons have been afforded be approved, the approval must specifically AGENCY: Federal Aviation an opportunity to participate in the reference this AD. Administration, DOT. making of this amendment. No Credit for Previous Revisions of Service ACTION: Final rule. comments were submitted in response Bulletins to the proposal or the FAA’s SUMMARY: This amendment adopts a (g) Actions accomplished before the determination of the cost to the public. new airworthiness directive (AD), effective date of this AD per Boeing Alert Conclusion Service Bulletin 747–53A2340, original issue, applicable to all Short Brothers Model dated August 1, 1991; or Revision 1, dated SD3–60 SHERPA series airplanes, that The FAA has determined that air October 31, 1991, are acceptable for requires repetitive inspections and safety and the public interest require the compliance with the requirements of this AD. torque tests for discrepancies of certain adoption of the rule as proposed. Alternative Methods of Compliance bolts and rivets; and related investigative and corrective actions. Cost Impact (h)(1) In accordance with 14 CFR 39.19, the This action is necessary to detect and The FAA estimates that 27 airplanes Manager, Seattle ACO, FAA, is authorized to approve alternative methods of compliance correct loose bolts that attach the of U.S. registry will be affected by this (AMOCs) for this AD. vertical stabilizer to the horizontal AD, that it will take approximately 5 (2) An AMOC that provides an acceptable stabilizer, and pulled or loose rivets in work hours per airplane to accomplish level of safety may be used for any inspection the upper shear angles, which could the required inspections and torque

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tests, and that the average labor rate is Authority: 49 U.S.C. 106(g), 40113, 44701. Alternative Methods of Compliance $65 per work hour. Based on these § 39.13 [Amended] (d) In accordance with 14 CFR 39.19, the figures, the cost impact of the AD on Manager, International Branch, is authorized U.S. operators is estimated to be $8,775, I 2. Section 39.13 is amended by adding to approve alternative methods of or $325 per airplane, per inspection/test the following new airworthiness compliance for this AD. cycle. directive: Incorporation by Reference The cost impact figure discussed (e) Unless otherwise specified in this AD, above is based on assumptions that no 2004–13–21 Short Brothers PLC: Amendment 39–13703. Docket 2003– the actions shall be done in accordance with operator has yet accomplished any of NM–200–AD. Short Brothers Service Bulletin SD3–60 the requirements of this AD action, and Sherpa–55–1, dated June 6, 2003. This Applicability: All Short Brothers Model incorporation by reference was approved by that no operator would accomplish SD3–60 SHERPA series airplanes, certificated those actions in the future if this AD the Director of the Federal Register in in any category. accordance with 5 U.S.C. 552(a) and 1 CFR were not adopted. The cost impact Compliance: Required as indicated, unless figures discussed in AD rulemaking part 51. Copies may be obtained from Short accomplished previously. Brothers, Airworthiness & Engineering actions represent only the time To detect and correct loose bolts that attach Quality, P.O. Box 241, Airport Road, Belfast necessary to perform the specific actions the vertical stabilizer to the horizontal BT3 9DZ, Northern Ireland. Copies may be actually required by the AD. These stabilizer, and pulled or loose rivets in the inspected at the FAA, Transport Airplane figures typically do not include upper shear angles, which could result in Directorate, 1601 Lind Avenue, SW., Renton, incidental costs, such as the time reduced structural integrity of the vertical Washington; or at the National Archives and stabilizer, accomplish the following: required to gain access and close up, Records Administration (NARA). For planning time, or time necessitated by Repetitive Inspections and Torque Tests and information on the availability of this other administrative actions. Related Investigative Action material at NARA, call (202) 741–6030, or go to: http://www.archives.gov/federal_register/ (a) Prior to the accumulation of 1,500 total Regulatory Impact code_of_federal_regulations/ flight hours, or within 2 months after the ibr_locations.html. The regulations adopted herein will effective date of this AD, whichever occurs not have a substantial direct effect on later: Perform a detailed inspection, Note 2: The subject of this AD is addressed the States, on the relationship between including a torque test, to detect in British airworthiness directive 001–06– the national Government and the States, discrepancies in the bolts or bolt holes that 2003. or on the distribution of power and attach the vertical stabilizer to the horizontal stabilizer; and to detect loose or pulled rivets Effective Date responsibilities among the various in the upper shear angles. Repeat the detailed (f) This amendment becomes effective on levels of government. Therefore, it is inspection and torque test at intervals not to August 3, 2004. determined that this final rule does not exceed 1,500 flight hours. If any discrepancy Issued in Renton, Washington, on June 16, have federalism implications under is found in the bolts or bolt holes, do the 2004. Executive Order 13132. related investigative action before further For the reasons discussed above, I flight. Accomplish all actions in accordance Ali Bahrami, certify that this action (1) is not a with the Accomplishment Instructions of Acting Manager, Transport Airplane ‘‘significant regulatory action’’ under Short Brothers Service Bulletin SD3–60 Directorate, Aircraft Certification Service. Executive Order 12866; (2) is not a Sherpa–55–1, dated June 6, 2003. [FR Doc. 04–14572 Filed 6–28–04; 8:45 am] ‘‘significant rule’’ under DOT Note 1: For the purposes of this AD, a BILLING CODE 4910–13–P Regulatory Policies and Procedures (44 detailed inspection is defined as: ‘‘An intensive visual examination of a specific FR 11034, February 26, 1979); and (3) structural area, system, installation, or DEPARTMENT OF TRANSPORTATION will not have a significant economic assembly to detect damage, failure, or impact, positive or negative, on a irregularity. Available lighting is normally Federal Aviation Administration substantial number of small entities supplemented with a direct source of good lighting at intensity deemed appropriate by under the criteria of the Regulatory 14 CFR Part 39 Flexibility Act. A final evaluation has the inspector. Inspection aids such as mirror, been prepared for this action and it is magnifying lenses, etc., may be used. Surface [Docket No. 2002–NM–254–AD; Amendment contained in the Rules Docket. A copy cleaning and elaborate access procedures 39–13702; AD 2004–13–20] may be required.’’ of it may be obtained from the Rules RIN 2120–AA64 Docket at the location provided under Related Corrective Actions the caption ADDRESSES. (b) If any discrepancy is found during any Airworthiness Directives; Aircraft Equipped With Garmin AT, Apollo GX List of Subjects in 14 CFR Part 39 inspection or torque test required by paragraph (a) of this AD: Before further flight, Series Global Positioning System Air transportation, Aircraft, Aviation repair in accordance with the (GPS) Navigation Units With Software safety, Incorporation by reference, Accomplishment Instructions of Short Versions 3.0 through 3.4 Inclusive Safety. Brothers Service Bulletin SD3–60 Sherpa– 55–1, dated June 6, 2003. Where the service AGENCY: Federal Aviation Adoption of the Amendment bulletin specifies to contact the manufacturer Administration, DOT. I Accordingly, pursuant to the authority for disposition of certain repair conditions: ACTION: Final rule. Before further flight, repair per a method delegated to me by the Administrator, approved by either the Manager, SUMMARY: This amendment adopts a the Federal Aviation Administration International Branch, ANM–116, FAA, new airworthiness directive (AD), amends part 39 of the Federal Aviation Transport Airplane Directorate; or the Civil applicable to aircraft equipped with Regulations (14 CFR part 39) as follows: Aviation Authority or its delegated agent. Garmin AT, Apollo GX series GPS PART 39—AIRWORTHINESS No Reporting Requirement navigation units with software versions DIRECTIVES (c) Although the service bulletin referenced 3.0 through 3.4 inclusive, that requires in this AD specifies to submit certain modification and testing of the software I 1. The authority citation for part 39 information to the manufacturer, this AD for Apollo GX50/55/60/65 TSO–C129a continues to read as follows: does not include such a requirement. GPS navigation units; and

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reidentification of the part. This action Conclusion been prepared for this action and it is is necessary to prevent the GPS The FAA has determined that air contained in the Rules Docket. A copy navigation unit, under certain safety and the public interest require the of it may be obtained from the Rules conditions, from providing erroneous adoption of the rule as proposed. Docket at the location provided under cross-deviation information, which the caption ADDRESSES. could result in the aircraft deviating Cost Impact List of Subjects in 14 CFR Part 39 from its intended course for a brief We do not know how many aircraft period of time. Erroneous information equipped with Apollo GX series GPS Air transportation, Aircraft, Aviation may also place an excessive workload navigation units (software versions 3.0 safety, Incorporation by reference, on the flightcrew while they monitor through 3.4 inclusive) of the affected Safety. other available navigation data to avoid design are on the U.S. Register. Adoption of the Amendment deviating off course. This action is However, we do know that the GPS intended to address the identified navigation units might be installed on I Accordingly, pursuant to the authority unsafe condition. 1,176 aircraft worldwide. It will take delegated to me by the Administrator, the Federal Aviation Administration DATES: Effective August 3, 2004. approximately 1 work hour per aircraft to accomplish the required amends part 39 of the Federal Aviation The incorporation by reference of a modification, at an average labor rate of Regulations (14 CFR part 39) as follows: certain publication listed in the $65 per work hour. The parts regulations is approved by the Director manufacturer will provide the required PART 39—AIRWORTHINESS of the Federal Register as of August 3, parts at no cost to the operator. Based DIRECTIVES 2004. on these figures, the cost impact of the I 1. The authority citation for part 39 ADDRESSES: The service information AD on U.S. operators is estimated to be continues to read as follows: $65 per aircraft. referenced in this AD may be obtained Authority: 49 U.S.C. 106(g), 40113, 44701. from Garmin AT, 2345 Turner Road The cost impact figure discussed Southeast, Salem, Oregon 97302. This above is based on assumptions that no § 39.13 [Amended] operator has yet accomplished any of information may be examined at the I 2. Section 39.13 is amended by adding Federal Aviation Administration (FAA), the requirements of this AD action, and that no operator would accomplish the following new airworthiness Transport Airplane Directorate, Rules directive: Docket, 1601 Lind Avenue, SW., those actions in the future if this AD Renton, Washington; or at the National were not adopted. The cost impact 2004–13–20 Garmin AT (formerly UPS Archives and Records Administration figures discussed in AD rulemaking Aviation Technologies, Inc.): actions represent only the time Amendment 39–13702. Docket 2002– (NARA). For information on the NM–254–AD. availability of this material at NARA, necessary to perform the specific actions actually required by the AD. These Applicability: Aircraft equipped with call (202) 741–6030, or go to: http:// Garmin AT, Apollo GX50/55/60/65 TSO– www.archives.gov/federal_register/ figures typically do not include incidental costs, such as the time C129a global positioning system (GPS) code_of_federal_regulations/ navigation units with software versions 3.0 ibr_locations.html. required to gain access and close up, through 3.4 inclusive; as listed in UPS planning time, or time necessitated by Aviation Technologies Service Bulletin 561– FOR FURTHER INFORMATION CONTACT: other administrative actions. 4002–001, dated April 19, 2002; certificated Walter Cameron, Aerospace Engineer, Manufacturer warranty remedies may be in any category. Systems and Equipment Branch, ANM– available for labor costs associated with Compliance: Required as indicated, unless 130S, FAA, Seattle Aircraft Certification this AD. As a result, the costs accomplished previously. Office, 1601 Lind Avenue, SW., Renton, attributable to the AD may be less than To prevent the GPS navigation unit, under Washington 98055–4056; telephone stated above. certain conditions, from providing erroneous cross-deviation information, which could (425) 917–6460; fax (425) 917–6590. Regulatory Impact result in the aircraft deviating from its SUPPLEMENTARY INFORMATION: A intended course for a brief period of time; The regulations adopted herein will and to also prevent erroneous information proposal to amend part 39 of the Federal not have a substantial direct effect on Aviation Regulations (14 CFR part 39) to from placing an excessive workload on the the States, on the relationship between flightcrew while they monitor other available include an airworthiness directive (AD) the national Government and the States, navigation data to avoid deviating off course; that is applicable to aircraft equipped or on the distribution of power and accomplish the following: with Garmin AT, Apollo GX series GPS responsibilities among the various navigation units with software versions Software Modification, Testing, and levels of government. Therefore, it is Reidentification 3.0 through 3.4 inclusive was published determined that this final rule does not in the Federal Register on April 1, 2004 (a) Within 6 months after the effective date have federalism implications under of this AD, do the actions specified in (69 FR 17076). That action proposed to Executive Order 13132. require modification and testing of the paragraphs (a)(1) and (a)(2) of this AD, For the reasons discussed above, I according to the Accomplishment software for Apollo GX50/55/60/65 certify that this action (1) is not a Instructions of UPS Aviation Technologies TSO–C129a GPS navigation units; and ‘‘significant regulatory action’’ under Service Bulletin 561–4002–001, dated April reidentification of the part. Executive Order 12866; (2) is not a 19, 2002. (1) Modify and test the software for the Comments ‘‘significant rule’’ under DOT Regulatory Policies and Procedures (44 Apollo GX50/55/60/65 TSO–C129a GPS Interested persons have been afforded FR 11034, February 26, 1979); and (3) navigation unit by accomplishing all of the actions specified in paragraphs 3.B. and 3.C. an opportunity to participate in the will not have a significant economic of the service bulletin. making of this amendment. No impact, positive or negative, on a (2) Reidentify the modified Apollo GX50/ comments were submitted in response substantial number of small entities 55/60/65 TSO–C129a GPS navigation unit, to the proposal or the FAA’s under the criteria of the Regulatory according to paragraph 3.D. of the service determination of the cost to the public. Flexibility Act. A final evaluation has bulletin.

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Alternative Methods of Compliance direct routes for which a minimum or effective date of this amendment reflects (b) In accordance with 14 CFR 39.19, the maximum en route authorized IFR those considerations. In view of the Manager, Seattle Aircraft Certification Office, altitude is prescribed. This regulatory close and immediate relationship FAA, is authorized to approve alternative action is needed because of changes between these regulatory changes and methods of compliance (AMOCs) for this AD. occurring in the National Airspace safety in air commerce, I find that notice Incorporation by Reference System. These changes are designed to and public procedure before adopting (c) The actions shall be done in accordance provide for the safe and efficient use of this amendment are impracticable and with UPS Aviation Technologies Service the navigable airspace under instrument contrary to the public interest and that Bulletin 561–4002–001, dated April 19, 2002. conditions in the affected areas. good cause exists for making the This incorporation by reference was DATES: Effective Date: 0901 UTC, August amendment effective in less than 30 approved by the Director of the Federal 5, 2004. days. Register in accordance with 5 U.S.C. 552(a) FOR FURTHER INFORMATION CONTACT: Conclusion and 1 CFR part 51. Copies may be obtained Donald P. Pate, Flight Procedure from Garmin AT, 2345 Turner Road Standards Branch (AMCAFS–420), The FAA has determined that this Southeast, Salem, Oregon 97302. Copies may regulation only involves an established be inspected at the FAA, Transport Airplane Flight Technologies and Programs Directorate, 1601 Lind Avenue, SW., Renton, Division, Flight Standards Service, body of technical regulations for which Washington; or at the National Archives and Federal Aviation Administration, Mike frequent and routine amendments are Records Administration (NARA). For Monroney Aeronautical Center, 6500 necessary to keep them operationally information on the availability of this South MacArthur Blvd., Oklahoma City, current. It, therefore—(1) is not a material at NARA, call (202) 741–6030, or go OK 73169. (Mail Address: PO Box ‘‘significant regulatory action’’ under to: http://www.archives.gov/federal_register/ Executive Order 12866; (2) is not a _ _ _ 25082, Oklahoma City, OK 73125.) code of federal regulations/ telephone: (405) 954–4164. ‘‘significant rule’’ under DOT ibr_locations.html. SUPPLEMENTARY INFORMATION: This Regulatory Policies and Procedures (44 Effective Date amendment to part 95 of the Federal FR 11034; February 26, 1979); and (3) (d) This amendment becomes effective on Aviation Regulations (14 CFR part 95) does not warrant preparation of a August 3, 2004. amends, suspends, or revokes IFR regulatory evaluation as the anticipated impact is so minimal. For the same Issued in Renton, Washington, on June 17, altitudes governing the operation of all 2004. aircraft in flight over a specified route reason, the FAA certifies that this amendment will not have a significant Ali Bahrami, or any portion of that route, as well as the changeover points (COPs) for economic impact on a substantial Acting Manager, Transport Airplane number of small entities under the Directorate, Aircraft Certification Service. Federal airways, jet routes, or direct criteria of the Regulatory Flexibility Act. [FR Doc. 04–14573 Filed 6–28–04; 8:45 am] routes as prescribed in part 95. BILLING CODE 4910–13–P The Rule List of Subjects in 14 CFR Part 95 The specified IFR altitudes, when Airspace, Navigation (air). DEPARTMENT OF TRANSPORTATION used in conjunction with the prescribed Issued in Washington, DC on June 22, changeover points for those routes, 2004. Federal Aviation Administration ensure navigation aid coverage that is James J. Ballough, adequate for safe flight operations and Director, Flight Standards Service. 14 CFR Part 95 free of frequency interference. The reasons and circumstances that create Adoption of the Amendment [Docket No. 30417; Amdt. No. 449] the need for this amendment involve I Accordingly, pursuant to the authority IFR Altitudes; Miscellaneous matters of flight safety and operational delegated to me by the Administrator, Amendments efficiency in the National Airspace part 95 of the Federal Aviation System, are related to published Regulations (14 CFR part 95) is amended AGENCY: Federal Aviation aeronautical charts that are essential to as follows effective at 0901 UTC. Administration (FAA), DOT. the user, and provide for the safe and I 1. The authority citation for part 95 ACTION: Final rule. efficient use of the navigable airspace. continues to read as follows: In addition, those various reasons or SUMMARY: This amendment adopts circumstances require making this Authority: 49 U.S.C. 106(g), 40103, 40106, miscellaneous amendments to the amendment effective before the next 40113, 40114, 40120, 44502, 44514, 44719, required IFR (instrument flight rules) scheduled charting and publication date 44721. altitudes and changeover points for of the flight information to assure its I 2. Part 95 is amended to read as certain Federal airways, jet routes, or timely availability to the user. The follows:

REVISIONS TO IFR ALTITUDES AND CHANGEOVER POINTS AMENDMENT 449 [Effective Date, August 05, 2004; Final, 06/16/2004]

From To MEA

§ 95.6001 VICTOR ROUTES–U.S. § 95.6010 VOR Federal Airway 10 Is Amended To Read in Part

VOLAN, PA FIX ...... *Eared, PA FIX ...... **4,000 *4,000—MRA **3,100—MOCA EARED, PA FIX ...... Talls, PA FIX ...... *4,000

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REVISIONS TO IFR ALTITUDES AND CHANGEOVER POINTS AMENDMENT 449—Continued [Effective Date, August 05, 2004; Final, 06/16/2004]

From To MEA

*3,100—MOCA

§ 95.6013 VOR Federal Airway 13 Is Amended To Read in Part

LUFKIN, TX VORTAC ...... Carth, TX FIX ...... *3,800 *2,400–MOCA CARTH, TX FIX ...... Belcher, LA VORTAC ...... 3,100

§ 95.6038 VOR Federal Airway 38 Is Amended To Read in Part

HARCUM, VA VORTAC ...... Cape Charles, VA VORTAC ...... 2,000

§ 95.6068 VOR Federal Airway 68 Is Amended To Read in Part

MIDLAND, TX VORTAC ...... Jokes, TX FIX ...... 4,500 JOKES, TX FIX ...... Steep, TX FIX ...... *5,000 *4,200—MOCA

§ 95.6137 VOR Federal Airway 137 Is Amended To Read in Part

IMPERIAL, CA VORTAC ...... *Brawl, CA FIX ...... **3,700 *4,500—MRA **2,300—MOCA BRAWL, CA FIX ...... Henhom, CA FIX ...... 3,700 HENOM, CA FIX ...... Thermal, CA VORTAC ...... 3,900

§ 95.6139 VOR Federal Airway 139 Is Amended To Read in Part

EWOOD, VA FIX ...... Snow Hill, MD VORTAC ...... 6,000

§ 95.6210 VOR Federal Airway 210 Is Amended To Read in Part

VOLAN, PA FIX ...... *Eared, PA FIX ...... **4,000 *4,000—MRA **3,100—MOCA EARED, PA FIX ...... Talls, PA FIX ...... *4,000 *3,100—MOCA

§ 95.6297 VOR Federal Airway 297 Is Amended To Read in Part

TALLS, PA FIX ...... *Eared, PA FIX ...... **4,000 *4,000—MRA **3,100—MOCA EARED, PA FIX ...... Volan, PA FIX ...... *4,000 *3,100—MOCA

§ 95.6328 VOR Federal Airway 328 Is Amended By Adding

JACKSON, WY VOR/DME ...... Big Piney, WY VOR/DME ...... 13,500

§ 95.6330 VOR Federal Airway 330 Is Amended To Read in Part

OSITY, ID FIX ...... *Jackson, WY VOR/DME ...... 14,000 *13,200—MCA JACKSON VOR/DME, W BND

§ 95.6465 VOR Federal Airway 465 Is Amended To Read in Part

LUNDI, ID FIX ...... Jackson, WY VOR/DME ...... #*15,000 *13,100—MOCA #MEA IS ESTABLISHED WITH A GAP IN NAVIGATIONAL SIGNAL COVERAGE.

§ 95.6520 VOR Federal Airway 520 Is Amended To Read in Part

DUBOIS, ID VORTAC ...... *Jackson, WY VOR/DME ...... 15,000 *14,600—MCA JACKSON VOR/DME, W BND

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Changeover points From To Distance From

§ 95.8003 VOR FEDERAL AIRWAY CHANGEOVER POINTS Airway segment V–328 Is Amended To Add Changeover Point

JACKSON, WY VOR/DME ...... Big Piney VOR/DME ...... 20 Jackson

V–330Is Amended To Add Changeover Point

IDAHO FALLS, ID VOR/DME ...... Jackson, WY VOR/DME ...... 48 Idaho Falls

V–465Is Amended To Add Changeover Point

MALAD CITY, ID VOR/DME ...... Jackson, WY VOR/DME ...... 63 Malad CITY

V–520Is Amended To Add Changeover Point

DUBOIS, ID VORTAC ...... Jackson, WY VOR/DME ...... 60 Dubois

[FR Doc. 04–14629 Filed 6–28–04; 8:45 am] Secretary of the Treasury to issue viticultural area are as specified in the BILLING CODE 4910–13–P regulations to carry out the Act’s petition; provisions. The Alcohol and Tobacco • Evidence relating to the Tax and Trade Bureau (TTB) geographical features, such as climate, DEPARTMENT OF THE TREASURY administers these regulations. soils, elevation, physical features, etc., Regulations in 27 CFR part 4, Labeling that distinguish the proposed Alcohol and Tobacco Tax and Trade and Advertising of Wine, allow the viticultural area from surrounding areas; Bureau establishment of definitive viticultural • A description of the proposed areas and the use of their names as viticultural area’s specific boundaries, 27 CFR Part 9 appellations of origin on wine labels based on features found on maps and in wine advertisements. Title 27 approved by the United States [T.D. TTB–13; Notice No. 20] CFR part 9, American Viticultural Geological Survey (USGS); and RIN 1513–AA69 Areas, contains the list of approved • A copy of the appropriate USGS- viticultural areas. approved map(s) with the boundaries Establishment of Salado Creek prominently marked. Viticultural Area (2003R–025P) Definition A petition requesting the modification Title 27 CFR 4.25(e)(1) defines an of an established viticultural area must AGENCY: Alcohol and Tobacco Tax and American viticultural area as a include information, evidence, and Trade Bureau (TTB), Treasury. delimited grape-growing region maps appropriate to support the ACTION: Final rule; Treasury decision. distinguishable by geographic features requested change(s). whose boundary has been delineated in Impact on Current Wine Labels SUMMARY: This Treasury decision subpart C of part 9. The establishment establishes the Salado Creek viticultural of viticultural areas allows the Under our part 4 regulations, State, area in western Stanislaus County, identification of regions where a given county, and viticultural area names California. We designate viticultural quality, reputation, or other have viticultural significance. Part 4 areas to allow vintners to better describe characteristics of the wine is essentially also prohibits the use of a brand name the origin of their wines and to allow attributable to its geographic origin. We or other label reference with viticultural consumers to better identify wines they believe that the establishment of significance on a wine unless the wine may purchase. viticultural areas allows wineries to meets the appellation of origin EFFECTIVE DATE: August 30, 2004. describe more accurately the origin of requirements for the named geographic FOR FURTHER INFORMATION CONTACT: N. their wines to consumers and helps area. A. Sutton, Program Manager, consumers identify the wines they With the establishment of this Regulations and Procedures Division, purchase. Establishment of a viticultural viticultural area, wine bottlers using Alcohol and Tobacco Tax and Trade area is neither an approval nor ‘‘Salado Creek’’ in a brand name, Bureau, 6660 Delmonico Dr., #D422, endorsement by TTB of the wine including trademarks, or in another Colorado Springs, CO 80919; telephone produced there. label reference, must ensure that the 415–271–1254. product is eligible to use the viticultural Requirements area’s name as an appellation of origin. SUPPLEMENTARY INFORMATION: Section 4.25(e)(2) outlines the For a wine to be eligible, at least 85 Background on Viticultural Areas procedure for proposing an American percent of the grapes in the wine must have been grown within the viticultural TTB Authority viticultural area. Anyone interested may petition TTB to establish a grape- area, and the wine must meet the other The Federal Alcohol Administration growing region as a viticultural area. requirements of 27 CFR 4.25(e)(3). Act (FAA Act) at 27 U.S.C. 205(e) The petition must include— If the wine is not eligible for the requires that alcohol beverage labels • Evidence that the proposed appellation, the bottler must change the provide the consumer with adequate viticultural area is locally and/or brand name or other label reference and information regarding a product’s nationally known by the name specified obtain approval of a new label. Different identity, while prohibiting the use of in the petition; rules apply if a wine in this category misleading information on such labels. • Historical or current evidence that bears a brand name that was used as a The FAA Act also authorizes the the boundaries of the proposed brand name on a label approved prior to

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July 7, 1986. See 27 CFR 4.39(i) for post office, its branch library, a new Route 33, which take its water to the details. school, and the city council’s chambers. San Joaquin River. The local irrigation district was Another intermittent stream, Little Salado Creek Petition previously known as the Salado Salado Creek, starts in the Diablo range In 2002, Stan Grant of Progressive Irrigation District. south of Salado Creek. It meanders east Viticulture filed a petition on behalf of Salado Creek is best known to local in its natural channel to the southern tip Fred Vogel of the Sunflower Ranch residents for its floods. ‘‘Salado Creek of the viticultural area at Interstate 5 Company in Patterson, California, History,’’ an article published in ‘‘The and Fink Road. The creek then enters a proposing to establish the ‘‘Salado Gateway: A Patterson Township History series of man-made drains and channels Creek’’ viticultural area in western Society Bulletin’’ in December 1996, as it flows northeast across the valley Stanislaus County, California. The discusses the creek’s significant floods. floor outside of the viticultural area, 2,940-acre viticultural area, which had As noted in the article, the March 4, south of Patterson. 44 acres of vineyards in 2002, is located The Salado Creek viticultural area 1938, edition of the local Patterson about 75 miles east-southeast of San covers the upper portion and back slope Irrigator newspaper states that Salado Francisco and 18 miles southwest of of the alluvial fan created by Salado and Creek spilled over its banks and onto Modesto in a rural area of central, Little Salado Creeks. The two creeks State Highway 33 on Patterson’s east interior California. The Salado Creek created the fan where they left the steep side. The article adds that a flood in area is located along Interstate 5 on the slopes of the Diablo Mountains and western edge of the San Joaquin Valley, November of 1938 spilled into a local their flow velocity diminished as they just southwest of the town of Patterson. nursery. entered the much gentler slopes of the The Diablo Mountains rise to the west Boundary Evidence San Joaquin Valley. This drop in of the viticultural area and shield it velocity allowed the coarser, heavier from the Pacific Ocean’s marine The waters from Salado Creek and sediments to settle out and formed the influence. Salado Creek flows from the Little Salado Creek have deposited large creeks’ alluvial fan at the foot of the mountains through the viticultural area, quantities of sediment on the flood Diablos. The two streams carried finer, while Little Salado Creek touches its plain and formed an alluvial fan. lighter sediments further downstream to southern tip. Further, these sediments are the parent the flood plain of the San Joaquin River. material for the Ensalado soil series, The coarser, heavier sediments of the Name Evidence which are unique to western Stanislaus alluvial fan became the parent material Spanish explorer Gabriel Moraga County. The Salado Creek viticultural for the Ensalado soils found within the named Salado Creek. Moraga, a Spanish area boundaries, which are on this viticultural area boundaries. army officer, explored the San Joaquin alluvial fan, generally coincide with the Valley during his 1806–1811 extent of the Ensalado soil series. Soils The Ensalado series soils, formerly expeditions to the San Joaquin Valley Distinguishing Features and named many of its geographic known as the Salado series, are unique features. The names ‘‘Salado’’ and Topography to west Stanislaus County, California, ‘‘Salado Creek’’ continue to be used in according to a 2001 publication by soil The Salado Creek viticultural area lies modern times and are attached to a scientist, vineyard consultant, and on the western side of the San Joaquin variety of features and places, both Salado Creek petition author Stan Grant. Valley at the foot of the Diablo natural and man-made. He further notes that this soil series As shown on the two official United Mountains, which are part of occurs only along three streams in the States Geological Survey (USGS) maps California’s Coast Range. The area, Salado, Orestimba, and Del Puerto that cover the viticultural area, the viticultural area is between 125 and 340 Creeks, and accounts for only 0.17 Patterson and Crows Landing feet above sea level and generally flat percent of the soils covering western quadrangles, Salado Creek is an with a gentle downward slope to the Stanislaus County. Mr. Grant notes in intermittent stream that flows east from northeast, toward the San Joaquin River. the petition that because of their lower the higher elevations of the Diablo A number of man-made canals, ditches, flow velocity, Salado Creek and Little Mountains. After passing under and drains cross the area’s boundary. Salado Creek dropped large quantities of Interstate 5, Salado Creek turns and The California Aqueduct and the Delta- sediment immediately after leaving the flows north through the viticultural area Mendota Canal, for example, flow from Diablo Mountains. This produced the and continues west and north of the the northwest to the southeast across the large alluvial fan upon which the Salado town of Patterson. Salado Creek viticultural area. Creek viticultural area sits. The The USGS Patterson map shows Little Salado Creek is the major natural Orestimba and Del Puerto Creeks, with Salado Creek running east from the watercourse for the Salado Creek their higher flow rates, took their Diablo Mountains to the viticultural viticultural area. As an intermittent sediments further to the east, producing area’s southern tip, where Interstate 5 stream, it begins in the Diablo Mountain smaller alluvial fans at the foot of the and the California Aqueduct interrupt Range to the area’s west and runs east mountains. its natural channel. On the USGS Crows in its natural channel from the The Ensalado soils are very deep, Landing map, the creek is shown to mountains to the California Aqueduct. with a root depth of 60 inches or more. resume southeast of the area where it After crossing the Aqueduct at the foot They are well drained, with parent runs northeast from the Delta-Mendota of the Diablos, the creek flows north and material from sandstone and shale, and Canal. The Salado Sub-Station, south of then northeasterly across the gently have little organic matter. They have Salado Creek and beside the California sloping floor of the San Joaquin Valley. limited layer development due to the Aqueduct, is within the viticultural After crossing the Delta-Mendota Canal dry, warm climate, and are calcareous. area. in a flume, it enters a man-made Classified as coarse-loamy, these soils The Salado Creek Ranch, known for channel that carries it north from the generally consist of a thin layer of fine its walnuts, is within the established viticultural area and then east around sandy loam over deep loam subsoil. boundaries. Salado Avenue in Patterson the heart of Patterson. Finally, Salado Other soils on the alluvial fan, older is a major street that passes the town’s Creek enters large drainpipes at State than the Ensalado soils, lie beyond the

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courses of Salado and Little Salado substantial number of small entities. 4.25 miles along Interstate 5 to its Creeks. This rule imposes no new reporting, junction with an unnamed light duty recordkeeping, or other administrative Climate road in section 35, T5S, R7E; then requirement. Any benefit derived from The Salado Creek viticultural area lies (2) Follow the unnamed light duty the use of a viticultural area name is the road for approximately 0.45 miles, going on the west side of the San Joaquin result of a proprietor’s efforts and east across the California Aqueduct and Valley at the foot of the Diablo consumer acceptance of wines from that then north, to the road’s intersection Mountains. This range shields the area area. Therefore, no regulatory flexibility from the maritime influences of the analysis is required. with the light duty road atop the levee Pacific Ocean. Also, the Salado Creek on the east bank of the Delta-Mendota area is in a ‘‘thermal belt,’’ which covers Executive Order 12866 Canal in section 35, T5S, R7E; then the alluvial fans along the western rim This rule is not a significant (3) Proceed southeast approximately of the valley in Stanislaus County. regulatory action as defined by 0.3 miles along the Delta-Mendota Canal Consistent breezes from the north, Executive Order 12866 (58 FR 51735). levee road to its intersection with an which cool the area in the summer, Therefore, it requires no regulatory unnamed unimproved road in section characterize this thermal belt. In the assessment. 35, T5S, R7E; then winter it has less fog and warmer temperatures than the valley’s lower Drafting Information (4) Proceed north and then east on the elevations along the San Joaquin River. The principal author of this document unimproved road for approximately 0.4 The petition included a recent is N.A. Sutton, Regulations and mile to its intersection with Baldwin comparison of weather information Procedures Division, Alcohol and Road and continue east on Baldwin gathered from stations north, within, Tobacco Tax and Trade Bureau. Road approximately one mile, crossing and south of the Salado Creek Salado Creek, to the Baldwin Road’s List of Subjects in 27 CFR Part 9 viticultural area. It has warmer intersection with Ward Avenue at the minimum temperatures and cooler Wine. eastern boundary line of section 36, maximum temperatures, for a milder The Final Rule T5S, R7E; then, climate, than the surrounding areas. (5) Proceed north on Ward Avenue I For the reasons discussed in the Minimum temperatures are higher in approximately 400 feet to its May, June, and August through October. preamble, we amend 27 CFR, chapter 1, intersection with the 2nd Lift drainage Maximum temperatures are cooler part 9 as follows: canal in section 31, T5S, R8E; then August through December. These periods of comparatively mild PART 9—AMERICAN VITICULTURAL (6) Follow the 2nd Lift canal temperatures correspond to the ripening AREAS southeast approximately 0.75 miles to season for wine grapes. I 1. The authority citation for part 9 its intersection with Elfers Road in Solar radiation statistics for 2001 continues to read as follows: section 31, T5S, R8E; then indicate less solar influence between Authority: 27 U.S.C. 205. (7) Proceed east on Elfers Road August and October in the viticultural approximately for 0.45 miles, crossing area, creating a slower ripening period Subpart C—Approved American onto the Crows Landing Quadrangle for the grapes. The area’s low humidity, Viticultural Areas map, to its intersection with an high average wind speeds, and high unnamed, unimproved road on the average solar radiation create a high rate I 2. Subpart C is amended by adding south side of Elfers Road that also marks of moisture evaporation from the plants § 9.163 to read as follows: and soil. This slow ripening, and the the western boundary of section 6, T6S, continuing high rate of evaporation for § 9.163 Salado Creek. R8E; then plants and soil, has a positive effect on (a) The name of the viticultural area (8) Proceed straight south on the the quality of grapes grown in the area. described in this section is ‘‘Salado unimproved road approximately one Creek’’. Notice of Proposed Rulemaking and mile to its intersection with Marshall (b) Approved Maps. The appropriate Road in section 6, T6S, R8E; then TTB Finding maps for determining the boundaries of TTB published a notice of proposed the Salado Creek viticultural area are (9) Follow Marshall Road straight rulemaking regarding the establishment two 1:24,000 Scale USGS topographic west 1.1 miles, crossing onto the USGS of the Salado Creek viticultural area in maps. They are titled: Patterson map, to its intersection with the October 30, 2003, Federal Register (1) Patterson, California Ward Avenue in section 6, T6S, R8E; as Notice No. 20 (68 FR 61776). In that Quadrangle,—Stanislaus Co., 7.5 Minute then notice, TTB requested comments by Series, edition of 1953; photorevised (10) Proceed south 1.65 miles on December 29, 2003. No comments were 1971, photoinspected 1978; and Ward Avenue to its intersection with received. Under the authority of the (2) Crows Landing, California the California Aqueduct, then continue Federal Alcohol Administration Act and Quadrangle,—Stanislaus Co., 7.5 Minute generally south approximately 1.4 miles part 4 of our regulations, we find that Series, edition of 1952, photorevised along the aqueduct to its intersection the submitted evidence supports the 1980. with Fink Road in section 19, T6S, R8E; (c) Boundaries. The Salado Creek proposed viticultural area’s then establishment. Therefore, we establish viticultural area is located in Stanislaus the ‘‘Salado Creek’’ viticultural area County, California, just southwest of the (11) Follow Fink Road northwest for effective 60-days from this document’s town of Patterson. The Salado Creek approximately 0.5 miles, returning to publication date. viticultural area boundary is as follows: the beginning point at the intersection (1) Beginning on the Patterson of Interstate Highway 5 and Fink Road Regulatory Flexibility Act Quadrangle map, section 19, T6S, R8E, in section 19, T6S, R8E. We certify that this rule will not have at the intersection of Interstate Highway a significant economic impact on a 5 and Fink Road, proceed northwest for

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Signed: March 15, 2004. establishment of definitive viticultural the use of brand names of viticultural Arthur J. Libertucci, areas and the use of their names as significance, such as the name of a Administrator. appellations of origin on wine labels State, county, or viticultural area, unless and in wine advertisements. Title 27 the wine meets the appellation of origin Approved: April 27, 2004. CFR Part 9, American Viticultural requirements for the named geographic Timothy E. Skud, Areas, contains the list of approved area. Deputy Assistant Secretary (Tax, Trade, and viticultural areas. With the establishment of the ‘‘San Tariff Policy). Bernabe’’ viticultural area, its name, like [FR Doc. 04–14651 Filed 6–28–04; 8:45 am] Definition that of the existing ‘‘San Lucas’’ BILLING CODE 4810–31–P Title 27 CFR 4.25(e)(1) defines an viticultural area, becomes a term of American viticultural area as a viticultural significance. Wine bottlers delimited grape-growing region using ‘‘San Bernabe’’ or ‘‘San Lucas’’ in DEPARTMENT OF THE TREASURY distinguishable by geographic features a brand name, including a trademark, or whose boundary has been delineated in in another label reference, must ensure Alcohol and Tobacco Tax and Trade subpart C of part 9. The establishment the product is eligible to use that Bureau of viticultural areas allows the viticultural area’s name as an identification of regions where a given appellation of origin. 27 CFR Part 9 quality, reputation, or other For a wine to be eligible to use a [T.D. TTB–14; Re: Notice No. 8] characteristics of the wine is essentially viticultural area name listed in part 9 of attributable to its geographic origin. The the TTB regulations as an appellation of RIN 1513–AA28 establishment of viticultural areas origin, at least 85 percent of the grapes used to make the wine must have been San Bernabe and San Lucas allows vintners to describe more grown within that viticultural area. If Viticultural Areas (2001R–170P) accurately the origin of their wines to consumers and helps consumers to the wine is not eligible to use the AGENCY: Alcohol and Tobacco Tax and identify the wines they purchase. viticultural area name and that name Trade Bureau, Treasury. Establishment of a viticultural area is appears in the wine’s brand name or in ACTION: Final rule; Treasury decision. neither an approval nor endorsement by another label reference, the label is not TTB of the wine produced there. in compliance and the bottler must SUMMARY: This Treasury decision change the brand name or other label establishes the San Bernabe viticultural Requirements reference and obtain approval of a new area and realigns the existing San Lucas Section 4.25(e)(2) outlines the label. viticultural area. Both viticultural areas procedure for proposing an American Different rules apply if a wine has a are within the Monterey viticultural viticultural area. Anyone interested may brand name containing a viticultural area in Monterey County, California, petition TTB to establish a grape- area name that was used as a brand and within California’s multi-county growing region as a viticultural area. name on a label approved before July 7, Central Coast viticultural area. The The petition must include— 1986. See 27 CFR 4.39(i) for details. • establishment of viticultural areas Evidence that the proposed San Bernabe and San Lucas Petitions allows vintners to describe more viticultural area is locally and/or accurately where their wines come from nationally known by the name specified We received two petitions from and enables consumers to better identify in the petition; Claude Hoover of Delicato Family the wines they purchase. • Historical or current evidence that Vineyards, Monterey, California, EFFECTIVE DATE: August 30, 2004. the boundaries of the proposed proposing the establishment of a new viticultural area to be named San FOR FURTHER INFORMATION CONTACT: N. viticultural area are as specified in the Bernabe, and the realignment of the A. Sutton, Program Manager, petition; • adjacent, established San Lucas Regulations and Procedures Division, Evidence relating to the viticultural area (27 CFR 9.56). Both Alcohol and Tobacco Tax and Trade geographical features, such as climate, viticultural areas are located in the Bureau, 6660 Delmonico Dr., #D422, soils, elevation, physical features, etc., Salinas Valley in central Monterey Colorado Springs, CO 80919; telephone that distinguish the proposed area from County, California. The two areas are 415–271–1254. surrounding areas; • A description of the proposed within the Monterey viticultural area SUPPLEMENTARY INFORMATION: viticultural area’s specific boundaries, (27 CFR 9.98) and the multi-county Background on Viticultural Areas based on features found on maps Central Coast viticultural area (27 CFR approved by the United States 9.75). TTB Authority Geological Survey (USGS); and The San Bernabe viticultural area The Federal Alcohol Administration • A copy of the appropriate USGS encompasses 24,796 acres of Act (FAA Act) at 27 U.S.C. 205(e) map(s) with the boundaries prominently predominantly rolling hills with sandy requires that alcohol beverage labels marked. soils and 7,636 acres of vineyards. The provide the consumer with adequate A petition requesting the modification realignment of the San Lucas information regarding a product’s of an established viticultural area must viticultural area transfers 1,281 acres of identity, while prohibiting the use of include the appropriate evidence and rolling, sandy land from the misleading information on such labels. maps as described above to support the northwestern San Lucas area to the The FAA Act also authorizes the requested modification(s). southern San Bernabe area. This Secretary of the Treasury to issue realignment avoids splitting a large regulations to carry out the Act’s Impact on Current Wine Labels vineyard between the two viticultural provisions. The Alcohol and Tobacco Part 4 of the TTB regulations prohibits areas, prevents overlapping boundary Tax and Trade Bureau (TTB) any label reference on a wine that lines between the two viticultural areas, administers these regulations. suggests an origin other than the wine’s and creates one common boundary line Regulations in 27 CFR Part 4, Labeling true place of origin. With certain between the San Bernabe viticultural and Advertising of Wine, allow the exceptions, the regulations also prohibit area and the San Lucas viticultural area.

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Name Evidence southwest boundary lines with the shale, and siltstone, which come from a According to the 1991 publication of surrounding Monterey viticultural area, different source material, according to ‘‘Monterey County Place Names, A which is, in turn, surrounded by the the petitioner. multi-county Central Coast viticultural Geographical Dictionary,’’ by Donald Climate Thomas Clark, Father Pedro Font, a area. The San Bernabe viticultural area The Salinas Valley forms a broad member of the California expedition of shares its south boundary line with the funnel for the strong, cool, afternoon Spanish explorer DeAnza, documented realigned San Lucas viticultural area’s marine winds coming off Monterey Bay the initial reference to San Bernabe on northwestern boundary. The transfer of during the warm months. The winds are March 8, 1776. He wrote in his diary, 1,281 acres of the San Lucas viticultural drawn inland and south through the ‘‘we had passed a spur of the Sierra de area to the San Bernabe viticultural area Salinas Valley by rising warm air that Santa Lucia * * *. The road at first runs helps to better define the geographical moderates the valley’s high and low through a spur of mountains, until it differences between the established San temperatures to varying degrees, descends to a wide valley called the Lucas area and the new San Bernabe producing a graduated effect in the Can˜ ada de San Bernabe.’’ Eventually the area while preventing the split of an valley. As a result, the San Bernabe area area became known as ‘‘Rancho San existing vineyard between the two is warmer than viticultural areas to the Bernabe.’’ viticultural areas. north, and closer to Monterey Bay, and The Thompson Canyon and San Growing Conditions cooler than the adjoining San Lucas Lucas USGS quadrangle maps viticultural area to the immediate south. prominently identify the area as San Topography The winds dissipate gradually as they Bernabe. The relevant Thomas Guide The San Bernabe viticultural area is travel inland from Monterey Bay and labels this area Rancho San Bernabe. located immediately south of King City create a series of temperature-unique, The TopoZone map Web site identifies in the long Salinas Valley. The grape-growing areas within the long this rural area as San Bernabe. approximately 9-mile-long and 7-mile- Salinas Valley. San Bernabe, at 60 miles The 13,000-acre San Bernabe vineyard wide viticultural area occupies the south of the Monterey Bay, averages a estate, owned by Delicato Family valley floor and rolling foothills, 30-degree daily temperature variation, Vineyards, has 7,636 acres planted to extending west from the Salinas River to while Salinas, at 17 miles from the grapes and sits almost entirely within the Santa Lucia Mountains. Unique Monterey Bay, averages a smaller 18- the new viticultural area. A small viticultural qualities of the San Bernabe degree daily temperature variation. portion of the vineyard estate, outside area include its climate, water quality, The cool night air helps retain the the San Bernabe viticultural area wind-produced eolian soils, and rolling grapes’ acid and color, while the daily boundaries, is unplanted and unsuitable hills. The 1,281 acres realigned from the heat encourages ripeness and flavor. for grape cultivation. According to the San Lucas viticultural area possess The San Bernabe area averages 30 frost- Delicato Family Vineyards petition, the similar eolian soils, rolling hills days annually, while Salinas, closer to San Bernabe vineyard estate is topography, and irrigation water quality Monterey Bay, averages only four frost- recognized as the largest continuous as found in the new San Bernabe days. vineyard estate under a single viticultural area. ownership in the free world. More rain falls at the Salinas Valley’s Soils extreme north and south ends, with less Boundary Evidence In the San Bernabe viticultural area, falling in the region between, which According to the 1991 ‘‘Monterey grapes are grown below the 700-foot includes the San Bernabe viticultural County Place Names, A Geographical elevation level on rolling hills in wind- area. At the valley’s north end, the city Dictionary,’’ the San Bernabe area land produced eolian soils. The Oceano, of Salinas averages 17.5 inches of grants were given to Jesus Molina in Garey, and Garey-Oceano complex annual rainfall, and, at the valley’s 1841 and in 1842 to Petronillo Rios. In eolian soil types, which are well to south end, Paso Robles averages 19 1842 Rios bought the Molina land grant excessively well-drained, dominate the inches. The San Bernabe area, between and the Rios family began raising cattle San Bernabe viticultural area. Small the two ends, averages only 13 inches of and crops on this land and producing niches of alluvial soils, derived from the annual rainfall. wine from their own grapes. The Rios shale-based Santa Lucia Mountains, lie Water Resources ranch, known as Rancho San Bernabe, within the area and immediately to the eventually became a successful vineyard north and south of the San Bernabe Irrigation water is used extensively in and wine producing property. boundary lines. the San Bernabe viticultural area’s In the 1970s Prudential-Southdown The larger, surrounding Monterey vineyards. The water comes from area purchased the San Bernabe acreage for viticultural area consists of only 1.6 reservoirs and contains only small vineyard development. In 1988 the percent eolian soils, and the alluvial amounts of carbonates and nitrates, Delicato family bought the San Bernabe Lockwood series soils dominate the which benefits the grapevines and soil. vineyard for its premium and super- adjacent San Lucas viticultural area. Toward the Monterey Bay, water quality premium wine market potential. The The realignment area possesses a declines as nitrate and carbonate levels San Bernabe vineyard estate occupies 52 predominance of the wind-produced increase. percent of the viticultural area of the eolian soils that contrast to the alluvial Notice of Proposed Rulemaking same name. type soils of the San Lucas area. Above The San Bernabe viticultural area and west of the 700-foot contour line, Comments boundary line connects benchmarks, the soils are derived from the shale- TTB published a notice of proposed mountain peaks, and other U.S.G.S. map based Santa Lucia Mountains. The rulemaking regarding the establishment geographical features by using straight bench soils along the east boundary are of the San Bernabe viticultural area and lines and several roads that follow the common to the Salinas River area. East the realignment of the San Lucas hilly terrain and soil changes. of the San Bernabe viticultural area viticultural area in the May 14, 2003, The San Bernabe viticultural area boundary line, the Gabilan Mountain Federal Register as Notice No. 8 (68 FR shares portions of its west and Range includes calcareous sandstone, 25851). In that notice, TTB requested

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comments by July 14, 2003, from all § 9.56 San Lucas. Salinas River, in Township 20 South interested persons. No comments were * * * * * (T20S) and Range 8 East (R8E). Proceed received in response to this Notice No. (c) Boundary. ***. southeast in a straight line for 2.35 miles 8. * * * * * to benchmark 304, at the intersection of a trail and the 300–foot contour line, TTB Finding (24) Then northeasterly approximately 1.3 miles to the 595-foot between U.S. Highway 101 and the TTB finds that the evidence submitted promontory, section 13, T21S, R8E Salinas River, in T20S and R8E (San with the petition supports the (Espinosa Canyon Quadrangle); Lucas Quadrangle); then establishment of the proposed San (25) Then northeasterly (2) Proceed southeast in a straight line Bernabe viticultural area and the approximately 0.6 mile to the for 2.9 miles to benchmark 336, between realignment of the existing San Lucas intersection of a meandering, unnamed, U.S. Highway 101 and the Salinas River, viticultural area. Therefore, under the light duty road and the fork of an in T20S and R8E (San Lucas authority of the Federal Alcohol intermittent stream, then continue Quadrangle); then Administration Act and part 4 of our meandering northeasterly, followed by (3) Proceed southeast in a straight line regulations, we establish the San southeasterly, approximately 1.1 miles for 3 miles to benchmark 340, between Bernabe viticultural area and realign the to its intersection with an unnamed, U.S. Highway 101 and the Salinas River, San Lucas viticultural area as described light duty road south of the windmill, in T21S and R9E (San Lucas in this final rule, effective 60-days from T21, R8E (Espinosa Canyon Quadrangle); then this document’s publication. Quadrangle); (4) Proceed south in a straight line for Regulatory Analyses and Notices (26) Then northeasterly along the 0.8 mile to the intersection of the unnamed road approximately 0.6 mile Salinas River and the Highway 198 Regulatory Flexibility Act to its intersection with the Salinas bridge, in T21S and R9E (Espinosa We certify that this rule will not have River, then continue 0.8 mile north in Canyon Quadrangle); then a significant economic impact on a a straight line to benchmark 340, (5) Proceed southwest along Highway substantial number of small entities. between U.S. Highway 101 and the 198 for 0.6 mile to its intersection with This rule imposes no new reporting, Salinas River, in T21S, R9E (San Lucas an unnamed light duty road, in T21S recordkeeping, or other administrative Quadrangle); and R9E (Espinosa Canyon Quadrangle); requirement. Any benefit derived from (27) Then approximately 0.4 mile then the use of a viticultural area name northwesterly in a straight line to the (6) Proceed northwest, followed by would be the result of a proprietor’s intersection with a water tank, then southwest, about 1.2 miles along the efforts and consumer acceptance of continues northeasterly in a straight line meandering, unnamed, light duty road wines from that area. Therefore, no approximately 0.7 mile, and return to to its intersection with the fork of an regulatory flexibility analysis is the point of beginning in the northwest intermittent stream, in T21S and R8E required. corner of section 5, in T21S, R9E (San (Espinosa Canyon Quadrangle); then Executive Order 12866 Lucas Quadrangle). (7) Proceed southwest in a straight I line for 0.6 mile to the 595-foot peak, This rule is not a significant 3. Subpart C is amended by adding § 9.171 to read as follows: Section 13, in T21S and R8E (Espinosa regulatory action as defined by Canyon Quadrangle); then Executive Order 12866, 58 FR 51735. § 9.171 San Bernabe. (8) Proceed southwest in a straight Therefore, it requires no regulatory (a) Name. The name of the viticultural line for 1.3 miles to the 788-foot peak, assessment. area described in this section is ‘‘San section 23, in T21S and R8E (Espinosa Drafting Information Bernabe’’. Canyon Quadrangle); then (b) Approved Maps. The appropriate (9) Proceed southwest in a straight The principal author of this document maps for determining the boundary of line for 0.7 mile to the intersection of is N.A. Sutton (Colorado) Regulations the San Bernabe viticultural area are the unimproved road and jeep trail, east and Procedures Division, Alcohol and four 1:24,000 scale, USGS topographic of the 73-degree longitudinal line, Tobacco Tax and Trade Bureau. maps. They are titled: section 26, in T21S and R8E (Espinosa List of Subjects in 27 CFR Part 9 (1) Thompson Canyon Quadrangle, Canyon Quadrangle); then Wine. California-Monterey County, 1949 (10) Proceed northwest in a straight (photorevised 1984); line for 3.2 miles to the northwest Authority and Issuance (2) San Lucas Quadrangle, California- corner of section 16, in T21S and R8E I For the reasons discussed in the Monterey County, 1949 (photorevised (Espinosa Canyon Quadrangle); then preamble, we amend 27 CFR, chapter 1, 1984); (11) Proceed southwest in a straight part 9 as follows: (3) Espinosa Canyon Quadrangle, line for 1.5 miles to the northeast corner California-Monterey County, 1949 of section 19, in T21S and R8E (Cosio PART 9—AMERICAN VITICULTURAL (photorevised 1979); and Knob Quadrangle); then AREAS (4) Cosio Knob Quadrangle, (12) Proceed southwest in a straight California-Monterey County, 1949 line for 2.2 miles to the southwest I 1. The authority citation for part 9 (photorevised 1984); corner of section 24, in T21S and R7E continues to read as follows: (c) Boundary. The San Bernabe (Cosio Knob Quadrangle); then Authority: 27 U.S.C. 205. viticultural area is located in central (13) Proceed north in a straight line Monterey County, south of King City, for 2 miles to the northwest corner of Subpart C—Approved American California, and west of U.S. Highway section 13, in T21S and R7E (Cosio Viticultural Areas 101. Knob Quadrangle); then (1) The point of beginning on the (14) Proceed east in a straight line for I 2. Amend § 9.56 to revise paragraphs Thompson Canyon Quadrangle is 1 mile to the northeast corner of section (c)(24) and (c)(25) and add paragraphs benchmark 304, located one-half mile 13, in T21S and R7E (Cosio Knob (c)(26) and (c)(27) to read as follows: southwest of King City, along the Quadrangle); then

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(15) Proceed north in a straight line potential confusion with multiple Accordingly, § 56.9000 has now been for 2 miles, along the R7E and R8E definitions. It provides the metal and deleted since berm and mobile common boundary line, to the nonmetal mining community a central equipment were the only definitions in northwest corner of section 6, in T21S location in the CFR where most that section. and R8E (Thompson Canyon definitions applicable to surface or IV. Part 57 Quadrangle); then underground metal and nonmetal mines (16) Proceed east in a straight line for can be found. Definitions that have a To eliminate potential confusion and 0.1 mile to the southwest corner of specific application to a particular redundancy with the definitions, the section 31 and continue diagonally to subpart have not been moved to subpart definitions for Auxiliary fan found in the northeast corner of section 31, in A. § 57.2 and § 57.22002, Booster fan found T20S and R8E (Thompson Canyon DATES: Effective Date: June 29, 2004. in § 57.2 and § 57.22002, Combustible Quadrangle); then FOR FURTHER INFORMATION CONTACT: material found in § 57.4000 and (17) Proceed west in a straight line for Marvin W. Nichols, Jr., Director, Office § 57.22002, Mobile equipment found in 2 miles to the southwest corner of of Standards, Regulations and § 57.9000 and § 57.14000, and section 25, in T20S and R7E (Thompson Variances, MSHA; 1100 Wilson Noncombustible material found in Canyon Quadrangle); then Boulevard, Room 2350, Arlington, § 57.4000 and § 57.22002, have been (18) Proceed due north in a straight Virginia 22209–3939; telephone (202) combined and moved to § 57.2, the line for 0.1 mile to the intersection with 693–9440; facsimile (202) 693–9441; or general definitions section to 30 CFR a light duty road, named Pine Canyon e-mail: [email protected]. This part 57. The definitions for berm and Road, in section 25, and continue notice is available on the Internet at mobile equipment have been moved to northeast along that road for 3.2 miles http://www.msha.gov/ § 57.2. Accordingly, § 57.9000 has now to its intersection with an unnamed REGSINFOR.HTM. been deleted since berm and mobile secondary highway, north of benchmark SUPPLEMENTARY INFORMATION: equipment were the only two 337, section 18, in T20S and R8E definitions in that section. (Thompson Canyon Quadrangle); then I. Discussion of Changes (19) Proceed northwest along the List of Subjects in 30 CFR Parts 56 and This technical amendment moves 57 unnamed secondary highway for 0.3 several definitions from subparts B, C, mile to its intersection with U.S. E, H, M and R of 30 CFR part 56; and Explosives, Ground control, Fire Highway 101, in T20S and R8E subparts B, C, E, H, M and T of 30 CFR prevention, Loading, hauling, dumping, (Thompson Canyon Quadrangle); then part 57 to the general definition section Machinery and equipment, Metal and (20) Proceed northeast along U.S. of subpart A of 30 CFR parts 56 and 57. nonmetal, Mine safety and health, Highway 101 for 0.7 mile to benchmark This action eliminates redundancy and Personnel hoisting. 304, returning to the point of beginning potential confusion with multiple Dated: June 23, 2004. (Thompson Canyon Quadrangle). definitions. It provides the metal and David Dye, Signed: April 26, 2004. nonmetal mining community a central Deputy Assistant Secretary of Labor for Mine Arthur J. Libertucci, location in the CFR where most Safety and Health. Administrator. definitions applicable to surface or underground metal and nonmetal mines I For the reasons set out in the preamble, Approved: May 26, 2004. can be found. Definitions that have a and under the authority of the Federal Timothy E. Skud, specific application to a particular Mine Safety and Health Act of 1977, Deputy Assistant Secretary, (Tax, Trade, and subpart have not been moved to subpart MSHA is amending chapter I, parts 56 Tariff Policy). A. and 57 of title 30 of the Code of Federal [FR Doc. 04–14652 Filed 6–28–04; 8:45 am] Regulations as follows: II. Procedural Matters BILLING CODE 4810–31–P PART 56—[AMENDED] Administrative Procedures Act The minor revisions contained in this I 1. The authority citation for part 56 DEPARTMENT OF LABOR notice are technical and nonsubstantive continues to read as follows: in nature. Accordingly, pursuant to 5 Mine Safety and Health Administration Authority: 30 U.S.C. 811. U.S.C. 553(b)(B) of the Administrative Procedures Act (APA), it has been I 2. Section 56.2 is revised to read as 30 CFR Parts 56 and 57 determined that the notice and follows: Definitions for Surface and comment procedures do not apply to § 56.2 Definitions. this action. For the same reason, it has Underground Metal and Nonmetal The following definitions apply in Mines been determined that in accordance with 5 U.S.C. 553(d), there is good cause this part. In addition definitions AGENCY: Mine Safety and Health to make these changes effective on the contained in any subpart of part 56 Administration (MSHA), Labor. date of publication in the Federal apply in that subpart. If inconsistent with the general definitions in this ACTION: Final rule; Technical Register. section, the definition in the subpart amendment. III. Part 56 will apply in that subpart: SUMMARY: This technical amendment To eliminate potential confusion and American Table of Distances means moves several definitions from subparts redundancy with the definitions, the the current edition of ‘‘The American B, C, E, H, M, and R of 30 CFR part 56, definition for Explosive found in § 56.2 Table of Distances for Storage of and from subparts B, C, E, H, M and T and § 56.6000, has been combined and Explosives’’ published by the Institute of 30 CFR part 57 to the general moved to § 56.2, the general definitions of Makers of Explosives. definitions section in subpart A of 30 section for 30 CFR part 56. The Approved means tested and accepted CFR parts 56 and 57 respectively. This definitions for berm and mobil for a specific purpose by a nationally action eliminates redundancy and equipment have been moved to § 56.2. recognized agency.

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Attended means presence of an Blasting switch means a switch used which an electric circuit is carried to individual or continuous monitoring to to connect a power source to a blasting one or more cables from a single prevent unauthorized entry or access. circuit. incoming feed line, each cable circuit Authorized person means a person Booster means any unit of explosive being connected through individual approved or assigned by mine or blasting agent used for the purpose of overcurrent protective devices. management to perform a specific type perpetuating or intensifying an initial Electric blasting cap means a of duty or duties or to be at a specific detonation. detonator designed for and capable of location or locations in the mine. Capped fuse means a length of safety being initiated by means of an electric Barricaded means obstructed to fuse to which a blasting cap has been current. prevent the passage of persons, vehicles, attached. Electrical grounding means to connect or flying materials. Capped primer means a package or with the ground to make the earth part Barrier means a material object, or cartridge of explosives which is of the circuit. objects that separates, keeps apart, or specifically designed to transmit Employee means a person who works demarcates in a conspicuous manner detonation to other explosives and for wages or salary in the service of an such as cones, a warning sign, or tape. which contains a detonator. employer. Berm means a pile or mound of Circuit breaker means a device Employer means a person or material along an elevated roadway designed to open and close a circuit by organization which hires one or more capable of moderating or limiting the nonautomatic means and to open the persons to work for wages or salary. force of a vehicle in order to impede the circuit automatically on a Emulsion means an explosive material vehicle’s passage over the bank of the predetermined overcurrent setting containing substantial amounts of roadway. without injury to itself when properly oxidizers dissolved in water droplets, Blast area means the area in which applied within its rating. surrounded by an immiscible fuel. concussion (shock wave), flying Combustible means capable of being Explosive means any substance material, or gases from an explosion ignited and consumed by fire. classified as an explosive by the may cause injury to persons. In Combustible liquids means liquids Department of Transportation in 49 CFR determining the blast area, the following having a flash point at or above 100 °F 173.53, 173.88, and 173.100 which are factors shall be considered: (37.8 °C). They are divided into the incorporated by reference. Title 49 CFR (1) Geology or material to be blasted. following classes: is available for inspection at each Metal (2) Blast pattern. (1) Class II liquids—those having flash and Nonmetal Safety and Health district (3) Burden, depth, diameter, and points at or above 100 °F (37.8 °C) and office of the Mine Safety and Health angle of the holes. below 140 °F (60 °C). Administration, and may be obtained (4) Blasting experience of the mine. (2) Class IIIA liquids—those having from the U.S. Government Printing (5) Delay system, powder factor, and flash points at or above 140 °F (60 °C) Office, Washington, DC 20402. pounds per delay. and below 200 °F (93.4 °C). Explosive material means explosives, (6) Type and amount of explosive (3) Class IIIB liquids—those having blasting agents, and detonators. material. flash points at or above 200 °F (93.4 °C). Face or bank means that part of any (7) Type and amount of stemming. Combustible material means a mine where excavating is progressing or Blast site means the area where material that, in the form in which it is was last done. explosive material is handled during used and under the conditions Fire resistance rating means the time, loading, including the perimeter formed anticipated, will ignite, burn, support in minutes or hours, that an assembly of by the loaded blastholes and 50 feet combustion, or release flammable materials will retain its protective (15.2 meters) in all directions from vapors when subjected to fire or heat. characteristics or structural integrity loaded holes. A minimum distance of 30 Wood, paper, rubber, and plastics are upon exposure to fire. feet (9.1 meters) may replace the 50-foot examples of combustible materials. Flammable means capable of being (15.2-meter) requirement if the Company official means a member of easily ignited and of burning rapidly. perimeter of loaded holes is demarcated the company supervisory or technical Flammable gas means a gas that will with a barrier. The 50-foot (15.2-meter) staff. burn in the normal concentrations of and alternative 30-foot (9.1-meter) Competent person means a person oxygen in the air. requirement also apply in all directions having abilities and experience that Flammable liquid means a liquid that along the full depth of the hole. fully qualify him to perform the duty to has a flash point below 100 °F (37.8 °C), Blasting agent means any substance which he is assigned. a vapor pressure not exceeding 40 classified as a blasting agent by the Conductor means a material, usually pounds per square inch (absolute) at 100 Department of Transportation in 49 CFR in the form of a wire, cable, or bus bar, °F (37.8 °C), and is known as a Class I 173.114(a) (44 FR 31182, May 31, 1979) capable of carrying an electric current. liquid. which is incorporated by reference. This Delay connector means a non-electric Flash point means the minimum document is available for inspection at short interval delay device for use in temperature at which sufficient vapor is each Metal and Nonmetal Safety and delaying blasts which are initiated by released by a liquid or solid to form a Health District Office of the Mine Safety detonating cord. flammable vapor-air mixture at and Health Administration, and may be Detonating cord means a flexible cord atmospheric pressure. obtained from the U.S. Government containing a solid core of high High potential means more than 650 Printing Office, Washington, DC 20402. explosives. volts. Blasting area means the area near the Detonator means any device Highway means any public street, blasting operations in which concussion containing a detonating charge that is public alley, or public road. or flying material can reasonably be used to initiate an explosive and Hoist means a power driven windlass expected to cause injury. includes but is not limited to blasting or drum used for raising ore, rock, or Blasting cap means a detonator which caps, electric blasting caps and other material from a mine, and for is initiated by a safety fuse. nonelectric instantaneous or delay lowering or raising persons and Blasting circuit means the electrical blasting caps. material. circuit used to fire one or more electric Distribution box means a portable Igniter cord means a fuse, cordlike in blasting caps. apparatus with an enclosure through appearance, which burns progressively

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along its length with an external flame Mantrip means a trip on which Powder chest means a substantial, at the zone of burning, and is used for persons are transported to and from a nonconductive portable container lighting a series of safety fuses in the work area. equipped with a lid and used at blasting desired sequence. Mill includes any ore mill, sampling sites for explosives other than blasting Insulated means separated from other works, concentrator, and any crushing, agents. conducting surfaces by a dielectric grinding, or screening plant used at, and Primer means a unit, package, or substance permanently offering a high in connection with, an excavation or cartridge of explosives used to initiate resistance to the passage of current and mine. other explosives or blasting agents, and to disruptive discharge through the Misfire means the complete or partial which contains a detonator. substance. When any substance is said failure of a blasting charge to explode as Reverse-current protection means a to be insulated, it is understood to be planned. method or device used on direct-current insulated in a manner suitable for the Mobile equipment means wheeled, circuits or equipment to prevent the conditions to which it is subjected. skid-mounted, track-mounted, or rail- flow of current in the reverse direction. Otherwise, it is, within the purpose of mounted equipment capable of moving Rock fixture means any tensioned or this definition, uninsulated. Insulating or being moved. nontensioned device or material covering is one means for making the Multipurpose dry-chemical fire inserted into the ground to strengthen or conductor insulated. extinguisher means an extinguisher support the ground. Insulation means a dielectric having a rating of at least 2–A:10–B:C Roll protection means a framework, substance offering a high resistance to and containing a nominal 4.5 pounds or safety canopy or similar protection for the passage of current and to a more of dry-chemical agent. the operator when equipment over- disruptive discharge through the Noncombustible material means a turns. substance. material that, in the form in which it is Safety can means an approved Laminated partition means a partition used and under the conditions container, of not over five gallons composed of the following material and anticipated, will not ignite, burn, capacity, having a spring-closing lid and spout cover. minimum nominal dimensions: 1⁄2-inch- support combustion, or release Safety fuse means a flexible cord thick plywood, 1⁄2-inch-thick gypsum flammable vapors when subjected to fire containing an internal burning medium wallboard, 1⁄8-inch-thick low carbon or heat. Concrete, masonry block, brick, by which fire is conveyed at a steel, and 1⁄4-inch-thick plywood, and steel are examples of bonded together in that order (IME–22 noncombustible materials. continuous and uniform rate for the Box). A laminated partition also Non-electric delay blasting cap means purpose of firing blasting caps or a black includes alternative construction a detonator with an integral delay powder charge. Safety switch means a sectionalizing materials described in the Institute of element and capable of being initiated switch that also provides shunt Makers of Explosives (IME) Safety by miniaturized detonating cord. protection in blasting circuits between Library Publication No. 22, Overburden means material of any the blasting switch and the shot area. ‘‘Recommendations for the Safe nature, consolidated or unconsolidated, Scaling means removal of insecure Transportation of Detonators in a that overlies a deposit of useful material from a face or highwall. Vehicle with other Explosive materials or ores that are to be mined. Secondary safety connection means a Materials,’’ (May 1993), and the Overload means that current which second connection between a ‘‘Generic Loading Guide for the IME–22 will cause an excessive or dangerous conveyance and rope, intended to Container,’’ (October 1993). This temperature in the conductor or prevent the conveyance from running incorporation by reference has been conductor insulation. away or falling in the event the primary approved by the Director of the Federal Permissible means a machine, connection fails. Register in accordance with 5 U.S.C. material, apparatus, or device that has Shaft means a vertical or inclined 552(a) and 1 CFR part 51. Copies are been investigated, tested, and approved shaft, a slope, incline or winze. available at MSHA, 1100 Wilson Blvd., by the Bureau of Mines or the Mine Short circuit means an abnormal Room 2436, Arlington, Virginia 22209– Safety and Health Administration and is connection of relatively low resistance, 3939, and at all Metal and Nonmetal maintained in permissible condition. whether made accidentally or Mine Safety and Health district offices, Potable water means water which intentionally, between two points of or available for inspection at the Office shall meet the applicable minimum different potential in a circuit. of the Federal Register, 800 North health requirements for drinking water Slurry (as applied to blasting). See Capitol Street, NW., 7th Floor, suite 700, established by the State or community ‘‘Water gel.’’ Washington, DC. in which the mine is located or by the Storage facility means the entire class Lay means the distance parallel to the Environmental Protection Agency in 40 of structures used to store explosive axis of the rope in which a strand makes CFR part 141, pages 169–182 revised as materials. A ‘‘storage facility’’ used to one complete turn about the axis of the of July 1, 1977. Where no such store blasting agents corresponds to a rope. requirements are applicable, the BATF Type 4 or 5 storage facility. Loading means placing explosive drinking water provided shall conform Storage tank means a container material either in a blasthole or against with the Public Health Service Drinking exceeding 60 gallons in capacity used the material to be blasted. Water Standards, 42 CFR part 72, for the storage of flammable or Low potential means 650 volts or less. subpart J, pages 527–533, revised as of combustible liquids. Magazine means a facility for the October 1, 1976. Publications to which Stray current means that portion of a storage of explosives, blasting agents, or references are made in this definition total electric current that flows through detonators. are hereby made a part hereof. These paths other than the intended circuit. Major electrical installation means an incorporated publications are available Substantial construction means assemblage of stationary electrical for inspection at each Metal and construction of such strength, material, equipment for the generation, Nonmetal Mine Safety and Health and workmanship that the object will transmission, distribution, or District Office of the Mine Safety and withstand all reasonable shock, wear, conversion of electrical power. Health Administration. and usage, to which it will be subjected.

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Suitable means that which fits, and Abandoned mine means all work has Blast site means the area where has the qualities or qualifications to stopped on the mine premises and an explosive material is handled during meet a given purpose, occasion, office with a responsible person in loading, including the perimeter formed condition, function, or circumstance. charge is no longer maintained at the by the loaded blastholes and 50 feet Travelway means a passage, walk or mine. (15.2 meters) in all directions from way regularly used and designated for Abandoned workings means deserted loaded holes. A minimum distance of 30 persons to go from one place to another. mine areas in which further work is not feet (9.1 meters) may replace the 50-foot Water gel or Slurry (as applied to intended. (15.2-meter) requirement if the blasting) means an explosive or blasting Active workings means areas at, in, or perimeter of loaded holes is demarcated agent containing substantial portions of around a mine or plant where men work with a barrier. The 50-foot (15.2-meter) water. or travel. and alternative 30-foot (9.1-meter) Wet drilling means the continuous American Table of Distances means requirements also apply in all directions application of water through the central the current edition of ‘‘The American along the full depth of the hole. In hole of hollow drill steel to the bottom Table of Distances for Storage of underground mines, at least 15 feet (4.6 of the drill hole. Explosives’’ published by the Institute meters) of solid rib, pillar, or broken Working place means any place in or of Makers of Explosives. rock can be substituted for the 50-foot about a mine where work is being Approved means tested and accepted (15.2-meter) distance. In underground performed. for a specific purpose by a nationally mines utilizing a block-caving system or recognized agency. similar system, at least 6 feet (1.8 § 56.3000 [Amended] Attended means presence of an meters) of solid rib or pillar, including I 3. Section 56.3000 is amended by individual or continuous monitoring to concrete reinforcement of at least 10 removing the definition for Rock fixture. prevent unauthorized entry or access. In inches (254 millimeters), with overall addition, areas containing explosive dimensions of not less than 6 feet (1.8 § 56.4000 [Amended] material at underground areas of a mine meters) may be substituted for the 50- I 4. Section 56.4000 is amended by can be considered attended when all foot (15.2-meter) distance requirement. removing the following definitions: (1) access to the underground areas of the Blasting agent means any substance Combustible liquids; (2) Combustible mine is secured from unauthorized classified as a blasting agent by the material; (3) Fire resistance rating; (4) entry. Vertical shafts shall be considered Department of Transportation in 49 CFR Flammable gas; (5) Flammable liquid; (6) secure. Inclined shafts or adits shall be 173.114(a) (44 FR 31182, May 31, 1979) Noncombustible material; and (7) considered secure when locked at the which is incorporated by reference. This Storage tank. surface. document is available for inspection at Authorized person means a person each Metal and Nonmetal Mine Safety § 56.6000 [Amended] approved or assigned by mine I and Health District Office of the Mine 5. Section 56.6000 is amended by management to perform a specific type Safety and Health Administration, and removing the following definitions: (1) of duty or duties or to be at a specific may be obtained from the U.S. Attended; (2) Barrier; (3) Blast area; (4) location or locations in the mine. Government Printing Office, Blast site; (5) Emulsion; (6) Explosive; (7) Auxilary fan means a fan used to Washington, DC 20402. Explosive material; (8) Laminated deliver air to a working place off the Blasting area means the area near partition; (9) Loading; and (10) Storage main airstream; generally used with blasting operations in which concussion facility. ventilation tubing. or flying material can reasonably be Barricaded means obstructed to expected to cause injury. § 56.9000 [Removed] prevent the passage of persons, vehicles, Blasting cap means a detonator which I 6. Section 56.9000 is removed. or flying materials. is initiated by a safety fuse. Barrier means a material object, or § 56.14000 [Amended] Blasting circuit means the electrical objects that separates, keeps apart, or I circuit used to fire one or more electric 7. Section 56.14000 is amended by demarcates in a conspicuous manner blasting caps. removing the definition for Mobile such as cones, a warning sign, or tape. equipment. Berm means a pile or mound of Blasting switch means a switch used material along an elevated roadway to connect a power source to a blasting PART 57—[AMENDED] capable of moderating or limiting the circuit. Blowout means a sudden, violent, I 8. The authority citation for part 57 force of a vehicle in order to impede the release of gas or liquid due to the continues to read as follows: vehicle’s passage over the bank of the reservoir pressure in a petroleum mine. Authority: 30 U.S.C. 811. roadway. Blast area means the area in which Booster means any unit of explosive I 9. Section 57.2 is revised to read as concussion (shock wave), flying or blasting agent used for the purpose of follows: material, or gases from an explosion perpetuating or intensifying an initial may cause injury to persons. In detonation. § 57.2 Definitions. determining the blast area, the following Booster fan means a fan installed in The following definitions apply to factors, shall be considered: the main airstream or a split of the main this part. In addition definitions (1) Geology or material to be blasted. airstream to increase airflow through a contained in any subpart of part 57 (2) Blast pattern. section or sections of a mine. apply in that subpart. If inconsistent (3) Burden, depth, diameter, and Capped fuse means a length of safety with the general definitions in this angle of the holes. fuse to which a blasting cap has been section, the definition in the subpart (4) Blasting experience of the mine. attached. will apply in that subpart: (5) Delay system, powder factor, and Capped primer means a package or Abandoned areas means areas in pounds per delay. cartridge of explosives which is which work has been completed, no (6) Type and amount of explosive specifically designed to transmit further work is planned, and travel is material. detonation to other explosives and not permitted. (7) Type and amount of stemming. which contains a detonator.

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Circuit breaker means a device Department of Transportation in 49 CFR covering is one means for making the designed to open and close a circuit by 173.53, 173.88 and 173.100 which are conductor insulated. nonautomatic means and to open the incorporated by reference. Title 49 CFR Insulation means a dielectric circuit automatically on a is available for inspection at each Metal substance offering a high resistance to predetermined overcurrent setting and Nonmetal Mine Safety and Health the passage of current and to a without injury to itself when properly District Office of the Mine Safety and disruptive discharge through the applied within its rating. Health Administration, and may be substance. Combustible means capable of being obtained from the U.S. Government Laminated partition a partition ignited and consumed by fire. Printing Office, Washington, DC 20402. composed of the following material and Combustible material means a Face or bank means that part of any minimum nominal dimensions: 1⁄2-inch- material that, in the form in which it is mine where excavating is progressing or thick plywood, 1⁄2-inch-thick gypsum used and under the conditions was last done. wallboard, 1⁄8-inch-thick low carbon anticipated, will ignite, burn, support Fire resistance rating means the time, steel, and 1⁄4-inch-thick plywood, combustion or release flammable vapors in minutes or hours, that an assembly of bonded together in that order (IME–22 when subjected to fire or heat. Wood, materials will retain its protective Box). A laminated partition also paper, rubber, and plastics are examples characteristics or structural integrity includes alternative construction of combustible materials. upon exposure to fire. materials described in the Institute of Company official means a member of Flame spread rating means the Makers of Explosives (IME) Safety the company supervisory or technical numerical designation that indicates the Library Publication No. 22, staff. extent flame will spread over the surface ‘‘Recommendations for the Safe Competent person means a person of a material during a specified period Transportation of Detonators in a having abilities and experience that of time. Vehicle with other Explosive fully qualify him to perform the duty to Flammable means capable of being Materials,’’ (May 1993), and the which he is assigned. easily ignited and of burning rapidly. ‘‘Generic Loading Guide for the IME–22 Conductor means a material, usually Flammable gas means a gas that will Container,’’ (October 1993). This in the form of a wire, cable, or bus bar, burn in the normal concentrations of incorporation by reference has been capable of carrying an electric current. oxygen in the air. approved by the Director of the Federal Delay connector means a nonelectric Flammable liquid a liquid that has a Register in accordance with 5 U.S.C. short interval delay device for use in flash point below 100 °F (37.8 °C), a 552(a) and 1 CFR part 51. Copies are delaying blasts which are initiated by vapor pressure not exceeding 40 pounds available at MSHA, 1100 Wilson Blvd., detonating cord. per square inch (absolute) at 100 °F Room 2436, Arlington, Virginia 22209– Detonating cord means a flexible cord (37.8 °C), and is known as a Class I 3939, and at all Metal and Nonmetal containing a solid core of high liquid. Mine Safety and Health district offices, explosives. Flash point means the minimum or available for inspection at the Office Detonator means any device temperature at which sufficient vapor is of the Federal Register, 800 North containing a detonating charge that is released by a liquid or solid to form a Capitol Street, NW., 7th Floor, suite 700, used to initiate an explosive and flammable vapor-air mixture at Washington, DC. includes but is not limited to blasting atmospheric pressure. Lay means the distance parallel to the caps, electric blasting caps and non- Geological area means an area axis of the rope in which a strand makes electric instantaneous or delay blasting characterized by the presence of the one complete turn about the axis of the caps. same ore bodies, the same stratigraphic rope. Distribution box means a portable sequence of beds, or the same ore- Loading means placing explosive apparatus with an enclosure through bearing geological formation. material either in a blasthole or against which an electric circuit is carried to Highway means any public street, the material to be blasted. one or more cables from a single public alley or public road. Low potential means 650 volts or less. incoming feed line; each cable circuit High potential means more than 650 Magazine means a facility for the being connected through individual volts. storage of explosives, blasting agents, or overcurrent protective devices. Hoist means a power driven windlass detonators. Electric blasting cap means a or drum used for raising ore, rock, or Main fan means a fan that controls the detonator designed for and capable of other material from a mine, and for entire airflow of the mine, or the airflow being initiated by means of an electric lowering or raising persons and of one of the major air circuits. current. material. Major electrical installation means an Electrical grounding means to connect Igniter cord means a fuse, cordlike in assemblage of stationary electrical with the ground to make the earth part appearance, which burns progressively equipment for the generation, of the circuit. along its length with an external flame transmission, distribution, or Employee means a person who works at the zone of burning, and is used for conversion of electrical power. for wages or salary in the service of an lighting a series of safety fuses in the Mantrip means a trip on which employer. desired sequence. persons are transported to and from a Employer means a person or Insulated means separated from other work area. organization which hires one or more conducting surfaces by a dielectric Mill includes any ore mill, sampling persons to work for wages or salary. substance permanently offering a high works, concentrator, and any crushing, Emulsion means an explosive material resistance to the passage of current and grinding, or screening plant used at, and containing substantial amounts of to disruptive discharge through the in connection with, an excavation or oxidizers dissolved in water droplets, substance. When any substance is said mine. surrounded by an immiscible fuel. to be insulated, it is understood to be Mine atmosphere means any point at Escapeway means a passageway by insulated in a manner suitable for the least 12 inches away from the back, face, which persons may leave a mine. conditions to which it is subjected. rib, and floor in any mine; and Explosive means any substance Otherwise, it is, within the purpose of additionally, in a Category IV mine, at classified as an explosive by the this definition, uninsulated. Insulating least 3 feet laterally away from the collar

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of a borehole which releases gas into a Powder chest means a substantial, Substantial construction means mine. nonconductive portable container construction of such strength, material, Mine opening means any opening or equipped with a lid and used at blasting and workmanship that the object will entrance from the surface into a mine. sites for explosives other than blasting withstand all reasonable shock, wear, Misfire means the complete or partial agents. and usage to which it will be subjected. failure of a blasting charge to explode as Primer means a unit, package, or Suitable means that which fits, and planned. cartridge of explosives used to initiate has the qualities or qualifications to Mobile equipment means wheeled, other explosives or blasting agents, and meet a given purpose, occasion, skid-mounted, track-mounted, or rail- which contains a detonator. condition, function, or circumstance. mounted equipment capable of moving Reverse-current protection means a Travelway means a passage, walk or or being moved. method or device used on direct-current way regularly used and designated for Multipurpose dry-chemical fire circuits or equipment to prevent the persons to go from one place to another. extinguisher means an extinguisher flow of current in a reverse direction. Water gel or Slurry (as applied to having a rating of at least 2–A:10–B:C Rock burst means a sudden and blasting) means an explosive or blasting and containing a nominal 4.5 pounds or violent failure of overstressed rock agent containing substantial portions of more of dry-chemical agent. resulting in the instantaneous release of water. Noncombustible material means a large amounts of accumulated energy. Wet drilling means the continuous material that, in the form in which it is Rock burst does not include a burst application of water through the central used and under the conditions resulting from pressurized mine gases. hole of hollow drill steel to the bottom anticipated, will not ignite, burn, Rock fixture means any tensioned or of the drill hole. support combustion, or release nontensioned device or material Working level (WL) means any flammable vapors when subjected to fire inserted into the ground to strengthen or combination of the short-lived radon or heat. Concrete, masonry block, brick, support the ground. daughters in one liter of air that will × 5 and steel are examples of Roll protection means a framework, result in ultimate emission of 1.3 10 noncombustible materials. safety canopy or similar protection for MeV (million electron volts) of potential Non-electric delay blasting cap means the operator when equipment overturns. alpha energy, and exposure to these a detonator with an integral delay Safety can means an approved radon daughters over a period of time is element and capable of being initiated container, of not over 5 gallons capacity, expressed in terms of ‘‘working level by miniaturized detonating cord. having a spring-closing lid and spout months’’ (WLM). Inhalation of air Outburst means the sudden, violent cover. containing a radon daughter Safety fuse means a flexible cord release of solids and high-pressure concentration of 1 WL for 173 hours containing an internal burning medium occluded gases, including methane in a results in an exposure of 1 WLM.’’ by which fire is conveyed at a domal salt mine. Working place means any place in or continuous and uniform rate for the about a mine where work is being Overburden means material of any purpose of firing blasting caps or a black performed. nature, consolidated or unconsolidated, powder charge. that overlies a deposit of useful Safety switch means a sectionalizing § 57.3000 [Amended] materials or ores that are to be mined. switch that also provides shunt I 10. Section 57.3000 is amended by Overload means that current which protection in blasting circuits between removing the definitions for Rock burst will cause an excessive or dangerous the blasting switch and the shot area. and Rock fixture. temperature in the conductor or Scaling means removal of insecure § 57.4000 [Amended] conductor insulation. material from a face or highwall. Permissible means a machine, Secondary safety connection means a I 11. Section 57.4000 is amended by material, apparatus, or device which has second connection between a removing the following definitions for: been investigated, tested, and approved conveyance and rope, intended to (1) Booster fan; (2) Combustible material; by the Bureau of Mines or the Mine prevent the conveyance from running (3) Fire resistance rating; (4) Flame Safety and Health Administration, and away or falling in the event the primary spread rating; (5) Flammable gas; (6) is maintained in permissible condition. connection fails. Flammable liquid; (7) Noncombustible Potable water means water which Shaft means a vertical or inclined material; and (8) Storage tank. shall meet the applicable minimum shaft, a slope, incline, or winze. health requirements for drinking water § 57.6000 [Amended] Short circuit means an abnormal I established by the State or community connection of relatively low resistance, 12. Section 57.6000 is amended by in which the mine is located or by the whether made accidentally or removing following the definitions for: Environmental Protection Agency in 40 intentionally, between two points of (1) Attended; (2) Barrier; (3) Blast area; CFR part 141, pages 169–182 revised as difference potential in a circuit. (4) Blast site; (5) Emulsion; (6) Laminated of July 1, 1977. Where no such Slurry (as applied to blasting). See partition; (7) Loading; and (8) Storage requirements are applicable, the ‘‘Water gel.’’ facility. drinking water provided shall conform Storage facility means the entire class § 57. 9000 [Removed] with the Public Health Service Drinking of structures used to store explosive I 13. Section 57.9000 is removed. Water Standards, 42 CFR part 72, materials. A ‘‘storage facility’’ used to subpart J, pages 527–533, revised as of store blasting agents corresponds to a § 57. 14000 [Amended] October 1, 1976. Publications to which BATF Type 4 or 5 storage facility. I 14. Section 57.14000 is amended by references are made in this definition Storage tank means a container removing the definition for Mobile are hereby made a part hereof. These exceeding 60 gallons in capacity used equipment. incorporated publications are available for the storage of flammable or for inspection at each Metal and combustible liquids. § 57. 22002 [Amended] Nonmetal Mine Safety and Health Stray current means that portion of a I 15. Section 57.22002 is amended by District Office of the Mine Safety and total electric current that flows through removing the definitions for (1) Health Administration. paths other than the intended circuit. Abandoned areas; (2) Auxilary fan; (3)

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Blowout; (4) Booster fan; (5) Combustible Executive Order 12866, ‘‘Regulatory I Accordingly, 32 CFR part 282 is added material; (6) Geological area; (7) Mine Planning and Review’’ to subchapter M to read as follows: atmosphere; (8) Noncombustible It has been determined that this rule material; (9) Outburst. PART 282—PROCEDURES FOR is not a significant rule because it does SETTLING PERSONNEL AND [FR Doc. 04–14698 Filed 6–28–04; 8:45 am] not (1) have an annual effect on the GENERAL CLAIMS AND PROCESSING BILLING CODE 4510–43–P economy of $100 million or more or ADVANCE DECISION REQUESTS adversely affect in a material way the economy; a sector of the economy; Sec. productivity; competition; jobs; the 282.1 Purpose. DEPARTMENT OF DEFENSE environment; public health or safety; or 282.2 Applicability and scope. State, local, or tribal governments or 282.3 Definitions. Office of the Secretary communities; (2) create a serous 282.4 Policy. 282.5 Responsibilities. inconsistency or otherwise interfere 32 CFR Part 282 Appendix A to Part 282—Guidance with an action taken or planned by Appendix B to Part 282—Claims Description another Agency; (3) materially alter the Appendix C to Part 282—Submitting a Claim RIN 0790–AG89 budgetary impact on entitlements, Appendix D to Part 282—Processing a Claim grants, user fees, or loan programs, or Appendix E to Part 282—Appeals Procedures for Settling Personnel and the rights and obligations of recipients Appendix F to Part 282—Requests for an General Claims and Processing thereof; or (4) raise novel legal or policy Advance Decision Advance Decision Requests issues arising out of legal mandates, the Authority: 5 U.S.C. 552; 10 U.S.C. 2575; 10 President’s priorities, or the principles U.S.C. 2771; 10 U.S.C. 4712; 10 U.S.C. 9712; AGENCY: Defense Office of Hearings and set forth in this Executive order. 24 U.S.C. 420; 31 U.S.C. 3529; 31 U.S.C. Appeals, Office of the General Counsel 3702; 32 U.S.C. 714; and 37 U.S.C. 554. of the Department of Defense. Public Law 96–354, ‘‘Regulatory Flexibility Act’’ § 282.1 Purpose. ACTION: Final rule. This part implements policy under 32 It has been certified that this rule does CFR part 281 and prescribes procedures not have a significant economic impact SUMMARY: This rule implements policy for processing and settling personnel on a substantial number of small entities and prescribes procedures for and general claims under 31 U.S.C. because this rule affects members of the processing and settling personnel and 3702, 10 U.S.C. 2575, 10 U.S.C. 2771, 24 Uniformed Services, Federal employees general claims and for processing U.S.C. 420, 10 U.S.C. 4712, 10 U.S.C. and transportation carriers and provides requests for an advance decision. The 9712, 37 U.S.C. 554, 32 U.S.C. 714 and procedures by which their claims Legislative Branch Appropriations Act for processing requests for an advance against the United States will be of 1996 transferred to the Director of the decision under 31 U.S.C. 3529. Office of Management and Budget adjudicated. The same minimal (OMB) the Comptroller General’s requirements for submitting a claim are § 282.2 Applicability and scope. authority to settle claims. The OMB applicable to members and This part applies to: Director subsequently delegated some of transportation carriers. (a) The Office of the Secretary of these authorities to the Department of Public Law 96–511, ‘‘Paperwork Defense, the Military Departments, the Defense. Later, the General Accounting Reduction Act’’ Chairman of the Joint Chiefs of Staff, the Office Act of 1996 codified many of Combatant Commands, the Office of the these delegations to the Secretary of It has been certified that this rule does Inspector General of the Department of Defense and others and transferred to not impose information collection Defense, the Defense Agencies, the DoD the OMB Director the authority of the requirements. Field Activities, and all other Comptroller General to waive uniformed Section 202, Public Law 104–4, organizational entities in the service member and employee debts ‘‘Unfunded Mandates Reform Act’’ Department of Defense (hereafter arising out of the erroneous payment of referred to collectively as ‘‘the DoD pay or allowances exceeding $1,500. It has been certified that this rule does Components’’). The OMB Director subsequently not involve a Federal mandate that may (b) The Coast Guard, when it is not delegated the authority to waive such result in the expenditure by State, local operating as a Service in the Navy under debts of uniformed service members and and tribal governments, in the aggregate, agreement with the Department of DoD employees to the Secretary of or by the private sector, of $100 million Homeland Security, and the Defense. The Secretary of Defense or more and that such rulemaking will Commissioned Corps of the Public further delegated his claims settlement not significantly or uniquely affect small Health Service (PHS) and the National and waiver authorities to the General governments. Oceanic and Atmospheric Counsel. This rule implements the Executive Order 13132, ‘‘Federalism’’ Administration (NOAA), under reassignment of the Comptroller agreements with the Departments of General’s former duties within the It has been certified that this rule does Health and Human Services and Department of Defense with little not have federalism implications. This Commerce (hereafter referred to impact on the public. rule does not have substantial direct collectively as ‘‘the non-DoD effects on the States, on the relationship Components’’). EFFECTIVE DATE: May 12, 2004. between the national government and the States, or on the distribution of § 282.3 Definitions. FOR FURTHER INFORMATION CONTACT: power and responsibilities among the Michael Hipple, 703–696–8510. (a) Armed Forces. The Army, the various levels of government. Navy, the Air Force, the Marine Corps, SUPPLEMENTARY INFORMATION: A and the Coast Guard. List of Subjects in 32 CFR Part 282 proposed rule was published Thursday, (b) Claim. A demand for money or November 14, 2002 (67 FR 68957– Administrative practice and property under one of the following 68963). No comments were received. procedure, Armed forces, Claims. statutes: 31 U.S.C. 3702, 10 U.S.C. 2575,

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10 U.S.C. 2771, 24 U.S.C. 420, 10 U.S.C. (1) Upon the request of the Director, (c) Appeals. The procedures for appealing 4712, 10 U.S.C. 9712, 37 U.S.C. 554, or Defense Office of Hearings and Appeals initial determinations are at Appendix E to 32 U.S.C. 714. (DOHA), consult on, or render legal this part. (c) Committee. The person or persons opinions concerning, questions of law (d) Disposition of claims upon settlement invested, by order of a proper court, that arise in the course of the in general. with the guardianship of a minor or performance of the Director’s (1) The appropriate official for the incompetent person and /or the estate of responsibilities under paragraph (b) of Component concerned shall pay a claim in a minor or incompetent person. this section. accordance with the final action concerning (d) Component Concerned. The (2) Render advance decisions under the claim. agency/activity (as well as the official 31 U.S.C. 3529 and oversee the (2) Where state law requires, a committee must be appointed for a minor or designated by the Head of the agency/ submission of requests for an advance incompetent person in accordance with State activity) required to perform the decision arising from the activity of a function or take the action indicated or law before payment may be made. DoD Component that are addressed to (e) Requests for an advance decision. from whose activity a claim arose. the Director of the Office of Personnel (e) Final Action. A finding by the Procedures for requesting an advance Management or the Administrator decision under 31 U.S.C. 3529 concerning appropriate official under this part General Services in accordance with the propriety of a payment or voucher concerning a claim from which there is this part. certification related to claims addressed in no right to appeal or request (b) The Director, Defense Office of this part are at Appendix F to this part. reconsideration, or concerning which Hearings and Appeals (DOHA), or (f) Publication. In accordance with 5 U.S.C. the time limit prescribed in this part for designee, under the GC, DoD (as the 552, the Director, DOHA, or designee, shall submitting an appeal or request for Director, Defense Legal Services make redacted copies of responses to reconsideration has expired without Agency), shall: requests for reconsideration and advance such a submission. (1) Consider, and grant or deny, a decisions by the GC, DoD, or designee, (f) Member. A member or former request by the Secretary concerned available for public inspection and copying member of the Uniformed Services. under 31 U.S.C. 3702(e) to waive the at DOHA’s public reading room and on the (g) Secretary Concerned. The time limit for submitting certain claims worldwide web. Secretary of the Army, addressing in accordance with 32 CFR part 281 and matters concerning the Army. The Appendix B to Part 282—Claims this part. Description Secretary of the Navy, addressing (2) Consider appeals from an initial matters concerning the Navy, the determination, and affirm, modify, The Secretary of Defense is authorized to Marine Corps, and the Coast Guard reverse, or remand the initial perform the claims settlement and advance when it is operating as a Service in the determination in accordance with 32 decision functions for claims under the Navy. The Secretary of the Air Force, CFR part 281, this part, and relevant following statutes: addressing matters concerning the Air DoD Office of General Counsel opinions. (a) 31 U.S.C. 3702 concerning claims in Force. The Secretary of Homeland (c) The Heads of the DoD general when there is no other settlement Security, addressing matters concerning Components, or designees, shall: authority specifically provided for by law.1 the Coast Guard when it is not operating (1) Process claims under 31 U.S.C. (b) 10 U.S.C. 2575 concerning the as a Service in the Navy. The Secretary 3702, 10 U.S.C. 2575, 10 U.S.C. 2771, 24 disposition of unclaimed personal property of Health and Human Services, U.S.C. 420, 10 U.S.C. 4712, 10 U.S.C. on a military installation. addressing matters concerning the PHS. 9712, 37 U.S.C. 554, and 32 U.S.C. 714 (c) 10 U.S.C. 2771 concerning the final The Secretary of Commerce, addressing in accordance with this part. settlement of accounts of deceased members matters concerning the NOAA. (2) Ensure that requests for an of the Armed Forces (but not the National Guard).2 (h) Settlement. A claim and the advance decision that originate in their (d) 24 U.S.C. 420, 10 U.S.C. 4712, and 10 amount due that is administratively organizations are prepared and determined to be valid. U.S.C. 9712 concerning the disposition of the submitted in accordance with this part. effects of a deceased person who was subject (i) Uniformed Services. The Army, the (3) Pay claims as provided in a final Navy, the Air Force, the Marine Corps, to military law at a place or Command under action in accordance with this part. the jurisdiction of the Army or the Air Force the Coast Guard, and the Commissioned (d) The Heads of the Non-DoD Corps of the PHS and the NOAA. or of a deceased resident of the Armed Forces Components, or designees, shall: Retirement Home. § 282.4 Policy. (1) Process claims under 31 U.S.C. (e) 37 U.S.C. 554 concerning the sale of 3702, 10 U.S.C. 2575, 10 U.S.C. 2771, or It is DoD policy that: personal property of members of the 37 U.S.C. 554 in accordance with this (a) Claims shall be settled and Uniformed Services who are in a missing advance decisions rendered in part. status. (2) Ensure that requests for an accordance with all pertinent statutes advance decision that originate in their and regulations, and after consideration 1 This includes claims involving Uniformed organizations are prepared and of other relevant authorities. Services members’ pay, allowances, travel, (b) This part applies to certain claim submitted in accordance with this part. transportation, payment for unused accrued leave, (3) Pay claims as provided in a final retired pay, and survivor benefits, and claims for settlement and advance decision action in accordance with this part. refund by carriers for amounts collected from them functions that, by statute or delegation, for loss or damage to property they transported at are vested in the Department of Defense Appendix A to Part 282—Guidance Government expense; also included are other or the Secretary of Defense. Appendix B claims arising from the activity of a DoD (a) Submitting a claim. The procedures a Component. However, the Director of the Office of to this part describes the claims claimant must follow to submit a claim are Personnel Management performs these functions for included under these functional at Appendix C to this part. claims involving civilian employees’ compensation authorities. (b) Processing a claim. The procedures a and leave; and the Administrator of General Services performs these functions for claims DoD Component must follow in processing a involving civilian employees’ travel, transportation, § 282.5 Responsibilities. 1 claim are at Appendix D to this part. and relocation expenses. (a) The General Counsel of the 2 Claims under this statute are actually settled Department of Defense (GC, DoD), or 1 Contact the appropriate non-DoD Component for under the authority in 31 U.S.C. 3702 because there designee, shall: the procedures it follows in processing a claim. is no specific settlement authority in the statute.

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(f) 32 U.S.C. 714 concerning the final incompetent person must include or have part, paragraph (f)) and follow the procedures settlement of accounts of deceased members attached a certificate of the court showing the in paragraph (b) of this Appendix if the claim of the National Guard.3 appointment and qualification of the was not timely. guardian or committee. (3) Investigate the claim. Appendix C to Part 282—Submitting a (f) When to Submit a Claim. A claimant (4) Decide whether the claimant provided Claim must submit a claim so that it is received by clear and convincing evidence that proves all (a) Who May Submit a Claim. Any person the Component concerned within the time or part of the claim. (‘‘claimant’’) may submit a claim who has a limit allowed by statute. (5) Issue an initial determination that demand for money or property against the (1) Claimants must submit claims within grants the claim to the extent proved or 1 Government under 31 U.S.C. 3702, 10 U.S.C. these statutory time limits: denies the claim, as appropriate. The initial 2575, 10 U.S.C. 2771, 24 U.S.C. 420, 10 (i) Claims on account of Treasury checks determination must state how much of the U.S.C. 4712, 10 U.S.C. 9712, 37 U.S.C. 554, under 31 U.S.C. 3702(c) must be received claim is granted and how much is denied, or 32 U.S.C. 714. within 1 year after the date of issuance. and must explain the reasons for the (b) Where to Submit a Claim. A claimant (ii) Claims under 31 U.S.C. 3702 (b), 10 determination. must submit a claim to the Component U.S.C. 2771 and 32 U.S.C. 714 must be (6) Notify the claimant of the initial concerned in accordance with guidance received within 6 years of the date the claim determination. The Component must send provided by that Component. A claim that is accrued. (A claim accrues on the date when the claimant a copy of the initial submitted somewhere other than to the everything necessary to give rise to the claim determination and a notice that explains: Component concerned does not stop the has occurred.) The time limit for claims of (i) The action the Component shall take on running of the time limit in paragraph (f) of members of the Armed Forces that accrue the claim, if the initial determination is or this Appendix. It is the claimant’s during war or within 5 years before war becomes a final action (the finality of an responsibility to submit a claim properly. begins, is 6 years from the date the claim initial determination is explained at (c) Format of a Claim. A claimant must accrued or 5 years after peace is established, paragraph (c) of this Appendix); and submit a claim in the format prescribed by whichever is later. (ii) The procedures the claimant must the Component concerned. It must be written (iii) Claims under 10 U.S.C. 2575(d)(3) follow to appeal an initial determination that and be signed by the claimant (in the case of must be received within 5 years after the date denies all or part of the claim (those appeal a claim on behalf of a minor or incompetent of the disposal of the property to which the procedures are explained at Appendix E to person, there are additional requirements claim relates. this part), if applicable. explained at paragraph (e) of this Appendix) (iv) Claims under 24 U.S.C. 420(d)(1), 10 (b) Untimely Claims. When the Component or by the claimant’s authorized agent or U.S.C. 4712, and 10 U.S.C. 9712 must be concerned determines that a claim was not attorney (there are additional requirements received within 6 years after the death of the received within the statutory time limit, the explained at paragraph (d) of this Appendix). deceased resident. Component must make an initial In addition, it should: (v) Claims under 37 U.S.C. 554(h) must be determination of untimely receipt. (The (1) Provide the claimant’s mailing address. received before the end of the 5-year period statutory time limits are explained in (2) Provide the claimant’s telephone from the date the net proceeds from the sale Appendix C to this part, paragraph (f).) number. of the missing person’s personal property are (1) The initial determination must cite the (3) State the amount claimed. covered into the Treasury. applicable statute and explain the reasons for (4) State the reasons why the Government (2) The time limits set by statute may not the finding of untimely receipt. The owes the claimant that amount. be extended or waived.2 Although the issue Component must send the initial (5) Have attached copies of documents of timeliness normally shall be raised upon determination to the claimant with a notice referred to in the claim. initial submission (as explained at Appendix that: (6) Include or have attached statements D to this part, paragraph (b)), the issue may (i) States the claim was not received within (that are attested to be true and correct to the be raised at any point during the claim the statutory time limit and, therefore, may best of the individual’s knowledge and belief) settlement process. not be considered, unless that finding is of the claimant or other persons in support (g) Claimant Must Prove the Claim. The reversed on appeal, and explains how the of the claim. claimant must prove, by clear and convincing claimant may appeal the finding (those (d) Claim Submitted by Agent or Attorney. evidence, on the written record that the appeal procedures are explained at Appendix In addition to the requirements in paragraph United States is liable to the claimant for the E to this part); and either (c) of this Appendix, a claim submitted by amount claimed. All relevant evidence to (ii) If the claim does not qualify under 31 the claimant’s agent or attorney must include prove the claim should be presented when a U.S.C. 3702(e), states that the statutory time or have attached a duly executed power of claim is first submitted. In the absence of limit may not be extended or waived; or attorney or other documentary evidence of compelling circumstances, evidence that is the agent’s or attorney’s right to act for the (iii) If the claim does qualify under 31 presented at later stages of the administrative U.S.C. 3702(e), states that the claim may be claimant. process will not be considered. (e) Claim Submitted on Behalf of a Minor further considered only if the time limit is or Incompetent Person. In addition to the Appendix D to Part 282—Processing a waived, and explains how the claimant may requirements in paragraph (c) of this Claim apply for a waiver. (Paragraph (d) of this Appendix: Appendix explains which claims qualify and (1) If a guardian or committee has not been (a) Initial Component Processing. Upon the procedures for applying for a waiver). appointed, a claim submitted on behalf of a receipt of a claim, the Component concerned (2) Except in cases where a claimant has minor or incompetent person must: must: applied under paragraph (d) of this Appendix (i) State the claimant’s relationship to the (1) Date stamp the claim on the date to request a waiver of the time limit, the minor or incompetent person. received. Component must return the claim to the (ii) Provide the name and address of the (2) Determine whether the claim was claimant when the initial determination person having care and custody of the minor received within the required time limit (time becomes a final action with a notice that the or incompetent person. limits are summarized at Appendix C to this finding in the initial determination is final (iii) Include an affirmation that any and, therefore, the claim may not be moneys received shall be applied to the use 1 Under Section 501 et seq. of title 50 Appendix, considered. If the claim qualifies under 31 and benefit of the minor or incompetent United States Code, periods of active military U.S.C. 3702(e), the notice must also state that person, and that the appointment of a service are not included in calculating whether a the claimant may resubmit the claim with an guardian or committee is not contemplated. claim has been received within these statutory time application under paragraph (d) of this limits. (2) If a guardian or committee has been 2 Appendix. There is an exception for certain claims (c) Finality of an Initial Determination. An appointed, a claim on behalf of a minor or described in 31 U.S.C. 3702(e). In those cases, the Secretary of Defense may waive the time limits in initial determination that grants all of a claim 3 Claims under this statute are actually settled paragraph (f)(1)(ii) of this Appendix. Appendix D of is a final action when it is issued. Otherwise, under the authority in 31 U.S.C. 3702 because there this part, paragraph (d), explains which claims an initial determination (including one of is no specific settlement authority in the statute. qualify and the procedures that apply. untimely receipt) is a final action if the

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Component concerned does not receive an procedures are explained at Appendix E to (3) In all other cases, the Component must appeal within 30 days of the date of the this part). The Director’s decision is a final forward the appeal to the DOHA in initial determination (plus any extension of action if the Director does not receive a accordance with paragraph (e) of this up to 30 additional days granted by the request for reconsideration within 30 days of Appendix. If the appeal concerns an initial Component concerned for good cause the date of the Director’s decision (plus any determination of untimely receipt, the shown). extension of up to 30 additional days granted Component should not investigate, or issue (d) Waiver of Certain Time Limits. When by the Director for good cause shown). an initial determination concerning, the the Component concerned determines that a merits of the claim before forwarding the claim was not received within the statutory Appendix E to Part 282—Appeals appeal. The Component must prepare a time limit in 31 U.S.C. 3702(b) or (c), the (a) Who May Appeal. A claimant may recommendation and administrative report claimant may request a waiver of the time appeal if an initial determination denies all (as explained in paragraph (f) of this limit. Waiver is permitted only for those or part of a claim or finds that the claim was Appendix). The Component must send a claims that satisfy the requirements of 31 not received by the Component concerned copy of the administrative report to the 1 U.S.C. 3702(e). This provision confers no within the time limit required by statute; claimant, with a notice that the claimant may right or entitlement on a claimant. It is solely however, the decision of the Secretary submit a rebuttal to the Component (as within the discretion of the Secretary of concerned not to request or recommend explained in paragraph (g) of this Appendix). Defense whether to grant such a waiver in a waiver of the time limit is not appealable (e) Submission of Appeal to DOHA. No particular case. except to the Secretary concerned, if the earlier than 31 days after the date of the (1) The claim must contain the information Secretary as a matter of discretion provides administrative report, or the day after the and documents that are generally required for for such appeals. claimant’s rebuttal period, as extended, claims (those requirements are explained at (b) When and Where to Submit an Appeal. expires, the Component must send the entire Appendix C to this part, paragraph (c)). A claimant’s appeal must be received by the record along with the recommendation and (2) The Component concerned must Component concerned within 30 days of the the administrative report required by investigate the claim and make an initial date of the initial determination. The paragraph (f) of this Appendix to the determination concerning the merits of the Component may extend this period for up to following address: Defense Office of Hearings claim. an additional 30 days for good cause shown. and Appeals, Claims Division, P.O. Box 3656, (3) If the initial determination grants all or No appeal may be accepted after this time Arlington, Virginia 22203–1995. part of the claim, and if the Secretary has expired. An appeal sent directly to the The record sent to the DOHA shall include concerned agrees with the determination, the DOHA is not properly submitted. specific identification of any major policy Secretary may request or recommend that the issue(s) and a statement as to whether the 2 (c) Content of an Appeal. No specific time limit be waived. Requests and format is required; however, the appeal must amount in controversy exceeds $100,000 recommendations must be in writing and be written and be signed by the claimant, the either in the instant claim or in the aggregate signed by the Secretary concerned. (This claimant’s authorized agent, or the claimant’s for directly related claims. If the amount in authority may not be delegated below the attorney. It also should: controversy exceeds $100,000, a full level of an Assistant Secretary.) (1) Provide the claimant’s mailing address; description of the financial impact shall be (i) The Secretary concerned shall forward (2) Provide the claimant’s telephone provided. the request or recommendation to the number; (f) Recommendation and Administrative following address: Defense Office of Hearings (3) State the amount claimed on appeal, or Report. The recommendation and and Appeals, Claims Division, P.O. Box 3656, that the appeal is from a finding of untimely administrative report required by paragraph Arlington, VA 22203–1995. receipt, whichever applies; (d) of this Appendix must include the (ii) The entire record concerning the claim, (4) Identify specific: following: including the initial determination, must be (i) Errors or omissions of material and (1) The name of the claimant; attached to the request. relevant fact; (2) The Component’s file reference number; (4) The Director, DOHA, must review the (ii) Legal considerations that were (3) The Component’s recommendation (and request and the written record and must: overlooked or misapplied; and the reasons for it) for the disposition of the (i) Grant the request and waive the (iii) Conclusions that were arbitrary, claim; statutory time limit, if the Director finds that capricious, or an abuse of discretion; (4) Relevant and material documents (such all or part of the claim has been proven. The (5) Present evidence of the correct or as correspondence, business records, and Director may also modify the finding additional facts alleged; witness statements), as attachments; and concerning the amount of the claim that has (6) Explain the reasons the findings or (5) Complete copies of regulations, been proven. conclusions should be reversed or modified; instructions, memorandums of (ii) Deny the request, if the Director finds (7) Have attached copies of documents understanding, tariffs and/or tenders, that no part of the claim has been proven. referred to in the appeal; and solicitations, contracts, or rules cited by the (iii) Notify the Secretary concerned and the (8) Include or have attached statements claimant or the Component, if a copy has not claimant of the decision and the reasons for the findings. (that are attested to be true and correct to the been previously provided, or is not available (5) In the event the Director, DOHA, denies best of the individual’s knowledge and belief) readily via electronic means. the request, or grants the request but modifies by the claimant or other persons in support (g) Claimant’s Rebuttal. A claimant may the finding concerning the amount of the of the appeal. submit a written rebuttal, signed by the claim proven, the Secretary concerned or the (d) Component’s Review. The Component claimant or the claimant’s agent or attorney, claimant may request reconsideration (the concerned must review a claimant’s appeal, in response to the recommendation and and affirm, modify, or reverse the initial administrative report. The rebuttal must be

1 determination. submitted to the Component within 30 days When this part was issued, 31 U.S.C. 3702(e) (1) If the appeal concerns the denial of all of the date of the recommendation and allowed time limit waivers only for claims up to $25,000 for Uniformed Service member’s pay, or part of the claim and the Component administrative report. The Component may allowances, travel, transportation, payments for grants the entire claim, or grants the claim to grant an extension of up to an additional 30 unused accrued leave, retired pay, and survivors the extent requested in the appeal, the days for good cause shown. The rebuttal benefits. Since 31 U.S.C. 3702(e) could be amended Component must notify the claimant in should include: at any time to modify these restrictions, always writing and explain the action the (1) An explanation of the points and consult the current provisions of that Section to Component shall take on the claim. This is reasons for disagreeing with the report; determine which claims are included. a final action. (2) The Component’s file reference number; 2 31 U.S.C. 3702(e) currently requires a Secretarial (2) If the appeal concerns the untimely (3) Any documents referred to in the request only in the case of a claim by or with receipt of the claim and the Component rebuttal; and respect to a member of the Uniformed Services who is not under the jurisdiction of the Secretary of a determines that the claim was received (4) Statements (that are attested to be true Military Department. As a matter of policy, the within the time limit required by statute, the and correct to the best of the individual’s Department of Defense currently requires a Component must notify the claimant in knowledge and belief) by the claimant or Secretarial recommendation in all other cases. writing and process the claim on the merits. other persons in support of the rebuttal.

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(h) Action by the Component. The requests and affirm, modify, reverse, or of a Component may request an advance Component must: remand the DOHA appeal decision. Requests decision on a question involving: (1) Date stamp the claimant’s rebuttal on for reconsideration by the GC, DoD received (1) A payment the disbursing official or the date it is received; more than 60 days after the effective date of Head of the Component shall make; or (2) Send the entire record to the DOHA, but this part shall not be accepted. Requests must (2) A voucher presented to a certifying no earlier than 31 days after the date of the be submitted to the address in paragraph (e) official for certification. report, or the day after the claimant’s rebuttal of this Appendix. The provisions of (b) Who May Render an Advance Decision. period, as extended, expires (as explained in paragraph (n) of this Appendix apply. The following officials are authorized to paragraph (e) of this Appendix). (l) Who May Request Reconsideration. A render an advance decision concerning the (i) DOHA Appeal Decision. Except as claimant or the Component concerned, or matters indicated: provided in paragraph (p) of this Appendix, both, may request reconsideration of a DOHA (1) The Secretary of Defense for requests the DOHA must base its decision on the appeal decision. involving claims under: written record, including the (m) When and Where to Submit a Request (i) 31 U.S.C. 3702 for Uniformed Services recommendation and administrative report for Reconsideration. The DOHA must receive members’ pay, allowances, travel, and any rebuttal by the claimant. The DOHA a request for reconsideration within 30 days transportation, retired pay, and survivor shall coordinate its decision in advance with of the date of the appeal decision.1 The benefits, and by carriers for amounts the GC, DoD when the appeal decision DOHA may extend this period for up to an collected from them for loss or damage to affects: additional 30 days for good cause shown. No property they transported at Government (1) Major policy issues; request for reconsideration may be accepted expense. (2) Involves a claim that is quasi- after this time has expired. A request for (ii) 31 U.S.C. 3702 that are not described contractual in nature and arises from the reconsideration must be sent to the DOHA at in paragraph (b)(1)(i) of this Appendix and activity of a DoD Component, but the claim the address in paragraph (e) of this that arise from the activity of a DoD was not settled under usual acquisition Appendix. Component, when there is no other procedures; or (n) Content of a Request for settlement authority specifically provided by (3) When the amounts in controversy Reconsideration. The requirements of law. exceed $100,000, either for the instant claim paragraph (c) of this Appendix, concerning (iii) 10 U.S.C. 2575, 10 U.S.C. 2771, 24 or in the aggregate for directly related claims. the contents of an appeal, apply to requests U.S.C. 420, 10 U.S.C. 4712, 10 U.S.C. 9712, The written decision must: for reconsideration. 37 U.S.C. 554, and 32 U.S.C. 714. Appendix (i) Affirm, modify, reverse, or remand the (o) DOHA’s Review of a Request for B to this part describes these claims. Component’s determination (and, if the issue Reconsideration. (2) The Director of the Office of Personnel is untimely receipt and there is a finding that (1) No earlier than 31 days after the date Management for requests involving claims for the claim was timely received, may either of the appeal decision, or the day after the civilian employees’ compensation and leave. consider and decide the claim on the merits last period for submitting a request, as (3) The Administrator of General Services or return the claim to the Component extended, expires, the DOHA must: for requests involving claims for civilian concerned for investigation and initial (i) Consider a request or requests for employees’ travel, transportation, and determination on the merits); reconsideration; relocation expenses. (ii) State the amount of the claim that is (ii) Affirm, modify, reverse, or remand the (c) Where to Submit a Request. All requests granted and the amount that is denied and/ appeal decision (and, if the issue is untimely described in paragraph (b)(1) of this or state that the claim was or was not receipt and there is a finding that the claim Appendix and all other requests arising from received within the statutory time limit, as was timely received, may either consider and the activity of a DoD Component (even if appropriate; and decide the claim on the merits or return the addressed to an official outside the (iii) Explain the reasons for the decision. claim to the Component concerned for Department of Defense) must be sent through (j) Processing After the Appeal Decision. investigation and initial determination on the the General Counsel of the Component After issuing an appeal decision, the DOHA merits); concerned to the following address: General must: (iii) Prepare a response that explains the Counsel, Department of Defense, 1600 (1) Send the claimant the decision and reasons for the finding; and Defense Pentagon, Washington, DC 20301– notify the claimant of: (iv) Send the response to the claimant and 1600. (i) The appropriate Component action on the Component concerned and notify both of (d) Content of a Request. Requests for an the claim as a consequence of the decision, the appropriate action on the claim. advance decision must: if it is or becomes a final action (as explained (2) The response is a final action. It is (1) Specifically request an advance in paragraph (k) of this Appendix); and precedent in the consideration of all claims decision pursuant to 31 U.S.C. 3529; (ii) The procedures under this appendix to covered by this part unless otherwise stated (2) Describe all the relevant facts; request reconsideration (as explained in in the document. (3) Explain the reasons (both factual and paragraphs (l) through (n) of this Appendix), (p) Consideration of Appeals and Requests legal) the requester considers the proposed if the decision does not grant the claim to the for Reconsideration. When considering an payment to be questionable; extent requested, or does not contain a appeal or request for reconsideration, the (4) Have attached vouchers, if any, and finding of timely receipt, as the case may be. DOHA may: copies of all other relevant documents (2) Notify the Component concerned of the (1) Take administrative notice of matters relating to the proposed payment; decision, and of the appropriate Component that are generally known or are capable of (5) Have attached a legal memorandum action on the claim as a consequence of the confirmation by resort to sources whose from the General Counsel of the Component decision. accuracy cannot reasonably be questioned. concerned that discusses the legality of the (k) Finality of a DOHA Appeal Decision. (2) Remand a matter to the Component proposed payment under the circumstances An appeal decision that finds that the claim with instructions to provide additional presented in the request; and was timely received is a final action when information. (6) Comply with any other requirements issued. Otherwise, an appeal decision is a established by the Director of the Office of final action if the DOHA does not receive a Appendix F to Part 282—Requests for Personnel Management or the Administrator request for reconsideration within 30 days of an Advance Decision of General Services. the date of the appeal decision (plus any (a) Who May Request an Advance Decision. (e) Advance Decisions. The GC, DoD must extension of up to 30 additional days granted A disbursing or certifying official or the Head take action under paragraphs (e)(1), (e)(2), or by the DOHA for good cause shown). Note: (e)(3) of this Appendix, whichever applies.

In the case of a DOHA appeal decision issued 1 (1) If the request is described in paragraph before the effective date of this part that With respect to appeal decisions issued before (b)(1) of this Appendix, the GC, DoD must the effective date of this part, the request for denied all or part of the claim, a request for reconsideration by the GC, DoD must be received review the request and issue an advance reconsideration by the GC, DoD may be by the DOHA within 60 days of the effective date decision, unless the GC, DoD elects to submitted within 60 days of the effective date of this part as explained in paragraph (k) of this proceed under paragraph (e)(3) of this of this part. The GC, DoD shall consider such Appendix. Appendix.

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(i) The GC, DoD must send the decision, ENVIRONMENTAL PROTECTION information unless you provide it in the through the General Counsel of the AGENCY body of your comment. If you send an Component concerned, to the requester, and e-mail comment directly to EPA without must send a copy of the decision to the 40 CFR Part 52 going through regulations.gov, your e- Director, DOHA for publication according to mail address will be automatically [MD135–3099a; FRL–7671–4] Appendix A to this part, paragraph (f). captured and included as part of the (ii) The decision is controlling in the case; Approval and Promulgation of Air comment that is placed in the public the reliance of certifying and disbursing Quality Implementation Plans; docket and made available on the officials on it in their disposition of the case Maryland; Control of Volatile Organic Internet. If you submit an electronic is evidence that those officials have exercised Compound Emissions From Portable comment, EPA recommends that you due diligence in the performance of their Fuel Containers include your name and other contact duties. information in the body of your (iii) An advance decision is precedent in AGENCY: Environmental Protection comment and with any disk or CD–ROM similar claims under this part unless Agency (EPA). you submit. If EPA cannot read your otherwise stated in the decision. ACTION: Direct final rule. comment due to technical difficulties (2) If the request is not described in and cannot contact you for clarification, paragraph (b)(1) of this Appendix, the GC, SUMMARY: EPA is taking direct final EPA may not be able to consider your DoD must review the request and either: action to approve revisions to the comment. Electronic files should avoid (i) Forward the request to the appropriate Maryland State Implementation Plan the use of special characters, any form advance decision authority and notify the (SIP). The revisions pertain to new of encryption, and be free of any defects requester of that action; or emission standards for portable fuel or viruses. (ii) Return the request, through the General containers. EPA is approving these Copies of the documents relevant to Counsel of the Component concerned, to the revisions in accordance with the this action are available for public requester, with a memorandum explaining requirements of the Clean Air Act. inspection during normal business that under existing legal authorities a request DATES: for an advance decision is not necessary. This rule is effective on August hours at the Air Protection Division, After considering the memorandum, the 30, 2004 without further notice, unless U.S. Environmental Protection Agency, requester may resubmit the request, through EPA receives adverse written comment Region III, 1650 Arch Street, the General Counsel of the Component by July 29, 2004. If EPA receives such Philadelphia, Pennsylvania 19103; the concerned, to the GC, DoD. The GC, DoD comments, it will publish a timely Air and Radiation Docket and must forward the request to the appropriate withdrawal of the direct final rule in the Information Center, U.S. Environmental advance decision authority, and notify the Federal Register and inform the public Protection Agency, 1301 Constitution requester of that action. that the rule will not take effect. Avenue, NW., Room B108, Washington, (3) If the request is described in paragraph ADDRESSES: Submit your comments, DC 20460; and Maryland Department of (b)(1) of this Appendix, and the claim is for identified by MD 135–3099 by one of the Environment, 1800 Washington not more than $250, the GC, DoD may refer the following methods: Boulevard, Suite 705, Baltimore, the request to the General Counsel, Defense A. Federal eRulemaking Portal: Maryland 21230. Finance and Accounting Service (DFAS). The http://www.regulations.gov. Follow the FOR FURTHER INFORMATION CONTACT: General Counsel, DFAS, shall review the on-line instructions for submitting Marilyn Powers, (215) 814–2308, or by request and issue an advance decision. comments. e-mail at [email protected]. (i) The General Counsel, DFAS, must send B. E-mail: [email protected]. SUPPLEMENTARY INFORMATION: the decision, through the General Counsel of C. Mail: Makeba Morris, Chief, Air the Component concerned, to the requester, Quality Planning Branch, Mailcode I. Background and must send a copy of the decision to the 3AP21, U.S. Environmental Protection In December 1999, the Environmental GC, DoD. Agency, Region III, 1650 Arch Street, Protection Agency (EPA) determined (ii) The decision is controlling in the case; Philadelphia, Pennsylvania 19103. that the State Implementation Plan (SIP) the reliance of certifying and disbursing D. Hand Delivery: At the previously- submittals for 10 areas, including the officials on it in their disposition of the case listed EPA Region III address. Such Baltimore and Philadelphia- is evidence that those officials have exercised deliveries are only accepted during the Wilmington-Trenton severe due diligence in the performance of their Docket’s normal hours of operation, and nonattainment areas, required duties. special arrangements should be made additional emission reductions in order (iii) An advance decision issued by the for deliveries of boxed information. for these areas to attain the one-hour General Counsel, DFAS, under this paragraph Instructions: Direct your comments to ozone standard. is not precedent in similar claims under this Docket ID No. MD 135–3099. EPA’s As part of a regional effort to address part. policy is that all comments received these emission reduction shortfalls in Dated: June 21, 2004. will be included in the public docket the Ozone Transport Region (OTR), the Patricia L. Toppings, without change, including any personal Ozone Transport Commission (OTC) Alternate OSD Federal Register Liaison information provided, unless the developed control measures into model Officer, Department of Defense. comment includes information claimed rules and estimated emission reductions [FR Doc. 04–14650 Filed 6–28–04; 8:45 am] to be Confidential Business Information that would result from their (CBI) or other information whose implementation. One of the model rules BILLING CODE 5001–06–P disclosure is restricted by statute. Do was for control of volatile organic not submit information that you compound (VOC) emissions from consider to be CBI or otherwise portable fuel containers. The OTC protected through regulations.gov or e- model rules were based on existing mail. The Federal regulations.gov rules developed by the California Air website is an ‘‘anonymous access’’ Resources Board (CARB), which were system, which means EPA will not analyzed and modified by the OTC know your identity or contact workgroup to address emission

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reduction needs in the OTR. proposed rule. EPA will not institute a In reviewing SIP submissions, EPA’s Implementation of these model rules second comment period on this action. role is to approve state choices, will help OTR states attain and maintain Any parties interested in commenting provided that they meet the criteria of the one-hour ozone standard and reduce must do so at this time. the Clean Air Act. In this context, in the eight-hour ozone levels. absence of a prior existing requirement IV. Statutory and Executive Order II. Summary of SIP Revision Reviews for the State to use voluntary consensus standards (VCS), EPA has no authority On March 8, 2002, the Maryland A. General Requirements to disapprove a SIP submission for Department of the Environment Under Executive Order 12866 (58 FR failure to use VCS. It would thus be submitted a formal revision to its SIP. 51735, October 4, 1993), this action is inconsistent with applicable law for The SIP revision consists of new not a ‘‘significant regulatory action’’ and EPA, when it reviews a SIP submission, regulation COMAR 26.11.13.07 Control therefore is not subject to review by the to use VCS in place of a SIP submission of VOC Emissions from Portable Fuel Office of Management and Budget. For that otherwise satisfies the provisions of Containers. This regulation applies this reason, this action is also not the Clean Air Act. Thus, the statewide to any person who sells, subject to Executive Order 13211, requirements of section 12(d) of the supplies, offers for sale, or manufactures ‘‘Actions Concerning Regulations That National Technology Transfer and for sale portable fuel containers and/or Significantly Affect Energy Supply, Advancement Act of 1995 (15 U.S.C. spout for use in Maryland on or after Distribution, or Use’’ (66 FR 28355, May 272 note) do not apply. This rule does January 1, 2003. 22, 2001). This action merely approves not impose an information collection This regulation requires each portable burden under the provisions of the fuel container and/or spout to meet the state law as meeting Federal requirements and imposes no additional Paperwork Reduction Act of 1995 (44 following requirements: (1) Have only U.S.C. 3501 et seq.). one opening for both filling and requirements beyond those imposed by pouring, (2) have an automatic shut-off state law. Accordingly, the B. Submission to Congress and the to prevent overfill during refueling, (3) Administrator certifies that this rule Comptroller General automatic closing and sealing of the will not have a significant economic container and/or spout when not impact on a substantial number of small The Congressional Review Act, 5 dispensing fuel, (4) have a minimum entities under the Regulatory Flexibility U.S.C. 801 et seq., as added by the Small flow rate and fill level, (5) meet a Act (5 U.S.C. 601 et seq.). Because this Business Regulatory Enforcement permeation standard, (6) have a rule approves pre-existing requirements Fairness Act of 1996, generally provides manufacturer’s warranty against defects, under state law and does not impose that before a rule may take effect, the and (7) clearly display a label with the any additional enforceable duty beyond agency promulgating the rule must date of manufacture and identifying the that required by state law, it does not submit a rule report, which includes a container and/or spout as a spill proof contain any unfunded mandate or copy of the rule, to each House of the system. Also included in the regulation significantly or uniquely affect small Congress and to the Comptroller General are compliance testing requirements, governments, as described in the of the United States. EPA will submit a exemptions, recordkeeping, and Unfunded Mandates Reform Act of 1995 report containing this rule and other administrative requirements. (Pub. L. 104–4). This rule also does not required information to the U.S. Senate, have tribal implications because it will the U.S. House of Representatives, and III. Final Action not have a substantial direct effect on the Comptroller General of the United EPA is approving a revision to the one or more Indian tribes, on the States prior to publication of the rule in Maryland SIP that adds new regulation relationship between the Federal the Federal Register. This rule is not a .07 under COMAR 26.11.13 to Government and Indian tribes, or on the ‘‘major rule’’ as defined by 5 U.S.C. establishes VOC emission standards for distribution of power and 804(2). portable fuel containers. responsibilities between the Federal C. Petitions for Judicial Review Implementation of this rule will result Government and Indian tribes, as in statewide emission reductions, and specified by Executive Order 13175 (65 Under section 307(b)(1) of the Clean will help the ozone nonattainment areas FR 67249, November 9, 2000). This Air Act, petitions for judicial review of in the state attain the one-hour ozone action also does not have Federalism this action must be filed in the United standard. implications because it does not have States Court of Appeals for the EPA is publishing this rule without substantial direct effects on the States, appropriate circuit by August 30, 2004. prior proposal because the Agency on the relationship between the national Filing a petition for reconsideration by views this as a noncontroversial government and the States, or on the the Administrator of this final rule does amendment and anticipates no adverse distribution of power and not affect the finality of this rule for the comment. However, in the ‘‘Proposed responsibilities among the various purposes of judicial review nor does it Rules’’ section of today’s Federal levels of government, as specified in extend the time within which a petition Register, EPA is publishing a separate Executive Order 13132 (64 FR 43255, for judicial review may be filed, and document that will serve as the proposal August 10, 1999). This action merely shall not postpone the effectiveness of to approve the SIP revision if adverse approves a state rule implementing a such rule or action. This action to comments are filed. This rule will be Federal standard, and does not alter the approve the Maryland’s VOC emission effective on August 30, 2004 without relationship or the distribution of power standards for portable fuel containers, further notice unless EPA receives and responsibilities established in the may not be challenged later in adverse comment by July 29, 2004. If Clean Air Act. This rule also is not proceedings to enforce its requirements. EPA receives adverse comment, EPA subject to Executive Order 13045 (See section 307(b)(2).) will publish a timely withdrawal in the ‘‘Protection of Children from List of Subjects in 40 CFR Part 52 Federal Register informing the public Environmental Health Risks and Safety that the rule will not take effect. EPA Risks’’ (62 FR 19885, April 23, 1997), Environmental protection, Air will address all public comments in a because it is not economically pollution control, Incorporation by subsequent final rule based on the significant. reference, Ozone, Reporting and

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recordkeeping requirements, Volatile ENVIRONMENTAL PROTECTION disclosure is restricted by statute. organic compounds. AGENCY Certain other material, such as Dated: May 27, 2004. copyrighted material, is not placed on 40 CFR Parts 141 and 142 the Internet and will be publicly James W. Newsom, [OW–2003–0066; FRL–7779–4] available only in hard copy form. Acting Regional Administrator, Region III. Publicly available docket materials are RIN 2040–AE58 I 40 CFR part 52 is amended as follows: available either electronically in EDOCKET or in hard copy at the Water National Primary Drinking Water Docket, EPA/DC, EPA West, Room PART 52—[AMENDED] Regulations: Minor Corrections and B102, 1301 Constitution Avenue, NW., Clarification to Drinking Water I Washington DC. The Public Reading 1. The authority citation for part 52 Regulations; National Primary Drinking continues to read as follows: Water Regulations for Lead and Room is open from 8:30 a.m. to 4:30 Copper p.m., Monday through Friday, excluding Authority: 42 U.S.C. 7401 et seq. legal holidays. The telephone number AGENCY: for the Public Reading Room is (202) Subpart V—Maryland Environmental Protection Agency (EPA). 566–1744, and the telephone number for the Water Docket is (202) 566–2426. If I ACTION: Final rule. 2. Section 52.1070 is amended by you would like to schedule an adding paragraph (c)(184) to read as SUMMARY: This rule makes minor appointment for access to docket follows: changes to clarify and correct EPA’s material, please call (202) 566–2426. Drinking Water regulations. This rule FOR FURTHER INFORMATION CONTACT: § 52.1070 Identification of plan. clarifies typographical errors, For * * * * * inadvertent omissions, editorial errors, general information, contact the Safe Drinking Water Hotline, telephone (800) (c) * * * and outdated language in the final Long Term 1 Enhanced Surface Water 426–4791. The Safe Drinking Water (184) Revisions to the Code of Treatment Rule (LT1ESWTR), the Hotline is open Monday through Friday, Maryland Administrative Regulations Surface Water Treatment Rule, and excluding legal holidays, from 9 a.m. to (COMAR) for the Control of VOC other rules. In addition to these 5:30 p.m., eastern time. For technical Emissions from Portable Fuel clarifications, EPA is adding optional inquiries, contact Tracy Bone, Office of Containers submitted on March 8, 2002 monitoring for disinfection profiling Ground Water and Drinking Water, U. S. by the Maryland Department of the and an earlier compliance date for some Environmental Protection Agency, 1200 Environment: requirements in the LT1ESWTR, and a Pennsylvania Ave., NW., Washington, DC 20460; telephone: (202) 564–5257; (i) Incorporation by reference. detection limit for the Uranium fax: (202) 564–3767; e-mail address: (A) Letter of March 8, 2002 from the Methods. Also, EPA is reinstating text that was [email protected]. Maryland Department of the inadvertently dropped from the Lead SUPPLEMENTARY INFORMATION: Environment transmitting an addition to and Copper Rule which listed the Maryland’s State Implementation Plan facilities that must be sent public I. General Information pertaining to the control of volatile education brochures by a public water Entities potentially regulated by this organic compounds (VOC) emissions system that has exceeded the action action are public water systems (PWS). from portable fuel containers. level for lead or copper. The following table provides examples (B) Addition of new regulation .07 DATES: This final rule is effective on July of the regulated entities under this rule. under COMAR 26.11.13—Control of 29, 2004, except for the amendment to A public water system, as defined by VOC Emissions from Portable Fuel § 141.85(c)(2)(iii) which is effective June section 1401 of the Safe Drinking Water Containers, adopted by the Secretary of 29, 2004. For purposes of judicial Act (SDWA), is ‘‘a system for the the Environment on December 21, 2001, review, this final rule is promulgated as provision to the public of water for and effective on January 21, 2002. of 1 p.m., eastern time on July 13, 2004, human consumption through pipes or as provided in 40 CFR 23.7. (ii) Additional Material.—Remainder other constructed conveyances, if such of the State submittal pertaining to the ADDRESSES: EPA has established a system has at least fifteen service revisions listed in paragraph (c)(184)(i) docket for this action under Docket ID connections or regularly serves at least No. OW–2003–0066. All documents in twenty-five individuals.’’ EPA defines of this section. the docket are listed in the EDOCKET ‘‘regularly served’’ as receiving water [FR Doc. 04–14602 Filed 6–28–04; 8:45 am] index at http://www.epa.gov/edocket. from the system 60 or more days per BILLING CODE 6560–50–P Although listed in the index, some year. Categories and entities potentially information is not publicly available, regulated by this action include the i.e., CBI or other information whose following:

Category Examples of potentially regulated entities

State, Tribal and Local Government ...... State, tribal or local government-owned/operated water supply systems using ground water, surface water or mixed ground water and surface water. Federal Government ...... Federally owned/operated community water supply systems using ground water, surface water or mixed ground water and surface water. Industry ...... Privately owned/operated community water supply systems using ground water, surface water or mixed ground water and surface water.

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This table is not intended to be included in the March 2, 2004, and is revising citation ‘‘(b)(2)(i)’’ to exhaustive, but rather provides a guide proposal. read ‘‘(b)(2)(iv).’’ These were for readers regarding entities likely to be By changing § 141.502, the following typographical errors and should have regulated by this action. This table lists 12 requirements will have a compliance been (b)(1)(i) and (b)(2)(iv), which refer the types of entities that EPA is now deadline of January 1, 2005, instead of to meeting the screening level aware could potentially be regulated by January 14, 2005: §§ 141.520, 141.521, requirements until the system meets the this action. Other types of entities not 141.522, 141.550, 141.551, 141.552, requirements for reduced monitoring. 141.553, 141.560, 141.561, 141.562, listed in the table could also be D. LT1ESWTR Clarifications regulated. To determine whether your 141.563, and 141.564. July 1, 2003 (or facility is regulated by this action, you January 1, 2004, for systems serving In addition to changing the date in should carefully examine the fewer than 500 persons), remains the § 141.502 to reduce monitoring burden applicability criteria in §§ 141.2 and compliance date for §§ 141.530– as well as to allow States to approve 141.3 of title 40 of the Code of Federal 141.536. March 15, 2002, remains the alternative data sets for optional Regulations. If you have questions compliance date for § 141.511. monitoring in § 141.531, EPA is regarding the applicability of this action In addition to changing the clarifying typographical errors in the to a particular entity, consult the person compliance date, EPA is adding a final LT1ESWTR. In Subpart Q listed in the preceding FOR FURTHER sentence to § 141.531 to clarify that Appendix B, in endnotes 4 and 8, the INFORMATION CONTACT section. States may approve a more year of publication for the Long Term 1 representative total trihalomethanes Enhanced Surface Water Treatment Rule II. Changes and Clarifications (TTHM) and haloacetic acids (five) is incorrectly identified as 2001 when it EPA is promulgating today, all of the (HAA5) data set (optional monitoring) to should be 2002. Also in endnote 4, the changes and clarifications proposed on avoid the disinfection profile word ‘‘monthly’’ is misspelled. In March 2, 2004 (69 FR 9781), with the monitoring required in § 141.530. EPA’s § 141.530 EPA is removing the exception of two proposed clarifications intent was to allow this flexibility in the grammatically incorrect, plural ‘‘s’’ from discussed in section F concerning final LT1ESWTR rule (67 FR 1820, ‘‘systems’’ in the sentence ‘‘If you are a calibration of turbiditimeters. Each January 14, 2002). EPA had failed to subpart H community or non-transient clarification and change promulgated make this flexibility explicit in that non-community water systems which today is discussed under the heading of regulation. serves fewer * * *’’. Two typographical errors are being the drinking water rule that it amends B. Detection Limit for Compliance corrected in § 141.534. In the (e.g., LT1ESWTR). EPA is also Monitoring of Uranium introductory paragraph for § 141.534, promulgating today an additional The December 7, 2000, final EPA inadvertently omitted a reference clarification, which was not in the Radionuclides Rule (65 FR 76708) to § 141.74(b)(3)(v), which provides March 2, 2004, Minor Corrections and included a detection limit for gross tables for determining the appropriate Clarification to Drinking Water alpha, radium-226 and radium-228, and CT99.9 value to calculate the Regulations proposal. This clarification reserved a place for a uranium detection inactivation ratio. EPA is changing the is discussed in section III. limit in Table B at § 141.25(c)(1). In introductory paragraph of § 141.534 to: In addition to clarifications of today’s action, EPA is amending Table ‘‘Use the tables in § 141.74(b)(3)(v) to typographical and editorial errors, EPA B at § 141.25(c)(1) to add a detection determine the appropriate CT99.9 value. is revising the LT1ESWTR to add limit of 1 µg/L for uranium. Establishing Calculate the total inactivation ratio as optional monitoring for disinfection a uranium detection limit permits States follows, and multiply the value by 3.0 profiling and an earlier compliance date the flexibility to substantially reduce the to determine log inactivation of Giardia for some requirements in that rule. EPA number of compliance samples and the lamblia:’’ is also promulgating a detection limit frequency of repeat monitoring for In the table in § 141.534(a)(2), EPA is for the uranium methods. These three uranium. changing the ‘‘3’’ to ‘‘S’’ in the CT changes are discussed first. calculation formula. EPA inadvertently C. Radionuclide Rule Clarifications A. LT1ESWTR Compliance Date Change changed the ‘‘S’’ to a ‘‘3’’ during a text and Optional Monitoring for In addition to amending the detection file conversion. Disinfection Profiling limit for uranium, EPA is making two In § 141.551(a)(2), EPA is adding a ‘‘t’’ clarifications to the final Radionuclide to the ‘‘no’’ in ‘‘A value determined by The final LT1ESWTR was published Rule (December 7, 2000, 65 FR 76708). the State (no to exceed 1 NTU) * * *’’. on January 14, 2002 (67 FR 1812). In In § 141.26(b)(2)(iv), EPA is adding In § 141.551(b)(2), EPA is adding the § 141.502 of the LT1ESWTR, EPA ‘‘screening level’’ to the first sentence. word ‘‘Filtration’’ to the phrase ‘‘All directed PWSs to ‘‘comply with these (Note also, that the second ‘‘beta’’ in this other ‘Alternative’’’ so that it matches requirements in this subpart beginning sentence is a typographical error, and related language in § 141.551(a)(2). January 14, 2005, except where under today’s rule is being removed.) EPA is deleting the last sentence in otherwise noted.’’ Today’s rule changes Similarly, EPA is clarifying in the second column in the table in the compliance date from January 14, § 141.26(b)(5), that there are two § 141.563(b), because it is redundant. 2005, to January 1, 2005, in § 141.502 as screening levels by adding the word Also in the same table in § 141.563(c), well as in endnote 8 of Subpart Q, ‘‘appropriate’’ to the first sentence so the first column contains a Appendix B. EPA’s reasons for moving that it reads ‘‘* * * exceeds the typographical error. The acronym the compliance date forward by two appropriate screening level * * *.’’ In ‘‘BTU’’ will read ‘‘NTU’’ (Nephelometric weeks are set forth in the preamble to addition, in the text that proposed to Turbidity Units). the proposed rule at 69 FR 9782. revise § 141.26(b)(5), we inadvertently In the table in § 141.570(b)(2), EPA is EPA is also changing the compliance referenced a nonexistent Table E, ‘‘or adding the phrase: ‘‘and the cause (if date in two additional sections, Table E in 141.66(d)’’—this reference is known) for the exceedance(s)’’ to the §§ 141.73(a)(4) and 141.170(d), which deleted in this final rule. description of information to report reference the January 14, 2005, date. In § 141.26(b)(6), EPA is revising the under § 141.570(b)(2). As a result, the These two citations should have been citation ‘‘(b)(1)(ii)’’ to read ‘‘(b)(1)(i),’’ entire paragraph will read: ‘‘The filter

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number(s), corresponding date(s), and until additional information provided in standards of quality for bottled water the turbidity value(s) which exceeded a public comment can be evaluated. from 21 CFR 103.35 to 21 CFR 165.110. 1.0 NTU during the month, and the EPA is changing all citations to EPA is correcting a reference in our cause (if known) for the exceedance(s), § 141.74(a)(3) or (4) to § 141.74(a)(1), regulations in § 142.62(g)(2) to reflect but only if 2 consecutive measurements and all citations to § 141.74(a)(5) to the updated citation of these FDA exceeded 1.0 NTU.’’ § 141.74(a)(2) to reflect revisions to the regulations. SWTR as described in the proposal. This action redesignates the I. Information Collection Rule LT1ESWTR special primacy text as § 142.16(p). In addition, EPA is revising TABLE 1.—REFERENCES TO THE The Information Collection Rule (ICR) a citation in § 142.16 (p)(2)(ii) to SURFACE WATER TREATMENT RULE was promulgated on May 14, 1996 (61 ‘‘141.536’’ to read ‘‘141.535.’’ This was FR 24354). The requirements a typographical error and should have SWTR provisions with promulgated in the ICR expired on incorrect cross Amendment December 31, 2000. As a result, the ICR been ‘‘141.535,’’ which refers to references calculating inactivation. requirements (referred to as subpart M— Information Collection Requirements E. Stage 1 Disinfectants and Disinfection 141.71(a)(2) ...... ‘‘(a)(4)’’ to (a)(1) 141.71(c)(2)(i) ...... ‘‘(a)(4)’’ to (a)(1) (ICRs) for Public Water Systems) were Byproducts Rule 141.72(a)(3) ...... ‘‘(a)(5)’’ to (a)(2) removed from the Code of Federal The Stage 1 Disinfectants and 141.72(a)(4)(i) ...... ‘‘(a)(3)’’ to (a)(1) Regulations in 2001. However, there Disinfection Byproducts Rule was and ‘‘(a)(5)’’ to were remaining references to the data promulgated on December 16, 1998 (63 (a)(2) collected as a result of the ICR in other FR 69390). This rule required systems to 141.72(a)(4)(ii) ...... ‘‘(a)(3)’’ to (a)(1) sections of part 141 that refer to 141.72(b)(2), ...... ‘‘(a)(5)’’ to (a)(2) ‘‘subpart M.’’ EPA is deleting the phrase measure and report, among other things, 141.72(b)(3)(i) ...... ‘‘(a)(5)’’ to (a)(2) violations of maximum residual ‘‘or subpart M of this part’’ from and, ‘‘(a)(3)’’ to § 141.132(a)(5). EPA is not deleting or disinfectant levels (MRDLs), see (a)(1) § 141.134(c)(1)(iv) (see 63 FR 69422 and 141.72(b)(3)(ii) ...... ‘‘(a)(3)’’ to (a)(1) revising the other references to subpart 69472). However, EPA failed to add 141.73(a)(1) ...... ‘‘(a)(4)’’ to (a)(1) M because the data collected under the compliance with the applicable MRDL 141.73(a)(2) ...... ‘‘(a)(4)’’ to (a)(1) ICR are still being used. to the compliance requirements in 141.73(b)(1) ...... ‘‘(a)(4)’’ to (a)(1) J. Phase V Rule 141.73(b)(2) ...... ‘‘(a)(4)’’ to (a)(1) § 141.133(a)(3). EPA is correcting this, In the final Phase V Rule (July 17, and the language in § 141.133(a)(3) now 141.73(c)(1) ...... ‘‘(a)(4)’’ to (a)(1) 141.73(c)(2) ...... ‘‘(a)(4)’’ to (a)(1) 1992, 57 FR 31776), EPA published a reads ‘‘If, during the first year of 141.74(b)(6)(ii) ...... ‘‘(a)(3)’’ to (a)(1) list of Best Available Technologies monitoring under § 141.132, any 141.74(c)(3)(i) ...... ‘‘(a)(3)’’ to (a)(1) (BATs) for cyanide, see § 141.62(c). EPA individual quarter’s average will cause 141.74(c)(3)(ii) ...... ‘‘(a)(3)’’ to (a)(1) is making the list more specific as to the the running annual average of that 141.75(a)(2)(viii)(G) ...... ‘‘(a)(3)’’ to (a)(1) type of chlorination (‘‘alkaline 141.75(b)(2)(iii)(G) ...... ‘‘(a)(3)’’ to (a)(1) system to exceed the MCL for total chlorination’’). trihalomethanes, haloacetic acids (five), or bromate; or the MRDL for chlorine or G. Filter Backwash Recycling Rule III. Correction in the Lead and Copper Rule Public Education Requirement chloramine, the system is out of The Filter Backwash Recycling Rule compliance at the end of that quarter.’’ (FBRR) was promulgated on June 8, In this final version of the rule, EPA The burden for this requirement was 2001 (66 FR 31086). EPA inadvertently is reinstating the list of the facilities that already accounted for in the approved provided incomplete citations in must be sent public education brochures Information Collection Request No. subpart Q, Appendix A of the Public by a public water system that has 1895.02. Notification rule for the FBRR exceeded the action level for lead or Also, in the final Stage 1 Disinfectants violations. In entry I.A.(8) of 40 CFR copper. This list was included in the and Disinfection Byproducts Rule, EPA part 141, subpart Q, Appendix A, EPA final Lead and Copper Rule, in incorrectly cited in § 142.14(d)(12)(iv) is adding a ‘‘(c)’’ to the ‘‘MCL/MRDL/TT § 141.85(c)(2)(iii) (June 7, 1991, 56 FR and § 142.14(d)(13) a reference to violations Citation’’ column of § 141.76; 26460; 26555) and published in the § 142.16(f). The reference for both and, in the ‘‘Monitoring & testing Code of Federal Regulations (CFR) from sections is now being revised to read procedure violations Citation’’ column 1991 to 1999. However, a technical § 142.16(h)(2) and § 142.16(h)(5) EPA has added ‘‘(b), (d)’’ to § 141.76. drafting error in the way in which EPA respectively. The FBRR preamble (66 FR 31086, drafted its language of amendment for F. Surface Water Treatment Rule 31094) explicitly states that violations of revisions to the LCR in 2000 caused the the recordkeeping and reporting Office of Federal Register to delete this The Surface Water Treatment Rule portions of this treatment technique text from the 2001 edition of the CFR (SWTR) was promulgated on June 29, trigger public notification (PN) (January 12, 2000, 65 FR 1950, 2007). 1989 (54 FR 27486). In that final rule, obligations under 40 CFR part 141, Thus, the current CFR text contains only EPA incorrectly cited in subpart Q. EPA is clarifying the PN rule a requirement to deliver public § 141.74(b)(4)(ii) a reference to by striking the reference to reporting education materials ‘‘to facilities and § 142.72(a). This citation is being violations in Appendix A, endnote 1, organizations, including the following:’’ corrected to read § 141.72(a). and explicitly adding §§ 141.76(b), (c) with no text following the colon. To Today’s rule does not include the and (d) to the list of categories requiring remedy this, EPA is reinstating the proposed clarifications (March 2, 2004, reporting in Appendix A (previous missing text, specifically subparagraphs 69 FR 9784) concerning the calibration reference was to the entire § 141.76). (A) through (G). Section 141.85(c)(2)(iii) of turbiditimeters in § 141.174(a) will once again read as follows: (Interim Enhanced Surface Water H. Bottled Water (iii) Deliver pamphlets and/or Treatment Rule (IESWTR)) and in In a November 1995 final rule (60 FR brochures that contain the public § 141.560(b) (LT1ESWTR). EPA is 57132), the Food and Drug education materials in paragraphs deferring a decision on this clarification Administration (FDA) moved their (a)(1)(ii) and (a)(1)(iv) of this section to

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facilities and organizations, including (3) Materially alter the budgetary small governmental jurisdiction that is a the following: impact of entitlements, grants, user fees, government of a city, county, town, (A) Public schools, and/or local or loan programs or the rights and school district or special district with a school boards; obligations of recipients thereof; or population of less than 50,000; and (3) (B) City or county health department; (4) Raise novel legal or policy issues a small organization that is any ‘‘not-for- (C) Women, Infants, and Children arising out of legal mandates, the profit enterprise which is independently and/or Head Start Program(s) whenever President’s priorities, or the principles owned and operated and is not available; set forth in the Executive Order. dominant in its field.’’ However, the (D) Public and private hospitals and/ It has been determined that this rule RFA also authorizes an agency to use or clinics; is not a ‘‘significant regulatory action’’ alternative definitions for each category (E) Pediatricians; under the terms of Executive Order of small entity, ‘‘which are appropriate (F) Family planning clinics; and 12866 and is therefore not subject to to the activities of the agency’’ after (G) Local welfare agencies. OMB review. proposing the alternative definition(s) in Section 553 of the Administrative B. Paperwork Reduction Act the Federal Register and taking Procedure Act, 5 U.S.C. 553(b)(B), comment. 5 U.S.C. 601(3)–(5). In provides that, when an agency for good This action does not impose an addition, to establish an alternative cause finds that notice and public information collection burden under the small business definition, agencies must procedure are impracticable, provisions of the Paperwork Reduction consult with SBA’s Chief Counsel for unnecessary, or contrary to the public Act, 44 U.S.C. 3501 et seq. This action Advocacy. interest, the agency may issue a rule modifies and clarifies existing For purposes of assessing the impacts without providing prior notice and an regulations. It does not add monitoring, of today’s rule on small entities, EPA opportunity for public comment. EPA is recordkeeping or reporting considered small entities to be public reinstating the list of facilities that must requirements. water systems serving 10,000 or fewer Burden means the total time, effort, or be sent public education brochures by a persons. This is the cut-off level financial resources expended by persons public water system that has exceeded specified by Congress in the 1996 to generate, maintain, retain, or disclose the action level for lead or copper. EPA Amendments to the Safe Drinking Water or provide information to or for a has determined that there is ‘‘good Act for small system flexibility Federal agency. This includes the time cause’’ for making this rule change final provisions. As required by the RFA needed to review instructions; develop, without prior proposal and opportunity requirements, EPA proposed using this acquire, install, and utilize technology for comment because this list was the alternative definition in the Federal and systems for the purposes of product of a prior notice-and-comment Register, (63 FR 7620, February 13, collecting, validating, and verifying rulemaking, see (June 7, 1991, 56 FR 1998), requested public comment, information, processing and 26502), it had appeared in the CFR for consulted with the Small Business maintaining information, and disclosing several years, the deletion was due Administration (SBA), and finalized in and providing information; adjust the solely to a technical drafting error in a the alternative definition in the existing ways to comply with any subsequent rule, and the list is not Consumer Confidence Reports previously applicable instructions and controversial. Thus, additional notice regulation (63 FR 44511, August 19, requirements; train personnel to be able and public comment is not necessary. 1998). As stated in that final rule, the to respond to a collection of EPA finds that this constitutes ‘‘good alternative definition would be applied information; search data sources; cause’’ under 5 U.S.C. 553(b)(B). For the to this regulation as well. complete and review the collection of same reasons, EPA is making this rule The optional monitoring for information; and transmit or otherwise change effective upon publication. 5 disinfection profiling provides U.S.C. 553(d)(3). disclose the information. An agency may not conduct or flexibility for PWSs complying with IV. Statutory and Executive Order sponsor, and a person is not required to LT1ESWTR. The earlier compliance Reviews respond to a collection of information date will not increase the cost of unless it displays a currently valid OMB complying with LT1ESWTR since the A. Executive Order 12866: Regulatory monitoring and reporting requirements Planning and Review control number. The OMB control numbers for EPA’s regulations in 40 are unchanged. By specifying the Under Executive Order 12866, (58 FR CFR are listed in 40 CFR part 9. detection limit for uranium, States have 51735 (October 4, 1993)) the Agency the flexibility to waive some monitoring must determine whether the regulatory C. Regulatory Flexibility Act for PWSs with samples below the action is ‘‘significant’’ and therefore The Regulatory Flexibility Act (RFA) detection limit. This action will not add subject to OMB review and the generally requires an agency to prepare new requirements. requirements of the Executive Order. a regulatory flexibility analysis of any This final rule imposes no cost on any The Order defines ‘‘significant rule subject to notice and comment entities over and above those imposed regulatory action’’ as one that is likely rulemaking requirements under the by previously published drinking water to result in a rule that may: Administrative Procedure Act or any rules. This action corrects and clarifies (1) Have an annual effect on the other statute unless the agency certifies existing regulations. economy of $100 million or more or that the rule will not have a significant After considering the economic adversely affect in a material way the economic impact on a substantial impacts of today’s final rule on small economy, a sector of the economy, number of small entities. Small entities entities, I certify that this action will not productivity, competition, jobs, the include small businesses, small have a significant economic impact on environment, public health or safety, or organizations, and small government a substantial number of small entities. State, local, or tribal governments or jurisdictions. The small entities directly regulated by communities; Small entities are defined as: (1) A this final rule are public water systems (2) Create a serious inconsistency or small business as defined by the Small serving 10,000 or fewer persons. We otherwise interfere with an action taken Business Administration’s (SBA) have determined that no number of or planned by another agency; regulations at 13 CFR 121.201; (2) a small entities will experience an impact.

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D. Unfunded Mandates Reform Act PWSs with samples below the detection 67249, November 9, 2000), requires EPA Title II of the Unfunded Mandates limit. Thus, today’s final rule is not to develop an accountable process to Reform Act of 1995 (UMRA), Public subject to the requirements of sections ensure ‘‘meaningful and timely input by Law 104–4, establishes requirements for 202 and 205 of the UMRA. tribal officials in the development of Federal agencies to assess the effects of EPA has determined that this rule regulatory policies that have tribal their regulatory actions on State, local, contains no regulatory requirements that implications.’’ ‘‘Policies that have tribal and Tribal governments and the private might significantly or uniquely affect implications’’ is defined in the sector. Under section 202 of the UMRA, small governments. This action corrects Executive Order to include regulations and clarifies existing regulations. Thus, EPA generally must prepare a written that have ‘‘substantial direct effects on today’s proposed rule is not subject to statement, including a cost-benefit one or more Indian tribes, on the the requirements of section 203 of the analysis, for proposed and final rules UMRA. relationship between the Federal with ‘‘Federal mandates’’ that may government and the Indian tribes, or on result in expenditures to State, local, E. Executive Order 13132: Federalism the distribution of power and and tribal governments, in the aggregate, Executive Order 13132, entitled responsibilities between the Federal or to the private sector, of $100 million ‘‘Federalism’’ (64 FR 43255, August 10, government and Indian tribes.’’ or more in any one year. Before 1999), requires EPA to develop an promulgating an EPA rule for which a This final rule does not have tribal accountable process to ensure implications. It will not have substantial written statement is needed, section 205 ‘‘meaningful and timely input by State of the UMRA generally requires EPA to direct effects on tribal governments, on and local officials in the development of the relationship between the Federal identify and consider a reasonable regulatory policies that have federalism government and Indian tribes, or on the number of regulatory alternatives and implications.’’ ‘‘Policies that have distribution of power and adopt the least costly, most cost- federalism implications’’ is defined in effective or least burdensome alternative the Executive Order to include responsibilities between the Federal that achieves the objectives of the rule. regulations that have ‘‘substantial direct government and Indian tribes, as The provisions of section 205 do not effects on the States, on the relationship specified in Executive Order 13175. apply when they are inconsistent with between the national government and There is no cost to tribal governments, applicable law. Moreover, section 205 the States, or on the distribution of and the rule does not preempt tribal allows EPA to adopt an alternative other power and responsibilities among the law. This action corrects and clarifies than the least costly, most cost-effective various levels of government.’’ existing regulations. Thus, Executive or least burdensome alternative if the This final rule does not have Order 13175 does not apply to this rule. Administrator publishes with the final Federalism implications. It will not Moreover, in the spirit of Executive rule an explanation why that alternative have substantial direct effects on the Order 13175, and consistent with EPA was not adopted. Before EPA establishes States, on the relationship between the policy to promote communications any regulatory requirements that may national government and the States, or between EPA and tribal governments, significantly or uniquely affect small on the distribution of power and EPA specifically solicited comment on governments, including tribal responsibilities among the various the proposed rule from tribal officials. governments, it must have developed levels of government, as specified in under section 203 of the UMRA a small Executive Order 13132. There is no cost G. Executive Order 13045: Protection of government agency plan. The plan must to State and local governments, and the Children From Environmental Health & provide for notifying potentially final rule does not preempt State law. Safety Risks affected small governments, enabling This action corrects and clarifies officials of affected small governments existing regulations. The optional Executive Order 13045: ‘‘Protection of to have meaningful and timely input in monitoring for disinfection profiling Children from Environmental Health the development of EPA regulatory provides flexibility for PWSs to comply Risks and Safety Risks’’ (62 FR 19885, proposals with significant Federal with LT1ESWTR. The earlier April 23, 1997) applies to any rule that: intergovernmental mandates, and compliance date will not increase the (1) Is determined to be ‘‘economically informing, educating, and advising cost of complying with LT1ESWTR significant’’ as defined under Executive small governments on compliance with since the monitoring and reporting Order 12866, and (2) concerns an the regulatory requirements. requirements are unchanged. By environmental health or safety risk that Today’s rule contains no Federal specifying the detection limit for EPA has reason to believe may have a mandates (under the regulatory uranium, States have the flexibility to disproportionate effect on children. If provisions of Title II of the UMRA) for waive some monitoring for PWSs with the regulatory action meets both criteria, State, local, or tribal governments or the samples below the detection limit. the Agency must evaluate the private sector. This final rule imposes Thus, Executive Order 13132 does not environmental health or safety effects of no enforceable duty on any State, local apply to this final rule. In the spirit of the planned rule on children, and or tribal governments or the private Executive Order 13132, and consistent explain why the planned regulation is sector. This action corrects and clarifies with EPA policy to promote preferable to other potentially effective existing regulations. The optional communications between EPA and State and reasonably feasible alternatives monitoring for disinfection profiling and local governments, EPA specifically considered by the Agency. provides flexibility for PWSs to comply solicited comment on the proposed rule with LT1ESWTR. The earlier from State and local officials. This final rule is not subject to the compliance date will not increase the Executive Order because it is not cost of complying with LT1ESWTR F. Executive Order 13175: Consultation economically significant as defined in since the monitoring and reporting and Coordination With Indian Tribal Executive Order 12866, and because the requirements are unchanged. By Governments Agency does not have reason to believe specifying the detection limit for Executive Order 13175, entitled the environmental health or safety risks uranium, EPA provides States with the ‘‘Consultation and Coordination with addressed by this action present a flexibility to waive some monitoring for Indian Tribal Governments’’ (65 FR disproportionate risk to children.

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H. Executive Order 13211: Actions That Reporting and recordkeeping be calculated and summed to determine Significantly Affect Energy Supply, requirements, Water supply. compliance with § 141.66(d)(1), using Distribution, or Use the formula in § 141.66(d)(2). Doses 40 CFR Part 142 must also be calculated and combined This rule is not subject to Executive Environmental protection, for measured levels of tritium and Order 13211, ‘‘Actions Concerning Administrative practice and procedure, strontium to determine compliance. Regulations That Significantly Affect Chemicals, Indians-lands, Radiation * * * * * Energy Supply, Distribution, or Use’’ (66 protection, Reporting and recordkeeping FR 28355 (May 22, 2001)) because it is requirements, Water supply. § 141.62 [Amended] not a significant regulatory action under Executive Order 12866. Dated: June 22, 2004. I 4. Section 141.62(c) is amended as Michael O. Leavitt, follows: I. National Technology Transfer and Administrator. I a. In the Table ‘‘BAT FOR INORGANIC Advancement Act I For the reasons set out in the preamble, COMPOUNDS LISTED IN SECTION As noted in the proposed rule, section title 40, chapter I of the Code of Federal 141.62(b)’’ amend the entry for 12(d) of the National Technology Regulations is amended as follows: ‘‘cyanide’’ by replacing the ‘‘10’’ with Transfer and Advancement Act of 1995 ‘‘13’’; and I (‘‘NTTAA’’), Public Law 104–113, 12(d) PART 141—NATIONAL PRIMARY b. In the list ‘‘Key to BATS in Table 1’’, (15 U.S.C. 272 note) directs EPA to use DRINKING WATER REGULATIONS add to the end of the list, ‘‘13 = Alkaline Chlorination (pH ≥ 8.5)’’. voluntary consensus standards in its I 1. The authority citation for part 141 regulatory activities unless to do so continues to read as follows: § 141.71 [Amended] would be inconsistent with applicable I law or otherwise impractical. Voluntary Authority: 42 U.S.C. 300f, 300g–1, 300g–2, 5. Section 141.71 is amended as consensus standards are technical 300g–3, 300g–4, 300g–5, 300g–6, 300j–4, follows: 300j–9, and 300j–11. I standards (e.g., materials specifications, a. In paragraph (a)(2) introductory text test methods, sampling procedures, and § 141.25 [Amended] remove the citation ‘‘§ 141.74(a)(4)’’ and add in its place ‘‘§ 141.74(a)(1)’’ and business practices) that are developed or I 2. Section 141.25(c)(1) is amended in I b. In paragraph (c)(2)(i) remove the adopted by voluntary consensus the entry for uranium in the second citation ‘‘§ 141.74(a)(4)’’ and add in its standards bodies. The NTTAA directs column of Table B by removing the word place ‘‘§ 141.74(a)(1)’’. EPA to provide Congress, through OMB, ‘‘reserve’’ and adding in it’s place ‘‘1 µg/ explanations when the Agency decides L’’. § 141.72 [Amended] not to use available and applicable I 3. Section 141.26 is amended as I voluntary consensus standards. 6. Section 141.72 is amended as follows: follows: This action does not involve technical I a. Revise paragraphs (b)(2)(iv) and I a. In paragraph (a)(3) remove the standards. Therefore, EPA did not (b)(5); and citation ‘‘§ 141.74(a)(5)’’ and add in its consider the use of any voluntary I b. In paragraph (b)(6) remove the place ‘‘§ 141.74(a)(2)’’; consensus standards. citation ‘‘(b)(1)(ii)’’ and add in its place I b. In paragraph (a)(4)(i) remove the ‘‘(b)(1)(i)’’ and remove the citation J. Congressional Review Act citation ‘‘§ 141.74(a)(5)’’ and add in its ‘‘(b)(2)(i)’’ and add in its place place ‘‘§ 141.74(a)(2)’’ and remove the The Congressional Review Act, 5 ‘‘(b)(2)(iv)’’. citation ‘‘§ 141.74(a)(3)’’ and add in its U.S.C. 801 et seq., as added by the Small The revisions read as follows: place ‘‘§ 141.74(a)(1)’’; Business Regulatory Enforcement § 141.26 Monitoring frequency and I c. In paragraph (a)(4)(ii) remove the Fairness Act of 1996, generally provides compliance requirements for radionuclides citation ‘‘§ 141.74(a)(3)’’ and add in its that before a rule may take effect, the in community water systems. place ‘‘§ 141.74(a)(1)’’; agency promulgating the rule must I d. In paragraph (b)(2) remove the submit a rule report, which includes a * * * * * (b) * * * citation ‘‘§ 141.74(a)(5)’’ and add in its copy of the rule, to each House of the (2) * * * place ‘‘§ 141.74(a)(2)’’; Congress and to the Comptroller General (iv) If the gross beta particle activity I e. In paragraph (b)(3)(i) remove the of the United States. EPA will submit a minus the naturally occurring citation ‘‘§ 141.74(a)(5)’’ and add in its report containing this rule and other potassium-40 beta particle activity at a place ‘‘§ 141.74(a)(2)’’, remove the required information to the U.S. Senate, sampling point has a running annual citation ‘‘§ 141.74(a)(3)’’ and add in its the U.S. House of Representatives, and average (computed quarterly) less than place ‘‘§ 141.74(a)(1)’’; and the Comptroller General of the United or equal to 15 pCi/L (screening level), I f. In paragraph (b)(3)(ii) remove the States prior to publication of the rule in the State may reduce the frequency of citation ‘‘§ 141.74(a)(3)’’ and add in its the Federal Register. A major rule monitoring at that sampling point to place ‘‘§ 141.74(a)(1)’’. cannot take effect until 60 days after it every 3 years. Systems must collect the is published in the Federal Register. same type of samples required in § 141.73 [Amended] This action is not a ‘‘major rule’’ as paragraph (b)(2) of this section during I 7. Section 141.73 is amended as defined by 5 U.S.C. 804(2). This rule the reduced monitoring period. follows: will be effective July 29, 2004, except I a. In paragraph (a)(1) remove both for the amendment to § 141.85(c)(2)(iii) * * * * * (5) If the gross beta particle activity citations ‘‘§ 141.74(a)(4)’’ and add in which is effective June 29, 2004. minus the naturally occurring their place ‘‘§ 141.74(a)(1)’’; List of Subjects potassium-40 beta particle activity I b. In paragraph (a)(2) remove the exceeds the appropriate screening level, citation ‘‘§ 141.74(a)(4)’’ and add in its 40 CFR Part 141 an analysis of the sample must be place ‘‘§ 141.74(a)(1)’’; Environmental protection, Chemicals, performed to identify the major I c. In paragraph (a)(4) remove the date Indians-lands, Intergovernmental radioactive constituents present in the ‘‘January 14, 2005’’ and add in its place relations, Radiation protection, sample and the appropriate doses must ‘‘January 1, 2005’’;

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I d. In paragraph (b)(1) remove the (3) If, during the first year of 10,000 people, using surface water or ground citation ‘‘§ 141.74(a)(4)’’ and add in its monitoring under § 141.132, any water under the direct influence of surface place ‘‘§ 141.74(a)(1)’’; individual quarter’s average will cause water) that use conventional filtration or I e. In paragraph (b)(2) remove the the running annual average of that direct filtration, after January 1, 2005, the citation ‘‘§ 141.74(a)(4)’’ and add in its turbidity level of a system’s combined filter system to exceed the MCL for total effluent may not exceed 0.3 NTU in at least place ‘‘§ 141.74(a)(1)’’; trihalomethanes, haloacetic acids (five), 95 percent of monthly measurements, and I f. In paragraph (c)(1) remove the or bromate; or the MRDL for chlorine or the turbidity level of a system’s combined citation ‘‘§ 141.74(a)(4)’’ and add in its chloramine, the system is out of filter effluent must not exceed 1 NTU at any place ‘‘§ 141.74(a)(1)’’; and compliance at the end of that quarter. time. Systems subject to the LT1ESWTR I g. In paragraph (c)(2) remove the * * * * * using technologies other than conventional, citation ‘‘§ 141.74(a)(4)’’ and add in its direct, slow sand, or diatomaceous earth place ‘‘§ 141.74(a)(1)’’. § 141.170 [Amended] filtration must meet turbidity limits set by the primacy agency. § 141.74 [Amended] I 13. In paragraph (d) remove the date ‘‘January 14, 2005’’ and add in its place * * * * * I 8. Section 141.74 is amended as ‘‘January 1, 2005’’. I 16. Revise § 141.502 to read as follows: follows: I a. In paragraph (b)(4)(ii) remove the Appendix A to Subpart Q of Part 141 § 141.502 When must my system comply citation ‘‘§ 142.72(a)’’ and add in its [Amended] with these requirements? place ‘‘§ 141.72(a)’’; I 14. In Subpart Q, Appendix A is You must comply with these I b. In paragraph (b)(6)(ii) remove the requirements in this subpart beginning citation ‘‘(a)(3)’’ and add in its place amended as follows: I a. In entry I.A.(8) remove the citation January 1, 2005, except where otherwise ‘‘(a)(1)’’; noted. I c. In paragraph (c)(3)(i) remove the in the third column ‘‘141.76’’ and add in citation ‘‘(a)(3)’’ and add in its place its place ‘‘141.76(c)’’ and remove the § 141.530 [Amended] citation in the fifth column ‘‘141.76’’ and ‘‘(a)(1)’’; and I 17. In § 141.530 in the second I d. In paragraph (c)(3)(ii) remove the add in its place ‘‘141.76 (b), (d)’’. I b. Amend endnote 1 by removing the sentence, revise ‘‘water systems’’ to read citation ‘‘(a)(3)’’ and add in its place ‘‘water system’’. ‘‘(a)(1)’’. words ‘‘reporting violations and’’ from the first parenthetical phrase. I 18. Amend § 141.531 by adding the § 141.75 [Amended] I 15. In Subpart Q, Appendix B revise following sentence to the end of the I 9. Section 141.75 is amended as endnotes 4 and 8 to read as follows: section, to read as follows: follows: Appendix B to Subpart Q of Part 141— § 141.531 What criteria must a State use to I a. In paragraph (a)(2)(viii)(G) remove Standard Health Effects Language for determine that a profile is unnecessary? the citation ‘‘§ 141.74(a)(3)’’ and add in Public Notification * * * Your State may approve a more its place ‘‘§ 141.74(a)(1)’’; and I b. In paragraph (b)(2)(iii)(G) remove * * * * * representative TTHM and HAA5 data set to determine these levels. the citation ‘‘§ 141.74(a)(3)’’ and add in 4 There are various regulations that set I its place ‘‘§ 141.74(a)(1)’’. turbidity standards for different types of 19. Section 141.534 is amended as I 10. Amend § 141.85 by adding systems, including 40 CFR 141.13, and the follows: paragraphs (c)(2)(iii) (A) through (G) to 1989 Surface Water Treatment Rule, the 1998 I a. By revising the introductory read as follows: Interim Enhanced Surface Water Treatment paragraph, Rule and the 2002 Long Term 1 Enhanced I b. In the table in paragraph (a)(2), § 141.85 Public education and Surface Water Treatment Rule. The MCL for remove the ‘‘3’’ and add in its place ‘‘S’’. supplemental monitoring requirements. the monthly turbidity average is 1 NTU; the * * * * * MCL for the 2-day average is 5 NTU for § 141.534 How does my system use this (c) * * * systems that are required to filter but have data to calculate an inactivation ratio? (2) * * * not yet installed filtration (40 CFR 141.13). Use the tables in § 141.74(b)(3)(v) to (iii) * * * * * * * * determine the appropriate CT99.9 value. 8 (A) Public schools, and/or local There are various regulations that set Calculate the total inactivation ratio as school boards; turbidity standards for different types of follows, and multiply the value by 3.0 (B) City or county health department; systems, including 40 CFR 141.13, the 1989 Surface Water Treatment Rule (SWTR), the to determine log inactivation of Giardia (C) Women, Infants, and Children lamblia: and/or Head Start Program(s) whenever 1998 Interim Enhanced Surface Water available; Treatment Rule (IESWTR) and the 2002 Long * * * * * (D) Public and private hospitals and/ Term 1 Enhanced Surface Water Treatment Rule (LT1ESWTR). For systems subject to the § 141.551 [Amended] or clinics; IESWTR (systems serving at least 10,000 I 20. Section 141.551 is amended as (E) Pediatricians; people, using surface water or ground water (F) Family planning clinics; and under the direct influence of surface water), follows: I (G) Local welfare agencies. that use conventional filtration or direct a. In paragraph (a)(2) remove ‘‘no’’ and * * * * * filtration, after January 1, 2002, the turbidity add in its place ‘‘not’’; and level of a system’s combined filter effluent I b. In paragraph (b)(2) remove § 141.132 [Amended] may not exceed 0.3 NTU in at least 95 ‘‘Alternative’’ and add in its place I 11. Section 141.132 is amended in percent of monthly measurements, and the ‘‘Alternative Filtration’’. paragraph (a)(5) by removing the turbidity level of a system’s combined filter effluent must not exceed 1 NTU at any time. § 141.563 [Amended] reference to ‘‘or subpart M of this part’’. Systems subject to the IESWTR using I 21. Section 141.563 is amended as I 12. In § 141.133 revise paragraph (a)(3) technologies other than conventional, direct, to read as follows: slow sand, or diatomaceous earth filtration follows: must meet turbidity limits set by the primacy I a. In paragraph (b) remove the last § 141.133 Compliance requirements. agency. For systems subject to the sentence in the second column of the (a) * * * LT1ESWTR (systems serving fewer than table, and

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I b. In paragraph (c) remove ‘‘BTU’’ and I 22. In § 141.570, revise paragraph § 141.570 What does subpart T require that add in its place ‘‘NTU’’ in the first (b)(2) in the table to read as follows: my system report to the State? column of the table. * * * * *

Corresponding requirement Description of information to report Frequency

******* (b) Individual Filter Turbidity Require- (2) The filter number(s), corresponding date(s), and the turbidity By the 10th of the following ments (§§ 141.560–141.564). value(s) which exceeded 1.0 NTU during the month, and the month. cause (if known) for the exceedance(s), but only if 2 consecutive measurements exceeded 1.0 NTU.

*******

PART 142—NATIONAL PRIMARY DEPARTMENT OF COMMERCE NMFS, 7600 Sand Point Way NE, DRINKING WATER REGULATIONS Seattle, WA 98115–0070; or Rod IMPLEMENTATION National Oceanic and Atmospheric McInnis, Acting Administrator, Administration Southwest Region, NMFS, 501 West I 23. The authority citation for part 142 Ocean Blvd, Suite 4200, Long Beach, CA 50 CFR Part 660 90802–4213. continues to read as follows: ∑ [Docket No. 031216314–3314–01; I.D. Fax: 206–526–6736 Authority: 42 U.S.C. 300f, 300g–1, 300g–2, 062304A] FOR FURTHER INFORMATION CONTACT: 300g–3, 300g–4, 300g–5, 300g–6, 300j–4, Jamie Goen (Northwest Region, NMFS), 300j–9, and 300j–11. Fisheries Off West Coast States and in phone: 206–526–6150; fax: 206–526– § 142.14 [Amended] the Western Pacific; Pacific Coast 6736; and e-mail: [email protected]. Groundfish Fishery; Annual SUPPLEMENTARY INFORMATION: I 24. Section § 142.14 is amended as Specifications and Management follows: Measures; Inseason Adjustments Electronic Access This Federal Register document is I a. In paragraph (d)(12)(iv) remove the AGENCY: National Marine Fisheries available on the Government Printing citation ‘‘§ 142.16(f)(2)’’ and add in its Service (NMFS), National Oceanic and Office’s website at: www.gpoaccess.gov/ place ‘‘§ 142.16(h)(2)’’; and Atmospheric Administration (NOAA), fr/index.html. I Commerce. b. In paragraph (d)(13) remove the Background information and citation ‘‘§ 142.16(f)(5)’’ and add in its ACTION: Inseason adjustments to documents are available at the NMFS place ‘‘§ 142.16(h)(5)’’. management measures; request for Northwest Region website at: comments. www.nwr.noaa.gov/1sustfsh/ § 142.16 [Amended] gdfsh01.htm and at the Pacific Fishery SUMMARY: NMFS announces changes to I Management Council’s website at: 25. Section 142.16 is amended as the commercial limited entry fixed gear www.pcouncil.org. follows: primary season sablefish tier limits for I a. In paragraph (l)(2) remove the the Pacific Coast groundfish fishery. Background citation ‘‘§ 142.16(e)(5)’’and add in its These actions, which are authorized by The Pacific Coast Groundfish FMP place ‘‘§ 142.16(e)(2)’’; the Pacific Coast Groundfish Fishery and its implementing regulations at 50 Management Plan (FMP), will allow I b. Add and reserve paragraphs (m), (n), CFR part 660, subpart G, regulate fishing fisheries to access more abundant and (o); for over 80 species of groundfish off the groundfish stocks while protecting coasts of Washington, Oregon, and I c. Redesignate paragraph (j) which was overfished and depleted stocks. California. Groundfish specifications added on January 14, 2002, at 67 FR 1812 DATES: Effective 0001 hours (local time) and management measures are as paragraph (p); and June 29, 2004, until the 2005–06 annual developed by the Pacific Fishery I d. In newly designated paragraph specifications and management Management Council (Pacific Council), (p)(2)(ii) remove the citation ‘‘141.536’’ measures are effective; unless modified, and are implemented by NMFS. The and add in its place ‘‘141.535’’. superseded, or rescinded through a specifications and management publication in the Federal Register. measures for the 2004 fishing year § 142.62 [Amended] Comments on this rule will be accepted (January 1 - December 31, 2004) were through July 28, 2004. I 26. Section 142.62(g)(2) is amended by initially published in the Federal removing the citation ‘‘103.35’’ and add ADDRESSES: You may submit comments, Register as an emergency rule for in its place ‘‘165.110’’. identified by (I.D. 062304A), by any of January 1 - February 29, 2004 (69 FR the following methods: 1322, January 8, 2004), and as a [FR Doc. 04–14604 Filed 6–28–04; 8:45 am] ∑ E-mail: proposed rule for March 1 - December BILLING CODE 6560–50–P GroundfishInseason#[email protected]: 31, 2004 (69 FR 1380, January 8, 2004). Include the I.D. number in the subject The emergency rule was amended at 69 line of the message. FR 4084, January 28, 2004, and the final ∑ Federal eRulemaking Portal: http:/ rule for March 1 - December 31, 2004, /www.regulations.gov. Follow the was published in the Federal Register instructions for submitting comments. on March 9, 2004 (69 FR 11064), and ∑ Mail: D. Robert Lohn, subsequently amended at 69 FR 23440 Administrator, Northwest Region, (April 29, 2004), 69 FR 23667 (April 30,

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2004), 69 FR 25013 (May 5, 2004)and 69 limited entry fixed gear and open access B. Limited Entry Fishery FR 28086 (May 18, 2004). daily trip limit fisheries and total (2) * * * The following changes to current harvest will remain below the sablefish (b) * * * groundfish management measures were OY. With the delay in landings reported (i) Primary season. The primary recommended by the Pacific Council, in into PacFIN from fish tickets, along with season begins at 12 noon l.t. on April 1, consultation with Pacific Coast Treaty the uncertainty on how many fishermen 2004, and ends at 12 noon l.t. on Indian Tribes and the states of are actively fishing their tiers, it is October 31, 2004. There are no pre- Washington, Oregon, and California, at difficult to determine at this time if the season or post-season closures. During its June 14–18, 2004, meeting in Foster sablefish OY will be exceeded in 2004. the primary season, each vessel with at City, CA. Pacific Coast groundfish NMFS will continue to track landings in least one limited entry permit with a landings will be monitored throughout this fishery, and if landings are tracking sablefish endorsement that is registered the year, and further adjustments to trip high and approaching the sablefish OY, for use with that vessel may land up to limits or management measures will be NMFS will consult with the Pacific the cumulative trip limit for each of the made as necessary to allow achievement Council at its September 12 - 17, 2004, sablefish-endorsed limited entry permits of, or to avoid exceeding the 2004 meeting to determine what further registered for use with that vessel, for optimum yields (OYs). adjustments may be necessary in this the tier(s) to which the permit(s) are Limited Entry Fixed Gear Primary fishery. assigned. For 2004, the following limits Sablefish Fishery The Pacific Council recommended, are in effect: Tier 1, 64,300 lb (29,166 NMFS made an error in calculating and NMFS is implementing, reductions kg); Tier 2, 29,200 lb (13,245 kg); and the limited entry fixed gear primary in the primary season sablefish tier Tier 3, 16,700 lb (7,575 kg). All limits sablefish fishery tier limits for the 2004 limits as follows: Tier 1 will be reduced are in round weight. If a vessel is season. Initially, the 2003 tier limits from 69,600 lb (31,570 kg) to 64,300 lb registered for use with a sablefish- were used as a placeholder for the 2004 (29,166 kg), Tier 2 will be reduced from endorsed limited entry permit, all primary season in the final rule (69 FR 31,600 lb (14,334 kg) to 29,200 lb sablefish taken after April 1, 2004, count 11064, March 9, 2004) until the new (13,245 kg), and Tier 3 will be reduced against the cumulative limits associated observer data was released in the spring from 18,100 lb (8,210 kg) to 16,700 lb with the permit(s) registered for use of 2004. Bycatch rates from the new (7,575 kg). These are the limits that with that vessel. observer data were used to update the should have been set in place in May, * * * * * had they been calculated from the model which calculates the sablefish Classification tier limits. The 2004 tier limits were sablefish OY instead of the ABC. expected to be higher than the 2003 A permit holder who has already These actions are authorized by the limits based on the new, lower bycatch landed his or her tier limits is not in Pacific Coast groundfish FMP and its rates and the higher sablefish OY for violation of these regulations if the implementing regulations, and are based 2004. Updated, higher tier limits for holder was complying with the on the most recent data available. The 2004 were published in the Federal regulations in effect at the time of aggregate data upon which these actions Register on May 5, 2004 (69 FR 25013) landing. For permit holders who at this are based are available for public after the start of the primary sablefish time have only partially achieved their inspection at the Office of the season. Subsequently, NMFS discovered tier limits, any past catch during the Administrator, Northwest Region, an error in its calculation of the 2004 2004 primary season will count toward NMFS, (see ADDRESSES) during business tier limits. The tier limits were the adjusted, lower tier limit. For hours. calculated from the 2004 sablefish example, a stacked Tier 1 and Tier 2 The Assistant Administrator for acceptable biological catch (ABC) rather permit would have previously had a Fisheries, NOAA, finds good cause to than from the OY. Thus, the 2004 tier cumulative limit of 101,200 lb (45,904 waive the requirement to provide prior limits were substantially higher than kg) and now has a cumulative limit of notice and opportunity for public they should have been and, if fully 93,500 lb (42,411 kg). If 70,000 lb comment on this action pursuant to 5 harvested, may result in allowing the (31,752 kg) have already been landed on U.S.C. 553(b)(3)(B), because providing fisheries to exceed the sablefish OY by a stacked Tier 1 and Tier 2 permit prior prior notice and opportunity for approximately 172 mt (78 kg), which is to this inseason action, 23,500 lb comment would be impracticable. 2 percent of the total 2004 sablefish OY. (10,659 kg) would remain to be fished Providing prior notice and comment on The primary sablefish season started on on those stacked permits. the inseason adjustment would be April 1 and tier limits through April in impracticable because the data upon PacFIN show landings are tracking NMFS Actions which these recommendations were slower this year than last year. However, based was provided to the Pacific For the reasons stated herein, NMFS due to the delay in reported landings Council and the Pacific Council made concurs with the Pacific Council’s data into PacFIN, it is likely that more its recommendations at its June 14–18, recommendations and hereby of the higher, erroneous tier limits have 2004, meeting in Foster City, CA. There announces the following changes to the already been landed. NMFS estimates was not sufficient time after that 2004 specifications and management that between 50 and 75 percent of the meeting to draft this notice and undergo measures (69 FR 11064, March 9, 2004), sablefish tier limits may have already proposed and final rulemaking before as subsequently amended at 69 FR been landed at the higher, erroneous tier these actions need to be in effect as 23440 (April 29, 2004), 69 FR 23667 limits. Based on those percentages, and explained below. The adjustments to (April 30, 2004), 69 FR 25013 (May 5, assuming the same tier limit tonnage management measures in this document 2004)and 69 FR 28086 (May 18, 2004), that was not landed in 2003 will remain are changes to the limited entry primary to read as follows: unlanded in 2004, the primary sablefish sablefish fishery tier limits. Changes are fishery may be 40 to 83 mt over the 1. In section IV., under B. Limited being made to correct an error in the amount originally planned for that Entry Fishery, paragraph (2)(b)(i) is calculation of the sablefish tier limits. fishery. Presumably, additional tonnage revised to read as follows: The tier limits implemented on May 1, will remain unharvested from the * * * * * 2004 were incorrectly calculated using

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the sablefish ABC rather than the OY. as practicable during the fishing year. For these reasons, good cause also Thus, tier limits were higher than they Alternatively, delay could lead to exists to waive the 30 day delay in should have been. Leaving these in exceeding the OY. Finally, providing effectiveness requirement under 5 place would result in allowing fisheries prior notice and public comment would U.S.C. 553 (d)(3). to exceed the sablefish OY if all tier provide most permit holders an These actions are taken under the limits were achieved. The sablefish tier opportunity to take their higher tier authority of 50 CFR 660.323(b)(1) and limits in this inseason action are limits before the effective date of this recalculated using the sablefish OY to notice, which would negate any benefit are exempt from review under Executive reduce the take of sablefish in an effort from this notice. As explained above, Order 12866. to keep harvest within the OY set for the prior notice and opportunity for Authority: 16 U.S.C. 1801 et seq. year. Delaying these changes to comment would be impracticable Dated: June 23, 2004. management measures could lead to because affording prior notice and early closures of the fishery. This would opportunity for public comment would Alan D. Risenhoover, contradict one of the Pacific Coast take too long, thus impeding the Acting Director, Office of Sustainable Groundfish FMP objectives of providing Agency’s function of managing fisheries Fisheries, National Marine Fisheries Service. for year-round harvest opportunities or to approach without exceeding the OYs [FR Doc. 04–14717 Filed 6–28–04; 8:45 am] extending fishing opportunities as long for federally managed species. BILLING CODE 3510–22–S

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Proposed Rules Federal Register Vol. 69, No. 124

Tuesday, June 29, 2004

This section of the FEDERAL REGISTER Agency, Region III, 1650 Arch Street, information provided in the direct final contains notices to the public of the proposed Philadelphia, Pennsylvania 19103. action, with the same title, that is issuance of rules and regulations. The D. Hand Delivery: At the previously- located in the ‘‘Rules and Regulations’’ purpose of these notices is to give interested listed EPA Region III address. Such section of this Federal Register persons an opportunity to participate in the deliveries are only accepted during the publication. rule making prior to the adoption of the final Docket’s normal hours of operation, and rules. Dated: May 27, 2004. special arrangements should be made James W. Newsom, for deliveries of boxed information. Acting Regional Administrator, Region III. ENVIRONMENTAL PROTECTION Instructions: Direct your comments to [FR Doc. 04–14603 Filed 6–28–04; 8:45 am] AGENCY Docket ID No. MD 135–3099. EPA’s policy is that all comments received BILLING CODE 6560–50–P 40 CFR Part 52 will be included in the public docket without change, including any personal [MD135–3099b; FRL–7671–3] information provided, unless the DEPARTMENT OF TRANSPORTATION Approval and Promulgation of Air comment includes information claimed National Highway Traffic Safety Quality Implementation Plans; to be Confidential Business Information Administration Maryland; Control of Volatile Organic (CBI) or other information whose Compound Emissions From Portable disclosure is restricted by statute. Do 49 CFR Part 579 Fuel Containers not submit information that you consider to be CBI or otherwise [Docket No. NHTSA 2001–8677; Notice 10] AGENCY: Environmental Protection protected through regulations.gov or e- Agency (EPA). mail. The Federal regulations.gov Web RIN 2127–AJ41 ACTION: Proposed rule. site is an ‘‘anonymous access’’ system, which means EPA will not know your Reporting of Information and SUMMARY: EPA proposes to approve the identity or contact information unless Documents About Potential Defects State Implementation Plan (SIP) you provide it in the body of your revision submitted by the State of comment. If you send an e-mail AGENCY: National Highway Traffic Maryland for the purpose of establishing comment directly to EPA without going Safety Administration (NHTSA), DOT. Volatile Organic Compound (VOC) through regulations.gov, your e-mail ACTION: Notice of proposed rulemaking. emission standards for portable fuel address will be automatically captured SUMMARY: containers. In the Final Rules section of and included as part of the comment This document proposes to this Federal Register, EPA is approving that is placed in the public docket and amend the date by which quarterly early the State’s SIP submittal as a direct final made available on the Internet. If you warning reports are to be submitted to rule without prior proposal because the submit an electronic comment, EPA the agency from 30 days following the Agency views this as a noncontroversial recommends that you include your end of a calendar quarter to 60 days submittal and anticipates no adverse name and other contact information in following the end of a calendar quarter. comments. A detailed rationale for the the body of your comment and with any This also proposes to amend the date by approval is set forth in the direct final disk or CD-ROM you submit. If EPA which copies of non-dealer field reports rule. If no adverse comments are cannot read your comment due to are to be submitted from 30 days after received in response to this action, no technical difficulties and cannot contact the quarterly reports are due to 15 days further activity is contemplated. If EPA you for clarification, EPA may not be after those reports are due. receives adverse comments, the direct able to consider your comment. DATES: Comments Closing Date: final rule will be withdrawn and all Electronic files should avoid the use of Comments must be received on or public comments received will be special characters, any form of before July 29, 2004. addressed in a subsequent final rule encryption, and be free of any defects or ADDRESSES: You may submit comments based on this proposed rule. EPA will viruses. identified by DOT DMS Docket Number not institute a second comment period. Copies of the documents relevant to NHTSA 2004–8677 by any of the Any parties interested in commenting this action are available for public following methods: on this action should do so at this time. inspection during normal business • Web site: http://dms.dot.gov. DATES: Comments must be received in hours at the Air Protection Division, Follow the instructions for submitting writing by July 29, 2004. U.S. Environmental Protection Agency, comments on the DOT electronic docket ADDRESSES: Submit your comments, Region III, 1650 Arch Street, site. identified by MD 135–3099 by one of Philadelphia, Pennsylvania 19103; and • Fax: 1–202–493–2251. the following methods: the Maryland Department of the • Mail: Docket Management Facility; A. Federal eRulemaking Portal: Environment, 1800 Washington U.S. Department of Transportation, 400 http://www.regulations.gov. Follow the Boulevard, Suite 705, Baltimore, Seventh Street, SW., Nassif Building, on-line instructions for submitting Maryland, 21230. Room PL–401, Washington, DC 20590– comments. FOR FURTHER INFORMATION CONTACT: 0001. B. E-mail: [email protected] Marilyn Powers, (215) 814–2308, or by • Hand Delivery: Room PL–401 on C. Mail: Makeba Morris, Chief, Air e-mail at [email protected]. the plaza level of the Nassif Building, Quality Planning Branch, Mailcode SUPPLEMENTARY INFORMATION: For 400 Seventh Street, SW., Washington, 3AP21, U.S. Environmental Protection further information, please see the DC, between 9 am and 5 pm, Monday

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through Friday, except Federal 11, 2003, NHTSA amended the and our experience in receiving EWR Holidays. reporting dates. Under the revised rule, data, we are proposing to revise section • Federal eRulemaking Portal: Go to the initial reporting period for all 579.28(b) to permit manufacturers to http://www.regulations.gov. Follow the quarterly data 1 other than historical submit EWR quarterly data not later online instructions for submitting reports and copies of non-dealer field than 60 days after the end of each comments. reports, was the third quarter of 2003. calendar quarter. Instructions: All submissions must Reports covering the last two quarters of The EWR rule requires manufacturers include the agency name and docket 2003 and the first quarter of 2004 were to submit large amounts of data that are number or Regulatory Identification due to NHTSA within 60 days after the stored in a variety of locations. As Number (RIN) for this rulemaking. For close of the reporting period. Thereafter, manufacturers have compiled and detailed instructions on submitting reports currently are due within 30 days reported EWR information, they have comments and additional information after the close of the quarter. NHTSA gained a better understanding of the on the rulemaking process, see the also amended the requirements for amount of time it takes them to collect, Request for Comments heading of the submission of copies of non-dealer field collate and report the information. SUPPLEMENTARY INFORMATION section of reports. The initial reporting period for Based upon the experience of the this document. Note that all comments the submission of copies of non-dealer Alliance’s members, it appears that at received will be posted without change field reports was the first calendar least for the foreseeable future, to http://dms.dot.gov, including any quarter of 2004. The field reports manufacturers need more than 30 days personal information provided. Please currently are due within 30 days after to provide complete and accurate EWR see the Privacy Act heading of the the quarterly data are due. 49 CFR reports to NHTSA. Incomplete or SUPPLEMENTARY INFORMATION section of 579.28(b), (n) (2003); see 68 FR 35145 inaccurate data would not serve NHTSA this document regarding documents (June 11, 2003). well. Complete quarterly reports are far submitted to the agency’s dockets. II. Petition for Extension of Time to more useful in comparing various data Docket: For access to the docket to Submit EWR Data. to determine whether there are trends read background documents or that are indicative of a potential defect. On April 22, 2004, the Alliance of comments received, go to http:// In fact, incomplete reports could lead Automobile Manufacturers (Alliance) dms.dot.gov at any time or to Room PL– the agency to fail to notice potential petitioned NHTSA to conduct a 401 on the plaza level of the Nassif defects or to examine issues rulemaking to allow manufacturers to Building, 400 Seventh Street, SW., unnecessarily. submit EWR quarterly reports within 60 Washington, DC., between 9 a.m. and 5 days after the close of the quarterly As we have stated in earlier Federal p.m., Monday through Friday, except reporting period, rather than the 30 days Register notices on the early warning Federal Holidays. allowed in the current regulation, reporting program, we plan to review FOR FURTHER INFORMATION CONTACT: For beginning with the report for the second the EWR regulation after two years of non-legal issues, contact Jonathan calendar quarter of 2004. The Alliance experience. During the course of this White, Office of Defects Investigation, stated that vehicle manufacturers have review, we will assess whether the NHTSA (phone: 202–366–5226). For learned through the experience of the appropriate time for quarterly reporting legal issues, contact Andrew DiMarsico, first three reporting periods that the should be 30, 60 or some other number Office of Chief Counsel, NHTSA (phone: processing and reporting of early of days after the end of the reporting 202–366–5263). warning information will take longer period. You may send mail to these officials than 30 days. As a result, the Alliance Under the current regulations, copies at National Highway Traffic Safety stated, despite the manufacturers’ best of non-dealer field reports are due to Administration, 400 Seventh Street, efforts, if the reports were due 30 days NHTSA within 30 days after the other SW., Washington, DC 20590. after the end of the quarter a significant quarterly reports are due. 49 CFR SUPPLEMENTARY INFORMATION: amount of reportable data could 579.28(n). In essence, beginning with the second quarter of 2004, these reports I. Background inadvertently be excluded from the reports, and included in the following are now due 60 days after the end of the On July 10, 2002, NHTSA published quarter’s reports instead. In order to quarter. Given the structure of the a final rule implementing the early avoid such incomplete reporting, the regulation, which bases the due date for warning reporting (EWR) provisions of Alliance requests an additional 30 days non-dealer field reports on the due date the Transportation Recall Enhancement, to provide the quarterly data. for quarterly reports, if we were to Accountability, and Documentation change the due date for the quarterly (TREAD) Act, 49 U.S.C. 30166(m) (67 III. Discussion reports and make no other changes, the FR 45822). The final rule established a When we issued the final rule, and non-dealer field reports would be due schedule for the reporting of when we postponed the initial reporting 90 days after the end of the quarter. We information and submission of copies of period on reconsideration, we believed do not see any need for such a delay, certain field reports required by the that after manufacturers had three which could delay our ability to identify rule. The first calendar quarter for opportunities to gain experience in potential safety defects. However, to which reports were required was the making EWR submissions, 30 days after avoid any possibility that the second calendar quarter of 2003. See 49 the end of each calendar quarter would submission of the field reports could CFR 579.28(a)(2002). For the quarterly be a sufficient amount of time for interfere with the submission of the reporting periods in 2003, the reports submitting EWR information. However, quarterly data, we want to continue to were due within 60 days after the end on the basis of the Alliance’s petition stagger the two dates. We believe that a of the quarter. Thereafter, starting in difference of 15 days is sufficient for 2004, reports were to be due within 30 1 In general, quarterly reports include information this purpose. Therefore, we propose to days after the end of the quarter. See 49 on production, incidents involving death or injury, change the language of subsection numbers of property damage claims, numbers of CFR 579.28(b) (2002). consumer complaints, numbers of warranty claims 579.28(n) to require non-dealer field In response to a petition for or warranty adjustments, and numbers of field reports to be submitted not later than 15 reconsideration of the final rule, on June reports. See e.g., 49 CFR 579.21. days after the quarterly data is due,

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which would be 75 days after the end adhere to the requirements of part 512 name of the individual submitting the of the calendar quarter. may result in the release of confidential comment (or signing the comment, if information to the public docket. In submitted on behalf of an association, IV. Request for Comments addition, you should submit two copies business, labor union, etc.). You may How Do I Prepare and Submit from which you have deleted the review DOT’s complete Privacy Act Comments? claimed confidential business Statement in the Federal Register published on April 11, 2000 (65 FR Your comments must be written and information, to Docket Management at 19477) or you may visit http:// in English. To ensure that your the address given at the beginning of dms.dot.gov. comments are correctly filed in the this document under ADDRESSES. Docket, please include the docket Will the Agency Consider Late VI. Rulemaking Analyses number of this document in your Comments? Regulatory Policies and Procedures. comments. We will consider all comments that Executive Order 12866, ‘‘Regulatory Your comments must not be more Docket Management receives before the Planning and Review’’ (58 FR 51735, than 15 pages long (49 CFR 553.21). We close of business on the comment October 4, 1993) provides for making established this limit to encourage you closing date indicated at the beginning determinations whether a regulatory to write your primary comments in a of this notice under DATES. In action is ‘‘significant’’ and therefore concise fashion. However, you may accordance with our policies, to the subject to Office of Management and attach necessary additional documents extent possible, we will also consider Budget (OMB) review and to the to your comments. There is no limit on comments that Docket Management requirements of the Executive Order. the length of the attachments. receives after the specified comment The Order defines as ‘‘significant Please submit two copies of your closing date. If Docket Management regulatory action’’ as one that is likely comments, including the attachments, receives a comment too late for us to to result in a rule that may: to Docket Management at the beginning consider in developing the proposed (1) Have an annual effect on the of this document, under ADDRESSES. rule, we will consider that comment as economy of $100 million or more or You may also submit your comments an informal suggestion for future adversely affect in a material way the electronically to the docket following rulemaking action. economy, a sector of the economy, the steps outlined under ADDRESSES. productivity, competition, jobs, the How Can I Read the Comments environment, public health or safety, or How Can I Be Sure That My Comments Submitted by Other People? Were Received? State, local, or Tribal governments or You may read the comments received communities; If you wish Docket Management to by Docket Management at the address (2) Create a serious inconsistency or notify you upon its receipt of your and times given near the beginning of otherwise interfere with an action taken comments, enclose a self-addressed, this document under ADDRESSES. or planned by another agency; stamped postcard in the envelope You may also see the comments on (3) Materially alter the budgetary containing your comments. Upon the Internet. To read the comments on impact of entitlements, grants, user fees, receiving your comments, Docket the Internet, take the following steps: or loan programs or the rights and Management will return the postcard by (1) Go to the Docket Management obligations of recipients thereof; or mail. System (DMS) Web page of the (4) Raise novel legal or policy issues How Do I Submit Confidential Business Department of Transportation (http:// arising out of legal mandates, the Information? dms.dot.gov/). President’s priorities, or the principles (2) On that page, click on ‘‘search.’’ set forth in the Executive Order. If you wish to submit any information (3) On the next page (http:// This document was not reviewed under a claim of confidentiality, you dms.dot.gov/search/), type in the four- under E.O. 12866 or the Department of should submit the following to the Chief digit docket number shown at the Transportation’s regulatory policies and Counsel (NCC–110) at the address given heading of this document. Example: if procedures. This rulemaking action is at the beginning of this document under the docket number were ‘‘NHTSA– not significant under Department of the heading FOR FURTHER INFORMATION 2001–1234,’’ you would type ‘‘1234.’’ Transportation policies and procedures. CONTACT: (1) A complete copy of the (4) After typing the docket number, The impacts of this rule are expected to submission; (2) a redacted copy of the click on ‘‘search.’’ be so minimal as not to warrant submission with the confidential (5) The next page contains docket preparation of a full regulatory information removed; and (3) either a summary information for the docket you evaluation because this proposal would second complete copy or those portions selected. Click on the comments you only revise the time period for reporting of the submission containing the wish to see. certain EWR data from 30 days to 60 material for which confidential You may download the comments. days after the calendar quarter ends and treatment is claimed and any additional The comments are imaged documents, revise the date for submission of certain information that you deem important to in either TIFF or PDF format. Please field reports by 15 days. This document the Chief Counsel’s consideration of note that even after the comment closing does not otherwise change the substance your confidentiality claim. A request for date, we will continue to file relevant of the reports. confidential treatment that complies information in the Docket as it becomes Regulatory Flexibility Act. The with 49 CFR part 512 must accompany available. Further, some people may Regulatory Flexibility Act of 1980 (5 the complete submission provided to submit late comments. Accordingly, we U.S.C. 601 et seq.) requires agencies to the Chief Counsel. For further recommend that you periodically search evaluate the potential effects of their information, submitters who plan to the Docket for new material. proposed and final rules on small request confidential treatment for any businesses, small organizations and portion of their submissions are advised V. Privacy Act Statement small governmental jurisdictions. This to review 49 CFR part 512, particularly Anyone is able to search the was addressed in the final rule and a those sections relating to document electronic form of all comments response to petitions for submission requirements. Failure to received into any of our dockets by the reconsideration. See 67 FR 45870–71

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and 69 FR 3292, 3297 respectively. pursuant to the requirements of that Act Pub. L. 106–414, 114 Stat. 1800 (49 Today’s proposal simply extends dates (44 U.S.C. 3501 et seq.). We received U.S.C. 30102–103, 30112, 30117–121, for reporting information under the clearance from OMB on December 20, 30166–167); delegation of authority at EWR rule and does not impose any new 2002, which will expire on December 49 CFR 1.50. burdens on small businesses. Based on 31, 2005. The clearance number is the analyses performed in the final rule 2127–0616. The amendments proposed Subpart C—Reporting of Early (67 FR 45870–71) and the response to by this document do not change the Warning Information petitions for rulemaking (69 FR 3292, overall paperwork burden. They simply 2. In § 579.28, revise paragraphs (b) 3297), I certify that this proposed rule extend the dates for reporting certain and (n) to read as follows: will not have a significant economic information pursuant to the EWR rule. impact on a substantial number of small Data Quality Act Section 515 of the § 579.28 Due date of reports and other entities. FY 2001 Treasury and General miscellaneous provisions. Executive Order 13132 (Federalism). Government Appropriations Act (Pub. * * * * * Executive Order 13132 on ‘‘Federalism’’ L. 106–554, section 515, codified at 44 (b) Due date of reports. Except as requires us to develop an accountable U.S.C. 3516 historical and statutory provided in paragraph (n) of this process to ensure ‘‘meaningful and note), commonly referred to as the Data section, each manufacturer of motor timely input by State and local officials Quality Act, directed OMB to establish vehicles and motor vehicle equipment in the development of ‘‘regulatory government-wide standards in the form shall submit each report that is required policies that have federalism of guidelines designed to maximize the by this subpart not later than 60 days implications.’’ The Executive Order ‘‘quality,’’ ‘‘objectivity,’’ ‘‘utility,’’ and after the last day of the reporting period. defines this phrase to include ‘‘integrity’’ of information that Federal * * * * * regulations ‘‘that have substantial direct agencies disseminate to the public. As (n) Submission of copies of field effects on the States, on the relationship noted in the EWR final rule (67 FR reports. Copies of field reports required between the national government and 45822), NHTSA has reviewed its data under this subpart shall be submitted the States, or on the distribution of collection, generation, and not later than 15 days after reports are power and responsibilities among the dissemination processes in order to due pursuant to paragraph (b) of this various levels of government.’’ The ensure that agency information meets section. agency has analyzed this proposed rule the standards articulated in the OMB Issued on: June 24, 2004. in accordance with the principles and and DOT guidelines. The changes Kenneth N. Weinstein, criteria set forth in Executive Order proposed by today’s document simply 13132 and has determined that it will extends the reporting period for Associate Administrator for Enforcement. not have sufficient federalism submission of data pursuant to the EWR [FR Doc. 04–14699 Filed 6–24–04; 3:58 pm] implications to warrant consultation rule and do not have any effects on data BILLING CODE 4910–59–P with State and local officials or the quality. preparation of a federalism summary Unfunded Mandates Reform Act. The impact statement. This changes Unfunded Mandates Reform Act of 1995 DEPARTMENT OF THE INTERIOR proposed in this document only affect a (Public Law 104–4) requires agencies to rule that regulates the manufacturers of prepare a written assessment of the Fish and Wildlife Service motor vehicles and motor vehicle costs, benefits, and other effects of equipment, which does not have proposed or final rules that include a 50 CFR Part 17 substantial direct effect on the States, on Federal mandate likely to result in RIN 1018–AT54 the relationship between the national expenditures by State, local or tribal government and the States, or on the governments, in the aggregate, or by the Endangered and Threatened Wildlife distribution of power and private sector, of more than $100 and Plants; Special Rule To Control responsibilities among the various million annually (adjusted annually for the Trade of Threatened Beluga levels of government, as specified in inflation with base year of 1995). The Sturgeon (Huso huso) Executive Order 13132. final rule did not have unfunded Civil Justice Reform. This proposed AGENCY: Fish and Wildlife Service, mandates implications. 67 FR 49263 rule will not have a retroactive or Interior. (July 30, 2002). Today’s proposal simply preemptive effect, and judicial review of ACTION: Proposed rule. it may be obtained pursuant to 5 U.S.C. extends the reporting period for 702. That section does not require that submission of data pursuant to the EWR SUMMARY: We, the U.S. Fish and a petition for reconsideration be filed rule and does not create any unfunded Wildlife Service (Service), are proposing prior to seeking judicial review. mandates within the meaning of this to establish a special rule under Section Paperwork Reduction Act. Today’s Act. 4(d) of the Endangered Species Act of proposal simply extends the reporting List of Subjects in 49 CFR Part 579 1973, as amended (Act), to exempt the period for the submission of EWR data. international, foreign, and interstate The proposal does not create new Imports, Motor vehicle safety, Motor commerce in certain beluga sturgeon information collection requirements, as vehicles, Reporting and recordkeeping (Huso huso) products from threatened that term is defined by the Office of requirements. species permits normally required Management and Budget (OMB) in 5 In consideration of the foregoing, 49 under 50 CFR 17.32. Beluga sturgeon CFR Part 1320. To the extent that this CFR chapter V is amended as follows: occur in the Caspian and Black Seas, proposed rule implicates the Paperwork PART 579—REPORTING OF and are found in the territorial waters of Reduction Act, we will rely upon our INFORMATION AND 11 countries (i.e., the range countries). previous clearance from OMB. To obtain COMMUNICATIONS ABOUT Over-harvest, severe habitat a three-year clearance for information POTENTIAL DEFECTS degradation, and other factors have led collection for the EWR rule, we to the listing of beluga sturgeon as published a Paperwork Reduction Act 1. The authority citation for part 579 threatened throughout its range under notice on June 25, 2002 (67 FR 42843) continues to read as follows: Sec. 3, the Act and in Appendix II of the

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Convention on International Trade in 703–358–1708; fax, 703–358–2276; or e- continued open access to U.S. Endangered Species of Wild Fauna and mail, [email protected]. commercial markets (currently Flora (CITES). In our final listing rule, SUPPLEMENTARY INFORMATION: responsible for 80 percent of beluga we delayed the effective date of the caviar trade) while requiring specific threatened listing for 6 months in order Background improvements in regional and national to promulgate a 4(d) rule. After the On April 21, 2004, the Service management programs for the species. listing becomes effective, the Act will published a final rule (69 FR 21425) to Therefore, we are proposing this special prohibit all trade (foreign, international, list beluga sturgeon, Huso huso, as rule, as permitted under Section 4(d) of and interstate) in beluga sturgeon and threatened throughout its range under the Act, to permit continued beluga sturgeon products, except as the Endangered Species Act of 1973, as commercial importation of certain provided in the special rule or with amended (16 U.S.C. 1531 et seq.). That beluga sturgeon products subject to permits under the provision of Section listing in 50 CFR 17.11 will prohibit all specific provisions. We believe this 10 of the Act. This proposed special rule trade (foreign, international, and special rule is necessary and advisable initially allows range countries 6 interstate) in beluga sturgeon, except as for the species’ conservation because it: months from the rule’s effective date to provided in this special rule. We (a) Offers the greatest incentive for range submit a suite of reports and delayed the effective date of the listing countries to remain engaged with the management measures to us for review. until October 21, 2004, in order to United States in Huso huso recovery During this initial waiting period, gather public comments on this special and conservation; (b) exceeds the imports, re-exports, and interstate and rule, allow adequate time to address requirements of CITES for data foreign commerce of certain beluga those comments, and promulgate a final reporting, management planning, and sturgeon products will continue without special rule. research transparency; and (c) will a requirement for threatened species The beluga sturgeon is a large fish continue to impose requirements on the permits. This is intended to provide the from which highly valued beluga caviar range countries after they satisfy current range countries time to submit the is obtained. The species’ range was CITES stipulations. reduced during the 20th century, and is required documents. CITES Description of the Special Rule documentation will still be required. now limited to the Caspian and Black Under this proposed rule, beluga Sea basins, which comprise the The purpose of this proposed special caviar and beluga sturgeon meat territorial waters of 11 countries rule is to enhance conservation of wild originating from wild-caught fish or (Azerbaijan, Bulgaria, Georgia, Iran, beluga sturgeon by requiring properly range country hatcheries may be Kazakhstan, Moldova, Romania, Russia, designed and implemented fishery transferred into and out of the United Turkey, Turkmenistan, and Ukraine). management programs in the range States without threatened species Hereafter the term ‘‘Black Sea’’ countries. We believe that the greatest permits. We will also exempt interstate describes both the Black Sea and Sea of benefit for the conservation of beluga and foreign commerce in these products Azov basins, which are connected via sturgeon will be attained through from permit requirements, if that trade the Kerch Strait. The species is continued involvement with range occurs in the United States or involves threatened by habitat modification and countries that have access to our U.S. citizens. However, after an initial 6 degradation, over-exploitation for trade, commercial sturgeon markets, and by months of information gathering in the and limited natural reproduction. The conditioning this access on proper range states, these exemptions will species has benefited from a number of management and recovery of wild occur only after the range countries positive conservation measures for all populations in their waters. The have fulfilled certain requirements as Acipenseriformes species (sturgeons alternative to this special rule is to described below. In addition, all and paddlefishes), which are listed in strictly prohibit U.S. trade in beluga relevant provisions of CITES will Appendices I (2 species of sturgeons) sturgeon products, except as permitted continue to govern the international and II (23 species of sturgeons and under Section 10 of the Act. We believe trade in all beluga sturgeon products. paddlefishes) of CITES. Although this alternative is less advisable than the special rule for a number of reasons, as We are proposing to allow this commercial trade in Appendix-I species described at the end of the section conditional trade to promote effective is prohibited, CITES Appendix-II entitled ‘‘Effects of the Special Rule.’’ conservation of Huso huso in the range species (such as beluga sturgeon) may We intend to use this special rule to countries, through demonstrable law be traded commercially under a system build upon the progress already made enforcement and cooperative of permits and international cooperation by the range countries in CITES forums, management activities. by the importing and exporting countries. while recognizing that there are certain DATES: Comments must be received by Over the last several years, the CITES data gaps and information and July 29, 2004. Public hearing requests Parties that harvest and trade in management needs yet to be filled. must be received by July 14, 2004. sturgeons and sturgeon products For example, we note that since 2001 ADDRESSES: Submit any comments, (especially caviar) have been compelled the range countries in the Black Sea and information, and questions by mail to by other CITES Parties to commit to Caspian Sea basins have committed to the Chief, Division of Scientific cooperative quota setting, better trade cooperative management frameworks, Authority, U.S. Fish and Wildlife controls, and new management systems including the Black Sea Sturgeon Service, 4401 N. Fairfax Drive, Room to help ensure the species’ conservation. Management Group and the 750, Arlington, Virginia 22203, or by We believe that conservation measures Commission on Aquatic Bioresources of fax, 703–358–2276, or by e-mail, for Caspian Sea and Black Sea sturgeon the Caspian Sea. [email protected]. Comments species (like beluga sturgeon) that have These bodies have set annual quotas and supporting information will be been required by the CITES Standing for beluga and other sturgeon species in available for public inspection, by Committee could be effective if fully the two basins, and have representatives appointment, from 8 a.m. to 4 p.m. at implemented and expanded upon. We from each of the sturgeon-harvesting the above address. also believe that the most effective way and -trading range countries in the FOR FURTHER INFORMATION CONTACT: John to motivate range countries to respective regions. Despite the progress Field at the above address, or by phone, implement these measures is to allow made by the range countries, we concur

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with findings of recent reports from the live specimens of beluga sturgeon, huso conservation. This plan must be CITES Secretariat (Anonymous, 2002a; including adults, gametes (eggs or agreed to by each country within the 2002b) on problems in national and sperm), fingerlings, and viable eggs. It range of beluga sturgeon in the relevant regional Huso huso management. These would not exempt beluga sturgeon or basin (not just exporting nations). include: (a) The absence of a formal, any beluga products derived from Presently, these include Bulgaria, written management plan for Caspian aquaculture or grow-out operations Georgia, Moldova, Romania, Turkey, Sea and Black Sea beluga sturgeon as outside the range countries from the and Ukraine in the Black Sea and called for in CITES Resolution Conf. provisions of the Act, which we believe Azerbaijan, Iran, Kazakhstan, Russia, 12.7 and Decision 12.50; (b) a lack of could undermine the economic and Turkmenistan in the Caspian Sea. transparency in data analysis and quota incentives for sustainable harvests of This basin-wide management plan must setting; (c) continued high levels of wild Huso huso in the range countries. contain the following elements: poaching and illegal trade; and (d) a Furthermore, non-range country a. A clear statement of the recovery data-poor evaluation of hatchery aquaculture of the species, if exempted and management objectives for the plan, protocols and restocking programs. from provisions of the Act under this including a specification of the stock(s) Therefore, for those range countries special rule, could utilize Huso huso concerned, a definition of what wishing to export beluga sturgeon caviar broodstock from the range countries constitutes over-fishing for that stock, and meat to the United States, this without any direct benefit to wild and a rebuilding objective and schedule special rule would require: populations. We also believe that for that stock; 1. Submission of basin-wide beluga aquaculture or grow-out of foreign b. A statement of standard sturgeon management plans for the sturgeon species in the United States management strategies to be utilized by Black Sea and Caspian Sea range poses a risk to the recovery efforts for the nations involved (e.g., size limits, countries; several native sturgeon species listed target harvest rates, quotas, seasons, 2. Submission of national regulations under the Act or under interstate fishing gear, or effort caps); that implement the basin-wide recovery plans. This risk comes from the c. A complete statement of the cooperative plan mentioned in item 1, potential competition between native specific regulatory, monitoring, and including information on hatchery and sturgeons and unintentionally released research requirements that each restocking protocols and monitoring fish from facilities culturing foreign cooperating nation must implement to results; sturgeon and disease transmission from be in compliance with the management 3. Submission of annual reports foreign species (ASMFC, 1998; NMFS, plan; documenting management measures in 1998; USFWS and GSMFC, 1995). d. A complete description of how place and current status of Huso huso in Therefore, import, export, re-export, or stock survey data and fisheries data are the given country; interstate or foreign commerce involving used to establish annual catch and 4. Labeling of exported, re-exported, any beluga sturgeon products that export quotas, including a full and domestically traded beluga caviar originate from aquaculture operations explanation of any models used and the products as per CITES Resolutions and outside the range countries would still assumptions underlying those models; Decisions; require a threatened species permit in e. Procedures under which the 5. Biennial review by the Service of addition to any applicable CITES nations may implement and enforce range country management and documents (except as provided for alternative management measures that restocking programs for beluga sturgeon; captive-bred wildlife in 50 CFR achieve the same conservation benefits 6. Compliance with CITES provisions 17.21(g)). for beluga sturgeon as the standards and recommendations (including As per CITES Resolution Conf. 12.9, mentioned in paragraph (b); and permits) for beluga sturgeon imports and existing U.S. policy, this special f. A complete schedule by which into the United States; and rule would allow for the legal nations must take particular actions to 7. Suspension of imports basin-wide importation of personal effects of caviar. be in compliance with the plan. or by country if the conservation status Under Resolution Conf. 12.9, The Service’s Division of Scientific or management approach for Huso huso individuals may import up to 250 grams Authority will immediately review changes and compromises the recovery of any Appendix-II Acipenseriformes these basin-wide management plans of beluga sturgeon in the wild. See caviar without a CITES permit. This upon receipt for completeness and discussion below for how such a allowance would apply in the United clarity. If any elements of the suspension would be imposed. States, and importation of personal management plans are missing or The trade in caviar and meat taken effects of beluga caviar (as defined by unclear, we will ask the appropriate from wild or hatchery-origin beluga the CITES Parties) would not require a range states to provide additional sturgeon and originating from the range threatened species permit under the information within 60 days of the date countries would be exempt from Act, if the proposed rule is adopted. we contact them. If the range states fail threatened species permits under this However, any trade suspension to respond or fail to submit basin-wide special rule. The current range countries administratively implemented under management plans by the specified are Azerbaijan, Bulgaria, Georgia, Iran, this special rule would also prohibit the deadline, or if we are unable to confirm Kazakhstan, Moldova, Romania, Russia, importation of beluga caviar personal that all range states are signatories to Turkey, Turkmenistan, and Ukraine. For effects. those plans, we will immediately the purposes of this special rule, Under the proposed rule we will suspend trade with all range states in ‘‘beluga caviar’’ refers to processed require the submission of certain the given basin (Caspian Sea or Black unfertilized eggs from female Huso huso documentation from the range Sea) until we are satisfied that such intended for human consumption. countries, specifically: management plans exist. ‘‘Beluga meat’’ refers to excised muscle 1. Within 6 months of the effective 2. Within 6 months of the effective tissue of Huso huso destined for human date of this special rule, if adopted, date of this special rule, if adopted, all consumption. range countries wishing to export beluga range countries wishing to export beluga This special rule would not exempt caviar and meat to the United States caviar and meat to the United States from threatened species permit must submit a written, basin-wide must submit copies of national requirements the international trade in management plan that addresses Huso legislation and national fishery

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regulations pertaining to the harvest, any other pertinent information on wild sturgeon recovery or survival in the trade, aquaculture, restocking, and beluga sturgeon conservation if the wild; processing of beluga sturgeon. These proposed rule is adopted. Thereafter, we 4. Adoption of scientifically unsound laws and regulations must exhibit clear will continue to conduct these reviews hatchery practices or restocking means to implement the cooperative biennially. If any elements of the annual programs for beluga sturgeon; management plans mentioned in reports are missing or unclear, the 5. A decline in wild Huso huso paragraph 1 above. Upon receipt, the Service will ask the appropriate range populations, as documented in national Service’s Division of Scientific states to provide additional information reports outlined above or the scientific Authority will immediately review within 60 days of the date we contact literature, that goes unaddressed by these laws and regulations for them. If the range states fail to respond regional or national management completeness and clarity. If any or fail to submit annual reports by the programs; elements of the national legislation or specified deadline, we will immediately 6. Failure to address poaching or national fishery regulations are missing suspend trade with the given range smuggling in beluga sturgeon, their or unclear, we will ask the appropriate states. We propose to use these reviews parts, or products in the range countries range states to provide additional to determine whether range country or re-exporting countries, as information within 60 days of the date management programs are leading to documented in national reports we contact them. If the range states fail recovery of wild beluga sturgeon stocks. described above or other law to respond or fail to submit copies of Although we have no ability to enforcement sources; national laws and regulations by the regulate take or institute recovery plans 7. Failure of the range countries to specified deadline, we will immediately for beluga sturgeon in the range address the loss of beluga sturgeon suspend trade with the given range countries, we have identified general habitat quality or quantity; states until we are satisfied that such short-term and long-term recovery 8. Failure of the range countries or re- laws and regulations are in effect. objectives for beluga sturgeon in the exporting countries to follow the caviar 3. No later than November 1, 2005, Caspian and Black Seas. These labeling recommendations of the CITES and every year on that anniversary, all objectives will help us gauge the Parties (currently embodied in range states wishing to export beluga efficacy of this special rule, and monitor Resolution Conf. 12.7); sturgeon products to the United States progress toward beluga sturgeon 9. Recommendations from the CITES must submit an annual report to the restoration in the wild as indicated in Standing Committee to suspend trade in Service, if this proposed rule is adopted. the annual reports mentioned above. beluga sturgeon from one or more This annual report must contain, at a The short-term objective is to prevent countries; or minimum: further reduction of existing wild 10. Any other natural or human- a. A description of the specific fishery populations of beluga sturgeon. Baseline induced phenomenon that threatens the regulations that affect the harvest of population indices for each beluga survival or recovery of beluga sturgeon. Huso huso in the respective range sturgeon stock are under development Under this proposed special rule, if country, with any changes from the (Anonymous, 2002c) or in the planning adopted, we will decide whether to previous year highlighted; stages (Anonymous, 2002a; ibid. 2002b), suspend trade in beluga sturgeon b. A description of any revisions to and changes in these indices will be products for an entire basin or on a the cooperative management program evaluated over 3- to 5-year periods. The country-specific basis, including re- mentioned above, including any new long-term recovery goal for beluga exporting countries. This decision, models, assumptions, or equations used sturgeon is to establish self-sustaining made by the Service’s Division of to set harvest and export quotas; stocks in the Caspian and Black Sea Scientific Authority in consultation c. Updated time-series of information basins that can withstand directed with relevant experts, will depend on on beluga sturgeon obtained from fishing pressure. A self-sustaining stock the scope of the problem observed, the monitoring programs, including is one in which the average rate of magnitude of the threat to wild beluga estimates of relative or absolute stock recruitment to the juvenile stage at least sturgeon, and whether remedial action size, fishing mortality, natural mortality, equals the average mortality rate across is necessary at a local, national, or spawning activity, habitat use, hatchery the population over a 12- to 17-year region-wide scale. Upon determination and restocking programs, or other period (the period required for beluga that a trade restriction or suspension is relevant subjects; sturgeon to reach maturity). necessary, we will publish our findings d. A summary of law enforcement Based on the biennial review of in the Federal Register with the activities undertaken in the last year, annual reports, we propose to following information: and a description of any changes in administratively suspend or restrict 1. The problem(s) identified in the programs to prevent poaching and imports of beluga sturgeon products annual reports or other salient smuggling; from the range countries if we documents. e. A summary of the revenues determine that wild beluga sturgeon 2. The scope of the problem and the generated by the commercial stock status worsens or threats to the number of nations involved. exploitation of beluga sturgeon in the species increase. Trade restrictions or 3. The scope of the trade restriction or respective range country, and a suspensions may result basin-wide or suspension we are imposing, including summary of any documented for specific range countries under one or products covered, duration of the conservation benefits resulting from the more of the following scenarios: restriction or suspension, and criteria commercial harvest program in that 1. Failure to submit any of the reports, for lifting it. country (e.g., revenues allocated to legislation, and management plans 4. How the public can provide input, hatchery and re-stocking programs or described above, or failure to respond to make comments, and recommend research programs); and requests for additional information; remedial action to withdraw the trade f. Export data for the previous 2. A change in regional cooperative measures imposed. calendar year. management that threatens the recovery Starting in November 2005, the of wild beluga sturgeon; Effects of the Special Rule Service will conduct a review of 3. A change in range country laws or Consistent with Sections 3(3) and 4(d) information in the annual reports and regulations that compromises beluga of the Act, this proposed special rule

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would amend 50 CFR 17.44 to allow issuing threatened species permits for diminish or eliminate the revenue importation, re-exportation, and foreign the import, export, re-export of, or gained from U.S. beluga caviar markets and interstate commerce of beluga commerce in, other beluga sturgeon that is used by range countries to sturgeon caviar and meat, without a specimens when the activity enhances support recovery programs for the threatened species permit otherwise the conservation of the species in the species; (c) re-direct beluga sturgeon required by 50 CFR part 17, if all wild or the other criteria for threatened products from monitored international requirements of the special rule and 50 species permits as described in 50 CFR trade into unmonitored domestic CFR part 13 (General Permit 17.32. In addition, all exports, re- markets; and (d) force us to rely on Procedures), part 14 (Importation, exports, and imports of beluga sturgeon limited international trade data when Exportation, and Transportation of specimens will require the presentation assessing changes in harvest levels and Wildlife), and part 23 (Endangered of valid CITES permits and certificates market demand. All of these outcomes Species Convention—CITES) are met. as per 50 CFR part 23. increase the conservation risks for the This proposed special rule does not As noted above, the Service’s Division species while reducing the amount of end protection for the species. For of Scientific Authority will conduct a data needed for informed decision permit exemptions under this special review beginning in November 2005 and making at the regional and international rule, beluga sturgeon caviar and meat every 2 years thereafter based on level. will have to originate from fish taken in information in the annual reports, and 3. Nearly all of the recommendations range countries that have complied with other available information, to promulgated by the CITES Standing the management and reporting determine whether range country and Committee for the range countries have requirements mentioned above, beluga regional management programs are been achieved or nearly achieved, caviar must be labeled as per the effectively achieving conservation according to the CITES Secretariat. We recommendations of the CITES Parties benefits for wild beluga sturgeon are unable to predict, therefore, how the (even for U.S. domestic trade), and all populations. Trade restrictions or a CITES system will require updates and beluga sturgeon products must be trade suspension could be placed on a systematic changes in range country accompanied by valid CITES Appendix- range country if the Service’s Division management programs for Huso huso II export permits or re-export of Scientific Authority administratively after the Standing Committee reviews certificates. The special rule will not determines that the conservation or compliance with the 2001 undermine conservation efforts for wild management status of beluga sturgeon in recommendations (including the so- beluga sturgeon in the range countries that country has changed such that called ‘‘Paris Agreement’’) after 2004. If since import, export, re-export, and continued recovery of the species is pressure from CITES processes abates, interstate and foreign commerce compromised. This provision gives the this special rule offers our most (involving people under U.S. Service the ability to react effectively to promising tool for getting information jurisdiction) in live Huso huso (usually potential conservation concerns that from the range countries and destined for aquaculture operations may emerge, such as persistent high influencing the recovery programs for outside the range countries) would still levels of poaching in some areas, or beluga sturgeon throughout its range. require a threatened species permit. changes in laws or regulations that Comments Solicited Issuance of these permits is predicated appear to be detrimental to the species on some direct benefit to wild in the wild, or the lack of submission of The Service invites comments on this populations of beluga sturgeon in the the required annual reports and proposed rule. Comments should be range countries. management plans. sent to the Service’s Division of Trade with the United States in We believe the issuance of this special Scientific Authority (see ADDRESSES beluga sturgeon products will be rule is necessary and advisable for the section). Comments must be received by allowed only with countries that have conservation of the species for the the date specified in the DATES section designated both a CITES Management following reasons: above. Authority and Scientific Authority, and 1. Exempting the commercial trade in Clarity of This Regulation have not been identified by the CITES wild-origin and hatchery-origin beluga Conference of the Parties, the CITES caviar and meat from permit Executive Order 12866 requires each Standing Committee, or in a Notification requirements, with conditions, will agency to write regulations that are easy from the CITES Secretariat as countries expedite transfer of specimens into and to understand. We invite your from which Parties are asked not to out of the United States without comments on how to make this rule accept shipments of beluga sturgeon compromising the species’ recovery. easier to understand, including answers specimens or all CITES-listed species. This expedited trade offers an incentive to questions such as the following: (1) This restriction will also apply to to range countries to meet the Are the requirements in the rule clearly intermediary countries that re-export requirements in this special rule, which stated? (2) Does the rule contain beluga sturgeon to the United States. are stricter than those imposed by technical language or jargon that The Service’s Division of Management CITES and provide more detailed interferes with its clarity? (3) Does the Authority will provide on request a list information on stock status and format of the rule (grouping or order of of those countries that have not management measures than CITES sections, use of headings, paragraphing, designated either a Management reports. etc.) aid or reduce its clarity? (4) Would Authority or a Scientific Authority, or 2. Without this special rule, we would the rule be easier to understand if it that have been identified as a country prohibit all commercial trade in beluga were divided into more (but shorter) from which Parties are asked not to caviar and meat unless approved via sections? (5) Is the description of the accept shipments of specimens of any threatened species permits and rule in the ‘‘Supplementary CITES-listed species that would include appropriate CITES documentation. Such Information’’ section of the preamble beluga sturgeon. a restriction could reasonably be helpful in understanding the proposed As noted above, this special rule expected to: (a) Hamper or cease rule? What else could we do to make the exempts certain trade in beluga caviar or multilateral discussions between the rule easier to understand? Send a copy meat from the issuance of threatened United States and the range countries on of any comments that concern how we species permits. We will consider beluga sturgeon conservation; (b) could make this rule easier to

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understand to Office of Regulatory obtaining individual authorization, the This rule would not have an annual Affairs, Department of the Interior, rule’s impacts on affected individuals effect on the economy of $100 million Room 7229, 1849 C Street, NW., would be positive. This rule will not or more; would not cause a major Washington, DC 20240. You also may e- raise novel legal or policy issues. We increase in costs or prices for mail the comments to have previously promulgated section consumers, individual industries, [email protected]. 4(d) rules for other species. Federal, State, or local government agencies, or geographic regions; and Required Determinations Regulatory Flexibility Act would not have significant adverse A Record of Compliance was prepared We have determined that this rule effects on competition, employment, for this proposed rule. A Record of would not have a significant economic investment, productivity, innovation, or Compliance certifies that a rulemaking effect on a substantial number of small the ability of United States-based action complies with the various entities as defined under the Regulatory enterprises to compete with foreign- statutory, Executive Order, and Flexibility Act (5 U.S.C. 601 et seq.). An based enterprises. Department Manual requirements initial regulatory flexibility analysis is The Service examined each of the four applicable to rulemaking. Without this not required, and a Small Entity exemptions of the Act’s section 9 trade proposed special rule, individuals Compliance Guide is not required. To prohibitions that would be created by subject to the jurisdiction of the United assess the effects of the rule on small the special rule (import, re-export, States would be prohibited from entities, the Service focused on the interstate commerce, and foreign engaging in domestic, foreign, and caviar import, re-export, and commerce). We determined that the international trade in beluga sturgeon aquaculture industries in the United foreign commerce exemption would meat and caviar except as permitted by States because these are the entities have little or no economic effect (i.e., Section 10 of the Act. Without this rule, most likely to be affected by the rule, would not ease any significant cost that anyone engaging in those activities particularly those engaged in beluga would have been imposed by section 9, would need to seek an authorization caviar importation, production, and without the rule). In foreign countries, from us through a permit under section distribution in the United States. In this exemption would allow individuals 10(a) of the Act. This process takes time 2002, the most recent year for which we and businesses subject to U.S. and can involve an economic cost. The have import data, 15 businesses jurisdiction to engage in commerce rule would allow these individuals to accounted for all of the foreign-source involving beluga sturgeon products avoid the costs associated with sturgeon caviar legally imported into the originating from range countries without abstaining from conducting these United States. It is possible that some of the need for threatened species permits. activities or with seeking a threatened these businesses did not trade in beluga We are not aware of such commerce species permit from us. These economic sturgeon. In those 15, the 10 largest currently, and therefore this exemption benefits, while important, do not rise to importers accounted for 94 percent of would create minimal benefits. the level of ‘‘significant’’ under the all imported caviar (by weight), while The Service also examined the impact following required determinations. the top 6 importers accounted for 85 of the special rule on import, re-export, percent of the U.S. trade (by weight). and interstate commerce in beluga Regulatory Planning and Review Illegal imports are not readily sturgeon products originating from a In accordance with the criteria in quantifiable, and were not addressed range country. This exemption would Executive Order 12866, the Office of further in our analysis. not have significant economic effects in Management and Budget has According to our analysis, no U.S. regard to scientific samples or personal determined that this rule is not a entities are involved in the commercial effects moving in and out of the United significant regulatory action. This rule aquaculture of pure (i.e., non- States, given our recorded low volume would not have an annual economic hybridized) H. huso products such as of such transactions. However, this impact of more than $100 million, or caviar and meat. However, at least one exemption would create significant significantly affect any economic sector, U.S. institution is conducting feasibility benefits to beluga sturgeon traders productivity, jobs, the environment, or studies on the commercial aquaculture commercially importing, re-exporting, other units of government. This rule of hybrid ‘‘bester’’ sturgeon products. and selling (across State lines) beluga would reduce the regulatory burden of This type of aquaculture utilizes live sturgeon caviar and meat originating the listing of the beluga sturgeon under beluga sturgeon and live sterlet from the range countries. Without the the Act as a threatened species by (Acipenser ruthenus) to produce caviar rule, section 9 would prevent all current providing certain exemptions to the in controlled, ex situ environments. import, re-export, and interstate section 9 prohibitions. These Neither the threatened listing for beluga commerce, and traders would receive no exemptions would reduce the economic sturgeon nor the special rule affects income from lucrative U.S. markets for costs of the listing; therefore, the trade in bester sturgeon products beluga sturgeon meat or caviar. With the economic effect of the rule would directly. However, there may be certain rule, this international and interstate benefit citizens and the economy. This amounts of live beluga sturgeon commerce could continue with an effect does not rise to the level of required by these entities from the range estimated annual net income of $16 ‘‘significant’’ under Executive Order countries. Given the apparently limited million to $39 million per year for the 12866. This rule will not create aquaculture use of beluga sturgeon, the traders, a beneficial effect of the rule. inconsistencies with other Federal section 9 prohibition on trade in live Unfunded Mandates Reform Act agencies’ actions. Other Federal and aquacultured beluga sturgeon agencies would be mostly unaffected by should have no significant economic In accordance with the Unfunded this proposed rule. This rule will not impact in U.S. markets. Mandates Reform Act (2 U.S.C. 1501, et materially affect entitlements, grants, seq.,) this rule would not impose an user fees, loan programs, or the rights Small Business Regulatory Enforcement unfunded mandate on State, local, or and obligations of their recipients. Fairness Act tribal governments or the private sector Because this rule would allow This rule is not a major rule under 5 of more than $100 million per year. This individuals to continue otherwise U.S.C. 804(2), the Small Business rule would not have a significant or prohibited activities without first Regulatory Enforcement Fairness Act. unique effect on State, local, or tribal

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governments or the private sector. A including national management plans, Executive Order 13211 Small Government Agency Plan is not national regulations, annual reports, and required. labeling of shipments, to be provided to We have evaluated this proposed rule the Service by countries wishing to in accordance with E.O. 13211 and have Takings export beluga sturgeon products to the determined that this rule would have no In accordance with Executive Order United States. The new information effects on energy supply, distribution, or 12630, this rule does not have requirements do not, however, require use. Therefore, this action is not a significant takings implications. By OMB approval under the Paperwork significant energy action, and no reducing the regulatory burden placed Reduction Act, as explained below. Statement of Energy Effects is required. on affected individuals resulting from Although we identify 11 countries in Literature Cited the listing of the beluga sturgeon as a the current biological range of the Anonymous, 2002a. Caspian Sea sturgeons. threatened species, this rule would beluga sturgeon, only 7 of these reduce the likelihood of potential Interpretation and implementation of the countries (Azerbaijan, Bulgaria, Iran, Convention, significant trade in takings. Affected individuals would Kazakhstan, Romania, Russia, and Appendix-II species. 47th meeting of the have more freedom to pursue activities Turkmenistan) currently have a national Standing Committee, 1–2 November (i.e., import and re-export) involving program to commercially harvest and 2002; Santiago, Chile. SC47 Doc. 11. beluga sturgeon without first obtaining export beluga sturgeon. In addition, Anonymous, 2002b. Conservation of individual authorization. Serbia and Montenegro (a federation Acipenseriformes; implementation of bordering the Adriatic Sea) routinely Decisions 11.59 and 11.152. Notification Federalism to the Parties 2002/012. 6 March 2002; declare catch and export quotas for In accordance with Executive Order Geneva, Switzerland. beluga sturgeon, but the species is 13132, this rule does not have sufficient Anonymous, 2002c. Report on results of considered extirpated from the Adriatic federalism implications to warrant the complex interstate all-Caspian Sea Sea. Therefore, only those 7 countries preparation of a federalism assessment. expedition on the assess of sturgeon with existing national harvest programs species stocks. FSUI CaspNIRKh, Atyrau Civil Justice Reform would be able to provide the branch of KazNIRKh, AzerNIRKh, State information required by this rule to the Fishery Department of Turkmenistan, In accordance with Executive Order Iran Scientific Research Center (Shilat). 12988, the Office of the Solicitor has Service. As such, the threshold of 10 or more respondents per year is not met, Astrakhan, 2002. determined that this rule does not ASMFC, 1998. Amendment 1 to the interstate unduly burden the judicial system and and OMB approval is not required. If, in fishery management plan for Atlantic meets the requirements of sections 3(a) the future, additional countries develop sturgeon. Fishery management report no. and 3(b)(2) of the Executive Order. national programs to commercially 31 of the Atlantic States Marine Fisheries harvest and export beluga sturgeon, and Commission. July 1998. 43 pp. Paperwork Reduction Act it therefore becomes necessary to collect NMFS, 1998. Final recovery plan for the Office of Management and Budget information from 10 or more shortnose sturgeon, Acipenser (OMB) regulations at 5 CFR 1320 respondents per year, we will first brevirostrum. December 1998. U.S. Department of Commerce, National implement provisions of the Paperwork obtain information collection approval from OMB. Oceanic and Atmospheric Reduction Act (44 U.S.C. 3501 et seq.). Administration, National Marine The OMB regulations at 5 CFR 1320.3(c) National Environmental Policy Act Fisheries Service. 104 pp. define a ‘‘collection of information’’ as USFWS and GSMFC, 1995. Gulf sturgeon the obtaining of information by or for an We have analyzed this rule in recovery plan. U.S. Fish and Wildlife agency by means of identical questions accordance with the criteria of the Service and Gulf States Marine Fisheries posed to, or identical reporting, National Environmental Policy Act of Commission. Atlanta, Georgia. 170 pp. 1969 (NEPA), and have determined that recordkeeping, or disclosure Author requirements imposed on, 10 or more this rule does not constitute a major persons. Furthermore, 5 CFR Federal action significantly affecting the The primary author of this rule is 1320.3(c)(4) specifies that ‘‘10 or more quality of the human environment John Field, Division of Scientific persons’’ refers to the persons to whom within the meaning of Section 102(2)(C) Authority, 4401 North Fairfax Drive, a collection of information is addressed of the NEPA, and it would not involve Room 750, U.S. Fish and Wildlife by the agency within any 12-month unresolved conflicts concerning Service, Arlington, VA 22203 period. For purposes of this definition, alternative uses of available resources [telephone, 703–358–1708]. employees of the Federal Government (516 DM 2.3A). Therefore, this rule is List of Subjects in 50 CFR Part 17 are not included. A Federal agency may categorically excluded under 516 DM 2, not conduct or sponsor, and a person is Appendix 1.10. Endangered and threatened species, not required to respond to, a collection Government-to-Government Exports, Imports, Reporting and of information unless it displays a Relationship With Tribes recordkeeping requirements, currently valid OMB control number. Transportation. This rule refers to CITES permits In accordance with the President’s required for the export to the United memorandum of April 29, 1994, Proposed Regulation Promulgation States of beluga sturgeon caviar and ‘‘Government-to-Government Relations For the reasons stated in the meat. Our CITES permit applications are With Native American Tribal preamble, the Service hereby proposes already approved by OMB under OMB Governments’’ (59 FR 22951) and E.O. to amend part 17, subpart B of chapter control number 1018–0093, which 13175, we have evaluated possible I, title 50 of the Code of Federal expires May 31, 2004. OMB is currently effects on federally recognized Indian Regulations, as set forth below: reviewing our request to renew the Tribes. We have determined that, approval for OMB control number because no Indian trust resources occur PART 17— [AMENDED] 1018–0093 for another 3 years. within the range of the beluga sturgeon, In addition, this rule would newly this rule would have no effects on 1. The authority citation for part 17 require certain other information, federally recognized Indian Tribes. continues to read as follows:

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Authority: 16 U.S.C. 1361–1407; 16 U.S.C. 2. In § 17.11(h) revise the entry for the § 17.11 Endangered and threatened 1531–1544; 16 U.S.C. 4201–4245; Pub. L. 99– ‘‘Sturgeon, beluga,’’ under ‘‘Fishes,’’ on wildlife. 625, 100 Stat. 3500; unless otherwise noted. the List of Endangered and Threatened * * * * * Wildlife to read as follows: (h) * * *

Species Vertebrate population When Critical Special Common Scientific Historic Range where endangered or Status listed habitat rules name name threatened

******* FISHES

******* Sturgeon, Huso huso ... Azerbaijan, Bulgaria, Croatia, Czech Entire ...... T ...... 743 ...... NA ...... 17.44 beluga. Republic, Georgia, Hungary, Islamic (y) Republic of Iran, Kazakhstan, Re- public of Moldova, Romania, Russian Federation, Turkey, Turkmenistan, Ukraine, Yugoslavia (Caspian Sea, Black Sea, Adriatic Sea, Sea of Azov, and all rivers in their water- sheds).

3. Amend § 17.44 by adding Romania, Russia, Turkey, committed any acts described in paragraph (y) to read as follows: Turkmenistan, and Ukraine. paragraphs (y)(2)(ii) and (iii) of this Re-export. Export of beluga sturgeon section. § 17.44 Special rules—fishes. specimens that were previously (3) What activities are exempted from * * * * * imported. threatened species permits by this rule? (y) Beluga sturgeon. This paragraph Wild beluga sturgeon. Specimens of (i) Import, re-export, and interstate applies to the threatened beluga Huso huso born and reared in the commerce involving certain caviar and sturgeon (Huso huso). natural marine environment within the meat obtained from beluga sturgeon. (1) How are various terms defined in current or former geographic range of You may import, re-export, or conduct this special rule? In addition to the the species. interstate or foreign commerce in beluga definitions specified in § 10.12 of (2) What activities involving beluga sturgeon caviar and meat without a subchapter B of this chapter, we define sturgeon are prohibited by this rule? threatened species permit issued (i) International trade in beluga certain terms that specifically apply to according to § 17.32 only if the caviar sturgeon. Except as provided in the beluga sturgeon trade and this and meat are derived from wild or paragraph (y)(3) of this section, all special rule as follows: hatchery-origin beluga sturgeon that prohibitions and provisions of § 17.31(a) Aquacultured beluga sturgeon were caught and processed in the range apply to the international trade in products. Eggs, larvae, fingerlings, or countries. Also, the provisions in parts beluga sturgeon, including its parts and other products derived from Huso huso 13, 14, and 23 of this chapter and the derivatives. This rule provides no bred in captivity or grown in captivity following requirements must be met: exemption to the prohibitions and for commercial purposes. (A) Any beluga caviar must comply Beluga caviar. Processed unfertilized provisions of § 17.32 for aquacultured beluga sturgeon products produced with all CITES labeling requirements, as eggs from female Huso huso intended outside the range countries or live defined in relevant Resolutions or for human consumption, including beluga sturgeon. Decisions of the Conference of the products containing such eggs (e.g., (ii) Trade without CITES documents. Parties, including beluga caviar in cosmetics). Except as provided in paragraph (y)(3) interstate commerce in the United Beluga meat. Excised muscle tissue of of this section, you may not import, States. All individuals or businesses in Huso huso destined for human export, or re-export, or present for the United States wishing to engage in consumption. export or re-export beluga sturgeon or interstate domestic commerce of beluga Black Sea. The contiguous waters of beluga sturgeon products without valid sturgeon caviar must follow the CITES the Black Sea and the Sea of Azov. CITES permits and other permits and caviar labeling requirements. CITES. The Convention on licenses issued under parts 13, 17, and (B) The shipment must be International Trade in Endangered 23 of this chapter. accompanied by a valid CITES permit or Species of Wild Fauna and Flora. (iii) Commercial activity. Except as certificate. Hatchery-origin beluga sturgeon. provided in paragraph (y)(3) of this (C) For each shipment covered by this Specimens of Huso huso bred in section and § 17.32, you may not sell or exception, the country of origin and captivity solely in the range countries, offer for sale, deliver, receive, carry, each country of re-export, and the primarily for reintroduction and stock transport, or ship in interstate or foreign country of import involved in the trade enhancement purposes. commerce in the course of a commercial of a particular shipment, must have Live beluga sturgeon. Any living activity any beluga sturgeon or beluga designated both a CITES Management specimen of Huso huso, including sturgeon products. Authority and Scientific Authority, and viable unfertilized or fertilized eggs, (iv) It is unlawful for any person have not been identified by the CITES adults, fingerlings, and juveniles. subject to the jurisdiction of the United Conference of the Parties, the CITES Range countries. Azerbaijan, Bulgaria, States to commit, attempt to commit, Standing Committee, or in a Notification Georgia, Iran, Kazakhstan, Moldova, solicit to commit, or cause to be from the CITES Secretariat as a country

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from which Parties should not accept part of your personal baggage, which is that addresses Huso huso conservation. permits for beluga sturgeon or all being carried by you or checked as Each of these two basin-wide CITES-listed species in general. baggage on the same plane, boat, car, or management plans must be agreed to by (D) The range country from which the train as you. all of the range countries (not just beluga sturgeon caviar or meat (5) The item was not mailed or exporting nations) in the Black Sea or originated has complied with all of the shipped separately. the Caspian Sea, as appropriate. Upon requirements shown in paragraph (y)(4) (D) Household effects. You do not receipt, the Service’s Division of of this section, and none of the need a CITES document to import or re- Scientific Authority will immediately exporting, importing, or re-exporting export any part, product, derivative, or review these basin-wide management countries involved in the commercial manufactured article of a legally plans for completeness and clarity. If activity has been subject to an acquired beluga sturgeon specimen that any elements of the management plans administrative trade restriction or is part of a shipment of your household are missing or unclear, we will ask the suspension as outlined in paragraphs effects when moving your residence to appropriate range states to provide (y)(5) and (6) of this section. or from the United States, if all of the additional information within 60 days (ii) Import and re-export of following conditions are met: of the date we contact them. If the range noncommercial personal or household (1) No living beluga sturgeon is states fail to respond or fail to submit effects. Article VII(3) of the CITES included. basin-wide management plans by the Convention recognizes a limited (2) You personally own the item and specified deadline, or if we are unable exemption for the international are moving it for noncommercial to confirm that all range states are movement of personal and household purposes. signatories to those plans, we will effects, including specimens of beluga (3) The item and quantity of items are immediately suspend trade with all sturgeon. reasonably necessary or appropriate for range states in the given basin (Caspian (A) Stricter national measures. The household use. Sea or Black Sea) until we are satisfied exemption for personal and household (4) You import or re-export your that such management plans exist. effects does not apply if a country household effects within 1 year of Submission of documents in English prohibits or restricts the import, export, changing your residence from one may help expedite the Service’s review. or re-export of the item. country to another. These cooperative management plans (1) You or your shipment must be (5) The shipment, or shipments if you must contain the following elements: accompanied by any document required cannot move all of your household (A) A clear statement of the recovery by a country under its stricter national effects at one time, contains only items and management objectives of the plan, measures. purchased, inherited, or otherwise including a specification of the stock(s) (2) In the United States, you must acquired before you moved your concerned, a definition of what obtain any permission needed under residence. constitutes over-fishing for that stock, other regulations in this subchapter. (E) Trade restrictions. Regardless of and a rebuilding objective and schedule (B) Required CITES documents. You the provisions above for personal and for that stock; must obtain a CITES document for household effects, any trade suspension (B) A statement of standard personal or household effects and meet or trade restriction administratively regulations (e.g., size limits, target the requirements of this part if one of imposed by the Service under harvest rates, quotas, seasons, fishing the following applies: paragraphs (y)(5) or (6) of this section gear, or effort caps) to be utilized by the (1) The Management Authority of the could also apply to personal and nations involved; importing, exporting, or re-exporting household effects of beluga caviar. (C) A complete statement of the country requires a CITES document. (4) What must beluga sturgeon range specific regulatory, monitoring, and (2) You or your shipment does not countries do to be authorized under the research requirements that each meet all of the conditions for an special rule to export to the United cooperating nation must implement to exemption as provided in paragraphs States? The following requirements be in compliance with the management (y)(3)(ii)(C) through (E) of this section. apply to the range countries wishing to plan; (3) The personal or household effect export beluga caviar or beluga meat to (D) A complete description of how exceeds 250 grams of beluga caviar. To the United States without the need for stock survey data and fisheries data are import or re-export more than 250 a threatened species permit issued used to establish annual catch and grams, you must have a valid CITES under § 17.32. These requirements export quotas, including a full document for the entire quantity. apply to all shipments of beluga caviar explanation of any models used and the (C) Personal effects. You do not need and beluga meat that originate in the assumptions underlying those models; a CITES document to import or re- range countries, even if the shipments (E) Procedures under which the export any part, product, derivative, or are re-exported to the United States via nations may implement and enforce manufactured article of a legally an intermediary country. (See paragraph alternative management measures that acquired beluga sturgeon specimen to or (y)(6) of this section for more achieve the same conservation benefits from the United States if all of the information on the Service’s biennial for beluga sturgeon as the standards following conditions are met: reviews under the special rule.) mentioned in paragraph (y)(4)(i)(B) of (1) No living beluga sturgeon is (i) Basin-wide beluga sturgeon this section; and included. management plans. By [insert date 6 (F) A complete schedule by which (2) You personally own and possess months after the effective date of this nations must take particular actions to the item for noncommercial purposes, special rule], each range country be in compliance with the plan. including any item intended as a wishing to export beluga caviar or (ii) National regulations. By [insert personal gift. beluga meat to the United States date 6 months after the effective date of (3) The item and quantity of items are without the need for a threatened this special rule], each range country reasonably necessary or appropriate for species permit issued under § 17.32 wishing to export beluga caviar or the nature of your trip or stay. must submit a copy of a cooperative beluga meat to the United States under (4) You are either wearing the item as management plan for their respective this special rule must provide us with clothing or an accessory or taking it as basin (i.e., Black Sea or Caspian Sea) copies of national legislation and

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regulations that implement the basin- mentioned in paragraph (y)(4)(i) of this Secretariat as lacking a designated wide cooperative management plan section, including any new models, Management Authority or Scientific described in paragraph (y)(4)(i) of this assumptions, or equations used to set Authority for the issuance of valid section, including regulations pertaining harvest and export quotas; CITES documents or their equivalent. to the harvest, trade, aquaculture, (C) New information obtained in the (ii) The country is identified in any restocking, and processing of beluga last year on beluga sturgeon action adopted by the Conference of the sturgeon. Upon receipt, the Service’s distribution, stock size, models used for Parties to the Convention, the Division of Scientific Authority will quota-setting, spawning activity, habitat Convention’s Standing Committee, or in immediately review these basin-wide use, hatchery programs and results, or a Notification issued by the CITES management plans for completeness and other relevant subjects; Secretariat, as a country from which clarity. If any elements of the national (D) A summary of law enforcement Parties are asked not to accept legislation or national fishery activities undertaken in the last year, shipments of specimens of beluga regulations are missing or unclear, we and a description of any changes in sturgeon or all CITES-listed species. A will ask the appropriate range states to programs to prevent poaching and listing of all countries that have not provide additional information within smuggling; designated both a Management 60 days of the date we contact them. If (E) A summary of the revenues Authority and Scientific Authority, or the range states fail to respond or fail to generated by the commercial that have been identified as a country submit copies of national laws and exploitation of beluga sturgeon in the from which Parties should not accept regulations by the specified deadline, respective range country, and a permits, is available by writing to: we will immediately suspend trade with summary of any documented Division of Management Authority, U.S. the given range states until we are conservation benefits resulting from the Fish and Wildlife Service, 4401 N. satisfied that such laws and regulations commercial harvest program in that Fairfax Drive, Room 700, Arlington, VA are in effect. Submission of documents country (e.g., revenues allocated to 22203. in English may help expedite the hatchery/re-stocking programs or (6) How will the Service set trade Service’s review. research programs); and restrictions or prohibitions under the (F) Export data for the previous (iii) Annual report. Range country special rule? The Service’s Division of calendar year. governments wishing to export Scientific Authority will conduct a specimens of beluga sturgeon caviar or (iv) Caviar labeling. All caviar shipments imported into the United biennial review of beluga sturgeon meat to the United States under this conservation based on information in special rule will need to provide an States must follow the CITES caviar the cooperative basin-wide management annual report containing the most labeling requirements as agreed to in the plans, national regulations and laws, recent information available on the relevant Resolutions and Decisions of and annual reports (submitted as per status of the species, following the the CITES Parties. paragraph (y)(4) of this section). We will information guidelines specified below. (v) CITES compliance. Except as combine that review with a review of The Service must receive the first provided in paragraph (y)(3)(ii) of this other relevant sources (e.g., scientific annual report no later than November 1, section, all shipments of beluga literature, law enforcement data, 2005, and every year thereafter on the sturgeon specimens, including those government-to-government anniversary of that date. Starting in exempted from threatened species consultations) to determine whether November 2005, and thereafter on a permits under this special rule, will biennial basis, the Service will conduct require accompanying valid CITES range country management programs are a review of information in the annual permits and certificates. effectively achieving conservation reports and any other pertinent (vi) Initial reporting period. Until benefits for beluga sturgeon. Based on information on wild beluga sturgeon [insert date 6 months after the effective this information, or the failure to obtain conservation. If any elements of the date of this rule], no threatened species it, the Service may restrict trade from a annual reports are missing or unclear, permits will be required for the import, range country, a re-exporting the Service will ask the appropriate re-export, or interstate or foreign intermediary country, or an entire basin range states to provide additional commerce of beluga sturgeon caviar and (i.e., the Caspian Sea or Black Sea) if we information within 60 days of the date meat that originated in the range determine that the conservation or we contact them. If the range states fail countries, in order to provide the range management status of beluga sturgeon to respond or fail to submit annual countries time to submit the required has changed and the continued recovery reports by the specified deadline, we documentation. After this 6-month of beluga sturgeon in that country or will immediately suspend trade with period, the exemption from threatened basin may be compromised. The the given range states. Submission of species permits will continue only decision to restrict trade in beluga documents in English may help under the terms and conditions sturgeon products on a national, basin, expedite the Service’s review. We specified in paragraphs (y)(4)(i) through or region-wide scale will depend on the propose to use these reviews to (v) of this section. scope of the problem observed, the determine whether range country (5) How will the Service inform the magnitude of the threat to wild beluga management programs are leading to public of CITES restrictions in trade of sturgeon, and whether remedial action recovery of wild beluga sturgeon stocks. beluga sturgeon? We will issue an is necessary at a national, basin, or For each range country, the following information bulletin that identifies a region-wide scale. information must be provided in the restriction or suspension of trade in (i) Trade restrictions or suspensions annual report: specimens of beluga sturgeon and post may result basin-wide or for specific (A) A description of the specific it on our websites (http://le.fws.gov and range countries under one or more of fishery regulations that affect the http://international.fws.gov) and at our the following scenarios: harvest of Huso huso in the respective staffed wildlife ports of entry if any (A) Failure to submit any of the range country, with any changes from criterion in paragraphs (y)(5)(i) or (ii) of reports, legislation, and management the previous year highlighted; this section is met: plans described above, or failure to (B) A description of any revisions to (i) The country is listed in a respond to requests for additional the cooperative management program Notification to the Parties by the CITES information;

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(B) A change in regional cooperative DEPARTMENT OF COMMERCE 15375), and a final rule on July 16, 2002, management that threatens the recovery (67 FR 46712), governing the taking of of wild beluga sturgeon; National Oceanic and Atmospheric marine mammals incidental to Navy Administration (C) A change in range country laws or SURTASS LFA sonar operations. That final rule became effective on August regulations that compromises beluga 50 CFR Part 216 15, 2002, and remains in effect until sturgeon recovery or survival in the August 15, 2007. Pursuant to the final wild; [Docket No. 040323099–4099–01; I.D. 072699A] rule, on August 16, 2002, NMFS issued (D) Adoption of scientifically a 1–year Letter of Authorization (LOA) unsound hatchery practices or RIN 0648–AR99 to the Navy authorizing the taking of restocking programs for beluga sturgeon; specified marine mammals within the Taking and Importing Marine specified areas of operation (67 FR (E) A decline in wild Huso huso Mammals; Taking Marine Mammals populations, as documented in national 55818; August 30, 2002). Subsequently, Incidental to Navy Operations of the Navy applied for and received two reports outlined above or the scientific Surveillance Towed Array Sensor additional LOAs covering two literature, that goes unaddressed by System Low Frequency Active Sonar SURTASS LFA sonar systems from regional or national management August 16, 2003, to August 15, 2004 (68 programs; AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and FR 50123; August 20, 2003). Additional (F) Failure to address poaching or Atmospheric Administration (NOAA), information regarding NMFS’ decision smuggling in beluga sturgeon, their Commerce. to authorize the taking of marine parts, or products in the range countries mammals incidental to Navy SURTASS ACTION: Proposed rule; request for or re-exporting countries, as LFA sonar operations is contained in comments. documented in national reports the proposed and final rules and the described above or other law SUMMARY: NMFS proposes to amend its LOAs and is not repeated here. enforcement sources; regulations governing the taking of National Defense Authorization Act marine mammals incidental to (G) Failure of the range countries to On November 24, 2003, the President operations of the U.S. Navy’s address the loss of beluga sturgeon signed into law the National Defense Surveillance Towed Array Sensor habitat quality or quantity; Authorization Act of 2004 (NDAA) System Low Frequency Active (Public Law 108–136). Included in this (H) Failure of the range countries or (SURTASS LFA) sonar to implement re-exporting countries to follow the law were amendments to the Marine provisions of the National Defense Mammal Protection Act (MMPA; 16 caviar labeling recommendations of the Authorization Act of 2004. CITES Parties (currently embodied in U.S.C. 1361 et seq.) that apply where a DATES: Comments and information must Resolution Conf. 12.7); ‘‘military readiness activity’’ is be received no later than July 29, 2004. concerned. Of specific importance for (I) Recommendations from the CITES ADDRESSES: Comments should be the SURTASS LFA sonar take Standing Committee to suspend trade in addressed to P. Michael Payne, Chief, authorization, the NDAA amended beluga sturgeon from one or more Marine Mammal Conservation Division, section 101(a)(5) of the MMPA, which countries; or Office of Protected Resources, National governs the taking of marine mammals (J) Any other natural or human- Marine Fisheries Service, 1315 East- incidental to otherwise lawful activities. induced phenomenon that threatens the West Highway, Silver Spring, MD Prior to the NDAA amendments, survival or recovery of beluga sturgeon. 20910–3225. Comments also may be section 101(a)(5)(A) of the MMPA submitted by e-mail. The e-mail mailbox directed the Secretary of Commerce to (ii) We will publish an information address is 0648–[email protected]. allow, upon request, the incidental but notice in the Federal Register if the Include in the subject line of the e-mail not intentional taking of small numbers Service’s Division of Scientific the following document identifier: of marine mammals by U.S. citizens Authority administratively suspends or 0648–AR99. who engage in a specified activity (other restricts imports of beluga sturgeon than commercial fishing) within a FOR FURTHER INFORMATION CONTACT: products from the range countries or re- Kenneth R. Hollingshead, Office of specified geographical region if the exports of beluga sturgeon products Protected Resources, NMFS, (301) 713– Secretary finds that the total of such from the United States after determining 2055, ext 128. taking will have a negligible impact on that wild beluga sturgeon stock status the species or stock and will not have SUPPLEMENTARY INFORMATION: worsens or threats to the species an unmitigable adverse impact on the increase. Background availability of the species or stock of marine mammal for subsistence uses Dated: June 22, 2004. SURTASS LFA Sonar Rulemaking and regulations are issued. The NDAA Craig Manson, History amended section 101(a)(5) of the MMPA Assistant Secretary for Fish and Wildlife and On August 12, 1999, NMFS received to exempt military readiness activities Parks. an application from the U.S. Navy from the ‘‘specified geographical [FR Doc. 04–14795 Filed 6–25–04; 11:50 am] requesting authorization under section region’’ and ‘‘small numbers’’ BILLING CODE 4310–55–P 101(a)(5)(A) of the MMPA for the taking, requirements. The term ‘‘military by harassment, of marine mammals readiness activity’’ is defined in Public incidental to deploying the SURTASS Law 107–314 (16 U.S.C. 703 note) to LFA sonar system for training, testing, include all training and operations of and routine military operations within the Armed Forces that relate to combat; the world’s oceans except Arctic and and the adequate and realistic testing of Antarctic waters (see 64 FR 57026, military equipment, vehicles, weapons October 22, 1999). NMFS issued a and sensors for proper operation and proposed rule on March 19, 2001 (66 FR suitability for combat use. The term

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expressly does not include the routine information regarding estimates of Advocacy of the Small Business operation of installation operating anticipated take will remain necessary Administration that this action, if support functions, such as military for NMFS’ negligible impact adopted, would not have a significant offices, military exchanges, determinations. economic impact on a substantial commissaries, water treatment facilities, number of small entities under the Information Solicited storage facilities, schools, housing, Regulatory Flexibility Act. This motor pools, laundries, morale, welfare NMFS requests that interested proposed rule removes some of the and recreation activities, shops, and persons submit comments, information, regulatory requirements applicable to mess halls; the operation of industrial and suggestions concerning this the Navy. This proposed rule would activities; or the construction or proposed action. Commenters are affect only the U.S. Navy which is not demolition of facilities used for a requested to restrict comments and a small entity. There may be a few small military readiness activity. recommendations to the scope of this entities that provide services related to action. Comments on issues beyond the Proposed Action the Navy’s SURTASS LFA sonar scope of this proposed rule will not be activities and the requirements under NMFS and the Navy have determined considered in developing a final NMFS’ original rule, but this proposed that the Navy’s SURTASS LFA sonar determination on this action. rule would not affect those activities as testing and training operations that are Determinations they would all continue to operate in the subject of NMFS’ July 16, 2002, final the same manner. As a result no rule constitute a military readiness This proposed rule amendment would regulatory flexibility analysis was activity because those activities not alter the determination that prepared. constitute ‘‘training and operations of SURTASS LFA sonar operations would the Armed Forces that relate to combat’’ have a negligible impact on the affected List of Subjects in 50 CFR Part 216 and constitute ‘‘adequate and realistic species or stocks of marine mammals Exports, Fish, Imports, Indians, testing of military equipment, vehicles, made by NMFS in its SURTASS LFA Labeling, Marine mammals, Penalties, weapons and sensors for proper sonar final rule (67 FR 46712, July 16, Reporting and recordkeeping operation and suitability for combat 2002). Nor would it change NMFS’ requirements, Seafood, Transportation. use.’’ Refer also to 67 FR 46712 determination that the activity covered Dated: June 24, 2004. (‘‘Summary of Request’’) and 67 FR under the final rule will not have an 46716–46717 (Comment and Response unmitigable adverse impact on Rebecca Lent, AC1). Accordingly, NMFS proposes to subsistence uses. These determinations Deputy Assistant Administrator for amend its rule and regulations would remain the same because the Regulatory Programs, National Marine Fisheries Service. governing the taking of marine Navy’s activity covered under the final For the reasons discussed in the mammals incidental to SURTASS LFA rule has not changed. Under the preamble, 50 CFR part 216 is proposed sonar testing and training operations to proposed rule amendment the Navy to be amended as follows: remove reference, in 50 CFR part 216, must still apply for LOAs, and NMFS subpart Q, to ‘‘small numbers’’ and must still find that the total taking by PART 216—REGULATIONS ‘‘specified geographical region,’’ as the Navy’s proposed activity as a whole GOVERNING THE TAKING AND those MMPA 101(a)(5)(A) terms no will have no more than a negligible IMPORTING OF MARINE MAMMALS longer apply to the SURTASS LFA impact and will not have an unmitigable sonar testing and training operations adverse impact on the availability of 1. The authority citation for part 216 covered by the final rule. It is necessary marine mammal species or stocks for continues to read as follows: to amend the final rule for SURTASS subsistence uses. Authority: 16 U.S.C. 1361 et seq., unless LFA sonar because that rule no longer National Environmental Policy Act otherwise noted. reflects the current requirements of the 2. In § 216.180, the section heading (NEPA) MMPA. Specifically, NMFS proposes to and paragraph (a) are revised to read as amend 50 CFR 216.180(a); 216.184(e)(2) This proposed amendment does not follows: (technical correction only); change the activity that was analyzed in 216.187(c)(2) and (c)(4); 216.188(b)(2) the Navy’s Final Environmental Impact § 216.180 Specified activity. and (c); and 216.189(a). Statement on SURTASS LFA sonar, * * * * * Although the MMPA no longer approved by the Deputy Assistant (a) Subject to the limitations in requires the identification of a Secretary of the Navy (Environment) in § 216.184(e), the incidental taking by ‘‘specified geographical region’’ in the SURTASS LFA sonar Record of harassment may be authorized in the which military readiness activities will Decision (67 FR 48145; July 23, 2002) following areas as specified in a Letter occur, information regarding where the and adopted by NMFS (67 FR 46712, of Authorization (see also Figure 1): Navy will operate SURTASS LFA sonar July 16, 2002). (1) North Atlantic Ocean: remains necessary for NMFS to make its (i) Western North Atlantic, from 35 required negligible impact Endangered Species Act (ESA) deg. N. lat. north to a line between Cape determination and to prescribe This proposed amendment does not Chidley, Labrador northeast to Nuuk, appropriate mitigation and monitoring. change the activity whose effects were Greenland, and from the North In that regard, this proposed analyzed in NMFS’ biological opinions American continent east to 41 deg. W. amendment would only make it clear on SURTASS LFA sonar. long. (Area A); and that identification of a ‘‘specified (ii) Eastern North Atlantic, from 35 geographical region’’ is no longer a Classification deg. N. lat. north to 72 deg. N. lat. and statutory requirement for SURTASS This action has been determined to be 41 deg. W. long. east to the European LFA sonar operations covered under the significant for purposes of Executive continent (Area B); final rule. Order 12866. (2) Mediterranean Sea (Area C); Similarly, although the ‘‘small The Chief Counsel for Regulation of (3) North Pacific Ocean: numbers’’ requirement no longer applies the Department of Commerce has (i) Western North Pacific, from 20 deg. to military readiness activities, certified to the Chief Counsel for N. lat. north to the Aleutian Island chain

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and the Sea of Okhotsk, and from the (7) South Pacific Ocean: (2) The species and/or stock(s) of Asian continent east to 175 deg. W. (i) Western South Pacific from 60 deg. marine mammals likely to be found long. (Area D); and S. lat. north to 10 deg. S. lat. and from within each area; (ii) Eastern North Pacific, from 42 deg. the east coast of Australia in the north * * * * * N. lat. north to Alaska and the south and 150 deg. E. long. south of Australia (4) The estimated percentage of side of the Aleutian Islands and from east to 105 deg. W. long. (Area K); and marine mammal species/stocks the North American continent west to (ii) Eastern South Pacific from 60 deg. potentially affected in each area for the 175 deg. W. long. (Area E); S. lat. north to 5 deg. S. lat. and from 12–month period of effectiveness of the (4) Central Atlantic Ocean: the 105 deg. W. long. east to the South Letter of Authorization; and (i) Eastern Central Atlantic, from 7 American coastline in the north and 70 * * * * * deg. S. lat. north to 35 deg. N. lat. and deg. W. long. in the south (Area L); from the African continent west to 40 5. In § 216.188, paragraphs (b)(2) and deg. W. long. between 5 deg. N. lat. and (8) South Atlantic Ocean: (c) are revised to read as follows: 35 deg. N. lat., to 30 deg. W. long. (i) Western South Atlantic, from 60 § 216.188 Letters of Authorization. between 0 deg. lat. and 5 deg. N. lat., deg. S. lat. north to 5 deg. N. lat. in the area west of 30 deg. W. long., and from * * * * * and to 20 deg. W. long. between 7 deg. (b) * * * S. lat. and 0 deg. lat. (Area F); and 60 deg. S. lat. north to 0 deg. lat. in the area east of 30 deg. W. long. and from (2) The area(s) where the vessel’s (ii) Western Central Atlantic, from 5 activities will occur; deg. N. lat. north to 35 deg. N. lat., and the South American continent east to 30 from the American continent, east to 40 deg. W. long. between 0 deg. And 5 deg. * * * * * deg. W. long. (Area G); N. lat. and east to 20 deg. W. long. (c) Issuance of each Letter of (5) Indian Ocean: between 0 deg. and 60 deg. S. lat. (Area Authorization will be based on a (i) Eastern Indian Ocean, from 60 deg. M); and determination that the total number of S. lat. north to the Bay of Bengal, and (ii) East South Atlantic from 60 deg. marine mammals taken by the activity Asian continent, and from 80 deg. E. S. lat. north to 7 deg. S. lat. and from specified in § 216.180 as a whole will long. east to the Asian continent, the 20 deg. W. long. east to the African have no more than a negligible impact Sunda Islands and Australia and to 150 coastline in the north and 30 deg. E. on the species or stock of affected deg. E. long. (Area H1); and long. south of the continent (Area N). marine mammal(s), and that the total taking will not have an unmitigable (ii) Western Indian Ocean, from 60 * * * * * deg. S. lat. north to the Arabian Sea, and adverse impact on the availability of 3. In 216.184, paragraph (e)(2) is species or stocks of marine mammals for from 30 deg. E. long. east to 80 deg. E. revised to read as follows: long. (Area H2); taking for subsistence uses. (6) Central Pacific Ocean: § 216.184 Mitigation. * * * * * (i) Western Central Pacific, from 175 * * * * * 6. In § 216.189, paragraph (a)(5) is deg. W. long., east to the Asian (e) * * * revised and a new graphic is added to continent and Indonesia, and from 10 the end of the section to read as follows: deg. S. lat., north to 20 deg. N. lat. (Area (2) Within any offshore area that has I); been designated asbiologically § 216.189 Renewal of Letters of Authorization. (ii) Central Pacific, from 10 deg. S. important for marine mammals under lat., north to 42 deg. N. lat. between 175 § 216.184(f), during the biologically * * * * * deg. W. long. and 130 deg. W. long. important season for that particular (a) * * * (Area J1); and area; (5) A determination by NMFS that the (iii) Eastern Central Pacific, from 5 * * * * * total number of marine mammals taken deg. S. lat. north along the American 4. In § 216.187, paragraphs (c)(1), by the activity specified in § 216.180 as coastline to 42 deg. N. lat., from 130 (c)(2) and (c)(4) are revised to read as a whole will have no more than a deg. W. long. along 10 deg. S. lat. to 105 follows: negligible impact on the species or stock deg. W. long., from 10 deg. S. lat. along of affected marine mammal(s), and that 105 deg. W. long. to 5 deg. S. lat., from § 216.187 Applications for Letters of the total taking will not have an Authorization. 105 deg. W. long. along 5 deg. S. lat. to unmitigable adverse impact on the the South American coastline, from 130 * * * * * availability of species or stocks of deg. W. long. along 42 deg. N. lat. to the (c) * * * marine mammals for taking for North American coastline and from 42 (1) The date(s), duration, and the subsistence uses. deg. N. lat. to 10 deg. S. lat. along the area(s) where the vessel’s activity will * * * * * 130 deg. W. long. line (Area J2); occur; BILLING CODE 3510–22–S

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[FR Doc. 04–14718 Filed 6–28–04; 8:45 am] BILLING CODE 3510–22–C

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Notices Federal Register Vol. 69, No. 124

Tuesday, June 29, 2004

This section of the FEDERAL REGISTER planning and reporting of information Washington, DC, 20523, (202) 712–1365 contains documents other than rules or on all USAID training activities, or via e-mail [email protected]. proposed rules that are applicable to the including in-country training. Data SUPPLEMENTARY INFORMATION: public. Notices of hearings and investigations, collected by USAID and/or its partners OMB No.: OMB 0412–0017. committee meetings, agency decisions and via TraiNet includes measures of results Form No.: AID 1440–3. rulings, delegations of authority, filing of Title: Contractor’s Certificate and petitions and applications and agency and performance monitoring, training statements of organization and functions are participant and program identification, Agreement with the U.S. Agency for examples of documents appearing in this and costs and cost-sharing. International Development/Contractor’s section. Annual Reporting Burden: Invoice and Contract Abstract. Respondents: 374. Type of Review: Renewal of Total annual responses: 15, 720. Information Collection. AGENCY FOR INTERNATIONAL Total annual hours requested: 2,630 Purpose: USAID finances host country DEVELOPMENT hours. contracts, for technical and professional services and for the construction of Dated: June 22, 2004. Notice of Public Information physical facilities, between the Collections Being Reviewed by the Joanne Paskar, contractors for such services and U.S. Agency for International Chief, Information and Records Division, entities in the country receiving Development; Comments Requested Office of Administrative Services, Bureau for assistance under loan or grant Management. agreements with the recipient country. SUMMARY: U.S. Agency for International [FR Doc. 04–14688 Filed 6–28–04; 8:45 am] USAID is not a party to these contracts, Development (USAID) is making efforts BILLING CODE 6116–01–M and the contracts are not subject to the to reduce the paperwork burden. USAID FAR. In its role as the financing agency, invites the general public and other USAID needs some means of collecting AGENCY FOR INTERNATIONAL Federal agencies to take this information directly from the DEVELOPMENT opportunity to comment on the contractors supplying such services so following proposed and/or continuing that it may take appropriate action in information collections, as required by Notice of Public Information Collections Being Reviewed by the the event that the contractor does not the Paperwork Reduction Act for 1995. comply with applicable USAID Comments are requested concerning: (a) U.S. Agency for International Development; Comments Requested regulations. The information collection, Whether the proposed or continuing recordkeeping, and reporting collections of information are necessary SUMMARY: U.S. Agency for International requirements are necessary to assure for the proper performance of the Development (USAID) is making efforts that USAID funds are expended in functions of the agency, including to reduce the paperwork burden. USAID accordance with statutory requirements whether the information shall have invites the general public and other and USAID policies. practical utility; (b) the accuracy of the Federal agencies to take this Annual Reporting Burden: burden estimates; (c) ways to enhance opportunity to comment on the Respondents: 25. the quality, utility, and clarity of the following proposed and/or continuing Total annual responses: 300. information collected; and (d) ways to information collections, as required by Total annual hours requested: 175 minimize the burden of the collection of the Paperwork Reduction Act for 1995. hours. information on the respondents, Comments are requested concerning: (a) Dated: June 22, 2004. including the use of automated Whether the proposed or continuing Joanne Pasker, collection techniques or other forms of collections of information are necessary Chief, Information and Records Division, information technology. for the proper performance of the Office of Administrative Services, Bureau for DATES: Submit comments on or before functions of the agency, including Management. August 30, 2004. whether the information shall have [FR Doc. 04–14689 Filed 6–28–04; 8:45 am] FOR FURTHER INFORMATION CONTACT: practical utility; (b) the accuracy of the BILLING CODE 6116–01–M Beverly Johnson, Bureau for burden estimates; (c) ways to enhance Management, Office of Administrative the quality, utility, and clarity of the Services, Information and Records information collected; and (d) ways to AGENCY FOR INTERNATIONAL Division, U.S. Agency for International minimize the burden of the collection of DEVELOPMENT Development, Room 2.07–106, RRB, information on the respondents, Washington, DC 20523, (202) 712–1365 including the use of automated Notice of Public Information or via e-mail [email protected]. collection techniques or other forms of Collections Being Reviewed by the U.S. Agency for International SUPPLEMENTARY INFORMATION: information technology. Development; Comments Requested OMB No.: OMB 0412–0554. DATES: Submit comments on or before Form No.: None. August 30, 2004. SUMMARY: U.S. Agency for International Title: Training Results and FOR FURTHER INFORMATION CONTACT: Development (USAID) is making efforts Information Network (TraiNet). Beverly Johnson, Bureau for to reduce the paperwork burden. USAID Type of Review: Renewal of Management, Office of Administrative invites the general public and other Information Collection. Services, Information and Records Federal agencies to take this Purpose: The purpose of this Division, U.S. Agency for International opportunity to comment on the information collection is to enable the Development, Room 2.07–106, RRB, following proposed and/or continuing

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information collections, as required by AGENCY FOR INTERNATIONAL manage development assistance the Paperwork Reduction Act for 1995. DEVELOPMENT programs utilizing public funds. The Comments are requested concerning: (a) requirements for information collection Whether the proposed or continuing Notice of Public Information requirements during the post-award collections of information are necessary Collections Being Reviewed by the period are based on the need to for the proper performance of the U.S. Agency for International administer public funds prudently. functions of the agency, including Development; Comments Requested Annual Reporting Burden: whether the information shall have Respondents: 6,300. SUMMARY: U.S. Agency for International Total annual responses: 53,270. practical utility; (b) the accuracy of the Development (USAID) is making efforts burden estimates; (c) ways to enhance Total annual hours requested: 74,620 to reduce the paperwork burden. USAID hours. the quality, utility, and clarity of the invites the general public and other information collected; and (d) ways to Federal agencies to take this Dated: June 22, 2004. minimize the burden of the collection of opportunity to comment on the Joanne Paskar, information on the respondents, following proposed and/or continuing Chief, Information and Records Division, including the use of automated information collections, as required by Office of Administrative Services, Bureau for collection techniques or other forms of the Paperwork Reduction Act for 1995. Management. information technology. Comments are requested concerning: (a) [FR Doc. 04–14692 Filed 6–28–04; 8:45 am] DATES: Submit comments on or before Whether the proposed or continuing BILLING CODE 6116–01–M August 30, 2004. collections of information are necessary for the proper performance of the FOR FURTHER INFORMATION CONTACT: functions of the agency, including AGENCY FOR INTERNATIONAL Beverly Johnson, Bureau for whether the information shall have DEVELOPMENT Management, Office of Administrative practical utility; (b) the accuracy of the Services, Information and Records Notice of Public Information burden estimates; (c) ways to enhance Division, U.S. Agency for International Collections Being Reviewed by the the quality, utility, and clarity of the Development, Room 2.07–106, RRB, U.S. Agency for International information collected; and (d) ways to Washington, DC, 20523, (202) 712–1365 Development; Comments Requested minimize the burden of the collection of or via e-mail [email protected]. information on the respondents, SUMMARY: U.S. Agency for International SUPPLEMENTARY INFORMATION: including the use of automated Development (USAID) is making efforts OMB No.: OMB 0412–0020. collection techniques or other forms of to reduce the paperwork burden. USAID Form No.: AID 1450–4. information technology. invites the general public and other Federal agencies to take this Title: Supplier’s Certificate and DATES: Submit comments on or before opportunity to comment on the Agreement with the U.S. Agency for August 30, 2004. following proposed and/or continuing International Development for Project FOR FURTHER INFORMATION CONTACT: information collections, as required by Commodities/Invoice and Contract Beverly Johnson, Bureau for the Paperwork Reduction Act for 1995. Abstract. Management, Office of Administrative Services, Information and Records Comments are requested concerning: (a) Type of Review: Renewal of Whether the proposed or continuing Information Collection. Division, U.S. Agency for International Development, Room 2.07–106, RRB, collections of information are necessary Purpose: When USAID is not a party Washington, DC 20523, (202) 712–1365 for the proper performance of the to a contract which it finances, it needs or via e-mail [email protected]. functions of the agency, including some means of collecting information whether the information shall have SUPPLEMENTARY INFORMATION: directly from the suppliers of such OMB No.: OMB 0412–0520. practical utility; (b) the accuracy of the commodities and related services to Form No.: AID 1420–17. burden estimates; (c) ways to enhance enable it to take appropriate action in Title: Information Collection Elements the quality, utility, and clarity of the the event that they do not comply with in the USAID Acquisition Regulation information collected; and (d) ways to applicable USAID regulations. The (AIDAR), 48 Chapter 7. minimize the burden of the collection of information collection, recordkeeping, Type of Review: Renewal of information on the respondents, and reporting requirements are Information Collection. including the use of automated necessary to assure that USAID funds Purpose: USAID is authorized to make collection techniques or other forms of are expended in accordance with contracts with any corporation, information technology. statutory requirements and USAID international organization, or other body DATES: Submit comments on or before policies. It also allows for positive of persons in or outside of the United August 30, 2004. identification of transactions where States in furtherance of the purposes FOR FURTHER INFORMATION CONTACT: overcharges occur. and within limitations of the Foreign Beverly Johnson, Bureau for Annual Reporting Burden: Assistance Act (FAA). The information Management, Office of Administrative Respondents: 60. collections requirements placed on the Services, Information and Records Total annual responses: 360. public are published in 48 CFR chapter Division, U.S. Agency for International 7, and include such items as the Total annual hours requested: 231 Development, Room 2.07–106, RRB Contractor Employee Biographical Data hours. Washington, DC 20523, (202) 712–1365 Sheet and Performance and Progress or via e-mail [email protected]. Dated: June 22, 2004. Reports (AIDAR 752.7026). These are all SUPPLEMENTARY INFORMATION: Joanne Paskar, USAID unique procurement OMB No.: OMB 0412–0543. Chief, Information and Records Division, requirements. The pre-award Form Nos.: AID 1558–1A. Office of Administrative Services, Bureau for requirements are based on a need for Title: Financial Status Report (Form Management. prudent management in the 268 and 269 worksheet). [FR Doc. 04–14691 Filed 6–28–04; 8:45 am] determination that an offeror either has Type of Review: Renewal of BILLING CODE 6116–01–M or can obtain the ability to competently Information Collection.

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Purpose: The purpose of this OMB No.: OMB 0412–0542. (202) 326–2487; e-mail: [email protected]. information collection is to assure that Form No.: Aid 1558–2. Mr. Heimert is also the Designated ASHA grant recipients are accountable Title: Request for Advance or Federal Officer (DFO) for the Antitrust for expenditures incurred under the Reimbursement. Modernization Commission. grant agreement for only those items Type of Review: Renewal of SUPPLEMENTARY INFORMATION: The authorized by the agreement. The Information Collection. Antitrust Modernization Commission information is used by ASHA to monitor Purpose: The purpose of this (‘‘AMC’’ or ‘‘Commission’’) was the expenditures under each authorized information collection is to assure that established by the Antitrust line item and calculate the monetary American Schools and Hospitals Abroad Modernization Commission Act of 2002. gain or loss realized during the life of (ASHA) grant recipients are permitted to Public Law 107–273, sections 11051–60, the grant. obtain advances or reimbursements for 116 Stat. 1758, 1856–59. The duties of Annual Reporting Burden: expenditures that are authorized by the the Commission are: Respondents: 196. grant agreement. The information is Total annual responses: 760. used by (a) ASHA to monitor grant (1) To examine whether the need exists to modernize the antitrust laws and to identify Total annual hours requested: 5,320 implementation relative to financial and study related issues; hours. matters, (b) the Office of Financial (2) To solicit views of all parties concerned Dated: June 22, 2004. Management (FM) to track with the operation of the antitrust laws; disbursements and expenditures, and (c) Joanne Paskar, (3) To evaluate the advisability of the Department of the Treasury to effect proposals and current arrangements with Chief, Information and Records Division, payments. respect to any issues so identified; and Office of Administrative Services, Bureau for (4) To prepare and submit to Congress and Management. Annual Reporting Burden: Respondents: 196. the President a report. [FR Doc. 04–14693 Filed 6–28–04; 8:45 am] Total annual responses: 1,140. Id. section 11053. The Commission’s BILLING CODE 6116–01–M Total annual hours requested: 2,280 report, which shall be issued no later hours. than three years after the first meeting AGENCY FOR INTERNATIONAL Dated: June 22, 2004. of the Commission, is to ‘‘contain[] a DEVELOPMENT Joanne Paskar, detailed statement of the findings and Chief, Information and Records Division, conclusions of the Commission, together Notice of Public Information Office of Administrative Services, Bureau for with recommendation for legislative or Collections Being Reviewed by the Management. administrative action the Commission U.S. Agency for International [FR Doc. 04–14694 Filed 6–28–04; 8:45 am] considers to be appropriate.’’ Id. section Development; Comments Requested BILLING CODE 6116–01–M 11058. The AMC has called this meeting SUMMARY: U.S. Agency for International pursuant to its authorizing statute and Development (USAID) is making efforts the Federal Advisory Committee Act. to reduce the paperwork burden. USAID ANTITRUST MODERNIZATION COMMISSION Antitrust Modernization Commission invites the general public and other Act of 2002, Public Law 107–273, Federal agencies to take this Public Meeting section 11058(f), 116 Stat. 1758, 1857; opportunity to comment on the Federal Advisory Committee Act, 5 following proposed and/or continuing AGENCY: Antitrust Modernization U.S.C. App., § 10(a)(2); 41 CFR 102– information collections, as required by Commission. 3.150 (2003). the Paperwork Reduction Act for 1995. ACTION: Notice of public meeting. Comments are requested concerning: (a) Dated: June 24, 2004. Whether the proposed or continuing SUMMARY: The Antitrust Modernization By direction of Deborah A. Garza, Chair of collections of information are necessary Commission will hold a public meeting the Antitrust Modernization Commission. for the proper performance of the on July 15, 2004. The purpose of the Approved by Designated Federal Officer. functions of the agency, including meeting will be to discuss and adopt the Andrew J. Heimert, whether the information shall have process by which the Commission will Executive Director & General Counsel, practical utility; (b) the accuracy of the identify issues to study in fulfilling its Antitrust Modernization Commission. burden estimates; (c) ways to enhance statutory duties. The Executive Director [FR Doc. 04–14695 Filed 6–28–04; 8:45 am] the quality, utility, and clarity of the will also report to the Commission on BILLING CODE 6820–YM–P information collected; and (d) ways to administrative matters. minimize the burden of the collection of DATES: July 15, 2004, 3 p.m. until 5 information on the respondents, p.m., unless earlier adjourned. All DEPARTMENT OF COMMERCE including the use of automated interested members of the public may collection techniques or other forms of attend. Registration is not required. International Trade Administration information technology. There will be a brief period for [A–560–803] DATES: Submit comments on or before questions from the public at the August 30, 2004. conclusion of the meeting. Antidumping Order on Extruded FOR FURTHER INFORMATION CONTACT: ADDRESSES: Rayburn House Office Rubber Thread From Indonesia: Beverly Johnson, Bureau for Building, Room 2226, located at the Revocation of Order Management, Office of Administrative corner of Independence Avenue and AGENCY: Import Administration, Services, Information and Records South Capitol Street, SW., Washington, International Trade Administration, Division, U.S. Agency for International DC. Department of Commerce. Development, Room 2.07–106, RRB, FOR FURTHER INFORMATION CONTACT: ACTION: Notice of Revocation of the Washington, DC 20523, (202) 712–1365 Andrew J. Heimert, Executive Director & Antidumping Duty Order of Extruded or via e-mail [email protected]. General Counsel, Antitrust Rubber Thread from Indonesia. SUPPLEMENTARY INFORMATION: Modernization Commission: telephone:

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SUMMARY: On April 1, 2004, the We received no response from the DEPARTMENT OF COMMERCE Department of Commerce (‘‘the domestic industry by the deadline dates Department’’) initiated a sunset review (see 19 CFR 351.218(d)(1)(i)). As a International Trade Administration of the antidumping duty order on result, the Department determined that [A–570–803] Extruded Rubber Thread from Indonesia no domestic party intends to participate (69 FR 17129). Because the domestic in the sunset review, and on April 20, Heavy Forged Hand Tools, Finished or interested parties did not participate in 2004, we notified the International Unfinished, With or Without Handles, this sunset review, the Department is Trade Commission that we intended to From the People’s Republic of China: revoking this antidumping duty order. issue a final determination revoking this Extension of Time Limit for Final DATES: Effective Date: May 21, 2004. antidumping duty order. Results of Antidumping Duty FOR FURTHER INFORMATION CONTACT: Administrative Reviews on Axes/ Hilary Sadler, Esq., Office of Policy, Determination To Revoke Adzes, Bars/Wedges, Hammers/ Sledges, and Picks/Mattocks Import Administration, International Pursuant to section 751(c)(3)(A) of the Trade Administration, U.S. Department Act and 19 CFR 351.218(d)(1)(iii)(B)(3), AGENCY: Import Administration, of Commerce, 14th Street and if no domestic interested party responds International Trade Administration, Constitution Avenue, NW., Washington, to the notice of initiation, the Department of Commerce. DC 20230; telephone: (202) 482–4340. Department shall issue a final ACTION: Notice of Extension of Time SUPPLEMENTARY INFORMATION: determination, within 90 days after the Limit of Final Results of Administrative The Applicable Statue initiation of the review, revoking the Reviews. The Department’s procedures for the order. Because no domestic interested party filed a notice of intent or SUMMARY: The Department of Commerce conduct of sunset reviews are set forth (the Department) is extending the time in Section 751(c) of the Tariff Act of substantive response, the Department finds that no domestic interested party limit for the final results of the 1930, as amended (the ‘‘Act’’), and 19 administrative reviews of the CFR 351.218. Guidance on is participating in this review, and we are revoking this antidumping duty antidumping duty orders on axes and methodological and analytical issues adzes, bars and wedges, hammers and order effective May 21, 2004, the fifth relevant to the Department’s conduct of sledges, and picks and mattocks from anniversary of the date of publication in sunset reviews is set forth in the the People’s Republic of China (PRC) Department’s Policy Bulletin 98:3— the Federal Register of the order, until September 7, 2004. This extension Policies regarding the Conduct of Five- consistent with 19 CFR 351.222(i)(2)(i). is made pursuant to section 751(a)(3)(A) Year Sunset Reviews of Antidumping Effective Date of Revocation of the Tariff Act of 1930, as amended, and Countervailing Duty Orders: Policy (the Act). Bulletin, 63 FR 18871 (April 16, 1998) Pursuant to sections 751(c)(3)(A) and DATES: Effective Date: June 29, 2004. (‘‘Sunset Policy Bulletin’’). 751(d)(2) of the Act, and 19 CFR FOR FURTHER INFORMATION CONTACT: For purposes of this review, the 351.222(i)(2)(i), the Department will product covered is extruded rubber Thomas Martin at (202) 482–3936; instruct the Customs Service to Office of AD/CVD Enforcement, Office thread (‘‘ERT’’) from Indonesia. ERT is terminate the suspension of liquidation defined as vulcanized rubber thread 4, Group II, Import Administration, of the merchandise subject to this order obtained by extrusion of stable or International Trade Administration, entered, or withdrawn from warehouse, concentrated natural rubber latex of any U.S. Department of Commerce, 14th cross sectional shape, measuring from on or after May 21, 2004. Entries of Street and Constitution Ave, NW., 0.18 mm, which is 0.007 inches or 140 subject merchandise prior to the Washington, DC 20230. gauge, to 1.42 mm, which is 0.056 inch effective date of revocation will SUPPLEMENTARY INFORMATION: or 18 gauge, in diameter. ERT is continue to be subject to suspension of Background currently classified under subheadings liquidation and countervailing duty 4007.00.00 of the Harmonized Tariff deposit requirements. The Department On March 25, 2003, the Department Schedule (‘‘HTS’’). Although the HTS will complete any pending published a notice of initiation of subheadings are provided for administrative reviews of this order and administrative reviews of the convenience and customs purposes, the will conduct administrative reviews of antidumping duty orders on heavy written description of the scope of this subject merchandise entered prior to the forged hand tools (HFHTs) from the order is dispositive. effective date of revocation in response PRC, covering the period February 1, to appropriately filed requests for 2002, through January 31, 2003. See Background review. Initiation of Antidumping and On May 21, 1999, the Department Countervailing Duty Administrative This five-year (‘‘sunset’’) review and issued an antidumping duty order on Reviews and Requests for Revocation in notice are in accordance with sections ERT (64 FR 27755). Pursuant to section Part, 68 FR 14394 (March 25, 2003). The 751(c) of the Act and 19 CFR part 351, 751(c), 752, and 777(i)(1) of the Act. deadline for the preliminary results of the Department initiated a sunset review Dated: June 23, 2004 these administrative reviews was of this order by publishing notice of the James J. Jochum, extended on October 16, 2003. See initiation in the Federal Register 69 FR Assistant Secretary for Import Heavy Forged Hand Tools, Finished or 17129 (April 1, 2004). In addition, as a Administration. Unfinished, With or Without Handles, courtesy to interested parties, the [FR Doc. 04–14707 Filed 6–28–04; 8:45 am] From the People’s Republic of China: Department sent letters, via certified Extension of Time Limit for Preliminary and registered mail, to each party listed BILLING CODE 3510–DS–P Results of Antidumping Duty on the Department’s most current Administrative Review, 68 FR 59583 service list for this proceeding to inform (October 16, 2003). The Department them of the automatic initiation of a published the preliminary results of sunset review of this order. these administrative reviews on March

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10, 2004. See Heavy Forged Hand Tools, results of the administrative review of of Time Limit for Preliminary Results of Finished or Unfinished, With or Without mechanical transfer presses (MTPs) Antidumping Administrative Review, 68 Handles, From the People’s Republic of from Japan until no later than July 14, FR 59365, in which we extended the China: Preliminary Results of 2004. The period of review is February preliminary results until not later than Administrative Reviews, Preliminary 1, 2002 through January 31, 2003. This February 28, 2004. Partial Rescission of Antidumping Duty extension is made pursuant to section On March 8, 2004, the Department Administrative Reviews, and 751(a)(3)(A) of the Tariff Act of 1930, as published the Preliminary Results of Determination Not To Revoke in Part, 69 amended (the Act). Antidumping Duty Administrative FR 11371 (March 10, 2004). DATES: Effective Date: June 29, 2004. Review and Preliminary Determination Not to Revoke, in-Part: Mechanical Extension of Time Limits for Final FOR FURTHER INFORMATION CONTACT: Transfer Presses from Japan, 69 FR Results of Reviews Jacqueline Arrowsmith, Office of AD/ CVD Enforcement VII, Import 10675 (Preliminary Results). The final Currently, the final results of Administration, International Trade results of this administrative review are administrative reviews are due on July Administration, U.S. Department of currently due not later than July 6, 2004. 8, 2004. Section 751(a)(3)(A) of the Act Commerce, 14th Street and Constitution requires the Department to complete its Extension of Time Limits for the Final Avenue, NW., Washington DC 20230; Results final results of review within 120 days telephone: (202) 482–5255. after the date on which the preliminary HZC/H&F has requested revocation results were published. However, the Background with respect to the order. There are Department may extend the deadline for On February 16, 1990, the Department complex issues with regard to the issue completion of an administrative review issued an antidumping duty order on of revocation. Therefore, it is not if it determines that it is not practicable mechanical transfer presses from Japan. practicable to complete this review to complete the review within the See Antidumping Duty Order: within the time limits mandated by statutory time limit. Section 751(a)(3)(A) Mechanical Transfer Presses from section 751(a)(3)(A) of the Act. The of the Act allows the Department to Japan, 55 FR 5642 (February 16, 1990). Department is therefore extending the extend the deadline for completion of The term ‘‘mechanical transfer presses’’ time period for issuing the preliminary the final results to 180 days from the refers to automatic metal-forming results of this review from July 6, 2004, date of publication of the preliminary machine tools with multiple die stations until no later than July 14, 2004, in results. As a result of the complex issues in which the work piece is moved from accordance with section 751(a)(3)(A) of involved in this review, the Department station to station by a transfer the Act. This notice is published has determined that it is not practicable mechanism designed as an integral part pursuant to sections 751(a)(3)(A) and to complete these reviews within the of the press and synchronized with the 777(I)(1) of the Act. original time limit. For this reason, we press action, whether imported as Dated: June 18, 2004. are extending the time limit by sixty machines or parts suitable for use solely James J. Jochum, days, to September 7, 2004. See or principally with these machines. Assistant Secretary for Import Memorandum from Holly Kuga, Office These presses may be imported Administration. Director, to Jeff May, Deputy Assistant assembled or unassembled. See [FR Doc. 04–14709 Filed 6–28–04; 8:45 am] Secretary for Import Administration, Mechanical Transfer Presses From BILLING CODE 3510–DS–P Group I, dated concurrently with this Japan: Final Results of Antidumping notice, which is on file in the Central Administrative Review 68 FR 39515. Records Unit, Room B–099 of the main On February 24, 2003, the Department COMMITTEE FOR THE Commerce building. of Commerce (the Department) received This notice is published in IMPLEMENTATION OF TEXTILE a timely request for administrative AGREEMENTS accordance with section 735(a)(2) of the review of the antidumping duty order Act and 19 CFR 351.210(g). on MTPs from Japan from respondent Adjustment of Import Limits for Certain Dated: June 23, 2004. Hitachi Zosen Corporation (HZC), and Cotton, Wool, and Man-Made Fiber Jeffrey May, its subsidiary Hitachi Zosen Fukui Textile Products Produced or Deputy Assistant Secretary for Import Corporation d/b/a H&F Corporation Manufactured in Hong Kong Administration, Group I. (H&F). On February 27, 2003, the June 24, 2004. [FR Doc. 04–14708 Filed 6–28–04; 8:45 am] Department received a timely request AGENCY: Committee for the BILLING CODE 3510–DS–P from petitioner, IHI—Verson Press Technology, LLC for an administrative Implementation of Textile Agreements review of HZC and H&F. On February (CITA). DEPARTMENT OF COMMERCE 28, 2003, HZC and H&F submitted a ACTION: Issuing a directive to the timely request that the Department Commissioner, Bureau of Customs and International Trade Administration revoke the order with respect to HZC Border Protection adjusting limits. [A–588–810] and H&F based on the absence of dumping in three consecutive reviews, EFFECTIVE DATE: June 30, 2004. Mechanical Transfer Presses From in accordance with section 351.222(e) of FOR FURTHER INFORMATION CONTACT: Japan: Extension of Time Limit for the Department’s regulations. On March Naomi Freeman, International Trade Final Results of Antidumping 25, 2003, the Department published a Specialist, Office of Textiles and Administrative Review notice of initiation of this administrative Apparel, U.S. Department of Commerce, review, covering the period of February (202) 482–4212. For information on the AGENCY: Import Administration, 1, 2002 through January 31, 2003 (see 68 quota status of these limits, refer to the International Trade Administration, FR 14394), for HZC and its subsidiary Quota Status Reports posted on the Department of Commerce. H&F. On October 15, 2003, the bulletin boards of each Customs port, SUMMARY: The Department of Commerce Department published the Mechanical call (202) 927–5850, or refer to the is extending the time limit for the final Transfer Presses from Japan: Extension Bureau of Customs and Border

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Protection website at http:// ACTION: Issuing a directive to the Category Adjusted twelve-month www.cbp.gov. For information on limit 1 Commissioner, Bureau of Customs and embargoes and quota re-openings, refer Border Protection adjusting limits. to the Office of Textiles and Apparel 445/446 ...... 1,387,918 dozen. website at http://otexa.ita.doc.gov. 638/639 ...... 5,071,011 dozen. 641 ...... 876,249 dozen. EFFECTIVE DATE: June 30, 2004. SUPPLEMENTARY INFORMATION: 648 ...... 1,194,260 dozen of FOR FURTHER INFORMATION CONTACT: Ross Authority: Section 204 of the Agricultural which not more than Arnold, International Trade Specialist, Act of 1956, as amended (7 U.S.C. 1854); 1,194,260 dozen Executive Order 11651 of March 3, 1972, as shall be in Category Office of Textiles and Apparel, U.S. amended. 648–W 5. Department of Commerce, (202) 482– The current limits for certain Within Group II Sub- 4212. For information on the quota categories are being adjusted for group status of these limits, refer to the Quota carryforward used and carryover. 342 ...... 645,873 dozen. Status Reports posted on the bulletin A description of the textile and boards of each Customs port, call (202) apparel categories in terms of HTS 1 The limits have not been adjusted to ac- count for any imports exported after December 927–5850, or refer to the Bureau of numbers is available in the 31, 2003. Customs and Border Protection website CORRELATION: Textile and Apparel 2 Categories 338/339: all HTS numbers ex- at http://www.cbp.gov. For information Categories with the Harmonized Tariff cept 6109.10.0018, 6109.10.0023, on embargoes and quota re-openings, Schedule of the United States (see 6109.10.0060, 6109.10.0065, 6114.20.0005 and 6114.20.0010. refer to the Office of Textiles and Federal Register notice 69 FR 4926, 3 Category 338/339(1): only HTS numbers Apparel website at http:// published on February 2, 2004). Also 6109.10.0018, 6109.10.0023, 6109.10.0060, otexa.ita.doc.gov. see 68 FR 59917, published on October 6109.10.0065, 6114.20.0005 and 20, 2003. 6114.20.0010. SUPPLEMENTARY INFORMATION: 4 Category 347–W: only HTS numbers D. Michael Hutchinson, 6203.19.1020, 6203.19.9020, 6203.22.3020, Authority: Section 204 of the Agricultural Acting Chairman, Committee for the 6203.22.3030, 6203.42.4005, 6203.42.4010, Act of 1956, as amended (7 U.S.C. 1854); 6203.42.4015, 6203.42.4025, 6203.42.4035, Executive Order 11651 of March 3, 1972, as Implementation of Textile Agreements. 6203.42.4045, 6203.42.4050, 6203.42.4060, amended. Committee for the Implementation of Textile 6203.49.8020, 6210.40.9033, 6211.20.1520, Agreements 6211.20.3810 and 6211.32.0040; Category The current limits for certain 348–W: only HTS numbers 6204.12.0030, June 24, 2004. 6204.19.8030, 6204.22.3040, 6204.22.3050, categories are being adjusted for carryover, the recrediting of unused Commissioner, 6204.29.4034, 6204.62.3000, 6204.62.4005, Bureau of Customs and Border Protection, 6204.62.4010, 6204.62.4020, 6204.62.4030, carryforward, swing, and special shift. 6204.62.4040, 6204.62.4050, 6204.62.4055, Washington, DC 20229. 6204.62.4065, 6204.69.6010, 6204.69.9010, A description of the textile and Dear Commissioner: This directive 6210.50.9060, 6211.20.1550, 6211.20.6810, apparel categories in terms of HTS amends, but does not cancel, the directive 6211.42.0030 and 6217.90.9050. numbers is available in the issued to you on October 14, 2003, by the 5 Category 648–W: only HTS numbers CORRELATION: Textile and Apparel Chairman, Committee for the Implementation 6204.23.0040, 6204.23.0045, 6204.29.2020, of Textile Agreements. That directive 6204.29.2025, 6204.29.4038, 6204.63.2000, Categories with the Harmonized Tariff concerns imports of certain cotton, wool, 6204.63.3000, 6204.63.3510, 6204.63.3530, Schedule of the United States (see man-made fiber, silk blend and other 6204.63.3532, 6204.63.3540, 6204.69.2510, Federal Register notice 69 FR 4926, vegetable fiber textiles and textile products, 6204.69.2530, 6204.69.2540, 6204.69.2560, published on February 2, 2004). Also 6204.69.6030, 6204.69.9030, 6210.50.5035, produced or manufactured in Hong Kong and see 68 FR 65253, published on exported during the twelve-month period 6211.20.1555, 6211.20.6820, 6211.43.0040 and 6217.90.9060. November 19, 2003. which began on January 1, 2004 and extends through December 31, 2004. The Committee for the Implementation of D. Michael Hutchinson, Effective on June 30, 2004, you are directed Textile Agreements has determined that to adjust the limits for the following Acting Chairman, Committee for the these actions fall within the foreign affairs Implementation of Textile Agreements. categories, as provided for under the Uruguay exception to the rulemaking provisions of 5 Round Agreement on Textiles and Clothing: U.S.C. 553(a)(1). Committee for the Implementation of Textile Sincerely, Agreements Category Adjusted twelve-month limit 1 D. Michael Hutchinson, June 23, 2004. Acting Chairman, Committee for the Commissioner, Implementation of Textile Agreements. Sublevels in Group II Bureau of Customs and Border Protection, 331pt...... 1,625,282 dozen pairs. [FR Doc. 04–14710 Filed 6–28–04; 8:45 am] Washington, DC 20229 335 ...... 353,909 dozen. BILLING CODE 3510–DR–S 338/339 2 (shirts and 3,020,630 dozen. Dear Commissioner: This directive blouses other than amends, but does not cancel, the directive tank tops and issued to you on November 13, 2003, by the tops, knit). COMMITTEE FOR THE Chairman, Committee for the Implementation 338/339(1) 3 (tank 2,269,414 dozen. IMPLEMENTATION OF TEXTILE of Textile Agreements. That directive tops and knit tops). AGREEMENTS concerns imports of certain cotton, man- 340 ...... 2,892,570 dozen. made fiber, silk blend and other vegetable 345 ...... 528,377 dozen. Adjustment of Import Limits for Certain fiber textiles and textile products, produced 347/348 ...... 7,004,097 dozen of Cotton and Man-Made Fiber Textiles or manufactured in India and exported which not more than and Textile Products Produced or during the twelve-month period which began 6,914,097 dozen Manufactured in India shall be in Cat- on January 1, 2004 and extends through December 31, 2004. egories 347–W/348– June 23, 2004. W 4; and not more Effective on June 30, 2004, you are directed than 5,239,765 AGENCY: Committee for the to adjust the current limits for the following dozen shall be in Implementation of Textile Agreements categories, as provided for under the Uruguay Category 348–W. (CITA). Round Agreement on Textiles and Clothing:

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ICR, with applicable supporting Average Time Per Respondent: Category Adjusted twelve-month limit 1 documentation, may be obtained by 8.7 hours reporting semi-annually. calling the Corporation for National and 14.7 hours reporting quarterly. Levels in Group I Community Service, Ms. Angela Estimated Total Burden Hours: 218 ...... 30,535,871 square Roberts, at (202) 606–5000, extension 12,045. meters. Total Burden Cost (capital/startup): 219 ...... 129,361,849 square 111, ([email protected]); (TTY/TDD) at (202) 606–5256 between the hours of 9 None. meters. Total Burden Cost (operating/ 313 ...... 81,702,686 square a.m. and 4 p.m. eastern standard time, meters. Monday through Friday. maintenance): $2,000. Description: The Corporation requests 314 ...... 15,400,220 square DATES: Comments may be submitted, reinstatement, with changes, of its meters. identified by the title of the information National Senior Service Corps Project 315 ...... 25,866,199 square collection activity, by any of the Progress Report which reflects the meters. following two methods listed in the 317 ...... 37,260,024 square Corporation’s intention to modify address section, within 30 days from the meters. selected sections of the collection date of publication in this Federal 326 ...... 14,791,782 square instrument to reflect changes in data Register. meters. considered ‘‘core reporting’’ information 334/634 ...... 274,420 dozen. ADDRESSES: Comments may be to meet a variety of needs, including: 335/635 ...... 1,302,773 dozen. submitted, identified by the title of the • 336/636 ...... 1,846,508 dozen. Modification of data elements, 338/339 ...... 6,001,600 dozen. information collection activity, by any including adding new data elements as 340/640 ...... 3,301,706 dozen. of the following two methods: needed to ensure information collection 341 ...... 6,817,840 dozen of (1) By fax to: (202) 395–6974, captures appropriate data for the which not more than Attention: Ms. Katherine Astrich, OMB Corporation’s required performance 3,904,760 dozen Desk Officer for the Corporation for measurement and other reporting. shall be in Category National and Community Service; and The Project Progress Report (PPR) was 341–Y 2. (2) Electronically by e-mail to: designed to assure that National Service 342/642 ...... 2,638,120 dozen. [email protected]. Corps (NSSC) grantees address and 345 ...... 433,969 dozen. fulfill legislated program purposes, meet 347/348 ...... 1,417,662 dozen. SUPPLEMENTARY INFORMATION: The OMB 351/651 ...... 505,663 dozen. is particularly interested in comments agency program management and grant 363 ...... 83,619,522 numbers. which: requirements, and assess progress 641 ...... 2,761,543 dozen. • Evaluate whether the proposed toward work plan objectives agreed 647/648 ...... 1,452,789 dozen. collection of information is necessary upon in the granting of the award. Further, the reinstatement of the 1 The limits have not been adjusted to ac- for the proper performance of the count for any imports exported after December functions of the Corporation, including previously used PPR will: (a) Enhance 31, 2003. whether the information will have data elements collected via this 2 Category 341–Y: only HTS numbers practical utility; information collection tool; (b) migrate 6204.22.3060, 6206.30.3010, 6206.30.3030 • the paper version of the form to the and 6211.42.0054. Evaluate the accuracy of the Corporation’s estimate of the burden of Corporation’s electronic grants The Committee for the Implementation of the proposed collection of information, management system, eGrants; and (c) Textile Agreements has determined that including the validity of the establish reporting periods consistent these actions fall within the foreign affairs methodology and assumptions used; with the Corporation’s integrated grants exception to the rulemaking provisions of 5 • Propose ways to enhance the management and reporting policies. U.S.C. 553(a)(1). Comments: A 60-day public comment Sincerely, quality, utility and clarity of the D. Michael Hutchinson, information to be collected; and notice, regarding modification of the Acting Chairman, Committee for the • Propose ways to minimize the Project Progress Report was published Implementation of Textile Agreements. burden of the collection of information in the Federal Register on December 5, [FR Doc. 04–14711 Filed 6–28–04; 8:45 am] on those who are to respond, including 2003. This comment period ended on BILLING CODE 3510–DR–S the use of appropriate automated, February 5, 2004; no comments were electronic, mechanical, or other received. technological collection techniques or Dated: June 22, 2004. CORPORATION FOR NATIONAL AND other forms of information technology, Tess Scannell, COMMUNITY SERVICE e.g., permitting electronic submissions Director, National Senior Service Corps. of responses. [FR Doc. 04–14715 Filed 6–28–04; 8:45 am] Information Collection; Submission for Type of Review: Request for BILLING CODE 6050–$$–P OMB Review; Comment Request reinstatement, with change, of a previously approved collection for AGENCY: Corporation for National and which approval has expired. Community Service. Agency: Corporation for National and DEPARTMENT OF DEFENSE ACTION: Notice. Community Service. Office of the Secretary Title: National Senior Services Corps SUMMARY: The Corporation for National Project Progress Report. and Community Service (hereinafter the Submission for OMB Review; OMB Number: 3045–0033. Comment Request ‘‘Corporation’’) has submitted a public Agency Number: CNCS Form 1020. information collection request (ICR) to Affected Public: Sponsors of National ACTION: Notice. the Office of Management and Budget Senior Service Corps grants. (OMB) for review and approval in Total Respondents: 1,350. The Department of Defense has accordance with the Paperwork Frequency: Semi-annual. It is submitted to OMB for clearance, the Reduction Act of 1995, Public Law 104– estimated that 1,350 will respond semi- following proposal for collection of 13, (44 U.S.C. chapter 35). Copies of this annually and 50 quarterly. information under the provisions of the

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Paperwork Reduction Act (44 U.S.C. DEPARTMENT OF DEFENSE comments on the submission for OMB Chapter 35). review as required by the Paperwork Office of the Secretary DATES: Consideration will be given to all Reduction Act of 1995. DATES: Interested persons are invited to comments received by July 29, 2004. Defense Business Board; Notice of submit comments on or before July 29, Title, Forms, and OMB Number: Advisory Committee Meeting Dependency Statements: Parent, Child 2004. Born Out of Wedlock, Incapacitated AGENCY: Department of Defense, DoD. ADDRESSES: Written comments should Child Over Age 21, Full Time Student ACTION: Notice of advisory committee be addressed to the Office of 21–22 Years of Age, and Ward of a meeting. Information and Regulatory Affairs, Court; DD Forms 137–3, 137–4, 137–5, Attention: Carolyn Lovett, Desk Officer, SUMMARY: 137–6, 137–7, OMB Number 0730–0014. The Defense Business Board Department of Education, Office of (DBB) will meet in open session on Type of Request: Reinstatement. Management and Budget, 725 17th Thursday, July 15, 2004, at the Street, N.W., Room 10235, New Number of Respondents: 19,440. Pentagon, Washington, DC from 0815 Responses Per Respondent: 1. Executive Office Building, Washington, until 1000. The mission of the DBB is DC 20503 or faxed to (202) 395–6974. Annual Responses: 19,440. to advise the Senior Executive Council SUPPLEMENTARY INFORMATION: Section Average Burden Per Response: 1.25 (SEC) and the Secretary of Defense on hours. 3506 of the Paperwork Reduction Act of effective strategies for implementation 1995 (44 U.S.C. Chapter 35) requires Annual Burden Hours: 24,300. of best business practices of interest to that the Office of Management and Needs and Uses: This information the Department of Defense. At this Budget (OMB) provide interested collection is used to certify dependency meeting, the Board’s Acquisition, Federal agencies and the public an early or obtain information to determine Human Resources, and Financial opportunity to comment on information entitlement to basic allowance for Management related task groups will collection requests. OMB may amend or housing with dependent rate, travel deliberate on their preliminary, findings waive the requirement for public allowance, or Uniformed Services and recommendations related to tasks consultation to the extent that public Identification and Privilege Card. assigned earlier this year. participation in the approval process Information regarding the particular DATES: Thursday, July 15, 2004, 0815 to would defeat the purpose of the dependent situation is provided by the 1000 hrs. information collection, violate State or military member or by another FOR FURTHER INFORMATION CONTACT: Federal law, or substantially interfere individual who may be a member of the Members of the public who wish to with any agency’s ability to perform its public. DoDFMR 7000.14, Vol.7A attend the meeting must contact the statutory obligations. The Leader, defines dependency and directs that Defense Business Board no later than Regulatory Information Management dependency be proven. Dependency Thursday, July 8 for further information Group, Office of the Chief Information claim examiners use the information about admission as seating is limited. Officer, publishes that notice containing from the forms to determine the degree Additionally, those who wish to make proposed information collection of benefits. The requirements to provide oral comments or deliver written requests prior to submission of these the information decreases the possibility comments should also request to be requests to OMB. Each proposed of monetary allowances being approved scheduled, and submit a written text of information collection, grouped by on behalf of ineligible dependents. the comments by Thursday, July 8 to office, contains the following: (1) Type Affected Public: Individuals or allow time for distribution to the Board of review requested, e.g. new, revision, households. members prior to the meeting. extension, existing or reinstatement; (2) Frequency: On occasion and annually. Individual oral comments will be Title; (3) Summary of the collection; (4) Respondent’s Obligation: Required to limited to five minutes, with the total Description of the need for, and obtain or retain benefits. oral comment period not exceeding proposed use of, the information; (5) OMB Desk Officer: Ms. Jacqueline thirty-minutes. Respondents and frequency of Zeiher. The DBB may be contacted at: Defense collection; and (6) Reporting and/or Written comments and Business Board, 1100 Defense Pentagon, Recordkeeping burden. OMB invites recommendations on the proposed Room 2E314, Washington, DC 20301– public comment. information collection should be sent to 1100, via e-mail at [email protected], or via phone at Dated: June 22, 2004. Ms. Zeiher at the Office of Management Angela C. Arrington, and Budget, Desk Officer for DoD, Room (703) 614–7085. Leader, Regulatory Information Management 10236, New Executive Office Building, Dated: June 23, 2004. Group, Office of the Chief Information Officer. Washington, DC 20503. L.M. Bynum, DOD Clearance Officer: Mr. Rober Alternative OSD Federal Register Liaison Office of Vocational and Adult Cushing. Officer, Department of Defense. Education Written requests for copies of the [FR Doc. 04–14649 Filed 6–28–04; 8:45 am] Type of Review: New. information collection proposal should BILLING CODE 5001–06–M Title: Annual Performance Report be sent to Mr. Cushing, WHS/ESCD/ Grants Under the Smaller Learning Information Management Division, 1225 Communities Program. South Clark Street, Suite 504, Arlington, DEPARTMENT OF EDUCATION Frequency: Annually. VA 22202–4326. Affected Public: State, local, or tribal gov’t, SEAs or LEAs (primary). Dated: June 23, 2004. Submission for OMB Review; Comment Request Reporting and Recordkeeping Hour L.M. Bynum, Burden: Alternate OSD Federal Register, Liaison AGENCY: Department of Education. Responses: 400. Officer, Department of Defense. SUMMARY: The Leader, Regulatory Burden Hours: 4,000. [FR Doc. 04–14648 Filed 6–28–04; 8:45 am] Information Management Group, Office Abstract: The Annual Performance BILLING CODE 5001–06–M of the Chief Information Officer invites Report form requests information from

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grantees regarding progress made in of the Higher Education Act of 1965, as 34 CFR parts 74, 75 (except as provided achieving the objectives identified in amended (HEA); and (3) intend to in 34 CFR 650.3(b)), 77, 82, 84, 85, 86, the grantee’s application including pursue a doctoral or master’s degree in 97, 98 and 99; and (b) The regulations student outcome data and program fields selected by the JKJ Fellowship for this program in 34 CFR part 650. implementation information. Board at accredited U.S. institutions of Requests for copies of the submission higher education. An individual must II. Award Information for OMB review; comment request may be a citizen or national of the United Type of Award: Discretionary grant. be accessed from http:// States, a permanent resident of the Estimated Available Funds: edicsweb.ed.gov, by selecting the United States, in the United States for $2,928,305. ‘‘Browse Pending Collections’’ link and other than a temporary purpose and Estimated Average Size of Awards: intending to become a permanent by clicking on link number 2548. When $41,511. you access the information collection, resident, or a citizen of any one of the click on ‘‘Download Attachments’’ to Freely Associated States. Estimated Number of Awards: 71. view. Written requests for information Estimated Available Funds: Note: The Department is not bound by any should be addressed to U.S. Department $2,928,305. estimates in this notice. of Education, 400 Maryland Avenue, Estimated Average Size of Awards: SW., Potomac Center, 9th Floor, $41,511. Project Period: Up to 48 months. Estimated Number of Awards: 71. Washington, DC 20202–4700. Requests III. Eligibility Information may also be electronically mailed to the Note: The Department is not bound by any Internet address [email protected] or estimates in this notice. 1. Eligible Applicants: Individuals faxed to 202–245–6621. Please specify who at the time of application: (1) Have the complete title of the information Project Period: Up to 48 months. not completed their first full year of collection when making your request. Full Text of Announcement study for a doctoral degree or a master’s Comments regarding burden and/or degree in those fields in which the I. Funding Opportunity Description the collection activity requirements master’s degree is the terminal highest should be directed to Sheila Carey at her Purpose of Program: The purpose of degree awarded in the selected field of e-mail address [email protected]. the Jacob K. Javits (JKJ) Fellowship study, or will be entering a doctoral Individuals who use a Program is to award fellowships to degree program or a master’s degree telecommunications device for the deaf eligible students of superior ability, program in those fields in which the (TDD) may call the Federal Information selected on the basis of demonstrated master’s degree is the terminal highest Relay Service (FIRS) at 1–800–877– achievement, financial need, and degree awarded in the selected field of 8339. exceptional promise, to undertake study in academic year 2005–2006; (2) graduate study in selected fields in the are eligible to receive grant, loan, or [FR Doc. 04–14653 Filed 6–28–04; 8:45 am] arts, humanities, and social sciences work assistance pursuant to section 484 BILLING CODE 4000–01–P leading to a doctoral degree or to a of the HEA; and (3) intend to pursue a master’s degree in those fields in which doctoral or master’s degree in fields the master’s degree is the terminal DEPARTMENT OF EDUCATION selected by the JKJ Fellowship Board at highest degree awarded in the selected accredited U.S. institutions of higher Office of Postsecondary Education; field of study at accredited institutions education. An individual must be a Overview Information; Jacob K. Javits of higher education. The selected fields citizen or national of the United States, Fellowship Program in the arts are: creative writing, music a permanent resident of the United performance, music theory, music States, in the United States for other Notice inviting applications for new composition, music literature, studio than a temporary purpose and intending awards for fiscal year (FY) 2005. arts (including photography), television, to become a permanent resident, or a Catalog of Federal Domestic film, cinematography, theater arts, citizen of any one of the Freely Assistance (CFDA) Number: 84.170A. playwriting, screenwriting, acting, and Associated States. Dates: Applications Available: August dance. The selected fields in the 2. Cost Sharing or Matching: There are 11, 2004. humanities are: art history (including no cost sharing or matching Deadline for Transmittal of architectural history), archeology, area requirements for this program. Applications for the Jacob K. Javits studies, classics, comparative literature, Fellowship Program: October 8, 2004. English language and literature, folklore, IV. Application and Submission Deadline for Transmittal of the Free folk life, foreign languages and Information Application for Federal Student Aid literature, history, linguistics, 1. Address to Request Application (FAFSA): January 31, 2005. philosophy, religion (excluding study of Eligible Applicants: Individuals who Package: Education Publications Center religious vocation), speech, rhetoric, (ED Pubs), P.O. Box 1398, Jessup, MD at the time of application: (1) Have not and debate. The selected fields in the completed their first full year of study 20794–1398. Telephone (toll free): 1– social sciences are: anthropology, 877–433–7827. FAX: (301) 470–1244. If for a doctoral degree or a master’s communications and media, economics, degree in those fields in which the you use a telecommunications device ethnic and cultural studies, geography, for the deaf (TDD), you may call (toll master’s degree is the terminal highest political science, psychology (excluding degree awarded in the selected field of free): 1–877–576–7734. clinical psychology), public policy and You may also contact ED Pubs at its study, or will be entering a doctoral public administration, and sociology degree program or a master’s degree Web site: www.ed.gov/edpubs.html or (excluding the master’s and doctoral you may contact ED Pubs at its e-mail program in those fields in which the degrees in social work). master’s degree is the terminal highest address: [email protected]. degree awarded in the selected field of Program Authority: 20 U.S.C. 1134–1134d. The application may also be accessed study in academic year 2005–2006; (2) Applicable Regulations: (a) The on the JKJ Fellowship Program Web site: are eligible to receive grant, loan, or Education Department General http://www.ed.gov/programs/ work assistance pursuant to section 484 Administrative Regulations (EDGAR) in iegpsjavits/index.html.

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Note: The FAFSA may be obtained from recommendation (100 points); (c) Student Development Service, 1990 K the institution of higher education’s financial academic record (50 points); (d) St., NW., suite 6000, Washington, DC aid office or accessed at: www.fafsa.ed.gov. scholarly awards/honors (50 points); 20006–8524. Telephone: (202) 502–7542 If you request an application from ED and (e) supporting arts materials (100 or via Internet: _ _ Pubs, be sure to identify this points). ope javits [email protected]. competition as follows: CFDA number 2. Review and Selection Process: The If you use a telecommunications 84.170A. review and selection process for the JKJ device for the deaf (TDD), you may call Individuals with disabilities may Fellowship Program consists of a two- the Federal Information Relay Service obtain a copy of the application package part process. Eligible applications are (FIRS) at 1–800–877–8339. Individuals with disabilities may in an alternative format (e.g., Braille, read and rated by a distinguished panel obtain this document in an alternative large print, audiotape, or computer of scholars and academics in each of format (e.g., Braille, large print, diskette) by contacting the program fields of the arts, humanities, and social audiotape, or computer diskette) on contact person listed under FOR FURTHER sciences on the basis of demonstrated request to the program contact persons INFORMATION CONTACT in section VII of scholarly achievements and exceptional listed in this section. this notice. promise. The second part of the 2. Content and Form of Application evaluation is a determination of VIII. Other Information financial need. Submission: Requirements concerning Electronic Access to This Document: the content of an application, together VI. Award Administration Information You may view this document, as well as with the forms you must submit, are in 1. Award Notices: Successful all other documents of this Department the application package for this applicants will be notified by telephone published in the Federal Register, in program. and a Grant Award Notification (GAN) text or Adobe Portable Document 3. Submission Dates and Times: will be sent directly to the institution Format (PDF) on the Internet at the Applications Available: August 11, the applicant will be attending. following site: www.ed.gov/news/ 2004. Unsuccessful applicants will be fedregister. Deadline for Transmittal of notified. To use PDF you must have Adobe Applications for the JKJ Fellowship 2. Administrative and National Policy Acrobat Reader, which is available free Program: October 8, 2004. Requirements: We identify at this site. If you have questions about Deadline for Transmittal of the administrative and national policy using PDF, call the U.S. Government FAFSA: January 31, 2005. requirements in the application package Printing Office (GPO), toll free, at 1– The dates and times for the and reference these and other 888–293–6498; or in the Washington, transmittal of applications by mail or by requirements in the Applicable DC, area at (202) 512–1530. hand (including a courier service or Regulations section of this notice. commercial carrier) are in the Note: The official version of this document We reference the regulations outlining is the document published in the Federal application package for this program. the terms and conditions of an award in We do not consider an application Register. Free Internet access to the official the Applicable Regulations section of edition of the Federal Register and the Code that does not comply with the deadline this notice and include these and other of Federal Regulations is available on GPO requirements. specific conditions in the GAN. Access at: www.gpoaccess.gov/nara/ 4. Intergovernmental Review: This 3. Reporting: On an annual basis, index.html. program is not subject to Executive fellows are required to submit their Order 12372 and the regulations in 34 Student Aid Report to the Javits Dated: June 23, 2004. CFR part 79. Program Coordinator at their institution Sally L. Stroup, 5. Funding Restrictions: We reference as specified by the Secretary in 34 CFR Assistant Secretary for Postsecondary regulations outlining funding 650.37. Education. restrictions in the Applicable 4. Performance Measures: The [FR Doc. 04–14672 Filed 6–28–04; 8:45 am] Regulations section of this notice. effectiveness of the JKJ Fellowship BILLING CODE 4000–01–P 6. Other Submission Requirements: Program will be measured by graduate Instructions and requirements for the completion rates, time to degree transmittal of applications by mail or by completion rates, and the costs per PhD ELECTION ASSISTANCE COMMISSION hand (including a courier service or of talented graduate students, with commercial carrier) are in the demonstrated financial need, who are Sunshine Act Notice application package for this program. pursuing the highest degree available in AGENCY: Election Assistance their designated fields of study. V. Application Review Information Commission. Institutions of higher education in 1. Selection Criteria: The selection which the fellows are enrolled are * * * * * criteria for this program have been required to submit an annual report ACTION: Notice of public meeting. established by the Jacob K. Javits documenting the fellows’ satisfactory Program Fellowship Board, pursuant to academic progress and the determined DATE & TIME: Tuesday, July 13, 2004, at section 702(a)(2) of the HEA and 34 CFR financial need. The Department will use 1 p.m. 650.20(a). The selection criteria for the reports to assess the program’s PLACE: U.S. Election Assistance applications in the humanities and success in assisting fellows in Commission, 1225 New York Ave., NW., social sciences are: (a) Statement of completing their course of study and Suite 1100, Washington, DC 20005. purpose (100 points); (b) letters of receiving their degree. (Metro stop: Metro Center). recommendation (100 points); (c) STATUS: This meeting will be open to the academic record (150 points); and (d) VII. Agency Contacts public. scholarly awards/honors (50 points). For Further Information Contact: Gary SUMMARY: The purpose of this meeting The selection criteria for applications in Thomas or Carmen Gordon, Jacob K. will be to receive general updates and the arts are: (a) Statement of purpose Javits Fellowship Program, U.S. reports on the following: EAC (100 points); (b) letters of Department of Education, Teacher and Administration, EAC Requirements

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Payments to States, the EAC Standards 6 p.m.—Call to Order; Introductions; Issued in Washington, DC, on June 23, Board and Board of Advisors, the EAC Review Agenda; Approval of June 2004. Technical Guidelines and Development Minutes. Carol A. Matthews, Committee and the Commission’s two 6:05 p.m.—DDFO’s Comments. Acting, Deputy Advisory Committee public hearings conducted on May 5th 6:25 p.m.—Ex-officio Comments. Management Officer. and June 3rd. The Commission will also 6:35 p.m.—Federal Coordinator [FR Doc. 04–14685 Filed 6–28–04; 8:45 am] review recommendations on the Comments. BILLING CODE 6450–01–P following: Best Practices, a Grant to the 6:45 p.m.—Public Comments and National Student and Parent Mock Questions. Election, the National Voter Registration 6:55 p.m.—Break. DEPARTMENT OF ENERGY Form, a Public Hearing on Poll Worker 7:05 p.m.—Task Forces/Presentations. Environmental Management Site- Recruitment and Training, Electronic • Waste Disposition. Voting Security Resolution and the Specific Advisory Board, Oak Ridge —Burial Grounds Operable Unit. Reservation November Election Research Project. • Water Quality. The Commission will also receive the • Long Range Strategy/Stewardship. AGENCY: Department of Energy. following presentations: U.S. —Operating Procedures and Bylaws. ACTION: Notice of open meeting. Department of Justice Election Crimes • Community Outreach. Branch and the National Software 8:05 p.m.—Public Comments and SUMMARY: This notice announces a Reference Library for the National meeting of the Environmental Institute of Standards and Technology. Questions. 8:15 p.m.—Administrative Issues. Management Site-Specific Advisory * * * * * • Review of Workplan. Board (EM SSAB), Oak Ridge. The Federal Advisory Committee Act (Pub. PERSON TO CONTACT FOR INFORMATION: • Review of Next Agenda. L. 92–463, 86 Stat. 770) requires that Bryan Whitener, telephone: (202) 566– 8:35 p.m.—Review of Action Items. public notice of meetings be announced 3100. 8:50 p.m.—Subcommittee Reports. in the Federal Register. DeForest B. Soaries, Jr., • Executive Committee. DATES: Wednesday, July 14, 2004, 6 p.m. Chairman, Election Assistance Commission. 9:15 p.m.—Final Comments. ADDRESSES: DOE Information Center, [FR Doc. 04–14842 Filed 6–25–04; 1:05 pm] 9:30 p.m.—Adjourn. 475 Oak Ridge Turnpike, Oak Ridge, BILLING CODE 6820–MP–M Copies of the final agenda will be TN. available at the meeting. Public Participation: The meeting is FOR FURTHER INFORMATION CONTACT: Pat DEPARTMENT OF ENERGY open to the public. Written statements Halsey, Federal Coordinator, may be filed with the Committee either Department of Energy Oak Ridge Environmental Management Site- before or after the meeting. Individuals Operations Office, P.O. Box 2001, EM– Specific Advisory Board, Paducah who wish to make oral statements 90, Oak Ridge, TN 37831. Phone (865) pertaining to agenda items should 576–4025; fax (865) 576–5333 or e-mail: AGENCY: Department of Energy (DOE). contact David Dollins at the address [email protected] or check the Web ACTION: Notice of open meeting. listed below or by telephone at (270) site at http://www.oakridge.doe.gov/em/ ssab. SUMMARY: This notice announces a 441–6819. Requests must be received meeting of the Environmental five days prior to the meeting and SUPPLEMENTARY INFORMATION: Purpose of Management Site-Specific Advisory reasonable provision will be made to the Board: The purpose of the Board is Board (EM SSAB), Paducah. The include the presentation in the agenda. to make recommendations to DOE in the Federal Advisory Committee Act (Pub. The Deputy Designated Federal Officer areas of environmental restoration, L. 92–463, 86 Stat. 770) requires that is empowered to conduct the meeting in waste management, and related public notice of these meetings be a fashion that will facilitate the orderly activities. announced in the Federal Register. conduct of business. Each individual Tentative Agenda: The meeting wishing to make public comments will presentation will focus on the FY 2005 DATES: Thursday, July 15, 2004, 5:30 be provided a maximum of five minutes p.m.–9:30 p.m. Oak Ridge Site-Specific Advisory Board to present their comments as the first work plan topics proposed by DOE, ADDRESSES: 111 Memorial Drive, item of the meeting agenda. EPA, and the Tennessee Department of Barkley Centre, Paducah, Kentucky Minutes: The minutes of this meeting Environment and Conservation. 42001. will be available for public review and Public Participation: The meeting is FOR FURTHER INFORMATION CONTACT: copying at the Freedom of Information open to the public. Written statements William E. Murphie, Deputy Designated Public Reading Room, 1E–190, Forrestal may be filed with the Committee either Federal Officer, Department of Energy Building, 1000 Independence Avenue, before or after the meeting. Individuals Portsmouth/Paducah Project Office, SW., Washington, DC 20585 between 9 who wish to make oral statements 1017 Majestic Drive, Suite 200, a.m. and 4 p.m., Monday–Friday, except pertaining to agenda items should Lexington, Kentucky 40513, (859) 219– Federal holidays. Minutes will also be contact Pat Halsey at the address or 4001. available at the Department of Energy’s telephone number listed above. SUPPLEMENTARY INFORMATION: Purpose of Environmental Information Center and Requests must be received five days the Board: The purpose of the Board is Reading Room at 115 Memorial Drive, prior to the meeting and reasonable to make recommendations to DOE in the Barkley Centre, Paducah, Kentucky provision will be made to include the areas of environmental restoration, between 8 a.m. and 5 p.m. on Monday presentation in the agenda. The Deputy waste management and related thru Friday or by writing to David Designated Federal Officer is activities. Dollins, Department of Energy Paducah empowered to conduct the meeting in a Site Office, Post Office Box 1410, MS– fashion that will facilitate the orderly Tentative Agenda 103, Paducah, Kentucky 42001 or by conduct of business. Each individual 5:30 p.m.—Informal Discussion. calling him at (270) 441–6819. wishing to make public comment will

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be provided a maximum of five minutes • Overview of the Priority Panel and also to establish initial rates for the to present their comments. Efforts to Date. facilities. The Algonquin facilities will Minutes: Minutes of this meeting will • Presentations from the Six Working provide a direct connection between the be available for public review and Groups. existing liquefied natural gas facility copying at the Department of Energy’s • Public Comments. (LNG) of KeySpan LNG, L.P., with Information Center at 475 Oak Ridge upgrades as described in Docket Nos. Tuesday, July 27, 2004 Turnpike, Oak Ridge, TN between 8 CP04–223–000 and CP04–293–000, and a.m. and 5 p.m. Monday through Friday, • ITER Project Status. Algonquin’s existing pipeline system. or by writing to Pat Halsey, Department • Further Discussions. Algonquin states that the pipeline of Energy Oak Ridge Operations Office, • Adjourn. facilities are designed to provide firm P.O. Box 2001, EM–90, Oak Ridge, TN Public Participation: The meeting is transportation service for BG LNG 37831, or by calling her at (865) 576– open to the public. If you would like to Services, LLC of up to 500,000 Dth/day, 4025. file a written statement with the as more fully described in its Committee, you may do so either before application. Issued in Washington, DC, on June 23, Algonquin states that these 2004. or after the meeting. If you would like to make oral statements regarding any of applications are on file with the Carol A. Matthews, Commission and open to public Acting Deputy Advisory Committee the items on the agenda, you should contact Albert L. Opdenaker at 301– inspection and are available for review Management Officer. at the Commission in the Public [FR Doc. 04–14686 Filed 6–28–04; 8:45 am] 903–8584 (fax) or [email protected] (e- Reference Room or may be viewed on BILLING CODE 6450–01–P mail). You must make your request for the Commission’s Web site at http:// an oral statement at least 5 business www.ferc.gov using the ‘‘eLibrary’’ link. Enter the docket number excluding the DEPARTMENT OF ENERGY days before the meeting. Reasonable provision will be made to include the last three digits in the docket number Office of Science; Fusion Energy scheduled oral statements on the field to access the document. For Sciences Advisory Committee agenda. The Chairperson of the assistance, please contact FERC Online Committee will conduct the meeting to Support at AGENCY: Department of Energy. facilitate the orderly conduct of [email protected] or toll free at (866) 208–3676, or for TTY, ACTION: Notice of open meeting. business. Public comment will follow contact (202) 502–8659. Any initial the 10-minute rule. questions regarding these applications SUMMARY: This notice announces a Minutes: We will make the minutes of should be directed to Steven E. Tillman, meeting of the Fusion Energy Sciences this meeting available for public review General Manager, Regulatory Affairs, Advisory Committee. The Federal and copying within 30 days at the Algonquin, Gas Transmission Company, Advisory Committee Act (Pub. L. 92– Freedom of Information Public Reading P.O. Box 1642, Houston, Texas 77251– 463, 86 Stat. 770) requires that public Room, IE–190, Forrestal Building, 1000 1642, phone: (713) 627–5113. notice of these meetings be announced Independence Avenue, SW., in the Federal Register. There are two ways to become Washington, DC, between 9 a.m. and 4 involved in the Commission’s review of DATES: Monday, July 26, 2004, 9 a.m. to p.m., Monday through Friday, except this project. First, any person wishing to 6 p.m.; Tuesday, July 27, 2004, 9 a.m. Federal holidays. obtain legal status by becoming a party to 12 noon. Issued in Washington, DC, on June 23, to the proceedings for this project ADDRESSES: The Marriott Gaithersburg 2004. should, on or before the below listed Washingtonian Center, 9751 Carol A. Matthews, comment date, file with the Federal Washingtonian Boulevard, Gaithersburg, Acting Deputy Advisory Committee Energy Regulatory Commission, 888 Maryland 20878, USA. Management Officer. First Street, NE., Washington, DC 20426, FOR FURTHER INFORMATION CONTACT: [FR Doc. 04–14687 Filed 6–28–04; 8:45 am] a motion to intervene in accordance Albert L. Opdenaker, Office of Fusion BILLING CODE 6450–01–P with the requirements of the Energy Sciences, U.S. Department of Commission’s rules of practice and Energy, 1000 Independence Avenue, procedure (18 CFR 385.214 or 385.211) SW., Washington, DC 20585–1290; DEPARTMENT OF ENERGY and the regulations under the NGA (18 telephone: 301–903–4927. CFR 157.10). A person obtaining party Federal Energy Regulatory SUPPLEMENTARY INFORMATION: status will be placed on the service list Purpose of Commission the Meeting: The purpose of this maintained by the Secretary of the meeting is to hear from the FESAC the [Docket No. CP04–358–000] Commission and will receive copies of progress that it has made in fulfilling its all documents filed by the applicant and charge to identify the major science and Algonquin Gas Transmission by all other parties. A party must submit technology issues that need to be Company; Notice of Application 14 copies of filings made with the Commission and must mail a copy to addressed, recommend how to organize June 22, 2004. the applicant and to every other party in campaigns to address those issues, and Take notice that on June 14, 2004, the proceeding. Only parties to the recommend the priority order in which Algonquin Gas Transmission Company proceeding can ask for court review of the identified campaigns should be (Algonquin) filed in Docket No. CP04– Commission orders in the proceeding. undertaken. 358–000 an application pursuant to However, a person does not have to Tentative Agenda section 7 of the Natural Gas Act (NGA) intervene in order to have comments seeking a certificate of public considered. The second way to Monday, July 26, 2004 convenience and necessity to construct, participate is by filing with the • Office of Science Perspective. own, and operate 1.44 miles of 24-inch Secretary of the Commission, as soon as • Office of Fusion Energy Sciences pipeline and appurtenant facilities in possible, an original and two copies of Perspective. the City of Providence, Rhode Island, comments in support of or in opposition

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to this project. The Commission will the Commission grant blanket approval DEPARTMENT OF ENERGY consider these comments in under 18 CFR part 34 of all future determining the appropriate action to be issuances of securities and assumptions Federal Energy Regulatory taken, but the filing of a comment alone of liability by Barclays Bank. Commission will not serve to make the filer a party On June 2, as amended June 4, 2004, [Docket No. EL04–108–000] to the proceeding. The Commission’s pursuant to delegated authority, the rules require that persons filing Director, Division of Tariffs and Market Public Utilities Providing Service in comments in opposition to the project Development—South, granted the California Under Sellers’ Choice provide copies of their protests only to request for blanket approval under part Contracts; Notice of Initiation of the party or parties directly involved in Proceeding and Refund Effective Date the protest. 34, subject to the following: Persons who wish to comment only Any person desiring to be heard or to June 22, 2004. on the environmental review of this protest the blanket approval of On June 17, 2004, the Commission project should submit an original and issuances of securities or assumptions of issued an order in the above-referenced two copies of their comments to the liability by Barclays Bank should file a dockets initiating a proceeding in Secretary of the Commission. Those motion to intervene or protest with the Docket No. EL04–108–000 under section providing environmental comments will Federal Energy Regulatory Commission, 206 of the Federal Power Act be placed on the Commission’s 888 First Street, NE., Washington, DC concerning issues related to sellers’ environmental mailing list, will receive 20426, in accordance with rules 211 and choice contracts. copies of the environmental documents, 214 of the Commission’s Rules of The refund effective date in Docket and will be notified of meetings Practice and Procedure (18 CFR 385.211 No. EL04–108–000, established associated with the Commission’s and 385.214). pursuant to section 206(b) of the Federal environmental review process. The Power Act will be 60 days following Notice is hereby given that the environmental commenters will not be publication of this notice in the Federal deadline for filing motions to intervene required to serve copies of filed Register. documents on all other parties. or protests, is July 2, 2004. However, the non-party commenters Absent a request to be heard in Magalie R. Salas, will not receive copies of all documents opposition by the deadline above, Secretary. filed by other parties or issued by the Barclays Bank is authorized to issue [FR Doc. E4–1434 Filed 6–28–04; 8:45 am] Commission (except for the mailing of securities and assume obligations or BILLING CODE 6717–01–P environmental documents issued by the liabilities as a guarantor, indorser, Commission) and will not have the right surety, or otherwise in respect of any to seek court review of the security of another person; provided DEPARTMENT OF ENERGY Commission’s final order. that such issuance or assumption is for Federal Energy Regulatory Motions to intervene, protests and some lawful object within the corporate Commission comments may be filed electronically purposes of Barclays Bank, compatible via the internet in lieu of paper; see 18 with the public interest, and is [Docket Nos. ER04–699–000, ER03–1272– CFR 385.2001(a)(1)(iii) and the reasonably necessary or appropriate for 002, ER98–4410–000, ER98–4410–001, instructions on the Commission’s Web such purposes. ER98–4410–002, EL02–101–000, EL02–101– site under the ‘‘e-Filing’’ link. The 001, and EL02–101–002] Commission strongly encourages The Commission reserves the right to electronic filings. require a further showing that neither Entergy Services, Inc., CLECO Power, public nor private interests will be LLC, Dalton Utilities, Entergy Services, Comment Date: July 13, 2004. adversely affected by continued Inc., Georgia Transmission Magalie R. Salas, approval of Barclays Bank’s issuances of Corporation, JEA, MEAG Power, Sam Secretary. securities or assumptions of liability. Rayburn G&T Electric Cooperative, [FR Doc. E4–1432 Filed 6–28–04; 8:45 am] Copies of the full text of the Order are Inc., Southern Company Services, Inc., BILLING CODE 6717–01–P available from the Commission’s Public City of Tallahassee, Florida; Reference Branch, 888 First Street, NE., Supplemental Notice of Technical Washington, DC 20426. The Order may Conference DEPARTMENT OF ENERGY also be viewed on the Commission’s June 21, 2004. Federal Energy Regulatory Web site at http://www.ferc.gov, using As announced in the Notice of Commission the e library (FERRIS) link. Enter the Technical Conference issued on May 12, docket number excluding the last three 2004, a technical conference will be [Docket No. ER04–734–000] digits in the docket number filed to held on July 29–30, 2004, in New access the document. Comments, Barclays Bank PLC; Notice of Issuance Orleans, Louisiana, to discuss with protests, and interventions may be filed of Order States and market participants issues electronically via the internet in lieu of related to Entergy Services, Inc.’s filing June 21, 2004. paper. See 18 CFR 385.2001(a)(1)(iii) to establish independent oversight over Barclays Bank PLC (Barclays Bank) and the instructions on the certain transmission system activities. filed an application for market-based Commission’s Web site under the ‘‘e- The conference will be held from 1 p.m. rate authority, with an accompanying Filing’’ link. The Commission strongly to 5 p.m. (central time) on July 29th and tariff. The proposed tariff provides for encourages electronic filings. from 9 a.m. to approximately 3 p.m. wholesale sales of capacity, energy, and (central time) on July 30th. The ancillary services at market-based rates. Magalie R. Salas, conference will be held at the City of Barclays Bank also requested waiver of Secretary. New Orleans’ City Council Chambers, various Commission regulations. In [FR Doc. E4–1440 Filed 6–28–04; 8:45 am] located on the First Floor of 1300 particular, Barclays Bank requested that BILLING CODE 6717–01–P Perdido Street, New Orleans, Louisiana

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70112. Members of the Federal Energy including Entergy’s transmission DEPARTMENT OF ENERGY Regulatory Commission are expected to facilities, were suspended. Federal Energy Regulatory participate, along with Entergy’s State The Commission expects that other Commission and local utility regulators. issues may be added after the The conference is open for the public Commission receives comments in to attend, and registration is not [Docket Nos. CP04–36–000 and CP04–41– Docket No. ER04–699–000 and will 000] required; however, in-person attendees publish an additional supplemental are asked to register for the conference notice with a detailed agenda. As a Weaver’s Cove Energy L.L.C. and Mill on-line by close of business on Monday, preliminary matter, the general issues to River Pipeline L.L.C.; Notice of Public July 26, 2004 at http://www.ferc.gov/ be addressed at each session of the Meeting Attendance whats-new/registration/entergy-0729- conference are discussed below. form.asp. June 22, 2004. Day One of the conference will focus On Wednesday, June 30, 2004, staff of The Commission believes that there on issues regarding Entergy’s oversight may be issues that overlap in these the Office of Energy Projects (OEP) will proposal, including whether the ICT’s participate in a public meeting held by proceedings which may affect the duties and responsibilities are adequate overall provision of transmission service State Representative Joseph N. Amaral to ensure non-discriminatory access on in Tiverton, Rhode Island regarding on the Entergy System. The Commission the Entergy Transmission System; actual intends that the technical conference it Weaver’s Cove Energy, L.L.C.’s independence of the ICT; independent proposed liquefied natural gas (LNG) ordered in these dockets will enable third party administration of Entergy’s import terminal and storage facility in regulators and interested parties to OASIS; and broad Entergy System Fall River, Massachusetts. The public discuss issues raised by Entergy’s Agreement issues. Additional issues meeting will start at 7 p.m. (e.s.t.) at the various proposals in the above dockets. may include feasibility of SPP serving as Patriot’s Club (formerly the Ponta The Commission asks that the the ICT and the possibility of Entergy Delgada Club) on 70 Shove Street in participants in the technical conference joining the SPP RTO. Tiverton, Rhode Island. address the reasonableness of Entergy’s proposal in Docket No. ER04–699–000 Day Two of the conference will focus Magalie R. Salas, to establish an Independent Coordinator on transmission access issues arising Secretary. of Transmission (ICT) to provide from Entergy’s proposed WPP, [FR Doc. E4–1433 Filed 6–28–04; 8:45 am] oversight over Entergy’s transmission participation in the WPP, the roles of BILLING CODE 6717–01–P system as opposed to the reasonableness the EMO, Entergy Transmission and feasibility of alternative Function—Weekly Operations, re- arrangements to provide oversight or dispatch costs and impacts on AFC. DEPARTMENT OF ENERGY control over Entergy’s transmission Entergy’s proposed transmission pricing Federal Energy Regulatory system. The Commission would like and expansion pricing proposal will Commission Entergy and parties to the various also be discussed. referenced proceedings to address the Transcripts of the conference will be issues raised in those proceedings as [Docket Nos. RP03–398–000, and RP04– immediately available from Ace 155–000 (Consolidated)] they relate to the broader issue of Reporting Company ((202) 347–3700 or transmission service on the Entergy 1–800–336–6646) for a fee. They will be Northern Natural Gas Company; Notice System. As such, the Commission available for the public on the of Informal Settlement Conference expects to discuss how the following Commission’s eLibrary (FERRIS) seven Entergy cases pending at the June 21, 2004. calendar days after FERC receives the Commission in relation to Entergy’s ICT Take notice that an informal proposal: The Available Flowgate transcript. Additionally, Capitol settlement conference will be convened Capability proceeding in Docket Nos. Connection offers the opportunity for in this proceeding at the offices of the ER03–1272–000, et al.; the Capacity remote listening of the conference via Federal Energy Regulatory Commission, Benefit Margin proceeding in Docket the Internet or a Phone Bridge 888 First Street, NE., Washington, DC Nos. ER01–4410–000, et al.; and the Connection for a fee. Interested persons 20426 commencing at 1 p.m. on transmission expansion pricing and should make arrangements as soon as Monday, June 28, 2004, and continuing, Weekly Procurement Process (WPP) possible by visiting the Capitol if necessary, at 9:30 a.m. on Tuesday, contained in Docket No. ER04–699–000. Connection Web site at http:// June 29, 2004 (e.s.t.), in a room to be The Commission would also like to www.capitolconnection.gmu.edu and announced later, for the purpose of consider the issues raised by Indicated clicking on ‘‘FERC.’’ If you have any exploring the possible settlement of the Stakeholders 1 in Docket Nos. EL02– questions contact David Reininger or above-referenced dockets. 101–000, et al. in its filed response to Julia Morelli at the Capitol Connection Any party, as defined by 18 CFR the announcement of the SeTrans ((703) 993–3100). 385.102(c), or any participant as defined Sponsors that efforts to establish a For more information about the by 18 CFR 385.102(b), is invited to Regional Transmission Organization in conference, please contact Anna attend. Persons wishing to become a the Southeastern United States, Cochrane at (202) 502–6357 or at party must move to intervene and receive intervenor status pursuant to the [email protected]. 1 The Indicated Stakeholders are: Alabama Commission’s regulations (18 CFR Municipal Electric Authority; Arkansas Electric Linda Mitry, 385.214). Cooperative Corporation; ChevronTexaco; Acting Secretary. For additional information, please Electricities of North Carolina, Inc.; Lafayette [FR Doc. E4–1441 Filed 6–28–04; 8:45 am] contact Kevin Frank (202) 502–8065 Utilities System; Louisiana Energy and Power [email protected], Gopal Authority; NRG Energy; Shell Trading Gas and BILLING CODE 6717–01–P Power Company; Tractebel Energy Marketing, Inc.; Swaminathan (202) 502–6132, and Williams Power Company, Inc. [email protected], or

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William Collins (202) 502–8248 issues, and longer-term reliability recommendations; NERC, Reliability [email protected]. issues. A more detailed agenda, with a readiness audits; NERC reliability list of speakers, will be published at a standards; State-level actions— Magalie R. Salas, Regulators representing NARUC, Ohio, later time. Michigan, New York, Indiana; Audience Secretary. The meeting was established in [FR Doc. E4–1438 Filed 6–28–04; 8:45 am] participation. response to an invitation by Governor 4 p.m.—Next Steps: Commitments and BILLING CODE 6717–01–P Bob Taft of Ohio to convene a public Recommendations: Discussion with forum and technical conference to FERC and State Regulators, DOE, and address these issues. The conference audience. DEPARTMENT OF ENERGY will also enjoy the participation of 4:30 p.m.—Adjourn. Federal Energy Regulatory members of the Public Utilities [FR Doc. E4–1439 Filed 6–28–04; 8:45 am] Commission Commission of Ohio. BILLING CODE 6717–01–P Transcripts of the conference will be [Docket No. PL04–11–000, PA04–14–000, immediately available from Ace EL04–52–000, ER03–262–009 et al., ER04– Reporting Company ((202) 347–3700 or DEPARTMENT OF ENERGY 691–000 and EL04–104–000, ER04–367–000 1–800–336–6646) for a fee. They will be et al., ER04–521–001 et al., ER04–375–000 Federal Energy Regulatory et al., ER04–364–000, PL04–5–000] available for the public on the Commission’s eLibrary system seven Commission Summer 2004 Reliability Workshop, calendar days after FERC receives the [Docket No. RM98–1–000] Ohio Edison Company, Toledo Edison transcript. Additionally, Capitol Company, Cleveland Electric Connection offers the opportunity for Records Governing Off-the-Record Illuminating Company, and remote listening of the conference via Communications; Public Notice Pennsylvania Power Company, Real Audio or a Phone Bridge Reporting by Transmission Providers Connection for a fee. Persons interested June 22, 2004. on Vegetation Management Practices in making arrangements should contact This constitutes notice, in accordance Related to Designated Transmission David Reininger or Julia Morelli at the with 18 CFR 385.2201(b), of the receipt Facilities, New PJM Companies, et al., Capitol Connection ((703) 993–3100) as of exempt and prohibited off-the-record Midwest Independent Transmission, soon as possible or visit the Capitol communications. System Operator, Inc. et al., PJM Connection Web site at http:// Order No. 607 (64 FR 51222, Interconnection, LLC et al., PJM www.capitolconnection.org and click on September 22, 1999) requires Interconnection, LLC, Midwest ‘‘FERC.’’ Commission decisional employees, who Independent Transmission System For more information about the make or receive an exempt or prohibited Operator, Inc. et al., Commonwealth conference, please contact Sarah off-the-record communication relevant Edison Company et al., Policy McKinley at (202) 502–8004 or to the merits of a contested on-the- Statement on Matters Related to Bulk [email protected]. record proceeding, to deliver a copy of the communication, if written, or a Power System Reliability; Notice of Magalie R. Salas, Technical Conference summary of the substance of any oral Secretary. communication, to the Secretary. June 21, 2004. Prohibited communications will be Take notice that a technical Attachment A included in a public, non-decisional file conference will be held to address what Agenda associated with, but not a part of, the steps have been taken to prevent a 9 a.m.—Opening comments: Chairman Pat decisional record of the proceeding. blackout reoccurrence and discuss Wood, Federal Energy Regulatory Unless the Commission determines that related reliability issues in the Midwest Commission; Governor Bob Taft of Ohio; the prohibited communication and any for the Summer 2004, on Thursday, July Chairman Alan R. Schriber, Public responses thereto should become a part 15, from approximately 9 a.m. to 4:30 Utilities Commission of Ohio. of the decisional record, the prohibited p.m. (eastern daylight time) at the 9:20 a.m.—Preparations for summer 2004: off-the-record communication will not First Energy, improvements to grid be considered by the Commission in Renaissance Cleveland Hotel, 24 Public operations and practices, Square, Cleveland, Ohio. Members of implementation of NERC reaching its decision. Parties to a the Commission will attend and recommendations; AEP, operations and proceeding may seek the opportunity to participate in the discussions. summer preparation; Midwest ISO, respond to any facts or contentions The Renaissance Cleveland Hotel is software, operations, communications; made in a prohibited off-the-record holding a block of rooms for attendees PJM, discussion of Commonwealth communication, and may request that at the rate of $139 for the evening of July Edison and AEP integration, the common the Commission place the prohibited 14. For reservations call 1–800– market, operations and communications; communication and responses thereto TVA, operations and preparations; in the decisional record. The HOTELS–1 or (216) 696–5600. NERC, blackout mitigation The conference is open for the public recommendations and implementation; Commission will grant such a request to attend, and registration is not Vegetation Management status, speaker only when it determines that fairness so required; however, in-person attendees from NARUC or FERC; Audience requires. Any person identified below as are asked to register for the conference Participation. having made a prohibited off-the-record on-line by close of business on 11:20 a.m.—Break. communication shall serve the Thursday, July 8, at http:// 11:40 a.m.—Midwest Infrastructure Issues document on all parties listed on the www.ferc.gov/whats-new/registration/ (OH, MI, WI, IL, IN, KY, TN, WV). Jeff official service list for the applicable reliability-workshop-0715-form.asp. Wright, FERC—Update on Midwest proceeding in accordance with rule A tentative agenda for this meeting is electric and gas infrastructure. MISO— Midwest transmission planning, issues 2010, 18 CFR 385.2010. included with this notice as Attachment and prospects. Audience Participation. Exempt off-the-record A. The discussion covers responses to 12:40 p.m.—Lunch Break. communications will be included in the the 2003 blackout, preparations for 2 p.m.—Longer-Term Reliability Issues: DOE, decisional record of the proceeding, Summer 2004, electricity infrastructure Implementation of blackout unless the communication was with a

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cooperating agency as described by 40 by docket numbers. These filings are docket number field to access the CFR 1501.6, made under 18 CFR available for review at the Commission document. For Assistance, please 385.2201(e)(1)(v). in the Public Reference Room or may be contact FERC, Online Support at The following is a list of prohibited viewed on the Commission’s Web site at [email protected] or toll and exempt communications recently http://www.ferc.gov using the eLibrary free at (866) 208–3676, or for TTY, contact (202) 502–8659. received in the Office of the Secretary. (FERRIS) link. Enter the docket number The communications listed are grouped excluding the last three digits in the Prohibited

Docket number Date filed Presenter or requester

1. CP01–49–000 ...... 6–17–04 Edmee Van Haeften. 2. CP04–58–000 ...... 6–14–04 Khalid Ibrahim, et al. 1 3. EL03–235–000 ...... 6–14–05 Robert Wilmouth. 4. Project No. 516–388 ...... 6–16–04 Kenneth and Sandy Fox. 1 This communication is one among numerous form letters sent to the Commission by the Greenpeace, USA organization. Only representative samples of these prohibited non-decisional documents are posted in this docket on the Commission’s eLibrary system (http://www.ferc.gov).

Exempt

Docket number Date filed Presenter or requester

1. CP04–37–000, CP04–44–000, CP04–45–000, CP04–46–000 5–20–04 Hon. Ken Armbrister. 2. CP04–37–000, CP04–44–000, CP04–45–000, CP04–46–000 5–25–04 Hon. Dennis Bonnen. 3. CP04–37–000, ...... 6–7–04 Sydne Marshall et al. 4. CP04–37–000, CP04–44–000, CP04–45–000, CP04–46–000 6–10–04 Hon. Jerry Patterson. 5. CP04–47–000, CP04–38–000 ...... 6–1–04 Hon. Kathleen Babnieaux Blanco. 6. CP04–58–000 ...... 6–1–04 Hon. Betty Karnette. 7. ER04–23–001 ...... 5–25–04 Hon. Joseph Lieberman, Hon. Rosa L. DeLauro, Hon. Chris- topher Shays, Hon. Christopher Dodd, Hon. John Larson. 8. Project No. 1413–000 ...... 6–17–04 Nicholas Jayjack. 9. Project No. 2042–013 ...... 6–3–04 Hon. George R. Nethercutt, Jr. 10. Project No. 2082–027 ...... 6–8–04 Ronnie Pellegrini. 11. Project No. 2082–000 ...... 6–17–01 Stephen D. Mikesell.

Magalie R. Salas, Commission approval to hold any such 3. While the statute applies to the Secretary. positions. individual officer or director, the 2 [FR Doc. E4–1431 Filed 6–28–04; 8:45 am] 2. The Commission’s regulations Commission urges public utilities to BILLING CODE 6717–01–P require that an application for approval exercise due diligence when selecting be filed with the Commission within individuals to serve as officers or thirty (30) days of election or directors and to ensure that current 3 DEPARTMENT OF ENERGY appointment to a qualifying position. If officers or directors are in compliance an application is filed after the 30-day with the requirements of section 305(b). Federal Energy Regulatory period, it is considered late. The Furthermore, the Commission expects Commission is concerned about the Commission that all individuals who seek to serve or timeliness of applications. The are serving as an officer or director of a Commission has previously stated that [Docket No. PL04–10–000] public utility will be aware of their it ‘‘does not look favorably on untimely responsibilities under section 305(b) of Federal Power Act; Section 305(b) applications to hold interlocking the FPA and will comply with all Obligations; Order Advising Public positions.’’ 4 Furthermore, if individuals requirements. Utilities and Their Officers and or public utilities are confused or Directors of Federal Power Act Section unclear about whether positions 4. This order is intended to reiterate 305(b) Obligations mandate prior Commission approval these obligations and emphasize the under section 305(b), they are strongly importance the Commission places on June 22, 2004. encouraged to ‘‘[seek] Commission compliance with the statute. The Before Commissioners: Pat Wood, III, clarification promptly.’’ 5 Commission will exercise remedial Chairman; Nora Mead Brownell, Joseph authority, as appropriate, to persons that T. Kelliher, and Suedeen G. Kelly. 2 18 CFR part 45 (2003). fail to obtain the prior approval required 3 Certain interlocking positions require only a 1. Under section 305(b) of the Federal more limited filing under our regulations. See 18 by FPA section 305(b). Power Act (FPA),1 any person seeking to CFR 45.9 (2003). Likewise, individuals holding 5. The Secretary is directed to publish hold the positions of officer or director other interlocking positions are permitted to make this order in the Federal Register. a more limited filing under our precedent. See, e.g., of a public utility and officer or director San Manuel Power Company LLC, 96 FERC By the Commission. of another public utility, or an electrical ¶ 61,089 at 61,371 and Ordering Paragraph (E) equipment supplier, or securities (2001); Bridgeport Energy LLC, 83 FERC ¶ 61,307 Linda Mitry, underwriter (with certain statutorily- at 62,262 and Ordering Paragraph (E) (1998). Acting Secretary. 4 Thomas Madison McDaniel, Jr., 24 FERC [FR Doc. 04–14655 Filed 6–28–04; 8:45 am] defined exceptions) must seek prior ¶ 61,026 at 61,107 (1983). 5 Walter F. Torrance, Jr., 29 FERC ¶ 61,288 at BILLING CODE 6717–01–P 1 16 U.S.C. 825d (2000). 61,588 (1984).

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ENVIRONMENTAL PROTECTION Resins; in 40 CFR part 63, subpart OOO; Dated: June 21, 2004. AGENCY was approved 05/17/2004; OMB Oscar Morales, Number 2060–0434; expires 05/31/2007. Director, Collection Strategies Division. [FRL–7779–7] EPA ICR No. 1790.03; NESHAP for [FR Doc. 04–14703 Filed 6–28–04; 8:45 am] Agency Information Collection Phosphoric Acid Manufacturing and BILLING CODE 6560–50–P Activities OMB Responses Phosphate Fertilizer Production Plants; in 40 CFR part 63, subparts AA and BB); AGENCY: Environmental Protection was approved 5/18/2004; OMB Number ENVIRONMENTAL PROTECTION Agency (EPA). 2060–0361; expires 05/31/2007. AGENCY ACTION: Notice. EPA ICR No. 1678.05; NESAP for [OAR–2004–0082, FRL–7779–6] SUMMARY: This document announces the Magnetic Tape Manufacturing Agency Information Collection Office of Management and Budget’s Operations; in 40 CFR part 63, subpart Activities: Proposed Collection; (OMB) responses to Agency clearance EE); was approved 05/17/2004; OMB Comment Request; Reporting and requests, in compliance with the Number 2060–0326; expires 05/31/2007. Recordkeeping Requirements Under Paperwork Reduction Act (44 U.S.C. EPA ICR No. 2149.01; Detroit EPA’s Natural Gas STAR Program, 3501 et. seq.). An agency may not Exposure and Aerosol Research Study EPA ICR Number 1736.04, OMB conduct or sponsor, and a person is not (DEARS); was approved 06/01/2004; Control Number 2060–0328 required to respond to, a collection of OMB Number 2080–00071; expires 06/ information unless it displays a 20/2007. AGENCY: Environmental Protection currently valid OMB control number. EPA ICR No. 1717.04; NESHAP for Agency (EPA). The OMB control numbers for EPA’s Off-Site Waste and Recovery ACTION: Notice. regulations are listed in 40 CFR part 9 Operations; in 40 CFR part 63, subpart SUMMARY: In compliance with the and 48 CFR chapter 15. DD; was approved 05/21/2004; OMB Paperwork Reduction Act (44 U.S.C. FOR FURTHER INFORMATION CONTACT: Number 2060–0313; expires 05/31/2007. 3501 et seq.), this document announces Susan Auby (202) 566–1672, or e-mail at EPA ICR No. 1783.03; NESHAP for [email protected] and please refer to that EPA is planning to submit the Flexible Polyurethane Foam Production; following continuing Information the appropriate EPA Information in 40 CFR part 63, subpart III; was Collection Request (ICR) Number. Collection Request (ICR) to the Office of approved 05/21/2004; OMB Number Management and Budget (OMB). This is SUPPLEMENTARY INFORMATION: 2060–0357; expires 05/13/2007. a request to renew an existing approved OMB Responses to Agency Clearance EPA ICR No. 1214.06; Pesticide collection. This ICR is scheduled to Requests Product Registration Maintenance Fee; expire on 11/30/04. Before submitting was approved 05/19/2004; OMB the ICR to OMB for review and OMB Approvals Number 2070–0100; expires 05/31/2007. approval, EPA is soliciting comments on EPA ICR No. 1249.07; Recordkeeping EPA ICR No. 1135.08; NSPS for specific aspects of the proposed Requirements for Certified Applications Magnetic Tape Coating Facilities; in 40 information collection as described Using 1080 Collars for Livestock CFR part 60, subpart SSS; was approved below. Protection; was approved 05/14/2004; 06/25/2004; OMB Number 2060–0171; DATES: Comments must be submitted on OMB Number 2070–0074; expires 05/ expires 06/20/2007. or before August 30, 2004. 31/2007. EPA ICR No. 1204.09; Submission of Short Term Extensions ADDRESSES: Submit your comments, Unreasonable Adverse Effects referencing docket ID number OAR– EPA ICR No. 1953.02; Information Information Under FIFRA Section 6 (a) 2004–0082, to EPA online using Collection Request for Best Management (2); was approved 05/14/2004; OMB EDOCKET (our preferred method), by e- Practices Alternatives, Effluent Number 2070–0039; expires 05/31/2007. mail to [email protected], or by EPA ICR No. 0276.12; Application for Limitations Guidelines and Standards, mail to: EPA Docket Center, Experimental Use Permit (EUP) to Ship Oil and Gas Extraction Point Source Environmental Protection Agency, Air and Use a Pesticide for Experimental Category; in 40 CFR part 435; OMB and Radiation Docket and Information Purposes; in 40 CFR part 172; was Number 2040–0230; in 04/26/2004; Center, MC 6102T, 1200 Pennsylvania approved 05/13/2004; OMB Number OMB extended the expiration to 07/13/ Ave., NW., Washington, DC 20460. 2070–0040; expires 05/31/2007. 204. FOR FURTHER INFORMATION CONTACT: EPA ICR No. 0116.07; Emission Withdrawn Kevin Tingley at EPA’s Natural Gas Control System Performance Warranty STAR Program by phone at (202) 343– Regulations and Voluntary Aftermarket EPA ICR No. 2126.01; Longitudinal 9086, by e-mail at [email protected] Part Certification Program; in 40 CFR Study of Your Children’s Exposures in or by fax at (202) 343–2208. part 85, subpart V; was approved 05/07/ their Homes to Selected Pesticides, SUPPLEMENTARY INFORMATION: EPA has 2004; OMB Number 2060–0060; expires Phthalates, Brominated Flame established a public docket for this ICR 05/31/2007. Retardants, and Perfluorinated under Docket ID number OAR–2004– EPA ICR No. 1857.03; Emission Chemicals (CHEERS); was withdrawn 0082, which is available for public Reporting Requirements for Ozone SIP by OMB 06/0/2004. viewing at the Air and Radiation Docket Revisions Relating to Statewide Budget Comment Filed and Information Center in the EPA for NOX Emissions to Reduce the Docket Center (EPA/DC), EPA West, Regional Transport of Ozone; in 40 CFR EPA ICR No. 1189.13; Identification Room B102, 1301 Constitution Ave., 51.121 and 40 CFR 51.122; was Listing and Rulemaking Petitions NW., Washington, DC. The EPA Docket approved 05/10/2004; OMB Number (Proposed Rule for Organic Dyes and/or Center Public Reading Room is open 2060–0445; expires 05/31/2007. Pigments Production Wastes); OMB from 8:30 a.m. to 4:30 p.m., Monday EPA ICR No. 1869.03; NESHAP for Number 2050–0053; OMB filed through Friday, excluding legal the Manufacture of Amino/Phenolic comment on 06/25/2004. holidays. The telephone number for the

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Reading Room is (202) 566–1744, and collection to evaluate a Partner’s complete and review the collection of the telephone number for the Air and progress and performance, assess overall information; and transmit or otherwise Radiation Docket and Information program results, and develop technical disclose the information. Center is (202) 566–1742. An electronic guidance documents for the benefit of Respondents/Affected Entities: 111. version of the public docket is available the industry. Information collection is Estimated Number of Respondents: through EPA Dockets (EDOCKET) at accomplished through the use of an 111. http://www.epa.gov/edocket. Use annual reporting process that allows Frequency of Response: varies. EDOCKET to obtain a copy of the draft companies to report their Estimated Total Annual Hour Burden: collection of information, submit or accomplishments in either a traditional 5,217 hours. view public comments, access the index hard-copy format or electronically. Estimated Total Annualized Cost listing of the contents of the public Participation in Natural Gas STAR is Burden: $382,335. docket, and to access those documents voluntary. Natural Gas STAR Partners Dated: June 16, 2004. in the public docket that are available may designate information submitted Kathleen Hogan, electronically. Once in the system, under this ICR as confidential business Director, Climate Protection Partnership select ‘‘search,’’ then key in the docket information. EPA will treat all such Division. ID number identified above. information as confidential business [FR Doc. 04–14705 Filed 6–28–04; 8:45 am] Any comments related to this ICR information and will not make the BILLING CODE 6560–50–P should be submitted to EPA within 60 company or agency-specific information days of this notice. EPA’s policy is that collected under this ICR available to the public comments, whether submitted general public. An agency may not ENVIRONMENTAL PROTECTION electronically or in paper, will be made conduct or sponsor, and a person is not AGENCY available for public viewing in required to respond to, a collection of [FRL–7779–5] EDOCKET as EPA receives them and information unless it displays a without change, unless the comment currently valid OMB control number. contains copyrighted material, CBI, or Access to Confidential Business The OMB control numbers for EPA’s Information by Enrollees Under the other information whose public regulations are listed in 40 CFR part 9 disclosure is restricted by statute. When Senior Environmental Employment and 48 CFR chapter 15. Program EPA identifies a comment containing The EPA would like to solicit copyrighted material, EPA will provide comments to: AGENCY: Environmental Protection a reference to that material in the (i) Evaluate whether the proposed Agency (EPA). version of the comment that is placed in collection of information is necessary for the ACTION: Notice. EDOCKET. The entire printed comment, proper performance of the functions of the including the copyrighted material, will agency, including whether the information SUMMARY: EPA has authorized grantee be available in the public docket. will have practical utility; organizations under the Senior Although identified as an item in the (ii) evaluate the accuracy of the agency’s Environmental Employment (SEE) official docket, information claimed as estimate of the burden of the proposed Program, and their enrollees; access to CBI, or whose disclosure is otherwise collection of information, including the information which has been submitted restricted by statute, is not included in validity of the methodology and assumptions to EPA under the environmental statutes used; the official public docket, and will not (iii) enhance the quality, utility, and clarity administered by the Agency. Some of be available for public viewing in of the information to be collected; and this information may be claimed or EDOCKET. For further information (iv) minimize the burden of the collection determined to be confidential business about the electronic docket, see EPA’s of information on those who are to respond, information (CBI). Federal Register notice describing the including through the use of appropriate DATES: Comments concerning CBI electronic docket at 67 FR 38102 (May automated electronic, mechanical, or other access will be accepted until July 6, technological collection techniques or other 31, 2002), or go to www.epa.gov./ 2004. edocket. forms of information technology, e.g., Affected entities: Entities potentially permitting electronic submission of ADDRESSES: Comments should be responses. affected by this action are those which submitted to: Susan Street, National produce, process, transport, and Burden Statement: The annual public Program Director, Senior Environmental distribute natural gas. reporting and recordkeeping burden for Employment Program (MC 3650A), U.S. Title: ‘‘Reporting and Recordkeeping this collection of information is Environmental Protection Agency; Ariel Requirements Under EPA’s Natural Gas estimated to average 47 hours per Rios Building, 1200 Pennsylvania Ave., STAR Program’’, EPA ICR Number facility. Burden means the total time, NW., Washington, DC 20460. 1736.04, OMB Control Number 2060– effort, or financial resources expended (Telephone (202) 564—0410). 0328, expiring on 11/30/2004. by persons to generate, maintain, retain, SUPPLEMENTARY INFORMATION: The Abstract: Natural Gas STAR is an or disclose or provide information to or Senior Environmental Employment EPA-sponsored, voluntary program that for a Federal agency. This includes the (SEE) program is authorized by the encourages natural gas companies to time needed to review instructions; Environmental Programs Assistance Act adopt cost effective methods for develop, acquire, install, and utilize of 1984 (Pub. L. 98–313), which reducing methane emissions. Natural technology and systems for the purposes provides that the Administrator may Gas STAR Partners agree to implement of collecting, validating, and verifying ‘‘make grants or enter into cooperative cost-effective Best Management information, processing and agreements’’ for the purpose of Practices, which will save participants maintaining information, and disclosing ‘‘providing technical assistance to: money and improve environmental and providing information; adjust the Federal, State, and local environmental quality. EPA needs to collect existing ways to comply with any agencies for projects of pollution information to establish program previously applicable instructions and prevention, abatement, and control.’’ participation and to obtain general requirements; train personnel to be able Cooperative agreements under the SEE information on new Natural Gas STAR to respond to a collection of program provide support for many Partners. EPA also uses the information information; search data sources; functions in the Agency, including

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clerical support, staffing hot lines, Cooperative agree- The public also is encouraged to suggest providing support to Agency ment number Organization risk management ideas or proposals to enforcement activities, providing library address the risks identified. EPA is services, compiling data, and support in CQ–831621 ...... SSAI developing a Reregistration Eligibility scientific, engineering, financial, and Decision (RED) for zinc pyrithione using other areas. Among the procedures established by a modified, four-phase public In performing these tasks, grantees EPA confidentiality regulations for participation process. EPA uses this and cooperators under the SEE program granting access is notification to the process to involve the public in and their enrollees may have access to submitters of confidential data that SEE developing pesticide reregistration and potentially all documents submitted grantee organizations and their enrollees tolerance reassessment decisions. under the Resource Conservation and will have access. 40 CFR 2.201(h)(2)(iii). Through these programs, EPA is This document is intended to fulfill that Recovery Act (RCRA), Clean Air Act ensuring that all pesticides meet current requirement. (CAA), Clean Water Act (CWA), Safe health and safety standards. The grantee organizations are required Drinking Water Act (SDWA), Federal by the cooperative agreements to protect DATES: Comments, identified by docket Insecticide, Fungicide and Rodenticide confidential information. SEE enrollees ID number OPP–2004–0147, must be Act (FIFRA), Emergency Planning And are require to sign confidentiality received on or before August 30, 2004. Community Rights to Know Act agreements and to adhere to the same ADDRESSES: Comments may be (EPCRA) and Comprehensive security procedures as Federal submitted electronically, by mail, or Environmental Response, employees. through hand delivery/courier. Follow Compensation, and Liability Act Dated: June 9, 2004. the detailed instructions as provided in (CERCLA), to the extent that these Unit I.C. of the SUPPLEMENTARY Linda Wallace, statutes allow disclosure of confidential INFORMATION. information to authorized Director, Customer Services Support Center representatives of the United States (or (3650A). FOR FURTHER INFORMATION CONTACT: to ‘‘contractors’’ under the Federal [FR Doc. 04–14704 Filed 6–28–04; 8:45 am] Tony Kish, Antimicrobials Division Insecticide, Fungicide, and Rodenticide BILLING CODE 6560–50–P (7510C), Office of Pesticide Programs, Act). Some of these documents may Environmental Protection Agency, 1200 contain information claimed as Pennsylvania Ave., NW., Washington, confidential. ENVIRONMENTAL PROTECTION DC 20460–0001; telephone number: EPA provides confidential AGENCY 703–308–9443; fax number: 703–308– 8481; e-mail address: information to enrollees working under [OPP–2004–0147; FRL–7363–8] the following cooperative agreements: [email protected]. Zinc Pyrithione (Formerly Known as SUPPLEMENTARY INFORMATION: Cooperative agree- Organization Omadine Salts) Preliminary Risk ment number Assessment; Notice of Availability I. General Information A. Does This Action Apply to Me? National Association AGENCY: Environmental Protection for Hispanic Elderly Agency (EPA). This action is directed to the public CQ–830339 ...... NAHE ACTION: Notice. in general, and may be of interest to a CQ–831334 ...... NAHE wide range of stakeholders including National Asian Pacific SUMMARY: This notice announces the environmental, human health, and Center on Aging availability of EPA’s preliminary risk agricultural advocates; the chemical CQ–831497 ...... NAPCA assessment, and related documents for industry; pesticide users; and members CQ–831498 ...... NAPCA the antimicrobial pesticide zinc of the public interested in the use of CQ–831499 ...... NAPCA pyrithione (also referred to as zinc pesticides. Since others also may be CQ–831500 ...... NAPCA omadine), and opens a public comment interested, the Agency has not CQ–831501 ...... NAPCA period on these documents. The Agency attempted to describe all the specific CQ–831534 ...... NAPCA has changed the reregistration case entities that may be affected by this National Caucus and name for this chemical from ‘‘omadine action. If you have any questions Center on Black salts’’ to ‘‘zinc pyrithione’’ to accurately regarding the applicability of this action Aged, Inc. reflect the sole active ingredient in this to a particular entity, consult the person CQ–830980 ...... NCBA case. Previously, the omadine salts case listed under FOR FURTHER INFORMATION CQ–831569 ...... NCBA contained two active ingredients (zinc CONTACT. CQ–829751 ...... NCBA omadine and tert-butylamine 2- National Council On pyridinethiol-1-oxide). The rationale for B. How Can I Get Copies of This the Aging, Inc. changing the case name is that: Document and Other Related CQ–831427 ...... NCOA Omadine is a registered trade name and Information? CQ–831496 ...... NCOA the Agency prefers not to use trade 1. Docket. EPA has established an CQ–831653 ...... NCOA names as titles of documents; the plural official public docket for this action National Older Work- ‘‘salts’’ in the case name indicates under docket identification (ID) number er Career Center multiple actives but there is only one OPP–2004–0147. The official public CQ–830918 ...... NOWCC chemical being considered (i.e., zinc docket consists of the documents CQ–830969 ...... NOWCC pyrithione); harmonize the case name specifically referenced in this action, CQ–831021 ...... NOWCC with the sole active ingredient; and the any public comments received, and CQ–831022 ...... NOWCC second chemical previously listed in other information related to this action. CQ–831023 ...... NOWCC this case (i.e., tert-butylamine 2- Although a part of the official docket, Senior Service Amer- pyridinethiol-1-oxide; PC code 088005) the public docket does not include ica, Inc. has no active registered products and is Confidential Business Information (CBI) CQ–831289 ...... SSAI no longer a registered active ingredient. or other information whose disclosure is

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restricted by statute. The official public identifies a comment containing i. EPA Dockets. Your use of EPA’s docket is the collection of materials that copyrighted material, EPA will provide electronic public docket to submit is available for public viewing at the a reference to that material in the comments to EPA electronically is Public Information and Records version of the comment that is placed in EPA’s preferred method for receiving Integrity Branch (PIRIB), Rm. 119, EPA’s electronic public docket. The comments. Go directly to EPA Dockets Crystal Mall #2, 1921 Jefferson Davis entire printed comment, including the at http://www.epa.gov/edocket/, and Hwy., Arlington, VA. This docket copyrighted material, will be available follow the online instructions for facility is open from 8:30 a.m. to 4 p.m., in the public docket. submitting comments. Once in the Monday through Friday, excluding legal Public comments submitted on system, select ‘‘search,’’ and then key in holidays. The docket telephone number computer disks that are mailed or docket ID number OPP–2004–0147. The is (703) 305–5805. delivered to the docket will be system is an ‘‘anonymous access’’ 2. Electronic access. You may access transferred to EPA’s electronic public system, which means EPA will not this Federal Register document docket. Public comments that are know your identity, e-mail address, or electronically through the EPA Internet mailed or delivered to the docket will be other contact information unless you under the ‘‘Federal Register’’ listings at scanned and placed in EPA’s electronic provide it in the body of your comment. http://www.epa.gov/fedrgstr/. public docket. Where practical, physical ii. E-mail. Comments may be sent by An electronic version of the public objects will be photographed, and the e-mail to [email protected], docket is available through EPA’s photograph will be placed in EPA’s Attention: Docket ID Number OPP– electronic public docket and comment electronic public docket along with a 2004–0147. In contrast to EPA’s system, EPA Dockets. You may use EPA brief description written by the docket electronic public docket, EPA’s e-mail Dockets at http://www.epa.gov/edocket/ staff. system is not an ‘‘anonymous access’’ to submit or view public comments, system. If you send an e-mail comment C. How and To Whom Do I Submit access the index listing of the contents directly to the docket without going Comments? of the official public docket, and to through EPA’s electronic public docket, access those documents in the public You may submit comments EPA’s e-mail system automatically docket that are available electronically. electronically, by mail, or through hand captures your e-mail address. E-mail Once in the system, select ‘‘search,’’ delivery/courier. To ensure proper addresses that are automatically then key in the appropriate docket ID receipt by EPA, identify the appropriate captured by EPA’s e-mail system are number. docket ID number in the subject line on included as part of the comment that is Certain types of information will not the first page of your comment. Please placed in the official public docket, and be placed in the EPA Dockets. ensure that your comments are made available in EPA’s electronic Information claimed as CBI and other submitted within the specified comment public docket. information whose disclosure is period. Comments received after the iii. Disk or CD ROM. You may submit restricted by statute, which is not close of the comment period will be comments on a disk or CD ROM that included in the official public docket, marked ‘‘late.’’ EPA is not required to you mail to the mailing address will not be available for public viewing consider these late comments. If you identified in Unit I.C.2. These electronic in EPA’s electronic public docket. EPA’s wish to submit CBI or information that submissions will be accepted in policy is that copyrighted material will is otherwise protected by statute, please WordPerfect or ASCII file format. Avoid not be placed in EPA’s electronic public follow the instructions in Unit I.D. Do the use of special characters and any docket but will be available only in not use EPA Dockets or e-mail to submit form of encryption. printed, paper form in the official public CBI or information protected by statute. 2. By mail. Send your comments to: docket. To the extent feasible, publicly 1. Electronically. If you submit an Public Information and Records available docket materials will be made electronic comment as prescribed in this Integrity Branch (PIRIB) (7502C), Office available in EPA’s electronic public unit, EPA recommends that you include of Pesticide Programs (OPP), docket. When a document is selected your name, mailing address, and an e- Environmental Protection Agency, 1200 from the index list in EPA Dockets, the mail address or other contact Pennsylvania Ave., NW., Washington, system will identify whether the information in the body of your DC 20460–0001, Attention: Docket ID document is available for viewing in comment. Also include this contact Number OPP–2004–0147. EPA’s electronic public docket. information on the outside of any disk 3. By hand delivery or courier. Deliver Although not all docket materials may or CD ROM you submit, and in any your comments to: Public Information be available electronically, you may still cover letter accompanying the disk or and Records Integrity Branch (PIRIB), access any of the publicly available CD ROM. This ensures that you can be Office of Pesticide Programs (OPP), docket materials through the docket identified as the submitter of the Environmental Protection Agency, Rm. facility identified in Unit I.B. EPA comment and allows EPA to contact you 119, Crystal Mall #2, 1921 Jefferson intends to work towards providing in case EPA cannot read your comment Davis Hwy., Arlington, VA, Attention: electronic access to all of the publicly due to technical difficulties or needs Docket ID Number OPP–2004–0147. available docket materials through further information on the substance of Such deliveries are only accepted EPA’s electronic public docket. your comment. EPA’s policy is that EPA during the docket’s normal hours of For public commenters, it is will not edit your comment, and any operation as identified in Unit I.B.1. important to note that EPA’s policy is identifying or contact information that public comments, whether provided in the body of a comment will D. How Should I Submit CBI to the submitted electronically or in paper, be included as part of the comment that Agency? will be made available for public is placed in the official public docket, Do not submit information that you viewing in EPA’s electronic public and made available in EPA’s electronic consider to be CBI electronically docket as EPA receives them and public docket. If EPA cannot read your through EPA’s electronic public docket without change, unless the comment comment due to technical difficulties or by e-mail. You may claim contains copyrighted material, CBI, or and cannot contact you for clarification, information that you submit to EPA as other information whose disclosure is EPA may not be able to consider your CBI by marking any part or all of that restricted by statute. When EPA comment. information as CBI (if you submit CBI

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on disk or CD ROM, mark the outside process for making pesticide RED as a final document for public of the disk or CD ROM as CBI and then reregistration eligibility and tolerance comment. identify electronically within the disk or reassessment decisions. Through these List of Subjects CD ROM the specific information that is programs, EPA is ensuring that CBI). Information so marked will not be pesticides meet current standards under Environmental protection, Pesticides disclosed except in accordance with the Federal Insecticide, Fungicide, and and pests. procedures set forth in 40 CFR part 2. Rodenticide Act (FIFRA) and the Dated: June 17, 2004. In addition to one complete version of Federal Food, Drug, and Cosmetic Act Frank Sanders, the comment that includes any (FFDCA), as amended by the Food Director, Antimicrobials Division, Office of information claimed as CBI, a copy of Quality Protection Act of 1996 (FQPA) Pesticide Programs. the comment that does not contain the and the Pesticide Registration [FR Doc. 04–14706 Filed 6–28–04 8:45 am] information claimed as CBI must be Improvement Act of 2003 (PRIA). BILLING CODE 6560–50–S submitted for inclusion in the public EPA is providing an opportunity, docket and EPA’s electronic public through this notice, for interested docket. If you submit the copy that does parties to provide written comments GENERAL SERVICES not contain CBI on disk or CD ROM, and input on the Agency’s risk ADMINISTRATION mark the outside of the disk or CD ROM assessment(s) for zinc pyrithione. Such clearly that it does not contain CBI. comments and input could address, for Office of Governmentwide Policy; Information not marked as CBI will be example, the availability of additional Cancellation of an Optional Form included in the public docket and EPA’s data to further refine the risk electronic public docket without prior assessments, or could address the AGENCY: General Services notice. If you have any questions about Agency’s risk assessment methodologies Administration. CBI or the procedures for claiming CBI, and assumptions as applied to this ACTION: Notice. please consult the person listed under specific pesticide. SUMMARY: FOR FURTHER INFORMATION CONTACT. EPA seeks to achieve environmental Because of low usage, the justice, the fair treatment and following Optional Form is cancelled: E. What Should I Consider as I Prepare OF 16, Sales Slip. My Comments for EPA? meaningful involvement of all people, regardless of race, color, national origin, FOR FURTHER INFORMATION CONTACT: Ms. You may find the following or income, in the development, Barbara Williams, (202) 501–0581. suggestions helpful for preparing your implementation, and enforcement of DATES: Effective June 29, 2004. comments: environmental laws, regulations, and 1. Explain your views as clearly as Dated: June 21, 2004. policies. To help address potential Barbara M. Williams, possible. environmental justice issues, the 2. Describe any assumptions that you Deputy Standard and Optional Forms Agency seeks information on any groups Management Officer. used. or segments of the population who, as 3. Provide any technical information [FR Doc. 04–14683 Filed 6–28–04; 8:45 am] a result of their location, cultural and/or data you used that support your BILLING CODE 6820–34–M practices, or other factors, may have views. atypical, unusually high exposure to 4. If you estimate potential burden or zinc pyrithione, compared to the general costs, explain how you arrived at your DEPARTMENT OF HEALTH AND population. estimate. HUMAN SERVICES 5. Provide specific examples to All comments should be submitted illustrate your concerns. using the methods in Unit I.C., and must Centers for Disease Control and 6. Offer alternatives. be received by EPA on or before the Prevention 7. Make sure to submit your closing date. Comments will become [60Day–04–68] comments by the comment period part of the Agency record for zinc pyrithione. deadline identified. Proposed Data Collections Submitted EPA is applying the principles of 8. To ensure proper receipt by EPA, for Public Comment and public participation to all pesticides identify the appropriate docket ID Recommendations number in the subject line on the first undergoing reregistration and tolerance page of your response. It would also be reassessment. In conducting these In compliance with the requirement helpful if you provided the name, date, programs, the Agency is tailoring its of section 3506(c)(2)(A) of the and Federal Register citation related to public participation process to be Paperwork Reduction Act of 1995 for your comments. commensurate with the level of risk, opportunity for public comment on extent of use, complexity of the issues, proposed data collection projects, the II. What Action Is the Agency Taking? and degree of public concern associated Centers for Disease Control and EPA is releasing for public comment with each pesticide. For zinc pyrithione, Prevention (CDC) will publish periodic its human health and environmental a modified, four-phase process with one summaries of proposed projects. To fate and effects risk assessment(s), and comment period and ample opportunity request more information on the related documents for zinc pyrithione, for public consultation seems proposed projects or to obtain a copy of an antimicrobial pesticide and appropriate in view of its refined risk the data collection plans and encouraging the public to suggest risk assessment. However, if as a result of instruments, call the CDC Reports management ideas or proposals. Zinc comments received during this Clearance Officer on (404) 498–1210. pyrithione is used as a materials comment period EPA finds that Comments are invited on: (a) Whether preservative, as an antifoulant for boat additional issues warranting further the proposed collection of information paints, and as an industrial laundry discussion are raised, the Agency may is necessary for the proper performance additive. EPA developed the risk lengthen the process and include a of the functions of the agency, including assessment(s) for zinc pyrithione second comment period, as needed. whether the information shall have through a modified version of its public EPA plans to issue the zinc pyrithione practical utility; (b) the accuracy of the

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agency’s estimate of the burden of the lead exposure; and (5) help allocate agencies to effectively intervene to proposed collection of information; (c) resources for lead poison prevention prevent further lead exposures. ways to enhance the quality, utility, and activities. State surveillance systems are Intervention strategies implemented by clarity of the information to be based on reports of blood-lead tests from state ABLES-reporting include: collected; and (d) ways to minimize the laboratories. Ideally, laboratories report Conducting follow-up interviews with burden of the collection of information results of all lead tests (not just elevated physicians, employers, and workers; on respondents, including through the values) to the state health department; investigating work sites; delivering use of automated collection techniques however, each state determines the technical assistance regarding exposure or other forms of information reporting level for blood-lead tests. In reduction or prevention; providing technology. Send comments to Sandra addition to blood-lead test results, state referrals for consultation and Gambescia, CDC Assistant Reports child-specific surveillance databases enforcement; and developing and Clearance Officer, 1600 Clifton Road, contain follow-up data on children with disseminating educational materials and MS–E11, Atlanta, GA 30333 or send an elevated blood-lead levels including outreach programs. To coordinate their e-mail to [email protected]. Written data on medical treatment, reporting and intervention activities for comments should be received within 60 environmental investigations, and maximum efficiency, state ABLES days of this notice. potential sources of lead exposure. programs are strongly encouraged to Surveillance data for the national Proposed Project develop effective working relationships database are extracted from the state with the childhood lead prevention National Blood Lead Surveillance child tracking databases and transferred programs in their states. An estimated System (OMB No. 0920–0337) — to CDC. 2%–3% of children with BLLs ≥10 µ/dL Extension — National Center for Since 1987, CDC has sponsored the reach those levels from exposure to lead Environmental Health, Centers for state-based Adult Blood Lead brought home from the workplace on Disease Control and Prevention. CDC, Epidemiology and Surveillance (ABLES) the clothes or in the vehicles of their National Center for Environmental program to track cases of elevated BLLs Health began the National Childhood among persons ages 16 years and older, adult caregivers. Lead Surveillance Program in 1992. The and provide intervention consultation ABLES is being included for the first goals of the childhood lead surveillance and other assistance. The public health time under this OMB approval request. program are to: (1) Establish childhood objective of the ABLES program, as ABLES is also a state laboratory-based lead surveillance systems at the state stated in Healthy People 2010, is to surveillance system and many states and national levels; (2) use surveillance reduce the number of persons with BLLs collect both child and adult blood lead data to estimate the extent of elevated ≥25 µ/dL from work exposures to zero data. This request is for a 3-year blood-lead levels (BLLs) among by 2010. The ABLES program seeks to extension with a change in the burden children; (3) assess the follow-up of accomplish its objective by continuing hours and inclusion of the adult blood children with elevated blood-lead to improve its surveillance programs lead surveillance system. There is no levels; (4) examine potential sources of and helping state health and other cost to respondents.

Average Number of Number of burden per Total Respondents respondents responses per response burden respondent (in hrs.) hours

State and Local Health Departments for Child Surveillance ...... 47 4 2 376 State and Local Health Departments for Adult Surveillance ...... 37 4 2 296

Total ...... 672

Dated: June 21, 2004. ACTION: Notice. demonstration and total funding is Diane Allen, limited to $500 million. Acting Director, Management Analysis and SUMMARY: This notice announces the ADDRESSES: Mail: Written inquiries Services Office, Centers for Disease Control implementation of a demonstration that regarding this demonstration must be and Prevention. would pay through December 31, 2005 submitted by mail to the following [FR Doc. 04–14669 Filed 6–28–04; 8:45 am] under Medicare Part B for drugs and address: Centers for Medicare & BILLING CODE 4163–18–P biologicals that are prescribed as Medicaid Services, Attn: Jody Blatt, replacements for existing covered Division of Payment Policy Medicare drugs and biologicals Demonstrations, Office of Research, DEPARTMENT OF HEALTH AND described in section 1861(s)(2)(A) or Development, and Information, Centers HUMAN SERVICES 1861(s)(2)(Q), or both, of title XVIII of for Medicare & Medicaid Services, C4– Centers for Medicare & Medicaid the Social Security Act. Under this 15–27, 7500 Security Boulevard, Services demonstration certain self-injected or Baltimore, Maryland 21244–1850. oral drugs that are not normally covered Please allow sufficient time for mailed [CMS–5025–N] under Medicare Part B would be information to be received in a timely covered if they were a replacement for manner in the event of delivery delays. RIN 0938–ZA51 a non self-administered drug or E-mail: Inquiries may be sent to the Medicare Program; Medicare biological normally provided in a following e-mail address: Replacement Drug Demonstration physician’s office. The statute requires [email protected]. Because cost sharing in the same manner as of staffing and resource limitations, we AGENCY: Centers for Medicare & Medicare Part D. No more than 50,000 cannot accept applications by facsimile Medicaid Services (CMS), HHS. patients may be covered under the (FAX) transmission.

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FOR FURTHER INFORMATION CONTACT: Jody D of Medicare for all those beneficiaries 4. Use of the drug represents an Blatt, (410) 786–6921 or who elect to enroll in Part D. advantage in terms of access and/or [email protected]. convenience for patients compared to II. Provisions of the Notice the currently covered drug. SUPPLEMENTARY INFORMATION: A. Covered Drugs 5. Drugs are not eligible for coverage I. Background In order to determine what drugs shall under this demonstration if the drug be covered under the demonstration, we they are replacing is not commonly Section 641 of the Medicare established an inter-agency panel of provided incident to a physician service Prescription Drug, Improvement and clinicians to determine the criteria for (for example, anti-hypertensives, Modernization Act of 2003 (MMA) (Pub. defining what constitutes a antibiotics, oral hypoglycemics, etc.). L. 108–173) provides for a ‘‘replacement’’ drug as provided in These criteria are consistent with the demonstration that would pay under section 641 of the MMA. An initial set statutory requirement under section Medicare Part B for drugs and of criteria were shared with the public 641(a) of the MMA that the biologicals that are prescribed as at an Open Door Forum held at CMS. demonstration include only drugs and replacements for existing covered Based on feedback received at this biologicals that are replacements for Medicare drugs and biologicals forum and subsequently in writing, the drugs currently covered under Part B. described in section 1861(s)(2)(A) or criteria have been modified. We are Although the statute does not explicitly 1861(s)(2)(Q), or both, of title XVIII of adopting the criteria proposed by this require us to cover all drugs and the Social Security Act (the Act). interagency panel as modified and have biologicals prescribed as replacements For example, under this determined that, to be covered under for drugs currently covered under Part demonstration certain oral or self- this demonstration, a drug/biological B, we nevertheless considered doing so. injected drugs that are not normally must meet all of the following criteria: However, in light of the legislative covered under Medicare Part B would 1. A drug or biological covered under directives limiting funding for the be covered if they were a replacement this demonstration must meet the demonstration to $500 million and for a non-self-administered drug or statutory requirement of being a enrollment in the demonstration to biologic that is normally provided in a replacement by eliminating the 50,000 beneficiaries, we concluded that physician’s office or an oral concurrent need for a currently covered this demonstration’s limited resources chemotherapeutic drug or biologic agent drug or biological for a currently should be allocated so as to maximize that is currently covered by Medicare covered indication. the aggregate benefit to the Medicare under Part B. The legislation requires 2. Coverage of the drug or biological population. We believe the criteria set cost sharing in the same manner as in the demonstration is limited to FDA forth above achieves this by focusing Medicare Part D. No more than 50,000 approved indications and, for any drug resources on those drugs or biologicals patients may be covered under the with an existing FDA approved that have proven efficacy for the demonstration and total funding is indication, any additional indication if conditions indicated as well as limited to $500 million. The such additional indication is being significantly improve access to demonstration is to commence with the reviewed by the FDA; and the requester important medications for severely ill acceptance of applications in July 2004 has received documentation from the beneficiaries. Using these criteria, we for coverage starting in September or FDA that no filing issues remain. have identified the following drugs/ October 2004. The demonstration will 3. The drug must be at least of equal biologicals as covered under this terminate December 31, 2005. In 2006, efficacy to the covered drug for which demonstration for the following these drugs will be covered under Part it is a replacement. conditions:

DRUGS COVERED UNDER THE MEDICARE REPLACEMENT DRUG DEMONSTRATION

Demonstration covered indication Drug/biological—compound name (brand name)

Rheumatoid Arthritis ...... Adalimumab (Humira). Anakinra (Kineret). Etanercept (Enbrel). Multiple Sclerosis ...... Glatiramer acetate (Copaxone). Interferon beta—1a (Rebif, Avonex). Interferon beta—1b (Betaseron). Osteoporosis (patient must be homebound) ...... Calcitonin—nasal (Miacalcin—nasal). Pulmonary Hypertension ...... Bosentan (Tracleer). Secondary Hyperparathyroidism ...... Doxercalciferol (Hectoral). Paget’s Disease ...... Alendronate (Fosamax). Risedronate (Actonel). Hepatitis C ...... Pegylated interferon alfa-2a (Pegasys). Pegalated interferon alfa-2a (PEG-Intron). CMV Retinitis ...... Valcyte (Valganciclovir). Anti-Cancer Cutaneous T-cell Lymphoma ...... Bexarotene (Targretin). Non-small cell lung cancer ...... Gefitinib (Iressa). Epithelial ovarian cancer ...... Altretamine (Hexalen). Chronic Myelogenous Lymphoma ...... Imatinib Mesylate (Gleevec). GI Stromal Tumor ...... Imatinib Mesylate (Gleevec). Anaplastic astrocytoma ...... Temozolomide (Temodar). Multiple Myeloma ...... Thalidomide (Thalomid). Breast Cancer ...... Hormonal therapy. Stage 2–4 only ...... Anastrozole (Arimidex). Exemestane (Aromasin).

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DRUGS COVERED UNDER THE MEDICARE REPLACEMENT DRUG DEMONSTRATION—Continued

Demonstration covered indication Drug/biological—compound name (brand name)

Letrozole (Femara). Tamoxifen (Nolvadex). Toremifene (Fareston).

We will consider covering additional drugcoveragedemo.asp or obtained by C. Eligibility drugs if they meet the criteria specified calling 1–866–563–5386 any time after 8 In order to be eligible for participation above and if the enrollment and/or a.m. Eastern time on July 6, 2004. Calls in this demonstration, a beneficiary funding limit for the demonstration has prior to that time will not be accepted. must meet the following criteria: not been reached or is projected to be Applications must be received by 5 p.m. • The beneficiary must have Part A reached before the end of the Eastern time September 30, 2004. and Part B. demonstration. Applications received by August 16, • Medicare must be the beneficiary’s If you believe that another drug/ 2004 will be eligible for an early primary health insurance. biological should be considered for selection process for coverage under the • The beneficiary must reside in one coverage under this demonstration, demonstration effective September 1, of the 50 states or the District of please submit your request, along with 2004. all required supporting documentation, Columbia. in writing as specified below. Applications will be considered Beneficiaries who are members of Requests for consideration must under two categories: (1) Those seeking Medicare Advantage or other Medicare explicitly list the drug/biological to be coverage for a covered cancer drug and coordinated care health plans as well as covered (trade and generic names), (2) those seeking coverage for any other those covered under the traditional manufacturer, FDA approved replacement drug covered under the Medicare Fee-For-Service program are indication(s), intended disease(s) and/or demonstration. The purpose of creating eligible to enroll. patient populations for the two enrollment categories is to insure Because a primary purpose of this demonstration is to increase access to demonstration project (including a that at least 40 percent of the available important medications in advance of the reference to the applicable treatment funding goes toward oral cancer full implementation of the Medicare guideline, for example, the National treatments as specified in the Medicare Part D drug benefit in 2006, those Comprehensive Cancer Network (NCCN) Modernization Act of 2003 ‘‘Conference guideline), typical dosing pattern in beneficiaries who already have a Agreement.’’ If more persons submit comprehensive drug coverage plan will each relevant patient population, the applications than we believe we can Part B covered drug/biological that will not be eligible to enroll. This includes accommodate because of the limits for beneficiaries who are covered under be replaced, and how it meets each of either or both of the enrollment the criteria noted above. Additionally, Tricare, the PACE program under categories specified, participants will be section 1894 of the Act, and most you must submit information describing chosen on a random basis among all the projected average annual cost of the Medicaid and SCHIP plans, as well as completed applications received. medication following typical dosing those who are covered under a Notification to applicants of their status patterns and any savings that Medicare comprehensive Medicare Advantage regarding participation in the might realize as a result of using this plan or an employer or union sponsored drug/ biological as a replacement. Those demonstration will be sent out by retiree plan. However, beneficiaries requesting inclusion of a drug or October 13, 2004. For those without any drug coverage and biological that has not yet received FDA participating in the demonstration, beneficiaries with more limited drug approval for the proposed indication but coverage will be effective October 18, coverage, such as that offered by otherwise meets all of the criteria must 2004. Medicare supplemental (employer- submit a letter from the FDA verifying If fewer applications are received than sponsored prescription drug coverage that the FDA has received all of the data the maximum number of enrollees (or other alternative coverage)) plans it needs to complete its review and that permitted or than can be covered within and some Medicare Advantage or other no further filing issues remain. the projected funding limits, then all Medicare coordinated care health plans, are eligible to apply for participation. B. Implementation eligible beneficiaries who have submitted applications by the deadline Beneficiaries who are eligible for VA We have entered into a contract with will be enrolled in the demonstration benefits are also eligible to apply for this TrailBlazer Health Enterprises, L.L.C. with an effective date of October 18, demonstration if they do not use their VA benefits to pay for medications. (TrailBlazer) to handle eligibility 2004. To the extent that enrollment slots Beneficiaries with questions about determination, enrollment and claims remain unfilled and we project available eligibility may contact 1–866–563–5386. processing for this demonstration. funding for additional participants, Beneficiaries who have a Medicare Under this arrangement, TrailBlazer will additional applications will be subcontract with Advance PCS, a sponsored discount drug card may considered on a rolling basis after that Caremark Company (Caremark), to participate in the demonstration, but date, although we do not anticipate this provide pharmacy benefit management they may not use the card to pay for will occur. (PBM) services. drugs or biologicals covered under the Starting July 6, 2004, TrailBlazer will Those selected to participate will demonstration. A separate begin accepting applications to receive a ‘‘welcome packet’’ from demonstration specific card will be participate in this demonstration. Caremark including information on how issued to beneficiaries participating in Applications may be downloaded from to fill their prescriptions as well as this demonstration. our Web site: http://www.cms.hhs.gov/ supplemental information about their In order to apply for this researchers/demos/ demonstration pharmacy benefit. demonstration, a beneficiary must

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obtain certification from their physician of the standard amount to reflect the some cases, funds provided by stating that the beneficiary (1) has a reduced benefit year. In 2005, the full charitable organizations may also count medical condition for which coverage of standard cost-sharing amount will be toward the beneficiary’s out-of-pocket the demonstration drug is allowed applied. limit. However, costs for which the under the demonstration and (2) either Therefore, while beneficiaries will not beneficiary is reimbursed through the physician has already written a be required to pay a premium for insurance or otherwise, a group health prescription for the demonstration drug participating in the demonstration, they plan, or other third-party payment for the beneficiary or intends to do so will be required to meet an annual arrangement do not count toward the if the beneficiary is enrolled in the deductible before benefits are paid. This $3,600 out-of-pocket limit. Once the demonstration. The beneficiary does not deductible will be applied each $3,600 ‘‘out-of-pocket limit’’ has been need to be taking either the calendar year a beneficiary is covered, reached, the beneficiary will pay the demonstration drug or a specific regardless of when the beneficiary greater of 5 percent of the cost of the Medicare Part B covered drug in order enrolls in the demonstration. covered replacement drug or a fixed co- to be eligible for this demonstration. In 2005, a standard annual deductible payment of $2 for generic or preferred Beneficiaries who are newly diagnosed of $250 will be applied. After the annual brand drugs that are multiple source and/or for whom the covered drug is deductible has been reached, the drugs (as defined in section prescribed for the first time during the beneficiary must pay 25 percent 1927(k)(7)(A)(i)) or $5 for all other course of the demonstration may apply coinsurance for the cost of each drugs. at that time and will be considered for prescription until the beneficiary has As noted above, due to fact that the participation in the demonstration to received covered replacement drugs demonstration is not starting in 2004 the extent new applications can be totaling $2,250, which includes until approximately two-thirds of the considered. amounts paid out of pocket by the calendar year has passed, out-of-pocket Beneficiaries who participate in the beneficiary (the $250 deductible plus costs for beneficiaries who enroll in demonstration will retain all of their $500 worth of ‘‘25% coinsurance’’ for a 2004 will be reduced by approximately Medicare benefits and should follow total of $750) and amounts paid by two-thirds. The annual deductible will their physician’s guidance regarding any Medicare under this demonstration. be reduced from $250 to $85. This changes in medication and/or treatment Once the beneficiary has received deductible will be applied regardless of that may be medically appropriate. $2,250 in replacement drugs, the when in 2004 a beneficiary enrolls. beneficiary will be responsible for Once the beneficiary has met the D. Beneficiary Cost Sharing paying 100 percent of all costs of the deductible, s/he will pay 25% of the In accordance with the requirements covered replacement drug until the next $660 in allowable costs until s/he of section 641 of the MMA, cost sharing beneficiary has paid an additional has paid an additional $165 out-of- under this demonstration must be $2,850 for a total of $3,600 out-of- pocket. The beneficiary will then be applied in the same manner as the pocket. Covered replacement drug costs responsible for paying 100 percent of standard prescription drug benefit paid by an individual (such as a family the allowed cost of the covered under Part D that will be effective in member) or a state pharmacy assistance replacement drug until the beneficiary 2006, as described in section 1860D– plan on the beneficiary’s behalf, and has paid an additional $950 for a total 2(b) of the Social Security Act (the low-income assistance paid by Medicare of $1,200 out-of-pocket ($85 deductible ‘‘Act’’). However, because this under the demonstration on behalf of plus $165 at the 25% coinsurance level demonstration will not begin covering beneficiaries eligible for such assistance plus $950 at the 100% coinsurance benefits until September, beneficiary (see II E. below), count toward the level). The table below summarizes the out-of-pocket cost sharing for 2004 will beneficiary’s $3,600 ‘‘out-of-pocket out-of-pocket costs under the be pro-rated to approximately one-third limit’’. Under the demonstration, in demonstration for 2004 and 2005.

2004 2005 (Sept–Dec) (Jan–Dec)

Deductible Standard Benefit * ...... • $85 • $250 25% Coinsurance Range • Allowable Cost of Drugs ...... • 660 • 2,000 • 25% Out of Pocket ...... • 165 • 500 100% Coinsurance ‘‘Donut’’ • 100% Out-of-Pocket Payments (in addition to above) ...... • 950 • 2,850 Catastrophic Limit 1. Total Allowable Cost of Drugs ...... • 1,695 ** • 5,100 ** 2. Total Out of Pocket Payments ...... • 1,200 • 3,600 * Some low-income beneficiaries, those with incomes between 135% and 150% of the Federal Poverty Level, will also have the deductible re- duced from $50 to $20 in 2004. Other low-income beneficiaries will not pay any deductible in either year. ** Because beneficiary cost-sharing under the demonstration that is paid for by a group health plan, insurer or otherwise, or similar third party payment arrangement will not count toward the annual out-of-pocket limit, the total drug spending amount that triggers catastrophic coverage may be higher for beneficiaries with these alternative sources of coverage.

Beneficiaries may receive their drugs network of pharmacies. More specific package of information, including a on a retail or mail order basis, but must information about the network and demonstration identification card and get them through Caremark, the pharmacies available can be obtained by instructions on how to fill their pharmacy benefit manager contracting calling 1–866–563–5386. Upon prescriptions for the demonstration- with TrailBlazer to implement this enrolling in the demonstration, covered drug. This card may be used demonstration. Caremark has a national beneficiaries will be mailed a complete

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only for drugs covered under the The application form consists of two attestation of income and resources. The demonstration. parts. Both parts must be filled in rules for low-income assistance, completely and submitted by September including coverage levels and E. Low-Income Assistance 30, 2004 in order to be considered for determination of eligibility, have been Beneficiaries who meet the criteria the demonstration. established to be consistent with what specified in Part D, section 1860D–14 of The first part of the form requests will be in effect in 2006 when the the Act, for low-income assistance will basic demographic information, Medicare Part D drug benefit is be eligible for assistance under this information on the drug being requested implemented. Information submitted on demonstration. Tables 1A and 1B and the availability of alternative the application for low-income specify the different cost sharing insurance coverage for prescription assistance is subject to formal requirements for the standard benefit drugs. Because this demonstration is verification by CMS. Enrollment in the level as well as the different low-income intended to increase access to demonstration will be determined on a options for 2004 and 2005. Table 2 prescription drugs, beneficiaries who ‘‘need-blind’’ basis, that is, without identifies which benefit levels apply have comprehensive, alternative drug regard to whether a beneficiary has also based on a person’s annual income and coverage through Medicaid, SCHIP, the submitted an application for the low- available financial resources. PACE program under section 1894 of income subsidy. Moreover, applications Beneficiaries, or their authorized the Act, Tricare, retiree insurance, or for the low-income subsidy may be representatives, will be required to other source are not eligible to enroll. submitted at any time during the submit an application form attesting to However, beneficiaries who have more duration of the demonstration and will the beneficiary’s annual income and limited drug coverage such as under a be considered as long as funds are financial resources in order to be Medicare supplement (employer- available. However, the low-income considered for the subsidy. sponsored prescription drug coverage subsidy will not be provided (or other alternative coverage, including F. Application Instructions retroactively. Medigap plans)) plan are eligible to Starting on or before July 6, 2004, enroll. Beneficiaries who are enrolled in G. Submission of Written Materials application forms will be available from a Medicare Advantage or other Medicare Those wishing to propose additional our Web site: http://www.cms.hhs.gov/ coordinated care health plan are also drugs/biologicals to be considered for researchers/demos/ eligible to enroll if they do not have coverage under the demonstration must drugcoveragedemo.asp. Alternatively, comprehensive drug coverage under submit written information individuals may call 1–866–563–5386 that plan that would cover the documenting how the proposed drug (TTY: 1–866–5387) any time after 8 a.m. replacement drug. Eastern time on July 6, 2004 to have an The second part of the application meets the criteria specified in section application mailed to them. Calls prior form is a certification from the II(A) of this notice. While the format for to that time will not be accepted. physician who is prescribing the this information is not prescribed, we Applications must be received by replacement drug for the beneficiary. are requesting that all of the criteria TrailBlazer by 5 p.m. eastern time, The physician must submit this signed listed above be fully addressed in the September 30, 2004. Applications statement specifying that he (or she) is materials submitted. should be sent to the following address: prescribing or will be prescribing the Written materials may be submitted Medicare Replacement Drug medication for the covered condition. by mail or e-mail to the addresses listed Demonstration, c/o TrailBlazer Health Beneficiaries who believe they qualify above under ‘‘Inquiries, Registration and Enterprises, L.L.C., P.O. Box 5136, for low-income assistance (see II.E Submission of Information.’’ Timonium, MD 21094. above) must also complete and sign an BILLING CODE 4120–01–P

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BILLING CODE 4120–01–C information requirement is submitted to requires that we solicit comment on the III. Collection of Information the Office of Management and Budget following issues: Requirements (OMB) for review and approval. In order • The need for the information to fairly evaluate whether an collection and its usefulness in carrying Under the Paperwork Reduction Act information collection must be out the proper functions of our agency. of 1995, we are required to notice in the approved by OMB, section 3506(c)(2)(A) • The accuracy of our estimate of the Federal Register and solicit public of the Paperwork Reduction Act of 1995 comment before a collection of information collection burden.

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• The quality, utility, and clarity of DEPARTMENT OF HEALTH AND elixir drug product without an approved the information to be collected. HUMAN SERVICES application after that date would be • Recommendations to minimize the subject to regulatory action. Food and Drug Administration information collection burden on the We permitted this period of continued affected public, including automated [Docket Nos. 1976N–0080 and 2000N–1610] marketing because we regard digoxin elixir products as medically necessary collection techniques. Prescription Drug Products; Digoxin and, therefore, wanted to allow Due to the following reasons, CMS Elixir; Extension to Obtain Marketing sufficient time for manufacturers to requested that OMB grant OMB Approval conduct the required studies and to emergency approval of the collection prepare and submit applications, as well AGENCY: requirements associated with this Food and Drug Administration, as to allow the agency sufficient time to demonstration Section 641 of the MMA: HHS. review these applications. It now (1) The statute required that this ACTION: Notice. appears that as of June 28, 2004, there demonstration begin 90 days after SUMMARY: The Food and Drug may not be any manufacturers prepared passage of the legislation, which was Administration (FDA) is announcing to market digoxin elixir under an March 8, 2004; (2) due to the that it will continue to exercise approved application. To assure the complexities of implementing this enforcement discretion to assure the continued availability of digoxin elixirs demonstration, CMS was unable to meet continued availability of digoxin elixirs after June 28, 2004, we have decided to that deadline; and (3) because of the after June 28, 2004, allowing extend for 6 months, until December 28, importance of this demonstration to manufacturers to continue to market 2004, the date by which manufacturers beneficiaries with serious illnesses and these products without approved must obtain marketing approval. This the already delayed time frame, it was applications until December 28, 2004. extension will only apply to urgent that there not be further delays. FDA is granting this extension to give manufacturers who have submitted manufacturers of digoxin elixir applications to FDA and who continue Based on the justification referenced additional time to obtain marketing to pursue approval of their applications above for emergency approval, with approval and bring products to market. with due diligence. We will reexamine OMB concurrence, on May 19, 2004 DATES: The date by which the need for a continued exercise of Volume 69, Number 97, Pages 28894– manufacturers must obtain marketing enforcement discretion at the end of this 28895, CMS announced the initiation of approval is extended to December 28, 6-month period. In making this procedural requirements set forth in 5 2004. determination, we will consider CFR 1320.13 to facilitate compliance whether there is an approved digoxin with Chapter 25 of Title 44 of United FOR FURTHER INFORMATION CONTACT: elixir product on the market and States Code. As the result, the collection Mary E. Catchings, Center for Drug whether the manufacturer is capable of Evaluation and Research (HFD–7), Food requirements associated with this producing sufficient product to meet and Drug Administration, 5600 Fishers demonstration, ‘‘Application for patient needs. Lane, Rockville, MD 20857, 301–594– This notice is issued under sections Participation in Medicare Replacement 2041. Drug Demonstration’’, were approved 502 and 505 of the act (21 U.S.C. 352, under OMB control number 0938–0924. SUPPLEMENTARY INFORMATION: In the 355)) and under authority delegated to Federal Register of June 26, 2002 (67 FR the Associate Commissioner for Policy It should be noted that during the 42992), FDA published a final rule and Planning (21 CFR 5.20). 180-day emergency approval period, revoking § 310.500 (21 CFR 310.500), Dated: June 24, 2004. CMS will publish a Federal Register which established conditions for Jeffrey Shuren, notice announcing the initiation of an marketing digoxin products for oral use extensive 60-day public comment (tablets and elixir). The agency Assistant Commissioner for Policy. period on these requirements. Upon concluded that § 310.500 was no longer [FR Doc. 04–14796 Filed 6–25–04; 2:57 pm] completion of the 60-day comment necessary because the products, which BILLING CODE 4160–01–S period, we will submit the requirements are new drugs, can be regulated under for OMB review and an extension of this the approval process for new drug emergency approval. applications and abbreviated new drug DEPARTMENT OF HEALTH AND HUMAN SERVICES Authority: Section 641 of the Medicare applications as set forth in the Federal Prescription Drug Improvement and Food, Drug, and Cosmetic Act (the act). Food and Drug Administration Modernization Act of 2003. Previously, in the Federal Register of November 24, 2000 (65 FR 70573), we [Docket No. 2003D–0554] (Catalog of Federal Domestic Assistance reaffirmed the new drug status of oral Program No. 93.778 and No. 93.774, digoxin products and announced that Compliance Policy Guide Regarding Medicare—Supplementary Medical these products required approved Prior Notice of Imported Food Under Insurance Program) applications for marketing. the Public Health Security and Dated: June 4, 2004. The June 26, 2002, final rule advised Bioterrorism Preparedness and Mark B. McClellan, that manufacturers who were marketing Response Act of 2002; Availability digoxin elixir drug products on or Administrator, Centers for Medicare & AGENCY: Food and Drug Administration, Medicaid Services. before June 26, 2002, may continue to HHS. [FR Doc. 04–14673 Filed 6–24–04; 3:00 pm] market their products until June 28, 2004.1 The final rule stated that a ACTION: Notice. BILLING CODE 4120–01–P manufacturer who marketed a digoxin SUMMARY: The Food and Drug Administration (FDA) is announcing the 1 After June 26, 2002, a new digoxin elixir drug product could not be introduced into the market availability of a revised Compliance unless we had approved an application for that Policy Guide (CPG) Sec. 110.310 product. entitled ‘‘Prior Notice of Imported Food

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Under the Public Health Security and require prior notice to FDA of all food II. Comments Bioterrorism Preparedness and imported or offered for import into the Interested persons may submit to the Response Act of 2002.’’ The original United States (68 FR 58974, October 10, Division of Dockets Management (see CPG, which was published in the 2003 (codified at 21 CFR 1.276 through ADDRESSES) written or electronic Federal Register of December 15, 2003 1.285)). FDA has revised the original comments on the guidance document. (68 FR 69708), provides written CPG, which was published on December Submit two copies of written comments, guidance to FDA’s and Customs and 15, 2003 (68 FR 69708), to include except that individuals may submit one Border Protection’s (CBP’s) staff on additional guidance regarding food copy. Comments are to be identified enforcement of section 307 of the Public imported or offered for import for with the docket number found in Health Security and Bioterrorism noncommercial purposes with a brackets in the heading of this Preparedness and Response Act of 2002 noncommercial shipper. The CPG document. The guidance and received (the Bioterrorism Act) and the agency’s explains that a ‘‘non-commercial comments may be seen in the Division implementing regulations, which purpose’’ generally exists when the food of Dockets Management between 9 a.m. require prior notice for all food is purchased or otherwise acquired by and 4 p.m., Monday through Friday. imported or offered for import into the an individual for nonbusiness purposes United States. The CPG has been revised and the shipper is the individual (i.e., III. Electronic Access to provide additional guidance to FDA the individual delivers the food to a An electronic version of this guidance and CBP staff regarding how to address post office or common carrier for is available on the Internet at http:// food that is imported or offered for delivery to self, family member, or www.fda.gov/ora under ‘‘Compliance import for noncommercial purposes friend for nonbusiness purposes, i.e., References.’’ with a noncommercial shipper. The not for sale, resale, barter, business use, Dated: June 24, 2004. revised CPG also reflects a change in the or commercial use). With respect to date of Stage III enforcement guidance these food imports, FDA intends to John M. Taylor, for the interim final rule from May 13, focus its efforts on education through Associate Commissioner for Regulatory 2004, to June 4, 2004. March 2005 (or shortly thereafter, Affairs. DATES: This guidance is final upon the depending on the date of issuance of the [FR Doc. 04–14766 Filed 6–25–04; 9:17 am] date of publication. However, you may final rule). Examples of foods imported BILLING CODE 4160–01–S submit written or electronic comments or offered for import that may be at any time. covered by this noncommercial category DEPARTMENT OF HEALTH AND ADDRESSES: Submit written requests for include the following: HUMAN SERVICES single copies of the guidance to the • Food in household goods, including Division of Compliance Policy (HFC– military, civilian, governmental agency, Indian Health Service 230), Office of Enforcement, Food and and diplomatic transfers; Drug Administration, 5600 Fishers Epidemiology Grant Program for • Food purchased by a traveler and Lane, Rockville, MD 20857. Send one American Indians/Alaska Natives; mailed or shipped to the traveler’s U.S. self-addressed adhesive label to assist Notice of Competitive Cooperative address by the traveler; that office in processing your request or Agreement Applications include a fax number to which the • Gifts purchased at a commercial guidance may be sent. establishment and shipped by the Funding Opportunity Number: HHS– Submit written comments on the purchaser, not the commercial IHS–EPID–2004–0001. guidance to the Division of Dockets establishment. The revised CPG also CFDA Number: 93.231. Management, 5630 Firhers Lane, rm. corrects the date of Stage III Dates: 1061, Rockville, MD 20852. Submit enforcement guidance for the interim Application Deadline: July 30, 2004. electronic comments to http:// final rule from May 13, 2004, to June 4, Application Review: August 16, 2004. Applicants Notified of Results: On or www.fda.gov/dockets/ecomments. See 2004, per the Automated Broker about September 1, 2004 (approved, the SUPPLEMENTARY INFORMATION section Interface (ABI) Administrative Message recommended for approval but not for electronic access to the guidance 04–1406 issued by CBP on June 3, 2004. document. funded, or disapproved). FDA is issuing this document as level Anticipated Award Start Date: FOR FURTHER INFORMATION CONTACT: 1 guidance consistent with FDA’s good September 15, 2004. Domenic Veneziano, Office of guidance practices regulation § 10.115 Regulatory Affairs (HFC–100), Food and (21 CFR 10.115). The revised CPG Sec. I. Funding Opportunity Description Drug Administration, 5600 Fishers 110.310 is being implemented The Indian Health Service (HHS) Lane, Rockville, MD 20857, 703–621– immediately without prior public announces that competitive cooperative 7809. comment, under § 10.115(g)(2), because agreement applications are now being SUPPLEMENTARY INFORMATION: the agency has determined that prior accepted for the Epidemiology Grant public participation is not feasible or Program for American Indians/Alaska I. Background appropriate. Under section 307 of the Natives and Urban Indian communities. FDA is announcing the availability of Bioterrorism Act, the prior notice These cooperative agreements are revised CPG Sec. 110.310 entitled ‘‘Prior requirements were effective December established under the authority of Notice of Imported Food Under the 12, 2003, making it urgent that the section 214(a)(1) of the Indian Health Public Health Security and Bioterrorism agencies explain how they intend to Care Improvement Act, Pub. L. 94–437, Preparedness and Response Act of enforce those requirements. Moreover, as amended by Pub. L. 102–573. There 2002.’’ This revised guidance is issued as a result of the revision to the CPG, will be only one funding cycle during with CBP concurrence and explains to FDA’s policies are generally less Fiscal Year (FY) 2004. These FDA and CBP staff the new FDA and burdensome for food imported or cooperative agreements will be awarded CBP policies on enforcement of section offered for import for noncommercial and administered in accordance with 307 of the Bioterrorism Act and its purposes with a noncommercial this announcement, Department of implementing regulations, which shipper. Health and Human Service (HHS) at 45

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CFR part 92, HHS Uniform communities, tribal organizations, and investigation, development of Administrative Requirements for Grants urban Indian organizations in the epidemiologic studies, development of and Cooperative Agreements to State, region. Assist and facilitate reporting of disease control programs, and local, and tribal governments, or 45 CFR nationally notifiable disease conditions coordination of activities); and part 74, Uniform Administrative to public health authorities in the (3) Overall operational planning and Requirements for Awards and region. program management. Subawards to Institutions of Higher b. Participate in the development of Provide opportunities for training Educations, Hospitals, Other Nonprofit systems for sharing, improving, and fellowships at the Epidemiology Organizations, and Commercial disseminating aggregate health data at a Program, IHS, if funds permit. Organizations; the Public Health Service national level for purposes of advocacy c. Conduct site visits to assess (PHS) Grant Policy Statement; and for AI/AN communities, Government program progress and mutually resolve applicable Office of Management and Performance Result Act, Healthy People problems, as needed, and/or coordinate Budget Circulars. 2010, and other national-level activities. reverse site visits to IHS in The PHS urges applicants submitting c. Collaborate with national DHHS Albuquerque, NM. applications to address specific programs in the development of d. At the request of the applicant, and objectives of Healthy People 2010. standardized surveillance and data if available, assign Federal personnel to Interested applicants may obtain a copy monitoring methods and data sets. a project in lieu of a portion of the of Healthy People 2010 (Summery d. Support responses to public health financial assistance. Report in print; Stock No. 017–001– emergencies in collaboration with the e. Coordinate all epidemiologic 00547–9) or CD-ROM (Stock No. 107– IHS National Epidemiology Program, activities on a national basis. 001–00549–5) through the local, tribal, State, and other Federal II. Award Information Superintendent of Documents, health authorities. Government Printing Office, P.O. Box e. Develop and implement American Indian/Alaska Native tribes, 371954, Pittsburgh, Pennsylvania, epidemiologic studies that have tribal organizations, and eligible 15250–7945, or (202) 512–1800. You practical application in improving the intertribal consortia or Indian may access this information via the health status of constituent organizations, may be eligible for a Internet at the following Web site: communities. Studies may require cooperative agreement. Such entities www.health.gov/healthypeople/ Institutional Review Board approval if must represent or serve a population of publications/. human subjects are involved. at least 60,000 AI/AN to be eligible. An The purpose of this grant program is f. Develop and implement disease intertribal consortium or AI/AN to develop Tribal Epidemiology Centers control and prevention programs in organization is eligible to receive a and public health infrastructure through cooperation with other public health cooperative agreement if it is the augmentation of existing programs entities. Make recommendations for incorporated for the primary purpose of with expertise in epidemiology and a targeting of public health services improving AI/AN health, and it is history of regional support. Activities needed by constituents. representative of the tribes, AN villages, should include, but not be limited to Ensure the coordination of services or urban Indian communities in which enhancement of surveillance for disease and program activities with other it is located. Collaborations with conditions; epidemiologic analysis, similar programs and establish abroad- regional IHS, CDC, State, or university interpretation, and dissemination of based council to advise and support the organizations are encouraged (letters of surveillance data; investigation of program. Such an advisory council support and collaboration should be disease outbreaks; development and would consist of technical experts in included in the application). implementation of epidemiologic epidemiology and public health, The following documentation is studies; development and community members, health care required: implementation of disease control and providers, and others who could 1. Tribal Resolution—(a) A signed and prevention programs; and coordination provide overall program direction and dated resolution supportive of the of activities with other public health guidance. epidemiology cooperative agreement authorities in the region. Proposed proposal from the Indian tribe(s) served activities that cover large populations 2. IHS Activities by the project must accompany the and/or geographical areas that do not a. Convene a workshop of funded application; (b)—applications must necessarily correspond with current IHS organizations every year for include resolutions from all tribes to be administrative areas are encouraged. information-sharing and problem- served; and (c) applications by tribal In conducting activities to achieve the solving. organizations will not require a specific purpose of this program, the recipient b. Provide funded organizations with tribal resolution(s) if the current blanket will be responsible for the activities ongoing consultation and technical tribal resolution(s) under which they under 1. (Recipient Activities), and IHS assistance to plan, implement, and operate would encompass the proposed will be responsible for conducting evaluate each component of the activities and project type. activities under 2. (IHS Activities). comprehensive program as described 2. Non-profit organization—copy of under Recipient Activities above. 501(c)(3) non-profit certificate. 1. Recipient Activities Consultation and technical assistance As part of an effort to establish a. Assist AI/AN communities, tribal will include, but not be limited to the Epidemiology Centers throughout the organizations, and urban Indian following areas: nation these funds initially will be used organizations in implementing and (1) Interpretation of current scientific to support activities on a regional basis. enhancing disease surveillance systems literature related epidemiology, Priority will be given to applicants and identifying their highest priority statistics, surveillance, Healthy People proposing to provide services to large health status objectives based on 2010 Objectives, and other disease regions consisting of more than a single epidemiologic data. Collect data relating control activities; IHS administrative Area. Priority will to, and monitor progress made toward (2) Design and implementation of also be given to proposals meeting each of the health status each program component (surveillance, demonstrating evidence of meaningful objectives of IHS, the AI/AN epidemiologic analysis, outbreak past and current epidemiologic

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activities. Collaborative efforts among at least 60,000 AI/AN to be eligible. An • Project Objective(s), Approach and tribal, local, State, Federal, and intertribal consortium or AI/AN Results & Benefits. university health organizations are organization is eligible to receive a • Project Evaluation. encouraged. cooperative agreement if it is • Organizational Capabilities and It is anticipated that up to incorporated for the primary purpose of Qualifications. approximately $300,000 will be improving AI/AN health, and it is • Budget. available to fund one award, and if representative of the tribes, AN villages, • Multi-Year Narratives and Budget additional funds are identified other or urban Indian communities in which Justifications. awards will be made based on the it is located. Collaborations with • Attachments to include: application scoring level. Although it is regional IHS, CDC, State, or university • Resumes of key staff. expected that project funding needs will organizations are encouraged (letters of • Position descriptions for key staff. vary depending on the scope of work, support and collaboration should be • Organizational chart. • the anticipated initial funding range, included in application). All letters of support from potential inclusive of direct and indirect costs, is collaborators. 2. Cost Sharing or Matching $200,000 to $300,000. If additional • Copy of current negotiated indirect funds become available, awardees who Cost Sharing or Matching is not cost rate agreement. • were originally funded at levels lower required for this application. A map of the area to benefit from than requested may receive additional the project. IV. Application and Submission • Application Receipt Card, IH–815– funding. Applicants who may be Information approved but unfunded during the 1A. 1. Address to Request Application— initial round of awards may be eligible 3. Submission Dates and Times for consideration in later funding cycles An application kit, including the without further review. At the request of required PHS 5161–1 (Rev. 7/00) (OMB Application Receipt Date—An the applicant, Federal personnel, if Approval No. 0348–0043) and the U.S. original and two copies of the available, may be assigned to a project Government Standard Forms (SF–424, completed grant application must be in lieu of a portion of the financial SF–424A and SF–424B), may be submitted with all required assistance. Only one project cooperative obtained from the grants Management documentation to the Grants agreement will be awarded per Indian Branch, Division of Acquisition and Management Branch, Division of tribe or tribal or Indian health Grants Operations, IHS, Twinbrook Acquisition and Grants Operations, organization. Metro Plaza, Suite 100, 12300 Twinbrook Metro Plaza, Suite 100, Limitations—only one cooperative Twinbrook Parkway, Rockville, MD 12300 Twinbrook Parkway, Rockville, agreement project will be awarded per 20852, telephone (301) 443–5204. (The Maryland 20852, by close of business tribe, tribal or Indian organization, or telephone number is not toll-free.) July 30, 2004. intertribal consortia. 2. Content and Form of Application Applications shall be considered as Period of support—Projects will be Submission—All applications must be meeting the deadline if they are either: funded for annual budget periods with double-spaced, typewritten, and have (1) Received on or before the deadline project periods of up to two years, consecutively numbered pages using with hand carried applications received dependent upon the scope of work. The black type not smaller than 12 by close of business 5 p.m.; or (2) continuation years will be based on the characters per inch, with conventional postmarked on or before the deadline following: (1) Satisfactory progress; (2) one-inch border margins, on only one and received in time to be reviewed availability of funds; and (3) continuing side of standard size 8.5 x 11 paper that along with all other timely applications. need of the IHS for the program. can be photocopied. The application A legibly dated receipt from a The projects under this narrative (not incoluding Abstract, commercial carrier or the U.S. Postal announcement will be awarded as Tribal Resolution, Standard Forms, Service will be accepted in lieu of a cooperative agreements. Because of the Table of Contents or the Attachments postmark. Private metered postmarks nature of these projects, they will must not exceed 25 typed pages as will not be accepted as proof of timely require collaboration with the IHS described above. All applications must mailing. IHS will not acknowledge National Epidemiology Program to: (1) include the following in order receipt of applications. Only Coordinate activities; (2) participate in presented: applications received via the U.S. Postal • projects, investigations, or studies of Tribal Resolution(s) and Service or an overnight shipper, e.g., national scope; and (3) share documentation. FedEx, UPS, etc., will be accepted. Late • surveillance and other data collected, in Standard Form 424, Application for applications not accepted for processing Federal Assistance. will be returned to the applicant and compliance with the Federal Privacy • Act, Health Insurance Portability & Standard Form 424A, Budget will not be considered for funding. Accountability Act, or similar tribal Information—Non-Construction Programs (pages 1 and 2). 4. Intergovernmental Review laws. The IHS will, therefore, have • substantial programmatic involvement Standard Form 424B, Assurances— Executive Order 12372 requiring in these projects (see IHS Activities Non-Construction Programs (front and intergovernmental review is not above). back). applicable to this program. • Certification (pages 17–19). III. Eligibility Information • Checklist (pages 25–26). Note: Each 5. Funding Restrictions standard form and the checklist is Maximum award amount is $300,000 1. Eligible Applicants contained in the PHS Grant Application, per year. American Indian/Alaska Native tribes, Form PHS 5161–1 (Revised 7/00). 6. Other Submission Requirements tribal organizations, and eligible • A one-page project Executive intertribal consortia or Indian Summary. Beginning October 1, 2003, applicants organizations, may be eligible for a • A Table of Contents. were required to have a Dun and cooperative agreement. Such entities • Introduction and Need for Bradstreet (DUNS) number to apply for must represent or serve a population of Assistance. a grant or cooperative agreement from

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the Federal Government. The DUNS c. Identify the type of project. desired qualifications and experience number is a nine-digit identification d. Explain the reason for the project. requirements related to the project. number which uniquely identifies e. Describe the relationship between Resumes should indicate that the business entities. Obtaining a DUNS this project and other federally funded proposed staff are qualified to carry out number is easy and there is no charge. work planned, anticipated, or the project activities. To obtain a DUNS number, access underway. Dun and Bradstreet online at http:// f. Identify all previous and/or current Budget (15 points) www.dunandbradstreet.com or call 1– TMGs received, dates of funding, and a. Provide a detailed budget for the 866–705–5711. Internet applications for project accomplishments (do not budget period required. a DUNS number can take up to 30 days include copies of reports). b. Provide a justification for each line to process. Interested parties may wish item in the budget including sufficient Project Objective(s), Approach and to obtain one by phone to expedite the cost and other details to facilitate the Results and Benefits (25 Points) process. The following information is determination of cost allowability and needed when requesting a DUNS a. State in measurable and realistic relevance of these costs to the proposed number: terms the objectives and appropriate project. The funds requested should be • Organization name. activities to achieve each objective for appropriate and necessary for the scope • Organization address. the project. of the project. • Organization telephone number. b. Identify the expected results, c. Describe where the project will be • Name of CEO, Executive Director, benefits, and outcomes or products to be housed, i.e., facilities and equipment President, etc. derived from each objective of the available. • Legal structure of the organization. project. d. If indirect costs are claimed, • Year organization started. c. Include a work plan for each applicant must submit a copy of the • Primary business (activity) line. • objective that indicates when the Indirect Cost Rate Agreement Total number of employees. objectives and major activities will be supporting this claim in the V. Application Review Information accomplished and who will conduct the attachments. activities on a calendar time line. The instructions for preparing the Attachments—to include: d. If use of consultants or contractors application narrative also constitute the • Resumes and job descriptions for are proposed or anticipated, provide a evaluation criteria for reviewing and key staff. detailed scope of work that clearly • scoring the application. Weights Current approved organizational defines the deliverables or outcomes assigned each section are noted in chart. anticipated. • Copy of current negotiated indirect parenthesis. e. Specify who will review and accept Executive Summary—The Executive cost rate agreement. the work to be performed by consultants • Summary may not exceed one A map of the Area to benefit from or contractors. the project. typewritten page. It should clearly • present the application in summary Project Evaluation (10 Points) Application Receipt card, #IHS– form, from a ‘‘who-what-when-where- 815–1A. a. State how it will be determined if • Letters of support/collaboration. how-cost’’ point of view so that the project’s objectives were achieved reviewers see how the multiple parts of and how the accomplishment of those 2. Review and Selection Process the application fit together to form a objectives can be attributed to the Applications submitted by the closing coherent whole. project. date and verified by the postmark under Table of Contents—Provide a one b. Define the criteria to be used to this program announcement will page typewritten table of contents. evaluate results and benefits. Narrative: Please describe the undergo a review to determine that: c. Explain the methodology that will a. The applicant is eligible in complete project in clear and succinct be used to determine if the needs accordance with the Eligibility Section language as application reviewers may identified for the project are being met of this application. have little or no knowledge of the Tribe and if the project’s outcomes identified b. The application executive or Tribal organization. It should not are being achieved. summary, forms and materials exceed 25 double spaced pages, and submitted are adequate to allow the address the following: Organization Capabilities and review panel to undertake an in-depth Qualifications (25 points) 1. Criteria evaluation. a. Explain the management and c. The application complies with this Introduction, Current Capacity, and administrative structure of the announcement; otherwise it will be Need for Assistance (25 Points) organization including documentation returned without consideration. a. Describe the tribe’s current health of current certified financial operation including the population to be management systems from the BIA, IHS, Competitive Review of Accepted served by management of tribal health or a Certified Public Accountant and an Applications programs and the number of eligible updated organizational chart (include Applications meeting eligibility beneficiaries, whether the tribe has a documentation and the organizational requirements that are complete, health department, how long it has been chart in the attachments). responsive, and conform to this program operating, and what programs or b. Describe the ability of the announcement will be reviewed for services are currently provided. organization to manage a project of the merit by an Ad Hoc Objective Review Specifically describe current proposed scope. Committee (ORC) appointed by the IHS epidemiologic capacity and history of c. Provide position descriptions and to review and to make recommendations support for such activities. resumes of key personnel, including on these applications. The review will b. Provide a precise location of the those of consultants or contractors in be conducted in accordance with the project and area to be served by the the Appendix. Position descriptions IHS objective review procedures. The proposed project including a map should very clearly describe each technical review process ensures (include the map in the attachments). position and its duties, indicating selection of quality projects in a

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national competition for limited d. OMB Circular A–133 ‘‘Audits of Register on May 28, 2004. The funding. The ORC will include at least States, Local Governments, and Non- document contained six errors. 60 percent non-IHS, Federal or non- Profit Organizations.’’ FOR FURTHER INFORMATION CONTACT: Federal individuals. Applications will e. A–102, Grants and Cooperative Denise Clark, Grants Management be evaluated and rated on the basis of Agreements with State and Local Branch, Indian Health Service, Reyes the application announcement criteria Governments. Building, 801 Thompson Avenue, listed above. These criteria are used to f. A–110; Uniform Administrative Rockville, MD 20852, Telephone (301) evaluate the quality of a proposed Requirements for Grants and Other 443–5204. (This is not a toll-free project, to assign a numerical score to Agreements with Institutions of Higher number.) each application, and to determine the Education, Hospitals, and Other likelihood of its success. Applications Nonprofit Organizations. Correction will be funded in accordance with 3. Reporting Requirements In the Federal Register of May 28, scores and funds available. 2004, in FR Doc. 04–12083, on page a. Progress Report—Program progress 3. Results of the Review reports may be required semi-annually. 30674, in the third column, section I, These reports will include a brief item 4 under Eligible Applicants, The results of the objective review are description of a comparison of actual change the 1st sentence to read ‘‘SDPI forwarded to the Director, Office of accomplishments to the goals grant recipients and SDPI grant sub- Public Health, for final review and established for the period, reasons for recipients (Tribes who are members of approval. The Director, OPH, will also slippage, and other pertinent a tribal consortium) are eligible to apply consider recommendations from the information as required. A final report for the SDPI Competitive Grant Program Epidemiology Program and Grants is due 90 days after expiration of the if they are one of the following Management Branch. After the Director, project/budget period. entities:’’. On page 30677, in the third OPH, has made decisions on all b. Financial Status Report—Semi- column, correct the deadline date of applications, applicants are notified in annually financial status reports will be ‘‘July 1, 2004’’ in section B. to read ‘‘July writing within approximately 90 days of submitted 30 days after the end of the 15, 2004’’. On page 30678, in the first the closing date. Unsuccessful half year. Final financial status reports column, section III, item 1 under applicants will be notified in writing of are due 90 days after expiration of the Eligible Applicants change the 1st disapproval. A brief explanation of the project/budget period. Standard Form sentence to read ‘‘Applicants eligible to reasons why the application was not 269 (long form) will be used for receive an award under this approved will be provided along with financial reporting. announcement are SDPI grantees and the name of the IHS official to contact SDPI grantee sub recipients.’’. On page if more information is desired. VII. Agency Contacts 30681, in the second column, For Epidemiology Program Application Due Date, correct ‘‘M.D.T.’’ VI. Award Administration Information information, contact Dr. James Cheek to ‘‘E.D.T.’’. On page 30682, in the first 1. Award Notices ([email protected]) or Dr. Nathaniel column, under Other Submission Cobb ([email protected]), National Requirements, in the third paragraph, Successful applicants are notified Epidemiology Program, Indian Health correct the number ‘‘222214’’ to ‘‘3’’. through the official Notice of Service, 5300 Homestead Road, NE., And on page 30682, in the first column, Cooperative Agreement (NCA) Albuquerque, NM 87110, (505) 837– Application Review Information, correct document. The NCA will state the 4132, fax (505) 248–4393. For grant the SF number to read ‘‘SF 424’’. amount of Federal funds awarded, the application and business management Dated: June 21, 2004. purpose of the cooperative agreement, information, contact Ms. Martha Charles W. Grim, the terms and conditions of the award, Redhouse, Grants Management Branch, the effective date, the project, and Indian Health Service, Twinbrook Metro Assistant Surgeon General, Director, Indian Health Service. budget period. Plaza, Suite 100, 123000 Twinbrook [FR Doc. 04–14646 Filed 6–28–04; 8:45 am] 2. Administration and National Policy Metro Plaza, Rockville, Maryland 20852, Requirements (301) 443–5204. (The telephone BILLING CODE 4160–16–M numbers are not toll-free.) Cooperative Agreement Administration Requirements: Dated: June 21, 2004. DEPARTMENT OF HOMELAND Cooperative agreements are Charles W. Grim, SECURITY administered in accordance with the Assistant Surgeon General, Director, Indian Health Service. following documents: Federal Emergency Management [FR Doc. 04–14647 Filed 6–28–04; 8:45 am] a. 45 CFR part 92, HHS Uniform Agency Administrative Requirements for Grants BILLING CODE 4160–16–M and Cooperative Agreements to State, [FEMA–1513–DR] local, and tribal governments or 45 CFR DEPARTMENT OF HEALTH AND Illinois; Amendment No. 3 to Notice of part 74, Uniform Administrative HUMAN SERVICES Requirements for Awards and a Major Disaster Declaration Subawards to Institutions of Higher Indian Health Service AGENCY: Federal Emergency Education, Hospitals, Other Nonprofit Management Agency, Emergency Special Diabetes Program for Indians Organizations, and Commercial Preparedness and Response Directorate, Competitive Grant Program; Organizations; Department of Homeland Security. b. PHS Grants Policy Statement; Correction ACTION: Notice. c. Appropriate Cost Principles: OMB ACTION: Notice; correction. Circulars A–87 ‘‘State and Local SUMMARY: This notice amends the notice Governments,’’ or OMB Circular A–122 SUMMARY: The Indian Health Service of a major disaster declaration for the ‘‘Non-Profit Organizations’’; and published a document in the Federal State of Illinois (FEMA–1513–DR),

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dated April 23, 2004, and related Emergency Management Agency, areas determined to have been adversely determinations. Washington, DC 20472, (202) 646–2705. affected by the catastrophe declared a DATES: Effective Date: June 22, 2004. SUPPLEMENTARY INFORMATION: The notice major disaster by the President in his declaration of May 25, 2004: FOR FURTHER INFORMATION CONTACT: of a major disaster declaration for the Magda Ruiz, Recovery Division, Federal State of Indiana is hereby amended to Clay and Polk Counties for Public Assistance Emergency Management Agency, include the following areas among those (already designated for Individual Washington, DC 20472, (202) 646–2705. areas determined to have been adversely Assistance.) affected by the catastrophe declared a SUPPLEMENTARY INFORMATION: The (The following Catalog of Federal Domestic Federal Emergency Management Agency major disaster by the President in his Assistance Numbers (CFDA) are to be used declaration of June 3, 2004: for reporting and drawing funds: 97.030, (FEMA) hereby gives notice that Community Disaster Loans; 97.031, Cora pursuant to the authority vested in the Greene and Owen Counties for Individual Brown Fund Program; 97.032, Crisis Under Secretary for Emergency Assistance (already designated for Public Counseling; 97.033, Disaster Legal Services Preparedness and Response, Department Assistance.) Program; 97.034, Disaster Unemployment of Homeland Security, under Executive Brown, Clay, Delaware, Henry, Jasper, Lake, Assistance (DUA); 97.046, Fire Management Madison, Monroe, Newton, Putnam, and Assistance; 97.048, Individual and Order 12148, as amended, Brad Gair, of Tipton Counties for Individual Assistance. FEMA is appointed to act as the Federal Household Housing; 97.049, Individual and (The following Catalog of Federal Domestic Household Disaster Housing Operations; Coordinating Officer for this declared Assistance Numbers (CFDA) are to be used disaster. 97.050 Individual and Household Program- for reporting and drawing funds: 97.030, Other Needs, 97.036, Public Assistance This action terminates my Community Disaster Loans; 97.031, Cora Grants; 97.039, Hazard Mitigation Grant appointment of Lee Champagne as Brown Fund Program; 97.032, Crisis Program.) Federal Coordinating Officer for this Counseling; 97.033, Disaster Legal Services disaster. Program; 97.034, Disaster Unemployment Michael D. Brown, Assistance (DUA); 97.046, Fire Management (The following Catalog of Federal Domestic Under Secretary, Emergency Preparedness Assistance Numbers (CFDA) are to be used Assistance; 97.048, Individual and and Response, Department of Homeland for reporting and drawing funds: 97.030, Household Housing; 97.049, Individual and Security. Community Disaster Loans; 97.031, Cora Household Disaster Housing Operations; [FR Doc. 04–14663 Filed 6–28–04; 8:45 am] 97.050 Individual and Household Program— Brown Fund Program; 97.032, Crisis BILLING CODE 9110–10–P Counseling; 97.033, Disaster Legal Services Other Needs, 97.036, Public Assistance Program; 97.034, Disaster Unemployment Grants; 97.039, Hazard Mitigation Grant Program.) Assistance (DUA); 97.046, Fire Management DEPARTMENT OF HOMELAND Assistance; 97.048, Individual and Michael D. Brown, SECURITY Household Housing; 97.049, Individual and Under Secretary, Emergency Preparedness Household Disaster Housing Operations; Federal Emergency Management 97.050 Individual and Household Program— and Response, Department of Homeland Other Needs, 97.036, Public Assistance Security. Agency Grants; 97.039, Hazard Mitigation Grant [FR Doc. 04–14665 Filed 6–28–04; 8:45 am] [FEMA–1523–DR] Program.) BILLING CODE 9110–10–P Michael D. Brown, Kentucky; Amendment No. 1 to Notice of a Major Disaster Declaration Under Secretary, Emergency Preparedness DEPARTMENT OF HOMELAND and Response, Department of Homeland SECURITY AGENCY: Federal Emergency Security. Management Agency, Emergency [FR Doc. 04–14661 Filed 6–28–04; 8:45 am] Federal Emergency Management Preparedness and Response Directorate, BILLING CODE 9110–10–P Agency Department of Homeland Security. [FEMA–1518–DR] ACTION: Notice. DEPARTMENT OF HOMELAND SUMMARY: This notice amends the notice SECURITY Iowa; Amendment No. 5 to Notice of a Major Disaster Declaration of a major disaster declaration for the Commonwealth of Kentucky (FEMA– Federal Emergency Management AGENCY: Federal Emergency 1523–DR), dated June 10, 2004, and Agency Management Agency, Emergency related determinations. [FEMA–1520–DR] Preparedness and Response Directorate, EFFECTIVE DATE: June 21, 2004. Department of Homeland Security. FOR FURTHER INFORMATION CONTACT: Indiana; Amendment No. 3 to Notice of ACTION: Notice. a Major Disaster Declaration Magda Ruiz, Recovery Division, Federal Emergency Management Agency, SUMMARY: This notice amends the notice AGENCY: Federal Emergency Washington, DC 20472, (202) 646–2705. of a major disaster declaration for the Management Agency, Emergency State of Iowa (FEMA–1518–DR), dated SUPPLEMENTARY INFORMATION: The notice Preparedness and Response Directorate, May 25, 2004, and related of a major disaster declaration for the Department of Homeland Security. determinations. Commonwealth of Kentucky is hereby ACTION: Notice. amended to include the following areas DATES: Effective Date: June 22, 2004. among those areas determined to have SUMMARY: This notice amends the notice FOR FURTHER INFORMATION CONTACT: been adversely affected by the of a major disaster declaration for the Magda Ruiz, Recovery Division, Federal catastrophe declared a major disaster by State of Indiana (FEMA–1520-DR), Emergency Management Agency, the President in his declaration of June dated June 3, 2004, and related Washington, DC 20472, (202) 646–2705. 10, 2004: determinations. SUPPLEMENTARY INFORMATION: The notice Breathitt, Elliott, Estill, Franklin, Harlan, DATES: Effective Date: June 22, 2004. of a major disaster declaration for the Henderson, Knott, Laurel, Lawrence, Lee, FOR FURTHER INFORMATION CONTACT: State of Iowa is hereby amended to Letcher, Menifee, Ohio, Pulaski, Rowan, Magda Ruiz, Recovery Division, Federal include the following areas among those and Wolfe Counties for Public Assistance

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(already designated for Individual Household Housing; 97.049, Individual and Grants; 97.039, Hazard Mitigation Grant Assistance). Household Disaster Housing Operations; Program.) Boyd, Carter, Fleming, and Jackson Counties 97.050 Individual and Household Program— for Public Assistance. Other Needs, 97.036, Public Assistance Michael D. Brown, Daviess County for Individual Assistance Grants; 97.039, Hazard Mitigation Grant Under Secretary, Emergency Preparedness (already designated for Public Assistance). Program.) and Response, Department of Homeland Bath, Fleming, Hancock, Lewis, Mason, Security. Nicholas, and Robertson Counties for Michael D. Brown, [FR Doc. 04–14662 Filed 6–28–04; 8:45 am] Individual Assistance. Under Secretary, Emergency Preparedness (The following Catalog of Federal Domestic and Response, Department of Homeland BILLING CODE 9110–10–P Assistance Numbers (CFDA) are to be used Security. for reporting and drawing funds: 97.030, [FR Doc. 04–14667 Filed 6–28–04; 8:45 am] Community Disaster Loans; 97.031, Cora BILLING CODE 9110–10–P DEPARTMENT OF HOMELAND Brown Fund Program; 97.032, Crisis SECURITY Counseling; 97.033, Disaster Legal Services Program; 97.034, Disaster Unemployment DEPARTMENT OF HOMELAND Federal Emergency Management Assistance (DUA); 97.046, Fire Management SECURITY Agency Assistance; 97.048, Individual and Household Housing; 97.049, Individual and Household Disaster Housing Operations; Federal Emergency Management [FEMA–1519–DR] 97.050 Individual and Household Program— Agency Other Needs, 97.036, Public Assistance Ohio; Amendment No. 2 to Notice of a Grants; 97.039, Hazard Mitigation Grant [FEMA–1517–DR] Major Disaster Declaration Program.) Nebraska; Amendment No. 3 to Notice AGENCY Michael D. Brown, : Federal Emergency of a Major Disaster Declaration Management Agency, Emergency Under Secretary, Emergency Preparedness and Response, Department of Homeland Preparedness and Response Directorate, AGENCY: Federal Emergency Security. Department of Homeland Security. Management Agency, Emergency [FR Doc. 04–14666 Filed 6–28–04; 8:45 am] Preparedness and Response Directorate, ACTION: Notice. BILLING CODE 9110–10–P Department of Homeland Security. SUMMARY: This notice amends the notice ACTION: Notice. of a major disaster declaration for the DEPARTMENT OF HOMELAND State of Ohio (FEMA–1519–DR), dated SECURITY SUMMARY: This notice amends the notice of a major disaster declaration for the June 3, 2004, and related Federal Emergency Management State of Nebraska (FEMA–1517–DR), determinations. Agency dated May 25, 2004, and related DATES: Effective Date: June 22, 2004. [FEMA–1523–DR] determinations. FOR FURTHER INFORMATION CONTACT: Kentucky; Amendment No. 2 to Notice DATES: Effective Date: June 22, 2004. Magda Ruiz, Recovery Division, Federal of a Major Disaster Declaration FOR FURTHER INFORMATION CONTACT: Emergency Management Agency, Magda Ruiz, Recovery Division, Federal Washington, DC 20472, (202) 646–2705. AGENCY: Federal Emergency Emergency Management Agency, Management Agency, Emergency SUPPLEMENTARY INFORMATION: The Washington, DC 20472, (202) 646–2705. Preparedness and Response Directorate, Federal Emergency Management Agency Department of Homeland Security. SUPPLEMENTARY INFORMATION: The notice (FEMA) hereby gives notice that ACTION: Notice. of a major disaster declaration for the pursuant to the authority vested in the State of Nebraska is hereby amended to Under Secretary for Emergency SUMMARY: This notice amends the notice include the following areas among those Preparedness and Response, Department of a major disaster for the areas determined to have been adversely of Homeland Security, under Executive Commonwealth of Kentucky (FEMA– affected by the catastrophe declared a Order 12148, as amended, Lee 1523–DR), dated June 10, 2004, and major disaster by the President in his Champagne, of FEMA is appointed to related determinations. declaration of May 25, 2004: act as the Federal Coordinating Officer DATES: Effective Date: June 18, 2004. Buffalo and Pawnee Counties for Public for this declared disaster. FOR FURTHER INFORMATION CONTACT: Assistance (already designated for This action terminates my Magda Ruiz, Recovery Division, Federal Individual Assistance). appointment of Brad Gair as Federal Emergency Management Agency, Antelope, Greeley, Howard, Nance, Pierce, Coordinating Officer for this disaster. Washington, DC 20472, (202) 646–2705. Red Willow, and Sherman Counties for Public Assistance. SUPPLEMENTARY INFORMATION: Notice is (The following Catalog of Federal Domestic hereby given that the incident period for (The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used this disaster is closed effective June 18, Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, for reporting and drawing funds: 97.030, 2004. Community Disaster Loans; 97.031, Cora Community Disaster Loans; 97.031, Cora Brown Fund Program; 97.032, Crisis (The following Catalog of Federal Domestic Brown Fund Program; 97.032, Crisis Counseling; 97.033, Disaster Legal Services Assistance Numbers (CFDA) are to be used Counseling; 97.033, Disaster Legal Services Program; 97.034, Disaster Unemployment for reporting and drawing funds: 97.030, Program; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Community Disaster Loans; 97.031, Cora Assistance (DUA); 97.046, Fire Management Brown Fund Program; 97.032, Crisis Assistance; 97.048, Individual and Assistance; 97.048, Individual and Counseling; 97.033, Disaster Legal Services Household Housing; 97.049, Individual and Household Housing; 97.049, Individual and Program; 97.034, Disaster Unemployment Household Disaster Housing Operations; Household Disaster Housing Operations; Assistance (DUA); 97.046, Fire Management 97.050 Individual and Household Program— 97.050 Individual and Household Program— Assistance; 97.048, Individual and Other Needs, 97.036, Public Assistance Other Needs, 97.036, Public Assistance

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Grants; 97.039, Hazard Mitigation Grant Further, you are authorized to make DEPARTMENT OF THE INTERIOR Program.) changes to this declaration to the extent allowable under the Stafford Act. Fish and Wildlife Service Michael D. Brown, Under Secretary, Emergency Preparedness The time period prescribed for the Notice of Availability of the and Response, Department of Homeland implementation of section 310(a), Sacramento River National Wildlife Security. Priority to Certain Applications for Refuge Draft Comprehensive [FR Doc. 04–14664 Filed 6–28–04; 8:45 am] Public Facility and Public Housing Conservation Plan and Environmental BILLING CODE 9110–10–P Assistance, 42 U.S.C. 5153, shall be for Assessment for Review and Comment, a period not to exceed six months after and Notice of Public Meetings the date of this declaration. DEPARTMENT OF HOMELAND AGENCY: Fish and Wildlife Service, SECURITY The Federal Emergency Management Department of the Interior. Agency (FEMA) hereby gives notice that ACTION: Notice of availability and notice Federal Emergency Management pursuant to the authority vested in the of public meetings. Agency Under Secretary for Emergency SUMMARY: The U.S. Fish and Wildlife [FEMA–1526–DR] Preparedness and Response, Department of Homeland Security, under Executive Service (Service) announces that the Wisconsin; Major Disaster and Related Order 12148, as amended, Ron Sacramento River National Wildlife Determinations Sherman, of FEMA is appointed to act Refuge (Refuge) Draft Comprehensive as the Federal Coordinating Officer for Conservation Plan and Environmental AGENCY: Federal Emergency this declared disaster. Assessment (Draft CCP/EA) is available Management Agency, Emergency for review and comment. The Draft Preparedness and Response Directorate, I do hereby determine the following CCP/EA was prepared pursuant to the Department of Homeland Security. areas of the State of Wisconsin to have National Wildlife Refuge System ACTION: Notice. been affected adversely by this declared Administration Act of 1966, as amended major disaster: by the National Wildlife Refuge System SUMMARY: This is a notice of the Columbia, Dodge, Fond du Lac, Jefferson, Improvement Act of 1997 (16 U.S.C. dd Presidential declaration of a major Kenosha, Ozaukee, and Winnebago et seq.) (Improvement Act), and the disaster for the State of Wisconsin Counties for Individual Assistance. National Environmental Policy Act of (FEMA–1526-DR), dated June 18, 2004, Clark, Columbia, Crawford, Dodge, Fond du 1969, as amended, and describes how and related determinations. Lac, Grant, Green Lake, Kenosha, Ozaukee, the Service proposes to manage this DATES: Effective Date: June 18, 2004. Vernon, and Winnebago Counties for Refuge over the next 15 years. Refuge FOR FURTHER INFORMATION CONTACT: Public Assistance. management changes proposed in the Magda Ruiz, Recovery Division, Federal draft CCP include: Restoration of Emergency Management Agency, All counties within the State of additional acres of historic riparian Washington,DC 20472, (202) 646–2705. Wisconsin are eligible to apply for habitat; increasing public use assistance under the Hazard Mitigation opportunities including wildlife SUPPLEMENTARY INFORMATION: Notice is Grant Program. hereby given that, in a letter dated June observation, photography, 18, 2004, the President declared a major (The following Catalog of Federal Domestic interpretation, and environmental disaster under the authority of the Assistance Numbers (CFDA) are to be used education; opening additional areas of Robert T. Stafford Disaster Relief and for reporting and drawing funds: 97.030, the Refuge to fishing; and opening the Emergency Assistance Act, 42 U.S.C. Community Disaster Loans; 97.031, Cora Refuge to waterfowl, deer, and upland 5121–5206 (the Stafford Act), as follows: Brown Fund Program; 97.032, Crisis gamebird hunting. Also available for Counseling; 97.033, Disaster Legal Services review with the Draft CCP/EA, are the I have determined that the damage in Program; 97.034, Disaster Unemployment draft compatibility determinations for certain areas of the State of Wisconsin, Assistance (DUA); 97.046, Fire Management hunting; fishing; environmental resulting from severe storms and flooding Assistance; 97.048, Individual and beginning on May 19, 2004, and continuing, education; wildlife observation, is of sufficient severity and magnitude to Household Housing; 97.049, Individual and photography, and interpretation; warrant a major disaster declaration under Household Disaster Housing Operations; research; camping and boating; farming; the Robert T. Stafford Disaster Relief and 97.050 Individual and Household Program— and grazing. Emergency Assistance Act, 42 U.S.C. 5121– Other Needs, 97.036, Public Assistance DATES: Please provide written comments 5206 (the Stafford Act). I, therefore, declare Grants; 97.039, Hazard Mitigation Grant to the address below by August 20, that such a major disaster exists in the State Program.) 2004. Public meetings will be held on: of Wisconsin. 1. July 20, 2004, 6 p.m. to 8 p.m., In order to provide Federal assistance, you Michael D. Brown, are hereby authorized to allocate from funds Willows, CA. Under Secretary, Emergency Preparedness 2. July 21, 2004, 6 p.m. to 8 p.m., available for these purposes, such amounts as and Response, Department of Homeland Chico, CA. you find necessary for Federal disaster Security. 3. July 27, 2004, 6 p.m. to 8 p.m., Red assistance and administrative expenses. [FR Doc. 04–14668 Filed 6–28–04; 8:45 am] You are authorized to provide Individual Bluff, CA. Assistance and Public Assistance in the BILLING CODE 9110–10–P 4. July 29, 2004, 6 p.m. to 8 p.m., designated areas, and Hazard Mitigation Colusa, CA. throughout the State. Consistent with the ADDRESSES: Comments on the Draft requirement that Federal assistance be CCP/EA should be addressed to Jackie supplemental, any Federal funds provided under the Stafford Act for Public Assistance, Ferrier, Refuge Planner, Sacramento Hazard Mitigation, and the Other Needs National Wildlife Refuge Complex, 752 Assistance under section 408 of the Stafford County Road 99 W, Willows, California, Act will be limited to 75 percent of the total 95988. Comments may also be eligible costs. submitted at the public meetings or via

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electronic mail to Proposed Action Sacramento River National Wildlife [email protected]. The Proposed Action is to adopt and Refuge (2002). Current funding and The public meeting locations are: implement a Comprehensive staffing levels would remain the same. Alternative B, the preferred Conservation Plan for the Sacramento 1. Willows Memorial Hall, 525 W. alternative would use active and passive River Refuge that best achieves the Sycamore Street, Willows, CA. management practices to achieve and Refuge’s purposes; contributes to the 2. Masonic Family Center, 1110 W. maintain full restoration and National Wildlife Refuge System East Avenue, Chico, CA. enhancement of all units on the Refuge mission; addresses significant issues (5,855 acres), where appropriate. The 3. Community Center—Rose Room, and relevant mandates; and is consistent agricultural program would be phased 1500 S. Jackson Street, Red Bluff, CA with sound fish and wildlife out as funding for restoration is 4. Colusa Industrial Properties— management. A CCP is required by the obtained and restoration takes place. Conference Room, 50 Sunrise Improvement Act of 1997. The purpose Boulevard, Colusa, CA. Public use activities would be in developing CCPs is to provide refuge optimized to allow for a balance of FOR FURTHER INFORMATION CONTACT: managers with a 15-year strategy for wildlife-dependant public uses (fishing, Project Leader, Sacramento National achieving refuge purposes and hunting, environmental education, Wildlife Refuge Complex, 752 County contributing to the mission of the interpretation, wildlife observation and Road 99 W, Willows, California 95988, National Wildlife Refuge System. The photography) throughout the entire (530) 934–2801, or Jackie Ferrier, Refuge CCP must be consistent with sound Refuge. Eighty-four percent of the Planner, Sacramento National Wildlife principles of fish and wildlife science Refuge would be open for Refuge Complex, 752 County Road 99 and conservation; and legal mandates environmental education, W, Willows, California 95988, (530) and Service policies. In addition to interpretation, wildlife observation and 934–2801. outlining refuge management direction photography. Hunting would be allowed for conserving wildlife and their SUPPLEMENTARY INFORMATION: Copies of on 55 percent of the Refuge. Twenty- habitats, CCPs identify wildlife- three river miles of seasonally the Draft CCP/EA may be obtained by dependent recreational opportunities writing to Jackie Ferrier, Refuge Planner, submerged areas would be opened to available to the public such as hunting, fishing. Camping would be allowed Sacramento National Wildlife Refuge fishing, wildlife observation and Complex, 752 County Road 99 W, below the ordinary high water mark on photography, and environmental gravel bars. Trails and access to the Willows, California 95988. Copies of the education and interpretation. Draft CCP/EA may be viewed at this Refuge would also be improved. Staffing address and are also available for Alternatives and funding levels would need to increase to implement this alternative. viewing and downloading online at The Draft CCP/EA identifies and Alternative C would accelerate habitat http://sacramentovalleyrefuges.fws.gov evaluates three alternatives for restoration and maximize public use. or http://pacific.fws.gov/planning. managing Sacramento River National The Refuge would use active and Printed documents will be available for Wildlife Refuge for the next 15 years. passive management practices to review at the following libraries: Bayliss Each alternative describes a achieve and maintain full restoration Library in Glenn; Butte County Library combination of habitat and public use and enhancement of all units on the in Chico; Butte County Library in management prescriptions designed to Refuge (5,855 acres), where appropriate, Oroville; Colusa County Library in achieve Refuge purposes. Of the as funding becomes available. The Colusa; Colusa County Library in alternatives described below, the agricultural program would end as Princeton; Corning Library in Corning; Service believes that Alternative B funding is obtained, and full restoration Orland City Library in Orland; Tehama would best achieve these elements, and efforts take place. Public use activities County Library in Los Molinos; Tehama is, therefore, identified as the Preferred would allow wildlife-dependant public County Library in Red Bluff; and Alternative. uses throughout the majority of the Willows Public Library in Willows. Alternative A, the no action Refuge (84 percent). Hunting would be Background alternative, assumes no change from allowed on 73 percent of the Refuge. current management programs and is Twenty-three river miles of seasonally The Refuge was established in 1989 considered the baseline to compare submerged areas would be opened to by the authority provided under the other alternatives. Under this fishing, and camping would be allowed Endangered Species Act of 1973, the alternative, the focus of the Refuge below the ordinary high water mark on Fish and Wildlife Act of 1956, and the would be to continue to restore and gravel bars. Trails and access to the Emergency Wetlands Resources Act of maintain riparian habitat for threatened Refuge would also be improved. 1986, using funds made available and endangered species, migratory Funding and staffing levels would have through the Land and Water birds, anadromous and native fish, to increase substantially to implement Conservation Fund Act of 1965. wildlife, and plants. The Refuge would this alternative. Sacramento River Refuge is part of the remain closed to visitor services other Sacramento National Wildlife Refuge than the limited existing opportunity for Features Common to All Alternatives Complex located in the Sacramento fishing at Packer Lake. Hunting, All three alternatives include a Valley of north-central California. The camping, wildlife observation and number of features in common. Under Refuge is located along both banks of photography would not be allowed and each alternative, riparian vegetation on the Sacramento River between Red Bluff access to the Refuge would be limited. La Barranca, Ohm, Pine Creek, Capay, and Princeton, California, in Glenn, Riparian restoration activities would Phelan Island, Dead Man’s Reach, Butte, and Tehama Counties. The continue on the eight units (La Hartley Island and Drumheller Slough Refuge is managed to maintain, enhance Barranca, Ohm, Pine Creek, Capay, units would be restored and enhanced. and restore habitats for threatened and Phelan Island, Dead Man’s Reach, These restoration activities are endangered species, migratory birds, Hartley Island, Drumheller Slough) addressed in the Environmental anadromous fish and native fish, covered under the Environmental Assessment for Proposed Restoration wildlife, and plants. Assessment for Proposed Activities on Activities on the Sacramento River

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National Wildlife Refuge (2002). Other Arizona. The applicant requests a Dated: May 25, 2004. continuing activities include baseline permit to take (capture and collect) Paul Henson, surveys and monitoring, fire the Mohave tui chub (Gila bicolor Manager, California/Nevada Operations management, law enforcement, and mohavensis) in conjunction with Office, Region 1, Fish and Wildlife Service. fishing at Packer Lake. parasite research in San Bernardino [FR Doc. 04–14671 Filed 6–28–04; 8:45 am] Dated: June 22, 2004. County, California, for the purpose of BILLING CODE 4310–55–P D. Kenneth McDermond, enhancing its survival. Manager, California/Nevada Operations Permit No.: TE–086996 Office, Fish and Wildlife Service. DEPARTMENT OF THE INTERIOR [FR Doc. 04–14670 Filed 6–28–04; 8:45 am] Applicant: David Hacker, Morro Bay, Bureau of Land Management BILLING CODE 4310–55–P California. The applicant requests a permit to take (harass by survey) the [CA–339–04–1030–DR] Conservancy fairy shrimp DEPARTMENT OF THE INTERIOR Notice of Availability of Record of (Branchinecta conservatio), the Decision for the Headwaters Forest Fish and Wildlife Service longhorn fairy shrimp (Branchinecta Reserve Resource Management Plan longiantenna), the Riverside fairy (RMP)/Environmental Impact Endangered Species Recovery Permit shrimp (Streptocephalus wootoni), the Statement (EIS) Applications San Diego fairy shrimp (Branchinecta sandiegonensis), and the vernal pool AGENCY: Bureau of Land Management, AGENCY: Fish and Wildlife Service, Interior. Interior. tadpole shrimp (Lepidurus packardi) in conjunction with surveys ACTION: Notice of availability of Record ACTION: Notice of receipt of permit of Decision (ROD). applications. throughout the range of each species in California for the purpose of SUMMARY: In accordance with the SUMMARY: The following applicants have enhancing their survival. National Environmental Policy Act applied for a scientific research permit Permit No.: TE–082546 (NEPA), the Federal Land Policy and to conduct certain activities with Management Act (FLPMA), the Bureau endangered species pursuant to section Applicant: Elkhorn Sough Reserve, of Land Management (BLM) 10(a)(1)(A) of the Endangered Species Watsonville, California. The applicant management policies and Public Law Act (16 U.S.C. 1531 et seq.). The U.S. requests a permit to take (capture and 105–83 (Headwaters authorizing Fish and Wildlife Service (‘‘we’’) solicits release) the Santa Cruz long-toed legislation), the BLM announces the review and comment from local, State, availability of the RMP/ROD for the and Federal agencies, and the public on salamander (Ambystoma Headwaters Forest Reserve located in the following permit requests. macrodactyium) in conjunction with California red-legged frog (Rana Humboldt County, Arcata, California. DATES: Comments on these permit aurora draytonii) research in San The California State Director will sign applications must be received on or the RMP/ROD, which becomes effective before July 29, 2004. Mateo, Santa Cruz, Monterey, San Luis Obispo, and Santa Barbara immediately. ADDRESSES: Written data or comments ADDRESSES: Copies of the Headwaters should be submitted to the U.S. Fish Counties, California, for the purpose Forest Reserve RMP/ROD are available and Wildlife Service, Chief, Endangered of enhancing its survival. upon request from the Field Manager, Species, Ecological Services, 911 NE. Permit No.: TE–802094 Arcata Field Office, Bureau of Land 11th Avenue, Portland, Oregon 97232– Management, at 1695 Heindon Road 4181 (fax: 503–231–6243). Please refer Applicant: Carl Page, Cotati, California. Arcata, California 95521–4573 or via the to the respective permit number for each The permittee requests an amendment Internet at www.ca.blm.gov/arcata. application when submitting comments. to take (harass by survey, capture, FOR FURTHER INFORMATION CONTACT: Dan All comments received, including handle, and release) the unarmored names and addresses, will become part Averill, at 1695 Heindon Road, Arcata, threespine stickleback (Gasterosteus California 95521–4573, or phone of the official administrative record and aculeatus williamsoni) in conjunction may be made available to the public. number: 707–825–2300, or with inventories throughout the range [email protected]. FOR FURTHER INFORMATION CONTACT: of the species in California for the Documents and other information SUPPLEMENTARY INFORMATION: The purpose of enhancing its survival. submitted with these applications are Headwaters Forest Reserve RMP/ROD available for review, subject to the Permit No.: TE–806679 was developed with broad public requirements of the Privacy Act and participation through a three (3)-year Freedom of Information Act, by any Applicant: Spring Rivers Ecological collaborative planning process. This party who submits a written request for Sciences, Cassel, California. The RMP/ROD addresses management on a copy of such documents within 30 permittee requests an amendment to approximately 7500 acres of public land days of the date of publication of this take (collect tissue) the Shasta in the planning area, which was notice to the address above (telephone: crayfish (Pacifastacus fortis) in acquired through Congressional 503–231–2063). Please refer to the conjunction with genetic research designation in 1999 by the BLM and the respective permit number for each throughout the species range in State of California with the U.S. application when requesting copies of California for the purpose of Department of Interior (DOI) acquiring documents. enhancing its survival. fee title and the State of California SUPPLEMENTARY INFORMATION: We solicit public review and acquiring a conservation easement over comment on each of these recovery the property. These public lands, known Permit No.: TE–086593 as the Headwaters Forest Reserve, are permit applications. Applicant: Arizona Cooperative Fish managed to protect old-growth and Wildlife Research Unit, Tucson, redwoods and the headwaters of two

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major stream systems. The Reserve modifications were made in preparing Minerals Management Service, Gulf of provides critical habitat for several the RMP/ROD. Mexico OCS Region, Attention: Public Information Office (MS 5034), 1201 terrestrial and aquatic wildlife species Mike Pool, including five species federally listed as Elmwood Park Boulevard, Room 114, California State Director. threatened: Coho salmon, chinook New Orleans, Louisiana 70123–2394, or [FR Doc. 04–14724 Filed 6–28–04; 8:45 am] salmon, steelhead trout, marbled by calling 1–800–200–GULF. murrelet (a threatened seabird) and the BILLING CODE 4310–40–P SUPPLEMENTARY INFORMATION: MMS northern spotted owl. prepares SEAs and FONSIs for The RMP presents management goals DEPARTMENT OF THE INTERIOR proposals that relate to exploration for and direction for long-term management and the development/production of oil and gas resources on the GOM OCS. of the Reserve. The plan addresses Minerals Management Service These SEAs examine the potential future management actions at the land- Environmental Documents Prepared environmental effects of activities use plan, program, and site level and for Proposed Oil and Gas Operations described in the proposals and present analyzes the extent and magnitude of on the Gulf of Mexico Outer MMS conclusions regarding the several types of actions, such as Continental Shelf (OCS) significance of those effects. watershed restoration, forest restoration, Environmental Assessments are used as and development of limited recreation AGENCY: Minerals Management Service a basis for determining whether or not facilities, including a trail system (MMS), Interior. approval of the proposals constitutes allowing public access. ACTION: Notice of the availability of major Federal actions that significantly The approved Headwaters Forest environmental documents prepared for affect the quality of the human Reserve RMP consists of essentially the OCS mineral proposals on the Gulf of environment in the sense of NEPA same array of selected alternatives that Mexico (GOM) OCS. Section 102(2)(C). A FONSI is prepared was identified in the Proposed in those instances where MMS finds SUMMARY: MMS in accordance with Headwaters Forest Reserve RMP/Final that approval will not result in Federal Regulations that implement the significant effects on the quality of the Environmental Impact Statement National Environmental Policy Act (PRMP/FEIS), published in September human environment. The FONSI briefly (NEPA) announces the availability of presents the basis for that finding and 2003. BLM received 79 protests to the NEPA-related Site-Specific PRMP/FEIS. No inconsistencies with includes a summary or copy of the SEA. Environmental Assessments (SEA) and This notice constitutes the public State or local plans, policies, or Findings of No Significant Impact notice of availability of environmental programs were identified during the (FONSI), prepared by MMS for the documents required under the NEPA Governor’s consistency review of the following oil and gas activities proposed Regulations. PRMP/FEIS and no editorial on the Gulf of Mexico OCS. This listing includes all proposals for FOR FURTHER INFORMATION CONTACT: which the GOM OCS Region prepared a Public Information Unit, Information FONSI in the period subsequent to Services Section at the number below. publication of the preceding notice.

Activity/operator Location Date

Samedan Oil Corporation, Structure Removal SEA ES/SR 03– East Cameron, Block 66, Lease OCS–G 04417, located 23 01/06/04 210, 03–211, 03–212. miles from the nearest Louisiana shoreline. Marathon Oil Corporation, Initial Exploration Plan SEA N–7910 DeSoto Canyon, Block 354, Lease OCS–G 23507, located 80 01/14/04 miles from the nearest Louisiana shoreline. LLOG Exploration Offshore, Inc., Supplemental Development High Island, Block A–367, Lease OCS–G 23222, located 124 01/29/04 Operations Coordination Plan SEA S–6308. miles from the nearest Texas shoreline. C & C Technologies, Inc., Geological & Geophysical Exploration Located in the central Gulf of Mexico south of the eastern Lou- 02/05/04 Plan for BHP Billiton (Americas) Inc. SEA L04–01. isiana shoreline. TDI-Brooks International, Geological & Geophysical Exploration Located in the eastern Gulf of Mexico east of the Freeport, 02/05/04 Plan for Shell Exploration SEA M04–01. Texas shoreline. BP America Production Company, Inc., Structure Removal SEA West Cameron, Block 71, Lease OCS–00244, located 10 miles 02/09/04 ES/SR 04–002. from the nearest Louisiana shoreline. Bois d’Arc offshore, Ltd, Structure Removal SEA ES/SR 04– South Timbalier, Block 50, Lease OCS–G 04119, located 10 02/11/04 003, 04–004. miles from the nearest Louisiana shoreline. El Paso Production Oil & Gas Company, Structure Removal Viosca Knoll, Block 24, Lease OCS–G 08763, located 17 miles 02/17/04 SEA ES/SR 04–005. from the nearest Louisiana shoreline. Bois d’Arc Offshore, Ltd, Structure Removal SEA ES/SR 03– South Timbalier, Block 34, Lease OCS–G 04842, located 5 02/19/04 198. miles from the nearest Louisiana shoreline. Bois d’Arc Offshore, Ltd, Structure Removal SEA ES/SR 04– South Timbalier, Block 34, Lease OCS–G 04842, located 5 02/19/04 006, 04–007. miles from the nearest Louisiana shoreline. Walter Oil & Gas Corporation, Structure Removal SEA ES/SR East Cameron (South Addition), Block 111, Lease OCS–G 02/25/04 04–009. 12845, located 81 miles from the nearest Vermilion Parish, Louisiana shoreline. Coastal Planning & Engineering, Inc., Geological & Geophysical Located in the western Gulf of Mexico east of Galveston & Jef- 02/26/04 Exploration Plan for Galveston & Jefferson Counties, TX SEA ferson Counties, Texas. T04–04. Chevron, U.S.A., Inc., Lease-Term Pipeline SEA P–14470 ...... Grand Isle, Block 37, Lease OCS–G 00392, closest distance is 03/01/04 located 3 miles from the nearest Louisiana shoreline. C & C Technologies, Inc., Geological & Geophysical Exploration Located in the central Gulf of Mexico south of the nearest east- 03/03/04 Plan for Kerr McGee Oil & Gas Company SEA L04–04. ern Louisiana shoreline.

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Activity/operator Location Date

Union Oil Company of California, Structure Removal SEA ES/ East Cameron, Block 62, Lease OCS–G 13574, located 19 03/04/04 SR 04–021. miles from the nearest Louisiana shoreline. Devon Energy Corporation, Structure Removal SEA ES/SR 04– Galveston, Block 362, Lease OCS–G 14841, located 18 miles 03/04/04 012. from the nearest Texas shoreline. Devon Energy Corporation, Structure Removal SEA ES/SR 04– West Cameron, Block 165, Lease OCS–G 00758, located 25 03/04/04 015. miles from the nearest Louisiana shoreline. Devon Energy Corporation, Structure Removal SEA ES/SR 04– West Cameron, Block 20, Lease OCS–G 00680, located 5 03/11/04 013, 04–014. miles from the nearest Louisiana shoreline. Devon Louisiana Corporation, Structure Removal SEA ES/SR Brazos, Block 377, Lease OCS–G 14803, located 13 miles 03/17/04 04–010. from the nearest Texas shoreline. Devon Louisiana Corporation, Structure Removal SEA ES/SR Brazos, Block 552, Lease OCS–G 11283, located 18 miles 03/17/04 04–011. from the nearest Texas shoreline. Walter Oil & Gas Corporation, Structure Removal SEA ES/SR High Island, Block 200, Lease OCS–G 09086, located 33 miles 03/17/04 04–035. from the nearest Texas shoreline. Canyon Offshore, Inc., Geological & Geophysical Exploration Located in the central Gulf of Mexico south of the nearest east- 03/17/04 Plan for BP Exploration & Production, Inc. SEA L04–05. ern Louisiana shoreline. C & C Technologies, Inc., Geological & Geophysical Exploration Located in the central Gulf of Mexico south of the eastern Lou- 03/17/04 Plan for Shell International Exploration & Production, Inc. SEA isiana shoreline. T04–07. SPN Resources, L.L.C., Structure Removal SEA ES/SR RA– Mobile, Block 864, Lease OCS–G 05064, located 6 miles from 03/17/04 2004–01. the nearest Alabama shoreline. Chevron U.S.A., Inc., Structure Removal SEA ES/SR 04–016, Mobile, Block 945, Lease OCS–G 07847; Viosca Knoll, Block 03/17/04 04–017. 27, Lease OCS–G 06868; located 15 miles from the nearest Mississippi shoreline and located 18 miles from the nearest Louisiana shoreline, respectively. Energy Resource Technology, Inc., Structure Removal SEA ES/ South Marsh Island, Ship Shoal, Vermilion, West Cameron; 03/17/04 SR 04–031, 04–032, 04–033, 04–034. Blocks 15, 220, 171, 202; Leases OCS–G 09534, 12950, 01130, 05182, respectively; located 34 to 40 miles from the nearest Louisiana shoreline. J. M. Huber Corporation, Structure Removal SEA ES/SR 04– South Timbalier, Block 28, Lease OCS–G 01362, located 5 03/17/04 018, 04–019. miles from the nearest Louisiana shoreline. Samedan Oil Corporation, Structure Removal SEA ES/SR 04– West Cameron (South Addition), Blocks 445, 463, Leases 03/17/04 022, 04–023, 04–024, 04–025. OCS–G 09423, 04093; High Island (East Addition), Blocks A232, A244, Leases OCS–G 21353, 05010, located 70 to 75 miles south of the nearest Texas shoreline and 80 miles south of the nearest Louisiana shoreline. Samedan Oil Corporation, Structure Removal SEA ES/SR 04– Vermilion (South), Block 336, Lease OCS–G 13892, located 90 03/23/04 036. miles from the nearest Louisiana shoreline. Anadarko Petroleum Corporation, Structure Removal SEA ES/ South Marsh, Block 241, Lease OCS–310, located 15 miles 03/24/04 SR 04–037. from the nearest Louisiana shoreline. Devon Energy Corporation, Structure Removal SEA ES/SR 04– West Cameron (South Addition), Block 533, Lease OCS–G 03/24/04 038. 02225, located 90 miles southwest from the nearest Lou- isiana shoreline. Newfield Exploration Company, Structure Removal SEA ES/SR West Cameron (South), Block 535, Lease OCS–G 15109, lo- 03/29/04 04–042. cated 97 miles from the nearest Louisiana shoreline. Union Oil Company of California, Structure Removal SEA ES/ West Cameron (West), Block 297, Lease OCS–G 15077, lo- 03/29/04 SR 04–041. cated 27 miles from the nearest Louisiana shoreline. BP America Production Company, Structure Removal SEA ES/ West Cameron, Block 36, Lease OCS–G 11753, located 7 03/30/04 SR 04–043. miles from the nearest Louisiana shoreline. Devon Louisiana Corporation, Structure Removal SEA ES/SR Eugene Island, Block 129, Lease OCS–G 00054, located 29 03/31/04 04–029, 04–030. miles from the nearest Louisiana shoreline. Devon Louisiana Corporation, Structure Removal SEA ES/SR Galveston, Block 393, Lease OCS–G 03741, located 23 miles 03/31/04 04–026. from the nearest Texas shoreline. Devon Louisiana Corporation, Structure Removal SEA ES/SR Galveston, Block 420, Lease OCS–G 14146, located 22 miles 03/31/04 04–027. from the nearest Texas shoreline. Devon Louisiana Corporation, Structure Removal SEA ES/SR High Island, Block 140, Lease OCS–G 00518, located 17 miles 03/31/04 04–028. from the nearest Texas shoreline.

Persons interested in reviewing DEPARTMENT OF JUSTICE Firearms License (FFL) renewal environmental documents for the application. proposals listed above, or obtaining Bureau of Alcohol, Tobacco, Firearms The Department of Justice (DOJ), information about SEAs and FONSIs and Explosives Bureau of Alcohol, Tobacco, Firearms prepared for activities on the GOM OCS and Explosives (ATF), has submitted the are encouraged to contact MMS. Agency Information Collection Activities: Proposed Collection; following information collection request Dated: May 27, 2004. Comments Requested to the Office of Management and Budget Chris C. Oynes, (OMB) for review and approval in accordance with the Paperwork Regional Director, Gulf of Mexico OCS Region. ACTION: 60-Day notice of information Reduction Act of 1995. The proposed [FR Doc. 04–14722 Filed 6–28–04; 8:45 am] collection under review: Federal information collection is published to BILLING CODE 4310–MR–P obtain comments from the public and

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affected agencies. Comments are (5) An estimate of the total number of comments should address one or more encouraged and will be accepted for respondents and the amount of time of the following four points: ‘‘sixty days’’ until August 30, 2004. This estimated for an average respondent to —Evaluate whether the proposed process is conducted in accordance with respond: It is estimated that 35,000 collection of information is necessary 5 CFR 1320.10. respondents will complete a 25 minute for the proper performance of the If you have comments especially on form. functions of the agency, including the estimated public burden or (6) An estimate of the total public whether the information will have associated response time, suggestions, burden (in hours) associated with the practical utility; or need a copy of the proposed collection: There are an estimated —Evaluate the accuracy of the agencies information collection instrument with 14,700 annual total burden hours estimate of the burden of the instructions or additional information, associated with this collection. proposed collection of information, please contact David Adinolfi, Firearms If additional information is required including the validity of the and Explosives National Licensing contact: Brenda E. Dyer, Deputy methodology and assumptions used; Center, 2600 Century Parkway, Atlanta, Clearance Officer, Policy and Planning —Enhance the quality, utility, and Georgia 30044. Staff, Justice Management Division, clarity of the information to be Written comments and suggestions Department of Justice, Patrick Henry collected; and from the public and affected agencies Building, Suite 1600, 601 D Street, NW., —Minimize the burden of the collection concerning the proposed collection of Washington, DC 20530. of information on those who are to information are encouraged. Your Dated: June 23, 2004. respond, including through the use of comments should address one or more appropriate automated, electronic, of the following four points: Brenda E. Dyer, mechanical, or other technological —Evaluate whether the proposed Deputy Clearance Officer, Department of Justice. collection techniques or other forms collection of information is necessary of information technology, e.g., for the proper performance of the [FR Doc. 04–14656 Filed 6–28–04; 8:45 am] BILLING CODE 4410–FY–P permitting electronic submission of functions of the agency, including responses. whether the information will have practical utility; Overview of this information —Evaluate the accuracy of the agencies DEPARTMENT OF JUSTICE collection: estimate of the burden of the (1) Type of Information Collection: Bureau of Alcohol, Tobacco, Firearms Revision of a currently approved proposed collection of information, and Explosives including the validity of the collection. (2) Title of the Form/Collection: methodology and assumptions used; Agency Information Collection —Enhance the quality, utility, and User—Limited Permit (Explosives). Activities: Proposed Collection; (3) Agency form number, if any, and clarity of the information to be Comments Requested collected; and the applicable component of the Department of Justice sponsoring the —Minimize the burden of the collection ACTION: 60-Day notice of information of information on those who are to collection under review: User—Limited collection: Form Number: ATF F 5400.6. respond, including through the use of Permit (Explosives). Bureau of Alcohol, Tobacco, Firearms appropriate automated, electronic, and Explosives. mechanical, or other technological The Department of Justice (DOJ), (4) Affected public who will be asked collection techniques or other forms Bureau of Alcohol, Tobacco, Firearms or required to respond, as well as a brief of information technology, e.g., and Explosives (ATF), has submitted the abstract: Primary: Business or other for- permitting electronic submission of following information collection request profit. Other: Individuals or households. responses. to the Office of Management and Budget The User-Limited Permit is useful to the Overview of this information (OMB) for review and approval in person making a one-time purchase of collection: accordance with the Paperwork explosives from out-of-state. This permit (1) Type of Information Collection: Reduction Act of 1995. The proposed is not transferable and valid only for a Extension of a currently approved information collection is published to single transaction involving the type collection. obtain comments from the public and and quantity of explosive materials (2) Title of the Form/Collection: affected agencies. Comments are specified on the permit. It is Federal Firearms License (FFL) encouraged and will be accepted for nonrenewable. The explosives RENEWAL Application. ‘‘sixty days’’ until August 30, 2004. This distributor makes entries on the form (3) Agency form number, if any, and process is conducted in accordance with and returns the form to the permittee to the applicable component of the 5 CFR 1320.10. prevent reuse of the permit. Department of Justice sponsoring the If you have comments especially on (5) An estimate of the total number of collection: Form Number: ATF F 8 the estimated public burden or respondents and the amount of time (5310.11). Bureau of Alcohol, Tobacco, associated response time, suggestions, estimated for an average respondent to Firearms and Explosives. or need a copy of the proposed respond: It is estimated that 1,092 (4) Affected public who will be asked information collection instrument with respondents will complete and retain or required to respond, as well as a brief instructions or additional information, the form in 12 minutes. abstract: Primary: Business or other for- please contact Lilia Vannett, Chief, (6) An estimate of the total public profit. Other: Individual or households. Firearms and Explosives National burden (in hours) associated with the The form is filed by the licensee Licensing Center, Room 400, 2600 collection: There are an estimated 218 desiring to renew a Federal firearms Century Parkway, Atlanta, Georgia annual total burden hours associated license. It is used to identify the 30044. with this collection. applicant, locate the business/collection Written comments and suggestions If additional information is required premises, identify the type of business/ from the public and affected agencies contact: Brenda E. Dyer, Deputy collection activity, and determine the concerning the proposed collection of Clearance Officer, Policy and Planning eligibility of the applicant. information are encouraged. Your Staff, Justice Management Division,

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Department of Justice, Patrick Henry their prescriptions filled at pharmacies substances into the United States and is Building, Suite 1600, 601 D Street NW., in foreign countries and mailed to them subject to criminal penalties (21 U.S.C. Washington, DC 20530. in the United States. For purposes of 951, 952, 960). Except as authorized by Dated: June 23, 2004. this document, DEA uses the term law, no person may import a controlled ‘‘brick and mortar businesses’’ to refer to substance into the United States unless Brenda E. Dyer, physical storefront locations of a such person is registered with DEA and Deputy Clearance Officer, Department of business having direct contact with has obtained the appropriate permit or Justice. customers. It has been DEA’s experience authorization from DEA to engage in [FR Doc. 04–14657 Filed 6–28–04; 8:45 am] that the vast majority of such such importation (21 U.S.C. 957). Illegal BILLING CODE 4410–FY–P prescriptions are for drugs for treatment importation of controlled substances of such conditions as high blood into the United States is a felony that pressure or cholesterol, arthritis pain, may result in imprisonment and fines DEPARTMENT OF JUSTICE diabetes, infections, etc., which are not (21 U.S.C. 960). Drug Enforcement Administration controlled substances; of all On April 27, 2001, DEA published a prescriptions issued each year, notice in the Federal Register (66 FR [Docket No. DEA–245N] approximately 89% are for non- 21181) to provide guidance to controlled substances and 11% are for prescribers, pharmacists, law Importing Controlled Substances From controlled substances. DEA is enforcement authorities, regulatory Canada and Other Foreign Countries concerned solely with the 11% of authorities, and the public concerning AGENCY: Drug Enforcement controlled substances prescriptions. the application of current laws and Administration (DEA), Justice. (Controlled substances are those regulations as they relate to the use of prescription medications which, among the Internet for dispensing, purchasing, ACTION: Notice. other factors, have the potential for or importing controlled substances. SUMMARY: On April 27, 2001, the Drug abuse, which may lead to physical or Since publication of that notice, DEA Enforcement Administration (DEA) psychological dependency.) The has noted increasing numbers of both published a notice in the Federal remaining 89% of prescriptions that do Internet web sites and ‘‘brick and Register (66 FR 21181) to provide not involve controlled substances are mortar’’ businesses claiming to be able guidance to prescribers, pharmacists, not the subject of this notice or any to assist individual consumers in law enforcement authorities, regulatory requirement under the Controlled purchasing prescription medications, authorities, and the public concerning Substances Act or the Controlled including controlled substances, from the application of current laws and Substances Import and Export Act. Canada and other foreign countries. This document reiterates current regulations as they relate to the use of Background the Internet for dispensing, purchasing, Federal law and DEA regulations or importing controlled substances. DEA administers the Controlled pertaining to the importation of Since publication of that notice, DEA Substances Act and the Controlled controlled substances from foreign Substances Import and Export Act has noted increasing numbers of both countries. (herein jointly called the CSA) which Internet Web sites and ‘‘brick and together form the basis for laws Explanation Regarding Controlled mortar businesses’’ claiming to be able governing the manufacture, distribution, Substances to assist individual consumers in dispensing, importation and exportation Medications which can be purchased purchasing prescription medications, of controlled substances. These laws without a prescription are over the including controlled substances, from may be found in Title 21, United States counter medications. Drugs which may Canada and other foreign countries. Code (U.S.C.), Sections 801–971. only be obtained pursuant to a This document reiterates current Regulations implementing these laws practitioner’s order are prescription Federal law and DEA regulations are found in Title 21, Code of Federal medications. Many drugs and pertaining to the importation of Regulations (CFR), Parts 1300 to 1316. medications which have potential for controlled substances from foreign Together, the CSA and its implementing abuse are controlled substances. Most countries. Persons who have controlled regulations provide the framework for drugs requiring a prescription from a substances sent from other countries DEA to ensure adequate supplies of physician or other practitioner are not into the United States violate Federal controlled substances for the legitimate controlled substances. The CSA and its law unless those persons are registered medical, scientific, research, and implementing regulations assign with DEA as importers of controlled industrial needs of the United States, controlled substances to one of five substances and have received from DEA while preventing the diversion of those ‘‘schedules.’’ These substances are an import permit. controlled substances. placed in a schedule based on, among FOR FURTHER INFORMATION CONTACT: To do this, the CSA creates a ‘‘closed other factors, their potential for abuse, Patricia M. Good, Chief, Liaison and system of drug distribution’’ which which may lead to physical or Policy Section, Office of Diversion requires DEA to register manufacturers, psychological dependency. Schedule I Control, Drug Enforcement distributors, dispensers, importers, and substances have no accepted medical Administration, Washington, DC 20537, exporters of controlled substances use for treatment in the United States Telephone (202) 307–7297. within the legitimate distribution chain, and are not available by prescription. SUPPLEMENTARY INFORMATION: and makes transactions outside the Schedule II controlled substances have legitimate distribution chain illegal. a high potential for abuse and a Introduction The CSA provides that any person currently accepted medical use in Recently, the Drug Enforcement who causes controlled substances to be treatment in the United States or a Administration (DEA) has noted brought into the United States by any currently accepted medical use with increasing public interest in, and use of, means—including causing items to be severe restrictions. The substances in both Internet Web sites and ‘‘brick and sent from other countries to the United each successive schedule have a lower mortar businesses’’ claiming to be able States by mail or private shipping potential for abuse and dependency to assist individual citizens in having company—has imported controlled relative to the higher schedules.

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Schedule II, III, IV and V controlled veterinarians, and, where authorized by found in 21 CFR Part 1308. Examples of substances may be dispensed by, or an appropriate state authority, physician controlled substances may also be found pursuant to, the lawful order of a assistants and advance practice nurses. at the Diversion Control Program Web practitioner acting in the usual course of Controlled substances include narcotics site: http:// professional practice for a legitimate (pain relievers), stimulants, depressants, www.deadiversion.usdoj.gov. A few medical purpose. Practitioners include, hallucinogens, and anabolic steroids. A examples are shown below. but are not limited to, doctors, dentists, listing of controlled substances can be

Schedule Example of Controlled Substances

Schedule I ...... Heroin, marijuana, methylenedioxymethamphetamine (MDMA; Ecstasy). Schedule II ...... Amphetamine, codeine, fentanyl (Duragesic), hydromorphone (Dilaudid), meperidine (Demerol), methadone (Dolophine), methylphenidate (Ritalin, Metadate ER, Concerta), morphine, oxycodone (Percodan, Tylox, OxyContin). Schedule III ...... Anabolic steroids (Anadrol, Depo-Testosterone, Dianabol), phendimetrazine (Prelu-2), acetami- nophen with codeine, hydrocodone/acetaminophen (Lorcet, Vicodin). Schedule IV ...... Alprazolam (Xanax), diazepam (Valium), lorazepam (Ativan), phentermine (Fastin, Ionamin, Adipex-P). Schedule V ...... Some cough preparations that contain a limited amount of codeine.

Basic Requirements for Prescribing and regulations specify the construction of companies which then have Canadian Dispensing Controlled Substances each storage facility to adequately practitioners write equivalent Only practitioners who are authorized secure these controlled substances. prescriptions for Canadian medications. to prescribe controlled substances by Such storage facility, regardless of its Some companies simply mail the the state in which they are licensed, are type, must be alarmed, and the alarm United States prescriptions to Canadian registered with DEA, and are acting in system, upon attempted unauthorized pharmacies which fill the prescriptions the usual course of their professional entry, must transmit a signal directly to based on the United States prescriptions practice for a legitimate medical a central protection company or a local only. purpose may prescribe controlled or state police agency which has a legal Some Internet sites do not require a substances. Pharmacies filling duty to respond, or a 24-hour control prescription, but instead require the prescriptions for controlled substances station operated by the importer (21 consumer to complete a questionnaire to must be licensed to dispense controlled CFR 1301.72). As with other registered receive a desired medication. These substances by the state(s) in which they handlers of controlled substances, sites claim the questionnaire is operate and also be registered with DEA. importers must design and operate a evaluated by a physician and a A prescription not issued for a system to disclose suspicious orders (21 prescription is written, if appropriate, legitimate medical purpose and not in CFR 1301.74(b)), and must file reports based on the information provided in the usual course of professional practice regarding the theft or significant loss of the questionnaire. Some foreign Internet (or not for legitimate and authorized controlled substances with DEA (21 CFR sites claim they can legally sell research) is not valid. 1301.74(c)). As with other registered controlled substances to consumers handlers of controlled substances, within the United States. Many of these Importing Controlled Substances into importers must maintain records sites require United States patients to the United States regarding controlled substances waive their right to take legal action if Federal law and DEA regulations imported, received, sold, delivered or a medication error occurs. Still other prohibit any person or entity from destroyed (21 CFR 1304.21, 1304.22(d)). Internet sites sell listings of foreign importing any controlled substance into Finally, importers must take a periodic Internet pharmacies which these sites the United States unless that person or inventory, at least biennially, of all claim will sell prescription medications entity is registered with DEA and controlled substances on hand (21 CFR without prescriptions. specifically authorized by DEA to 1304.03, 1304.11(e)(4)). It is illegal for a United States import the controlled substances (21 Illegal importation of controlled consumer or business to have controlled U.S.C. 952 and 957). Controlled substances is a felony that may result in substances shipped to the United States substances may only be imported into imprisonment and fines (21 U.S.C. 960). from a foreign country unless the person the United States for medical and receiving the controlled substances is Purchasing Controlled Substances From scientific purposes or other legitimate registered with DEA as an importer or Foreign Countries purposes (21 U.S.C. 952). Controlled researcher and is in compliance with 21 substances may only be imported DEA has become aware of both ‘‘brick U.S.C. 952 and 957 and 21 CFR Part pursuant to a permit or declaration, as and mortar businesses’’ and Internet 1312. Importers must comply with applicable, obtained from DEA (21 sites within the United States which recordkeeping and reporting U.S.C. 952, 21 CFR 1312.11). As with all claim that they are able to have United requirements regarding the controlled other registered handlers of controlled States consumers’ prescriptions filled in substances they import. substances, importers of controlled Canada or other foreign countries, or are The acquisition of a controlled substances must provide effective able to facilitate a United States substance from a foreign country by any controls and procedures to guard against consumer’s acquisition of prescription person other than a DEA-registered the theft and diversion of controlled medications from pharmacies in Canada importer or researcher is a violation of substances (21 CFR 1301.71). Such or other foreign countries. These stores the Controlled Substances Act. security includes, depending on the and Internet sites accomplish this in a Therefore, United States pharmacies schedule of the controlled substance, a number of ways. Some stores or Internet which fill prescriptions for controlled vault, safe, cage or other secure storage sites send prescriptions issued by substances by obtaining those controlled facility (21 CFR 1301.72). The United States practitioners to Canadian substances from Canada, or any other

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foreign country, are in violation of the controlled substances into the United at: http://www.nrc.gov/what-we-do/ Controlled Substances Act, regardless of States unless those persons are policy-making/schedule.html. whether the consumer possesses a registered with DEA to do so. Persons * * * * * legitimate prescription issued by a importing controlled substances into the The NRC provides reasonable United States practitioner in the usual United States without being properly accommodation to individuals with course of their professional practice. registered to do so are in violation of the disabilities where appropriate. If you Likewise, consumers are also in CSA and are subject to prosecution for need a reasonable accommodation to violation of the Controlled Substances violation of Federal drug laws. participate in these public meetings, or Act if they have prescriptions for Dated: May 24, 2004. need this meeting notice or the controlled substances filled in foreign William J. Walker, transcript or other information from the countries and shipped to the United public meetings in another format (e.g., States. Deputy Assistant Administrator, Office of Diversion Control. braille, large print), please notify the Personal Medical Use Exemption [FR Doc. 04–14716 Filed 6–28–04; 8:45 am] NRC’s Disability Program Coordinator, August Spector, at (301) 415–7080, BILLING CODE 4410–09–P The CSA contains a ‘‘personal TDD: (301) 415–2100, or by e-mail at medical use’’ exemption (21 U.S.C. 956; [email protected]. Determinations on 21 CFR 1301.26) which makes a limited requests for reasonable accommodation NUCLEAR REGULATORY allowance for travelers entering and will be made on a case-by-case basis. departing the United States who have a COMMISSION legitimate medical need for controlled * * * * * substances during their journey. Under Meeting; Sunshine Act This notice is distributed by mail to this exemption, United States residents several hundred subscribers; if you no who travel to foreign countries and non- DATE: Weeks of June 28, July 5, 12, 19, longer wish to receive it or would like United States residents who travel to the 26, August 2, 2004. to be added to the distribution please United States may carry controlled PLACE: Commissioners’ Conference contact the Office of the Secretary, substances on their person for their Room, 11555 Rockville Pike, Rockville, Washington, DC 20555 (301) 415–1969. legitimate personal medical use. DEA Maryland. In addition, distribution of this meeting notice over the Internet system is published a Notice of Proposed STATUS: Public and closed. available. If you are interested in Rulemaking in the Federal Register on MATTERS TO BE CONSIDERED: September 11, 2003 addressing the receiving this Commission meeting personal medical use exemption (68 FR Week of June 28, 2004 schedule electronically, please send an electronic message to [email protected]. 53529). There are no meetings scheduled for The ‘‘personal medical use’’ the week of June 28, 2004. Dated: June 24, 2004. exemption only applies to individual Dave Gamberoni, travelers who themselves are entering or Week of July 5, 2004—Tentative Office of the Secretary. departing the United States who require Wednesday, July 7, 2004: [FR Doc. 04–14771 Filed 6–25–04; 9:29 am] controlled substances. The ‘‘personal 1:55 p.m.—Affirmation Session BILLING CODE 7590–01–M medical use’’ exemption does not apply (public meeting) (if needed). to the shipment of controlled substances into the United States from a foreign Week of July 12, 2004—Tentative country, regardless of whether the Tuesday, July 13, 2004: OFFICE OF PERSONNEL individual receiving the shipment 2:15 p.m.—Discussion of Security MANAGEMENT possesses a valid prescription issued by Issues (closed—Ex. 1). Proposed Collection; Comment a United States practitioner for the Week of July 19, 2004—Tentative Request for a Revised Information controlled substances, and regardless of Collection Mail Reinterview Form (OFI the fact that those controlled substances Wednesday, July 21, 2004: 10), OMB No. 3206–0106 are intended for the personal medical 9:30 a.m.—Meeting with Advisory use of an individual. As stated Committee on Nuclear Waste AGENCY: Office of Personnel previously, purchasing controlled (ACNW) (public meeting) (contact: Management. substances from a foreign country or John Karkins (301) 415–7360). This ACTION: Notice. from a foreign Internet site and having meeting will be Web cast live at the them shipped to a business or Web address—http://www.nrc.gov. SUMMARY: In accordance with the Paperwork Reduction Act of 1995 (Pub. individual within the United States is Week of July 26, 2004—Tentative not permitted by the ‘‘personal medical L. 104–13), this notice announces that use’’ exemption. Such purchases and There are no meetings scheduled for the Office of Personnel Management shipments are considered ‘‘imports’’ the week of July 26, 2004. intends to submit to the Office of Management and Budget a request for under the Controlled Substances Act Week of August 2, 2004—Tentative even if the substances are for personal clearance of a revised information use. Unless the business or individual There are no meetings scheduled for collection. OPM sends the OFI 10 within the United States receiving the the week of August 2, 2004. questionnaire to a random sampling of shipment is registered as an importer * The schedule for Commission record and personal sources contacted with DEA and is in compliance with the meetings is subject to change on short during background investigations when requirements of Federal law and DEA notice. To verify the status of meetings investigators have performed fieldwork. regulations, such shipments are illegal call (recording)—(301) 415–1292. The OFI 10 is used as a quality control and subject to seizure. Contact person for more information: instrument designed to ensure the Dave Gamberoni, (301) 415–1651. accuracy and integrity of the Conclusion * * * * * investigative product, as it inquires of The Controlled Substances Act The NRC Commission Meeting the sources about the investigative prohibits persons from importing Schedule can be found on the Internet procedure employed by the investigator,

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the investigator’s professionalism, and SECURITIES AND EXCHANGE obligation to be registered under section the information discussed and reported. COMMISSION 12(b) of the Act.3 In addition to the pre-formatted Any interested person may, on or response options, OPM invites the Issuer Delisting; Notice of Application of Cleco Corporation To Withdraw its before July 19, 2004, comment on the recipients to respond with any other facts bearing upon whether the relevant comments or suggestions. A Common Stock, $1.00 Par Value, and application has been made in postage-paid envelope is provided with Associated Rights To Purchase accordance with the rules of the PCX, the OFI 10. Preferred Stock From Listing and and what terms, if any, should be Comments are particularly invited on: Registration on the Pacific Exchange, imposed by the Commission for the • Whether this collection of Inc. File No. 1–05663 protection of investors. All comment information is necessary for the proper June 23, 2004. letters may be submitted by either of the performance of functions of the Office of On June 17, 2004, Cleco Corporation, following methods: Personnel Management and its Center a Louisiana corporation (‘‘Issuer’’), filed for Federal Investigative Services, which an application with the Securities and Electronic Comments administers its background Exchange Commission (‘‘Commission’’), • Send an e-mail to rule- investigations. pursuant to section 12(d) of the • [email protected]. Please include the Whether our estimate of the public Securities Exchange Act of 1934 burden of this collection is accurate, (‘‘Act’’) 1 and Rule 12d2–2(d) File Number 1–05663 or; and based on valid assumptions and 2 thereunder, to withdraw its common Paper Comments methodology; and, stock, $1.00 par value, and associated • Ways in which we can minimize rights to purchase preferred stock • Send paper comments in triplicate the burden of the collection of (‘‘Securities’’), from listing and to Jonathan G. Katz, Secretary, information on those who are asked to registration on the Pacific Exchange, Securities and Exchange Commission, respond, through the use of the Inc. (‘‘PCX’’ or ‘‘Exchange’’). 450 Fifth Street, NW., Washington, DC appropriate technological collection The Board of Directors of the Issuer 20549–0609. techniques or other forms of information adopted resolutions on April 23, 2004, All submissions should refer to File technology; and, to withdraw the Issuer’s Securities from Number 1–05663. This file number • Whether the reinterview listing on the PCX. The Issuer states that should be included on the subject line questionnaire addresses all of the the following reasons factored into its questions relevant to ensure the decision to withdraw its Securities from if e-mail is used. To help us process and accuracy and integrity of the the PCX: (i) The Issuer has maintained review your comments more efficiently, investigative product. a dual listing of its Securities on the please use only one method. The It is estimated that 9,600 OFI 10 forms New York Stock Exchange, Inc. Commission will post all comments on are sent to individual sources annually. (‘‘NYSE’’) and the PCX since 1988; (ii) the Commission’s Internet Web site Of those, it is estimated that 5,600 at the time of the 1988 PCX listing, a (http://www.sec.gov/rules/delist.shtml). individuals will respond. Each form regional exchange listing was thought to Comments are also available for public takes approximately six minutes to provide added liquidity to a NYSE- inspection and copying in the complete. The estimated annual burden traded stock since some investors traded Commission’s Public Reference Room, is 560 hours. only on regional exchanges. Since that 450 Fifth Street, NW., Washington, DC For copies of this proposal, contact time, the advances in electronic trading 20549. All comments received will be Mary Beth Smith-Toomey on (202) 606– platforms have essentially created a posted without change; we do not edit 8358, Fax (202) 418–3251 or e-mail to single domestic trading platform and personal identifying information from [email protected]. Please be sure to eliminated the benefit of dual listings on submissions. You should submit only include a mailing address with your regional exchanges; (iii) the PCX listing information that you wish to make request. adds additional fees and results in dual available publicly. reporting requirements and; (iv) the DATES: Comments on this proposal The Commission, based on the Issuer believes that since the listing on should be received within 60 calendar information submitted to it, will issue the PCX no longer provides additional days from the date of this publication. value, delisting the Securities will lower an order granting the application after ADDRESSES: Send or deliver comments fees and reduce reporting activities. In the date mentioned above, unless the to: Kathy Dillaman, Deputy Associate addition, the Issuer states that the Commission determines to order a Director, Center for Federal Investigative Securities will continue to trade on the hearing on the matter. Services, U.S. Office of Personnel NYSE. For the Commission, by the Division of Management, 1900 E Street, Room 5416, The Issuer stated in its application Market Regulation, pursuant to delegated Washington, DC 20415. that it has complied with PCX’s Rule authority.4 FOR INFORMATION REGARDING 5.4(b) by complying with all applicable Jill M. Peterson, laws in effect in the State of Louisiana ADMINISTRATIVE COORDINATION CONTACT: Assistant Secretary. and by providing PCX with the required Sabrina Price—Program Analyst, [FR Doc. 04–14674 Filed 6–28–04; 8:45 am] Program Services Group, Center for documents governing the removal of Federal Investigative Services, U.S. securities from listing and registration BILLING CODE 8010–01–P Office of Personnel Management, (202) on the Exchange. The Issuer’s 606–3534. application relates solely to the withdrawal of the Securities from listing Office of Personnel Management. on the PCX and shall not affect its Kay Coles James, continued listing on the NYSE or its Director. [FR Doc. 04–14697 Filed 6–28–04; 8:45 am] 1 15 U.S.C. 78l(d). 3 15 U.S.C. 781(b). BILLING CODE 6325–38–P 2 17 CFR 240.12d2–2(d). 4 17 CFR 200.30–3(a)(1).

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SECURITIES AND EXCHANGE may be obtained for a fee at the in exchange for Shares of the Core Stock COMMISSION Commission’s Public Reference Branch, Fund. The Transfers are referred to, 450 Fifth Street, NW., Washington, DC collectively, as the ‘‘Exchange’’. [Investment Company Act Release No. 20549–0102 (telephone (202) 942–8090). 5. The Assets of the Unregistered 26472; 812–13039] Funds contemplated for transfer to the Applicant’s Representations MMA Praxis Mutual Funds, et al.; Mutual Funds in the Exchange will Notice of Application 1. The Trust, a Delaware statutory consist of individual securities that are trust, is registered under the act as an substantially similar to those held as June 23, 2004. open-end management investment investments by the Mutual Funds. The AGENCY: Securities and Exchange company. The Trust is organized as a Assets will be valued by each Mutual Commission (‘‘Commission’’). series investment company consisting of Fund at the time of acquisition at the ACTION: Notice of an application under 4 series, two of which are the MMA independent ‘‘current market price’’ of section 17(b) of the Investment Praxis Intermediate Income Fund the securities as defined in rule 17a–7 Company Act of 1940 (the ‘‘Act’’) for an (‘‘Intermediate Income Fund’’) and under the Act, the same valuation exemption from section 17(a) of the Act. MMA Praxis Core Stock Fund (‘‘Core procedures set forth in the Mutual Stock Fund’’) (collectively, the ‘‘Mutual Funds’ registration statements. The SUMMARY OF APPLICATION: Applicants Funds’’). The Intermediate Income Fund Shares of the Intermediate Income Fund request an order to permit certain invests primarily in undervalued and the Core Stock Fund received in the entities excluded from the definition of securities of medium to large Exchange will have an aggregate net investment company under section capitalization companies. MMA, an asset value (‘‘NAV’’) equal to the NAV 3(c)(10) or 3(c)(11) of the Act to transfer Indiana corporation, is an investment of the Assets transferred by MF and certain classes of assets held in separate adviser to the Mutual Funds pursuant to MRT to the Intermediate Income Fund accounts to two series of a registered an investment advisory agreement with and the Core Stock Fund. The open-end management investment the Trust. Unregistered Funds and the Mutual 2. MF, a not-for-profit corporation company in exchange for shares of the Funds will each pay their own expenses organized under the laws of Indiana, is series. incurred in connection with the excluded from the definition of Exchange. APPLICANTS: MMA Praxis Mutual Funds investment company under the Act 6. After the Exchange, MF’s Common (‘‘Trust’’), The Mennonite Insurance pursuant to section 3(c)(10) of the Act. Stock Fund and Intermediate Bond Services Inc. d/b/a MMA Capital MF’s board of directors manages and Fund will not make any investments Management (‘‘MMA’’). controls the business of MF. MF’s other than investments in shares of the FILING DATES: The application was filed portfolio securities are segregated by Core Stock Fund and Intermediate on November 14, 2003 and amended on asset class and are held in separate Income Fund, respectively. Similarly, June 21, 2004. accounts. Each separate account is a after the Exchange, MRT’s Bond Fund HEARING OR NOTIFICATION OF HEARING: An sub-account of MF and is not a legal and MRT’s Large Cap Blend Fund will order granting the application will be entity separate from MF. Two of these not make any investments other than issued unless the Commission orders a sub-accounts, Common Stock Fund and investments in shares of Intermediate hearing. Interested persons may request Intermediate Bond Fund, are managed Income Fund and Core Stock Fund, a hearing by writing to the by MMA. respectively. 3. MRT, a qualified retirement plan, is Commission’s Secretary and serving Applicants’ Legal Analysis applicants with a copy of the request, excluded from the definition of personally or by mail. Hearing requests investment company under the Act 1. Section 17(a) of the Act, in relevant should be received by the Commission pursuant to section 3(c)(11) of the Act. part, prohibits an affiliated person of a by 5:30 p.m. on July 19, 2004, and MRT’s board of trustees manages its registered investment company, or any should be accompanied by proof of investment activities. MRT’s portfolio affiliated person of such person, acting service on the applicants, in the form of securities are segregated by asset class as principal, from selling to or an affidavit, or, for lawyers, a certificate and are held in separate accounts. Each purchasing from such investment of service. Hearing requests should state separate account is a sub-account of company any security or other property. the nature of the writer’s interest, the MRT and is not a legal entity separate 2. Section 2(a)(3) of the Act defines an reason for the request, and the issues from MRT. Two of these sub-accounts, ‘‘affiliated person’’ of another person to contested. Persons who wish to be Large Cap Blend Fund and Bond Fund, include (a) any person directly or notified of a hearing may request are managed by MMA. The directors/ indirectly controlling, controlled by, or notification by writing to the trustees of MRT and MF (collectively, under common control with the other Commission’s Secretary. the ‘‘Unregistered Funds’’) also serve as person and (b) if the other person is an directors of Mennonite Mutual Aid, Inc., investment company, any investment ADDRESSES: Secretary, Commission, 450 the controlling company of MMA. adviser of that company. Applicants Fifth Street, NW., Washington, DC 4. Applicants seek relief to permit state that the Unregistered Funds and 20549–06090; Applicants, c/o MMA MRT and MF to transfer substantially all MMA may be considered to be under Praxis Mutual Funds, 3435 Stelzer the assets in MRT’s Bond Fund and common control because a majority of Roads, Columbus, OH 43219. MF’s Intermediate Bond Fund, the directors/trustees serving on the FOR FURTHER INFORMATION CONTACT: John respectively, (the ‘‘Assets’’) to the Unregistered Funds’ boards of directors/ Yoder, Attorney-Adviser, at (202) 942– Intermediate Income Fund in exchange trustees also serve as directors of MMA. 0544, or Mary Kay Frech, Branch Chief, for shares (the ‘‘Shares’’) of the Applicants also state that the at (202) 942–0564 (Division of Intermediate Income Fund. Applicants Unregistered Funds and the Mutual Investment Management, Office of also propose that MRT and MF will Funds may be considered to be under Investment Company Regulation). transfer substantially all of the assets in common control and therefore may be SUPPLEMENTARY INFORMATION: The MRT’s Large Cap Blend Fund and MF’s considered affiliated persons of each following is a summary of the Common Stock Fund (included in the other under section 2(a)(3) of the Act. application. The complete application term, ‘‘Assets’’) to the Core Stock Fund Thus, applicants state that the proposed

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Exchange may be prohibited under existing shareholders of each Mutual solicit comments on the proposed rule Section 17(a) of the Act. Fund will not be diluted as a result of change from interested persons. 3. Rule 17a–7 exempts certain the Exchange. Applicants state that the I. Self-Regulatory Organization’s purchase and sale transactions Exchange will comply with the terms of Statement of the Terms of Substance of otherwise prohibited by section 17(a) of paragraphs (a) (other than the cash the Proposed Rule Change the Act if an affiliation exists solely by payment requirement) through (g) of reason of having a common investment rule 17a–7 and the provisions of rule The MSRB’s proposed rule change adviser, investment advisers that are 17a–8 (as those provisions apply to the relates to Rule G–14, on transaction affiliated persons of each other, merger of an Eligible Unregistered Fund reporting, Rule G–12(f), on automated common directors, and/or common with a registered investment company). comparison, and the implementation of officers, provided, among other No brokerage commissions, fees (except a facility for real-time transaction requirements, that the transaction is for for customary transfer fees, if any) or reporting and price dissemination (the no consideration other than cash. other remuneration will be paid by the ‘‘Real-Time Transaction Reporting Applicants state that the relief provided Mutual Funds or the Unregistered System’’ or ‘‘RTRS’’). Below is the text by rule 17a–7 may not be available for Funds in connection with the Exchange. of the proposed rule change. Proposed the Exchange because the Exchange will new language is in italics; proposed involve consideration other than cash Applicants’ Condition deletions are in brackets. (i.e., Shares of the Mutual Funds). Applicants agree that any order * * * * * Applicants also state that the granting the requested relief will be Unregistered Funds may be deemed to subject to the following condition: Rule G–12. Uniform Practice be affiliated with the Mutual Funds for The Exchange will comply with the (a)–(e) No change. reasons other than those set forth in rule terms of paragraphs (a) (other than the (f) Use of Automated Comparison, 17a–7. cash payment requirement) through (g) Clearance and Settlement Systems. 4. Rule 17a–8 exempts certain of rule 17a–7 and the provisions of rule (i) Notwithstanding the provisions of transactions (including mergers, 17a–8 (as those provisions apply to the sections (c) and (d) of this rule, [a] an consolidations or purchases or sales of merger of an Eligible Unregistered Fund Inter-Dealer T[t]ransaction E[e]ligible substantially all of the assets of a with a registered investment company). for [automated trade] C[c]omparison by company) between registered For the Commission, by the Division of a C[c]learing A[a]gency R[r]egistered investment companies and eligible Investment Management, under delegated with the [Securities and Exchange] unregistered funds, as defined in rule authority. Commission (registered clearing agency) 17a–8 (‘‘Eligible Unregistered Fund’’). Jill M. Peterson, shall be compared through a registered Applicants state that the relief provided Assistant Secretary. clearing agency. Each party to such a by rule 17a–8 is not available for the [FR Doc. 04–14675 Filed 6–28–04; 8:45 am] transaction shall submit or cause to be submitted to a registered clearing Exchange because the Unregistered BILLING CODE 8010–01–M Funds are not registered investment agency all information and instructions companies or Eligible Unregistered required from the party by the registered Funds, and the Exchange does not SECURITIES AND EXCHANGE clearing agency for automated involve substantially all of the assets of COMMISSION comparison of the transaction to occur. the Unregistered Funds.1 Each transaction effected during the 5. Section 17(b) of the Act provides [Release No. 34–49902; File No. SR–MSRB– RTRS Business Day shall be submitted that the Commission may exempt a 2004–02] for comparison within 15 minutes of the transaction from the provisions of Self-Regulatory Organizations; Notice Time of Trade, unless the transaction is section 17(a) of the Act if the evidence of Filing of Proposed Rule Change by subject to an exception specified in the establishes that the terms of the the Municipal Securities Rulemaking Rule G–14 RTRS Procedures paragraph proposed transaction, including the Board Relating to Proposed (a)(ii), in which case it shall be consideration to be paid, are reasonable Amendments to the MSRB’s Rule G– submitted for comparison in the time frame specified in the Rule G–14 RTRS and fair and do not involve 12(f) on Automated Comparison and Procedures paragraph (a)(ii). overreaching on the part of any person G–14 on Transaction Reporting, and to Transactions effected outside the hours concerned, and that the proposed the Implementation of a Facility for of an RTRS Business Day shall be transaction is consistent with the policy Real-Time Transaction Reporting and submitted no later than 15 minutes after of each registered investment company Price Dissemination concerned and with the general the beginning of the next RTRS Business purposes of the Act. June 22, 2004. Day. In the event that a transaction 6. Applicants submit that the terms of Pursuant to Section 19(b)(1) of the submitted to a registered clearing the Exchange satisfy the standards set Securities Exchange Act of 1934 agency for comparison in accordance forth in section 17(b) of the Act. (‘‘Act’’),1 and Rule 19b–4 thereunder,2 with the requirements of this paragraph Applicants state that the board of the notice is hereby given that on June 2, (i) shall fail to compare, the party Trust, including a majority of the 2004, the Municipal Securities submitting such transaction shall, as trustees who are not interested persons Rulemaking Board (‘‘MSRB’’ or soon as possible, use the [post-original- as defined in section 2(a)(19) of the Act, ‘‘Board’’) filed with the Securities and comparison] procedures provided by the found that participation in the Exchange Exchange Commission (‘‘SEC’’ or registered clearing agency in connection is in the best interests of each Mutual ‘‘Commission’’) the proposed rule with such transaction until such time as Fund and that the interests of the change as described in Items I, II, and the transaction is compared or final III below, which Items have been notification of a failure to compare the 1 Although the Exchange will involve prepared by the MSRB. The transaction is received from the contra- substantially all of the assets of MF’s Common Commission is publishing this notice to party. A broker, dealer or municipal Stock Fund and Intermediate Bond Fund and MRT’s Bond Fund and Large Cap Blend Fund, these securities dealer (‘‘dealer’’) that effects entities do not have an existence separate from the 1 15 U.S.C. 78s(b)(1). inter-dealer transactions eligible for Unregistered Funds. 2 17 CFR 240.19b–4. comparison by a clearing agency

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registered with the Commission shall purposes and to the compilation of an and shall either have successfully tested ensure that submissions made against it audit trail for regulatory purposes. All its RTRS capabilities or have scheduled in the comparison system are monitored [brokers, dealers and municipal a testing date with the MSRB by that for the purpose of ensuring that correct securities] dealers have an ongoing time. trade information alleged against it is obligation to report this information (2) A dealer electing to use only the acknowledged promptly and that promptly, accurately and completely. Web-based trade input method of erroneous information alleged The [broker, dealer or municipal transaction reporting and that has concerning its side of a trade (or its side securities] dealer may employ an agent averaged submissions of five or fewer of a purported trade) is corrected for the purpose of submitting [customer] trades during a one-year period promptly through the procedures of the transaction information; however the beginning in July 2003 shall be required registered securities clearing agency or primary responsibility for the timely to test its RTRS capabilities no later the MSRB. and accurate submission remains with than one month prior to the Announced (ii) No change. the [broker, dealer or municipal RTRS Start-Up Date. (iii) No change. securities] dealer that effected the (vi) The following transactions shall (iv) Definitions. transaction. A dealer that acts as a not be reported under Rule G–14: (A) ‘‘Inter-Dealer Transaction Eligible submitter for another dealer has specific (A) Transactions in securities without for Comparison by a Clearing Agency responsibility to ensure that transaction assigned CUSIP numbers; Registered with the Commission’’ means reporting requirements are met with (B) Transactions in Municipal Fund a contract for purchase and sale respect to those aspects of the reporting Securities; and between one dealer and another dealer, process that are under the Submitter’s (C) Inter-dealer transactions for resulting in a contractual obligation for control. A dealer that submits inter- principal movement of securities one such dealer to transfer municipal dealer municipal securities transactions between dealers that are not inter-dealer securities to the other dealer involved in for comparison, either for itself or on transactions eligible for comparison in a the transaction, and which contract is behalf of another dealer, has specific clearing agency registered with the eligible for comparison under the responsibility to ensure that transaction Commission. procedures of an automated comparison reporting requirements are met with system operated by a registered clearing respect to those aspects of the Rule G–14RTRS [Transaction agency. comparison process that are under the Reporting] Procedures (B) ‘‘Time of Trade’’ is defined in Rule Submitter’s control. [(a) Inter-Dealer Transactions.] G–14 Transaction Reporting Procedures. (iii) To identify its transactions for [(i) Except as described in paragraph (C) The ‘‘RTRS Business Day’’ is reporting purposes, each [broker, dealer (ii) of this section (a), each broker, defined in Rule G–14 RTRS Transaction and municipal securities] dealer shall Reporting Procedures. obtain a unique [executing] broker dealer and municipal securities dealer symbol from the National Association of shall report all transactions with other Rule G–14. Reports of Sales or Securities Dealers, Inc. brokers, dealers or municipal securities Purchases (iv) Each dealer shall provide to the dealers to the Board’s designee for (a) No change. Board on Form RTRS information receiving such transaction information. (b) Transaction Reporting necessary to ensure that its trade reports The Board has designated National Requirements. can be processed correctly. Such Securities Clearing Corporation (NSCC) (i) Each broker, dealer or municipal information includes the manner in for this purpose. A broker, dealer or securities dealer (‘‘dealer’’) shall report which transactions will be reported, the municipal securities dealer shall report to the Board or its designee information broker symbol used by the dealer, the a transaction by submitting or causing to about [its] each purchase and sale identity of and information on any be submitted to NSCC information in transaction[s] effected in municipal intermediary to be used as a Submitter, such format and within such timeframe securities to the Real-time Transaction information on personnel that can be as required by NSCC to produce a Reporting System (‘‘RTRS’’) in the contacted if there are problems in RTRS compared trade for the transaction in manner prescribed by Rule G–14 RTRS submissions, and information necessary the initial comparison cycle on the night Procedures and the RTRS Users Manual for systems testing with RTRS. of trade date in the automated [extent required by, and using the Information provided on Form RTRS comparison system operated by NSCC. formats and within the timeframes shall be kept current by notifying the Such transaction information may be specified in, Rule G–14 Transaction MSRB when contact information or submitted to NSCC directly or to Reporting Procedures]. Transaction other information provided on the form another registered clearing agency information collected by the Board changes. linked for the purpose of automated under this rule will be used to make (v) Testing Requirements. comparison with NSCC.] public reports of market activity and (A) Prior to submitting transaction [The information submitted in prices and to assess transaction fees. data under RTRS Procedures, a dealer accordance with this procedure shall The transaction information will be must successfully test its ability to include the time of trade execution and made available by the Board to the interface with RTRS as described in the the identity of the brokers, dealers, or Commission, securities associations RTRS Users Manual. municipal securities dealers that registered under Section 15A of the Act (B) Testing During RTRS Start-Up execute the transaction in addition to and other appropriate regulatory (1) Testing facilities will be made the identity of the entities that clear the agencies defined in Section 3(a)(34)(A) available at least six months prior to the transaction. If clearing/introducing of the Act to assist in the inspection for announced effective date of these broker arrangements are used for compliance with and the enforcement of transaction reporting procedures transactions, the introducing brokers Board rules. (‘‘Announced RTRS Start-Up Date’’). shall be identified as the ‘‘executing (ii) The information specified in the Except as provided in the subparagraph brokers.’’ If the settlement date of a [Transaction Reporting] Rule G–14 below, each dealer shall be prepared for transaction is known by the broker, RTRS Procedures is critical to public testing no later than three months prior dealer or municipal securities dealer, reporting of prices for transparency to the Announced RTRS Start-Up Date the report made to NSCC also shall

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include a value for accrued interest in [(iii) The following transactions shall price shall report such trades by the end the format prescribed by NSCC.] not be required to be reported under this of the day on which the trades were [(ii) A transaction that is not eligible section (b): executed. to be compared in the automated (A) a transaction in a municipal (B) A dealer effecting trades in short- comparison system operated by NSCC security that is ineligible for assignment term instruments under nine months in (because of the lack of a CUSIP number of a CUSIP number by the Board or its effective maturity, including variable for the security or other reasons) shall designee; and rate instruments, auction rate products, (B) a transaction in a municipal fund not be required to be reported under this and commercial paper shall report such security.] trades by the end of the RTRS Business section (a). A transaction that is subject [(iv) Each broker, dealer and Day on which the trades were executed. to a ‘‘one-sided’’ submission procedure municipal securities dealer effecting (C) A dealer shall report a trade in the automated comparison system customer transactions in municipal within three hours of the Time of Trade operated by NSCC shall be reported securities, including introducing and if all the following conditions apply: (1) only by the broker, dealer or municipal clearing brokers, shall provide to the The CUSIP number and indicative data securities dealer that is required to Board the name and telephone number of the issue traded are not in the submit the transaction information of a person responsible for testing that securities master file used by the dealer under the one-sided submission firm’s capabilities to report customer to process trades for confirmations, procedure.] transaction information. Each broker, clearance and settlement; (2) the dealer [(b) Customer Transactions] dealer or municipal securities dealer has not traded the issue in the previous [(i) Each broker, dealer and municipal shall test such capabilities in a manner year; and (3) the dealer is not a securities dealer shall report to the and according to the requirements syndicate manager or syndicate member Board all transactions with customers specified in the current User’s Manual for the issue. If fewer than three hours effected after March 1, 1998, except as for Customer Transaction Reporting. of the RTRS Business Day remain after described in paragraph (iii) of this This paragraph (iv) shall take effect July the Time of Trade, the trade shall be section (b). A broker, dealer or 1, 1997.] reported no later than 15 minutes after municipal securities dealer shall report (a) General Procedures. the beginning of the next RTRS Business a transaction by submitting or causing to (i) The Board has designated three Day. This provision (C) will cease to be be submitted to the Board, by midnight RTRS Portals for dealers to use in the effective one year after the Announced of trade date, the customer transaction submission of transaction information. RTRS Start-Up Date. information specified in paragraph (ii) Transaction data submissions must (iii) Transactions effected with a Time of this section (b) in such format and conform to the formats specified for the of Trade outside the hours of the RTRS manner specified in the current User’s RTRS Portal used for the trade Business Day shall be reported no later Manual for Customer Transaction submission. The RTRS Portals may be than 15 minutes after the beginning of Reporting. The broker, dealer or used as follows: the next RTRS Business Day. municipal securities dealer shall (A) The message-based trade input (iv) Transaction data that is not promptly report cancellation of the RTRS Portal operated by National submitted in a timely and accurate trade or corrections to any required data Securities Clearing Corporation (NSCC) manner in accordance with these items.] (‘‘Message Portal’’) may be used for any Procedures shall be submitted or trade record submission or trade record corrected as soon as possible. [(ii) The information submitted in modification. (v) Information on the status of trade accordance with this procedure shall (B) The RTRS Web-based trade input reports in RTRS is available through the include: the CUSIP number of the method (‘‘RTRS Web Portal’’ or ‘‘RTRS Message Portal, through the RTRS Web security; the trade date; the time of trade Web’’) operated by the MSRB may be Portal, or via electronic mail. Trade execution; the executing broker symbol used for low volume transaction status information from RTRS identifying the broker, dealer or submissions and for modifications of indicating a problem or potential municipal securities dealer that effected trade records, but cannot be used for problem with reported trade data must the transaction; a symbol indicating the submitting or amending inter-dealer be reviewed and addressed promptly to capacity of the broker, dealer or transaction data that is used in the ensure that the information being municipal securities dealer as buyer or comparison process. Comparison data disseminated by RTRS is as accurate seller in the transaction; the par value instead must be entered into the and timely as possible. traded; the dollar price of the comparison system using a method (vi) RTRS Portals will be open for transaction, exclusive of any authorized by the registered clearing transmission of transaction data and commission; the yield of the agency. status of trade reports beginning 30 transaction; a symbol indicating the (C) The NSCC Real-Time Trade minutes prior to the beginning of the capacity of the broker, dealer or Matching (‘‘RTTM’’) Web-based trade RTRS Business Day and ending 90 municipal securities dealer as agent for input method (‘‘RTTM Web Portal’’ or minutes after the end of the RTRS the customer or principal in the ‘‘RTTM Web’’) may be used only for Business Day. transaction; the commission, if any; the submitting or modifying data with (b) Reporting Requirements for settlement date, if known to the broker, respect to Inter-Dealer Transactions Specific Types of Transactions. dealer or municipal securities dealer; a Eligible for Comparison. (i) Inter-Dealer Transactions Eligible control number, determined by the (ii) Transactions effected with a Time for Comparison by a Clearing Agency broker, dealer or municipal securities of Trade during the hours of the RTRS Registered with the Commission. dealer, identifying the transaction; and Business Day shall be reported within (A) Bilateral Submissions: Inter- a symbol indicating whether the trade 15 minutes of Time of Trade to an RTRS Dealer Transactions Eligible for Trade has previously been reported to the Portal except in the following situations: Comparison at a Clearing Agency Board, and, if so, the control number (A) Syndicate managers, syndicate Registered with the Commission used by the broker, dealer or municipal members and selling group members (registered clearing agency) shall be securities dealer for the previous that effect trades in new issues on the reported by each dealer submitting, or report.] first day of trading at the list offering causing to be submitted, such

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transaction records required by the (iii) ‘‘Time of Trade’’ is the time at stating the date of effectiveness, registered clearing agency to achieve which a contract is formed for a sale or describing the technical means of data comparison of the transaction. The purchase of municipal securities at a set dissemination, and proposing fees to be transaction records also shall include quantity and set price. charged for RTRS data products. the additional trade information for (iv) ‘‘Submitter’’ means a dealer, or The proposed RTRS facility would such trades listed in the Specifications service bureau acting on behalf of a replace the existing Transaction for Real-Time Reporting of Municipal dealer, that has been authorized to Reporting System (TRS), which Securities Transactions contained in the interface with RTRS for the purposes of currently receives and disseminates RTRS Users Manual. entering transaction data into the transaction data in an overnight batch (B) Unilateral Submissions: For system. process. The proposed amendments to transactions that, under the rules of the (v) ‘‘Inter-Dealer Transaction Eligible Rules G–12 and G–14 require dealer registered clearing agency, are deemed for Automated Comparison by a participation in RTRS and are designed compared upon submission by one side Clearing Agency Registered with the to ensure that transactions are reported of the transaction (unilateral Commission’’ is defined in MSRB Rule to RTRS in a timely manner. The submissions), a submission is not G–12(f)(iv). proposed amendments are described in required by the contra-side of the (vi) ‘‘Municipal Fund Securities’’ is section (ii) below and the proposed transaction. The contra-side, however, defined in Rule D–12. RTRS facility is described in section (iii) must monitor such submissions to * * * * * below. ensure that data representing its side of (i) Overview. The Board has a long- the trade is correct and use procedures II. Self-Regulatory Organization’s standing policy to increase price of the registered clearing agency to Statement of the Purpose of, and transparency in the municipal securities correct the trade data if it is not. Statutory Basis for, the Proposed Rule market, with the ultimate goal of (ii) Customer Transactions. Reports of Change disseminating comprehensive and transactions with customers shall In its filing with the Commission, the contemporaneous pricing data.3 The include the specific items of information MSRB included statements concerning Board implemented a limited listed for such transactions in the the purpose of and basis for the transaction reporting facility (the Specifications for Real-Time Reporting proposed rule change and discussed any ‘‘Transaction Reporting System’’ or of Municipal Securities Transactions. comments it received on the proposed ‘‘TRS’’) for the municipal securities (iii) Agency Transactions With rule change. The text of these statements market in 1995 and has since increased Customers Effected By An Introducing may be examined at the places specified price transparency in the municipal Broker Against Principal Account of its in Item IV below. The MSRB has securities market in measured steps.4 Clearing Broker. Reports of agency prepared summaries, set forth in transactions effected by an introducing Sections A, B, and C below, of the most 3 See ‘‘Planned Pilot Program for Publishing Inter- broker for a customer against the significant aspects of such statements. Dealer Transaction Information,’’ MSRB Reports, principal account of its clearing broker Vol. 13, No. 3 (June 1993) at 3 and ‘‘Board to shall include the specific items of A. Self-Regulatory Organization’s Proceed with Pilot Program to Disseminate Inter- Statement of the Purpose of, and Dealer Transaction Information,’’ MSRB Reports, information listed in the Specifications Vol. 14, No. 1 (January 1994) at 13. for Real-Time Reporting of Municipal Statutory Basis for, the Proposed Rule 4 The MSRB’s first public price transparency Securities Transactions for ‘‘Inter-Dealer Change report, the T+1 Daily Report, was initiated in 1995. It was disseminated daily on the day after trade date Regulatory-Only’’ trades. 1. Purpose (c) RTRS Users Manual. The RTRS and summarized high, low and average inter-dealer The purpose of the proposed rule prices for issues that met a trading threshold of four Users Manual is comprised of the or more trades in the inter-dealer market. See Specifications for Real-Time Reporting change is to increase transparency and Release Number 34–34955 (November 9, 1994), 59 of Municipal Securities Transactions, to enhance the surveillance database FR 59810 (November 18, 1994). In 1998, the MSRB the Users Guide for RTRS Web, Testing and audit trail of transaction data used added customer trade data to the report. See Rel. by enforcement agencies. The proposed No. 34–37998 (November 29, 1996), 61 FR 64782, Procedures, guidance on how to report and Rel. No. 34–40349 (August 20, 1998), 63 FR specific types of transactions and other rule change contains draft amendments 45545. In January 2000, the MSRB further enhanced information relevant to transaction to MSRB rules that would require the T+1 Daily Report by publishing individual reporting under Rule G–14. The RTRS brokers, dealers and municipal transaction data (rather than high, low and average securities dealers (‘‘dealers’’) to report prices) for each issue that met the threshold of four Users Manual is located at or more trades. See Rel. No. 34–42241 (December www.msrb.org and may be updated transactions in municipal securities to 16, 1999), 64 FR 72123. In October 2000 the MSRB from time to time with additional RTRS within 15 minutes of the time of began disseminating a Monthly Comprehensive guidance or revisions to existing trade execution instead of by midnight Report, which lists all municipal securities on trade date, as is currently required. transactions regardless of frequency of trading. This documents. report covers all trades done during the previous (d) Definitions. Upon receipt of this transaction data, month and includes late-reported trades, inter- (i) ‘‘RTRS’’ or ‘‘Real-Time Transaction RTRS would immediately perform dealer trades compared after trade date, and Reporting System’’ is a facility operated automated error checking and would transaction data corrected by dealers after trade by the MSRB. RTRS receives municipal electronically disseminate prices, date, as well as infrequently traded issues. See Rel. No. 34–43426 (October 10, 2000). In October 2001, securities transaction reports submitted providing the municipal securities the MSRB began disseminating a Daily by dealers pursuant to Rule G–14, market with real-time transaction price Comprehensive Report of all trades done on a single disseminates price and volume transparency. day two weeks earlier. See Rel. No. 34–44894 information in real time for The proposed RTRS facility for real- (October 2, 2001), 65 FR 61367. As the market became familiar with these reports, the MSRB began transparency purposes, and otherwise time collection and dissemination of the process of lowering the trading threshold in the processes information pursuant to Rule transaction prices is planned to become T+1 Daily Report to make more trade data available G–14. operational in January 2005, at which on a T+1 basis. In May 2002, the MSRB changed (ii) The ‘‘RTRS Business Day’’ is 7:30 time MSRB would begin to disseminate the trading threshold for the T+1 Daily Report to three trades. See Rel. No. 34–45861 (May 1, 2002), a.m. to 6:30 p.m., Eastern Time, Monday transaction data electronically in real 67 FR 30989. In August 2002, the delay for the through Friday, on each business day as time. MSRB expects to make a second Daily Comprehensive Report was changed from two defined in Rule G–12(b)(i)(B). filing on the RTRS facility in the future, weeks to one week. At the same time, the MSRB

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The proposed rule change represents the time basis, as is done in many other registered clearing agency to attain final stage of the evolution of price securities markets. In general, real-time comparison, unless one of the parties transparency in the municipal securities price transparency should benefit the provides the other with final market, which is a system for market by helping to ensure that notification of failure to compare. comprehensive, real-time price information relevant to the value of (Sections (ii) and (iii) of Rule G–12(f) dissemination. municipal securities issues is pertain to other aspects of clearance and The Board believes that a number of incorporated more quickly and reliably settlement unchanged by the proposed benefits to the market will accrue as a into transaction prices. amendment.) result of making real-time price The Board also believes that real-time The proposed amendment to Rule G– information available, including more price transparency will enhance 12(f)(i) would contain a new efficient pricing and enhanced investor investor confidence by providing, for requirement that inter-dealer trades confidence. The MSRB recognizes that, the first time, a comprehensive and effected during the RTRS Business Day, because of the unique features of the contemporaneous view of the market, when eligible for automated municipal securities market, real-time accessible to any interested party. There comparison, be submitted to a registered price transparency for municipal is a significant demand by sophisticated clearing agency within 15 minutes of securities will not necessarily function investors to see where municipal bonds the time of trade. The RTRS Business in the same manner as in the major are trading as part of their research and Day (7:30 a.m. through 6:30 p.m.) 6 is equity markets. Since less that one investment strategies for fixed-income defined in proposed Rule G–14. There percent of outstanding municipal products. Real-time price transparency would be limited exceptions to the 15- securities trade on a given day, an will increase confidence that the best minute requirement, as detailed below. investor holding municipal securities market price for specific securities has The proposed amendment would add a often will not be able simply to view been located. For both institutional and requirement, identical to that in the ‘‘last sale’’ information to obtain an retail investors, the open availability of proposed amendment to Rule G–14, that exact market price, as generally can be market prices should instill greater inter-dealer trades effected outside the done for exchange-traded or NASDAQ confidence that pricing mechanisms in hours of the RTRS Business Day be listed stocks. Nevertheless, real-time the market are fair, open and efficient. submitted for comparison within 15 prices will provide important (ii) Proposed Amendments to Rules minutes of the start of the next RTRS information on the market conditions G–12(f) and G–14. As discussed below, Business Day. It also notes a dealer’s for individual securities that are trading the procedures for dealers to report obligation to monitor submissions made on a given day, and this information inter-dealer transactions to RTRS are against it in the real-time comparison often can be extrapolated to assist in the integrated with the central comparison system and to use the procedures accurate valuation of similar municipal system to provide a cost-effective provided by the clearing agency to issues that are not actively traded on a mechanism for dealers to report address any erroneous information given day. transactions in real-time.5 The proposed concerning its side of a transaction that With respect to efficiency of pricing rule change thus includes amendments may be submitted by a contra-party. mechanisms, the transaction data both to Rule G–14 on transaction Rule G–14 and Rule G–14 Procedures. available from TRS show that, while reporting and Rule G–12(f) on The current Rule G–14 and the much of the market trades within a automated comparison. The Rule G–14 associated Rule G–14 Procedures narrow range, there are instances in Procedures would also be amended. require that dealers report their trades to which intra-day prices for specific Rule G–12(f). Rule G–12(f)(i) currently the MSRB by midnight of trade date. issues vary substantially, even when no requires that an inter-dealer transaction The existing Rule G–14 Procedures apparent news or transaction size eligible for automated trade comparison exempt from reporting requirements differences account for the different through the facilities of a clearing transactions in municipal securities that valuations. This fact is not intended to agency registered with the Commission are ineligible for assignment of a CUSIP suggest that instances of substantial (‘‘registered clearing agency’’) shall be number, transactions in municipal fund intra-day price volatility would be compared through a registered clearing securities and the (rare) inter-dealer eliminated by real-time price agency. Each party to the transaction transactions that are not eligible for transparency, particularly when the must submit or cause to be submitted to automated comparison. The current market is assimilating new information the registered clearing agency all the Rule G–14 Procedures also require each about interest rates or the credit quality information required by the registered dealer to provide to the MSRB of specific issues. However, the clearing agency for automated information about a person responsible transaction data do suggest that the comparison to occur. If a transaction for testing the dealer’s capabilities to efficiency of pricing in some cases fails to compare, the parties must use report customer transactions, and might be improved substantially if the procedures provided by the require the dealer to conduct such prices are made accessible on a real- testing. 5 Automated comparison, which is required for The proposed amendment to Rule G– began disseminating a daily report of all trades inter-dealer transactions by rule G–12(f)(i), is 14 would require the dealer to report done on a single day one month earlier, to enable accomplished by a clearing corporation registered information about its transactions to the users of the report to update their databases each with the Commission under section 17A of the Act. day with trades reported or corrected more than one It is the first step in the clearance and settlement MSRB or its designee in the manner week after trade date. See Rel. No. 34–46380 of an inter-dealer transaction and generally involves required by RTRS Transaction Reporting (August 19, 2002), 67 FR 54831. In November 2002, the matching of trade data submitted by both sides Procedures, which in most cases require the MSRB changed the trading threshold for the of an inter-dealer trade. Only one registered the report to be made within 15 minutes T+1 Daily Report from three trades to two trades. securities clearing corporation—National Securities See Rel. No. 34–46819 (November 12, 2002), 67 FR Clearing Corporation—compares municipal of the time of trade execution. The 69779. In June 2003, the trading threshold was securities transactions and is thus a central point proposed amendment would retain dropped and all T-submitted trades were for trade data in the municipal securities market. without change the prohibition against disseminated on T+1. At the same time, the display Consequently, the Board chose to use NSCC as the reporting fictitious or fraudulent of par values on this report were changed to show main portal for RTRS data submission and, with the exact par for trades of $1 million or less and respect to inter-dealer transactions, to allow the transactions, the statement of the ‘‘1MM+’’ for par over $1 million. See Rel. No. 34– comparison submission to also serve the purpose of 47888 (May 19, 2003), 68 FR 28865. transaction reporting. 6 All times given are Eastern.

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purpose of transaction reporting, and Proposed Rule Change (‘‘Announced dealers would face serious and in some the requirement for the dealer to obtain RTRS Start-Up Date’’). Each dealer will cases insurmountable operational an identifying symbol. have to be prepared to test its use of challenges in processing and reporting As in the current transaction reporting RTRS no later than three months before the above types of trades within 15 system, a dealer will be able to use an the Announced RTRS Start-Up Date and minutes using the processing systems intermediary, e.g., its clearing broker, to must schedule a test date by that time available at this time. The challenges submit transaction reports. The MSRB unless it has already successfully tested that are the basis for the reporting expects those dealers that are not self- its RTRS capabilities. However, dealers exceptions are discussed further in the clearing to submit inter-dealer trades that have effected an average of five or section discussing comments received through their clearing broker as they do fewer transactions per week during the on the proposed rule change. today. The language articulating dealer preceding year and that will use only Under the proposed amendment to responsibility for timely and accurate the Web-based method must Rule G–14, trades effected outside the reporting is clarified in the proposed successfully test their RTRS capabilities RTRS Business Day would have to be amendment, reflecting existing policy of one month before the Announced RTRS reported no later than 15 minutes after the MSRB. It notes that, while the dealer Start-Up Date. the beginning of the next Business Day. that effected the transaction has the The proposed RTRS Procedures RTRS will be available to receive trade primary responsibility to ensure timely would replace the current Rule G–14 reports for at least 90 minutes after the and accurate transaction reporting, any Procedures used for TRS data end of an RTRS Business Day and at dealer that submits information for submission with a new set of least 30 minutes before the beginning of transaction reporting on behalf of requirements specific to RTRS. The the next RTRS Business Day, i.e., from another dealer has a specific RTRS Procedures generally would 7:00 a.m. through 8:00 p.m.9 The RTRS responsibility to ensure that transaction require dealers to report trades to the Procedures would require that a dealer reporting requirements are met with MSRB within 15 minutes, using either that does not submit transaction data in respect to the activities under the a message-based or Web-based reporting a timely or accurate manner must dealer’s control. method.8 The 15-minute requirement submit or correct the data as soon as The proposed amendment would would apply to all reportable trades possible. RTRS will provide to the require each dealer to provide the MSRB effected during the RTRS Business Day, submitter of data an indication of the with information needed to process with the following limited exceptions: status of each trade, i.e., whether an transactions correctly on a new form, • Syndicate managers, syndicate error has been found in the input. The Form RTRS. The dealer would indicate members and selling group members effecting dealer (and its clearing broker thereon the method it will use to submit that effect trades in new issues at the list that submits data, if any) would be trade reports, its broker symbol, the offering price would be required to required to monitor the status of each identity of any intermediary or agent it report such trades by the end of the first trade report as shown in RTRS, and to will use to report transactions, contact day of trading in the issue. review and address any problem or information for dealer testing and • Dealers would be required to report potential problem. operations staff and whether the dealer trades in short-term issues such as The RTRS Procedures provide 7 acts in the capacity of a broker’s broker. variable rate instruments, auction rate specific requirements for reporting The proposed amendment also products, and commercial paper by the different types of transactions. As is the continues to maintain the current end of the day in which the trades are case currently in TRS, if an inter-dealer exemptions for transactions in effected. transaction is eligible for comparison at municipal securities that are ineligible • On a temporary basis, a dealer a registered clearing agency, the dealer for assignment of a CUSIP number, would be required to report trades or its clearing broker would satisfy the transactions in municipal fund within three hours of the time of trade transaction reporting requirement by securities and the (rare) inter-dealer if the CUSIP number and indicative data submitting the transaction to the transactions that are not eligible for of the issue traded are not in the dealer’s registered clearing agency to achieve automated comparison. securities master file, the dealer has not comparison. The inter-dealer trade Finally, as in the current Rule G–14 traded the issue in the previous year, submission would have to satisfy the Procedures, a mandatory testing and the dealer is not a syndicate requirements of the registered clearing requirement is included in the proposed manager or syndicate member for the agency and would have to include the amendment. Testing would be required issue. This provision would sunset additional information required by the of dealers making the transition from automatically one year after RTRS MSRB in its Specifications for Real- the current Transaction Reporting implementation. Time Reporting of Municipal Securities 10 System to RTRS, and also would be The Board established the above Transactions. To achieve comparison, required of dealers that begin reporting exceptions after it received a number of both parties to the inter-dealer trade transactions in the future. The MSRB comments on its exposure draft of the would have to submit or cause to be will make testing facilities available to proposed rule change that indicated that submitted a trade report to the dealers at least six months before the registered clearing agency, unless the announced effective date of the 8 In using the message-based method of trade trade is one deemed by the clearing reporting, the dealer would send electronic agency to be compared upon submission 7 Broker’s brokers are dealers that hold messages containing trade data from the dealer’s by the party on one side of the trade themselves out to effect transactions exclusively computer to NSCC and receive interactive feedback, (unilateral submission).11 The contra- between dealers, on an agency or riskless principal also as electronic messages. NSCC would act as a basis, and that do not take inventory positions in ‘‘portal,’’ relaying the messages to and from the municipal securities. A broker’s broker therefore MSRB’s RTRS. Each trade would be reported with 9 As noted below, submissions may be made to always has matched purchase and sale transactions a message. In using the Web-based method, the RTRS via the Internet from 6:00 a.m. to 9:00 p.m. in the inter-dealer market. The requirement for a dealer would enter trade data to RTRS through an 10 See ‘‘Revised Specifications for the Real-Time dealer to designate whether it is acting as a broker’s Internet browser on the dealer’s personal computer Transaction Reporting System, Version 1.2,’’ MSRB broker will be used to mark transaction reports and would receive RTRS feedback that would Notice 2004–2 (January 23, 2004), on disseminated by RTRS. This is done to allow RTRS appear on the screen. These two methods are www.msrb.org. data users to distinguish these matched trades from further described in connection with the proposed 11 For example, currently only the syndicate other inter-dealer trading activity. Facility. manager is required by NSCC to report its sales of

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party would not be required to report a below in the section, ‘‘Enhancement of make price and volume information trade subject to unilateral submission information available to regulators.’’ publicly available as soon as possible but, to ensure the accuracy of trade The RTRS Users Manual will give after trades are executed. Real-time information in RTRS, would be required detailed guidance on how specific reporting will also bring improved to monitor such submissions against it trading situations are handled and will functionality to dealers and enforcement to ensure that the data submitted against include the Specifications for Real-Time agencies, compared with the current it is correct, and to use procedures of Reporting of Municipal Securities batch-oriented reporting system. These the registered clearing agency to correct Transactions,12 the Users Guide for improvements include: the trade data if it is not. RTRS Web, and the Testing Procedures. • The ability to correct regulatory Also similar to existing TRS The Users Manual will be located at data, such as time of trade, on inter- requirements, transactions with www.msrb.org and may be updated from dealer trade reports; • customers would be reported by time to time. The ability for a dealer to ensure the including the information required by (iii) Proposed RTRS Facility. accuracy of regulatory information such The MSRB has coordinated its plans the Specifications for Real-time as the time of trade, even when that for the RTRS facility with the new real- Reporting of Municipal Securities information is reported on its behalf by time comparison system for municipal Transactions. The extended reporting a clearing broker; and corporate bonds (the ‘‘Real-Time • deadlines for new issue securities The capability for dealers to report Trade Matching’’ or ‘‘RTTM’’ system) traded at the list price, securities not their capacity as agent in inter-dealer now being implemented by National trades; and traded in the previous year and variable- Securities Clearing Corporation • rate securities would apply to customer Improvements in the ‘‘audit trail’’ of (NSCC).13 The use of the NSCC trade information. transactions in the same way as they telecommunication facility as a data would to inter-dealer transactions. Submission of Transaction Reports by collection point or ‘‘Portal’’ for Intermediaries. As in the current The RTRS Procedures contain a new transaction data and the use of a transaction reporting system, a dealer requirement that an agency trade standard common format for trade will be able to use an intermediary, i.e., effected for a customer by an reporting and automated comparison its clearing broker or service bureau, to introducing broker against the principal through NSCC are intended to reduce submit transaction reports to RTRS. account of its clearing broker must be dealer costs in complying with the 15- Also following current policies, inter- reported with data including the minute transaction reporting dealer transaction reporting and identity and role of the clearing broker. requirement. Retail and institutional comparison will be accomplished using The information that will be required in customer transactions and IDRO reports one transaction report. The MSRB this ‘‘inter-dealer regulatory-only’’ also will be reported through NSCC expects those dealers that are not self- (‘‘IDRO’’) report is nearly the same as using the same record format as used for clearing to submit inter-dealer trades that in a unilateral submission of an inter-dealer trades.14 NSCC will not through their clearing broker as they do inter-dealer trade. The IDRO reporting process customer transactions in the today. However, these dealers must requirement represents a change from comparison system, but will forward the ensure that the clearing broker will be the existing transaction reporting system data to the MSRB and thus allow dealers able to submit the trade report satisfying for municipal securities, in which the to avoid setting up separate both comparison and transaction introducing broker reports an agency telecommunications links and facilities reporting requirements within 15 transaction with the customer, but no specifically for trade reporting to the minutes of the time of trade. Both 15 report is made of the offsetting side of MSRB. In this manner NSCC and dealers in this case will have the the agency transaction if it is executed MSRB have attempted to provide a responsibility to work together to ensure against the clearing broker’s account. means for dealers to leverage their that such trade submissions are timely The change is being made at the request systems development work to satisfy and accurate. It will be possible for the of NASD to provide a more complete two goals at once—that of real-time correspondent to submit customer trade audit trail for surveillance purposes, transaction reporting and real-time reports directly to the MSRB or for the and is further described below in comparison of inter-dealer transactions. clearing broker to submit on the connection with the enhancements that In this regard, the development plans correspondent’s behalf. will be available to regulators in the for both systems have been coordinated Message-Based and Web-Based Input real-time environment. This change also to provide the greatest efficiencies Methods. Two format options will be provides greater consistency with the possible for dealers. available for submission of data into manner in which similar transactions Improved Functionality. The objective RTRS: 1) message-based trade input, are handled in the TRACE transaction of real-time transaction reporting is to and 2) Web-based trade input. In reporting system for corporate bonds. message-based trade input, each trade is RTRS will also have new 12 See ‘‘Revised Specifications for the Real-Time Transaction Reporting System, Version 1.2,’’ MSRB submitted as a ‘‘message’’ in a requirements for dealers to report Notice 2004–2 (January 23, 2004), on standardized format. A trade input indicators to show: ‘‘special condition’’ www.msrb.org. message consists of a sequence of data trades that might be effected at a price 13 NSCC is a clearing agency registered under the tags and data fields—for example, the other than the market price. The dealer Act. tag ‘‘SETT’’ followed by a date field would provide a code identifying the 14 For RTTM message specifications, see Interactive Messaging: NSCC Participant indicates the settlement date of the reason for the special condition, such as Specifications for Matching Input and Output trade. For real-time trade reporting and that a trade was done ‘‘flat.’’ These Version 1.0 (March 31, 2003), and ‘‘Modifications comparison, the format standard is the indicators will enhance the market to RTTM Messaging Specifications,’’ FICC CMU ISO 15022 format established by the surveillance functions of the current RTTM New Project Update Issue 6 (April 20, 2004), on www.ficc.com. International Organization for reporting system and are described 16 15 By agreement with the MSRB, NSCC will not Standardization. Each message is sent charge dealers for serving as the portal for customer new issue securities to syndicate members. NSCC transaction data, but MSRB will reimburse NSCC 16 The ISO 15022 format is also used by NSCC’s deems such a trade compared on receipt of the for any system costs that are attributable exclusively parent organization, the Fixed Income Clearing syndicate manager’s submission. to this function. Continued

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as a separate unit between two Transaction Reporting Procedures, the Measurement of Timely Reporting. computers. The fact that a trade message MSRB has designated three RTRS The time taken to report the trade will is the basic telecommunications unit ‘‘Portals’’ for the receipt of municipal be measured by comparing the time of enables real-time reporting, comparison securities trade data. Each Portal has a trade reported by the dealer with the and interactive feedback. Messages are different policy governing the type of time of receipt of the trade report at the well-suited to automated high-volume trade data it can accept. Message-based designated RTRS Portal. RTRS will operations and to ‘‘straight-through trade input must go through the assess each trade against its reporting processing’’ methods. Message Portal, but Web-based trade deadline (15 minutes, three hours, or In using the Web-based method, the input may go through either the RTRS end-of-day). Trades not received by the dealer manually accesses a Web site Web Portal or the RTTM Web Portal. appropriate reporting deadline will be through an Internet browser to enter, • The Message Portal is operated by considered late. correct or view trade data. As described NSCC and accepts any type of Enhancement of Information below, different Web sites are used municipal security trade submission or Available to Regulators. MSRB has depending whether the data is entered modification. All trade messages that worked with NASD and other regulators for both comparison and regulatory the dealer indicates should be to improve the audit trail and other reporting or only for reporting purposes. forwarded to RTRS will be relayed to surveillance capabilities that will be The Web-based method requires no RTRS by NSCC. In addition, messages available once data is collected on a system development work beyond that the dealer indicates should be real-time basis. Some of these changes setting up an Internet connection and processed by the comparison system will require modifications or additions obtaining the appropriate user ID, will be routed to RTTM.18 to existing transaction reporting password and security safeguards. • procedures observed by dealers. One However, Web input is manual and it The RTRS Web Portal is operated addition concerns the situation in will not be possible to interface the by the MSRB and accepts any municipal which one dealer passes an order to a Web-based method with the dealer’s security trade submission or second dealer for execution directly out processing system. Therefore, exclusive modification except data that would of the second dealer’s principal account, use of the Web-based method for initially report or modify inter-dealer with settlement made directly between submitting transactions generally will transaction data used in the comparison the second dealer and the party placing be appropriate only for relatively low- process. (Comparison data instead must the order. The situation requiring this volume submitters. be entered into the comparison system ‘‘Inter-Dealer Regulatory-Only’’ or For high-volume submitters of using a method authorized by NSCC ‘‘IDRO’’ report typically occurs when a transaction data, such as large dealers, such as the Message Portal or the RTTM fully disclosed introducing broker clearing brokers and service bureaus, Web Portal). The RTRS Web Portal may submits a customer order to its clearing the only efficient and practical means be used to report or correct (a) customer broker for execution, and the clearing for initial trade submission is likely to trade data, (b) IDRO data, and (c) inter- broker executes and settles directly with be message-based. The extent of systems dealer trade data, but only if that data the introducing broker’s customer. The work necessary for interfacing with is not used in comparison. For example, current TRS system requires only one RTRS (and with RTTM) in this case will a dealer may use the RTRS Web Portal trade report in this situation—a be dependent in large part on whether to correct an inter-dealer trade record customer trade report from the the submitter currently captures trade with regard to the time of trade or dealer introducing broker. RTRS procedures data in real time for processing. capacity, but not to correct (or to input will require another trade report Submitters that have prepared for real- initially) the CUSIP number, par or showing the identity and role of the time transaction reporting and price of the trade. clearing broker—it will be described as comparison by converting from • The RTTM Web Portal is operated an Inter-Dealer Regulatory-Only overnight batch processing systems to by NSCC for comparison purposes.19 It transaction. The new trade report was ones with a more real-time or straight- may be used to report or correct both requested by the NASD to provide a through processing approach should ‘‘comparison data’’ (CUSIP number, par, more complete audit trail for find the necessary systems changes price, etc.) and ‘‘regulatory reporting surveillance purposes.20 comparatively minor. data’’ (time of trade, etc.), if that data is The current transaction reporting Dealers may use the message-based associated with an inter-dealer procedures require a dealer effecting a method, the Web-based method, or both. transaction eligible for comparison. The trade ‘‘as agent’’ for a customer to Some high-volume dealers may submit RTTM Web Portal may not be used to designate its capacity on the customer the initial trade report as a message, report or correct customer or IDRO trade trade report. This requirement will review their submission and the RTRS records. remain in RTRS. Inter-dealer transaction status information on a Web site, and All RTRS Portals will be open to reports currently do not require a make corrections manually using Web- receive trade data for at least 90 minutes capacity field to show whether the inter- based trade input. Instead of using the after the end of an RTRS Business Day dealer trade was done as agent for a Web, dealers may also submit and 30 minutes before the beginning of corrections in message format. the next Business Day, i.e., they will be 20 To satisfy the need for this audit trail requirement the execution of the order by the Alternatively, some low-volume dealers open at least from 7 a.m. through 8 p.m. may use the message-based system if clearing broker for the correspondent will be The RTRS Web Portal will be open for considered to constitute an inter-dealer messaging is made available to them by ‘‘transaction’’ between the two dealers even though 17 an additional 60 minutes at the clearing brokers or service bureaus. beginning and end of the RTRS Business no principal position transfers between the two RTRS Portals. In the proposed dealers. (The principal position in these situations Day, i.e., it will be open from 6 a.m. to amendment to the G–14 RTRS moves directly from the clearing broker to the 9 p.m. customer.) If a principal position does transfer between dealers, the trade is an ‘‘Inter-dealer Corporation, for processing government, mortgage- Transaction Eligible for Comparison,’’ and the trade backed, corporate, and unit interest trust securities. 18 Use of the Message Portal for trade comparison must be compared and reported, even though 17 See ‘‘Operational Overview of MSRB’s Real- is currently restricted to NSCC participants. settlement between the parties may occur only as Time Transaction Reporting System,’’ MSRB Notice 19 Use of the RTTM Web Portal is restricted to a movement on the books of the clearing broker. 2003–13 (April 7, 2003), on www.msrb.org. NSCC participants. This is consistent with existing G–14 policy in TRS.

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customer, but RTRS will add such a ‘‘correspondent’s correspondent’’ field they contain data needed exclusively for requirement.21 will be omitted.) regulatory reporting, come to RTRS as Another new feature added in the Finally, although it does not require messages via the RTTM network or as real-time environment is the Special any change in dealer procedures, RTRS input to the RTRS Web (but not via the Condition Code. RTRS will require a will provide regulators with the record RTTM Web). • dealer that executes a trade with certain of all changes reported by a dealer after Format edits. Each message will be special conditions to code the trade its initial trade submission. This is an edited to verify that its format is report accordingly. For example, if there enhancement over the current system, correct.25 This involves checking that is a specific reason for a trade being which reports the results of trade required data elements are present in reported at a price that is not a true modifications but does not show the the correct form (e.g., dates are in date market price, the dealer will indicate initial submission or the subsequent format and money amounts are in this with a Special Condition Code. A change records. RTRS will provide decimal format) and with the correct trade report with a Special Condition reports to regulators showing each number of digits or characters. Messages Code that is indicative of an off-market modification or cancellation of a trade that fail these edits will not be price will not be disseminated by RTRS, report, including the time the change processed further and an error message but will be made available to regulatory was made. The MSRB plans also to describing the deficiency will be agencies for market surveillance and provide regulators with real-time returned to the submitter. Both RTTM inspection purposes. Some Special connections to RTRS. This will enable and RTRS will conduct format edits. Condition Codes will not be indicative regulatory agency staff to obtain routine Input from Web-based screens will have of an off-market price but will report reports of transactions more quickly been checked before it is transferred conditions such as a security that is than is now possible. from the user’s personal computer to the traded ‘‘flat.’’ 22 RTRS Processing. Following is a Web server. description of key steps in RTRS • Submitter validation. RTRS will RTRS will also add the reporting of a processing with regard to input accept input only from parties known to code by which a dealer will indicate requirements, input data flow, format the MSRB. Trade messages routed that a price being reported was derived edits, submitter validation, through RTTM are checked by RTTM as part of a ‘‘weighted average price’’ timestamping, lateness checking, and rejected unless submitted to RTTM transaction. A weighted average price content validation, feedback, by an NSCC participant. The message is transaction is one in which a dealer modification and cancellation, and the checked again when received by RTRS agrees to purchase up to a certain maintenance of the surveillance and is not processed further unless it quantity of securities for a customer at database. bears the identifier of a clearing broker market prices during the day, • Input Requirements. The basic or service bureau known to the MSRB. culminating with one sale transaction to transaction information proposed to be RTRS further checks each trade message the customer of the aggregate par value, reported by a dealer in RTRS will be to verify that the dealer has previously with a price representing a weighted similar to that reported in the existing authorized the submitter to report trades average of the dealer’s purchases. The transaction reporting system. This on its behalf. RTRS Web-based input is Price Dissemination Plan currently calls information supports both the price validated at multiple levels. First, the for displaying the ‘‘weighted average transparency and surveillance functions user cannot log on to RTRS unless he or price’’ code along with other data about of the system. The complete list of data she enters a user identifier and the transaction. elements required on a trade report are password issued by the MSRB. RTRS Another data element added for in Specifications for Real-time security controls allow a dealer access surveillance purposes is the identifier of Reporting of Municipal Securities only to trades in which it was a party an ‘‘intermediate dealer’’ in a Transactions 23 and will be included or which it has submitted on behalf of transaction. This applies to a situation within the RTRS Users Manual, another dealer. Finally, the dealer- in which a dealer is a correspondent of available at www.msrb.org. submitter combination is validated in an NSCC participant and this • Input data flow. RTRS receives the same way as input from RTTM, correspondent passes data to its clearing information about each trade separately above. broker about a trade effected by a third as an electronic message and processes • Timestamping. To enforce the rule dealer. Since the dealer that effected the each trade individually.24 All inter- on timely reporting of trades in the real- trade is a correspondent of the clearing dealer trade messages that contain time environment, each trade message broker’s correspondent, this dealer is initial values or modifications to data will be given an electronic timestamp, termed the ‘‘correspondent’s elements needed for comparison (e.g., accurate to the second, when it is correspondent.’’ The proposed reporting dollar price or par) come to RTRS as received. RTRS will interpret the procedures would require that if there messages via RTTM or as input to the timestamp as the time the trade was are three dealers on one side of an inter- RTTM Web. Inter-dealer trade messages reported. Messages that are input dealer trade, all three dealers must be that affect only data elements needed for through the Message Portal or the RTTM identified in the trade report: The regulatory reporting (e.g., time of trade) Web Portal will be timestamped by clearing broker, its correspondent, and come to RTRS either as messages via the RTTM, and messages submitted via the the correspondent’s correspondent. (If RTTM network, or as Web-based input RTRS Web Portal will be timestamped there are only one or two dealers on a via the RTTM Web or RTRS Web. by the RTRS server. By this means, any side, as will usually be the case, the new Customer and IDRO messages, since delays that may occur in application processing or telecommunications 21 The dealer is not required to link the inter- 23 See ‘‘Revised Specifications for the Real-Time connections between RTTM and the dealer and customer transaction reports associated Transaction Reporting System, Version 1.2,’’ MSRB MSRB will not affect the assessment of with agency transactions. Notice 2004–2 (January 23, 2004), on 22 The MSRB in its June 2003 Notice requesting www.msrb.org. the time the trade was reported. comment on plans for real-time reporting 24 Screen input through either Web Portal is (discussed below), referred to some of what are now converted into message format by the appropriate 25 Message formats are defined in detail in the termed Special Condition Codes as ‘‘Special Price Web server and sent from that server to the RTRS Specifications for Real-time Reporting of Municipal Reason Codes.’’ host computer. Securities.

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• Lateness checking. The dealer will exceeds ten percent of the dollar price system operations. The proposed include an indicator in the trade (bonds traded very close to a premium Procedures would require dealers to test message that shows the deadline that it call may have a very high nominal their use of RTRS before reporting any understands applies to the trade yield, but this is most likely an input trades. The MSRB will make testing report.26 RTRS will determine whether error) or a reported time of trade before facilities available to dealers at least six the trade was received by the deadline. 0600 hours (trading is allowed at any months before the announced effective If the dealer indicates it has not traded time of day, but this is most likely date of the Proposed Rule Change the security in the previous year and intended to be a time in the afternoon, (‘‘Announced RTRS Start-Up Date’’). therefore may report the trade up to e.g., 5 p.m. reported as 0500). Under the Testing would be required of dealers three hours after the time of trade, RTRS proposed Rule G–14 RTRS Transaction making the transition from the current will check whether the dealer’s trading Reporting Procedures, paragraph (e), Transaction Reporting System to RTRS, history is as claimed. If a trade is dealers must examine such trade reports and also required of dealers that begin reported late, an error message to determine if they are in fact reporting transactions in the future. indicating this fact will be sent to the erroneous and, if so, correct them. A Each dealer will have to be prepared to submitter at the end of processing. trade is ‘‘unsatisfactory for reporting test its use of RTRS no later than three • Content edits. The values in the purposes’’ if it is missing an essential months before the Announced RTRS reported trade will be checked to data element, is defective in some way Start-Up Date and must schedule a test determine that they are within that prevents it from being processed, or date by that time unless it has already reasonable limits, in order to detect cannot be included in the surveillance successfully tested its RTRS input errors such as misplaced decimal database or publicly reported. Examples capabilities. However, dealers that have points. The relationship between values of ‘‘unsatisfactory’’ conditions are a effected an average of five or fewer is checked (e.g., the settlement date may reported trade date in the future, a transactions per week during the not precede the trade date) and crucial missing dealer symbol, and an incorrect preceding year and that will use only data elements are verified against CUSIP check digit. Certain modification the Web-based method must reference tables (e.g., the identifier of attempts are also unsatisfactory, such as successfully test their RTRS capabilities the dealer that effected the trade must a modification that cannot be matched one month before the Announced RTRS be present in the RTRS dealer reference with any previous message from the Start-Up Date. table). Finally, for those trades where dealer. • The requirement for testing and the dollar price and yield are reported, Modification and cancellation. submission of a new ‘‘Form RTRS’’ with the consistency of price and yield will Under the proposed rule change, the the name of a contact person is reflected be verified when possible. dealer is responsible for timely and • in the new proposed language for Rule Feedback. If a dealer’s message is accurate submission of trade reports. G–14. deficient, RTRS interactive feedback The dealer must monitor its reported (iv) Price Dissemination by RTRS. will provide descriptive detail. MSRB trades by any of the available feedback Description of Service. Real-time price anticipates that this feedback will help methods and must correct any errors as data will be available by subscription, dealers to detect and correct errors soon as possible. If a dealer is unable to after subscribers sign an agreement quickly. report a trade within the deadline, it regarding re-dissemination. During the RTRS will generate an must report the trade as soon as acknowledgement or error message for RTRS Business Day, price data will be possible. RTRS will produce statistics disseminated in real time, immediately every reported trade, except inter-dealer on dealer performance in timely after receipt. Modifications and trades that have passed RTTM edits and submission and timely correction of cancellations submitted by dealers that which do not have any RTRS errors. errors and will provide the statistics to apply to earlier trade submissions will (These trades will already have been dealers. acknowledged by RTTM.) The RTRS will enable dealers to submit, also be disseminated in real time. acknowledgement/error message is sent modify and cancel messages for all The technical means of data to the dealer and/or submitter in the types of trades. Unlike the current dissemination are not yet determined. format(s) that the dealer or submitter transaction reporting system in which MSRB expects to make a second filing has previously requested. The available only customer trades can be modified to on the RTRS facility in the future with feedback formats are message or e-mail. correct regulatory data, RTRS will proposals for fees to be charged for the In addition, the dealer and the submitter support such changes for all trade types. various RTRS data products. may view the trade, and any errors • Surveillance database. The RTRS In addition to real-time reports, the found, using RTRS Web. Surveillance Database will store each MSRB plans to continue providing Feedback will indicate to the dealer message submitted by a dealer or service reports each morning covering the whether the trade is error-free or late, bureau. Audit trail reports will provide previous day’s trades (T+1 reports), as and whether it is questionable or regulators with information about trades well as daily reports covering all trades unsatisfactory for reporting purposes. A effected by a dealer, trades in specific done on the trading day one week ‘‘questionable’’ trade message is one that CUSIPs, highest/lowest prices for a earlier (T+5 reports), and monthly appears to have an error, but which may CUSIP within a day or other time reports covering all trades done during be correct depending on circumstances. period, and specific data elements such the previous month. Examples are a trade with a yield that as trades with Special Condition Codes Trades to be Disseminated. During the reported by a dealer. Other reports will RTRS Business Day, the MSRB will 26 As noted, trades must be reported within 15 show all modifications and disseminate data on all transactions as minutes of the time of trade, except for new issue cancellations reported by a dealer. soon as they are received, except for two trades by syndicate managers or members at the list types of dealer submissions. The price (for which the deadline is the end of the first Testing and Contact Requirements. As day of trading), trades in variable rate products or described in connection with the exceptions, which will be stored in the commercial paper (for which the deadline is the proposed Rule G–14 Procedures, surveillance database but not end of trade date), and trades in securities which successful testing will be required of disseminated in real-time, are trades the dealer has not traded in the previous year (for which the deadline is three hours from the time of RTRS submitters to ensure a working marked as by the dealer as having prices trade). interface with RTRS prior to the date for other than market prices, using a

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Special Condition Code,27 and reports of the RTRS Business Day would be RTRS may report trades using new ‘‘inter-dealer regulatory-only’’ disseminated within a few minutes after formats transactions. These have already been receipt at the designated RTRS Portal. October—Dealers that have not yet described. The current plan for dissemination of completed certification testing must List of Information Items to be prices calls for inter-dealer price schedule test, unless dealer reports Disseminated. The specific items information to be published only after an average of fewer than five trades proposed to be disseminated by RTRS comparison is achieved on the trade, as per week (low-volume dealers) for price transparency purposes are: done in the current system. Comparison November—Low-volume dealers that • CUSIP number and description of of the inter-dealer trade ensures the have not yet completed certification the issue traded; reliability of the data that was testing must schedule test • Par value of the transaction if one submitted, since the buyer’s and the Dec. 15—All dealers must complete million dollars or under; otherwise seller’s details are matched. However, certification testing reported as ‘‘1MM+’’; RTRS is being designed with the 2005 • Dollar price; flexibility to disseminate uncompared • Yield (for inter-dealer new issue inter-dealer transaction data if it is January—Real-time comparison and transactions done on a yield basis and found that a substantial proportion of reporting requirements would for all customer transactions in non- trades take longer than 15 minutes to be become effective defaulted securities where the compared.28 2. Statutory Basis transaction is done on a yield basis or Transactions Done Outside the RTRS if the yield can be computed from dollar Business Day. Under the proposed rule The MSRB believes that the proposed price); rule change is consistent with section change, dealers would be required to 29 • Date and time of trade; report transactions done outside of the 15B(b)(2)(C) of the Act, which • Whether the transaction was a (i) RTRS Business Day, but would not be provides that the Board’s rules shall purchase from a customer; (ii) sale to a required to do so on a real-time basis. ‘‘* * * be designed to prevent customer; or (iii) inter-dealer Instead, trades would be reported fraudulent and manipulative acts and transaction; within the first 15 minutes of the next practices, to promote just and equitable • Indicator that an inter-dealer RTRS Business Day, at which time they principles of trade, to foster cooperation transaction was done by a broker’s would be disseminated. and coordination with persons engaged in regulating, clearing, settling, broker and, if so, the broker’s broker role Late Trade Reports and Trade Data processing information with respect to, as buyer or seller; Modifications. Trades that are not and facilitating transactions in • When-issued indicator, if any; reported within the timeframe set by the municipal securities, to remove • Syndicate list price indicator, if proposed rule change would be impediments to and perfect the any; considered late. Late trade reports and mechanism of a free and open market in • Assumed settlement date, if initial trade modifications will be municipal securities, and, in general, to settlement date is not known at time of disseminated RTRS as soon as received protect investors and the public interest trade; if they are submitted during the RTRS ***’’ 30 The MSRB believes that the • Indicator that dollar price was Business Day and at the start of the next proposed rule change is consistent with computed by MSRB using an estimated Business Day otherwise. the Act in that it will provide the market settlement date for an issue on which Broker’s Broker Indicator. Trades by with more efficient pricing information the initial settlement date has not been broker’s brokers will be marked as such and will enhance investor confidence in set; on disseminated trade reports and the • the market. Indicator that a trade was done at buy/sell indicator will show whether the weighted average price of trades the broker’s broker was buying or B. Self-Regulatory Organization’s done earlier in the day; selling. Because broker’s broker trades Statement on Burden on Competition • Modification/Cancellation occur in matched pairs that, in market The Board does not believe that the indicator, if any; terms, many observers view as • RTRS broadcast time, date and proposed rule change will result in any representing one movement of securities burden on competition not necessary or sequential trade message number; and between two dealers, the Board believes • appropriate in furtherance of the RTRS Control Number. it will be helpful to RTRS data users if Transactions Done During RTRS purposes of the Act, since it would broker’s brokers’ trades are identified as apply equally to all dealers in municipal Business Day. As noted, under the such in trade reports. proposed rule language, dealers would securities. with limited exceptions report within (v) Implementation Schedule C. Self-Regulatory Organization’s 15 minutes of the time of trade all RTRS development is proceeding on Statement on Comments on the transactions done during the RTRS the following schedule. Proposed Rule Change Received From Business Day. Trade submissions made Members, Participants, or Others during the RTRS Business Day will be 2004 (i) Introduction disseminated within a few minutes of April—Beta testing with dealers began receipt. July—Certification testing with dealers Comments on the proposed rule Dissemination of Compared or begins change were solicited in a notice dated Uncompared Inter-Dealer Trades. July–Dec.—Dealers that have passed June 13, 2003 (the ‘‘June 2003 Unless the trade report contains errors certification testing with RTTM and Notice’’).31 or is subject to an exception, The MSRB received comments from: transactions reported by dealers during 28 Unlike inter-dealer transactions, which have two submissions (both a buy side and a sell side) 29 15 U.S.C. 78o–4(b)(2)(C). 27 In an inter-dealer trade, if either dealer that must be compared, customer trades, which 30 Id. indicates the trade was done at a special price, comprise approximately 80% of all reported trades, 31 ‘‘Request for Comment: Plan for Real-Time RTRS considers the entire trade to be a special price do not require comparison and will be disseminated Price Reporting,’’ MSRB Notice 2003–23 (June 13, trade. as soon as automated error checks are completed. 2003), on www.msrb.org.

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Alliance Capital Management Southlake Capital, LLC (‘‘Southlake’’) 47 (iii) Comments on Operational Aspects Corporation (‘‘Alliance Capital’’) 32 UBS Financial Services, Inc. (‘‘UBS’’) 48 49 15-Minute Reporting Requirement. The Asset Managers Forum (‘‘AMF’’) of The Vanguard Group (‘‘Vanguard’’) Four commentators express their 33 50 the Bond Market Association Wachovia Bank, NA (‘‘Wachovia’’) concern about the operational resources Wedbush Morgan Securities William Blair & Company LLC necessary to achieve real-time reporting. 34 51 (‘‘Blair’’) (‘‘Wedbush’’) One commentator ‘‘wholeheartedly The Bond Market Association: Letter (ii) Comments on Real-Time supports the approach MSRB has taken dated September 11, 2003 regarding Transparency in using RTTM for submission of operational issues (‘‘BMA I’’) 35 In the June Notice, the MSRB noted transaction data to RTRS’’ and BMA: Letter dated September 12, 2003 ‘‘commend[s] the MSRB for that it believes that real-time trade regarding price dissemination (‘‘BMA coordinating the move to RTRS to 36 transparency will benefit the municipal II’’) coincide with NSCC’s transition to securities market. The MSRB also noted Cobey, Jacobson & Gordon, Inc. (‘‘Cobey RTTM.’’ However, four commentators 37 that it had committed to reaching this Jacobson’’) state concerns about the cost of redesign 38 goal. Commentators on the June Notice, Financial Information Forum (‘‘FIF’’) to the industry that will be necessary for 39 however, are divided on whether Fixed Income Securities, LLC (FIS) compliance with the 15-minute transparency is generally beneficial to Griffin, Kubik, Stephens & Thompson, reporting requirement and the 40 the market and on whether real-time Inc. (5 e-mails) (‘‘Griffin, Kubik’’) possibility that the operating costs for Hartfield, Titus & Donnelly, LLC transparency would harm the secondary 41 small firms may make them less (‘‘Hartfield’’) market for certain infrequently traded competitive with large firms. Huntleigh Securities Corporation issues. Two commentators believe that The MSRB has designed RTRS to 42 (‘‘Huntleigh’’) transparency generally benefits the minimize the redesign and operational Regional Municipal Operations municipal market and support the role costs to report trades in real-time. The 43 Association (‘‘RMOA’’) of the MSRB in moving toward real-time implementation date of real-time The Charles Schwab Corporation price transparency. One commentator transaction reporting, originally 44 (‘‘Schwab’’) states that in general the MSRB proposal scheduled for 1997, has been delayed by Seattle-Northwest Securities ‘‘would improve the transparency of the the MSRB several times to give dealers 45 Corporation (‘‘Seattle-Northwest’’) municipal securities markets and additional time to make changes in Siebert Brandford Shank & Co., LLC provide substantial benefits to the bond processing systems necessary to 46 (‘‘Siebert’’) investing public.’’ One commentator capture trade data and process it on a believes that real-time reporting will real-time basis.52 The current focus on 32 Letter from R. B. Davidson, III and Fred S. ‘‘enhance investor confidence in the straight-through processing of securities Cohen, Alliance Capital, to Justin Pica, MSRB, municipal market’’ and that ‘‘while dated August 27, 2003. transactions provides the best possible there will be short-term dislocations, 33 Letter from Kenneth Juster, The Asset Managers environment to make the conversion to Forum, to Harold L. Johnson, MSRB, dated eventually increased transparency will real-time transaction reporting.53 In September 15, 2003. benefit all market participants.’’ One particular, the contemporaneous 34 Letter from James D. McKinney, William Blair commentator expresses the belief that development of RTTM by NSCC will and Co., to Harold L. Johnson, MSRB, dated the interests of mutual fund September 14, 2003. allow dealers to leverage their systems shareholders and individual 35 Letter from Lynette Kelly Hotchkiss, The Bond development work to satisfy two goals Market Association, to Harold L. Johnson, MSRB, bondholders ‘‘are surely best served at once—that of real-time transaction dated September 11, 2003. with the highest degree of price reporting and real-time comparison of 36 Letter from Lynette Kelly Hotchkiss, The Bond transparency’’ and that ‘‘any short-term inter-dealer transactions. For trades that Market Association, to Harold L. Johnson, MSRB, dislocations would be inconsequential are not eligible for comparison, NSCC dated September 12, 2003. compared to the long-term benefits 37 Letter from H. Todd Cobey, Cobey, Jacobson & will not process the transaction data Gordon, Inc., to Christopher Taylor, MSRB, dated offered by the MSRB’s proposal.’’ submitted, but will immediately August 7, 2003. Other commentators believe there is forward the data to the MSRB. This will 38 Letter from W. Leo McBlain and Thomas J. little increased benefit to greater allow dealers to avoid setting up Jordan, Financial Information Forum, to Harold L. transparency. They are concerned about separate telecommunications links and Johnson, MSRB, dated September 12, 2003. negative liquidity effects, investor 39 Letter from Jim Dillahunty, Fixed Income facilities specifically for trade reporting Securities, LLC, to John Baughman, MSRB, dated impacts and the possibility that dealers these trades to the MSRB. October 31, 2003. might exit the market if their spreads are Schedule for Phase-In of Real-Time 40 E-mails from Brian J. Battle, Jeff S. Kellough, narrowed. Three commentators believe Reporting. Five commentators state their Shane S. Kranov and Tom W. Boylen, Griffin, that transparency will cause dealers to belief that there should be a phased-in Kubik, Stephens & Thompson, Inc., to Justin Pica, MSRB, dated October 3, 2003. leave the market and therefore will approach to dealer testing and 41 Letter from John J. Lynch, Jr., to Harold L. adversely affect investors. implementation of RTRS. One of these Johnson, MSRB, dated October 1, 2003. commentators states that dealers require 42 Letter from John A. Bohrmann and Catherine T. 47 Letter from Richard L. Sandow, Southlake a minimum of six months of testing of Marshall, Huntleigh Securities Corp., to Larry Capital, LLC, to Harold L. Johnson, MSRB, dated RTRS after RTTM is fully operational, Lawrence, MSRB, dated September 24, 2003. June 13, 2003. 43 Letter from Thomas Sargant, Regional 48 Letter from Charles Paviolitis, UBS Financial and proposes that after six months of Municipal Operations Association, to Harold L. Services, Inc., to Justin Pica, MSRB, dated August RTTM operation, dealers would begin Johnson, MSRB, dated September 25, 2003. 29, 2003. 44 Letter from Diana Kohanski, The Charles 49 Letter from John J. Brennan, The Vanguard 52 See, e.g., ‘‘Real Time Reporting of Municipal Schwab Corporation, to Justin Pica, MSRB, dated Group, to Harold L. Johnson, MSRB, dated Securities Transactions,’’ MSRB Reports, Vol. 21, September 8, 2003. September 9, 2003. No. 2 (July 2001), and ‘‘Plans for MSRB’s Real-Time 45 Letter from John Rose and Maud Daudon, 50 Letter from Donna M. D’Orazio, Wachovia Transaction Reporting System,’’ MSRB Notice Seattle-Northwest Securities Corp., to Harold L. Bank, NA, to Harold L. Johnson, MSRB, dated 2003–3 (February 3, 2003), on www.msrb.org. Johnson, MSRB, dated October 13, 2003. September 15, 2003. 53 See, e.g., ‘‘SIA Board Endorses Program to 46 Letter from Harold Durk, Siebert Brandford 51 Letter from David Colville, Wedbush Morgan Modernize Clearing, Settlement Process for Shank & Co., LLC, to Harold L. Johnson, MSRB, Securities, to Harold L. Johnson, MSRB, dated Securities,’’ SIA Press Release (July 18, 2002) on dated September 12, 2003. October 9, 2003. www.sia.com.

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submitting most inter-dealer trades period on 15-minute reporting (rather window because the CUSIP had to be through RTTM under the 15-minute than the existing requirement to report added to the firm’s or to its vendor’s reporting requirement. Two by midnight of trade date), the MSRB security master file. commentators would initiate reporting notes that the performance data is not The MSRB agrees, in light of the large of customer trades using messages sent intended to relevant for enforcing number of pre-sale commitments that a through RTTM at the same time as inter- existing ‘‘end-of-day’’ reporting syndicate manager or syndicate member dealer trades, but would delay requirements. may have to report when a bond subjecting customer trades to the 15- Exemption from the 15-Minute purchase agreement is signed or an minute requirement until dealers have Requirement for Syndicate and Other award is announced, that it may be six months of experience with real-time New Issue Trades. Several burdensome and even impossible in inter-dealer trade reporting. commentators discuss the reporting of some cases for a syndicate manager or One commentator suggests that during trades by an underwriting syndicate and member to report all of these the testing and phase-in period the other trades in new municipal securities transactions within 15 minutes using MSRB provide ‘‘progress reports’’ that issues. One commentator states that systems that are currently available to would help dealers measure their there are so many transactions dealers. Accordingly, the planned success and become aware of areas that associated with a new issue that it may changes to Rules G–12(f) and G–14 will need improvement. This commentator be physically impossible to enter them allow syndicate managers, syndicate believes that regulators, in assessing all within 15 minutes. Two members and selling group members to individual firms’ performance, should commentators note that CUSIP numbers report their trades done at the list not use the progress reports. One and ‘‘indicative data’’ (securities offering price as late as at the end of the commentator states that dealers ‘‘will descriptive data needed to make price/ day on which the issue was traded. need the co-operation of the yield calculations and to confirm a They would be required to include in enforcement agencies in recognizing the transaction, such as dated date, coupon the trade report an indicator to show difference between non-compliance and and maturity) are often not available to that the trade is a ‘‘syndicate price growing pains.’’ market participants, especially dealers trade,’’ i.e., a trade done by a syndicate The MSRB notes that in December that are not in an underwriting manager or member at the list offering 2003 it announced a revised schedule syndicate, on the first day of trading of price on the first day of trading. Once that extended the RTRS operational start new issues. Regarding syndicates, one a new issue has been released for date from mid-2004 to January 2005 and commentator states that ‘‘the Syndicate trading, normal transaction reporting thereby provided six more calendar Manager always has the complete rules will apply to the syndicate months for dealer system preparation. details before the Selling Members, manager and members and they will be The MSRB believes this went far to allay putting the Selling Members at a required to enter trades within 15 the concerns expressed above relating to disadvantage.’’ minutes of the time of trade, as they also dealer readiness for real-time In addition, five commentators will be required to do for trades done at transaction reporting. Under the revised question the value of reporting other than the publicly stated list price. schedule, RTRS was available for beta syndicate trades because, as one With respect to the concern that testing with dealers in April 2004. In commentator states, ‘‘on sale date, the syndicate prices are mixed in with July 2004, RTRS will go into parallel new issue transactions are done at a ‘‘secondary market’’ prices on the initial operation with RTTM. Dealers will price that is already publicly known by trade date, the MSRB plans to continue to be able to test with RTRS way of the public offering itself,’’ and disseminate the ‘‘syndicate list price’’ from this point onward, and, in therefore there is little need for real-time indicator with the trade as part of the addition, may at any time before January disclosure of these new issue prices. transparency reports. The MSRB also 2005 opt voluntarily to submit trades in One commentator notes that the price will monitor this area to see if the message format and to discontinue reported on the first official day of additional action is warranted. With using the current batch format. Dealers trading in an issue may reflect an respect to the concern that it is voluntarily using the message format agreement based on market conditions sometimes difficult for dealers to obtain before 2005 will be encouraged to on a day that precedes the initial trade issue information such as CUSIP submit trade reports in real time, but the date for the issue. This commentator numbers in order to submit trades current end-of-day requirement will further states that trade reports on the within 15 minutes,54 remain in effect until 2005. initial trade date for a new issue may the MSRB is Based on the above schedule, the consist of both primary market trades reviewing possible modifications to MSRB is not aware of an operational (possibly based on prices agreed to days Rule G–34 on CUSIP numbers and new reason to phase in the customer trade before) and secondary market trades issue requirements to enhance the reporting requirement six months after reflecting that day’s market availability of this information and to the inter-dealer reporting requirement as environment, which, it says, might ensure that trades are submitted in a requested by some commentators. Both mislead some investors as to prevailing timely manner after execution occurs in customer and inter-dealer trades market prices on the initial trade date. the new issue market. accordingly are proposed to become Five commentators propose that The comments on adding new CUSIP subject to the 15-minute requirement in reports of new issues should be required numbers and indicative data for new January 2005. by the end of the first trading day or, if issues are addressed in the next With regard to the request for the CUSIP number is still not available, paragraph, since a similar topic arises in compliance progress reports, the MSRB the next day. One commentator states connection with some secondary market plans during the testing period to make that ‘‘this should be considered a transactions. reports available to each dealer showing temporary reprieve and the industry Exemption for Trades in Issues Not the dealer’s performance on the various should begin to search for a more Traded in the Prior Year. Six compliance parameters, along with permanent solution.’’ One commentator 54 For a discussion of this concern, see ‘‘Real- industry averages for each parameter. To proposes a flag for trades in the primary Time Transaction Reporting: Revised Schedule and the extent that these reports will relate or secondary market to indicate that a Operational Plan,’’ MSRB Notice 2003–44 to dealer performance during the test submission has exceeded the 15-minute (December 11, 2003) on www.msrb.org.

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commentators discuss secondary market dealers have about obtaining new issue The MSRB does not currently plan to trades of securities that have not been information on issues that they are not require reports of yields or reset rates on traded for a long time.55 They state that underwriting. The MSRB believes that variable rate and auction rate products, it is not practical for a dealer to keep all syndicate managers and syndicate but continues to be interested in price 1.5 million CUSIP numbers in its members do have, or should have, transparency in this area. Accordingly, securities master file in preparation for timely access to information on a new the MSRB will explore other ways to a possible trade, and that it is not issue that they are underwriting. provide transparency for the short-term possible to obtain and enter a CUSIP The three-hour provision will expire rates that are being set in reofferings and number and indicative data for such a or ‘‘sunset’’ automatically after one year in variable rate and auction products. security within 15 minutes of the trade. from the date of RTRS implementation. Discrepancies in Timestamps on These commentators cite times ranging During this year, MSRB plans to work Inter-Dealer Trades. The BMA states up to several hours as being necessary, with dealers, trade associations and that its members ‘‘question the basis depending on circumstances.56 The information vendors to ensure that upon which the valid timestamp [on a same considerations would apply to a industry efforts are being made to speed trade report] will be determined in the dealer that is not a member of a up the process of updating securities case of an inter-dealer discrepancy,’’ syndicate and that is trading a new issue master files and that indicative data and it asks the MSRB to clarify this for the first time. provided by the various commercial point. RTRS processing will assume that The MSRB understands that, using services meets dealer needs with respect if there are different times on sides of an existing systems, a dealer that does not to 15-minute transaction reporting with inter-dealer trade, the earlier time is currently have a CUSIP number in its respect to quality and consistency as correct. If the times differ by more than security master file might reasonably well as speed. 15 minutes, RTRS will send messages to take as much as three hours to enter the Exemption for Variable and Short- parties on both sides informing them of issue into its securities master, even Term Instruments. Two commentators the difference, but RTRS will not mark when best efforts are applied. Therefore, note that short-term instruments such as either time as invalid. The MSRB plans the proposed rule change will provide, variable rate demand obligations to review this assumption as experience when a dealer has not traded an issue (VRDOs), commercial paper and auction is gained with real-time reporting. within the past year, that a three-hour rate instruments typically are traded at ATS Indicator. The June 2003 notice trade reporting requirement will apply par or at the clearing bid rate, and three requested comments about designating rather than a 15-minute reporting commentators state that there is limited certain trades that are done through requirement. The dealer will be required benefit to disseminating such prices in alternative trading systems (ATSs). The to code the trade report with an real time. Two commentators cite the BMA states that the expectation that indicator to show that the report was difficulty of real-time reporting of ATS trades will be reported is ‘‘both delayed because of the need to add the transactions in these instruments, since problematic and unnecessary’’ and asks CUSIP number to the dealer’s master they are sold at auction with for additional information from the file. Because the MSRB believes it is unpredictable results and are large MSRB about the utility of reporting and practical for a dealer’s securities master issues involving numerous investors. disseminating the ATS designation. file to hold all the CUSIP numbers it has They believe that trades in short-term This commentator states that trading traded in the previous year, a dealer will instruments should be reported at the information through ATSs is already not be allowed to use this exemption for end of the day rather than within 15 reported to the SEC and that the SEC a particular CUSIP more than once minutes. However, one commentator might make such information available during the year it is in operation. Trades states that VRDO reporting should be to the MSRB.57 Hartfield states that, that the dealer indicates are delayed reported in real time because ‘‘it is while it is registered as an ATS, it does because of the need to add the CUSIP preferable to have a consistent not execute trades with broker-dealers number will be checked against the procedure for submitting these trades.’’ through electronic means, but instead dealer’s previous transaction reports to The MSRB understands that trades in functions as a voice-broker. In light of ensure that the issue had not been variable rate products (including this, the commentator believes ‘‘the traded by that dealer during the past auction rate products) and commercial identification of our trades as ATS year. The three-hour requirement also paper frequently are processed in a trades will be confusing, and provide would apply to new issue securities that different manner than other fixed rate inaccurate data.’’ a dealer trades for the first time, as long municipal securities. Because it may The commentators have raised issues as the dealer in question is not the present significant operational that would be problematic for real-time syndicate manager or a syndicate challenges for dealers to incorporate reporting in the case of an ATS dealer member. This should address concerns these instruments in the 15-minute in municipal securities that also does reporting stream, the proposed rule non-ATS trades. The MSRB plans to 55 One commentator states the problem is change would require that trades in review the issue to determine whether exacerbated for West Coast firms that use East Coast short-term instruments, including there is another way to enhance existing clearing firms and that trade late in the afternoon variable rate and auction rate products audit trail capabilities with respect to Pacific Time. and commercial paper, be reported by electronically executed trades without 56 One commentator states that up to two hours are necessary and another states that setup can take the end of the day rather than within 15 identifying traditional voice brokered more than three hours. One commentator states that minutes. The dealer will include an trades as ‘‘ATS’’ transactions. At this ‘‘this process is normally measured in hours, not indicator in the trade report to show time, the MSRB is dropping the minutes.’’ One commentator depends upon a that the security is being reported requirement for dealers to identify ATS service bureau where setting up a CUSIP ‘‘can take trades, but is retaining the field in the quite a bit of time.’’ One commentator, without outside the 15-minute window for this citing details, states a concern about the time to set reason. The proposed rule change reporting format for potential use later. up non-investment grade paper. One commentator would require that trades in longer-term states that even dealers that have integrated data notes (i.e., securities with a fixed or zero 57 The MSRB understands that the SEC does not services with their processing systems still take interest rate and over nine months in have trade-level data on ATS trades similar to the approximately 7–11 minutes to set up a security RTRS trade-level data. ATSs send quarterly traded in the secondary market, if it was not already maturity) be subject to normal reporting summaries of activity to the SEC but they do not set up. rules. report to the SEC each transaction price and size.

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When RTRS is initially implemented, Proposals to Phase-In Real-Time Price participants involved in those trades in dealers will not be required to populate Dissemination. Several commentators thinly traded issues.62 In connection the ATS indicator in trade reports. suggested that a phased with its phase-in proposal, the BMA RTRS Business Day. The June 2003 implementation, in which some issues suggests that real-time trade reports Notice requested comment on the are held back from real-time disclose par value of transactions in proposed requirement to report trades dissemination in the initial phase, might investment-grade securities, showing within 15 minutes if the trades are done ease liquidity concerns. Seattle actual trade size for trades up to $5 during the ‘‘RTRS Business Day,’’ Northwest, without proposing details, million in par value, with actual par defined as the period between 7:30 a.m. states that dissemination should be value shown for the remaining trades on and 6:30 p.m. Eastern time. The time of phased-in ‘‘in order to further study the a report made one week later, as is done receipt of an electronic trade report impact on liquidity of infrequently today. Alliance Capital also states that would be the time of its arrival at NSCC. traded bonds.’’ The BMA 60 proposes more information on par value should Trades reported during the Business that the MSRB immediately disseminate be shown on trade reports. Wachovia Day would be disseminated in real-time. trades in all bonds rated ‘‘A’’ or higher ‘‘strongly agree[s]’’ with the MSRB’s Transactions effected outside of the and all trades of $1 million or less, current policy of displaying ‘‘1MM+’’ RTRS Business Day would have to be regardless of rating. Under this for all trades of $1 million or more to reported by dealers no later than 15 proposal, trades in bonds rated below prevent easy identification of the minutes after the start of the next RTRS ‘‘A’’ that are over $1 million in size trading parties. Business Day. Schwab states that it would not be disseminated in real- Because the primary purpose of real- ‘‘prefer[s] to follow the same procedures time.61 Alliance Capital, which also time transparency is to provide price used in GSCC reporting’’ but does not stated that it would like ‘‘more information, and because the concern specify the GSCC procedures or their disclosure of trading in blocks greater over identifying parties to transactions advantages. Hartfield agrees with the than $1 million,’’ proposes deferring in real-time with exact par values of dissemination of trades in bonds rated large trades, the MSRB at this time is MSRB’s proposal that the RTRS ¥ business day would be defined to below ‘‘AA ’’ and phasing in the proposing to retain the policy of extend from 7:30 a.m. to 6:30 p.m. The remainder of trades. displaying the exact par value for trades proposed rule change retains the In considering the comments on of $1 million or less and displaying definition of the RTRS Business Day phasing in real-time transparency, the ‘‘1MM+’’ for larger trades. The same contained in the June 2003 Notice. MSRB weighed the potential for values will be displayed on reports liquidity problems against the potential published each morning covering the (iv) Comments on Trades To Be for transparency benefits. The MSRB previous day’s trades (T+1 reports). As Disseminated believes that any liquidity problems that currently, exact par values of all trades may occur are likely to be temporary Divided Views on Infrequently Traded will be disseminated five business days and will resolve over time as market Issues. Some commentators that after trade date. The MSRB will review participants make adjustments in generally support transparency this policy as it gains experience with response to the more transparent nevertheless express concern about its real-time transparency. environment. The MSRB also believes effect on liquidity in certain market Broker’s Broker’s Transactions. The that the potential for transparency segments. The BMA describes its June 2003 Notice asked whether RTRS benefits, such as more accurate pricing, trade reporting could in some way concern as being focused on issues that lower transaction costs for investors and address concerns that have been are ‘‘concentrated in the hands of a few increased investor confidence, expressed about the reporting of dealers or buy-side institutions’’ which outweighs the potential for short-term broker’s broker’s trades in the same way are traded ‘‘when a bond has been liquidity problems. On this basis, the as other inter-dealer trades. It can be outstanding for a considerable period of MSRB has determined that, with the argued that this format ‘‘double counts’’ time or has a low or uncertain credit exception of issues that are not required 58 this movement of securities between standing’’. The BMA also suggests that to be reported by dealers within 15 dealers since many observers consider an economic study should be conducted minutes of the trade, all transactions the broker’s broker’s two trades to examine the issue. The BMA states, should be disseminated in real-time as effectively to be only one ‘‘trade’’ in the * * * Immediate price dissemination for they are executed. bonds that are infrequently traded and market. Hartfield, a broker’s broker, difficult to trade will likely mean that dealers (v) Comments on Information To Be comments that MSRB should not will either be less willing to supply liquidity Disseminated disseminate broker’s broker’s trades at to the market by buying bonds in these Display of Par Value. The current TRS all because ‘‘these trades do not circumstances, or else will only buy them at system produces reports that display accurately reflect the information a discounted price that accounts for this actual par value on all transactions of $1 intended by price transparency, i.e., additional risk.* * * 59 million or less that were effected the PRICE information. * * *’’ UBS [at 3] The opposite view is expressed by previous day and an indicator for larger believes ‘‘identifiers used to indicate Vanguard, which proposes that all trades stating only that the trade size * * * broker’s broker trades * * * will trades should be disseminated. was over $1 million. The ‘‘par value help avoid double counting. * * *’’ Vanguard believes that the goals of real- screen’’ for trades over $1 million was RMOA states that these trades should be time price transparency should apply to adopted by the MSRB in 2002 because reported because ‘‘including them ‘‘actively traded securities and, of concerns that the exact par value of would not exaggerate volume but would especially, inactively traded ones.’’ It large trades tends to identify the market clearly reflect the path the bond has states, ‘‘we strongly oppose * * * the taken.’’ exclusion of inactively traded securities 60 The Asset Managers Forum, which describes from the reporting regime.’’ itself as an independent affiliate of the BMA, agrees 62 TRS publishes a comprehensive transparency with the BMA proposals. report one week after trade date, which includes 61 58 See note 36 supra, at 4. Trades in all bonds will be disseminated one dealer error corrections and late trade reports. This week after trade date, as they are now. No report shows the actual par value for trades over $1 59 Id. commentators oppose this feature. million.

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The MSRB has determined to also asked dealers to describe specific Comment on National Matrix. Blair disseminate broker’s brokers’ trades reasons that might cause a transaction to states that instead of increasing along with an indicator that they were be effected at an off-market price. transparency, a national matrix should effected by a broker’s broker, and to RMOA gives as an example of a special be established that would provide indicate whether the broker’s broker price a premium price paid to cover a investors with yield information via the bought or sold the security. As noted Depository Trust Corporation short MSRB’s Web site and the Wall Street above, broker’s broker trades occur in position. Journal. The MSRB notes that private matched pairs that, in market terms, Under current practices, trades done vendors publish matrix-type many observers view as representing at a price different than the market price information in the form of various daily one movement of securities between are not separately indicated by dealers scales, and believes it would add little two dealers. Accordingly, the Board reporting trades to TRS. When such benefit for the MSRB to publish a believes it will be helpful to RTRS data trade reports are received, they are matrix. users if broker’s broker’s trades are disseminated and contribute to intra- III. Date of Effectiveness of the identified as such in trade reports. day price discrepancies seen in the Agency and Riskless Principal Proposed Rule Change and Timing for current T+1 reports. Therefore, the Commission Action Transactions. As with broker’s brokers’ MSRB has determined not to trades, users of TRS data sometimes disseminate trades that the dealer Within 35 days of the date of have been confused over reports of indicates as trades done at other than publication of this notice in the Federal agency transactions by dealers. In TRS, the market price. (Certain Special Register or within such longer period (i) and as planned in RTRS, the dealer Condition Codes will be indicative of as the Commission may designate up to reports both sides of an agency prices other than the market price.63) 90 days of such date if it finds such transaction and these trade reports are All special price trades nevertheless longer period to be appropriate and each disseminated, even though many will be kept in the RTRS database for publishes its reasons for so finding or observers consider it to be one trade. In surveillance purposes for use by the (ii) as to which the self-regulatory response to the June 2003 Notice, one NASD, SEC and bank regulatory organization consents, the Commission commentator, UBS, suggested that agencies. RTRS will, however, will: agency and riskless principal indicators disseminate ‘‘weighted average’’ trades A. By order approve such proposed be disseminated in trade records to that are received, with an indicator to rule change, or avoid the double counting issue that effect. B. Institute proceedings to determine inherent in these situations. Transaction Control Numbers. RTRS whether the proposed rule change Although new capabilities in RTRS should be disapproved. would allow the system to identify will assign a ‘‘control number’’ to each agency trades on disseminated reports transaction reported by a dealer. This is IV. Solicitation of Comments a unique number that will apply to the of inter-dealer trades, RTRS will have Interested persons are invited to initial submission and subsequent no capability to identify riskless submit written data, views, and corrections or cancellations of trade principal trades. Indicating agency arguments concerning the foregoing, data.64 The June 2003 Notice asked for trades without similarly marking including whether the proposed rule views on the use of the RTRS control riskless principal transactions would change is consistent with the Act. number to track trade report corrections introduce inconsistent treatment of two Comments may be submitted by any of and modifications. The intent was to types of transactions that most observers the following methods: consider to be equivalent in economic obtain comment both on the operational terms. Therefore, RTRS will not question of dealers using the control Electronic Comments disseminate agency or riskless principal number to refer to a submission when • Use the Commission’s Internet indicators in its transparency reports. making a change, and on the question of comment form (http://www.sec.gov/ Inter-Dealer Regulatory-Only Reports. disseminating the control number so rules/sro.shtml); or Another double counting issue concerns that a user of public trade information • Send an e-mail to rule- the new type of trade report in RTRS can tell when a trade has been changed [email protected]. Please include File termed the Inter-Dealer Regulatory-Only after it is first disclosed. In response, Number SR–MSRB–2004–02 on the or ‘‘IDRO’’ report (described above). The Schwab, RMOA and UBS state that they subject line. MSRB has determined not to agree with the MSRB’s proposed use of disseminate IDRO reports as trades. The the control number on trade information Paper Comments IDRO is reported to the MSRB for audit disseminated by RTRS. • Send paper comments in triplicate trail purposes and is substantially The MSRB plans to disseminate trade to Jonathan G. Katz, Secretary, different than a true, principal-to- corrections and modifications in real Securities and Exchange Commission, principal, trade between dealers. Each time, including the RTRS control 450 Fifth Street, NW., Washington, DC IDRO is related to a separately reported number on original trades and on any 20549–0609. and disclosed transaction with a subsequent changes in the trade. This All submissions should refer to File customer. Given the existence of the will enable users of real-time Number SR–MSRB–2004–02. This file reported customer trade showing the net information to more easily update their number should be included on the price paid by the customer, the IDRO databases when dealers make changes to subject line if e-mail is used. To help the imparts no additional market pricing trades that have been reported and Commission process and review your information. disseminated. comments more efficiently, please use Trades Reported at Prices Other than only one method. The Commission will the Market Price. The June 2003 Notice 63 As previously noted, the June 2003 Notice used post all comments on the Commission’s asked whether codes showing that a the term ‘‘Special Price Reason Code’’ to refer to Internet Web site (http://www.sec.gov/ trade was done at a price different than some of what are currently called Special Condition rules/sro.shtml). Copies of the Codes. the true market price should be 64 In making trade corrections, a dealer may refer submission, all subsequent disseminated or whether off-market to a transaction using either the RTRS control amendments, all written statements trades should be disseminated at all. It number or its own control number. with respect to the proposed rule

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change that are filed with the proposed rule change has been filed by were made on substantially the same Commission, and all written Nasdaq as a ‘‘non-controversial’’ rule terms, including interest rates and communications relating to the change under Rule 19b–4 under the collateral, as those prevailing at the proposed rule change between the Act,4 which renders the proposal time for comparable transactions with Commission and any person, other than effective upon filing with the the general public, (3) did not involve those that may be withheld from the Commission.5 The Commission is more than a normal degree of risk or public in accordance with the publishing this notice to solicit other unfavorable factors, and (4) were provisions of 5 U.S.C. 552, will be comments on the proposed rule change not otherwise subject to the specific available for inspection and copying in from interested persons. disclosure requirements of SEC the Commission’s Public Reference Regulation S–K, Item 404; I. Self-Regulatory Organization’s Room. Copies of such filing also will be (vi) payments from a financial Statement of the Terms of Substance of available for inspection and copying at institution in connection with the the Proposed Rule Change the Board’s principal offices. All deposit of funds or the financial comments received will be posted Nasdaq proposes to change Rule institution acting in an agency capacity, without change; the Commission does 4200(a)(15) to clarify the treatment of provided such payments were (1) made not edit personal identifying certain non-preferential payments made in the ordinary course of business; (2) information from submissions. You by financial institutions to directors of made on substantially the same terms as should submit only information that listed companies and their family those prevailing at the time for you wish to make available publicly. All members in the ordinary course of comparable transactions with the submissions should refer to File business. The text of the proposed rule general public; and (3) not otherwise Number SR–MSRB–2004–02 and should change is below. Proposed new subject to the disclosure requirements of be submitted on or before July 20, 2004. language is in italics; proposed SEC Regulation S–K, Item 404; or deletions are in brackets.6 (vii) loans permitted under Section For the Commission, by the Division of Market Regulation, pursuant to delegated * * * * * 13(k) of the Act. authority.65 Provided however, that in addition to Rule 4200. Definitions the requirements contained in this Jill M. Peterson, paragraph (B), audit committee Assistant Secretary. (a) For purposes of the Rule 4000 Series, unless the context requires members are also subject to additional, [FR Doc. 04–14676 Filed 6–28–04; 8:45 am] otherwise: more stringent requirements under Rule BILLING CODE 8010–01–P (1)–(14) No change 4350(d). (15) ‘‘Independent director’’ means a (C)–(G) No change person other than an officer or employee (16)–(38) No change SECURITIES AND EXCHANGE of the company or its subsidiaries or any (b) No change COMMISSION other individual having a relationship, IM—4200 Definition of Independence— [Release No. 34–49903; File No. SR–NASD– which, in the opinion of the company’s Rule 4200(a)(15) 2004–086] board of directors, would interfere with the exercise of independent judgment in It is important for investors to have Self-Regulatory Organizations; Notice carrying out the responsibilities of a confidence that individuals serving as of Filing and Immediate Effectiveness director. The following persons shall independent directors do not have a of Proposed Rule Change and not be considered independent: relationship with the listed company Amendment No. 1 Thereto by the (A) No change that would impair their independence. National Association of Securities (B) a director who accepted or who The board has a responsibility to make Dealers, Inc. to NASD Rule 4200 to has a Family Member who accepted any an affirmative determination that no Clarify the Treatment of Certain Non- payments from the company or any such relationships exist through the Preferential, Ordinary-Course parent or subsidiary of the company in application of Rule 4200. Rule 4200 also Payments excess of $60,000 during any period of provides a list of certain relationships twelve consecutive months within the that preclude a board finding of June 22, 2004. independence. These objective Pursuant to section 19(b)(1) of the three years preceding the determination of independence, other than the measures provide transparency to Securities Exchange Act of 1934 investors and companies, facilitate (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 following: (i)–(iii) No change uniform application of the rules, and notice is hereby given that on June 1, (iv) benefits under a tax-qualified ease administration. Because Nasdaq 2004, the National Association of retirement plan, or non-discretionary does not believe that ownership of Securities Dealers, Inc. (‘‘NASD’’), compensation; [or] company stock by itself would preclude through its subsidiary, the Nasdaq Stock (v) loans from a financial institution a board finding of independence, it is Market, Inc. (‘‘Nasdaq’’), filed with the provided that the loans (1) were made not included in the aforementioned Securities and Exchange Commission in the ordinary course of business, (2) objective factors. It should be noted that (‘‘Commission’’) the proposed rule there are additional, more stringent change as described in items I, II, and (‘‘Division’’), Commission, dated June 16, 2004 requirements that apply to directors III below, which Items have been (‘‘Amendment No. 1’’). Amendment No. 1 clarified serving on audit committees, as prepared by Nasdaq. On June 17, 2004, the text of IM–4200 regarding the three-year ‘‘look specified in Rule 4350. back’’ periods applicable to certain provisions of Nasdaq submitted Amendment No. 1 to The Rule’s reference to a ‘‘parent or 3 the definition of ‘‘independent director’’ in NASD the proposed rule change. The Rule 4200. The change conforms with a recent subsidiary’’ is intended to cover entities amendment to the text made by Nasdaq in another the issuer controls and consolidates 65 17 CFR 200.30–3(a)(12). proposal. See infra note. with the issuer’s financial statements as 1 4 15 U.S.C. 78s(b)(1). 17 CFR 240.19b–4. filed with the Commission (but not if 2 17 CFR 240.19b–4. 5 17 CFR 240.19b–4(f)(6). 3 See letter from Edward S. Knight, Executive 6 Changes are marked based on the text of Rule the issuer reflects such entity solely as Vice President, Nasdaq, to Katherine A. England, 4200 as amended by File No. SR–NASD–2004–80 an investment in its financial Assistant Director, Division of Market Regulation and Amendment No. 1 thereto. statements). The reference to executive

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officer means those officers covered in circumstances, such as where a director comments it received on the proposed Rule 16a–1(f) under the Act. In the has direct, significant business holdings, rule change. The text of these statements context of the definition of Family it may be appropriate to apply the may be examined at the places specified Member under Rule 4200(a)(14), the corporate measurements in paragraph in item IV below. Nasdaq has prepared reference to marriage is intended to (D), rather than the individual summaries, set forth in sections A, B, capture relationships specified in the measurements of paragraph (B). Issuers and C below, of the most significant Rule (parents, children and siblings) should contact Nasdaq if they wish to aspects of such statements. that arise as a result of marriage, such apply the Rule in this manner. The as ‘‘in-law’’ relationships. reference to a partner in paragraph (D) A. Self-Regulatory Organization’s The three year look-back periods is not intended to include limited Statement of the Purpose of, and referenced in paragraphs (A), (C), (E) partners. It should be noted that the Statutory Basis for, the Proposed Rule and (F) of the Rule commence on the independence requirements of Change date the relationship ceases. For paragraph (D) of the Rule are broader 1. Purpose example, a director employed by the than Rule 10A–3(e)(8) under the Act. company is not independent until three Under paragraph (D), a director who NASD Rule 4200(a)(15)(B) generally years after such employment terminates. is, or who has a Family Member who is, provides that a director of a listed Paragraph (B) of the Rule is generally an executive officer of a charitable company will not be considered intended to capture situations where a organization may not be considered independent if that director or a family payment is made directly to (or for the independent if the company makes member accepted any payments from benefit of) the director or a Family payments to the charity in excess of the the company in excess of $60,000 per Member of the director. For example, greater of 5% of the charity’s revenues year in a three-year period. According to consulting or personal service contracts or $200,000. However, Nasdaq Nasdaq, the purpose of this proposed with a director or Family Member of the encourages companies to consider other rule change is to clarify that certain director or political contributions to the situations where a director or their standard, non-preferential transactions campaign of a director or a Family Family Member and the company each by financial institutions that technically Member of the director would be have a relationship with the same involve ‘‘payments’’ by the financial considered under paragraph (B) of the charity when assessing director institution to the financial institutions’ Rule. Subparagraph (v) clarifies that a independence. customers will not preclude a finding of loan from a financial institution that For purposes of determining whether independence under this rule. was exempt from specific disclosure a lawyer is eligible to serve on an audit Nasdaq states that the ordinary pursuant to Instruction 3 to SEC committee, Rule 10A–3 under the Act business services provided by financial Regulation S–K, Item 404(c) will not generally provides that any partner in a institutions, such as banks, often preclude a finding of director law firm that receives payments from involve ‘‘payments’’ to the financial independence. Subparagraph (vi) the issuer is ineligible to serve on that institutions’ customers. For example, a clarifies that certain payments from issuer’s audit committee. In determining bank customer technically receives financial institutions will not preclude a whether a director may be considered ‘‘payments’’ from the bank in the form finding of director independence. In independent for purposes other than the of interest payments on deposits, the particular, subparagraph (vi) is audit committee, payments to a law firm receipt of a loan check, or the principal intended to capture standard, non- would generally be considered under and interest from a matured savings preferential payments made by financial Rule 4200(a)(15)(D), which looks to bonds. A financial institution also may institutions in the ordinary course of whether the payment exceeds the make agency ‘‘payments’’ to its business such as interest payments greater of 5% of the recipient’s gross customers in connection with securities made by a bank on deposits, certificates revenues or $200,000; however, if the transactions. For example, when a of deposits, or savings bonds. firm is a sole proprietorship, Rule brokerage firm’s customer receives Furthermore, subparagraph (vi) is 4200(a)(15)(B), which looks to whether dividends, the brokerage firm may intended to capture technical the payment exceeds $60,000, applies. receive the dividend from the issuer as ‘‘payments’’ made by a financial Paragraph (G) of the Rule provides a the customer’s agent, and then make a institution to its customers when the different measurement for financial institution acts as an agent for independence for investment companies ‘‘payment’’ to the customer after it has its customers. For example, when a in order to harmonize with the received the dividend from the issuer. brokerage firm receives dividends for Investment Company Act of 1940. In Furthermore, when a brokerage firm securities held by a customer, it will particular, in lieu of paragraphs (A)–(F), customer sells securities, the proceeds make a ‘‘payment’’ of the dividend a director who is an ‘‘interested person’’ from the sale are first received by the amount to that customer. Likewise, of the company as defined in Section brokerage firm since the securities are when a brokerage firm executes a 2(a)(19) of the Investment Company Act normally held in its name. Upon receipt customer’s order to sell the customer’s of 1940, other than in his or her capacity of the proceeds from the sale, the securities, it will make a ‘‘payment’’ of as a member of the board of directors or brokerage firm will make a ‘‘payment’’ the proceeds to the customer. any board committee, shall not be in the amount of the proceeds to the Subparagraph (vi) clarifies that agency considered independent. customer. payments, such as those described * * * * * Nasdaq believes that these non- above, shall not preclude a finding of preferential and ordinary-course director independence. II. Self-Regulatory Organization’s ‘‘payments’’ do not raise independence Paragraph (D) of the Rule is generally Statement of the Purpose of, and concerns and, therefore, should not intended to capture payments to an Statutory Basis for, the Proposed Rule preclude a finding of director entity with which the director or Family Change independence. Any type of preferential Member of the director is affiliated by In its filing with the Commission, or compensatory payment to a director serving as a partner, controlling Nasdaq included statements concerning or Family Member of a director in shareholder or executive officer of such the purpose of and basis for the excess of $60,000 would continue to be entity. Under exceptional proposed rule change and discussed any considered pursuant to that Rule.

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2. Statutory Basis has become effective pursuant to section Securities and Exchange Commission, 11 Nasdaq believes that the proposed 19(b)(3)(A) of the Act and Rule 19b– 450 Fifth Street, NW., Washington, DC 4(f)(6) thereunder.12 20549–0609. rule change is consistent with the 13 provisions of section 15A of the Act,7 in Pursuant to Rule 19b–4(f)(6)(iii), a proposed ‘‘non-controversial’’ rule All submissions should refer to File general, and with section 15A(b)(6) of No. SR–NASD–2004–086. This file the Act,8 in particular, in that it is change does not become operative for 30 days after the date of filing, or such number should be included on the designed to foster cooperation and subject line if e-mail is used. To help the coordination with persons engaged in shorter time as the Commission may Commission process and review your regulating and processing information designate if consistent with the with respect to, and facilitating protection of investors and the public comments more efficiently, please use transactions in securities, to remove interest. Nasdaq has requested that the only one method. The Commission will impediments to a free and open market Commission waive the 30-day operative post all comments on the Commission’s and a national market system, and, in delay, to permit the NASD to implement Internet Web site (http://www.sec.gov/ general, to protect investors and the the proposal immediately. rules/sro.shtml). Copies of the public interest. In particular, the The Commission believes that submission, all subsequent proposed rule change will benefit waiving the 30-day operative delay is amendments, all written statements investors, issuers, issuers’ counsel, and consistent with the protection of with respect to the proposed rule member firms by providing additional investors and the public interest. The change that are filed with the transparency to Nasdaq’s corporate Commission believes that the proposed Commission, and all written governance standards. rule change is a reasonable clarification communications relating to the of the rules regarding director proposed rule change between the B. Self-Regulatory Organization’s independence, and that acceleration of Commission and any person, other than Statement on Burden on Competition the operative date should facilitate the those that may be withheld from the application of those rules for listed Nasdaq does not believe that the public in accordance with the proposed rule change will impose any companies. Therefore, the Commission designates the proposed rule change to provisions of 5 U.S.C. 552, will be burden on competition that is not available for inspection and copying in necessary or appropriate in furtherance be operative immediately.14 the Commission’s Public Reference of the purposes of the Act. At any time within 60 days of the filing of the proposed rule change, the Section, 450 Fifth Street, NW., C. Self-Regulatory Organization’s Commission may summarily abrogate Washington, DC 20549. Copies of such Statement on Comments on the such rule change if it appears to the filing also will be available for Proposed Rule Change Received From Commission that such action is inspection and copying at the principal Members, Participants, or Others necessary or appropriate in the public office of the NASD. All comments Written comments were neither interest, for the protection of investors, received will be posted without change; solicited nor received. or otherwise in furtherance of the the Commission does not edit personal purposes of the Act.15 identifying information from III. Date of Effectiveness of the submissions. You should submit only Proposed Rule Change and Timing for IV. Solicitation of Comments Commission Action information that you wish to make Interested persons are invited to available publicly. All submissions The proposed rule change has been submit written data, views, and should refer to File No. SR–NASD– arguments concerning the foregoing, designated by Nasdaq as a ‘‘non- 2004–086 and should be submitted on including whether the proposed rule controversial’’ rule change pursuant to or before July 20, 2004. section 19(b)(3)(A) of the Act 9 and change is consistent with the Act. subparagraph (f)(6) of Rule 19b–4 Comments may be submitted by any of For the Commission, by the Division of thereunder.10 the following methods: Market Regulation, pursuant to delegated The foregoing proposed rule change: authority.16 Electronic Comments (1) does not significantly affect the Margaret H. McFarland, • protection of investors or the public Use the Commission’s Internet Deputy Secretary. comment form (http://www.sec.gov/ interest, (2) does not impose any [FR Doc. 04–14677 Filed 6–28–04; 8:45 am] significant burden on competition, and rules/sro.shtml); or • BILLING CODE 8010–01–P (3) by its terms does not become Send an e-mail to rule- operative for 30 days after the date of [email protected]. Please include File this filing, or such shorter time as the No. SR–NASD–2004–086 on the subject Commission may designate, if line. consistent with the protection of Paper Comments investors and the public interest. • Send paper comments in triplicate Furthermore, the NASD gave the to Jonathan G. Katz, Secretary, Commission written notice of its intent to file the proposed rule change, along 11 15 U.S.C. 78s(b)(3)(A). with a brief description and text of the 12 17 CFR 240.19b–4(f)(6). proposed rule change, at least five 13 17 CFR 240.19b–4(f)(6)(iii). business days prior to the date of filing 14 For the purposes only of accelerating the of the proposed rule change. operative date of this proposal, the Commission has Consequently, the proposed rule change considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78o–3. 15 For purposes of calculating the 60-day 8 15 U.S.C. 78o–3(b)(6). abrogation period, the Commission considers the 9 15 U.S.C. 78s(b)(3)(A). period to commence on June 17, 2004, the date that 10 17 CFR 240.19b–4(f)(6). Nasdaq filed Amendment No. 1. 16 17 CFR 200.30–3(a)(12).

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SECURITIES AND EXCHANGE Rule 4200. Definitions uniform application of the rules, and COMMISSION (a) For purposes of the Rule 4000 ease administration. Because Nasdaq does not believe that ownership of [Release No. 34–49901; File No. SR–NASD– Series, unless the context requires 2004–080] otherwise: company stock by itself would preclude (1)–(14) No change a board finding of independence, it is Self-Regulatory Organizations; Notice (15) ‘‘Independent director’’ means a not included in the aforementioned of Filing and Immediate Effectiveness person other than an officer or employee objective factors. It should be noted that of a Proposed Rule Change and of the company or its subsidiaries or any there are additional, more stringent Amendment No. 1 Thereto by the other individual having a relationship, requirements that apply to directors National Association of Securities which, in the opinion of the company’s serving on audit committees, as Dealers, Inc. To Conform Certain board of directors, would interfere with specified in Rule 4350. Provisions of NASD Rules 4200 and the exercise of independent judgment in The R[r]ule’s reference to a ‘‘parent or 4350 to the Rules of Another Self- carrying out the responsibilities of a subsidiary’’ is intended to cover entities Regulatory Organization, and to Make director. The following persons shall the issuer controls and consolidates Additional Revisions not be considered independent: with the issuer’s financial statements as (A) No change filed with the [U.S. Securities and June 22, 2004. (B) A director who accepted or who Exchange] Commission (but not if the Pursuant to section 19(b)(1) of the has a Family Member who accepted any issuer reflects such entity solely as an Securities Exchange Act of 1934 payments from the company or any investment in its financial statements). (‘‘Act’’),1 and Rule 19b–4 thereunder,2 parent or subsidiary of the company in The reference to executive officer means notice is hereby given that on May 18, excess of $60,000 during any period of those officers covered in SEC Rule 16a– 2004, the National Association of twelve consecutive months within the 1(f) under the Act. In the context of the Securities Dealers, Inc. (‘‘NASD’’), three years preceding the determination definition of Family Member under Rule through its subsidiary, the Nasdaq Stock of independence [the current or any of 4200(a)(14), the reference to marriage is Market, Inc. (‘‘Nasdaq’’), filed with the the past three fiscal years], other than intended to capture relationships Securities and Exchange Commission the following: specified in the R[r]ule (parents, (‘‘Commission’’) the proposed rule (i)–(iv) No change children and siblings) that arise as a change as described in items I, II, and (v) loans permitted under Section result of marriage, such as ‘‘in-law’’ III below, which items have been 13(k) of the Act. Provided however, that relationships. prepared by Nasdaq. On June 17, 2004, in addition to the requirements The three year look-back periods Nasdaq submitted an amendment to the contained in this paragraph (B), audit referenced in paragraphs (A), (C), (E) proposed rule change.3 Nasdaq has committee members are also subject to and (F) of the Rule commence on the designated the proposed rule change as additional, more stringent requirements date the relationship ceases. For constituting a ‘‘non-controversial’’ rule under Rule 4350(d). example, a director employed by the change under subparagraph (f)(6) of (C)–(F) No change company is not independent until three Rule 19b–4 under the Act,4 which (G) In the case of an investment years after such employment terminates. renders the proposal effective upon company, in lieu of paragraphs (A)–(F), Paragraph (B) of the R[r]ule is filing with the Commission. The a director who is an ‘‘interested person’’ generally intended to capture situations Commission is publishing this notice to of the company as defined in S[s]ection where a payment is made directly to (or solicit comments on the proposed rule 2(a)(19) of the Investment Company Act for the benefit of) the director or a change from interested persons. of 1940, other than in his or her capacity [f]Family [m]Member of the director. For as a member of the board of directors or I. Self-Regulatory Organization’s example, consulting or personal service any board committee. contracts with a director or [f]Family Statement of the Terms of the Substance (16)–(38) No change of the Proposed Rule Change [m]Member of the director or political (b) No change contributions to the campaign of a Nasdaq proposes to amend NASD IM—4200 Definition of director or a [f]Family [m]Member of the Rules 4200 and 4350 as set forth below. Independence—Rule 4200(a)(15) director would be considered under It is important for investors to have Proposed new language is in italics; paragraph (B) of the R[r]ule. proposed deletions are in brackets.5 confidence that individuals serving as Paragraph (D) of the [r]Rule is independent directors do not have a * * * * * generally intended to capture payments relationship with the listed company to an entity with which the director or 1 that would impair their independence. 15 U.S.C. 78s(b)(1). Family Member of the director is 2 17 CFR 240.19b–4. The board has a responsibility to make affiliated by serving as a partner, 3 See letter from Edward S. Knight, Executive an affirmative determination that no controlling shareholder or executive Vice President, Nasdaq, to Katherine A. England, such relationships exist through the Assistant Director, Division of Market Regulation, officer of such entity. Under exceptional application of Rule 4200. Rule 4200 also Commission, dated June 16, 2004 (‘‘Amendment circumstances, such as where a director provides a list of certain relationships No. 1’’). In Amendment No. 1, Nasdaq clarified, in has direct, significant business holdings, the text of its proposed rule language, a reference that preclude a board finding of it may be appropriate to apply the to exemptions that are not afforded to investment independence. These objective companies and deleted a proposed reference to corporate measurements in paragraph measures provide transparency to NASD Rule 4200(a)(15) in the paragraph in the (D), rather than the individual Interpretive Material to Rule 4200 relating to look- investors and companies, facilitate back provisions. measurements of paragraph (B). Issuers 4 17 CFR 240.19b– 4(f)(6). 2003), 68 FR 64154 (November 12, 2003). Changes should contact Nasdaq if they wish to 5 Changes are marked from the text of NASD with respect to NASD Rule 4350 are marked based apply the R[r]ule in this manner. The Rules 4200 and 4350 and IM–4200, which are on the rule text as amended by SR–NASD–2004– reference to a partner in paragraph (D) currently available in electronic format in the 069. See Securities Exchange Act Release 49732 is not intended to include limited NASD Manual at http://www.nasd.com and http:// (May 19, 2004), 69 FR 29774 (May 25, 2004). www.nasdaq.com. The relevant portion of current Nasdaq represents that no other pending or partners. It should be noted that the NASD Rule 4200 was approved in Securities approved rule filings would affect the text of these independence requirements of Exchange Act Release No. 48745 (November 4, Rules. paragraph (D) of the R[r]ule are broader

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than SEC Rule 10A–3(e)(8) under the [must]shall continue to comply with from the date of listing to comply with Act. Rules 4200–1 and 4350–1, which the majority independent board Under paragraph (D), a director who consist of sunsetting sections of requirement in Rule 4350(c). It should is, or who has a Family Member who is, previously existing Rules 4200 and be noted, however, that pursuant to SEC an executive officer of a charitable 4350. Rule 10A–3(b)(1)(iii) investment organization may not be considered The provisions of Rule 4200(a) and companies are not afforded the[se] independent if the company makes Rule 4350(c), (d) and (m) regarding exemptions under SEC Rule 10A– payments to the charity in excess of the director independence, independent 3(b)(1)(iv). Issuers may choose not to greater of 5% of the charity’s revenues committees, and notification of adopt a compensation or nomination or $200,000. However, Nasdaq noncompliance shall be implemented committee and may instead rely upon a encourages companies to consider other by the following dates: majority of the independent directors to situations where a director or their • July 31, 2005, for foreign private discharge responsibilities under [the Family Member and the company each issuers and small business issuers (as r]Rule[s] 4350(c). [These issuers shall be have a relationship with the same defined in SEC Rule 12b–2); and required to meet the majority charity when assessing director • For all other listed issuers, by the independent board requirement within independence. earlier of: (1) The listed issuer’s first one year of listing.] For purposes of Rule For purposes of determining whether annual shareholders meeting after 4350 other than Rule 4350(d)(2)(A)(ii) a lawyer is eligible to serve on an audit January 15, 2004; or (2) October 31, and Rule 4350(m), a company shall be committee, SEC Rule 10A–3 under the 2004. considered to be listing in conjunction Act generally provides that any partner In the case of an issuer with a with an initial public offering if, in a law firm that receives payments staggered board, with the exception of immediately prior to listing, it does not from the issuer is ineligible to serve on the audit committee requirements, the have a class of common stock registered that issuer’s audit committee. In issuer shall have until their second under the Act. For purposes of Rule determining whether a director may be annual meeting after January 15, 2004, 4350(d)(2)(A)(ii) and Rule 4350(m), a considered independent for purposes but not later than December 31, 2005, to company shall be considered to be other than the audit committee, implement all new requirements listing in conjunction with an initial payments to a law firm would generally relating to board composition, if the public offering only if it meets the be considered under Rule issuer would be required to change a conditions in SEC Rule 10A– 4200(a)(15)(D), which looks to whether director who would not normally stand 3(b)(1)(iv)(A) under the Act, namely, the payment exceeds the greater of 5% for election at an earlier annual meeting. that the company was not, immediately of the recipient’s gross revenues or Such issuers shall comply with the prior to the effective date of a $200,000; however, if the firm is a sole audit committee requirements pursuant registration statement, required to file proprietorship, Rule 4200(a)(15)(B), to the implementation schedule bulleted reports with the Commission pursuant which looks to whether the payment above. to Section 13(a) or 15(d) of the Act. exceeds $60,000, applies. [Issuers that have listed or shall be Companies that are emerging from Paragraph (G) of the R[r]ule provides listed in conjunction with their initial bankruptcy or have ceased to be a different measurement for public offerings shall be afforded Controlled Companies within the independence for investment companies exemptions from all board composition meaning of Rule 4350(c)(5) shall be in order to harmonize with the requirements consistent with the permitted to phase-in independent Investment Company Act of 1940. In exemptions afforded in Rule 10A– nomination and compensation particular, in lieu of paragraphs (A)–(F), 3(b)(1)(iv)(A) under the Act. That is, for committees and majority independent a director who is an ‘‘interested person’’ each committee that the company boards on the same schedule as of the company as defined in S[s]ection adopts, the company shall have one companies listing in conjunction with 2(a)(19) of the Investment Company Act independent member at the time of their initial public offering. It should be of 1940, other than in his or her capacity listing, a majority of independent noted, however, that a company that as a member of the board of directors or members within 90 days of listing and has ceased to be a Controlled Company any board committee, [would]shall not all independent members within one within the meaning of Rule 4350(c)(5) be considered [to be] independent. year.] A company listing in connection must comply with the audit committee * * * * * with its initial public offering shall be requirements of Rule 4350(d) as of the permitted to phase in its compliance date it ceased to be a Controlled 4350. Qualitative Listing Requirements with the independent committee Company. Furthermore, the executive for Nasdaq National Market and requirements set forth in Rule 4350(c) sessions requirement of Rule 4350(c)(2) Nasdaq SmallCap Market Issuers on the same schedule as it is permitted applies to Controlled Companies as of Except for Limited Partnerships to phase in its compliance with the the date of listing and continues to No change. independent audit committee apply after it ceases to be controlled. (a) Applicability requirement pursuant to SEC Rule 10A– Companies transferring from other (1)through (4) No change. 3(b)(1)(iv)(A). Accordingly, a company markets with a substantially similar (5) Effective Dates/Transition. In order listing in connection with its initial requirement shall be afforded the to allow companies to make necessary public offering shall be permitted to balance of any grace period afforded by adjustments in the course of their phase in its compliance with the the other market. Companies regular annual meeting schedule, and independent committee requirements transferring from other listed markets consistent with [Exchange Act]SEC Rule set forth in Rule 4350(c) as follows: (1) that do not have a substantially similar 10A–3, Rules 4300 and 4350 are One independent member at the time of requirement shall be afforded one year effective as set out in this subsection. listing; (2) a majority of independent from the date of listing on Nasdaq. This During the transition period between members within 90 days of listing; and transition period is not intended to November 4, 2003 and the effective date (3) all independent members within one supplant any applicable requirements of of Rules 4200 and 4350, companies that year of listing. Furthermore, a company Rule 10A–3 under the Act. have not brought themselves into listing in connection with its initial The limitations on corporate compliance with these [r]Rules public offering shall have twelve months governance exemptions to foreign

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private issuers shall be effective July 31, certain provisions of Nasdaq’s existing member at the time of listing, a majority 2005. However, the requirement that a corporate governance standards to of independent members within 90 days foreign issuer disclose the receipt of a conform to the corporate governance of listing, and all independent members corporate governance exemption from standards of another self-regulatory within one year of listing. Furthermore, Nasdaq shall be effective for new organization and to provide additional the company would be required to have listings and filings made after January 1, transparency to such standards. a majority independent board within 2004. (i) Rule 4200(a)(15)(B) Look-Back one year of listing. Nasdaq states that it Rule 4350(n), requiring issuers to Provision has historically given a company adopt a code of conduct, shall be emerging from bankruptcy or a company effective May 4, 2004. NASD Rule 4200(a)(15)(B) currently that ceases to be a Controlled Company Rule 4350(h), requiring audit provides that a person cannot be an the same grace period for compliance independent director if the person has committee approval of related party with NASD Rule 4350 as it provides a accepted any payments from the transactions, shall be effective January company seeking to be listed in company or a subsidiary or parent of the 15, 2004. connection with an IPO. Nasdaq company in excess of $60,000 during The remainder of Rule 4350(a) and believes that providing such companies the current or any of the past three fiscal Rule 4350(b) are effective November 4, with a reasonable period of time to years. The proposed rule filing would 2003. make adjustments to comply with the (b)–(g) No change eliminate the use of an issuer’s fiscal year in determining the three-year look- requirements of Rule 4350 is reasonable (h) Conflict of Interest and appropriate under the Each issuer shall conduct an back period set forth in NASD Rule circumstances. Likewise, pursuant to appropriate review of all related party 4200(a)(15)(B). Under the proposed new section 303A of the Listed Company transactions for potential conflict of rule, as amended, the look-back period Manual of the New York Stock interest situations on an ongoing basis would be any period of 12 consecutive Exchange (‘‘NYSE’’), the NYSE permits and all such transactions [must] shall be months within the three years preceding a company emerging from bankruptcy approved by the company’s audit the date independence is to be and a company that has ceased to be committee or another independent body determined. For example, if Controlled Company to phase-in of the board of directors. For purposes independence were to be determined as independent nomination and of this rule, the term ‘‘related party of an issuer’s annual meeting scheduled compensation committees and majority transaction’’ shall refer to transactions for May 1, 2004, the look-back period required to be disclosed pursuant to under the proposed new NASD Rule independent boards on the same SEC Regulation S–K, Item 404. However, 4200(a)(15)(B) would be from May 1, schedule as companies listing in in the case of small business issuers (as 2001, to May 1, 2004. Under the current conjunction with an IPO. Accordingly, that term is defined in SEC Rule 12b– NASD Rule 4200(a)(15)(B), the look- Nasdaq believes the proposed rule 2), the term ‘‘related party transactions’’ back period depends on when the filing, as amended, will conform shall refer to transactions required to be issuer’s fiscal year begins. Using the Nasdaq’s corporate governance disclosed pursuant to SEC Regulation same example above, with standards to the NYSE’s corporate S–B, Item 404, and in the case of non- independence to be determined as of the governance standards, creating more U.S. issuers, the term ‘‘related party issuer’s annual meeting scheduled for uniformity across market centers with transactions’’ shall refer to transactions May 1, 2004, and with the issuer’s fiscal respect to transition rules for these required to be disclosed pursuant to year beginning on October 1, the look- companies. back period would be from October 1, Form 20–F, Item 7.B. (iii) Clarification of the Definition of (i)–(n) No change. 2000, to May 1, 2004. Nasdaq believes that the proposed modification to NASD ‘‘Related Party Transaction’’ * * * * * Rule 4200(a)(15)(B) is appropriate Further, the proposed rule change, as II. Self-Regulatory Organization’s because it introduces a simpler amended, would clarify the definition of Statement of the Purpose of, and calculation that is not dependent on an the term ‘‘related party transaction’’ in Statutory Basis for, the Proposed Rule issuer’s particular fiscal year-end. NASD Rule 4350(h) with respect to Change (ii) Clarification of the Transition Rules small business issuers and non-U.S. In its filing with the Commission, for a Company Emerging From issuers. The term ‘‘related party Nasdaq included statements concerning Bankruptcy or a Company That Ceases transaction’’ is currently defined in the purpose of and basis for the To Be a Controlled Company NASD Rule 4350(h) as any transaction proposed rule change, as amended, and The proposed rule change, as that must be disclosed pursuant to SEC discussed any comments it received on amended, also would clarify that a Regulation S–K, Item 404. Small the proposed rule change. The text of company emerging from bankruptcy or business issuers and non-U.S. issuers, these statements may be examined at a company that ceases to be a Controlled however, are not subject to SEC the places specified in item IV below. Company (as defined by NASD Rule Regulation S–K, Item 404, but are Nasdaq has prepared summaries, set 4350(c)(5)) will be given the same instead subject to SEC Regulation S–B, forth in sections A, B, and C below, of schedule for compliance with NASD Item 404, and Form 20–F, Item 7.B, the most significant aspects of such Rule 4350’s independent committees respectively. Accordingly, the proposed statements. and majority independent board rule change, as amended, corrects this A. Self-Regulatory Organization’s requirements as a company seeking to discrepancy by clarifying that the term Statement of the Purpose of, and be listed in connection with an initial ‘‘related party transaction’’ for purposes Statutory Basis for, the Proposed Rule public offering (‘‘IPO’’) is given of small business issuers shall refer to Change pursuant to NASD Rule 4350(a)(5). In transactions required to be disclosed particular, for each committee that the under SEC Regulation S–B, Item 404, 1. Purpose company adopts (other than the audit and, with respect to non-U.S. issuers, According to Nasdaq, the purpose of committee) the company would be the term ‘‘related party transactions’’ this rule filing, as amended, is to change required to have one independent shall refer to those transactions required

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to be disclosed under Form 20–F, Item significant burden on competition, and arguments concerning the foregoing, 7.B.6 (3) by its terms does not become including whether the proposed rule operative for 30 days after the date of change is consistent with the Act. 2. Statutory Basis this filing, or such shorter time as the Comments may be submitted by any of Nasdaq believes that the proposed Commission may designate, if the following methods rule change, as amended, is consistent consistent with the protection of with the provisions of section 15A of investors and the public interest. Electronic Comments the Act,7 in general, and furthers the Furthermore, the NASD gave the • Use the Commission’s Internet objectives of section 15A(b)(6) of the Commission written notice of its intent comment form (http://www.sec.gov/ Act,8 in particular, in that it is designed to file the proposed rule change, along rules/sro.shtml); or to foster cooperation and coordination with a brief description and text of the • with persons engaged in regulating and proposed rule change, at least five Send e-mail to rule- processing information with respect to, business days prior to the date of filing [email protected]. Please include File and facilitating transactions in of the proposed rule change. Number SR–NASD–2004–080 on the securities, to remove impediments to a Consequently, the proposed rule change subject line. free and open market and a national has become effective pursuant to section Paper Comments market system, and, in general, to 19(b)(3)(A) of the Act 11 and Rule 19b– protect investors and the public interest. 4(f)(6) thereunder.12 • Send paper comments in triplicate Nasdaq believes the proposed rule Pursuant to Rule 19b–4(f)(6)(iii),13 a to Jonathan G. Katz, Secretary, change will benefit investors, issuers, proposed ‘‘non-controversial’’ rule Securities and Exchange Commission, issuers’ counsel, and member firms by change does not become operative for 30 450 Fifth Street, NW., Washington, DC providing additional transparency to days after the date of filing, or such 20549–0609. Nasdaq’s corporate governance shorter time as the Commission may All submissions should refer to File standards and promoting greater designate if consistent with the Number SR–NASD–2004–080. This file uniformity with the existing corporate protection of investors and the public number should be included on the governance standards of the NYSE. interest. Nasdaq has requested that the subject line if e-mail is used. To help the Nasdaq also believes additional Commission waive the 30-day operative Commission process and review your transparency and greater uniformity will delay, to permit the NASD to implement comments more efficiently, please use reduce administrative costs associated the proposal immediately. only one method. The Commission will with compliance with Nasdaq’s The Commission believes that post all comments on the Commission’s corporate governance standards. waiving the 30-day operative delay is Internet Web site (http://www.sec.gov/ B. Self-Regulatory Organization’s consistent with the protection of rules/sro.shtml). Copies of the Statement on Burden on Competition investors and the public interest. The submission, all subsequent Commission believes that the proposed Nasdaq does not believe that the amendments, all written statements rule change makes reasonable with respect to the proposed rule proposed rule change will result in any modifications that will ease the burden on competition that is not change that are filed with the application of certain of Nasdaq’s Commission, and all written necessary or appropriate in furtherance corporate governance rules for listed of the purposes of the Act, as amended. communications relating to the issuers and conforms others to those of proposed rule change between the C. Self-Regulatory Organization’s the NYSE, and that acceleration of the Commission and any person, other than Statement on Comments on the operative date is appropriate to expedite those that may be withheld from the Proposed Rule Change Received From their implementation. Therefore, the public in accordance with the Members, Participants, or Others Commission designates the proposed provisions of 5 U.S.C. 552, will be rule change to become operative Written comments were neither available for inspection and copying in immediately.14 solicited nor received for this proposed the Commission’s Public Reference At any time within 60 days of the rule change. Room. Copies of such filing also will be filing of the proposed rule change, the available for inspection and copying at III. Date of Effectiveness of the Commission may summarily abrogate the principal office of Nasdaq. All Proposed Rule Change and Timing for such rule change if it appears to the comments received will be posted Commission Action Commission that such action is without change; the Commission does The proposed rule change has been necessary or appropriate in the public not edit personal identifying designated by Nasdaq as a ‘‘non- interest, for the protection of investors, information from submissions. You controversial’’ rule change pursuant to or otherwise in furtherance of the should submit only information that 15 section 19(b)(3)(A) of the Act 9 and purposes of the Act. you wish to make available publicly. All subparagraph (f)(6) of Rule 19b–4 IV. Solicitation of Comments submissions should refer to File thereunder.10 Number SR–NASD–2004–080 and The foregoing proposed rule change: Interested persons are invited to should be submitted on or before July (1) Does not significantly affect the submit written data, views, and 20, 2004. protection of investors or the public 11 For the Commission, by the Division of interest, (2) does not impose any 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b–4(f)(6). Market Regulation, pursuant to delegated 13 17 CFR 240.19b–4(f)(6)(iii). authority.16 6 The Commission notes that the proposed rule 14 For the purposes only of accelerating the Margaret H. McFarland, change also includes additional amendments to the operative date of this proposal, the Commission has text of NASD Rules 4200 and 4350 and IM–4200 considered the proposed rules impact on efficiency, Deputy Secretary. that do not introduce substantive changes. competition, and capital formation. 15 U.S.C. 78c(f). [FR Doc. 04–14678 Filed 6–28–04; 8:45 am] 7 15 U.S.C. 78o–3. 15 For purposes of calculating the 60-day BILLING CODE 8010–01–U 8 15 U.S.C. 78o–3(b)(A). abrogation period, the Commission considers the 9 15 U.S.C. 78s(b)(3)(A). period to commence on June 17, 2004, the date that 10 17 CFR 240.19b–4(f)(6). Nasdaq filed Amendment No. 1. 16 17 CFR 200.30–3(a)(12).

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SMALL BUSINESS ADMINISTRATION Dated: June 23, 2004. experienced a change in class location. Cheri L. Cannon, A class location change results from [Declaration of Disaster #3585] Acting Associate Administrator for Disaster new construction in the vicinity of a Assistance. pipeline segment and, in the absence of State of Indiana (Amendment #2) [FR Doc. 04–14714 Filed 6–28–04; 8:45 am] a waiver, triggers a requirement that the In accordance with a notice received BILLING CODE 8025–01–P maximum allowable operating pressure from the Department of Homeland be confirmed or revised. The criteria Security—Federal Emergency matrix provides information and Management Agency, effective June 22, SMALL BUSINESS ADMINISTRATION guidance to pipeline operators 2004, the above numbered declaration is concerning the specific pipe design and Public Federal Regulatory hereby amended to include Brown, operating parameters within which OPS Enforcement Fairness Roundtable; Clay, Delaware, Greene, Henry, Jasper, is likely to consider a class location Region X Regulatory Fairness Board Lake, Madison, Monroe, Newton, Owen, waiver application to be consistent with Putnam, and Tipton Counties as disaster The Small Business Administration pipeline safety. areas due to damages caused by severe Region X Regulatory Fairness Board and FOR FURTHER INFORMATION CONTACT: Joy storms, tornadoes, and flooding the SBA Office of the National Kadnar, (tel: 202–366–0568; e-mail occurring on May 27, 2004, and Ombudsman will hold a Public [email protected] regarding the continuing. Roundtable on Wednesday, July 28, subject matter of this notice. A copy of In addition, applications for economic 2004 at 8:30 a.m. at the State Capitol the new criteria for consideration of gas injury loans from small businesses Building, Hearing Room E, 900 Court pipeline Class Location waiver located in the contiguous counties of Street, NE., Salem, OR 97301–4042, to applications can be accessed in the Fayette, Jay, LaPorte, Porter, Randolph, provide small business owners and docket captioned above on the DOT’s Sullivan, Vigo, and Wayne in the State representatives of trade associations Docket Management System Web site at: of Indiana; and Cook, Kankakee, and with an opportunity to share http://dms.dot.gov. Additional Will Counties in the State of Illinois information concerning the federal information about RSPA/OPS Class may be filed until the specified date at regulatory enforcement and compliance Location waiver criteria can be found at the previously designated location. All environment. http://primis.rspa.dot.gov/gasimp. other counties contiguous to the above Anyone wishing to attend or to make ADDRESSES: For access to the docket to named primary counties have been a presentation must contact Moe read background documents or previously declared. Mowery in writing or by fax, in order to comments, go to http://dms.dot.gov at All other information remains the be put on the agenda. Moe Mowery, any time or to Room PL–40 on the plaza same, i.e., the deadline for filing Business Development Officer, Small level of the Nassif Building, 400 applications for physical damage is Business Administration Portland Seventh Street, SW., Washington, DC, August 2, 2004, and for economic injury District Office, 1515 S.W. Fifth Avenue, between 9 a.m. and 5 p.m., Monday the deadline is March 3, 2005. Suite 1050, Portland, OR 97201–5494, through Friday, except Federal (Catalog of Federal Domestic Assistance phone (503) 326–5209, fax (202) 481– Holidays. Program Nos. 59002 and 59008) 4411, e-mail: [email protected]. SUPPLEMENTARY INFORMATION: For more information, see our Web Dated: June 23, 2004. site at http://www.sba.gov/ombudsman. Background Cheri L. Cannon, Dated: June 23, 2004. The criteria document available in the Acting Associate Administrator for Disaster Assistance. Peter Sorum, docket establishes guidelines for the consideration of requests for waiver of [FR Doc. 04–14713 Filed 6–28–04; 8:45 am] Senior Advisor, Office of the National Ombudsman. the requirement at 49 CFR 192.611 to BILLING CODE 8025–01–P [FR Doc. 04–14712 Filed 6–28–04; 8:45 am] confirm or revise the maximum BILLING CODE 8025–01–P allowable operating pressure (MAOP) of SMALL BUSINESS ADMINISTRATION a natural gas pipeline after a change in class location has occurred. If granted, [Declaration of Disaster #3590] DEPARTMENT OF TRANSPORTATION a class location waiver would allow a pipeline operator to perform alternative Commonwealth of Kentucky Research and Special Programs risk control activities based on the (Amendment #1) Administration principles and requirements of the Integrity Management Program in lieu of In accordance with a notice received [Docket No. RSPA–04–17401] pipe replacement or pressure reduction. from the Department of Homeland On December 15, 2003, the Office of Pipeline Safety: Development of Class Security—Federal Emergency Pipeline Safety (OPS) published a Final Location Change Waiver Criteria Management Agency, effective June 18, Rule requiring operators of gas 2004, the above numbered declaration is AGENCY: Office of Pipeline Safety, transmission pipelines to develop and hereby amended to establish the Research and Special Programs implement integrity management incident period for this disaster as Administration, DOT. programs for their pipelines in high beginning on May 26, 2004 and ACTION: consequence areas (68 FR 69778; Dec. continuing through June 18, 2004. Notice; criteria for class location change waivers. 15, 2003). The cost-benefit analysis in All other information remains the the rule states that: same, i.e., the deadline for filing SUMMARY: This notice announces the Another benefit to be realized from applications for physical damage is availability of the criteria that the Office August 9, 2004, and for economic injury implementing this rule is reduced cost to the of Pipeline Safety (OPS) will use in pipeline industry for assuring safety in areas the deadline is March 10, 2005. considering waiver applications along pipelines with relatively more (Catalog of Federal Domestic Assistance submitted by operators of natural gas population. The improved knowledge of Program Nos. 59002 and 59008) pipeline segments that have pipeline integrity that will result from

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implementing this rule will provide a normal case-by-case waiver approval • Up to 25 miles of pipe either side technical basis for providing relief to process. Under 49 U.S.C. 60118, OPS of the waiver location must be included operators from current requirements to may grant a waiver of any regulatory in the pipeline company’s Integrity reduce operating stresses in pipelines when requirement if granting the waiver is population near them increases. Regulations Management Program and periodically currently require that pipelines with higher ‘‘not inconsistent with pipeline safety.’’ inspected with an in-line inspection local population density operate at lower Therefore, each operator submitting a technique pressures. This is intended to provide an waiver request has the burden of While each waiver request is extra safety margin in those areas. Operators demonstrating that the proposed waiver considered in its entirety, requests typically replace pipeline when population would not be inconsistent with pipeline involving pipelines with operating increases, because reducing pressure to safety with respect to the particular pipe conditions reflecting higher risk will reduce stresses reduces the ability of the in the affected area. Each waiver request merit more rigorous scrutiny and pipeline to carry gas. Areas with population growth typically require more, not less, gas. is also subject to public notice and require increasing levels of justification. Replacing pipeline, however, is very costly. comment. Operators of intrastate The criteria document outlines in more Providing safety assurance in another pipelines are required to submit waiver detail the specific parameters of pipe manner, such as by implementing this rule, requests at the state level. design and operating conditions that could allow RSPA/OPS to waive some pipe Beginning in 2004, requests for class OPS considers in reviewing class replacement. RSPA/OPS estimates that such location waivers will be considered for location waiver requests. It contains waivers could result in a reduction in costs a number of candidate sites. During this three categories specifying: (1) The to industry of $1 billion over the next 20 initial period, OPS will gather data to parameters within which a waiver years, with no reduction in public safety. assess whether the integrity request is likely to be considered In addition to being factored into the management programs and other consistent with pipeline safety; (2) the cost-benefit analysis of the Integrity alternative risk control activities these parameters within which a request is Management Program rule, the technical waivers would be conditioned upon are less likely to be considered consistent soundness of issuing class location being implemented effectively. The with pipeline safety; and (3) those waivers has been considered in monitoring of compliance with the within which a request is unlikely to be connection with the following required activities will be conducted considered consistent with pipeline regulations, standards, and programs: through periodic operator reporting safety. These criteria reflect OPS’ • The Risk Management requirements as well as scheduled current thinking and are subject to Demonstration Program pipeline inspections. If, after a class • change as more experience with the The Integrity Management Program location waiver is granted, OPS issuance of class location waivers is regulations (49 CFR Part 192, Subpart O) • determines that the waiver is no longer gained. The development of ASME consistent with public safety, OPS may Standard B31.8S ‘‘Managing System take appropriate regulatory action up to Notification Requirements Integrity of Gas Pipelines’’ • and including retraction of the waiver Under 49 CFR 192.611(d) class Various requests for waiver and requiring immediate compliance location change sites have a 24-month regarding compliance activities in class with the MAOP restrictions otherwise remediation time limit that begins with location change areas applicable to the changed class location. the identification of the site. The provision of class location Any pipeline or pipeline section for Accordingly, operators who have waivers, where warranted, is intended which a class location waiver is granted candidate sites should submit written to benefit both the public and pipeline remains subject to all other notice to OPS of their intent to request operators. First, within the waiver area requirements of 49 CFR Parts 190, 191, a class location waiver as early in the the pipeline operator will be conducting and 192. 24-month period as possible. With in-line inspections and other assessment respect to intrastate pipelines, since methods, substantially increasing the Criteria state agency approval is required, the operator’s knowledge of the integrity of The age and manufacturing process of operator should submit the notice to pipe structures and potentially the pipe, construction processes used both the applicable state agency and accelerating the identification and and operating and maintenance history OPS. In the notification, the operator repair of actionable anomalies that are all significant factors that must be must include the following information: could pose a threat to the public and considered in the waiver process. • A list of the proposed waiver sites environment. Second, in addition to Additionally, certain threshold including their beginning and ending performing in-line inspections of the requirements must be met in order for mileposts and a map of the class change pipe located within the waiver areas, in a pipeline section to be considered a location(s), adjacent housing and other most cases, operators will perform in- candidate site. Among these structures (within the 1320-foot line inspection and repairs of any requirements are: corridor, or C–FER Circle if potential • actionable anomalies identified up to 25 No pipe segments changing to Class impact radius is greater than 660 feet miles upstream and downstream of the 4 locations will be considered (must have actual data, do not prorate)), waiver area, substantially increasing the • No bare pipe will be considered • identification of current and previous protection afforded to populated and No pipe containing wrinkle bends class location designation, and the environmentally sensitive areas along will be considered reason for the class change. The • No pipe segments operating above the right of way. Third, provision of a operator shall indicate when this 72% SMYS will be considered for a class location waiver may avoid the condition changed creating the new Class 3 waiver delivery interruptions, supply shortages, class location area and will provide and additional costs associated with • Records must be produced that show a hydrostatic test to at least 1.25 verification of those date changes. excavating and replacing the pipe in the • Attributes associated with the affected areas. x MAOP • In-line inspection must have been inspection area containing the proposed Candidates for Waiver Consideration performed with no significant anomalies waiver location(s) including: The vehicle for an operator seeking a identified that indicate systemic » Pipe Vintage class location waiver will be through the problems —Date of installation

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—Pipe manufacturer the hydrostatic test and ILI results and • Any leaks on the pipeline in the » Diameter, wall thickness, grade and remedial activities. inspection area containing the waiver seam type • The operator must determine and location(s) that occurred during the » Coating type provide certification that the previous year. (both reportable and non » Depth of Cover inspections/activities associated with reportable) » Local geology and risks associated this site will not impact or defer any of • List of all repairs on the pipeline with the terrain the operator’s assessments for HCAs the inspection area containing the » Maximum Allowable Operating under Part 192, Subpart O, particularly waiver location(s) made during the Pressure (MAOP) (revised MAOP, if those associated with the most previous year. applicable); historical maximum and significant 50%. • On-going damage prevention minimum operating pressure • A summary list of any additional initiatives on the pipeline in the » Hydrostatic test records proposed alternative risk control inspection area containing the waiver » Girth weld radiography records activities for each candidate site, location(s) and a discussion on its » In-line inspection records (date including any sites not located in a HCA success. launched, tool type, vendor or (i.e., inspections and assessments, • Any mergers, acquisitions, transfers operator evaluated log, dig records, electrical surveys, increased patrolling, of assets, or other events affecting the was the tool tolerance accurately leak surveys, public education, etc. regulatory responsibility of the company reflected in digs) above and beyond the current » operating the pipeline to which the Cathodic Protection records requirements of Part 192). Include the waiver applies. • Identify the inspection area mileposts within which each activity containing the proposed waiver would be conducted (additional mileage Supplemental Reporting location(s). upstream and downstream of the waiver To the extent possible, the pipeline • Limits of HCAs within the area is expected) and the proposed time company should provide the following inspection area containing the proposed interval for performing the activities on information with the first annual report: waiver location(s), if applicable. an ongoing basis. Note that OPS may • Describe the benefit to the public in • Direct Assessment results for the require that the scope or the interval of terms of energy availability. Availability proposed waiver area (ECDA, SCCDA, any proposed alternative risk control should address the benefit of avoided and coating) activity be modified or require disruptions required for pipe • Any incidents associated with the additional activities before granting a replacement and the benefit of inspection area containing the proposed waiver. maintaining system capacity. waiver location(s) (both reportable and • Describe the safety benefit both to non reportable) the specific waiver request site, and Authority: 49 U.S.C. 60102, 60109, 60117. • History of leaks on the pipeline in areas outside the waiver location. This Issued in Washington, DC, on June 24, the inspection area containing the should specifically include the number 2004. proposed waiver location(s) (both of residences and identified sites at the Richard D. Huriaux, reportable and non reportable) proposed waiver location(s) and within Director, Technical Standards, Office of • List of all repairs on the pipeline the inspection area containing the Pipeline Safety. within the inspection area containing waiver location(s). [FR Doc. 04–14725 Filed 6–28–04; 8:45 am] the proposed waiver location(s). Reporting Requirements BILLING CODE 4910–60–P • On-going damage prevention initiatives on the pipeline within the Within three months following inspection area containing the proposed approval of a class location waiver and DEPARTMENT OF TRANSPORTATION waiver location(s) and a discussion of annually thereafter, operators will be its effectiveness. required to periodically report the Research and Special Programs • A list of all Safety Related following: Administration Condition Reports related to line pipe • Define the economic benefit to the integrity submitted on the inspection company. This should address both the [Docket No. RSPA–03–17375; Notice 2] area containing the proposed waiver cost avoided from not replacing the pipe location(s). as well as the added costs of the Pipeline Safety: Grant of Waiver; • A summary of the integrity threats inspection program (required for the GulfTerra Field Services LLC to which the pipe within the site is initial report only). AGENCY: Research and Special Programs susceptible based on Part 192 criteria. • The results of any ILI or direct Administration (RSPA); U.S. • An in-line inspection schedule and assessments performed within the Department of Transportation (DOT). a hydrostatic testing schedule (if a valid inspection area containing the waiver in-line inspection and hydrostatic test location(s) during the previous year. ACTION: Notice; grant of waiver. have not already been conducted). • Any new integrity threats identified These inspections/tests must be within the inspection area containing SUMMARY: GulfTerra Field Services LLC scheduled such that they will be the waiver location(s) during the (GTFS), requested a waiver of completed, and any actionable previous year. compliance with the regulatory anomalies remediated in accordance • Any encroachment in the requirements at 49 CFR 192.619(a)(2)(ii), with Part 192, Subpart O, prior to the inspection area including the waiver 192.503, and 192.505 for certain end of the 24-month compliance location(s) including the number of new offshore pipeline segments of the window. The operator shall provide 30 residences or gathering areas. deepwater Phoenix Gas Gathering days prior notice of any ILI or direct • Any incidents associated with the System (Phoenix). GTFS is requesting a assessments to be performed within the inspection area containing the waiver waiver from the post-construction inspection area containing the waiver location(s) that occurred during the hydrotesting requirement for selected location(s). Note: Final approval of the previous year. (both reportable and non segments of the Phoenix system. waiver will be based on the results of reportable) SUPPLEMENTARY INFORMATION:

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Background RSPA/OPS sees no added value in the environment. Finally, the suggestion GTFS, a wholly owned subsidiary of performing a hydrotest on this pipeline. that a sizing pig be used in addition to GulfTerra Energy Partners L.P., has GulfTerra has committed to perform a hydrotest is beyond the scope of this entered into a gas gathering agreement several additional quality control waiver. 5. Mr. Langer commented that the with Kerr McGee Oil & Gas Corporation measures on this pipeline throughout its elimination of the hydrotest would and the Devon Louisiana Corporation to construction to ensure its integrity. introduce the possibility of shoddy design, build, own, and operate the These additional risk control measures are listed at the end of this document. materials and shoddy workmanship. Phoenix Gas Gathering System 2. Mr. Langer thought it prudent to The Federal pipeline safety (Phoenix). GTFS will transport require a hydrotest as a means of regulations set forth minimum production fuel from the Red Hawk applying pressure on pipeline project standards for materials and Spar, a deepwater fuel production managers to eliminate as many human constructions. In addition, GTFS has facility in the Gulf of Mexico, to the errors as possible. committed to perform several other Pioneer Platform, an existing pipeline Although no one can disagree that quality control checks on this pipeline facility located approximately 76 miles humans make mistakes, the purpose of throughout its construction to ensure downstream. a hydrotest has never been to apply the integrity of the pipeline. GTFS is GTFS requested a waiver of additional pressure on pipeline project expected to comply with the federal compliance with the requirements at 49 managers. To the contrary, the purpose pipeline safety regulations and the CFR 192.619(a)(2)(ii), 192.503, and of a hydrotest is to impose wall stresses conditions of this waiver. 192.505 based on its contention that it that are sufficient to expose defects in A waiver of the hydrotest requirement is unnecessary to hydrostatically test the pipeline. for the Phoenix system does not relieve this pipeline. GTFS asserts that a 3. Both commenters mentioned that a GTFS of its responsibility to ensure that hydrostatic test will not demonstrate the hydrotest can be useful in detecting quality control procedures are adhered strength and integrity of the pipeline small pipeline leaks due to minor to during the construction of this because the pipeline is designed of defects and not necessarily major pipeline. heavy wall pipe and it will not pipeline failures. 6. Mr. Langer commented that there experience the wall stress intended to The intent of the hydrotest regulation may come a time when it is cost be produced by a hydrotest. The heavy is to produce stresses in the pipe wall prohibitive to dewater gas transmission wall pipe is being used to prevent the that are sufficient to expose defects in pipelines after a hydrotest has been collapse of the pipeline in the face of the pipe prior its operation. Because this performed. However, he does not the huge external pressures exerted on pipeline is built using heavier wall pipe believe this to be the case with the it at a water depth of 5,300 feet. GTFS and is under huge compressive stresses Phoenix pipeline because this line is at proposes to perform alternative risk from more than a mile of water, a a depth of only 5,300 feet. control activities instead of the pressure hydrotest as required by the gas pipeline In evaluating this waiver request, test regulations. safety regulations will not produce wall RSPA/OPS evaluated whether the After reviewing the waiver request, stresses high enough to detect leaks. proposed waiver would provide an RSPA/OPS published a notice inviting 4. Mr. Langer commented on the equal or greater level of safety to that interested persons to comment on consequences of a leaking hydrocarbon currently provided by the regulations. whether a waiver should be granted pipeline and how negative public RSPA/OPS believes that because the (Notice 1) (69 FR 16338; March 29, opinion could result in a suspension of Phoenix system is constructed of heavy 2004). RSPA/OPS stated that it was operations for an offshore oil producing wall pipe and located offshore at a considering if a hydrotest of this facility in the event of a major crude oil depth of 5,300 feet, a hydrotest of this pipeline was necessary and if the pipeline break. He stated that it is better pipeline does not provide any alternative risk control activities to verify that the pipeline is free of leaks meaningful information because the proposed by GTFS will yield an during construction—before stresses produced from the tests are not equivalent or greater degree of safety. hydrocarbons are introduced into the sufficient to demonstrate the integrity of pipeline. He also suggested that a sizing the pipe. Comments on Proposed Waiver pig be used in addition to a hydrotest. 7. MMS commented that research Comments were received from Carl The Phoenix system is a natural gas should be performed by industry Langer (a private citizen) and the U.S. pipeline, not a hazardous liquid experts to determine what viable Department of the Interior, Minerals pipeline. Because of the different hydrotest alternatives exist and how can Management Service (MMS). Each characteristics of gas and hazardous they be implemented. substantive comment is addressed liquids, the impact of gas pipeline GTFS relied on the research and below: incidents on an offshore pipeline expertise of Det Norske Veritas (DNV), 1. Both commenters noted that a facility is expected to be significantly a respected international and hydrotest is a means of ensuring that the less than a similar accident involving a independent foundation involved in finished pipeline meets all quality hazardous liquid pipeline. Moreover, safeguarding life, property, and the requirements. because this is an offshore natural gas environment at sea, and designed this RSPA/OPS agrees that a hydrotest is pipeline facility, there would be no pipeline to meet DNV’s Offshore one of several quality control checks immediate safety hazard to the general Standard for Submarine Pipeline that are generally used to ensure quality public. RSPA/OPS expects—and the Systems (DNV–OS–F101, Jan. 2003). construction of a pipeline. For the federal pipeline safety regulations DNV publishes Offshore Service Phoenix pipeline, however, GTFS has require—GTFS to take actions that are Specifications, Offshore Standards, and demonstrated that a hydrotest, as necessary to ensure the safe operation of Recommended Practices for ships, required by 49 CFR part 195, will not its system. In addition, RSPA/OPS has offshore units and installations. It also produce stresses in the pipe wall the enforcement authority to impose provides classification, certification, sufficient to demonstrate the integrity of restrictions or discontinue the use of the and other verification and consulting the pipe because the Phoenix pipeline Phoenix pipeline in the event the services for general use by the offshore uses heavy wall pipe. Furthermore, facility becomes a danger to persons or industry. For additional information on

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DNV’s research and expertise dealing DEPARTMENT OF TRANSPORTATION (Sub-No. 216X) and must be sent to: (1) with offshore pipeline facilities, they are Surface Transportation Board, 1925 K located on the Web and can be reached Surface Transportation Board Street, NW., Washington, DC 20423– at http://exchange.dnv.com. [STB Docket No. AB–33 (Sub–No. 216X)] 0001; and (2) Mack H. Shumate, Jr., 101 North Wacker Drive, Room 1920, Grant of Waiver Union Pacific Railroad Company— Chicago, IL 60606. Replies to the UP For the reasons explained above and Abandonment Exemption—in Weld petition are due on or before July 22, 2004. in Notice 1, and in light of the County, CO Persons seeking further information equivalent level of safety provided by On June 15, 2004, Union Pacific concerning abandonment procedures the alternative risk control activities, Railroad Company (UP) filed with the 1 may contact the Board’s Office of Public RSPA/OPS finds that the request for Board a petition under 49 U.S.C. 10502 Services at (202) 565–1592 or refer to waiver is consistent with pipeline for exemption from the provisions of 49 the full abandonment or discontinuance safety. Therefore, GTFS’s request for U.S.C. 10903 to abandon a 1.12-mile regulations at 49 CFR part 1152. waiver of compliance with 49 CFR portion of its Monfort Industrial Lead Questions concerning environmental between milepost 141.12 and milepost 192.619(a)(2)(ii), 192.503, and 192.505 issues may be directed to the Board’s 140.00 near Kersey, in Weld County, is granted subject to GTFS compliance Section of Environmental Analysis CO.2 The line traverses United States with the following conditions: (SEA) at (202) 565–1539. [Assistance for Postal Service Zip Code 80644 and the hearing impaired is available 1. Utilize thick wall, high strength, includes no stations. and high quality DSAW pipe; The line contains both federally through the Federal Information Relay Service (FIRS) at 1–800–877–8339.] 2. Perform a pipe mill hydrotest on granted rights-of-way and fee title An environmental assessment (EA) (or each pipe joint equivalent to 95% property. Any documentation in UP’s possession will be made available environmental impact statement (EIS), if specified minimum yield strength necessary) prepared by SEA will be (SMYS) to detect defects in the seam promptly to those requesting it. The interest of railroad employees served upon all parties of record and weld and prevent the deployment of upon any agencies or other persons who defective pipe joints; will be protected by the conditions set forth in Oregon Short Line R. Co.— commented during its preparation. 3. Perform extensive inspection and Abandonment—Goshen, 360 I.C.C. 91 Other interested persons may contact quality control during the line pipe (1979). SEA to obtain a copy of the EA (or EIS). manufacture, transport, fabrication, and By issuance of this notice, the Board EAs in these abandonment proceedings installation to prevent pipe damage; is instituting an exemption proceeding normally will be made available within 60 days of the filing of the petition. 4. Utilize Automated Ultrasonic pursuant to 49 U.S.C. 10502(b). A final The deadline for submission of Inspection (AUT) for inspection of decision will be issued by October 1, comments on the EA will generally be offshore welds to improve defect 2004. Any offer of financial assistance within 30 days of its service. detection in the girth weld and to (OFA) under 49 CFR 1152.27(b)(2) will Board decisions and notices are improve the weld quality during the be due no later than 10 days after available on our Web site at ‘‘http:// pipeline and steel catenary riser service of a decision granting the www.stb.dot.gov.’’ fabrication; petition for exemption. Each OFA must Decided: June 18, 2004. 5. Subject all buckle arrestors to be accompanied by a $1,100 filing fee. By the Board, David M. Konschnik, complete radiographic and magnetic See 49 CFR 1002.2(f)(25). Director, Office of Proceedings. particle inspection, including All interested persons should be Vernon A. Williams, aware that, following abandonment of radiographic inspection of all buckle Secretary. arrestor to line pipe welds; rail service and salvage of the line, the line may be suitable for other public [FR Doc. 04–14591 Filed 6–28–04; 8:45 am] 6. Perform complete radiographic use, including interim trail use. Any BILLING CODE 4915–01–P inspection and hydrotesting of all welds request for a public use condition under connecting subsea valves and 49 CFR 1152.28 or for trail use/rail assemblies to the pipeline; banking under 49 CFR 1152.29 will be DEPARTMENT OF THE TREASURY 7. Perform a leak test of the pipeline’s due no later than July 22, 2004. Each subsea tie-in flange that connects to the trail use request must be accompanied Fiscal Service VR 397 riser flange; and by a $200 filing fee. See 49 CFR Renegotiation Board Interest Rate; 8. Perform factory acceptance 1002.2(f)(27). Prompt Payment Interest Rate; All filings in response to this notice hydrotests of all subsea ‘‘wye’’, tee, ball Contract Disputes Act must refer to STB Docket No. AB–33 valve, and check valve assemblies. AGENCY: Bureau of the Public Debt, Issued in Washington, DC, on June 24, 1 The petition was initially received on May 28, Fiscal Service, Treasury. 2004. 2004, but contained conflicting information regarding ownership of the right-of-way. On June ACTION: Notice. William H. Gute, 15, 2004, a supplemental filing was received Acting Deputy Associate Administrator for correcting the draft notice to indicate that the line SUMMARY: For the period beginning July Pipeline Safety. contains both federally granted rights-of-way and 1, 2004 and ending on December 31, fee title property. Accordingly, June 15, 2004, is 2004, the prompt payment interest rate [FR Doc. 04–14726 Filed 6–28–04; 8:45 am] considered to be the actual filing date and the due BILLING CODE 4910–60–P dates in this notice are based on that date. is 4.500 per centum per annum. 2 UP states that after abandonment the track and ADDRESSES: Comments or inquiries may right-of-way will be sold to ConAgra Foods, the be mailed to Mitzie Johnson, Acting only shipper on the line. The shipper will then reconfigure its facility to receive larger, more Team Leader, Borrowings Accounting efficient unit shuttle trains of grain, and the line Team, Division of Accounting will be converted to an industry track. Operations, Office of Public Debt

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Accounting, Bureau of the Public Debt, ACTION: Notice and request for Estimated Number of Respondents: Parkersburg, West Virginia 26106–1328. comments. 5,000. A copy of this Notice will be available Estimated Time Per Respondent: 21 to download from http:// SUMMARY: The Department of the hr., 37 min. www.publicdebt.treas.gov. Treasury, as part of its continuing effort Estimated Total Annual Burden to reduce paperwork and respondent Hours: 108,100. DATES: This notice announces the burden, invites the general public and The following paragraph applies to all applicable interest rate for the July 1, other Federal agencies to take this of the collections of information covered 2004 to December 31, 2004 period. opportunity to comment on proposed by this notice: FOR FURTHER INFORMATION CONTACT: and/or continuing information An agency may not conduct or Stephanie Brown, Director, Division of collections, as required by the sponsor, and a person is not required to Accounting Operations, Office of Public Paperwork Reduction Act of 1995, respond to, a collection of information Debt Accounting, Bureau of the Public Public Law 104–13 (44 U.S.C. unless the collection of information Debt, Parkersburg, West Virginia 26106– 3506(c)(2)(A)). Currently, the IRS is displays a valid OMB control number. 1328, (304) 480–5181; Mitzie Johnson, soliciting comments concerning Form Books or records relating to a collection Acting Team Leader, Borrowings 8804, Annual Return for Partnership of information must be retained as long Accounting Team, Division of Withholding Tax (Section 1446), Form as their contents may become material Accounting Operations, Office of the 8805, Foreign Partner’s Information in the administration of any internal Public Debt Accounting, Bureau of the Statement of Section 1446 Withholding revenue law. Generally, tax returns and Public Debt, Parkersburg, West Virginia Tax and Form 8813, Partnership tax return information are confidential, 26106–1328, (304) 480—5166; Edward Withholding Tax Payment Voucher as required by 26 U.S.C. 6103. C. Gronseth, Deputy Chief Counsel, (Section 1446). Request for Comments: Comments Office of the Chief Counsel, Bureau of DATES: Written comments should be submitted in response to this notice will the Public Debt, (304) 480–8692); or received on or before August 30, 2004, be summarized and/or included in the Latisha R. Brown, Attorney-Adviser, to be assured of consideration. request for OMB approval. All Office of the Chief Counsel, Bureau of ADDRESSES: Direct all written comments comments will become a matter of the Public Debt, (202) 504–3710. to Glenn P. Kirkland, Internal Revenue public record. Comments are invited on: (a) Whether the collection of SUPPLEMENTARY INFORMATION: Although Service, room 6411, 1111 Constitution information is necessary for the proper the Renegotiation Board is no longer in Avenue, NW., Washington, DC 20224. performance of the functions of the existence, other Federal Agencies are FOR FURTHER INFORMATION CONTACT: agency, including whether the required to use interest rates computed Requests for additional information or information shall have practical utility; under the criteria established by the copies of the forms and instructions (b) the accuracy of the agency’s estimate Renegotiation Act of 1971 Sec. 2, Public should be directed to Carol Savage at of the burden of the collection of Law 92–41, 85 Stat. 97. For example, the Internal Revenue Service, room 6407, information; (c) ways to enhance the Contracts Disputes Act of 1978 Sec. 12, 1111 Constitution Avenue, NW., quality, utility, and clarity of the Public Law 95–563, 92 Stat. 2389 and, Washington, DC 20224, or at (202) 622– information to be collected; (d) ways to indirectly, the Prompt Payment Act of 3945, or through the internet at minimize the burden of the collection of 1982, 31 U.S.C. 3902(a), provide for the [email protected]. information on respondents, including calculation of interest due on claims at SUPPLEMENTARY INFORMATION: Title: through the use of automated collection a rate established by the Secretary of the Form 8804, Annual Return for techniques or other forms of information Treasury for the Renegotiation Board Partnership Withholding Tax (Section technology; and (e) estimates of capital under Public Law 92–41. 1446); Form 8805, Foreign Partner’s or start-up costs and costs of operation, Therefore, notice is given that the Information Statement of Section 1446 maintenance, and purchase of services Secretary of the Treasury has Withholding Tax; and Form 8813, to provide information. determined that the rate of interest Partnership Withholding Tax Payment Approved: June 22, 2004. applicable, for the period beginning July Voucher (Section 1446). 1, 2004 and ending on December 31, OMB Number: 1545–1119. Glenn P. Kirkland, 2004, is 4.500 per centum per annum. Form Number: 8804, 8805 and 8813. IRS Reports Clearance Officer. This rate is determined pursuant to the Abstract: Internal Revenue Code [FR Doc. 04–14720 Filed 6–28–04; 8:45 am] above-mentioned sections for the section 1446 requires partnerships that BILLING CODE 4830–01–P purpose of said sections. are engaged in the conduct of a trade or Dated: June 24, 2004. business in the United States to pay a DEPARTMENT OF THE TREASURY Donald V. Hammond, withholding tax if they have effectively connected taxable income that is Fiscal Assistant Secretary. allocable to foreign partners. The Internal Revenue Service [FR Doc. 04–14690 Filed 6–28–04; 8:45 am] partnerships use Form 8813 to make Proposed Collection; Comment BILLING CODE 4810–39–M payments of withholding tax to the IRS. Request for Form 2848 They use Forms 8804 and 8805 to make annual reports to provide the IRS and AGENCY: Internal Revenue Service (IRS), DEPARTMENT OF THE TREASURY affected partners with information to Treasury. Internal Revenue Service assure proper withholding, crediting to ACTION: Notice and request for partners’ accounts and compliance. comments. Proposed Collection; Comment Current Actions: There are no changes Request for Forms 8804, 8805 and being made to the forms at this time. SUMMARY: The Department of the 8813 Type of Review: Extension of a Treasury, as part of its continuing effort currently approved collection. to reduce paperwork and respondent AGENCY: Internal Revenue Service (IRS), Affected Public: Business or other for- burden, invites the general public and Treasury. profit organizations and individuals. other Federal agencies to take this

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opportunity to comment on proposed taxpayer in tax matters. It grants all revenue law. Generally, tax returns and and/or continuing information powers that the taxpayer has except tax return information are confidential, collections, as required by the signing a return and cashing refund as required by 26 U.S.C. 6103. Paperwork Reduction Act of 1995, checks. The information on the form is Request for Comments: Comments Public Law 104–13 (44 U.S.C. used to identify representatives and to submitted in response to this notice will 3506(c)(2)(A)). Currently, the IRS is ensure that confidential information is be summarized and/or included in the soliciting comments concerning Form not divulged to unauthorized persons. request for OMB approval. All 2848, Power of Attorney and Current Actions: There are no changes comments will become a matter of Declaration of Representative. being made to the form at this time. public record. Comments are invited on: DATES: Written comments should be Type of Review: Extension of a (a) Whether the collection of received on or before August 30, 2004, currently approved collection. information is necessary for the proper to be assured of consideration. Affected Public: Individuals or performance of the functions of the households, business or other for-profit ADDRESSES: Direct all written comments agency, including whether the to Glenn P. Kirkland, Internal Revenue organizations, not-for-profit institutions, information shall have practical utility; Service, room 6411, 1111 Constitution and farms. (b) the accuracy of the agency’s estimate Avenue NW., Washington, DC 20224. Estimated Number of Respondents: of the burden of the collection of 800,000. FOR FURTHER INFORMATION CONTACT: information; (c) ways to enhance the Estimated Time Per Respondent: 1 quality, utility, and clarity of the Requests for additional information or hour, 39 minutes. copies of the form and instructions information to be collected; (d) ways to Estimated Total Annual Burden minimize the burden of the collection of should be directed to Carol Savage at Hours: 1,320,500. Internal Revenue Service, room 6407, information on respondents, including The following paragraph applies to all through the use of automated collection 1111 Constitution Avenue NW., of the collections of information covered Washington, DC 20224, or at (202) 622– techniques or other forms of information by this notice: technology; and (e) estimates of capital 3945, or through the internet at An agency may not conduct or [email protected]. or start-up costs and costs of operation, sponsor, and a person is not required to maintenance, and purchase of services SUPPLEMENTARY INFORMATION: respond to, a collection of information to provide information. Title: Power of Attorney and unless the collection of information Declaration of Representative. displays a valid OMB control number. Approved: June 22, 2004. OMB Number: 1545–0150. Books or records relating to a collection Glenn P. Kirkland, Form Number: 2848. of information must be retained as long IRS Reports Clearance Officer. Abstract: Form 2848 issued to as their contents may become material [FR Doc. 04–14721 Filed 6–28–04; 8:45 am] authorize someone to act for the in the administration of any internal BILLING CODE 4830–01–P

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Corrections Federal Register Vol. 69, No. 124

Tuesday, June 29, 2004

This section of the FEDERAL REGISTER line, ‘‘August 3, 2004’’ should read §12.102 [Corrected] contains editorial corrections of previously ‘‘July 6, 2004. ’’. published Presidential, Rule, Proposed Rule, 1. On page 34227, in the third and Notice documents. These corrections are [FR Doc. Z4–1256 Filed 6–28–04; 8:45 am] column, in §12.102 (g)(1), in the second prepared by the Office of the Federal BILLING CODE 1505–01–D line, ‘‘14313’’ should read, ‘‘1431’’. Register. Agency prepared corrections are 2. On the same page, in the same issued as signed documents and appear in the appropriate document categories DEPARTMENT OF DEFENSE column, in the same section, in the sixth elsewhere in the issue. and seventh lines, the phrase GENERAL SERVICES ‘‘performance–based contracting’’ ADMINISTRATION should be deleted. [FR Doc. C4–13618 Filed 6–28–04; 8:45 am] DEPARTMENT OF COMMERCE NATIONAL AERONAUTICS AND BILLING CODE 1505–01–D National Oceanic and Atmospheric SPACE ADMINISTRATION Administration 48 CFR Part 12 [I.D. 050304F] [FAC 2001–24; FAR Case 2004–004; Item Atlantic Coastal Fisheries Cooperative I] Management Act Provisions; RIN 9000–AJ97 Application for Exempted Fishing Permit (EFP) Federal Acquisition Regulation; Incentives for Use of Performance– Correction Based Contracting for Services In notice document E4–1256 beginning on page 31588 in the issue of Correction June 4, 2004, make the following In rule document 04–13618 beginning correction: on page 34226 in the issue of Friday, On page 31588, in the third column, June 18, 2004, make the following in the DATES section, in the second corrections:

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Part II

Environmental Protection Agency 40 CFR Parts 9, 69, et al. Control of Emissions of Air Pollution From Nonroad Diesel Engines and Fuel; Final Rule

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ENVIRONMENTAL PROTECTION these devices are damaged by sulfur. in the index, some information is not AGENCY These fuel controls will be phased-in publicly available, i.e., CBI or other starting in mid-2007. Today’s nonroad information whose disclosure is 40 CFR Parts 9, 69, 80, 86, 89, 94, 1039, final rule is largely based on the restricted by statute. Certain other 1048, 1051, 1065, and 1068 Environmental Protection Agency’s material, such as copyrighted material, [OAR–2003–0012; FRL–7662–4] 2007 highway diesel program. is not placed on the Internet and will be To better ensure the benefits of the publicly available only in hard copy RIN 2060–AK27 standards are realized in-use and form. Publicly available docket throughout the useful life of these materials are available either Control of Emissions of Air Pollution engines, we are also adopting new test electronically in EDOCKET or in hard From Nonroad Diesel Engines and Fuel procedures, including not-to-exceed copy at the Air Docket in the EPA AGENCY: Environmental Protection requirements, and related certification Docket Center, EPA/DC, EPA West, Agency (EPA). requirements. The rule also includes Room B102, 1301 Constitution Ave., ACTION: Final rule. provisions to facilitate the transition to NW, Washington, DC. The Public the new engine and fuel standards and Reading Room is open from 8:30 a.m. to SUMMARY: Nonroad diesel engines to encourage the early introduction of 4:30 p.m., Monday through Friday, contribute considerably to our nation’s clean technologies and clean nonroad excluding legal holidays. The telephone air pollution. These engines, used diesel fuel. We have also developed number for the Public Reading Room is primarily in construction, agricultural, provisions for both the engine and fuel (202) 566–1744, and the telephone and industrial applications, are programs designed to address small number for the Air Docket is (202) 566– projected to continue to contribute large business considerations. 1742. amounts of particulate matter, nitrogen The requirements in this rule will FOR FURTHER INFORMATION CONTACT: oxides, and sulfur oxides, all of which result in substantial benefits to public contribute to serious public health health and welfare through significant Carol Connell, Assessment and problems in the United States. These reductions in emissions of nitrogen Standards Division, Office of problems include premature mortality, oxides and particulate matter, as well as Transportation and Air Quality, aggravation of respiratory and nonmethane hydrocarbons, carbon Environmental Protection Agency, 2000 cardiovascular disease, aggravation of monoxide, sulfur oxides, and air toxics. Traverwood Drive, Ann Arbor, MI existing asthma, acute respiratory We are now projecting that by 2030, this 48105; telephone number: (734) 214– symptoms, chronic bronchitis, and program will reduce annual emissions 4349; fax number: (734) 214–4050; e- decreased lung function. We believe of nitrogen oxides and particulate mail address: [email protected], or that diesel exhaust is likely to be matter by 738,000 and 129,000 tons, Assessment and Standards Division carcinogenic to humans by inhalation. respectively. These emission reductions Hotline; telephone number: (734) 214– Today, EPA is adopting new emission will prevent 12,000 premature deaths, 4636; e-mail address: [email protected]. standards for nonroad diesel engines over 8,900 hospitalizations, and almost SUPPLEMENTARY INFORMATION: and sulfur reductions in nonroad diesel a million work days lost, and will fuel that will dramatically reduce achieve other quantifiable benefits every Does This Action Apply To Me? harmful emissions and will directly year. The total benefits of this rule will help States and local areas recently This action may affect you if you be approximately $80 billion annually designated as 8-hour ozone produce or import new diesel engines by 2030. The substantial health and nonattainment areas to improve their air which are intended for use in nonroad welfare benefits we are projecting for quality. This comprehensive national vehicles or equipment, such as this final action exceed those we program regulates nonroad diesel agricultural and construction anticipated at the time of this proposal. engines and diesel fuel as a system. New equipment, or if you produce or import Costs for both the engine and fuel engine standards will begin to take such nonroad vehicles or equipment. It requirements will be many times less, at effect in the 2008 model year, phasing may also affect you if you convert approximately $2 billion annually. in over a number of years. These nonroad vehicles or equipment, or the standards are based on the use of DATES: This final rule is effective on engines used in them, to use alternative advanced exhaust emission control August 30, 2004. fuels. It may also affect you if you devices. We estimate particulate matter The incorporation by reference of produce, import, distribute, or sell reductions of 95 percent, nitrogen certain publications listed in this nonroad diesel fuel. oxides reductions of 90 percent, and the regulation is approved by the Director of The following table gives some virtual elimination of sulfur oxides from the Federal Register as of August 30, examples of entities that may have to nonroad engines meeting the new 2004. follow the regulations. But because standards. Nonroad diesel fuel sulfur ADDRESSES: EPA has established a these are only examples, you should reductions of more than 99 percent from docket for this action under Docket ID carefully examine the regulations in 40 existing levels will provide significant Nos. OAR–2003–0012 and A–2001–28. CFR parts 80, 89, 1039, 1065, and 1068. health benefits as well as facilitate the All documents in the docket are listed If you have questions, call the person introduction of high-efficiency catalytic in the EDOCKET index at http:// listed in the FOR FURTHER INFORMATION exhaust emission control devices as www.epa.gov/edocket. Although listed CONTACT section of this preamble:

Category NAICS SIC Examples of potentially regulated entities codesa codesb

Industry ...... 333618 3519 Manufacturers of new nonroad diesel engines. Industry ...... 333111 3523 Manufacturers of farm machinery and equipment. Industry ...... 333112 3524 Manufacturers of lawn and garden tractors (home). Industry ...... 333924 3537 Manufacturers of industrial trucks. Industry ...... 333120 3531 Manufacturers of construction machinery.

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NAICS Category SIC Examples of potentially regulated entities codesa codesb

Industry ...... 333131 3532 Manufacturers of mining machinery and equipment. Industry ...... 333132 3533 Manufacturers of oil and gas field machinery and equipment. Industry ...... 811112 7533 Commercial importers of vehicles and vehicle components. 811198 7549 Industry ...... 324110 2911 Petroleum refiners. Industry ...... 422710 5171 Diesel fuel marketers and distributors. 422720 5172 Industry ...... 484220 4212 Diesel fuel carriers. 484230 4213 Notes: a North American Industry Classification System (NAICS). b Standard Industrial Classification (SIC) system code.

How Can I Get Copies of This Outline of This Preamble B. Additional Requirements for Refiners Document and Other Related I. Overview and Importers Information? A. What Is EPA Finalizing? C. Requirements for Parties Downstream of B. Why Is EPA Taking This Action? the Refinery or Import Facility Docket. EPA has established an II. Nonroad Engine Standards D. Diesel Fuel Sulfur Sampling and Testing official public docket for this action A. What Are the New Engine Standards? Requirements under Docket ID No. OAR–2003–0012 at B. Are the New Standards Feasible? E. Selection of the Marker for Heating Oil http://www.epa.gov/edocket. The C. Why Do We Need 15ppm Sulfur Diesel F. Fuel Marker Test Method official public docket consists of the Fuel? G. Requirements for Record-keeping, Reporting, and PTDs III. Requirements for Engine and Equipment documents specifically referenced in H. Liability and Penalty Provisions for Manufacturers this action, any public comments Noncompliance A. Averaging, Banking, and Trading received, and other information related I. How Will Compliance With the Sulfur B. Transition Provisions for Equipment to this action. Although a part of the Standards Be Determined? Manufacturers VI. Program Costs and Benefits official docket, the public docket does C. Engine and Equipment Small Business A. Refining and Distribution Costs not include Confidential Business Provisions (SBREFA) B. Cost Savings to the Existing Fleet From Information (CBI) or other information D. Certification Fuel the Use of Low Sulfur Fuel whose disclosure is restricted by statute. E. Temporary In-Use Compliance Margins C. Engine and Equipment Cost Impacts The official public docket is the F. Test Cycles D. Annual Costs and Cost Per Ton collection of materials that is available G. Other Test Procedure Issues E. Do the Benefits Outweigh the Costs of for public viewing at the Air Docket in H. Engine Power the Standards? the EPA Docket Center, (EPA/DC) EPA I. Auxiliary Emission Control Devices and F. Economic Impact Analysis West, Room B102, 1301 Constitution Defeat Devices VII. Alternative Program Options Considered J. Not-To-Exceed Requirements Ave., NW, Washington, DC. The EPA A. Summary of Alternatives K. Investigating and Reporting Emission- B. Introduction of 15 ppm Nonroad Diesel Docket Center Public Reading Room is Related Defects open from 8:30 a.m. to 4:30 p.m., Sulfur Fuel in One Step L. Compliance With the Phase-In C. Applying the 15 ppm Sulfur Cap to Monday through Friday, excluding legal Provisions Locomotive and Marine Diesel Fuel holidays. The telephone number for the M. Incentive Program for Early or Very D. Other Alternatives Reading Room is (202) 566–1742, and Low Emission Engines VIII. Future Plans the telephone number for the Air Docket N. Labeling and Notification Requirements A. Technology Review is (202) 566–1742. O. General Compliance B. Test Procedure Issues P. Other Issues Electronic Access. You may access C. In-use Testing Q. Highway Engines D. Engine Diagnostics this Federal Register document R. Changes That Affect Other Engine electronically through the EPA Internet E. Future NOX Standards for Engines in Categories Mobile Machinery Over 750 hp under the ‘‘Federal Register’’ listings at IV. Our Program for Controlling Nonroad, F. Emission Standards for Locomotive and http://www.epa.gov/fedrgstr/. Locomotive and Marine Diesel Fuel Marine Diesel Engines An electronic version of the public Sulfur G. Retrofit Programs docket is available through EPA’s A. Nonroad, Locomotive and Marine Diesel H. Reassess the Marker Specified for electronic public docket and comment Fuel Quality Standards Heating Oil system, EPA Dockets. You may use EPA B. Hardship Relief Provisions for IX. Public Participation Qualifying Refiners X. Statutory and Executive Order Reviews Dockets at http://www.epa.gov/edocket/ C. Special Provisions for Alaska and the to view public comments, access the A. Executive Order 12866: Regulatory Territories Planning and Review index listing of the contents of the D. NRLM Diesel Fuel Program Design B. Paperwork Reduction Act official public docket, and to access E. How Are State Diesel Fuel Programs C. Regulatory Flexibility Act (RFA), as those documents in the public docket Affected by the Sulfur Diesel Program? amended by the Small Business that are available electronically. F. Technological Feasibility of the 500 and Regulatory Enforcement Fairness Act of Although not all docket materials may 15 ppm Sulfur Diesel Fuel Program 1996 (SBREFA), 5 U.S.C. 601 et. seq be available electronically, you may still G. What Are the Potential Impacts of the D. Unfunded Mandates Reform Act access any of the publicly available 15 ppm Sulfur Diesel Program on E. Executive Order 13132: Federalism Lubricity and Other Fuel Properties? docket materials through the docket F. Executive Order 13175: Consultation H. Refinery Air Permitting and Coordination With Indian Tribal facility identified above. Once in the V. Nonroad, Locomotive and Marine Diesel Governments system, select ‘‘search,’’ then key in the Fuel Program: Details of the Compliance G. Executive Order 13045: Protection of appropriate docket identification and Enforcement Provisions Children from Environmental Health and number. A. Special Fuel Provisions and Exemptions Safety Risks

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H. Executive Order 13211: Actions That rule for public health and welfare hearings on the proposal and have Significantly Affect Energy Supply, improvements are greater than participated in scores of meetings with Distribution, or Use estimated at proposal. commenters in developing the I. National Technology Transfer This final rule sets out emission Advancement Act provisions of today’s final rule. An J. Congressional Review Act standards for nonroad diesel engines— important aspect of this collaborative XI. Statutory Provisions and Legal Authority engines used mainly in construction, development effort has been EPA’s agricultural, industrial and mining coordination with other governments in I. Overview operations—that will achieve reductions helping to further world harmonization in PM and NO emissions levels in EPA today is completing the third X of nonroad engine controls and fuel excess of 95 percent and 90 percent recent major program to reduce sulfur levels. Information gathered in respectively. This action also regulates emissions from the nation’s mobile these comments and discussions, taken nonroad diesel fuel for the first time by sources. Today’s final rule establishes in context with the principles described reducing sulfur levels in this fuel more standards for nonroad diesel engines above, has been the basis for our action than 99 percent to 15 parts per million and fuel and builds on the recently today. (ppm). These provisions mirror those adopted Tier 2 program for cars and In summary, this rule sets out engine already in place for highway diesel light trucks and the 2007 highway diesel standards and emission test procedures engines, which will lead to the program for on-highway diesel engines. (including not-to-exceed requirements) introduction of 15 ppm sulfur diesel These three programs have in common for new nonroad diesel engines, and fuel, followed by stringent engine large reductions in sulfur levels in fuel sulfur control requirements for diesel standards in that sector beginning in that will not only achieve public health fuel used in land-based nonroad, 2007 based on advanced aftertreatment benefits but also facilitate the locomotive, and marine engines (NRLM technologies. We believe it is highly fuel). Beginning in 2008, the new Tier introduction of advanced emissions appropriate to bring the same types of control technologies. In 1996, emissions 4 engine standards for five power expected advanced aftertreatment categories for engines from under 25 from land-based nonroad, marine, and technologies to the nonroad market as locomotive diesel engines were horsepower (hp) to above 750 soon as possible and we believe today’s horsepower will be phased in. New estimated to be about 40 percent of the nonroad fuel and engine program total mobile source inventory of PM2.5 engine emissions test procedures will be represents the next step in a feasible phased in along with these new (particulate matter less than 2.5 microns progression in the application of clean in diameter) and 25 percent of the NOX standards to better ensure emissions technologies to nonroad diesel engines control over real-world engine operation (nitrogen oxides) inventory. Without and the associated diesel fuel. today’s final rule, these contributions and to help provide for effective As we did with the proposed nonroad compliance determination. The sulfur would be expected to grow to 44 percent rulemaking, we followed specific reductions to land-based nonroad diesel and 47 percent by 2030 for PM2.5 and principles when developing this final fuel will be accomplished in two steps, NOX, respectively. By themselves, land- rule. First, the program achieves with an interim step from currently based nonroad diesel engines are a very reductions in NO , sulfur oxides (SO ), X X uncontrolled levels to a 500 ppm cap large part of the diesel mobile source and PM emissions as early as possible. starting in June, 2007 and the final step PM2.5 inventory, contributing about 47 Second, it does so by implementing the to 15 ppm in June, 2010. This change in percent in 1996, and growing to 70 fuel program as soon as possible while fuel quality will directly lead to percent of this inventory by 2020 at the same time not interfering with the important health and welfare benefits without today’s final rule. In order to implementation and expected benefits associated with the reduced generation meet the Clean Air Act’s goal of of introducing ultra low sulfur fuel cleaning up the nation’s air, emissions (diesel fuel containing no greater than of sulfate PM and SOX. Even more reductions from the nonroad sector are 15 ppm sulfur) in the highway market important, introduction of 15 ppm necessary. as required by the 2007 highway diesel sulfur nonroad diesel fuel facilitates the This program begins to get important rule. Next, we are generally treating introduction of advanced aftertreatment emission reductions in 2008, and by vehicles and fuels as a system, that is devices for nonroad engines. 2030 we estimate that this program will promulgating engine and fuel standards Although we did not propose to reduce over 129,000 tons PM2.5 and in tandem in order to cost-effectively control locomotive and marine diesel 738,000 tons of NOX annually. These achieve the greatest emission fuel sulfur levels to 15 ppm in the emission reductions will be directly reductions. Lastly, the program provides NPRM, recognizing the important helpful to the 474 counties nationwide sufficient lead time to allow the environmental and public welfare that have been recently designated as migration of advanced emissions control benefits that such a program could nonattainment areas for the 8-hour technologies from the highway sector to enable, we have decided to finalize this ozone standard and for counties that nonroad diesel engines as well as the second step to 15 ppm sulfur fuel will be designated as nonattainment for expansion of ultra low sulfur diesel fuel control program for locomotive and PM2.5 later this year. The resulting production to the nonroad market. marine diesel fuel beginning in 2012. ambient PM2.5 and NOX reductions The May 2003 proposed rulemaking Locomotive and marine diesel fuel will correspond to public health culminated a multi-year effort to first be reduced from current improvements in 2030 including develop control strategies for nonroad uncontrolled levels to a 500 ppm cap approximately 12,000 fewer premature engines. EPA worked collaboratively starting in June 2007 and the second mortalities, 15,000 fewer heart attacks, 1 with stakeholders from industry, state step down to a 15 ppm cap will take million fewer lost days of work due to and local government, and public health place in June, 2012. While we have adults with respiratory symptoms, 5.9 organizations in putting together its chosen to reduce sulfur levels in million fewer days when adults have to comprehensive (and widely praised) locomotive and marine diesel fuel to 15 restrict their activities due to respiratory new engine standards and sulfur fuel ppm in this rulemaking without symptoms, and almost 6,000 emergency controls. We received about 150,000 adopting corresponding engine controls, room visits for asthma attacks in comments on the proposal, almost all of we note that the Agency has already children. Our projections in this final them in support. We held three public begun work to promulgate appropriate

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new standards for these engines.1 The 1. Nonroad Diesel Engine Emission be addressed in a future action (we are monetized health and welfare benefits Standards currently considering such an action in associated with further sulfur reduction Today’s action adopts Tier 4 the 2007 time frame). to 15 ppm outweigh the costs of the standards for nonroad diesel engines of We are also continuing the averaging, sulfur reductions. Also, doing so now all horsepower ratings. These standards banking, and trading provisions engine allows for the promulgation of a single are technology-neutral in the sense that manufacturers can use to demonstrate integrated fuel program and provides manufacturers are the responsible party compliance with the standards. We also the refining industry with long term in determining which emission control are continuing provisions providing flexibilities which equipment predictability for sulfur control. technologies will be needed to meet the manufacturers may use to facilitate The requirements in this rule will requirements. Applicable emissions standards are determined by model year transition to compliance with the new result in substantial benefits to public standards. In addition, we are including for each of five engine power band health and welfare and the environment turbocharged diesels in the existing categories. For engines less than 25 hp, through significant reductions in NOX regulation of crankcase emissions, we are adopting a new engine standard and PM as well as nonmethane effective in the same year that the new for PM of 0.30 g/bhp-hr (grams per standards first apply in each power hydrocarbons (NMHC), carbon brake-horsepower-hour) beginning in monoxide (CO), SOX, and air toxics. As category. 2008, and leaving the previously-set 5.6 As discussed at length in the noted, by 2030 this program will reduce g/bhp-hr combined standard for annual emissions of NOX and PM by proposal, new test procedures and NMHC+NOX in place. For engines of 25 738,000 and 129,000 tons, respectively. compliance provisions, especially the to 75 hp, we are adopting standards not-to-exceed and transient tests, are We estimate these annual emission reflecting approximately 50 percent reductions will prevent 12,000 necessary to ensure the benefits of the reductions in PM control from today’s standards being adopted today are premature deaths, over 8,900 engines, again applicable beginning in achieved when the aftertreatment-based hospitalizations, 15,000 nonfatal heart 2008. Then, starting in 2013, standards standards go into place. We are attacks, and approximately 1 million of 0.02 g/bhp-hr for PM and 3.5 g/bhp- therefore adopting the proposed test days that people miss work because of hr for NMHC+NOX will apply for this procedures and compliance provisions, respiratory symptoms, among power category. For engines of 75 to 175 with slight modifications designed to quantifiable benefits. The overall hp, the standards will be 0.01 g/bhp-hr better implement the provisions, in quantifiable benefits will total $83 for PM, 0.30 g/bhp-hr for NOX and 0.14 today’s rule. We continue to believe the billion annually by 2030 using a 3 g/bhp-hr for NMHC starting in 2012, new transient test, cold start transient percent discount rate and $78 billion with the NOX and NMHC standards test, and not-to-exceed test procedures using a 7 percent discount rate at a cost phased in over a period of three to four and standards will all help achieve our of approximately $2 billion, with a 30- years in order to address lead time, goal of emissions reductions being year net present value for the benefits of workload, and feasibility achieved in actual engine operation. $805 billion at 3 percent discounting considerations. These same standards As noted, the final rule also and $352 billion at 7 percent will apply to engines of 175 to 750 hp continues, and in some cases modifies, discounting at a net present value cost as well starting in 2011, with a similar existing provisions that will facilitate of $27 billion at 3 percent discounting phase-in. These PM, NOX, and NMHC the transition to the new engine and fuel and $14 billion at 7 percent discounting. standards and phase-in schedules are standards. Many of these provisions will Clearly the benefits of this program similar in stringency to the 2007 help small business engine and dramatically outweigh its cost at a ratio highway diesel standards and are equipment manufacturers meet the of approximately 40:1 in 2030. expected to require the use of high- requirements. They will also aid efficiency aftertreatment systems to manufacturers in managing their A. What Is EPA Finalizing? ensure compliance. development of engines and equipment For engines above 750 hp, we are that will meet our new standards. As part of the proposed rulemaking, requiring PM and NMHC control to we set out very detailed provisions for 0.075 g/bhp-hr and 0.30 g/bhp-hr, 2. Nonroad, Locomotive, and Marine new engine exhaust emission controls, respectively, starting in 2011. More Diesel Fuel Quality Standards sulfur limitations in nonroad and stringent standards take effect in 2015 The fuel program requirements are locomotive/marine diesel fuels, test with PM standards of 0.02 g/bhp-hr (for very similar to those included in the procedures, compliance requirements, engines used in generator sets) and 0.03 proposal, with two notable exceptions. and other information. We also looked g/bhp-hr (for non-generator set engines), The first involves the standards at a number of alternative program and an NMHC standard of 0.14 g/bhp- themselves with the inclusion of options, such as requiring refiners to hr. The NOX standard in 2011 will be locomotive and marine diesel fuel in the reduce sulfur from uncontrolled levels 0.50 g/bhp-hr for generator set engines 15 ppm standard. The second addresses to 15 ppm in one step in 2008. We above 1200 hp, and 2.6 g/bhp-hr for all the compliance provisions designed to continue to believe that the main other engines in the above 750 hp ensure the effectiveness of the program. program options set out in the proposal category. This application of advanced We are adopting the two-step are feasible and the most cost-effective NOX emission control technologies to approach to sulfur control, with all requirements, taking into account other generator set engines above 1200 hp will land-based nonroad, locomotive, and factors such as lead time and interaction provide substantial NOX reductions and marine diesel fuel going from with the highway diesel program, so we will occur earlier than we had proposed uncontrolled sulfur levels of are generally adopting the engine and in the NPRM. In 2015, the 750–1200 hp approximately 3,000 ppm sulfur to 500 fuel provisions which we proposed. generator set engines will be added to ppm in June, 2007. The interim step the stringent 0.50 g/bhp-hr NOX will by itself achieve significant PM and 1 EPA is issuing an Advanced Notice of Proposed requirement as well. The long-term NOX SOX emission reductions with Rulemaking for locomotive and marine engine standard for engines not used in associated important health benefits as standards as part of this effort. generator sets (mobile machinery) will early as is practicable. Then, in June

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2010, the sulfur cap for land-based mechanism we discussed in the PM NAAQS and meeting regional haze nonroad engine diesel fuel will be proposal, a ‘‘designate and track’’ type goals in our treasured national parks. reduced to the final standard of 15 ppm. approach, is better suited to address our SOX levels can themselves pose a Two years later, in 2012, the 15 ppm priorities and commitments for the respiratory hazard. cap for locomotive and marine engine nonroad diesel sulfur control program. Although controlling air pollution diesel fuel will go into effect. The This approach allows refiners to from nonroad diesel exhaust is reduction to 15 ppm sulfur provides designate volumes of nonroad fuel into challenging, we strongly believe it can additional direct control of PM and SOX various categories and these be accomplished through the emissions and is an enabling technology designations would follow the fuel application of high-efficiency emissions for the application of advanced catalyst- throughout the distribution system. We control technologies. As discussed in based emission control technologies. have successfully worked through our much greater detail in section II, very Although we did not propose to enforceability and other concerns with large emission reductions (in excess of control locomotive and marine diesel this approach and are now including it 90 percent) are possible, especially fuel to 15 ppm in the NPRM, after as our compliance mechanism for the through the use of catalytic emission careful consideration and reviewing fuel standards of today’s program. control devices installed in the nonroad substantial comments from equipment’s exhaust system and stakeholders, we have decided to B. Why Is EPA Taking This Action? integrated with the engine controls. To include fuel used in locomotive and As we have discussed extensively in meet the standards being adopted today, marine applications in the final step to both the proposal and today’s action, application of such technologies for 15 ppm beginning in 2012. The EPA strongly believes it is appropriate both PM and NOX control will be incremental PM health and welfare to take steps now to reduce future needed for most engines. High- benefits associated with this standard emissions from nonroad, locomotive, efficiency PM exhaust emission control outweigh the costs. The locomotive and and marine diesel engines. Emissions technology has been available for marine diesel fuel program provides a from these engines contribute greatly to several years, and it is the same near-term positive impact on public a number of serious air pollution technology we expect to be applied to health and welfare. Also, the 15 ppm problems and would continue to do so meet the PM standards for highway sulfur diesel fuel provides an in the future absent further reduction diesel engines in 2007. For NOX, we opportunity that may enable the measures. Such emissions lead to expect the same high-efficiency application of advanced catalyst-based adverse health and welfare effects technologies being developed for the emission control technologies to associated with ozone, PM, NOX, SOX, 2007 highway diesel engine program locomotive and marine diesel engines. and volatile organic compounds, will be used to meet our new nonroad We are issuing an Advance Notice of including toxic compounds. In addition, requirements. All of these technologies Proposed Rulemaking for locomotive diesel exhaust is of specific concern are dependent on the 15 ppm maximum and marine diesel engines that because it is likely to be carcinogenic to sulfur levels for nonroad diesel fuel investigates this potential. Recognizing humans by inhalation as well as posing being adopted today. The fuel control the value that a locomotive and marine a hazard from noncancer respiratory program being adopted today also yields fuel program could have for public effects. Ozone, NOX, and PM also cause significant and important reductions in health and welfare, State and local significant public welfare harm such as SOX from these sources. authorities and public health advocacy damage to crops, eutrophication, 1. Basis for Action Under the Clean Air organizations provided a large number regional haze, and soiling of building Act of comments encouraging us to take materials. action in this rulemaking to address Millions of Americans continue to Section 213 of the Clean Air Act (‘‘the emissions from this category. live in areas with unhealthy air quality Act’’ or CAA) gives us the authority to Including locomotive and marine fuel that may endanger public health and establish emissions standards for in the 15 ppm sulfur diesel fuel pool welfare. As discussed in more detail nonroad engines and vehicles. Section also simplifies the overall design of the below, there are approximately 159 213(a)(3) authorizes the Administrator fuel program and will simplify the million people living in areas that either to set standards for NOX, volatile distribution of diesel fuel. At the same do not meet the 8-hour ozone National organic compounds (VOCs), and CO time, we have finalized this standard Ambient Air Quality Standards which ‘‘standards shall achieve the with flexibilities designed specifically (NAAQS) or contribute to violations in greatest degree of emission reduction to address fuel program implementation other counties as noted in EPA’s recent achievable through the application of issues raised in the comments. nonattainment designations for part or technology which the Administrator Noting that sulfur levels in highway all of 474 counties. In addition, determines will be available for the diesel fuel will generally be at or below approximately 65 million people live in engines or vehicles.’’ As part of this 15 ppm starting in 2006 and not counties where air quality determination, the Administrator must wanting to reduce the benefits of measurements violate the PM2.5 give appropriate consideration to cost, introducing this clean fuel, we spent NAAQS. These numbers do not include lead time, noise, energy, and safety considerable time developing a the tens of millions of people living in factors associated with the application compliance assurance scheme for areas where there is a significant future of such technology. The standards introducing our nonroad diesel sulfur risk of failing to maintain or achieve the adopted today for NOX implement this program to mesh with the highway ozone or PM2.5 NAAQS. Federal, state, provision. Section 213(a)(4) authorizes program requirements. We initially and local governments are working to the Administrator to establish standards thought that a ‘‘baseline’’ approach bring ozone and PM levels into to control emissions of pollutants (other essentially requiring refiners to compliance with the NAAQS attainment than those covered by section 213(a)(3)) maintain a constraint on sulfur levels of and maintenance plans and the which ‘‘may reasonably be anticipated various distillate fuels, based on reductions included in today’s rule will to endanger public health and welfare.’’ historical production volumes, was the play a critical part in these actions. Here, the Administrator may promulgate most appropriate mechanism. Reducing regional emissions of SOX is regulations that are deemed appropriate Subsequently we learned that the other critical to this strategy for attaining the for new nonroad vehicles and engines

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which cause or contribute to such air effects. Moreover, these compounds reasonably may be anticipated to pollution, taking into account costs, have the potential to cause health effects endanger public health or welfare, or (2) noise, safety, and energy factors. EPA at environmental levels of exposure. will impair to a significant degree the believes the new controls for PM in Third, emissions from nonroad diesel performance of any emission control today’s rule are an appropriate exercise engines (including locomotive and device or system which is in general of EPA’s discretion under the authority marine diesel engines) contribute to use, or which the Administrator finds of section 213(a)(4). regional haze and impaired visibility has been developed to a point where in We believe the evidence provided in across the nation, as well as to odor, a reasonable time it will be in general section II of this preamble and in the acid deposition, polycyclic organic use were such a regulation to be Regulatory Impact Analysis (RIA) matter (POM) deposition, promulgated. This rule meets both of indicates that the stringent emission eutrophication and nitrification, all of these criteria. Sulfur dioxide (SO2)and standards adopted today are feasible which are serious environmental sulfate PM emissions from nonroad, and reflect the greatest degree of welfare problems. locomotive, marine and diesel vehicles emission reduction achievable in the EPA has already found in previous are due to sulfur in diesel fuel. As model years to which they apply. We rules that emissions from new nonroad discussed above, emissions of these have given appropriate consideration to diesel engines contribute to ozone and pollutants cause or contribute to costs in promulgating these standards. CO concentrations in more than one ambient levels of air pollution that Our review of the costs and cost- area which has failed to attain the ozone endanger public health and welfare. effectiveness of these standards indicate and CO NAAQS (59 FR 31306, June 17, Control of sulfur to 15 ppm for this fuel that they will be reasonable and 1994). EPA has also previously through a two-step program would lead comparable to the cost-effectiveness of determined that it is appropriate to to significant, cost-effective reductions other emission reduction strategies for establish standards for PM from new in emissions of these pollutants. Control the same pollutants that have been nonroad diesel engines under section of sulfur to 15 ppm in nonroad diesel required or could be required in the 213(a)(4), and the additional fuel will also enable emissions control future. We have also reviewed and given information on diesel exhaust technology that will achieve significant, appropriate consideration to the energy carcinogenicity noted above reinforces cost-effective reduction in emissions of factors of this rule in terms of fuel this finding. In addition, we have these pollutants, as discussed in section efficiency and effects on diesel fuel already found that emissions from I.B.2 below. The substantial adverse supply, production, and distribution, as nonroad engines significantly contribute effect of high sulfur levels on the discussed below, as well as any safety to air pollution that may reasonably be performance of diesel emission control factors associated with these new anticipated to endanger public welfare devices or systems that would be standards. due to regional haze and visibility expected to be used to meet the nonroad The information in this section and impairment (67 FR 68242–68243, Nov. standards is discussed in detail in chapters 2 and 3 of the RIA regarding air 8, 2002). We find here, based on the section II. Control of sulfur to 15 ppm quality and the contribution of nonroad, information in this section of the for locomotive and marine diesel fuel, locomotive, and marine diesel engines preamble and chapters 2 and 3 of the as with nonroad diesel fuel, will to air pollution provides strong RIA, that emissions from the new provide meaningful additional benefits evidence that emissions from such nonroad diesel engines covered by this that outweigh the costs. In addition, our engines significantly and adversely final action likewise contribute to authority under section 211(c) is impact public health or welfare. First, as regional haze and to visibility discussed in more detail in Appendix A noted earlier, there is a significant risk impairment that may reasonably be to chapter 5 of the RIA. that several areas will fail to attain or anticipated to endanger public welfare. maintain compliance with the NAAQS Taken together, these findings indicate 2. What Is the Air Quality Impact of for 8-hour ozone concentrations or the the appropriateness of the nonroad This Final Rule? NAAQS for PM during the period that 2.5 diesel engine standards adopted today a. Public Health and Environmental these new vehicle and engine standards for purposes of section 213(a)(3) and (4) Impacts will be phased into the vehicle of the Act. These findings were population, and that nonroad, unchallenged by commenters. With this rulemaking, we are acting to locomotive, and marine diesel engines These standards must take effect at extend advanced emission controls to contribute to such concentrations, as ‘‘the earliest possible date considering another major source of diesel engine well as to concentrations of other the lead time necessary to permit emissions: Nonroad land-based diesel criteria pollutants. This risk will be development and application of the engines. This final rule sets out significantly reduced by the standards requisite technology,’’ giving emission standards for nonroad land- adopted today, as also noted above. ‘‘appropriate consideration’’ to cost, based diesel engines—engines used However, the evidence indicates that energy, and safety.2 The compliance mainly in construction, agricultural, some risk remains even after the dates we are adopting reflect careful industrial and mining operations—that reductions achieved by these new consideration of these factors. The will achieve reductions in PM and NOX controls on nonroad diesel engines and averaging, banking, and trading (ABT), standards in excess of 95 percent and 90 nonroad, locomotive, and marine diesel equipment manufacturer flexibilities, percent, respectively for this class of fuel. Second, EPA believes that diesel and phase-in provisions for NOX are vehicles. This action also regulates exhaust is likely to be carcinogenic to elements in our determination that we nonroad diesel fuel for the first time by humans. The risk associated with have selected appropriate lead times for reducing sulfur levels in this fuel more exposure to diesel exhaust includes the the standards. than 99 percent to 15 ppm. The diesel particulate and gaseous components Section 211(c) of the CAA allows us fuel sulfur requirements will decrease among which are benzene, to regulate fuels where emission PM and SO2 emissions for land-based formaldehyde, acetaldehyde, acrolein, products of the fuel either: (1) Cause or diesel engines, as well as for three other and 1,3–butadiene, all of which are contribute to air pollution that nonroad source categories: Commercial known or suspected human or animal marine diesel vessels, locomotives, and carcinogens, or have noncancer health 2 See Clean Air Act section 213(b). recreational marine diesel engines.

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These sources are significant information in the preamble, RIA, and likely to continue to persist in the future contributors to atmospheric pollution of support documents for the proposed in the absence of additional controls (among other pollutants) PM, ozone and rule. and that the emission reductions would a variety of toxic air pollutants. In 1996, When fully implemented, this final assist areas with attainment and future emissions from these four source rule will reduce nonroad (equipment maintenance of the PM and ozone categories were estimated to be 40 such as construction, agricultural, and NAAQS.3 For example, in 2020, based percent of the mobile source inventory industrial), diesel PM2.5 and NOX on emission controls currently adopted, for PM2.5 and 25 percent for NOX, and emissions by 95 percent and 90 percent, we project that 66 million people will 10 percent and 13 percent of overall respectively. It will also virtually live in 79 counties with average PM2.5 emissions for these potential health eliminate nonroad diesel SO2 emissions, levels above 15 micrograms per cubic hazards, respectively. Without further which amounted to approximately meter (ug/m3). In 2030, the number of controls beyond those we have already 234,000 tons in 1996, and would people projected to live in areas adopted, these sources will emit 44 otherwise grow to approximately exceeding the PM2.5 standard is percent of PM2.5 from mobile sources 326,000 tons by 2020. These dramatic expected to increase to 85 million in and 47 percent of NOX emissions from reductions in nonroad emissions are a 107 counties. An additional 24 million mobile sources by the year 2030. critical part of the effort by federal, state people are projected to live in counties Nonroad engines, and most and local governments to reduce the within 10 percent of the standard in importantly nonroad diesel engines, health related impacts of air pollution 2020, which will increase to 64 million contribute significantly to ambient and to reach attainment of the NAAQS people in 2030. Furthermore, for ozone, PM2.5 levels, largely through direct for PM and ozone, as well as to improve in 2020, based on emission controls emissions of carbonaceous and sulfate other environmental effects such as currently adopted, the number of particles in the fine (and even ultrafine) atmospheric visibility. Based on the counties violating the 8-hour ozone size range. Nonroad diesels also most recent data available for this rule, standard is expected to decrease to 30 currently emit high levels of NOX which such problems are widespread in the counties where 43 million people are react in the atmosphere to form United States. There are almost 65 projected to live. Thereafter, exposure to secondary PM2.5 (namely ammonium million people living in 120 counties unhealthy levels of ozone is expected to nitrate) as well as ozone. Nonroad with monitored PM2.5 levels (2000– begin to increase again. In 2030 the diesels also emit SO2 and hydrocarbons 2002) exceeding the PM2.5 NAAQS, and number of counties violating the 8-hour which react in the atmosphere to form 159 million people living in areas ozone NAAQS is projected to increase secondary PM2.5 (namely sulfates and recently designated as exceeding 8-hour to 32 counties where 47 million people organic carbonaceous PM2.5). This ozone NAAQS. Figure I–1 illustrates the are projected to live. In addition, in section summarizes key points widespread nature of these problems. 2030, 82 counties where 44 million regarding the nonroad diesel engine Shown in this figure are counties people are projected to live will be contribution to these pollutants and exceeding the PM2.5 NAAQS or within 10 percent of violating the ozone their impacts on human health and the designated for nonattainment with the 8-hour NAAQS. environment. EPA notes that we are 8-hour ozone NAAQS plus mandatory BILLING CODE 6560–50–P relying not only on the information Federal Class I areas, which have presented in this preamble, but also on particular needs for reductions in 3 Note this analysis does not include the effects atmospheric haze. of the proposed Rule to Reduce Interstate Transport the more detailed information in of Fine Particulate Matter and Ozone (Interstate Air chapters 2 and 3 of the RIA and Our air quality modeling also Quality Rule). 69 FR 4566 (January 30, 2004). See technical support documents, as well as indicates that similar conditions are http://www.epa.gov/interstateairquality/rule.html.

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EPA is still developing the their comments on the proposal, states Furthermore, this action would ensure implementation process for bringing the told EPA that they need nonroad diesel that nonroad diesel emissions will nation’s air into attainment with the engine reductions in order to be able to continue to decrease as the fleet turns PM2.5 and 8-hour ozone NAAQS. Based meet and maintain the PM2.5 and ozone over in the years beyond 2014; these on section 172(a) provisions in the Act, NAAQS as well as to make progress reductions will be important for designated areas will need to attain the toward visibility requirements.4 maintenance of the NAAQS following PM2.5 NAAQS in the 2010 (based on attainment. 2007–2009 air quality data) to 2015 4 The following are sample comments from states (based on 2012 to 2014 air quality data) and state associations on the proposed rule, which Scientific studies show ambient PM is corroborate that this rule is a critical element in associated with a series of adverse time frame, and then be required to States’ NAAQS attainment efforts. Fuller maintain the NAAQS thereafter. information can be found in the Summary and health effects. These health effects are Similarly, we expect that most areas Analysis of Comments. discussed in detail in the EPA Criteria covered under subpart 1 and 2 will —‘‘Unless emissions from nonroad diesels are Document for PM as well as the draft sharply reduced, it is very likely that many areas updates of this document released in the attain the ozone standard in the 2007 to of the country will be unable to attain and maintain 2014 time frame, depending on an area’s health-based NAAQS for ozone and PM.’’ classification and other factors, and then (STAPPA/ALAPCO) be required to maintain the NAAQS —‘‘Adoption of the proposed regulation * * * is necessary for the protection of public health in thereafter. California and to comply with air quality standards Since the emission reductions * * * The need for 15 ppm sulfur diesel fuel expected from this final rule would cannot be overstated.’’ (California Air Resources Board) —‘‘Attainment of the NAAQS for ozone and PM2.5 begin in this same time frame, the is of immediate concern to the states in the projected reductions in nonroad —‘‘The EPA’s proposed regulation is necessary if the West is to make reasonable progress towards northeast region.* * * Thus, programs * * * such emissions would be used by states in improving visibility in our nation’s Class I areas.’’ as the proposed rule for nonroad diesel engines are meeting the PM2.5 and ozone NAAQS. In (Western Regional Air Partnership (WRAP)) essential.’’ (NESCAUM)

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past year.5, 6 EPA’s ‘‘Health Assessment specific influence of mobile source- effects observed in larger-scale Document for Diesel Engine Exhaust,’’ related PM2.5 on daily mortality and a epidemiologic studies. Recent studies (the ‘‘Diesel HAD’’) also reviews health concentration-response function for conducted in Los Angeles have effects information related to diesel mobile source-associated PM2.5 and illustrated that a substantial increase in exhaust as a whole including diesel PM, daily mortality. Another recent study in the concentration of ultrafine particles which is one component of ambient 14 U.S. cities examining the effect of is evident in locations near roadways, 7 PM. In the Diesel HAD, we note that PM10 (particulate matter less than 10 indicating substantial differences in the the particulate characteristics in the microns in diameter) on daily hospital nature of PM immediately near mobile zone around nonroad diesel engines are admissions for cardiovascular disease source emissions.14 For additional likely to be substantially the same as found that the effect of PM10 was information on health effects, see the published air quality measurements significantly greater in areas with a RIA. made along busy roadways. This larger proportion of PM10 coming from In addition to its contribution to conclusion supports the relevance of motor vehicles, indicating that PM10 ambient PM concentrations, diesel health effects associated with highway from these sources may have a greater exhaust is of specific concern because it diesel engine-generated PM to nonroad effect on the toxicity of ambient PM10 has been judged to pose a lung cancer applications. when compared with other sources.10 hazard for humans as well as a hazard As described in these documents, Of particular relevance to this rule is from noncancer respiratory effects. In health effects associated with short-term a recent cohort study which examined this context, diesel exhaust PM is variation in ambient PM have been the association between mortality and generally used as a surrogate measure indicated by epidemiologic studies residential proximity to major roads in for diesel exhaust. Further, nonroad showing associations between exposure the Netherlands. Examining a cohort of diesel engine emissions also contain and increased hospital admissions for 55 to 69 year-olds from 1986 to 1994, several substances known or suspected ischemic heart disease, heart failure, the study indicated that long-term as human or animal carcinogens, or that respiratory disease, including chronic residence near major roads, an index of have noncancer health effects as obstructive pulmonary disease (COPD) exposure to primary mobile source described in the Diesel HAD. Moreover, and pneumonia. Short-term elevations emissions (including diesel exhaust), these compounds have the potential to in ambient PM have also been was significantly associated with cause health effects at environmental associated with increased cough, lower increased cardiopulmonary mortality.11 levels of exposure. These other respiratory symptoms, and decrements Other studies have shown children compounds include benzene, 1,3- in lung function. Additional studies living near roads with high truck traffic butadiene, formaldehyde, acetaldehyde, have associated changes in heart rate density have decreased lung function acrolein, dioxin, and POM. For some of and/or heart rhythm in addition to and greater prevalence of lower these pollutants, nonroad diesel engine changes in blood characteristics with respiratory symptoms compared to emissions are believed to account for a exposure to ambient PM. Short-term children living on other roads.12 A significant proportion of total nation- variations in ambient PM have also been recent review of epidemiologic studies wide emissions. All of these compounds associated with increases in total and examining associations between asthma were identified as national or regional cardiorespiratory mortality. Studies and roadway proximity concluded that ‘‘risk drivers’’ in the 1996 NATA.15 That examining populations exposed to some coherence was evident in the is, these compounds pose a significant different levels of air pollution over a literature, indicating that asthma, lung portion of the total inhalation cancer number of years, including the Harvard function decrement, respiratory risk to a significant portion of the Six Cities Study and the American symptoms, and other respiratory population. Mobile sources contribute Cancer Society Study, suggest an problems appear to occur more significantly to total emissions of these association between long-term exposure frequently in people living near busy air toxics. As discussed in more detail to ambient PM2.5 and premature roads.13 As discussed later, nonroad in the RIA, this final rulemaking will mortality, including deaths attributed to diesel engine emissions, especially result in significant reductions of these lung cancer.8, 9 Two studies further particulate, are similar in composition emissions. analyzing the Harvard Six Cities Study’s to those from highway diesel vehicles. In EPA’s Diesel HAD.16 diesel exhaust air quality data have also established a Although difficult to associate directly was classified as likely to be with PM2.5, these studies indicate that carcinogenic to humans by inhalation at 5 U.S. EPA (1996.) Air Quality Criteria for direct emissions from mobile sources, environmental exposures, in accordance Particulate Matter—Volumes I, II, and III, EPA, and diesel engines specifically, may Office of Research and Development. Report No. with the revised draft 1996/1999 EPA EPA/600/P–95/001a–cF. This material is available explain a portion of respiratory health cancer guidelines. A number of other electronically at http://www.epa.gov/ttn/oarpg/ agencies (National Institute for ticd.html. 10 Janssen, NA; Schwartz J; Zanobetti A; et al. Occupational Safety and Health, the 6 U.S. EPA (2003). Air Quality Criteria for (2002) Air conditioning and source-specific International Agency for Research on Particulate Matter—Volumes I and II (Fourth particles as modifiers of the effect of PM10 on External Review Draft) This material is available hospital admissions for heart and lung disease. Cancer, the World Health Organization, electronically at http://cfpub.epa.gov/ncea/cfm/ Environ Health Perspect 110(1):43–49. partmatt.cfm. 11 Hoek, G; Brunekreef, B; Goldbohm, S; et al. 14 Yifang Zhu, William C. Hinds, Seongheon Kim, 7 U.S. EPA (2002). Health Assessment Document (2002) Association between mortality and Si Shen and Constantinos Sioutas Zhu Y; Hinds for Diesel Engine Exhaust. EPA/600/8–90/057F indicators of traffic-related air pollution in the WC; Kim S; et al. (2002) Study of ultrafine particles Office of Research and Development, Washington, Netherlands: a cohort study. Lancet near a major highway with heavy-duty diesel traffic. DC. This document is available electronically at 360(9341):1203–1209. Atmos Environ 36(27): 4323–4335. http://cfpub.epa.gov/ncea/cfm/ 12 Brunekreef, B; Janssen NA; de Hartog, J; et al. 15 U.S. EPA (2002). National-Scale Air Toxics recordisplay.cfm?deid=29060. (1997) Air pollution from traffic and lung function Assessment. This material is available 8 Dockery, DW; Pope, CA, III; Xu, X; et al. (1993) in children living near motor ways. Epidemiology electronically at http://www.epa.gov/ttn/atw/nata/. An association between air pollution and mortality (8): 298–303. 16 U.S. EPA (2002). Health Assessment Document in six U.S. cities. N Engl J Med 329:1753–1759. 13 Delfino RJ. (2002) Epidemiologic evidence for for Diesel Engine Exhaust. EPA/600/8–90/057F 9 Pope, CA, III; Burnett, RT; Calle, EE; et al. (2002) asthma and exposure to air toxics: linkages between Office of Research and Development, Washington Lung cancer, cardiopulmonary mortality, and long- occupational, indoor, and community air pollution DC. This document is available electronically at term exposure to fine particulate air pollution. research. Env Health Perspect Suppl 110(4): 573– http://cfpub.epa.gov/ncea/cfm/ JAMA 287: 1132–1141. 589. recordisplay.cfm?deid=29060.

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California EPA, and the U.S. chest.17, 18 Ozone can reduce lung part of the ongoing review of the air Department of Health and Human function and make it more difficult to quality criteria and NAAQS for ozone. Services) have made similar breathe deeply, and breathing may A revised Air Quality Criteria Document classifications. become more rapid and shallow than for Ozone and Other Photochemical EPA generally derives cancer unit risk normal, thereby limiting a person’s Oxidants will be prepared in estimates to calculate population risk normal activity. Ozone also can consultation with EPA’s Clean Air more precisely from exposure to aggravate asthma, leading to more Science Advisory Committee (CASAC). carcinogens. In the simplest terms, the asthma attacks that require a doctor’s Key new health information falls into cancer unit risk is the increased risk attention and/or the use of additional four general areas: Development of new- associated with average lifetime medication. In addition, ozone can onset asthma, hospital admissions for exposure of 1 ug/m3. EPA concluded in inflame and damage the lining of the young children, school absence rate, the Diesel HAD that it is not possible lungs, which may lead to permanent and premature mortality. In all, the new currently to calculate a cancer unit risk changes in lung tissue, irreversible studies that have become available since for diesel exhaust due to a variety of reductions in lung function, and a lower the 8-hour ozone standard was adopted factors that limit the current studies, quality of life if the inflammation occurs in 1997 continue to demonstrate the such as lack of an adequate dose- repeatedly over a long time period harmful effects of ozone on public response relationship between exposure (months, years, a lifetime). People who health and the need for areas with high and cancer incidence. are of particular concern with respect to ozone levels to attain and maintain the However, in the absence of a cancer ozone exposures include children and NAAQS. unit risk, the EPA Diesel HAD sought to adults who are active outdoors. Those Finally, nonroad diesel emissions provide additional insight into the people particularly susceptible to ozone contribute to nine categories of non- significance of the cancer hazard by effects are people with respiratory health impacts: visibility impairment, estimating possible ranges of risk that disease, such as asthma, and people soiling and material damage, acid might be present in the population. The with unusual sensitivity to ozone, and deposition, eutrophication of water possible risk range analysis was children. Beyond its human health bodies, plant and ecosystem damage developed by comparing a typical effects, ozone has been shown to injure from ozone, water pollution resulting environmental exposure level for plants, which has the effect of reducing from deposition of toxic air pollutants highway diesel sources to a selected crop yields and reducing productivity in with resulting effects on fish and range of occupational exposure levels forest ecosystems.19, 20 wildlife, and odor. In particular, EPA and then proportionally scaling the New research suggests additional determined that nonroad engines occupationally observed risks according serious health effects beyond those that contribute significantly to unacceptable to the exposure ratios to obtain an were known when the 8-hour ozone visibility conditions where people live, estimate of the possible environmental health standard was set. Since 1997, work and recreate, including risk. A number of calculations are over 1,700 new health and welfare contributing to visibility impairment in needed to accomplish this, and these studies relating to ozone have been Federally mandated Class I areas that can be seen in the EPA Diesel HAD. The published in peer-reviewed journals.21 are given special emphasis in the Clean outcome was that environmental risks Many of these studies investigate the Air Act (67 FR 68242, November 8, from diesel exhaust exposure could impact of ozone exposure on such 2002). Visibility is impaired by fine PM ¥ ¥ range from a low of 10 4 to 10 5 or be health effects as changes in lung and precursor emissions from nonroad ¥ as high as 10 3 this being a reflection structure and biochemistry, diesel engines subject to this final rule. of the range of occupational exposures inflammation of the lungs, exacerbation Reductions in emissions from this final that could be associated with the and causation of asthma, respiratory rule will improve visibility as well as relative and absolute risk levels illness-related school absence, hospital other environmental outcomes as observed in the occupational studies. and emergency room visits for asthma described in the RIA. Because of uncertainties, the analysis and other respiratory causes, and As supplementary information, we acknowledged that the risks could be have made estimates using air quality ¥ ¥ premature mortality. EPA is currently lower than 10 4 or 10 5 and a zero risk evaluating these and other studies as modeling to illustrate the types of from diesel exhaust exposure was not change in future PM2.5 and ozone levels ruled out. Although the above risk range 17 U.S. EPA (1996). Air Quality Criteria for Ozone that we would expect to result from a is based on environmental exposure and Related Photochemical Oxidants, EPA/600/P– final rule like this as described in levels for highway mobile sources only, 93/004aF. Docket No. A–99–06. Document Nos. II– chapter 2 of the RIA. That modeling the 1996 NATA estimated exposure for A–15 to 17. shows that control of nonroad emissions 18 U.S. EPA (1996). Review of National Ambient nonroad diesel sources as well. Thus, Air Quality Standards for Ozone, Assessment of would produce nationwide air quality the exposure estimates were somewhat Scientific and Technical Information, OAQPS Staff improvements in PM2.5 and ozone levels higher than those used in the risk range Paper, EPA–452/R–96–007. Docket No. A–99–06. as well as visibility improvements. On analysis described above. The EPA Document No. II–A–22. a population-weighted basis, the average 19 U.S. EPA (1996). Air Quality Criteria for Ozone Diesel HAD, therefore, stated that the modeled change in future-year PM2.5 and Related Photochemical Oxidants, EPA/600/P– NATA exposure estimates result in a 93/004aF. Docket No. A–99–06. Document Nos. II– annual averages is projected to decrease similar risk perspective. A–15 to 17. by 0.42 µg/m3 (3.3%) in 2020, and 0.59 The ozone precursor reductions 20 U.S. EPA (1996). Review of National Ambient µg/m3 (0.6%) in 2030. In addition, the expected as a result of this rule are also Air Quality Standards for Ozone, Assessment of population-weighted average modeled important because of health and welfare Scientific and Technical Information, OAQPS Staff change in future year design values for Paper, EPA–452/R–96–007. Docket No. A–99–06. effects associated with ozone, as Document No. II–A–22. ozone would decrease by 1.8 parts per described in the Air Quality Criteria 21 New Ozone Health and Environmental Effects billion (ppb) in 2020, and 2.5 ppb in Document for Ozone and Other References, Published Since Completion of the 2030. Within areas predicted to violate Photochemical Oxidants. Ozone can Previous Ozone AQCD, National Center for the ozone NAAQS in the projected base Environmental Assessment, Office of Research and irritate the respiratory system, causing Development, U.S. Environmental Protection case, the average decrease would be coughing, throat irritation, and/or Agency, Research Triangle Park, NC 27711 (7/2002) somewhat higher: 1.9 ppb in 2020 and uncomfortable sensation in the Docket No. A–2001–28, Document II–A–79. 3.0 ppb in 2030.

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The PM air quality improvements work due to their respiratory symptoms, for land-based nonroad diesel expected from this final rule are and 5.9 million fewer days when adults engines. 22 For locomotive, commercial anticipated to produce major benefits to have to restrict their activities due to marine vessel (CMV), and recreational human health and welfare, with a respiratory symptoms. The reductions marine vessel (RMV) engines, the final combined value in excess of half a will also improve visibility and reduce fuel standards will affect direct PM2.5 trillion dollars between 2007 and 2030. diesel odor. For further details on the and SO2 emissions. Each sub-section For example, in 2030, we estimate that economic benefits of this rule, please below discusses one of these this program will reduce approximately refer to the benefit-cost discussion in pollutants,23 including expected 129,000 tons PM2.5 and 738,000 tons of section VI of this preamble and chapter emission reductions associated with the NO . The resulting ambient PM X 9 of the RIA. final standards.24 Table I.B–1 reductions correspond to public health summarizes the impacts of this rule for improvements in 2030, including 12,000 b. Emissions From Nonroad Diesel 2020 and 2030. Further details on our fewer premature mortalities, 15,000 Engines fewer heart attacks, 200,000 fewer The engine and fuel standards in this inventory estimates, including results asthma exacerbations in children, and 1 final rule will affect emissions of direct for other years, are available in chapter 3 of the RIA. million fewer days when adults miss PM2.5, SO2, NOX, VOCs, and air toxics

TABLE I.B–1.—ESTIMATED NATIONAL (50 STATE) REDUCTIONS IN EMISSIONS FROM NONROAD LAND-BASED, LOCOMOTIVE, COMMERCIAL MARINE, AND RECREATIONAL MARINE DIESEL ENGINES

Pollutant [short tons] 2020 2030

Direct PM2.5: PM2.5 Emissions Without Rule ...... 167,000 181,000 PM2.5 Emissions With 500 ppm Sulfur in 2007 and No Other Controls ...... 144,000 155,000 PM2.5 Emissions With 15 ppm Sulfur in 2012 and No Other Controls ...... 141,000 152,000 PM2.5 Emissions With Entire Rule ...... 81,000 52,000 PM2.5 Reductions Resulting from this Rule ...... 86,000 129,000 SO2: SO2 Emissions Without Rule ...... 326,000 379,000 SO2 Emisions With 500 ppm Sulfur in 2007 ...... 37,000 43,000 SO2 Emissions With Entire Rule (15 ppm Sulfur in 2012) ...... 3,000 3,000 SO2 Reductions Resulting from this Rule ...... 323,000 376,000 a NOX—Land-Based Nonroad Engines Only : NOX Emissions Without Rule ...... 1,125,000 1,199,000 NOX Emissions With Rule ...... 681,000 461,000 NOX Reductions Resulting from this Rule ...... 444,000 738,000 VOC—Land-Based Nonroad Engines Onlya: VOC Emissions Without Rule ...... 98,000 97,000 VOC Emissions With Rule ...... 75,000 63,000 VOC Reductions Resulting from this Rule ...... 23,000 34,000 Notes: a NOX and VOC numbers only include emissions for land-based nonroad diesel engines because the Tier 4 controls will not be applied to loco- motive, commercial marine, and recreational marine engines; and no NOX and VOC emission reductions are generated through the lowering of fuel sulfur levels.

i. Direct PM2.5 a 50 state inventory are shown in table emissions estimates with the final rule, As described earlier, the Agency I.B–1, along with our estimates of the emissions estimates based on lowering reductions in 2020 and 2030 we expect diesel fuel sulfur without any other believes that reductions of diesel PM2.5 emissions are needed as part of the would result from our final rule for a controls are shown in table I.B–1 for nation’s progress toward clean air. PM2.5 exhaust emission standard and 2020 and 2030. Direct PM2.5 emissions from land-based from changes in the sulfur level in land- Figure I.B–1a shows our estimate of nonroad diesel engines amount to based nonroad, locomotive, and marine PM2.5 emissions between 2000 and 2030 increasingly large percentages of total diesel fuel. Land-based nonroad, both without and with the final man-made diesel PM2.5. Between 1996 locomotive, and marine diesel fuel standards and fuel sulfur requirements and 2030, we estimate that the sulfur levels will be lowered to about of this rule. We estimate that PM2.5 percentage of total man-made diesel 340 ppm in-use (500 ppm maximum) in emissions from this source would be PM2.5 emissions coming from land- 2007. Land-based nonroad diesel fuel reduced by 71 percent in 2030. sulfur will be lowered further to about based nonroad diesel engines will ii. SO increase from about 46 percent to 72 11 ppm in-use (15 ppm maximum) in 2 percent (based on a 48 state inventory). 2010 and locomotive and marine diesel We estimate that land-based nonroad, Emissions of direct PM2.5 from land- fuel sulfur will be lowered to the same CMV, RMV, and locomotive diesel based nonroad diesel engines based on level in 2012. In addition to PM2.5 engines emitted about 234,000 tons of

22 We are also adopting a few minor adjustments locomotive, and commercial marine vessel diesel the inventory, we use a 48 state emissions of a technical nature to current CO standards. engines are based on 50 state emissions inventory inventory, to match the 48 state nature of those Emissions effects from these standards are estimates. A 48 state inventory was used for air other inventories. discussed in the RIA. quality modeling that EPA conducted for this rule, 24 Please see the Summary and Analyses of 23 The estimates of baseline emissions and of which Alaska and Hawaii are not a part. In cases Comments document for discussions of issues emissions reductions from the final rule reported where land-based nonroad diesel engine emissions raised about the emission inventory estimates here for nonroad land-based, recreational marine, are compared with non-mobile source portions of during the comment period for the NPRM.

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SO2 in 1996, accounting for about 33 iii. NOX iv. VOCs and Air Toxics percent of the SO2 from mobile sources Table I.B–1 shows the 50 state Based on a 48 state emissions (based on a 48 state inventory). With no inventory, we estimate that land-based estimated tonnage of NOX emissions for reduction in diesel fuel sulfur levels, we nonroad diesel engines emitted over 221 estimate that these emissions will 2020 and 2030 without the final rule and the estimated tonnage of emissions thousand tons of VOC in 1996. Between continue to increase, accounting for 1996 and 2030, we estimate that land- eliminated with the final rule in place. about 44 percent of mobile source SO2 based nonroad diesel engines will These results are shown graphically in emissions by 2030. contribute about 2 to 3 percent of Figure I.E–1c at the end of this section. As part of this final rule, sulfur levels mobile source VOC emissions. Without We estimate that NOX emissions from further controls, land-based nonroad in fuel will be significantly reduced, these engines will be reduced by 62 leading to large reductions in nonroad, diesel engines will emit about 97 percent in 2030. thousand tons/year of VOC in 2020 and locomotive, and marine diesel SO2 emissions. By 2007, the sulfur in diesel We note that the magnitude of NOX 2030 nationally. fuel used by all land-based nonroad, reductions determined in the final rule Table I.B–1 shows our projection of locomotive, and marine diesel engines analysis is somewhat less than what was the reductions in 2020 and 2030 for VOC emissions that we expect from will be reduced from the current average reported in the proposal’s preamble and implementing the final NMHC in-use level of between 2,300 to 2,400 RIA, especially in the later years when 25 the fleet has mostly turned over to Tier standards. This estimate is based on a ppm to an average in-use level of 50 state emissions inventory. By 2030, about 340 ppm, with a maximum level 4 designs. The greater part of this is due to the fact that we have deferred setting VOC emissions from this category of 500 ppm. By 2010, the sulfur in would be reduced by 35 percent from diesel fuel used by land-based nonroad a long-term NOX standard for mobile machinery over 750 horsepower to a baseline levels. engines will be reduced to an average While we are not adopting any in-use level of 11 ppm with a maximum later action. When this future action is completed, we would expect roughly specific gaseous air toxics standards in level of 15 ppm. Sulfur in diesel fuel today’s rule, air toxics emissions would equivalent reductions between the used by locomotive and marine engines nonetheless be significantly reduced proposal and the overall final program, will be reduced to the same level by through the NMHC standards included 2012. Table II.B–1 and figure II.B–1b though there are some other effects in the final rule. By 2030, we estimate show the estimated reductions from reflected in the differing NOX that emissions of air toxics pollutants, these sulfur changes. reductions as well, due to updated such as benzene, formaldehyde, modeling assumptions and the adjusted acetaldehyde, 1,3-butadiene, and NOX standards levels for engines over acrolein, would be reduced by 35 750 horsepower. Section II.A.4 of this percent from land-based nonroad diesel 25 Highway fuel is currently used in a significant preamble contains a detailed discussion fraction of land based nonroad equipment, engines. Diesel PM reductions were locomotives, and marine vessels, reducing the in- of the NOX standards we are adopting discussed above. For specific air toxics use average sulfur level from about 3,000 ppm for for engines over 750 horsepower as well reduction estimates, see chapter 3 of the uncontrolled high-sulfur fuel to 2,300 or 2,400 ppm. as the basis for those standards. RIA.

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II. Nonroad Engine Standards and obtain very similar emissions Likewise, the long-term NOX standards In this section we describe the reductions. The long-term PM filter- we are adopting for nearly all engines emission standards for nonroad diesel based standards that apply to all engines above 75 hp will yield NOX reductions engines that we are setting to address over 25 hp, combined with the fuel of about 90% from the NOX levels the serious air quality problems change and new requirements to ensure expected from even the low-emitting discussed in section I. These Tier 4 robust control in the field, will yield PM Tier 3 engines due to first reach the standards, which take effect starting in reductions of over 95% from the in-use market in 2006 or later. The Tier 4 2008, are very similar to those proposed, levels of today’s cleanest Tier 2 engines. standards will bring about large

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reductions in toxic hydrocarbon sulfur nonroad diesel fuel requirement A. What Are the New Engine Standards? emissions as well. discussed in section IV); and In this final rule we are largely • How diesel fuel sulfur affects an The Tier 4 exhaust emissions adopting the standards and timing we standards for PM, NOX, and NMHC are engine’s ability to meet the new 26 proposed, with the exception of those standards. summarized in tables II.A–1, 2, and 4. Crankcase emissions control that apply to engines over 750 hp. We Additional provisions for engine and requirements are discussed in section restructured and modified the standards equipment manufacturers are discussed II.A.7. Previously adopted CO emission and timing for these engines to address in detail in section III. These include: standards continue to apply as well. All technical concerns and to focus on • The averaging, banking, and trading achieving comparable emission of these standards apply to covered (ABT) program. nonroad engines over the useful life reductions through the introduction of • The transition program for periods specified in our regulations, advanced technology as early as feasible equipment manufacturers. from specific applications within this except where temporary in-use • The addition of a ‘‘not-to-exceed’’ power category. See section II.A.4 for a compliance margins apply as discussed program to ensure in-use emissions detailed discussion. We also are not in section III.E. To help ensure that control. This program includes new adopting the proposed minor these emission reductions will be emission standards and related test adjustments to the CO standard levels achieved in use, we have adopted test procedures to supplement the standards for some engines under 75 hp, as procedures for measuring compliance discussed in this section. with these standards tailored to both explained in section II.A.6. In addition, • there are minor changes from the The test procedures and other steady-state and transient nonroad proposal in the phase-in approach we compliance requirements associated engine operating characteristics. These are adopting for NO and NMHC with the emission standards. test procedures are discussed in several X • standards, as detailed in this section. Special provisions to aid small subsections of section III. Another In this section we discuss: businesses in implementing our component of our program to ensure • The Tier 4 engine standards, and requirements. control of emissions in-use is the new the schedule for implementing them; • An incentive program to encourage ‘‘not-to-exceed’’ (NTE) emission • The feasibility of the Tier 4 innovative technologies and the early standards and associated test standards (in conjunction with the low- introduction of new technologies. procedures, discussed in section III.J.

TABLE II.A–1.—TIER 4 PM STANDARDS (G/BHP-HR) AND SCHEDULE

Model year Engine power 2008 2009 2010 2011 2012 2013

hp < 25 (kW < 19) ...... a 0.30 ...... 25 ≤ hp < 75 (19 ≤ kW < 56) ...... b 0.22 ...... 0.02 75 ≤ hp < 175 (56 ≤ kW < 130) ...... 0.01 ...... 175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ...... 0.01 ......

hp 750 (kW > 560) ...... See table II.A–4 Notes: a For air-cooled, hand-startable, direct injection engines under 11 hp, a manufacturer may instead delay implementation until 2010 and dem- onstrate compliance with a less stringent PM standard of 0.45 g/bhp-hr, subject also to additional provisions discussed in section II.A.3.a. b A manufacturer has the option of skipping the 0.22 g/bhp-hr PM standard for all 50–75 hp engines. The 0.02 g/bhp-hr PM standard would then take effect one year earlier for all 50–75 hp engines, in 2012.

TABLE II.A–2.—TIER 4 NOX AND NMHC STANDARDS AND SCHEDULE

Standard Phase-in schedule (g/bhp-hr) (model year) Engine power (percent) NOX NMHC 2011 2012 2013 2014

a 25 ≤ hp < 75 (19 ≤ kW < 56) ...... 3.5 NMHC+NOX ...... 100% ...... 75 ≤ hp < 175 (56 ≤ kW < 130) ...... 0.30 0.14 b50 b50 b100 175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ...... 0.30 0.14 50 50 50 100

hp > 750 (kW > 560) ...... See table II.A–4 Notes: Percentages indicate production required to comply with the Tier 4 standards in the indicated model year. a This is the existing Tier 3 combined NMHC+NOX standard level for the 50–75 hp engines in this category. In 2013 it applies to the 25–50 hp engines as well. b Manufacturers may use banked Tier 2 NMHC+NOX credits from engines at or above 50 hp to demonstrate compliance with the 75–175 hp engine NOX standard in this model year. Alternatively, manufacturers may forego this special banked credit option and instead meet an alter- native phase-in requirement of 25/25/25% in 2012, 2013, and 2014 through December 30, with 100% compliance required beginning December 31, 2014. See sections III.A and II.A.2.b.

26 Consistent with past EPA rulemakings for outside the U.S., and in laboratory operations in horsepower-hour, power ratings in horsepower, etc. nonroad diesel engines, our regulations express which these units are the norm. However, in this In any compliance questions that might arise from standards, power ratings, and other quantities in preamble and in other rulemaking documents for differences in these due to, for example, rounding international SI (metric) units—kilowatts, gram per the general reader, we have chosen to use terms conventions, the regulations themselves establish kilowatt-hour, etc. This aids in achieving more common in general usage in the U.S. Hence the applicable requirements. harmonization with standards-setting bodies standards are expressed in units of grams per brake

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The long-term 0.01 and 0.02 g/bhp-hr As we proposed, these 2008 Tier 4 2008 (see section III.D). Fuel sulfur has Tier 4 PM standards for 75–750 hp and engine standards apply only to engines a known correlation to PM generation, 25–75 hp engines, respectively, below 75 hp. We are not setting Tier 4 even for engines without aftertreatment. combined with the fuel change and new standards taking effect in 2008 for larger Moreover, for any manufacturers who requirements to ensure robust control in engines. The reasons for this differ believe that accomplishing this PM pull- the field, represent a reduction of over depending on the engines’ hp rating. ahead will hamper their Tier 3 95% from in-use levels expected with Setting Tier 4 2008 standards for compliance efforts for these engines, Tier 2/Tier 3 engines.27 The 0.30 g/bhp- engines at or above 100 hp would there is an alternative Tier 4 compliance hr Tier 4 NOX standard for 75–750 hp provide an insufficient period of option. Instead of meeting new Tier 4 engines represents a NOX reduction of stability (an element of lead time) PM standards in both 2008 and 2013, about 90% from in-use levels expected between Tier 2⁄3 and Tier 4, and so manufacturers may skip the Tier 4 2008 with Tier 3 engines. Emissions would not be appropriate. This is PM standard, and instead focus design reductions from engines over 750 hp are because these engines become subject to efforts on introducing PM filters for discussed in section II.A.4. existing Tier 2 or 3 NMHC+NOX these engines one year earlier, by In general, there was widespread standards in 2006 or 2007. Setting new complying with the aftertreatment-based support in the comments for the 2008 standards for them thus would standard for PM in 2012. These options proposed Tier 4 engine standards and provide only one or two years of Tier 2/ are discussed in more detail in section for the timing we proposed for them. Tier 3 stability before another round of II.A.3.b. Some commenters raised category- design changes would have to be made We view the 2008 portion of the Tier specific concerns, especially for the in 2008 for Tier 4. 4 program as highly important because smaller and the very large engine It is also inappropriate to establish it provides substantial PM and SOX categories. These comments are 2008 Tier 4 standards for engines of 75– emissions reductions during the several discussed below. 100 hp. The stability issue just noted for years prior to 2011. Initiating Tier 4 in larger engines is not present for these 2008 also fits well with the lead time 1. Standards Timing engines, because these engines are (including stability), cost, and a. 2008 Standards subject to Tier 3 NMHC+NOX standards technology availability considerations of starting in 2008, so that our setting a the overall program. Initiating the Tier The timing of the Tier 4 engine Tier 4 PM standard for them in the same 4 engine standards in 2008 provides standards is closely tied to the timing of year would not create the situation in three to four years of stability after the fuel quality changes discussed in which engines have to be redesigned start of Tier 2 for engines under 50 hp. section IV, in keeping with the systems twice to comply with new standards As mentioned above, it also coincides approach we are taking for this program. within a space of one or two years. with the start date of Tier 3 NMHC+NOX The earliest Tier 4 engine standards take However, EPA believes the more standards for 50–75 hp engines and so effect in model year 2008, in significant concern for these engines is introduces no stability issues for these conjunction with the introduction of meeting the stringent aftertreatment- engines (as redesign for both PM and 500 ppm maximum sulfur nonroad based standards for PM and NOX in NOX occurs at the same time). The 2008 diesel fuel in mid-2007. This fuel 2012. We are concerned that adopting start date provides almost 4 years of change serves a dual environmental interim 2008 standards for these engines lead time to accomplish redesign and purpose. First, it provides a large would divert resources needed to testing. The evolutionary character of immediate reduction in PM and SOX achieve these 2012 standards and the 2008 standards, based as they are on emissions for the existing fleet of indeed jeopardize attaining them. Thus, proven technologies, and the fact that engines in the field. Second, its although early emission reductions from some certified engines already meet widespread availability by the end of these engines in 2008 would of course these standards as discussed in section 2007 aids engine designers in be desirable, we felt that the focus we II.B, leads us to conclude that the employing emissions controls capable of are putting on obtaining much larger standards are appropriate within the achieving the Tier 4 standards for model reductions from them in 2012, together meaning of section 213(a)(4) of the year 2008 and later engines; this is with the fact that we already have a Tier Clean Air Act and that we are providing because the performance and durability 3 NMHC+NOX standard taking effect for adequate lead time to achieve those of such technologies as exhaust gas 75–100 hp engines in 2008, warrants standards. recirculation (EGR) and diesel oxidation our not adding additional control Engine and equipment manufacturers catalysts is improved by lower sulfur requirements for these engines during argued in their comments that the PM fuel.28 The reduction of sulfur in this interim period. pull-ahead option for 50–75 hp engines nonroad diesel fuel will also provide We note that the 50–75 hp engines is inappropriate because it constitutes a sizeable economic benefits to machine also have a Tier 3 NMHC+NOX standard re-opening of the Tier 3 rule, involving operators as it will reduce wear and taking effect in 2008 and, as noted as it does a Tier 4 PM standard in 2008, corrosion and will allow them to extend above, we are setting a new Tier 4 2008 the same year that the Tier 3 oil change intervals (see section VI.B). PM standard for them. Unlike the larger NMHC+NOX takes effect. They further These economic benefits will occur for 75–100 hp engines, however, the 50–75 argued that the non-pull-ahead option is all diesel engines using the new fuel, hp engines have one additional year, not a real option because PM not just for those built in 2008 or later. until 2013, before filter-based PM aftertreatment cannot be implemented standards take effect, and also have no for these engines in 2012. additional NO control requirement We disagree with both contentions. 27 Note that we are grouping all standards in this X rule, including those that take effect in 2008, under being set beyond the 2008 Tier 3 We determined, as part of our feasibility the general designation of ‘‘Tier 4 standards.’’ As a standard. These differences justify analysis for Tier 4, that it is feasible to result, there are no ‘‘Tier 3’’ standards in the multi- including the interim Tier 4 PM design engines to meet the 2008 PM tier nonroad program for engines below 50 hp or standard for these engines. We note too standard in the same year that a Tier 3 above 750 hp. 28 ‘‘Nonroad Diesel Emissions Standards Staff that achieving the 2008 PM standard is NMHC+NOX standard takes effect. See Technical Paper,’’ EPA420–R–01–052, October enabled in part by the large reduction in section II.B and RIA sections 4.1.4 and 2001. certification fuel sulfur that applies in 4.1.5. One reason is that a substantial

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part of the 2008 PM emission reductions in mid-2010, and the related engine implementation of Tier 4 standard start do not result from engine redesign, but standards for PM, NOX, and NMHC that dates over 2011–2013 as described rather are due to the reduction in begin to phase-in in the 2011 model above to be responsive to the technology certification test fuel maximum sulfur year, provide most of the environmental migration and workload distribution levels from 2000 to 500 ppm that results benefits of the program. Like the 2008 concerns. from the fuel change in the field. This standards, these standards are timed to reduction in sulfur levels also aids provide adequate lead time for engine 2. Phase-In of NOX and NMHC engine designers in employing emission and equipment manufacturers. They Standards for 75–750 hp Engines control technologies that are also are phased in over time to allow for a. Percent-of-Production Phase-In for detrimentally affected by sulfur, not the orderly transfer of technology from NOX and NMHC only for PM control, but also for NMHC the highway sector, and to spread the We are finalizing the percent-of- and NOX control. Examples of these overall workload for engine and production phase-in for NOX and sulfur-sensitive technologies are equipment manufacturers engaged in NMHC that we proposed for 75–750 hp oxidation catalysts, which can redesigning a large number and variety engines. Because Tier 4 NOX emissions substantially reduce PM and NMHC, of products for Tier 4. control technology is expected to be As we explained at proposal, we and EGR, which is effective at reducing derived from technology first believe that the high-efficiency exhaust NOX. We note further that designing introduced in highway heavy-duty emission control technologies being engines to meet the 2008 PM standard diesels, we proposed to adopt the developed to meet our 2007 emission is also made less difficult by our not implementation pattern for the Tier 4 standards for heavy-duty highway diesel requiring engine designers to consider NO standard which we adopted for the the transient test, cold start, and not-to- engines can be adapted to most nonroad X heavy-duty highway diesel program. exceed requirements that are otherwise diesel applications. The engines for This will help to ensure a focused, part of the Tier 4 program. These which we believe this adaptation from orderly development of robust high- requirements do not take effect for these highway applications will be most efficiency NO control in the nonroad engines until the 0.02 g/bhp-hr standard straightforward are those in the 175–750 X sector and will also help to ensure that is implemented in 2012 or 2013. See hp power range, and thus these engines manufacturers are able to take section III.F for details. are subject to new standards requiring We also believe that the second high-efficiency exhaust emission maximum advantage of the highway option (compliance with the controls as soon as the 15 ppm sulfur engine development program, with aftertreatment-based PM standard in diesel fuel is widely available, that is, in resulting cost savings. 2012, with no interim 2008 standard) is the 2011 model year. Engines of 75–175 The heavy-duty highway rule allows viable, and may be an attractive choice hp are subject to the new standards in for a gradual phase-in of the NOX and especially for engine families on the the following model year, 2012, NMHC requirements over multiple higher side of the 50–75 hp range that reflecting the need to spread the model years: 50% of each share a design platform with larger redesign workload and, to some extent, manufacturer’s U.S.-directed production engines being equipped with PM filters the greater effort that may be involved volume must meet the new standard in to meet the Tier 4 standard for 75–175 in adapting highway technologies to 2007–2009, and 100% must do so by hp engines in 2012. We believe 75 hp these engines. Engines between 25 and 2010. Through the use of emissions is the appropriate cutpoint for setting 75 hp are subject to new standards for averaging, this phase-in approach also and timing emissions standards (see PM based on high-efficiency exhaust provides the flexibility for highway section II.A.5), but it obviously is not a emission controls in 2013, reflecting engine manufacturers to meet that hard-and-fast separator between engine again the need to spread the workload program’s environmental goals by platforms for all manufacturers in all and the challenge of adapting this allowing somewhat less-efficient NOX product lines. Even for many 50–75 hp technology to these engines which controls on more than 50% of their engines that do not share a design typically do not have highway production during the 2007–2009 platform with larger engines, we believe counterparts. Engines over 750 hp phase-in years. that a 2012 implementation date for PM involve a number of special We follow the same pattern in this filter technology may be practical, considerations, necessitating an rule. As proposed, we are phasing in the considering the 4-year lead time it implementation approach unique to NOX standards for nonroad diesels over affords after Tier 3 begins for these these engines as explained in section 2011–2013 as indicated in table II.A–2, engines (in 2008), 8-year lead time after II.A.4. Lastly , there are additional based on compliance with the Tier 4 the last PM standard change (in 2004), provisions discussed in sections III.B.2 standards for 50% of a manufacturer’s and 5-year lead time after full-scale PM and III.M to encourage early technology U.S.-directed production in each power filter technology implementation on introduction and to further draw from category between 75 and 750 hp in each highway engines (in 2007). the highway technology experience. phase-in model year. The phase-in of Engine manufacturers also This approach of implementing Tier 4 standards for engines over 750 hp is commented that the two-options standards by power category over 2011– discussed in section II.A.4. With a NOX approach would cause their customers 2013 provides for the orderly migration phase-in, all manufacturers are able to to switch engine suppliers in 2012 to get of technology and distribution of introduce their new technologies on a the least expensive engines possible in redesign workload over three model limited number of engines, thereby every year, thus compromising the years, as EPA provided in Tier 3. gaining valuable experience with the environmental objectives and creating Overall, this approach provides 4 to 6 technology prior to implementing it on market disruptions. We have addressed years of real world experience with the their entire product line. In tandem with these concerns as discussed in section new technology in the highway sector, the equipment manufacturer transition II.A.3.b. involving millions of engines (in program discussed in section III.B, the addition to the several additional years phase-in ensures timely progress to the b. 2011 and Later Standards provided by demonstration fleets on the Tier 4 standard levels while providing The second fuel change for nonroad road in earlier years), before the new a great degree of implementation diesel fuel, to 15 ppm maximum sulfur standards take effect. We consider the flexibility for the industry.

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This ‘‘percent of production phase-in’’ objectives for nonroad diesels. Therefore compliance on larger engines with is intended to take maximum advantage we are not adopting the suggested much higher lifetime emissions of the highway program technology earlier completion of the phase-in. potential. Even so, the horsepower development. It adds a new dimension As proposed, we are phasing in the ranges for these power categories are of implementation flexibility to the Tier 4 NMHC standard for 75–750 hp fairly broad, so this restriction allows staggered ‘‘phase-in by power category’’ engines with the NOX standard, as is ample freedom to manufacturers to used in the nonroad program for Tiers being done in the highway program. structure compliance plans in the most 1–3 (and also in this Tier 4) which, Engines certified to the new NOX cost-effective manner. There were no though structured to facilitate requirement would be expected to adverse comments on this approach. technology development and transfer, is certify to the NMHC standard as well. The ‘‘phase-out’’ engines (those not b. Special Considerations for the 75–175 more aimed at spreading the redesign hp Category workload. Because the Tier 4 program certified to the new Tier 4 NOX and involves challenges in addressing both NMHC standards) would continue to be As discussed in the proposal, the 75– technology development and redesign certified to the applicable Tier 3 175 hp category of engines and workload, we believe that incorporating NMHC+NOX standard. As discussed in equipment may involve added workload both of these phase-in mechanisms into section II.B, we believe that the NMHC challenges for the industry to develop the program is warranted, resulting in standard is readily achievable through and transfer technology. Though the coordinated phase-in plan shown in the application of PM traps to meet the spanning only 100 hp, this category table II.A–2, which we are finalizing PM standard, which does not involve represents a great diversity of essentially as proposed. Note that this such a phase-in. However, in the applications, and comprises a disproportionate number of the total results in the new NOX requirements for highway program we chose to phase in 75–175 hp engines taking effect starting the NMHC standard with the NOX nonroad engine and machine models. in the second year of the 2011–2013 standard to simplify the phase-in under Some of these engines, though having general phase-in, in effect creating a 50– the percent-of-production approach characteristics comparable to many 50% phase-in in 2012–2013 for this taken there, thus avoiding subjecting the highway engines such as turbocharging category. This then staggers the Tier 4 ‘‘phase-out’’ engines to separate and electronic fuel control, are not start years by power category as in past standards for NMHC and NMHC+NOX directly derived from highway engine tiers: 2011 for engines at or above 175 (which could lead to increased platforms and so are likely to require more development work than larger hp, 2012 for 75–175 hp engines, and administrative costs with essentially no engines to transfer emission control 2013 for 25–75 hp engines (for which no different environmental result). The technology from the highway sector. NO adsorber-based standard and thus same reasoning applies here because, as X Furthermore, the engine and equipment no percentage phase-in is being in the highway program, the previous- manufacturers have greatly varying adopted), while still providing a tier standards are combined market profiles in this category, from production-based phase-in for advanced NMHC+NOX standards. No commenters focused one- or two-product offerings to NO control technologies. objected to this approach. X Because of the tremendous variety of very diverse product lines with a great Comments from the States and engine sizes represented in the nonroad many models. environmental organizations argued for diesel sector, we are finalizing our Therefore, in addition to the the completion of the phase-in by the proposed requirement that the phase-in flexibility provided through the phase- end of 2012, contending that technology requirement be met separately in both of in mechanism, we proposed two progress for NOX control in the highway the power categories with a phase-in optional measures to provide added sector has been good to date and would (75–175 hp and 175–750 hp).29 For flexibility in implementing the Tier 4 support an accelerated phase-in in the example, a manufacturer that produces NOX standards, while keeping a priority nonroad sector. However, our 1000 engines for the 2011 U.S. market on bringing PM emissions control into assessment continues to show unique in the 175 to 750 hp range would have this diverse power category as quickly (though surmountable) challenges in to demonstrate compliance with the as possible. First, we proposed to allow adapting advanced technologies to NOX and NMHC standards on at least manufacturers to use NMHC+NOX nonroad engines, especially for engines 500 of these engines, regardless of how credits generated by any Tier 2 engines least like highway diesels, and it is many complying engines the over 50 hp (in addition to any other these engines that would be most manufacturer produces in the 75–175 allowable credits) to demonstrate affected by a truncated phase-in hp category. (Note however that we are compliance with the Tier 4 requirement schedule. Furthermore, even if we were allowing averaging of emissions for 75–175 hp engines in 2012, 2013, to conclude that advanced technologies between these engine categories through and 2014 only. Second, we proposed will be ready earlier than expected, we the use of power-weighted ABT program allowing a manufacturer to instead would not be able to move up the start credits.) We believe that this restriction demonstrate compliance with a reduced of phase-in dates because these dates reflects the availability of emissions phase-in requirement of 25% for NOX also depend on low-sulfur fuel control technology, and is needed to and NMHC in each of 2012, 2013, and availability. Thus an end-of-2012 phase- avoid erosion of environmental benefits the first 9 months of 2014. Full in completion date would result in that might occur if a manufacturer with compliance (100% phase-in) with the phase-ins as short as one year, thus a diverse product offering were to meet Tier 4 standards would have needed to degrading the industry’s opportunity to the phase-in with relatively low cost be demonstrated beginning October 1, distribute the redesign workload and smaller engines, thereby delaying 2014. departing from the pattern set by the Engine manufacturers reinforced the highway program. Both of these are 29 Note exceptions to the percent phase-in points we made in the proposal critical factors in our assessment that requirements during the phase-in model years regarding added workload challenges the proposed engine standards are discussed in sections III.L and III.M. These deal for this diverse category of engines and with differences between a manufacturer’s actual feasible, and so a change to shorter and projected production levels, and with machines. However, they suggested that phase-ins would jeopardize incentives for early or very low emission engine the first of the proposed options to achievement of our environmental introductions. address these challenges (allowing use

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of Tier 2 credits) is not likely to be used standards will need to be demonstrated engines are now planning to comply due to a lack of available Tier 2 credits, beginning December 31, 2014. As with our 2007 standards using this and therefore should be dropped, and proposed, manufacturers using this emissions averaging approach, that the second option (allowing a reduced phase-in option will not be increasing the significance of comments slower phase-in) provided too short a allowed to generate NOX credits from on the topic from nonroad engine stability period, and should be modified engines in this power category in 2012, manufacturers, many of whom also to delay final compliance by an 2013, and 2014, except for use in make highway engines.30 additional 3 months, to December 31, averaging within the 75–175 hp category After carefully considering the issues 2014 or January 1, 2015. In addition to (that is, no banking or trading, or involved, we agree that the proposed describing the very large redesign averaging with engines in other power approach lends itself to expression in workload, they pointed out that engines categories). We believe that this terms outside of the averaging, banking, and machines in this category typically restriction on credit use is appropriate, and trading program and that it makes do not have a model year that differs considering that larger engine categories sense to do so. We are creating such an from the calendar year, and so the will be required to demonstrate a alternative in the final regulations substantial changes required for Tier 4 substantially greater degree of accordingly. These alternative standards compliance in October 2014 could force compliance with the 0.30 g/bhp-hr NOX do not substantively change our Tier 4 the need to change the product for all standard several years earlier than program from what we proposed, but of 2014, effectively shortening the engines built under this option. As the rather respond to manufacturers’ phase-in to two years. One manufacturer purpose of this option is to aid suggestions for administrative argued that the compliance date for the manufacturers in implementing Tier 4 simplifications to what is essentially an 75–100 hp engines in this category NOX standards for this challenging averaging-based flexibility option in should be delayed an additional year, to power category, we do not want any demonstrating compliance with the 2016, and that the start of the phase-in manufacturers who might be capable of percent-of-production NOX phase-in. for these engines should be likewise building substantially greater numbers The alternative NOX phase-in standards delayed from 2012 to 2013. of cleaner engines to use this option as are shown in table II.A–3. They apply We do not feel that the first option an easy and copious source of credits only during the NOX phase-in years. (allowing use of Tier 2 credits) should (owing to its slower phase-in of Manufacturers may use both approaches be dropped, as it provides an alternative stringent standards) that in turn can be within a power category if desired, flexibility mechanism for a power used to delay building clean engines in certifying some engines to the category in which flexibility is clearly other categories or model years. alternative standards, with the rest important, and is environmentally c. Alternative Phase-In Standards subject to the phase-in percentage helpful as it provides an option for requirement. Note that engines under 75 manufacturers to achieve NOX emission To ensure that Tier 4 engine hp subject to Tier 4 NOX standards do reductions earlier than under the second development is able to take maximum not have an alternative standard because advantage of highway diesel technology option. By providing an opportunity to they do not have a NOX phase-in, and use Tier 2 credits in the 75–175 hp advances, we proposed to adopt engines over 750 hp do not have an category, it coordinates well with the nonroad diesel provisions in the alternative standard because of the Tier 2 credit use opportunity we are averaging, banking, and trading program separate standards we are adopting for providing for the 50–75 hp engines that would parallel the heavy-duty these engines (explained in section meeting the 2008 PM standard (see highway engine program’s ‘‘split family II.A.4). section III.A), and allows for provisions’’ (see 68 FR 28470, May 23, coordinated redesign and credit use 2003). In essence, these allow a TABLE II.A–3.—TIER 4 ALTERNATIVE planning by a manufacturer over this manufacturer to declare an engine NOX PHASE-IN STANDARDS (G/BHP- wide power range over many years. family during the phase-in years that is HR) Nonetheless, recognizing that the certified at NOX levels roughly midway second option may be more attractive to between the phase-out standard and NOX standard manufacturers, and considering the phase-in standard, without the Engine power (g/bhp-hr) comments they provided on it, we have complication of tracking credit concluded that a three month phase-in generation and use. Because they 75 ≤ hp < 175 (56 ≤ kW < extension until the end of 2014 is constitute a calculational simplification 130) ...... a 1.7 of the emissions averaging provisions, 175 ≤ hp ≤ 750 (130 ≤ kW warranted to address the workload ≤ burden and to align product cycle dates. these split family provisions do not 560) ...... 1.5 Thus we are adopting the December 31, result in a loss in environmental Notes: a Under the option identified in foot- 2014 implementation date suggested in benefits compared to what the phase-in note b of table II.A–2, by which manufacturers comments for completion of the 75–175 can achieve. may meet an alternative phase-in requirement The nonroad proposal also included of 25/25/25% in 2012, 2013, and 2014 through hp engine phase-in. December 30, the corresponding alternative specific emission levels for these split We do not agree that an additional NOX standard is 2.5 g/bhp-hr. year of delay is appropriate for the 75– families, rather than just describing how The engines certified under these 100 hp engines in this category. The they are calculated. Commenters standards will of course also need to comment expressing interest in our suggested that we go one step further meet the Tier 4 PM and crankcase doing so did not provide any basis for still and express these levels as control requirements that take effect for it in technological feasibility or in alternative standards. They argued that all engines in the first phase-in year. workload burden, and we do not see any this would facilitate attempts at They will also need to comply with all basis for it ourselves. harmonizing standards globally, Therefore, we are adopting both of the especially for standards-setting bodies Tier 4 provisions that would apply to proposed optional measures for the 75– such as the European Commission that 30 See the recently published ‘‘Highway Diesel 175 hp engine phase-in, except that in do not have emissions averaging Progress Review Report 2,’’ EPA420–R–04–004, the second option, full compliance programs. We are also aware that most available at http://www.epa.gov/otaq/ (100% phase-in) with the Tier 4 manufacturers of highway diesel diesel.htm#progreport2.

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phase-in engines, including the 0.14 g/ with all of our ABT programs, is the concluded that other proven PM- bhp-hr NMHC standard and the NTE adoption of NOX FEL caps for these reducing technologies such as diesel and transient test requirements for all engines. To maintain the character of oxidation catalysts and engine pollutants. We recognize that this differs this compliance path as producing optimization could be applied to from what is required under the phase- engines during the phase-in years that engines under 25 hp. Accordingly, we in approach, in which these emit at NOX levels which are roughly proposed Tier 4 PM standards to take requirements would not apply to the averaged between Tier 3 and final Tier effect beginning in 2008 for these 50% of engines categorized as ‘‘phase- 4 levels, we are setting NOX FEL caps engines based on use of these out’’ engines. However, under the for these engines at levels reasonably technologies. alternative standards approach, what close to the alternative standards. (See In contrast to our proposals for other would have been two different engine section III.A for details.) Because we are engine categories, the proposed Tier 4 families (one meeting phase-in also maintaining the original phase-in/ standards for this category elicited very requirements and one meeting phase- phase-out compliance path, a little comment from the engine out requirements, with NOX and PM manufacturer wishing to build engines manufacturers other than an expression emissions averaging allowed between with NOX levels higher than these FEL of support for deferring consideration of them under the ABT provisions) are caps, at or approaching the Tier 3 levels, any more stringent standards pending replaced by a single engine family could still do so; in fact these would in results of a future technology review. meeting the one set of alternative actuality fit the description of a phase- The States and environmental standards. Therefore all of the engines out engine. This manufacturer would organizations expressed disappointment in this family must by default meet the also, of course, have to produce a that EPA had not proposed more phase-in requirements for provisions corresponding number of phase-in stringent standards for these engines, that lack any sort of averaging engines meeting the aftertreatment- given the very large number of these engines in the field and the significant mechanism (NMHC standard, NTE, etc). based Tier 4 NOX standards. As a result, any manufacturer choosing We also observe that the creation of risk they pose due to individuals’ to design to the alternative standards alternative standards provides the exposure to diesel PM and air toxics. rather than using the phase-in approach opportunity to adjust the phase-in/ They urged more stringent 2008 PM provides some additional environmental phase-out provisions so as to reinforce standards and the adoption of standards benefit as an indirect result of choosing their focus on introducing high- obtaining emission reductions of 90% or more by the end of 2012. Emissions this approach. efficiency NOX aftertreatment We also believe that this alternative technology during the phase-in years, control manufacturers argued that more standards provision makes appropriate a which is, of course, their aim. We are stringent 2008 standards based on the further adjustment to the NOX phase-in use of more efficient oxidation catalysts doing this by setting NOX family scheme to better preserve both the emission limit (FEL) caps for phase-in are feasible. advanced technology phase-in engines at the same low levels as for As discussed in section II.B.4, we approach, for those manufacturers Tier 4 engines produced in the post- continue to believe that the standards choosing that compliance path, and the phase-in years. (Again, see section III.A we proposed for engines under 25 hp alternative standards approach, for for details.) Although the engine are feasible, and commenters in the nonroad diesel industry provided no those choosing that path. Under the manufacturers indicated in their comments to the contrary. Our reasons proposal, the provision for certifying a comments that they did not believe it for not proposing more stringent Tier 4 split engine family at a pre-designated likely that anyone would choose this standards for these engines based on the NOX level would not allow credit phase-in/phase-out compliance path, we use of PM filters and NO aftertreatment generation by or credit use on engines believe that preserving it and focusing it X were mainly focused on the cost of in the split family (other than for on encouraging very low-NO engines X equipping these relatively low cost averaging within the family). This was as early as possible provides a consistent with our goal of providing a engines with such devices, especially potentially useful and environmentally simple, single average NO standard considering the prerequisite need for X desirable alternative path. Thus these level for the family, equivalent to electronic fuel control systems to two concepts have been developed to arbitrarily designating a portion of the facilitate regeneration. The comments provide complementary compliance engines in the family as ‘‘phase-out’’ supporting more stringent standards paths obtaining equivalent overall NO engines (credit generators) and the rest X were not convincing, as they did not reductions, one focused on phasing in as ‘‘phase-in’’ engines (credit users) address these cost issues. However, we high-efficiency NO aftertreatment and with a net credit balance of zero, while X do agree that these small engines likely the other on achieving NO control for avoiding the burden of actually X have a large impact on human health, all subject engines during the phase-in calculating and tracking credits. This and, as discussed in section VIII.A, we was also consistent with our approach years at an average level between the are reaffirming the plan we described in under the 2007 highway engine program Tier 3 and final Tier 4 standards levels. the proposal to reassess the appropriate from which this concept is derived. 3. Standards for Smaller Engines long-term standards for these engines in However, because this split family a technology review to take place in provision has evolved into a set of a. Engines Under 25 hp 2007. We will set more stringent alternative standards, there is no longer We are finalizing the Tier 4 program standards for these engines at that time, a need to prohibit the generation and we proposed for engines under 25 hp. if appropriate. use of ABT credits for these engines to In the proposal we presented our view We also disagree with comments preserve a de facto net zero credit that standards based on the use of PM supporting more stringent 2008 balance, and so, considering that it is filters should not be set at this time for standards that would require the use of also not environmentally detrimental, the very small diesel engines below 25 diesel oxidation catalysts on all small we believe it is appropriate to allow hp. We also discussed our plan to engines. Although we agree that these credit use and generation for these reassess the appropriate long-term catalysts can be applied so as to achieve engines as for other engines. A standards in a technology review. emission reductions on some small consequence of doing so, consistent However, for the nearer-term, we engines, the emissions performance data

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we have analyzed do not support our generate credits as part of the ABT these standards in 2007. This planned setting a more stringent standard. program, although credit use by these review is discussed in section VIII.A. Section 4.1.5 of the RIA summarizes engines will still be allowed. Additional discussion of our feasibility such data showing a very wide range of We received no adverse comments on assessment for the 2008 and 2013 engine-out PM emissions in this power this proposed alternative for qualifying standards can be found in section II.B.4 category. Applying oxidation catalyst engines under 11 hp. Euromot and RIA section 4.1.4. technology to these engines, though commented that there are hand-startable In comments, emissions controls capable of some PM reduction if engines in the 11–25 hp range, and that manufacturers argued that more properly designed and matched to the we should extend the alternative stringent 2008 standards for PM and application, is limited by sulfur in the compliance option to these engines as NMHC based on the use of more diesel fuel. Specifically, precious-metal well. However, hand-startability is not efficient oxidation catalysts are feasible oxidation catalysts (which have the the sole defining feature of engines for and should be adopted. Environmental greatest potential for reducing PM) can which we established this alternative. organizations argued that PM and NOX oxidize the sulfur in the fuel and form Rather, the alternative is for a class of standards for 2008 should be set at more particulate sulfates. Even with the 500 engines typified by a combination of stringent levels, based on the use of ppm maximum sulfur fuel available characteristics (very small, air-cooled, oxidation catalysts and improved engine after 2007, the sulfate production direct injection, hand-startable), which optimization. The California Air potential is large enough to limit what give rise to the potential technical Resources Board argued for more can be done to set more stringent 2008 difficulties noted above. To extend the stringent 2008 standards for HC+NOX, PM standards through the use of these alternative to other engines simply PM and toxics, based on the use of catalysts. The 15 ppm maximum sulfur because they have a hand-start is not oxidation catalysts. fuel available after 2010 will greatly justified, because they do not share We disagree with the comments improve the potential for use of these technical difficulties (or do not calling for more stringent 2008 oxidation catalysts, but as we discussed share them to the same degree). Such an standards than proposed for 25–75 hp above, we believe that the much larger extension could also potentially engines, based on the use of diesel potential reduction afforded by PM filter encourage manufacturers of the many oxidation catalysts. The standards we technology warrants our waiting until models of these larger engines to market proposed and are adopting for these the technology review in 2007 to a hand-start option simply to avoid engines pull ahead sizeable PM evaluate the appropriate long-term more stringent standards. reductions starting three years ahead of standards for these engines. See section b. Standards for 25–75 hp Engines the earliest PM filter-based standards for II.B.5 and RIA section 4.1.5 for further any engine size. The pull-ahead discussion. We proposed a 0.22 g/bhp-hr PM standard level balances early reductions When implemented, the Tier 4 PM standard for 25–75 hp engines, to take with the need to ensure that the PM standard and related provisions we are effect in 2008. We also proposed a filter- filter-based standards and Tier 3 based 0.02 g/bhp-hr PM standard for adopting today for engines under 25 hp NMHC+NOX standards are not will yield an in-use PM reduction of these engines, to take effect in 2013, the jeopardized by an overemphasis on over 50% for these engines, and large year in which filter-based technology for early reductions. Although we agree that reductions in toxic hydrocarbons as these engines is expected to be oxidation catalysts can be applied to well. Achieving these emission applicable on a widespread basis (see these engines, the emissions reductions is very important, section II.A.1). Also in 2013, the 25–50 performance data we have analyzed do considering the fact that many of these hp engines would be subject to the 3.5 not support our setting a more stringent smaller engines operate in populated g/bhp-hr NMHC+NOX standard already standard, for the same reasons described areas and in equipment without closed adopted for 50–75 hp engines (taking above in section II.A.3.a for engines cabs—in mowers, portable electric effect in 2008 as part of Tier 3). We are under 25 hp. Refer to section II.B.4 and power generators, small skid steer adopting all of these proposed standards to section 4.1.4 of the RIA for additional loaders, and the like. in this final rule. discussion. For a discussion of The 2008 PM standard for these We are also adopting the alternative comments opposed to new standards in engines should maximize reduction of compliance option that we proposed for 2008, see sections II.A.1 and II.B of this PM emissions using technology air-cooled, direct injection engines preamble. under 11 hp that are startable by hand, available in that year. We believe that We also do not agree that more the 2008 PM standard is feasible for such as with a crank or recoil starter. As stringent NO requirements based on these engines, based on the same engine X we explained in the proposal, the improved engine optimization are or oxidation catalyst technologies alternative is justified due (among other appropriate for these engines in 2008. In feasible for engines under 25 hp in things) to these engines’ need for loose 2001 we reviewed and confirmed the 2008, following the introduction of design fit tolerances, their small previously set NMHC+NO emission nonroad diesel fuel with sulfur levels X cylinder displacement and bore sizes, standards that will be in effect for these reduced below 500 ppm. We expect in- and the difficulty in obtaining engines during the time frame in use PM reductions for these engines of components for them with tight enough question.31 Because of the focus we are over 50% (and large reductions in toxic tolerances (68 FR 28363, May 23, 2003). putting on achieving large PM hydrocarbons as well) over the five This alternative allows manufacturers of reductions from these engines as early model years this standard would be in these engines to delay Tier 4 as possible, we felt that it was important effect (2008–2012). These engines will compliance until 2010, and in that year to strike a balance between PM and NO constitute a large portion of the in-use X to certify them to a PM standard of 0.45 control. As a result, we did not propose population of nonroad diesel engines for g/bhp-hr, rather than to the 0.30 g/bhp- more stringent NO standards for 50–75 many years after 2008. Although we are X hr PM standard applicable beginning in hp engines, and we proposed to apply 2008 to the other engines in this power finalizing the 2013 standards for 25–75 category. As proposed, engines certified hp engines today, we are also 31 ‘‘Nonroad Diesel Emissions Standards Staff under this alternative compliance reaffirming our commitment to Technical Paper,’’ EPA420–R–01–052, October requirement will not be allowed to conducting a technology review for 2001.

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the 3.5 g/bhp-hr NMHC+NOX standard 2012 meeting the 0.02 g/bhp-hr PM As an example of this third option, to 25–50 hp engines in 2013 because standard; that is, the equipment consider an equipment manufacturer this is the year in which the PM filter- manufacturer would have to use an who does not use the transition based standard is being implemented. engine from the same engine flexibility provisions (described in Requiring new NOX controls for these manufacturer or from another engine section III.B), and over the 2008–2010 engines earlier than 2013 would add a manufacturer choosing the same period makes 1000 50–75 hp machines third redesign step to those already compliance option. We also solicited for use in the U.S., 200 (20%) of which called for in 2008 and 2013. This would comment on possible alternative use engines not certified to the 0.22 g/ add a potentially unacceptable amount solutions using a numerical basis, bhp-hr standard. In 2012, that of redesign workload, to a point that it describing an example that would manufacturer must make at least 15% of could jeopardize our objective of require the percentage of 50–75 hp his 50–75 hp machines for use in the bringing stringent PM control to these machines equipped with PM filters in U.S. using engines certified to the 0.02 engines as early as possible. 2012 to be no less than the same g/bhp-hr standard. We feel that the 5% Consistent with the proposal, we are percentage of 50–75 hp machines margin is needed to allow for some not setting more stringent NOX produced with non-pull-ahead engines reasonable sales shifts within the standards for engines below 75 hp at in 2008–2011. manufacturer’s product offering over this time based on the use of NOX The Engine Manufacturers time, but is small enough to ensure that aftertreatment. As discussed in section Association (EMA) and Deere any possible advantage gained from 4.1.2.3 of the RIA, a high degree of commented on the unenforceability of selling higher-emissions products complexity and engine/aftertreatment the proposed ‘‘no switch’’ measure as remains minimal. Equipment integration will be involved in applying part of a broader objection to our manufacturers must keep production NOX adsorber technology to nonroad proposal for 50–75 hp engines. They records sufficient to prove compliance. diesel engines. The similarity of larger pointed out that changing equipment This restriction and the percentage nonroad engines (above 75 hp) to model designations could easily allow calculation will not apply to any 2008– highway diesel engines, which will an equipment manufacturer seeking to 2012 engines at issue that are being provide the initial experience base for avoid PM filter-equipped engines in produced under the equipment this integration process, is key to our 2012 to declare a product in this model manufacturer transition flexibility assessment that NOX adsorbers are year a ‘‘new product,’’ not the same as provisions discussed in section III.B. feasible for these engines. On the other the 2008–2011 product. We have For example, if in addition to the 200 hand, although engines under 75 hp are concluded that there is indeed potential engines in 2008–2010 not certified to gradually increasing in sophistication for this abuse to occur and, although no the 0.22 g/bhp-hr standard in the above over time, the accumulation of one commented specifically on the example, this manufacturer also used experience with designing and alternative approach, we believe it 500 previous-tier engines in 2008–2010 operating these engines with more clearly addresses this problem because under the flexibility allowance program, advanced technology clearly lags it does not depend on product his percentage target for PM filter- significantly behind the sizeable designations. equipped engines in 2012 would be experience base already developed for Therefore, we are adopting a 35% of all the engines used in 2012 that larger engines. At this point, we are provision to discourage engine are not previous-tier engines under the unable to forecast how quickly adequate switching based on this alternative flexibility allowance program. 33 experience may accrue. Because this approach. An equipment manufacturer experience is crucial to ensuring the who uses 50–75 hp engines will have 4. Standards for Engines Above 750 hp successful integration of the engines three options: We are adopting different Tier 4 with NOX adsorber technology, we are standards for over 750 hp engines from not adopting NO adsorber-based (1) The manufacturer may exclusively use X engines certified to the 0.22 g/bhp-hr PM those we proposed, and we are also standards for engines under 75 hp in standard (including through use of ABT adopting different implementation dates this final rule. Rather, as discussed in credits) over the 2008–2011 period. This for these engine standards, though both section VIII.A, we plan to undertake a manufacturer is then free to use any number the proposed and final programs have as technology assessment in the 2007 time of 50–75 hp engines not certified to the 0.02 their primary focus the implementation frame which would evaluate the status g/bhp-hr standards in 2012. of high-efficiency exhaust emission of engine and emission control (2) The manufacturer may exclusively use controls as quickly as possible. The engines not certified to the 0.22 g/bhp-hr PM technologies, including NOX controls, approach being adopted reflects our for engines less than 75 hp. standard over the 2008–2011 period. This manufacturer must then use only 50–75 hp careful review of the technical issues As described in section II.A.1.a, we presented by these engines. For some of are providing two PM standard engines that are certified to the 0.02 g/bhp- hr standards in 2012 (including through use these engines, we are accelerating compliance options to engine of ABT credits). standards based on the use of manufacturers for 50–75 hp engines. As (3) The manufacturer may use a mix of aftertreatment controls. For others, we part of this, we also proposed a measure engines in 2008–2011. In this case, the are deferring a decision on such to ensure that it would not be abused by manufacturer must calculate the percentage aftertreatment-based standards. This equipment manufacturers who use of 50–75 hp engines used (in U.S.-directed approach represents a feasible and engines that do not meet the PM pull- equipment) over the 2008–2010 period that efficient approach to redesigning ahead standard in 2008–2011, but who are not certified to the 0.22 g/bhp-hr PM pull- then switch engine suppliers to avoid ahead standard. Then the percentage of 50– 75 hp engines this manufacturer uses in 2012 2011 confirmation of production volumes which, as PM filter-equipped engines in 2012 as it would occur in 2012, would be too late to easily well (68 FR 28360, May 23, 2003). We that are certified to the 0.02 g/bhp-hr PM standard must be no less than this 2008–2010 re-focus 2012 production if the confirmed volumes proposed that an equipment differ from projections. It is not likely that non-pull-ahead percentage figure minus a 5% manufacturers would abuse the program by manufacturer making a product with 32 margin. switching engine suppliers for this one year of engines not meeting the pull-ahead production. standard in any of the years 2008–2011 32 The 2011 production is not included in the 33 That is: [200/(1000–500)] = 40%; subtracting must use engines in that product in percentage calculation to avoid the need for post- the 5% margin then yields 35%.

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engines and installing aftertreatment in standards, due primarily to the After evaluating these issues, EPA is a coordinated, orderly manner over a relatively long product design cycles adopting an approach that tailors the decade or more, and will achieve major typical of these high-cost, low-sales standards to the circumstances reductions in PM and NOX from these volume engines and machines. presented by the different kinds of large diesel engines. Specifically, we proposed that this engines in this power category. The Under the proposal, all engines above category of engines move directly from NOX standards we are adopting will 750 hp were treated the same, with a Tier 2 to Tier 4, and that the Tier 4 PM achieve effective NOX control by phase-in of PM and NOX aftertreatment standard be phased in for these engines accelerating the proposed schedule for technology that started in 2011 and on the same 50–50–50–100% schedule final NOX standards based on high- finished in 2014. The final standards are as the NOX and NMHC phase-in efficiency NOX aftertreatment for the based on our evaluation of the differing schedule, over the 2011–2014 model largest generator sets, and by requiring technical issues presented by the two years. This would provide engine engines in other generator sets to also primary kinds of equipment in this manufacturers with up to 8 years of meet aftertreatment-based NOX category, mobile power generation design stability to address concerns standards, although we are delaying the equipment (generator sets) and mobile specific to this category. Although we implementation date for these standards machinery. For both generator sets and expressed our belief that these proposed compared to the implementation mobile machinery, PM aftertreatment- provisions would enable the schedule we proposed. We believe that based standards will start in 2015, with manufacturers to meet proposed Tier 4 NOX adsorber technology will be no prior phase-in. EPA is replacing the engine standards, we also acknowledged feasible for these generator set engines. proposed phase-in with a PM standard concerns the manufacturers had We also believe that they may be an starting in 2011 that is comparable to expressed to us, and asked for comment especially attractive application for the overall level of control that the on whether this category, or some subset Selective Catalytic Reduction (SCR) proposed phase-in would achieve. of it defined by hp or application, technology, which relies on the Differences within these applications, should have a later phase-in start date, injection of urea into the exhaust however, call for different approaches to a later phase-in end date, adjusted stream. There are many stationary diesel the implementation of NOX standards, additional equipment generator sets using SCR today. Large aftertreatment technology. For generator manufacturer transition flexibility mobile generator sets, though moved sets above 1200 hp, an aftertreatment- provisions, or some combination of from location to location, operate much based NOX standard will start in 2011, these (68 FR 28364, May 23, 2003). like stationary units once in place, with three years earlier than the date we fuel (and potentially urea) delivered and proposed for full implementation of Comments from manufacturers of replenished periodically. See section such standards. For generator sets below engines and equipment in this power II.B.3 for further discussion. 1200 hp, the same aftertreatment-based category expressed their widespread For equipment other than generator NOX standard will start in 2015. As with view that the proposed standards were sets, we are deferring a decision on the PM standard, there is no phase-in. inappropriate in critical respects. In setting aftertreatment-based NOX For engines used in mobile machinery, addition to reiterating the need for extra standards to allow additional time to which is assumed to include all lead time due to long product design evaluate the technical issues involved in equipment that is not a generator set, cycles, they pointed to difficulties with adapting NOX control technology to EPA is deferring a decision on setting aftertreatment placement, with these applications and engines. We are aftertreatment-based NOX standards to fabrication of the large filters that would still evaluating the issues involved for allow additional time to evaluate the be needed for these engines, with these engines to achieve a more technical issues involved in adapting potential failures caused by uneven soot stringent NOX standard, and believe that NOX adsorber technology to these loading and regeneration in large filters, these issues are resolvable. We intend to applications and engines. However, EPA with stresses due to thermal gradients continue evaluating the appropriate is adopting a NOX standard for these across large filters, and with mechanical long-term NOX standard for mobile engines starting in 2011 that will stresses in mining applications with machinery over 750 hp and expect to achieve large NOX reductions by relying high shock loads. The manufacturers announce further plans regarding these on engine-based emissions control noted that aftertreatment-based issues (we are currently considering technology. Consistent with the standards for NOX and PM were feasible such an action in the 2007 time frame). different approaches we are taking to for engines used in large mobile power The basis for the 0.50 g/bhp-hr NOX setting standards for engines above and generators. However, manufacturers did standard we are adopting for generator below 750 hp, we are also adopting not believe aftertreatment-based NOX sets over 750 hp is discussed in section restrictions on ABT credit use between standards could be implemented in the II.B.3. We are also modifying the PM these power categories, as described in time frame proposed for engines used in and NMHC standards we proposed (as section III.A. large mobile machinery such as well as certain implementation dates for Consistent with the approach we took bulldozers and mine haul trucks. States, these provisions), and modifying our in previous standard-setting for these environmental organizations, and proposed approach to ensuring transient engines, we proposed that nonroad manufacturers of emissions controls, on emissions control for these engines diesels above 750 hp be given more lead the other hand, expressed support for (discussed in section III.F). The Tier 4 time than engines in other power the standards we proposed for these standards for engines over 750 hp are categories to fully implement Tier 4 engines. shown in table II.A–4.

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TABLE II.A–4.—TIER 4 STANDARDS FOR ENGINES OVER 750 HP (G/BHP-HR)

2011 2015

PM NOX NMHC PM NOX NMHC

Engines used in: generator sets ≤1200 hp ...... 0.075 2.6 0.30 0.02 0.50 0.14 generator sets >1200 hp ...... 0.075 0.50 0.30 0.02 No new standard 0.14 all other equipment ...... 0.075 2.6 0.30 0.03 No new standard 0.14

Unlike NOX control technology, we via the ABT program. Because in this 5. Establishment of New Power believe that the more advanced state of rule we are no longer phasing in to a Categories PM filter technology development today final NOX standard for some engines We are finalizing our proposal to makes their availability for these over 750 hp, it no longer makes sense regroup the nine power categories engines by 2015, with over ten years of to express the 2011 standards for these established for previous tiers into the development lead time, more certain, engines in this manner. Instead we are five Tier 4 power categories shown in and so we are setting PM standards for setting brake-specific emission table II.A–1. As we explained in the both mobile machinery and generator standards effective in 2011. proposal, this regrouping will more sets based on use of this technology. We Furthermore, to avoid further closely match the degree of challenge note in section II.B.3 that achieving complicating an already complex involved in transferring advanced durable PM filter designs for these large standards structure, we are adopting emissions control technology from applications will likely require the use this pattern for the entire category, even highway engines to nonroad engines. of wire mesh filter technology rather with engines such as those used in The proposed choice of 75 hp as the than the somewhat more efficient wall generator sets for which the standards appropriate cutpoint for applying flow ceramic-based technology could still be expressed as a percent aftertreatment-based NOX control drew applicable to smaller engines, justifying phase-in to final standards. Except for particular attention. In the proposal, we the somewhat higher level for the 2015 the pull-ahead of the long-term NO recognized that there is not an abrupt PM standards shown in table II.A–4 X standard for large generator sets (which power cutpoint above and below which (0.03 or 0.02 g/bhp-hr compared to 0.01 will increase the environmental benefit the highway-derived nonroad engine g/bhp-hr). Section II.B.3 also contains compared to the proposal), these 2011 families do and do not exist, but noted discussion of our bases for the other further that 75 hp is a more appropriate PM and NO standards essentially Tier 4 standard levels in this category. X cutpoint to generally identify nonroad correspond to averaged standards under We believe that the 2015 engines in Tier 4 that will most likely implementation year (versus the a 50% phase-in to aftertreatment-based be using highway-like engine proposed 2014 date for the fully phased- standards, hence our conclusion that the technology than either of the closest in standard) is necessary to allow Tier 4 program will provide a level of previously-adopted power category development of the requisite control in 2011 that is substantially cutpoints of 50 or 100 hp. Nonroad technologies for these large engines, and equivalent to that of the proposal. In diesels produced today with rated to deal with the redesign workload Tier addition, PM and NOX emissions power above 75 hp (up to several 4 will create for the many engine and averaging through the ABT program will hundred hp) are mostly variants of equipment models in this category allow a manufacturer to comply by nonroad engine platforms with four or which, as noted, typically have very low phasing in aftertreatment technologies more cylinders and per-cylinder production volumes and long product as in the proposed program, should they displacements of one liter or more. cycles. desire to do so. Although there is no These in turn are largely derived from For the purpose of determining which such averaging program for NMHC, the or are similar to heavy-duty highway nonroad engines are subject to the 2011 NMHC standard can be achieved engine platforms. Even where nonroad generator set standards, we are defining without the use of advanced engine models above 75 hp are not so a generator set engine as: ‘‘An engine aftertreatment (as explained in section directly derived from highway models, used primarily to operate an electrical II.B.3), thus helping to enable a they typically share many common generator or alternator to produce manufacturer to pursue this compliance characteristics such as displacements of electric power for other applications.’’ strategy if desired. one liter per cylinder or more, direct This definition makes it clear that injection fueling, turbocharging, and, This approach involving separate generator set engines do not include increasingly, electronic fuel injection. engines used in machines such as mine 2011 and 2015 standards is comparable These common features provide key trucks that do mechanical work but that to the proposed percent phase-in building blocks in transferring high- employ engine-powered electric motors approach with emissions averaging. We efficiency exhaust emission control to propel the machine, but they do believe that it enables manufacturers to technology from highway to similar include engines in nonroad equipment redesign engines and equipment in a nonroad diesel engines. We therefore for which the primary purpose is to coordinated, orderly manner over a proposed to regroup power ratings using generate electric power, even if the decade or more, and effectively gives the 75 hp cutpoint. machine is also self-propelled. targeted additional flexibility to the The Engine Manufacturers Similar to other power categories, we industry. Given the continuing Association and Euromot, which proposed a 50% phase-in to the final availability of emissions averaging, we together represent the companies that Tier 4 PM, NOX and NMHC standards, do not view this change as the creation make all but a tiny fraction of nonroad with opportunity to average PM and of an additional, separate tier of diesel engines sold in the U.S., NOX between phase-in and phase-out standards compared to the proposal’s expressed their support for the 75 hp engines in the 2011–2013 phase-in years phase-in of the Tier 4 standards. cutpoint, as did every individual engine

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manufacturer who commented on this NOX control. EPA does not believe that the result being that the existing CO subject. These companies generally the costs of meeting the NOX standard standards remain in place. In doing so, endorsed EPA’s reasoning that the 75 hp for engines in the 75–100 hp range are we are not considering or reexamining level is appropriate to ‘‘delineate those unreasonable, and we refer the reader to (and at proposal did not consider or engines (and applications) for which the section VI for a detailed discussion of reexamine) the substantive basis for application of on-highway like NOX our cost analysis for engines and those standards. Having multiple CO aftertreatment technologies is not likely equipment meeting Tier 4 standards in standards within a power category will, to be feasible or practical’’ (EMA this power range. Moreover, EPA firmly at worst, create minor inconveniences in Comments p.10). believes such standards are certification and compliance efforts. As However, the Association of technologically feasible for 75–100 hp a result, in the less than 25 hp category, Equipment Manufacturers (AEM) and engines. (See section II.B.2.) Tier 4 engines below 11 hp will the equipment manufacturer Ingersoll- Ingersoll-Rand also expressed concern continue to be subject to a different CO Rand commented that 100 hp is the that the proposed consolidation of 3 standard than 11–25 hp engines, more appropriate cutpoint for previous power categories into a single identical to Tier 2. Likewise, different application of advanced NOX control 175–750 hp category creates significant CO standards will continue to apply in technology. They based this view on hardship by requiring the introduction Tier 4 to engines above and below 50 hp their observations that 75–100 hp of aftertreatment technologies in a single in the 25–75 hp category. engines do not share many of the year, contrasting this with the Tier 2 We do note, however, that we are characteristics of highway diesels, thus standards, which phased in over 2001– applying new certification tests to all making technology transfer from the 2003 for these engines. In response, we pollutants covered by the rule, the result highway sector very costly, and note that the Tier 3 standards, which being that Tier 4 engines will have to customers will be negatively affected were set in the same rule that certify to CO standards measured by the due to the relatively large cost impacts established the Tier 2 standards, will be transient test (NRTC) (which includes a of NOX aftertreatment on these smaller introduced in a single year for these cold start test), and the NTE. Our intent engines. They also argued that the 75 hp engines (2006), and that the Tier 2 in adopting these new certification cutpoint would create significant phase-in over 3 years was established in requirements is not to alter the level of misalignment in the global marketplace response to particular issues and stringency of the standard but rather to because European regulations do not opportunities that were identified, ensure robust control of emissions to use this cutpoint. specific to that time frame (see 62 FR this standard in use. The CO standards We agree with the equipment 50181, September 24, 1997). In addition remain readily achievable using these manufacturers’ observation that there to the gradual phase-in of Tier 4 tests, and we anticipate that no are engines above 75 hp without standards over several years, we are additional engine adjustments are turbocharging or electronic controls. adopting significant flexibility necessary for the standards to be However, EPA did not choose the 75 hp provisions specifically to provide achievable (so there are no significant cutpoint with the expectation that all adequate lead time for equipment associated costs). We also explain there engines above it had the same manufacturers to make the transition to that the CO standards can be achieved technology characteristics. There is a the new standards, including some without jeopardizing the ability to continuum in the degree to which key provisions that provide additional achieve all of the other engine technology characteristics exist on flexibility from what we proposed, as standards. engines throughout the power spectrum, explained in section III.B. and the 75 hp cutpoint was based on 7. Crankcase Emissions Control information from the current fleet of 6. CO Standards We currently require the control of engines and on manufacturers’ and We proposed minor changes in CO crankcase emissions from naturally- EPA’s expectations for future design standards for some engines solely for aspiriated nonroad diesel engines. We trends, showing there is a marked the purpose of helping to consolidate proposed to extend this requirement to difference in the prevalence of these and power categories. We stated in the turbocharged nonroad diesel engines as other key engine design characteristics proposal that we were not exercising well, starting in the same model year for engines above and below 75 hp, and our authority to revise the CO standard that Tier 4 exhaust emission standards that, over time, 75–100 hp engines for the purpose of improving air quality, first apply in each power category. increasingly share advanced technology but rather for purposes of administrative EMA opposed the proposed characteristics common in larger efficiency. However, manufacturers extension, reiterating concerns engines. Clear evidence of this trend objected to these proposed changes, expressed in comments on a similar over recent model years is documented citing technological feasibility concerns, proposed provision in the 2007 heavy- in the RIA, section 4.1.4. As discussed and a lack of parity with highway diesel duty highway rule, including concerns in section II.B.2, the kind of engine and nonroad spark-ignition engines, over the impact that recirculating technology generally employed by given that existing CO standards levels crankcase emissions may have on the engines in the 75–100 hp range, for nonroad engines are already five feasibility of engine standards over the combined with the lead time and phase- times lower than the standard level for full useful life. These concerns are in provided for the Tier 4 NOX highway engines. addressed in the Summary and Analysis standards, leads us to conclude that Because we proposed the CO standard of Comments document for that rule, highway-like NOX aftertreatment can be changes for the sake of simplifying and which is included in the docket for transferred to these engines. In addition, consolidating power categories and not today’s rule. Besides the feasibility since our proposal, the Council of the because of any technical considerations issues raised by EMA for nonroad European Union (EU) has issued a relating to emission reductions, we do diesels that are addressed in the revised final version of new nonroad not believe it productive to take issue highway rule, two nonroad-specific diesel emission standards that with the views expressed that these issues were raised as well: (1) The need essentially aligns their power cutpoints proposed changes raise serious to design crankcase emission control with our own, including adoption of the feasibility concerns. We instead are systems that operate at the high 75 hp cutpoint for advanced technology withdrawing this aspect of the proposal, angularity experienced by some

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nonroad machines on uneven ground, manufacturers, stressing the need for As the EU program does not provide and (2) the concern that this EPA to work with other governmental for emissions averaging, the alternative requirement adds to the large number of standards-setting bodies to harmonize NOX standards we are setting for 75–750 ‘‘first time’’ requirements being adopted standards. We recognize the importance hp engines are the NOX levels at which for Tier 4. We agree that high angularity of harmonization of international the EU standards are generally aligned operation may add new design standards and have worked diligently during our NOX phase-in years. The EU considerations for these controls, but do with our colleagues in Europe and Japan Directive also includes transition not see how it would pose a serious to achieve that objective. Harmonization flexibility provisions for equipment barrier that could not be overcome in of these standards will allow manufacturers similar to those in our time. The grouping of new EPA manufacturers continued access to program, discussed in section III.B. requirements in a specific model year is world markets and lower the required The EU program for nonroad diesels an important objective of our program research and development and tooling has not adopted or proposed any current aimed at providing stability to the costs needed to meet different or future standards for engines above design process, a goal much supported standards. We will continue to work 750 hp or below 25 hp, and its revised by the engine manufacturers. We have with standards-setting governmental Directive for 25–50 hp engines does not accounted for this in assessing entities and with foreign and domestic subject them to any future standards feasibility, costs, and flexibility needs manufacturers. beyond those entering into force in 2007 for the program. One flexibility we are In October 2003, the Council and (equivalent to 0.45 g/bhp-hr PM and 5.6 providing is the three-path opportunity Parliament of the European Union g/bhp-hr hydrocarbon+NOX), in contrast to satisfy our crankcase control reached agreement on revisions to a to our 2013 standards based the use of requirement, as described below. In fact, proposal developed by the European PM filters and more advanced engine- in its written comments EMA Commission that would amend based control technologies (0.02 g/bhp- recommended that, if EPA were to Directive 97/68/EC to include nonroad hr PM and 3.5 g/bhp-hr NMHC+NOX). proceed with crankcase emission diesel emissions standards similar to However, as discussed further in section control requirements for Tier 4, it adopt those in our Tier 4 program, and, as in VIII.A, the EU Directive includes plans all three options for demonstrating the U.S., coordinated with low sulfur to conduct a future technology review of compliance. This is indeed what we are diesel fuel requirements in Europe. This appropriate standards for engines below doing. revised proposal has since been 50 hp and above 750 hp. The year that Thus, as proposed, in addition to finalized.34 This revised Directive aligns this is planned for is 2007, the same allowing for compliance through the well with our program in the Tier 4 time year in which we are planning a routing of crankcase emissions to the technology review for engines below 75 frame, even more so than did the engine air intake system, we are also hp. Considering progress to date, and original Commission proposal. It also allowing manufacturers to instead meet announced plans for reviews in 2007, closely aligns with our Tier 3 standards the requirement by routing the we believe that prospects for in the Tier 3 time frame. crankcase gases into the exhaust stream, harmonized standards are excellent. provided they keep the combined total For engines of 50–750 hp, the 9. Exclusion of Marine Engines of the crankcase emissions and the Directive’s standards are very closely exhaust emissions below the applicable aligned with our own Tier 4 standards, For reasons outlined in the proposal, exhaust emission standards. Also as including emissions levels, we are not applying Tier 4 standards to proposed, we are allowing implementation dates, the defined the marine diesel engines under 50 hp manufacturers to instead meet the power categories, and the lower hp limit that are covered under our Tier 1 and requirement by measuring crankcase of NOX control based on high-efficiency 2 standards. We believe it is more emissions instead of completely exhaust emission controls (75 hp). appropriate to consider more stringent eliminating them, provided Exceptions are noted below: standards for a range of marine diesel • manufacturers add these measured The 2008 PM standard level for 50– engines, including these, in a future emissions to exhaust emissions in 75 hp engines (the equivalent of 0.3 g/ action. It should be noted that the assessing compliance with exhaust bhp-hr vs our 0.22 g/bhp-hr level). Note, existing Tier 2 standards will continue emissions standards. Manufacturers however, that we do allow certification to apply to marine diesel engines under using this option must also modify their to the 0.3 g/bhp-hr level as an option, 50 hp until that future action is exhaust deterioration factors or develop provided the manufacturer must then completed. We did not receive any separate deterioration factors to account meet our 0.02 g/bhp-hr standard in adverse comments on this proposed for increases in crankcase emissions as 2012, one year earlier than otherwise. approach. the engine ages, and must ensure that • The 2013 PM standard level for 50– B. Are the New Standards Feasible? crankcase emissions can be readily 75 hp engines (the equivalent of 0.01 g/ measured in use. We see no reason to bhp-hr vs our 0.02 g/bhp-hr level). Today we are finalizing a program of treat naturally-aspirated engines • An October 1, 2014 start for the stringent new standards for a broad differently than turbocharged engines, final 75–175 hp NOX standard (the same category of nonroad diesel engines and so are allowing these options for all as our proposed date), compared to the coupled with a new nonroad diesel fuel Tier 4 engines subject to the crankcase December 31, 2014 date we are adopting standard that dramatically lowers the control requirement, both turbocharged in this final rule. sulfur level in nonroad diesel fuel and naturally-aspirated. The wording of • For constant speed engines: no Tier ultimately to 15 ppm. We believe these the proposed regulations limiting the 4-equivalent standards. Also, the EU’s standards are technically feasible in the options to turbocharged engines was Tier 3-equivalent standards are not leadtime provided given the availability inadvertent. implemented on these engines until of 15 ppm sulfur fuel and the rapid 2011–2012. progress to develop the needed emission 8. Prospects for International control technologies. We acknowledge, Harmonization 34 Council of the European Union, ‘‘Directive of as pointed out by a number of We received numerous comments, the European Parliament and of the Council commenters, that these standards will especially from engine and equipment amending Directive 97/68/EC’’, March 15, 2004. be challenging for industry to meet, in

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part due to differences in operating these technologies to nonroad engines power and can vary dramatically as conditions and duty cycles for nonroad and why we believe the emission engine power demands vary. For equipment and the diesel engines used standards finalized today are technically catalyzed diesel particulate filters in that equipment. Also, we recognize feasible in the leadtime provided. (CDPFs), exhaust temperature that transferring and effectively determines the rate of filter 1. Can Advanced Diesel Emission applying these technologies, which have Control Technologies Be Applied to regeneration, and if too low, causes a largely been developed for highway Nonroad Engines and Equipment? need for supplemental means to ensure engines, will require additional time proper filter regeneration. In the case of after the application of the technology to The emission standards and the the CDPF, it is the aggregate soot on-highway engines. Diesel engine introduction dates for those standards, regeneration rate that is important, not industry commenters and as described earlier in this section, are the regeneration rate at any particular environmental stakeholder commenters premised on the transfer of diesel moment in time. A CDPF controls PM on our proposal consistently agreed engine technologies being or already emissions under all conditions and can with our position that for most engine developed to meet light-duty and heavy- function properly (i.e., not plug) even horsepower categories the technologies duty vehicle standards that begin in when exhaust temperatures are low for to meet the standards exist and that the 2007. The advanced technology an extended time and the regeneration transfer of these technologies to nonroad standards that we are finalizing today rate is lower than the soot accumulation is possible. The biggest difference of for engines over 25 horsepower will rate, provided that occasionally exhaust opinions in the range of comments begin to go into effect four years later. temperatures and thus the soot received by the Agency concerns the This time lag between equivalent regeneration rate are increased enough timing of the emission standards and highway and nonroad diesel engine to regenerate the CDPF. Similarly, there the flexibility provisions (i.e., the standards is necessary in order to allow is a minimum temperature (e.g., 200 °C) time for engine and equipment leadtime necessary to transfer the for NOX adsorbers below which NOX technology). One of the most important manufacturers to further develop these regeneration is not readily possible and tasks for a feasibility analysis is to highway technologies for nonroad a maximum temperature (e.g., 500 °C) determine the appropriate amount of engines and to align this program with above which NO adsorbers are unable nonroad Tier 3 emission standards that X development time needed to to effectively store NOX. Therefore, successfully bring new technologies to begin to go into effect in 2006. there is a need to match diesel exhaust This section summarizes the market. We have carefully weighed the temperatures to conditions for effective engineering challenges to applying desire to have clean engines sooner, catalyst operation under the various advanced emission control technologies with the challenges yet to be overcome operating conditions of nonroad to nonroad engines and equipment, and in applying the technologies to nonroad engines. why we believe that technologies engines and equipment, in determining Although the range of products for the appropriate timing and emission developed for highway diesel engines can be further refined to address these highway vehicles is not as diverse as for levels for the standards finalized today. nonroad equipment, the need to match The RIA associated with today’s issues in a timely manner for nonroad exhaust temperatures to catalyst action contains a detailed description engines consistent with the emission characteristics is still present. This is an and analysis of diesel emission control standards finalized today. important concern for highway engine technologies, issues specific to applying a. Nonroad Operating Conditions and manufacturers and has been a focus of these technologies to nonroad engines, Exhaust Temperatures our ongoing 2007 diesel engine progress and why we believe the new emission Nonroad equipment is highly diverse review. There we have learned that standards are feasible. Additional in- in design, application, and typical substantial progress is being made to depth discussion of these technologies operating conditions. This variety of broaden the operating temperature can be found in the final RIA for the operating conditions affects emission window of catalyst technologies while HD2007 emission standards, the final control systems through the resulting at the same time to design engine RIA for the HD2004 emission standards, variety in the torque and speed systems to better control average the 2002 Highway Diesel Progress demands (i.e., power demands). In our exhaust temperatures (for ongoing Review and the recently released proposal, we highlighted the challenge catalyst performance) and to attain Highway Diesel Progress Review Report for design and implementation of periodically higher temperatures (to 2.35 36 37 38 The following sections advanced emission control technologies control PM filter regeneration and NOX summarize the challenges to applying posed by this wide range in what adsorber desulfation). Highway diesel constitutes typical nonroad operation. engine manufacturers are working to 35 Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Some commenters emphasized their address this need through modifications Fuel Sulfur Control Requirements, United States concerns regarding this issue as well, to engine design, modifications to Environmental Protection Agency, December 2000, and their belief that these issues make engine control strategies, and EPA420–R–00–026. Copy Available in EPA Air the application of the technology to modifications to exhaust system Docket A–2001–28 Item II–A–01. 36 Regulatory Impact Analysis: Control of nonroad infeasible. While we recognize designs. New engine control strategies Emissions of Air Pollution from Highway Heavy- and agree with the commenters designed to take advantage of engine Duty Engines, United States Environmental regarding the nature of the challenges, and exhaust system modifications can Protection Agency, June 2000, EPA420–R–00–010. we disagree with their conclusion be used to manage exhaust temperatures Copy available in EPA Air Docket A–2001–28 Item II–A–02. regarding feasibility because, as across a broad range of engine 37 Highway Diesel Progress Review, United States described in the following section, we operation. The technology solutions Environmental Protection Agency, June 2002, EPA see a clear path to overcome the being developed for highway engines to 420–R–02–016. Copy available in EPA Air Docket challenges. better manage exhaust temperature are A–2001–28 Item II–A–52. The primary concern for catalyst- built upon the same emission control 38 Highway Diesel Progress Review Report 2, United States Environmental Protection Agency, based emission control technologies is technologies (i.e., advanced air handling March 2004, EPA420–R–04–004. Copy available in exhaust temperature. In general, exhaust systems and electronic fuel injection Docket OAR–2003–0012–0918. temperature increases with engine systems) that we expect nonroad engine

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manufacturers to use in order to comply performance than passenger car urban equipment operating characteristics, with the existing Tier 3 emission driving. Both the Toyota and PSA that, in use, some nonroad engines will standards. systems are designed to function even experience conditions that require the Matching the emission control with extended idle operation as would use of temperature management technology and the operating be typified by a taxi waiting to pick up strategies (e.g., active regeneration) in temperature window of the broad range a fare. order to effectively use the NOX of nonroad equipment may be It is our conclusion that by actively adsorber and CDPF systems. We have somewhat more challenging for nonroad managing exhaust temperatures, for assumed in our cost analysis that all engines than for many highway diesel example through engine management to nonroad engines complying with a PM engines simply because of the diversity increase exhaust temperatures, engine standard of 0.03 g/bhp-hr or lower will in equipment design and equipment manufacturers can ensure highly have an active means to control use. Nonetheless, the problem has been effective catalyst-based emission control temperature (i.e. we have costed a successfully solved in highway performance (i.e., compliance with the backup regeneration system, although applications facing low exhaust emission standards across the some applications likely may not need temperature performance situations as applicable tests) and reliable filter one). We have made this assumption difficult to address as any encountered regeneration across a wide range of believing, as indicated by a number of by nonroad applications. The most engine operation as would be typified commenters, that manufacturers will challenging temperature regime for by the broad range of in-use nonroad not be able to accurately predict in-use highway engines are encountered at duty cycles. Active methods of conditions for every piece of equipment very light-loads as typified by congested regenerating PM filters have been shown and will thus choose to provide the urban driving with periods of extended to be reliable under all operating technologies on a back-up basis. As idle operation. Under congested urban conditions and can be applied to explained earlier, the technologies driving conditions, exhaust nonroad diesel engines in the time necessary to accomplish this temperatures may be too low for frame required by these regulations. The temperature management are effective NOX reduction with a NOX additional cost for active regeneration, enhancements of both the Tier 3 adsorber catalyst. Similarly, exhaust beyond the cost for the PM filter alone, emission control technologies that will temperatures may be too low to ensure has been accounted for in the cost form the starting point for Tier 4 engines passive CDPF regeneration. To address analysis summarized in section VI of larger than 50 hp, and the control these concerns, light-duty diesel engine this preamble. strategies being developed for highway manufacturers have developed active We have conducted an analysis of diesel engines.41 Based on our analyses, temperature management strategies that various nonroad equipment operating we believe that there are no nonroad provide effective emissions control even cycles and various nonroad engine engine applications above 25 under these difficult light-load power density levels to better horsepower for which these highway conditions. Toyota has shown with their understand the matching of nonroad engine approaches for temperature prototype diesel particulate NOX engine exhaust temperatures, catalyst management will not work. However, reduction (DPNR) vehicles that changes installation locations and catalyst we agree with commenters that given to EGR and fuel injection strategies can technologies. This analysis, documented the diversity in nonroad equipment realize an increase in exhaust in the RIA, shows that for many engine ° design and application, additional time temperatures of more than 100 F under power density levels and equipment will be needed in order to match the operating cycles, exhaust temperatures even very light-load conditions allowing engine performance characteristics to are quite well matched to catalyst the NOX adsorber catalyst to function the full range of nonroad equipment. under these normally cold exhaust temperature window characteristics. In We have concluded that, given the 39 conditions. Similarly, PSA Peugeot particular, the nonroad transient cycle timing of the emissions standards Citroen (PSA) has demonstrated (NRTC), the cycle we are finalizing to finalized today, and the availability and effective CDPF regeneration under use for certification for most engines continuing development of technologies demanding light-load taxi cab with rated power less than 750 hp, was to address temperature management for conditions with current production shown to be well matched to the NOX highway engines which technologies are 40 adsorber characteristics with estimated technologies. Both of these are transferrable to all nonroad engines with performance in excess of 90 percent for examples of technology paths available greater than 25 hp power rating, a turbocharged diesel engine tested to nonroad engine manufacturers to nonroad engines can be designed to under a range of power density levels. increase temperatures under light-load meet the new standards in the lead time The analysis also indicated that the conditions. provided, and can be provided to While a number of commenters exhaust temperatures experienced over equipment makers in a timely manner expressed concerns about low the NRTC are better matched to the NO X within that lead time. temperature operation for nonroad adsorber catalyst temperature window equipment, no commenters provided than the temperatures that would be b. Nonroad Operating Conditions and data showing that nonroad equipment expected over the highway FTP test Durability in-use operating cycles would be more cycle. This suggests (when coupled with Nonroad equipment is designed to be demanding of low temperature the fact that PM filters function with used in a wide range of tasks, from equal effectiveness at essentially all mining equipment to crop cultivation 39 Sasaki, S., Ito, T., and Iguchi, S., ‘‘Smoke-less conditions) that compliance based on and harvesting to excavation and Rich Combustion by Low Temperature Oxidation in testing with the nonroad Tier 4 Diesel Engines,’’ 9th Aachener Kolloquim Fahrzeug—und Motorentechnik 2000. Copy standards on the NRTC will be 41 We do not have Tier 3 emission standards for available in EPA Air Docket A–2001–28 Item II–A– somewhat easier, using similar engines in the horsepower category from 25–50 hp. 56. technology, than complying with the However, we expect that similar Tier 3 emission 40 Jeuland, N., et al., ‘‘Performances and highway 2007 emission standards on control technologies will form part of the emission Durability of DPF (Diesel Particulate Filter) Tested control technology package used for compliance on a Fleet of Peugeot 607 Taxis First and Second the highway transient test cycle. with the Tier 4 standards for these engines in 2013. Test Phases Results,’’ October 2002, SAE 2002–01– In sum, we believe based on our Our cost analysis reflects the additional cost to 2790. analysis of nonroad engines and apply these technologies for NOX and PM control.

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loading, and operated in harsh or catalyst housing.42 The Deutz system engines. Those standards are discussed environments. In the normal course of utilized a conventional cordierite PM in sections II.A and II.B.3 below. Our equipment operation the engine and its filter substrate as is commonly used for cost estimates summarized in section VI associated hardware will experience heavy-duty highway truck CDPF for engines greater than 750 hp are levels of vibration, impacts, and dust systems. The canning and mounting of consistent with the use of either silicon that may exceed conditions typical of the system was a Deutz design. Deutz carbide or wire mesh PM filter highway diesel vehicles. For this reason, was able to design the catalyst housing technologies. some commenters said that the PM filter and mounting in such a way as to Certain nonroad applications, technology was infeasible for nonroad protect the catalyst from the harsh including some forms of harvesting equipment. We disagree with this environment as evidenced by its equipment, consumer lawn and garden equipment, and mining equipment, may assertion and continue to believe that excellent record of reliable function. have specific limits on maximum PM filter technologies can be applied to A number of commenters asserted surface temperature for equipment a wide range of nonroad equipment. that it was not possible to apply conventional CDPF technologies (i.e., components in order to ensure that the Specific efforts to design for the ceramic wall-flow filter media) to the components do not serve as ignition nonroad operating conditions will be largest diesel engines with power sources for flammable dust particles required in order to ensure that the ratings above 750 hp. In the draft RIA (e.g., coal dust or fine crop/lawn dust). benefits of these new emission control for the proposal, we described our Some commenters have raised concerns technologies are realized for the life of expectation that these highway-based that these design constraints might limit nonroad equipment. Much of the systems could be assembled into larger the equipment manufacturers ability to engineering knowledge and experience systems to work well for these largest install advanced diesel catalyst to address these issues already exists diesel engines. While we continue to technologies such as NOX adsorbers and with the nonroad equipment believe that it may be possible in the CDPFs. This concern seems to be largely manufacturers. Vibration and impact time frame of this rulemaking for these based upon anecdotal experience with issues are fundamentally mechanical conventional CDPFs to be applied to gasoline catalyst technologies where durability concerns (rather than issues under certain circumstances catalyst engines with more than 750 hp, based ° of technical feasibility of achieving on the evidence provided by the temperatures can exceed 1,000 C and emissions reductions) for any commenters, we now agree that too without appropriate design component mounted on a piece of much uncertainty remains for us to considerations could conceivably serve equipment (e.g., an engine coolant reach that conclusion today. We cannot as an ignition source. We do not believe overflow tank). Equipment clearly today describe a method to that these concerns are justified in the manufacturers must design mounting monitor the soot loading of individual case of either the NOX adsorber catalyst hardware such as flanges, brackets, and filter elements in a parallel system made or the CDPF technology. Catalyst bolts to support the new component up of a significant number of smaller temperatures for NOX adsorbers and without failure. Further, the catalyst components. This is because for parallel CDPFs should not exceed the maximum substrate material itself must be able to systems the pressure drop (the best exhaust manifold temperatures already withstand the conditions encountered current method to monitor filter commonly experienced by diesel engines (i.e., catalyst temperatures are on nonroad equipment without itself condition) across all of the parallel expected to be below 800 °C).43 CDPF cracking or failing. There is a large body components is exactly the same. If a temperatures are not expected to exceed of real world testing with retrofit single filter begins to plug and needs to approximately 700 °C in normal use and emission control technologies on be regenerated it may not be detected in are expected to only reach the 650 °C engines up to 750 hp that demonstrate such a system. Therefore, we believe that instead of a massively parallel filter temperature during periods of active the durability of the catalyst regeneration. Similarly, NO adsorber components themselves even in the system, an alternate PM filtering media X may be more appropriate in order to catalyst temperatures are not expected harshest of nonroad equipment to exceed 700 °C and again only during applications. The evidence for even address issues of scalability, durability and packaging for these largest engines. periods of active sulfur regeneration as larger engines (i.e., those above 750 hp) described in section III.C below. Under is less conclusive because of the limited Fortunately, there are other filter media technologies (e.g., wire or fiber mesh conditions where diesel exhaust number of applications. temperatures are naturally as high as depth filters) that can be successfully ° Deutz, a nonroad engine scaled to any size and which we have 650 C, no supplemental heat addition manufacturer, sold approximately 2,000 confidence in projecting today will be a from the emission control system will diesel particulate filter systems for more appropriate solution for the bulk be necessary for regeneration and nonroad equipment in the period from of the engines in this size category. therefore exhaust temperatures will not 1994 through 2000. The very largest of Because these depth filtration exceed their natural level. When natural these systems were limited to engine technologies are not quite as efficient at exhaust temperatures are too low for sizes below 850 hp. The majority of filtering PM as the ceramic systems that effective emission system regeneration these systems were sold into are the dominant solution for the significantly smaller applications. Many 43 The hottest surface on a diesel engine is smaller highway diesel engines, we are typically the exhaust manifold which connects the of these systems were sold for use in finalizing a set of PM filter-based engines exhaust ports to the inlet of the mining equipment. Mining equipment is standards for engines greater than 750 turbocharger. The hot exhaust gases leave the exposed to extraordinarily high levels of hp which are slightly higher than the engine at a very high temperature (800 °C at high vibration, experiences impacts with the power conditions) and then pass through the proposed PM standards for these turbocharger where the gases expand driving the mine walls and face, and encounters turbocharger providing work. The process of high levels of dust. Yet in meetings with 42 ‘‘Summary of Conference Call between U.S. extracting work from the hot gases cools the exhaust the Agency, Deutz shared their EPA and Deutz Corporation on September 19, 2002 gases. The exhaust leaving the turbocharger and experience that no system had failed regarding Deutz Diesel Particulate Filter System’’, entering the catalyst and the remaining pieces of the EPA Memorandum to Air Docket A–2001–28 Item exhaust system is cooler (as much as 200 °C at very due to mechanical failure of the catalyst II–B–31. high loads) than in the exhaust manifold.

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then supplemental heating, as described that would not commonly be engines regardless of engine size. The earlier, may be necessary but would not experienced by highway vehicles. We effectiveness of NOX adsorbers to be expected to produce temperatures believe further as demonstrated by control NOX emissions and CDPFs to higher than the maximum levels retrofit experiences around the world control PM, NMHC, and CO emissions normally encountered in diesel exhaust. that technical solutions exist which are determined by fundamental catalyst Furthermore, even if it were necessary allow catalyst-based emission control and filter characteristics. Therefore, we to raise exhaust temperatures to a higher technologies to be applied to nonroad disagree with commenters who suggest level in order to promote effective equipment. that these highway technology based emission control, there are technologies 2. Are the Standards for Engines 75–750 emission standards are infeasible for available to isolate the higher exhaust hp Feasible? nonroad engines. We acknowledge the temperatures from flammable materials comments raised regarding the unique such as dust. One approach would be There are three primary test characteristics nonroad diesel engines the use of air-gapped exhaust systems provisions and associated standards in which must be considered in setting (i.e., an exhaust pipe inside another the Tier 4 program we are finalizing these standards, and we have addressed concentric exhaust pipe separated by an today. These are the Nonroad Transient those issues by allowing (where air-gap) that serve to insulate the inner Cycle (NRTC), the existing International appropriate) for additional lead time or high temperature surface from the outer Organization for Standardization (ISO) slightly less stringent standards for surface which could come into contact C1 steady-state cycle, and the highway- nonroad diesel engines in comparison to with the dust. The use of such a system based Not-To-Exceed (NTE) highway diesel engines (and likewise 46 also may be desirable in order to provisions. Under today’s rules, most have made appropriate cost estimates to maintain higher exhaust temperatures nonroad diesel engines must meet the account for the technology and inside the catalyst in order to promote new standards for each of these three engineering needed to address these better catalyst function. Another test cycles (the exceptions are noted issues). technology to control surface below). Compliance on the transient test cycle includes weighting the results PM Standard. We are finalizing a PM temperature already used by some standard for engines in this category of nonroad equipment manufacturers is from a cold start and hot start test with the cold start emissions weighted at 1/ 0.01 g/bhp-hr based upon the emissions water cooled exhaust systems.44 This reductions possible through the approach is similar to the air-gapped 20 and hot start emissions weighted at 19/20. Additionally, we have alternative application of a CDPF and 15 ppm system but uses engine coolant water to sulfur diesel fuel. This is the same actively cool the exhaust system. optional test cycles including the existing ISO–D2 steady-state cycle and emissions level as for highway diesel We thus do not believe that engines in the heavy-duty 2007 flammable dust concerns will prevent the Transportation Refrigeration Unit (TRU) cycle which a manufacturer can (HD2007) program (66 FR 5001, January the use of either a NOX adsorber or a 18, 2001). While emission levels of CDPF because catalyst temperatures are choose to use for certification in lieu of the NRTC and the ISO–C1, provided engine-out soot (the solid carbon not expected to be unacceptably high fraction of PM) may be somewhat higher and because remediation technologies that the manufacturer can demonstrate to the Agency that the engine will only for some nonroad engines when exist to address these concerns. In fact, compared to highway engines, these exhaust emission control technologies be used in a limited range of nonroad equipment with known operating emissions are virtually eliminated (i.e., aftertreatment) have already been (reduced by 99 percent) by the CDPF applied on both an original equipment conditions. A complete discussion of these various test cycles can be found in technology. With application of the manufacturer (OEM) basis and for CDPF technology, the soluble organic retrofit to nonroad equipment for use in chapter 4.2, 4.3, and 4.4 of the RIA. The standards we are finalizing today fraction (SOF) portion of diesel PM is potentially explosive environments. for nonroad engines with rated power predicted to be all but eliminated. The Many of these applications must from 75 to 750 hp are based upon the primary emissions from a CDPF undergo Underwriters Laboratory (UL) performance of technologies and equipped engine are sulfate PM approval before they can be used.45 standards for highway diesel engines emissions formed from sulfur in diesel Therefore, while we appreciate the which go into effect in 2007. As fuel. The emissions rate for sulfate PM commenters’ concerns regarding safety, explained above, we believe these is determined primarily by the sulfur we remain convinced that the technologies, namely NOX adsorbers level of the diesel fuel and the rate of application of these emission control and catalyzed diesel particulate filters fuel consumption. With the 15 ppm technologies will not compromise (or enabled by 15 ppm sulfur diesel fuel, sulfur diesel fuel, the PM emissions decrease) equipment safety. can be applied to nonroad diesel level from a CDPF equipped nonroad We agree that nonroad equipment engines in a similar manner as for diesel engine will be similar to the must be designed to address safety and highway diesel engines. The emissions rate of a comparable highway durable performance for a wide range of combustion process and the means to diesel engine. Therefore, the 0.01 g/bhp- operating conditions and applications modify that process are fundamentally hr emission level is feasible for nonroad the same for highway and nonroad engines tested on the NRTC cycle and 44 ‘‘Engine Technology and Application Aspects for Earthmoving Machines and Mobile Cranes,’’ Dr. diesel engines regardless of engine size. on the steady-state cycles, ISO–C1 and E. Brucker, Liebherr Machines Bulle, SA, AVL The formation mechanism and quantity ISO–D2. Put another way, control of PM International Commercial Powertrain Conference, of pollutants formed in diesel engines using CDPF technology is essentially October 2001. Copy available in EPA Air Docket A– are fundamental characteristics of independent of duty cycle given active 2001–28, Docket Item # II–A–12. engine design and are not inherently 45 Phone conversation between Byron Bunker, catalyst technology (for reliable United States Environmental Protection Agency and different for highway and nonroad regeneration and SOF oxidation), Dale McKinnon, Manufacturers of Emission Control adequate control of temperature (for Association (MECA), 9 April, 2003 confirming the 46 As an alternative to compliance with the ISO reliable regeneration) and low sulfur use of emission control technologies on nonroad C1 test procedure, a manufacturer can show diesel fuel (for reliable regeneration and equipment used in coal mines, refineries, and other compliance with the standards by testing over the locations where explosion proofing may be Ramped Modal Cycle (RMC) as described in section low PM emissions). While some required. III.F. commenters argued that PM filters will

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not enable the 0.01 PM emission learning that will be realized from the would prevent achieving the NTE standard for nonroad engines, we introduction of these same technologies standard. remain convinced by the demonstration to highway diesel engines, plus the lack Under the brief episodic periods of of 0.01 or lower PM emission levels of any fundamental technical rich operation necessary to regenerate from a number of diesel engines impediment, makes us confident that NOX adsorber catalysts, it is possible to described in the RIA, that the standard the new NOX standards can be met. briefly experience higher levels of NMHC emissions. Absent a controlling is feasible given the leadtime provided Given the fundamental similarities and the availability of 15 ppm sulfur standard, it is possible that these NMHC between highway and nonroad diesel diesel fuel. Likewise, the NTE emissions could be high. There are two engines, we believe that the NO provisions for nonroad engines are the X possible means to control the NMHC adsorber technology developed for same as for on-highway engines meeting emissions during these periods in order highway engines can be applied with an equivalent PM control level. The to meet the NMHC standard finalized equal effectiveness to nonroad diesel maximum PM emission level from a today. Manufacturers can design the CDPF equipped diesel engine is engines with additional developments regeneration system and the oxygen primarily determined by the maximum in engine thermal management (as storage (oxidation function under rich discussed in section II.B.2 above) to fuel sulfur conversion level experienced conditions) of the NOX adsorber catalyst at the highest operating conditions. As address the more widely varied nonroad such that the NMHC emissions are documented in RIA chapter 4.1.1.3, operating cycles. In fact, as discussed inherently controlled. This is similar to testing of diesel engines at conditions previously, the NOX adsorber catalyst the control realized on today’s three- representative of the highest sulfate PM temperature window is particularly well way automotive catalysts which also formation rates shows PM levels below matched to transient operating experience operation that toggles the level required by the NTE provisions conditions as typified by the NRTC. between rich and lean conditions. when tested on less than 15 ppm sulfur As pointed out by some commenters, Secondly, a downstream clean-up diesel fuel. compliance with the NTE provisions catalyst can be used to oxidize the NOX Standard. We are finalizing a will be challenging for the nonroad excess NMHC emissions to a level NOX standard of 0.30 g/bhp-hr for engine industry due to the diversity of below the standard. This approach has engines in this category based upon the nonroad products and operating cycles. been used in the NOX adsorber emission reductions possible from the However, the technical challenge is demonstration program at EPA application of NOX adsorber catalysts reduced somewhat by the 1.5 multiplier described in the RIA. Our cost analysis and the expected emission levels for used to calculate the NTE standard as for engines in the 75 to 750 hp category Tier 3 compliant engines which form discussed in section III.J. Controlling includes a cost for a clean-up catalyst to the baseline technology for Tier 4 NOX emissions under NTE conditions is perform this function. engines. The Tier 3 emission standards fundamentally similar for both highway Cold Start. The standards include a are a combined NMHC+NOX standard of and nonroad engines. The range of cold start provision for the NRTC 3.0 g/bhp-hr for engines greater than 100 control is the same and the amount of procedure. This means that the results hp and less than 750 horsepower. For reduction required is also the same. We of a cold start transient test will be engines less than 100 hp but greater know of no technical impediment, nor weighted with the emissions of a hot than 50 horsepower the Tier 3 were any raised by commenters, that start test in order to calculate the NMHC+NOX emission standard is 3.5 g/ would prevent achieving the NTE emissions for compliance against the bhp-hr. We believe that in the time- standard under the zone of operating standards. In a change from the frame of the Tier 4 emission standards, conditions required by the NTE. proposed rule, the weightings are 1/20 all engines from 75 to 750 hp can be cold start and 19/20 for the hot start (as NMHC Standard. Meeting the NMHC developed to control NOX emissions to opposed to the proposed weightings of engine-out levels of 3.0 g/bhp-hr or standard under the lean operating 1/10 and 9/10, respectively) as lower.47 This means that all engines will conditions typical of the biggest portion described more fully in chapter 4.2 of need to apply Tier 3 emission control of NOX adsorber operation should not the RIA and section III.F below. Because technologies (i.e., turbochargers, charge- present any special challenges to exhaust temperatures are so important air-coolers, electronic fuel systems, and nonroad diesel engine manufacturers. to catalyst performance, a cold start for some manufacturers EGR systems) to Since CDPFs and NOX adsorbers contain provision is an important tool to ensure get to this baseline level. As discussed platinum and other precious metals to that the emissions realized in use are in more detail in the RIA, our analysis oxidize NO to NO2, they are also very consistent with the expectations of this of the NRTC and the ISO–C1 cycles efficient oxidizers of hydrocarbons. program. Achieving this standard NMHC reductions of greater than 95 indicates that the NOX adsorber catalyst represents an additional technical percent have been shown over transient can provide a 90 percent or greater NOX challenge for NOX control and to a reduction level on the cycles. The and steady-state test procedures.48 lesser extent CO and NMHC control standard of 0.30 g/bhp-hr reflects a Given that typical engine-out NMHC is (i.e., control of gaseous pollutants). PM baseline emissions level of 3.0 g/bhp-hr expected to be in the 0.40 g/bhp-hr control with a CDPF is not expected to and a greater than 90 percent reduction range or lower for engines meeting the be significantly impacted by cold-start of NOX emissions through the Tier 3 standards, this level of NMHC provisions due to the primary filter application of the NOX adsorber reduction will mean that under lean mechanism being largely unaffected by catalyst. The additional lead time conditions emission levels will be well temperature. available to nonroad engine below the standard. For the same With respect to achievability of the manufacturers and the substantial reasons, there is no obstacle which NOX, CO and NMHC standards, during the initial start and warmup period for 47 For engines between 75 and 100 horsepower, 48 ‘‘The Impact of Sulfur in Diesel Fuel on a diesel engine, the exhaust this may require re-optimization of the engine to Catalyst Emission Control Technology,’’ report by temperatures are typically below the lower NOX emissions if they are higher than 3.0, but the Manufacturers of Emission Controls light-off temperature of a catalyst. As a we would not expect any new hardware beyond the Association, March 15, 1999, pp. 9 & 11. Copy Tier 3 hardware to be required in the Tier 4 available in EPA Air Docket A–2001–28 Item II–A– result, exhaust stack emissions may timeframe to accomplish this reduction. 67. initially be higher during this period of

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operation. The cold start test procedure example, even if the average NOX combination of technologies that we is designed to quantify these emissions adsorber performance over the cold-start expect will be used to meet those to ensure that emission control systems test cycle was only 70 percent, the standards are virtually identical to the are designed appropriately to minimize average NOX adsorber performance over HD2007 program for on-highway the contribution of cold-start emissions. the hot-start portion of the test cycle engines. The following three sections Cold-start emissions can be minimized would only need to be 91 percent in (II.B.3, II.B.4, and II.B.5) describing the by improving catalyst technology to order to realize a weighted average feasibility of the standards for engines allow for control at lower exhaust performance of 90 percent. Similarly, above 750 hp, from 25 to 75 hp, and temperatures (i.e., by lowering the were the cold-start test cycle below 25 hp, while following the same catalyst light-off temperature) and by performance only 50 percent, the hot- pattern and objective, take additional applying strategies to quickly raise the start performance would only need to be consideration of the fact that engines exhaust temperature to a level above the 92 percent in order to realize a weighted and equipment in these size categories catalyst light-off temperature. average performance of 90 percent.49 have no direct on-highway equivalent There are a number of technologies We are confident, based on our and differ from highway engines in available to the engine manufacturer to estimates of NOX adsorber performance substantial ways that cause us to reach promote rapid warmup of the exhaust over the nonroad test cycle summarized differing conclusions regarding the and emission control system. These in the RIA, that NOX adsorber appropriate standards and timing for include retarding injection timing, performance in excess of 92 percent can those standards. Whether in scale, or increasing EGR, and potentially late be expected in the time frame of the use, or operating conditions, the cycle injection, all of which are requirements finalized today. characteristics of these engines and technologies we expect manufacturers Complying with the PM standard equipment are such that we have taken to apply as part of the normal operation given consideration of the cold start test particular consideration of them in of the NOX adsorber catalyst system. procedure is not expected to be as setting the timing and level of the These are the same technologies we challenging as compliance with the NOX standards. The remainder of this section expect highway engine manufacturers to standard. The effectiveness for PM (II.B.3) discusses what makes the above use in order to comply with the filtration is not significantly effected by 750 hp category unique and why the highway cold start FTP provision which exhaust temperatures, as noted earlier. standards which we are adopting are weights cold start emissions more Thus, PM emission levels are similar technologically feasible. heavily with a 1/7 weighting. As a over the cold and hot start tests. result, we expect the transfer of highway The standards that we are finalizing a. What Makes the Over 750 hp Category technology to be well matched to today for nonroad engines with rated Different? accomplish this control need for horsepower levels from 75 to 750 hp are The first and most obvious difference nonroad engines as well. Using these based upon the same emission control for engines in this horsepower category technologies we expect nonroad engine technologies, clean 15 ppm or lower is scale. No on-highway engines come manufacturers to be able to comply with sulfur diesel fuel, and relative levels of close to the size of the largest engines the new Tier 4 NOX, CO, and NMHC emission control effectiveness as the HD in this category which can produce in emission standards including the cold 2007 emission standards. We have given excess of 3,000 horsepower, consist of start provisions of the transient test consideration to the diversity of 16 or more cylinders and have 12 or procedure. nonroad equipment for which these more turbochargers. The engines, and One commenter has raised the technologies must be developed and the the equipment that they power, are concern that if diesel engines are no timing of the Tier 3 emissions standards quite simply significantly larger than cleaner than 3 g/bhp-hr NOX and if NOX in determining the appropriate timing any on-highway diesel engine. Many adsorbers can be no more efficient than for the Tier 4 standards. Based upon the commenters argued that emission 90 percent, then any increase in NOX availability of the emission control technologies from on-highway vehicles emissions above the 0.30 g/bhp-hr level technologies, the proven effectiveness of could not be simply scaled up for these on a cold-start test will make the the technologies to control diesel larger engines and that if they were, the emission standards infeasible. We emissions to these levels, the technology consequences of this resizing would should clarify, when discussing the paths identified here to address include structural weakness and emission reduction potential of the NOX constraints specific to nonroad reduced system robustness. As adsorber catalyst generically in the equipment, and the additional lead time discussed below, our review of the NPRM, we have sometimes simply afforded by the timing of the standards, information provided with these stated that it is 90 percent or more we have concluded that the standards comments and our subsequent analysis effective without plainly saying that this are technically feasible in the leadtime of the technical characteristics of some refers to our expectation for average provided. emission control components has led us performance considering both cold and to conclude that revised emission 3. Are the Standards for Engines Above hot start emissions. More precisely then, standards (based on performance of 750 hp Feasible? we would expect lower effectiveness different technologies that those whose over the cold-start test procedure with The preceding discussion of the performance formed the basis for the somewhat higher effectiveness realized standards for engines of 75 to 750 hp proposed rule) from those we proposed over the hot-start test procedure. highlights the main thrust of our new for this horsepower category are Because of the relative weightings of the Tier 4 program, a focus on realizing very appropriate and available. two test cycles (i.e., 1/20 for the cold- low on-highway like emission levels for We have concluded that it is start and 19/20 for the hot-start), the vast majority of nonroad diesel appropriate to distinguish between two although the degradation of engines. The emission standards and the broad categories of engines over 750 hp performance below 90 percent over the grouped by application: Mobile cold-start cycle can be substantially 49 The combined weighted average performance is machines and generator sets. Mobile calculated as 1/20 (cold-start) + 19/20 (hot-start). greater than the performance above 90 Hence it can be seen that 1/20 (70%) + 19/20 (91%) machines include the very largest percent realized over the hot-start cycle, = 90% and likewise that 1/20 (50%) + 19/20 (92%) nonroad equipment used in mining the standards remain feasible. For = 90%. trucks and large excavation equipment.

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The environment and operating standard is feasible based on the cannot today conclude with certainty conditions (especially for vibration) substantial reductions in sulfate PM due that such systems would be as robust in- represent the harshest application into to the use of 15 ppm sulfur diesel fuel use as needed (see earlier discussion in which nonroad engines are applied. and the potential to improve the section II.B.1.b). Considering the Design considerations for technologies combustion process to reduce PM information available to the Agency used to control emissions from engines emissions formed in the engine. today, we believe it appropriate to set in these applications must first consider Specifically, we believe based on the the long term PM standard for these robustness to the harsh environments evidence in the RIA that increasing fuel very large engines based on technologies that will be experienced in use. In injection pressure, improving electronic which we can project with confidence contrast, mobile nonroad generator sets controls and optimizing the combustion will give high levels of emission operate in relatively good operating system geometry will allow engine reduction, durability, and robustness environments. In addition, while mobile manufacturers to meet this level of PM when scaled to these very large engine nonroad generator sets can, and are control in 2011. Some engine sizes. moved between operating locations, manufacturers have in fact indicated to The 0.01 g/bhp-hr difference in the they are always stationary during actual the Agency that this level of control PM emission standards between the operation. Thus the levels of vibration represents an achievable goal by 2011. standard for generator sets and for other and the general environment for engine One commenter argued however, that a mobile applications in this category operation are significantly less more relaxed standard of 0.1 g/bhp-hr (0.01 g/bhp-hr lower for generator sets) demanding for generator sets than for based on today’s on-highway diesel reflects our expectation that engine-out mobile machines. Also the dynamic engine performance would be emissions from generator sets can be range of operation is significantly appropriate. We disagree with this reduced below the level for mobile narrower and less demanding for comment, believing that given the machines due to generator set operation generator sets. Designed to operate at a substantial leadtime available and the at a single engine speed. Without the set engine speed, synchronous to the potential for further improvements in need to provide full power and control frequency cycle desired for electric combustion systems, that it is over the wider range of possible generation (i.e., 1200 or 1800 RPM for appropriate to set a forward looking PM operating conditions that mobile 60 hz), diesel engines designed for standard of 0.075 g/bhp-hr. Conversely, machines must deliver, we believe that generator set applications can be other commenters argued that future on- the air handling systems (especially the optimized for operation in this narrow highway PM filter technology should be turbocharger match to the engine) can range. applied to this class of engines as early be improved to provide a moderate We have given specific consideration as 2011 (i.e., that a standard of 0.01 g/ reduction in engine-out emissions. This, to the unique engineering challenges for bhp-hr PM is appropriate). While we coupled with the reduction afforded by engines in this horsepower category in agree with the commenters that in the the PM filter technology, would allow determining the appropriate emission long-term it will be appropriate to apply generator sets to meet a more stringent standards set in today’s action. We have filter-based emission control 0.02 g/bhp-hr standard. Diesel engines also taken into account the important technologies to these engines, we do not designed for use in generator sets differences between generator set agree that such control is appropriate as meeting this standard will need to applications and other mobile early as 2011. As the following section demonstrate compliance over the appropriate test cycles, either the ISO applications in developing standards for explains, we believe that there are this horsepower category. C1 or D2 tests. As discussed in RIA remaining technical challenges to be chapter 4.3.6.2, PM emission rates are b. Are the New Tier 4 Standards for addressed prior to the application of PM nearly the same for steady-state testing Over 750 hp Engines Technologically filters to these engines and that it is or for alternative ramped modal cycle Feasible? necessary to allow additional leadtime (RMC) testing. These test cycles, like the for those challenges to be addressed. The emission standards described in engines, are designed to be section II.A above describe a Beginning in 2015 all nonroad representative of the range of operation comprehensive program for engines engines over 750 hp must meet stringent expected from a generator set. over 750 hp that give consideration to PM filter technology-based emission As discussed previously, PM emission both the physical size of these engines standards of 0.02 g/bhp-hr for engines control over the NTE region for PM filter and the applications into which these used in generator set applications and equipped diesel engines is engines are applied. Engines in this 0.03 g/bhp-hr for engines used in mobile predominantly a function of sulfate power category must show compliance machine applications. We are formation at high exhaust temperatures. with the C1 or D2 steady-state test predicating these emission standards Given that fuel consumption (and thus cycles as appropriate as well as with the based on the application of a different sulfur) consumption rates on a brake NTE provisions finalized today. As form of diesel particulate filter specific basis tend to be lower for described in sections III.F and III.G, technology, a wire or fiber mesh depth engines above 750 hp, we can conclude these engines will not be tested over the filter rather than a ceramic wall flow that the increase in PM emissions over NRTC nor will they be subject to a cold- filter. Wire mesh filters are capable of the NTE region will likely be lower for start test procedure. The feasibility reducing PM by 70 percent or more. We these engines than for engines meeting discussion in this section describes have not based these standards upon the the 0.01 g/bhp-hr standard. Thus, we expected performance of the engines more efficient (>90 percent) control can conclude based on the evidence in over the required test cycles and the possible from ceramic wall flow style the RIA that compliance with the NTE NTE. This section will briefly PM filters, because we believe that the provisions for PM is feasible for engines summarize the feasibility analysis application of the wall flow filter over 750 hp. contained in the RIA for these engines. technology on engines of this size has Although we are projecting that PM Standards. Beginning in 2011 all not been adequately demonstrated at manufacturers will comply with this nonroad diesel engines above 750 hp this time. While it would certainly be standard using a slightly less efficient must meet a PM standard of 0.075 g/ possible to apply the ceramic-based PM filter technology, we remain bhp-hr. We believe that this PM technology to these larger engines, we convinced that 15 ppm sulfur diesel fuel

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will still be a necessity for this other mobile source emission category. For engines over 750 hp used in technology to be applied. Regardless of Although nonroad generator sets are mobile machines (and for 750–1200 hp the filter media chosen for the PM filter, mobile, in operation they remain at a generator sets from 2011 until 2015) we the filter will still require catalyst-based fixed location where fuel is delivered to are setting a new NOX standard of 2.6 systems to ensure robust regeneration them periodically (i.e., a 1,200 hp g/bhp-hr beginning in 2011. We are and adequate control of the SOF portion generator set does not and cannot pull predicating this level of emission of PM. As these catalyst-based into the local truck stop for a fuel fill). control (an approximate 50 percent technologies are adversely impacted by Therefore, the same infrastructure that reduction from Tier 2) on an improved sulfur in diesel fuel as described in II.C currently provides urea delivery for combustion system and proven engine- below, 15 ppm sulfur diesel fuel will be stationary power generation can also be based NOX control technologies. required in order to ensure compliance utilized for nonroad generator set Specifically, we believe manufacturers with the PM standards finalized here for applications.52 It would still remain for can apply either proven cooled EGR engines over 750 hp. the manufacturer to develop a technology, or apply additional levels of NOX Standards. As with the PM mechanism to ensure urea refill, but we engine boost, a limited form of Miller standards, we are setting distinct NOX believe it is likely that solutions to this Cycle operation, and increased standards for this category of engines problem can be addressed through intercooling capacity for the two-stage reflecting particular concerns with the monitoring as for stationary source turbocharging systems that are used on application of technologies to engines of emissions or other technology options these engines. The second approach for this size and our desire to realize (e.g., a urea interlock that precludes in-cylinder emissions reductions is significant NOX reductions as soon as engine operation without the presence similar in description at least to the possible. There are two sets of NOX of urea). Caterpillar ACERT technology which we standards that we are finalizing today, a Either of these technology approaches believe could be another path for 0.50 g/bhp-hr NOX standard for engines could be applied to realize an compliance with this standard. We are used in generator set applications and a approximately 90 percent reduction projecting a modest increase in heat- 2.6 g/bhp-hr NOX standard for mobile from the current Tier 2 emission levels rejection to the engine coolant for these machines. for these engines in order to comply in-cylinder emission control solutions For engines used in generator set with an emission standard of 0.50 g/ and have accounted for those costs in applications we are finalizing a 0.50 g/ bhp-hr. The 0.50 g/bhp-hr standard is our cost analysis. These approaches for different from our proposed level of 0.30 bhp-hr standard that goes into effect for NOX reduction have been proven for on- engines above 1,200 hp in 2011 and in g/bhp-hr reflecting the changes we have highway diesel engines since 2003 2015 for engines above 750 hp. We see made in this final action to the including compliance with NTE two possible technology options for implementation schedule for this class provisions similar to those for nonroad manufacturers to meet these standards. of engines and therefore our projections engines finalized here. We can conclude First, compliance with this NOX for a technology path. At the time of the based on the on-highway experience standard will be possible through the proposal, we projected that this class of that the NTE provisions can be met for application of a dual bed NOX adsorber engine would follow an integrated two- engines in this horsepower category. system (i.e., a system that allows step technology path. We are now One commenter suggested that a regeneration to be controlled external to finalizing a program that anticipates the standard of 3.5 g/bhp-hr would be the engine). This approach can work application of 90 percent effective NOX achievable in this time frame. As well for generator set applications control to diesel engines for use in described here, we believe that further where packaging constraints and generator sets without a reduction in emission reductions to 2.6 g/bhp-hr are vibration issues are greatly reduced. engine-out NOX levels beyond Tier 2. possible in this time frame. Engine Since this approach requires limited This reflects our desire to focus on manufacturers have indicated to the engine redesign, it would be an getting the largest emission reduction Agency that they believe this level of in- appealing approach for these large possible in the near term (beginning in cylinder emission control can be engines sold in very low volumes. NOX 2011) from these engines. Where we realized for these very large diesel adsorber systems for stationary power believe additional technology engines by 2011. We are deferring any generation (systems that never move) development is needed, as is the case decision on setting aftertreatment based for mobile machines over 750 hp, we are are available today on a retrofit basis, NOX standards for mobile machinery and we believe with further finalizing a more gradual emission above 750 hp to allow additional time development to address packaging and reduction technology pathway to evaluate the technical issues durability concerns that similar systems anticipating further reductions in involved, as discussed in section II.A.4. engine-out NO emissions followed by can be applied to mobile generator X NMHC Standards. We are setting two 50 a possible future action to reduce sets. different NMHC emission standards for emissions further as described in A second possible technology option engines in this category linked to the section II.A. RIA chapter 4.1.2.3.3 for engines in this category is urea SCR. technologies used to control PM describes NO adsorber effectiveness to The challenges for urea SCR in mobile X emissions. We are requiring all engines control NO emissions including applications are well known, X over 750 hp to meet an NMHC standard effectiveness over the NTE region. The specifically a lack of urea infrastructure of 0.30 g/bhp-hr starting in 2011. As discussion there is equally applicable to to provide urea refill at diesel fueling explained earlier, in 2011 all engines engines above and below 750 hp locations and a need to ensure that urea over 750 hp must meet a PM emission 51 regarding NTE performance because the is added as necessary in use. These standard of 0.075 g/bhp-hr. We are key attribute of NTE performance hurdles can be addressed more easily projecting that manufacturers will meet (exhaust temperature) is similar for for generator sets than for virtually any this standard through improvements in engines across the horsepower range. in-cylinder emission control of PM (in 50 Emerachem EMxTM Datasheet—Describing the EMx IC (Internal Combustion) System Air Docket 52 Fleetguard StableGuardTM Urea Premix for use conjunction with use of 15 ppm sulfur OAR–2003–0012–0948. with SCR NOX Reduction Systems, Air Docket A– diesel fuel). These PM control 51 See for example 68 FR 28375, May 23, 2003. 2001–28 Item IV–A–04. technologies, increased fuel injection

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pressure, improved electronic controls transitional standard is optional for 50– standard and the 2013 standards. For an and enhanced combustion system 75 hp engines, as the 2008 explanation and discussion of the designs will concurrently lower NMHC implementation date is the same as the implementation dates, please refer to emissions to the NMHC standard of 0.30 effective date of the Tier 3 standards. section II.A. g/bhp-hr. Manufacturers may decide, at their i. 2008 PM Standards 54 The second step in our NMHC option, not to undertake the 2008 standards is to a level of 0.14 g/bhp-hr, transitional PM standard, in which case We are today finalizing the interim consistent with the standard for on- their implementation date for the 0.02 g/ PM control program as proposed for highway diesels beginning in 2007 and bhp-hr PM standard begins in 2012. The engines in the power category from 25– for other nonroad diesel engines from 75 remainder of this section discusses what 75 hp. The new PM standard for 2008 to 750 hp beginning in 2011. This makes the 25–75 hp category unique is 0.22 g/bhp-hr over the appropriate change in NMHC standards is timed to and why the standards are steady-state test cycle (the NRTC and coincide with the requirement that technologically feasible. NTE do not apply, for the reasons engines over 750 hp meet stringent PM explained below).55 The standard is a. What Makes the 25–75 hp Category emission standards that we believe will premised on the use of 500 ppm sulfur Unique? require the use of catalyst-based diesel diesel fuel and the potential for particulate filter systems. These systems As EPA explained in the proposal, improvements in engine-out emission are expected to incorporate oxidation and as discussed in section II.A, one control where possible or the catalyst functions to control the SOF cannot assume that highway application of a diesel oxidation catalyst portion of diesel PM and to promote technologies are automatically (DOC). Some commenters raised robust soot regeneration within the transferable to 25–75 hp nonroad concerns that this level of emission filter. This same oxidation function is engines. In contrast with 75–750 hp control from diesel engines may not be highly effective at controlling NMHC engines, which share similarities in possible in 2008 without fuel cleaner emissions (the RIA documents displacement, aspiration, fuel systems, than 500 ppm or without changes in the reductions of more than 80 percent) and and electronic controls with highway Tier 3 NMHC+NOX emission standards. will result in a reduction in NMHC diesel engines, engines in the 25–75 hp Other commenters, including some emissions below the 0.14 g/bhp-hr category have a number of technology engine manufacturers, supported this standard for these engines. As the high differences from the larger engines. interim program. As explained in the level of NMHC control afforded by the These include a higher percentage of following sections, we continue to application of this technology is broadly indirect-injection fuel systems, and a believe that these standards are realized across the wide range of diesel low fraction of turbocharged engines appropriate and feasible in the leadtime engine operation, it will allow for (see generally RIA chapter 4.1). The provided. compliance with the NTE provisions as distinction in the under 25 hp category Engines in the 25–50 hp category well. Although in practice we expect is even more pronounced, with no must meet Tier 2 NMHC+NOX and PM that NMHC emissions may be lower turbocharged engines, nearly one-fifth of standards today. We have examined the than the 0.14 g/bhp-hr standard, we the engines have two cylinders or less, model year 2004 engine certification have not finalized a more stringent and a significant majority of the engines data for engines in the 25–50 hp standard for NMHC in order to maintain have indirect-injection fuel systems. category. These data indicate that over consistency with the NMHC standard The distinction is particularly marked 35 percent of the engine families meet we are finalizing for engines from 75 hp with respect to electronically controlled the 2008 0.22 g/bhp-hr PM standard and fuel systems. These are commonly to 750 hp, for which the NMHC 5.6 g/bhp-hr NMHC+NOX standard standard is in part based on feasibility available in the power categories greater (unchanged from Tier 2 in 2008) today considerations for NOX adsorber catalyst than or equal to 75 hp, but, based on the (even without 500 ppm sulfur diesel systems that use diesel fuel to available certification data as well as fuel). At the time of the proposal, we regenerate themselves (with consequent our discussions with engine had analyzed model year 2002 data for increased NMHC emissions during manufacturers, we believe there are very this power range, which at that time regeneration events). We believe this is limited numbers, if any, in the 25–75 hp indicated approximately 10 percent of appropriate considering our expectation category (and no electronic fuel systems the engine families complied with the that NOX adsorber technology will be in the less than 25 hp category). The 2008 requirements. The most recent found feasible for all nonroad engines research and development work being data for model year 2004 indicates over 750 hp. performed today for the heavy-duty substantial progress has already been highway market is targeted at engines 4. Are the New Tier 4 Standards for made in just the past few year in which are 4-cylinders or more, direct- Engines 25–75 hp Feasible? lowering emissions from these engines. injection, electronically controlled, This is primarily due to the As discussed in section II.B, our turbocharged, and with per-cylinder implementation of the Tier 2 standards standards for 25–75 hp engines consist displacements greater than 0.5 liters. As in model year 2004. The model year of a 2008 transitional standard and long- discussed in more detail below, as well term 2013 standards. The transitional as in section II.B.5 (regarding the under 54 As discussed in section II.B., manufacturers can standard is a 0.22 g/bhp-hr PM 25 hp category), these engine choose, at their option, to pull-ahead the 2013 PM standard. The 2013 standards consist of distinctions are important from a standard for the 50–75 hp engines to 2012, in which a 0.02 g/bhp-hr PM standard and a 3.5 technology perspective and warrant a case they do not need to comply with the 53 transitional 2008 PM standard. g/bhp-hr NMHC+NOX standard. As different set of standards for the 25–75 55 However, a manufacturer can choose to comply discussed in section II.A, the hp category (as well as for the under 25 over the TRU cycle including the associated NTE hp category). provisions. Compliance with the NTE for engines 53 The 2013 NOX+NMHC standard is a new selecting to certify on the TRU cycle is standard only for engines in the 25–50 hp category. b. Are the New Tier 4 Standards for 25– straightforward because by the very nature of the For engines in the 50–75 hp category, 3.5 g/bhp-hr 75 hp Engines Technologically Feasible? products, their operation is directly limited to a NOX+NMHC is the existing Tier 3 emission small range of operating modes over which standard which will now also apply across the new This section will discuss the technical compliance with the emission standard has already regulated test cycles (e.g., NRTC). feasibility of both the interim 2008 PM been shown.

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2001 certification data also showed the with the commenters that sulfur with the 0.22 g/bhp-hr PM standard 2008 standard were achievable using a reductions are important to control PM (and the 2008 NMHC+NOX standard), mix of engine technologies (IDI and DI, and in the long term that a 15 ppm fuel and the availability of well known PM turbocharged and naturally aspirated) sulfur level will be the best solution, we reduction technologies such as engine- tested on a variety of certification test disagree with the assertion that the out improvements and diesel oxidation cycles.56 A detailed discussion of these amount of sulfate PM formed from a catalysts, we project that the 0.22 g/bhp- data is contained in the RIA. DOC will be such that compliance with hr PM standards is technologically At the time of the proposal, no the 0.22 g/bhp-hr standard will be feasible by model year 2008. infeasible. While commenters shared certification data was available for ii. 2013 Standards engines in the 50–75 hp range, because data showing increased PM emissions those engines were not subject to a Tier when DOCs are used, we have similarly For engines in the 25–50 range, we are 1 standard and were not subject to Tier found data (included in the RIA) that finalizing standards commencing in 2 standards until model year 2004. We shows an overall reduction in 2013 of 3.5 g/bhp-hr for NMHC+NOX have now had an opportunity to analyze emissions. To understand this and 0.02 g/bhp-hr for PM. For the 50– the model year 2004 certification data discrepancy, it is important to realize 75 hp engines, we are finalizing a 0.02 for engines in the 50–75 hp range. These that DOCs can be designed for operation g/bhp-hr PM standard which will be data shows that more than 70 percent of on a range of fuel sulfur levels. The implemented in 2013, and for those the engine families in this power range lower the fuel sulfur level, the more manufacturers who choose to pull- are capable of meeting the 2008 PM effective the PM oxidation function, but ahead the standard one-year, 2012 standards today. However, most of these even at 500 ppm sulfur a properly (manufacturers who choose to pull- engines do not yet meet the 3.5 g/bhp- designed DOC will realize a net ahead the 2013 standard for engines in the 50–75 range do not need to comply hr Tier 3 NMHC+NOX standard, which reduction in PM emissions. DOCs have is required in 2008. We expect that to been successfully applied to diesel with the transitional 2008 PM standard). comply with the Tier 3 standards, these engines for on-highway applications for A more complete discussion of the engines will use technologies such as PM control on 500 ppm fuel since 1994 options available to manufacturers and EGR and electronically controlled fuel through careful design of the DOC the nature of the transitional program injection systems (and we included the trading-off PM reduction potential and can be found in section II.A. These costs of these technologies in assessing sulfur oxidation potential. The RIA standards are measured using the NRTC the costs of the Tier 3 standards). These contains additional analysis describing and steady-state tests. These engines also will be subject to the NTE starting technologies have been shown to reduce DOC function, and its expected with the 2013 model year. NO emissions by 50 percent without effectiveness when applied to nonroad X PM Standard. For engines in the increasing PM emissions. The diesel engines. Other commenters argued that the horsepower category from 25–75 hp, we certification data show that for the 70 are finalizing a PM standard of 0.02 g/ percent of the engine families which application of DOC to diesel engines in this category would lead to an even bhp-hr based on the application of meet the 2008 Tier 4 PM standard (0.22 catalyzed diesel particulate filters to g/bhp-hr), a NO reduction of less than greater emission reduction than X estimated in our proposal, thus allowing engines in this category. We received a 50 percent is needed for most of these wide range of comments on our engines to meet the 2008 Tier 4 the Agency to finalize a lower PM standard. While we agree that some proposal with some arguing that the NMHC+NO standard. A detailed X engines will have lower emissions than emission standard could be met earlier discussion of these data is contained in required to meet the standard and that than 2013 and others arguing that while the RIA. in the long term (once 15 ppm fuel is technically possible to apply PM filters In addition to using known engine-out widely available) the PM emissions will to engines in this category, that it was techniques, we also project that the be further reduced, we do not believe not economically or otherwise practical 2008 standards can be achieved with the that an emission level lower than 0.22 to do so. use of DOCs. DOCs are passive flow- g/bhp-hr will be generally feasible in The RIA discusses in detail catalyzed through emission control devices which 2008 due to the sulfur level of diesel diesel particulate filters, including are typically coated with a precious fuel of 500 ppm sulfur and the potential explanations of how CDPFs reduce PM metal or a base-metal washcoat. DOCs for sulfate PM formation. emissions, and how to apply CDPFs to have been proven to be durable in use In summary then, there are two likely nonroad engines. We have concluded, on both light-duty and heavy-duty means by which companies can comply as explained above, that CDPFs can be diesel applications. In addition, DOCs with the interim 2008 PM standard. used to achieve the 0.01 g/bhp-hr PM have already been used to control First, engine manufacturers can comply standard for 75–750 hp engines. As also carbon monoxide on some nonroad with this standard using known engine- discussed in section II.B.2.a above, PM 57 applications. Some commenters raised out techniques (e.g., optimizing filters will require active back-up concerns that DOCs could actually combustion chamber designs, fuel- regeneration systems for many nonroad increase PM emissions when used on injection strategies). In fact, some applications above and below 75 hp 500 ppm sulfur diesel fuel due to the fraction of engines already would because low temperature operation is an potential for oxidation of the sulfur in comply with the emission standard. In issue across all power categories. One the fuel to sulfate PM. While we agree addition, some engine manufacturers commenter raised concerns regarding may choose to use diesel oxidation the low exhaust temperatures possibly 56 The Tier 1 and Tier 2 standards for this power catalysts to meet this standard. Our cost experienced by small nonroad engines category must be demonstrated on one of a variety of different engine test cycles. The appropriate test analysis makes the conservative and argued that such low temperatures cycle is selected by the engine manufacturer based assumption (i.e., the higher cost make PM filter regeneration impossible on the intended in-use application of the engine. assumption) that all manufacturers will absent the use of active regeneration 57 EPA Memorandum ‘‘Documentation of the use DOC catalysts to comply with these technologies. We agree with the Availability of Diesel Oxidation Catalysts on Current Production Nonroad Diesel Equipment,’’ emission standards. commenter that active regeneration, as William Charmley. Copy available in EPA Air Based on the existence of a number of described previously, may be necessary Docket A–2001–28 Item II–B–15. engine families which already comply and have included the cost for such

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systems in our cost estimates. See ratio increases. This leads to higher proposal, new information regarding section II.B.1.a. A number of secondary heat-transfer losses and therefore lower model year 2004 engine certifications technologies are likely required to efficiency and higher fuel consumption. has become available. That data show enable proper regeneration, including In addition, frictional losses are a higher 18 percent of the engines in the 75–100 possibly electronic fuel systems such as percentage of total power for the smaller hp category already use electronically common rail systems which are capable displacement engines which also results controlled fuel systems. In model year of multiple post-injections which can be in higher fuel consumption. Because of 2001, no engines in this category used used to raise exhaust gas temperatures the higher fuel consumption rate, we electronic fuel systems. We believe this to aid in filter regeneration. expect a higher particulate sulfate level, strong trend toward the introduction of Particulate filter technology, with the and therefore we have set a 0.02 g/bhp- more advanced electronic fuel system requisite trap regeneration technology, hr standard for engines in this power technology will continue in the future can also be applied to engines in the 25 category. We did not receive any and, importantly for engines in the 25– to 75 hp range. As explained earlier, the comments on our proposal arguing that 75 hp category, will extend to ever fundamentals of how a filter is able to the technical basis for this higher PM smaller engine categories due to the user reduce PM emissions are not a function level was inappropriate. benefits provided by the technology and of engine power, so that CDPF’s are just The 0.02 g/bhp-hr standard applies to the falling cost for such systems. as effective at capturing soot emissions all of the test cycles applicable to However, acknowledging the substantial and oxidizing SOF on smaller engines engines in this power category (i.e., the time between now and 2012, and the as on larger engines. The PM filter NRTC including cold-start, the ISO C1, potential for technologies to mature regeneration systems described in D2 and G2 cycles and the alternative faster or slower than we are estimating section II.B.2 are also applicable to TRU and RMC cycles, as appropriate). here, we have decided to conduct a engines in this size range and are Our feasibility analysis summarized technology review of these standards as likewise feasible. There are specific trap here and detailed in the RIA takes into described in section II.A above. This regeneration technologies which we consideration these different test cycles. review will provide EPA with another believe engine manufacturers in the 25– The control technologies work in a opportunity to confirm that the 75 hp category may prefer over others. similar manner and provide the same technical path laid out here is indeed For example, some manufacturers may high level of emission control across progressing in a manner consistent with choose to apply an electronically- these different operating regimes our expectations. controlled secondary fuel injection including the NTE. The most significant NMHC+NOX Standard. As we system (i.e., a system which injects fuel effect on emission performance is proposed, we are finalizing a 3.5 g/bhp- into the exhaust upstream of a PM related to sulfate PM formation at high hr NMHC+NOX standard for engines in filter). Such a system has been load, high temperature operating the 25–50 hp range for 2013. We commercially used successfully by at conditions. As the RIA details, this level received limited comments arguing that least one nonroad engine manufacturer, of high sulfate formation rate is not high the NMHC+NOX standard should be less and other systems have been tested by enough to preclude compliance with the stringent. Like the PM standard, some 58 technology companies. However, we PM emission standard with 15 ppm fuel commenters argued that the NOX recognize that the application of these sulfur on the regulated test cycles nor is standard would be costly and technologies will be challenging and it high enough to preclude compliance complicated, although not necessarily will require additional time to develop. with the NTE provisions. At higher fuel infeasible to apply. Other commenters We therefore disagree with commenters sulfur levels however, compliance with argued that the NOX standard for who say that the standard could be met the PM emission standard would not be engines in this category like the new sooner and have decided to finalize the feasible. standard for larger engines, should be implementation schedule as proposed. The majority of negative comments on based upon the application of advanced As we proposed, we are finalizing a our proposal to set a PM standard based NOX catalyst-based technologies. As slightly higher PM standard (0.02 g/bhp- on the control possible from PM filter described previously in section II.A, we hr rather than 0.01) for engines in this technologies focused on the economic do not believe that the catalyst-based power category. As discussed in the and technical challenges to apply these NOX technologies have matured to a preamble to the proposed rule and in technologies and the major engine state were we can accurately define a some detail in the RIA, with the use of technology enabler, electronic fuel feasible technical path for compliance a CDPF, the PM emissions emitted by systems, to smaller diesel engines. Some for engines in this power category. We the filter are primarily derived from the commenters acknowledged that the intend to revisit this question in our fuel sulfur (68 FR 28389–28390, May 23, technologies were ‘‘technically feasible’’ technology review and if we find that a 2003). The smaller power category but not economically feasible or viable technical path can be described engines tend to have higher fuel practical for engines in this power we will consider the appropriateness of consumption per unit of work than category. While we acknowledge that a more stringent catalyst-based larger engines. This occurs for a number the application of these technologies to standard. of reasons. First, the lower power diesel engines in this horsepower The new standard aligns the categories include a high fraction of IDI category will be challenging and have NMHC+NOX standard for engines in engines which by their nature consume given consideration to this in setting the this power range with the Tier 3 approximately 15 percent more fuel timing for the new standard, we believe standard for engines in the 50–75 hp than a DI engine. Second, as engine that the technical path for compliance is range which are implemented in 2008. displacements get smaller, the engine’s clear and that the cost estimates we EPA’s recent Staff Technical paper combustion chamber surface-to-volume have made for these engines accurately which reviewed the technological represent this technical path. As feasibility of the Tier 3 standards 58 ‘‘The Optimized Deutz Service Diesel discussed in the RIA, at the time of the contains a detailed discussion of a Particulate Filter System II,’’ H. Houben et. al., SAE proposal we projected no significant number of technologies which are Technical Paper 942264, 1994 and ‘‘Development of a Full-Flow Burner DPF System for Heavy Duty penetration of electronic fuel systems capable of achieving a 3.5 g/bhp-hr Diesel Engines,’’ P. Zelenka et. al., SAE Technical for engines in the 50–100 hp range prior standard. These include cooled EGR, Paper 2002–01–2787, 2002. to the Tier 3 standards (2008). Since the uncooled EGR, as well as advanced in-

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cylinder technologies relying on 5. Are the Standards for Engines Under engine families are at or below the PM electronic fuel systems and 25 hp Feasible? standard today, while meeting the 2008 59 turbocharging. These technologies are As we explained at proposal and as NMHC+NOX standard. At the time of capable of reducing NOX emissions by discussed in section II.A, the new PM the proposal, we examined the model as much as 50 percent. Given the Tier standard for engines less than 25 hp is year 2002 certification, which indicated 2 NMHC+NO standard of 5.6 g/bhp-hr, approximately 30 percent of the engine X 0.30 g/bhp-hr beginning in 2008. The a 50 percent reduction would allow a families were at or below the 2008 certification test cycle for this standard Tier 2 engine to comply with the 3.5 g/ emission standards. This certification is the ISO C1 cycle (or other appropriate bhp-hr NMHC+NO standard set in this data includes both IDI and DI engines, X steady-state test as defined by the action. Therefore, we are projecting that as well as a range of certification test engine’s intended use) from 2008 3.5 g/bhp-hr NO +NMHC standard is cycles.61 Many of the engine families are X through 2012. Beginning in 2013, the feasible with the addition of cooled EGR certified well below the Tier 4 standard NRTC (with cold-start) and the NTE will (the basis for our cost analysis) or other while meeting the 2008 NMHC+NOX also apply to engines in this category. equally effective in-cylinder NO level. Specifically, for the model year X As discussed below, we are not setting control technology as described in the 2002 data, 15 percent of the engine a new standard more stringent than the RIA and our recent Staff Technical families are cleaner than the new Tier existing Tier 2 NMHC+NO standard for Paper. In addition, because this X 4 PM standard by more than 20 percent. this power category at this time. This NMHC+NO standard is concurrent The public certification data indicate X section describes what makes the less with the 0.02 g/bhp-hr PM standards that these engines do not use than 25 hp category different and why which we project will be achievable turbocharging, electronic fuel systems, the standards are technologically with the use of particulate filters, engine exhaust gas recirculation, or feasible. designers will have significant aftertreatment technologies. We saw additional flexibility in reducing NOX a. What Makes the Under 25 hp little change between the model year because the PM filter will lessen the Category Unique? 2002 and 2004 data for this power category primarily because both model traditional concerns with the engine-out As we explained at proposal and in years are subject to the Tier 1 standards, NOX vs. PM trade-off. the RIA, nonroad engines less than 25 Our recent highway 2004 standard and many engine families are simply hp are the least sophisticated nonroad review rulemaking (see 65 FR 59896, carried over from the previous model diesel engines from a technological October 2000) demonstrated that a year. Tier 2 standards for these engines perspective. All of the engines currently diesel engine with advanced electronic will not be implemented until model sold in this power category lack fuel injection technology as well as NO year 2005. A detailed discussion of X electronic fuel systems and control technology such as cooled EGR these data is contained in the RIA. turbochargers. Nearly 20 percent of the is capable of complying with an NTE In summary then, there are two likely products have two-cylinders or less, and standard set at 1.25 times the laboratory- means by which companies can comply 14 percent of the engines sold in this based FTP standard. We project that the with the 2008 PM standard for engines category are single-cylinder products, a same technology (electronic fuel under 25 hp. First, engine number of these have no batteries and systems and cooled EGR) are also manufacturers can comply with this are crank-start machines, much like capable for engine in the 25–75 hp range standard using known engine-out today’s simple walk behind lawnmower of complying with the NTE standard of techniques (e.g., optimizing combustion engines. In addition, given what we 4.4 g/bhp-hr NMHC+NO (1.25 × 3.5) in chamber designs, fuel-injection X know today and taking into account the 2013. This is based on the broad NO strategies). In fact, some fraction of X Tier 2 standards which have not yet reduction capability of cooled EGR engines already would comply with the been implemented, we are not technology, which is capable of emission standard. In addition, some projecting any significant penetration of reducing NO emissions across the engine manufacturers may choose to use X advanced engine technology, such as engine operating map (including the diesel oxidation catalysts to meet this electronically controlled fuel systems, NTE region) by at least 30 percent even standard. Our cost analysis makes the into this category in the next 5 to 10 under high load conditions.60 conservative assumption (i.e., the higher years. Based on the information available to cost assumption) that all manufacturers EPA and presented here, and giving b. What Data Indicate That the will use DOCs to comply with these appropriate consideration to the lead Standards Are Feasible? emission standards. As discussed in section II.A, we are time necessary to apply the technology We project the Tier 4 PM standard can as well, we have concluded the 0.02 g/ finalizing supplemental test procedures be met by 2008 based on: The existence and standards (nonroad transient test bhp-hr PM standard for engines in the of a large number of engine families 25–75 hp category and the 3.5 g/bhp-hr cycle and not-to-exceed requirements) which meet the new standards today; for engines in the under 25 hp category NMHC+NOX standards for the 25–50 hp the use of engine-out reduction engines are achievable. beginning in 2013. The supplemental techniques; and the use of diesel test procedures and standards will oxidation catalysts. apply not only to PM, but also to 59 See section 2.2 through 2.3 in ‘‘Nonroad Diesel Emission Standards—Staff Technical Paper,’’ EPA Engines in the less than 25 hp NMHC+NOX. The engine technologies Publication EPA420–R–01–052, October 2001. Copy category must meet Tier 1 NMHC+NOX necessary to comply with the available in EPA Air Docket A–2001–28. and PM standards today. We have supplemental test procedures and 60 See section 8 of ‘‘Control of Emissions of Air examined the 2004 model year engine standards are the same as the Pollution from 2004 and Later Model Year Heavy- Duty Highway Engines and Vehicles: Response to certification data for nonroad diesel technology necessary to comply with Comments,’’ EPA document EPA420–R–00–011, engines less than 25 hp. These data the 2008 standard, and we have given July 2000, and chapter 3 of ‘‘Regulatory Impact indicate that a number of engine Analysis: Control of Emissions of Air Pollution families meet the new Tier 4 PM 61 The Tier 1 and Tier 2 standards for this power from Highway Heavy-duty Engines,’’ EPA standard (and the 2008 NMHC+NO category must be demonstrated on one of a variety document EPA420–R–00–010, July 2000. Copies of X of different engine test cycles. The appropriate test both documents available in EPA docket A–2001– standard, unchanged from Tier 2) today. cycle is selected by the engine manufacturer based 28. The data show that 31 percent of the on the intended in-use application(s) of the engine.

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consideration to these test conditions in will be required for heavy-duty diesel C. Why Do We Need 15 ppm Sulfur setting this standard. The range of trucks in the United States beginning in Diesel Fuel? operating conditions covered by the 2007. The new Tier 4 emission standards for various test cycles and the mechanism We anticipate that the diesel engine most categories of nonroad diesel for emission control over those ranges of manufacturers will be able to control engines are predicated on the operation are substantially similar crankcase emissions through the use of application of advanced diesel emission allowing us to conclude that emission control technologies that are being control will be substantially uniform closed crankcase filtration systems or by routing unfiltered blow-by gases directly developed for on-highway diesel across these test procedures. However, engines to meet the HD2007 emission we are delaying the implementation of into the exhaust system upstream of the emission control equipment. However, standards, namely catalyzed diesel the supplemental test procedures and particulate filters and NO adsorber standards until 2013, as proposed, in the provisions have been written such X that if adequate control can be had catalysts. Sulfur in diesel fuel order to implement these supplemental significantly impacts the durability, requirements on the larger powered without ‘‘closing’’ the crankcase then efficiency and cost of applying these nonroad engines before the smallest the crankcase can remain ‘‘open.’’ technologies. Therefore, we required power category. (There were no adverse Compliance would be ensured by that on-highway diesel fuel produced comments on this aspect of the adding the emissions from the crankcase for use in 2007 or newer on-highway proposed rule.) This will also provide ventilation system to the emissions from diesel engines have sulfur content no engine manufacturers with additional the engine control system downstream higher than 15 ppm. Based on the same time to install any emission testing of any emission control equipment. We concerns outlined in the 2007 equipment upgrades they may need in have limited this provision for rulemaking, discussed in the proposal at order to implement the new nonroad controlling emissions from open 68 FR 28395–28400, set out in the RIA, transient test cycle. crankcases to turbocharged engines, Based on the existence of a number of and briefly summarized below, we which is the same as for heavy-duty engine families which already comply today are finalizing a requirement that highway diesel engines. with the new Tier 4 PM standard (and diesel fuel for nonroad engines be reduced to no higher than 15 ppm the 2008 NMHC+NOX standard), and Some commenters in essence argued the availability of PM reduction that the Agency was obligated to show beginning in 2010. There was consensus technologies such as improved that all potential compliance paths were among commenters that such standards mechanical fuel systems, combustion feasible and absent that showing that were necessary if the proposed chamber improvements, and in the Agency should reconsider this standards based on advanced diesel particular diesel oxidation catalysts, we provision. Our feasibility analysis is emission control technologies were to project that the 0.30 g/bhp-hr PM based on the use of closed crankcase be achievable. Sulfur in diesel fuel acts to poison the standards is technologically feasible by technologies designed to filter crankcase model year 2008. oxidation function of platinum-based gases sending the clean gas to the engine catalysts including DOCs and CDPFs 6. Meeting the Crankcase Emissions intake for combustion and returning the reducing the oxidation efficiency Requirements oil filtered from the gases to the engine substantially, especially at lower The most common way to eliminate crankcase. These systems are proven in temperatures. This poisoning limits the crankcase emissions has been to vent use and the use of this technology to effectiveness of DOCs and CDPFs to the blow-by gases into the engine air eliminate crankcase emissions is oxidize CO and HC emissions. Of even intake system, so that the gases can be acceptable to demonstrate compliance. greater concern is the reduction in NO recombusted. Prior to the HD2007 The other options, the option to vent oxidation efficiency of the CDPF due to rulemaking, we have required that crankcase emissions into the exhaust or sulfur poisoning. NO oxidation to NO2 crankcase emissions be controlled only to continue to vent crankcase emissions is a fundamental mechanism for PM on naturally aspirated diesel engines. to the atmosphere provided the total filter regeneration necessary to ensure We had made an exception for emissions including tailpipe and robust operation of the CDPF (i.e., to turbocharged diesel engines (both crankcase emissions do not exceed the prevent filter plugging). Sulfur highway and nonroad) because of standards are provided as alternate poisoning from sulfur in diesel fuel at concerns in the past about fouling that solutions that are clearly effective to levels higher than 15 ppm has been could occur by routing the diesel control emissions (i.e., if the emissions shown to increase the likelihood of PM particulates (including engine oil) into are measured and are below the filter failure due to a depressed NO to the turbocharger and aftercooler. standard they are adequately NO2 oxidation efficiency of the CDPF. However, this is an environmentally controlled). The commenter suggests The RIA documents substantial field significant exception since most however, that they may not be able to experience in Europe regarding this nonroad equipment over 75 hp use control the emissions to the required phenomenon. Sulfur in diesel fuel can itself be turbocharged engines, and a single level using these alternate approaches. oxidized to form sulfate PM emitted into engine can emit over 100 pounds of In this case, a manufacturer would need NO , NMHC, and PM from the the environment. CDPFs in particular X to use the primary approach identified crankcase over its lifetime. are designed for robust regeneration and Given the available means to control by EPA, closing the crankcase and are highly effective at oxidizing sulfur to crankcase emissions, we eliminated this routing the filtered gases to the engine’s sulfate PM (approaching 100 percent exception for highway engines in 2007 intake (this is the approach we used in conversion under some circumstances). and similarly in today’s action are the cost analysis summarized in section The sulfate PM emissions from a CDPF eliminating the exception for nonroad VI). We have allowed the alternative when operated on 350 ppm fuel can be diesel engines as well. A number of approaches at the recommendation of so high as to actually increase the PM commenters supported this provision some in industry, because if they prove emission rate above the baseline level noting that the necessary technologies to be effective we accept that resulting for an engine without a PM filter. In are already in application in Europe and total emissions will be acceptably low. spite of more than ten years of research,

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no effective means has been found to of higher fuel sulfur levels on fuel through 89.212). With today’s action we provide the NO to NO2 oxidation economy due to more frequent are retaining the basic structure of the efficiency needed to ensure robust filter desulfation events can be found in the existing nonroad diesel ABT program, regeneration without similarly RIA. though we are adopting a number of increasing efficiency to oxidize sulfur to For all of the reasons documented in changes to accommodate sulfate PM. Conversely, technologies the RIA and summarized here, we implementation of the newly adopted developed to suppress sulfate PM remain convinced that a cap of 15 ppm Tier 4 emission standards. The ABT formation (e.g., the addition of fuel sulfur is necessary for both on- program is intended to enhance the vanadium to DOCs designed to operate highway and nonroad diesel engines in ability of engine manufacturers to meet on 500 ppm sulfur fuel) also suppress order to apply the advanced emission the stringent standards adopted today. NO to NO formation. Therefore, it is 2 control technologies necessary to meet The program is also structured to limit not possible to apply the robust CDPF the emission standards we are finalizing production of very high-emitting technology to achieve the PM standards today. without first having lower diesel fuel engines and to avoid unnecessary delay sulfur levels. The RIA documents III. Requirements for Engine and of the transition to the new exhaust substantial test data showing the impact Equipment Manufacturers emission control technologies. of sulfur in diesel fuel on total PM This section describes the regulatory We view the ABT program as an emissions due to an increase in sulfate changes being made for the engine and important element in setting emission PM emissions. equipment compliance program. A standards that are appropriate under Sulfur from diesel fuel likewise number of specific items are discussed CAA section 213(a) with regard to poisons the storage function of the NOX in this section, including test technological feasibility, lead time, and adsorber catalyst. Sulfur in the exhaust procedures, certification fuels, and cost, given the wide breadth and variety in the form of SOX is stored on the credit program provisions. These of engines covered by the standards. As catalyst in the same way as the NO X provisions are important in that they we noted at proposal, if there are engine emissions are stored. Unfortunately, due help us ensure the engines and families that will be particularly costly to the chemical properties of the equipment will meet the new materials, the sulfur is stored or have a particularly hard time coming requirements throughout their entire into compliance with the standard, this preferentially to the NOX and will useful life, thus achieving the expected flexibility allows the manufacturer to actually displace the stored NOX emission and public health benefits. adjust the compliance schedule emissions. The stored sulfur is not One of the most obvious changes from easily removed from the catalyst. A the Tier 2/Tier 3 program is that the accordingly, without special delays or sulfur removal step, called a regulations for Tier 4 engines have been exceptions having to be written into the desulfation, can be accomplished by written in a plain language format. They rule. Emission-credit programs also raising exhaust temperatures to a very are structured to contain the provisions create an incentive for the early high level while simultaneously that are specific to nonroad compression introduction of new technology (for increasing the reductant content of the ignition (CI) engines in a new part 1039, example, to generate credits in early exhaust above the stoichiometric level and to apply the general provisions of years to create compliance flexibility for (i.e., more fuel than oxygen in the existing parts 1065 and 1068. The plain later engines), which allows certain exhaust). This process can be effective language regulations, however, are not engine families to act as trailblazers for to remove sulfur from the catalyst but at intended to significantly change the new technology. This can help provide the expense of damaging the catalyst compliance program, except as valuable information to manufacturers slightly. Over the lifetime of a diesel specifically noted in today’s notice and on the technology before they apply the engine the cumulative damage from supporting documents. These plain technology throughout their product repeated desulfation events, as would be language regulations will only apply for line. This early introduction of clean required if operation on higher than 15 Tier 4 engines. The changes from the technology improves the feasibility of ppm sulfur fuels were attempted, would existing nonroad program are described achieving the standards and can provide lead to excessive damage and loss in below along with other notable aspects valuable information for use in other NOX control. The RIA contains an of the compliance program. extensive description of this phenomena regulatory programs that may benefit As described below, we received from similar technologies. Early including the tradeoff between higher comments from a broad range of fuel sulfur levels and more frequent introduction of such engines also commenters for some of these issues. secures earlier emission benefits. desulfation events. For other issues, we received only The damage that sulfur inflicts on manufacturer comments or no In an effort to make information on both the CDPF and NO adsorber X comments at all. See Chapter 9 of the the ABT program more available to the technologies not only reduces their Summary and Analysis of Comments for public, we intend to issue an annual effectiveness but also impacts the fuel more information about the comments report summarizing use of the ABT economy of their application. Reduced received and our responses to them. program by engine manufacturers. The soot regeneration potential due to sulfur information contained in the reports poisoning would lead to the need for A. Averaging, Banking, and Trading will be based on the information more frequent active CDPF regeneration. submitted to us by engine As each active soot regeneration event 1. Why Are We Adopting an ABT consumes fuel, more frequent Program for Tier 4 Nonroad Diesel manufacturers in their annual reports, regeneration events with higher fuel Engines? and summarized in a way that protects sulfur levels leads to an increase in fuel EPA has included averaging, banking, the confidentiality of individual engine consumption. Similarly, higher fuel and trading (ABT) programs in almost manufacturers. We believe this sulfur levels would necessitate more all of its recent mobile source emission information will also be helpful to frequent NOX adsorber desulfation control programs. Our existing engine manufacturers by giving them a events and thus higher fuel regulations for nonroad diesel engines better indication of the availability of consumption. An estimate of the impact include an ABT program (40 CFR 89.201 credits.

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2. What Are the Provisions of the ABT The existing ABT program for and appropriate. Thus, as proposed, to Program? nonroad diesel engines covers ensure that the ABT provisions are not The following section describes the NMHC+NOX emissions as well as PM used to continue unnecessarily to ABT provisions being adopted with emissions. With today’s action and as produce old-technology high-emitting today’s action. Areas in which we have proposed, we are making the ABT engines under the new program, the FEL made changes to the proposed ABT program available for the Tier 4 NOX caps are not, in general, set at the program are highlighted. A complete standards (and NMHC+NOX standards, previous standards. Exceptions have summary of comments received on the where applicable) and the Tier 4 PM been made for the NMHC+NOX standard proposed ABT program and our standards. As proposed, ABT will not be for engines between 25 and 50 response to those comments are available for the Tier 4 NMHC standards horsepower effective in model year 2013 contained in the Summary and Analysis for engines above 75 horsepower. and the NOX standards applicable to Engine manufacturers commented of Comments document for this rule. engines above 750 horsepower in 2011, that ABT will most likely be necessary The ABT program has three main where we are using the estimated NOX- for the Tier 4 CO standards, given the components. Averaging means the only equivalent for the previously reductions in PM and NO emissions. In exchange of emission credits between X applicable NMHC+NOX standard for the the Tier 4 proposal, we proposed minor engine families within a given engine FEL cap since the gap between the changes in CO standards for some manufacturer’s product line. Engine previous and newly adopted standards engines solely for the purpose of manufacturers divide their product line is approximately 40 percent (rather than helping to consolidate power categories into ‘‘engine families’’ that are 90 percent for engines between 75 and and improving administrative comprised of engines expected to have 750 horsepower), and because the efficiency. However, as noted earlier in similar emission characteristics technology basis for these standards can section II.A.6, we have withdrawn this throughout their useful life. Averaging be a form of engine-out control, like the aspect of the proposal. We do note, allows a manufacturer to certify one or previous tier standards. This approach however, that we are applying new of setting FEL caps at lower levels than more engine families at levels above the certification tests to all pollutants applicable emission standard, but below the previously applicable standards is covered by the rule, the result being that consistent with the level of the FEL a set upper limit. However, the Tier 4 engines will have to certify to CO increased emissions must be offset by limits set in the 2007 on-highway standards measured by the transient test heavy-duty diesel engine program. one or more engine families within that (including a cold start component), and manufacturer’s product line that are the NTE. However, as shown in RIA STAPPA/ALAPCO supported the certified below the same emission chapter 4.1.1.2 (see e.g., note F), we proposed FEL caps. The Engine standard, such that the average believe that application of Tier 4 Manufacturers Association (EMA) emissions from all the manufacturer’s technologies will lead to a reduction in commented that EPA should eliminate engine families, weighted by engine CO emissions over the Tier 3 baseline. the FEL caps altogether. They believe power, regulatory useful life, and We thus believe the CO standards will FEL caps are unnecessary because the production volume, are at or below the be readily achievable under the zero-sum requirement of ABT will level of the emission standard. (The transient test and NTE. Moreover, we ensure that there are no adverse inclusion of engine power, useful life, believe that there will not be any emission impacts. Short of eliminating and production volume in the averaging associated costs: The CO standards can the FEL caps, they commented that EPA calculations is designed to reflect be met without any further should set FEL caps at the level of the differences in the in-use emissions from technological improvements (i.e., previous standards, not the more the engines.) Averaging results are improvements other than those already stringent levels proposed. With today’s calculated for each specific model year. necessary to meet the Tier 4 standards) action, EPA is adopting the FEL caps as The mechanism by which this is and these tests will already be used for proposed, with some exceptions for accomplished is certification of the certification. Since CO standards engines above 750 horsepower (where engine family to a ‘‘family emission measured by the new certification tests we are adopting different standards than limit’’ (FEL) set by the manufacturer, are achievable without cost, there is no originally proposed) and for phase-in which may be above or below the basis for allowing ABT because no engines between 75 and 750 horsepower standard. An FEL that is established additional lead time is needed. (where we have adopted an option for above the standard may not exceed an As noted earlier, the existing ABT manufacturers to certify to alternative upper limit specified in the ABT program for nonroad diesel engines NOX standards during the phase-in regulations. Once an engine family is includes FEL caps—limits on how high period). We continue to believe that it certified to an FEL, that FEL becomes the emissions from credit-using engine is important to ensure that technology the enforceable emissions limit for all families can be. No engine family may turns over in a timely manner and that the engines in that family for purposes be certified above these FEL caps. These manufacturers do not continue of compliance testing. Averaging is limits provide manufacturers with producing large numbers of high- allowed only between engine families in compliance flexibility while protecting emitting, old technology engines once the same averaging set, as defined in the against the introduction of the Tier 4 standards become fully regulations. unnecessarily high-emitting engines. In effective. (As noted below, however, we Banking means the retention of the past, we have generally set the FEL are adopting provisions that allow emission credits by the engine caps at the emission levels allowed by manufacturers to produce a limited manufacturer for use in future model the previous standard, unless there was number of 75 to 750 horsepower engines year averaging or trading. Trading some specific reason to do otherwise. for a limited period that are certified means the exchange of emission credits With today’s action, we are taking a with FELs as high as the previous tier between nonroad diesel engine different approach because the level of of standards.) For the Tier 4 standards, manufacturers which can then be used the standards being adopted for most where the standards are being reduced for averaging purposes, banked for engines are significantly lower than the by an order of magnitude, we believe future use, or traded to another engine current level of the standards. The this goal to be particularly important, manufacturer. transfer to new technology is feasible and in keeping with the technology-

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forcing provisions of section 213(a). It previously applicable Tier 2 PM 2011 NOX and PM standards are simply would not be appropriate to standards for the FEL caps (which do approximately 50 percent lower than have long-term FEL caps that allowed vary within the 25 to 75 horsepower the previous standard (rather than in engines to indefinitely have emissions category) because the gap between the excess of 90 percent for engines between as high as ten times the level of the previous standards and the newly 75 and 750 horsepower), and for most standard. adopted standards is approximately 50 engines are based on performance of the For engines between 75 and 750 percent (rather than in excess of 90 same type of technology (engine-out), horsepower certified using the phase-in/ percent for engines between 75 and 750 we are adopting the previously phase-out approach, there will be two horsepower), and the technology basis applicable Tier 2 standards for the FEL separate sets of engines with different for the 2008 PM standards can be a form caps. FEL caps. For engines certified to the of engine-out control, like the previous Beginning in model year 2015, the existing (Tier 3) NMHC+NOX standards tier standard. For the Tier 4 PM 0.50 g/bhp-hr NOX standard will apply during the NOX phase-in (referred to standard effective in model year 2013 to all engines above 750 horsepower generally as ‘‘phase-out’’ engines), the for engines between 25 and 75 used in generator sets. Beginning in FEL cap for these pollutants will (almost horsepower, we are adopting a PM FEL model year 2015, the PM standard drops necessarily) be the existing FEL caps cap of 0.04 g/bhp-hr, and for the Tier 4 to 0.02 g/bhp-hr for engines greater than adopted in the October 1998 Tier 3 rule. PM standard effective in model years 750 horsepower used in generator sets For engines certified to the newly 2011 and 2012 for engines between 75 and 0.03 g/bhp-hr for engines greater adopted Tier 4 NO standard during the and 750 horsepower, we are adopting a X than 750 horsepower used in other phase-in (referred to generally as PM FEL cap of 0.03 g/bhp-hr. As with machines. Consistent with the Tier 4 ‘‘phase-in’’ engines), we have revised the Tier 4 NOX standards for these FEL caps for lower horsepower the proposed FEL cap to be 0.60 g/bhp- engines, given the fact that these Tier 4 categories where the new standards are hr, consistent with the proposed long- aftertreatment-based PM standards for significantly lower than the previously term Tier 4 NO FEL cap. As described engines between 25 and 750 horsepower X applicable standards and reflect in section II.A.2.c above, we have used are over 90 per cent more stringent than performance of aftertreatment the creation of alternative NO the previous standards, we do not X technology, we are adopting a NO FEL standards for engines between 75 and believe the previous standards are X cap of 0.80 g/bhp-hr for engines used in 750 horsepower to restate the phase-in/ appropriate as FEL caps once the Tier 4 generator sets and PM FEL caps of 0.04 phase-out concept as a path truly standards take effect. We believe that g/bhp-hr for engines used in generator focused on achieving high-efficiency the newly adopted PM FEL caps will sets and 0.05 g/bhp-hr for engines used NO aftertreatment during the phase-in ensure that manufacturers adopt PM X in other machines (i.e., mobile years. Setting the NO FEL cap at 0.60 aftertreatment technology across all of X machines). We believe that the FEL caps g/bhp-hr for phase-in engines will their engine designs (except for a for engines above 750 horsepower will ensure this happens if a manufacturer limited number of engines), yet will still ensure that manufacturers adopt PM chooses to certify to the phase-in provide substantial flexibility in aftertreament technology across all of provisions. In contrast, the higher FEL meeting the standards. their engine designs and NO caps which we proposed (see 68 FR The final Tier 4 standards for engines X aftertreatment for generator sets once 28467–28468) would not have achieved above 750 horsepower have been the 2015 standards are adopted, while this objective. revised from the proposal. We similarly Beginning in model year 2014 when revised a number of the proposed ABT allowing for some meaningful use of averaging beginning in 2015. the Tier 4 NOX standards for engines provisions for engines above 750 between 75 and 750 horsepower take horsepower. Beginning in 2011, all Table III.A–1 contains the FEL caps full effect, we are adopting a NOX FEL engines above 750 horsepower will be and the effective model year for the FEL cap of 0.60 g/bhp-hr for all engines. We required to meet a NOX standard of 2.6 caps (along with the associated reiterate that given the fact that the Tier g/bhp-hr, except for those above 1200 standards adopted for Tier 4). It should 4 NOX standard is approximately a 90 horsepower used in generator sets be noted that for Tier 4, where we are percent reduction from the existing which will be required to meet a NOX adopting a new transient test for most standards for engines between 75 and standard of 0.50 g/bhp-hr. The NOX FEL engines, as well as retaining the current 750 horsepower, we do not believe the cap for the 2011 standards will be 4.6 steady-state test, the FEL established by previous standard is appropriate as the g/bhp-hr, which is an estimate of the the engine manufacturer will be used as FEL cap for engines having to comply NOX emissions level that is expected the enforceable limit for the purpose of with the Tier 4 NOX standard of 0.30 g/ under the combined NMHC+NOX compliance testing under both test bhp-hr. We believe that the NOX FEL standards that apply with the previously cycles. In addition, under the NTE caps will ensure that manufacturers applicable tier for engines above 750 requirements, the FEL times the adopt NOX aftertreatment technology horsepower. Beginning in 2011, all appropriate multiplier will be used as across all of their engine designs. engines above 750 horsepower will have the enforceable limit for the purpose of For the interim PM standards for to meet a PM standard of 0.075 g/bhp- such compliance testing. This is engines between 25 and 75 horsepower hr. The PM FEL cap for the 2011 PM consistent with how FELs are used for effective in model year 2008 and for the standard will be the previously- compliance purposes in the 2007 on- Tier 4 PM standards for engines below applicable Tier 2 standard of 0.15 g/ highway heavy-duty diesel engine 25 horsepower, we are adopting the bhp-hr. As noted above, because the program.

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TABLE III.A–1.—FEL CAPS FOR THE TIER 4 STANDARDS IN THE ABT PROGRAM (G/BHP-HR)

PM NOX stand- PM Power category Effective model year NOX FEL cap FEL ard standard cap

hp <25 (kW <19) ...... 2008+ ...... a 5.6 7.8 a for <11hp ...... c 0.30 0.60 7.1 a for >11hp 25 ≤ hp < 50 (19 ≤ kW <37) ...... 2008–2012 ...... a 5.6 7.1 a ...... 0.22 0.45 25 ≤ hp < 50 (19 ≤ kW <37) ...... 2013+ ...... b3.5 5.6 b ...... 0.02 f 0.04 50 ≤ hp < 75 (37 ≤ kW <56) ...... 2008–2012 d ...... a 3.5 5.6 a ...... 0.22 0.30 50 ≤ hp < 75 (37 ≤ kW <56) ...... 2013+ e ...... a 3.5 5.6 a ...... 0.02 f 0.04 75 ≤ hp < 175 (56 ≤ kW <130) ...... 2012+ ...... 0.30 0.60 fgh ...... 0.01 f 0.03 175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ...... 2011+ ...... 0.30 0.60 fgh ...... 0.01 f 0.03 hp > 750 (kW >560) ...... 2011–2014 ...... 2.6 4.6 ...... 0.075 0.15 i 0.50 4.6 Generator Sets hp > 750 (kW >560) ...... 2015+ ...... 0.50 0.80 f ...... 0.02 f 0.04 Other Machines hp > 750 (kW >560) ...... 2015+ ...... j 2.6 4.6 j ...... 0.03 f 0.05 Notes: a These are the previous tier NMHC+NOX standards and FEL caps. These levels are not being revised with today’s rule and are printed here solely for readers’ convenience. b These are a combined NMHC+NOX standard and FEL cap. c A manufacturer may delay implementation until 2010 and then comply with a PM standard of 0.45 g/bhp-hr for air-cooled, hand-startable, di- rect injection engines under 11 horsepower. d These FEL caps do not apply if the manufacturer opts out of the 2008 standards. In such cases, the existing Tier 3 standards and FEL caps continue to apply. e The FEL caps apply in model year 2012 if the manufacturer opts out of the 2008 standards. f As described in this section, a small number of engines are allowed to exceed these FEL caps. g For engines certified as phase-out engines, the NMHC+NOX FEL caps for the Tier 3 standards apply. h For engines certified to the alternative NOX standards during the phase-in, the NOX FEL caps shown in tables III.A–3 and III.A–4 apply. i The 0.50 g/bhp-hr NOX standard applies only to engines above 1200 horsepower used in generator sets. j The 2011 NOX standard and FEL cap continue to apply unless and until revised by EPA in a future action.

As noted above, we are allowing a tell if the proposed amounts provided on these engines because we expect limited number of engines to have a enough flexibility. these engines would be carried over higher FEL than the caps noted in Table In an effort to provide flexibility to directly from the previous tier without III.A–1 in certain instances. The FEL engine manufacturers while preserving any modification. (NTE testing would cap for such engines would be set based the effective number of engines allowed apply to engines above 750 horsepower on the level of the standards that to certify at levels up to the higher FEL because the previously applicable set of applied in the year prior to the new caps, we are revising the proposed standards required NTE testing.) standards and will allow manufacturers provisions with today’s action. The Similarly, for engines between 75 and to produce a limited number of engines revised provisions are intended to allow 750 horsepower, manufacturers would certified to these earlier standards in the manufacturers to produce the same not be required to have closed crankcase Tier 4 timeframe. The allowance to number of engines certified to the controls on these engines because we certify up to these higher FEL caps will higher FEL caps as would have been also expect that these engines would be apply to Tier 4 engines between 25 and allowed under the proposal, but provide carried over directly from the previous 750 horsepower beginning as early as added flexibility in how they distribute tier without any modification. (Engines the 2011 model year, and will apply to the allowances over the first four years between 25 and 75 horsepower, and engines above 750 horsepower starting of the transition to the new standards. engines above 750 horsepower, would with the 2015 model year. The This additional lead time appears be required to have closed crankcase provisions are intended to provide some appropriate, given the potential that a controls because the previously limited flexibility for engine limited set of nonroad engines may face applicable set of standards require manufacturers as they make the especially challenging compliance closed crankcase controls.) transition to the aftertreatment-based difficulties. Under the provisions For the purpose of calculating the Tier 4 standards while ensuring that the adopted today and subject to the number of credits such engines would vast majority of engines are converted to limitations explained below, a use, the manufacturer would include an the advanced low-emission technologies manufacturer would be allowed to adjustment to the FEL to be used in the expected under the Tier 4 program. certify up to 40 percent of its engines credit calculation equation. The Under the proposal, manufacturers above the FEL caps shown in Table adjustment would be included by would have been allowed to certify at III.A–1 over the first four years the multiplying the steady-state FEL by a levels up to these FEL caps for ten aftertreatment-based Tier 4 standards Temporary Compliance Adjustment percent of its engines in each of the first take effect (calculated as a cumulative Factor (TCAF) of 1.5 for PM and 1.1 for four years after the Tier 4 standards took total of the percent of engines exceeding NOX. (The NOX TCAF would not apply effect and then five percent for these FEL caps in each year over the to engines that are not subject to the subsequent years. The California Air four years), with a maximum of 20 transient testing requirements for NOX Resources Board supported the percent allowed in any given year as discussed in section III.F.) We are proposed allowance. The Engine (provided the FELs for these engines do adopting TCAFs in part to assure in-use Manufacturers Association commented not exceed levels specified below). control of emission from these engines that the percentages of engines allowed During this four year period, in the absence of transient and NTE to the higher FEL caps may not be manufacturers would not be required to testing, and also to assure that any sufficient, noting that it is too early to perform transient testing or NTE testing credits these engines use reflect the

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level of reductions expected in use. The engines during the phase-in years. We For engines above 750 horsepower, level of the TCAFs are based on data originally proposed that the allowance the allowance to certify a limited from pre-control, Tier 1, and Tier 2 to use a higher FEL cap would apply to number of engines at levels up to the engines which show that the emissions PM from either phase-in or phase-out higher FEL caps would apply beginning from such engines tested over transient engines during the phase-in years. On in model year 2015. (As noted, this is test cycles which are more reflection, this is inconsistent with our because the FEL caps being adopted for representative of real in-use operation policy that phase-in engines truly have the 2011 standards for engines above are higher than emissions from those low emissions reflecting use of 750 horsepower are the previous tier PM engines tested over the steady-state aftertreatment (see also the discussion standard and the NOX-only equivalent certification test cycle. This is a sales above where we explain that, for the of the previous tier standard.) For NOX, weighted version of the Transient same reason, we are adopting a NOX the allowance to certify a limited Adjustment Factor used in the FEL cap of 0.60 g/bhp-hr for phase-in number of engines above the FEL cap NONROAD model. For compliance engines). We consequently are revising beginning in model year 2015 will apply purposes, a manufacturer would be held the proposed allowance so that it is only to engines used in generator sets. accountable to the unadjusted steady- available for PM emissions only from Engines used in other machines are still state FEL established for the engine phase-out engines. As proposed, the subject to the model year 2011 NOX family. allowance to use a higher FEL cap for standard and FEL caps. For PM, the As proposed, after the fourth year the NOX will apply starting in 2014 when allowance to certify a limited number of Tier 4 standards apply, the allowance to the phase-in period is complete. engines above the FEL caps beginning in certify engines using the higher FEL For the power category between 25 model year 2015 will apply to all caps shown in Table III.A–2 will still be and 75 horsepower, this allowance to engines above 750 horsepower. available but for no more than five certify engines at levels up to the higher Table III.A–2 presents the model percent of the engines a manufacturer FEL caps will apply beginning with the years, percent of engines, and higher produces in each power category in a Tier 4 standards taking effect in the FEL caps that will apply under these given year. When the 5 percent 2013 model year and will apply to PM allowances. As noted above, engines allowance takes effect, these engines only. For manufacturers choosing to opt certified under these higher FEL caps will be considered Tier 4 engines and out of the 2008 model year Tier 4 during the first four years would not be all other requirements for Tier 4 engines standards for engines between 50 and 75 required to perform transient testing or will also apply, including the Tier 4 horsepower and instead comply with NTE testing and engines between 75 and NMHC standard, transient testing, NTE the Tier 4 standards beginning in 2012, 750 horsepower would not be required testing, and closed crankcase controls. the 40% allowance would apply to to have closed crankcase controls on TCAFs thus do not apply when model years 2012 through 2015, and the these engines. However, as also noted calculating the number of credits such 5% allowance would apply to model earlier, beginning in the fifth year, when engines would use. year 2016 and thereafter. The allowance the 5 percent allowance takes effect, In the two power categories where we to use the higher FEL caps is not these engines will be considered Tier 4 are adopting phase-in provisions (i.e., applicable for the 2008 standards or the engines and all other requirements for 75 to 175 horsepower engines and 175 2013 NMHC+NOX standards for these Tier 4 engines will also apply, including to 750 horsepower engines), the engines because the FEL caps for those the Tier 4 NMHC standard, transient allowance to use a higher FEL cap will standards already are set at the level of testing, NTE testing, and closed only apply to PM from phase-out the standard which previously applied. crankcase controls.

TABLE III.A–2.—ALLOWANCE FOR LIMITED USE OF AN FEL CAP HIGHER THAN THE TIER 4 FEL CAPS

Engines al- lowed to Power category Model years have higher NOX FEL cap (g/bhp-hr) PM FEL cap (g/bhp-hr) FELs (%)

25 ≤ hp < 75 ...... 2013–2016 a ...... b 40 Not applicable ...... 0.22 (19 ≤ kW < 56) ...... 2017+ a ...... 5 75 ≤ hp < 175 ...... 2012–2015 ...... b 40 3.3 c for hp <100 ...... 0.30 d for hp <100 (56 ≤ kW <130) ...... 2016+ ...... 5 2.8 c for hp ≥100 ...... 0.22 d for hp ≥100 175 ≤ hp ≤ 750 ...... 2011–2014 ...... b 40 2.8 c ...... 0.15 d (130 ≤ kW ≤ 560) ...... 2015+ ...... 5 >750 hp ...... 2015–2018 ...... bc40 2.6 ...... 0.075 (>560 kW) ...... 2019+ ...... e 5. a For manufacturers choosing to opt out of the 2008 model year Tier 4 standards for engines between 50 and 75 horsepower and instead com- ply with the Tier 4 standards beginning in 2012, the 40% allowance would apply to model years 2012 through 2015, and the 5% allowance would apply to model year 2016 and thereafter. b Compliance with the 40% limit is determined by adding the percent of engines that have FELs above the FEL caps shown in Table III.A.–1 in each of the four years. A manufacturer may not have more than 20% of its engines exceed the FEL caps shown in Table III.A–1 in any model year in any power category. c The allowance to certify to these higher NOX FEL caps is not applicable during the phase-in period. d These higher PM FEL caps are applicable to phase-out engines only during the phase-in period. e The limits of 40% or 5% allowed to exceed the NOX FEL cap would apply to engines used in generator sets only. (Engines >750 hp used in other machines are allowed to have an NOX FEL as high as 4.6 g/bhp-hr.) The limits of 40% or 5% allowed to exceed the PM FEL cap would apply to all engines above 750 hp.

Under the Tier 4 program, there will horsepower engines during the NOX out engines’’), engines will certify to the be two different groups of 75–750 phase-in period. In one group (‘‘phase- applicable Tier 3 NMHC+NOX standard

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and will be subject to the NMHC+NOX manufacturer could garner nearly 0.3 g/ such credits would not expire. We ABT restrictions and allowances bhp-hr of NMHC+NOX credit for each of disagree that adopting a restriction on previously established for Tier 3. In the these engines produced. Allowing these the use of the previous tier ABT credits other group (‘‘phase-in engines’’), NMHC-derived credits to be used is an unconstitutional taking. EPA did engines will certify to the 0.30 g/bhp-hr undiscounted to offset NOX emissions not, and could not, decide in the Tier 2/ NOX standard, and will be subject to the on the phase-in engines in 2011 (for 3 rulemaking that Tier 2/3 credits could restrictions and allowances in this which each 0.1 g/bhp-hr of margin can be used to show compliance with some program. Although engines in each make a huge difference in facilitating future standards that had not yet even group are certified to different the design of engines to meet the 0.30 been adopted. Thus, EPA in this standards, we are (as proposed) g/bhp-hr NOX standard) would be rulemaking is not taking away allowing manufacturers to transfer inappropriate. Therefore, while we are something previously given. We are not credits across these two groups of reducing the value of credits earned revisiting the Tier 2/3 standards but engines with the following adjustment from Tier 2/Tier 3 engines, the establishing a new set of engine to the amount of credits generated. adjustment accounts for the NMHC standards. In doing so, we necessarily Manufacturers will be able to use credits fraction of the credits which we do not must evaluate the provisions of previous generated during the phase-out of believe should be used to demonstrate rules and their potential impact on the engines subject to the Tier 3 compliance with the NOX-only Tier 4 future standards being considered. We NMHC+NOX standard to average with standards (such credits would be are reasonably concerned that credits engines subject to the 0.30 g/bhp-hr ‘‘windfalls’’ because they would from engines certified to relatively high NOX standard, but these credits will be necessarily occur by virtue of the standards could be used to significantly subject to a 20 percent discount, the technology needed to meet the PM delay the implementation of the final adjustment reflecting the NMHC standard) (68 FR 28469, May 23, 2003). Tier 4 program and its benefits, contribution. Thus, each gram of Second, the discounting will work resulting in a situation where the NMHC+NOX credits from the phase-out toward providing a small net standards would no longer reflect the engines will be worth 0.8 grams of NOX environmental benefit from the ABT greatest degree of emission reduction credits in the new ABT program. The program, such that the more available as required under section ability to average credits between the manufacturers use banked and averaged 213(a)(3) of the Clean Air Act, or would two groups of engines will give credits, the greater the potential no longer be appropriate under section manufacturers a greater opportunity to emission reductions overall. Most 213(a)(4) of the Clean Air Act. gain experience with the low-NOX basically, it is inherently reasonable, in Therefore, with today’s action, we are technologies before they are required to using NOX+NMHC reductions to show adopting the proposed provisions meet the final Tier 4 standards across credit with a NOX-only standard, to use regarding the use of credits from their full production. The 20 percent only that portion which represents NOX previous tier engines, with one minor discount will also apply, for the same reductions. (Indeed, for this reason, revision. reason, to all NMHC+NO credits used X terming the 20 per cent a ‘‘discount Under today’s action, manufacturers for averaging purposes with the NO X factor’’ is a misnomer; it apportions the may only use credits generated from standards for engines greater than 75 NMHC fraction of the reduction.) As horsepower. other Tier 4 engines or from engines noted, this is further supported by the certified to the previously applicable The California Air Resources Board fact that the NMHC reductions for supported the proposed discount of 20 tier of standards—except for engines phase-out engines are not extra percent on NMHC+NO credits used for between 50 and 75 horsepower. Because X reductions above and beyond what NO compliance. The Engine we are adopting Tier 4 standards that X would otherwise occur, and therefore Manufacturer’s Association commented take effect as early as 2008 for those don’t warrant eligibility as credits. that we should eliminate the 20 percent engines, the same year the previously- We are adopting one additional adopted Tier 3 standards are scheduled ‘‘discount’’ on NMHC+NOX credits used for NOX compliance. restriction on the use of credits under to take effect (see section II.A.1.a above), We disagree with the Engine the ABT program. For the Tier 4 there is no possibility to earn credits Manufacturer’s Association comments. standards, we proposed that against the Tier 3 standards for As noted in the proposal, we have two manufacturers could only use credits manufacturers that certify with the pull- main reasons for adopting this generated from other Tier 4 engines or ahead standards in 2008 for engines adjustment. First, the discounting from engines certified to the previously between 50 and 75 horsepower. addresses the fact that NMHC applicable tier of standards (i.e., Tier 2 Therefore, we will allow manufacturers reductions can provide substantial for engines below 50 horsepower, Tier to use credits from engines in the Tier NMHC+NOX credits, which are then 3 for engines between 50 and 750 2 power category that includes 50 to 75 treated as though they were NOX horsepower, and Tier 2 engines above horsepower (i.e., the 50 to 100 credits. For example, a 2010 model year 750 horsepower). This proposed horsepower category) that are certified 175 horsepower engine emitting at 2.7 restriction was similar to a restriction to the Tier 2 standards if they choose to g/bhp-hr NOX and 0.3 g/bhp-hr NMHC we currently have that prohibits the use demonstrate compliance with the pull- meets the 3.0 g/bhp-hr NMHC+NOX of Tier 1 credits to demonstrate Tier 3 ahead Tier 4 standards in 2008 for standard in that year, but gains no compliance. STAPPA/ALAPCO and the engines between 50 and 75 horsepower. credits. In 2011, that engine, equipped Natural Resources Defense Council Manufacturers that do not choose to with a PM trap to meet the new PM supported the proposed approach that comply with the 2008 Tier 4 standards standard, will have very low NMHC limited the use of previous-tier credits for engines between 50 and 75 emissions because of the trap, an for Tier 4. The Engine Manufacturer’s horsepower and instead comply with emission reduction already accounted Association commented that by limiting the 2012 Tier 4 standards for such for in our assessment of the air quality the use of previous-tier credits, we are engines will not be allowed to use Tier benefit of this program. As a result, engaged in an unconstitutional taking 2 credits in Tier 4, but instead will be without substantially redesigning the because EPA had guaranteed in the allowed to use Tier 3 credits as allowed engine to reduce NOX or NMHC, the previous Tier 2/Tier 3 rulemaking that under the standard provisions regarding

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use of previous-tier credits only for Tier One engine manufacturer commented Tier 3 engines will continue to apply if 4 compliance demonstration. that EPA should include a barrier to they are used to demonstrate With regard to other restrictions on trading credits across the 75 horsepower compliance for Tier 4 engines.) the use of ABT credits, we are adopting level. They cited concerns over the EPA also proposed to allow engine one restriction on the use of credits ability of manufacturers that produce a manufacturers to demonstrate across the 750 horsepower threshold. In large range of engine sizes to use credits compliance with the NO phase-in previous rulemakings, EPA has defined from high horsepower engines to offset X requirements by certifying evenly split ‘‘averaging sets’’ within which emissions from their small horsepower engine families at, or below, specified manufacturers may use credits under engines. We are not adopting any NO FELs (68 FR 28470, May 23, 2003). the ABT program. Credits may not be averaging set restrictions for Tier 4 X As described in section II.A.2.c above, used outside of the averaging set in engines below 750 horsepower in EPA is revising the evenly split family which they were generated. As today’s action. In the current nonroad described in section II.A.4 of today’s diesel ABT program, there are averaging provisions for the Tier 4 program and is action, we have revised the Tier 4 set restrictions. The current averaging now codifying them as alternative standards for engines above 750 sets consist of engines less than 25 standards. (As described in section III.L, horsepower. Because the standards for horsepower and engines greater than or we also are adopting the proposed Tier 4 engines greater than 750 equal to 25 horsepower. We adopted provisions allowing manufacturers to horsepower will not be based on the use this restriction because of concerns over certify ‘‘split’’ engine families during of PM aftertreatment technology in 2011 the ability of manufacturers to generate the phase-in years.) Because the evenly or NOX aftertreatment technology for all significant credits from the existing split family provision has evolved into mobile machinery engines in 2015, we engines and use the credits to delay a set of alternative NOX standards, we are adopting provisions that prevent compliance with the newly adopted believe it is appropriate to allow manufacturers from using credits from standards (63 FR 56977, October 23, manufacturers to use ABT for them. model year 2011 and later model year 1998). We believe the Tier 4 standards Table III.A–3 presents the FEL caps that engines greater than 750 horsepower to for engines below 750 horsepower are will apply to engines certified to the demonstrate compliance with engines sufficiently rigorous to limit the ability alternative NOX standards during the below 750 horsepower. Without such a of manufacturers to generate significant phase-in years. The FEL caps for these limit, we are concerned that credits from their engines. In addition, alternative standards have been set at manufacturers could use credits from we believe the FEL caps being adopted levels reasonably close to the alternative such engines to significantly delay today provide sufficient assurance that standards and are intended to ensure compliance with the numerically lower low-emissions technologies will be sizeable emission reductions from the standards for engines below 750 introduced in a timely manner. previously-applicable Tier 3 standards. horsepower. In addition, without such a Therefore, we believe averaging can be (For engines between 75 and 175 limit, we are concerned that allowed between all engine power horsepower certified under the reduced manufacturers could use credits from categories below 750 horsepower phase-in option, the FEL cap is the engines below 750 horsepower to delay without restriction effective with the NOX-only equivalent of the previously implementation of aftertreatment Tier 4 standards. (It should be noted applicable NMHC+NOX standards technology for engines above 750 that the averaging set restriction placed because the alternative standard is horsepower. on credits generated from Tier 2 and sufficiently close to the Tier 3 standard.)

TABLE III.A–3.—NOX FEL CAPS FOR ENGINES CERTIFIED TO THE ALTERNATIVE NOX STANDARDS

Alternative NOX FEL cap (g/bhp- Power category NOX standard (g/bhp-hr) hr)

50/50/100 phase-in option for 75 ≤ hp < 175 (56 ≤ kW <130) ...... 1.7 2.2. 25/25/25/100 phase-in option for 75 ≤ hp < 175 (56 ≤ kW <130) ...... 2.5 3.3 (for 75–100 hp). 2.8 (for 100–175 hp) 175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ...... 1.5 2.0.

Because we are allowing 40 percent over the first four years the NMHC+NOX standards. For manufacturers to use ABT for Tier 4 standards take effect as described manufacturers certifying under the demonstrating compliance with the earlier). Table III.A–4 presents the NOX reduced phase-in (25 percent) option, alternative standards for engines FEL caps that would apply to engines because the FEL caps are the NOX-only between 75 and 750 horsepower, we are certified under the alternative standards equivalent of the Tier 3 NMHC+NOX allowing manufacturers to exceed the (limited by the 40 percent cap over the standards, they may not exceed the FEL FEL caps noted in table III.A–3 and first four years). The higher NOX FEL cap during the years the alternative include them in the count of engines caps are set at the estimated NOX-only standard applies. allowed to exceed the FEL caps (i.e., the equivalent of the previous-tier

TABLE III.A–4.—LIMITED-USE NOX FEL CAPS UNDER THE ALTERNATIVE NOX STANDARDS

NOX FEL cap (g/bhp- Power category Model years hr)

50/50/100 phase-in option for 75 ≤ hp < 175a ...... 2012–2013 3.3 for hp <100. (56 ≤ kW <130) ...... 2.8 for hp ≥100. 175 ≤ hp ≤ 750 ...... 2011–2013 2.8.

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TABLE III.A–4.—LIMITED-USE NOX FEL CAPS UNDER THE ALTERNATIVE NOX STANDARDS—Continued

NOX FEL cap (g/bhp- Power category Model years hr)

(130 ≤ kW ≤ 560) ......

For reasons explained in section will be permitted). This restriction will Tier 4 timeframe. No adverse comments II.A.1.b.i above, we are also adopting apply throughout this period even if the were submitted to EPA on this issue. unique phase-in requirements for NOX reduced phase-in option is exercised As explained in the proposal, we are standards for engines between 75 and during only a portion of this period. We not applying a specific discount to Tier 175 horsepower in order to ensure believe that this restriction is important 3 PM credits used to demonstrate appropriate lead time for these engines. to avoid potential abuse of the added compliance with the Tier 4 standards Because of these unique phase-in flexibility allowance, considering that (68 FR 28471, May 23, 2003). PM credits provisions, as proposed, we are larger engine categories will be required generated under the Tier 3 standards are adopting slightly different provisions to demonstrate substantially greater based on testing performed over a regarding 75 to 175 horsepower engines’ compliance levels with the 0.30 g/bhp- steady-state test cycle. Under the Tier 4 use of previous-tier credits. Under hr NOX standard several years earlier standards, the test cycle is being today’s action, manufacturers that than engines built under the reduced supplemented with a transient test (see choose to demonstrate compliance with phase-in option. section III.F.1 below). Because in-use these phase-in requirements (i.e., 50 As described in section II.A.3.a of PM emissions from Tier 3 engines will percent in 2012 and 2013 and 100 today’s action, and as proposed, we are vary depending on the type of percent in 2014) or the 1.7 g/bhp-hr adopting an optional PM standard for application in which the engine is used alternative NOX standard (which is air-cooled, hand-startable, direct (most applications having higher in-use based on the 50 percent phase-in injection engines under 11 horsepower PM emissions, some having lower in- option) will be allowed to use Tier 2 effective in 2010. In order to avoid use PM emissions), the relative ‘‘value’’ NMHC+NOX credits generated by potential abuse of this standard, engines of the Tier 3 PM credits in the Tier 4 engines between 50 and 750 horsepower certified under this requirement will not timeframe will differ. Instead of (even though they are not generated by be allowed to generate any credits as requiring manufacturers to gather previous-tier engines), along with any part of the ABT program. Credit use by information to estimate the level of in- other allowable credits, to demonstrate these engines will be allowed. The use PM emissions compared to the PM compliance with the Tier 4 NOX restriction on generating credits should level of the steady-state test, we believe standards for engines between 75 and not be a burden to manufacturers, as it allowing manufacturers to bring Tier 3 175 horsepower during model years will apply only to those air-cooled, PM credits directly into the Tier 4 time 2012, 2013 and 2014 (the years of the hand-startable, direct injection engines frame without any adjustment is phase-in) only. These Tier 2 credits will under 11 horsepower that are certified appropriate because it discounts their be subject to the power rating under the optional approach, and the value for use in the Tier 4 timeframe conversion already established in our production of credit-generating engines (since the initial baseline being reduced ABT program, and to the 20% credit would be contrary to the standard’s is higher than measured in the Tier 2 adjustment being adopted today for use purpose. No adverse comments were test procedure for most applications). of NMHC+NOX credits as NOX credits. submitted to EPA on this issue. No adverse comments were submitted to The requirements for manufacturers The current ABT program contains a EPA on this issue. that choose to demonstrate compliance restriction on trading credits generated 3. Are We Expanding the Nonroad ABT with the optional reduced phase-in from indirect injection engines greater Program To Include Credits From requirement for engines between 75 and than 25 horsepower. The restriction was Retrofit of Nonroad Engines? 175 horsepower (i.e, the 25/25/25 originally adopted because of concerns percent phase-in option; see Table II.A.– over the ability of manufacturers to In the proposal, we requested 2, note b) or the 2.5 g/bhp-hr alternative generate significant credits from existing comment on expanding the scope of the NOX standard (which is based on the 25 technology engines (63 FR 56977, standards by setting voluntary new percent phase-in option) are different. October 23, 1998). With today’s action, engine emission standards applicable to Under the reduced phase-in there will be no restriction prohibiting the retrofit of nonroad diesel engines (68 requirement, use of credits will be manufacturers from trading credits FR 28471, May 23, 2003). As described allowed in accordance with the general generated on Tier 4 indirect fuel in the proposal, retrofit nonroad engines ABT program provisions. In other injection engines greater than 25 would be able to generate PM and NOX words, manufacturers will not have the horsepower. Based on the certification credits which would be available for use special allowance to use Tier 2 levels of indirect injection engines, we by new nonroad engines in the NMHC+NOX credits generated by do not believe there is the potential for certification ABT program. We received engines between 50 and 750 horsepower manufacturers to generate significant a significant number of comments on a noted above to demonstrate compliance credits from their currently certified retrofit ABT program. A number of with the Tier 4 standards. In addition, engines against the Tier 4 standards. commenters associated with the manufacturers choosing the reduced Therefore, as proposed, we are not agricultural sector were concerned phase-in option will not be allowed to adopting any restrictions on the trading retrofits would be mandatory. Some generate NOX credits from engines in of credits generated on Tier 4 indirect commenters were opposed to a retrofit this power category in 2012, 2013, and injection engines to other credit program that would allow use of most of 2014, except for use in manufacturers. The restriction placed the credits under the certification ABT averaging within this power category on the trading of credits generated from program. However, a number of (i.e., no banking or trading, or averaging Tier 2 and Tier 3 indirect injection commenters supported the concept of a with engines in other power categories engines will continue to apply in the retrofit program, but noted a number of

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concerns regarding the details of such a 56978, October 23, 1998 and 68 FR with today’s action. Areas in which we program, including making sure that 28472–28476, May 23, 2003). have made changes to the proposed any credits earned would be verifiable Given the levels of the newly adopted transition program are highlighted. A and enforceable. Some commenters Tier 4 standards, we believe that there complete summary of comments suggested that EPA consider the will be engine design and other changes received on the proposed transition establishment of a retrofit credit at least comparable in magnitude to program and our response to those program through a separate rulemaking those involved during the transition to comments are contained in the because there were many details of the Tier 2/3. Therefore, with a few Summary and Analysis of Comments program that needed to be explored exceptions described in more detail document for this rule. more fully before adopting such a below, we are adopting transition EPA believes that the lead time program. In response to the comments, provisions for Tier 4 that are similar to provided through the equipment maker we are not adopting a retrofit credit those adopted with the previous Tier 2/ transition flexibilities, as adopted in this program with today’s action. Although 3 rulemaking. We also note that rule, will be sufficient, as has proved we provided a detailed explanation of a opportunities for greater flexibility the case in past tiers. These flexibilities potential program at proposal, 62 we arises from the structure of the Tier 4 provide equipment manufacturers with believe it is important to more fully rule. For example, Tier 4 consolidates the selective ability to delay use of the consider the details of a nonroad engine the nine power categories in Tier 2/3 Tier 4 engines in those applications retrofit credit program and work with into five categories, providing where additional time is needed to interested parties in determining opportunities for more flexibility by successfully incorporate the redesigned allowing more engine families within engines into their equipment. whether a viable program can be each power category, with consequent Ingersoll-Rand, an equipment developed. EPA intends to explore the increased averaging possibilities. The manufacturer, submitted a number of possibility of a voluntary, opt-in NO phase-in also provides increased comments arguing that significant nonroad retrofit credit program through X flexibility opportunities, as do the expansions of the proposed flexibility a separate action later this year. Such a longer Tier 4 lead times. program are needed if equipment program would be based on the We are adding new notification, manufacturers are to produce compliant generation of credits beyond the scope reporting, and labeling requirements to applications within the effective dates of any existing retrofit program. The the Tier 4 program. We believe these of the standards. One suggestion was for final rule contains no requirements for additional provisions are necessary for EPA to include provisions that provide retrofitting existing engines or EPA to gain a better understanding of a definitive period of lead time for equipment. the extent to which these provisions incorporation of Tier 4 engines into B. Transition Provisions for Equipment will be used and to ensure compliance nonroad equipment. Ingersoll-Rand Manufacturers with the Tier 4 transition provisions. would have the rules specify a ‘‘made We are also adopting new provisions available’’ date before which each 1. Why Are We Adopting Transition dealing specifically with foreign engine supplier must provide technical Provisions for Equipment equipment manufacturers and the and performance specifications, Manufacturers? special concerns raised by the use of the complete drawings, and a final transition provisions for equipment compliant engine to EPA and the open As EPA developed the 1998 Tier 2/3 imported into the U.S. The following market. After the mandated ‘‘made standards for nonroad diesel engines, section describes the Tier 4 transition available’’ date, equipment we determined, as an aspect of provisions available to equipment manufacturers should be provided a determining an appropriate lead time manufacturers. (Section III.C of this minimum 18 months of lead time to for application of the requisite preamble describes all of the provisions incorporate the new engines into technology (pursuant to section 213(b) that will be available specifically for nonroad equipment. One form of the of the Act), that provisions were needed small businesses.) suggestion also entailed a prohibition on to avoid unnecessary hardship and to As under the existing Tier 2/Tier 3 design changes once the engine, create additional flexibility for provisions, equipment manufacturers specifications, drawings, etc. had been equipment manufacturers. The specific are not obligated to use any of these initially provided to EPA and to the concern is the amount of work required provisions, but all equipment open market. As an alternative, and the resulting time needed for manufacturers are eligible to do so. Ingersoll-Rand urged that the percent of equipment manufacturers to incorporate Also, as under the existing program, all production allowance flexibility be all of the necessary equipment redesigns entities under the control of a common expanded to 150 percent for the power into their applications in order to entity, and that meet the regulatory categories between 75 and 750 accommodate engines that meet the new definition of a nonroad vehicle or horsepower and 120 percent for the emission standards. We therefore nonroad equipment manufacturer, must power category between 25 and 75 adopted a set of provisions for be considered together for the purpose horsepower. Ingersoll-Rand believes equipment manufacturers to provide of applying exemption allowances. This these levels correspond proportionately them with reasonable lead time for the will not only provide certain benefits for to the increased challenges facing transition process to the newly adopted the purpose of pooling exemptions, but equipment manufacturers during Tier 4 standards. The program consisted of will also preclude the abuse of the as opposed to Tier 2 and Tier 3. four major elements: (1) A percent-of- small-volume allowances that would As discussed in greater detail in the production allowance, (2) a small- exist if companies could treat each Summary and Analysis of Comments, as volume allowance, (3) availability of operating unit as a separate equipment well as in later parts of this section of hardship relief, and (4) continuance of manufacturer. this preamble and elsewhere in the the allowance to use up existing administrative record, we disagree with inventories of engines (63 FR 56977– 2. What Transition Provisions Are We most of Ingersoll-Rand’s suggestions. Adopting for Equipment Manufacturers? Our fundamental disagreement is with 62 See memorandum referenced at 68 FR 28471 The following section describes the Ingersoll-Rand’s premise that Tier 4 will (May 23, 2003), footnote 299. transition provisions being adopted create a situation where need for

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expanded equipment maker lead time is of the engine design and validation selection of any single made available the norm rather than the exception so process.63 date is bound to be arbitrary in most that the rule must provide a drastic, We also have studied the extent to situations. We also believe that the 18- across-the-board expansion of which equipment manufacturers have month lead time following a made equipment manufacturer lead time. We used their flexibilities under the Tier 2/ available date entails a mandated 18- believe that the lead time provided for 3 program. Although at an early stage in month period (at least) with no return equipment makers in this rule is the Tier 2/3 process, initial indications on investment to engine suppliers (i.e. adequate, and that the equipment maker are that the flexibility program is being the period between when the Tier 4 flexibilities we are adopting provide a used by many equipment engine would be produced and when it reasonable and targeted safety valve to manufacturers, but in general, could lawfully be sold), which would manufacturers do not appear to be using deal with isolated problems. There is no increase the engine cost, and discourage the full level of allowances.64 It appears across-the-board problem necessitating a design changes (since such changes that the flexibilities are being used as drastic expansion of equipment would entail more investment with EPA intended, providing manufacturers manufacturer lead time, or a drastic delayed return on that investment). The with flexibility to deal with specific ultimate result would be a costlier rule expansion of equipment manufacturer limited situations, rather than to deal flexibilities. We base these conclusions and less environmental benefit due to with an across-the-board problem. the delay in introducing Tier 4 engines. largely on three factors: (a) Our The emerging pattern is thus the one investigation and understanding of the Even were EPA to put forth such a on which the flexibility program is regulation, it is not clear that it could be engineering process by which engine predicated: there is not a need for enforced or that it would help the makers and equipment manufacturers across-the-board drastic expansion of situation. It would only be natural for bring new products to market; (b) the equipment manufacturer lead time. engine manufacturers to continue to specific engineering challenges which Indeed, such an expansion would be improve its products even after the equipment manufacturers will address inconsistent with the lead time-forcing predefined ‘‘made available date’’ and in complying with the Tier 4 rule; and nature of section 213 (b) of the Act. This equipment manufacturers would want (c) past practice of equipment is not to say that there is no need for to use this improved product even if it manufacturers under previous rules equipment manufacturer flexibilities, or meant they had to make last minute providing transition flexibilities for that the Tier 2/3 flexibility format need changes to the equipment design. For nonroad equipment. not be adjusted to accommodate EPA to preclude engine manufacturers Because it is in both parties’ interest potential problems to be faced under the from changing their product designs for new engines and new equipment Tier 4 regime. Instances where over the period between the certification applications to reach the market additional lead time could be justified date and the equipment manufacturer are where resource constraints prevent expeditiously, engine makers and date would be both unusual and completion of certain applications, or equipment manufacturers usually adopt counterproductive to our goal of seeing where for business reasons it makes concurrent engineering programs the best possible products available in sense for equipment manufacturers to the market. Moreover, EPA sees no need whereby the new equipment design delay completion of small volume to interfere with the concurrent design process occurs simultaneous to the new families in order to complete larger market mechanism, which allows engine development process. We believe volume equipment applications. In engine makers and equipment that this concurrent process should addition, the Tier 2/3 experience manufacturers to negotiate optimal work well for Tier 4 because, in many illustrates that there can be instances solutions. We believe it is better to leave important ways, the engineering where emission control optimization challenges facing equipment which necessitates equipment design to the market participants the actual manufacturers can be anticipated and changes occurs late in the design cycle, decision for how and when to conduct dealt with early in the design process. resulting in a need for additional concurrent engineering designs. We expect that relatively early in the equipment manufacturer lead time. The The California Air Resources Board design process, engine manufacturers equipment manufacturer flexibilities commented that EPA should eliminate will be able to define the size and adopted in today’s rule accommodate or reduce the amount of flexibilities characteristics of the emission control these possibilities. provided for less than 25 horsepower technologies (e.g., NOX adsorbers and We have specific objections to engines, because the Tier 4 engine CDPFs), based on the same systems that Ingersoll-Rand’s preferred approach of a standards are not aftertreatment-based. will be in production for on-highway mandated made available date, followed The Engine Manufacturers Association engines. The equipment manufacturers by 18 months of additional lead time for commented that we should expand the will concurrently redesign their equipment manufacturers. amount of flexibilities for engines equipment to accommodate these new Superimposing a government mandate greater than 750 horsepower, given the technologies, including designing, on the engine maker—equipment difficulty of complying with the mounting and supporting the catalytic manufacturer business relationship proposed standards for engines above equipment similar to current exhaust insinuates EPA into the middle of 750 horsepower. With today’s action, muffler systems. contractual/market relationships (e.g., we are applying the same flexibility for when is an objectively reasonable all power categories, including engines Moreover, while we expect the delivery date?), forcing EPA to prejudge below 25 horsepower and engines above redesign challenge for Tier 4 equipment myriad differing business relationships/ 750 horsepower. While it is true that the to be similar to that for Tier 2/3, we also engineering situations. Moreover, Tier 4 standards for engines below 25 expect the redesign to be better and horsepower are not aftertreatment- more clearly defined well in advance of 63 ‘‘Tier 4 Nonroad Diesel Equipment Flexibility based, we believe there will be changes the Tier 4 introduction dates. This is Provisions,’’ memorandum from Byron Bunker, et in engine design for many of those because we do not expect the catalyst al., (EPA) to EPA Air Docket OAR–2003–0012. 64 engines in response to the Tier 4 system size or shape to change ‘‘Tier 4 Nonroad Diesel Equipment Flexibility Provisions,’’ memorandum from Byron Bunker, et standards. As engine designs change, significantly during the last 24 months al., (EPA) to EPA Air Docket OAR–2003–0012. there is the potential for impacts on

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equipment design as well (as shown in they may use flexibilities in the year the provisions to allow equipment implementing the Tier 2/3 rule). final Tier 4 standards (the manufacturers to have the option of Therefore, we believe providing aftertreatment-based standards for both starting the seven-year period in which equipment manufacturer flexibility for PM and NOX) take effect. Put another flexibility engines may be used in either engines below 25 horsepower is way, they would not need more lead the first year of the interim Tier 4 appropriate and we are adopting the time for equipment to meet the interim standards or the first year of the final same flexibilities for engines below 25 standards, but could need more lead Tier 4 standards. For engines between horsepower as for other power time for equipment required to meet the 25 and 75 horsepower, the final Tier 4 categories. With regard to engines above final standards. In addition, the standards may begin in 2012 or 2013 750 horsepower, we are retaining the commenter suggested a modified depending on whether the manufacturer same flexibilities for those engines as for approach that could lead to earlier chooses to comply with the interim other power categories. As described in emission reductions than under the section II.A.4, the Tier 4 standards being proposed rule: Requiring delayed 2008 Tier 4 standards. An equipment adopted today for engines above 750 flexibility engines to meet the interim manufacturer who does not use horsepower have been revised from the Tier 4 standards instead of meeting the flexibilities in 2008 thus may need proposal. We believe that these Tier 2/3 standards (as would have been flexibilities as early as 2012. Therefore, revisions have appropriately allowed under the proposal if the the seven-year period for the final Tier accommodated concerns for the most flexibilities started in the first year of 4 standards for engines between 25 and difficult to design applications (i.e., the interim Tier 4 standards). 75 horsepower will begin in 2012 NOX adsorbers for engines in mobile EPA wants to encourage the instead of 2013. Moreover, it is clearly applications), so that additional implementation of the Tier 4 standards appropriate that these delayed equipment flexibilities are not as early as possible. Therefore, we flexibility engines meet the interim Tier warranted for these engines. believe it makes sense to provide 4 standards, in order not to backslide The Engine Manufacturers incentives to equipment manufacturers from existing levels of performance. Association commented that some to use interim Tier 4 compliant engines Table III.B–1 shows the years in equipment manufacturers may be in their equipment during the transition capable of making an on-time transition to the final Tier 4 standards. Moreover, which manufacturers could choose to to the interim Tier 4 standards (e.g. the it is reasonable to expect that more lead start the Tier 4 flexibilities given the 2011 standards applicable for 175–750 time will be needed for the standards being adopted today. (The horsepower engines) without the use of aftertreatment-based standards than for seven-year period for engines below 25 flexibilities. Such equipment the interim standards. Therefore, in horsepower takes effect in 2008 as manufacturers would like the ability to response to these comments, we are proposed, because there are no interim start the seven-year period in which revising the proposed flexibility standards for such engines.)

TABLE III.B–1.—FLEXIBILITY PERIODS FOR THE TIER 4 STANDARDS

Model year flexibility Standards to which flexibility en- Power category period gines would have to certify options

25 ≤ hp < 75 ...... 2008–2014 Tier 2 standards. (19 ≤ kW < 56) ...... 2012–2018 Model Year 2008 Tier 4 standards. 75 ≤ hp < 175 ...... 2012–2018 Tier 3 standards. (56 ≤ kW <130) ...... 2014–2020 Model Year 2012 Tier 4 standards. 175 ≤ hp ≤ 750 ...... 2011–2017 Tier 3 standards. (130 ≤ kW ≤ 560) ...... 2014–2020 Model Year 2011 Tier 4 standards. >750 hp ...... 2011–2017 Tier 2 standards. (>560 kW) ...... 2015–2021 Model Year 2011 Tier 4 standards.

Under today’s action, and as and production of equipment to another exact situation we are attempting to proposed, only those nonroad manufacturer. While we understand prevent with the changes to the equipment manufacturers that install there are many different types of eligibility requirements for the engines and have primary responsibility relationships between equipment allowances. Therefore, we are adopting for designing and manufacturing manufacturers, we believe it is the proposed requirement that only equipment will qualify for the important to establish firm criteria for those nonroad equipment manufacturers allowances or other relief provided determining eligibility to use the that install engines and have primary under the Tier 4 transition provisions. equipment manufacturer allowances. responsibility for designing, and As a result of this definition, importers We are concerned that the change to the manufacturing equipment will qualify that have little involvement in the equipment manufacturer definition for the allowances or other relief manufacturing and assembling of the suggested by the commenters would provided under the Tier 4 transition equipment will be ineligible to receive allow entities that have little or no provisions. However, we are revising any allowances. The Engine involvement in the actual design, the provisions regarding which engines Manufacturers Association and one manufacture and assembly of equipment an equipment manufacturer may engine manufacturer commented that (e.g., companies that only import include in its total count of U.S.- the proposed definition of equipment equipment) to claim they contracted directed equipment production, which manufacturer needed to be revised to with an equipment manufacturer to in turn affects the number of allowances cover situations in which a produce equipment for them and an equipment manufacturer may claim. manufacturer contracts out the design therefore claim allowances. This is the Under today’s action, an equipment

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manufacturer may include equipment identical to the percent-of-production be included in an equipment produced by other manufacturers under allowance adopted in the October 1998 manufacturer’s percent of production license to them for which they had final rule (63 FR 56967, October 23, calculations. primary design responsibility (see 2003), the difference being, as explained The choice of a cumulative percent section 1039.625(a) of the regulations). earlier, that there are fewer power allowance of 80 percent is based on our This should cover the type of situation categories (and consequent increased best estimate of the degree of reasonable described by the commenters while flexibility in spreading the flexibility lead time needed by equipment preventing an import-only entity from among engine families) associated with manufacturers. We believe the 80 claiming it is an equipment the Tier 4 standards. percent allowance responds to the need manufacturer and thereby gaining The 80 percent exemption allowance, for flexibility identified by equipment access to the allowances. were it to be used to its maximum manufacturers, while ensuring a extent by all equipment manufacturers, significant level of emission reductions a. Percent-of-Production Allowance will bring about the introduction of in the early years of the program. (As Under the percent-of-production cleaner engines several months later noted in the following section III.B.2.b, allowance adopted today, each than would have occurred if the new we are adopting a technical hardship equipment manufacturer will be standards were to be implemented on provision that allows an equipment allowed to install engines not certified their effective dates. However, the manufacturer to request additional relief to the Tier 4 emission standards in a equipment manufacturer flexibility under the percent of production limited percentage of machines program has been integrated with the allowance under certain conditions and produced for the U.S. market. standard-setting process from the initial with EPA approval.) Equipment manufacturers will need to development of this rule, and as such b. Technical Hardship Flexibility provide written assurance to the engine we believe it is a key factor in assuring manufacturer that such engines are that there is sufficient lead time to Ingersoll-Rand commented that the being procured for the purpose of the initiate the Tier 4 standards according to 80% percent of production allowance transition provisions for equipment the final implementation schedule.65 level is not sufficient for Tier 4 given manufacturers. These engines will As proposed, machines that use the stringency of the standard and the instead have to be certified to the engines built before the effective date of difficulty engine manufacturers will standards that would apply in the the Tier 4 standards do not have to be have complying with the standards. In absence of the Tier 4 standards (see included in an equipment further discussions with Ingersoll-Rand Table III.B–1 for the applicable manufacturer’s percent of production on this issue, they suggested that a standards). As proposed, this percentage calculations under this allowance. percent of production allowance level of will apply separately to each of the Tier Machines that use engines certified to 150% for totally non-integrated 4 power categories (engines below 25 the previous tier of standards under our equipment manufacturers (i.e., horsepower, engines between 25 and 75 Small Business provisions (as described equipment manufacturers producing no horsepower, engines between 75 and in section III.C of this preamble ) do not diesel engines) was appropriate for Tier 175 horsepower, engines between 175 have to be included in an equipment 4 power categories above 25 and 750 horsepower, and engines above manufacturer’s percent of production horsepower. A fully integrated manufacturer would still receive the 750 horsepower) and is expressed as a calculations under this allowance. All 80% level and partially-integrated cumulative percentage of 80 percent engines certified to the Tier 4 standards, companies would receive somewhere over the seven years beginning when the including those engines that produce between 80% and 150% depending on Tier 4 standards apply in a category (see emissions at higher levels than the the share of self-produced engines in Table III.B–1 for the applicable seven- standards, but for which an engine each specific power category. The basis year periods). No exemptions will be manufacturer uses ABT credits to for this comment is their belief that non- allowed after the seventh year. For demonstrate compliance, will count as example, an equipment manufacturer integrated manufacturers are at a Tier 4 complying engines and do not could install engines certified to the disadvantage to integrated have to be included in an equipment Tier 3 standards in 40 percent of its manufacturers (manufacturers making manufacturer’s percent of production entire 2011 production of nonroad both the engine and equipment) when it calculations. Engines that meet the Tier equipment that use engines rated comes to planning for new Tier 4 engine 4 PM standards but are allowed to meet between 175 and 750 horsepower, 30 designs. the Tier 3 NMHC+NO standards during percent of its entire 2012 production in X Although we do not accept the the phase-in period also count as Tier 4 this horsepower category, and 10 premise that equipment manufacturer complying engines and do not have to percent of its entire 2013 production in lead time must be drastically expanded this horsepower category. (During the across-the-board for the Tier 4 program, 65 As explained at proposal, for emissions transitional period for the Tier 4 modeling purposes, we have assumed that we do agree, as explained earlier, that standards, the fifty percent of engines manufacturers take full advantage of the allowances there may be situations where that are allowed to certify to the under the existing transition program for equipment additional lead time, in the form of manufacturers (adopted in the October 1998 rule; previous tier NOX standard but meet the increased equipment manufacturer see 63 FR 56967 (October 23, 2003) in establishing Tier 4 PM standard are considered Tier the baseline emissions inventory. In modeling the transition flexibilities, can be justified. 4-compliant engines for the purpose of impact of the Tier 4 standards, because the Therefore, we have added an additional the equipment manufacturer transition standards will not take effect for many years and flexibility (which has no direct analogue provisions.) If the same manufacturer it is not possible to accurately forecast use of the in the Tier 2/3 rule) to this rule in order transition program for equipment manufacturers, so produces equipment using engines rated to assess costs in a conservative manner, we have to provide additional needed lead time above 750 horsepower, a separate assumed that all engines will meet the Tier 4 in appropriate, individualized cumulative percentage allowance of 80 standards in the timeframe required by the circumstances based on a showing of percent will apply to those machines standards without use of the Tier 4 transition extreme technical or engineering provisions. As discussed in section VI.C, this is during the seven years beginning in consistent with our cost analysis, which assumes no hardship. Ingersoll-Rand has agreed, by 2011 or 2015. This percent-of- use of the transition program for equipment letter to EPA, that this provision production allowance is almost manufacturers. satisfies all of its concerns regarding

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adequacy of lead time for meeting Tier manufacturer has received from the manufacturer, whether integrated or not, 4 standards. engine supplier, and a comparison of that uses engines from a different This additional flexibility would be the design process for the equipment manufacturer) that makes additional available for the three Tier 4 power model for which the exemption is relief under the percent of production categories between 25 and 750 requested with the design process for allowance unnecessary. In addition, horsepower. As noted earlier, Ingersoll- other models for which no exemption is integrated equipment manufacturers Rand did not believe additional needed. The equipment manufacturer have other programs available to them flexibility was needed for engines below also would have to make and describe (that non-integrated manufacturers do 25 horsepower. We agree because the all efforts to find other compliant not have) such as the engine averaging, Tier 4 standards for engines below 25 engines for the model. EPA will then banking and trading program, which can horsepower are not based on the use of evaluate and determine whether or not provide lead time flexibility during the advanced aftertreatment. We also are to grant each such request, and what transition years. Most basically, not including this new provision for additional increment under the percent integrated manufacturers should be able engines above 750 horsepower because of production allowance (above the 80 to design concurrently in all nearly all of the equipment percent normally allowed) is justified circumstances, so that extreme technical manufacturers utilizing engines above (not to exceed an additional 70 percent or engineering hardships should not 750 horsepower make small volumes of as noted above). As part of our arise. equipment. The small-volume evaluation of requests based on c. Small-Volume Allowance allowance (described in the following technical hardship, we may contact the section) allows a manufacturer to engine supplier(s) listed by the The percent-of-production approach exempt a specific number of engines equipment manufacturer to check on the described above may provide little over a seven-year period, which in most accuracy of the engine-related benefit to businesses focused on a small cases will be greater than the increased information supplied by the equipment number of equipment models, and percentage potentially available under manufacturer. This extension of lead hence there could be situations where this new provision. time is premised on the existence of there is insufficient lead time for such This new provision, found in new extreme technical or engineering models. Therefore, with today’s action, § 1039.625(m), is a case-by-case problems, in contrast to the economic we are adopting a small-volume exemption granted by EPA to an hardship provision described in section allowance that will allow any equipment manufacturer. The III.B.2.f below, where consideration of equipment manufacturer to exceed the equipment manufacturer would have economic impact is critical. percent-of-production allowances the burden of demonstrating existence EPA would not grant an application described above during the same seven- of extreme technical or engineering for technical hardship exemption unless year period, provided the manufacturer hardship conditions that are outside its the equipment manufacturer limits the number of exempted engines control. It must also demonstrate that it demonstrates that the full 80 percent to 700 total over the seven years, and to has exercised reasonable due diligence allowed under the percent of production 200 in any one year. The limit of 700 to avoid the situation. EPA would treat allowance is reasonably expected to be exempted engines (and no more than each request for technical hardship used up in the first two years of the 200 engines per year) applies separately separately, with no guarantee that it seven-year flexibility period. The reason to each of the Tier 4 power categories would grant the exemption. If EPA is obvious. If that allowance would not (engines below 25 horsepower, engines grants the exemption, the equipment be fully utilized, then no further between 25 and 75 horsepower, engines manufacturer could receive up to an extension of lead time can be justified. between 75 and 175 horsepower, additional 70 percent under the percent Furthermore, any technical hardship engines between 175 and 750 of production allowance for each of the allowance would have to be used up horsepower, and engines above 750 three power categories noted above within two years after the Tier 4 percent horsepower). In addition, manufacturers (meaning that there is a potential total of production allowances start for any making use of this provision must limit 150 percent under the percent of power category. This is because, exempted engines to a single engine production allowance available, the although we believe that circumstances family in each Tier 4 power category. initial 80 percent available without of extreme technical or engineering We are also adopting an alternative application, and an additional potential hardship may arise, we cannot see that small-volume allowance, which increment of up to 70 percent available these circumstances could not be solved equipment manufacturers have the on a case-by-case basis). within the first two years of the option of utilizing. In discussions The exemption could only be granted transition. Indeed, Ingersoll-Rand itself regarding the current small-volume upon written application to EPA setting clearly indicated that this is a temporary allowance, some manufacturers forth essentially why the normally burden which exists during initial expressed the desire to be able to successful elements of engine maker/ model transition and indicated that only exempt engines from more than one equipment manufacturer design cycle 18 months (rather than two years) could engine family, but still fall under the have not provided adequate lead time be needed from receipt of the certified number of exempted engine limit. For for a particular equipment model. The engine. that reason, we solicited comment on a application would therefore have to This flexibility will be available to all small-volume allowance program that address, with documentation: The equipment manufacturers, but may only would allow manufacturers to exempt engineering or technical problems that be requested for equipment in which the engines in more than one family, but have proved unsolvable within the lead equipment manufacturer is different have lower numerical limits. Under this time provided, the normal design cycle than the engine manufacturer. We alternative, manufacturers using the between the engine maker and believe that integrated manufacturers small-volume allowance could exempt equipment manufacturer and why that who produce both the equipment and 525 machines over seven years (with a cycle has not worked in this instance, the engine used in the piece of maximum of 150 in any given year) for all information (such as written equipment could have an advantage in each of the three power categories below specifications, performance data, the equipment redesign process 175 horsepower, and 350 machines over prototype engines) the equipment (compared to an equipment seven years (with a maximum of 100 in

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any given year) for the two power As with the percent-of-production horsepower engines, as discussed in categories above 175 horsepower. allowance, machines that use engines III.C.2.b.ii. Concurrent with the revised caps of 525 built before the effective date of the Tier d. Early Use of Tier 4 Flexibilities in the or 350, depending on power category, 4 standards do not have to be included Tier 2/3 Timeframe manufacturers could exempt engines in an equipment manufacturer’s count from more than one engine family under of engines under the small-volume As proposed, we are also adopting the small-volume allowance program. allowance. Similarly, machines that use provisions that allow equipment Based on sales information for small engines certified to the previous tier of manufacturers to start using a limited businesses, we estimated that the standards under our Small Business number of the new Tier 4 percent of alternative small-volume allowance provisions (as described in section III.C production allowances or Tier 4 small- program to include lower numbers of of today’s action) do not have to be volume allowances once the seven-year eligible engines and allow included in an equipment period for the existing Tier 2/Tier 3 manufacturers to exempt more than one manufacturer’s count of engines under program expires (and so continue using engine family would keep the total the small-volume allowance. All engines meeting Tier 1 or Tier 2 number of engines eligible for the engines certified to the Tier 4 standards, standards). In this way, a manufacturer allowance at roughly the same overall including those that produce emissions can potentially continue exempting the level as the 700-unit program.66 We also at higher levels than the standards but most difficult applications once the requested comment on allowing for which an engine manufacturer uses seven-year period of the current Tier 2/ equipment manufacturers to choose ABT credits to demonstrate compliance, 3 flexibility provisions is finished. between the two small-volume will be considered to be Tier 4 (Under the existing transition program allowance programs described above (68 complying engines and do not have to for equipment manufacturers, any FR 28474–28475, May 23, 2003). be included in an equipment unused Tier 2/3 allowances expire after Both engine and equipment manufacturer’s count of engines under the seven-year period.) However, opting manufacturers supported dropping the the small-volume allowance. Engines to start using Tier 4 allowances once the one engine family restriction from the that meet the Tier 4 PM standards but seven-year period from the current Tier 700 unit small-volume allowance. In are allowed to meet the Tier 3 2/Tier 3 program expires will reduce the number of exemptions available from addition, they commented that if the NMHC+NOX standards during the one engine family restriction was not phase-in period (i.e., phase-out engines) the Tier 4 standards under either the percent of production allowance or the dropped from the 700 unit option, they will also be considered as Tier 4 small-volume allowance. supported the option of allowing complying engines and do not have to With today’s action, equipment equipment manufacturers to choose be included in an equipment manufacturers may use up to a total of between the two small-volume manufacturer’s count of engines under 10 percent of their Tier 4 percent of allowance options. With today’s action, the small-volume allowance. All production allowances or up to 100 of we are revising the proposed small- engines used under the small-volume their Tier 4 small-volume allowances volume allowance to allow equipment allowance must certify to the standards prior to the effective date of the Tier 4 manufacturers to choose between the that would be in effect in the absence of standards. (The early use of Tier 4 700 unit over seven years option, with the Tier 4 standards (see Table III.B–1 allowances will be allowed in each Tier exempted engines limited to one engine for the applicable standards). As noted 4 power category.) This amount of family, or the proposed alternative earlier, equipment manufacturers will equipment utilizing the early Tier 4 which would allow equipment need to provide written assurance to the allowances will be subtracted from manufacturers to exempt fewer engines engine manufacturer when it purchases either the Tier 4 allowance of 80 percent over seven years (525 or 350 units, engines under the transition provisions under the percent of production depending on the power category), but for equipment manufacturers. allowance or the applicable limit under with no restriction on the number of The Engine Manufacturers the small-volume allowance for the engine families that could be included Association commented that the appropriate power category, resulting in in the exempted engine count. Based on proposed regulations for the small- fewer allowances once the Tier 4 our analysis of small businesses noted volume allowance established a limit on standards take effect. For example, if an above, we expect the number of engines the total number of engines an equipment manufacturer uses the that could be exempted under either equipment manufacturer could use that maximum amount of early Tier 4 option is roughly the same. Giving did not meet the Tier 4 standards and percent of production allowances of 10 equipment manufacturers the ability to should be revised to set a limit based on percent, then the manufacturer will choose between the two options should U.S.-directed production (consistent have a cumulative total of 70 percent not significantly impact the number of with the proposed regulatory language remaining for that power category when engines likely to be exempted under the for the percent-of-production the Tier 4 standards take effect (i.e., 80 small-volume allowance. We have not allowance). EPA agrees that the limit percent production allowance minus 10 chosen to drop the one engine family under the small-volume allowance percent). restriction from the 700-unit small- should apply to U.S.-directed The California Air Resources Board volume allowance because it would production only—as the commenter commented that we should discount the result in a significant increase in the surmised, this is what EPA intended— early use of Tier 4 flexibilities to number of engines eligible to be and has revised the final regulations for discourage abuse of the provisions, by exempted to levels which we believe are the small-volume allowance requiring equipment manufacturers to not needed to provide adequate lead accordingly. give up more than one flexibility after 67 time for the Tier 4 program. We are also finalizing a technical Tier 4 begins for every flexibility used hardship provision for small business prior to Tier 4. California did not 66 ‘‘Analysis of Small Volume Equipment specifically recommend what the Manufacturer Flexibilities,’’ memo from Phil equipment manufacturers using 25–50 Carlson (EPA) to Docket A–2001–28. discount level should be. We are not 67 Memorandum, Phil Carlson to Docket A–2001– Flexibilities,’’ April 15, 2003. Docket A–2001–28, adopting a discount for early use of the 28, ‘‘Analysis of Equipment Manufacturer document no. II–B–24. Tier 4 flexibilities. The intent of

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allowing manufacturers to use the Tier lead to additional emission reductions The early Tier 4 engine incentive 4 flexibilities early was to allow them to above and beyond those expected under program for equipment manufacturers carry over the few remaining equipment the existing Tier 2/3 standards in the will apply to the four power categories models that might not have been years prior to Tier 4 taking effect. above 25 horsepower where the use of redesigned at the end of the seven-year Moreover, equipment manufacturers advanced exhaust aftertreatment is Tier 2/Tier 3 flexibility period until Tier (and especially non-integrated expected under the Tier 4 standards. 4 begins, and not requiring a possible equipment manufacturers) are unlikely Because the Tier 4 standards for engines double redesign in a short period of to buy early Tier 4 engines without below 25 horsepower are not expected time. Because we have placed a some incentive to do so since these to result in the use of advanced relatively low cap (10% under the engines are likely to be more expensive aftertreatment technologies, we are not percent of production allowance or 100 than Tier 2/3 engines. For these reasons, including such engines in the program. units under the small volume we are adopting new provisions that In order for an engine to be allowance) on the amount an equipment will allow any equipment manufacturer considered an early Tier 4 compliant manufacturer could use early from Tier to earn early compliance credits that engine, it will need to be certified to the 4, we do not believe that manufacturers could be used to increase the number of final Tier 4 standards for PM, NOX, and will be able to abuse the program and equipment flexibilities above and NMHC (i.e., the 2013 standards for therefore should not have to discount beyond the levels allowed under the engines between 25 and 75 horsepower, the number of Tier 4 flexibilities used percent of production allowance or the 2014 standards for engines between early. small-volume allowance (and for 75 and 175 horsepower, the 2014 We view this provision on early use reasons independent of those standards for engines between 175 and of Tier 4 allowances as providing allowances: namely, an inducement to 750 horsepower, and the 2015 standards reasonable lead time for introducing make early use of Tier 4 engines). for engines above 750 horsepower) or to Tier 4 engines, since it should result in The program will be available to all the final PM and NMHC standards and earlier introduction of Tier 4-compliant equipment manufacturers regardless of the alternative NOX standards during engines (assuming that the allowances whether they are integrated or non- the phase-in (as described in section would otherwise be fully utilized) with integrated. While Ingersoll-Rand II.A.2.c of today’s rule for engines resulting net environmental benefit commented that the program should be between 75 and 750 horsepower). In (notwithstanding longer utilization of available to non-integrated equipment order to be an early Tier 4 compliant earlier Tier engines, due to the manufacturers only, we believe the engine, these engines would also have stringency of the Tier 4 standards) and program should provide an incentive for to certify to the Tier 4 CO standards. should do so at net reduction in cost by all equipment manufacturers to use Because 15 ppm sulfur diesel fuel will providing cost savings for the engines early Tier 4 engines (since the benefits be available on a widespread basis in that have used the Tier 4 allowances accruing from early use of such engines time for 2007 (due to the requirements early. (This is another reason we see no exist regardless of whether the for on-highway heavy-duty engines), we reason to discount the allowance.) equipment manufacturer is integrated are allowing engine manufacturers to with the engine maker). begin certifying engines to the Tier 4 e. Early Tier 4 Engine Incentive Program Before describing this provision standards, and therefore have engines for Equipment Manufacturers further, it is desirable to put it in eligible for the early Tier 4 engine Ingersoll-Rand commented that non- context by explaining its relationship to incentive program, beginning with the integrated equipment manufacturers the engine manufacturer incentive 2007 model year. who incorporate Tier 4 compliant program for early Tier 4 or very low In order to provide assurance that engines into their equipment prior to emission engines (described in section early Tier 4 compliant engines are the applicable date for the Tier 4 III.M below), as well as to the similar placed into equipment earlier than standards should be able to earn early incentive provisions for engine would otherwise happen under the Tier compliance credits. These early manufacturers which we proposed (68 4 program, engine manufacturers will be compliance credits could allow use of FR 28482, May 23, 2003). We are, in required to certify and start producing the previous-tier engine (above and essence, redirecting the proposed such engines before September 1 of the beyond the base percentage granted incentive for using early Tier 4 year prior to the post-2011 Tier 4 under the flexibility program) for up to compliant engines to equipment standards taking effect or before 18 months after the certification date of manufacturers. Thus, under today’s September 1, 2010 for engines in the the engine. Ingersoll-Rand also rule, an engine manufacturer could use 175 to 750 horsepower category. commented that such early compliance the incentive program (as described in Similarly, equipment manufacturers credits should be able to be traded section III.M) only if an equipment will be required to install such engines across power categories with manufacturer uses an early Tier 4 in equipment before January 1 of the appropriate weightings applied. engine but (for whatever reason) year the post-2011 Tier 4 standards take We believe a program that provides an declines to use the early engine effect or before January 1, 2011 for incentive for equipment manufacturers flexibility allowance. In such a case, the engines in the 175 to 750 horsepower to use early Tier 4-compliant engines is engine manufacturer could opt to earn category. In addition, in order to be worthwhile from both a technology either ‘‘engine offsets’’ (which would considered an early Tier 4 compliant development perspective and an allow them to make fewer engines engine, such engines would be required environmental perspective. As we noted certified to the Tier 4 standards once the to comply with all of the requirements at proposal when we proposed a similar Tier 4 program takes effect) or ABT associated with the final Tier 4 incentive program for engine makers, credits, but not both. In the more likely standards such as NTE requirements, early use of Tier 4 compliant engines case of an equipment manufacturer transient testing (where otherwise will help foster technology development using early Tier 4 engines and using the required for certification, i.e. for 25–750 by getting the Tier 4 technologies out in incentive flexibilities itself, the engine horsepower engines), and closed the market early and provide real-world manufacturer would be eligible to crankcase requirements. Finally, for experience to manufacturers and users generate ABT credits from such early engines certified prior to model year (68 FR 28482, May 23, 2003). It will also Tier 4 compliant engines. 2011, the engine manufacturer would be

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allowed to demonstrate early fuel is recommended (see section equipment. Equipment manufacturers compliance with the Tier 4 standards on 1039.104(e) of the regulations). installing engines between 75 and 750 a 15 ppm sulfur fuel (as allowed under Equipment manufacturers using such horsepower that comply with the final the certification fuel requirements pre-2011 engines in their equipment Tier 4 PM standard and the alternative specified in section III.D of today’s rule) would likewise need to take steps to NOX standard (described in section provided the engine manufacturer ensure that fuel meeting this low sulfur II.A.2.c) would earn one-half of a demonstrates that the equipment in specification is used in the equipment flexibility allowance for each early Tier which the engines are placed will use once operated in use to earn the 4 compliant engine used in its fuel meeting this low sulfur additional flexibility allowances. equipment. Table III.B–2 presents the specification and includes appropriate Equipment manufacturers installing requirements an engine would need to information on the engine label and engines complying with the final Tier 4 meet to be considered an early Tier 4 ensures that ultimate purchasers of standards (as described above) would engine for the purposes of this early Tier equipment using these engines are earn one flexibility allowance for each informed that ultra low-sulfur diesel early Tier 4 compliant engine used in its 4 engine incentive program.

TABLE III.B–2.—REQUIREMENTS FOR ENGINES [Under the Early Tier 4 Engine Incentive Program]

Number of flexibility allow- Date before which engines must be installed by ances earned Power category Tier 4 standards the engines must meet the equipment manufacturer for use of early tier 4 en- gines

25 ≤ hp < 75 ...... Model Year 2013 ...... January 1, 2013a ...... 1–to–1 (19 ≤ kW < 56) ...... 75 ≤ hp < 175 ...... Model Year 2014 ...... January 1, 2012 ...... 1–to–1 (56 ≤ kW <130) ...... Model Year 2012b ...... January 1, 2012 ...... 0.5–to–1 175 ≤ hp ≤ 750 ...... Model Year 2014 ...... January 1, 2011 ...... 1–to–1 (130 ≤ kW ≤ 560) ...... Model Year 2011b ...... January 1, 2011 ...... 0.5–to–1 Generator Sets ...... Model Year 2015 ...... January 1, 2015 ...... 1–to–1 >750 hp ...... (>560 kW) ...... Other Machines ...... Model Year 2015 ...... January 1, 2015 ...... 1–to–1 >750 hp ...... (>560 kW) ...... a The installation date for 50 to 75 horsepower engines purchased from manufacturers choosing to opt out of the 2008 model year Tier 4 standards and instead comply with the Tier 4 standards beginning in 2012 would be January 1, 2012. b To be eligible, engines must meet the 0.01g/bhp-hr PM standard and the alternative NOX standards in section 1039.102 (e) described in sec- tion II.A.2.c.

As described above, equipment number of engines used prior to Tier 4 equipment manufacturers to ‘‘trade’’ the manufacturers using early Tier 4 in each power category, the rated power additional flexibilities earned in the two compliant engines can earn flexibility of the engines, and the type of power categories between 75 and 750 allowances that can be used to application the engines above 750 horsepower, with the power rating of effectively increase the number of horsepower were used in) when they the engines factored into the ‘‘trade’’ to allowances provided under the percent submit their first report under the Tier ensure equivalent emissions for the of production allowance or the small 4 flexibility program. For engines above engines generating the early allowances volume allowance in the same power 750 horsepower, equipment and the engines using the allowances. category. For example, an equipment manufacturers also would be required to For example, an equipment manufacturer that uses 500 engines in keep records of how many early Tier 4 manufacturer that earned 100 additional the 175 to 750 horsepower category that compliant engines are used in generator flexibility allowances under the early met the model year 2011 PM standards sets, versus how many are used in other Tier 4 engine incentive program from and alternative NOX standards would machinery. This is because the 100 horsepower engines, could ‘‘trade’’ earn 250 additional flexibility additional flexibility allowances earned those flexibilities into the next power allowances in that power category. That from the use of early Tier 4 compliant category up (175 to 750 horsepower). manufacturer could then exclude 250 engines used in generator sets could The equipment manufacturer would engines from its calculations before only be used for additional flexibility generate 10,000 horsepower-allowances demonstrating compliance with the 80 allowances for generator sets. Likewise, from those early engines (i.e., 100 percent limit under the percent of the additional flexibility allowances horsepower times 100 allowances). The production allowance (or the applicable earned from the use of early Tier 4 equipment manufacturer could then limit under the small volume allowance compliant engines used in mobile produce, for this example, an additional if the equipment manufacturer is using machinery (labeled ‘other machinery’ in 25 engines with a power rating of 400 that option) once Tier 4 starts in that the table above) applications could only horsepower above and beyond the power category. be used for additional flexibility normal limit on allowances (or any Equipment manufacturers would be allowances for other non-generator set other combination of engines such that required to report certain information applications. the sum of the horsepower-weighted regarding the early Tier 4 compliant Under the early Tier 4 engine allowances adds up to the 10,000 engines (such as engine family name, incentive program, we will allow horsepower-allowances used in this

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example). We are not allowing trading economic hardship relief generally will not reasonably be expected to affect for engines in the 25 to 75 horsepower only be accepted during the first year emissions such as a change in materials category because the Tier 4 standards after the effective date of an applicable or a change in the company supplying for these engines are based on the new emission standard. the components of the engine. application of only PM aftertreatment The Agency expects this provision 3. What Are the Recordkeeping, technology. Similarly, we are not will be rarely used. This expectation has Notification, Reporting, and Labeling allowing trading for engines in the been supported by our initial experience Requirements Associated With the above 750 horsepower category because with the Tier 2 standards in which only Equipment Manufacturer Transition the Tier 4 standards are based on the one equipment manufacturer has Provisions? application of PM aftertreatment to all applied under the existing hardship engines, but NOX aftertreatment for only relief provisions (and the request was The following section describes the some engines. subsequently denied). Requests for recordkeeping, notification, reporting, economic hardship relief will be and labeling requirement being adopted f. Economic Hardship Relief Provision evaluated by EPA on a case-by-case today. As proposed, failure to comply With today’s action, and as proposed, basis, and may require, as a condition of with these requirements will subject the we are providing an additional Tier 4 granting the applications, that the noncomplying party to penalties as transition flexibility for ‘‘economic equipment manufacturer agree (in described in 40 CFR 1068.101. hardship relief’’ for equipment writing) to some appropriate measure to a. Recordkeeping Requirements for manufacturers. Under the economic recover the lost environmental benefit. Engine and Equipment Manufacturers hardship relief provisions, an Ingersoll-Rand commented that the equipment manufacturer that does not provisions regarding eligibility for With today’s action, we are extending make its own engines could obtain hardship relief should be revised so that the recordkeeping requirements from limited additional relief by providing they do not require a demonstration of the current equipment manufacturer evidence that, despite its best efforts, it severe economic hardship, noting that transition program. Under the Tier 4 cannot meet the implementation dates, such a showing would invariably transition program, engine even with the Tier 4 equipment preclude large entities (like Ingersoll- manufacturers will be allowed to flexibility program provisions outlined Rand) from utilizing the provision, even continue to build and sell previous tier above. Such a situation could occur if though delays were beyond their engines needed to meet the market an engine supplier without a major control. As described earlier in this demand created by the equipment business interest in the equipment section, we have included an additional manufacturer flexibility program, manufacturer were to change or drop an flexibility in the Tier 4 rule in order to provided they receive written assurance engine model very late in the provide additional needed lead time in from the engine purchasers that such implementation process. The purpose of appropriate, individualized engines are being procured for this the provision is to redress individual circumstances based on a showing of purpose. Engine manufacturers will be situations of extreme economic extreme technical or engineering required to keep copies of the written hardship, not merely to perpetuate hardship. We believe the provisions of assurance from the engine purchasers existing market share. That is, if the technical hardship address the for at least five full years after the final situations arise where one equipment concerns noted by Ingersoll-Rand in year in which allowances are available maker cannot produce equipment using their comments, and therefore we are for each power category. Tier 4-compliant engines by the not revising the existing economic Equipment manufacturers choosing to compliance date, but another can, hardship relief provisions (which take advantage of the Tier 4 allowances ordinarily EPA would not adjust the require a demonstration of severe will be required to: (1) Keep records of program to allow use of the non- economic impact) for the Tier 4 final the production of all pieces of compliant application absent extreme, program. equipment excepted under the compelling equitability considerations. allowance provisions for at least five g. Existing Inventory Allowance Applications for economic hardship full years after the final year in which relief will have to be made in writing, The current program for nonroad allowances are available for each power and will need to be submitted before the diesel engines includes a provision for category; (2) include in such records the earliest date of noncompliance. The equipment manufacturers to continue to serial and model numbers and dates of application will also have to include use engines built prior to the effective production of equipment and installed evidence that failure to comply is not date of new standards, until the older engines, and the rated power of each the fault of the equipment manufacturer engine inventories are depleted. It also engine, (3) calculate annually the (such as a supply contract broken by the prohibits stockpiling of previous tier number and percentage of equipment engine supplier), and include evidence engines. As proposed, we are extending made under these transition provisions that serious economic hardship to the these provisions for the transition to the to verify compliance that the allowances company will result if relief is not Tier 4 standards adopted today. We are have not been exceeded in each power granted. (As explained in section also extending the existing provision category; and (4) make these records III.B.2.b above, this is a significant that provides an exception to the available to EPA upon request. difference between this economic applicable compliance regulations for hardship provision and the technical the sale of replacement engines. In b. Notification Requirements for hardship flexibility, where extending this provision, we are Equipment Manufacturers consideration of cost is generally requiring that engines built to replace We are adopting new notification irrelevant.) We expect to work with the certified engines be identical in all requirements for equipment applicant to ensure that all other material respects to an engine of a manufacturers with the Tier 4 program. remedies available under the flexibility previously certified configuration that is Under the Tier 4 transition program, provisions are exhausted before granting of the same or later model year as the equipment manufacturers wishing to additional relief (if appropriate), and engine being replaced. The term participate in the Tier 4 transition place a limit on the period of relief to ‘‘identical in all material respects’’ provisions will be required to notify no more than one year. Applications for allows for minor differences that would EPA prior to their use of the Tier 4

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transition provisions. Equipment c. Reporting Requirements for Engine program. In addition, and also as manufacturers will be required to and Equipment Manufacturers proposed, equipment manufacturers submit their notification before the first As with the current program, engine will be required to apply a label to the calendar year in which they intend to manufacturers who participate in the engine or piece of equipment that use the transition provisions. We Tier 4 program will be required to identifies the equipment as using an believe that prior notification will submit information each year on the engine produced under the Tier 4 greatly enhance our ability to ensure number of such engines produced and transition program for equipment compliance. Under the newly adopted to whom the engines are provided. The manufacturers. Engine manufacturers were opposed notification requirements, each purpose of these submittals is to help to the new labeling requirements. We equipment manufacturer will be EPA monitor compliance with the believe these new labeling requirements required to notify EPA in writing and program and prevent abuse of the provide the following information prior will allow EPA to easily identify the program. exempted engines and equipment, to the start of the first year in which the We are adopting new reporting verify which equipment manufacturers manufacturer intends to use the requirement for equipment flexibilities: are using these exceptions, and more manufacturers participating in the Tier easily monitor compliance with the (1) The nonroad equipment 4 equipment manufacturer transition transition provisions. Labeling of the manufacturer’s name, address, and provisions. With today’s action, equipment should also help U.S. contact person’s name, phone number; equipment manufacturers participating Customs to quickly identify equipment (2) The allowance program that the in the program will be required to being imported using the exemptions for nonroad equipment manufacturer submit an annual written report to EPA equipment manufacturers. intends to use by power category; that calculates its annual number of exempted engines under the transition 4. What Are the Requirements (3) The calendar years in which the provisions by power category in the Associated With Use of Transition nonroad equipment manufacturer previous year. Equipment Provisions for Equipment Produced by intends to use the exception; manufacturers using the percent of Foreign Manufacturers? (4) An estimation of the number of production allowance, will also have to Under the current regulations in 40 engines to be exempted under the calculate the percent of production the CFR 89.2, importers are treated as transition provisions by power category; exempted engines represented for the equipment manufacturers and are each (5) The name and address of the appropriate year. Each report will allowed the full allowance under the engine manufacturer from whom the include a cumulative calculation (both transition provisions in 40 CFR equipment manufacturer intends to total number and, if appropriate, the 89.102(d). Therefore, under the current obtain exempted engines; and percent of production) for all years the provisions, importers of equipment from (6) Identification of the equipment equipment manufacturer is using the a foreign equipment manufacturer could manufacturer’s prior use of Tier 2/3 transition provisions for each of the Tier as a group import more excepted transition provisions. 4 power categories. In order to ease the equipment from that foreign reporting burden on equipment manufacturer than 80% of that Engine manufacturers supported the manufacturers, EPA intends to work manufacturer’s production for the U.S. new notification requirements for with the manufacturers to develop an market (i.e., more than the percent-of- equipment manufacturers. One electronic means for submitting production), or more than the small- equipment company, however, information to EPA. volume allowance. Therefore, the commented that the notification EPA had requested comment on current regulation creates a potentially requirements are of minimal value and whether these new reporting significant adverse environmental should be deleted. We disagree and requirements for equipment impact. EPA did not intend this continue to believe the new notification manufacturers should also apply to the outcome, and does not believe it is requirements will greatly enhance our current Tier 2/Tier 3 transition program, needed to provide reasonable lead time ability to ensure compliance with the and if so, how these provisions should to foreign equipment manufacturers. flexibility provisions. Given the limited be phased in for equipment EPA thus proposed to change the information that must be provided by manufacturers using the current Tier 2/ current regulations to eliminate this equipment manufacturers, we do not Tier 3 transition provisions. We did not disparity. expect that the notifications will require receive any comments on this issue. As noted earlier, with today’s action, any significant effort to pull the However, consistent with our approach only those nonroad equipment information together and submit to EPA. to several other Tier 4 requirements that manufacturers that install engines and EPA had requested comment on we were considering applying to the have primary responsibility for whether the notification provisions Tier 2/Tier 3 transition program, we are designing and manufacturing equipment should also apply to the current Tier 2/ not adopting reporting requirements for will qualify for the allowances or other Tier 3 transition program, and if so, how equipment manufacturers for the relief provided under the Tier 4 these provisions should be phased in for current Tier 2/Tier 3 program. transition provisions. Foreign equipment manufacturers using the equipment manufacturers who comply current Tier 2/Tier 3 transition d. Labeling Requirements for Engine with the compliance related provisions provisions. We did not receive any and Equipment Manufacturers discussed below will receive the same comments on this issue. However, Engine manufacturers are currently allowances and other transition consistent with our approach to several required to label their certified engines provisions as domestic manufacturers. other Tier 4 requirements that we were with a label that contains a variety of Foreign equipment manufacturers who considering applying to the Tier 2/Tier information. Under today’s action, as do not comply with these compliance 3 transition program, we are not proposed, we are adopting requirements related provisions will not receive adopting such notification requirements that engine manufacturers be required to allowances. Importers that have little for equipment manufacturers for the identify on the engine label if the engine involvement in the manufacturing and current Tier 2/Tier 3 program. is exempted under the Tier 4 transition assembling of the equipment will not

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receive any allowances or other engines imported into the U.S. We engine cost estimates from table 6.2–5 of transition relief directly, but can import believe the bond requirements are an the final RIA, equipment using engines exempt equipment if it is covered by an important tool to ensure that foreign exempted under the transition program allowance or transition provision equipment manufacturers are subject to will require a bond in the amount associated with a foreign equipment the same level of enforcement as shown in table III.B–3. manufacturer. These provisions allow domestic equipment manufacturers. the transition allowances and other Furthermore, we believe that a bonding TABLE III.B–3.—BOND VALUE FOR provisions to be used by foreign requirement for the foreign equipment ENGINES IMPORTED equipment manufacturers in the same manufacturer is an important [Under the Tier 4 Transition Program] way as domestic equipment enforcement tool in order to ensure that manufacturers, while avoiding the EPA has the ability to collect any Per en- potential for importers using judgements assessed against a foreign Power range gine bond unnecessary allowances. equipment manufacturer for violations value (dollars) Under today’s action, a foreign of these transition provisions. equipment manufacturer includes any Under the bond program adopted 0 < hp < 25 ...... 150 equipment manufacturer that produces today, a participating foreign equipment 25 ≤ hp < 75 ...... 300 equipment outside of the United States manufacturer will have to obtain 75 ≤ hp < 175 ...... 500 that is eventually sold in the United annually a bond in the proper amount 175 ≤ hp < 300 ...... 1,000 States. All foreign nonroad equipment that is payable to satisfy United States 300 ≤ hp < 600 ...... 3,000 ≥ manufacturers wishing to use the judicial judgments that results from hp 600 hp ...... 8,000 transition provisions will have to administrative or judicial enforcement comply with all requirements of the actions for conduct in violation of the Depending on the number of engines/ regulation discussed above including: Clean Air Act. The foreign equipment equipment brought into the U.S. each Notification, recordkeeping, reporting manufacturer will have two options for year, the value of the bond calculated and labeling. Along with the equipment complying with the bonding using the above values could change from year to year. Under the provisions manufacturer’s notification described requirement. The foreign equipment adopted today, an importer would earlier, a foreign nonroad equipment manufacturer can: calculate the estimated bond amount manufacturer will have to comply with (1) Obtain a bond in the proper amount using the values in table III.B–3 and be various compliance related provisions from a third-party surety agent that is cited required to obtain a bond equal to the similar to those adopted in several fuel in the U.S. Department of Treasury Circular highest bond value estimated over the regulations relating to foreign refiners.68 570, ‘‘Companies Holding Certificates of seven-year flexibility period. Because As part of the notification, the foreign Authority as Acceptable Sureties on Federal we have the authority to bring nonroad equipment manufacturer will Bonds and as Acceptable Reinsuring Companies’’; or enforcement actions against a have to: (2) Obtain an EPA waiver from the bonding manufacturer for five years beyond the (1) Agree to provide EPA with full, requirement, if the foreign equipment end of the program, the manufacturer complete and immediate access to conduct manufacturer can show that it has assets of would be required to maintain the bond inspections and audits; an appropriate value in the United States. for five years beyond the end of the (2) Name an agent in the District of EPA expects the second bond option flexibility period or five years after Columbia for service of process; (3) Agree that any enforcement action to address instances where an using up all of its available allowances, related to these provisions will be governed equipment manufacturer produces whichever occurs first. Finally, if a by the Clean Air Act; equipment outside the United States foreign equipment manufacturer’s bond (4) Submit to the substantive and containing flexibility engines, but also is used to satisfy a judgment within the procedural laws of the United States; has facilities (and thus significant seven-year flexibility period, the foreign (5) Agree to additional jurisdictional assets) inside the United States. Under equipment manufacturer will then be provisions; this second option, such a manufacturer required to increase the bond to cover (6) Agree that the foreign nonroad can apply to the EPA for a waiver of the the amount used within 90 days of the equipment manufacturer will not seek to date the bond is used. detain or to impose civil or criminal bonding requirement. remedies against EPA inspectors or auditors Because EPA’s concerns of Most comments received on this issue for actions performed within the scope of compliance will relate to the nature and supported the proposed provisions. EPA employment related to the provisions of tier of engines used in the transition However, Ingersoll-Rand commented this program; equipment, we believe the bond value that EPA should clarify whether the (7) Agree that the foreign nonroad should be related to the value of the special requirements for foreign equipment manufacturer becomes subject to engine used. Therefore, we are adopting equipment manufacturers apply to U.S.- the full operation of the administrative and requirements that the bond be set at a based companies that have foreign judicial enforcement powers and provisions level designed to represent manufacturing facilities. Ingersoll-Rand of the United States without limitation based approximately 10% of the cost of the believes that such requirements should on sovereign immunity; and (8) Submit all reports or other documents engine for each piece of transition not apply because EPA appears to be in the English language, or include an equipment produced for import into the concerned about abuse of the program English language translation. United States under this program. So by foreign companies that export that manufacturers have certainty machines into the U.S. With today’s In addition to these requirements, we regarding the bond amounts and so that action, all equipment manufacturers are adopting a new provision for foreign there isn’t a need for extensive data who import equipment into the U.S. equipment manufacturers that submittals and evaluation between EPA will be required to comply with the participate in the transition program to and the manufacturer, the rule specifies provisions for foreign equipment comply with a bond requirement for the bond value for each imported engine manufacturers, even if they are U.S.- based companies. Because there is a 68 See, for example, 40 CFR 80.410 concerning based on the estimated average cost for provisions for foreign refiners with individual a Tier 4 engine on which the bond wide range of actual presence in this gasoline sulfur baselines. would be based. Based on average country for ‘‘U.S.-based’’ companies,

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EPA believes it is important that all C. Engine and Equipment Small the Agency with an opportunity to companies importing equipment to the Business Provisions (SBREFA) identify and explore potential ways of U.S. comply with the requirements for The Regulatory Flexibility Act (RFA) shaping the rule to minimize the burden foreign equipment manufacturers. generally requires an agency to prepare of the rule on small entities while Neither the notification requirements a regulatory flexibility analysis of any achieving the rule’s purposes and being described earlier for foreign equipment rule subject to notice and comment consistent with Clean Air Act statutory manufacturers nor the bonding rulemaking requirements under the requirements. requirements should cause any burden Administrative Procedure Act or any EPA approached this process with for companies with significant presence other statute, unless the agency certifies in this country. We would expect that care and diligence. To identify that the rule will not have a significant representatives of small businesses for only those companies with limited economic impact on a substantial presence or no presence in this country this process, we used the definitions number of small entities. Small entities provided by the Small Business will be impacted to any measurable include small businesses, small degree because of the requirements Administration (SBA) for manufacturers organizations, and small governmental of nonroad diesel engines and vehicles. placed on foreign equipment jurisdictions. As EPA believed that the The categories of small entities in the manufacturers. ultimate rule could have a significant nonroad diesel sector that will In addition to the foreign equipment economic impact on small businesses, manufacturer requirements discussed we prepared a regulatory flexibility potentially be affected by this above, EPA is also requiring importers analysis as part of this rulemaking. We rulemaking are defined in the following of exempted equipment from a prepared an Initial Regulatory table: complying foreign equipment Flexibility Analysis (IRFA) pursuant to Defined as Major SIC manufacturer to comply with certain section 603 of the RFA which is part of Industry small entity provisions. EPA believes these importer the record for the NPRM, and we by SBA if: codes provisions are essential to EPA’s ability prepared a Final Regulatory Flexibility to monitor compliance with the Analysis (FRFA) to support today’s Engine manu- Less than Major Group transition provisions. Under today’s action. facturers. 1,000 em- 35 action, each importer will be required to Under section 609(b) of the RFA, a ployees. notify EPA prior to their initial Small Business Advocacy Review Panel Equipment importation of equipment exempted (SBAR Panel or Panel) is required to be manufactur- under the Tier 4 transition provisions. convened prior to publication of both an ers: Importers will be required to submit IRFA and a FRFA. Section 609(b) of the —construc- Less than Major Group tion 750 em- 35 their notification prior to the first RFA directs the Panel to, through equip- ployees. calendar year in which they intend to outreach with small entity ment. import exempted equipment from a representatives (SERs), report on the —industrial Less than Major Group complying foreign equipment comments of the SERs and make truck 750 em- 35 manufacturer under the transition findings under section 603 of the RFA manufac- ployees. provisions. The importer’s notification on issues related to identified elements turers will need to include the following of an IRFA during the proposal stage of (i.e., fork- information: a rulemaking. During the development lifts). —all other Less than Major Group (1) The name and address of importer (and of the rulemaking, EPA is to analyze the elements of the IRFA in developing the nonroad 500 em- 35 any parent company); equip- ployees. (2) The name and address of the FRFA for the final rulemaking (see ment manufacturers of the exempted equipment section X.C of this preamble for more manufac- and engines the importer expects to import; discussion on the elements of a FRFA). turers. (3) Number of exempted equipment the The purpose of the Panel was to gather importer expects to import for each year information to identify impacts on small One small engine manufacturer and 5 broken down by equipment manufacturer businesses and to develop potential and power category; and regulatory options to mitigate these small equipment manufacturers agreed (4) The importer’s use of the transition concerns. At the completion of the to serve as Small Entity Representatives provisions in prior years (number of (SERs) throughout the SBAR Panel flexibility engines imported in a particular SBAR Panel process, the Panel prepared a Final Panel Report. This report process for this proposal. These year, under what power category, and the companies represented the nonroad names of the equipment and engine includes: manufacturers). • Background information on the market well, as the group of SERs proposed rule being developed; consisted of businesses that In addition, EPA is requiring that any • Information on the types of small manufacture various types of nonroad importer electing to import to the entities that would be subject to the diesel equipment. United States exempted equipment from proposed rule; The following are the provisions • a complying foreign equipment A description of efforts made to recommended by the SBAR Panel. As manufacturer will have to submit obtain the advice and recommendations described in section III.B above, there annual reports to EPA. The annual of representatives of those small are other provisions that apply to all report will have to include the number entities; and, equipment manufacturers; however, the of exempted equipment the importer • A summary of the comments that discussion in this section focuses actually imported to the United States had been received to date from those in the previous calendar year; and the representatives. mainly on small entities. identification of the equipment The Panel report was included in the manufacturers and engine proposal’s rulemaking record (and manufacturers whose exempted hence in the rulemaking record for this equipment/engines were imported. final rule), and provided the Panel and

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1. Nonroad Diesel Small Engine one year if the 2008 interim standards on meeting this standard. (Please note Manufacturers are met, with the stipulation that small the distinction between these engines a. Lead Time Transition Provisions for business manufacturers cannot use PM and engines in the 50–75 hp power Small Business Engine Manufacturers credits to meet the interim standard. band, where we are conditioning a However, if a small manufacturer elects three-year extension on meeting the i. Panel Recommendations and Our the optional approach to the standard 2008 standards. The difference is that Proposal (elects to skip the interim standard), no engines in the 50–75 hp category have The transition provisions further relief will be provided. an option of whether or not to meet With regard to NOX— those 2008 standards. We consequently recommended by the SBAR Panel for • engines produced or imported by small There is no change in the level of have structured the small business entities are listed below. For all of the the NOX standard for engines under 25 engine extension to encourage a choice hp and those between 50 and 75 hp, so to comply with those standards.) provisions, the Panel recommended that • small business engine manufacturers we did not propose any special NOX—a manufacturer may elect to provisions for these categories. delay compliance with the standard for and small importers must have certified • engines in model year 2002 or earlier in For engines in the 25–50 hp and the up to three years. For engines in the 50–75 hp category: order to take advantage of these 75–175 hp categories we proposed a three year delay in the program • As proposed, EPA is adopting provisions. Each manufacturer would be special provisions for these engines, limited to 2,500 units per year as this consistent with the one-phase approach recommendation above. reflecting the special provisions in the number allows for some market growth. rules which give engine manufacturers The Panel recommended these ii. What We Are Finalizing the choice of meeting an interim stipulations in order to prohibit the We are finalizing all of the provisions standard for PM in 2008 and meeting misuse of the transition provisions as a set out above for NOX. For PM, we are the aftertreatment-based standard in tool to enter the nonroad diesel market finalizing some of the proposed 2013, or meeting the aftertreatment- or to gain unfair market position relative provisions with certain revisions, as based standard in 2012 without meeting to other manufacturers. described below. In finalizing these an interim standard. A small business Currently, certified nonroad diesel provisions, we considered not only the engine manufacturer may delay engines produced by small recommendations of the Panel, but also compliance with the 2013 Tier 4 manufacturers all have a horsepower the public comments on the proposed requirement of 0.02 g/bhp-hr PM for up rating of 80 or less. At proposal, we small business engine manufacturer to three years provided that it complies considered both a one-step approach, transition provisions. Extensions of an with the interim Tier 4 requirements and the two-step approach which we are applicable standard also apply to all that begin in model year 2008 on time, finalizing today. Due to the structure of certification requirements associated without the use of credits. We proposed the standards and their timing, EPA with that standards (so that transient an extension of only one year, but this proposed transition provisions for small and NTE testing would not be required would be inconsistent with the business engine manufacturers which until expiration of the extension). Based extension period we are adopting, and encompassed both approaches on available data, and further which we proposed, for all of the other recommended by the Panel, with the conversations with manufacturers power categories. In addition, this inclusion of the 2,500 unit limit (as during the development of this provision for 50–75 hp engines is suggested by the Panel) for each rulemaking (documented in the structured to encourage small business manufacturer. Given the two-step administrative record), we have found engine manufacturers to opt for early structure of the final rule, we are only no small business manufacturers of PM reductions by meeting the 2008 providing those proposed provisions nonroad diesel engines above 175 hp. interim PM standard, so that an related to that approach (a complete For engines under 25 hp: extension of three years is appropriate description of the provisions proposed • PM—a manufacturer may elect to as an incentive. We are requiring that by the Panel, and also by specific Panel delay compliance with the standard for these engines achieve the 2008 standard members, is located in the SBAR Final up to three years. without use of credits to assure that Panel Report). • NOX—there is no change in the there be improvements in actual For a two-step approach the Panel level of the existing NOX standard for performance by engines certifying to the recommended that: engines in this category, so no special standard. We believe that such • An engine manufacturer should be provisions are being provided. assurance is a necessary and reasonable allowed to skip the first phase and For engines in the 25–50 hp category: balance for the three year additional comply on time with the second; or, • PM—manufacturers must comply lead time for meeting the aftertreatment- • A manufacturer could delay with the interim standards (the Tier 4 based standard. There were no adverse compliance with each phase of requirements that begin in model year comments on conditioning the standards for up to three years. 2008) on time, and may elect to delay extension in this manner. We proposed the following provisions compliance with the 2013 Tier 4 In the alternative, a manufacturer may in the NPRM (based on available data, requirements (0.02 g/bhp-hr PM elect to skip the interim standard we believe that there are no small standard) for up to three years. Due to completely. However, manufacturers manufacturers of nonroad diesel engines an oversight at proposal, we did not choosing this option will receive only above the 75–175 hp category): include transition provisions for this one additional year for compliance with With regard to PM— category in the NPRM, but there is no the 0.02 g/bhp-hr standard (i.e. • Engines under 25 hp and those reason to exclude them when all other compliance in 2013, rather than 2012). between 75 and 175 hp have only one small business engines are eligible for These engines would already have had standard so the manufacturer could extensions. We therefore are adopting a eight years of lead time to prepare for delay compliance with these standards three year extension with today’s action. the PM standard without any diversion for up to three years. As engines in this category must meet of resources to meet an interim PM • For engines between 50 and 75 hp, the 2008 standard, we are not standard, so that an extension of longer we proposed to delay compliance for conditioning this three year extension than one year would not be appropriate,

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within the meaning of section 213(b) of with little corresponding environmental Horsepower Provision the Act. In addition, structuring the category benefit; and further, that we should extension in this way encourages small exclude smaller engines (those under 75 engine manufacturers to choose to meet Manufacturers may hp) from further regulation in order to skip the interim the 2008 interim standard for PM, comply with the Regulatory Flexibility standard com- Act and fulfill the requirement of furthering the objective of early PM pletely, and will re- emission reductions. ceive an additional reducing the burden on small engine classes. As proposed, we are not • NO —there is no change in the year for compli- X ance with the 0.02 adopting standards based on NOX standard for engines in this g/bhp-hr PM Tier 4 performance of NOX aftertreatment category, therefore no special provisions standard (i.e. com- technologies for engines under 75 hp. are being provided. pliance in 2013, As described in more detail in section For engines in the 75 to 175 hp rather than 2012). II of this preamble, the Summary and category: 75–175 hp .... NOX Manufacturers may Analysis of Comment Document, and delay compliance the RIA, we have found no factual basis • PM—a manufacturer may elect to with the standard supporting the assertion that standards delay compliance with the standard for for three years. PM Manufacturers may for PM for engines between 25 and 75 up to three years. hp based on use of advanced • delay compliance NOX—a manufacturer may elect to with the standard aftertreatment impose costs out of delay compliance with the standard for for three years. relation to environmental benefit, have up to three years. a disproportionate impact on small These provisions are also set out b. Hardship Provisions for Small businesses, or are otherwise below in the following table (in all Business Engine Manufacturers inappropriate. In fact, it is our finding that these standards for PM are instances, these engines must meet the i. Panel Recommendations and Our ‘‘appropriate’’ within the meaning of previously applicable standards as set Proposals section 213(a)(4) of the Clean Air Act, out in § 1039.104 (c): The Panel recommended two types of and that PM standards for these engines hardship provisions for small business not based on performance of advanced Horsepower category Provision engine manufacturers. These provisions aftertreatment would be inappropriate would allow for relief in the following as failing to reflect standards based on

<25 hp ...... NOX No special provisions cases: available treatment for these engines are being pro- • A catastrophic event, or other (taking into account costs, noise, safety, vided. extreme unforseen circumstances, and energy factors). We received no PM Manufacturers may beyond the control of the manufacturer adverse comments from small business delay compliance that could not have been avoided with engine manufacturers on the proposed with the standard reasonable discretion (i.e., fire, tornado, transition provisions for those for three years. supplier not fulfilling contract, etc.); manufacturers.69 Accordingly, we are NOX Manufacturers may and finalizing the small business engine delay compliance • The event where a manufacturer manufacturer hardship provisions that with the standard has taken all reasonable business, for three years. we proposed in the NPRM (as technical, and economic steps to 25–50 hp ...... PM Manufacturers must recommended by the Panel). We believe comply with the in- comply but cannot. that these provisions will provide terim standards in The Panel believed that either adequate regulatory flexibility for these 2008, and may hardship relief provision would provide manufacturers, while remaining delay compliance lead time for up to 2 years, and that a consistent with the requirements of with the 2013 Tier manufacturer should have to section 213(a)(4) and 213(b) of the Clean 4 requirements demonstrate to EPA’s satisfaction that Air Act. (0.02 g/bhp-hr PM failure to sell the noncompliant engines standard) for three would jeopardize the company’s c. Other Small Business Engine years. solvency. EPA may also require that the Manufacturer Issues NOX No special provisions manufacturer make up the lost i. Panel Recommendations and Our are being pro- environmental benefit. Proposals vided. We proposed the Panel Manufacturers must The Panel also recommended that an comply with the in- recommendations for hardship ABT program be included as part of the terim Tier 4 re- provisions for small business engine overall rulemaking program. In quirements in manufacturers. While perhaps addition, the Panel suggested that EPA 2008, without the ultimately not necessary given the take comment on including specific use of credits, and phase-in schedule discussed above, we ABT provisions for small business may elect to delay stated that such provisions provide a engine manufacturers. We proposed an compliance with useful safety valve in the event of ABT program for all engine the 2013 Tier 4 re- unforeseen extreme hardship. quirements (0.02 manufacturers, with this program g/bhp-hr PM ii. What We Are Finalizing retaining the basic structure of the standard) for three We received two comments on the current nonroad diesel ABT program. years We did not include small business provisions for small business engine 50–75 hp ...... PM —OR— engine manufacturer-specific ABT manufacturers. SBA’s Office of Advocacy commented that the rule 69 The one comment that we received supported would impose significant burdens on a the provisions proposed for small business engine substantial number of small entities manufacturers.

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provisions in the proposal. Discussions The Panel recommended that EPA ii. What We Are Finalizing during the SBAR process indicated that seek comment on the total number of We are finalizing the Percent-of- small volume manufacturers would engines and annual cap values listed Production and Small Volume need extra time to comply due to cost above. In contrast to the Tier 2/Tier3 Allowances for all equipment and personnel constraints, and there is rule, the SBA Office of Advocacy manufacturers, with a few changes. little reason to believe that small expected the transition to the Tier 4 Some non-small equipment business manufacturer specific ABT technology will be more costly and manufacturers commented that the provisions could create an incentive to technically difficult. Therefore, the small-volume provision should enable accelerate compliance. small business equipment manufacturers to exempt up to 700 ii. What We Are Finalizing manufacturers may need more liberal pieces of equipment over a seven-year flexibility allowances especially for period, with no engine family As discussed above in section III.B, equipment using the lower hp engines. restriction. As explained earlier in we are finalizing an ABT program in The Panel’s recommended flexibility section III.B.2.c, we are finalizing today’s action similar to that already in may not adequately address the provisions that allow manufacturers to place for nonroad engine manufacturers. approximately 50 percent of small choose between two options: (a) We have also made a number of changes business equipment models where the Manufacturers would be allowed to to accommodate implementation of annual sales per model is less than 300 exempt 700 pieces of equipment over these new emission standards. and the fixed costs are higher. Thus, the seven years, within one engine family; 2. Small Nonroad Diesel Equipment SBA Office of Advocacy and the Office or (b) manufacturers using the small- Manufacturers of Management and Budget (OMB) volume allowance could exempt 525 Panel members recommended that machines over seven years (with a a. Transition Provisions for Small comment be sought on implementing maximum of 150 in any given year) for Business Equipment Manufacturers the small volume allowance (700 engine each of the three power categories below i. Panel Recommendations and Our provision) for small business equipment 175 horsepower, and 350 machines over Proposals manufacturers without a limit on the seven years (with a maximum of 100 in number of engine families which could any given year) for the two power The Panel recommended that we be covered in any hp category. categories above 175 horsepower. adopt the transition provisions Concurrent with the revised caps, described below for small business • Due to the changing nature of the manufacturers could exempt engines manufacturers and small business technology as the manufacturers make from more than one engine family under importers of nonroad diesel equipment. the transition from Tier 2 to Tier 3 and the small-volume allowance program. These transition provisions are similar Tier 4, the Panel recommended that the As explained earlier, based on sales to those in the Tier 2/3 rule (see 40 CFR equipment manufacturers be permitted information for small businesses, we 89.102). The recommended transition to borrow from the Tier3/Tier 4 estimated that the alternative small- provisions were as follows: flexibilities for use in the Tier 2/Tier 3 • time frame. volume allowance program to include Percent-of-Production Allowance: lower caps and allow manufacturers to • Over a seven model year period, Lastly, the Panel recommended exempt more than one engine family equipment manufacturers may install proposing a continuation of the current would keep the total number of engines engines not certified to the new transition provisions, without eligible for the allowance at roughly the emission standards in an amount of modifications to the levels or nature of same overall level as the 700–unit equipment equivalent to 80 percent of the provisions, that are available to program. The Agency believes that these one year’s production. This is to be these manufacturers. provisions will afford manufacturers the implemented by power category with To maximize the likelihood that the type of transition leeway recommended the average determined over the period application of these provisions will by the Panel. Further, these transition in which the flexibility is used. provisions could allow small business • result in the availability of previous Tier Small Volume Allowance: A engines for use by the small business equipment manufacturers to postpone manufacturer may exceed the 80 percent equipment manufacturers, the Panel any redesign needed on low sales allowance in seven years as described recommended that—similar to the volume or difficult equipment packages, above, provided that the previous Tier application of flexibility options that are thus saving both money and strain on engine use does not exceed 700 total currently in place—these provisions limited engineering staffs. Within limits, over seven years, and 200 in any given should be provided to all equipment small equipment manufacturers would year. This is limited to one family per manufacturers.70 be able to continue to use their current power category. Alternatively, the Panel engine/equipment configuration and We did in fact propose the Percent-of- recommended, at the manufacturer’s avoid out-of-cycle equipment redesign Production and Small Volume choice by hp category, a program that until the allowances are exhausted or eliminates the ‘‘single family provision’’ Allowances listed above for all the time limit passes. restriction with revised total and annual equipment manufacturers, and During the SBREFA Panel process, the sales limits as shown below: explicitly took the Panel report into Panel discussed the possible misuse of —For categories ≤175 hp–525 account in making that proposal. We the transition provisions by using them previous Tier engines (over 7 years) also requested comment on a number of as a loophole to enter the nonroad diesel with an annual cap of 150 units (these additional items, some of which were equipment market or to gain unfair engine numbers are separate for each hp proposed by the Panel (see section III.B market position relative to other category defined in the regulations) above). manufacturers. See 68 FR at 28481. EPA —For categories of > 175 hp–350 was concerned that importers of previous Tier engines (over 7 years) 70 The Panel recognized that, similar to the Tier equipment from a foreign equipment 2/3 standards, it may be necessary to provide with an annual cap of 100 units (these transition provisions for all equipment manufacturer could, as a group, import engine numbers are separate for each hp manufacturers, not just for small entities, and the more exempted equipment from that category defined in the regulations). Panel recommended that this be taken into account. foreign manufacturer than 80 percent of

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that manufacturer’s production for the manufacturers, small or large, in provisions that are being adopted for all United States market or more than the implementing the current nonroad equipment manufacturers). small volume allowances identified in standards. In addition, we believe that EPA also received comment the transition provisions. This would any application-specific difficulties can concerning the situation faced by small create a potentially significant disparity be accommodated by the transition business equipment manufacturers between the treatment of foreign and provisions the Agency is proposing using engines in the 25–50 horsepower domestic equipment manufacturers. including ABT. range. The concern was raised that EPA did not intend this outcome, and We are also finalizing two additional small businesses in this power grouping did not believe it was needed to provide provisions for all equipment will face a greater relative burden in reasonable lead time to foreign manufacturers that small business designing equipment for engines with equipment manufacturers. The Panel equipment manufacturers may take aftertreatment, and that they may need recognized that this was a possible advantage of. These provisions are the additional lead time beyond that problem, and believed that a Technical Hardship Provision and the provided by the small volume requirement that small equipment Early Tier 4 Engine Incentive Program. allowances. EPA believes that in general manufacturers and importers must have Both provisions are discussed in greater the small volume allowances should reported equipment sales using certified detail in sections III.B.2.b and e above. provide reasonable lead time engines in model year 2002 or earlier in opportunity for these manufacturers, but order to be eligible to access the b. Hardship Provisions for Small recognizes that there may be individual transition provisions was sufficient to Business Equipment Manufacturers cases where more lead time would be alleviate this problem. Upon further i. Panel Recommendations and Our appropriate for small business analysis during the development of the Proposals manufacturers in this power category. proposal, EPA decided to limit the EPA is therefore adopting a technical The Panel also recommended that two availability of transition provisions to hardship provision similar to that types of hardship provisions be entities that install engines and have adopted for the percent of production extended to small business equipment primary responsibility for designing and allowance. Small business manufacturers. These provisions would manufacturing equipment and included manufacturers using engines in the 25– allow for relief in the following cases: such a requirement in the proposal. Id. • 50 hp range could petition EPA to at 28477. Therefore, a company that A catastrophic event, or other approve additional needed lead time in only imported equipment, and had no extreme unforseen circumstances, appropriate, individualized involvement in the actual beyond the control of the manufacturer circumstances, based on a showing of manufacturing of the equipment, would that could not have been avoided with extreme technical or engineering be ineligible to access the transition reasonable discretion (i.e., fire, tornado, hardship as provided in 40 CFR supplier not fulfilling contract, etc.). 1039.625(m). EPA could approve provisions. As described in section • III.B.4, we are finalizing the proposed The event where a manufacturer additional small volume allowances, up requirements associated with the use of has taken all reasonable business, to a total number of 1100 units. This transition provisions by foreign technical, and economic steps to total number includes the allowances importers. Therefore, we no longer comply but cannot. In this case relief that are already available under the rule believe it is necessary to have a separate would have to be sought before there is without request. These additional requirement that small equipment imminent jeopardy that a allowances could only be used for manufacturers and importers have manufacturer’s equipment could not be engines in the 25–50 horsepower range, reported equipment sales using certified sold and a manufacturer would have to and could only be approved for engines in model year 2002 or earlier, demonstrate to the Agency’s satisfaction qualifying small business equipment and therefore are not finalizing this that failure to get permission to sell manufacturers. The limitations on the redundant provision. equipment with a previous Tier engine use of small volume allowances (such as We are also finalizing the Panel’s would create a serious economic when allowances may only be used recommendation that equipment hardship. Hardship relief of this nature within a single engine family and the manufacturers be allowed to borrow cannot be sought by an ‘‘integrated’’ annual limits) continue to apply to the from Tier 4 flexibilities in the Tier2/3 manufacturer (one which also standard allowances (that are available time frame. See the more extended manufactures the engines for its under the rule without request). Finally, discussion on this issue in section equipment). any additional allowances granted III.B.2.d above. We proposed that the hardship under this provision would have to be We are not finalizing the Panel provisions recommended by the Panel used within 36 months after the recommendation of a provision allowing be extended to small business transition flexibility period commences small manufacturers to request limited equipment manufacturers in addition to for these engines. The additional ‘‘application specific’’ alternative the transition provisions described allowances would not be subject to the standards for equipment configurations above. We also requested comment on annual limits noted earlier but they which present unusually challenging the stipulation that, to be eligible for could only be used after the maximum technical issues for compliance. We do these hardship provisions (as well as the amount of standard allowances are used not believe that the need for such a other proposed transition provisions), in a given year (e.g., a manufacturer provision has been established, and equipment manufacturers and importers using the 700 unit allowance would further, it could likely provide more must have reported equipment sales have to use 200 of their standard lead time than can be justified, and using certified engines in model year allowances for that year before they undermine emission reductions which 2002 or earlier. could use any of the additional are achievable. Moreover, no participant allowances granted by EPA under this ii. What We Are Finalizing in the SBAR process or during the technical hardship provisions). public comment period offered any We are finalizing the Panel- EPA recognizes that it is important to empirical support that such a problem recommended hardship provisions for facilitate the process for small business even exists. Nor have such issues been small business equipment equipment manufacturers to seek such demonstrated (or raised) by equipment manufacturers (which are the same approval, and intends to work with

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small manufacturers so that any We received very little comment on more sulfur than this, we would adjust transaction costs for them or for EPA our proposed certification fuel this target upward. can be minimized. For example, EPA provisions. Detroit Diesel commented We are also adopting two options for could consider at one time a common that we should set a maximum sulfur early use of the new 7 to 15 ppm sulfur request from similarly situated small specification of 500 ppm for Tier 3 diesel test fuel. The first will be business equipment manufacturers, as engines, which we are in fact doing available beginning in the 2007 model long as all of the necessary individual beginning in model year 2008 after this year for engines employing sulfur- information for each applicant were fuel is introduced in the nonroad sensitive technology. (Model year 2007 provided. Given that information in market, and optionally allowing as early coincides approximately with the such an application would still be both as 2006, the earliest Tier 3 model year, introduction of 15 ppm highway fuel.) company- and fact-specific (and likely provided manufacturers take steps to This allowance to use the new fuel in confidential as well), and that the encourage the use of this fuel, as model years before 2011 will only be criteria for relief as well as the scope of discussed below. available for engines which the appropriate relief are case-specific, we Because we are lowering the upper manufacturer demonstrates will be operated in use on fuel with 15 ppm would necessarily evaluate and decide limit for in-use nonroad diesel fuel sulfur or less. Any testing that we whether or not to approve additional sulfur content to 500 ppm in 2007, and perform on these engines will also use small volume allowances on a company- again to 15 ppm in 2010, we are also fuel meeting this lower sulfur by-company, case-by-case basis. establishing new ranges of allowable specification. This optional certification For a detailed description of the sulfur content for testing. These are 300 fuel provision is intended to encourage comments received on small business to 500 ppm (by weight) for model year the introduction of low-emission diesel engine and equipment manufacturer 2008 to 2010 engines, and 7 to 15 ppm technologies in the nonroad sector. issues, please refer to the Summary and (by weight) for 2011 and later model These engines will be able to use the Analysis of comments, which is a part year engines. We believe that these lower sulfur fuel throughout their of the rulemaking record (E-DOCKET ranges best correspond to the fuels that number OAR–2003–0012, and legacy operating life, given the early diesel machines will potentially see in availability of this fuel under the docket number A–2001–28). A summary 71 use. These specifications will apply to highway program, and the assured of the SBREFA process is located in emission testing conducted for section X.C of this preamble. availability of this fuel for nonroad certification, selective enforcement engines by mid-2010. D. Certification Fuel audits, in-use, and NTE testing, as well Considering that our Tier 4 program as any other laboratory engine testing It is well-established that measured will subject engines under 75 hp to new for compliance purposes for engines in emission standards in 2008 when 15 emissions may be affected by the the designated model years. Any properties of the fuel used during the ppm maximum sulfur fuel will be compliance testing of previous model readily available from highway fuel test. For this reason, we have year engines will be done with the fuels historically specified allowable ranges pumps (and will enter the nonroad fuel designated in our regulations for those market shortly after in 2010), we believe for test fuel properties such as cetane model years. Note that, as proposed, we number and sulfur content. These it is appropriate to provide a second, are allowing certification with fuel less proscriptive, option for use of 15 specifications are intended to represent meeting the 7 to 15 ppm sulfur most typical fuels that are commercially ppm sulfur certification fuel. This specification in 2010 for under 11 hp, option will be available to any available in use. This helps to ensure air-cooled, hand-startable, direct manufacturers willing to take extra steps that the emissions reductions expected injection (DI) engines certified under the to encourage the use of this fuel before from the standards occur in use as well optional standard provision discussed it is required in the field. We are as during emissions testing. in section II.A.3.a. allowing the early use of 15 ppm We are establishing all 6 provisions certification fuel for 2008–2010 engines that we proposed related to the sulfur It is important to note that while these under 75 hp, provided the certifying content of fuel used in conducting specifications include the maximum manufacturer ensures that ultimate nonroad diesel engine emissions testing: sulfur level allowed for in-use fuel, we • believe that it is generally appropriate to purchasers of equipment using these 300–500 ppm for model year 2008 engines are informed that the use of fuel to 2010 engines, test using the most typical fuels. As for • highway fuel, we expect that, under the meeting the 15 ppm specification is 7–15 ppm for 2011 and later model recommended, and also recommends to year engines, 15 ppm maximum sulfur requirement, refineries will typically produce diesel equipment manufacturers buying these • Extension through model year 2007 fuel with about 7 ppm sulfur, and that engines that labels be applied at the fuel of the maximum 2000 ppm specification the fuel could have slightly higher inlet to remind users of this for Agency testing on pre-Tier 4 engines, sulfur levels after distribution. Thus, we recommendation. This option does not • 7–15 ppm for 2007–2010 model expect that we will use fuel having a apply to those 50–75 hp engines not year engines that use sulfur-sensitive sulfur content between 7 and 10 ppm being certified to the 0.22 g/bhp-hr PM technology, sulfur for our emission testing. This is standard, under the manufacturers’ • 7–15 ppm for 2008–2010 model the same as the range we indicated will option discussed in section II.A.1.a. year engines under 75 hp, be used for heavy-duty diesel engine We believe that there may be a very • 300–500 ppm for some model year (HDDE) engine testing in model year small loss of emissions benefit from any 2006–2007 engines at or above 100 hp. 2007 and later (66 FR 5002, January 18, of these engines for which the operator The last 3 of these provisions are at the 2001). As with the highway fuel, should chooses to ignore the recommendation. certifying manufacturer’s option, and we determine that the typical in-use This is because the engine manufacturer involve additional measures that the nonroad diesel fuel has significantly will be designing the engine to comply manufacturer must take to help ensure with the emissions standards when that the specified fuel is used in the 71 See 66 FR 5112–5113 (January 18, 2001) where tested using 15 ppm fuel, potentially field. The below discussion provides we adopted a similar approach to certification fuels resulting in slightly higher emissions more detail on each of these provisions. for highway heavy-duty diesel engines (HDDEs). when it is not operated on the 15 ppm

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fuel. We also believe, however, that this specification of 500 ppm sulfur conducted on engines until the 2008 is more than offset overall by the maximum could have some limited model year when the 500 ppm encouragement this provision provides effect on the emissions control designs maximum test fuel sulfur level takes for early use of 15 ppm fuel. We are not used on these Tier 2 and 3 engines, in effect as discussed above. making this option available for engine that it will be slightly easier to meet the E. Temporary In-Use Compliance designs employing oxidation catalysts Tier 2 and 3 standards using the lower Margins or other sulfur-sensitive exhaust sulfur test fuel. In general, it is emission control devices except under reasonable to set specifications of test The Tier 4 standards will be the more restrictive provision for early fuel reflecting representative in-use challenging for diesel engine use of 15 ppm fuel described above, fuels, and here the engines are expected manufacturers to achieve, and will involving a demonstration by the to be using fuel with sulfur levels of 500 require manufacturers to develop and manufacturer that the fuel will indeed ppm or lower until 2010, and 15 ppm adapt new technologies for a large be used. Because these devices could or lower after that. In this case, any number and wide variety of engine potentially have very high sulfur-to- impact on expected engine emissions platforms. Not only will manufacturers sulfate conversion rates (see section from this change in test fuel for Tier 2 be responsible for ensuring that these II.B.4 and 5 above), and because very and 3 is expected to be slight. technologies enable compliance with high-sulfur fuels will still be available to We note that under current Tier 4 standards at the time of some extent, we believe that allowing regulations manufacturers are already certification, they will also have to this provision for these engines would allowed to conduct testing with ensure that these technologies continue risk very high PM emissions until the 15 certification fuel sulfur levels as low as to be highly effective in a wide range of ppm nonroad fuel is introduced. We are 300 ppm. The additional provision for in-use environments so that their not making this second early 15 ppm early use of 300–500 ppm sulfur test engines will comply in use when tested test fuel option available for engines not fuel will, however, result in any by EPA. Furthermore, for the first time, subject to a new Tier 4 standard in 2008 compliance testing conducted by the these nonroad diesel engines will be as these engines should already be Agency being done with fuel meeting subject to transient emissions control designed to meet applicable standards the 300–500 ppm specification. requirements and to NTE standards. in earlier years without need for the 15 Likewise choice of the option for early However, in the early years of a ppm fuel. use of 15 ppm sulfur test fuel would program that introduces new We are also adopting a similar result in any Agency testing being done technology, there are risks of in-use provision for use of certification fuel using that fuel. However, under both of compliance problems that may not meeting the 300–500 ppm sulfur these early certification fuel options appear in the certification process or specification before the 2008 model involving a recommended fuel use during developmental testing. Thus, we year. We believe certification of model provision, the Agency will not reject believe that for a limited number of year 2006 and 2007 engines being engines from in-use testing for which model years after new standards take designed without the use of sulfur- there is evidence or suspicion that the effect it is appropriate to adjust the sensitive technologies to meet new Tier engine had been fueled at some time compliance levels for assessing in-use 2 or Tier 3 emission standards taking with higher sulfur fuel. compliance for diesel engines equipped effect in those years (2006 for engines at Finally, we are extending a provision with high-efficiency exhaust emissions or above 175 hp and 2007 for 100–175 adopted in the 1998 final rule (63 FR control devices. This provides assurance hp engines) should be able to use this 56967, October 23, 1998). In that rule to the manufacturers that they will not fuel, provided the certifying we set a 2000 ppm upper limit on the face recall if they exceed standards by manufacturer is willing to take measures test fuel sulfur concentration for any a small amount during this transition to equivalent to those discussed above to testing to be performed by the Agency clean technologies. This approach is encourage the early use of this fuel (a on Tier 1 engines under 50 hp and Tier very similar to that taken in the light- recommendation to the ultimate 2 engines at or above 50 hp. We did not duty highway Tier 2 final rule (65 FR purchaser to use fuel with 500 ppm extend this provision to later model year 6796, February 10, 2000) and the maximum sulfur and a recommendation engines at that time because we felt that highway heavy-duty rule (66 FR 5113– to equipment manufacturers to so label more time was needed to assess trends 5114, January 18, 2001), both of which their equipment). in fuel sulfur levels for fuels used in involve similar approaches to The widespread availability of 500 nonroad diesels. At this time we are not introducing the new technologies. In ppm sulfur highway fuel, the short time aware of any additional information that fact, the similarities of nonroad diesel that these 2006 and 2007 engines could would indicate that a change in this test engines and expected Tier 4 control use higher sulfur fuels if an operator specification is warranted. More technologies to counterpart engines and were to ignore the recommendation, and importantly, because the fuel regulation technologies for heavy-duty highway the eventual use of 15 ppm sulfur fuel we are adopting will make 500 ppm diesel engines led us to model the in most of these engines for most of maximum sulfur nonroad diesel fuel proposed Tier 4 add-on provisions after their operating lives, gives us available by mid-2007, Tier 3 engines at the 2007 heavy-duty highway diesel confidence that this provision to or above 50 hp (which phase in program, with add-on levels chosen to encourage early use of lower sulfur fuel beginning in 2006) will be in the field be roughly equivalent to the levels will be beneficial to the environment for only 11⁄2 years prior to the in-use adopted in the highway rule. overall. As with the change to 300–500 introduction of 500 ppm fuel, and Tier Comments on the proposal were ppm cert fuel for model years 2008– 2 engines under 50 hp (which phase in received from engine manufacturers, 2010, engine manufacturers will design beginning in 2004) will be in the field requesting changes that would make the their engines to comply based on the for at most 31⁄2 years prior to this time. temporary in-use adjustments more test fuel specifications for certification We believe it is appropriate to avoid closely parallel the highway and compliance testing. The change adding the unnecessary complication of requirements. Specifically, they from a fuel specification for compliance frequent multiple changes to the test requested: (1) Providing two full model testing that ranges up to 2000 ppm fuel specification. We are therefore years of applicability following the sulfur for Tier 2 and 3 engines to a extending the 2000 ppm limit to testing completion of standards phase-in for the

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75–175 hp category, as was proposed for changes to the in-use add-on program because the standards in the regulations the other power categories, (2) adjusting for these engines as well. Specifically, are expressed in g/kW-hr, the the NOX threshold for applicability of these are the extension of model year adjustments included in the regulations the provisions to a level 8% above the applicability to 2016, two years after the are set at levels that make the resulting split family standard, (3) adopting 3 final Tier 4 standards take effect, and adjusted in-use standard equivalent in levels of add-ons based on how many the clarification of what PM thresholds stringency to the standards in this hours the test engine had been used, apply for engines used in generator sets preamble (expressed in g/bhp-hr) with cutpoints at 2000 and 3400 hours, and for other engines. adjusted by the values in Table III.E–1 and (4) a 25% upward adjustment to the Table III.E–1 shows the in-use (also expressed in g/bhp-hr). add-on levels. We agree that these adjustments that we will apply. These Note too that, as part of the changes would result in a closer in-use add-on levels will be applied certification demonstration, approximation to the highway program. only to engines certified in the indicated manufacturers will still be required to Our goal in proposing provisions model years and having FELs (or demonstrate compliance with the somewhat different from the highway certifying to standards without FELs) at unadjusted Tier 4 certification standards program was to avoid unnecessary or below the specified threshold levels. using deteriorated emission rates. complexity. However, we believe that These adjustments are added to the Therefore, the manufacturer will not be maintaining consistency with the appropriate FELs (see section III.A) or, able to use these in-use standards as the highway program is a more important for engines certified to the standards design targets for the engine. They will goal and the manufacturers’ suggested without the use of ABT program credits, need to project that most engines will changes do not overly complicate the to the standards themselves, in meet the standards in-use without program, and so we have decided to determining the in-use compliance level adjustment. The in-use adjustments will make these changes. for a given in-use hours accumulation merely provide some assurance that We note too that changes we are on the engine being tested. Note that the they will not be forced to recall engines making to the Tier 4 program for PM adjustment is the same for all in-use because of some small miscalculation of engines over 750 hp necessitate other hours accumulation. Note also that, the expected deterioration rates.

TABLE III.E–1.—ADD-ON LEVELS USED IN DETERMINING IN-USE STANDARDS

NOX PM Engine power Model years Add-on level a For operating Add-On level b (g/bhp-hr) hours (g/bhp-hr)

25 ≤ hp <75 ...... (19 ≤ kW <56) ...... 2013–2014 none 0.01

0.12 ≤ 2000 75 ≤ hp <175 ...... 2012–2016 0.19 2001–3400 0.01 (56 ≤ kW <130) ...... 0.25 > 3400

0.12 ≤ 2000 175 ≤ hp ≤750 ...... 2011–2015 0.19 2001–3400 0.01 (130≤ kW ≤560) ...... 0.25 > 3400

0.12 ≤ 2000 hp >750 ...... 2011–2016 0.19 2001–3400 0.01 (kW >560) ...... 0.25 > 3400 Notes: a Applicable only to those engines certifying to standards or with FELs at or below 1.6 g/bhp-hr NOX. b Applicable only to those engines certifying to standards or with FELs at or below the filter-based Tier 4 PM standards (0.01 g/bhp-hr for 75– 750 hp engines, 0.02 g/bhp-hr for 25–75 hp engines and for >750 hp engines in generator sets, and 0.03 g/bhp-hr for all other >750 hp engines).

F. Test Cycles development of such a test. This NRTC cycle captures transient development progressed steadily and emissions over much of the typical 1. Transient Test has resulted in the creation of the nonroad engine operating range, and In the 1998 final rule that set new Nonroad Transient Composite (NRTC) thus helps to ensure effective control of emission standards for nonroad diesel test cycle which we are adopting in our all regulated pollutants. The speed and engines, EPA expressed a concern that Tier 4 nonroad diesel program. The load operating schedule for EPA’s NRTC the steady-state test cycles used to NRTC cycle supplements the existing test cycle is described in regulations at demonstrate compliance with emission nonroad steady-state test requirements. 40 CFR 1039.505. A detailed discussion standards did not adequately reflect Thus, most nonroad engines subject to of the transient test cycle and its transient operation as many nonroad today’s Tier 4 standards will be required derivation is contained in chapter 4.2 of 72 engines are used in applications that are to certify using both of these tests. The the RIA for this rule. largely transient in nature and would We expect that this transient test 72 See EPA Dear Manufacturer Letter VPCD–98– not therefore yield adequate control of 13, ‘‘Heavy-duty Diesel Engines Controlled by requirement will significantly reduce emissions in use (63 FR 56984, October Onboard Computers: Guidance on Reporting and real world emissions from nonroad 23, 1998). Although we were not Evaluating Auxiliary Emission Control Devices and diesel equipment. Proper transient prepared to adopt a transient test at that the Defeat Device Prohibition of the Clean Air Act,’’ October 15, 1998 and EPA Advisory Circular 24– time, we announced our intention in 3, ‘‘Implementation of Requirements Prohibiting Engines.’’ A copy of both of these documents is that final rule to move forward with the Defeat Devices for On-Highway Heavy-Duty Diesel available in EPA Air Docket A–2001–28.

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operation testing captures engine TABLE III.F–1.—IMPLEMENTATION these engines’ performance with respect emissions from the broad range of MODEL YEAR FOR NONROAD TRAN- to gaseous pollutant emissions).75 engine speed and load combinations SIENT TESTING Transient testing standards do apply that the engine may attain in-use, while with respect to PM emissions from the steady-state emission test Transient test phase-out engines, however. The reason characterizes emissions at the few Power category implementation is evident: the PM standard for phase- isolated operating points that may be model years out (and phase-in) engines is based on typical for that family of engines. performance of aftertreatment, so the < 25 hp ...... 2013 Testing for transient emissions will ≤ full complement of test cycles (NTE as 25 hp < 75 ...... 2013 well as transient testing) should apply. likewise identify emissions which result 75 ≤ hp < 175 ...... 2012 from the operation of the engine, as with 175≤ hp < 750 ...... 2011 A consequence of this is that phase-out speed and load changes, turbocharger engines will generally be tested over the lag, etc. transient cycle, since they must do so In keeping with our goal to maximize In addition, any engines for which an with respect to PM emissions. We the harmonization of emissions control engine manufacturer (see section III.M) repeat, however, that although the programs as much as possible, we have or equipment maker (see section engines will do transient testing, only developed this cycle in collaboration III.B.2.c) claims credit under the PM (and not gaseous pollutants) is with nonroad engine manufacturers and incentive program for early-introduction subject to the transient test standard. regulatory bodies, both domestic and engines will have to be certified to that In addition, manufacturers choosing foreign, over the last several years.73 program’s standards under applicable to certify engines under 750 hp using Further, the NRTC cycle has been Tier 4 nonroad transient and steady- alternative FEL caps during the first four introduced as a work item for possible state duty cycles, e.g., NRTC, 8-mode years that the alternative caps are adoption as a potential global technical and 5-mode steady-state cycles. In turn, available (see section III.A.i.2 above) regulation under the 1998 Agreement any 2011 or later model year engine that will not be subject to the transient or for Working Party 29 at the United uses these engine count-based credits NTE standards. However, to properly Nations.74 will not need to demonstrate account for the transient effects when EPA’s nonroad transient test will compliance under the NRTC cycle. calculating credits, we are requiring the apply (with one exception noted below) Engines in any power category certified FELs of such engines to be adjusted to a nonroad diesel engine when that to an alternate NOX standard are all upwards by applying a Temporary engine must first show compliance with subject to the transient test requirement, Compliance Adjustment Factor 76 EPA’s Tier 4 PM and NOX+NMHC as they clearly will be substantially (TCAF) . See 40 CFR 1039.104 (g) (2). emissions standards which are based on redesigned to achieve Tier 4 Even though we are requiring that the performance of the advanced post- compliance, regardless of whether or NRTC testing start when the PM combustion emissions control systems not they use high-efficiency exhaust aftertreatment-based standards take (e.g. catalyzed-diesel particulate filters emission controls. See section II.A.1.c effect, one should not infer that the and NOX adsorbers). This is 2011 for above. NRTC is directed at solely (or even engines at 175 hp–750 hp, 2012 for 75– We solicited comment on whether the primarily) at PM control. In fact, we 175 hp engines (2012, as well, for 50– transient duty cycle should apply to believe that advanced NOX emission 75 hp engines made by a manufacturer NOX emissions from phase-out engines controls may be even more sensitive to choosing the option to not comply with (68 FR 28484, May 23, 2003) and transient operation than PM filters, the 2008 transitional PM standard.), and received comment from EMA. EMA since the PM filters ordinarily operate 2013 for engines under 75 hp. The prefers that the transient cycle only be equally effectively in all operating transient test cycle will not apply to applicable to PM emission testing and modes, as noted earlier. It is, however, engines greater than 750 hp. Specific not for NOX, NMHC and CO for phase- our intent that the control of emissions provision is made for engines under 25 out engine families. They believe that during transient operation be an integral hp for PM and under 75 hp for NOX the application of the transient NRTC part of Tier 4 engine design (which are not based on performance of and standards could result in the need considerations. We have therefore advanced aftertreatment). Constant- to redevelop the NOX/NMHC/CO chosen to apply the transient test speed, variable-load engines of any emission control systems used for their requirement starting with the PM filter- horsepower category currently certify to members’ compliance with Tier 3 based Tier 4 PM standards as these EPA’s 5–Mode Steady State duty cycle standards. standards precede or accompany the and are not subject to transient duty earliest Tier 4 NO or NMHC standards We essentially agree with this X cycle testing. As with current nonroad in all power categories except engines comment to the extent that phase-out diesel standards, today’s Tier 4 emission over 750 hp. standards will apply to certification, engines do not include improvements in As EPA is not promulgating PM filter- Selective Enforcement Audits (SEAs) gaseous pollutant emission control (i.e. based standards for engines below 25 hp and to recall testing of equipment in-use they remain essentially Tier 3 engines in today’s rulemaking, we are likewise for all engines subject to these for emissions other than PM). Imposing not requiring these engines to be tested standards. new requirements with respect to these engines’ gaseous pollutant emissions 75 Please note that this discussion does not apply 73 Letter from Jed Mandel of the Engine could divert resources inappropriately. to engines certifying to the alternative NOX phase- Manufacturers Association to Chet France of U.S. The rule therefore states (in 40 CFR in standards, which engines are required to meet EPA, Office of Transportation and Air Quality, 1039.102 (a)(2)) that gaseous pollutant transient and NTE requirements for gaseous ‘‘Development of appropriate transient test cycle for pollutants (as well as all other requirements that variable speed land-based compression ignition emissions from these engines are not would apply to phase-in engines). See discussion at non-road engines,’’ Air Docket A–2001–28, II–B–33. subject to transient testing standards. II.A.2.c; also please note that these engines are 74 Informal Document No.2, ISO—45th GRPE, This would not apply if a manufacturer expressly not defined as phase-out engines in the rules; see section 1039.801 and 1039.102 (e). ‘‘Proposal for a Charter for the Working Group on declares a new NOX+NMHC FEL for the a New Test Protocol for Exhaust Emissions from engine family (since the manufacturer 76 As noted elsewhere, the TCAFs are derived Nonroad Mobile Machinery,’’ Jan. 13–17, 2003, Air identically to the Transient Adjustment Factor used Docket A–2001–28, document II–A–171. would then already be choosing to alter in the NONROAD emissions model.

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over the NRTC test cycle until model these very large displacement engines as Test, as outlined in regulations at 40 year 2013. More broadly, though we being greater than the benefit of CFR 86.1306–07. intend for transient emissions control to gathering transient emission Transient testing requires be an integral part of Tier 4 design measurements from them. For example, consideration of statistical parameters considerations, we do not believe it in many instances, these engines will for verifying that test engines adequately appropriate to mandate compliance have multiple aspiration and exhaust follow the prescribed schedule of speed with the transient test for the engines systems requiring a test cell designed to and load values. The regulations in 40 under 50 hp which are subject to PM accommodate multiple large flow CFR 1065.514, table 1, detail these standards in 2008. We recognize that volumes in real-time on a five Hertz, or statistical parameters, also known as transient emission testing, though faster, basis. New transient test cycle performance statistics. These routine in highway engine programs, requirements could require values are somewhat different than the involves a fair amount of laboratory manufacturers to create new or comparable values for highway diesel equipment and new expertise in the expanded testing facilities to house, engines to take into account the nonroad engine certification process. As prepare and run transient tests on these characteristics of nonroad engine with the transfer of advanced emission larger engines. The space requirements, operation. The values are an outgrowth control technology itself, we believe that i.e., ‘‘footprint,’’ of such facilities could of the long development process for the the transient test requirement should be make building them cost-prohibitive. NRTC test cycle, itself. implemented first for larger Absent transient testing, these engines 2. Cold Start Transient Testing displacement engines. These engines are will still be required to certify to both more likely to be made by steady-state and NTE test requirements. Nonroad diesel engines typically manufacturers who provide engines to Moreover, we are modifying the operate in the field by starting and the on-highway market and therefore certification requirements to include warming to a point of stabilized hot have had prior on-highway engine additional information for engines operation at least once in a workday. development and certification under 750 hp. For more detail on this Such ‘‘cold-start’’ conditions may also experience. We do not believe that the submission, see the discussion in occur at other times over the course of smaller engines should be the power section III.I of this preamble and 40 CFR the workday, such as after a lunch categories first charged with 1039.205(p) of the regulations. break. We have observed that certain implementing the new transient test, as Finally, engines in this power test engines, which generally had early as 2008, especially because category are found in a relatively small emission-control technologies for manufacturers of these engines do not proportion of the nonroad equipment meeting Tier 2 or Tier 3 standards, had generally make highway engines and are population and, despite the potential for elevated emission levels for about 10 neither as experienced nor as well- large quantities of emissions from this minutes after starting from a cold equipped as their larger engine class of engines during operation, units condition. The extent and duration of manufacturer counterparts at equipped with these engines have increased cold-start emissions will conducting transient cycle testing. likewise been noted to contribute a likely be affected by changing However, to encourage earlier transient small proportion of total diesel nonroad technology for meeting Tier 4 standards, emission control in these engines, EPA engine emissions.77 Many of these but there is no reason to believe that this will allow manufacturers of engines larger-displacement engines operate effect will lessen. In fact, cold-start below 25 hp to submit data describing predominately in a constant-speed concerns are especially pronounced for emission levels for their engines over fashion with few transient excursions, engines with catalytic devices for the appropriate certification transient as with electric power generation sets controlling exhaust emissions, because duty cycle beginning in model year (gen sets) which make up a significant many require heating to a ‘‘light-off’’ or 2008. We extend this option as well to percent of these larger engines. Many of peak-efficiency temperature to begin manufacturers of 25–50 hp engines, these gen sets, too, operate on an working. See, for example, RIA section subject to those engines meeting the intermittent or stand-by only basis. 4.1.2.2 and following. EPA’s highway Tier 4 transitional PM standard in 2008. Indeed, as explained below, such engine and vehicle programs, which Should a manufacturer choose to submit constant-speed, variable-load engines increasingly involve such catalytic data in the 2008–2011 time frame, prior (for example, those certifying devices, address this by specifying a test to required certification data exclusively to the 5-mode steady-state procedure that first measures emissions submissions, that transient data will not cycle) of any horsepower category are with a cold engine, then repeats the test be used for compliance enforcement. not subject to the nonroad transient test after the engine is warmed up, EPA requested comment on whether cycle. weighting emission results from the two engines greater than 750 hp should be tests for a composite emission Further, the Agency does not intend subject to the transient cycle, noting measurement. at this time to require that concerns of technical difficulties and In the proposal, we described an manufacturers use partial-flow sampling cost for these engines (68 FR 28484, analytical approach that led to a systems (PFSS) to determine PM May 23, 2003). STAPPA–ALAPCO and weighting of 10 percent for the cold- emissions from their engines for other agencies representing the States’ start test and 90 percent for the hot-start certification. A large engine interests responded to EPA that all test. Manufacturers pointed out that manufacturer may, however, choose to nonroad engines should be uniformly their analysis of the same data led to a submit PM data to the Agency using required to test their transient weighting of about 4 percent for cold- PFSS as an alternative test method, if emissions. Likewise, they asked that the start testing and that a high cold-start that manufacturer can demonstrate test Agency not delay implementation of weighting would affect the feasibility of equivalency using a paired-T test and F- this particular requirement. However, at the proposed emission standards. this time, the Agency is not adopting a Manufacturers also expressed a concern 77 Memorandum from Kent Helmer to Cleophas transient emission testing requirement Jackson, ‘‘Applicability EPA’s NRTC cycle to that there would be a significant test for engines 750 hp and over. EPA sees Nonroad Diesel Population,’’ Air Docket A–2001– burden associated with cold-start the burden of transient cycle testing in 28, document II–B–34. testing.

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Unlike steady-state tests, which amount of information available in this test cycle. The CSVL transient cycle was always start with hot-stabilized engine area at this time, we intend to revisit the developed to approximate the speed and operation, transient tests come closer to cold-start weighting factor for transient load operating characteristics of many simulating actual in-use operation, in testing in the future as additional data constant-speed nonroad diesel which engines may start operating after become available. Since the composite applications.80 It, too, would have been only a short cool-down (hot-start) or transient test represents a combination subject to the cold-start requirement of after an extended soak (cold-start). The of variable-speed and constant-speed nonroad transient test cycles as is the new transient test and manufacturers’ operation, we would consider operation NRTC. However, after considerable expected use of catalytic devices to meet from both of these types of engines in discussion with and comment from Tier 4 emission standards make it evaluating the cold-start weighting. engine manufacturers, equipment imperative to address cold-start Also, we intend to apply the same cold- makers and other interested parties, the emissions in the measurement start weighting when we adopt a Agency has decided not to promulgate procedure.78 We are therefore adopting transient duty cycle specifically for an alternative nonroad transient test a test procedure that requires engines certified only for constant-speed cycle for constant-speed engines at this measurement of both cold-start and hot- operation. time. EMA, in its comments on the start emissions over the transient duty The planned data-collection effort CSVL cycle, felt generally that: (1) The cycle, much like for highway diesel will focus on characterizing cold-start average load factor is much too low; (2) engines. We acknowledge, however, that operation for nonroad diesel equipment. the frequency of the transient operations limited data are available to establish an The objective will be to reassess, and if was too high; (3) the amplitudes of the appropriate cold-start weighting. For necessary, redevelop a weighting factor transients were too great; and (4) the this final rule, we are therefore opting that properly accounts for the degree of rates of transient load increase and to establish a cold-start weighting of 5 cold-start operation so that in-use response were too fast. percent. This is based on a typical engines effectively control emissions It was further noted that the CSVL test scenario of engine operation involving during these conditions. As we move cycle is based solely upon the operation an overnight soak and a total of seven forward with this investigation, other of a single, relatively small, naturally- hours of operation over the course of a interested parties, including the State of aspirated arc welder engine, which workday. Under this scenario, the 20– California, will be invited to participate. EMA claims is a variable-speed type of minute cold-start portion constitutes 5 We are interested in pursuing a joint engine certified generally on the 8-mode percent of total engine operation for the effort, in consultation with other test cycle. Arc welders, Cummins noted, day. Section II.B above addresses the national government bodies, to ensure a are not much like generator sets, which feasibility of meeting the emission robust and portable data set that will comprise around 50% of population of standards with cold-start testing. facilitate common global technical constant-speed engines and have a very Regarding the test burden associated regulations. This effort will require different operation and test cycle than with cold-start testing, we believe that consideration of at least the following the typical portable generator set. manufacturers will be able to take steps factors: Generator sets, DDC wrote, were built generally for a higher power capability to minimize the burden by taking • What types of equipment will we advantage of the provision that allows at a single speed, many having larger, investigate? less-responsive turbochargers to achieve for forced cooling to reduce total testing • How many units of each equipment type time (40 CFR 1039.510(c)). will we instrument? the higher brake mean effective pressure We believe the 5-percent weighting is • How do we select individual models that (BMEP). This made it difficult for these based on a reasonable assessment of will together provide an accurate cross- engines to shed load as quickly as the typical in-use operation and it addresses section of the type of equipment they CSVL test cycle would require them to the need to design engines to control represent? do. Commenters likewise wrote that the • When will the program start and how test cycle was costly and burdensome emissions under cold-start operation. long will it last? We believe cold-start testing with these for equipment which, like generator • How should we define a cold-start event sets, was only operated infrequently or weighting factors will be sufficient to from the range of in-use operation? require manufacturers to take steps to when emergencies occurred. Some We expect to complete our further wrote that it would compromise minimize emission increases under evaluation of the cold-start weighting in generator set engine performance if cold-start conditions. Once the context of the 2007 Technology manufacturers had to re-engineer their manufacturers have applied Review, if not sooner. In case changes products to run over the CSVL test technologies and strategies to minimize to the regulation are necessary, this cycle, especially for larger BMEP cold-start emissions, they will be timing will allow enough time for engines. One commenter noted that achieving the greatest degree of manufacturers to adjust their designs as these changes to nonroad engines would emission reductions achievable under needed to meet the Tier 4 standards. carry over to other stationary those conditions. A higher weighting applications of these generator sets. A factor for cold-start testing is not likely 3. Constant-Speed Tests more extensive discussion of comments be more effective in achieving in-use The Agency proposed that engine relating to the CSVL cycle may be read emission control as new technologies manufacturers could certify constant- in the Summary and Analysis of will be expected to have resulted in speed engines using EPA’s Constant- Comment document for this rule. significant control of emissions at Speed, Variable-Load (CSVL) transient Given these potential problems and engine startup. duty cycle 79 as an alternative to the strong possibility of fixing them by However, given our interest in certifying these engines under its NRTC 2007, the Agency has decided to defer controlling emissions under cold-start adopting the CSVL test cycle here. conditions and the relatively small 79 Two Memoranda from Kent Helmer to Cleophas Jackson, ‘‘Speed and Load Operating 80 Memorandum from Kent Helmer to Cleophas 78 Note that this discussion applies only to Schedule for the Constant Speed Variable Load Jackson, ‘‘Brake-specific Emissions Impact of engines that are subject to testing with transient test (CSVL) transient test cycle,’’ e-Docket OAR–2003– Nonroad Diesel Engine Testing Over the NRTC, procedures. For example, this excludes constant- 0012–0993, and ‘‘CSVL Cycle Construction,’’ A– AWQ, and AW1 duty cycles,’’ Docket A–2001–28, speed engines and all engines over 750 hp. 2001–28, II–B–50. #.

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Instead, EPA with all of its stakeholders to implement it in an orderly manner. found within the nonroad equipment in this regard will map out a process of If we encounter unforeseen and and engine population, and as engine testing and analysis to better unavoidable delays or complications in proposed, EPA is retaining current characterize constant-speed equipment this process, we will consider Federal steady-state test procedures for in-use to design the most appropriate approaches to control based on available nonroad engines. (Manufacturers are test cycle for the largest number of data at the time of the 2007 Technology thus required to meet emission constant-speed engines. EPA undertakes Review. standards under steady-state conditions, this process with an eye to initiating The Agency is adopting additional in addition to meeting emission rulemaking which would lead to requirements, in conjunction with standards under the transient test cycle, promulgation of a transient cycle for existing steady-state test requirements, whenever the transient test cycle constant-speed engines before the which will help ensure that constant- applies.) This requirement, like NTE Agency’s 2007 Nonroad Diesel speed nonroad diesel engines are emission testing, is one of two tests Technical Review. subject to a rigorous program of in-use which apply to every Tier 4 engine. EPA defines a constant-speed engine control of emissions and that diesel Table III–2 below sets out the particular in this regard as one which is certified engine emissions will be controlled over steady-state duty cycle applicable to to constant-speed operation, in other a wide range of speed and load each of the following categories: (1) words, an engine which may not operate combinations. EPA is finalizing Nonroad engines 25 hp and greater; (2) at a speed outside a single, fixed stringent nonroad NTE limits and nonroad engines less than 25 hp; and (3) reference speed set by the engine’s related test procedures for all new nonroad engines having constant-speed, governor. It should be clear then that nonroad diesel engines subject to the variable-load applications, (e.g., gen any engine for which the governor Tier 4 emissions standards beginning in sets). The steady-state cycles remain, doesn’t strictly limit the engine speed 2011 which will supplement the respectively, the 8-mode cycle, the 6- in-use to constant-speed operation, that existing steady-state five-mode test mode cycle and the 5-mode cycle.81 engine will be subject to the NRTC. cycle for constant-speed application Steady-state test cycles are needed so Thus, if a manufacturer’s engine is engines. NTE testing for transient that testing for certification will reflect certified to EPA’s 8-mode steady-state operation will add further assurance the broad range of operating conditions test, the engine would also need to that emissions from constant-speed experienced by these engines. A steady- certify to the NRTC, since the 8-mode engines within this class, which have a state test cycle represents an important test does not limit the engine’s fixed limited speed response in-use, are type of modern engine operation, in operating speed. Conversely, those controlled under in-use operation. power and speed ranges that are typical manufacturers who certify their engines Typically, engines which are designed in-use. The mid-to-high speeds and to EPA’s constant-speed steady-state to a particular transient cycle will loads represented by present steady- test, the 5-mode test cycle, are not control emissions effectively under state testing requirements are the speeds required to have their engines certify to other types of transient operation not and loads at which these engines are the NRTC. specifically included in that designed to operate for extended By utilizing an inclusive, data-driven certification procedure. Engines that are periods for maximum efficiency and approach (see Summary and Analysis capable of meeting emission standards durability. Details concerning the three document for more detail), the Agency on a constant-speed, variable-load cycle steady-state procedures for nonroad is allowing time to develop, and if will have the transient-response engines and equipment are found in appropriate, finalize and implement a characteristics that are appropriate for regulations at 40 CFR 1039.505 and in test procedure that meets the needs of controlling emissions at higher engine Appendices I–III to 40 CFR part 1039. the Agency, manufacturers, and other loads and for less dynamic transient Manufacturers will perform each parties in advance of the 2007 operation. EPA, engine manufacturers, steady-state test following all applicable Technology Review. In fact, the Agency and interested parties will, in the mean test procedures in the regulations at 40 envisions constant speed variable load time, work to develop a more CFR part 1039, e.g., procedures for cycle generation to be completed by July appropriate transient test for constant- engine warm-up and exhaust emissions 2005. This approach should allow the speed engines. A transient test for this measurement. The testing must be Agency to develop a testing program broad class of nonroad engines will conducted with all emission-related which ensures robust control in-use, is ensure a robust level of emissions engine control variables in the data-driven and remains globally control in-use within the diverse maximum NOX-producing condition harmonized. We expect to initiate this population of constant-speed engines which could be encountered for a 30 effort within 3 months of promulgation and equipment. second or longer averaging period at a of this rule and to conclude the work on given test point. Table III.F–2 below 4. Steady-State Tests the new test cycle in enough time to summarizes the steady-state testing promulgate it through rulemaking and Recognizing the variety of both power requirements by individual engine to provide industry adequate lead time classes and work applications to be power categories.

TABLE III.F–2.—SUMMARY OF STEADY-STATE TEST REQUIREMENTS

Steady-state testing requirements Nonroad engine power classes 8-Mode cycle (C1 weighting) 6-Mode cycle (G3 weighting) 5-Mode cycle (D2 weighting)

hp < 25 (kW < 19) ...... applies a ...... applies a ...... applies b 25 ≤ hp < 75 (19 ≤ kW < 56) ...... applies ...... NA c ...... applies b 75 ≤ hp < 175 (56 ≤ kW < 130) ...... applies ...... NA c ...... applies c

ISO 8178–4:1996 (E) and remain consistent with the 81 These three steady-state test cycles are similar existing 40 CFR part 89 steady-state duty cycles. to test cycles found in the International Standard

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TABLE III.F–2.—SUMMARY OF STEADY-STATE TEST REQUIREMENTS—Continued

Steady-state testing requirements Nonroad engine power classes 8-Mode cycle (C1 weighting) 6-Mode cycle (G3 weighting) 5-Mode cycle (D2 weighting)

175 ≤ hp ≤ 750 (130 ≤ kW ≤ 560) ...... applies ...... NA c ...... applies b hp > 750 (kW > 560) ...... applies ...... NA c ...... applies b a Manufacturers may use either of these tests for this class of engines. b For constant, or nearly constant, speed engines and equipment with variable, or intermittent, load. c Testing procedures not applicable to this class of engines.

Nonroad engine manufacturers 82, test burden of diesel engine dynamometer to operate a particular have called for steady-state testing manufacturers. Rather, the RMC engine. Finally, statistical targets serve which would collect emissions versions of EPA’s steady-state test cycles to increase repeatability and reduce continuously ‘‘in a pseudo-transient allow for more consistent and variability of engine operating manner,’’ proposing in effect, one-filter predictable emission testing of emission parameters and emission test results on PM collections during a steady-state control system hardware-equipped a test-to-test basis. duty cycle. In response to these and diesel engines. Eliminating the Transport refrigeration unit (TRU) other manufacturer concerns for ‘‘downtime’’ between modes for the engines, a specific application of a emission variability during certification emission collection equipment allows steady-state operation engine (68 FR testing due to unanticipated emission sampling of emissions to be done on a 28485, May 23, 2003), will be subject to control system regeneration between composite basis for the whole test as both steady-state and NTE standards steady-state test modes, the Agency 83 opposed to sampling emissions mode- based on any normal operation that has adopted, in its 40 CFR 1065.515 by-mode. The RMC versions of these these engines would experience in the regulations, the concept of modifying tests simply create a negligible field. To that end, EPA has adopted a EPA’s 40 CFR part 89 steady-state transition period 20 seconds long four-mode steady-state test cycle engine certification duty cycles. The connecting each mode and collects designed specifically for engines used in section describes ramped ‘‘modal’’ emissions during these brief transitions, TRU applications which may be used by steady-state certification tests which as well as collecting emissions during the manufacturer in lieu of normal would link the modes of a steady-state the running of each test’s discrete steady-state testing. Commenters to the test together for the purpose of operating modes. The continuous rule agreed that a TRU test cycle would collecting a continuous stream of engine emission sampling allows regeneration be more representative of refrigeration emissions. These tests provide for events from engine emission control unit operation than the nonroad cycles operating an engine at all of the modes hardware to be captured more reliably currently available to manufacturers of specified in the present steady-state and repeatably. By running emission TRU engines, but some took issue with nonroad test cycles but without the testing without breaks and over the EPA’s usage restrictions in paragraphs breaks in emission collection required same engine duty schedule for each (d)(2), (e)(2), and (e)(3) of regulations by switching between modes, stabilizing repetition of a RMC test, regeneration proposed at 40 CFR part 1039 subpart G. engine operation, and collecting within the engine’s emission control In response, the final rule allows emissions at that next operating mode. hardware should become almost a manufacturers to test their engines Since a ramped modal cycle (RMC) test predictable event. The longer sampling under a broad definition of intermediate cycle may more reliably and times of RMCs, while creating an test speed. The definition covers the 60– consistently report engine emissions identical weighting of each mode’s 75% range of engine rpm at the from particulate trap and other emission emissions, also help to avoid collecting specified test cycle engine load points, control hardware-equipped nonroad a minuscule, possibly unreliably as defined in 40 CFR, 89.2. This will engines than the comparable steady- measured, amount of sample over the enable an engine manufacturer to more state duty cycle from which it was course of any single operating mode. PM closely match the TRU cycle to the derived, the Agency is providing the emissions, for example, can be collected operation of their engines in-use. option of using these RMC versions of and measured more precisely under Further, the engine is allowed to exhibit its steady-state engine duty cycles for these test conditions as either batch or no more than 2% variation in transient nonroad diesel engine certification operation (speed or torque change) testing in lieu of the otherwise continuous samples. The opportunities around the four operating modes applicable steady-state cycles. Details for loss of emissions during sampling defined under this test cycle. The on the procedures may be found in and storage due to sample retention by provisions to address load set point drift chapter 4.2 of the RIA for this rule and equipment at shut-down between modes are discussed in detail in the RIA at regulations at 40 CFR 1039.505 and or by filter handling and weighing are chapter 4.3.2 and in regulations at 40 Appendix I of part 1039. greatly reduced. As well, running a The optional RMC duty cycles do not ‘‘steady-state’’ test on a continuous basis CFR part 1039 subpart G. represent a relaxation in stringency of allows cycle performance statistics to be In choosing to certify their engine as emission testing nor are they an applied to RMC emission tests (see 40 a TRU engine, manufacturers will need unreasonable increase in the emission CFR, part 39). Manufacturers are to state on the engine emission control familiar with test cycles run with a set label that the engine will only be used 82 Letter from EMA (Engine Manufacturers of statistical engine duty cycle in a TRU application and records must Association) to EPA Air Docket A–2001–28, IV–D– performance ‘‘targets’’. Further, their be kept on the delivery destination(s) for 402, pp 64. test runs will be subject to less test cell their engines. Manufacturers of these 83 Memorandum and summary of technical ‘‘tuning’’, modifying control strategies engines may petition EPA at discussions (including Appendix ‘‘A’’ text) in the e-Docket submission, OAR–2003–0012–0028, to using repeat testing runs to fit the certification for a waiver of the EPA’s Air Docket. emission test cycle and the requirement to provide smoke emission

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data for their constant-torque engines. A as well as improved smoke testing However, in past discussions, some more detailed discussion of the TRU standards and procedures. Engines manufacturers have indicated that it is associated provisions is contained in below 19 kilowatts (kW) will generally possible for the maximum test speed to chapter 4.2 of the RIA. It should be not have particulate filters, but most of be unrepresentative of in-use operation. noted that an RMC version of the steady these are constant-speed engines and are Since we were aware of this potential state TRU duty cycle is provided in therefore not subject to smoke during the original development of this Table 2 of 40 CFR part 1039 subpart G. standards, as described below. definition, we included provisions to We are continuing the established address issues such as these. Part 1065 G. Other Test Procedure Issues policy of exempting constant-speed allows EPA to modify test procedures in This section contains further detail engines and single-cylinder engines situations where the specified test and explanation regarding several from smoke standards. We do not procedures would otherwise be related nonroad diesel engine emissions believe that constant-speed engines unrepresentative of in-use operation. test and measurement provisions. The undergo the kind of acceleration or Thus, in cases in which the definition test procedures are specified in 40 CFR lugging events that occur during this of maximum test speed resulted in an part 1065 and part 1039 subpart F. Part smoke test procedure, so it would not be engine speed that was not expected to 1065 contains general test procedure appropriate for these engines to be occur with in-use engines, we would requirements and part 1039 contains the subject to smoke standards. We exempt work with the manufacturers to provisions that are specific to CI single-cylinder engines for a different determine the maximum speed that nonroad engines, such as test cycles. reason. These engines, which very often would be expected to occur in-use (see The changes described here will not provide power for generator sets and regulations at 40 CFR 1065.10 (c)). significantly affect the stringency of the other constant-speed applications, but standards. While some of the changes may in some cases experience 3. Improvements to the Test Procedures being made may appear to increase the accelerations, the nature of single- As we proposed, we are making stringency of the standards when cylinder engine operation makes it changes to the test procedures to considered by themselves, others would difficult to get a valid smoke emission improve the precision of emission appear to have the opposite effect. measurement. Single-cylinder engines measurements. These changes address When considered together, however, generally have discrete puffs of smoke, the potential effect of measurement they will result in more repeatable and rather than a stable emission stream for precision on the feasibility of the less subjective testing that is equivalent measuring smoke values. We believe it standards. It is important to note that to the existing procedures with respect is not appropriate to use such erratic these changes are not intended to bias to stringency. measurements to evaluate an engine’s results high or low, but only to improve the precision of the measurements. 1. Smoke Testing emission performance. As a result, we will not require single-cylinder engines Based on our experience with these To control smoke emissions, we are to meet our smoke standards until we modified test procedures, and our requiring in this final rule that the find a test method that takes this into discussions with manufacturers about current smoke standards and procedures account. their experiences, we are confident that will continue to apply to certain Also, as described in the proposed these changes will not affect the engines. We proposed to change these rule, we are exempting from smoke stringency of the standards. These smoke standards and procedures, based emission standards any engines that are changes are summarized briefly here. on recent developments toward an certified to PM emission standards or The rationale for the changes are established international protocol that FELs at or below 0.07 g/kW-hr. We discussed in detail elsewhere. The was designed to allow a straightforward believe any engine that has such low changes affecting Constant Volume method to test engines in the field (68 PM emissions will have inherently low Sampling (CVS) and PM testing are FR 28486, May 23, 2003). We have smoke emissions. No commenters discussed in a memo to the docket (Air chosen not to adopt the proposed disagreed with this position. Docket A–99–06, IV–B–11), which was approach, mainly because it is becoming originally submitted in support of the 2. Maximum Test Speed increasingly clear that ongoing recent highway heavy-duty diesel development of in-use testing We are changing how test cycles are engine rule (66 FR 5001, January 18, equipment will allow direct specified. As proposed, we are applying 2001). measurement of PM emissions in the the existing definition of maximum test In general, we are applying the field. We believe this will provide the speed in 40 CFR part 1065 to nonroad highway heavy-duty engine test best long-term control of both PM CI engines. This definition of maximum procedures to nonroad CI engines in this emissions. Controlling smoke is in some test speed is the single point on an rulemaking. Many of the specific ways independent of PM, but the engine’s normalized maximum power changes being adopted are to the PM interest in developing an in-use smoke versus speed curve that lies farthest sampling procedures. The PM test was primarily as a means of away from the zero-power, zero-speed procedures are the procedures finalized providing a secondary indicator of high point. This is intended to ensure that as part of the highway heavy-duty diesel in-use PM emissions from these engines. the maximum speed of the test is engine rule (66 FR 5001, January 18, Direct PM measurement removes much representative of actual engine operating 2001). These include changes to the of the advantage of in-use smoke characteristics and is not improperly type of PM filters that are used and measurements. Relying on the existing used to influence the parameters under improvements in how PM filters are smoke test also addresses concerns which their engines are certified. In weighed before and after emission raised by manufacturers that the effort establishing this definition of maximum measurements, including requirements to comply with the new smoke test speed, it was our intent to specify for more precise microbalances. requirements would be a large testing the highest speed at which the engine is It is also worth noting that we intend and development burden with little air- likely to be operated in use. Under to make additional improvements to the quality benefit. We believe that normal circumstances this maximum test procedures in a separate rulemaking aftertreatment-based Tier 4 PM test speed should be close to the speed that will be proposed later this year to standards will control smoke emissions at which peak power is achieved. incorporate the latest measurement

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technologies. Many of the certify an engine family, because For example, for engines that use improvements being considered were certification typically occurs before emission credits, this could occur if a discussed in the previously-mentioned production begins. Therefore the manufacturer deliberately biased its memo to the docket (Air Docket A–99– definition of ‘‘maximum engine power’’ production variability so that the 06, IV–B–11). We recognize the being finalized today relies primarily engines have higher average power than importance of these improvements for upon the manufacturer’s design described in the application. If we use in testing by nonroad diesel engine specifications and the maximum torque voided the certificate for those engines manufacturers and EPA. However, since curve that the manufacturer expects to the manufacturer would be subject to we expect that the changes would also represent the actual production engines. large fines and any other appropriate apply to many nonroad spark-ignition This provision is specified in a new enforcement provisions for each engine. engine manufacturers, it is appropriate section 40 CFR 1039.140. Under this Finally, in light of some of the to conduct a separate notice and approach the manufacturer would take comments that we received, it is worth comment rulemaking for all affected the torque curve that is projected for an clarifying that the maximum engine parties. We remain committed to engine configuration, based on the power will not be used during engine incorporating appropriate additional manufacturer’s design and production testing. It is only used to define power improvements to the test procedures. specifications, and convert it into a categories and calculate ABT emission We have placed into the docket a draft ‘‘nominal power curve’’ that would credits. revised version of part 1065 that relate the maximum power that would represents our current thinking on be expected to engine speed when a I. Auxiliary Emission Control Devices appropriate testing regulations. production engine is mapped according and Defeat Devices our specified mapping procedures. The Existing nonroad regulations prohibit H. Engine Power maximum engine power is being the use of a defeat device (see 40 CFR Currently, rated power and power defined as the maximum power point 89.107) in nonroad diesel engines. The rating are undefined, and we are on that nominal power curve. defeat device prohibition is intended to concerned that this makes the Manufacturers will be required to ensure that engine manufacturers do not applicability of the standards too report the maximum engine power of use auxiliary emission control devices subjective and confusing. One each configuration in their applications (AECD) which sense engine operation in manufacturer may choose to define for certification. As with other engine a regulatory test procedure and as a rated power as the maximum measured parameters, manufacturers will be result reduce the emission control power output, while another may define required to ensure that the engines that effectiveness of that procedure.84 In it as the maximum measured power at they produce under the certificate have today’s notice we are supplementing a specific engine speed. Using this maximum engine power consistent with existing nonroad test procedures with a second approach, an engine’s rated those described in their applications. transient engine test cycle and NTE power may be somewhat less than the However, since we recognize that emission standards with associated test true maximum power output of the variability is a normal part of engine requirements. As such, the Agency engine. Given the importance of engine production, we will not require that all believes that a clarification of the power in defining which standards an production engines have exactly the existing nonroad diesel engine engine must meet and when, we believe power specified in the application. regulations regarding defeat devices is that it is critical that a singular power Instead, we will only require that the required in light of these additional value be determined objectively power specified in the application be emission test requirements. The defeat according to a specific regulatory within the normal range of powers of device prohibition makes it clear that definition. the production engines. Typically, we AECDs which reduce the effectiveness To address this, we proposed to add would expect the specified power to be of the emission control system are a definition of ‘‘maximum engine within one standard deviation of the defeat devices, unless one of several power’’ to the regulations. This term mean power of the production engines. conditions is met. One of these was to be used instead of previously If a manufacturer determines that the conditions is that an AECD which undefined terms such as ‘‘rated power’’ specified power is outside of the normal operates under conditions ‘‘included in or ‘‘power rating’’ to specify the range, we may require the manufacturer the test procedure’’ is not a defeat applicability of the standards. The to change the settings of the engines device.85 While the existing defeat addition of this definition was intended being produced and/or amend the device definition does contain the term to allow for more objective applicability application for certification. In deciding ‘‘test procedure,’’ and therefore should of the standards. More specifically, we whether to require such amendment, we be interpreted as including the proposed that: would consider the degree to which the supplemental testing requirements, we specified power differed from the Maximum engine power means the want to make it clear that both the measured maximum brake power output of production engines, the normal power supplemental transient test cycle and an engine. The maximum engine power of an variability for those engines, whether NTE emission test procedures are engine configuration is the average maximum the engine used or generated emission engine power of the engines within the credits, and whether the error affected 84 Auxiliary emission control device is defined at configuration. The maximum engine power which standards applied to the engine. 40 CFR 89.2 as ‘‘any element of design that senses of an engine family is the highest maximum The preceding discussion presumes temperature, vehicle speed, engine RPM, engine power of the engines within the that each manufacturer will develop its transmission gear, or any other parameter for the family. production processes to produce the purpose of activating, modulating, delaying or deactivating the operation of any part of the During the comment period, engines described in the application. If emission control system.’’ manufacturers opposed the proposed a manufacturer were to intentionally 85 40 CFR 89.107(b)(1) states ‘‘Defeat device definition. (We received no other produce engines different than those includes any auxiliary emission control device comments on this issue.) The described in the application, we would (AECD) that reduces the effectiveness of the emission control system under conditions which manufacturers correctly pointed out that consider the application to be may reasonably be expected to be encountered in they cannot know the average actual fraudulent, and could void the normal operation and use unless such conditions power of production engines when they certificate ab initio for those engines. are included in the test procedure.’’

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included within the defeat device state test cycle and that which is regulations by specifying what type of regulations as conditions under which predominately associated with transient information manufacturers must submit an operational AECD will not be operation;86 regarding AECDs. considered a defeat device. Therefore, E. A comparative analysis of the base Finally, we take this opportunity to we are clarifying the defeat device emissions control maps from certified emphasize that the information regulations by specifying the engines rated at or below 750 submitted must be specific to each appropriate test procedures (i.e., the horsepower and those rated over 750 engine family. The practice of existing steady-state procedures and the horsepower. describing AECDs in a ‘‘common’’ supplemental tests). We are clarifying We will use this information to section, wherein the strategies are the engine manufacturers certification determine the degree to which the described in general for all the reporting requirements with respect to design and effectiveness of the transient manufacturer’s engines, is acceptable as the description of AECDs. Under the emissions control system compares to long as each engine family’s application previous nonroad engine regulations, the control demonstrated over the contains specific references to the manufacturers are required to provide a steady-state cycle as well as the AECDs in the common section which generalized description of how the transient control used for certified clearly indicate which AECDs are emissions control system operates and a engines at or below 750 horsepower present on that engine family, and the ‘‘detailed’’ description of each AECD where compliance over the transient application contains specific calibration installed on the engine (see 40 CFR cycle is required. information for that engine family’s 89.115(d)(2)). This change clarifies what A thorough disclosure of the presence AECDs. The regulatory requirements is meant by ‘‘detailed.’’ and purpose of AECDs is essential in can be found at 40 CFR 89.115(d)(2) in For engines rated above 750 allowing EPA to evaluate the AECD and today’s notice. horsepower, the expanded determine whether it represents a defeat J. Not-To-Exceed Requirements interpretation of ‘‘included in the test device. Clearly, any AECD which is not cycle’’ extends only to the NTE because fully identified in the manufacturer’s In today’s action we are finalizing not- we are not requiring these engine to be application for certification cannot be to-exceed (NTE) emission standards for tested over the supplemental transient appropriately evaluated by EPA and all new nonroad diesel engines subject test cycle. Transient emissions control therefore cannot be determined to be to the Tier 4 emissions standards strategies that are substantially included acceptable by EPA. Our clarifications to beginning in 2011. These NTE standards in the NTE will be considered to comply the certification application and requirements are largely identical to with the defeat device criteria. For requirements include additional detail the NTE provisions we proposed, except instances where transient emissions specific to those AECDs which the as noted below. control strategies are not well manufacturer believes are necessary to The NTE standards and test represented over the official test protect the engine or the equipment in procedures are being finalized to help requirements, we will rely on the defeat which it is installed against damage or ensure that nonroad diesel emissions device provisions to ensure appropriate accident (‘‘engine protection’’ AECDs). are controlled over the wide range of transient off-cycle emissions control. While the definition of a defeat device speed and load combinations commonly The defeat device provisions restrict the allows as an exception strategies needed experienced in-use. EPA has similar ability of manufacturers to reduce the to protect the engine and equipment NTE standards for highway heavy-duty level of emissions control during against damage or accident, we intend diesel engines, compression ignition transient operation compared to that to continue our policy of closely marine engines, and nonroad spark- employed over the steady state cycle. In reviewing the use of this exception. In ignition engines. The NTE requirements supplement the existing steady-state test order to evaluate transient emissions evaluating whether a reduction in as well as the new transient test which control strategies for compliance with emissions control effectiveness is is also being finalized today. the defeat device provisions, we are needed for engine protection, EPA will The NTE standards and test requiring manufacturers to submit closely evaluate the actual technology procedures which we proposed, and information which indicates how employed on the engine family, as well which we are finalizing, are derived transient emissions are controlled as the use and availability of other from similar NTE standards and test during normal operation and use. emission control technologies across the procedures which EPA adopted for Information that would adequately industry, taking into consideration how highway heavy-duty diesel engines. In fulfill this requirement includes but is widespread the use is, including its use the proposal, we requested comment on not limited to: in similar engines and similar an alternative NTE test procedure A. Emissions data gathered with equipment. While we have specified approach (see 68 FR 28369, May 23, portable emissions measurement additional information related to engine 2003). As discussed in the proposal, the systems from in-service engines protection AECDs in the regulations, we two NTE approaches would result in the operating over a broad range of typical reserve the right to request additional same overall level of emission control, transient conditions; information on a case-by-case basis as but the implementation of each B. Emissions data generated under necessary. approach from an in-use measurement laboratory conditions representing a In the last several years, EPA has and data gathering perspective are quite broad range of typical transient issued extensive guidance on the different. We have decided not to operation; disclosure of AECDs for both highway finalize this alternative approach. This C. Transient test cycle results from and nonroad diesel engine decision is based primarily on our belief certified engines rated at or below 750 manufactures. These provisions do not that nonroad engine manufacturers will horsepower which share nearly impose any new certification burden on more easily transfer the knowledge and identical transient emissions control engine manufacturers, rather, it clarifies experience gained from the highway strategies; the existing certification application D. Base emissions control maps along NTE implementation (which begins in with an explanation for differences in 86 Base emissions control maps describe the 2007) to the nonroad program if the two control between portions of the map modulation of an emissions control parameter as a programs have similar requirements. For substantially included in the steady- function of changing engine speed and torque. additional discussion regarding our

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decision to not finalize the alternative The NTE requirements establish an exceed a specified value for any of the approach, please see the Summary and area (the ‘‘NTE zone’’ or ‘‘NTE control regulated pollutants.87 An illustrative Analysis of Comments. area’’) under the torque curve of an NTE zone is shown in Figure III.J–1. engine where emissions must not

The NTE standard applies during any The NTE standard applies to engines at The NTE test procedure can be run in conditions that could reasonably be the time of certification as well as in use nonroad equipment during field expected to be seen by that engine in throughout the useful life of the engine. operation or in an emissions testing normal operation and use, within laboratory using an appropriate certain broad ranges of real ambient TABLE III.J–1.—NTE STANDARD dynamometer. The test itself does not conditions. The NTE requirements will IMPLEMENTATION SCHEDULE involve a specific operating cycle of any help to ensure emission benefits over specific length; rather, it involves the full range of in-use operating NTE imple- nonroad equipment operation of any conditions. The NTE being finalized Power category mentation type which could reasonably be today for nonroad contains the same model year a expected to occur in normal nonroad basic provisions as the highway NTE. equipment operation that could occur <25 hp ...... 2013 This NTE control area is defined in the within the bounds of the NTE control 25–75 hp ...... 2013 b same manner as the highway NTE area. The nonroad engine is operated 75–175 hp ...... 2012 control area, and is therefore a subset of 175–750 hp ...... 2011 under conditions that may reasonably the engine’s possible speed and load >750 hp ...... 2011 be expected to be encountered in operating range. The NTE standard normal operation and use, including applies to emissions sampled during a Notes: operation under steady-state or transient time duration as small as 30 seconds. a The NTE applies for each power category conditions and under varying ambient once Tier 4 standards are implemented, such The NTE standard requirements for that all engines in a given power category are conditions. Emissions are averaged over nonroad diesel engines are summarized required to meet NTE standards. a minimum time of thirty seconds and below and specified in the regulations at b The NTE standard would apply in 2012 for then compared to the applicable 40 CFR 1039.101 and 40 CFR 1039.515. any engines in the 50–75 hp range which emission standard. The NTE standard These requirements will take effect as choose not to comply with the proposed 2008 applies over a wide range of ambient transitional PM standard. early as 2011, as shown in table III.J–1. conditions, including up to an altitude

87 Torque is a measure of rotational force. The of Federal Regulations. The intent of the mapping merely a graphical representation of the maximum torque curve for an engine is determined by an procedure is to determine the maximum available torque across all engine speeds. engine ‘‘mapping’’ procedure specified in the Code torque at all engine speeds. The torque curve is

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of 5,500 feet above-sea level at ambient manufacturer has relevant in-use application(s), is not capable of temperatures as high as 86 deg. F, and nonroad emissions test data, it should operating in such regions. We have also at sea-level up to ambient temperatures be taken into consideration by the finalized a provision which would as high as 100 deg. F. The specific manufacturer in developing the basis for allow a manufacturer to petition the temperature and altitude conditions its statement. Agency to limit testing in a defined under which the NTE applies, as well as In addition, as we proposed, we are region of the NTE engine control zone the methodology for correcting finalizing a transition period during during NTE testing. This optional emissions results for temperature and/or which a manufacturer could apply for provision would require the humidity, are specified in the an NTE deficiency for a nonroad diesel manufacturer to provide the Agency regulations. engine family. The NTE deficiency with in-use operation data which the For new nonroad diesel engines provisions would allow the manufacturer could use to define a subject to the NTE standards, we will Administrator to accept a nonroad single, continuous region of the NTE require that manufacturers state in their diesel engine as compliant with the NTE control zone. This single area of the application for certification that they are standards even though some specific control zone must be specified such that able to meet the NTE standards under requirements are not fully met. We are operation within the defined region all conditions that may reasonably be finalizing these NTE deficiency accounts for 5 percent or less of the total expected to occur in normal equipment provisions because we believe that, in-use operation of the engine, based on operation and use. Manufacturers will despite the best efforts of manufacturers, the supplied data. Further, to protect have to maintain a detailed description for the first few model years it is against ‘‘gaming’’ by manufacturers, the of any testing, engineering analysis, and possible some manufacturers may have defined region must generally be other information that forms the basis technical problems that are limited in elliptical or rectangular in shape, and for their statement. We believe that nature but cannot be remedied in time share a boundary with the NTE control there is a variety of information that a to meet production schedules. We are zone. If approved by EPA, the manufacturer could use as a reasonable not limiting the number of NTE regulations then disallow testing with basis for a statement that engines are deficiencies a manufacturer can apply sampling periods in which operation expected to meet NTE standards. For for during the first three model years for within the defined region constitutes example, a reasonable basis could which the NTE applies. For the fourth more than 5.0 percent of the time- include data from laboratory steady- through the seventh model year after weighted operation within the sampling state and transient test cycle operation, which the NTE standards are period. a robust engine emissions map derived implemented, a manufacturer could The NTE numerical standard is a from laboratory testing (e.g., an apply for no more than three NTE function of FTP emission standards emissions map of similar resolution to deficiencies per engine family. Within contained in today’s final rule, which the engine’s base fuel injection timing an engine family, NTE deficiencies must standards are described in section II. As map) and technical analysis relying on be applied for on an engine model or with the NTE standards we have good engineering judgment which are power rating basis; however, the same established for the 2007 highway rule, sufficient, in combination, to project deficiency when applied to multiple the nonroad NTE standard is emissions levels under NTE conditions ratings or models counts as a single determined as a multiple of the engine reasonably expected to be encountered deficiency within an engine family. No families’ underlying FTP emission in normal operation and use. Data deficiency may be applied for or granted standard. In addition, as with the 2007 generated from in-use nonroad after the seventh model year. The NTE highway standard, the multiple is either equipment testing to determine deficiency provision will only be 1.25 or 1.5, depending on the emission emission levels could, at the considered for failures to meet the NTE pollutant type and the value of the FTP manufacturer’s option, also be part of requirements. EPA will not consider an standard (or the engine families’ FEL). this combination. However, a reasonable application for a deficiency for failure to These multipliers are based on EPA’s basis for the manufacturer’s statement meet the FTP or supplemental transient assessment of the technological does not require in-use emissions test standards. feasibility of the NTE standard, and our data. This statement could reasonably Similar to the 2007 highway HD rule, assessment that as the underlying FTP be based solely on laboratory test data, we are also finalizing a provision which standard becomes more stringent, the analysis, and other information would allow a manufacturer to exclude NTE multiplier should increase (from reasonably sufficient to support a defined regions of the NTE engine 1.25 to 1.5). The FTP standard or FEL conclusion that the engine will meet the control zone from NTE compliance if thresholds for the NTE standard’s 1.25x NTE under conditions reasonably the manufacturer could demonstrate multiplier and the 1.5x multiplier are expected to be encountered in normal that the engine, when installed in a specified for each regulated emission in vehicle operation and use. If a specified nonroad equipment table III.J–2.

TABLE III.J–2.—THRESHOLDS FOR APPLYING NTE STANDARD OF 1.25X FTP STANDARD VS. 1.5X FTP STANDARD

Emission Apply 1.25x NTE when . . . Apply 1.5x when . . .

NOX ...... NOX std or FEL ≥ 1.9 g/bhp-hr ...... NOX std or FEL < 1.9 g/bhp-hr NMHC ...... NOX std or FEL ≥ 1.9 g/bhp-hr ...... NOX std or FEL < 1.9 g/bhp-hr NOX+NMHC ...... NMHC+NOX std or FEL ≥ 2.0 g/bhp-hr ...... NMHC+NOX std or FEL < 2.0 g/bhp-hr PM ...... PM std or FEL ≥ 0.05 g/bhp-hr ...... PM std or FEL < 0.05 g/bhp-hr CO ...... All stds or FELs ...... No stds or FELs

For example, beginning in 2011, the PM standard of 0.01 g/bhp-hr and a FTP 0.02 g/bhp-hr PM and 0.45 g/bhp-hr NTE standard for engines meeting a FTP NOX standard of 0.30 g/bhp-hr would be NOX. In the NPRM, we proposed a NOX

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threshold value of 1.5 g/bhp-hr as the filters. The PM only carve-out is a sub- requirements because the number of value at which the NTE multiplier region of the NTE zone in which the defects triggering the submission would switch from 1.5 to 1.25. NTE PM standard does not apply. requirement rises with the engine family We proposed this NOX emission Figure III.J–1 contains an illustration of size. The new approach may trigger threshold level (1.5 g/bhp-hr) primarily the PM carve-out. This is a region of some additional reports for small- because it is the same value as we high engine speed and low engine volume families, but the percentage- finalized for the highway NTE. As torque during which engine-out PM based approach will ensure that shown in table III.J–2, we have finalized emissions are difficult to control to investigations and reports correspond to a threshold value of 1.9 g/bhp-hr NOX levels below the PM NTE standard. The issues that are likely to be significant. for nonroad engines. We have finalized dimensions of the PM carve-out are Part 1068, subpart F, is intended to this higher NOX threshold based on the specified in the regulations. For engines require manufacturers to use differences in the emission performance equipped with a PM filter, compliance information we would expect them to of NOX control technologies between with the PM NTE standard in this region keep in the normal course of business. highway and nonroad diesel engines. is achievable due to the highly efficient We believe in most cases manufacturers Specifically, nonroad diesel NOX PM reduction capabilities of the CDPF will not be required to institute new standards have traditionally been higher technology. However, for engines in the programs or activities to monitor than the equivalent highway NOX under 25 hp category, for which we product quality or performance. A standard due primarily to the have established Tier 4 emission manufacturer that does not keep effectiveness of charge-air-cooling and standards that do not require the use of warranty or replacement part the lack of ram-air for nonroad a PM filter, PM control in this sub- information may ask for our approval to applications. For example, the nonroad region of the NTE zone with use an alternate defect-reporting Tier 3 NMHC+NOX standards are higher conventional PM reduction technologies methodology that is at least as effective than the 2004 heavy-duty highway may not be achievable. Therefore, as we in identifying and tracking possible standards (e.g., 3.0 g/bhp-hr vs. 2.5 g/ allowed with highway heavy-duty emission-related defects as the bhp-hr), and the Tier 4 NOX standard is engines certifying to the 0.1 g/bhp-hr requirements of 40 CFR 1068.501. Thus higher than the 2007 heavy-duty standard, we have created a PM carve- manufacturers will have the flexibility highway standard (e.g., 0.3 g/bhp-hr vs. out for nonroad engines that use in- to develop defect tracking and reporting 0.2 g/bhp-hr). We expect that the cylinder PM control technologies. programs that work better for their nonroad Tier 3 standard for engines Specifically, the PM carve-out applies to standard business practices. However, above 100 hp will require NOX levels of engines meeting a PM standard or FEL until we approve such a request, the approximately 2.5 g/bhp-hr and we greater than or equal to 0.05 g/bhp-hr. thresholds and procedures of subpart F expect that for the 2004 highway heavy- continue to apply. K. Investigating and Reporting duty standards, NOX levels are Manufacturers may also ask for our approximately 2 g/bhp-hr. In both cases, Emission-Related Defects approval to use an alternate defect- these emission levels are the building In 40 CFR part 1068, subpart F, we are reporting methodology when the blocks for the next set of EPA standards adopting defect reporting requirements requirements of 40 CFR 1068.501 can be (e.g., Tier 4 for nonroad and 2007 for that obligate manufacturers to tell us demonstrated to be highly impractical highway). Because the nonroad Tier 3 when they learn that emission-control or unduly burdensome. In such cases, NOX emission levels are expected to be systems are defective and to conduct we will generally allow alternate approximately 25 percent greater than investigations under certain methodologies that are at least as the 2004 highway level (2.5 vs 2), we circumstances to determine if an effective in identifying, correcting, and believe that the NTE NOX multiplier emission-related defect is present. informing EPA of possible emission- threshold for nonroad should be 25 Under these defect-reporting related defects as the requirements of 40 percent greater for nonroad as compared requirements, manufacturers must track CFR 1068.501. We expect this flexibility to highway. For these reasons, we have available warranty claims and any other to be useful in special circumstances finalized a NOX multiplier threshold of available information from dealers, such as when new models of very large 1.9 g/bhp-hr, which is 25 percent greater hotlines, diagnostic reports, or field- engines are introduced for the first time. than the highway multiplier threshold. service personnel to identify possible In this situation, it may be appropriate In addition, as proposed, we are defects. If the number of possible to allow an alternate defect reporting finalizing a number of specific engine defects exceeds certain thresholds, they method because the high cost of these operating conditions during which the must investigate future warranty claims engines often makes it impractical to nonroad NTE standard would not apply. and other information to establish build and test large numbers of The exact criteria for these conditions whether these are actual defects. prototype engines. The initial are defined in the regulations, but in We believe the investigation production of these engines can have summary: the NTE does not apply requirement in this rule will allow both similar defect rates to the high levels during engine start-up conditions; the EPA and the engine manufacturers to often associated with prototype engines. NTE does not apply during very cold fully understand the significance of any While we are concerned about such engine intake air temperatures for EGR- unusually high rates of warranty claims defects and want to be kept informed equipped engines during which the for systems or parts that may have an about them, it is not clear that our basic engine may require an engine protection impact on emissions. In the past, defect program would be the best way to strategy; and, finally, for engines reports were submitted based on a very address these defects. In such cases, we equipped with NOX and/or NMHC low threshold with the same threshold believe it may be more appropriate for aftertreatment (such as a NOX adsorber), applicable to all size engine families manufacturers to propose an alternative the NTE does not apply during warm- and with little information about the approach that consolidates reports on a up conditions for the exhaust emission full extent of the problem. The new regular interval, such as quarterly, and control device. Finally, while we did approach should result in fewer overall identifies obvious early-life defects not propose this, we are finalizing the defect reports being submitted by without a formal tracking process. In NTE PM carve-out provisions for manufacturers than would otherwise be general, we would encourage engines which will not require PM required under the old defect-reporting manufacturers to propose an alternate

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approach to ensure that these defects are noncompliant products (such as production or 20 engines, whichever is properly addressed while minimizing exported engines), and part shipments greater. For engines over 750 hp, the the associated burden. are generally not identifiable by model same percentage thresholds apply, but Issues related to parts shipments year. The final rule therefore requires we are extending the percentage values received the most attention from manufacturers to pursue a defect down to smaller engine families to commenters who pointed out that the investigation if the number of shipped reflect their disproportionate proposed requirement to track parts is higher than the manufacturer contribution to total emissions. For shipments of all emission-related would expect based on historical these engines, the absolute thresholds components was overly burdensome shipment levels, specifications for are 25 engines for investigations and 10 and not likely to reveal useful scheduled maintenance, or other factors. or 15 engines for defects (see table III.K– information. We have concluded that it We have modified the proposed is not appropriate to use parts thresholds to address concerns that 1). We believe these thresholds shipments as a quantitative indicator to manufacturers would be required to adequately balance the desire to evaluate whether manufacturers exceed investigate and report defects too document emission-related defects the threshold that would trigger an frequently. For engines under 750 hp, without imposing an unreasonable investigation. We generally agree with we are adopting investigation thresholds reporting burden. Also, we believe this manufacturers concerns that parts- of 10 percent of total production or 50 approach to adopting thresholds shipments data would be too difficult to engines, whichever is greater, for any adequately addresses reporting evaluate, for example, because parts are single engine family in one model year. requirements for aftertreatment and often shipped for stocking purposes, Similarly, we are adopting defect- non-aftertreatment components. parts are installed in compliant and reporting thresholds of 2 percent of total

TABLE III.K–1.—INVESTIGATION AND DEFECT-REPORTING THRESHOLDS FOR VARYING SIZES OF ENGINE FAMILIES1

Engine size Investigation threshold Defect-reporting threshold

≤750 hp ...... less than 500: 50 ...... less than 1,000: 20 500–50,000: 10% ...... 1,000–50,000: 2% 50,000+: 5,000 ...... 50,000+: 1,000 >750 hp ...... less than 150: 10 less than 250: 25 ...... 150–750: 15 250+: 10% ...... 750+: 2% Notes: 1 For varying sizes of engine families, based on sales per family in a given model year.

EMA also expressed concern about defects, taking steps as necessary to If the number of engines with a the existing regulatory language in 40 prevent bias in sampled data (or making specific defect is found to be less than CFR 1068.501(b)(3), which states that adjusted calculations to take into the threshold for submitting a defect manufacturers must ‘‘consider defects account any bias that may remain). For report, but information such as warranty that occur within the useful life period, example, if 75 percent of the data later indicates that there may be or within five years after the end of the components replaced under warranty additional defective engines, all the model year, whichever is longer.’’ are available for evaluation, it would be information must be considered in However, this provision has no effect on appropriate to extrapolate known determining whether the threshold for the diesel engines subject to the Tier 4 information on failure rates to the submitting a defect report has been met. standards being adopted today, since components that are unavailable for If a manufacturer has actual knowledge they all have useful lives of at least five evaluation. from any source that the threshold for years. We recognize that this issue may The second threshold in 40 CFR submitting a defect report has been met, be relevant to engine categories that do 1068.501 specifies when a manufacturer a defect report must be submitted even not have five-year useful lives, such as must report that there is an emission- if the trigger for investigating has not yet small SI engines, and will consider related defect. This threshold involves a been met. For example, if manufacturers these concerns in our future regulation smaller number of engines because each receive from their dealers, technical of such engines. possible occurrence has been screened staff or other field personnel When manufacturers start an to confirm that it is in fact an emission- information showing conclusively that investigation, they must consider any related defect. In counting engines to there is a recurring emission-related available information that would help compare with the defect-reporting defect, they must submit a defect report. them evaluate whether any of the threshold, the manufacturer generally If manufacturers trigger the threshold possible defects that contributed to considers a single engine family and to start an investigation, they must triggering the investigation threshold model year. Where information cannot promptly and thoroughly investigate would lead them to conclude that these be differentiated by engine family and whether their parts are defective, were actual defects. Otherwise, model year, the manufacturer must use collecting specific information to manufacturers are expected to look good engineering judgment to evaluate prepare a report describing their prospectively at any possible defects whether the information leads to a conclusions. Manufacturers must send and attempt to determine whether these conclusion that the number of defects the report if an investigation concludes are actual defects. Also, during an exceeds the applicable thresholds. that the number of actual defects did not investigation, manufacturers should use However, when a defect report is exceed reporting thresholds. appropriate statistical methods to required, the manufacturer must report Manufacturers must also send these as project defect rates if they are unable to all occurrences of the same defect in all status reports twice annually during an collect information to evaluate possible engine families and all model years. investigation. After investigating for

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several months, or perhaps a couple use of ABT credits) in the phase-in years standards. Commenters generally years, it may become clear that the (after factoring in any adjustments for supported this approach, as long EPA problems that triggered the investigation early introduction engine credits; see ensures that compliance requirements will never show enough actual defects section III.M). This minimum required for these engines are enforced. to trigger a defect report. In this case, production level would be 20% for the However, one equipment the manufacturer would send us a 75–175 hp category if a manufacturer manufacturer submitted comments report justifying this conclusion. exercises the option to comply with a suggesting that we should adopt a In general, we believe this updated reduced phase-in schedule in lieu of program that would provide incentives approach to defect reporting will using banked Tier 2 ABT credits, as for equipment manufacturers to use the decrease the number of defect reports discussed in section III.A.1.b. Another early Tier 4 engines in their equipment. submitted by manufacturers overall important restriction is that For an early low-emission engine while significantly improving their manufacturers would not be allowed to program to be successful, we agree that quality and their value to both EPA and have a deficit in the year immediately it is important to provide incentives to the manufacturer. preceding the completion of the phase- both the engine manufacturer and the Note that misbuilds are a special type in to 100%. This would help ensure that equipment manufacturer, who may of emission-related defect. An engine manufacturers are able to make up the incur added cost to install and market that is not built consistent with its deficit. Since they could not produce the advanced engine in the equipment. application for certification violates the more than 100% low-NOX engines after As was pointed out in comments, the prohibited act of introducing into the final phase-in year, it would not be proposed program did not provide clear commerce engines that are not covered possible to make up a deficit from this incentives to equipment manufacturers by a certificate of conformity. year. These provisions are identical to to use the (presumably more expensive) L. Compliance With the Phase-In those adopted in the highway HDDE early low-emission engines. Therefore, Provisions program. we are adding such provisions. Section We are also finalizing the proposed III.B.2.e describes these early Tier 4 In section II we described the NOX ‘‘split family’’ allowance for the phase- engine incentive provisions under and NMHC standards phase-in in years. This provision, which is which equipment manufacturers can schedule, which is intended to allow similar to a provision of the highway earn increased allowance flexibilities. engine manufacturers to phase-in their program, allows manufacturers to certify Under those provisions, the engine new advanced technology engines, engine families to both the phase-in and manufacturer’s incentive to produce the while they phase-out existing engines. phase-out standards. Manufacturers low-emitting engines will come from This phase-in requirement is based on choosing this option must assign at the customers’ demand for them, and from percentages of a manufacturer’s end of the model year specific numbers the fact that the engine manufacturer production for the U.S. market. We of engines to the phase-in and phase-out can earn ABT program credits for these recognize, however, that manufacturers categories. All engines in the family engines in the same way as without need to plan for compliance well in must be labeled with the same NOX and these incentive provisions. If the advance of the start of production, and PM FELs, which apply for all equipment manufacturer does not wish that actual production volumes for any compliance testing, and must meet all to earn the increased allowance one model year may differ from their other requirements that apply to phase- flexibilities, then the engine projections. On the other hand, we in engines. Engines assigned to the manufacturer would be allowed to use believe that it would be inappropriate phase-out category may generate the provisions of the incentive program and infeasible to base compliance solely emission credits relative to the phase- for early low-emission engines on a manufacturer’s projections. That out standards. described below in this subsection, could encourage manufacturers to though to do so would require the M. Incentive Program for Early or Very overestimate their production of forfeiture of any ABT credits earned by Low Emission Engines complying phase-in engines, and could the subject engines, essentially to avoid result in significantly lower emission We believe that it is appropriate and double counting, as explained below. benefits during the phase-in. In beneficial to provide voluntary This engine manufacturer incentive response to these concerns, we incentives for manufacturers to program is being adopted as proposed, proposed to initially only require introduce engines emitting at very low except for engines above 750 hp, for nonroad diesel manufacturers to project levels early. Such inducements may which the proposed program requires compliance with the phase-in based on help pave the way for greater and/or some adjustment to account for the their projected production volumes, more cost effective emission reductions approach we are taking to final provided that they made up any deficits from future engines and vehicles. To standards. (in terms of percent of production) the encourage early introduction of low- As discussed in section II.A.4, the following year. We received no emission engines, the proposal final rule does not phase in standards comments on this issue and are contained provisions to allow engine for engines above 750 hp as proposed, finalizing it as proposed. manufacturers to benefit from producing and instead adopts application-specific Because we expect that a engines certified to the final standards in 2011 and 2015. The 2011 manufacturer making a good-faith (aftertreatment-based) Tier 4 standards standards are not based on advanced projection of sales would not be very far prior to the 2011 model year, by being aftertreatment except for NOX on off of the actual production volumes, we allowed to make fewer engines certified engines above 1200 hp used in generator are limiting the size of the deficit that to these standards once the Tier 4 sets. To avoid overcomplication of the would be allowed, as in the highway program takes effect, a concept that we incentive program, which might program. In all cases, the manufacturer are terming ‘‘engine offsets’’ to avoid discourage its use, we are not separating would be required to produce at least confusion with ABT program credits. over and under 1200 hp generator set 25% of its production in each phase-in The number of offsets that could be engines into separate groups for these power category as ‘‘phase-in’’ engines generated would depend on the degree provisions. Instead, any of these engines (meeting the NOX and NMHC standards to which the engines are able to meet, that meet the 2015 standards before or demonstrating compliance through or perform better than, the final Tier 4 2015 can earn offsets. We are, however,

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separating the generator set engines and early introduction offsets. The in section III.B.2.e, where incentives for non-generator set engines above 750 hp regulations specify that the standards both the engine manufacturer (ABT into separate groups, because we are must be met without the use of ABT credits) and the equipment deferring setting a NOX standard for the credits and actual production of the manufacturer (allowance flexibilities) latter that is based on use of advanced engines must begin by September 1 are needed to ensure successful early aftertreatment technology. preceding the first model year when the introduction of clean engines. Because Table III.M–1 summarizes the standards would otherwise be 15 ppm sulfur diesel fuel will be requirements and available offsets for applicable. Also, to avoid double- available on a widespread basis in time engine manufacturers in this program. counting, as explained in the proposal, for 2007 (due to the requirements for on- As the purpose of the incentive is to the early engines can earn either the highway heavy-duty engines), we are encourage the introduction of clean engine offsets or the ABT emission allowing engine manufacturers to begin technology engines earlier than credit, but not both. Note that this is certifying engines to the very low required, we require that the emission different than the approach taken in the emission levels required to be eligible standard levels actually be met, and met early Tier 4 engine incentive program for this incentive program, beginning early, by qualifying engines to earn the for equipment manufacturers described with the 2007 model year.

TABLE III.M–1.—PROGRAM FOR EARLY INTRODUCTION OF CLEAN ENGINES

Category Engine group Must meet a Per-engine offset

Early ...... 25–75 hp ...... 0.02 g/bhp-hr PM ...... 1.5-to-1 PM-only b ...... 75–750 hp ...... 0.01 g/bhp-hr PM ...... PM-only 25–75 hp ...... 0.02/3.5 g/bhp-hr PM/NMHC+NOX. 75–750 hp ...... 0.01/0.30/0.14 g/bhp-hr PM/NOX/NMHC. >750 hp generator set ...... 0.02/0.50/0.14 g/bhp-hr PM/NOX/NMHC ...... 1.5–to–1 b Early Engine ...... >750 hp non-generator set 0.03/2.6/0.14 g/bhp-hr PM/NOX/NMHC. Low NOX Engine ...... >25 hp ...... as above for Early Engine, except must meet 0.15 g/ 2–to–1 bhp-hr NOX standard. Notes: a All engines must also meet the Tier 4 crankcase emissions requirements. Engines must certify using all test and other requirements (such as NRTC and NTE) otherwise required for final Tier 4 standards. b Offsets must be earned prior to the start of phase-in requirements in applicable engine groups (prior to 2013 for 25–75 hp engines, prior to 2012 for 75–175 hp engines, prior to 2011 for 175–750 hp engines, prior to 2015 for >750 hp engines).

For any engines being certified under urgent need in many parts of the NOX and NMHC standards (since there this program before the 2011 model year country as explained in section I, and is no reason for PM offsets to offset using 15 ppm sulfur certification fuel, because the early learning opportunity emissions of other pollutants). Tier 4 the manufacturer would have to meet with new technologies can help to engines between 25 and 75 hp certified the requirements described in section ensure a smooth transition to Tier 4 to the 2008 PM standard would not III.D, including demonstrating that the standards. participate in this program, nor would engine would indeed be fueled with 15 We are providing this early engines below 25 hp, because they do ppm sulfur fuel in the field. We expect introduction offset for engines over 25 not have advanced aftertreatment-based this would occur through selling such hp that meet all of today’s Tier 4 standards. engines into fleet applications, such as emissions standards (NOX, PM, and An important aspect of the early municipal maintenance fleets, large NMHC) in the applicable engine incentive provision is that it must be construction company fleets, or any category. We are also providing this done on an engine count basis. That is, such well-managed centrally-fueled early introduction offset to engines that a diesel engine meeting new standards fleet. While obtaining a reliable supply pull ahead compliance with only the early would count as 1.5 such diesel of 15 ppm maximum sulfur diesel fuel PM standard. However, a PM-only early engines later. This contrasts with a prior to the 2011 model year will be engine would offset only the PM provision done on an engine percentage possible, it will require some effort by standard for an offset-using engine. For basis which would count one percent of nonroad diesel machine operators. We engines in power categories with a diesel engines early as 1.5 percent of therefore believe it is necessary and percentage phase-in, this would diesel engines later. Basing the appropriate to provide a greater correspond (during the phase-in years) incentive on an engine count alleviates incentive for early introduction of clean to offset use for ‘‘phase-out’’ engines any possible influence of fluctuations in diesel technology. Thus, as proposed, (those required to meet the new Tier 4 engine sales in different model years. we would count one early engine (that standard for PM but not for NOX or Another important aspect of this is, an engine meeting the final Tier 4 NMHC). Engines using the PM-only program is that it is limited to engines standards) as offsetting 1.5 engines later. offset would be subject to the other sold prior to the 2013 model year for This means that fewer clean diesel applicable Tier 4 emission standards, engines between 25 and 75 hp, prior to engines than otherwise required may including applicable transient and NTE the 2012 model year for engines enter the market in later years, but, more standards (see Section III.F) and between 75 and 175 hp, and prior to the importantly, it means that emission crankcase requirements. The applicable 2011 model year for engines between reductions would be realized earlier PM standard and requirements for these 175 and 750 hp. In other words, as in than under our base program. We PM-only offset-using engines would be the highway program, nonroad diesel believe that providing incentives for those of Tier 3 (Tier 2 for 25–50 hp engines sold during the transitional early emission reductions is a engines). PM-only offsets would not ‘‘phase-in’’ model years would not be worthwhile goal for this program, offset engines required to meet other considered ‘‘early’’ introduction engines because improving air quality is an Tier 4 standards such as the phase-in and would therefore be ineligible to

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generate early introduction offsets. 500 ppm may be accidentally or factors. EPA has the authority to However, such engines and vehicles purposely misfueled with higher-sulfur evaluate whether a manufacturer’s use would still be able to generate ABT fuel. Any of these misfueling events of engineering judgment is reasonable. credits. Because the engines over 750 hp could seriously degrade the emission The regulations describe the engines have no percent-of-production performance of sulfur-sensitive exhaust methodology we use to address any phase-in provisions, we are allowing emission control devices, or perhaps concerns related to how manufacturers offsets for early engines in any model destroy their functionality altogether. use good engineering judgment in cases year prior to 2015. For the same reason, In the highway rule, we adopted a where the manufacturer has such there is no PM-only offset for these requirement that heavy-duty vehicle discretion (see 40 CFR 1068.5). If we engines. As with the phase-in itself, and manufacturers notify each purchaser find a problem with a manufacturer’s for the same reasons, an early that the vehicle must be fueled only use of engineering judgment, we will introduction engine could only be used with the applicable low-sulfur diesel take into account the degree to which to offset requirements for engines in the fuel. We also required that diesel any error in judgment was deliberate or vehicles be equipped by the same engine group (25–75 hp, 75–175 in bad faith. If manufacturers object to manufacturer with labels near the hp, 175–750 hp, >750 hp generator sets, a decision we make under this refueling inlet to indicate that low and >750 hp non-generator sets) as the provisions, they are entitled to a offset-generating engine. sulfur fuel is required. We are adopting As a further incentive to introduce similar requirements here.88 hearing. This subpart is consistent with clean engines and vehicles early, we are Specifically, manufacturers will be provisions already adopted for light- also adopting the proposed provision required to notify each purchaser that duty highway vehicles, marine diesel that gives engine manufacturers an early the nonroad engine must be fueled only engines, industrial spark-ignition introduction offset equal to two engines with the applicable low-sulfur diesel engines, and recreational vehicles. during or after the phase-in years for fuel, and ensure that the equipment is 2. Replacement Engines engines with NOX levels well below the labeled near the refueling inlet to final Tier 4 NOX standard. This indicate that low sulfur fuel is required. In the proposal we included a incentive applies for diesel engines We believe that these measures would provision allowing manufacturers to sell achieving a 0.15 g/bhp-hr NOX standard help owners find and use the correct a new, noncompliant engine intended to level (one-half of the aftertreatment- fuel and would be sufficient to address replace an engine that fails in service. based standard for most engines) while misfueling concerns. Thus, more costly The proposed language closely mirrored also meeting the NMHC and PM provisions, such as fuel inlet restrictors, the existing provisions in 40 CFR standards. Due to the extremely low should not be necessary. 89.1003(b)(7), except that it specified emission levels to which these engines In general, beginning in model year that manufacturers could produce new, and vehicles would need to certify, we 2011, nonroad engines will be required noncompliant replacement engines if no believe that the double engine count to use the Ultra Low Sulfur diesel fuel engine from any manufacturer were offset is appropriate. (with less than 15 ppm sulfur). Thus, available with the appropriate physical In the NPRM we asked for comment the default label will state ‘‘ULTRA or performance characteristics. on whether or not we should extend the LOW SULFUR FUEL ONLY.’’ The Manufacturers objected to this provision existing Blue Sky program that labeling requirements for earlier model and requested that the final regulations encourages the early introduction of year Tier 4 engines are specified in follow the language in 40 CFR part 89, engines with emission levels (as § 1039.104(e). Some new labeling in which the manufacturer of the new measured on a transient test) about 40% requirements for earlier model year Tier engine confirm that no appropriate lower than the Tier 2 standards levels. 3 engines are specified in 40 CFR engine is available from its product line See 68 FR at 28483. We received 89.330(e). These requirements for earlier (or that of the manufacturer of the comments both for and against doing so, years generally require that engines and original engine, if that were a different but no commenter provided substantive equipment be labeled consistent with arguments or information. Given the company). We agree that the language the sulfur of the test fuel used for their from 40 CFR part 89 is appropriate, but very low emissions levels being adopted certification. So where the engine is in Tier 4, we have decided not to extend we note two things to address remaining certified using Low Sulfur diesel fuel concerns that manufacturers could the existing Blue Sky Series program, (with less than 500 ppm sulfur), the because it does not encourage engines potentially use the replacement-engine required label will state ‘‘LOW SULFUR provisions to produce large numbers of emitting at such low emission levels. FUEL ONLY.’’ See section III.D and the noncompliant products. First, we are regulatory text for the other specific N. Labeling and Notification including a specific statement in the requirements related to labeling the Requirements regulations that manufacturers may not earlier model years. As explained in section II, the use the replacement-engine exemption emissions standards will make it O. General Compliance to circumvent the regulations. Second, we plan to use the data-collection necessary for manufacturers to employ 1. Good Engineering Judgment exhaust emission control devices that provision under 40 CFR 1068.205(d) to require very low-sulfur fuel (less than The process of testing engines and ask manufacturers to report the number 15 ppm) to ensure proper operation. preparing an application for of engines they sell under the This action restricts the sulfur content certification requires the manufacturer replacement-engine exemption. Rather of diesel fuel used in these engines. to make a variety of judgments. This than adopting a specific data-reporting However, the 2008 emissions standards includes, for example, selecting test requirement, we believe this more would be achievable with less sensitive engines, operating engines between flexible approach is most appropriate to technologies and thus it could be tests, and developing deterioration allow us to get information to evaluate appropriate for those engines to use how manufacturers are using the 88 We also required that highway vehicles be exemption without imposing reporting diesel fuel with up to 500 ppm sulfur. labeled on the dashboard. Given the type of There could be situations in which equipment using nonroad CI engines, we are not requirements that may involve more or vehicles requiring either 15 ppm fuel or adopting any dashboard requirement here. less information than is actually needed.

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3. Warranty that the engine manufacturer provide The installer is also liable. We may find We are modifying 40 CFR 1068.115 sufficiently detailed and clear the equipment manufacturer to be in regarding engine manufacturers’ instructions so that the equipment violation of the tampering prohibitions warranty obligations by removing manufacturer can readily install the at 40 CFR 1068.101(b)(1) for the paragraph (b). This paragraph addresses engine and its ancillary components in improper installation, which could specific circumstances under which a configuration covered under the subject it to substantial civil penalties. manufacturers may not deny emission- certificate of conformity held by the In any event, the engine manufacturer related warranty claims, while engine manufacturer. We are also remains liable for the in-use compliance paragraph (a) of this section addresses requiring that the engine manufacturer of the engine as installed. For example, the circumstances under which have a contractual agreement obligating it has responsibility for the emission- manufacturers may deny such claims. the equipment manufacturer to related warranty, including for the As described in our Summary and complete the final assembly into a aftertreatment, and is responsible for Analysis of Comments related to our certified configuration. The engine any potential recall liability. However, if November 8, 2002 final rule (67 FR manufacturer must ship any noncompliance of the in-use engines 68242), we intended to adopt 40 components directly to the equipment stems from improper installation of the CFR1068.115 without this paragraph. manufacturer or arrange for their aftertreatment, then the tampering that We wanted to remove paragraph (b) shipment from a component supplier. occurred by the installer may remove because we agreed with a comment The engine manufacturer must tag the recall liability. Where the engine pointing out that publishing both engines and keep records. The engine manufacturer had complied with the paragraphs leaves ambiguous which manufacturer must obtain annual regulations and the failure was solely provision applies if a situation applies affidavits from each equipment due to the equipment manufacturer’s that is not on either list. Since neither manufacturer as to the parts and part actions, we would not be inclined to list can be comprehensive, we believe numbers that the equipment revoke or suspend the exemption or to the provisions in paragraph (a) manufacturer installed on each engine void the exemption for the entire engine describing when manufacturers may and must conduct a limited number of family. We may deny the exemption for deny warranty claims appropriately audits of equipment manufacturers’ future model years if the engine addresses the issue. As a result, facilities, procedures, and production manufacturer does not take action to records to monitor adherence to the paragraph (b) was inadvertently adopted address the factors causing the instructions it provided. Where an as part of the November 2002 final rule. nonconformity. On the other hand, if equipment manufacturer is located the manufacturer failed to comply, had 4. Separate Catalyst Shipment outside of the U.S., the audits may be shipped improper parts, had provided We are adopting provisions that will conducted at U.S. port of distribution instructions that led to improperly allow engine manufacturers to ship facilities. installed parts, or had otherwise engines to equipment manufacturers The rule also contains various contributed to the installation of engines where the engine manufacturer had not provisions establishing responsibility in an uncertified configuration, we yet installed the aftertreatment or for proper installation. Where the might suspend, revoke, or void the otherwise included it as part of the engines are not in a certified engine shipment. This allows the engine configuration when installed in nonroad exemption for the engine family. In this manufacturer to ship the engine without equipment because the equipment case, the engine manufacturer would be the aftertreatment; for example, in cases manufacturer used improper emission- subject to substantial civil penalties. where it would be impractical to install control devices or failed to install the P. Other Issues aftertreatment devices on the engine shipped parts or failed to install the before shipment or even ship products devices correctly, then both the engine We are also making other minor with the aftertreatment devices manufacturer and the installer have changes to the compliance program. uninstalled along with the engine; or responsibility. For the engine maker, the These changes are summarized in table where shipping it already installed exemption is void for those engines that III.Q–1 below. For more information would require it to be disassembled and are not in their certified configuration about these changes, you should read reinstalled when the engine was placed after installation. We may also suspend the NPRM and Summary and Analysis in the equipment. Today’s final rule or revoke the exemption for future of Comments for this rulemaking. We requires that the components be engines where appropriate, or void the believe that these changes are included in the price of the engine and exemption for the entire engine family. straightforward and noncontroversial.

TABLE III.Q–1.—REGULATORY CHANGES

Issue Regulatory provision

Applicability to alcohol-fueled engines ...... §§ 1039.101, 1039.107. Prohibited controls ...... § 1039.115. Emission-related maintenance instructions ...... § 1039.125. Engine installation instructions ...... § 1039.130. Engines labels ...... §§ 1039.20, 1039.135, 1068.320. Engine family definition ...... § 1039.230. Test engine selection ...... § 1039.235. Deterioration factors ...... § 1039.240. Engines that use noncommercial fuels ...... § 1039.615. Use of good engineering judgment ...... § 1068.5. Separate shipment of aftertreatment ...... § 1068.260. Exemptions ...... 40 CFR 1068 Subpart C. Importing engines ...... 40 CFR 1068 Subpart D.

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TABLE III.Q–1.—REGULATORY CHANGES—Continued

Issue Regulatory provision

Hearings ...... 40 CFR 1068 Subpart G.

Q. Highway Engines make their own duplicate labels as emission reductions. Sulfur We are changing the diesel engine/ needed. We intend to amend 40 CFR significantly inhibits or impairs the vehicle labeling requirements in 40 CFR parts 1048 and 1051 to correspond with function of the diesel exhaust emission 86.007–35 to be consistent with the new this change. control devices which will generally be • As described above in section III, pump labels. This change corrects a necessary for nonroad diesel engines to we are revising the criteria mistake in the proposal that would have meet the emission standards finalized manufacturers would use to show that resulted in confusion for highway today. With the 15 ppm sulfur standard they may use the replacement-engine vehicle operators. (We received no for nonroad diesel fuel, we have exemption under 40 CFR 1068.240. We comment on this issue.) concluded that this emission control also clarify that we may require technology will be available for model R. Changes That Affect Other Engine manufacturers to report to us how many year 2011 and later nonroad diesel Categories engines they sell in given year under the engines to achieve the NOX and PM replacement-engine exemption. We are making some minor changes to emission standards adopted today. The • As described above and in the the regulations in 40 CFR parts 1048 benefits of today’s program also include Summary and Analysis of Comments, and 1051 for nonroad spark-ignition the sulfate PM and SO2 reductions we are adding a provision in 40 CFR achieved by establishing the same engines over 19 kW and recreational 1068.260 to allow manufacturers to ship vehicles, respectively. We are also standard for the sulfur content of aftertreatment devices directly from the locomotive and marine diesel fuel. changing several additional provisions component supplier to the equipment in 40 CFR parts 1065 and 1068, which The sulfur requirements established manufacturer. This regulatory section under today’s program are similar to the define test procedures and compliance includes several provisions to ensure provisions for these same categories of sulfur limits established for highway that the equipment manufacturer diesel fuel in prior rulemakings —500 engines. See the regulatory text for the installs the aftertreatment device in a ppm in 1993 (55 FR 34120, August 21, specific changes. The proposed rule way that brings the engine to its 1990) and 15 ppm in 2006 (66 FR 5002, included most of these changes. To the certified configuration. extent there were comments on any of • As described above, we are January 18, 2001). Beginning June 1, these changes, those issues are modifying the defect-reporting 2007, refiners will be required to addressed elsewhere in this document requirements in 40 CFR 1068.501. produce NRLM diesel fuel with a or in the Summary and Analysis of • While most of the changes being maximum sulfur content of 500 ppm. Comments. adopted for part 1065 will only affect Then, beginning June 1, 2010, the sulfur • In 40 CFR 1048.125 and 40 CFR diesel nonroad engines, we are also content will be reduced for nonroad 1051.125, we are correcting the making minor changes that will also diesel fuel to a maximum of 15 ppm. provisions related to critical emission- apply for SI engines. These changes, The sulfur content of locomotive and related maintenance to allow however, are generally limited to marine diesel fuel will be reduced to 15 manufacturers to do maintenance clarifications, corrections, and options. ppm beginning June 1, 2012. The during service accumulation for They will not affect the stringency of the program contains certain provisions to durability testing, as long as their standards or create new burdens for ease refiners’ transition to the lower maintenance steps meet the specified manufacturers. sulfur standards and to enable the criteria ensuring that in-use engines will efficient distribution of all diesel fuels. undergo those maintenance procedures. IV. Our Program for Controlling These provisions include the 2012 date • In 40 CFR 1068.27, we clarify that Nonroad, Locomotive and Marine for locomotive and marine diesel fuel, manufacturers must make available a Diesel Fuel Sulfur early credits for refiners and importers reasonable number of production-line We are finalizing today a two-step and special provisions for small engines so we can test or inspect them sulfur standard for nonroad, locomotive refiners, transmix processors, and if we make such a request. and marine (NRLM) diesel fuel that will entities in the fuel distribution system. • We are changing the definition of achieve significant, cost-effective sulfate In general, the comments we received nonroad engine to explicitly exclude PM and SO2 emission reductions. These during the public comment period aircraft engines. This is consistent with emission reductions will, by supported the proposed program. our longstanding interpretation of the themselves, provide dramatic Adjustments we have made to the Clean Air Act. Clarifying the definition environmental and public health proposed program will make the final this way allows us to more clearly benefits which far outweigh the cost of program even stronger, both in terms of specify the applicability of the fuel meeting the standards necessary to our ability to enforce it and the requirements to nonroad engines in this achieve them. In addition, the final environmental and public health final rule. sulfur standards for nonroad diesel fuel benefits that it will achieve. In • We are adding a provision directing will enable advanced high efficiency particular, today’s final program equipment manufacturers to request emission control technology to be contains provisions to smooth the duplicate labels from engine applied to nonroad engines. As a result, refining industry’s transition to the low manufacturers and keep appropriate these nonroad fuel sulfur standards, sulfur fuel requirements, encourage records if the original label is obscured coupled with our program for more earlier introduction of cleaner burning in the final installation. The former stringent emission standards for new fuel, maintain the fuel distribution approach under 40 CFR part 1068 was nonroad engines and equipment, will system’s flexibility to fungibly distribute to require equipment manufacturers to also achieve dramatic NOX and PM similar products, and provide an outlet

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for off-specification distillate product, 15 ppm sulfur highway diesel fuel. The (1) Achieves the greatest reduction in all while maintaining, and even designate and track approach includes sulfate PM and SO2 emissions from nonroad, enhancing, the health and record keeping and reporting locomotive, and marine diesel engines as environmental benefits of today’s requirements for all parties in the fuel early as practicable; program. distribution system, associated with (2) Provides for a smooth transition of the NRLM diesel fuel pool to 15 ppm sulfur; The first adjustment that we made to tracking designated fuel volumes (3) Ensures that 15 ppm sulfur diesel fuel the proposed program was to move from through each custodian in the is produced and distributed widely for use in the ‘‘refiner baseline’’ approach distribution chain until the fuel exits all 2011 and later model year nonroad diesel discussed in the proposal to a the terminal. The program also includes engines; ‘‘designate and track’’ approach. Under enforcement and compliance assurance (4) Ensures that the fuel program’s the proposed refiner baseline approach, provisions to enable the Agency to requirements are enforceable and verifiable. any refiner or importer could choose to rapidly and accurately review for (5) Enables the efficient distribution of all fungibly distribute its 500 ppm sulfur discrepancies the large volume of data diesel fuels; and NRLM and highway diesel fuels without collected on fuel volume hand-offs. The (6) Maintains the benefits and program adding red dye to the NRLM at the bulk of the designate and track integrity of the highway diesel fuel program. refinery gate. However, the refiners’ provisions end May 31, 2010 when all The remainder of this section covers production would then be subject to a highway diesel fuel must meet the 15 several topics. In section IV.A, we non-highway distillate baseline, ppm sulfur standard. However, as discuss the fuel that is covered by established as a percentage of its total discussed below, scaled back designate today’s program, the standards that distillate fuel production volume. While and track provisions continue beyond apply for refiners and importers (for EPA preferred this approach in the 2010 for purposes of enforcing against both steps of the program), and the proposal, we decided not to finalize it heating oil being used in the NRLM standards that apply for downstream because we concluded that it would market and to enforce against 500 ppm entities. In section IV.B, we address the have unnecessarily constrained refiners’ LM diesel fuel being used in the various hardship provisions that we are ability to meet market demands. It nonroad market. including in today’s program. In section would have encouraged them to dye 500 The second adjustment that we made IV.C, we describe the special provisions ppm sulfur NRLM at the refinery gate, to the proposed NRLM diesel fuel that apply in the State of Alaska and the resulting in an additional grade of diesel program was to establish a 15 ppm Territories. Next, in section IV.D, we fuel and, consequently, an added sulfur standard at the refinery gate for describe the design of the designate and burden to the distribution system. locomotive and marine (LM) diesel fuel track provisions of the NRLM diesel fuel Furthermore, we were concerned that it in addition to nonroad (NR) diesel program for compliance purposes and would have created a trend that could fuel.89 We are finalizing this standard how it differs from what we proposed. reduce the volume of 15 ppm sulfur for several reasons as discussed below. In section IV.E, we discuss the impact highway diesel fuel and potential While we are finalizing a 15 ppm of today’s program on state NRLM diesel options to remove the market sulfur standard for locomotive and fuel programs. In sections IV.F and G, constraints could have increased the marine diesel fuel, we are doing so in we discuss the technological feasibility possibility for reduced volume. a manner that responds to the primary of the NRLM diesel fuel standards In place of the refiner baseline concerns raised in comments regarding adopted today and the impacts of approach, we are finalizing a designate the need for an outlet for off- today’s program on lubricity and other and track approach. The final designate specification product. We are setting a fuel properties. Finally, in section IV.H, and track approach is a modified refinery gate standard of 15 ppm sulfur we discuss the steps the Agency will version of the designate and track beginning June 1, 2012, two years later take to streamline the refinery air approach discussed in the proposal. As than for nonroad diesel fuel. We are also permitting process for the equipment finalized it now allows us to enforce the continuing to provide an outlet for off- that refiners may need to install to meet program through the entire distribution specification product generated in the today’s NRLM diesel fuel standards.. system. In essence, the final designate distribution system, thereby affording Analyses supporting the design and and track approach requires refiners and the opportunity to reduce reprocessing cost of the fuel program are located in importers to designate the volumes of and transportation costs. We are leaving chapters 5, 7, and 8 of the RIA. Section diesel fuel they produce and/or import. the downstream standard for LM diesel V of this preamble discusses the details Refiners/importers will identify whether fuel at 500 ppm sulfur. In this way the of the additional compliance and their diesel fuel is highway or NRLM LM diesel fuel pool may remain an enforcement provisions affecting NRLM and the applicable sulfur level. They outlet for off-specification distillate diesel fuel and explains various may then mix and fungibly ship product and interface/transmix material. additional elements of the program. highway and NRLM diesel fuels that In developing the provisions of the meet the same sulfur specification NRLM diesel fuel program adopted A. Nonroad, Locomotive and Marine without dyeing their NRLM diesel fuel today, we identified several principles Diesel Fuel Quality Standards at the refinery gate. The designations that we want the program to achieve. 1. What Fuel Is Covered by This will follow the fuel through the Specifically, as described in more detail Program? distribution system with limits placed below, we believe the fuel program— on the ability of downstream parties to The fuel covered by today’s final rule change the designation. These limits are 89 While today’s program does not establish more is generally the same as the fuel that was designed to restrict the inappropriate stringent emission standards for locomotive or covered by the proposal. We have not marine diesel engines, the Agency intends in the sale of 500 ppm sulfur NRLM diesel fuel near future to initiate a rulemaking to adopt new expanded or reduced the pool of diesel into the highway market , the emission standards for locomotive and marine fuel that will be subject to the lower inappropriate sale of heating oil into the engines based on the use of high efficiency exhaust sulfur standards. However, the second NRLM market, the inappropriate sale of emission control technology like that required for step of the program now includes the the nonroad standards adopted in today’s rule. An 500 ppm sulfur LM into the nonroad advanced notice of proposed rulemaking (ANPRM) same ultra low sulfur standard for market, and to implement the for this rule is published elsewhere in today’s locomotive and marine diesel fuel as for downgrading restrictions that apply to Federal Register, June 29, 2004. nonroad diesel fuel.

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Specifically, the sulfur standards stationary diesel engines, industrial boilers, produced when fuels such as DMA are finalized under today’s program apply or for heating; brought on board the vessel in this to all the diesel fuel that is used in (3) Number 4, 5, and 6 fuels (e.g., residual manner. EPA’s sulfur standards will nonroad, locomotive, and marine diesel fuels or residual fuel blends, IFO Heavy Fuel apply to the distillate that is used to Oil Grades 30 and higher), used for stationary applications—fuel not already covered source purpose; produce the DMB, for example the DMA by the previous standards for highway (4) Any distillate fuel with a T–90 distillate, up to the point that it becomes diesel fuel. This includes all fuel used distillation point greater than 700 F, when DMB. DMB itself is not subject to the in nonroad, locomotive, and marine used in Category 2 or 3 marine diesel sulfur standards when it is used in diesel engines, except for fuels heavier engines. This includes Number 4, 5, and 6 Category 2 or 3 engines. than a No. 2 distillate used in Category fuels (e.g., IFO Heavy Fuel Oil Grades 30 and DMC is a grade of marine fuel that 2 and 3 marine engines 90 and any fuel higher), as well as fuels meeting ASTM may contain some residual fuel and is that is exempted for national security or specifications DMB, DMC, and RMA–10 and often a residual fuel blend. This fuel is other reasons. While we are not heavier; and similar to No. 4 diesel, and can be used (5) Any fuel for which a national security in Category 2 and Category 3 marine adopting sulfur standards for other or research and development exemption has distillate fuels (such as jet fuel, heating been approved or fuel that is exported from diesel engines. DMC is produced by oil, kerosene, and No. 4 fuel oil) we are the U.S. (see section V.A.1. and 2). blending a distillate fuel with residual adopting provisions to prevent the fuel, for example at a location It is useful to clarify what marine inappropriate use of these other fuels. downstream in the distribution system. diesel fuels are covered by the sulfur Use of distillate fuels in nonroad, EPA’s standards will apply to the standards. As with nonroad and locomotive, or marine diesel engines distillate that is used to produce the will generally be prohibited unless they locomotive diesel fuel, our basic DMC, up to the point that it is blended meet the fuel sulfur standards finalized approach is that the standards apply to with the residual fuel to produce DMC. today.91 The program includes several any diesel or distillate fuel used or DMC itself is not subject to the sulfur provisions, as described below in intended for use in marine diesel standards when it is used in Category 2 section IV.D, to ensure that heating oil engines. However, the fuel used by or 3 marine engines. and other higher sulfur distillate fuels marine diesel engines spans a wide Residual fuel is typically designated will not be used in nonroad, locomotive, variety of fuels, ranging from No. 1 and by the prefix RM (e.g., RMA, RMB, etc.). or marine applications. 2 diesel fuel to residual fuel and These fuels are also identified by their The regulated fuels under today’s residual fuel blends used in the largest nominal viscosity (e.g., RMA10, RMG35, program include the following: engines. It is not EPA’s intention to etc.). Most residual fuels require cover all such fuels, and EPA has treatment by a purifier-clarifier (1) Any No. 1 and 2 distillate fuels used, adopted an objective criteria to identify intended for use, or made available for use centrifuge system, although RMA and in nonroad, locomotive, or marine diesel those marine fuels subject to regulation RMB do not require this. For the engines. Fuels under this category include and those that are not. Any distillate purpose of this rule, we consider all RM those meeting the American Society for fuel with a T–90 greater than 700 F will grade fuel as residual fuel. Residual fuel Testing and Materials (ASTM) D 975 or D 396 not be subject to the sulfur standards is not covered by the sulfur content specifications for grades No. 1–D and No. 2– when used in Category 2 or 3 marine standards as it is not a distillate fuel. D. Fuels meeting ASTM DMX and DMA engines. This criteria is designed to The distillation criteria adopted by specifications would be covered; exclude fuels heavier than No. 2 EPA, T–90 greater than 700F, is (2) Any No. 1 distillate fuel (e.g., kerosene) added to such No. 2 diesel fuel, e.g., to distillate, including blends containing designed to identify those fuels that are improve its cold flow properties; residual fuel. In addition, residual fuel not subject to the sulfur standards when (3) Any other fuel used in nonroad, is not subject to the sulfur standards. used in Category 2 or 3 marine diesel locomotive, or marine diesel engines or While many marine diesel engines engines. It is intended to exclude DMB, blended with diesel fuel for use in such use No. 2 distillate, ASTM DMC, and other heavy distillates or engines. Fuels under this category include specifications for marine fuels identify blends, when used in Category 2 or 3 non-distillate fuels such as biodiesel and four kinds of marine distillate fuels: marine diesel engines. certain specialty fuel grades such as JP–5, JP– DMX, DMA, DMB, and DMC. DMX is a Hence, the fuel that refiners and 8, and F76 if used in a nonroad, locomotive, or marine diesel engine, except when a special light distillate intended mainly importers are required to produce to the national security or research and for use in emergency engines. DMA more stringent sulfur standards include development exemption has been approved. (also called MGO) is a general purpose those No. 1 and No. 2 diesel fuels as See V. A.1. and 2. marine distillate that is to contain no well as similar distillate or non- On the other hand, the sulfur traces of residual fuel. These fuels can distillate fuels that are intended or made standards do not apply to— be used in all marine diesel engines but available for use in NRLM diesel are primarily used by Category 1 engines. Furthermore, the sulfur (1) No. 1 distillate fuel used to power engines. DMX and DMA fuels intended standard also covers any fuel that is aircraft; blended with or substituted for No. 1 or (2) No. 1 or No. 2 distillate fuel used for for use in any marine diesel engine are stationary source purposes, such as to power subject to the fuel sulfur standards. No. 2 diesel fuel for use in nonroad, DMB, also called marine diesel oil, is locomotive, or marine diesel engines. 90 Category 3 marine engines frequently are not typically used with Category 1 For instance, as required under the designed to use residual fuels and include special engines, but is used for Category 2 and highway diesel fuel program, in those fuel handling equipment to use the residual fuel. 3 engines. DMB is allowed to have a situations where the same batch of 91 For the purposes of this final rule, the term trace of residual fuel, which can be high kerosene is distributed for two purposes heating oil basically refers to any No. 1 or No. 2 distillate other than jet fuel, kerosene, and diesel in sulfur. This contamination with (e.g., kerosene to be used for heating and fuel used in highway, nonroad, locomotive, or residual fuel usually occurs due to the to improve the cold flow of No. 2 NRLM marine applications. For example, heating oil distribution process, when distillate is diesel fuel), or where a batch distributed includes fuel which is suitable for use in furnaces, brought on board a vessel via a barge just for heating is later distributed for boilers, stationary diesel engines and similar applications and is commonly or commercially that has previously contained residual blending with No. 2 diesel fuel, that known or sold as heating oil, fuel oil, or other fuel, or using the same supply lines as batch of kerosene must meet the similar trade names. are used for residual fuel. DMB is standards adopted today for NRLM

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diesel fuel. The purpose of this provisions as well as transmix produce as it shifts all of its distillate requirement is to ensure that fuels like processors. production to 15 ppm sulfur.92 jet fuel, kerosene, and/or military We are finalizing the 15 ppm sulfur a. The First Step to 500 ppm Sulfur specification fuels meet the diesel fuel standard for locomotive and marine NRLM Diesel Fuel sulfur standards adopted under today’s diesel fuel, along with nonroad diesel program when they are used in nonroad, Under today’s program, NRLM diesel fuel, for several reasons. First, it will locomotive, or marine diesel engines. fuel produced by refiners or imported provide important health and welfare benefits from the additional sulfate PM 2. Standards and Deadlines for Refiners into the U.S. by importers must meet a and SO2 emission reductions as early as and Importers 500 ppm sulfur standard beginning June 1, 2007. Refiners and importers may possible. Second, it is technologically The NRLM diesel fuel program comply by either producing such fuel at feasible, as it is for nonroad diesel fuel. adopted today is a two-step approach to or below 500 ppm sulfur, or they may Third, the benefits outweigh the costs reduce the sulfur content of NRLM comply by obtaining credits as and the costs do not otherwise warrant diesel fuel from uncontrolled levels discussed in section IV.D below. delaying this second step for locomotive down to 15 ppm sulfur. While we and marine. As shown in chapter 8 of We believe that the adopted level of received several comments supporting a the RIA, the costs for the increment of 500 ppm sulfur is appropriate for single step down to 15 ppm sulfur, the LM diesel fuel going from 500 to 15 several reasons. First, the reduction to vast majority of commenters, especially ppm sulfur is just $0.20 billion in 2030. 500 ppm sulfur is significant most refiners and engine manufacturers, Fourth, it will simplify the fuel environmentally. The 500 ppm sulfur supported the two-step approach. We distribution system and overall design level achieves approximately 90 percent are finalizing the two-step approach of the fuel program. For example, the of the sulfate PM and SO benefits primarily because it achieves the 2 addition of a marker to locomotive and otherwise achievable by going all the greatest reduction in sulfate PM and SO marine diesel fuel after 2012 is no 2 way to 15 ppm sulfur. Second, because emissions from nonroad, locomotive, longer necessary to successfully enforce this first step is only to 500 ppm sulfur, and marine diesel engines as early as the program. Finally, it will allow it also allows for a short lead time for practicable. By starting with an initial refiners to coordinate plans to reduce implementation, enabling the step of 500 ppm sulfur we can achieve the sulfur content of all of their off- environmental benefits to begin significant emission reductions and highway diesel fuel at one time. accruing as soon as possible. Third, it is associated health and welfare benefits Our primary reason in the NPRM for consistent with the current specification from the current fleet of equipment as leaving locomotive and marine diesel for highway diesel fuel, a grade which soon as possible. As discussed in fuel at the 500 ppm sulfur specification may remain for highway purposes until section VI, the health-related benefits of was to preserve an outlet for off- 2010. As such, adopting the same 500 the fuel standards finalized today, even specification product that may be ppm sulfur level for NRLM diesel fuel without the engine standards, amount to created in the distribution system helps to avoid issues and costs through contamination of 15 ppm sulfur more than $28 billion in 2030, while the associated with more grades of fuel in diesel fuel with higher sulfur distillates projected costs, after taking into account the distribution system during this and for off-specification batches of fuel engine maintenance benefits amount to initial step of the program. that are produced by refineries during just $0.7 billion. the first couple years of the 15 ppm b. The Second Step to 15 ppm Sulfur In addition, the two-step approach sulfur program (when they are still NRLM Diesel Fuel encourages a more smooth and orderly perfecting their production processes). transition by the refining industry to 15 However, we have concluded that it is ppm sulfur NRLM diesel fuel, by We are finalizing a second step of sulfur control down to 15 ppm sulfur for not necessary to leave the standard for providing more time for refiners to all locomotive and marine diesel fuel at develop the most cost-effective all NRLM. This second step provides additional important direct sulfate PM the 500 ppm sulfur specification to approaches, finance them, and then address these concerns. Setting a 15 implement the necessary refinery and SO2 emission reductions and associated health benefits. As discussed ppm sulfur standard for refiners and modifications. importers in 2012, but maintaining a Finally, by waiting until 2010 to drop in the RIA, the health related benefits for this second step of fuel control by downstream standard for locomotive to the 15 ppm sulfur standard for NR and marine diesel fuel at 500 ppm diesel fuel, the two-step approach itself are greater than the associated cost. Furthermore, the second step for sulfur and allowing off-specification harmonizes with the highway diesel product to continue to be sold into this fuel program by delaying the nonroad diesel fuel is essential to enable the application of high efficiency market accomplishes the same goal. implementation of the 15 ppm sulfur In addition, controlling the sulfur standard for NR diesel fuel until the end exhaust emission control technologies to nonroad diesel engines beginning content of NRLM diesel fuel from of the phase-in period for 15 ppm sulfur uncontrolled levels to 15 ppm is clearly with the 2011 model year as discussed highway diesel fuel. The 2010 date also a cost-effective fuel control program. in Section II of this preamble. harmonizes with the date 15 ppm While the incremental cost-effectiveness nonroad fuel is needed to enable the In the proposal, the second step of the from 500 ppm sulfur to 15 ppm sulfur nonroad engines standards finalized program only applied to nonroad diesel is less cost-effective, the benefits of this today. The second step to 15 ppm sulfur fuel, while locomotive and marine second step outweigh the costs, the for the LM diesel fuel is set for 2012. On diesel fuel could remain at 500 ppm concerns about a market for off- balance we believe that the advantages sulfur. We also sought comment on specification product have been of the two-step approach outweigh those finalizing the 15 ppm sulfur standard addressed, and other factors discussed of a single step down to 15 ppm. for LM diesel fuel in 2010 along with As discussed in section IV.C, below, nonroad diesel fuel, as well as delaying 92 Off-specification fuel here refers to 15 ppm later deadlines for meeting the 500 and it until as late as 2012 to allow for an diesel fuel that becomes contaminated such that it additional outlet for any off- no longer meets the 15 ppm sulfur cap. In most 15 ppm sulfur standards apply to cases, off-specification 15 ppm sulfur diesel fuel is refineries covered by special hardship specification product a refinery might expected to easily meet a 500 ppm sulfur cap.

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above support the reasonableness of this This off-specification material generally One refining company commented approach. The body of evidence cannot be added in any significant that EPA should not implement the strongly supports the view that quantity to either of the adjoining cetane index and aromatic requirements controlling sulfur in NRLM fuel to 15 products that produced the interface.93 in the proposed rule since the impacts ppm, through a two-step process, is Under today’s program, as discussed in are weak or nonexistent for engines to quite reasonable in light of the more detail in section A.3, below, off- be used in the future. In addition, the emissions reductions achieved, taking specification material that is generated commenter stated that the vast majority costs into consideration. in the distribution system may be of diesel fuel already meets the EPA Implementation of today’s rule will distributed as 500 ppm NRLM diesel cetane index/aromatics specification for reduce the sulfur level of almost all fuel from June 1, 2010 through May 31, highway diesel fuel and that there is distillate fuel to a 15 ppm maximum 2014 and as 500 ppm LM from June 1, nothing in the RIA that either sulfur level. In addition to the small 2014 and beyond. Furthermore, as demonstrates the benefits or supports refiner, hardship, and other provisions discussed in section IV.C, below, the need for such a requirement. The adopted in this rule, EPA is adopting transmix processors, which are facilities commenter also stated that EPA should several provisions that will help ensure that process transmix by separating it not set a requirement simply because a smooth transition to the second step into its components (e.g., separating the ASTM standard has a cetane number of 15 ppm sulfur diesel fuel. First, gasoline from diesel fuel), are treated as specification for a particular fuel. refiners and importers of locomotive a separate class of refiners. One hundred Low cetane levels are associated with and marine diesel fuel, a small segment percent of the diesel fuel they produce increases in NOX and PM emissions of the entire distillate pool, will be from transmix may be sold as high from current nonroad diesel engines.94 required to meet a 15 ppm sulfur sulfur NRLM until June 1, 2010, 500 Thus, we expect that extending the standard starting June 1, 2012, two years ppm sulfur NRLM until June 1, 2014, cetane index specification to NRLM later than for nonroad diesel fuel. and 500 ppm sulfur LM diesel fuel after diesel fuel will directionally lead to a Second, 500 ppm sulfur diesel fuel June 1, 2014. reduction in these emissions from the generated in the distribution system These provisions provide refiners and existing fleet. However, because the vast through contamination of 15 ppm sulfur importers with a similar degree of majority of NRLM diesel fuel already fuel can be marketed in the nonroad, flexibility for off-specification product meets the specification, the NOX and locomotive and marine market until as the proposal which held the sulfur PM emission reductions will be small. June 2014, and in the locomotive and standard for all locomotive and marine At the same time, the refining/ marine market after that date. Third, 500 diesel fuel at 500 ppm indefinitely. If production costs associated with ppm sulfur diesel fuel produced by off-specification product is produced, extending the cetane index specification transmix processors from contaminated there is a temporary outlet for it. If to NRLM diesel fuel are negligible as downstream diesel fuel can also be providing the off-specification product current NRLM diesel fuel already meets marketed to the nonroad, locomotive to a locomotive and marine market is a more stringent ASTM specification. and marine markets, under the same difficult under this final rule, such that ASTM already recommends a cetane schedule. While today’s rule does not a refiner will choose to re-process it, number specification of 40 for NRLM contain an end date for the downstream then the refiner would have been in the diesel fuel, which is, in general, more distribution of 500 ppm sulfur same position under the proposal. stringent than the similar 40 cetane locomotive and marine fuel, we will Furthermore, these provisions provide index specification. Because of this, the review the appropriateness of allowing the refining industry an alternative to vast majority of current NRLM diesel this flexibility based on experience reprocessing the off-specification fuel already meets the EPA cetane gained from implementation of the 15 material created in the distribution index/aromatics specification for ppm sulfur NRLM diesel fuel standard. system, which preserves refining highway diesel fuel. Thus, the cetane We expect to conduct such an capacity for the production of new fuel index specification will impact only a evaluation in 2011. volume, helping to maintain overall few refiners and there will be little When EPA adopted a 15 ppm sulfur diesel fuel supply. overall cost associated with producing standard for highway diesel fuel, we As with the 500 ppm sulfur standard fuel to meet the cetane/aromatic included several provisions to ensure a under the first step of today’s program, requirement. In fact, as discussed in smooth transition to 15 ppm sulfur refiners and importers may comply with chapter 5.9 of the RIA, compliance with highway fuel. One provision was a the 15 ppm sulfur standard by either the sulfur standards adopted today is temporary compliance option, with an producing NRLM diesel fuel containing expected to result in a small cetane averaging, banking and trading no more than 15 ppm sulfur or by component. In a similar manner, the obtaining sulfur credits (until June 1, increase as increases in cetane correlate 2012 deadline for 15 ppm sulfur LM 2014), as described below. with decreases in sulfur, leaving little or fuel, the last, relatively small segment of no further control to meet the standard. c. Cetane Index or Aromatics Standard While the emissions benefits and diesel fuel, will help ensure that the refining/production costs of extending entire pool of diesel fuel is smoothly Currently, in addition to containing transitioned to the 15 ppm sulfur level no more than 500 ppm sulfur, highway the specification to NRLM diesel fuel over a short period of time. (See section diesel fuel must meet a minimum cetane may be small, the extension will reduce 8.3 of the summary and analysis of index level of 40 or, as an alternative, costs by giving refiners and distributors comments.) contain no more than 35 volume percent the ability to fungibly distribute EPA is also adopting two provisions aromatics. Today’s program extends this highway and NRLM diesel fuels of like aimed at smoothing the transition of the cetane index/aromatics content sulfur content. For that small fraction of distribution system to ultra low sulfur specification to NRLM diesel fuel. NRLM diesel fuel today that does not diesel fuel. These provisions are meet the cetane index or aromatics designed to accommodate off- 93 In some cases the off-specification product can 94 specification fuel generated in the not be added to the adjoining products because of The Effect of Cetane Number Increase Due to the applicable sulfur standards. In other cases, the Additives on NOX Emissions From Heavy-Duty distribution system, such as through the off-specification product, called transmix, must be Highway Engines, Final Technical Report, February mixing that occurs at product interfaces. re-processed before it can be used. 2003, EPA420–R–03–002.

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specification, the requirement will a. Standards and Deadlines From June 1, fuel and heating oil must be re- eliminate the need for refiners and fuel 2007 Through May 31, 2010 designated and labeled as heating oil. distributors to separately distribute fuels As soon as the program begins on of different cetane/aromatics b. Standards and Deadlines From June June 1, 2007, all NRLM diesel fuel must 1, 2010 Through May 31, 2014 specifications. Requiring NRLM diesel be designated or classified and must fuel to meet this cetane index comply with the designation or Beginning June 1, 2010, most NR specification thus gives fuel distributors classification stated on its product diesel fuel will be required to meet the certainty in being able to combine transfer document (PTD), pump label, or 15 ppm sulfur standard, and beginning shipments of highway and NRLM diesel other documentation. In other words, if June 1, 2012, most LM diesel fuel will fuels. Perhaps more importantly, it can the fuel is intended for sale as NRLM be required to meet the 15 ppm sulfur also give engine manufacturers and end- diesel fuel and is labeled as 500 ppm standard. However, some production of users the confidence they need that sulfur diesel fuel, then beginning June 1, 500 ppm sulfur NRLM diesel fuel may their fuel will meet the minimum cetane 2007, it must comply with the 500 ppm continue through May 31, 2014. As with or maximum aromatics standard. Given sulfur standard. Similarly, if fuel is the inherent difficulty in segregating the delayed downstream compliance intended for sale as NRLM diesel fuel dates for the 500 ppm sulfur standard two otherwise identical fuels, were we and is labeled as 15 ppm sulfur, then not to carry over these standards to under the first step of today’s program, beginning June 1, 2010 (or June 1, 2009 parties downstream of refineries will be NRLM, lower cetane NRLM could easily under the early credit provisions), it find its way into current highway allowed additional time to turnover must comply with the 15 ppm sulfur their tanks to 15 ppm sulfur NR diesel engines. If not designed for this lower standard. fuel. Specifically, at the terminal level, cetane fuel, these engines could have Beginning June 1, 2010, all NRLM elevated emission levels and diesel fuel produced or imported is all NR diesel fuel will be required to performance problems. required to meet at least a 500 ppm meet the 15 ppm sulfur standard Overall, we believe that there will be sulfur limit. In order to allow for a beginning August 1, 2014. At any wholesale purchaser-consumer facilities a small reduction in NOX and PM smooth and orderly transition to 500 emissions from current engines and the ppm sulfur NRLM diesel fuel in the and retail stations carrying all NR diesel economic benefits from more efficient distribution system, and allow any fuel, including bulk plants serving as fuel distribution will likely exceed the remaining high sulfur fuel to be sold, we retailers, NR diesel fuel must meet the cost of raising the cetane level for the are providing parties downstream of 15 ppm sulfur standard beginning small volume of NRLM diesel fuel that refineries time to turnover their NRLM October 1, 2014. Thus, beginning does not already meet the cetane index tanks to 500 ppm sulfur diesel fuel. At October 1, 2014, 500 ppm sulfur NR or aromatics content specification. the terminal level, all NRLM diesel fuel diesel fuel may no longer legally exist in the fuel distribution system.97 3. Standards, Deadlines, and must meet at least the 500 ppm sulfur Flexibilities for Fuel Distributors standard beginning August 1, 2010. At Like the first step to 500 ppm sulfur, any wholesale purchaser-consumer prior to these 2014 downstream The first years of the NRLM diesel facilities and any retail stations carrying deadlines all NRLM diesel fuel would fuel program include various NRLM diesel fuel, including bulk plants still be designated or classified with flexibilities to smooth the refining and that serve as retailers, all diesel fuel respect to sulfur level and required to distribution industry’s transition to 15 must meet the 500 ppm sulfur standard meet the designation or classification 95 ppm sulfur fuel. These flexibilities beginning October 1, 2010. Thus, stated on its PTD, pump label, or other include a 2012 deadline for production beginning October 1, 2010, high sulfur documentation. of 15 ppm sulfur locomotive and marine (greater than 500 ppm sulfur) NRLM diesel fuel, credit provisions, small diesel fuel may no longer legally exist c. Sulfur Standard for NRLM Diesel Fuel refiner provisions, hardship provisions, in the fuel distribution system.96 Beginning June 1, 2014 and downstream off-specification fuel Although we expect that most NRLM provisions. As a result, during the diesel fuel in the distribution system As discussed above, all refiners will transition years, we are not able to will be subject to the 500 ppm sulfur be required to produce and importers simply enforce the sulfur standards standard during the period from June 1, will be required to import only 15 ppm downstream based on a single sulfur 2007 through May 31, 2010, based on its sulfur NRLM diesel fuel by June 1, 2014. level of the new standard. From June 1, designation or classification, some of However, we will continue to allow 500 2007 through May 31, 2010, both 500 the 500 ppm sulfur NRLM diesel fuel ppm sulfur diesel fuel to be sold into ppm sulfur diesel fuel and high sulfur may be mixed with high sulfur NRLM the LM diesel fuel markets beyond 2014. diesel fuel can be produced, distributed, diesel fuel. Since the blended product The LM diesel fuel markets are expected and sold for use in NRLM diesel will likely no longer meet the 500 ppm to provide a valuable outlet for higher engines. From June 1, 2010 through May sulfur standard, it must be re-designated sulfur distillate fuel produced in the 31, 2014, both 15 ppm sulfur and 500 and labeled as high sulfur NRLM diesel distribution system, at least through the ppm sulfur diesel fuel can be produced, fuel. Similarly, fuel that results from early years of the program. distributed, and sold for use in NRLM blending 500 ppm sulfur NRLM diesel Consequently, beyond 2014, both 15 diesel engines. Beyond June 1, 2014, ppm sulfur and 500 ppm sulfur LM both 15 ppm sulfur and 500 ppm sulfur 95 A bulk plant is a secondary distributor of diesel fuel may continue to exist in the diesel fuel that is produced from fuel refined petroleum products. They typically receive fuel from terminals and distribute fuel in bulk by distribution system, and each fuel must product downgrade and transmix in the truck to end users. Consequently, while for highway comply with the designation stated on distribution system can be distributed fuel, bulk plants often serve the role of a fuel its PTD, pump label, or other and sold for use in locomotive and distributor, delivering fuel to retail stations, for documentation. marine diesel engines. As these nonroad fuel, they often serve the role of the retailer, delivering fuel directly to the end-user. transition flexibilities expire, however, 96 By December 1, 2010, all NRLM diesel fuel, 97 By December 1, 2014, all NR diesel fuel, we are able to streamline our including fuel in end-user tanks, must comply with including fuel in end-user tanks, must comply with downstream enforcement provisions. at least the 500 ppm sulfur standard. at least the 15 ppm sulfur standard.

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d. Interface/Transmix Flexibility for sufficient to accommodate distillate fuel emission controls). Beginning with the Fuel Distributors exceeding 15 ppm sulfur that is 2011 model year, such equipment will As described above, today’s program generated in the pipeline. Therefore, require the use of 15 ppm sulfur diesel provides flexibility to the distribution such fuel would need to be returned to fuel to operate properly. The same system by allowing interface/transmix a refinery for reprocessing to meet a 15 concerns do not exist regarding the material generated within the ppm sulfur standard. In addition, some continued use of such 500 ppm sulfur distribution system to be sold into the refiners may be reluctant to accept such diesel fuel in locomotive and marine NRLM diesel fuel markets. Specifically, material for reprocessing given the engines for three reasons. First, any fuel interface/transmix generated in impact this would have on their refinery locomotive and marine engines are not the fuel distribution system may be sold operations. More importantly, because currently required to be equipped with as: such material appears at the terminus of the sulfur sensitive emissions the pipeline distribution system and aftertreatment that will start being used (1) High sulfur NRLM diesel fuel or heating often where no access to pipeline or on nonroad equipment in 2011.100 oil from June 1, 2007 through May 31, 2010; (2) 500 ppm sulfur NRLM diesel fuel or marine shipment is available, it would Second, locomotive and marine markets heating oil from June 1, 2010 through May have to be shipped back to a refinery by are centrally fueled to a much greater 31, 2014; or truck, or rail if available, at additional extent than nonroad markets, and thus (3) 500 ppm sulfur LM diesel fuel or cost. enforceability is not as significant of an heating oil after June 1, 2014. As discussed in chapter 7 of the RIA, issue. Finally, we believe the program’s Hence, beginning June 1, 2014, fuel generated from such interface/ designate and track provisions interface/transmix material exceeding transmix will typically meet a 500 ppm discussed below will be sufficient to 15 ppm sulfur may only be sold into the sulfur standard. Therefore, allowing the enforce the limits on production and LM diesel fuel or heating oil markets. As continued use of such 500 ppm sulfur use of 500 ppm sulfur diesel fuel. discussed above, the downstream diesel fuel in locomotive and marine It is difficult to project exactly how standard for LM diesel fuel will be 500 engines could reduce the burden on the much of this downstream generated ppm sulfur. However, heating oil may fuel distribution industry by lowering downgraded fuel could be segregated not be shifted into the LM markets. costs. Our cost estimates of marketing and shipped to LM markets. However, it Parties in the distribution system such fuel include additional shipping is clear that this provision represents an receiving diesel fuel with a sulfur charges for situations where there is not important flexibility for the distribution content greater than 15 ppm sulfur must a local locomotive or marine market (see system. In fact, it provides virtually the maintain records and report to EPA section VI of this preamble).99 Allowing same flexibility as provided by the information demonstrating that they did the continued sale of 500 ppm sulfur proposal to handle off-specification not shift heating oil into the LM diesel fuel into the locomotive and product. In both cases, use of the markets, as discussed in section IV.D. marine markets without requiring it to flexibility is dependent on the ability to The generation of greater than 15 ppm be reprocessed will also help preserve segregate the interface and transport it sulfur distillate fuel from pipeline refining capacity for the overall diesel to available LM markets. While today’s interface/transmix cannot be avoided fuel production. Therefore, this rule does not contain an end date for the due to the physical realities of a multi- provision also serves to address downstream distribution of 500 ppm product fuel distribution system. Such lingering concerns expressed by some sulfur locomotive and marine fuel, we fuel first appears at the terminus of the refiners regarding the impacts of the 15 will review the appropriateness of pipeline distribution system; at ppm sulfur standard for highway and allowing this flexibility based on terminals due to the generation of NRLM diesel fuel on overall diesel fuel experience gained from implementation segregated interface, or at transmix supply. of the 15 ppm sulfur NRLM diesel fuel processing facilities.98 In areas where Downstream-generated 500 ppm standard. We expect to conduct such an there is a strong demand for heating oil, sulfur diesel fuel may only be used in evaluation in 2011. much of this pipeline-generated off- nonroad engines until December 1, A summary of the NRLM sulfur levels specification fuel can be sold into the 2014, due to concerns regarding and final deadlines for refiners, heating oil market, just as it is today. enforceability and the increased importers, terminals, and other However, in many areas of the country potential for misfueling of nonroad downstream parties is shown in table the demand for heating oil would not be equipment (equipment with advanced IV–1 below.

TABLE IV–1.—500 PPM SULFUR AND 15 PPM SULFUR NRLM FINAL COMPLIANCE DATES

Bulk plants, whole- Refiners and sale purchaser-con- importers Credit, small refiner Terminals sumers and retail out- Other locations lets

500 ppm NRLM ...... June 1, 2007 ...... June 1, 2010 ...... August 1, 2010 ...... October 1, 2010 ...... December 1, 2010. 15 ppm NR ...... June 1, 2010 ...... June 1, 2014 ...... August 1, 2014 ...... October 1, 2014 ...... December 1, 2014.

98 Segregated interface refers to the mixing zone engines. An advanced notice of proposed implementation of the 15 ppm sulfur NRLM diesel between two batches of fuel that abut each other in rulemaking (ANPRM) for this rule is published fuel standard. We would conduct such an the pipeline, where the volume in the mixing zone elsewhere in today’s Federal Register, June 29, evaluation in 2011. can not be cut into either of the fuel batches, but 2004. While we are not finalizing a sunset date for 100 Although, as mentioned above, the Agency can still meet another fuel product specification this downgrade provision in today’s final rule, we intends in the near future to initiate a rulemaking without reprocessing, provided that it is drawn off are evaluating the appropriateness of establishing a to adopt new emission standards for locomotive of the pipeline separately and segregated. sunset date on this provision in the context of the and marine engines. An advanced notice of 99 As mentioned above, the Agency intends in the subsequent engine standards rule. We also intend proposed rulemaking (ANPRM) for this rule is near future to initiate a rulemaking to adopt new to review the appropriateness of any sunset published elsewhere in today’s Federal Register, emission standards for locomotive and marine provision in light of experience gained from June 29, 2004.

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TABLE IV–1.—500 PPM SULFUR AND 15 PPM SULFUR NRLM FINAL COMPLIANCE DATES—Continued

Bulk plants, whole- Refiners and sale purchaser-con- importers Credit, small refiner Terminals sumers and retail out- Other locations lets

15 ppm LM ...... June 1, 2012 ...... June 1, 2014.

4. Diesel Sulfur Credit Banking and the program’s second step when they Vol500 = Volume of 500 ppm sulfur Trading Provisions are still adjusting their operations for diesel fuel produced and designated Today’s final program includes consistent production/importation of as highway or NRLM provisions for refiners and importers to NRLM diesel fuel that is subject to the Basehwy = 2003–2005 highway diesel generate early credits for the production new sulfur standards. fuel baseline volume of 500 ppm sulfur NRLM diesel fuel a. Credit Generation From June 1, 2006 Volhwy = Volume of diesel fuel produced prior to June 1, 2007 and for the Through May 31, 2007 and designated as highway production of 15 ppm sulfur NRLM If the excess production is 15 ppm diesel fuel prior to June 1, 2010. These Credits may be generated under sulfur diesel fuel instead of 500 ppm credit banking and trading provisions today’s program to allow for the sulfur diesel fuel, then the refiner will will provide implementation flexibility production of high sulfur NRLM diesel have the option of generating 500 ppm by facilitating a somewhat smoother fuel after June 1, 2007. A refiner or sulfur credits under the highway diesel transition at the start of the program in importer may obtain credit for early fuel program. Credit may not be earned 2007, with some refineries/import production/importation of fuel meeting under both programs for a given volume facilities complying early, others on the 500 ppm sulfur standard that they of 500 ppm sulfur or 15 ppm sulfur time, and others a little later. These designate as NRLM diesel fuel, from diesel fuel. credit banking and trading provisions June 1, 2006 through May 31, 2007. In b. Credit Generation From June 1, 2009 may also facilitate some of the addition, small refiners may also Through May 31, 2010 environmental benefits of the program generate credits for the early production being achieved earlier than otherwise of 500 ppm sulfur diesel fuel that they In addition to allowing credit for the required, and may increase the overall designate as NRLM diesel fuel. As early production of 500 ppm sulfur environmental benefits of the program. described in section IV.B, below, small NRLM diesel fuel, today’s program also As discussed below, overall benefits refiners are not required to produce any allows credit for the early production of will accrue if refiners produce 500 ppm 500 ppm sulfur NRLM diesel fuel until 15 ppm sulfur NRLM diesel fuel. earlier in lieu of high sulfur NRLM and June 1, 2010. Those small refiners who Specifically, refiners and importers may then bank those credits to continue choose to comply with the 500 ppm obtain credit for early production/ producing 500 ppm sulfur NR diesel sulfur standard earlier than required, importation of fuel meeting the 15 ppm fuel in 2010 or 500 ppm LM diesel fuel that is before June 1, 2010, may generate sulfur standard and that they designate in 2012 in lieu of 15 ppm.101 credits for any volume of diesel fuel as NRLM from June 1, 2009 through Specifically, credits generated under they produce from June 1, 2007 through May 31, 2010. In addition, small the NRLM diesel fuel program may be May 31, 2010 and designate as NRLM. refiners, which are not required to banked and later used to delay Credits for the early production of 500 produce any 15 ppm sulfur NRLM compliance with either the 500 ppm ppm sulfur fuel (including by small diesel fuel until June 1, 2014, may also sulfur NRLM standard that begins in refineries) are fungible, may be banked generate credits for the early production 2007, the 15 ppm sulfur NR standard for future use, or traded to any other of any volume of 15 ppm sulfur diesel that begins in 2010, or the 15 ppm refiner or importer nationwide. In order fuel that they designate as NRLM from sulfur LM standard that begins in 2012. to ensure that these early credits are real June 1, 2010 through December 31, Credits may also be traded within and not merely shifts from the highway 2013. Again, these early credits are companies such that credits generated at market, both early credits and small fungible, may be banked for future use, one refinery/import facility in a given refinery credits will be subject to a limit or traded to any other refinery or company may be traded to another determined by the following formula: importer nationwide. However, in order refinery/import facility within that same CreditHS = (Vol15 + Vol500) ¥ Volhwy to ensure these credits are real and not company. In addition, refiners or CreditHS Limit = (Vol15 + Vol500) ¥ merely shifts from the highway market, importers may purchase credits Basehwy credits for the early production or generated by other refiners or importers Where: importation of 15 ppm sulfur fuel will to meet the program requirements. be subject to a limit determined by the Credit Limit = Limit for 500 ppm Finally, and perhaps most importantly, 500 following formula: NRLM credits individual refineries/import facilities 102 Credit500 = Vol15 ¥ Vol15hwy CreditHS = High-Sulfur NRLM credits may be able to use credits to permit the Credit500 Limit = Vol15 ¥ Base15hwy continued sale of otherwise off- Vol15 = Volume of 15 ppm sulfur diesel Where: specification product at the beginning of fuel produced and designated as highway or NRLM Credit500 Limit = Limit for 500 ppm sulfur NRLM credits 101 We are not adopting specific provisions to generate credits for early production of LM diesel 102 For the purposes of this rule, credits are Vol15 = Volume of 15 ppm sulfur diesel fuel prior to June 1, 2012. The difference in start labeled on the basis of their use in order to follow fuel produced and designated as date between 2010 and 2012 already provides the convention used in the highway diesel rule. A highway or NRLM additional flexibility to producers of LM diesel fuel, high-sulfur credit is generated through the and setting separate credit generation periods for production of one gallon of 500 ppm sulfur NRLM Base15hwy = 2006–2008 15 ppm sulfur NR and LM diesel fuel would unnecessarily diesel fuel and allows the production of one gallon highway diesel fuel baseline complicate the compliance assurance provisions. of high sulfur NRLM diesel fuel. volume

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Hence, to generate credits, a refiner or to the 15 ppm sulfur standard, except sulfur standards, as well as for refiners’ importer’s highway diesel fuel volume LM diesel fuel produced by transmix planning for the highway diesel for the compliance period must be processors from transmix can continue standards. The details of these greater than or equal to the baseline to meet the 500 ppm sulfur limit. provisions are discussed below. volume. That is, a refiner or importer We proposed that all credits would 1. Hardship Provisions for Qualifying may only generate credits for ‘‘new’’ expire May 31, 2012, however we are Small Refiners volumes of 15 ppm sulfur diesel fuel finalizing an expiration date of May 31, that it produces. If their highway diesel 2014 based on the comments we As in previous fuel rulemakings, our fuel volume were to drop below the received. The additional two years that justification for including provisions baseline volume, that would likely we are now allowing for credit use (1) specific to small refiners is that, in indicate a shift in production from the will provide a longer period for refiners general, small refiners generally have a highway market to generate 15 ppm to sell off-specification fuel instead of degree of hardship in complying with sulfur NRLM diesel fuel credits. having to reprocess it, (2) is an the standards compared to other environmentally neutral change to the refiners. In the NPRM, we proposed c. Credit Use overall program, and (3) is now flexibilities/transition provisions, or There are two ways in which refiners consistent with the end-date for small ‘‘hardship provisions’’ (these terms are or importers may use high-sulfur NRLM refiner flexibility. equivalent), for small refiners. We are credits under the NRLM diesel fuel While credits can be generated and adopting the provisions that were program. First, credits may be used traded nationwide, they are restricted proposed for small refiners virtually during the period from June 1, 2007 from use in certain parts of the country unchanged, and including similar through May 31, 2010 to continue to under the provisions of this final rule. provisions for the treatment of produce high sulfur NRLM diesel fuel. As discussed in section IV.D, we are locomotive and marine fuel. Any high sulfur NRLM diesel fuel that avoiding the burden to terminals of a. Regulatory Process and Justification is produced, however, must be adding marker to heating oil in those for Small Refiner Relief designated and labeled as such for areas of the country where demand for tracking purposes throughout the heating oil is expected to continue to In developing our NRLM diesel fuel distribution system and be dyed red at remain high after today’s final rule. The sulfur program, we evaluated the the refinery gate. NRLM diesel fuel sulfur standards will environmental need as well as the The second way in which refiners and be enforced based on sulfur level in technical and financial ability of importer could use high-sulfur NRLM these areas, not through the refinery refiners to meet the 500 and 15 ppm credits is by banking them for use designation and marker provisions. sulfur standards as expeditiously as during the June 1, 2010 through May 31, Consequently, in the area defined in possible. We believe it is feasible and 2014 period. Credits used in this section IV.D comprising most of the necessary for the vast majority of the manner would provide a net Northeast and Mid-Atlantic region of program to be implemented in the environmental benefit, since they were the country, as well as in the State of established time frame to achieve the air generated by reducing the sulfur level Alaska, many of the fuel program’s quality benefits as soon as possible. from approximately 3000 ppm to less flexibilities, including refiners’ ability to Based on information available from than 500 ppm (a net change of 2500 use credits, are not allowed. Refiners small refiners and others, we believe ppm sulfur), but when used only allow and importers may not use credits to that refiners classified as small generally the sulfur level to increase from 15 ppm produce or import diesel fuel with a face unique circumstances with regard to 500 ppm (a net change of less than sulfur content greater than 500 ppm to compliance with environmental 500 ppm sulfur). 500 ppm sulfur credits beginning June 1, 2007 or 15 ppm programs, compared to larger refiners. generated from the early production of beginning June 1, 2010, for sale or Consequently, as discussed below, we 15 ppm sulfur NRLM diesel fuel may distribution in this Northeast/Mid- are finalizing several special provisions also be used from June 1, 2010 through Atlantic area or the State of Alaska. for refiners that qualify as ‘‘small May 31, 2014. Thus, during this period, However, credits generated in these refiners’’ to reduce the disproportionate when the 15 ppm sulfur standard is in areas can be sold to other refiners and/ burden that today’s program will have effect for nonroad diesel fuel, refiners/ or importers for use outside these areas. on them. importers may use either high sulfur Small refiners generally lack the credits or 500 ppm sulfur credits to B. Hardship Relief Provisions for resources that are available to large continue producing/importing 500 ppm Qualifying Refiners refining companies, including those sulfur nonroad diesel fuel. Any 500 As in our gasoline sulfur and highway large companies that own small- ppm sulfur diesel fuel that is produced, diesel fuel sulfur programs, today’s capacity refineries, to raise capital for however, must be appropriately program contains the following investing in desulfurization equipment, designated and labeled for tracking hardship relief provisions to provide such as shifting of internal funds, purposes throughout the distribution regulatory flexibility to challenged securing of financing, or selling of system, and cannot be sold for use in refiners: assets. Small refiners are also likely to 2011 and later model year nonroad • Small refiner hardship for have more difficulty in competing for engines. From June 1, 2012, when the 15 qualifying small refiners; engineering and construction resources ppm sulfur standard for LM diesel fuel • General hardship for any refiner needed for the installation of the becomes effective, through May 31, experiencing either— desulfurization equipment which will 2014, refiners/importers may use either (1) Extreme unforeseen circumstances likely be required to meet the standards high sulfur credits or 500 ppm sulfur such as natural disaster or acts of God; finalized in this action. credits to continue producing/importing or Because small refiners are more likely 500 ppm sulfur NRLM diesel fuel. All (2) Extreme hardship circumstances to face adverse circumstances with credits expire after May 31, 2014. such as financial or technical hardship. regard to regulatory compliance than Hence, beginning June 1, 2014, all Similar provisions have proved larger refiners, we are finalizing interim NRLM diesel fuel produced by refiners invaluable for some refiners in the provisions that will provide additional or imported in the U.S. will be subject recent implementation of the gasoline time for refineries owned by small

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refiners to meet the sulfur standards. those comments, can be found in gasoline sulfur control, vendors will be This approach will allow the overall section X.C of this preamble, and also more likely to contract their services program to begin as early as possible, the Summary and Analysis of with the larger refiners first, as their avoiding the need for delay in order to Comments. projects will offer larger profits for the address the ability of small refiners to vendors. Temporarily delaying ii. Rationale for Small Refiner comply. compliance for small refiners will Regulatory Flexibility Provisions spread out the demand for these i. Regulatory Flexibility Process for Generally, we structured the small resources and may help reduce cost Small Refiners refiner provisions to reduce the burden premiums for everyone caused by As explained in the discussion of our on small refiners while expeditiously limited engineering and construction compliance with the Regulatory achieving air quality benefits and supply. Flexibility Act (RFA) in section X.C of ensuring that the availability of 15 ppm We discuss below the provisions that this preamble, and in the Final sulfur NR diesel fuel will coincide with we are finalizing to minimize the degree Regulatory Flexibility Analysis in the introduction of 2011 model year of hardship imposed upon small chapter 11 of the RIA, we considered nonroad diesel engines and equipment. refiners by this program. With these the impacts of today’s regulations on We believe the special provisions for provisions we are confident in going small businesses. Most of our analysis of small refiners are necessary and forward with the 500 ppm sulfur small business impacts was performed appropriate for several reasons. standard for NRLM diesel fuel in 2007 as part of the Small Business Advocacy First, the compliance schedule for and the 15 ppm sulfur standard for NR Review (SBAR) Panel convened by EPA, today’s program, combined with special diesel fuel in 2010 and for LM diesel pursuant to the RFA as amended by the relief provisions for small refiners, will fuel in 2012, for the rest of the industry. Small Business Regulatory Enforcement achieve the air quality benefits of the The provisions for small refiners will Fairness Act of 1996 (SBREFA). The program as soon as possible, while allow these refiners to continue to Panel’s final report is available in the helping to ensure that small refiners produce higher sulfur NRLM fuel until rulemaking public docket (Docket A– will have adequate time to raise capital June 1, 2010, and similarly, will allow 2001–28, Document No. II–A–172). for new or upgraded fuel desulfurization for the production of 500 ppm nonroad For the SBREFA process, EPA equipment. Most small refiners have NRLM fuel until June 1, 2014. Without conducted outreach, fact-finding, and limited additional sources of income small refiner relief, we would have to analysis of the potential impacts of the beyond refinery earnings for financing consider delaying the overall program proposed nonroad regulations on small and typically do not have the financial until the burden of the program on businesses. Based on these discussions backing that larger and generally more many small refiners was diminished, and analyses by all panel members, the integrated companies have. Therefore, which would delay the air quality Panel concluded that small refiners in additional time to accumulate capital benefits of the overall program. By general would likely experience a internally or to secure capital financing providing temporary relief to small significant and disproportionate from lenders can be central to their refiners, we are able to adopt a program financial burden in reaching the ability to comply. that expeditiously reduces NRLM diesel objectives of the proposed nonroad Second, we recognize that while the fuel sulfur levels in a feasible manner diesel fuel sulfur program. sulfur levels in today’s program can be for the industry as a whole. One indication of the achieved using conventional refining The four-year leadtime from which disproportionate burden on small technologies, new technologies are also begins in 2010 for small refiners for refiners is the relatively high cost per being developed that may reduce the locomotive and marine diesel fuel is gallon projected for producing NRLM capital and/or operating costs of sulfur identical to the relief that was supported diesel fuel under today’s program. removal. Thus, we believe that by small refiners for nonroad diesel fuel. Refinery modeling of refineries owned providing small refiners some We believe that this relief is necessary by refiners likely to qualify as small additional time to allow for new and adequate to reduce the burden on refiners, and of refineries owned by technologies to be proven out by other small entities while still achieving our other non-small refiners, indicates refiners will have the added benefit of air quality goals. Small refineries vary significantly higher refining costs for reducing the risks faced by small considerably in their markets for NRLM small refiners. Specifically, we project refiners. The added time will likely diesel fuels. Consequently, the proposal that without special provisions, refining enable small refiners to benefit from the to control nonroad diesel fuel to 15 ppm costs for small refiners on average lower costs of these improvements in sulfur impacted small refiners with would be about two cents per gallon desulfurization technology (e.g., better significant nonroad market shares, but higher than for other refiners in the catalyst technology or lower-pressure left those with significant locomotive same PADD to meet the 15 ppm sulfur hydrotreater technology). This will help and marine market shares relatively standard. to offset the disproportionate financial untouched. With control of all NRLM The Panel also noted that the burden burden that may be imposed upon small diesel fuel to 15 ppm sulfur in this final imposed on small refiners by the refiners. rule, all small refiners of NRLM diesel proposed sulfur standards may vary Finally, providing small refiners more fuel will face similar challenges, and from refiner to refiner. Thus, the Panel time to comply will spread out the therefore the same four year lead time recommended more than one type of availability of engineering and from 2010 proposed for those small burden mitigation so that most, if not construction resources. Most refiners refiners impacted by nonroad fuel all, small refiners could benefit. We will need to install additional control alone is also appropriate when considered the issues raised during the processing equipment to meet the the standards are expanded to all SBREFA process, and discussed them in NRLM diesel fuel sulfur requirements. NRLM. In essence, while more small the NPRM, and have decided to finalize We anticipate that there may be refiners face the challenge of each of the provisions recommended by significant competition for technology desulfurizing all of their diesel fuel to the Panel. A discussion of the comments services, engineering resources, and the 15 ppm sulfur standard, the we received regarding small refiners and construction management and labor. In magnitude of this challenge is not any terminal operators, and our responses to addition, as has been the experience in greater. Furthermore, providing

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additional relief (beyond 2014) to small vehicles, even if the likely ‘‘blending Specifically, a refiner that either refiners would undermine the program down’’ of sulfur levels does not occur as acquires or restarts a refinery that was by further delaying air quality benefits. this fuel mixed with lower sulfur fuel shut down or non-operational between The 2014 deadline for all small refiner during distribution. This provision will January 1, 2002 and January 1, 2003 diesel fuel to 15 ppm sulfur will also also maintain the maximum 450 ppm may apply for small refiner status. In simplify the fuel program and it will gasoline sulfur per-gallon cap standard such cases, we will judge eligibility allow small refiners the ability to in all cases, providing a reasonable under the employment and crude oil coordinate their plans to reduce the sulfur ceiling for any small refiners capacity criteria based on the most sulfur content of all off-highway diesel using this provision. recent 12 consecutive months of data fuel at the same time. unless we conclude from the data b. Small Refiner Definition for Purposes provided by the refiner that another iii. Impact of Small Refiner Options on of the Hardship Provisions period of time is more appropriate. Program Emissions Benefits The definition of small refiner under Companies with refineries built after Small refiners that choose to delay the the NRLM diesel program is similar to January 1, 2002 are not eligible for the NRLM diesel fuel sulfur requirements the definitions under the Tier 2/ small refiner provisions. Similarly, will also delay to some extent the Gasoline Sulfur and Highway Diesel entities that do not own or operate a emission reductions that would rules. Under the NRLM program, a small refinery are not eligible to apply for otherwise have been achieved. refiner must demonstrate that it meets small refiner status. However, for several reasons, the overall the following criteria: impact of these postponed emission • Produced NRLM diesel from crude; c. Provisions for Small Refiners reductions will be small. First, small • No more than 1,500 employees We are finalizing several provisions refiners represent only a fraction of corporate-wide, based on the average intended to reduce the regulatory national non-highway diesel number of employees for all pay periods burden of today’s program on small production. Today, refiners that we from January 1, 2002 to January 1, 2003; refiners as well as to encourage their expect to qualify as small refiners and, early compliance whenever possible. As represent only about six percent of all • A corporate crude oil capacity less described below, these small refiner high-sulfur diesel production. Second, than or equal to 155,000 barrels per relief options consist of additional time the delayed compliance provisions calendar day (bpcd) for 2002. for compliance and, for small refiners described below will affect only engines As with the earlier fuel sulfur that choose to comply earlier than without new emission controls. During programs, the effective dates for the required, the option of either generating the program’s first step to 500 ppm determination of employee count and diesel fuel sulfur credits or receiving a sulfur NRLM diesel fuel, small refiner for calculation of the crude capacity limited relaxation of their gasoline NRLM diesel fuel could be well above represent the most recent complete year sulfur standards. 500 ppm sulfur, but the new advanced prior to the issuing of the proposed i. NRLM Delay Option engine controls will not yet be required. rulemaking (2002, in this case). During the second step to 15 ppm sulfur In determining its total number of First, we are finalizing an option that NRLM diesel fuel, equipment with the employees and crude oil capacity, a allows small refiners to postpone their new controls will be entering the refiner must include the number of compliance with the NRLM diesel fuel market, but use of the 500 ppm small employees and crude oil capacity of any sulfur standards. The delayed refiner fuel will be restricted to older subsidiary companies, any parent compliance schedule for small refiners engines without the new controls. There company and subsidiaries of the parent is intended to compensate for the will be some loss of sulfate PM control company, and any joint venture relatively higher compliance burdens on in the older engines that operate on partners. We define a subsidiary of a these refiners. It is not intended as an higher sulfur small refiner fuel, but no company to mean any subsidiary in opportunity for those refiners to greatly effect on the major emission reductions which the company has a 50 percent or expand their production of uncontrolled that the new engine standards will greater ownership interest. However, diesel fuel (2007–2010) or 500 ppm achieve starting in 2011. Finally, refiners owned and controlled by an sulfur diesel fuel (2010–2014). To help because small diesel refiners are Alaska Regional or Village Corporation ensure that any significant expansion of generally dispersed geographically organized under the Alaska Native refining capacity that a small refiner across the country, the limited loss of Claims Settlement Act (43 U.S.C. 1626), might undertake in the future is sulfate PM control will also be are also eligible for small refiner status, accompanied by an expansion of dispersed. based only on the refiner’s employees desulfurization capacity, small refiners One option for small refiner relief will and crude oil capacity. Such an producing higher sulfur fuel must limit allow a modest 20 percent relaxation in exclusion is consistent with our desire their production to baseline volume the gasoline sulfur interim standards for to grant regulatory relief to that part of levels. Specifically, during the first step small refiners that produce all of their the industry that is the most challenged of today’s diesel fuel program to 500 NRLM diesel fuel at 15 ppm sulfur by with respect to regulatory compliance. ppm sulfur, from June 1, 2007 through June 1, 2006. To the extent that small We believe that very few refiners, May 31, 2010, a small refiner may at any refiners elect this option, a small loss of probably only one, will qualify under or all of its refineries produce emission control from Tier 2 gasoline this provision. We are also uncontrolled NRLM diesel fuel up to the vehicles that use the higher sulfur incorporating this exclusion into the 2003 through 2005 non-highway gasoline could occur. We believe that small refiner provisions of the highway baseline volume for the refinery(s). Any such a loss of control will be very small. diesel and gasoline sulfur rules, which diesel fuel produced over the baseline Very few small refiners will be in a did not address this issue. volume will be subject to the 500 ppm position to use this provision. Further, As under the gasoline sulfur and sulfur standard applying to other the relatively small production of highway diesel fuel rules, refiners that refiners. Similarly, from June 1, 2010 gasoline with slightly higher sulfur either acquire or restart a refinery in the through May 31, 2014, a small refiner levels should have no measurable future may be eligible for small refiner may produce at any or all of its impact on the emissions of new Tier 2 status under the NRLM program. refineries NRLM diesel fuel subject to

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the 500 ppm sulfur standard at a volume from small refiner or credit-using high in locomotives or marine engines during equal to or less than the refineries’ sulfur NRLM made this option this time. Section IV.D below discusses 2006–2008 non-highway baseline undesirable in these areas. Based on our the requirements for designating and volumes. LM fuel produced to the 500 review of anticipated small refiner tracking the production of 500 ppm ppm standard during 2010 to 2012 situations, this portion of PADD 1 sulfur NRLM diesel fuel produced by would be counted towards meeting this appears unlikely to provide a small refiners during this period. baseline volume. NRLM fuel produced meaningful market for small refiners The following table illustrates the in excess of the baseline volume will be seeking this option. Therefore, in this small refiner NRLM diesel fuel sulfur subject to the 15 ppm sulfur NRLM part of the country it imposed costs standards as compared to the standards diesel fuel standard. The baseline for without providing the intended benefit. for the base NRLM diesel fuel program. 2003–2005 will be determined by Consequently, while this option was As previously stated, small refiners will subtracting the refinery’s highway proposed to be available nationwide, we receive additional lead time, compared volume from its total highway and are not finalizing it for a portion of to non-small refiners for 15 ppm sulfur heating oil volume production. The PADD 1. This change from the proposal locomotive and marine diesel fuel. This baseline for 2006–2008 will be should have no meaningful impact on lead time is identical to that which had determined based upon the volume of small refiners’ flexibility, but will been proposed for 15 ppm sulfur the refinery’s NRLM fuel designations reduce the costs for fuel distributors. nonroad diesel fuel. This will ensure discussed in section IV.D. Since new engines with sulfur that emission benefits of ultra low sulfur As discussed in section IV.D, the costs sensitive emission controls will begin to diesel fuel are achieved as soon as to the distribution system to mark become widespread beginning in 2011, possible, and should not significantly heating oil in areas of PADD 1 with high small refiner fuel can only be sold for change the nature or magnitude of the heating oil demand to distinguish it use in pre-2011 nonroad equipment or burden on affected small refiners.

TABLE IV–4.—SMALL REFINER NRLM DIESEL FUEL SULFUR STANDARDS, PPM A

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015+

Non-Small Refiners–NR fuel ...... 500 500 500 15 15 15 15 15 15 Non-Small Refiners–LM fuel ...... 500 500 500 500 500 15 15 15 15 Small Refiners–NR diesel fuel ...... 500 500 500 500 15 15 Small Refiners–LM diesel fuel ...... 500 500 500 500 15 15 Notes: a New standards will take effect on June 1 of the applicable year.

ii. NRLM Credit Option June 1, 2010 through December 31, allowed under the gasoline sulfur 2013. The specifics of the credit program. Some small refiners have indicated program are described in section IV.A.4, We believe it is very important to link that, for a variety of reasons, they might including how the program applies to any relaxation of a small refiner’s need to produce fuel meeting the NRLM small refiners. Generating and selling interim gasoline sulfur standards with diesel fuel sulfur standards earlier than credits could provide small refiners the environmental benefit of early required under the small refiner with funds to help defray the costs of desulfurization of a significant volume program described above. For some early NRLM compliance. of NRLM diesel fuel. As such, a small small refiners, the distribution system refiner choosing to use this option must might limit the number of grades of iii. NRLM/Gasoline Compliance Option produce a minimum volume of NRLM diesel fuel that will be carried. Others The NRLM/Gasoline Compliance diesel fuel at the 15 ppm sulfur standard might find it economically option is available to small refiners that by June 1, 2006. Each participating advantageous to make 500 ppm or 15 produce greater than 95 percent of their small refiner must produce a volume of ppm sulfur NRLM diesel fuel earlier NRLM diesel fuel at the 15 ppm sulfur 15 ppm sulfur fuel that is at least 85 than required to prevent losing market standard by June 1, 2006 and elect not percent of the annual average volume of share. At least one small refiner has to use the provision described above to non-highway diesel fuel it produced indicated that it might decide to earn NRLM diesel fuel sulfur credits for from 2003–2005. If the refiner began to desulfurize its NRLM pool at the same this early compliance. Refiners choosing produce gasoline in 2004 at the higher time as it desulfurizes its highway this option will receive a modest interim standard under this provision diesel fuel, in June 2006, due to revision in their small refiner interim but then either fails to meet the 15 ppm limitations in its distribution system gasoline sulfur standards, beginning sulfur standard for its NRLM diesel fuel and to take advantage of economies of January 1, 2004. Specifically, the by June 1, 2006 or fails to meet the 85 scale. applicable small refiner annual average percent minimum volume requirement, The NRLM Credit option allows small and per-gallon cap gasoline sulfur the original small refiner interim refiners to participate in the NRLM standards will be increased by 20 gasoline sulfur standard applicable to diesel fuel sulfur credit banking and percent for the duration of the interim that refiner will automatically apply trading program discussed earlier in this program. The interim program is retroactively to 2004. In addition, the section. Under this option, a small through either 2007 or 2010, depending refiner must compensate for the higher refiner may generate diesel fuel sulfur on whether the refiner extended the gasoline sulfur levels by purchasing credits by producing any volume of 500 duration of its interim gasoline sulfur gasoline sulfur credits or producing an ppm sulfur NRLM diesel fuel from standards by producing 15 ppm sulfur equivalent volume of gasoline below the crude oil prior to from June 1, 2006 highway diesel fuel by June 1, 2006, as required sulfur levels. Under this through May 31, 2010, and by provided under 40 CFR 80.552(c). In no option, a small refiner could in effect producing any volume from crude oil of case may the per-gallon gasoline sulfur shift some funds from its gasoline sulfur 15 ppm sulfur NRLM diesel fuel from cap exceed 450 ppm, the highest level program to accelerate desulfurization of

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NRLM diesel fuel. While there would be sulfur provisions. These types of able to generate credits for ‘‘early’’ a small potential loss of emission transactions typically involve refiners production of lower sulfur diesels reduction under the gasoline sulfur with approved small refiner status that during this two-year period. program from fuel produced by the very are involved in potential or actual sales Nevertheless, we continue to believe few small refiners that we believe would of the small refiner’s refinery, or involve these lead-time concerns are valid. choose this second option, there are also the small refiner merging with another Failure to address them could lead to environmental benefits gained from the refiner or purchasing another refinery unnecessary disruption to the diesel production of 15 ppm sulfur diesel fuel (or other non-refining asset). We believe fuel market. Therefore, we are adopting earlier than otherwise required. that these concerns are also relevant to a provision to provide an appropriate the small refiner provisions described period of lead time for compliance with iv. Relationship of the Options to Each below for the NRLM diesel fuel sulfur the NRLM diesel fuel sulfur Other program. requirements for situations in which a A small refiner may choose to use the refiner purchases any refinery owned by NRLM Delay option, the NRLM Credit i. Large Refiner Purchasing a Small a small refiner, whether by purchase of option or both in combination, since it Refiner’s Refinery the refinery or purchase of the small has no requirement to produce 500 ppm The first type of transaction involves refiner entity. Refiners that acquire a sulfur NRLM diesel fuel before June 1, a ‘‘non-small’’ refiner that wishes to refinery from an approved small refiner 2010, or 15 ppm sulfur NRLM diesel purchase a refinery owned by an will be provided 30 additional months fuel before June 1, 2014. Thus any fuel approved small refiner. In some cases, from the date of the completion of the that it produces from crude at or below the small refiner may not have purchase transaction (but no later than the sulfur standards earlier than completed or even begun refinery June 1, 2010 for 500 ppm NRLM fuel required will qualify for generating upgrades to meet the long-term fuel and June 1, 2014 for 15 ppm NRLM credits. sulfur standards if it was using an fuel). During this interim period, On the other hand, the NRLM/ interim small refiner compliance production at the newly-acquired Gasoline Compliance option may not be provision. Under the gasoline sulfur and refinery may remain at the interim used in combination with either the highway diesel fuel sulfur programs, sulfur levels that applied to that refinery NRLM Delay option or the NRLM Credit once such a purchase transaction is for the previous small refiner owner option, since a small refiner must completed, the ‘‘non-small’’ buyer does under the small refiner options produce at least 85 percent of its NRLM not have the benefit of the small refiner discussed below. At the end of this diesel fuel at the 15 ppm sulfur standard relief provisions that had applied to the period, the refiner must comply with under the NRLM/Gasoline Compliance previous owner. the ‘‘non-small refinery’’ sulfur option. The purchasing refiner would have to standards. perform the necessary upgrades on the We received comments suggesting d. How Do Refiners Apply for Small acquired refinery for it to meet the that the proposed 24 months of Refiner Status? ‘‘non-small’’ sulfur standards. As the additional lead time would not be A refiner applying for small refiner gasoline sulfur and highway diesel fuel adequate, and further, discussions with status must provide the Agency with sulfur provisions existed prior to today’s several refiners indicated that in most several types of information by action, such a refiner would be left with cases, 24 months would be inadequate. December 31, 2004. The detailed very little or, in the case of the gasoline As discussed in section IV.F, we project application requirements are sulfur program which has already a range of 27–39 months is needed to summarized in section V.F.2 below. In begun, no lead time to bring the refinery design and construct a diesel general, a potential small refiner must into compliance. The refiners that have hydrotreater. Therefore, in order to own the refinery/refineries in question raised this issue have claimed that allow a reasonable opportunity for and must provide the following refiners in this situation would not be complying, we are finalizing the information for the parent company and able to immediately comply with the provision that 30 months of additional all subsidiaries at all locations: (1) The ‘‘non-small refiner’’ standards upon lead time will be afforded. Thirty average number of employees for all pay acquisition of the new refinery. These months should in most cases be periods from January 1, 2002 through refiners claim that this could prevent sufficient for the new refiner-owner to January 1, 2003; (2) the total corporate them from purchasing a refinery from a accomplish the necessary engineering, crude oil capacity, which must be a small refiner and, as a result, this would permitting, construction, and start-up of positive number; and (3) an indication severely limit the ability of small the necessary desulfurization of which small refiner option the refiner refiners to sell such an asset. The equipment. However, if there are intends to use (see section IV.B.1.c refiners that raised this issue requested instances where the technical above). As with applications for relief additional lead time before the non- characteristics of its planned under other fuel programs, applications small refiner sulfur standards take desulfurization project will require for small refiner status under this rule effect. additional lead time, we have included that are later found to contain false or We received comments on this issue provisions for the refiner to apply for up inaccurate information will be void ab from two refiners. Both refiners to six months of additional time and for initio. commented that lead time for refiners EPA to consider such requests on a case- losing their small refiner status should by-case basis. Such an application must e. The Effect of Financial and Other only be allowed for the case where a be based on the technical factors Transactions on Small Refiner Status small refiner merges with, or acquires, supporting the need for more time and and Small Refiner Relief Provisions another small refiner. Neither refiner should include detailed technical Since the gasoline sulfur and highway supports allowing additional lead time information and projected schedules for diesel fuel sulfur programs were for a large refiner that merges with or engineering, permitting, construction, finalized, several refiners have raised acquires a small refiner. In addition, and startup. Based on information concerns about how various financial these refiners also commented that it provided in such an application and and other transactions could affect would be inappropriate to allow a small other relevant information, EPA will implementation of the small refiner fuel refiner that receives this lead time to be decide whether additional time is

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technically necessary and, if so, how with another entity, through the small non-small refiner that acquired a small much additional time is appropriate. refiner itself purchasing another entity refiner’s refinery would. Therefore, the However, we anticipate that in most or assets from another entity, or when additional lead time described above for cases 30 months will be sufficient, since it ceases to process crude oil. However, non-small refiners purchasing a small developing plans for compliance should an approved small refiner who exceeds refiner’s refinery will also apply to this be expected to be a part of any purchase the employee or crude oil capacity situation. Thus, this 30 month lead time decision. criteria without merger or acquisition, will apply to all of the refineries, All existing small refiner provisions may retain its small refiner status for the existing or newly-purchased, that had and restrictions, as described below, purposes of the complying with the previously been subject to the small will also remain in place for that NRLM diesel fuel standards. refiner program, but would not apply to refinery during the 30 months of Furthermore, in the sole case of a a newly-purchased refinery that is additional lead time and any further merger between two approved small subject to the non-small refiner lead time approved by EPA for the refiners we will allow such refiners to standards. Again, there would be no purchasing refiner; including the per- retain their small refiner status for adverse environmental impact because refinery volume limitation on the purposes of complying with the NRLM of the pre-existing relief provisions that amount of NRLM diesel that may be diesel fuel program. Commenters applied to the newly-purchased small produced at the small refiner standards. explained that additional financial refiner. Furthermore, since the purpose of this resources would not typically be The issues discussed in this section grace period is solely to provide time to provided in the case of a merger apply equally to the gasoline sulfur and bring the refinery into compliance with between small refiners. In light of these highway diesel fuel sulfur programs. the NRLM standards, refiners will not comments, we believe the justification Thus, we are also adopting the same be allowed to generate credits for early for continued small refiner relief for the provisions relating to additional lead compliance during this 30 month merged entity is valid. Small refiner time in cases of certain financial, or period. There will be no adverse status for the two entities of the merger other, transactions for the small refiner environmental impact of this provision, will not be affected, hence the original programs in the earlier fuel sulfur since the small refiner would have compliance plans of the two refiners programs. already been provided this same relief should not be impacted. Moreover, no In the proposal for today’s final rule, prior to the purchase and this provision environmental detriment will result we invited comment on several other is no more generous. from the two small refiners maintaining related provisions that were considered during the development of this ii. Small Refiner Losing Its Small their small refiner status within the merged entity as they would have likely rulemaking: Refiner Status Due To Merger or (1) Instead of merely allowing small Acquisition maintained their small refiner status had the merger not occurred. refiners a grace period to come into Another type of transaction involves a Consistent with our intent in the compliance if they lose their small refiner with approved small refiner gasoline sulfur and highway diesel fuel refiner status, we also asked for status that later loses its small refiner sulfur programs to limit the use of the comment on whether or not such a status because it exceeds the small small refiner hardship provisions, we small refiner should instead be allowed refiner criteria. Under the gasoline also intended in the gasoline sulfur and to ‘‘grandfather’’ the small refiner relief sulfur and highway diesel fuel sulfur highway diesel fuel sulfur programs that provisions for its existing refinery or regulations, an approved small refiner an exceedance of corporate crude oil refineries. We did not receive any that exceeds 1,500 employees due to capacity limit of 155,000 bpcd, due to specific comments on this issue and we merger or acquisition will lose its small merger or acquisition, would be grounds are not finalizing this provision in refiner status. We also intended for for disqualifying a refiner’s small refiner today’s action. refiners that exceeded the 155,000 barrel status. However, we inadvertently failed (2) Regarding small refiners that per calendar day crude capacity limit to include this second criterion as exceed the small refiner criteria due to due to merger or acquisition to lose its grounds for disqualification in the the purchase of a non-small refiner’s small refiner status and in this rule we regulations. In today’s action, we are refinery, we requested comment on are amending the regulations to reflect resolving this error by including the whether or not the proposed additional that criterion as well. This includes crude capacity limit, along with the lead time should apply to the purchased exceedances of the employee or crude employee limit for both the gasoline refinery. We also requested comment on capacity criteria caused by acquisitions sulfur and highway diesel fuel sulfur whether or not the refiner should be of assets such as plant and equipment, programs, effective January 1, 2004. required to meet the non-small refiner as well as acquisitions of business Thus, a refiner exceeding either standards on schedule at the purchased entities. criterion due to merger or acquisition refinery, since the previous owner could Our intent in the gasoline and will lose its small refiner status. The be assumed to have anticipated the new highway diesel fuel sulfur programs, as exception to this would be in the case standards and taken steps to accomplish well as the NRLM diesel fuel sulfur of merger only between two small this prior to the purchase. One refiner program, has been and continues to be, refiners. We received comments commented that merger acquisition limiting the small refiner relief supporting the allowance of additional flexibility for refineries that lose their provisions to a small subset of refiners lead time for small refiners that lose small refiner status should be limited to that are challenged, as discussed above. their small refiner status through a instances where a small refiner merges At the same time, it is also our intent merger with, or acquisition of, another with another small refiner. They to avoid stifling normal business small refiner. believed that any small refiner that loses growth. Therefore, the regulations we We recognize that a small refiner that its small refiner status due to an are adopting today will disqualify a loses its small refiner status because of acquisition of a non-small refiner’s refiner from small refiner status if it a merger with, or acquisition of, a non- refinery should not be eligible for exceeds the small refiner criteria small refiner would face the same type hardship relief. Similarly, another through its involvement in transactions of lead time concerns in complying with refiner commented that a refiner should such as being acquired by or merging the non-small refiner standards as a not retain small refiner status if it has

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the financial resources to acquire section. We do not intend for the NRLM gasoline, low sulfur gasoline, and additional refineries that increase program to undermine the benefits highway diesel fuel sulfur regulations. It corporate-wide crude processing above afforded to small refiners under the is intended to provide refiners short- 155,000 bpd. We are not adopting any gasoline and highway diesel fuel sulfur term relief due to unanticipated flexibility for the purchased refinery in programs, as described in the circumstances, such as a refinery fire or this situation (except in the case of a comments. At the same time, however, a natural disaster, that cannot be merger between two small refiners, as we want to preserve small refiner status reasonably foreseen now or in the near discussed above). under today’s program only for those future. businesses that meet the criteria Under this provision, a refiner may f. Provisions for Approved Gasoline and seek a waiver to distribute NRLM diesel Highway Diesel Fuel Small Refiners described above. Under the nonroad proposal, a refiner with approved small fuel that does not meet the applicable That Do Not Qualify for Small Refiner 500 ppm or 15 ppm sulfur standards for Status Under Today’s Program refiner status under the highway diesel fuel program but not the NRLM program a brief time period. An approved waiver Some refiners that have approved would be required to produce 500 ppm of this type could, for example, allow a small refiner status under the gasoline sulfur NRLM diesel fuel in 2007 and refiner to produce and distribute diesel sulfur and highway diesel fuel programs both 15 ppm sulfur highway and NR fuel with higher than allowed sulfur may not qualify for small refiner status diesel fuel in 2010. Under today’s final levels, so long as the other conditions under today’s program if they have program, such a refiner may instead described below were met. Such a grown through normal business skip the 2007 500 ppm interim sulfur request must be based on the refiner’s operations and now exceed the standard for its NRLM diesel fuel, and inability to produce complying NRLM qualification criteria for NRLM small meet the 15 ppm sulfur standard for diesel fuel because of extreme and refiner status. One refiner commented both its highway and NR diesel fuel in unusual circumstances outside the on the lack of a ‘‘grandfather’’ provision 2010 and LM diesel fuel in 2012. Such refiner’s control that could not have in the nonroad proposal that would an approach will maintain the refiner’s been avoided through the exercise of automatically continue small refiner flexibility under the highway program due diligence. The request must also status to refiners already approved as by allowing it to delay diesel show that other avenues for mitigating small refiners under the gasoline and hydrotreating investment until 2010, the problem, such as the purchase of highway diesel fuel sulfur programs. while limiting its flexibility under the credits to be used toward compliance, Without such a provision some refiners nonroad diesel program. had been pursued yet were insufficient. could be approved small refiners under As with other types of regulatory relief the gasoline sulfur and highway diesel g. Additional Provisions and Program established in this rule, this type of fuel sulfur programs (because they grew Elements temporary waiver will have to be through normal business expansions To reduce the burden on all refiners designed to prevent fuel exceeding the and not through merger or acquisition) (including small refiners), we have 15 ppm sulfur standard from being used but would not qualify under the NRLM chosen to finalize the designate and in 2011 and later model year nonroad program because they now exceed the track approach, rather than the baseline engines. criteria. As a consequence, the approach. Discussions with parties in The conditions for obtaining a NRLM commenter argued that in some cases all parts of the distribution system led diesel fuel sulfur waiver are similar to benefits afforded to such small refiners us to believe that this is the preferred those under the RFG, gasoline sulfur, under the gasoline and highway diesel approach, as tracking is currently done and highway diesel fuel sulfur fuel sulfur programs could be negated. by parties throughout the distribution regulations. These conditions are Specifically, under the highway diesel necessary and appropriate to ensure that system. We are also finalizing rule they were allowed until 2010 before any waivers that are granted are limited provisions to simplify the segregation, needing to have diesel fuel in scope, and that refiners do not gain marking, and dyeing requirements. In hydrotreating capacity. Under the economic benefits from a waiver. addition, we are finalizing provisions to nonroad rule, they would have to do so Therefore, refiners seeking a waiver will alleviate the concern raised by small in 2007. Since it would only make sense be required to show that the waiver is terminal operators regarding the heating to invest for adequate 15 ppm capacity in the best public interest and that they: oil marker. Terminals in parts of PADD when they do invest, the nonroad (1) Were not able to avoid the 1 (Northeast/Mid-Atlantic Area) will not standards essentially would require nonconformity; (2) will make up the air have to add the marker to home heating them to invest to bring all highway and quality detriment associated with the oil. Therefore we expect that no nonroad diesel to 15 ppm sulfur in waiver; (3) will make up any economic terminals inside of the Northeast/Mid- 2007, eliminating the flexibility granted benefit from the waiver; and (4) will Atlantic Area will need to install them in the highway rule. Furthermore, meet the applicable diesel fuel sulfur injection equipment. These provisions the refiners’ clean fuel projects for low standards as expeditiously as possible. sulfur gasoline, highway diesel fuel, and are discussed in greater detail in section NRLM diesel fuel could no longer be IV.D, below. b. Temporary Relief Based on Extreme Hardship Circumstances staggered. In fact, small refiners in such 2. General Hardship Provisions situations would be required to make In addition to the provision for short- a. Temporary Waivers From NRLM investments for compliance with all term relief under extreme unforseen Diesel Fuel Sulfur Requirements in three fuel programs in the same three to circumstances, we are finalizing a Extreme Unforseen Circumstances four year period, if not virtually all at provision for relief based on extreme once. We are finalizing a provision which, hardship circumstances such as We believe that a refiner who no at our discretion, will permit any circumstances that impose extreme longer meets the criteria for small domestic or foreign refiner to seek a hardship and significantly affect a refiner status, since it has successfully temporary relief from the NRLM diesel refiners ability to comply with the grown through normal business fuel sulfur standards under certain rare program requirements by the applicable operations, does not face the same level circumstances. This waiver provision is dates. This provision is also very similar of hardship described earlier in this similar to provisions in the reformulated to those established under the gasoline

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sulfur and highway diesel fuel sulfur with other relief provisions established —A plan demonstrating how the refiner programs. Under the gasoline sulfur in this rule, any waiver under this would achieve the standards as program, we have granted relief in the provision will be designed to prevent quickly as possible, including a form of individual compliance plans to fuel exceeding the 15 ppm sulfur timetable for obtaining the necessary five refiners. Under the highway diesel standard from being used in 2011 and capital, contracting for engineering program, we have approved two. Each later model year nonroad engines. and construction resources, obtaining plan was designed for the specific Providing short-term relief to those any necessary permits, and beginning situation of that refiner. In all cases, the refiners that need additional time and completing construction. companies would have experienced because they face hardship —A description of the market area for severe hardship if temporary relief had circumstances facilitates adoption of an the refiner’s diesel fuel products. not been granted. Moreover, some overall program that reduces NRLM —In some cases, it could also include a refineries were at a high risk of shutting diesel fuel sulfur to 500 ppm beginning compliance plan for how the refiner’s down without the relief. in 2007, and NRLM diesel fuel sulfur to diesel fuel will be segregated through In developing today’s program, as 15 ppm in 2010 and 2012, for the to the end-user and information on under our other fuel programs, we majority of the industry. However, we each of the end-users to whom its fuel considered whether any refiners would do not intend for this waiver provision is delivered. face particular difficulty in complying to encourage refiners to delay the We will consider several factors in with the standards in the lead time planning and investments they would our evaluation of any hardship waiver provided. As described earlier in this otherwise make. We do not expect to applications that we receive. Such section, we concluded that, in general, grant temporary waivers that apply to factors include whether a refinery’s small refiners would experience more more than approximately one percent of configuration is unique or atypical; the difficulty in complying with the the national NRLM diesel fuel pool in proportion of non-highway diesel fuel standards on time because they have any given year. production relative to other refinery less ability to raise the capital necessary The regulatory language for today’s products; whether the refiner, its parent for refinery investments, face action includes a list of the information company, and its subsidiaries are faced proportionately higher costs because of that must be included in a refiner’s with severe economic limitations and poorer economies of scale, and are less application for an extreme hardship steps the refiner has taken to attempt to able to successfully compete for limited waiver. If a refiner fails to provide all of comply with the standards, including engineering and construction resources. the information specified in the efforts to obtain credits towards However, it is possible that other regulations as part of its hardship compliance. In addition, we will refiners that are not small refiners may application, we will deem the consider the total crude oil capacity of also face particular difficulty in application void. In addition, we may the refinery and its parent or subsidiary complying on time with the sulfur request additional information as corporations, if any, in assessing the standards required under today’s needed. Our experience to date shows degree of hardship and the refiner’s role program. Therefore, we are including in that detailed technical and financial in the diesel market. Finally, we will this rulemaking a provision which information from the companies seeking consider where the diesel fuel is allows us, at our discretion, to grant relief has been necessary to fully intended to be sold in evaluating the temporary waivers from the NRLM evaluate whether a hardship situation environmental impacts of granting a diesel fuel sulfur standards based on a exists. The following are some examples waiver. Typically, because of EPA’s showing of extreme hardship of the types of information that must be comprehensive evaluation of both circumstances. contained in an application: financial and technical information, The extreme hardship provision action on hardship applications can take allows any domestic or foreign refiner to —The crude oil refining capacity and six or more months. request relief from the sulfur standards fuel sulfur level(s) of each diesel fuel This extreme hardship provision is based on a showing of unusual product produced at each of the intended to address unusual circumstances that result in extreme refiner’s refineries. circumstances that should be apparent hardship and significantly affect a —A technical plan for capital now or could emerge in the near future. refiner’s ability to comply with either equipment and operating changes to Thus, refiners seeking additional time the 500 ppm or 15 ppm sulfur NRLM achieve the NRLM diesel fuel sulfur under this provision must apply for diesel fuel standards by either June 1, standards. relief by June 1, 2005, although we 2007, June 1, 2010, or June 1, 2012, —The anticipated timing for the overall retain the discretion to consider respectively. The Agency will evaluate project the refiner is proposing and hardship applications later as well for each application on a case-by-case basis, key milestones to ultimately produce good cause. considering the factors described below. 100 percent of NRLM diesel fuel at Approved hardship applications may the 15 ppm sulfur cap. 3. Provisions for Transmix Facilities include compliance plans with relief —The refiner’s capital requirements for In the petroleum products similar to the provisions for small each step of its proposed projects. distribution system, certain types of refiners, which are described in detail —Detailed plans for financing the interface mixtures in product pipelines above in section IV.B.1.c. Depending on project and financial statements cannot be added in any significant the refiner’s specific situation, such demonstrating the nature of and quantity to either of the adjoining approved delays in meeting the sulfur degree of financial hardship and how products that produced the interface. requirements may be more stringent the requested relief would mitigate These mixtures are known as than those allowed for small refiners, this hardship. This would include a ‘‘transmix.’’ The pipeline and terminal but will not likely be less stringent. description of the overall financial industry’s practice is to transport Given such an approval, we expect to situation of the company and its plans transmix via truck, pipeline, or barge to impose appropriate conditions to: (1) to secure financing for the a facility with an on-site fractionator Assure the refiner is making its best desulfurization project (e.g., internal that is designed to separate the effort; and (2) minimize any loss of cash flow, bank loans, issuing of products. The owner or operator of such emissions benefits from the program. As bonds, sale of assets, or sale of stock). a facility is called a ‘‘transmix

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processor.’’ Such entities are generally crude or heavy oils. Therefore, under highway diesel fuel program, we have considered to be a refiner under existing today’s final rule, transmix processors granted Alaska exemptions from both EPA fuel regulations. may choose to continue to produce all the sulfur standard and dye provisions Transmix processors, like of their highway diesel fuel to the 500 because of its unique geographical, conventional refiners, are also currently ppm sulfur standard until 2010. They meteorological, air quality, and subject to the ‘‘80 percent/20 percent’’ may further choose to continue to economic factors. 104 On December 12, production requirement for 15 ppm and produce all of their NRLM diesel fuel as 1995, Alaska submitted a petition for a 500 ppm sulfur highway diesel fuel. high sulfur diesel fuel until June 1, permanent exemption for all areas of the This requirement, however, is 2010, all of their NRLM diesel fuel to state served by the FAHS, that is, those inconsistent with the inherent nature of the 500 ppm sulfur standard until June areas previously covered only by a the transmix processors’ business. 1, 2014, and all of their LM diesel fuel temporary exemption. While Unlike conventional refiners, transmix to a 500 ppm sulfur limit indefinitely. considering that petition, we started processors refine batches of fuel that Transmix processors will be required work on a nationwide rule to consider vary in volume and timing—largely to properly designate their fuel with the more stringent highway diesel fuel unpredictably. Complying with set proper PTDs. Because the volume of requirements for sulfur content. percentages of different highway diesel fuel involved will be small and the fuel In the January 18, 2001, highway fuel sulfur grades would be very processed will already have been off- diesel rule EPA fully applied the 2007 difficult, probably resulting in either a specification, we believe that providing motor vehicle engine emission need to purchase credits or to postpone this flexibility for transmix processors standards in Alaska. Based on factors processing of some shipments. will have essentially no environmental unique to Alaska, we provided the state Transmix processors commented that it impact and will not affect the efficient with: (1) An extension of the exemption would not be appropriate to have any functioning of the NRLM diesel fuel from the 500 ppm sulfur fuel standard additional restrictions, beyond those program or the existing highway diesel until the effective date of the new 15 based on sulfur content, imposed on fuel program. Rather, this approach will ppm sulfur standard for highway diesel their ability to market the fuel that they allow fuel volume to remain in the fuel in 2006; (2) an opportunity to produce. They stated that the highway, NRLM, or LM (as applicable request an alternative implementation implementation of other restrictions, based on time frame) markets that might plan for the 15 ppm sulfur diesel fuel such as those under the highway diesel otherwise be forced into the heating oil program; and (3) a permanent program’s 80/20 requirement, would market. exemption from the diesel fuel dye force them to ship large volumes of provisions. In response to these blendstocks back to refineries by truck, C. Special Provisions for Alaska and the provisions in our January 18, 2001, resulting in tank lock-outs that could Territories highway rule, Alaska informed us that cascade upstream though the 1. Alaska areas served by the FAHS, i.e., distribution system potentially communities on the connected road interfering with pipeline operations. 103 The nationwide engine emission system or served by the Alaska state Furthermore, transmix processors do standards established today apply to all ferry system (‘‘urban’’ areas), would not have the ability to change the nature NR engines throughout Alaska. The follow the nationwide requirements. 105 of their products, as their processing nationwide NRLM diesel fuel sulfur Diesel fuel produced for use in areas of equipment consists only of a distillation standards and implementation dates Alaska served by the FAHS will column to separate the blendstocks. apply to NRLM diesel fuel used in the therefore be required to meet the same This simple refinery configuration areas of Alaska served by the federal aid requirements for highway diesel fuel as further limits their ability to install and highway system (FAHS). In this final diesel fuel produced for the rest of the operate a distillate hydrotreater. The rule, EPA is not finalizing fuel sulfur nation. For the rural parts of the state— commenters added that the sulfur standards and implementation areas not served by the FAHS—Alaska content of the slate of fuel products that deadlines for NRLM diesel fuel used in requested that highway diesel fuel not they produce is completely dependant the areas of Alaska not served by the be subject to the highway diesel fuel on feed material that they receive, and FAHS (i.e., the ‘‘rural’’ areas). They will sulfur standard until June 1, 2010. that it is not feasible for them to install be addressed in a separate rulemaking to Between 2006 and 2010, the rural desulfurization equipment. We agree allow EPA to address the requirements communities would choose their own that it is not feasible for transmix for highway and NRLM diesel fuel in fuel management strategy, except that processors to alter the sulfur content of the rural areas in the same rulemaking. all 2007 model year and newer diesel the fuels that they produce and that This final rule does, however, adopt the vehicles would require ultra-low sulfur limiting the market for these fuels could prohibition in the rural areas on the use diesel fuel. Beginning June 1, 2010, all potentially lead to disruptions in the of high sulfur (greater than 15 ppm) highway diesel fuel in the rural areas fuel distribution system. diesel fuel in model year 2011 and later would be subject to the 15 ppm sulfur In light of this disproportionate nonroad engines, which will be highway diesel fuel sulfur standard. 106 burden on transmix processors, today’s manufactured to operate on ultra-low final rule removes the restriction on the sulfur diesel fuel. 104 Copies of information regarding Alaska?s volume of highway or NRLM diesel fuel petition for exemption, subsequent requests by they produce, if they produce diesel fuel a. How Do the Highway Diesel Engine Alaska, public comments received, and actions by according to typical operational Standards, the Highway Diesel Fuel EPA are available in public docket A–96–26. practices involving the separation of Standards, and Implementation 105 Letter and attached document to Jeffrey Deadlines Apply in Alaska? Holmstead of EPA from Michele Brown of the transmix and not, for example, by Alaska Department of Environmental Conservation, blending of blendstocks or processing Unlike the rest of the nation, Alaska dated April 1, 2002. The communities on the is currently exempt from the 500 ppm connected road system or served by the Alaska 103 In a tank lock out situation a storage tank can sulfur standard for highway diesel fuel State ferry system are listed in the attached document. no longer accept product from upstream in the and the dye provisions for diesel fuel distribution system because there is not sufficient 106 Letter and attached document to Jeffrey outlet for the product it holds. A tank lock our not subject to this standard. Since the Holmstead of EPA from Ernesta Ballard of the downstream can quickly propagate upstream. beginning of the 500 ppm sulfur Continued

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EPA intends to propose and request along with the rest of the nation implementation of refiner product comment on an amendment to the beginning June 1, 2010 and June 1, designations, labeling of fuel pumps, highway diesel sulfur rule to 2012, respectively. retailer education, and rapid transition incorporate the rural area transition The state, in its comments on the to ULSD would ensure that 500 ppm plan submitted by the state. proposal, supports today’s action for the sulfur diesel fuel is used in NRLM urban areas described above. One b. What NRLM Diesel Fuel Standards equipment from 2007–10 and that 15 refiner in Alaska commented that we ppm sulfur diesel fuel is used in Are We Establishing for Urban Areas of should implement a one-step approach Alaska? nonroad equipment after 2010. requiring 15 ppm sulfur diesel fuel In section IV.D below, we discuss the Since Alaska is currently exempt from starting in 2010. The refiner indicated provisions that we are adopting for the the 500 ppm sulfur standard for that, due to the limited NRLM market, State of Alaska that will allow us to highway diesel fuel, we also considered the benefits of introducing 500 ppm enforce the NRLM diesel fuel program exempting Alaska from the 500 ppm sulfur diesel fuel in 2007 would be without requiring the fuel marker. sulfur step of the proposed NRLM minimal. Also, the distribution system standards. However, despite the in Alaska is not capable of handling the c. Why Are We Deferring Final Action exemption, officials from the state of two grades of diesel fuel that would be on NRLM Diesel Fuel Standards for Alaska have informed us that some 500 required between 2007 and 2010, thus Rural Areas of Alaska? ppm sulfur diesel fuel is nevertheless 15 ppm sulfur fuel would be distributed We are deferring final action on the being marketed in many parts of Alaska. as NRLM. We agree that the distribution fuel sulfur standards and Market forces have brought the prices system in Alaska is limited compared to implementation deadlines for the rural for 500 ppm diesel fuel down such that the rest of the nation, and that areas of Alaska. We proposed to it is now becoming competitive with consumption of diesel fuel by NRLM permanently exempt NRLM diesel fuel higher sulfur, uncontrolled diesel fuel. applications in Alaska is small. used in the rural areas from fuel content Assuming this trend continues, However, as previously discussed, we standards, except that diesel fuel used requiring that NRLM diesel fuel be expect that some 500 ppm sulfur diesel in 2011 and later model year nonroad produced to 500 ppm beginning June 1, fuel will be available due to market engines would have had to meet the 2007 would not appear to be unduly forces, and that 15 ppm sulfur highway sulfur content standard of 15 ppm burdensome. Even if 500 ppm diesel diesel fuel will be available beginning in sulfur. However, this proposed action is fuel were not available in Alaska today, 2006 in the urban areas. Thus, requiring inconsistent with the action requested our expectation is that compliance with 500 ppm sulfur diesel fuel (or 15 ppm by the state in its comments to the the highway program described above sulfur diesel fuel as a substitute) for the proposal. It is also inconsistent with the will likely result in the transition of all limited NRLM applications beginning in state’s alternative implementation plan of the urban area highway diesel fuel 2007 does not appear to create any for highway diesel fuel in rural Alaska, distribution system to 15 ppm sulfur undue burden on the fuel supply or the which was submitted after publication beginning in 2006. It could prove very distribution system in urban Alaska. of the proposal. challenging for the distribution system During the development of the We intend to issue a supplemental in some of the areas to segregate a 500 original 500 ppm sulfur highway diesel proposal that would address both ppm sulfur grade of NRLM from a 15 fuel standards in the early 1990’s, highway and NRLM diesel fuel sulfur ppm sulfur grade of highway and an refiners and distributors in Alaska standards for Alaska’s rural areas. This uncontrolled grade for other purposes. expressed concern that if Alaska were proposal will address the comments We believe economics would determine required to dye its non-highway diesel submitted by the state, as well as the whether the distribution system would fuel red along with the rest of the state’s alternative implementation plan country, residual dye in tanks or other handle the new grade of fuel or for highway diesel fuel. substitute 15 ppm sulfur highway diesel equipment would be enough to fuel for NRLM applications. Thus, in the contaminate and disqualify Jet-A 2. American Samoa, Guam, the 2007 to 2010 time frame, the NRLM kerosene used as aviation fuel. Since Commonwealth of Northern Mariana market in some urban areas might be much of the diesel fuel in Alaska is No. Islands, and Puerto Rico supplied with 500 ppm sulfur diesel, 1 and is indistinguishable from Jet-A a. What Provisions Apply in American and in other areas might be supplied kerosene, not only would tanks and Samoa, Guam, and the Commonwealth with 15 ppm sulfur diesel. For this transfer equipment have to be cleaned, of Northern Mariana Islands? reason, today’s action applies the 500 but separate tankage would be needed. ppm sulfur standard for NRLM diesel Consequently, we granted Alaska As we proposed, we are excluding fuel to Alaska’s urban areas. temporary exemptions from the dye American Samoa, Guam and the Regardless of what occurs prior to requirement and in the January 18, Commonwealth of the Northern Mariana 2010, we anticipate that 15 ppm sulfur 2001, highway diesel rule granted the Islands (CNMI) from the NRLM diesel highway diesel fuel will be made state a permanent exemption. fuel sulfur standards and associated available in urban areas of Alaska by The proposed use of a marker for requirements. We also are excluding this time frame. The 2007 and later heating oil in the 2007–10 time period these territories from the tier 4 nonroad model year highway fleet will be presents similar concerns in Alaska’s engine emissions standards, and other growing, demanding more and more distribution system. In response to our requirements associated with those supply of 15 ppm sulfur diesel fuel. request for comments on this issue, the emission standards. The territories will Adding nonroad volume to this would state and refiners indicated that Alaska’s continue to have access to new nonroad not appear to create any undue burden. system is not capable of accommodating diesel engines and equipment using pre- Thus, today’s action also applies the 15 dyes or markers and segregation. The tier 4 technologies, at least as long as ppm sulfur standard for NR and LM priority of the state and fuel industry is manufacturers choose to market those diesel fuel in the urban areas of Alaska, to keep dyes and markers out of the fuel technologies. In the future, if stream to prevent contamination of Jet- manufacturers choose to market Alaska Department of Environmental Conservation, A and facilitate movement of the fuel. nonroad diesel engines and equipment dated June 12, 2003. The comments suggested that only with tier 4 emission control

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technologies, we believe the market will Commonwealth of the Northern Mariana its claims. We have no reason to believe determine if and when the territories Islands petitioned us for an exemption that the costs of the NRLM diesel fuel will make the investment needed to under section 325 of the CAA from the program in Puerto Rico will be obtain and distribute the diesel fuel sulfur requirement under section 211(i) significantly greater than that of the U.S. necessary to support these technologies. of the CAA and associated regulations at For example, Puerto Rico is close to the We are also requiring that all nonroad 40 CFR 80.29. We subsequently granted U.S. mainland, and to South American diesel engines and equipment for these the petitions.107 Consistent with this and Central American suppliers of fuel territories be certified and labeled to the decision, in our January 18, 2001 to the U.S. mainland, and therefore has applicable requirements—either to the highway rule (66 FR 5088), we ready access to nearby fuel supplies that previous-tier standards and associated determined that the 2007 heavy-duty meet U.S. requirements. Similar to the requirements under this exclusion, or to engine emission standards and 2006 fuel distribution system in the rest of the Tier 4 standards and associated diesel fuel sulfur standard would not the country, the fuel distribution system requirements applicable for the model apply to these territories. in Puerto Rico is geared to separate fuel year of production under the Compliance with the NRLM diesel handling and storage facilities for nationwide requirements of today’s fuel sulfur standards would result in highway and non-highway diesel fuels. action. The engines would still be major economic burden on the Today’s rule will require additional emissions warranted, as otherwise territories. All three of these territories segregation for the NRLM diesel fuels, required under the CAA and EPA lack internal petroleum supplies and but no differently for Puerto Rico than regulations. Special recall and warranty refining capabilities and rely on long for the U.S. Nevertheless, to avoid that considerations due to the use of distance imports. Given their remote additional fuel segregation, Puerto Rico excluded high sulfur fuel would be the location from Hawaii and the U.S. could substitute highway fuel for use in same as those for Alaska during its mainland, most petroleum products are NRLM diesel engines and equipment. exemption and transition periods for imported from east rim nations, We also believe that the important air highway diesel fuel and for these particularly Singapore. Australia, the quality benefits to be realized by today’s territories for highway diesel fuel (see Philippines, and certain other Asian rule for the four million people in 66 FR 5086, 5088, January 18, 2001). countries are beginning to consider and Puerto Rico should not be significantly To protect against circumvention of in some cases implement lower sulfur different than those for the rest of the the emission requirements applicable to diesel fuel standards. However, it is not country. Consequently, today’s rule the rest of the U.S., we are restricting clear that supply, especially of 15 ppm includes Puerto Rico in the NRLM the importation of nonroad engines and sulfur diesel fuel, would be possible to diesel fuel program. equipment from these territories into the these territories. D. NRLM Diesel Fuel Program Design rest of the U.S. After the 2010 model Furthermore, compliance with new 15 year, nonroad diesel engines and ppm sulfur requirement for highway In addition to specifying the sulfur equipment certified under this diesel fuel beginning in 2006 and standards and the implementation dates exclusion for sale in American Samoa, today’s 15 ppm sulfur requirement for when the standards take effect, the Guam and the Commonwealth of the NRLM diesel fuel beginning in 2010 (or diesel fuel program compliance Northern Mariana Islands will not be the 500 ppm sulfur requirement for provisions must be designed and permitted entry into the rest of the U.S. NRLM diesel fuel beginning 2007) structured carefully to achieve the overall principles of the program. b. Why Are We Treating These would require construction of separate Specifically, the health and welfare Territories Uniquely? storage and handling facilities for a unique grade of diesel fuel for highway benefits of the NRLM diesel fuel and the Like Alaska, these territories are and nonroad purposes, or use of 15 ppm highway diesel programs, and the need currently exempt from the 500 ppm sulfur diesel fuel for all diesel for widespread availability of 15 ppm sulfur standard for highway diesel fuel. applications to avoid segregation. Either sulfur highway diesel fuel must be Unlike Alaska, they are also exempt of these alternatives would require maintained. The program benefits and from the new highway diesel fuel sulfur importation of 500 and 15 ppm sulfur fuel availability will only happen if the standard effective in 2006 and the new diesel fuel from Hawaii or the U.S. NRLM diesel fuel program is designed highway vehicle and engine emission mainland, and would significantly add such that the amount of 15 ppm sulfur standards effective beginning in 2007 to the already high cost of diesel fuel in fuel expected to be produced under the (see 66 FR 5088, January 18, 2001). these territories, which rely heavily on highway diesel fuel program is in fact Section 325 of the CAA provides that U.S. support for their economies. At the produced and that 500 ppm highway upon request of Guam, American same time, it is not clear that the fuel is not overproduced. Likewise, the Samoa, the Virgin Islands, or the environmental benefits in these areas benefits of the NRLM diesel fuel sulfur Commonwealth of the Northern Mariana would warrant this cost. Therefore, we standards adopted today will only be Islands, we may exempt any person or are not applying the fuel and engine achieved if the program is designed to source, or class of persons or sources, in ensure that the volume of diesel fuel standards to these territories. that territory from any requirement of The Caribbean Petroleum Corporation consumed by NRLM diesel engines is the CAA, with some specific exceptions. (CPC) commented that the proposed matched by the supply of NRLM diesel The requested exemption could be nonroad diesel rule would result in a fuel produced to the appropriate low granted if we determine that compliance major economic burden for Puerto Rico, sulfur levels. At the same time, with such requirement is not feasible or the environmental benefits do not promoting the efficiency of the is unreasonable due to unique warrant the cost, and that Puerto Rico distribution system calls for fungible geographical, meteorological, or should be exempt. However, the CPC distribution of physically similar economic factors of the territory, or did not include any cost or products, and minimizing the need for other local factors as we consider environmental information to support product segregation. significant. Prior to the effective date of As discussed below, the situation the current highway diesel fuel sulfur 107 See 57 FR 32010, July 20, 1992 for American faced in 1993 when EPA first regulated standard of 500 ppm, the territories of Samoa; 57 FR 32010, July 30, 1992 for Guam; and the sulfur content of highway diesel fuel American Samoa, Guam and the 59 FR 26129, May 19, 1994 for CNMI. parallels some of the issues that EPA

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needed to address in today’s rule. Prior fungible distribution of highway and small refiners and/or through the use of to the implementation of the 500 ppm NRLM diesel fuel with the same sulfur credits. This could substantially reduce sulfur standard for highway diesel fuel level risks the loss of important benefits the environmental benefits of today’s in 1993, most No. 2 distillate fuel was of the highway program. For example, if rule. produced to essentially the same a refiner produced all 500 ppm sulfur After 2010, when the 15 ppm sulfur specifications, shipped fungibly, and fuel and designated it as NRLM diesel standard for NR diesel fuel goes into used interchangeably by highway diesel fuel, that refiner would have no effect, small refiner and credit NR fuel engines, nonroad diesel engines, obligation to produce any 15 ppm sulfur must meet a 500 ppm standard. locomotive and marine diesel engines, highway diesel fuel. Without an Therefore, after 2010 NRLM diesel fuel and heating oil applications. Beginning effective way of limiting the use in the can be distinguished from high sulfur in 1993, highway diesel fuel was highway market of 500 ppm sulfur (greater than 500 ppm) home heating required to meet a 500 ppm sulfur cap diesel fuel produced as NRLM diesel fuel based on sulfur content. However, and was segregated from other distillate fuel, much more 500 ppm sulfur fuel 500 ppm NR (small refiner, credit) fuels as it left the refinery by the use of could, and likely would find its way produced from June 1, 2010 through a visible level of dye solvent red 164 in into the highway market than would May 31, 2012, and 500 ppm NRLM all non-highway distillate. At about the otherwise happen under the current (small refiner, credit) diesel fuel same time, the Internal Revenue Service highway program. This would displace produced from June 1, 2012 through (IRS) similarly required non-highway 15 ppm sulfur diesel fuel that would May 31, 2014, could not be diesel fuel to be dyed red to a much have otherwise been produced. This distinguished from heating oil produced higher concentration prior to retail sale likely series of events would circumvent to meet a similar 500 ppm sulfur limit. to distinguish it from highway diesel the intent of the highway program’s Likewise, from June 1, 2010 to June 1, fuel for excise tax purposes. Dyed non- TCO and sacrifice some of the resulting 2012, 500 ppm NR (small refiner, credit) diesel fuel and LM diesel fuel need to highway fuel is exempt from this tax. PM and SO2 emission benefits of the This splitting of the distillate pool overall highway diesel program. If this be distinguished from each other, so necessitated changes in the distribution occurred to any significant degree, it that diesel fuel produced as 500 ppm system to ship and store the now could also undermine the integrity of LM is not later misdirected to the NR distinct products separately. In some the highway program by threatening the diesel market. Such misdirected 500 parts of the country where the costs to availability of 15 ppm sulfur diesel fuel ppm sulfur LM diesel fuel would be segregate non-highway diesel fuel from nationwide for the vehicles that need it. indistinguishable from legal 500 ppm highway diesel fuel could not be This is no longer a concern after 2010, sulfur NR diesel fuel, reducing the justified, both fuels have been produced when all highway diesel fuel is required environmental benefits of today’s rule. to highway specifications.108 to meet a 15 ppm sulfur standard. These various 500 ppm fuels could not be distinguished based on sulfur level. 1. Requirements During the First Step of The second reason is to maintain the As previously discussed, the situation the Fuel Program integrity of the NRLM diesel fuel which was faced in 1993 regarding the program, while allowing the efficient EPA is adopting specific compliance need to differentiate 500 ppm sulfur distribution of NRLM diesel fuel and provisions during the first step of highway diesel fuel from other diesel heating oil where they have similar today’s NRLM diesel fuel sulfur control fuel is similar to the need today to sulfur levels. By establishing new sulfur program for three reasons. The first is to differentiate highway diesel fuel, NRLM standards for NRLM diesel fuel but not maintain the integrity of the highway diesel fuel, and heating oil. heating oil, today’s program creates the diesel program, while allowing the The third reason is to maintain the need to distinguish the fuel used for efficient distribution of highway and integrity of the anti-downgrading these two purposes. Currently, there is NRLM diesel fuel. Since 500 ppm sulfur requirements in the highway diesel no grade of diesel fuel which is highway diesel fuel allowed under the program. The highway diesel program produced and marketed as a highway diesel fuel program’s requires that each entity in the distinguishable grade for NRLM diesel Temporary Compliance Option (TCO) distribution system downgrade no more engine uses. It is typically produced and and NRLM diesel fuel meeting today’s than 20 percent of the 15 ppm sulfur shipped fungibly with other distillate 500 ppm sulfur standard will be highway diesel fuel for which it used for heating oil purposes, and it is physically the same, it would be assumes custody to 500 ppm sulfur all dyed red in accordance with EPA impossible to maintain the benefits and highway diesel fuel. These provisions and IRS regulations. Because today’s program integrity of the highway diesel are necessary to ensure the widespread rule includes small refiner and credit fuel program without some means of availability of 15 ppm sulfur diesel fuel provisions that allow the limited differentiating highway diesel fuel from for use in model year 2007 and later production of high sulfur (greater than NRLM diesel fuel. highway vehicles, in which the use of 500 ppm) NRLM diesel fuel through Continuing the current practice of 15 ppm sulfur fuel is essential to 2010, it is not possible to rely on sulfur dyeing NRLM diesel fuel at the refinery facilitate the projected emissions content alone to differentiate NRLM gate and requiring that it be segregated benefits of the highway program. The diesel fuel from heating oil during the throughout the distribution system is highway program placed no restrictions first step of the program. Without not a practical way to differentiate on the volume of highway diesel fuel adequate controls, a refiner could NRLM diesel fuel from highway fuel. At that could be downgraded to NRLM choose not to desulfurize any of its fuel the same time, allowing the unrestricted diesel fuel. Under the proposed rule that is destined for the NRLM diesel fuel there would be no way to distinguish 108 Diesel fuel produced to highway specifications market, instead designating that volume 500 ppm sulfur NRLM diesel fuel from but used for non-highway purposes is referred to as as heating oil at the refinery gate. This 500 ppm sulfur highway diesel fuel ‘‘spill-over.’’ It leaves the refinery gate and is fuel, ostensibly manufactured for use as downstream of the refinery. Therefore, fungibly distributed as if it were highway diesel heating oil could be misdirected for use to preserve the integrity of the highway fuel, and is typically dyed at a point later in the distribution system. Once it is dyed it is no longer in NRLM diesel equipment, and would program, the proposal would have made available for use in highway vehicles, and is not be indistinguishable from legal high the highway program’s anti-downgrade part of the supply of highway fuel. sulfur NRLM diesel fuel produced by requirements more stringent by also

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restricting downgrades to 500 ppm essential, since segregating the fuels designate and track approach amplified sulfur NRLM diesel fuel. We received could result in substantial additional potential concerns regarding whether several negative comments on this transportation costs and necessitate the approach might reduce the volume proposed restriction. The compliance additional storage tanks throughout the of 15 ppm sulfur diesel fuel required to and record keeping requirements system. be produced under the highway diesel finalized to address the two concerns The NPRM invited comment on two program, leading to a reduction in the discussed above, can be utilized to alternative approaches to ensure that environmental benefits of the highway facilitate the implementation of the refiner production of 15 ppm sulfur diesel program and calling into question highway program’s anti-downgrading highway diesel fuel met the highway the availability of 15 ppm sulfur diesel requirements without the need to rule’s 80/20 requirement; the ‘‘refiner fuel. We were also concerned about further restrict downgrading. As a baseline’’ approach, and the ‘‘designate whether this approach would place too result, today’s rule also contains several and track’’ approach. The baseline much burden on the numerous entities modifications which clarify the anti- approach is essentially a constraint on in the fuel distribution system, as downgrading provisions of the highway the sulfur levels of the various distillate compliance was focused on downstream diesel program. fuel products a refiner produces, based parties. While the designate and track The requirements described below on historical production volumes. Fuel approach provided greater production will help ensure that the projected with similar sulfur levels could then be flexibility to refiners than the baseline benefits of the highway diesel program fungibly distributed with only limited approach, it appeared to increase the and of today’s NRLM diesel program are controls on the downstream distribution burden and restrictions on downstream achieved. system. The designate and track parties. approach requires that a refiner Of the approaches discussed in the a. Ensuring Refiner Production Volumes designate into which market discrete NPRM, we expected that the baseline of 15 ppm Sulfur Highway Diesel Fuel volumes of the distillate fuels it approach would provide the best Are Consistent With the Highway Rule’s produces must be sold, without any mechanism to achieve the fuel program 80/20 Requirement consideration of historical production goals described at the beginning of this To avoid adding unnecessary cost to volumes. The fuel must then be tracked section. Since the proposal, we have the fuel distribution system, we through the distribution system and comprehensively evaluated the proposed that the current requirement sold only for its designated purpose (or advantages and disadvantages of both of dyeing non-highway distillate fuels at a purpose that requires less control). As approaches. Based on this review, we the refinery gate become voluntary as of with the baseline approach, diesel fuel now believe that a baseline approach June 1, 2006.109 As discussed in the with similar sulfur levels could be would produce significant adverse proposal, continuing to require that fungibly shipped up to the point of problems because of its overly NRLM diesel fuel and heating oil distribution from a terminal where off- restrictive impact on the ability of fuel contain a visible trace of red dye at the highway diesel fuel must be dyed red producers and distributors to efficiently refinery gate would allow for simple pursuant to IRS requirements to indicate respond to the myriad and daily needs enforcement of the highway standards its tax exempt status. of the markets for highway and NRLM throughout the duration of the highway We proposed the baseline approach diesel fuel. Implementation of the program’s TCO. Clear, undyed diesel because, in the absence of a red dye approach could also produce an fuel would have to meet the 80/20 ratio requirement at the refinery-gate for unintended bias that would tend to of 15 ppm to 500 ppm sulfur highway NRLM diesel fuel, we expected that it reduce the benefits of the highway diesel fuel, and dyed fuel could only be would: (1) Allow for the fungible program and reduce the availability of used in NRLM diesel equipment or as distribution of 500 ppm sulfur highway 15 ppm sulfur highway diesel fuel. At heating oil. Continuing the current dye and NRLM diesel fuel; (2) ensure the the same time, our review of the provisions would therefore ensure that enforceability of the highway diesel fuel approaches shows that the designate the intended benefits of the highway and NRLM diesel fuel standards; (3) and track approach can be implemented program are achieved. However, maintain the projected production in an enforceable manner and likely maintaining this dye distinction would volume of 15 ppm sulfur highway diesel would not cause a reduction in the also require segregation of a new grade fuel; (4) allow refinery production of environmental benefits of the highway of dyed 500 ppm sulfur NRLM diesel 500 ppm sulfur NRLM diesel fuel and diesel program or adversely impact the fuel throughout the entire distribution heating oil to remain flexible to meet widespread availability of 15 ppm system. The costs of requiring market demand; and (5) enable the sulfur highway diesel fuel. Our segregation of two otherwise identical efficient distribution of diesel fuel while evaluation of these alternate approaches fuels throughout the entire distribution imposing the least burden on the parties is discussed in more detail in the system could be quite substantial.110 in the fuel production and distribution following sections. Comments on the proposed rule system. In the proposal, we also i. Proposed Refiner Baseline Approach confirmed EPA’s assessment that the discussed how a refiner’s baseline ability of the fuel distribution system to would be set, and invited comment on Under the refiner baseline approach, distribute these fuels fungibly is ways to account for changes refiners we proposed that from June 1, 2007 might make from their historical through May 31, 2010, any refiner or 109 The IRS requirements concerning dyeing of production practices in response to the importer could choose to distribute its non-highway fuel prior to sale to consumers are not highway diesel program. 500 ppm sulfur NRLM and highway changed by this rulemaking. In the NPRM, we expressed concerns diesel fuels fungibly without adding red 110 Under the highway program the potential exists to add a third grade of diesel fuel in an that a designate and track approach dye at the refinery gate. Refiners and estimated 40 percent of the country, and we would raise significant workability and importers who elect to distribute these projected one-time tankage and distribution system enforceability issues and therefore fuels fungibly would need to establish a costs of $1.05 billion to accomplish this. Using might not maintain the integrity of non-highway distillate baseline, defined similar assumptions, to add a second 500 ppm grade nationwide would cost in excess of $2 billion. highway and NRLM diesel fuel sulfur as a percentage of its total distillate fuel This assumes that the capability exists to add such programs. Our concerns about the production volume based on historical new tankage. workability and enforceability of a production data. For future production

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purposes, this percentage of the volume In the case of a spike in heating oil meeting the market demand for such of diesel fuel produced would have to demand due to an unusually cold fuels. At the same time, it would not be either meet the 500 ppm sulfur NRLM winter, the baseline approach would possible for EPA to reduce the ability of diesel fuel sulfur standard or be marked limit a refiner’s ability to produce other refiners to produce non-highway as heating oil. All the remaining additional volumes of high sulfur fuel who may have lost these markets. production of diesel fuel would have to distillate fuel beyond the volume Therefore, for such alternatives to be meet the requirements of the highway established under its baseline. Refiners effective in responding to changing fuel program (i.e., 80 percent of this fuel that were limited in their ability to market conditions, an unintended would have to meet a 15 ppm sulfur produce additional high sulfur fuel downward bias would result regarding cap). Refiners not wishing to participate could choose to supply low sulfur diesel the required production of 15 ppm in the baseline approach would have to fuel to the heating oil market. However, sulfur highway diesel fuel. dye all of their 500 ppm sulfur NRLM they may not have sufficient Even without any changes we diesel fuel at the refinery. However, we hydrotreating capacity to do so. This discovered from the highway diesel anticipated that few refiners would opt could limit their ability to respond to a program pre-compliance reports that the to dye 500 ppm sulfur NRLM diesel supply shortage. proposed baseline approach has a fuel, other than the volumes that they The proposed rule suggested various downward bias that could result in a dispense from their own racks, since potential modifications to the baseline reduction in the volume of 15 ppm this would eliminate the ability to approach to address refiner concerns sulfur diesel fuel produced under the fungibly distribute 500 ppm sulfur regarding the associated constraints on highway diesel program.111 We highway and NRLM diesel fuels. the slate of fuels they produce. We proposed that refiners could choose to Since the publication of the proposed received comments on the potential calculate their off-highway baseline rule, we have developed a better modifications discussed in the NPRM as using either an average of 2003 through understanding of refiner concerns about well as other potential changes to the 2005 production data or 2006 the constraints associated with the baseline approach. Some commenters production data. Providing the option baseline approach. Specifically, it is suggested that if EPA were to finalize a for a 2006 baseline was necessary now clear that individual refiners would baseline approach, refiners should be because a number of refiners will be be significantly constrained by the able to apply to EPA for a yearly changing the slate of fuels that they baseline approach from efficiently adjustment to their baseline based on produce in response to the highway responding to changes in contract annual demand forecasts. Even with diesel rule which becomes effective in arrangements with their clients and such flexibility, refiners still concluded 2006. While the highway diesel pre- changes in market demands. Refiners that in many cases they would likely be compliance reports indicate an overall commented that they win and lose forced to dye their fuel instead. For fuel increase in production volume, they contracts on a daily basis and that distributors, having refiners dye their also indicate that 40 percent of highway depending on which contracts they NRLM diesel fuel presented an diesel refiners will decrease the volume secure, they may not be able to comply unacceptable situation due to the need of highway diesel fuel they produce. If with their baseline. Specific concerns to distribute another grade of fuel. As a all of these refiners were to take a 2006 were raised regarding the ability of result, all comments from the refining baseline to determine the volume of 15 refiners to compensate for the loss of and fuel distribution community were ppm sulfur diesel fuel they would be export contracts and to respond to in agreement that the baseline approach required to produce, a substantial drop spikes in the demand for heating oil may be unworkable. in the total volume of 15 ppm sulfur which periodically result from an Based on our review of the comments diesel fuel produced could result. unexpectedly cold winter. Refiners also and our discussions with fuel producers The pre-compliance reports indicate related that the constraints under the and distributors, it has become clear that the other 60 percent of refiners will baseline approach could cause an anti- that none of the potential modifications be increasing the volume of highway competitive dynamic between fuel to the baseline approach would diesel fuel they produce. We projected refiners and their customers. adequately compensate for the inherent that these shifts in the slate of fuel Based on our reevaluation of the inflexibility of requiring refiners to products that refiners produce would baseline approach and the information comply with set production ratios. Even have an overall positive impact on gathered from the public comments, it is if EPA were to adjust such ratios on an diesel fuel supply. However, refiners now clear that the constraints on the annual basis, refiners might need to that increase the volume of highway slate of fuels that a refiner produces approach EPA for an interim adjustment fuel they produce would likely chose to under the baseline approach could if their contractual agreements changed calculate their baseline using their interfere with a refiner’s ability to meet or if market demand shifted lower 2003–2005 production volumes. market demands, which in turn could unexpectedly. The process of evaluating Doing so would result in a lower result in supply shortages and increased requests for baseline adjustments could percentage of their distillate fuel that fuel prices. For example, if a refiner be very burdensome to the industry and would be required to be produced for were to lose an export contract for high to EPA, and EPA would unlikely be able highway diesel use, and subject to a 15 sulfur diesel fuel, the baseline approach to respond quickly enough to changing ppm sulfur standard. could prevent that refiner from seeking market conditions. The volume of spillover could also be to market that product domestically. More importantly, all of the potential reduced refiners were to dye 500 ppm This could impact the overall supply of alternatives that we might implement to sulfur diesel they manufactured to meet diesel fuel since the refiner may not mitigate the constraints of the baseline anticipated NRLM diesel fuel demand have sufficient facilities to desulfurize approach could potentially undermine in order to avoid needing to comply diesel fuel. Also, knowing that losing the environmental benefits of the with the baseline approach. Many such an export contract would leave the highway program. Such alternatives all refiners commented that they refiner with no ability to market its fuel would involve granting allowances to domestically could give the refiner’s some refiners to produce additional 111 ‘‘Summary and Analysis of the Highway export client an undue advantage during volumes of non-highway fuels above the Diesel Fuel 2003 Pre-compliance Reports,’’ EPA contract negotiations. set baseline to facilitate a refiner 420–R–03–103, October 2003.

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considered the baseline approach so would inappropriately restrict the caused by product downgrading in unworkable and onerous that they flexibility of downstream parties to pipelines could be adequately would choose to dye all of their 500 respond to market changes. EPA also accounted for under a designate and ppm sulfur NRLM diesel fuel at the had concerns that it would reduce the track system so that such fluctuations refinery gate. This could force some amount of 15 ppm spillover from the would not mask the inappropriate parts of the distribution systems which highway market, reducing the shifting of 500 ppm sulfur NRLM diesel had previously not carried two grades of environmental benefits of that rule. fuel to the highway pool. We have diesel fuel for highway and off-highway Since the proposal, we received subsequently developed a periodic uses to begin doing so. extensive input both in the written volume account balance system to In summary, we are not finalizing the comments and through in-depth account for such fluctuations. proposed baseline system because we meetings with representatives of all Through discussions with terminal believe— segments of the fuel distribution operators, we have also resolved 1. It could unnecessarily constrain industry on how the designate and track concerns expressed in the NPRM that a refiners ability to meet market demands, system might be structured to provide designate and track approach might encouraging them to dye 500 ppm sulfur the needed compliance oversight limit a terminal operator’s ability to NRLM diesel fuel at the refinery without placing an undue burden on respond to shifts in demand for 500 resulting in an added burden to the industry. Refiners now agree that the ppm sulfur highway versus NRLM distribution system; designate and track approach should not diesel fuel. To avoid this potential 2. It could create a bias that could be an option for refiners in addition to problem today’s rule allows terminal result in a loss in the volume of 15 ppm the baseline approach, and support it as operators and others to switch the sulfur highway diesel fuel produced, a stand alone approach. All parties in designation of 500 ppm sulfur NRLM and the options to remove these market the fuel distribution system have also diesel fuel to highway diesel fuel on a constraints would only increase the bias now expressed support for the record temporary basis but not on a cumulative to reduce the volume of 15 ppm sulfur keeping and reporting requirements basis over time. This will allow terminal highway diesel fuel; and associated with tracking designated fuel operators to sell NRLM designated 500 3. The baseline approach would not volumes through each custodian in the ppm sulfur fuel into the highway market ensure that the environmental benefits distribution chain until the fuel leaves provided that they later sell the same of the 2007 highway diesel program the terminal either taxed or dyed. volume of highway-designated 500 ppm would be maintained. Furthermore, commenters from all sulfur fuel into the NRLM market. To ii. Designate and Track Approach segments of the fuel distribution ensure that 500 ppm sulfur NRLM industry from the refiner through to the diesel fuel is not inappropriately shifted At the time of the NPRM, we invited terminal stated that the information into the highway diesel pool, terminal comment on an alternative to the needed to support the designate and operators will need to demonstrate that baseline approach called the ‘‘designate track approach is already kept as part of the volume of 500 ppm sulfur highway and track’’ approach. Under the normal business practices. Commenters diesel fuel they delivered is less than or envisioned designate and track stated that only modest upgrades in equal to the volume received. approach, refiners and importers would their record keeping procedures would In the NPRM, we stated that designate the volumes of 500 ppm be needed to compile the needed determining the responsible party for a sulfur diesel fuel they produce/import information and that preparing the violation of the restriction against as either highway or NRLM diesel fuel necessary reports would not represent a shifting 500 ppm sulfur NRLM diesel and would ship them fungibly. These significant burden. Thus, our concerns fuel into the highway pool would be designations would follow the fuel that a designate and track approach difficult under a designate and track through the distribution system and be might represent a large burden to fuel approach because a number of parties in used to restrict the sale of 500 ppm distributors were unfounded. the distribution chain take custody of sulfur NRLM diesel fuel from the In addition, we have developed the fuel without taking ownership. highway market. While we sought appropriate solutions to the various However, this concern can be addressed comment on various forms of the open questions and issues that we had by structuring the provisions to hold the designate and track approach, we also with the designate and track approach at custodian of the fuel accountable for expressed serious reservations regarding the time of the proposal. In the proposal any such violation that takes place its workability, enforceability, impact it was unclear how a designate and track while the fuel is in their custody. on the benefits of the highway rule, and approach would be structured to Review of electronic data submitted constraints on the distribution system. account for the swell in highway diesel from all custodians in the highway and For example, at the time of the proposal, fuel volumes in the winter that results NRLM diesel fuel distribution chain refiners supported a designate and track from downstream kerosene blending to will reveal the custodian responsible for approach where certain parts of the improve cold flow properties. Without a violation. By comparing such data on distribution system (e.g., pipelines) did an adequate control mechanism, normal the hand-offs of designated fuel volumes not have to report. EPA believed that swell in downstream highway diesel between all adjacent pairs of custodians such an approach was unenforceable. fuel volumes in the North due to in the distribution chain for Refiners were also supporting the kerosene blending during winter discrepancies, we can identify any party designate and track approach as an months could mask the inappropriate responsible for inappropriately shifting option for refiners to choose in addition shifting of NRLM-designated 500 ppm volumes of 500 ppm sulfur fuel to the baseline approach. However, EPA sulfur fuel to the highway diesel pool. designated for use in NRLM equipment believed that the two approaches were We have developed an appropriate to the highway market. Many terminals incompatible. mechanism to address this situation as do not take ownership of the fuel that As noted in the proposal, the described in section IV.D.3. they handle. Terminals that lease designate and track approach allows In the proposal, we also expressed storage tanks to multiple owners will maximum flexibility for refiners and concerns regarding how normal need to enter into contractual importers, but EPA had concerns that volumetric fluctuations in the agreements with their tenants to ensure the volume reconciliation requirements distribution system such as those that they understand their obligations as

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a custodian of designated fuel and do in the distribution system.112 These are highway program will be substantially not inappropriately change the the same areas where the majority of greater than estimated if the projections designation of fuels stored in such spillover occurs today. After the in the pre-compliance reports are leased tanks. highway diesel program becomes realized. effective in 2006, we project that only Based on the above discussion, we An effective enforcement and 15 ppm sulfur highway diesel fuel will believe that the concerns regarding the compliance assurance program must be supplied in bulk shipments to both designate and track approach’s include the ability to rapidly and the highway and NRLM markets in most workability, enforceability, and ability accurately review the large amount of of these same areas. Although 500 ppm to preserve the benefits of the highway data on the hand-offs of designated fuel sulfur highway diesel fuel could be program and today’s NRLM diesel fuel volumes for discrepancies. This can be shipped in bulk to these areas through program have been satisfactorily accomplished if all parties report 2010 under the highway program’s TCO, resolved. electronically to a database which can the potential demand for such fuel and b. Ensuring That Heating Oil Is Not reconcile hand-off volumes between all for 500 ppm sulfur NRLM diesel fuel Used in NRLM Equipment From June 1, parties in the distribution chain in an would not be sufficient to justify the 2007 Through June 1, 2010 automated fashion. All segments in the cost of segregating an additional grade fuel distribution system are now in of 500 ppm sulfur diesel fuel in these i. Use of a Fuel Marker in Heating Oil support of providing the necessary areas for a short period of time. The To prevent shifting heating oil into information to such an electronic designate and track approach does not the NRLM market, we proposed that a reporting system. We have conducted a impact the costs of segregation, and fuel marker be added to heating oil at review of the Agency resources that therefore is not expected to change the refinery gate. We proposed that the would be needed to compile the distribution patterns that are based on presence of the marker required in industry reports on the transfer of these costs. heating oil would be strictly prohibited designated fuel volumes, perform After 2010, when 500 ppm sulfur in NRLM diesel fuel. As noted earlier, highway fuel no longer exists, the total quality assurance on these data, and to this approach is similar to red dye volume of 500 ppm sulfur diesel fuel in perform the necessary analysis of the requirements for high sulfur diesel fuel the distribution system will be database to discover potential that were implemented in 1993 to substantially reduced, and there will be violations. Our review indicates that the prevent its use as highway diesel fuel even less incentive to distribute an subject to the then applicable 500 ppm reporting forms can be standardized and additional grade of 500 ppm sulfur sulfur standard. the review process automated in such a diesel fuel in bulk. Therefore, the only We proposed that the marker be fashion as to minimize the Agency areas where substantial flexibility will added at the refinery gate rather than at resource requirements, while at that exist under today’s program to supply the terminal for several reasons. First, same time ensuring the quality of the either highway or NRLM diesel fuel to this seemed to be the most efficient and data and completeness of the review the NRLM market is in areas where this lowest cost option for addition of the process. In light of the above discussion, flexibility exists today. Despite this marker given that the number of we are now convinced that a designate flexibility in the current regulations, terminals is far greater than the number and track approach can be designed to spillover currently still occurs. of refineries.113 Second, requiring that meet our enforcement and compliance Therefore, we project that there will be the marker be present in heating oil assurance needs under today’s rule. little additional potential due to today’s when it is introduced into the In addition to concerns regarding the rule for refiners to reduce highway distribution system would ensure that workability and enforceability of a spillover into the NRLM market under we could differentiate high sulfur small refiner and credit fuel from heating oil designate and track approach, the a designate and track approach and that such spillover levels would not be at any point in the system. This NPRM expressed concerns that significantly reduced from historical approach would provide good assurance application of such an approach could levels. In contrast, as discussed above, that the inability to use fuel sulfur reduce the benefits of the highway we now believe that the baseline content to differentiate heating oil from diesel program by reducing the amount approach would have resulted in a high sulfur NRLM diesel fuel produced of highway diesel fuel that is used in significant loss of 15 ppm diesel under the small refiner and credit nonroad equipment due to the logistical production. provisions in today’s rule (effective constraints in the distribution system Furthermore, concerns regarding a until June 1, 2010) would not provide (‘‘spillover’’). Specifically, it was potential reduction in the spillover of 15 an opportunity to mask the potential use thought that the opportunity to fungibly ppm sulfur highway diesel into the of heating oil in NRLM equipment. ship batches of 500 ppm sulfur NRLM NRLM markets has been lessened by the Providing such assurance is an essential diesel fuel and 500 ppm sulfur highway information provided in the highway element to enable the implementation of diesel fuel might allow refiners to program pre-compliance reports. These the small refiner and credit provisions supply highway and NRLM diesel fuel reports suggest that more than 95 in today’s rule. Lastly, under the to markets where they would otherwise percent of highway diesel fuel will be proposed baseline approach, there was have supplied just highway fuel for both produced to a 15 ppm sulfur standard no other way to ensure that heating oil purposes. Our reevaluation since the beginning in 2006. In calculating the was not shifted into the NRLM diesel proposal indicates that this is not a projected benefits of the highway diesel fuel pool during distribution from the significant concern. As noted earlier, program, we assumed that only 80 refinery/importer to the terminal. there are currently substantial regions of percent of highway diesel fuel would We received numerous comments that the country where only highway diesel meet a 15 ppm sulfur standard. the upstream addition of the proposed marker to heating oil would raise fuel is supplied by bulk shipments to Therefore, the actual benefits of the significant concerns that the marker both the highway and NRLM markets due to the high costs associated with 112 This highway diesel fuel would meet the currently-applicable 500 ppm sulfur standard for 113 Additional injection equipment will be segregating an additional distillate grade highway diesel fuel. required to inject the heating oil marker.

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might contaminate jet fuel. Commenters today’s rule does not provide visual focused on determining the likely stated that this would represent a evidence of its presence. However, if the production and marketing of these high substantial safety concern unless the marker is added at the terminal it will sulfur NRLM fuels in portions of PADD proposed marker was proven not to only be present in heating oil when red I in this time frame. adversely impact the quality of jet fuel dye is also present. The fact that heating We held in-depth discussions with and the operation of jet engines. oil will be dyed red pursuant to IRS organizations representing refiners, The designate and track approach requirements before it leaves the pipelines, and terminal operators to described above for 500 ppm sulfur terminal will enable jet fuel distributors evaluate this issue. Representatives of NRLM diesel fuel, however, also to continue to use the ‘‘white bucket non-small refiners including API and provides an effective means to address test’’ to detect heating oil NPRA stated that being precluded from concerns about the use of the fuel contamination, and hence marker selling sulfur credit fuel in the marker. By extending the designate and contamination of jet fuel. Today’s rule Northeast and Mid-Atlantic would not track approach to high sulfur NRLM also includes a stand-alone requirement significantly reduce the intended diesel fuel and heating oil, these that any fuel to which the fuel marker benefits to refiners of the credit otherwise identical fuel grades can be is added must also contain visible provisions in today’s rule. We also tracked down to the terminal, and the evidence of red dye.118 spoke with small refiner representatives marker then can be added at the ii. Provisions To Ensure Heating Oil Is of and the specific small refiners whose terminal instead of at the refinery gate. marketing area might include the Going beyond the terminal with Not Used in NRLM Equipment in the Northeast and Mid-Atlantic Northeast and Mid-Atlantic and found designate and track is not feasible give that in fact, small refiners were not In the Northeast, heating oil will the breadth and nature of entities expected to market fuel in this area. 114 continue to be distributed in significant involved. As a result, the marker is Finally, we evaluated the current and quantities after implementation of the still required downstream of the likely future practices in the Northeast NRLM diesel fuel program. Discussions terminal. However, shifting the point of and Mid-Atlantic areas for the sale of with terminal operators in the marker addition downstream to the downgraded fuel generated in the Northeast, and other representatives of terminal should eliminate any distribution system. We found that this heating oil users and distributors, significant opportunity for jet fuel downgraded diesel fuel could easily revealed concerns that the proposed contamination. Subsequent comments continue to be sold in the very large and heating oil marker requirement would and discussions appear to have ubiquitous heating oil market that is confirmed this.115 EPA will continue to represent a substantial new burden on expected to continue to exist in this work with other federal agencies, terminal operators and users of heating region. This avoids any need for including FAA and DoD, and to follow oil. Terminal operators stated that the additional storage or tankage for both ongoing research and studies regarding cost of installing new injection high sulfur and low sulfur NRLM fuels, the effect of dyes and markers on jet equipment would be burdensome, and and fits into the pre-existing market fuel, particularly potential that the cost of the marker itself would structure for heating oil. contamination that could have an be significant given the large volume of adverse impact on the safe operation of heating oil used in the Northeast. They Consequently, unlike the rest of the aircraft. We will keep abreast of the also stated that they did not expect any country, there was little expected need ASTM, CRC, FAA, IRS, and EU small refiner or credit fuel to be used in to maintain a high sulfur NRLM market activities regarding the evaluation of the the Northeast, and that consequently, in this part of the country as an outlet use of SY–124 and commit to a review the marker requirement was not needed for small refiner, credit, or off- of our use of SY–124 under today’s rule in this area. They suggested that if we specification, downgraded diesel fuel. based on these findings. If alternative prohibited the sale of small refiner and Based on this input, we concluded that markers are identified that do not raise credit fuel in PADD I, this area could be codifying this expected practice and concerns regarding the potential exempted from the heating oil marker making it enforceable, i.e. not allowing contamination of jet fuel, we will requirement. high sulfur fuel to be marketed as NRLM initiate a rulemaking to evaluate the use We evaluated the viability of avoiding in this area of the country, would be of one of these markers in place of SY– the heating oil marker requirement in consistent with the current distribution 124.116 portions of PADD I and instead practices in this area of the country and We also received a number of enforcing the NRLM diesel fuel that the potential impact of taking such comments expressing concern over the standards on the basis of sulfur content an approach on the flexibility offered in inability of the proposed marker to be alone. The heating oil marker is needed the program would be minimal or detected using the standard simple test to ensure that heating oil is not sold into nonexistent. If we codified it we would used today to detect contamination with the NRLM market as high sulfur NRLM no longer need the marker requirement, red dye.117 The marker finalized by fuel. The marker is needed only if high and the resulting benefits and cost sulfur NRLM fuels will otherwise be in savings to terminals would be 114 Including every end-user of heating oil. the market. High sulfur NRLM fuel can substantial. The approach would also 115 Letter to Paul Machiele, EPA, from James be produced under the small refiner and simplify and strengthen the enforcement Thomas, American Society for Testing and credit provisions, and through the of today’s sulfur requirements in this Materials (ASTM), entitled ‘‘Withdrawal of ASTM Request,’’ January 19, 2004. In this letter ASTM generation of high sulfur NRLM in the area by allowing EPA to enforce the withdraws its request for a postponement of the distribution system from the NRLM standards simply based on the finalization of the heating oil marker requirements downgrading of 500 ppm sulfur NRLM. measurement of the sulfur content of the in today’s rule. See section V.E regarding the selection of the heating oil marker required in In evaluating the feasibility of avoiding fuel. There would be little expected today’s rule. the heating oil marker, EPA therefore impact on the environment as this is not 116 See section VIII.H. of today’s preamble. expected to change the amount of high 117 To test for contamination, jet fuel marketers 118 If IRS amends its red dye requirements, EPA sulfur fuel produced from small typically fill a white five gallon bucket with jet fuel. will also seriously consider amending the fuel refiners, credit usage, or downgrade in The presence of a pink tinge to the light straw marker and associated red dye requirements colored jet fuel indicates that the fuel has been contained in today’s rule. See section V.E. of the distribution system, only the market contaminated with fuel that contains red dye. today’s preamble. into which it is sold.

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In deciding which parts of PADD I to NRLM diesel fuel, and reviewed heating In summary, the areas excluded from use this enforcement mechanism, we oil use levels in areas that will have the marker requirement and where the attempted to minimize the number of access to bulk shipments of heating oil. sale of NRLM diesel fuel produced or terminals that would need to install new Based on our assessment we concluded imported under the credit and hardship injection equipment and the amount of that defining the Northeast/Mid-Atlantic provisions or from the downstream heating oil that would need to be area as described below would best downgrade provisions of today’s rule is marked, while preserving the benefits of achieve our goals.119 In most cases, prohibited are: North Carolina, Virginia, the small refiner and credit fuel whole states in PADD 1 were assigned Maryland, Delaware, New Jersey, provisions in today’s rule to the to this ‘‘Northeast/Mid-Atlantic’’ area. Connecticut, Rhode Island, maximum extent possible. To assess the This decision was primarily based on Massachusetts, Vermont, New placement of the boundary for the the continued high level of heating oil Hampshire, Maine, Washington DC, Northeast/Mid-Atlantic area where the use projected in these states and the New York (except for the counties of marker requirement was waived, we lack of significant concern regarding the Chautauqua, Cattaraugus, and evaluated the magnitude of heating oil elimination of the program’s flexibilities Allegany), Pennsylvania (except for the demand by state (see chapter 5 of the to produce high sulfur NRLM diesel fuel RIA), solicited input from the in these states. A few counties in counties of Erie, Warren, Mc Kean, potentially affected parties, evaluated Eastern West Virginia were also Potter, Cameron, Elk, Jefferson, Clarion, the area supplied by the pipeline assigned to the Northeast/Mid-Atlantic Forest, Venango, Mercer, Crawford, distribution systems that are expected to area based on supply patterns in the Lawrence, Beaver, Washington, and continue to ship heating oil after the area. On the other hand, a number of Greene), and the eight eastern-most implementation of today’s rule, counties in Western New York and counties in West Virginia (namely: evaluated the locations of terminals that Pennsylvania were not assigned to the Jefferson, Berkeley, Morgan, Hampshire, are likely to receive bulk shipments of Northeast/Mid-Atlantic area due to the Mineral, Hardy, Grant, and Pendleton). heating oil, evaluated the distribution need to maintain flexibilities for refiners The Northeast/Mid-Atlantic Area is area of small refiner(s) for high sulfur serving this area. illustrated in the following figure:

As discussed in section IV.D.2 below, significant factor in our evaluation of pathways from a limited number of the marker requirement for 500 ppm how to define the boundary of the refineries. Therefore, a significant sulfur LM diesel fuel that will be Northeast/Mid-Atlantic area. We expect number of terminals will not need to effective outside of this Northeast/Mid- that locomotive and marine diesel fuel handle LM diesel fuel that is subject to Atlantic area and Alaska from June 1, subject to the marker requirements will the marker requirement. Thus, the 2010, through May 31, 2012, was not a primarily be distributed via segregated potential cost of installing injection

119 See chapter V of the RIA for a detailed where the marker requirement is waived. See the RIA for a discussion of the costs of the heating discussion of the analysis which supports our section VI of today’s preamble and chapter VII of oil marker requirements finalized by today’s rule. definition of the Northeast/Mid-Atlantic areas

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equipment to add the marker to 500 referred to as a tank wagon) for direct 500 ppm sulfur LM diesel that is ppm sulfur LM diesel fuel which is delivery to heating oil users, and by required to be marked which is subject to the marker requirement will bulk plant operators. Bulk plant distributed over the compliance period. be limited to only a few refineries and operators pick up fuel from terminals as These records must demonstrate that the terminals (i.e. approximately 15, see described above. However, since they prescribed marker concentration was section VI.A of today’s preamble). maintain their own bulk fuel storage present in the heating oil and the 500 In all areas of the country other than facilities, they have the choice of storing ppm sulfur LM diesel fuel subject to the the Northeast/Mid-Atlantic area shown the fuel at their facility prior to eventual marker requirement that they in figure IV.D–1 (and Alaska as delivery to their customers. Under the discharged. discussed below), heating oil, and high provisions of today’s rule, as long as a iii. State of Alaska sulfur NRLM diesel fuel will be bulk plant only receives heating oil to designated at the refinery or importer which the marker has already been Although the fuel marker facilitates and tracked through the distribution added, it does not have to register, keep the enforcement of the NRLM diesel fuel system to the terminal. From June 1, records, or report. However, if it chooses sulfur standards by distinguishing it 2010, through May 31, 2012, 500 ppm to receive any unmarked heating oil, from heating oil, as described above, we sulfur LM diesel fuel and 500 ppm then it will be treated the same as a large are not requiring use in Alaska. Unlike nonroad diesel fuel must also be terminal under the provisions of today’s the situation in the Northeast and Mid- designated at the refinery or importer final rule. We do not expect that bulk Atlantic area, however, we are not and tracked through the distribution plants will handle LM diesel fuel to a prohibiting the production of high system to the terminal outside of the significant degree. For bulk plant sulfur NRLM diesel fuel after 2007, and Northeast/Mid-Atlantic area and Alaska. operators that might handle LM diesel 500 ppm nonroad diesel fuel from after The specified fuel marker (see section fuel, today’s rule provides that as long 2010 by small refiners in Alaska. While V.E of this preamble) must be added to as a bulk plant does not receive any 500 such a prohibition in the Northeast/ heating oil distributed from all ppm sulfur LM diesel fuel which is Mid-Atlantic area does not impact small terminals located outside of the required to be marked under today’s refiners, flexibility for small refiners is Northeast/Mid-Atlantic area defined rule, but which has not yet been expected to be important in Alaska. above and Alaska. The same fuel marker marked, it does not have to register, Thus, we need to preserve the flexibility must also be added to 500 ppm sulfur keep records, or report. However, if it for high sulfur NRLM diesel fuel in LM diesel fuel produced at a refinery or chooses to receive any unmarked 500 Alaska for small refiners along with imported that is distributed from ppm sulfur LM diesel fuel which is eliminating the marker. The program terminals located outside of the subject to the marker requirements must therefore provide another means of Northeast/Mid-Atlantic area and Alaska under today’s rule, then it will be enforcing the NRLM diesel fuel sulfur from June 1, 2010, through May 31, treated the same as a large terminal standards without eliminating a small 2012. This includes all heating oil and under the provisions of today’s final refiner’s ability to produce and the subject 500 ppm sulfur LM diesel rule. distribute high sulfur NRLM diesel fuel. fuel distributed from terminals outside Any party that transports bulk Under today’s program we are of the Northeast/Mid-Atlantic area quantities of heating oil solely to the finalizing a provision that will allow regardless of whether the fuel is Northeast/Mid-Atlantic area or within flexibility for small refiners to delay delivered to a retailer, wholesale this area is not subject to the designate compliance with the NRLM diesel fuel purchaser-consumer, or end-user and track requirements for heating oil sulfur standards as discussed in section located inside or outside of the described below. Similarly, any party IV.B. Small refiners in Alaska may avail Northeast/Mid-Atlantic area. that transports bulk quantities of 500 themselves of this option provided that Terminals inside the Northeast/Mid- ppm sulfur LM diesel fuel solely to the the refiner first obtains approval from Atlantic area are exempted from the fuel Northeast/Mid-Atlantic area or within the administrator for a compliance plan. marker requirements in today’s rule, but this area is not subject to the designate The plan must at a minimum show the only for the volume of heating oil and and track requirements for LM diesel following information: 500 ppm sulfur LM diesel fuel subject fuel. However, any high sulfur fuel (1) How they will segregate its fuel through to the marker requirements that is used distributed from inside the Northeast/ to end-users; by wholesale-purchaser-consumers and Mid-Atlantic area to outside of the (2) How they will segregate its fuels from end-users that are located inside the Northeast/Mid-Atlantic area must be other grades and other refiners’ fuels; and Northeast/Mid-Atlantic area. Any designated as heating oil by the party (3) All end-users to whom the fuel is sold heating oil and subject 500 ppm sulfur responsible for the transfer and must be as well as the fuel volumes. LM diesel fuel distributed from marked. Likewise, any 500 ppm sulfur End-users who receive the fuel must terminals inside the Northeast/Mid- LM diesel fuel distributed from inside retain records of all fuel shipments to Atlantic area to a retailer, wholesale- the Northeast/Mid-Atlantic area from demonstrate that no heating oil was purchaser-consumer, or end-user that is June 1, 2010, through May 31, 2012, used in NRLM diesel equipment and located outside of the Northeast/Mid- must be designated as 500 ppm sulfur that no 500 ppm sulfur LM diesel was Atlantic area must be marked. LM diesel fuel by the party responsible used in nonroad equipment. In order to Terminal operators do not often for the transfer and must be marked. limit the potential sources of fuel not distribute fuel to retailers, wholesale- Entities who are required to inject meeting the sulfur standard, constrain purchaser-consumers, and end-users marker into heating oil must maintain the number of end-users who may directly. This task is frequently records of the volume of marker used in legitimately have higher sulfur fuel in accomplished by ‘‘jobbers’’ who pick up heating oil, and the volume of heating their NRLM diesel equipment, and thus large tank truck loads of fuel from the oil distributed over the compliance maintain the overall program’s terminal for delivery to their retailer and period. Entities that are required to enforceability, we are not finalizing the wholesale-purchaser-consumer inject marker into 500 ppm sulfur LM other provisions that allow for higher customers, ‘‘heating oil dealers’’ who diesel fuel must maintain records of the sulfur fuel to be produced and/or pick up fuel from a terminal using a volume of marker used in 500 ppm distributed in Alaska (i.e., credit, smaller capacity tank truck (often sulfur LM diesel fuel, and the volume of transmix processor, or downstream

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distribution system provisions). In this to 15 ppm sulfur No 1, diesel fuel. Such downgrading provisions finalized in the regard, Alaska is treated in the same fuel will be manufactured for 2007 highway diesel final rule, such as manner as the Northeast/Mid-Atlantic wintertime blending to improve diesel the provisions unique to fuel retailers. area. cold flow properties. In a number of 2. Requirements During the Second Step areas we expect that 15 ppm sulfur No. c. Updating the Highway Program’s of Today’s Sulfur Control Program 1 fuel will be the only No.1 fuel Anti-Downgrade Requirements available for winterizing highway and Beginning June 1, 2010, all NR diesel Under the highway diesel fuel NRLM diesel fuel, and heating oil. fuel and beginning June 1, 2012 all LM program, each entity in the distribution Therefore, applying the anti- diesel fuel produced or imported must system may downgrade a maximum of downgrading requirements to 15 ppm meet a 15 ppm sulfur standard except 20 percent of the 15 ppm sulfur sulfur No. 1 fuel would be unnecessary for fuel manufactured under the credit highway diesel fuel it receives to 500 to maintain the availability of 15 ppm and small refiner provisions in today’s ppm sulfur highway diesel fuel. sulfur highway diesel fuel, and would rule. This credit and small refiner diesel However, there was no limit on the interfere with its intended use in the fuel must meet a 500 ppm sulfur level. volume of 15 ppm sulfur highway diesel range of No. 2 fuels. From June 1, 2010 to June 1, 2012, all fuel that could be downgraded to NRLM From October 1, 2006, through May LM diesel fuel must meet a 500 ppm diesel fuel. Prior to today’s rule, this 31, 2010, all fuel distributors sulfur standard. Today’s rule also allows was appropriate because the sulfur downstream of the refiner or import 500 ppm sulfur diesel fuel generated in content of NRLM diesel fuel was facility must satisfy one of four criteria the pipeline distribution system to be uncontrolled, and hence once 15 ppm as outlined in 40 CFR 80.598 of today’s used in NRLM equipment through May sulfur highway diesel fuel was regulation to demonstrate compliance 31, 2014 120 and in locomotive and downgraded to NRLM diesel fuel such with the highway program’s anti- marine equipment thereafter. After May fuel could not be used in the 500 ppm downgrading requirements. These 31, 2014, the credit and small refiner sulfur highway diesel market. The criteria are based on the designate and provisions expire. implementation of today’s 500 ppm track system for different grades of fuel We proposed that once refiners were sulfur standard for NRLM diesel fuel, through the distribution system. The no longer able to produce 500 ppm however, means that 15 ppm sulfur first criteria is the simplest and most sulfur diesel fuel for use in nonroad highway fuel downgraded to 500 ppm straightforward, with the least record engines and such fuel had a few months sulfur NRLM diesel fuel potentially keeping burden. It merely tracks a to work its way through the distribution could be shifted into the highway facility’s No. 2 15 ppm sulfur highway system, that 500 ppm sulfur diesel fuel market. This could undermine the diesel volume receipts and deliveries could no longer be used in nonroad benefits of the highway program for the and requires the deliveries to be at least equipment. Today’s rule adopts this reasons described previously. To 80 percent of the receipts. Since the proposed prohibition. Although today’s prevent this situation, we proposed that anti-downgrading provisions were rule extends the 15 ppm sulfur nonroad the anti-downgrading requirements implemented to protect against diesel standard to locomotive and under the highway diesel program intentional downgrading and not to marine diesel fuel, we have elected not would also apply to the downgrading of limit downgrading that would occur in to extend the prohibition against the use 15 ppm sulfur highway diesel fuel to the normal distribution of 15 ppm sulfur of 500 ppm sulfur diesel fuel in 500 ppm sulfur NRLM diesel fuel. We fuel, we anticipate that most facilities locomotive and marine equipment after received comments from refiners and will be able to easily meet this simple refiners and importers are no longer fuel distributors that such a limitation criteria. allowed to produce/import such fuel. would restrict their ability to supply the The second criteria tracks a facility’s Diesel fuel with a maximum sulfur NRLM diesel market, particularly in receipts and distribution of both No. 2 concentration of 500 ppm that is areas where refiners plan to supply only 15 ppm sulfur fuel and No.2 500 ppm generated in the pipeline distribution 15 ppm sulfur diesel fuel for both the sulfur highway diesel fuel, and limits system can continue to be used in highway and NRLM markets. deliveries of No. 2 500 ppm sulfur locomotive and marine equipment after Putting in place the designate and highway diesel fuel to no more than June 1, 2014, as discussed in section track provisions allows 500 ppm sulfur what was received plus 20 percent of IV.A above. highway and 500 ppm sulfur NRLM the No. 2 15 ppm sulfur highway diesel Providing for the continued use of 500 diesel fuel to be tracked separately. This fuel volume received. This allows more ppm sulfur diesel fuel in NRLM enables the anti-downgrading flexibility than the first criteria by not equipment through May 31, 2014, requirements to only apply to the constraining downgrades to NRLM means that without adequate controls downgrading of 15 ppm sulfur highway diesel fuel or heating oil, but does so by similar to those under the first step of diesel fuel to 500 ppm sulfur highway requiring tracking and records of today’s program, a refiner could fuel as originally required in the 2007 volumes of No. 2 15 ppm sulfur manufacture 500 ppm sulfur diesel fuel highway final rule. In the context of the highway diesel fuel received and the ostensibly for use as heating oil which designate and track requirements in products to which it is downgraded. could actually be sold downstream into today’s rule, the highway program’s The third and fourth criteria provide the NRLM market through May 31, anti-downgrading provisions are even more flexibility, especially for 2014. Similarly, the continued use of clarified as described below. Similar to wintertime blending of No. 1 15 ppm 500 ppm fuel in locomotive and marine the approach described above regarding sulfur highway diesel fuel, and also for engines after May 31, 2014, means that the prevention of the use of 500 ppm any temporary shifts that might occur without adequate controls, a refiner sulfur NRLM diesel fuel in the highway between NRLM diesel fuel and highway could continue to manufacture 500 ppm market, each custodian of 15 ppm sulfur diesel fuel markets from 2007–2010. sulfur diesel fuel ostensibly for use as No. 2 highway diesel fuel must maintain However, a facility will have to meet heating oil which could actually be sold records that demonstrate their more extensive criteria to demonstrate compliance with the highway program’s compliance. 120 The use of 500 ppm fuel in nonroad anti-downgrade requirements. The anti- Today’s final rule does not change equipment is restricted to 2011 model year and downgrading requirements do not apply any other aspects of the anti- earlier equipment.

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downstream into the locomotive and would be tracked, and the 500 ppm when it is delivered to another party. marine market indefinitely. To prevent sulfur LM fuel would be marked in the The definition also include mobile this possibility, we have elected to same manner as heating oil. The same components, such as the vessels in a continue the designate and track and provisions that apply to marking of barge facility. Examples of facilities marker requirements for heating oil heating oil, such as the Northeast/Mid- include refineries, import terminals, applicable under the first step of today’s Atlantic area, would also apply to the pipelines, terminals, bulk plants, and program indefinitely with some marking of 500 ppm sulfur LM fuel. The barge systems. Where the same entity simplifications. It is a significantly tracking and marking provisions would owns and operates a series of locations smaller program during the second step, not apply to any 15 ppm sulfur LM in the distribution system (e.g., refiner since only heating oil needs to be diesel fuel. to pipeline to terminal), it may choose tracked, and we expect that by then very to register them as a single aggregated 3. Summary of the Designate and Track little heating oil will be produced for facility, provided the entity maintains Requirements sale outside of the Northeast/Mid- custody of the fuel throughout the Atlantic area. Consistent with the The designate and track program facility. However, if the aggregated approach taken during the first step of requires refiners and importers to facility includes a refinery, then it may today’s program, these designate and designate the volumes of diesel fuel not receive any diesel fuel from another track provisions would not be they produce and/or import. Refiners/ entity at any place within the aggregated applicable in the Northeast/Mid- importers will identify whether their facility. Under this approach, a pipeline Atlantic area or Alaska, since the diesel fuel is highway or NRLM and the could be treated as one facility from the flexibility to sell greater than 15 ppm applicable sulfur level. They may then point where it receives fuel to the point sulfur diesel fuel into the NRLM market mix and fungibly ship highway and where it either delivers it to a terminal, there does not exist under this final NRLM diesel fuels that meet the same or into a tank truck after passing rule.121 Any diesel fuel with a sulfur sulfur specification without dyeing their through their terminal. The choice made content greater than 500 ppm beginning NRLM diesel fuel at the refinery gate. by the entity to treat these places as a June 1, 2007, any NR diesel fuel with The volume designations will follow the single facility or separate facilities may greater than 15 ppm sulfur beginning fuel through the distribution system not change during any applicable June 1, 2010, and any LM diesel fuel with limits placed on the ability of compliance period. These same with greater than 15 ppm sulfur downstream parties to change the definitions for facility will apply for beginning June 1, 2012 in the Northeast/ designation. These limits are designed both the designate and track provisions, Mid-Atlantic area can only be sold as to restrict the inappropriate sale of 500 as well as the anti-downgrading heating oil, and if shipped outside of the ppm sulfur NRLM diesel fuel into the provisions of the highway rule. Northeast/Mid-Atlantic area must be highway market; from 2007 to 2010, the Therefore, if a proprietary system marked as heating oil. inappropriate sale of 500 ppm sulfur LM chooses to aggregate into one facility for While today’s rule does not contain diesel fuel into the 500 ppm sulfur NR purposes of the designate and track an end date for the downstream market from 2010 to 2012; and the provisions, it will also be treated as one distribution of 500 ppm sulfur inappropriate sale of heating oil into the facility for determining compliance with locomotive and marine fuel, we will NRLM market. The designate and track the 20 percent anti-downgrading limit of review the appropriateness of allowing approach includes record keeping and the highway rule. EPA will provide a this flexibility based on experience reporting requirements for all parties in unique registration number to each gained from implementation of the 15 the fuel distribution system, associated custodial facility of designated fuels. In ppm sulfur NRLM diesel fuel standard. with tracking designated fuel volumes addition, EPA intends to work with We expect to conduct such an through each custodian in the industry subsequent to this final rule to evaluation in 2011. Were we to distribution chain until the fuel exits provide guidance regarding facility discontinue the downstream provision the terminal. The program also includes boundary and aggregation decisions that for downgraded fuel, we would also enforcement and compliance assurance will address the many unique evaluate discontinuing the designate provisions to enable the Agency to situations. and track and marker requirements for rapidly and accurately review for The designation provisions described heating oil, as is the case now for the discrepancies the large volume of data below require refiners and importers to Northeast/Mid-Atlantic area. collected on fuel volume hand-offs. Providing for the continued designate all distillates they produce or production and import of 500 ppm a. Registration import consistent with the production sulfur LM diesel fuel from June 1, 2010 Each entity in the fuel distribution and end-use requirements in today’s to June 1, 2012 means that without system, up through and including the rule. These designations serve as the adequate controls similar to those under point where fuel is loaded onto trucks foundation upon which the fuel the first step of today’s program, a for distribution to retailers or wholesale distributors are able to properly track, refiner could manufacture 500 ppm purchaser-consumers, must register designate, redesignate, and label the fuel sulfur diesel fuel ostensibly for use as each of its facilities with EPA no later they receive. LM diesel fuel which could actually be than December 31, 2005, or six months b. Designation by Refiners and sold downstream into the NR market. To prior to commencement of producing, Importers prevent this possibility, we have importing, generating, or distributing i. Designation of 500 ppm and 15 ppm adopted designate and track and marker any designated diesel fuel.122 A facility Sulfur Diesel Fuel requirements similar to those applicable is defined as the physical location(s) to heating oil under the first step of where a party has custody of designated From June 1, 2006, through May 31, today’s program. For these two years, fuel, from when it was produced, 2010, any refiner 123 or importer that 500 ppm sulfur NR and LM diesel fuel imported, or received from one party to 123 Transmix operators that produce diesel fuel 121 Unless, in the case of Alaska, the refiner 122 This requirement also applies to parties inside from transmix and terminal operators that produce segregates its fuel through to the end user as of the Northeast/Mid-Atlantic area who handle from segregated interface will be treated as a refiner discussed in section IV.D.1.b.ii. heating oil. Continued

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produces or imports 15 ppm sulfur 80/20 highway requirements. As with requirements such that refiner who was diesel fuel, and/or 500 ppm sulfur 15 ppm sulfur kerosene or jet fuel, previously required to produce 100 diesel fuel must designate all batches of downstream parties would later percent of its highway diesel fuel to the such fuel as one of the following. The redesignate it as highway or NRLM 15 ppm sulfur standard may now purpose of this designation requirement diesel fuel if blended in or used for produce 95 percent to the 15 ppm sulfur is to ensure that 500 ppm sulfur NRLM these purposes. Any 500 ppm sulfur standard (in order to avail itself of the diesel fuel is not shifted into the diesel fuel containing visible evidence extended gasoline sulfur interim highway market, and to evaluate of red dye must be designated as NRLM standards). diesel fuel or heating oil unless it is tax compliance with the highway program’s ii. Designation of High Sulfur NRLM exempt highway diesel fuel (e.g., fuel anti-downgrade requirements. Diesel Fuel, Heating Oil, and Jet Fuel/ • for use in school buses or certain 15 ppm sulfur No. 2 highway diesel Kerosene fuel; municipal fleets). • 15 ppm sulfur No. 1 highway diesel The reported volumes of designated From June 1, 2007 through May 31, fuel; fuels must be the volumes delivered to 2010, any refiner, or importer not • 500 ppm sulfur No. 2 highway the first downstream party. This is located in the Northeast/Mid-Atlantic diesel fuel; typically a pipeline facility, a marine area or Alaska, that produces or imports • 500 ppm sulfur No. 1 highway barge/tanker loading dock that accepts unmarked high sulfur distillate fuel diesel fuel; product from a refiner/importer, or the must designate all batches of such fuel • 500 ppm sulfur No. 2 NRLM diesel refiner’s/importer’s truck loading rack. as one of the following: heating oil, high fuel; This is consistent with normal business sulfur NRLM diesel fuel, or jet fuel/ • 500 ppm sulfur No. 1 NRLM diesel practices. Refiners, importers, and kerosene. Any heating oil distributed fuel; transmix processors are not required to from a refiner’s or importer’s rack not • 500 ppm sulfur jet fuel; or add red dye to NRLM diesel fuel unless located in the Northeast/Mid-Atlantic • 500 ppm sulfur kerosene. the fuel is distributed over their truck area or Alaska must contain the The start date for these requirements loading rack such that the IRS requires designated marker and red dye. Any coincides with the start date for the the addition of red dye for the heating oil distributed from a refiner/ early credit program under today’s final assessment of taxes. importer rack inside of the Northeast/ rule, and the start date for the highway Fuel designated by a refiner or Mid-Atlantic area or Alaska is exempted diesel program for the purposes of anti- importer as highway diesel fuel must from the marker requirement except any downgrading. The end date for these comply with the highway program’s 80/ heating oil that is delivered outside the requirements coincides with the end 20 requirement for 15 ppm/500 ppm Northeast/Mid-Atlantic area must be date for the highway program’s sulfur highway diesel fuel. The volume marked. Temporary Compliance Option and of fuel designated as NRLM early credit As discussed previously, 500 ppm today’s NRLM diesel fuel early credit fuel must be consistent with the credit sulfur diesel fuel may be used in NRLM program. provisions in today’s rule. Since equipment through May 31, 2014 and in Any batch of 15 ppm or 500 ppm No. highway diesel fuel volumes are locomotive and marine equipment 1 diesel fuel which is also suitable for determined at the point of delivery from thereafter. Therefore, designate and use as kerosene or jet fuel (referred to as the refiner/importer to another party, track provisions for heating oil will be dual-purpose kerosene) may be the anti-downgrade requirements do not needed to ensure that heating oil is not considered kerosene or jet fuel and need apply to refiners and importers. Under shifted into the NRLM market from June not be designated as highway or NRLM the highway diesel fuel program, 1, 2007 through May 31, 2014, and to diesel fuel, even if it may later be refiners that are required to produce 100 the locomotive and marine market blended into highway or NRLM diesel percent of their highway diesel fuel to thereafter. Consequently, from June 1, fuel downstream of the refinery to a 15 ppm sulfur standard are provided 2010 through May 31, 2014, refiners and improve the cold-flow properties of the with an allowance to deliver a small importers must continue to designate fuel. Upon such blending, the kerosene percentage of 500 ppm sulfur diesel fuel any heating oil they produce as such as or jet fuel takes on the designation of the to the pipeline (e.g., small refiners and well as any 500 ppm sulfur NRLM diesel fuel into which it was blended. GPA refiners who exercise an option diesel fuel produced under the small We expect refiners and importers will under the 2007 highway rule to delay refiner, transmix/segregated interface, elect to designate all of their 15 ppm compliance with gasoline sulfur and credit provisions. sulfur No. 1 diesel fuel as highway fuel, standards). This allowance is provided Beginning June 1, 2014, refiners and since this will aid in their compliance because a small volume of ‘‘line-wash’’ importers may no longer produce or with the highway program’s 80/20 is typically generated in the feed line import 500 ppm sulfur diesel fuel for highway fuel production requirement. from the refiner’s facility to the use in NRLM equipment. Therefore, Designation as highway diesel fuel by pipeline. This line-wash will often be beginning June 1, 2014, all diesel fuel the refiner will also help avoid suitable for use as 500 ppm sulfur with a sulfur level greater than 15 ppm downstream blending from causing a highway diesel fuel. Under the must be designated as heating oil, jet violation by the downstream party provisions of the highway rule this line- fuel, or kerosene. The one exception to under the tracking and compliance wash could have been excluded from this is transmix processors and calculations finalized today. We also compliance with the 15 ppm standard if terminals acting as refiners which will expect that refiners and importers will the refiner accounted for their be permitted to produce 500 ppm sulfur elect to designate their 500 ppm sulfur production volume prior to shipment. diesel fuel for use in locomotive and No. 1 fuel as kerosene or jet fuel since However, in this rule, all volume-related marine equipment from transmix and this will be the predominant use for requirements are keyed to the volume segregated interface. actually delivered. As a result of this such fuel, and designating it as highway iii. Designation of 500 ppm NR and 500 would hinder their compliance with the change in the point of fuel volume measurement (delivered versus ppm LM Sulfur Diesel Fuel for the purposes of compliance with these produced), we are amending the From June 1, 2010, through May 31, requirements. highway diesel fuel program 2012, any refiner or importer that

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produces or imports 500 ppm sulfur NR limits on the fuel volumes that can be In many cases, we expect that diesel fuel (small refiner and credit) redesignated, calculated as a volume downstream facilities will not change and/or 500 ppm sulfur LM diesel fuel balance over a specified compliance the designation of 500 ppm sulfur diesel must designate all batches of such fuel. period. Specifically, the volumes of 15 fuel from NRLM diesel fuel to highway The purpose of this designation ppm and 500 ppm sulfur highway while the fuel is in their custody. requirement is to ensure that 500 ppm received must be compared to the However, to accommodate fluctuations sulfur LM diesel fuel is not shifted into volumes of these fuels delivered, to in the demand for highway-designated the NR market. Any 500 ppm sulfur LM ensure that the amount of 15 ppm sulfur versus NRLM-designated 500 ppm diesel fuel distributed from a refiner’s or highway diesel fuel that is downgraded sulfur fuel, today’s rule allows terminals importer’s rack not located in the to 500 ppm sulfur highway diesel fuel and other distributors to change the Northeast/Mid-Atlantic area or Alaska complies with the highway program’s designation of 500 ppm sulfur fuel from must contain the designated marker and anti-downgrading requirements. The NRLM diesel fuel to highway diesel fuel red dye, along with heating oil. Any 500 volumes of 500 ppm sulfur highway and on a daily basis, as long as the required ppm sulfur LM diesel fuel distributed NRLM diesel fuel that a distributor volume balance is achieved over the from a refiner/importer rack inside of receives must also be compared to the compliance period.124 Terminal the Northeast/Mid-Atlantic area or volumes of 500 ppm sulfur highway and operators must ensure that the running Alaska is exempted from the marker NRLM diesel fuel delivered, to ensure balance of total highway-designated fuel requirement except any 500 ppm sulfur that NRLM diesel fuel was not that they discharged from the beginning LM fuel that is delivered outside the inappropriately transferred to the of today’s program does not exceed the Northeast/Mid-Atlantic area must be highway market. The volumes of 500 volume of highway fuel that they marked. ppm sulfur NR and LM diesel fuel received since, and had in their received must be compared to the c. Designation and Tracking possession at the beginning of today’s volumes of 500 ppm sulfur NR and LM Requirements Downstream of the program (adjusted for changes in diesel fuel delivered, to ensure that the Refinery or Importer inventory). This simple one-sided test 500 ppm sulfur LM fuel was not allows 15 ppm sulfur highway diesel The result of the refiner/importer inappropriately transferred to the NR fuel to flow to 500 ppm sulfur highway designation provisions is that all of the market. In addition, the volumes of diesel fuel (subject to anti-downgrading diesel fuel received by distributors will heating oil received must be compared limits), 500 ppm sulfur NRLM diesel be clearly and accurately designated. to the volumes distributed to ensure it fuel, or heating oil. It also allows 500 The distributors are then subject to their was not inappropriately transferred to ppm sulfur highway diesel fuel to flow own designation and tracking the NRLM market. These volume to NRLM diesel fuel or heating oil. requirements. The downstream balances are calculated over a However, the flow of NRLM diesel fuel provisions are designed to ensure that compliance period, providing to highway diesel fuel must first have certain fuel shifts do not occur, such as distributor’s the day to day flexibility to been offset by shifts from highway to the inappropriate shifting of 500 ppm redesignate fuel based on market NRLM diesel fuel. In this way we can sulfur NRLM diesel fuel to the highway conditions, as long as the required have assurance that the 500 ppm sulfur market, the inappropriate shifting of 500 volume balance is achieved over the fuel sold for highway purposes was in ppm sulfur LM diesel fuel into the compliance period. Finally, once NRLM fact produced pursuant to the 80/20 nonroad market, the inappropriate diesel fuel is dyed, 500 ppm sulfur LM requirements of the highway rule. Since downgrading of 15 ppm sulfur to 500 diesel fuel is marked (2010–2012), or any 500 ppm sulfur diesel fuel in the ppm sulfur highway diesel fuel, and the heating oil is marked, the dye and possession of parties downstream of the inappropriate shifting of heating oil to marker may be used to ensure the fuels refiner at the beginning of today’s the NRLM market. The downstream are not inappropriately shifted to other program will be considered as highway provisions are designed to ensure these markets, and the designation, tracking diesel fuel, each custodian will begin results in a readily enforceable manner and volume balance requirements are no today’s program with a positive while maximizing downstream longer needed; just the PTD, labeling, flexibility to address changing market volumetric account balance regarding and record keeping provisions typical of their input/output of highway- conditions. our other fuel regulations (e.g., highway In general, each time custody of designated 500 ppm sulfur. Conformity diesel) apply. with this requirement will be evaluated designated fuel is transferred from one In large part, the designate and track by EPA at the end of each quarterly facility to another facility, the transferor provisions are structured to be compliance period. must designate the fuel and record it’s compatible with the normal business volume. The party who receives custody In order to accommodate volumetric practices currently used by the industry fluctuations due to such factors as must record the same information, to to record and reconcile volume ensure that each party relies on the thermal expansion of the fuel, facilities transactions between parties. As such, such as pipelines upstream of the same designation and volume for its EPA expects that these downstream own compliance purposes. This process terminal can use the same volumetric provisions can be implemented in a balance. However, since these facilities occurs each time custody of diesel fuel fairly straightforward manner. is transferred. Each distributor may typically do not, and should not change redesignate fuel while in its custody or i. Designation and Tracking of 500 ppm designations, the compliance periods when it is delivered, subject to certain and 15 ppm Sulfur Diesel Fuel can be annual. In addition, to ensure basic requirements. First, any re- From June 1, 2006 through May 31, that there are no significant designation must be accurate. For 2010, facilities downstream of the redesignations, we are also requiring example, 500 ppm sulfur NRLM diesel refiner or importer must designate and that the volume of highway-designated fuel can not be redesignated as 15 ppm maintain records of all volumes of fuel 500 ppm sulfur diesel fuel that a facility unless it in fact meets the 15 ppm designated as 15 ppm sulfur highway 124 Any party is free to redesignate highway diesel standard. The sulfur standard applicable diesel fuel, 500 ppm sulfur highway fuel to NRLM diesel fuel or heating oil at any time. to downstream fuel is based on the diesel fuel, or 500 ppm sulfur NRLM The required volume balance does not limit such fuel’s designation. Second, there are diesel fuel that they receive and deliver. designations.

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discharges from its custody must be no volume balance requirements for high be identified. In such cases, records greater than 102 percent of the volume sulfur NRLM diesel fuel are met. must be kept regarding the total volume of such fuel that it received during each The volume balance for heating oil of high sulfur NRLM diesel fuel that is annual compliance period. All parties requires that the volumes of high sulfur received, discharged, and in inventory downstream of the refiner, importer, or NRLM diesel fuel and heating oil during each compliance period. transmix processor also must received must be compared to the From June 1, 2010 through May 31, demonstrate that over any given volumes of high sulfur NRLM diesel 2014, facilities downstream of the compliance period, they did not fuel and heating oil delivered over a refiner or importer must continue to downgrade more than 20 percent of the compliance period. The volume of high designate heating oil and any 500 ppm 15 ppm highway diesel fuel that they sulfur NRLM diesel fuel may not sulfur NRLM diesel fuel that they received to 500 ppm sulfur highway increase by a greater proportion than the distribute. Beyond June 1 2014, they diesel fuel. volume of heating oil over a compliance must designate 500 ppm sulfur LM From June 1, 2006 through May 31, period. There are many reasons why the diesel fuel in addition to heating oil. 2010, distributors must maintain combined pool of high sulfur fuel will Designations for heating oil are subject records regarding each transfer of a increase in volume such as the to the volume balance requirements and designated fuel into and out of their inevitable downgrades from 15 ppm and records must be kept on the facility on a batch-by-batch basis. These 500 ppm when these fuels are shipped designations. records must include the EPA by pipeline. The volume balance allows Beginning June 1, 2010, the volume registration number of the source or for this to occur while keeping fuel balance requirement for heating oil is recipient facility, and the volume of produced as heating oil from being simply that the volume of heating oil each designated fuel transfer. However, shifted to NRLM diesel fuel. The may not decrease. As discussed for transfers of dyed NRLM and volume balance calculation allows high previously, there are many reasons why highway diesel fuel on which taxes have sulfur NRLM diesel fuel and heating oil the volume could increase. been assessed, the recipient or source to increase proportionately, satisfying Consequently, if the volume decreases it facility need not be specifically both needs. As discussed previously, would mean that heating oil is being identified. In such cases, records must high sulfur NRLM diesel fuel and shifted to NRLM or locomotive and be kept regarding the total volume of heating oil compliance will be required marine uses, thereby allowing refiners dyed and tax assessed fuel that is on a quarterly basis for terminal to circumvent the NRLM diesel fuel received, discharged, and in inventory facilities that add marker/dye (and are sulfur standards. Given the likely during each compliance period. After more likely to change designations on a increase in heating oil volume for other May 31, 2010, unique records for these day to day basis), while compliance for reasons, there should be ample designate and track provisions are no other entities (e.g., pipelines) will be on flexibility provided with this one-sided longer required, but the normal records an annual basis. Compliance with the test to account for minor variations due and PTDs must still be kept regarding volume balance requirement is to volume swell/shrinkage related to compliance with the fuel standards. determined by comparing volumes temperature, meter differences, or other received and delivered during that causes, so no additional tolerance or ii. Designation and Tracking of High compliance period. There is no need to flexibility is necessary. Sulfur NRLM Diesel Fuel and Heating have a running total volume of high Oil iii. Designation and Tracking of 500 sulfur NRLM diesel fuel delivered from ppm Sulfur NR and LM Diesel Fuel The requirements regarding the the beginning of the program since we designation and tracking of heating oil do not expect any party will need to The requirements regarding the and high sulfur or 500 ppm sulfur redesignate heating oil to high sulfur designation and tracking of 500 ppm NRLM diesel fuel parallel those NRLM diesel fuel, even on a day-to-day sulfur NR and LM diesel fuel parallel regarding the designation and tracking basis. Further, we are not providing any those regarding the designation and of 500 ppm sulfur highway and NRLM tolerance since sufficient flexibility tracking of 500 ppm sulfur highway and diesel fuel discussed above. However, already exists due to the many sources NRLM diesel fuel discussed above. the requirements described below of downgrade to heating oil. However, the requirements described pertain only to facilities not in the Facilities must maintain records below pertain only to facilities not in Northeast/Mid-Atlantic area or Alaska, regarding each transfer of heating oil the Northeast/Mid-Atlantic area or and to facilities inside of the Northeast/ and high sulfur NRLM diesel fuel that Alaska, and to facilities inside of the Mid-Atlantic area that transport heating they receive and discharge from June 1, Northeast/Mid-Atlantic area that oil outside of the Northeast/Mid- 2007 through May 31, 2010 on a batch- transport 500 ppm sulfur NR and LM Atlantic area. by-batch basis.125 These records must diesel fuel outside of the Northeast/Mid- From June 1, 2007 through May 31, include the EPA registration number of Atlantic area. 2010, facilities downstream of the the source or recipient facility, and the From June 1, 2010 through May 31, refiner or importer must designate all volume of each fuel transfer. However, 2012, facilities downstream of the high sulfur diesel fuel they distribute as for transfers of marked heating oil, the refiner or importer must continue to NRLM diesel fuel and all heating oil recipient or source facility need not be designate 500 ppm sulfur NR and LM they distribute as heating oil, and must specifically identified. In such cases, diesel fuel that they distribute, and must keep records of all volumes of fuel records must be kept regarding the total keep records of all volumes of fuel designated as high sulfur NRLM diesel volume of marked heating oil that is designated as these fuels. In many cases, fuel or heating oil. In many cases, we received, discharged, and in inventory we expect that downstream facilities expect that downstream facilities will during each compliance period. For will not change the designation of diesel not change the designation of diesel fuel transfers of dyed high sulfur NRLM fuel from 500 ppm sulfur LM to 500 from heating oil to high sulfur NRLM diesel fuel from a truck loading rack, the ppm sulfur NR diesel fuel while the fuel diesel fuel while the fuel is in their specific recipients also do not need to is in their custody. However, today’s custody. However, today’s final rule final rule provides the flexibility to provides the flexibility to make this 125 As discussed in section V, these records must make this change in designation change in designation provided that be kept for five years. provided that volume balance

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requirements for 500 ppm sulfur NR d. Reporting Requirements accordingly (e.g., June 1, 2007– diesel fuel are met. i. Compliance and Reporting Periods September 30, 2007, and April 1, 2010– The volume balance for 500 ppm May 31, 2010). Quarterly reports are due sulfur NR and LM diesel fuel requires We believe that any regulatory two months following the end of the that the volumes of 500 ppm sulfur NR program should promote compliance quarterly compliance period (i.e., and LM diesel fuel received must be and deter non-compliance. Today’s December 1, March 1, June 1, and compared to the volumes of 500 ppm program includes compliance and September 1). Annual compliance sulfur NR and LM diesel fuel delivered reporting provisions to deter periods begin on July 1 and end June 30 over a compliance period. The volume noncompliance and to detect and of the following year. Again, certain of 500 ppm sulfur NR diesel fuel may correct instances of noncompliance in a annual compliance periods were not increase by a greater proportion than timely fashion. Under today’s program lengthened or shortened to match the the volume of 500 ppm sulfur LM diesel entities must submit to the Agency significant dates of the program (e.g., fuel over a compliance period. The compliance reports containing June 1, 2007–June 30, 2008). Annual combined pool of 500 ppm sulfur diesel information on the diesel fuel volumes reports are due by August 31 following fuel may increase in volume such as the they handle, separately by fuel the annual compliance period. For the inevitable downgrades from 15 ppm and designation category. Compliance with sake of simplifying compliance and 500 ppm sulfur diesel fuel when these these volume designation and tracking record keeping, the compliance periods fuels are shipped by pipeline. The requirements will be determined on an for the highway final rule have been volume balance allows for this to occur annual basis for refiners and pipelines adjusted to match these. while keeping fuel produced as 500 and a quarterly basis for terminals Reports must be submitted ppm sulfur LM diesel fuel from being during the first step of today’s program. electronically, or in a form which shifted to NR fuel. The volume balance Compliance will be determined on an facilitates direct entry into an electronic calculation allows 500 ppm sulfur NR annual basis for everyone after 2010. To database. Without reliance on an and LM diesel fuel to increase demonstrate compliance, refiners, electronic database and reporting proportionately, satisfying both needs. pipelines, and terminals will be system to cross check and verify 500 ppm sulfur NR and LM diesel fuel required to submit reports on a quarterly reported information, the designate and compliance will be required on an basis during the first step of today’s track provisions would become so annual basis, for terminal facilities as program and then on an annual basis cumbersome as to be virtually well as other entities. Compliance with every year thereafter. unenforceable by EPA staff given the volume balance requirement is We are requiring the submission of projected resource availability. determined by comparing volumes volume reports on a quarterly basis ii. Reporting Requirements During the received and delivered during that during the first step of today’s program First Step of Today’s Program compliance period. for several reasons. First, and most Facilities must maintain records importantly, today’s program allows During the first step of today’s regarding each transfer of 500 ppm entities to change the designations of program, from June 1, 2007 through May sulfur NR and LM diesel fuel that they 500 ppm sulfur diesel fuel from NRLM 31, 2010, entities must report to EPA for receive and discharge from June 1, 2010 diesel fuel to highway diesel fuel and each of their facilities regarding the total through May 31, 2012 on a batch-by- heating oil to NRLM diesel fuel on a volume of each of the designated fuels batch basis. These records must include daily basis (provided that they later that they receive from, or discharge to, the EPA registration number of the redesignate the same volume of 500 another entity’s facility in the fuel source or recipient facility, and the ppm diesel fuel from highway diesel distribution system. If a facility is a volume of each fuel transfer. However, fuel to NRLM diesel fuel and the same refiner as well as a distributor (e.g., a for transfers of marked 500 ppm sulfur volume of NRLM diesel fuel to heating blender of biodiesel or blendstocks from LM diesel fuel, the recipient or source oil). Second, quarterly reporting unfinished diesel fuel or heating oil or facility need not be specifically coupled with quarterly compliance by otherwise both accepts previously identified. In such cases, records must terminals will constrain the magnitude designated fuel and also produces fuel), be kept regarding the total volume of of any noncompliance. Finally, during it must also report both volumes marked 500 ppm sulfur LM diesel fuel the start up of the designate and track produced and released to other entities that is received, discharged, and in system, there may also be a greater in its capacity as refiner and also report inventory during each compliance potential for errors in the transmission the volumes received and released for period. For transfers of dyed 500 ppm of records between custodians of each designation like any other terminal sulfur NR diesel fuel from a truck designated fuels, in the calculations or pipeline. loading rack, the specific recipients also related to compliance with the volume For example, an entity that operates a do not need to be identified. In such account balance requirements, and in pipeline may have multiple points cases, records must be kept regarding the materials provided in reports. where it discharges fuel, and at each of the total volume of 500 ppm sulfur NR Today’s program establishes quarterly these points it may supply multiple diesel fuel that is received, discharged, compliance periods which are based on terminals. The pipeline operator must and in inventory during each standard industry practices. report on the receipt of designated fuel compliance period. Specifically, the quarterly compliance from each party that transfers fuel to it, EPA plans to work closely with periods finalized in today’s rule are as and on the designated fuel transferred members of the diesel fuel refining and follows: by the pipeline at each discharge point distribution industry, to provide clear • 1st quarter: July 1–September 30; which specifies the fuel transferred, and comprehensive guidance on what is • 2nd quarter: October 1–December separately for each of its terminal expected of the various parties under 31; customers. Entities must report for each the designate and track and volume • 3rd quarter: January 1–March 31; of their facilities the total volumes of the balance provisions adopted in this rule. • 4th quarter: April 1–June 30. designated fuels that were either dyed EPA invites suggestions from these Where the start and end dates of the red, marked, or on which taxes were parties on the most useful ways to program do not line up with these dates, assessed tax while in their custody. provide such guidance. the quarters are lengthened or shortened Reports regarding these volumes do not

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need to include details on the recipients reporting period is therefore sufficient report the volume of marked 500 ppm of the fuel (but product transfer and appropriate. sulfur LM diesel fuel separately and documents must be kept to facilitate Beginning June 1, 2010, entities that indicate the facility from which the EPA’s ability to compare the outgoing produce, import, or take custody of 500 marked 500 ppm sulfur LM diesel fuel transfers and to fuel received). ppm sulfur NRLM diesel fuel, marked was received. Entities that handle only dyed NRLM heating oil, or unmarked heating oil diesel fuel, dyed and marked 500 ppm outside of the Northeast/Mid-Atlantic E. How Are State Diesel Fuel Programs sulfur LM diesel fuel (2010–2012) and area and Alaska, must submit an annual Affected by the Sulfur Diesel Program? heating oil, or highway diesel fuel on report to EPA that provides summary Section 211(c)(4)(A) of the CAA which taxes have been assessed do not information regarding the transfer of prohibits states and political need to report to EPA. Information from these fuels.126 Entities must report for subdivisions of states from prescribing such entities is not needed for each of their facilities the total volume or attempting to enforce, for purposes of compliance purposes, because there is of each of these fuels that they received motor vehicle emission control, ‘‘any no chance of violating the prohibitions from, or discharge to, another entity’s control or prohibition respecting any against the shifting of fuel from one pool facility in the fuel distribution system characteristic or component of a fuel or to another contained in today’s rule during each annual compliance period. fuel additive in a motor vehicle or motor without also violating either the For batches of heating oil that are vehicle engine,’’ if EPA has prescribed requirement that highway diesel fuel delivered marked, the reports do not ‘‘a control or prohibition applicable to contain no red dye, or the requirement need to indicate the entities to which such characteristic or component of the that NRLM diesel fuel contain no the batches were delivered—only the fuel or fuel additive’’ under section heating oil marker. Furthermore, total volume of marked heating oil 211(c)(1). This prohibition applies to all consistent with the highway rule, there delivered during each compliance states except California, as explained in are no periodic reporting requirements period must be reported. If an entity section 211(c)(4)(B). This express regarding the demonstration of only receives marked heating oil (i.e., it preemption provision in section compliance with the highway program’s does not receive any unmarked heating 211(c)(4)(A) applies only to controls or anti-downgrading requirements in oil), it does not need to report at all. If prohibitions respecting any today’s rule. Maintenance of records a facility received marked heating oil in characteristics or components of fuels or should be sufficient for EPA to addition to unmarked heating oil, it fuel additives for motor vehicles or adequately monitor compliance with must report the volume of marked motor vehicle engines, that is, highway these requirements, as insufficient 15 heating oil separately and indicate the vehicles. It does not apply to controls or ppm sulfur diesel fuel availability in an facility from which the marked heating prohibitions respecting any area should highlight potential anti- oil was received. characteristics or components of fuels or downgrading violations. Beginning June 1, 2010 to June 1, fuel additives for nonroad engines or Quarterly reports from facilities 2012, entities that produce, import, or nonroad vehicles.128 downstream of the refinery and take custody of 500 ppm sulfur NR and Section 211(c)(4)(A) specifically importer must also include data on the LM diesel fuel outside of the Northeast/ mentions only controls respecting total volume of the designated fuels Mid-Atlantic area and Alaska, must characteristics or components of fuel or received, discharged, and in inventory submit an annual report to EPA that fuel additives in a ‘‘motor vehicle or during the quarterly reporting period. provides summary information motor vehicle engine,’’ adopted ‘‘for Using these data, the reporting party regarding the transfer of these fuels.127 purposes of motor vehicle emissions must demonstrate compliance with the Entities must report for each of their control,’’ and the definitions of motor volume account balance requirements facilities the total volume of each of vehicle and nonroad engines and regarding highway diesel fuel and high these fuels that they received from, or vehicles in CAA section 216 are sulfur NRLM. discharge to, another entity’s facility in mutually exclusive. This is in contrast the fuel distribution system during each to sections 211(a) and (b), which iii. Reporting Requirements During the specifically mention application to fuels Second Step of Today’s Program annual compliance period. For batches of 500 ppm sulfur LM diesel fuel that or fuel additives used in nonroad We believe that we may safely engines or nonroad vehicles, and with are delivered marked, the reports do not dispense with quarterly reporting and section 211(c)(1) which refers to fuel need to indicate the entities to which compliance evaluations starting June 1, used in motor vehicles or engines or the batches were delivered—only the 2010 and instead rely on annual reports. nonroad engines or vehicles. total volume of marked 500 ppm sulfur During the second step of today’s rule, Thus, today’s action does not preempt LM diesel fuel delivered during each the designate and track requirements state controls or prohibitions respecting compliance period must be reported. If will be focused on preventing the use of characteristics or components of fuel or an entity only receives marked 500 ppm heating oil in NRLM equipment, and fuel additives used in nonroad, sulfur LM diesel fuel (i.e., it does not during 2010–2012 preventing the use of locomotive, or marine engines or receive any unmarked 500 ppm sulfur 500 ppm sulfur LM diesel fuel in LM diesel fuel), it does not need to nonroad equipment. By 2010, all 128 See 66 FR 36543, July 12, 2001 (notice report at all. If a facility received reporting parties in the system will have proposing approval of Houston SIP revisions). See marked in addition to unmarked 500 also letter from Carl Edlund, Director, Multimedia had experience in complying with the ppm sulfur LM diesel fuel, it must Planning and Permitting Division, U.S. program’s designate and track Environmental Protection Agency, Region VI, to provisions. In addition, the Agency will Jeffrey Saitas, Executive Director, Texas Natural 126 500 ppm sulfur NR diesel fuel, and starting have had ample experience in Resources Conservation Commission, dated June 1, 2012, 500 ppm sulfur NRLM diesel fuel, is September 25, 2000, providing comments on administering the system. Consequently, not permitted in the Northeast/Mid-Atlantic area proposed revisions to the Texas State we expect that there will be few errors and only in the State of Alaska in limited Implementation Plan for the control of ozone, or omissions in reports and that EPA circumstances. specifically the Post 99 Rate of Progress Plan and 127 During this time period, 500 ppm sulfur NR Attainment Demonstration for the Houston/ will have determined how best to detect diesel fuel is not permitted in the Northeast/Mid- Galveston area. This letter noted that preemption and remedy instances of Atlantic area and only in the State of Alaska in under section 211(c)(4) of the CAA did not apply noncompliance. We believe an annual limited circumstances. to controls on nonroad diesel fuel.

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nonroad, locomotive, or marine vehicles range. It boils at a higher average locomotive and marine fuel demand under the provisions of section temperature than gasoline, No. 1 from analyses supporting EPA’s 211(c)(4)(A). At the same time, a state distillate, jet fuel and kerosene, and at locomotive and marine engine control that regulates both highway fuel a lower average temperature than rulemaking. These future levels of and nonroad fuel is preempted to the residual fuel (or bunker fuel). ASTM NRLM fuel demand differed from those extent that the state control respects a defines three No. 2 distillate fuels: (1) implicit in our projection of the characteristic or component of highway Low sulfur No. 2 diesel fuel (No. 2–D); emission reductions associated with the fuel regulated by EPA under section (2) high sulfur No. 2–D; and (3) No. 2 rule, which were based primarily on 211(c)(1). fuel oil.129 Low sulfur No. 2–D fuel EPA’s NONROAD emission model. We A court may consider whether a state must contain 500 ppm sulfur or less, pointed out this inconsistency in the control for fuels or fuel additives used have a minimum cetane number of 40, rule and indicated that we would in nonroad engines or nonroad vehicles and have a minimum cetane index limit resolve this inconsistency for the final is implicitly preempted under the of 40 (or a maximum aromatic content rule. supremacy clause of the U.S. of 35 volume percent) (i.e., meet the In their comments on the NPRM, the constitution. Courts have determined EPA standard for highway diesel American Petroleum Institute (API), the that a state law is preempted by federal fuel).130 Both high sulfur No. 2–D and Engine Manufacturers Association law where the state requirement No. 2 fuel oil must contain no more than (EMA) and others highlighted this actually conflicts with federal law by 5000 ppm sulfur,131 and currently inconsistency and suggested that EPA preventing compliance with the federal averages 3000 ppm nationwide. The resolve it by basing its projection of requirement, or by standing as an ASTM specification for high sulfur No. future NRLM fuel demand using obstacle to accomplishment of 2–D fuel also includes a minimum information developed by EIA and not congressional objectives. A court could cetane number of 40. Practically, since from the NONROAD emission model. thus consider whether a given state most No. 2 fuel oil meets this minimum API pointed to a lower estimate of standard for sulfur in nonroad, cetane number specification, pipelines nonroad fuel demand developed in a locomotive or marine diesel fuel is which ship fuel fungibly need only contracted study performed by Baker preempted if it places such significant carry one high sulfur No. 2 distillate and O’Brien. A detailed analysis of cost and investment burdens on refiners fuel which meets both sets of these comments and additional that refiners cannot meet both state and specifications. Currently, nonroad, technical analyses of distillate fuel federal requirements in time, or if the locomotive and marine engines can be demand are described in Section 4.6.3.1 state control would otherwise meet the and are fueled with both low and high of the Summary and Analysis document criteria for conflict preemption. sulfur No. 2–D fuels. If No. 1 distillate to this rule. In summary, we decided to continue using the NONROAD emission F. Technological Feasibility of the 500 is blended into highway diesel fuel, as model to project the emission benefits of and 15 ppm Sulfur Diesel Fuel Program is sometimes done to prevent gelling in the winter, the final blend must meet this rule. To eliminate the inconsistency This section summarizes our the 500 ppm EPA cap. in the NPRM, we also use the assessment of the feasibility of refining No. 1 distillate (e.g., jet fuel and NONROAD model to determine demand and distributing 500 ppm NRLM diesel kerosene) meets lower boiling point and for nonroad fuel and project the fuel starting in 2007 and 15 ppm viscosity specifications requirements economic impacts of this final rule. nonroad diesel fuel in 2010 and than No. 2 distillate. No. 1 distillate, or However, the analyses presented in locomotive and marine diesel fuel in any of these other similar boiling Section 4.6.3.1 of the Summary and 2012. Based on this evaluation, we distillates, added to No. 2 NRLM Analysis document to this rule believe it is technologically feasible for distillate becomes NRLM diesel fuel and identified uncertainties in the current refiners and distributors to meet both thus, must meet the applicable and future level of nonroad fuel sulfur standards in the lead time specifications for No. 2 distillate. demand. To insure that these provided with the desulfurization For the purpose of this rule, we split uncertainties did not affect the outcome technology available. We begin this the No. 2 distillate market into three of this rulemaking process, we evaluate section by describing the nonroad, pieces, according to the sulfur standard the emissions, costs and cost locomotive and marine diesel fuel which each must meet: (1) Highway effectiveness of the standards contained market and how these fuels differ from diesel fuel, (2) NRLM diesel fuel, and in this rule using an alternative estimate current highway diesel fuel. We discuss heating oil, which is used in both of nonroad fuel demand derived from desulfurization technologies, both furnaces and boilers, as well as in EIA information. This alternative conventional and advanced, which are stationary diesel engines to generate analysis is presented in Appendix 8A of available for complying with the 500 power. the Final RIA. In addition to use of the ppm and 15 ppm NRLM standards. We In the NPRM, EPA estimated current NONROAD model to project nonroad then present what mix of technologies production and demand for NRLM fuel fuel demand, we also updated our we believe will be used. Next we from studies conducted by the U.S. projections of the production of and provide our analysis of the lead time for Energy Information Administration demand for highway fuel and heating complying with either standard. Finally, (EIA). We projected growth in nonroad oil using more recent versions of the we analyze the feasibility of distributing fuel demand using EPA’s NONROAD same EIA reports used in the NPRM low sulfur NRLM diesel fuel. We refer emission model. We based the growth in analysis. the reader to the Final RIA for more In 2001, nationwide outside of details regarding these assessments. 129 ‘‘Standard Specification for Diesel Fuel Oils,’’ California, nonroad diesel fuel ASTM D 975–98b and ‘‘Standard Specifications for comprised about 18 percent of all No. 2 1. What Is the Nonroad, Locomotive and Fuel Oils,’’ ASTM D 396–98. distillate fuel, while locomotive and Marine Diesel Fuel Market Today? 130 These ASTM requirements were formed after marine diesel fuel comprised about Nonroad, locomotive and marine and are consistent with the EPA regulations for eight percent of all No. 2 distillate fuel. highway diesel fuel. (NRLM) engines almost exclusively use 131 Some states, particularly those in the Diesel fuel consumed by highway No. 2 distillate fuel. No. 2 distillate fuel Northeast, limit the sulfur content of No. 2 fuel oil vehicles/engines comprised about 56 is a class of fuel defined by its boiling to 2000–3000 ppm. percent of all No. 2 distillate fuel.

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Heating oil comprised about 19 percent hydrotreater to meet the 15 ppm specific refiner’s situation should be of No. 2 distillate. Because of limitations standard in 2010 and 2012. EPA relatively short. in the fuel distribution system and other therefore projects that the 500 ppm Twenty-six out of the 36 refineries factors, about 18 percent of all non- sulfur cap NRLM standard will be met projected to produce 500 ppm NRLM highway distillate met the 500 ppm using conventional hydrotreating diesel fuel in 2007 have indicated that highway diesel fuel cap. Thus, about 64 technology. We made this same they will produce highway diesel fuel in percent of No. 2 distillate pool met the projection in the NPRM and no their highway diesel fuel pre- 500 ppm sulfur cap, not just the 56 comments to the contrary were received. compliance reports, see RIA section percent used in highway vehicles. We In some cases, refiners will also need 7.2.1.3.4.1, Table 7.2.1–38 and following project that this spillover of highway to install or expand several ancillary discussion for description of these fuel to the NRLM diesel fuel market will processes related to sulfur removal (e.g., refineries. Thus, roughly 70% of the continue under the highway diesel fuel hydrogen production and purification, refiners likely to produce 500 ppm program. Thus, today’s rule will only sulfur processing, and sour water sulfur NRLM diesel fuel in 2007 are materially affect about 19 percent of treatment). These technologies are all already well into their planning for today’s distillate market. The remaining commercially demonstrated, as nearly meeting the 15 ppm highway diesel fuel 17 percent of No. 2 distillate which is all refineries already have such units. standard, effective June 1, 2006. It is high sulfur heating oil is estimated to likely that these refiners have already remain at higher sulfur levels. 3. Is the Leadtime Sufficient To Meet chemically characterized their high This rule will also affect any No. 1 the 2007 500 ppm NRLM Sulfur sulfur diesel fuel blendstocks, as well as distillate which is blended into Standard? their highway diesel fuel, in assessing wintertime NRLM fuel. Because gelling After the highway diesel fuel program how to meet produce 15 ppm fuel. They can also be prevented through the use is implemented, we project that 92 will also have already assessed the of pour point additives, the current and refineries in U.S. will be producing high various technologies for producing 15 future level of this of No. 1 distillate sulfur distillate fuel. We project that 36 ppm diesel fuel. This provides an blending is uncertain. However, the of these refineries will likely produce extensive base of information on how to feasibility of desulfurizing and 500 ppm sulfur NRLM diesel fuel in design a hydrotreater to produce 500 distributing this No. 1 distillate will also 2007. Of those 36, 30 will have to build ppm NRLM fuel, as well as how to be addressed below. new hydrotreaters while the other 6 are revamp this hydrotreater to produce 15 ppm NRLM diesel fuel in 2010 and 2. What Technology Will Refiners Use expected to use existing hydrotreaters to 132 2012. Those refiners only producing To Meet the 500 ppm Sulfur Cap? produce 500 ppm NRLM diesel fuel. The remaining 56 refineries are high sulfur distillate fuel today will be Refiners currently hydrotreat most or projected to continue to produce high able to take advantage of the significant all of their distillate blendstocks using sulfur distillate fuel, with 26 of the 56 experience that technology vendors what is commonly referred to as refineries producing heating oil. The have obtained in assisting refiners of ‘‘conventional’’ hydrotreating other 30 refineries are owned by small highway diesel fuel meet the 15 ppm technology to meet the 500 ppm sulfur refiners and will likely produce high cap in 2006. and cetane limits applicable to highway sulfur NRLM diesel fuel. The 56 We also expect that roughly 20 diesel fuel. This conventional refineries continuing to produce high percent of the 101 refineries in the U.S. technology has been available and in sulfur distillate will not have to add or and its territories will build a new use for many years. U.S. refiners have modify any equipment to continue hydrotreater to produce 15 ppm nearly ten years of experience with this producing this fuel. highway fuel. Those which also produce technology in producing highway diesel This rule will provide refiners and high sulfur distillate will be able to fuel. The distillate blendstocks importers 37 months before they will produce 500 ppm NRLM fuel with their comprising NRLM fuel do not differ have to begin producing 500 ppm existing highway hydrotreater. In 2007, substantially from those comprising NRLM diesel fuel on June 1, 2007. Our we conservatively assumed that 20% of highway diesel fuel. Thus, the lead time analysis projects that 27–39 the 500 ppm NRLM production from technology to produce 500 ppm sulfur months are typically needed to design refineries that produce highway and NRLM diesel fuel has clearly been and construct a diesel fuel high sulfur distillate could be produced demonstrated and optimized over the hydrotreater.133 As discussed below, we with these existing treaters at no capital last decade. Additionally, this believe that 37 months will be sufficient costs (existing highway treater capacity technology continues to evolve for all refiners of NRLM fuel. available for 500 ppm NRLM production primarily through the development of Easing the task is the fact that we would be higher if based on highway more active catalysts and motivated by project that essentially all refiners will treater capacity). Thus, in 2007 we the 15 ppm cap applicable to most use conventional hydrotreating to project that four refineries will be able highway diesel fuel starting in 2006. comply with the 500 ppm sulfur NRLM to use their recently idled highway Several advanced desulfurization diesel fuel cap. This technology has treater due to building a new highway technologies are being developed and been used extensively for more than 10 treater unit for 2006. Furthermore, the are discussed in more detail in the next years and its capabilities to process a highway diesel program pre-compliance section. However, the fact that none of wide range of diesel fuel blendstocks are reports indicate that another 7 refineries these technologies have been well understood. Thus, the time currently producing 500 ppm highway demonstrated commercially for a typical necessary to apply this technology for a fuel will likely leave the highway fuel catalyst life (i.e., two years) makes it market in 2006. We project that 2 of unlikely that they would be selected by 132 These refiners have said that they will leave these would use their existing treater to many refiners for use in mid-2007. Also, the highway market in 2006 in their pre-compliance produce 500 ppm NRLM with no these advanced technologies promise reports for complying with the Highway Diesel investment costs. Another three of these the greatest cost savings in achieving 15 Rule, thus freeing up their existing hydrotreaters to 101 refineries produce relatively small produce 500 ppm NRLM diesel fuel. ppm levels, rather than 500 ppm. These 133 ‘‘Highway Diesel Progress Review,’’ USEPA, volumes of high sulfur distillate advanced technologies can also be EPA420–R–02–016, June 2002. The leadtime compared to highway diesel fuel today. combined with a conventional analysis in the RIA can be found in section 5.3. We project that they will be able to

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produce 500 ppm sulfur NRLM fuel ppm diesel fuel. Thus, we continue to Dynamics IsoTherming, improves the from their high sulfur distillate with believe that advanced technologies will contact between hydrogen, diesel fuel only minor modification to their be used to produce a large percentage of and the desulfurization catalyst. The existing highway diesel fuel 15 ppm NRLM fuel. However, the IsoTherming process dissolves the hydrotreater. number of advanced technologies used hydrogen in the liquid fuel phase prior Refiners not planning on producing may be smaller. Because of the more to passing the liquid over the catalyst, 100 percent highway fuel in 2006 will limited choices, we project that the eliminating the need for a two-phase also need some time to assess which penetration of advanced technologies (gas and liquid) reactor. The liquid, plug distillate market in which to participate will be only 60 percent. The remainder flow reactor design also avoids the poor starting in 2007, NRLM or heating oil. of this section discusses the production liquid distribution over the catalyst bed While this is a decision which requires of 15 ppm diesel fuel using often present in a two-phase reactor some amount of time for analysis, conventional and advanced design. Process Dynamics projects that refiners also needed to assess what technologies. their IsoTherming process could reduce market they would participate in for the One approach to produce 15 ppm the hydrotreater volume required to 1993 500 ppm highway diesel fuel NRLM fuel would be to revamp the achieve sub-15 ppm sulfur levels by sulfur cap. In all, we project that the conventional hydrotreater built to roughly a factor of two. task of producing 500 ppm sulfur NRLM produce 500 ppm NRLM fuel in 2007. Process Dynamics has already built a fuel in 2007 will be less difficult than Knowing that the 500 ppm NRLM cap commercial-sized demonstration unit the task refiners faced with the will only be in effect for three years for (5000 barrels per day) at a refinery in implementation of the 500 ppm nonroad refiners and five years for New Mexico. They have been operating highway diesel fuel cap in 1993. locomotive and marine refiners (four the unit since September 2002, and Refiners had just over three years of lead years for small refiners), we expect that demonstrating the capability to meet a time for complying with the 1993 500 refiners will design their 500 ppm 15 ppm cap since the spring of 2003. ppm highway diesel fuel cap, as is the hydrotreater to allow the production of Thus, refiners will have 4–5 years of case here, and this proved sufficient. 15 ppm fuel through the addition of operating data on this process before No explicit comments were made by reactor volume or a second they would have to select a technology refiners on the lead time needed for hydrotreating stage. Refiners might also to produce 15 ppm nonroad diesel fuel complying with the proposed NRLM shift to a more active catalyst in the in 2010, and 6–7 years before producing 500 ppm sulfur standard. However, existing reactor, as the life of that 15 ppm locomotive and marine diesel their comments supported the two step catalyst might be nearing its end. fuel in 2012. This should be more than approach, preferring it over a one step, Equipment to further purify its sufficient for essentially all refiners to 15 ppm NRLM cap starting in 2008. hydrogen supply could also be added. consider this process for 2010 or 2012. 4. What Technology Will Refiners Use Producing 15 ppm NRLM fuel via these Based on information received from To Meet the 15 ppm Sulfur Cap? steps will be feasible as they are Process Dynamics, we estimate that this essentially the same steps refiners will technology could reduce the cost of In the highway diesel rule, we be using in 2006 to produce 15 ppm meeting the 15 ppm cap for many projected that refiners producing 15 highway diesel fuel. refiners by about 30 percent. This ppm fuel in 2006 would utilize EPA recently reviewed the progress savings arises from a smaller reactor, extensions of conventional being made by refining technology less catalyst and avoiding the need for hydrotreating technology. We also vendors and refiners in meeting the a recycle gas compressor and reactor projected that refiners first producing 15 2006 highway diesel sulfur cap.134 All distributor. Refineries facing poorer ppm fuel in 2010 would use a mix of evidence available confirms EPA’s economies of scale, such as small extensions of conventional and projection that conventional refineries, would particularly benefit advanced technologies. Based on the hydrotreating will be capable of from this desulfurization process. refiners’ highway pre-compliance producing diesel fuel containing less A second process being developed to reports, it appears that 95% of highway than 10 ppm sulfur. Furthermore, as produce 15 ppm diesel fuel is the fuel could meet the 15 ppm cap in 2006. part of the highway program’s reporting Unipure oxidation process. This process We expect that virtually all of this 15 requirements, refiners are required to oxidizes the sulfur in distillate ppm fuel will be produced with report their progress in complying with molecules, facilitating its removal. conventional hydrotreating. Thus, it the 15 ppm highway diesel fuel Unipure Corporation installed a small appears that conventional hydrotreating standard. In those reports they indicated (50 barrels per day), continuous flow will be used to produce the vast that they primarily will be applying demonstration unit at Valero’s Krotz majority of 15 ppm highway diesel fuel. extensions of conventional Spring refinery in the spring of 2003. It In the nonroad NPRM, we projected hydrotreating. NRLM fuel refiners will appears that this technology could that refiners would use advanced have the added advantage of being able reduce the cost of producing 15 ppm desulfurization technologies to produce to design their 500 ppm hydrotreater diesel fuel for some refiners compared 80 percent of 15 ppm nonroad diesel with the production of 15 ppm fuel in to conventional hydrotreating. However, fuel in 2010, with the balance using mind. Additionally, refiners producing the small size of the demonstration unit conventional hydrotreating. At the time 15 ppm NRLM fuel will be able to take may make the risk associated with a of the NPRM, all of the advanced advantage of the experience gained from new technology too large. Thus, we technologies appeared to be progressing those producing 15 ppm highway fuel. believe that this technology needs be rapidly. Since the proposal, we have As mentioned above, several demonstrated further before most learned that a couple of these advanced technologies are presently refiners will seriously considered it for technologies, Unipure and S-Zorb, are being developed to produce 15 ppm commercial application. This not going to be commercially diesel fuel at lower cost. One of these technology, however, may be ideal for demonstrated as soon as expected. advanced technologies, Process use at transmix processing plants or However, one refiner is already using large terminals to reprocess 15 ppm Process Dynamics’ IsoTherming 134 ‘‘Highway Diesel Progress Review,’’ USEPA, diesel fuel which have become technology to commercially produce 15 EPA420–R–02–016, June 2002. contaminated during shipment. We

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discuss this distillate downgrade in 5. Is the Leadtime Sufficient To Meet IsoTherming process before having to greater detail in Section VI.A.2 of this the 2010 and 2012 15 ppm NRLM Sulfur make their technology selections for preamble. This oxidation process avoids Cap? 2010 and 2012 . This should be more the need for high pressure hydrogen, We project that 32 refineries will than adequate to fully access the costs which is usually not economically produce 15 ppm nonroad diesel fuel in and capabilities of this technology for available at these smaller facilities. 2010, with two of these being owned by all but the most cautious refiners. Considering the amount of leadtime small refiners. In 2012, we project that Finally, Conoco-Phillips has adapted available and the desulfurization 15 refineries will produce 15 ppm their S–Zorb adsorption technology technologies which will be available locomotive and marine diesel fuel. We which was originally designed for and proven for complying with a 15 project that an additional 15 refineries gasoline desulfurization, for diesel fuel ppm sulfur standard, we do not expect will produce 500 ppm nonroad diesel desulfurization. At the time of the that the leadtime for complying with the fuel in 2010 under the small refiner NPRM, Conoco-Phillips had signed 23 15 ppm NRLM cap standard in 2010 and provisions included in the today’s final licensing agreements with refiners in 2012 will be an issue for refiners. North America regarding the use of S- rule. Then in 2014, we project that the Zorb to comply with the Tier 2 gasoline 15 refineries exempted under the small 6. Feasibility of Distributing 500 and 15 sulfur standards. Furthermore, Conoco- refiner provisions will begin producing ppm NRLM Fuel Phillips had plans for the quick 15 ppm NRLM diesel fuel in 2014. There are two considerations with installation of an S-Zorb unit to The timing of this rule provides respect to the feasibility of distributing demonstrate the production of 15 ppm refiners and importers with more than non-highway diesel fuels meeting the diesel fuel. However, we have since six years before they will have to sulfur standards in today’s rule. The learned that Conoco-Phillips has produce 15 ppm nonroad diesel fuel, first pertains to whether sulfur and two years more for producing 15 dropped its plans to build a commercial contamination can be adequately ppm locomotive and marine diesel fuel. demonstration unit for desulfurizing managed throughout the distribution Our leadtime analysis, which is diesel fuel. Without a commercial unit system so that fuel delivered to the end- presented in Section 5.4.2 of the Final operating in the 2006 time frame, we do user does not exceed the specified RIA, projects that 30–39 months are not believe that many refiners will maximum sulfur concentration. The typically needed to design and construct seriously consider S-Zorb to produce 15 second pertains to the physical a diesel fuel hydrotreater, perhaps less limitations of the system to ppm NRLM diesel fuel in 2010 and if it is a Process Dynamics unit. Thus, 2012. accommodate any additional refiners will have about three years segregation of product grades. Due to the fact that the Process before they would have to begin Dynamics IsoTherming process is detailed design and construction for a. Limiting Sulfur Contamination already operating commercially and 2010, and five years before 2012. This With respect to limiting sulfur operational data indicate a 30 percent will allow sufficient time to consult contamination during distribution, the reduction in the cost of producing 15 with vendors, test their diesel fuel in physical hardware and distribution ppm fuel relative to conventional pilot plants to assess the difficulty of its practices for non-highway diesel fuel do hydrotreating, we project that 60 desulfurization via a variety of not differ significantly from those for percent of the new volume of 15 ppm technologies, and to select its highway diesel fuel. Therefore, we do NRLM diesel fuel will be produced technology for 2010 and 2012. In not anticipate any new issues with using this technology. We project that addition, these refiners will also have respect to limiting sulfur contamination the remaining 40 percent of 15 ppm the chance to observe the performance during the distribution of non-highway NRLM diesel fuel will use extensions of of the hydrotreaters being used to fuel that would not have already been conventional hydrotreating. We assume produce 15 ppm highway diesel fuel for accounted for in distributing highway this 60/40 mix of Isotherming and at least one year for those complying in diesel fuel. Highway diesel fuel has extensions of conventional 2010, and two years more for those been required to meet a 500 ppm sulfur hydrotreating, respectively, for 2010, complying in 2012. While not a full standard since 1993. Thus, we expect 2012 and even for 2014 when the small catalyst cycle, any unusual degradation that limiting contamination during the refiners exemptions expire. in catalyst performance should be distribution of 500 ppm non-highway apparent within the first year. Based on diesel engine fuel can be readily API commented that the advanced the pre-compliance reports, some accomplished by the industry. This desulfurization technologies have not refineries in the U.S. will be producing applies to locomotive and marine diesel been commercially demonstrated and 15 ppm sulfur highway diesel fuel fuel as well as nonroad diesel fuel. thus should not be used as the basis for earlier than 2006. Some refineries are In the highway diesel rule, EPA estimating the cost of desulfurizing expected to produce complying fuel acknowledged that meeting a 15 ppm NRLM diesel fuel to 15 ppm. While this earlier than the compliance date in sulfur specification would pose a is true for the Unipure oxidation and Europe as well. The refineries which are substantial new challenge to the Conoco-Phillip’s S-Zorb processes, the complying early will accrue experience distribution system. Refiners, pipelines, Process Dynamics IsoTherming process earlier and longer providing refiners a and terminals would have to pay careful has been commercially demonstrated. It better sense of the reliability of attention to and eliminate any potential is therefore appropriate for use as a producing 15 ppm diesel fuel. Thus, we sources of contamination in the system partial basis for the refining costs project that the 2010 and 2012 start (e.g., tank bottoms, deal legs in associated with today’s final rule. To dates will allow refiners to be quite pipelines, leaking valves, interface cuts, indicate the effect that this projection certain that the designs they select in etc.). In addition, bulk plant operators for the use of IsoTherming has on the mid-2007 will perform adequately in and delivery truck operators would have rule’s cost, in Section 7.2.2 of the Final 2010 and 2012. to carefully observe recommended RIA, we estimate the cost of producing In addition, refiners will have three to industry practices to limit 15 ppm NRLM fuel with only the use of four years or more to observe the contamination, including practices as conventional hydrotreating technology. performance of the Process Dynamics simple as cleaning out transfer hoses,

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proper sequencing of fuel deliveries, product segregation. This is not to say in areas outside of the Northeast (where and parking on a level surface when that additional steps will not have to be most heating oil is used). If the market draining the storage tank. Due to the taken. However, this program will result for this fuel was limited, it would have need to prepare for compliance with the in only a limited number of entities in to be trucked back to a refinery to be highway diesel program, we anticipate the distribution system choosing to add desulfurized which could raise that issues related to limiting sulfur new tankage due to new product significant logistical and cost issues. contamination during the distribution of segregation. Bulk plants in areas of the Consequently, today’s rule provides that 15 ppm NRLM diesel fuel will be country where heating oil is expected to 500 ppm sulfur diesel fuel produced resolved well in advance of the 2010 remain in the market will have to decide due to interface mixing can continue to and 2012 implementation dates . We are whether to add tankage to distribute be used in nonroad equipment until not aware of any additional issues that both heating oil and 500 ppm sulfur 2014 (subject to specific sulfur might arise unique to NRLM diesel fuel. NRLM fuel. Terminal operators requirements for new equipment), and If anything we anticipate limiting commented that the proposed presence in locomotive and marine engines contamination will become easier as of a fuel marker in heating oil would indefinitely.139 These provisions ensure batch sizes are allowed to increase and make it impossible for them to blend that there will be a sufficient market for potential sources of contamination 500 ppm sulfur diesel from 15 ppm such 500 ppm sulfur diesel fuel. decrease as more and more of the diesel sulfur and high sulfur fuels. They G. What Are the Potential Impacts of the pool turns over to 500 and 15 ppm related that this ability would be 15 ppm Sulfur Diesel Program on sulfur. Industry representatives important to certain terminal operators Lubricity and Other Fuel Properties? acknowledge that the task can be who would not have the storage accomplished. However, they are still in facilities available for three grades of 1. What Is Lubricity and Why Might It the process of identifying all of the diesel fuel, but would still not wish to Be a Concern? 136 measures that will need to be taken. forgo selling 500 ppm diesel fuel. Engine manufacturers and owner/ b. Potential Need for Additional Product Today’s rule allows the required marker operators depend on diesel fuel Segregation to be added to heating oil before it lubricity properties to lubricate and leaves the terminal (see section IV.D of protect moving parts within fuel pumps As discussed in section IV.D, we have this preamble). Therefore, terminals will designed the NRLM diesel fuel program and injection systems for reliable be able to blend 500 ppm diesel from 15 performance. Unit injector systems and to minimize the need for additional ppm and high sulfur diesel fuels, product segregation and the feasibility in-line pumps, commonly used in diesel provided they fulfill all of the engines, are actuated by cams lubricated and cost issues associated with it. This responsibilities associated with acting final rule allows for the fungible with crankcase oil, and have minimal as a fuel refiner (see section V of this sensitivity to fuel lubricity. However, distribution of 500 ppm highway and 137 preamble). However, because this rotary and distributor type pumps, 500 ppm sulfur NRLM diesel fuel in will be a relatively costly way of 2007, and 15 ppm highway and 15 ppm commonly used in light and medium- producing 500 ppm diesel fuel, we do duty diesel engines, are completely fuel NR diesel fuel in 2010 and 15 ppm not expect that the practice will be NRLM diesel fuel in 2012, up until the lubricated, resulting in high sensitivity widespread. In all other cases we point where NRLM, LM, or nonroad fuel to fuel lubricity. The types of fuel anticipate segments of the distribution must be dyed for IRS excise tax pumps and injection systems used in system will choose to avoid any fuel purposes. We proposed that heating oil nonroad diesel engines are the same as segregation costs by limiting the range would be required to be segregated those used in highway diesel vehicles. of sulfur grades they choose to carry, throughout the distribution system by Consequently, nonroad and highway just as they do today. Regardless, the use of a marker added at the refiners diesel engines share the same need for however, the costs and impacts of these from 2007 through 2010. We received adequate fuel lubricity to maintain fuel choices are small. A more detailed comments that addition of the marker at pump and injection system durability. explanation of this assessment can be the refinery would cause significant Diesel fuel lubricity concerns were concerns regarding potential marker found in chapter 7 of the RIA. first highlighted for private and A limited volume of 500 ppm sulfur contamination in the jet fuel. In commercial vehicles during the initial diesel fuel is projected to be produced responding to these and other implementation of the federal 500 ppm downstream due to interface mixing in comments, we have chosen to adopt a sulfur highway diesel program and the the distribution system (see section designate and track system of ensuring state of California’s diesel program. The IV.A).138 Fuel from these sources is refiner compliance with desulfurization Department of Defense (DoD) also has a currently sold into the NRLM and requirements (see IV.D.). This allows the longstanding concern regarding the heating oil markets. The point of marker addition to be moved lubricity of distillate fuels used in its downstream to the terminal where such implementation of the 15 ppm sulfur equipment as evidenced by the contamination concerns are minimal. As standard for NR diesel fuel in 2010 and implementation of its own fuel lubricity a result heating oil and high-sulfur for LM diesel fuel in 2012 raises the improver performance specification in NRLM will also be fungible in the concern that the heating oil market 1989.140 The diesel fuel requirements in distribution system up to the point might be insufficient to absorb all such the state of California differed from the where the fuel marker must be added at downstream 500 ppm sulfur diesel fuel the terminal.135 139 While today?s rule does not contain an end The design of today’s fuel program 136 15 ppm diesel fuel and high sulfur heating oil date for the downstream distribution of 500 ppm will be the largest volume products at such sulfur locomotive and marine fuel, we will review eliminates any potential feasibility terminals. the appropriateness of allowing this flexibility issues associated with the need for 137 The definition of a refiner includes persons based on experience gained from implementation of who produce highway or NRLM diesel fuel by the 15 ppm sulfur NRLM diesel fuel standard. We 135 The fuel marker requirements only apply blending. expect to conduct such an evaluation in 2011. outside of the Northeast/Mid-Atlantic area. Inside 138 This fuel will be produced by transmix 140 DoD Performance Specification, Inhibitor, the Northeast/Mid-Atlantic area, high sulfur NRLM processors and at terminals by segregating the Corrosion/Lubricity Improver, Fuel Soluble, MIL– cannot be sold to end users. See section IV.D for pipeline interface between 15 ppm diesel fuel and PRF–25017F, 10 November 1997, Superseding MIL– a detailed discussion of the fuel marker provisions. jet fuel. I–25017E, 15 June 1989.

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federal requirements by substantially the lubricity of conventional diesel fuel. highway and nonroad engines are the restricting the aromatic content of diesel Indications are that low concentrations same, and the potential decrease in fuel which requires more severe of biodiesel might be sufficient to raise lubricity from desulfurization of NRLM hydrotreating than reducing the sulfur the lubricity to acceptable levels. diesel fuel would be no greater than that content to meet a 500 ppm standard.141 Biodiesel is a renewable fuel made from experienced in desulfurizing highway Consequently, concerns regarding diesel agricultural sources such as soybean oil, diesel fuel, we estimate that the fuel lubricity have primarily been peanut oil and other vegetable oils as potential need for lubricity additives in associated with California diesel fuel well as rendered and animal fats and NRLM diesel fuel under today’s action and some California refiners treat their recycled cooking oils. Biodiesel would be the same as that for highway diesel fuel with a lubricity additive as generally contains very low amounts of diesel fuel meeting the same sulfur needed. Outside of California, sulfur, which is an attractive standard. hydrotreating to meet the current 500 characteristic for use in diesel engines ppm sulfur specification does not using advanced aftertreatment systems. a. Farm and Mining Equipment typically result in a substantial Additionally, biodiesel, by virtue of its The types of fuel pumps and injection reduction of lubricity. Diesel fuels lubricity properties, may be a good systems used in the nonroad diesel outside of California seldom require the alternative to additives currently used to engines found in farm and mining use of a lubricity additive. Therefore, we ensure adequate fuel lubricity. equipment are similar to those used in anticipate only a marginal increase in According to the U.S. Department of highway diesel vehicles.144 The the use of lubricity additives in NRLM Agriculture, there is a current capacity hydrotreating process for generating 500 diesel fuel meeting the 500 ppm sulfur to produce 100 million gallons ppm diesel fuel will not adversely effect standard for 2007.142 Today’s action annually. Thus, we believe that fuel injection equipment in farm and requires diesel fuel used in nonroad, biodiesel is a feasible technology that mining equipment based on the use of locomotive, and marine diesel engines could help support today’s clean diesel comparable injection systems in to meet a 15 ppm sulfur standard in fuel program. highway diesel vehicles. We believe that 2010 and 2012, respectively. Based on Research remains to be performed to the use of lubricity additives in 15 ppm the following discussion, we believe better understand which fuel sulfur NRLM diesel fuel will be required that the increase in the use of lubricity components are most responsible for and result in adequate protection of fuel additives in 15 ppm sulfur NRLM diesel lubricity. Consequently, it is unclear injection equipment and is similar to fuel would be the same as that estimated whether and to what degree the sulfur that needed for 15 ppm sulfur highway for 15 ppm highway diesel fuel. standards for NRLM diesel fuel will diesel fuel. The state of California currently impact fuel lubricity. Nevertheless, requires the same standards for diesel there is evidence that the typical b. Locomotives fuel used in nonroad equipment as in process used to remove sulfur from One of the locomotive manufacturers highway equipment. Outside of diesel fuel ‘‘hydrotreating’’ can impact expressed concern in its comments that California, highway diesel fuel is often lubricity depending on the severity of low sulfur fuel might damage existing used in nonroad equipment when the treatment process and locomotives. However, the manufacturer logistical constraints or market characteristics of the crude. We expect provided no evidence to show that such influences in the fuel distribution that hydrotreating will be the damage would likely occur. system limit the availability of high predominant process used to reduce the Locomotives already use a significant sulfur fuel. Thus, for nearly a decade sulfur content of NRLM diesel fuel to amount of low sulfur fuel, especially in nonroad equipment has been using meet the 500 ppm sulfur standard California, and we have not seen any federal 500 ppm sulfur diesel fuel and during the first step of the program. evidence of sulfur-related problems. The California diesel fuel, some of which Similarly, we project that both railroads expressed a similar concern, may have been treated with lubricity conventional hydrotreating and the but acknowledged that any potential additives. During this time, there has Linde Isotherming process will be used problems would be manageable with been no indication that the level of to meet the 15 ppm sulfur standard for sufficient lead time. At this time, we see diesel lubricity needed for fuel used in NRLM diesel fuel. no reason for any special concern nonroad engines differs substantially Based on our comparison of the related to locomotives using low sulfur from the level needed for fuel used in blendstocks and processes used to fuel. highway diesel engines. manufacture non-highway diesel fuels, Blending small amounts of lubricity- we believe that the potential decrease in 2. A Voluntary Approach on Lubricity enhancing additives increases the the lubricity of these fuels from In the United States, there is no lubricity of poor-lubricity fuels to hydrotreating that might result from the government or industry standard for acceptable levels. These additives are sulfur standards should be diesel fuel lubricity. Therefore, available in today’s market, are approximately the same as that specifications for lubricity are effective, and are in widespread use experienced in desulfurizing highway determined by the market. Since the around the world. Among the available diesel fuel.143 To provide a beginning of the 500 ppm sulfur additives, biodiesel has been suggested conservative, high cost estimate, we highway diesel program in 1993, as one potential means for increasing assumed that the potential impact on refiners, engine manufacturers, engine fuel lubricity from the use of the new component manufacturers, and the 141 Chevron Products Diesel Fuel Technical Review provides a discussion of the impacts on fuel desulfurization processes would be the military have been working with ASTM lubricity of current diesel fuel compositional same as that experienced when requirements in California versus the rest of the hydrotreating diesel fuel to meet a 15 144 Nonroad and highway diesel engines meeting nation; see http://www.chevron.com/prodserv/ ppm sulfur standard. Given that the similar emissions standards use similar fuel fuels/bulletin/diesel/l2%5F7%5F2%5Frf.htm. systems provided by common suppliers. For 142 The cost from the increased use of lubricity requirements for fuel lubricity in example, a nonroad engine meeting the 2001 Tier additives in 500 ppm NRLM diesel fuel in 2007 and 2 nonroad diesel engine emission standards would in 15 ppm nonroad diesel fuel in 2010 and 143 See chapter 5 of the RIA for a discussion of have the same fuel system as a highway diesel locomotive and marine diesel fuel in 2012 is the potential impacts on fuel lubricity of this engine meeting the 1998 highway diesel engine discussed in section VI of this preamble. proposal. emissions standards.

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to develop protocols and standards for diesel fuel specifications, and benefits lead many pipelines to discontinue diesel fuel lubricity in its D 975 from the considerable experience gained carrying high sulfur heating oil as a specifications for diesel fuel. ASTM is since 1993. It would also include any separate grade. In areas served by these working towards a single lubricity new specifications and test procedures pipelines, heating oil users will likely specification that is applicable to all that we expect would be adopted by switch to 500 ppm sulfur diesel fuel. diesel fuel used in any type of engine. ASTM regarding lubricity of NRLM This will reduce emissions of SO2 and Although ASTM has not yet adopted diesel fuel quality. sulfate PM from furnaces and boilers specific protocols and standards, In any event, this is an issue that will fueled with heating oil. The primary refiners that supply the U.S. market be resolved to meet the demands of the exception to this will likely be the have been treating diesel fuel with highway diesel market, and whatever Northeast, where a distinct higher sulfur lubricity additives on a batch by batch resolution is reached for highway diesel heating oil will still be distributed as a basis, when poor lubricity fuel is fuel could be applied to NRLM diesel separate fuel. Also, we expect that a produced. ASTM’s target fuel with sufficient advance notice. We small volume of moderate sulfur implementation date for this are continuing to participate in the distillate fuel will be created during specification is January 1, 2005. ASTM Diesel Fuel Lubricity Task distribution from the mixing of low The potential need for lubricity Force 145 and will assist their efforts to sulfur diesel fuels and higher sulfur additives in diesel fuel meeting a 15 finalize a lubricity standard. We are fuels, such as jet fuel in the pipeline ppm sulfur specification was evaluated hopeful that ASTM can reach a interface. Such moderate sulfur during the development of EPA’s consensus this summer at the next distillate will often be sold by the highway diesel rule. In response to the meeting of the ASTM’s Lubricity Task terminal as high sulfur heating oil, but proposed highway diesel rule, all Force. If for some reason ASTM does in fact its sulfur level will be lower than comments submitted regarding lubricity not take action to set a lubricity that normally sold as heating oil. either stated or implied that the specification, EPA will consider taking proposed sulfur standard of 15 ppm appropriate action to ensure 15 ppm H. Refinery Air Permitting would likely cause the refined fuel to sulfur diesel fuel has adequate lubricity. Prior to beginning diesel have lubricity characteristics that would 3. What Other Impact Would Today’s desulfurization projects, some refineries be inadequate to protect fuel injection Actions Have on the Performance of may be required to obtain a equipment, and that mitigation Diesel and Other Fuels? preconstruction permit, under the New measures such as lubricity additives Source Review (NSR) program, from the would be necessary. However, the We do not expect that the fuel applicable state/local air pollution commenters suggested varied program finalized today will have any control agency.146 We believe that approaches for addressing lubricity. For negative impacts on the performance of today’s program provides sufficient lead example, some suggested that we need diesel engines in the existing fleet time for refiners to obtain any necessary to establish a lubricity requirement by which would use the fuels regulated NSR permits well in advance of the regulation while others suggested that today. applicable compliance dates. the current voluntary, market based While the process of lowering sulfur Given that today’s diesel sulfur system would be adequate. The levels to 500 ppm does lower program provides roughly three years of Department of Defense recommended polynuclear aromatic hydrocarbons lead time before the 500 ppm standard that we encourage the industry (ASTM) (PNAs) and total aromatics in general, it takes effect, we believe refiners will to adopt lubricity protocols and does not achieve the near-zero levels have time to obtain any necessary standards before the 2006 previously seen in California. The 15 preconstruction permits. In addition, implementation date of the 15 ppm ppm sulfur standard will further reduce the experience gained by many sulfur standard for highway diesel fuel. PNAs, however, in most diesel fuel, refineries to obtain the preconstruction The final highway diesel rule did not there will still be PNAs present. permits needed to comply with the Tier establish a lubricity standard for Furthermore, since the 1990’s, diesel 2 and highway diesel fuel programs highway diesel fuel. We believe the engine manufacturers have switched to should benefit them in obtaining the issues related to the need for diesel alternative materials (such as Viton), necessary permits to comply with lubricity in fuel used in nonroad diesel which do not experience leakage when today’s new diesel fuel requirements. engines are substantially the same as PNAs are reduced. We believe that there Nevertheless, we believe it is reasonable those related to the need for diesel will be no issues with leaking fuel to continue our efforts under the Tier 2 lubricity for highway engines. pump O-rings with the changes in diesel and highway diesel fuel programs, to Consequently, we expect the same fuel sulfur levels required by this help states in facilitating the issuance of industry-based voluntary approach to rulemaking. permits under the NRLM diesel fuel ensuring adequate lubricity in nonroad The moderate reduction in PNAs and sulfur program whenever such diesel fuels that we recognized for total aromatics associated with the assistance may be needed and highway diesel fuel. We believe the best hydrotreating of diesel fuel will tend to requested. We anticipate that such approach is to allow the market to increase the cetane index and number of assistance may include both technical address the lubricity issue in the most diesel fuel. This will improve the economical manner, while avoiding an driveability of vehicles operating on this 146 Hydrotreating diesel fuel involves the use of additional regulatory scheme. A higher cetane diesel fuel. process heaters, which have the potential to emit voluntary approach should provide We do not expect any negative pollutants associated with combustion, such as adequate customer protection from impacts on other fuels, such as jet fuel NOX, PM, CO and SO2. In addition, reconfiguring refinery processes to add desulfurization equipment engine failures due to low lubricity, or heating oil. We do expect that the could increase fugitive VOC emissions. The while providing the maximum sulfur levels of heating oil may decrease emissions increases associated with diesel flexibility for the industry. This because of this rulemaking. Beginning desulfurization would vary widely from refinery to approach would be a continuation of in mid-2007, we expect that controlling refinery, depending on many source-specific factors, such as crude oil supply, refinery current industry practices for diesel fuel NRLM diesel fuel to 500 ppm sulfur will configuration, type of desulfurization technology, produced to meet the current federal amount of diesel fuel produced, and type of fuel and California 500 ppm sulfur highway 145 ASTM sub committee D02.E0. used to fire the process heaters.

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and procedural assistance as would be A. Special Fuel Provisions and vehicles, engines, or equipment with a provided by the appropriate EPA Exemptions national security exemption. Use of JP– Regional and Headquarters offices. As discussed in section IV.A.1 above, 5, JP–8, F76, or any other fuel not Finally, to facilitate the processing of the sulfur standards in today’s rule meeting NRLM diesel fuel standards in permits, we encourage refineries to generally cover all the diesel fuel that is a motor vehicle or NRLM diesel engine begin discussions with permitting intended for use in or used in nonroad, or equipment other than the those agencies and to submit permit locomotive, and marine (NRLM) described above is prohibited under applications as early as possible. applications that is not already covered today’s rule. EPA and the Department of Defense by the standards for highway diesel fuel. V. Nonroad, Locomotive and Marine have developed a process to address the For the purposes of this preamble, this Diesel Fuel Program: Details of the tactical vehicles, engines, and fuel is defined primarily by the type of Compliance and Enforcement equipment covered by the diesel fuel engine which it is used to power: Land- Provisions exemption and are discussing whether based nonroad, locomotive, and marine As with earlier fuel programs, we changes to it might be appropriate. diesel engines. Section IV.A.1 above have developed a comprehensive set of Based on data provided by the also describes several types of compliance and enforcement provisions Department of Defense to date in the petroleum distillate that are not covered designed to promote effective and context of implementing a similar by the sulfur standards promulgated efficient implementation of this fuel exemption provision in the highway today, including jet fuel and heating oil, program and thus to achieve the full program, EPA believes that providing an provided they are not used in NRLM environmental potential of the program. exemption for military fuel used in engines. The following paragraphs The compliance provisions under tactical nonroad engines and equipment discuss several provisions and today’s final rule are designed to ensure will not have any significant exemptions for NRLM diesel fuel that that nonroad, locomotive, and marine environmental impact. will apply in special circumstances. diesel fuel sulfur content requirements The Department of Defense (DoD) are met throughout the distribution 1. Fuel Used in Military Applications commented that EPA should reconsider its determination that the definition of system, from the refiner or importer NRLM diesel fuel used in military through to the end user, subject to diesel fuel includes JP8 and JP5. DoD applications is treated in the same cited a 1995 letter from EPA which certain provisions applicable during the manner as under the recent highway early transition years. Section IV above stated that there was insufficient reason diesel rule. Refiners are not required to to conclude that JP–8 is commonly and describes our program for the reduction produce these fuels to the NRLM of sulfur in nonroad, locomotive and commercially known as diesel fuel standards. However, at the same time, under the then applicable definition of marine (NRLM) diesel fuel including the their use is limited only to certain standards and basic design of the motor vehicle diesel fuel. Since the time military applications. NRLM diesel fuel of this letter, EPA has become aware of compliance and enforcement program. is defined so that JP–5, JP–8, F76, and This section contains additional details a substantial number of cases of the any other military fuel that is used or misuse of aviation turbine fuel in regarding the compliance and assurance intended for use in NRLM diesel program. The provisions discussed in highway engines. The potential for engines or equipment is initially subject misuse of JP–8 or similar fuels in NRLM this section fall into several broad to all of the requirements applicable to categories: equipment where no national security NRLM diesel fuel. However, today’s rule exemption exists would remain. To —Special fuel provisions and also exempts these military fuels from ensure that NRLM equipment is exemptions; the diesel fuel sulfur content and other properly fueled with low sulfur fuel, the —Additional provisions applicable to requirements in certain circumstances. refiners and importers; definition of NRLM diesel fuel has been First, these fuels are exempt if they are written to encompass all diesel or other —Additional provisions applicable to used in tactical military motor vehicles parties downstream of the refinery or distillate fuels used or intended for use or nonroad engines, or equipment that in NRLM engines, which would include importer; have a national security exemption from —Special provisions regarding JP–8 and JP–5. Furthermore, the the vehicle or engine emissions additives, kerosene, and the provisions in today’s rule allow standards. Due to national security prohibition against the use of motor vehicles, engines, and equipment to be considerations, EPA’s existing oil in fuel; fueled with military specification fuels —Fuel testing and sampling regulations allow the military to request that are exempt from the sulfur requirements; and receive national security standards when needed for national —Records required to be kept, including exemptions (NSE) for their motor security. We believe that this provides those applying under the designate vehicles and NRLM diesel engines and DoD with the needed flexibility to meet and track, credit provisions, small equipment from emissions regulations if its goals of keeping vehicles, engines, refiner, and refiner hardship the operational requirements for such and equipment ready for quick provisions; vehicles, engines, or equipment warrant deployment overseas. such an exemption. This final rule does —Reporting requirements; 2. Fuel Used in Research, Development, —Exemptions from the program; not change these provisions. Fuel used —Provisions concerning liability, in these applications is exempt. Second, and Testing defenses, and penalties for these fuels are also exempt if they are Today’s final rule permits parties to noncompliance; and used in tactical military vehicles, request an exemption from the sulfur or —The selection of the marker for engines, or equipment that are not other standards for NRLM diesel fuel heating oil and 500 ppm sulfur LM covered by a national security used for research, development and diesel fuel. (The specific requirements exemption but, for national security testing purposes (‘‘R & D exemption’’). with respect to heating oil and 500 reasons (such as the need to be ready for We recognize that there may be ppm sulfur LM diesel fuel inside and immediate deployment overseas), these legitimate research programs that outside of the Northeast/Mid-Atlantic vehicles, engines, and equipment need require the use of diesel fuel with higher Area are discussed in section IV.D.) to be fueled on the same fuel as sulfur levels than allowed under today’s

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rule. As a result, this final rule contains nonroad diesel fuel requirements for addition, both the seller and purchaser provisions for obtaining an exemption fuel used in racing vehicles or of invalid credits must adjust their from the prohibitions for persons, equipment. credit calculations to reflect the proper producing, distributing, transporting, credits and either party (or both) can be 4. Fuel for Export storing, selling, or dispensing NRLM deemed in violation if the adjusted diesel fuel that exceeds the standards, Fuel produced for export, and that is calculations demonstrated where such diesel fuel is necessary to actually exported for use in a foreign noncompliance. We expect that the conduct a research, development, or country, is exempt from the fuel content parties to such a credit transaction will testing program. standards and other requirements of this develop contractual provisions to Parties seeking an R & D exemption final rule. Such fuel will be considered address these circumstances. must submit an application for as intended for use in the U.S. and Nevertheless, in a situation where exemption to EPA that describes the subject to the standards in today’s rule invalid credits are transferred, our purpose and scope of the program, and unless it is designated by the refiner as strong preference will be to hold the the reasons why higher-sulfur diesel for export only and PTDs state that the credit seller liable for the violation, fuel is necessary. Upon presentation of fuel is for export only. Fuel intended for rather than the credit purchaser. As a the required information, an exemption export must be segregated from all fuel general matter we expect to enforce a can be granted at the discretion of the intended for use in the U.S., and shortfall in credit compliance Administrator, with the condition that distributing or dispensing such fuel for calculations against the credit seller, EPA can withdraw the exemption in the domestic use is illegal. and we expect to enforce a compliance event the Agency determines the B. Additional Requirements for Refiners shortfall (caused by the good faith exemption is not justified. In addition, and Importers purchase of invalid credits) against a an exemption based on false or good faith purchaser only in cases inaccurate information will be The primary requirements for refiners where we are unable to recover considered void ab initio. Fuel subject and importers under today’s final rule sufficient valid credits from the seller to to an exemption is exempt from certain are discussed in section IV above. In cover the shortfall. Moreover, in provisions of this rule, including the that section, we discuss the general settlement of such cases we will sulfur standards, provided certain structure of the compliance and strongly encourage the seller to requirements are met. These enforcement provisions applicable to purchase credits to cover the good faith requirements include the segregation of refiners and importers, including fuel purchaser’s credit shortfall. EPA will the exempt fuel from non-exempt NRLM content standards, fuel volume consider the covering of a credit deficit and highway diesel fuel, identification designation and tracking provisions, through the purchase of valid credits a of the exempt fuel on PTDs, pump and credit provisions. In this very important factor in mitigation of labeling, and where appropriate, the subsection, we discuss several any case against a good faith purchaser, replacement, repair, or removal from additional requirements for refiners and whether the purchase of valid credits is service of emission systems damaged by importers that are not addressed in made by the seller or by the purchaser. the use of the high sulfur fuel. section IV. In addition, sections V.G, V.H, and V.I below discuss several 2. Additional Provisions for Importers 3. Fuel Used in Racing Equipment provisions that apply to all parties in and Foreign Refiners Subject to the There are no provisions for an the diesel fuel production and Credit Provisions or Hardship exemption from the sulfur or other distribution system, including refiners Provisions content standard and other and importers. Since this final rule includes several requirements for diesel fuel used in compliance options that can be used by 1. Transfer of Credits racing in today’s final rule. Under NRLM diesel fuel importers and foreign certain conditions, racing vehicles are This final rule includes provisions for refiners, we are also finalizing specific not considered nonroad vehicles. See, NRLM diesel sulfur credit transfers that compliance and enforcement provisions for example, 40 CFR § 89.2, definition of are essentially identical to other fuels to ensure compliance for imported ‘‘nonroad vehicle.’’ The fuel used by rules that have credits provisions. As in NRLM diesel fuel. These additional such racing vehicles would not other fuels rules, NRLM diesel sulfur foreign refiner provisions are similar to necessarily be considered nonroad credits can only be transferred between those under the gasoline anti-dumping diesel fuel. However, we believe that the refiner or importer generating the regulations, the gasoline sulfur there is a realistic chance that such fuel credits and the refiner or importer using regulations and the highway diesel fuel also could be used in NRLM equipment, the credits. If a credit purchaser can not regulations (see 40 CFR 80.94, 80.410, and therefore, should be considered use all the credits it purchased from the and 80.620). NRLM diesel fuel. We received no refiner who generated them, the credits Under today’s final rule, the per comments supporting the need for an can be transferred one additional time. gallon standards for NRLM diesel fuel exemption for racing fuel. We are not We recognize that there is potential for produced by refineries owned by foreign aware of any advantage for racing credits to be generated by one party and refiners must be met by the importer, vehicles or racing equipment to use fuel subsequently purchased and used in unless the foreign refiner has been having higher sulfur levels than are good faith by another party, where the approved to produce NRLM diesel fuel required by this rule, and we are credits are later found to have been under the credit provisions, small concerned about the potential for calculated or created improperly, or refiner provisions or hardship misfueling of nonroad equipment and otherwise found to be invalid. As with provisions of this final rule. If the motor vehicles that could result from the reformulated gasoline rule, the Tier foreign refiner is approved under any of having a high sulfur (e.g., 3,000 ppm) 2/Gasoline Sulfur rule, and the highway these provisions, the volume and other fuel for vehicle or nonroad equipment diesel sulfur rule, invalid credits requirements must be met by the foreign available in the marketplace. purchased in good faith are not valid for refiner for its refinery(s) and the foreign Consequently, as was the case with the use by the purchaser. To allow such use refiner must be the entity(s) generating, highway diesel rule, this final rule does would not be consistent with the using, banking or trading any credits for not provide an exemption from the environmental goals of the regulation. In the NRLM diesel fuel produced for and

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imported into the U.S. Importers for application to 15 ppm sulfur ensure that the sulfur level of fuels themselves are not eligible for small highway diesel fuel. supplied to the various end-users refiner or hardship relief as they do not Where diesel fuel that has been covered by today’s rule complies with face the same capital cost and lead-time previously designated by a refiner is the requirements in today’s rule. At issues faced by refiners. Importers may used to reduce the sulfur level of the certain points in the distribution participate in the credit programs, DTAB to 15 ppm or less, the party, in system, such parties must keep the however, an importer and a foreign its refiner capacity, is required to report various grades of fuel having different refiner may not generate credits for the only the volume of the imported DTAB sulfur specifications physically same fuel. as the amount of diesel fuel separate,150 and ensure that the fuel is Any foreign refiner that produces produced.147 This avoids the double properly designated and labeled. In NRLM diesel fuel subject to the credit counting that would result if the same other words, fuel represented as 15 ppm provisions, small refiner provisions or diesel fuel is reported twice (i.e., once sulfur must comply with the 15 ppm the hardship provisions will be subject by the refiner who originally produced sulfur standard, and fuel represented as to the same requirements as domestic it and again by the refiner using it to 500 ppm sulfur must meet the 500 ppm refiners operating under the same blend with DTAB). If the product that is sulfur standard. At other points in the provisions. Additionally, provisions for blended with the DTAB is not distribution system, certain fuels may be foreign refiners exist that are similar to previously designated diesel fuel, but is commingled provided that the fuel the provisions at 40 CFR 80.94, 80.410, also blendstock, the total combined volumes are appropriately designated and 80.620, which include: volume of the DTAB and other and accounted for in the custody —Segregation of NRLM diesel fuel blendstock constitutes the batch holders volume account balance. produced at the foreign refinery until produced. Owners and operators of NRLM diesel it reaches the U.S. and separate When an importer classifies diesel equipment must also use fuels meeting tracking of volumes imported into fuel as DTAB, that DTAB does not count specific sulfur content standards. The each PADD; toward the importer’s calculations following paragraphs discuss several —Controls on product designation; under the highway diesel rule’s provisions that apply to these parties: —Load port and port of entry testing; temporary compliance option, toward Distribution of various fuel sulfur and credit generation or use, or for volume grades; diesel fuel pump labeling; use of —Requirements regarding bonds and account balance compliance used motor oil in diesel fuel; use of 148 sovereign immunity. calculations (see section IV). The kerosene in diesel fuel; use of additives same party, however, must include the in diesel fuel; requirements for end These provisions will aid the Agency DTAB in such calculations in its users; and provisions covering in tracking NRLM diesel fuel from the capacity as a refiner. We believe such an downgrading of undyed diesel fuel to foreign refinery to its point of import approach will increase the supply of 15 different grades of fuel. These into this country. We believe these ppm sulfur fuel by reducing the volume provisions are analogous to similar provisions are necessary and sufficient of near-compliant fuel that is provisions that apply to highway diesel to ensure that foreign refiners’ downgraded to higher sulfur fuel under the highway program. compliance can be monitored and that designations. In essence, it allows Section IV discusses in detail the the diesel fuel requirements in today’s importers the same flexibility that provisions applicable to downstream rule can be enforced against foreign refiners have within their refinery gate. parties under the designate and track refiners. Similar to the provisions discussed program. 3. Diesel Fuel Treated as Blendstock above regarding the manufacture of 15 1. Product Segregation and End Use (DTAB) ppm sulfur diesel fuel using DTAB, 500 Requirements ppm sulfur NRLM and highway diesel Under today’s program, a situation fuel can also be manufactured using The main requirements for could arise for importers where fuel that DTAB provided that this is compliance with the fuel sulfur was expected to comply with the 15 appropriately reflected in the importer’s standards under today’s rule, including ppm sulfur NRLM standard is found to compliance calculations. the designate and track provisions, are be slightly higher in sulfur than the discussed in section IV of today’s standard. Rather than require that C. Requirements for Parties Downstream preamble. The sulfur content of all fuels importer to account for, and report, that of the Refinery or Import Facility subject to the sulfur requirements in fuel as 500 ppm sulfur fuel, an importer In order for the environmental today’s rule must be appropriately will be able to designate the non- benefits of the NRLM diesel program to complying fuel as blendstock—‘‘diesel be realized, parties in the fuel retail outlet is not limited to stationary facilities. fuel treated as blendstock’’ or DTAB— distribution system downstream of the EPA proposed specific textual changes to the rather than as NRLM diesel fuel. In its definition of retail outlet to clarify this, but has refinery (including pipelines, terminals, decided there is no need to change the definition, capacity as a refiner, the party can then bulk plants, wholesale purchaser- as it has always had this plain meaning. The owner/ blend this DTAB fuel with lower sulfur consumers, and retailers 149) must operator of such a tanker truck may also be subject diesel fuel or with other blendstocks to to distributor requirements and prohibitions, or carrier responsibilities if the trucker company does cause the sulfur level of the combined 147 Volumes of previously designated diesel fuel not take title to the fuel. As the definitions in 40 product to meet the 15 ppm sulfur would be reported as volumes received under the CFR 80.2 make clear, it is the functions performed NRLM diesel fuel standard prior to designate and track provisions of Section IV.D. by the owner/operator that determine whether they delivery to another entity. The same 148 Importer/refiners availing themselves of the come within the scope of the applicable definitions, DTAB provisions are still subject to the and the resulting obligations or requirements that situation exists with respect to downgrading provisions, and other provisions apply. Mobile refuelers are not subject to the compliance with the 15 ppm sulfur applicable to any importer or refiner. labeling requirements applicable to other retailers highway standard. However, no 149 An owner/operator of a tanker truck that but are required to provide PTDs to their customers. provision was made in the 2007 delivers fuel directly from the tanker truck tank into 150 For example: Once the required marker is motor vehicles or nonroad equipment of another added to heating oil at the terminal, heating oil highway final rule for this. business entity (i.e. a mobile refueler) would be must be segregated from all other fuel grades. Once Consequently, we are also finalizing acting as a retailer, and the truck would be red dye is added to NRLM it must be segregated these DTAB provisions in this final rule operating as a retail outlet. In other words, the term from highway diesel fuel.

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represented (designated/classified/ the 15 ppm sulfur standard or the 500 it maintains its designation, or it must labeled) at all times through to the ppm sulfur standard, as applicable, and be redesignated and labeled to its retailer or wholesale purchaser if so identified must meet such downgraded specification.154 consumer. Furthermore, the designation standard. Distributors and retailers must Because of the sulfur sensitivity of the and classification information on the avoid contaminating fuel represented by expected engine emission control label and PTD, and the actual sulfur them on PTDs or pump labels as 15 ppm systems beginning in model year 2011 content of any subject fuel must be sulfur fuel or 500 ppm sulfur fuel with for nonroad diesel engines, it is consistent with the requirements higher sulfur fuels. End users are imperative that the distribution system detailed in section IV. Section IV also required to use only the fuel grades segregate nonroad diesel fuel subject to details how to accurately redesignate, identified as appropriate for use on the the 15 ppm sulfur standard from higher reclassify, and re-label fuel volumes. label affixed to their NRLM equipment. sulfur distillate products, such as 500 This subsection discusses the various b. The Period From June 1, 2010 ppm sulfur LM fuel, 500 ppm sulfur grades and uses of NRLM fuel under the Through May 31, 2012 nonroad diesel fuel produced by small NRLM diesel program. In later refiners or through the use of credits, subsections, we discuss related Beginning June 1, 2010, all fuel used heating oil, and jet fuel. End users are requirements for PTDs to identify fuels in nonroad equipment must meet a 15 required to use only the fuel grades throughout the distribution system and ppm sulfur standard except for 500 ppm identified as appropriate for use on the provisions relating to the liability that sulfur fuel produced or imported under label affixed to their NR and LM all parties in the distribution face for the hardship, small refiner, and credit equipment. failing to maintain the standards of provisions, or downstream flexibility We are also concerned about potential these different fuel sulfur grades. provisions which may continue to be misfueling of engines requiring 15 ppm used in nonroad engines produced prior sulfur fuel at retail or wholesale a. The Period From June 1, 2007 to 2011. Locomotive and marine fuel Through May 31, 2010 purchaser-consumer facilities (as will continue to be subject to the sulfur defined under this program), or other From June 1, 2007 through May 31, requirements applicable beginning June end-user facilities, even when 2010, all fuel used in NRLM equipment 1, 2007, until May 31, 2012. segregation of 15 ppm sulfur fuel from must meet a 500 ppm sulfur standard During this time period, we will not the higher-sulfur grades of diesel fuel except for fuel produced or imported be able to rely upon the measurement of has been maintained in the distribution under the hardship, small refiner, and sulfur content alone to enforce the system. Thus, downstream compliance 151 credit provisions. Outside of the segregation requirements for LM fuel and enforcement provisions of this rule Northeast/Mid-Atlantic Area and and NR 500 ppm sulfur fuel outside of are aimed at both preventing Alaska, we will not be able to rely upon the Northeast/Mid-Atlantic Area and contamination of nonroad diesel fuel the measurement of sulfur content alone Alaska, and are therefore requiring that subject to the 15 ppm sulfur standard to enforce the segregation requirements LM fuel produced or imported for use (i.e., fuel represented to meet that for heating oil, and are therefore outside of the Northeast/Mid-Atlantic standard) and preventing misfueling of requiring that heating oil be marked Area and Alaska be marked before it new nonroad equipment. before it leaves the terminal by the leaves the terminal by the addition of 6 addition of 6 mg/L of SY–124. Fuel mg/L of SY–124. Fuel containing more c. The Period From June 1, 2012 containing more than 0.1 mg/L of the than 0.1 mg/L of the marker will be Through May 31, 2014 marker will be deemed to be heating oil deemed to be either LM fuel or heating Beginning June 1, 2012, all fuel used and may not be used as nonroad, oil and may not be used as nonroad fuel. in locomotive and marine equipment locomotive or marine fuel. Fuel containing the marker that meets a must meet a 15 ppm sulfur standard NRLM fuel designated or labeled as 500 ppm sulfur standard will be deemed except for 500 ppm sulfur fuel produced 500 ppm sulfur must meet the 500 ppm to be LM fuel, whereas fuel containing or imported under the hardship, small sulfur standard and any fuel designated the marker with a sulfur content above refiner, and credit provisions, or or labeled as 15 ppm must meet the 15 500 ppm will be deemed to be heating downstream flexibility provisions. As 152 ppm sulfur standard. If a fuel meeting oil. discussed in section IV above, small these standards is mixed or As discussed in section IV above, refiners will be able to continue to contaminated with a higher sulfur fuel small refiners will be able to continue produce 500 ppm sulfur LM fuel, it must be downgraded to the higher to produce 500 ppm sulfur nonroad through May 31, 2014. Other refiners sulfur product and new documentation fuel, through May 31, 2014. Other may use credits through May 31, 2014 (e.g., PTD, label) must be created to refiners may use credits through May to continue to produce fuel to the 500 reflect the downgrade. During this 31, 2014 to continue to produce fuel to ppm sulfur LM diesel fuel standard. period there will also be nonroad the 500 ppm sulfur nonroad diesel fuel Locomotive, and marine diesel fuel equipment that is expected to be standard. Nonroad diesel fuel meeting a meeting a 500 ppm sulfur standard may equipped with sulfur sensitive 500 ppm sulfur standard may also be also be produced due to interface emissions control technology that needs produced due to interface mixing in the mixing in the distribution system to operate on 500 ppm sulfur or less fuel distribution system.153 In any case, 15 indefinitely. in order to meet the NRLM program’s ppm sulfur diesel fuel must be The marker requirement for 500 ppm emission standards in-use. Fuels sold segregated from 500 ppm sulfur NRLM sulfur LM diesel fuel expires on June 1, for use in, or dispensed into, these diesel fuel throughout the distribution 2012. After June 1, 2012, only heating engines must be identified as meeting system including the end user, such that oil must continue to be marked and any LM diesel fuel distributed from the 151 Fuel produced in the distribution system that 153 Such 500 ppm sulfur downstream flexibility terminal must not contain the marker. meets a 500 ppm sulfur specification may be used nonroad diesel fuel may be also be used in LM in NRLM equipment through June 1, 2014, and in equipment since it complies with the LM sulfur To allow marked LM diesel fuel locomotive and marine equipment thereafter. standard applicable during this time period. Thus, 152 This requirement becomes effective June 1, both marked and unmarked 500 ppm sulfur fuel 154 These flexibilities do not exist in the 2006 to support the anti-downgrade requirements in may be used in LM equipment during this time Northeast/Mid-Atlantic Area, and only the small the highway diesel rule. period. refiner option exists in Alaska.

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distributed prior to June 1, 2012 to be and properly fuel their nonroad non-highway labeling requirement consumed by end-users, the equipment. Section III.N above effective June 1, 2006 under the downstream prohibition against LM fuel describes the labels that manufacturers highway diesel rule from the non- containing the marker will not become are required to place on nonroad highway labeling requirements of this effective until October 1, 2012. equipment, and the information that rule that are effective in 2007. Beginning October 1, 2012, LM diesel must be provided to nonroad equipment Alternate labels to those specified in fuel at any location must contain no owners. Section VI discusses the likely today’s rule may be used if they are more than 0.1 mg/L of the marker.155 benefit for many nonroad engines to approved by the Administrator. We believe that allowing four months utilize 500 ppm sulfur diesel fuel as Today’s rule also finalizes labeling for downstream parties to blend down soon as it becomes available in 2007. requirements for pumps in Alaska that their stocks of marked LM diesel fuel Today’s final rule includes requirements dispense NRLM diesel fuel and heating with receipts of unmarked LM diesel for labeling fuel pump stands used to oil which is exempt from the red dye fuel will be sufficient for such parties to fuel NRLM equipment and highway and fuel marker requirements which comply with the prohibition against diesel vehicles. differ from the labeling requirements possessing LM fuel with a marker To help prevent misfueling of discussed in this section. Please refer to concentration greater than 0.1 mg/L. nonroad, locomotive and marine § 69.52(e) of the regulatory text to The requirements that became engines, and to thus ensure that the today’s rule for these pump labeling effective for fuel used in nonroad environmental benefits of the program requirements applicable in Alaska. equipment on June 1, 2010, will remain are realized, we are finalizing pump effective until May 31, 2014. labeling requirements similar to those a. Pump Labeling Requirements that adopted in the highway diesel rule (40 Become Effective June 1, 2006 d. After May 31, 2014 CFR 80.570). Today’s pump dispenser The pump labeling requirements After the small refiner, credit, and off- labeling requirements are discussed described in this section become specification fuel flexibilites have separately according to the date they effective June 1, 2006. expired, the remaining sulfur grades of become effective: June 1, 2006, June 1, diesel fuel will be 15 ppm sulfur 2007, June 1, 2010, and June 1, 2014. i. Pumps Dispensing Highway Diesel highway and NRLM fuel, 500 ppm Today’s final rule also amends the Fuel Subject to the 15 ppm Sulfur sulfur LM diesel fuel (produced due to pump dispenser labeling language in the Standard interface mixing in the distribution highway diesel regulations for The label on pumps dispensing system outside of the Northeast/Mid- consistency with the NRLM program. highway diesel fuel subject to the 15 Atlantic Area and Alaska), and heating Because existing highway diesel ppm sulfur standard must read as oil, some of which may meet a 500 ppm regulations prohibit highway diesel fuel follows: sulfur standard. Product transfer with sulfur levels above 500 ppm, the documents are required to accompany highway diesel final rule and this ULTRA LOW-SULFUR HIGHWAY DIESEL FUEL (15 ppm Sulfur Maximum) the batches of such fuels which must program have different meanings for the contain the specified identifying terms ‘‘low sulfur’’ and ‘‘high sulfur,’’ Required for use in all model year 2007 information. Highway and NRLM diesel and the highway diesel final rule does and later highway diesel vehicles and engines. fuel meeting a 15 ppm sulfur not use the term ‘‘ultra low-sulfur.’’ specification must be segregated from Recommended for use in all diesel vehicles Further, because the highway diesel and engines. 500 ppm sulfur LM diesel fuel, and final rule did not need to categorize the heating oil. Today’s rule contains different uses of non-highway diesel The above labeling requirement for 15 provisions for the fungible shipment of fuel, the highway diesel final rule and ppm sulfur highway diesel fuel LM diesel fuel with any heating oil this program have different meanings continues through May 31, 2010, after meeting a 500 ppm sulfur cap up to the for the term ‘‘nonroad.’’ 156 The which time different pump label point where the fuel leaves the terminal amendments to the highway pump requirements for this fuel become that are similar to the provisions that dispenser labeling language finalized by effective as described in section allow the fungible shipment of high today’s rule are meant to avoid V.C.2.c.3. of this preamble. sulfur NRLM diesel fuel and high sulfur confusion at the fuel pumps caused by ii. Pumps Dispensing Highway Diesel heating oil discussed in the previous labels that would have different Fuel Subject to the 500 ppm Sulfur section. Under such circumstances the meanings depending on whether the Standard designate and track and heating oil pump is dispensing highway or non- account balance requirements must be highway diesel fuel. Today’s final rule The label on pumps dispensing satisfied. adds effective dates to each paragraph of highway diesel fuel subject to the 500 the labeling provisions of the highway ppm sulfur standard must read as 2. Diesel Fuel Pump Labeling To follows: Discourage Misfueling diesel rule for consistency with the additional pump labeling sections of LOW-SULFUR HIGHWAY DIESEL FUEL For any multiple-fuel program like the this program, and to distinguish the (500 ppm Sulfur Maximum) two-step program we are finalizing WARNING today, we believe that the clear labeling 156 In the highway diesel rule, the term ‘‘high- of nonroad diesel fuel pumps is vital so sulfur’’ means diesel fuel with a sulfur level greater Federal law prohibits use in model year that end users can readily distinguish than 15 ppm, whereas in this rule it means diesel 2007 and later highway vehicles and engines. between the several grades of fuel that fuel with a sulfur level greater than 500 ppm. In the Its use may damage these vehicles and highway diesel rule, the term ‘‘low-sulfur’’ means engines. may be available at fueling facilities, diesel fuel with a sulfur level less than or equal to 15 ppm, whereas in this rule it means diesel fuel Dispensing highway diesel fuel that 155 Allowing four months for the LM fuel with a sulfur level less than or equal to 500 ppm. has a sulfur content above 15 ppm is distribution system to sufficiently purge itself of In addition, the term ‘‘nonroad’’ as used in the prohibited into any highway vehicle marked fuel is consistent with the time allowed for highway diesel rule means ‘‘non-highway’’ (i.e., all LM diesel fuel to comply with a 500 ppm sulfur fuel that is not highway fuel), but the term after September 30, 2010. Hence no standard after the refinery gate 15 ppm sulfur ‘‘nonroad’’ as used in this rule does not include pumps may display the above label after standard for LM fuel becomes effective. locomotive diesel, marine diesel and heating oil. September 30, 2010.

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iii. Pumps Dispensing Diesel Fuel for LOW-SULFUR NON-HIGHWAY DIESEL iv. Pumps Dispensing Heating Oil FUEL (500 ppm Sulfur Maximum) Non-Highway Equipment That Does Not As discussed in section IV.B.2.b, it is Meet the Standards for Motor Vehicle WARNING necessary to segregate heating oil from Diesel Fuel Federal law prohibits use in any highway NRLM diesel fuel to ensure that the fuel vehicle or engine used in nonroad, locomotive, and The label on pumps dispensing diesel marine equipment is compliant with the fuel for non-highway equipment that The above labeling requirement sulfur standards in today’s rule. The does not meet the standards for motor remains effective until May 31, 2010, label on pumps dispensing non- vehicle diesel fuel must read as follows: after which it is superceded by the highway diesel fuel for use other than NON-HIGHWAY DIESEL FUEL (May Exceed requirements described below. in nonroad, locomotive or marine 500 ppm Sulfur) ii. Pumps Dispensing NRLM Diesel Fuel engines, such as for use in stationary WARNING Subject to the 15 ppm Sulfur Standard diesel engines or as heating oil, must read as follows: Federal law prohibits use in any highway It is also likely that prior to June 1, vehicle or engine 2010 some 15 ppm sulfur (maximum) HEATING OIL (May Exceed 500 ppm Sulfur) Its use may damage these vehicles and diesel fuel will be introduced into the WARNING engines. nonroad market early. Both the engine Federal law prohibits use in highway and fuel credit provisions envision such vehicles or engines, or in nonroad, This labeling requirement is effective early introduction of 2011–compliant locomotive, or marine engines. until May 31, 2007, after which high engines and 15 ppm sulfur diesel fuel. Its use may damage these diesel engines. sulfur non-highway diesel fuel must be Thus, it is important that nonroad end labeled according to the provisions The above labeling will remain users be able to know when they are effective indefinitely. described in section V.C.2.b.iii and 500 purchasing diesel fuel with 15 ppm or ppm sulfur non-highway diesel fuel less sulfur.157 The label on pumps c. Pump Labeling Requirements That must be labeled according to the dispensing 15 ppm sulfur diesel fuel for Become Effective June 1, 2010 provisions described in section use in NRLM engines must read as Beginning October 1, 2010, all diesel V.C.2.b.1. of today’s preamble. follows: fuel introduced into highway diesel vehicles, regardless of the year of b. Pump Labeling Requirements That ULTRA-LOW SULFUR NON-HIGHWAY Become Effective June 1, 2007 DIESEL FUEL (15 ppm Sulfur Maximum) manufacture, must meet the 15 ppm sulfur standard. Furthermore, with As discussed in section IV, between Required for use in all model year 2011 certain exceptions, fuel introduced into and newer nonroad diesel engines. June 1, 2007 and September 30, 2010, Recommended for use in all nonroad, any nonroad engine must meet the 15 end users are not always required to locomotive and marine diesel engines. ppm sulfur standard. The exceptions are dispense fuel meeting the 500 ppm fuel allowed to meet the 500 ppm sulfur sulfur standard into nonroad, WARNING standard for use only in pre-model year equipment, locomotives or marine Federal law prohibits use in any highway 2011 nonroad engines and locomotive vessels. During this time period, small vehicle or engine. and marine engines, for example, small refiner fuel and fuel produced under the The above labeling requirement refiner nonroad diesel fuel and credit credit provisions with sulfur levels continues until May 31, 2014, after nonroad diesel fuel, as well as exceeding 500 ppm will continue to which it is superceded by the labeling downgraded 15 ppm sulfur diesel fuel exist in the distribution system. During provisions described in section V.C.2.e.i from the distribution system. This use of this time period, there will also be of today’s preamble. 500 ppm sulfur diesel fuel in nonroad nonroad equipment with engines engines will continue through certified as meeting the Tier 4 emission iii. Pumps Dispensing Diesel Fuel With September 30, 2014,158 after which all standards (i.e., engines equipped with a Sulfur Content Greater Than 500 ppm nonroad diesel fuel must meet the 15 emission controls that allow them to for Use in Older NRLM Equipment ppm sulfur standard. The following meet the Tier 4 standards earlier than The label on pumps dispensing diesel pump labeling requirements become required). Some of this equipment is fuel having a sulfur content greater than effective June 1, 2010: expected to be equipped with sulfur 500 ppm (for use in older nonroad, sensitive technology that will need to i. Pumps Dispensing NRLM Diesel Fuel locomotive, and marine diesel engines) operate on fuel with a sulfur content of Subject to the 500 ppm Sulfur Standard must read as follows: 500 ppm or less to function properly. The label on pumps dispensing 500 For this reason, it is important that HIGH-SULFUR NON-HIGHWAY DIESEL ppm (maximum) nonroad, locomotive, NRLM end users be able to know the FUEL (May Exceed 500 ppm Sulfur) and marine diesel fuel, as discussed in sulfur level of the fuel they are WARNING section IV.B.3.b, must read as follows: purchasing and dispensing. Therefore, Federal law prohibits use in highway LOW-SULFUR NON-HIGHWAY DIESEL fuel pump dispensers for the various vehicles or engines FUEL (500 ppm Sulfur Maximum) sulfur grades must also be properly May damage nonroad, diesel engines WARNING labeled. The following pump labeling required to use low-sulfur or ultra-low sulfur requirements become effective from diesel fuel. Federal law prohibits use in all model year June 1, 2007: 2011 and newer nonroad engines. The above labeling requirement May damage model year 2011 and newer i. Pumps Dispensing NRLM Diesel Fuel remains effective until September 30, nonroad engines. Subject to the 500 ppm Sulfur Standard 2010. After September 30, 2010 no pump may display this label. 158 Production of 500 ppm sulfur fuel under the The label on pumps dispensing 500 credit provisions is allowed until June 1, 2012, but small refiner fuel subject to the 500 ppm sulfur ppm (maximum) sulfur content diesel 157 The IRS requires that 15 ppm sulfur non- standard can continue to be produced until June 1, fuel for use in NRLM engines must read highway diesel fuel must contain red dye after it 2014 and will be available to end users until as follows: leaves the terminal. September 1, 2014.

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Federal Law Prohibits Use in any Highway WARNING Although in the highway diesel fuel Vehicle or Engine. Federal law prohibits use in any highway rule we did not finalize any provisions Recommended for use in all locomotive vehicle or engine. beyond fuel pump labeling and marine equipment. The above labeling requirement requirements, we recognized that some The above labeling requirement continues indefinitely. potential for misfueling could still exist. remains effective until September 30, Consequently, we expressed a desire to 2014. After September 30, 2014, no ii. Pumps Dispensing Locomotive and continue to explore with industry pump may display this label. Marine Diesel Fuel Subject to the 500 simple, cost-effective approaches that ii. Pumps Dispensing Marked LM Fuel ppm Sulfur Standard could further minimize misfueling For pumps dispensing locomotive or potential such as color-coded nozzles/ The label on pumps dispensing 500 scuff guards. Since the highway diesel ppm sulfur locomotive, and marine marine diesel fuel, the label must read as follows: rule was promulgated, we have had diesel fuel, as discussed in section discussions with fuel retailers, IV.B.3.b., must read as follows: LOW-SULFUR LOCOMOTIVE OR MARINE wholesale purchaser-consumers, vehicle DIESEL FUEL (500 ppm Sulfur Maximum) LOW-SULFUR LOCOMOTIVE AND manufacturers, and nozzle MARINE DIESEL FUEL (500 ppm Sulfur WARNING manufacturers, and continue to examine Maximum) Federal law prohibits use in nonroad different methods for preventing WARNING engines or in highway vehicles or engines. accidental or intentional misfueling under the highway diesel fuel sulfur Federal law prohibits use in nonroad Its use may damage these engines. program. To date, the affected engines or in highway vehicles or engines. The above labeling requirement will stakeholders, including engine and The above labeling requirement remain effective indefinitely. truck manufacturers, truck operators, remains effective until September 30, f. Nozzle Size Requirements or other fuel retailers, and fuel nozzle 2012. After September 30, 2012, no Requirements To Prevent Misfueling manufacturers have not reached any pump may display this label. common view that the concerns over Like the highway diesel fuel program, misfueling warrant any additional iii. Pumps Dispensing Highway Diesel the NRLM diesel fuel program does not prevention measures. Fuel Subject to the 15 ppm Sulfur include a nozzle size requirement. In Standard part this is because we are not aware of 3. Prohibition Against the Use of Used The label on pumps dispensing an effective and practicable scheme to Motor Oil in New Nonroad Diesel highway diesel fuel subject to the 15 prevent misfueling through the use of Equipment ppm sulfur standard of § 80.520(a)(1) different nozzle sizes or shapes, and in We understand that used motor oil is must read as follows: part because we do not believe that sometimes blended with diesel fuel ULTRA LOW-SULFUR HIGHWAY DIESEL improper fueling will be a significant today for use as fuel in nonroad diesel FUEL (15 ppm Sulfur Maximum) enough problem to warrant such an equipment. Such practices include action. In the preamble to the highway Required for use in all highway diesel blending used motor oil directly into the vehicles and engines. diesel fuel rule, we stated our belief that equipment fuel tank, blending it into the Recommended for use in all diesel vehicles the use of unique nozzles, color-coded fuel storage tanks, and blending small and engines. scuff-guards, or dyes to distinguish the amounts of motor oil from the engine The above labeling requirement for 15 grades of diesel fuel may be useful in crank case into the fuel system as the ppm sulfur highway diesel fuel preventing accidental use of the wrong equipment is operated. continues indefinitely. fuel. (See 66 FR 5119, January 18, 2001.) However, motor oil normally contains However, we did not finalize any such high levels of sulfur. Thus, the addition d. Pump Labeling Requirements That requirements, for the reasons described of used motor oil to nonroad diesel fuel Become Effective June 1, 2014 in the RIA for that final rule (section could substantially impair the sulfur- Beginning October 1, 2014, all IV.E). sensitive emissions control equipment nonroad fuel distributed to end-users is Similar reasoning applies to the expected to be used by engine required to meet the 15 ppm sulfur NRLM diesel fuel program. For manufacturers to meet the emissions standard, without exception. example, 15 ppm sulfur diesel fuel will standards in today’s final rule. Locomotive and marine fuel be the dominant fuel in the market by Depending on how the oil is blended, it downstream of the refinery or importer 2010, likely comprising more than 80 could increase the sulfur content of the is still subject to the 500 ppm sulfur percent of all number 2 distillate. fuel by as much as 200 ppm sulfur. As standard. The pump labels for heating Further, we believe that 500 ppm sulfur a result, we believe blending used motor oil will continue to be the same as for diesel fuel will have limited availability oil into nonroad diesel fuel could render the period 2010 through 2014. The between 2010 and 2014. High-sulfur inoperative the expected emission following pump labeling requirements distillate for heating oil uses will control technology and potentially become effective beginning June 1, remain, but will only exist in significant cause driveability problems. 2014: volumes in certain parts of the country. Consequently, it would violate the In addition, as with highway diesel tampering prohibition in the Act. See i. Pumps Dispensing NRLM Diesel Fuel engines, there is currently no CAA sections 203(a)(3), and 213(d). Subject to the 15 ppm Sulfur Standard standardization of fuel tank openings Therefore, like the highway diesel For pumps dispensing nonroad diesel and filler necks that would allow for a rule, today’s rule prohibits any person fuel the label must read as follows: simple, inexpensive, standardization of from introducing or causing or allowing ULTRA-LOW SULFUR NON-HIGHWAY nozzles. In any event, we believe that the introduction of used motor oil, or DIESEL FUEL (15 ppm Sulfur Maximum) most owners and operators of new diesel fuel containing used motor oil, Required for use in all nonroad diesel nonroad diesel engines and equipment into the fuel delivery systems of engines. will not risk voiding the general nonroad equipment engines Recommended for use in all locomotive warranty and the emissions warranty by manufactured in model year 2011 and and marine diesel engines. misfueling. later. The only exception to this will be

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where the engine was explicitly not need to meet the 80/20 requirements No. 1 highway diesel fuel, and will certified to the emission standard with under the highway diesel program. This simply need to meet all of the used motor oil added and the oil was activity is treated the same way under requirements of highway diesel fuel. It added in a manner consistent with the the final highway diesel rule. Parties is also possible, though less likely that certification. Furthermore, as discussed that blend kerosene into diesel fuel are kerosene meeting the 500 ppm sulfur in section IV, today’s rule includes subject to the downstream designate and standard will be designated as No. 1 certain sunset dates when all NRLM track provisions applicable to other highway diesel fuel. However, if it is, it diesel fuel in the distribution system downstream parties. would also merely need to comply with must meet the applicable sulfur In order to ensure the continued all the requirements applicable to standard, and before that date any compliance of 15 ppm sulfur fuel with highway diesel fuel. NRLM designated, classified, or labeled the 15 ppm sulfur standard, as 15 ppm sulfur fuel must meet that downstream parties choosing to blend 5. Use of Diesel Fuel Additives sulfur standard. Blending of used motor kerosene into 15 ppm sulfur NRLM Diesel fuel additives include lubricity oil into NRLM could cause these diesel fuel are required to either have a improvers, corrosion inhibitors, cold- standards to be exceeded in violation of PTD for that kerosene indicating operability improvers, and static today’s rule. Any party who causes the compliance with the 15 ppm sulfur dissipaters. Use of such additives is sulfur content of nonroad diesel fuel standard, or to have test results for the distinguished from the use of kerosene subject to the 15 ppm sulfur standard to kerosene establishing such compliance. or biodiesel by the low concentrations at exceed 15 ppm by blending motor oil Further, downstream parties choosing to which they are used (defined to be one into nonroad diesel fuel, or by using blend kerosene into 15 ppm sulfur percent or less) and their relatively more motor oil as nonroad diesel fuel, is NRLM diesel fuel are entitled to the two complex chemistry.159 The suitability of subject to liability for violating the ppm adjustment factor discussed in diesel fuel additives for use in diesel sulfur standard. Similarly, parties who section V.D.2. for both the kerosene and fuel meeting a 500 ppm sulfur cause the sulfur level of nonroad diesel the diesel fuel into which it is blended specification has been well established fuel subject to the 500 ppm sulfur at downstream locations, provided that due to the existence of 500 ppm sulfur nonroad diesel fuel standard to exceed the kerosene had been transferred to the highway diesel fuel in the marketplace that standard by blending motor oil into party with a PTD indicating compliance since 1993. The suitability of additives the fuel, are also subject to liability. with that standard. Sulfur test results for use in 15 ppm sulfur diesel fuel was from downstream locations of parties 4. Use of Kerosene in Diesel Fuel first addressed by EPA in the highway who do not have such a PTD for their diesel program, which requires highway As we discussed in the highway kerosene will not be subject to this diesel fuel to meet a 15 ppm sulfur diesel final rule, kerosene is commonly adjustment factor, either for the standard beginning in 2006. At the time added to diesel fuel to reduce fuel kerosene itself, or for the NRLM diesel of the finalization of the highway diesel viscosity in cold weather (see 66 FR fuel into which it is blended. final rule and during our development 5120, January 18, 2001). This final rule Any party who causes the sulfur of the proposed NRLM diesel rule, our does not limit this practice with regard content of NRLM diesel fuel represented review of data submitted by additive to 15 ppm sulfur or 500 ppm sulfur as meeting the 15 ppm sulfur standard and fuel manufacturers to comply with NRLM diesel fuel. However the to exceed 15 ppm sulfur by blending EPA’s Fuel and Fuel Additive resulting blend will still be subject to kerosene into NRLM diesel fuel, or by Registration requirements indicated that the 15 ppm sulfur or 500 ppm sulfur using greater than 15 ppm sulfur additives to meet every purpose, standard. Kerosene that is used, kerosene as NRLM diesel fuel, is subject including static dissipation, are intended for use, or made available for to liability for violating the sulfur currently in common use which meet a use as, or for blending with, 15 ppm standard. Similarly, parties who cause 15 ppm cap on sulfur content.160 sulfur or 500 ppm sulfur diesel fuel is the sulfur level of NRLM diesel fuel itself required to meet the 15 ppm sulfur subject to the 500 ppm sulfur diesel fuel a. Additives Used in 15 ppm Sulfur or 500 ppm sulfur standard. standard to exceed that standard by Diesel Fuel As a general matter, any party who blending kerosene into the fuel, are also Similar to the highway diesel rule, blends kerosene, or any blendstock, into subject to liability. today’s rule allows the bulk addition of NRLM diesel fuel, or who produces Today’s rule does not require refiners diesel fuel additives with a sulfur NRLM diesel fuel by mixing or importers of kerosene to produce or content greater than 15 ppm in NRLM blendstocks, will be treated as a refiner import kerosene meeting the 15 ppm diesel fuel under certain and will be subject to the requirements sulfur standard. However, we believe circumstances.161 However, NRLM and prohibitions applicable to refiners that refiners will produce ultra low under today’s rule. For example, the sulfur kerosene in the same refinery 159 Diesel fuel additives are used at fuel that they manufacture must meet processes that they use to produce ultra concentrations commonly expressed in parts per the sulfur standards established in this low sulfur diesel fuel, and that the million. Diesel fuel additives can include specially- rule, and represented on the PTD. market will drive supply of ultra low formulated polymers and other complex chemical components. Kerosene is used at much higher However, in deference to the sulfur kerosene for those areas where, concentrations, expressed in volume percent. longstanding and widespread practice of and during those seasons when, the Unlike diesel fuel additives, kerosene is a narrow blending kerosene into diesel fuel at product is needed for blending with distillation fraction of the range of hydrocarbons downstream locations, downstream NRLM, as well a highway, diesel fuel. normally contained in diesel fuel. parties who only blend kerosene into As discussed in section IV.D, 160 See Chapter IV.D. of the RIA for the highway diesel fuel rule for more information on diesel fuel NRLM and highway diesel fuel will not kerosene blending also factors into the additives, EPA Air docket A–99–06, docket item V– be subject to the requirements designate and track provisions finalized B–01. Also see 40 CFR part 79. applicable to other refiners, provided today from June 1, 2006 until June 1, 161 Most diesel fuel additives are added at the that they do not alter the fuel in any 2010. During this time period it is terminal to bulk fuel volumes before sale to the consumer. These additives are referred to as bulk other way, and do not violate the possible, and in fact likely, that additives. End users and wholesale purchaser volume balance requirements discussed kerosene meeting the 15 ppm sulfur consumers sometimes also add additives to diesel in section IV.D. For example, they will standard will instead be designated as Continued

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diesel fuel containing such additives The specific requirements regarding needed for such additives, their use will will continue to be subject to the 15 the use of bulk diesel fuel additives in raise the sulfur content of the finished ppm sulfur cap. We believe that it is NRLM fuel subject to the 15 ppm sulfur fuel by no more than 0.02 ppm. most appropriate for the market to standard are as follows: Commenters stated that because of the determine how best to accommodate —Bulk additives that have a sulfur extremely low potential contribution to increases in fuel sulfur content from the content at or below 15 ppm must be the sulfur level of the finished diesel refinery gate to the end user, while accompanied by a PTD that states: fuel which might result from the use of maintaining the 15 ppm sulfur cap, and ‘‘The sulfur content of this additive static dissipater additives, there was whether such increases result from does not exceed 15 ppm.’’ little risk that use of such additives contamination in the distribution —Bulk additives that exceed 15 ppm would result in noncompliance with the system or bulk diesel additive use. By sulfur could continue to be used in 15 ppm sulfur cap. providing this flexibility, we anticipate diesel fuel subject to the 15 ppm We contacted all of the additive that market forces will encourage an sulfur standard provided that they are manufactures that have registered static optimal balance between the competing used at a concentration of less than dissipater additives in EPA’s Fuel and 162 demands of manufacturing fuel lower one volume percent and their transfer Fuel Additive Database. All of these than the 15 ppm sulfur cap, limiting is accompanied by a PTD that lists the manufactures stated that there are no contamination in the distribution following: fully-effective static dissipater additives available that have a sulfur content system, and limiting the bulk additive (1) A warning that the additive’s below 15 ppm. They further stated that contribution to fuel sulfur content. sulfur content may exceed 15 ppm and sulfur is an essential component in Thus, as in the highway diesel that improper use of the additive may static dissipater additives, and that it is program, additive manufacturers that result in non-complying fuel, currently unclear how to formulate a market bulk diesel additives with a (2) The additive’s maximum sulfur static dissipater additive that would sulfur content higher than 15 ppm and concentration, have a sulfur content below 15 ppm. blenders that use them in nonroad (3) The maximum recommended Because of this input, we now recognize diesel have additional requirements to concentration for use of the additive in that static dissipater additives are in a ensure that the 15 ppm sulfur cap for diesel fuel, and unique category with respect to the NRLM diesel fuel is not exceeded. (4) The contribution to the sulfur level ability to comply with a 15 ppm sulfur The 15 ppm sulfur cap on highway of the fuel that would result if the cap. Additive manufactures stated that diesel fuel that becomes effective in additive is used at the maximum reformulation of static dissipater 2006 may encourage the gradual recommended concentration. additives to meet a 15 ppm sulfur cap retirement of additives that do not meet We proposed that the affirmative will likely be a lengthy undertaking. a 15 ppm sulfur cap. The 15 ppm sulfur defenses to presumptive liability for cap for NR fuel in 2010 and for LM fuel It is unclear which of the naturally- blenders of bulk additives with a sulfur occurring components in diesel fuel act in 2012 may further this trend. content greater than 15 ppm must However, we do not anticipate that this to dissipate static electricity. However, include periodic sulfur tests after the certain batches of fuel are periodically will result in disruption to additive addition of the additive showing that users and producers or a significant found which do not have adequate static the finished fuel does not exceed the 15 dissipating qualities. In such cases, increase in cost. Additive manufacturers ppm sulfur cap. We are adopting this commonly reformulate their additives static dissipater additives are necessary proposed requirement for additives to prevent a static discharge from on a periodic basis as a result of other than static dissipater additives. competitive pressures. We anticipate occurring during the transfer of fuel into that any reformulation that might need b. Static Dissipater Additives a storage tank which might cause an explosion. Therefore, it is essential that to occur to meet a 15 ppm sulfur cap, Comments from diesel fuel today’s rule is structured in such a way will be accomplished prior to the distributors and additive manufactures so as to not impede the use static implementation of the 15 ppm sulfur stated that static dissipater additives are dissipater additives. Because of the lack cap on highway diesel fuel in 2006. unique among the various types of of static dissipater additives meeting a Like the highway diesel fuel rule, this diesel fuel additives in that there are 15 ppm sulfur specification, the unique rule will limit the continued use in 15 currently none available with a sulfur difficulty in reformulating them to meet ppm sulfur fuel of a bulk additive that content below 15 ppm which are fully a 15 ppm sulfur standard, the fact that exceeds 15 ppm sulfur to a effective. Considering the lack of static they are essential to the safety of the concentration of less than one volume dissipater additives meeting a 15 ppm fuel distribution system, and the percent. We believe that this limitation sulfur cap, and the inability to add static impracticability for them to be added at is appropriate and will not cause any dissipater (S–D) additives prior to the refinery, today’s rule includes undue burden because the diesel fuel shipment by pipeline, commenters special affirmative defense provisions to additives for which this flexibility was stated that the prohibitive cost of testing reduce the sulfur testing burden included are always used today at fuel batches after the addition of static associated with the use of static concentrations well below one volume dissipater additives could discourage dissipater additives that have a sulfur percent. Further, one volume percent is their use. To avoid the potential adverse content greater than 15 ppm. the threshold above which the blender impact on the safety of the fuel Commenters suggested an alternative of an additive becomes subject to all the distribution industry which could mechanism to demonstrate an requirements applicable to a refiner. See result, commenters requested that we affirmative defense to presumptive 40 CFR 79.2(d)(1) and 40 CFR part 80. provide an alternative method for use in liability for blenders of static-dissipater demonstrating their affirmative defense (S–D) additives which would avoid the fuel by hand blending into the vehicle fuel tank or to presumptive liability when they use need to test every batch of fuel at the fleet fuel storage tanks. Such additives are referred static dissipater additives with a sulfur to as aftermarket additives. As discussed at the end of this section, today’s rule contains different content above 15 ppm. Manufacturers of 162 All additives must be registered with EPA requirements regarding the use of aftermarket static dissipater additives stated that Fuel and Fuel Additive Database prior to their use additives. due to very low treatment rates that are in motor vehicle diesel fuel.

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terminal after additization. Under this which shows that the contribution to subject to the 15 ppm sulfur approach, blenders of S–D additives the sulfur level of the finished diesel specification when used at the would be required to provide volume fuel from the use of the additive at the maximum recommended treatment level accounting reconciliation (VAR) records treatment level at which it was are required to conduct a sulfur test on similar to those under EPA’s deposit injected would not cause any such the fuel batch after the addition of the control additive rule (40 CFR part 80, batch of fuel to exceed the 15 ppm additive. Blenders of additives other subpart G) which would show whether sulfur specification than S–D additives which have a sulfur the S–D additive is being added at the • Quality assurance records which content greater than 15 ppm into diesel appropriate rate on average over a show that the precision of the additive fuel subject to the 15 ppm sulfur course of a monthly accounting period. injection equipment has been standard are also required to conduct a Today’s rule finalizes the approach maintained in such a manner as to sulfur test on the fuel batch after the suggested by commenters with certain prevent malfunctions which could addition of the additive for affirmative modifications. In cases where a result in the injection of the S–D defense purposes. violation of the 15 ppm sulfur cap for additive at a higher concentration than EPA may require additive diesel fuel is discovered on a batch of that reported. manufactures to supply samples of the fuel downstream of a blender of S–D The additive blender must also be additive packages (or the components additives that have a sulfur content able to meet its normal diesel fuel additives in such packages) that are above 15 ppm, the S–D additive blender defense elements: That the additive used in 15 ppm sulfur diesel fuel, or must provide the following information blender-fuel distributor did not cause may sample from additive batches to EPA in order to meet their affirmative the violation; that PTDs account for all already in the distribution system. In defense to presumptive liability the fuel and show apparent compliance; such cases, we may test the sulfur regarding the potential that the use of S– and that quality assurance sampling and content of these additives to evaluate D additive might have caused or testing has occurred, as modified by the whether they are in compliance with the contributed to the violation: discussion above. information provided on the PTDs or • A sulfur test on the diesel batch In addition, the ratio of the amount of other relevant documentation. In cases prior to the addition of the S–D additive additive used to the amount of fuel into where a violation is discovered, any package that indicates that the additive, which the additive was injected over party in the distribution system that had when added, will not cause the fuel to any given monthly VAR period must not custody of the additive batch found to exceed 15 ppm exceed the maximum treatment rate be in violation may be held • A product transfer document that which could be added to any batch of presumptively liable for the violation. accompanied the transfer of the S–D fuel additized during the period. If not, Today’s rule amends the highway additive package to the additive blender the blender could be liable for any batch diesel regulation so that the provisions which contains the following: of diesel fuel found that exceeded the 15 finalized today regarding the use of S– —A statement that the S–D additive ppm sulfur cap which had been in their D additives with a sulfur content above package exceeds 15 ppm in sulfur possession. The above provisions are 15 ppm in NRLM diesel fuel also apply content and that special requirements only relevant for establishing affirmative to the use of such additives in highway apply if it is to be used in diesel fuel defense to presumptive liability diesel fuel subject to a 15 ppm sulfur subject to the 15 ppm sulfur cap. regarding the potential that the use of S– standard. However, we continue to be —The maximum sulfur level of the S– D additives might have caused a concerned about the use of additives D additive package including other violation. Under no circumstances may having a sulfur content greater than 15 additive components such as diesel an additive blender cause the sulfur ppm. We will continue to monitor this detergents and carrier fluid to the level of any batch of finished fuel to issue and may initiate an additional extent that they are part of the exceed the 15 ppm sulfur cap. Blenders rulemaking in the future to consider package. Each component of the of S–D additives must meet all other further limiting or prohibiting the use of additive package other than the S–D requirements for distributors of 15 ppm greater than15 ppm sulfur additives in additive itself must comply with the sulfur diesel fuel. Regardless of the diesel fuel subject to a 15 ppm sulfur 15 ppm sulfur cap. cause of a violation of the 15 ppm sulfur cap. —The maximum recommended standard, any party that had custody or The special provisions for static- concentration for the S–D additive title of off-specification fuel is dissipater additives finalized in today’s package. potentially liable and responsible for rule will ensure that the unique —The contribution to the final sulfur their affirmative defense elements. challenges regarding the manufacture content of a finished fuel when the These provisions may only be used and use of such additives do not present additive is added at the maximum for static dissipater additives which a barrier to their continued use. recommended concentration. The have the potential to raise the sulfur Additive manufactures have stated that maximum recommended content of the finished fuel by no more they are working on reformulation of concentration must result in a than 0.050 ppm when used at their their S–D additives to meet a 15 ppm potential increase in the sulfur maximum recommended treatment sulfur limit. content of the finished fuel of no more level. Based on the input from additive We recently learned that industry is than 0.05 ppm. manufacturers noted above, this will beginning to develop a standardized test • Monthly volume accounting allow the use of S–D additives that are to quantify the concentration of static- reconciliation (VAR) records that fully effective for this purpose. The use dissipater additives in finished fuel.163 include: of S–D additives that might have a If such a test were available, it might be —The amount of S–D additive package higher contribution to the sulfur content useful for establishing an additive used during the month of the finished fuel, therefore, is blender’s affirmative defense to —The volume of the fuel into which the unnecessary. To establish affirmative presumptive liability in place of some of additive was injected during the defense to presumptive liability, the VAR provisions described above. If month blenders that use S–D additives that —The measured sulfur level of each fuel could contribute more than 0.050 ppm 163 Phone conversation with Eon McMullen, Octel batch prior to injection of the additive to the sulfur content of a finished fuel additives, February 12, 2004.

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a batch of fuel was found to exceed the sulfur standard. We believe that the (3) Beginning December 1, 2010, no 15 ppm sulfur cap, the use of such a test requirement that NRLM fuel comply person may introduce, or permit the would allow for the measurement of the with a 500 ppm sulfur cap throughout introduction of any fuel exceeding 500 contribution to the sulfur level of the the distribution system to the end-user ppm sulfur content into any nonroad, finished fuel which resulted from the will be sufficient to ensure that entities locomotive, and marine engine; and addition of the static dissipater additive. who introduce additives into such fuel (4) Beginning December 1, 2014, no If the contribution was below the take into account the potential increase person may introduce, or permit the permissible level given the sulfur in fuel sulfur content. introduction of any fuel exceeding 15 measurements on each batch of fuel d. Aftermarket Additives ppm sulfur content into any nonroad additized with the greater than 15 ppm S–D additive, it might be useful in We believe that more stringent diesel engine regardless of year of association with other blender records requirements are needed for aftermarket manufacture. to demonstrate that the additive blender additives than for bulk additives due to D. Diesel Fuel Sulfur Sampling and was not at fault for the violation. If such the lack of practical safeguards to ensure Testing Requirements a standardized test becomes available, that the use of such additives do not EPA will work with the appropriate cause a violation of the sulfur standards 1. Testing Requirements industry parties to evaluate its in today’s rule. Also, the presence of applicability for affirmative defense multiple grades of aftermarket additives, Today’s action provides a new purposes, and conduct a rulemaking if some suitable for use in engines approach for fuel sulfur measurement. appropriate to amend the elements equipped with sulfur sensitive The details of this approach are required to establish affirmative defense emissions control equipment as well as described below, followed by a to presumptive liability under the pre-control engines, and some suitable description of who will be required to NRLM and highway diesel programs. for use only in pre-control engines conduct fuel sulfur testing as well as would raise significant concerns what fuel must be tested. The diesel fuel c. Additives Used in 500 ppm Sulfur regarding the misuse. The misuse of a sulfur sampling and testing provisions Diesel Fuel high sulfur additive in an engine with described below are similar to those that The 1993 and 2007 highway diesel sulfur sensitive emissions control were proposed. Adjustments we made programs did not contain any equipment could damage this to the proposed provisions were in requirements regarding the maximum equipment. Therefore, today’s rule response to comments we received sulfur content of additives used in requires that all aftermarket additives during the public comment period. highway diesel fuel subject to a 500 sold for use in nonroad, locomotive, and ppm sulfur cap.164 Our experience marine equipment must meet a 500 ppm a. Test Method Approval, Record- under the highway program indicates sulfur cap beginning June 1, 2007, and keeping, and Quality Control that application of the 500 ppm sulfur that all aftermarket additives sold for Requirements cap throughout the distribution system use in nonroad equipment must meet a Most current and past EPA fuel to the end-user has been sufficient to 15 ppm sulfur specification beginning programs designated specific analytical prevent the use of additives from June 1, 2010. After June 1, 2010, methods which refiners, importers, and jeopardizing compliance with the 500 aftermarket additives with a sulfur downstream parties 165 use to analyze ppm sulfur standard. The potential content less than 500 ppm may continue fuel samples at all points in the fuel increase of several ppm in the sulfur to be used in locomotive and marine distribution system for regulatory content of diesel fuel which might result engines. This approach is consistent from the use of some diesel additives with that taken in the highway diesel compliance purposes. Some of these raises substantial concerns regarding the rule which requires all aftermarket programs have also allowed certain impact on compliance with a 15 ppm additives to meet a 15 ppm sulfur specific alternative methods which may sulfur cap. However, this is not the case specification beginning June 1, 2006. be used as long as the test results are with respect to the potential impact on correlated to the designated test method. 6. End User Requirements compliance with a 500 ppm sulfur cap. The highway diesel rule (66 FR 5002, The current average sulfur content of In light of the importance of ensuring January 18, 2001), for example, specifies highway diesel fuel of 340 ppm that the proper fuel is used in nonroad, one designated test method and three provides ample margin for the minimal locomotive, and marine engines covered alternative methods for measuring the increase in the fuel sulfur content which by this program, any person is sulfur content of highway diesel fuel might result from the use of additives. prohibited from fueling such an engine subject to the 15 ppm sulfur standard. We expect that this will also be the case with fuel not meeting the applicable The rule also specifies one designated for NRLM fuel subject to the 500 ppm sulfur standard. method and three alternative methods sulfur standard. Therefore, we are not Specifically: for measuring the sulfur content of finalizing any requirements regarding (1) No person may introduce, or highway diesel fuel subject to the 500 the sulfur content of additives used in permit the introduction of fuel ppm sulfur standard. NRLM fuel subject to the 500 ppm containing the heating oil marker into nonroad, locomotive, marine or 165 Other EPA fuels regulations have allowed 164 The 500 ppm sulfur highway diesel final rule highway diesel engines; downstream parties conducting periodic quality contains the requirement that highway diesel fuel (2) No person may introduce, or assurance testing for defense purposes to use not exceed 500 ppm sulfur at any point in the fuel permit the introduction of, fuel that methods other than the designated method, so long distribution system including after the blending of exceeds 15 ppm sulfur content into as the method is an ASTM method appropriate for additives. Fuel Quality Regulations for Highway testing for the applicable fuel property, and so long Diesel Fuel Sold in 1993 and Later Calendar Years, nonroad equipment with a model year as the instrument is correlated to the designated Final Rule, 55 FR 34120, August 21, 1990. 2011 or later engine; method.

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TABLE V.H–1.—DESIGNATED AND ALTERNATIVE SULFUR TEST METHODS ALLOWED UNDER THE HIGHWAY DIESEL PROGRAM

Sulfur Test Method 500 ppm 15 ppm

ASTM D 2622–03, as modified, Standard Test Method for Sulfur in Petroleum Products Designated ...... Alternative. by Wavelength Dispersive X-ray Fluorescence Spectrometry. ASTM D 3120–03a, Standard Test Method for Trace Quantities of Sulfur in Light Liquid ...... Alternative. Petroleum Hydrocarbons by Oxidative Microcoulometry. ASTM D 4294–03, Standard Test Method for Sulfur in Petroleum and Petroleum Prod- Alternative ...... ucts by Energy-Dispersive X-ray Fluorescence Spectrometry. ASTM D 5453–03a, Standard Test Method for Determination of Total Sulfur in Light Hy- Alternative ...... Alternative. drocarbons, Motor Fuels and Motor Oils by Ultraviolet Fluorescence. ASTM D 6428–99, Test Method for Total Sulfur in Liquid Aromatic Hydrocarbons and Alternative ...... Designated. Their Derivatives by Oxidative Combustion and Electrochemical Detection.

The highway diesel fuel rule also government-unique standards where this issue, we are also clarifying that the announced the Agency’s intention to such consensus standards would test results must in general be a adopt a performance-based test method suffice. Under the performance criteria sequential record of the analyses with approach in the future, as well as our approach in today’s rule, methods no omissions. A laboratory facility may intention to continue working with the developed by consensus bodies as well exclude a given sample or test result industry to develop and improve sulfur as methods not yet approved by a only if (1) the exclusion is for a valid test methods. Today’s action adopts consensus body qualify for approval reason under good laboratory practices such a performance-based test method provided they meet the specified and (2) it maintains records regarding approach for both highway and NRLM performance criteria as well as the the sample and test results and the diesel fuel subject to the 15 ppm and record-keeping and reporting reason for excluding them. Using the 500 ppm sulfur standards. In addition, requirements for quality control test results167 of ASTM D 3120 for the current approach for measuring the purposes. diesel fuel subject to the 15 ppm sulfur standard, the precision must be less sulfur content of diesel fuel subject to i. How Can a Given Method Be than 0.72 ppm.168 Similarly, using the the 500 ppm sulfur standard, i.e., using Approved? the designated sulfur test method or one test results of ASTM D 2622 for diesel of the alternative test methods with A given test method can be approved fuel subject to the 500 ppm sulfur correlation will remain applicable. for use under today’s program by standard, the precision must be less meeting certain precision and accuracy Under the performance-based than 9.68 ppm. criteria. Approval applies on a approach, a given test method can be The second criterion, accuracy, refers laboratory/facility-specific basis. If a approved for use in a specific laboratory to the closeness of agreement between a company chooses to employ more than by meeting certain precision and measured or calculated value and the one laboratory for fuel sulfur testing accuracy criteria specified in the actual or specified value. To purposes, then each laboratory must regulations. The method can be demonstrate the accuracy of a given test separately seek approval for each approved for use by that laboratory as method under the performance-based method it intends to use. Likewise, if a long as appropriate quality control approach, a laboratory facility is laboratory chooses to use more than one required to perform 10 repeat tests on a procedures are followed. Properly sulfur test method, then each method selected precision and accuracy values must be approved separately. Separate 167 Sulfur Repeatability of Diesel by Method at 15 allow multiple methods and multiple approval is not necessary for individual ppm, ASTM Report on Low Level Sulfur commercially available instruments to operators or laboratory instruments Determination in Gasoline and Diesel Interlaboratory Study—A Status Report, June 2002. be approved, thus providing greater within a given laboratory facility. flexibility in method and instrument 168 0.72 ppm is equal to 1.5 times the standard The specific precision and accuracy deviation of ASTM D 3120, where the standard selection while also encouraging the criteria were derived from existing deviation is equal to the repeatability of ASTM D development and use of better methods sulfur test methods that are either 3120 (1.33) divided by 2.77. 9.68 ppm is equal to and instrumentation in the future. 1.5 times the standard deviation of ASTM D 2622, required or allowed under the highway where the standard deviation is equal to the Under today’s rule, there is no diesel fuel sulfur program. The first repeatability of ASTM D 2622 (17.88) divided by designated sulfur test method as criterion, precision, refers to the 2.77. In the proposal, we stated that the specified under previous regulations. consistency of a set of measurements repeatability of ASTM D 2622 was 26.81. While that reported value was incorrect due to either a Since any test method that meets the and is used to determine how closely typographical or a computational error, the specified performance criteria may analytical results can be duplicated resulting precision value that we are finalizing qualify, this type of approach does not based on repeat measurements of the today was correctly calculated and reported as 9.68 conflict with the ‘‘National Technology same material under prescribed ppm. The ‘‘sample standard deviation’’ should be used for this purpose. By its use of N–1 in the Transfer and Advancement Act of 1995’’ conditions. To demonstrate the denominator, this measure applies a correction for (NTTAA), section 12(d) of Public Law precision of a given sulfur test method the small sample bias and provides an unbiased 104–113, and the Office of Management under the performance-based approach, estimate of the standard deviation of the larger population from which the sample was drawn. and Budget (OMB) Circular A–119. Both a laboratory facility must perform 20 Since the conditions of the precision qualification of these are designed to encourage the repeat tests over 20 days on samples test admit more sources of variability than the adoption of standards developed by taken from a homogeneous supply of a conditions under which ASTM repeatability is ‘‘voluntary consensus standards bodies’’ commercially available diesel fuel. determined (longer time span, different operators, 166 environmental conditions, etc.) the repeatability (VCSB) and to reduce reliance on Based on the comments we received on standard deviation derived from the round robin was multiplied by what we believe to be a 166 These are standard-setting organizations, like all interested stakeholders and make decisions by reasonable adjustment factor, 1.5, to compensate for ASTM, and ISO that have broad representation of consensus. the difference in conditions.

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standard sample, the mean of which for are required to retain the fuel samples the initial quality of a method and a diesel fuel subject to the 15 ppm sulfur used for precision and accuracy company may have invested significant standard can not deviate from the demonstration for 90 days. While we resources in developing a method. Accepted Reference Value (ARV) of the proposed a 30 day sample retention However, if after a reasonable time a test standard by more than 0.54 ppm and for period, commenters stated that the method fails to gain consensus body diesel fuel subject to the 500 ppm sulfur sample retention period for fuel samples approval, EPA believes approval of the standard can not deviate from the ARV that are used for precision and accuracy method should be withdrawn because of of the standard by more than 7.26 demonstrations should be equivalent to the absence of ongoing consensus ppm 169. These tests must be performed the length of EPA’s review period (i.e., oversight. Accordingly, a non-VCSB using commercially available 90 days). We agree with the commenters method will cease to be qualified five gravimetric sulfur standards. Ten tests and are thus finalizing a 90 day sample years from the date of its original are required using each of two different retention period in today’s rule. This approval by EPA in the absence of VCSB sulfur standards. For 15 ppm fuel, one sample retention requirement also approval. must be in the range of 1–10 ppm sulfur applies to non-VCSB methods which are To assist the Agency in determining and the other in the range of 10–20 ppm described below. the performance of a given sulfur test sulfur. For 500 ppm fuel, one must be For test methods that have not been method, non-VCSB methods, in in the range of 100–200 ppm sulfur and approved by a VCSB, full test method particular, we reserve the right to send the other in the range of 400–500 ppm documentation, including a description samples of commercially available fuel sulfur for 500 ppm sulfur diesel fuel. of the technology/instrumentation that to laboratories for evaluation. Such Therefore, a minimum of 20 total tests makes the method functional, as well as samples are intended for situations in is required for sufficient demonstration subsequent EPA approval of the method which the Agency has concerns of accuracy for a given sulfur test is also required. These submissions will regarding a test method and, in method at a given laboratory facility. As also be subject to the Agency’s review particular, its ability to measure the with the requirement for precision for 90 days, and the method will be sulfur content of a random demonstration described above, the test considered approved in the absence of commercially available diesel fuel. results must be a sequential record of EPA comment. Submission of VCSB Laboratory facilities are required to the analyses with no omissions. Finally, methods is not required since they are report their results from tests of this any known interferences for a given test available in the public domain. In material to the Agency. addition, industry and the Agency will method must be mitigated. iii. What Quality Control Provisions Are likely have had substantial experience Some commenters remarked that the Required? ARV of the standards does not account with such methods. We are requiring ongoing Quality for any uncertainty given that all As described above, federal Control (QC) procedures for sulfur commercially available standards have government and EPA policy is to use measurement instrumentation. These an uncertainty associated with the standards developed by voluntary are procedures used by laboratory certified value. The commenters added consensus bodies when available. The facilities to ensure that the test methods that EPA should specify what maximum purpose of the NTTAA, at least in part, they have qualified and the instruments value in the uncertainty associated with is to foster consistency in regulatory on which the methods are run are the ARV is allowed. requirements, to take advantage of the yielding results with appropriate These requirements are not intended collective industry wisdom and wide- accuracy and precision, e.g., that the to be overly burdensome. Indeed, we spread technical evaluation required results from a particular instrument do believe these requirements are before a test method is approved by a not ‘‘drift’’ over time to yield equivalent to what a laboratory would consensus body, and to take advantage unacceptable values. It is our do during the normal start up procedure of the ongoing oversight and evaluation understanding that most laboratories for a given test method. In addition, we of a test method by the consensus body already employ QC procedures, and that believe this approach will allow that results from wide-spread use of an these are commonly viewed as regulated entities to know that they are approved method e.g., the ongoing important good laboratory practices. measuring diesel fuel sulfur levels round-robin type analysis and typical annual updating of the method by the Laboratories will be required, at a accurately and within reasonable site consensus body. These goals are not met minimum, to abide by the following QC reproducibility limits. where the Agency allows use of a non- procedures for each instrument used to ii. What Information Must Be Reported consensus body test method in test batches of diesel fuel under these to the Agency? perpetuity. Moreover, it is not possible regulations even where a laboratory For test methods that have already to realize many of the advantages that elects to use the test method used to been approved by a VCSB, such as result from consensus status where a establish the precision and accuracy ASTM or the International Standards test method is used by only one or a few criteria finalized in today’s rule: Organization (ISO), each laboratory companies. It will not have the practical (1) Follow the mandatory provisions facility must report to the Agency the scrutiny that comes from ongoing wide- of ASTM D 6299–02, Standard Practice precision and accuracy results as spread use, or the independent scrutiny for Applying Statistical Quality described above for each method for of the consensus body and periodic Assurance Techniques to Evaluate which it is seeking approval. Such updating. In addition, EPA does not Analytical Measurement System submissions to EPA, as described have the resources to conduct the degree Performance. Laboratories are required elsewhere, are subject to the Agency’s of initial scrutiny or ongoing scrutiny to construct control charts from the review for 90 days, and the method will that are practiced by consensus bodies. mandatory QC sample testing prescribed be considered approved in the absence Nevertheless, EPA believes it is in paragraph 7.1, following the of EPA comment. Laboratory facilities appropriate to allow limited use of a guidelines under A 1.5.1 for individual proprietary test method for a limited observation charts and A 1.5.2 for 169 0.54 and 7.26 are equal to 0.75 times the time, even though the significant moving range charts. precision values of 0.72 for 15 ppm sulfur diesel advantages of consensus test methods (2) Follow ASTM D 6299–02 and 9.68 for 500 ppm sulfur diesel, respectively. are absent, because EPA can evaluate paragraph 7.3.1 (check standards) using

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a standard reference material. Check this batch testing requirement to15 ppm this compliance provision. We also standard testing is required to occur at sulfur highway diesel fuel beginning in received comments that a test tolerance least monthly and should take place 2006. should be provided in determining following any major change to the In order to address situations where compliance with the 500 ppm sulfur laboratory equipment or test procedure. refiners produce NRLM diesel fuel using standards for NRLM fuel. We believe Any deviation from the accepted computer-controlled inline blending that such a tolerance is not needed for reference value of the check standard equipment and do not have storage fuels subject to a 500 ppm sulfur greater than 1.44 ppm for diesel fuel tanks from which to withdraw samples, standard because of the flexibility that subject to the 15 ppm sulfur standard we are including in today’s final rule a refiners possess to produce fuel with a and 19.36 ppm for diesel fuel subject to provision to allow refiners to test a sufficiently low sulfur content to the 500 ppm sulfur standard170 must be composited sample of a batch of diesel accommodate test variability. investigated. fuel for its sulfur content after the diesel 3. Sampling Requirements (3) Upon discovery of any QC testing fuel has been shipped from the refinery. violation of A 1.5.2.1 or A 1.5.3.2 or This inline blending provision is similar Today’s rule adopts the same check standard deviation greater than to the provision that exists under the sampling methods adopted by the 1.44 ppm and 19.36 ppm for 15 ppm reformulated gasoline and gasoline highway diesel rule (66 FR 5002, sulfur diesel and 500 ppm sulfur diesel, sulfur programs and applies to both January 18, 2001). These sampling respectively, as provided in item 2 highway and NRLM diesel fuel under methods are American Society for above, any measurement made while today’s action. Testing and Materials (ASTM) D 4057– the system was out of control must be Today’s rule does not require 95 (manual sampling) and D 4177–95 tagged as suspect and an investigation downstream parties to conduct every- (automatic sampling from pipelines/in- conducted into the reasons for this batch testing. However, we believe that line blending). The requirement to use anomalous performance. Refiners and most downstream parties will these methods becomes effective for importers are required to retain batch voluntarily conduct ‘‘periodic’’ NRLM diesel fuel on June 1, 2007. samples for 30 days or the period equal sampling and testing for quality These same methods were also adopted to the interval between QC sample tests, assurance purposes if they want to for use in the Tier 2/Gasoline Sulfur whichever is longer. If an instrument is establish a defense to presumptive rule.171 found to be out of control, all of the liability, as discussed in section V.H. below. 4. Alternative Sampling and Testing retained samples since the last time the Requirements for Importers of Diesel instrument was shown to be in control 2. Two Part-Per-Million Downstream Fuel Who Transport Diesel Fuel by must be retested. Sulfur Measurement Adjustment Tanker Truck (4) QC records, including We believe that it is appropriate to investigations under item 3 above must We understand that importers who recognize sulfur test variability in transport diesel fuel into the U.S. by be retained for five years and must be determining compliance with the 15 tanker truck are frequently relatively provided to the Agency upon request. ppm sulfur NRLM diesel fuel standards small businesses that could be subject to downstream of a refinery or import b. Requirements To Conduct Fuel Sulfur a substantial burden if they were facility. Thus, today’s rule provides that Testing required to sample and test each batch for all 15 ppm sulfur NRLM diesel fuel of NRLM or highway diesel fuel Given the importance of assuring that at locations downstream of a refinery or imported by truck, especially where a NRLM diesel fuel designated to meet the import facility, sulfur test results can be trucker imports many small loads of 15 ppm sulfur standard in fact meets adjusted by subtracting two ppm. In the diesel fuel. Therefore, today’s rule that standard, we are requiring that same manner as finalized for 15 ppm provides that truck importers may refiners, importers, and transmix sulfur highway diesel fuel, the sole processors test each batch of NRLM purpose of this downstream compliance comply with an alternative sampling diesel fuel designated to meet the 15 provision is to address test variability and testing requirement, involving a ppm sulfur standard and maintain concerns (see the highway diesel fuel sampling and testing program of the records of such testing. Requiring that rule). We received comments suggesting foreign truck loading terminal, if certain refiners, importers, and transmix that a higher downstream test tolerance conditions are met. For an importer to processors test each batch of fuel subject is needed based on the current values be eligible for the alternative sampling to the 15 ppm sulfur NRLM standard for test method variability. However, we and testing requirement, the terminal assures that compliance can be anticipate that the reproducibility of must conduct sampling and testing of confirmed through testing records, and sulfur test methods is likely to improve the NRLM or highway diesel fuel even more importantly, assures that to two ppm or even less by the time the immediately after each receipt into its diesel fuel exceeding the 15 ppm 15 ppm sulfur standard for highway terminal storage tank but before loading standard is not introduced into diesel fuel is implemented—four years product into the importer’s tanker truck commerce as fuel for use in nonroad before implementation date of the 15 storage compartments or immediately equipment having sulfur-sensitive ppm standard for NRLM diesel fuel. prior to loading product into the emission control devices. Batch testing With this provision, we anticipate that importer’s tanker truck if it hasn’t tested was not required under the highway refiners will be able to produce diesel after each receipt. Moreover, the diesel fuel rule. Instead, such testing fuel with an average sulfur level of importer will be required to conduct was expected to be performed to approximately 7–8 ppm and some periodic quality assurance testing of the establish a defense to potential liability. contamination could occur throughout terminal’s diesel fuel, and the importer However, for the same reasons the distribution system, without fear of will be required to assure EPA that we discussed above, today’s rule extends causing a downstream violation due will be allowed to make unannounced solely to test variability. As test methods 170 1.44 ppm is equal to two times the precision 171 65 FR 6833–34 (Feb. 10, 2000). Today’s rule value of 0.72 ppm for 15 ppm diesel and 19.36 is improve in the future, we will also provides that these methods be used under the equal to two times the precision value of 9.68 ppm reevaluate whether two ppm is the RFG and CG rules. See 62 FR 37337 et seq. (July for 500 ppm diesel. appropriate allowance for purposes of 11, 1997).

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inspections and audits, to sample and NRLM diesel fuel generated under the heating oil dealers, retailers, and even test fuel at the foreign terminal facility, downstream flexibility provisions in end-users with storage tanks such as to assure that the terminal maintained today’s rule could be sold into the LM farmers. Reporting errors for even a sampling and testing records, and to market outside of the Northeast/Mid- small fraction would require too many submit such records to EPA upon Atlantic Area and Alaska. Such 500 resources to track down and correct and request. ppm sulfur NRLM diesel fuel does not would eliminate the effectiveness of the need to be marked. Therefore, both system. E. Selection of the Marker for Heating marked and unmarked 500 ppm sulfur Our proposal envisioned that a fuel Oil diesel fuel could be used in locomotive marker would be required in heating oil As discussed in section IV.D, to and marine diesel equipment outside of from June 1, 2006 through May 31, ensure that heating oil is not shifted into the Northeast/Mid-Atlantic Area and 2010, and that the same marker would the NRLM market, we need a way to Alaska from 2010 through 2012.173 be required in locomotive and marine distinguish heating oil from high sulfur As discussed in section IV.D., use of fuel from June 1, 2010 through May 31, or 500 ppm sulfur NRLM diesel fuel the same marker in heating oil and 500 2014. As a consequence of finalizing the produced under the small refiner and ppm sulfur LM fuel is feasible because 15 ppm sulfur standard for locomotive credit provisions in today’s rule. the underlying goal is the same, i.e., and marine fuel in 2012, we no longer Currently, there is no differentiation keeping 500 ppm sulfur diesel fuel need to require that LM diesel fuel be today between fuel used for NRLM uses produced as heating oil or LM fuel from marked after June 1, 2012. The 2010– and heating oil. Both are typically begin shifted into the nonroad diesel 2012 marking requirement for 500 ppm produced to the same sulfur market from 2010 through 2012. We will sulfur LM diesel fuel does not apply to specification, and both are required to be able to determine whether heating oil 500 ppm sulfur LM fuel produced by a have the same red dye added prior to with a sulfur content greater than 500 refiner or imported in the Northeast/ distribution from downstream of the ppm has been shifted into the LM Mid-Atlantic Area or in Alaska. There is terminal. Based on recommendations market downstream of the terminal by an ongoing need to require the from refiners, in the NPRM, we testing the sulfur content of LM. 500 continued use of the marker in heating concluded that the best approach to ppm fuel initially designated as heating oil indefinitely (see section IV of today’s differentiate heating oil from NRLM oil can be later shifted into the LM preamble). diesel fuel would be to require that a market, since the sulfur standard for LM We proposed that beginning June 1, marker be added to heating oil at the diesel fuel during this period is 500 2007 SY–124 must be added to heating refinery gate. Since the proposal we ppm. oil in the U.S. at a concentration of 6 received additional information which Terminal operators suggested that we milligrams per liter (mg/L). Today’s rule allows us to rely upon record-keeping might be able to rely on record-keeping adopts this requirement except for and reporting provisions to differentiate and reporting downstream of the heating oil used in the Northeast/Mid- heating oil from NRLM up to the point terminal as well as above the terminal Atlantic Area and Alaska.174 The where it leaves the terminal (see section level, thereby eliminating any need for chemical composition of SY–124 is as IV.D). Therefore, today’s rule requires a fuel marker. However, we believe such follows: N-ethyl-N-[2-[1-(2- that a marker be added to heating oil record-keeping and reporting methylpropoxy)ethoxyl]-4-phenylazo]- before it leaves the terminal gate rather mechanisms would be insufficient to benzeneamine.175 This concentration is than the refinery gate as proposed.172 keep heating oil out of the NRLM sufficient to ensure detection of SY–124 Section IV.D of today’s preamble also market and 500 ppm sulfur LM fuel in the distribution system, even if discusses the need to distinguish 500 produced by a refiner or imported out diluted by a factor of 50. Any fuel found ppm sulfur locomotive and marine fuel of the nonroad market downstream of with a marker concentration of 0.1 produced by refiners and imported from the terminal under typical milligrams per liter or more will be 2010–2012 from 500 ppm sulfur circumstances. We can rely on such presumed to be heating oil. Below this nonroad diesel fuel produced during measures before the fuel leaves the level, the prohibition on use in this time frame under the small refiner, terminal because it is feasible to require highway, nonroad, locomotive, or credit, and downstream flexibility all of the facilities in the distribution marine applications would not apply. provisions in today’s rule. Without this system to report to EPA on their fuel There are a number of other types of ability, it would be possible for 500 ppm transfers. As discussed in section IV.D., dyes and markers. Visible dyes are most sulfur LM diesel fuel to be shifted into these electronic reports can be common, are inexpensive, and are easily the nonroad market during this time compared by EPA to identify parties detected. Using a second dye in period outside of the Northeast/Mid- responsible for shifting heating oil into addition to the red dye required by IRS Atlantic Area and Alaska. Therefore, the NRLM market from 2007–2014, 500 in all non-highway fuel for segregation today’s rule requires that from June 1, ppm sulfur LM fuel into the nonroad of heating oil based on visual 2010 through May 31, 2012, the same market from 2010–2012, and heating oil identification raises certain challenges. marker added to heating oil must also be into the LM market beginning 2014. The marker that we require in heating added to 500 ppm sulfur LM diesel fuel Downstream of the terminal the parties oil and 500 ppm sulfur LM diesel fuel produced by a refiner or imported for involved in the fuel distribution system must be different from the red dye use outside of the Northeast/Mid- become far too numerous for such a currently required by IRS and EPA and Atlantic Area and Alaska before the fuel system to be implemented and enforced not interfere with the identification of leaves the terminal. Nonroad diesel fuel (including jobbers, bulk plant operators, red dye in distillate fuels. Invisible meeting a 500 ppm sulfur standard 174 produced under the small refiner or 173 Inside the Northeast/Mid-Atlantic Area, 500 See section IV.D of today’s preamble for a ppm sulfur fuel produced from transmix or discussion of the provisions for the Northeast/Mid- credit provisions, and 500 ppm sulfur segregated interface could be sold into the LM or Atlantic Area and Alaska. heating oil markets from 2010–2012, and could only 175 Opinion on Selection of a Community-wide 172 Heating oil sold inside the Northeast/Mid- be sold into the heating oil market after 2012. Mineral Oils Marking System, (‘‘Euromarker’’), Atlantic Area adopted under today’s rule and Outside of the Northeast/Mid-Atlantic Area, such European Union Scientific Committee for Toxicity, Alaska does not need to contain a marker (see fuel could be sold into the NRLM market from Ecotoxicity and the Environment plenary meeting, section IV.D.). 2010–2012, and into the LM market thereafter. September 28, 1999.

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markers are beginning to see more use concentration of red dye in distillate The American Society of Testing and in branded fuels and are somewhat fuel. Thus, the use of SY–124 at 6 mg/ Materials (ASTM), the Coordinating more expensive than visible markers. L in diesel fuel would not interfere with Research Council (CRC), and the Federal Such markers are detected either by the the use of the red dye by IRS to identify Aviation Administration (FAA) addition of a chemical reagent or by non-taxed fuels. requested that we delay finalizing the their fluorescence when subjected to Solvent yellow 124 is chemically selection of a specific marker for use in near-infra-red or ultraviolet light. Some similar to other additives used in heating oil in today’s rule. They chemical-based detection methods are gasoline and diesel fuel, and has been requested that selection of a specific suitable for use in the field. Others must registered by EPA as a fuel additive marker should be deferred until testing be conducted in the laboratory due to under 40 CFR part 79. Therefore, we could be conducted regarding the the complexity of the detection process expect that its products of combustion potential impact of SY–124 on jet or concerns regarding the toxicity of the would not have an adverse impact on engines. The Air Transport Association reagents used to reveal the presence of emission control devices, such as a stated that EPA should conduct an the marker. Near-infra-red and ultra- catalytic converter. Extensive evaluation extensive study regarding the potential violet flourescent markers can be easily and testing of SY–124 was conducted by for contamination, determine the levels detected in the field using a small the European Commission. This at which the marker will not pose a risk device and after brief training of the included combustion testing which to jet engines, and seek approval of SY– operator. There are also more exotic showed no detectable difference 124 as a jet fuel additive. Other parties markers available such as those based between the emissions from marked and including the Department of Defense on immunoassay, and isotopic or unmarked fuel. Norway specifically (DoD) also stated that EPA should molecular enhancement. Such markers evaluated the use of distillate fuel refrain from specifying a heating oil typically need to be detected by containing SY–124 for heating purposes marker under today’s rule until industry laboratory analysis. and determined that the presence of the and other potentially affected parties We selected SY–124, however, for a Euromarker did not cause an increase in can recommend an appropriate marker. number of reasons: harmful emissions from heating Representatives of the heating oil (1) There is considerable data and equipment. Based on the European industry stated that they were experience with it which indicates there experience with SY–124, we do not concerned that EPA had not conducted are no significant issues with its use; expect that there would be concerns an independent review regarding the (2) It is compatible with the existing regarding the compatibility of SY–124 safety/suitability of SY–124 for use in red dye; in the U.S. fuel distribution system or heating oil. (3) Test methods exist to quantify its for use in motor vehicle engines and We met and corresponded with concentration, even if diluted by a factor numerous and diverse parties to other equipment such as in residential of 50 to one; evaluate the concerns expressed furnaces. (4) It is reasonably inexpensive; and regarding the use of SY–124, and to (5) It can be produced and provided Our evaluation of the process determine whether it might be more by a number of sources. conducted by the EU in selecting SY– appropriate to specify a different marker Effective in August 2002, the 124 for use in the EU convinced us that for use in heating oil. These parties European Union (EU) enacted the SY–124 was also the most appropriate include IRS, FAA, ASTM, CRC, various requirement that SY–124 be added at 6 marker to propose for use in heating oil marker/dye manufacturers, European mg/L to diesel fuel that is taxed at a under today’s program. We received a distributors of fuels containing the lower rate in all EU member states.176 number of comments expressing Euromarker, marker suppliers, and Solvent yellow 124 is referred to as the concern about the use of SY–124 in members of all segments in the U.S. fuel ‘‘Euromarker’’ in the EU. The EU has heating oil. Based on our evaluation of distribution system. found this treatment rate to be sufficient these comments (summarized below We believe that concerns related to for their enforcement purposes while and in the S&A), we continue to believe potential jet fuel contamination have not interfering with the identification of that SY–124 is the most appropriate been sufficiently addressed for us to the various different colored dyes marker to specify for use in heating oil finalize the selection of SY–124 as the required by different EU member states and 500 ppm sulfur LM diesel fuel required heating oil marker in today’s (including the same red dye that is under today’s rule. Therefore, today’s rule.178 As discussed in section IV.D of required in the U.S.). Despite its name, rule requires that beginning June 1, today’s preamble, changes in the SY–124 does not impart a strong color 2007, SY–124 be added to heating oil, structure of the fuel program finalized to diesel fuel when used at a and that from June 1, 2010 through May in today’s rule from that in the proposed concentration of 6 mg/L. Most often it 31, 2012, SY–124 be added to 500 ppm program have allowed us to move the is reportedly nearly invisible in sulfur LM diesel fuel produced by a point where the marker must be added distillate fuel given that the slight refiner or imported at a concentration of from the refinery gate to the terminal. yellow color imparted is similar to the 6 mg/L before such fuel leaves the The vast majority of concerns regarding natural color of many distillate fuels.177 terminal except in the Northeast/Mid- the potential for contamination of jet In the presence of red dye, SY–124 can Atlantic Area and Alaska. fuel with SY–124 pertained to the impart a slight orange tinge to the fuel. The concerns regarding the use of SY– shipment of marked fuel by pipeline. However, it does not interfere with the 124 in heating oil primarily pertained All parties were in agreement that visual identification of the presence of to: the potential impact on jet engines if nearly all of the potential for marker red dye or the quantification of the jet fuel were contaminated with SY– contamination of jet fuel would 124; the potential health effects of SY– disappear if the point of marker 176 The European Union marker legislation, 2001/ 124 when used in fuel for heating addition was moved to the terminal. We 574/EC, document C(2001) 1728, was published in purposes, particularly for unvented the European Council Official Journal, L203 heaters; the potential cost impact on 178 See the Summary and Analysis of Comments 28.072001. fuel distributors and transmix for a more detailed discussion of our response to 177 The color of distillate fuel can range from near concerns about the possible contamination of jet water white to a dark blackish brown but is most processors; and the potential conflict fuel with the marker prescribed for use in heating frequently straw colored. with IRS red dye requirements. oil and 500 ppm sulfur LM fuel under today’s rule.

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spoke with terminal operators, both distribution of marked LM diesel fuel impacts from the use of SY–124 do not large and small, who confirmed that will primarily be by segregated present sufficient cause to delay they maintain strictly segregated pathways, and the duration of the finalization of the requirement for it’s distribution facilities for red dyed fuel marker requirement for 500 ppm sulfur use that is contained in today’s rule. and jet fuel because of jet fuel LM diesel fuel produced by refiners or The European Union intends to contamination concerns. The same type imported for use outside of the review the use of SY–124 after of segregation practices will apply to the Northeast/Mid-Atlantic Area and Alaska December 2005, but may undertake the handling of marked heating oil, marked is only two years. On the whole, we review earlier if any health and safety or 500 ppm sulfur LM diesel fuel, and jet actually expect that today’s rule will environmental concerns about its use fuel since the marker will only be reduce the potential for jet fuel to are raised. We intend to keep abreast of present in heating oil and locomotive become contaminated with the azo dyes such activities and may initiate our own and marine fuel when red dye is also such as the IRS-required red dye and review of the use of SY–124 depending present. Therefore, these practices will SY–124 since visual evidence will no on the European Union’s findings, or be equally effective in limiting longer be required leaving the refinery other relevant information. There will contamination of jet fuel with SY–124. gate in 500 ppm NRLM fuel beginning be nearly four years of accumulated Downstream of the terminal, the only June 1, 2007, and will no longer be field experience with the use of SY–124 other chance for marker contamination required in any off-highway diesel fuel in Europe at the time of the review by of jet fuel pertains to bulk plant beginning June 1, 2010. the EU and nearly 5 years by the operators and jobbers that handle This final rule requires addition of the implementation of the marker marked heating oil and jet fuel. For the marker at the terminal rather than the requirement under today’s rule. This most part, these parties also currently refinery gate as proposed. Based on this will provide ample time for any maintain strict segregation of the change, ASTM withdrew its request to potential unidentified issues with SY– facilities used to transport jet fuel and delay the finalization of the marker 124 to be identified, and for us to heating oil. The one exception is that requirements in today’s rule. However, choose a different marker if warranted. small bulk plant operators that supply ASTM stated that some concern remains Commenters stated that potential small airports sometimes use the same regarding jet fuel contamination health concerns regarding the use of tank truck to alternately transport jet downstream of the terminal (due to the SY–124 might be exacerbated with fuel and heating oil. In such cases, they limited use of the same tank wagons to respect to its use in unvented space flush the tank compartment prior to alternately transport jet fuel and heating heaters. Commenters further stated that transporting jet fuel to remove any oil discussed above). Nevertheless, there are prohibitions against the dyeing residual heating oil left behind after the ASTM related that these concerns need of kerosene (No. 1 diesel) used in such heaters. No information was provided to tank is drained. Since few, if any bulk not delay finalization of the marker support these concerns, however, and plants handle LM fuel, it is unlikely that requirements in this rule. ASTM intends we have no information to suggest any the same tank trucks will be used to to support a CRC program to evaluate health concerns exist regarding the use alternately transport LM fuel and jet the compatibility of markers with jet of SY–124 in unvented heaters. fuel. Thus, we expect that there will be fuel. The Federal Aviation Nevertheless, even if there were such even less chance for LM fuel containing Administration is also undertaking an concerns, today’s rule will not require the marker to contaminate jet fuel. effort to identify fuel markers that would be compatible for use in jet fuel. SY–124 to be used in the fuel used in Today’s rule requires that heating oil We commit to a review of the use of SY– unvented heaters. Furthermore, today’s and locomotive and marine fuel which 124 in the future based on the findings rule, does not require that SY–124 be contains the marker must also contain of the CRC and the FAA, experience added to kerosene. This resolves most of visible evidence of red dye. Therefore, with the use of SY–124 in Europe, and what concern might remain regarding the ‘‘white bucket’’ test that distributors future input from ASTM or other this issue, since kerosene is the currently use to detect red dye concerned parties. If alternative markers predominate fuel used in unvented contamination of jet fuel can also be are identified that do not raise concerns heaters. However, the DoD stated that relied upon to detect marker regarding the potential contamination of No. 2 diesel fuel is sometimes used in contamination of jet fuel. Based on the jet fuel, we will initiate a rulemaking to its tent heaters and expressed concern above discussion, we concluded that the evaluate the use of one of these markers regarding the presence of SY–124 in fuel required addition of the marker to in place of SY–124. used for this purpose. We understand heating oil and 500 ppm sulfur Since the NPRM, no new information that to simplify the DoD fuel locomotive and marine fuel from 2010– has been provided which indicates that distribution system, it is DoD policy to 2012 would not significantly increase the combustion of SY–124 in heating use a single fuel called JP–8 for multiple the likelihood of jet fuel contamination, equipment would result in more purposes where practicable, including and that when such contamination harmful emissions than when space heating. JP–8 used for such a might occur, it could be readily combusted in engines, or would result purpose would not be subject to today’s identified without the need for in more harmful emissions than fuel marker requirement. In cases where additional testing. Our finalization of combustion of unmarked heating oil. JP–8 might not be available for space the Northeast/Mid-Atlantic Area in (see The European experience with the use heating, DoD could avoid the use of SY– section IV.D) also minimizes potential of SY–124 and the evaluation process it 124 containing fuel by using kerosene in concerns regarding the potential that jet underwent prior to selection by the EU, their space heaters. fuel may become contaminated with the provides strong support regarding the We believe that the concerns marker, since no marker is required in compatibility of SY–124 in the U.S. fuel expressed regarding the potential this area. Furthermore, there is expected distribution system, and for use in impact on distributors and transmix to be little heating oil used outside of motor vehicle engines and other processors from the presence of SY–124 the Northeast/Mid-Atlantic Area, the equipment such as in residential in heating oil and 500 ppm sulfur LM locomotive and marine market outside furnaces and nonroad, locomotive, and fuel have been addressed by moving the of the Northeast/Mid-Atlantic Area is marine engines. We believe that point of marker addition to the terminal. limited. We anticipate that the concerns regarding the potential health Terminal operators stated that they

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desire the flexibility to blend 500 ppm We do not expect that the fuel marker to adopt one of the markers from the diesel fuel from 15 ppm diesel fuel and requirements will result in the need for family of markers that they are heating oil. This practice would have additional fuel storage tanks or tank investigating. Given the changes to our been prevented by the proposed trucks in the distribution system. As program in today’s final rule, the marker addition of the marker at the refinery discussed in section VI.A of today’s provisions will not impose a significant gate. Under today’s rule, terminal preamble, the implementation of the burden. However, if the IRS program operators will have access to unmarked NRLM sulfur standards in today’s rule were to develop an alternate marker that high sulfur fuel with which to is projected to result in the need for would be compatible with jet we will manufacture 500 ppm diesel fuel by additional storage tanks and tank truck initiate a rulemaking to evaluate the use blending with 15 ppm diesel fuel.179 de-manifolding at a limited number of of one of these markers in place of SY– Transmix processors stated that the bulk plant facilities. The marker 124 (see section VIII.H.). presence of a marker in transmix would requirement does not add another Commenters also expressed concerns limit the available markets for their criteria apart from the sulfur content of regarding the proprietary rights related reprocessed distillates. The feed the fuel which would force additional to the manufacture and use of SY–124, material for transmix processors product segregation. As discussed and stated that EPA should adopt a primarily consists of the interface above, industry has expressed concern nonproprietary marker if possible. The mixing zone between batches of fuels about the use of the same tank trucks to proprietary rights related to SY–124 that abut each other during shipment by alternately transport heating oil and jet expire several months after the pipeline where this mixing zone can not fuel. We do not expect that the addition implementation of the marker be cut into either of the adjacent of marker to heating oil and 500 ppm requirements finalized in today’s rule. products. If marked heating oil and sulfur LM diesel fuel will exacerbate Therefore, we do not expect that the locomotive and marine fuel was these concerns. However, depending on current proprietary rights regarding SY– shipped by pipeline, the source material the outcome of the aforementioned CRC 124 are a significant concern. for transmix processors fed by pipelines program, the addition of marker to Commenters also stated that our that carry marked fuel could contain heating oil may hasten the current trend estimated cost of SY–124 in the NPRM SY–124.180 Transmix processors stated to avoid the use of tank trucks to (0.2 cents per gallon of treated fuel) was that it would be prohibitively expensive alternately transport jet fuel and heating high compared to other markers that to segregate pipeline-generated transmix oil. To the extent that this does occur, cost hundredths of a cent per gallon. containing the marker from that which we do not expect that it would result in Since the proposal we have obtained does not contain the marker prior to substantial additional costs since few more accurate information which processing, and that they could not tank truck operators currently use the indicates that the current cost of bulk economically remove the marker during same tank truck compartments to quantities of SY–124 is approximately reprocessing. Thus, in cases where the alternately transport heating oil and jet 0.03 cents per gallon of treated fuel (see marker would be present in a transmix fuel. section VI.A.). Based on conversations processor’s feed material, they would be Through our discussions with the IRS, with various marker manufacturers, this limited to marketing their reprocessed we have confirmed that the presence of cost is comparable to or less than other distillate fuels into the heating oil SY–124 will not interfere with fuel markers. market. Since today’s final rule requires enforcement of their red dye F. Fuel Marker Test Method requirement. 181 Although, SY–124 may that the marker be added at the terminal As discussed in section V.E above, impart a slight orange tint to red-dyed gate (rather than at the refinery gate), the today’s rule requires the use of SY–124 diesel fuel, this will not complicate the feed material that transmix processors at a concentration of 6mg/L in heating identification of the presence of the IRS receive from pipelines will not contain oil beginning in 2007, and in 500 ppm red dye. In fact, IRS has determined that the marker. Hence, they will not sulfur LM diesel fuel produced by a the presence of SY–124 may even typically need to process transmix refiner or importer from 2010 through enhance enforcement of their fuel tax containing the fuel marker prescribed in 2012, except for such fuels that used in program. 182 However, as identified in today’s rule, and today’s marker the Northeast/Mid-Atlantic Area and the comments, the implementation of requirement is not expected to Alaska. There is currently no industry significantly alter their operations. today’s marker requirement for heating standard test procedure to quantify the There is little opportunity for marker oil arguably may be in conflict with IRS presence of SY–124 in distillate fuels. contamination of fuels that are not regulations at 26 CFR 48.4082–1(b) The most commonly accepted method is subject to the marker requirements to which state that no dye other than the based on the chemical extraction of the occur at the terminal and further IRS-specified red dye must be present in SY–124 using hydrocloric acid solution downstream. In the rare instances where untaxed diesel fuel. IRS is evaluating and cycloxane, and the subsequent this might occur, the fuel contaminated what actions might be necessary to evaluation of the extract using a visual would likely also be a distillate fuel, clarify that the addition of SY–124 to spectrometer to determine the and thus could be sold into the heating heating oil would not be in violation of concentration of the marker.183 This test oil market without need for IRS regulations. is inexpensive and easy to use for field reprocessing. IRS also related that they are inspections. However, the test involves investigating new markers for potential reagents that require some safety use either to supplement or to replace 179 Terminals that manufacture 500 ppm diesel precautions and the small amount of fuel by blending 15 ppm and high sulfur fuel are red dye under their diesel tax program fuel required in the test must be treated as a refiner under today’s rule. They must which might be compatible with jet fuel. disposed of as hazardous waste. also comply with all applicable designate and track IRS stated that it might result in a requirements, anti-downgrading provisions, and the Commenters expressed concerns about other applicable requirements in today’s rule (see reduced burden on industry if EPA were section IV.D of today’s preamble). 183 Memorandum to the docket entitled ‘‘Use of 180 We do not expect that there will be sufficient 181 Phone conversation between Carl Dalton and a Visible Spectrometer Based Test Method in demand for 500 ppm sulfur LM diesel fuel Rick Stiff, IRS and Jeff Herzog and Paul Machiele, Detecting the Presence and Determining the produced by refiners or importers to justify its EPA, February 19, 2004. Concentration of Solvent Yellow 124 in Diesel shipment by pipeline after 2010. 182 ibid. Fuel.’’

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the use of a test procedure which developed for SY–124 that can avoid the date of the European Union’s marker involves a hazardous reagent use of reagents and the generation of requirement. However, EPA is aware of (hydrochloric acid) and which generates hazardous waste that is by product of only limited summary data on the a waste product that must be disposed the current commonly accepted method. variability of the reference test method of as hazardous waste. Nevertheless, we Under the performance criteria from a manufacturer of the visible continue to believe that such safety approach, methods developed by spectrometer apparatus used in the concerns are manageable here in the consensus bodies as well as methods testing.186 The stated resolution of the U.S. just as they are in Europe and that not yet approved by a consensus body test method from the materials provided the small amount of waste generated can will qualify for approval provided they by this equipment manufacturer is 0.1 be handled along with other similar meet the specified performance criteria mg/L, with a repeatability of plus or waste generated by the company as well as the record-keeping and minus 0.08 mg/L and a reproducibility conducting the test, and that the reporting requirements for quality of plus or minus 0.2 mg/L.187 Given the associated effort and costs will be control purposes. There is no designated lack of more extensive data, we have negligible. marker test method. decided to use these available data as Changes made in today’s final rule 1. How Can a Given Marker Test the basis of the precision and accuracy from the proposal will mean that few Method Be Approved? criteria for the marker test procedure parties in industry will need to test for under today’s rule (as discussed below). the marker, thereby minimizing A marker test method can be EPA may initiate a review of the concerns about the burden of such approved for use under today’s program precision and accuracy criteria finalized testing. Much of the testing for the fuel by meeting certain precision and in today’s rule should additional test marker that was envisioned by industry accuracy criteria. Approval will apply data become available. was associated with detecting marker on a laboratory/facility-specific basis. If Using a similar methodology to that contamination in other fuels. By moving a company chooses to employ more employed in deriving the sulfur test the required point of marker addition than one laboratory for fuel marker procedure precision value results in a downstream to the terminal, today’s rule testing purposes, then each laboratory precision value for the marker test virtually eliminates these concerns. will have to separately seek approval for procedure of 0.043 mg/L (see section Where such concerns continue to exist, each method it intends to use. Likewise, V.H).188 However, we are concerned the presence of the red dye will provide if a laboratory chooses to use more than that the use of this precision value, a visual means of detecting marker one marker test method, then each because it is based on very limited data, contamination.184 Therefore, we expect method will have to be approved might preclude the acceptability of test that the instances where parties will separately. Separate approval will not procedures that would be adequate for need to test for marker contamination be necessary for individual operators or the intended regulatory use. In addition, will be rare. Also, the Northeast/Mid- laboratory instruments within a given the lowest measurement of marker Atlantic Area provisions finalized in laboratory facility. The method will be concentration that will have relevance today’s rule will exempt the vast approved for use by that laboratory as under the regulations is 0.1 mg per liter. majority of heating oil used in the U.S. long as appropriate quality control Consequently, today’s rule requires that from the marker requirement. Based on procedures were followed. the precision of a marker test procedure the above discussion, we believe that In developing the precision and will need to be less than 0.1 mg/L for the vast majority of testing for the accuracy criteria for the sulfur test it to qualify. presence of the fuel marker that will be method, EPA drew upon the results of To demonstrate the accuracy of a conducted will be that by EPA for an inter-laboratory study conducted by given test method, a laboratory facility enforcement purposes. the American Society for Testing and will be required to perform 10 repeat Similar to the approach proposed Materials (ASTM) to support ASTM’s tests, the mean of which can not deviate regarding the measurement of fuel standardization of the sulfur test from the Accepted Reference Value sulfur content discussed in section V.H method. Unfortunately, there has not (ARV) of the standard by more than 0.05 above, we are finalizing a performance- been sufficient time for industry to mg/L. We believe that this accuracy based procedure to measure the standardize the test procedure used to level is not overly restrictive, while concentration of SY–124 in distillate measure the concentration of SY–124 in being sufficiently protective considering fuel. Section V.H above describes our distillate fuels or to conduct an inter- that the lowest marker level of rationale for finalizing performance- laboratory study regarding the based test procedures. Under the variability of the method. Nevertheless, 186 Technical Data on Fuel/Dye/Marker & Color performance-based approach, a given the European Union has been successful Analyzers, as downloaded from the Petroleum test method can be approved for use in in implementing its marker requirement Analyzer Company L.P. Web site at http:// while relying on the marker test www.petroleum-analyzer.com/product/PetroSpec/ a specific laboratory or for field testing lit_pspec/DTcolor.pdf. by meeting certain precision and procedures which are currently 187 Repeatability and reproducibility are terms accuracy criteria. Properly selected available, as noted above. We used, the related to test variability. ASTM defines precision and accuracy values allow most commonly used marker test repeatability as the difference between successive procedure to establish the precision and results obtained by the same operator with the same multiple methods and multiple apparatus under constant operating conditions on commercially available instruments to accuracy criteria on which a marker test identical test materials that would, in the long run, be approved, thus providing greater procedure would be approved under the in the normal and correct operation of the test 185 flexibility in method and instrument today’s rule. method be exceeded only in one case in 20. Reproducibility is defined by ASTM as the selection while also encouraging the There has been substantial experience in the use of this reference market test difference between two single and independent development and use of better methods results obtained by different operators working in and instrumentation in the future. For method since the August 2002 effective different laboratories on identical material that example, we are hopeful that with more would, in the long run, be exceeded only in one 185 Memorandum to the docket entitled ‘‘Use of case in twenty. time and effort a simpler test can be a Visible Spectrometer Based Test Method in 188 See section V.H of this proposal for a Detecting the Presence and Determining the discussion of the methodology used in deriving the 184 Today’s rule requires that red dye be present Concentration of Solvent Yellow 124 in Diesel proposed precision and accuracy values for the in heating oil which contains the marker. Fuel.’’ sulfur test method.

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regulatory significance would be 0.1 method will be considered approved in by December 31, 2004 and shall include mg/L. Ten tests will be required using the absence of EPA comment. the following information: each of two different marker standards, Laboratory facilities are required to • The name and address of each one in the range of 0.1 to 1 mg/L and retain the fuel samples used for location at which any employee of the the other in the range of 4 to 10 mg/L precision and accuracy demonstration company, including any parent of SY–124. Therefore, a minimum of 20 for 30 days. companies, subsidiaries, or joint venture total tests will be required for sufficient For test methods that have not been partners 190 worked From January 1, demonstration of accuracy for a given approved by a VCSB, full test method 2002 until January 1, 2003; marker test method at a given laboratory documentation, including a description • facility. Finally, any known of the technology/instrumentation that The average number of employees interferences for a given test method makes the method functional, as well as at each location, based on the number will have to be mitigated. These tests subsequent EPA approval of the method of employees for each of the company’s must be performed using commercially is also required. These submissions are pay periods from January 1, 2002 until available SY–124 standards. Since the subject to the Agency’s review for 90 January 1, 2003; European Union’s marker requirement days, and the method will be considered • The type of business activities will have been in effect for nearly 5 approved in the absence of EPA carried out at each location; and years by the implementation date of comment. Submission of VCSB methods • The total crude oil refining capacity today’s marker, we believe that such is not required since they are available of the corporation. We define total standards will be available by the in the public domain. In addition, capacity as the sum of all individual implementation date for today’s rule. industry and the Agency will likely refinery capacities for multiple-refinery These requirements are not overly have had substantial experience with companies, including any and all burdensome. To the contrary, these such methods. subsidiaries, and joint venture partners requirements are equivalent to what a To assist the Agency in determining as reported to the Energy Information laboratory would do during the normal the performance of a given marker test Administration (EIA) for 2002, or in the start up procedure for a given test method (non-VCSB methods, in case of foreign refiners, a comparable method. In addition, we believe the particular), we reserve the right to send reputable source, such as professional performance based approach finalized samples of commercially available fuel publication or trade journal.191 Refiners in today’s rule will allow regulated to laboratories for evaluation. Such do not need to include crude oil entities to know that they are measuring samples are intended for situations in capacity used in 2002 through a lease fuel marker levels accurately and within which the Agency has concerns agreement with another refiner in which reasonable site reproducibility limits. regarding a test method and, in it has no ownership interest. particular, its ability to measure the 2. What Information Would Have To Be marker content of a random The crude oil capacity information Reported to the Agency? commercially available diesel fuel. reported to the EIA is presumed to be As noted above, the European Union’s Laboratory facilities are required to correct. However, in cases where a (EU) marker requirement will have been report the results from tests on this company disputes this information, we in effect for nearly five years prior to the material to the Agency. will allow 60 days after the company effective data for the proposed marker submits its application for small refiner G. Requirements for Recordkeeping, requirements and we expect the EU status for that company to petition us Reporting, and PTDs requirement to continue indefinitely. with detailed data it believes shows that Thus, we anticipate that the European 1. Registration Requirements the EIA’s data was in error. We will consider this data in making a final testings standards community will As discussed in section IV.D, by likely have standardized a test determination about the refiner’s crude December 31, 2005, or six months prior oil capacity. procedure to measure the concentration to handling fuels subject to the of SY–124 in distillate fuels prior to the designation requirements of today’s Finally, applications for small refiner implementation of the marker rule, each entity in the fuel distribution status must also include information on requirement in today’s final rule. The system, up through and including the which small refiner option the refiner United States testing standards point where fuel is loaded onto trucks expects to use at each of its refineries. community may also enact such a for distribution to retailers or wholesale 3. Applications for Refiner Hardship standardized test procedure. To the purchaser-consumers, must register Relief extent that marker test methods that each of its facilities with EPA. have already been approved by a An entity’s registration must include As discussed above in section IV.C, a voluntary consensus standards body 189 the following information: refiner seeking general hardship relief (VCSB), such as the International • Corporate name and address under today’s program will apply to Standards Organization (ISO) or the —Contact name, telephone number, and EPA and provide several types of American Society for Testing and e-mail address financial and technical information, Materials (ASTM), each laboratory • For each facility operated by the such as internal cash flow data and facility would be required to report to entity: information on bank loans, bonds, and the Agency the precision and accuracy assets as well as detailed engineering —Type of facility (e.g. refinery, import results as described above for each and construction plans and permit facility, pipeline, terminal) method for which it is seeking approval. status. Applications for general Such submissions to EPA, as described —Facility name —Physical location hardship relief are due June 1, 2005. elsewhere, will be subject to the —Contact name, telephone number, and Agency’s review for 30 days, and the e-mail address 190 ‘‘Subsidiary’’ here covers entities of which the parent company has 50 percent or greater 189 These are standard-setting organizations, like 2. Applications for Small Refiner Status ownership. ASTM, and ISO that have broad representation of 191 We will evaluate each foreign refiner?s all interested stakeholders and make decisions by An application of a refiner for small documentation of crude oil capacity on an consensus. refiner status must be submitted to EPA individual basis.

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4. Pre-Compliance Reports for Refiners numbers of credits to be earned and/or reported over the quarterly compliance used; period; We believe that an early general • Information on project schedule by • Calculations showing that the understanding of the refining industry’s known or projected completion date (by volume of highway diesel fuel progress in complying with the quarter) by the stage of the project. For distributed from the facility relative to requirements in today’s rule will be example, following the five project the volume received did not increase valuable to both the industry and EPA. phases described in EPA’s June 2002 since June 1, 2007; and As with the highway diesel program, we Highway Diesel Progress Review report • Calculations showing that the are requiring that each refiner and (EPA420–R–02–016): (1) Strategic importer provide annual reports on the volume of high sulfur NRLM diesel fuel planning, (2) planning and front-end did not increase by a greater proportion progress of compliance and plans for engineering, (3) detailed engineering compliance for each of their refineries than the volume of heating oil over the and permitting, (4) procurement and quarterly compliance period (not or import facilities. These pre- construction, and (5) commissioning compliance reports are due June 1 of applicable in the Northeast/Mid- and startup. Atlantic Area or Alaska). each year beginning in 2005 and • Basic information regarding the The quarterly compliance periods and continuing through 2011, or until the selected technology pathway for dates by which the reports are due for production of 15 ppm sulfur NR and LM compliance (e.g., conventional each period are as follows. diesel fuel commences, whichever is hydrotreating vs other technologies, later. revamp vs grassroots, etc.); EPA will maintain the confidentiality • Whether capital commitments have TABLE V.G–1. QUARTERLY COMPLI- of information submitted in pre- been made or are projected to be made; ANCE PERIODS AND REPORTING compliance reports to the full extent and DATES a authorized by law. We will report • The pre-compliance reports in 2006 and later years must provide an update Quarterly compliance pe- generalized summaries of this data riod Report due date following receipt of the pre-compliance of the progress in each of these areas. reports. We recognize that plans may 5. Compliance Reports for Refiners, July 1 through September November 30. change for many refiners or importers as Importers, and Distributors of 30. the compliance dates approach. Thus, Designated Diesel Fuel October 1 though Decem- February 28. submission of the reports will not ber 31. impose an obligation to follow through a. Designate and Track Reporting January 1 through March May 31. on plans projected in the reports. Requirements 31. April 1 through June 30 ..... August 31. Pre-compliance reports can, at the i. Quarterly Reports discretion of the refiner/importer, be From June 1, 2007 and through Notes: a The first quarterly reporting period submitted in conjunction with the will be from June 1, 2007 though September September 1, 2010, all entities who are 30, 2007 and the last quarterly compliance pe- annual compliance reports discussed required to maintain records must riod will be from April 1, 2010 through May 31, below and/or the pre-compliance and report the following information by 2010. annual compliance reports required facility to EPA on a quarterly basis: ii. Annual Reports under the highway diesel program, as • The total volume in gallons of each long as all of the information that is type of designated diesel fuel for which Beginning June 1, 2007, all entities required in all reports is clearly custody was transferred by the entity to that are required to maintain records for provided. Based on experience with the any other entity, and the EPA entity and batches of fuel must report by facility on first pre-compliance reports for the facility identification number(s), as an annual basis (due August 31) highway diesel program, we are applicable, of the transferee; and information on the total volumes clarifying the information request for • The total volume in gallons of each received of each fuel designation as well the pre-compliance reports as shown type of designated diesel fuel for which as the results of all compliance below. This should provide responses in custody was received by the entity from calculations including the following: a more standardized format which will any other entity and the EPA entity and • The total volumes transferred of allow for better aggregation of the data, facility identification number(s), as each fuel designation; as well as eliminate reporting of applicable, of the transferor. • Beginning and ending inventories unnecessary information. If a facility receives fuel from another of each fuel designation; facility that does not have an EPA Pre-compliance reports must include • In Alaska, for diesel fuel designated facility identification number then that the following information: as high sulfur NRLM delivered from batch of fuel must be designated and • Any changes in the basic corporate June 1, 2007 through May 31, 2010 and reported as (1) heating oil if it is or facility information since registration; for diesel fuel designated as 500 ppm marked, (2) highway diesel fuel if taxes • Estimates of the average daily sulfur NRLM delivered from June 1, have been assessed, (3) NRLM diesel volumes (in gallons) of each sulfur grade 2010 through May 31, 2014, refiners fuel if the fuel is dyed but not marked. of highway and NRLM diesel fuel Terminals must also report the results must report all information required produced (or imported) at each refinery of all compliance calculations including under their individual compliance plan, (or facility). These volume estimates the following: including the end-users to whom each must be provided both for fuel produced • The total volumes received of each batch of fuel was delivered and the total from crude oil, as well as any fuel fuel designation required to be reported delivered to each end-user for the produced from other sources, and must over the quarterly compliance period; compliance period; be provided for the periods of June 1, • The total volumes transferred of • Ending with the report due August 2010–December 31, 2010, calendar years each fuel designation required to be 31, 2010, calculations showing that the 2011–13, January 1, 2014–May 31, 2014, reported over the quarterly compliance volume of highway diesel fuel and June 1, 2014–December 31, 2014; period; distributed from the facility relative to • For entities expecting to participate • Beginning and ending inventories the volume received did not increase in the credit program, estimates of of each fuel designation required to be since June 1, 2007;

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• Ending with the report due August credits. Credit transfer information must track transfers are somewhat more 31, 2010, calculations showing that the include the identification of the number straightforward. volume of highway diesel fuel of credits obtained from, or transferred We believe this additional distributed from the facility relative to to, each entity. Reports must also show information on commercial PTDs is new volume received did not increase the credit balance at the start of the necessary to maintain the integrity of over the annual compliance period by period, and the balance at the end of the the various grades of diesel fuel in the more than two percent of the total period. NRLM or nonroad diesel sulfur distribution system. Parties in the volume of highway diesel fuel received; credit information is required to be system will be better able to identify • Ending with the report due August stated separately from highway diesel which type of fuel they are dealing with 31, 2010, calculations showing that the credit information since the two credit and more effectively ensure that they volume of high sulfur NRLM diesel fuel programs are treated separately. are meeting the requirements of today’s did not increase by a greater proportion • For a small refiner that elects to program. This in turn will help to than the volume of heating oil over the produce 15 ppm sulfur NRLM diesel ensure that misfueling of sulfur annual compliance period (not fuel by June 1, 2006 and therefore is sensitive engines does not occur and applicable in the Northeast/Mid- eligible for a limited relaxation in its that the program results in the needed Atlantic Area or Alaska); interim small refiner gasoline sulfur emission reductions. • Calculations showing that the standards, the annual reports must also Today’s rule allows the use of product volume of heating oil did not decrease include specific information on gasoline codes to convey the required over the annual compliance period, sulfur levels and progress toward information, except for transfers to truck beginning June 1, 2010 (not applicable highway and NRLM diesel fuel carriers, retailers and wholesale in the Northeast/Mid-Atlantic Area or desulfurization. purchaser-consumers. We believe that Alaska); and more explicit language on PTDs to these • From June 1, 2010 through August 6. PTDs parties is necessary since employees of 1, 2012, calculations showing that the Refiners, importers, and other parties such parties are less likely to be aware volume of 500 ppm sulfur NR diesel in the distribution system must provide of the meaning of product codes. PTDs fuel did not increase by a greater information on commercial PTDs that will not be required for transfers of proportion than the volume of 500 ppm identify diesel fuel distributed by use product into nonroad, locomotive, or sulfur LM diesel fuel over the annual designation and sulfur content; i.e., for marine equipment at retail outlets or compliance period (not applicable in use in or motor vehicles, nonroad wholesale purchaser-consumer facilities the Northeast/Mid-Atlantic Area and equipment, locomotive and marine with the exception of mobile refuelers. Alaska. equipment, or nonroad, locomotive, and Mobile refuellers are required to provide marine diesel equipment, as a separate PTD to their customers for b. Other Reporting Requirements appropriate, and the sulfur standard to each type of fuel (e.g., 500 ppm sulfur After the NRLM diesel fuel sulfur which the fuel is subject. The PTD must NRLM diesel fuel, 15 ppm sulfur NRLM requirements begin on June 1, 2007, indicate whether the fuel is diesel fuel, diesel fuel, or 15 ppm highway diesel refiners and importers will be required heating oil, kerosene, exempt fuel, or fuel) that they dispense from tanker to submit annual compliance reports for other. It must further state whether it is trucks or other vessels into motor each refinery or import facility. If a No. 1 or No. 2, dyed or undyed, marked vehicles, nonroad diesel engines or refiner produces 15 ppm sulfur or 500 heating oil, marked LM fuel, or nonroad diesel engine equipment, for ppm sulfur fuel early under the credit unmarked. The specific designations on each instance when they refuel such provisions, its annual compliance PTDs will change during the course of equipment at a given location.192 reporting requirement will begin on the program. For example, the highway a. Kerosene and Other Distillates To June 1 following the beginning of the designation for 500 ppm sulfur fuel Reduce Viscosity early fuel production. These reporting ends after 2010. Where a party delivers requirements will sunset after all or receives a particular load of fuel that To ensure that downstream parties flexibility provisions end (i.e., after May has a uniform sulfur content but that can determine the sulfur level of 31, 2014). Annual compliance reports has two different designations, the kerosene or other distillates that may be will be due on August 31. parties must utilize two different PTDs. distributed for use for blending into 15 A refiner’s or importer’s annual For example, if, in 2007 a refiner moves ppm sulfur highway or NRLM diesel compliance report must include the 1,000 gallons of 500 ppm sulfur diesel fuel, for example, to reduce viscosity in following information for each of its into a pipeline, and the refiner’s cold weather, we are requiring that facilities: designation is that half of that product PTDs identify distillates specifically • Batch reports for each batch is highway 500 and half is nonroad 500, distributed for such use as meeting the produced or imported providing the parties would utilize one PTD for 15 ppm sulfur standard. information regarding volume, 500 gallons of highway 500 ppm sulfur b. Exported Fuel designation (e.g., 500 highway), sulfur diesel fuel and another for 500 gallons level and whether the fuel was dyed of nonroad 500 diesel fuel. Consistent with other EPA fuel and/or marked. Each batch can only As in other fuels programs, PTDs programs, NRLM diesel fuel exported have one designation. Therefore, if a must accompany each transfer of either from the U.S. is not required to meet the refiner ships 100 gallons of 500 ppm title or custody of fuel. However, only sulfur standards of today’s regulations. sulfur fuel in 2007 and wants to custody transfers are relevant to For example, where a refiner designates designate 50 gallons as highway 500 and compliance with the designation and a batch of diesel fuel for export, and can 50 gallons as NR 500, the refiner must tracking requirements and the demonstrate through commercial report two separate batches and there downgrade limitations, and transfers to documents that the fuel was exported, must be two PTDs—one for 50 gallons retail outlets and wholesale purchaser- such fuel would not be required to of highway 500 and one for 50 gallons consumers of fuel by distributors below 192 of NR 500). the truck rack are not covered by the Only one PTD is required for each fuel • designation or classification regardless of the Report on the generation, use, designate and track scheme. Therefore, number of motor vehicles or the number of diesel- transfer and retirement of diesel sulfur the PTDs for these non-designate and powered NRLM equipment that are fueled.

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comply with the NRLM sulfur standards described below for the various periods • 15 ppm sulfur NRLM diesel fuel; in today’s rule. Product transfer of the program.193 • No. 1 500 ppm sulfur highway documents accompanying the transfer of • Batch number (including whether it diesel fuel; custody of the fuel at each point in the is an incoming or out-going batch for • No. 2 500 ppm sulfur highway distribution system are required to state refineries that also handle previously diesel fuel; or that the fuel is for export only and may designated fuel); • 500 ppm sulfur NRLM diesel fuel. • not be used in the United States. Batch designation; • Volume in gallons; b. June 1, 2007 Through May 31, 2010 c. Additives • Date/time of day of custody Refiners and importers must maintain transfer; and the records listed above for each batch • Today’s rule requires that PTDs for Name and EPA entity and facility of distillate fuel that they designate and additives for use in NRLM diesel fuel identification number of the facility to transfer custody of during the time state whether the additive complies which the batch was transferred. period from June 1, 2007 through May with the 15 ppm sulfur standard. Like For highway diesel fuel, the records 31, 2010 with the following fuel types: the highway diesel rule, this program must also identify whether the batch • No. 1 15 ppm sulfur highway diesel allows the sale of additives, for use by was received or delivered with or fuel; fuel terminals or other parties in the without taxes assessed. For NRLM • No. 2 15 ppm sulfur highway diesel diesel fuel distribution system, that diesel fuel, the records must also fuel; have a sulfur content greater than 15 identify whether the batch was received • 15 ppm sulfur NRLM diesel fuel; ppm under specified conditions. or delivered with or without the IRS red • No. 1 500 ppm sulfur highway dye. For heating oil, the records must For additives that have a sulfur diesel fuel; indicate whether the batch was received • No. 2 500 ppm sulfur highway content less than 15 ppm, the PTD must or delivered with or without the fuel state: ‘‘The sulfur content of this diesel fuel; or marker. From June 1, 2010, through May • additive does not exceed 15 ppm.’’ For 500 ppm sulfur NRLM diesel fuel; 31, 2012, the records for LM fuel • additives that have a sulfur content High sulfur NRLM diesel fuel; or batches must also indicate whether the • Heating oil. greater than 15 ppm, the additive batch was received or delivered with or manufacturer’s PTD, and PTDs without the fuel marker. c. June 1, 2010 Through May 31, 2012 accompanying all subsequent transfers, In addition to the designate and track must provide a warning that the Refiners and importers must maintain records, refiners and importers must the records listed above for each batch additive’s sulfur content exceeds 15 maintain the following records on the of diesel fuel that they designate and ppm; the maximum sulfur content of the highway and NRLM diesel fuel that they transfer custody of during the time additive; the maximum recommended produce and/or import: period from June 1, 2010 through May concentration for use of the additive in • PTDs; 31, 2012, with the following fuel types: diesel fuel (stated as gallon of additive • Sampling and testing results for • 500 ppm sulfur NR diesel fuel; per gallon of diesel fuel); and the sulfur content (for highway and NRLM • 500 ppm sulfur LM diesel fuel; or increase in sulfur concentration of the diesel fuel that is subject to either the • Heating oil. fuel the additive will cause when used 15 ppm or 500 ppm sulfur standards), at the maximum recommended as well as sampling and testing results d. June 1, 2012 Through May 31, 2014 that are part of a quality assurance concentration. Refiners and importers must maintain program; Today’s rule contains provisions for • Sampling and testing results for the the records listed above for each batch aftermarket additives sold to owner/ cetane index or aromatics content, as of distillate fuel that they transfer operators for use in diesel powered well as sampling and testing results for custody of and designate during the nonroad equipment. These provisions additives; time period from June 1, 2012 through are in response to concerns that • Records on credit generation, use, May 31, 2014 with the following fuel additives designed for engines not types: transfer, purchase, or termination, • requiring 15 ppm sulfur fuel, such as maintained separately for the highway 15 ppm sulfur highway or NRLM locomotive or marine engines, could and NRLM diesel fuel credit programs; diesel fuel; • accidentally be introduced into nonroad and 500 ppm sulfur NRLM diesel fuel; engines if they had no label stating • Records related to individual or • appropriate use. Beginning June 1, 2010, compliance plans, if applicable, and Heating oil. aftermarket additives for use in nonroad annual compliance calculations. d. June 1, 2014 and Beyond equipment must be accompanied by a. June 1, 2006 through May 31, 2007 information that states that the additive Refiners and importers must maintain complies with the 15 ppm sulfur Refiners and importers must maintain the records listed above for each batch standard. We believe this information is the records listed above for each batch of heating oil that they transfer custody necessary for end users to determine if of diesel fuel that they designate and of and designate during the time period an additive is appropriate for use. transfer custody of during the time from June 1, 2014 and beyond. period from June 1, 2006 through May 7. Recordkeeping Requirements for 8. Recordkeeping Requirements for 31, 2007, with the following fuel types: Distributors Refiners and Importers • No. 1 15 ppm sulfur highway diesel fuel; Distributors of distillate fuel must Refiners and importers of distillate • No. 2 15 ppm sulfur highway diesel maintain the following designate and fuel must maintain the following fuel; track records on a facility-specific basis designate and track records for the for the distillate fuel they distribute. distillate fuel they produce and/or 193 Transmix processors and terminal operators The specific distillate fuel designations import. The specific types of distillate acting as refiners that produce 500 ppm sulfur that are subject to these recordkeeping fuel that are subject to these diesel fuel for sale into the locomotive and marine markets are also subject to the recordkeeping requirements are described below for recordkeeping requirements are requirements. the various periods of the program.

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• Batch number (including whether it records. Similarly, if a facility only period from June 1, 2012 through May is an incoming or out-going batch); receives highway diesel fuel on which 31, 2014. This requirement does not • Batch designation; taxes have been assessed or NRLM apply to facilities located in Alaska or • Volume in gallons; diesel fuel which has been dyed the Northeast/Mid-Atlantic Area unless • Date/time of day of custody pursuant to IRS regulations (i.e., it does they deliver marked heating oil to transfer; • not receive any untaxed highway diesel facilities outside of these areas. Name and EPA entity and facility fuel or undyed NRLM diesel fuel), then • 500 ppm sulfur NRLM diesel fuel; identification number of the facility it does not need to maintain records of and from which the fuel batch was received the 500 ppm sulfur highway or NRLM • Heating oil. or to which the fuel batch was diesel fuel that it receives. delivered; 9. Recordkeeping Requirements for End- • Beginning and ending inventory a. June 1, 2006 Through May 31, 2007 Users volumes on a quarterly basis; and • Facilities that receive No. 2 15 ppm Today’s program also contains certain Inventory adjustments. sulfur highway diesel fuel and For highway diesel fuel, the records recordkeeping provisions for end-users. distribute any No. 2 500 ppm sulfur must also identify whether the batch From June 1, 2007 through October 1, highway diesel fuel, must maintain was received or delivered with or 2010, end-users that receive any batch records for each batch of diesel fuel without taxes assessed. For NRLM of high sulfur NRLM in Alaska must with the following designations that diesel fuel, the records must also maintain records of each batch of fuel they receive or deliver during the time identify whether the batch was received received for use in NRLM equipment period from June 1, 2006 through May or delivered with or without the IRS red unless otherwise allowed by EPA. From 31, 2007: June 1, 2010 through October 1, 2012, dye. For heating oil, the records must • No. 1 15 ppm sulfur highway diesel indicate whether the batch was received end-users that receive any batch of 500 fuel; ppm sulfur NR in Alaska must maintain or delivered with or without the fuel • No. 2 15 ppm sulfur highway diesel marker. From June 1, 2010, through records of each batch of fuel received for fuel; use in NR equipment unless otherwise October 1, 2012, the records must • No. 2 500 ppm sulfur highway indicate whether LM fuel was received allowed by EPA. In addition, from June diesel fuel; and 1, 2012 through October 1, 2014, end- or delivered with or without the fuel • 500 ppm sulfur NRLM diesel fuel. marker.194 In addition to these designate users that receive any batch of 500 ppm and track records, distributors will be b. June 1, 2007 Through May 31, 2010 sulfur NRLM in Alaska must maintain records of each batch of fuel received for required to maintain records related to All facilities must maintain records their quarterly and annual compliance use in NRLM equipment unless for each batch of diesel fuel or heating otherwise allowed by EPA. calculations as well as copies of all oil with the following designations for PTDs. which they receive or transfer custody 10. Record Retention If a facility receives fuel from another during the time period from June 1, facility that does not have an EPA We are adopting a retention period of 2007 through May 31, 2010: five years for all records required to be facility identification number then that • No. 1 15 ppm sulfur highway diesel batch of fuel must be designated as (1) kept under today’s rule. This is the same fuel; period of time required in other fuels heating oil if it is marked, or from 2010 • No. 2 15 ppm sulfur highway diesel rules, and it coincides with the through 2012, LM diesel fuel if the fuel fuel; applicable statute of limitations. We is dyed and marked and is not heating • No. 1 500 ppm sulfur highway believe that most parties in the oil (2) highway diesel fuel if taxes have diesel fuel; distribution system would maintain been assessed, and (3) NRLM diesel fuel • No. 2 500 ppm sulfur highway some or all of these records for this if the fuel is dyed but not marked. diesel fuel; length of time even without the If a facility delivers fuel to other • 500 ppm sulfur NRLM diesel fuel; requirement. facilities and that fuel is either 500 ppm • 15 ppm sulfur NRLM diesel fuel; sulfur highway diesel fuel on which • High sulfur NRLM diesel fuel; and This retention period applies to PTDs, taxes have been assessed or 500 ppm • Heating oil. records required under the designate sulfur NRLM, or LM diesel fuel into and track provisions, records of any test which red dye has been added pursuant c. June 1, 2010 Through May 31, 2012 results performed by any regulated party to IRS requirements, then the facility All facilities must maintain records for quality assurance purposes or does not need to maintain separate for each batch of diesel fuel or heating otherwise (whether or not such testing records for each of the other facilities to oil with the following designations for was required by this rule), along with which it delivered fuel. Similarly, if a which they receive or transfer custody supporting documentation such as date facility delivers batches of marked during the time period from June 1, of sampling and testing, batch number, heating oil to other facilities, then it 2007 through May 31, 2012. This tank number, and volume of product. does not need to maintain separate requirement does not apply to facilities Business records regarding actions taken records for each of the other facilities to located in the Northeast/Mid-Atlantic in response to any violations discovered which it delivered the marked heating Area or Alaska. must also be maintained for five years. oil. If a facility only receives marked • 500 ppm sulfur NR diesel fuel; All records that are required to be heating oil (i.e., it does not receive any • 500 ppm sulfur LM diesel fuel; or maintained by refiners or importers unmarked heating oil), then it does not • Heating oil. participating in the generation or use of need to maintain any heating oil credits, hardship options (or by d. June 1, 2012 Through May 31, 2014 importers of diesel fuel produced by a 194 After August 1, 2012, LM fuel distributed from Facilities that receive unmarked fuel foreign refiner approved for the terminals must contain a concentration of the designated as heating oil, must maintain temporary compliance option or a marker no greater than 0.1 mg/L. After October 1, 2012, LM fuel at any location in the fuel records for each batch of diesel fuel hardship option), including small distribution system must contain no more than a with the following designations that refiner options, are also covered by the trace amount of the marker (0.1 mg/L). they receive or deliver during the time retention period.

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H. Liability and Penalty Provisions for when NRLM would otherwise be liability are rebuttable. In general, in Noncompliance required to meet a 500 ppm sulfur order to rebut the presumption of standard, and can produce 500 ppm liability, parties will be required to 1. General sulfur NR or LM diesel fuel when establish that: (1) The party did not The liability and penalty provisions of nonroad or LM diesel fuel would cause the violation; (2) PTD(s) exist the today’s NRLM diesel sulfur rule are otherwise be required to meet a 15 ppm which establish that the fuel or diesel very similar to the liability and penalty sulfur standard. A refiner that produces additive was in compliance while under provisions found in the highway diesel fuel under the small refiner and credit the party’s control; and (3) the party sulfur rule, the gasoline sulfur rule, the provisions would be in violation unless conducted a quality assurance sampling reformulated gasoline rule and other they can demonstrate that they meet the and testing program. As part of their EPA fuels regulations.195 Regulated definition of a small refiner or have affirmative defense diesel fuel refiners parties are subject to prohibitions which sufficient credits for the volume of fuel or importers, diesel fuel additive are typical in EPA fuels regulations, produced. All regulated parties will be manufacturers, and blenders of high such as prohibitions on selling or liable for a failure to meet certain sulfur additives into diesel fuel, will distributing fuel that does not comply requirements, such as the record- also be required to provide test results with the applicable standard, and keeping, reporting, or PTD establishing the conformity of the causing others to commit prohibited requirements, or causing others to fail to product prior to leaving that party’s acts. For example, liability will also meet such requirements. control. Blenders of static dissipater arise under the NRLM diesel rule for Under today’s rule, the party in the additives have alternative defense violating certain prohibited acts and diesel fuel distribution system that provisions as discussed in section V.C. requirements, such as: Distributing or controls the facility where a violation Branded refiners have additional dispensing NR diesel fuel not meeting occurred, and other parties in that fuel affirmative defense elements to the 15 ppm sulfur standard for use in distribution system (such as the refiner, establish. The defenses under the model year 2011 or later nonroad reseller, and distributor), will be nonroad diesel sulfur rule are similar to equipment (and after Dec 1, 2014 into presumed to be liable for the those available to parties for violations any nonroad diesel equipment); violation.197 As in the Tier 2 gasoline of the highway diesel sulfur, distributing or dispensing diesel fuel sulfur rule and the highway diesel fuel reformulated gasoline, gasoline not meeting the 500 ppm sulfur rule, today’s rule explicitly prohibits volatility, and the gasoline sulfur standard for locomotive and marine causing another person to commit a regulations. Today’s rule also clarifies engines; distributing fuel containing the prohibited act or causing non- that parent corporations are liable for marker for use in engines that require conforming diesel fuel to be in the violations of subsidiaries, in a manner the use of fuel that does not contain the distribution system. Non-conforming consistent with the gasoline sulfur rule marker; prohibitions and requirements fuels include: (1) Diesel fuel with sulfur and the highway diesel sulfur rule. under the designate and track content above 15 ppm incorrectly Finally, the NRLM diesel sulfur rule provisions in today’s rule, including represented as appropriate for model mirrors the gasoline sulfur rule and the specific prohibitions and requirements year 2011 or later nonroad equipment or highway diesel sulfur rule by clarifying regarding fuel produced or distributed other engines requiring 15 ppm fuel; (2) that each partner to a joint venture will in the Northeast/Mid-Atlantic Area or in diesel fuel with sulfur content above be jointly and severally liable for the Alaska.196 500 ppm incorrectly represented as violations at the joint venture facility or Small refiners and refiners using appropriate for nonroad equipment or by the joint venture operation. credits can produce high sulfur NRLM locomotives or marine engines after the As is the case with the other EPA applicable date for the 500 ppm sulfur fuels regulations, today’s rule will apply 195 See section 80.5 (penalties for fuels standard for these pieces of equipment; the provisions of section 211(d)(1) of the violations); section 80.23 (liability for lead Clean Air Act (Act) for the collection of violations); section 80.28 (liability for gasoline (3) heating oil that is required to contain volatility violations); section 80.30 (liability for the marker which does not, LM fuel penalties. These penalty provisions highway diesel violations); section 80.79 (liability which is required to contain the marker currently subject any person that for violation of RFG prohibited acts); section 80.80 which does not, or other fuels that are violates any requirement or prohibition (penalties for RFG/CG violations); section 80.395 of the diesel sulfur rule to a civil (liability for gasoline sulfur violations); section required to be free of the marker in 80.405 (penalties for gasoline sulfur regulations).; which the marker is present; (4) fuel penalty of up to $32,500 for every day and section 80.610–614 (prohibited acts, liability designated or labeled as 500 ppm sulfur of each such violation and the amount for violations, and penalties for highway diesel highway diesel fuel above and beyond of economic benefit or savings resulting sulfur regulations. the volume balance limitations; (5) fuel from the violation.198 A violation of a 196 Today’s rule, in 40 CFR 80.610, provides that no person shall, inter alia, ‘‘dispense, supply, offer designated or labeled as NRLM above NRLM diesel sulfur standard will for supply, store or transport * * *’’ fuel not in and beyond the volume balance constitute a separate day of violation for compliance with applicable standards and limitations; or (6) fuels otherwise not each day the diesel fuel giving rise to requirements starting on a certain date. These complying with the requirements of this the violation remains in the fuel prohibitions apply at downstream locations such as retail outlets, wholesale purchaser-consumer rule. Parties outside the diesel fuel distribution system. Under today’s facilities as well as end-user locations. The act of distribution system, such as diesel regulation, the length of time the diesel storage or transport refers to storage or transport in additive manufacturers and distributors, fuel in question remains in the fuel storage tanks from which fuel is dispensed into are also subject to liability for those distribution system is deemed to be motor vehicles or NRLM engines or equipment. It does not refer to storing or transporting the fuel that diesel rule violations which could have twenty-five days unless there is is in the motor vehicle propulsion tank or other been caused by their conduct. evidence that the fuel remained in its tank that is incorporated in the NRLM equipment Today’s rule also provides affirmative distribution system a lesser or greater for the purpose of supplying the engine with fuel. defenses for each party presumed liable amount of time. This is the same time While the prohibition against dispensing inappropriate fuels does apply as of the applicable for a violation, and all presumptions of presumption that is incorporated in the date, the motor vehicle or NRLM engine or equipment may continue to burn any fuel in the 197 An additional type of liability, vicarious 198 This limit is amended periodically pursuant to motor vehicle fuel tank or NRLM equipment fuel liability, is also imposed on branded refiners under Congressional authority to change maximum civil tank that was properly dispensed into such tank. today’s rule. penalties to account for inflation.

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RFG, gasoline sulfur and highway diesel recognizing that party should primarily today’s rule imposes presumptive sulfur rules. The penalty provisions in be liable for penalties for the violation. liability on parties in the additive today rule are also be similar to the distribution system if diesel fuel into 2. What are the Liability Provisions for penalty provisions for violations of which the additive has been blended is Additive Manufacturers and these regulations. determined to have a sulfur level in Distributors, and Parties That Blend EPA has included in today’s rule two excess of its permitted concentration. Additives into Diesel Fuel? prohibitions for ‘‘causing’’ violations: This presumptive liability will differ (1) Causing another to commit a a. General depending on whether the blended violation; and (2) causing non- The final highway diesel rule permits additive was designated as meeting the complying diesel fuel to be in the the blending of diesel fuel additives 15 ppm sulfur standard (a ‘‘15 ppm distribution system. These causation with sulfur content in excess of 15 ppm additive’’) or designated as a greater prohibitions are like similar into 15 ppm highway diesel fuel under than 15 ppm sulfur additive (a ‘‘high prohibitions included in the gasoline limited circumstances. As more fully sulfur additive’’), as discussed below. sulfur and the highway diesel sulfur discussed earlier in this preamble, this b. Liability When the Additive Is regulations, and, as discussed in the rule also permits downstream parties to Designated as Complying with the 15 preamble to those rules, EPA believes blend fuel additives having a sulfur ppm Sulfur Standard they are consistent with EPA’s content exceeding 15 ppm into 15 ppm implementation of prior motor vehicle Additives blended into diesel fuel nonroad diesel, provided that: (1) The downstream of the refinery are required fuel regulations. See the liability blending of the additive does not cause discussion in the preamble to the to have a sulfur content no greater than the diesel fuel’s sulfur content to exceed 15 ppm, and be accompanied by PTD(s) gasoline sulfur final rule, at 65 FR 6812 the 15 ppm sulfur standard; (2) the et seq. accurately identifying them as additive is added in an amount no complying with the 15 ppm sulfur The prohibition against causing greater than one volume percent of the another to commit a violation will apply standard, with the sole exception of blended product; and (3) the diesel additives blended into nonroad where one party’s violation is caused by downstream party obtained from its the actions of another party. For diesel fuel at a concentration no greater additive supplier a product transfer than one percent by volume of the example, EPA may conduct an document (‘‘PTD’’) with the additive’s inspection of a terminal and discover blended fuel. sulfur content and the recommended All parties in the fuel and additive that the terminal is offering for sale treatment rate, and that it complied with distribution systems will be subject to nonroad diesel fuel designated as such treatment rate. As discussed in presumptive liability if the blended fuel complying with the 15 ppm sulfur section V.C, today’s rule includes exceeds the sulfur standard. The two standard, while the fuel, in fact, had an alternate affirmative defense ppm downstream adjustment will apply actual sulfur content greater than the requirements for blenders of S–D 199 when EPA tests the fuel subject to the standard. In this scenario, parties in additives that can contribute a 15 ppm sulfur standard. Low sulfur the fuel distribution system, as well as maximum of 0.050 ppm to the sulfur additives present a less significant parties in the distribution system of any content of finished fuel subject to the 15 threat to diesel fuel sulfur compliance diesel additive that had been blended ppm sulfur standard. Today’s rule also than would occur with the use of into the fuel, will be presumed liable for implements these same alternate additives designated as possibly causing the terminal to be in violation. defense requirements regarding the exceeding 15 ppm sulfur. Thus, parties Each party will have the right to present blending of such additives into 15 ppm in the additive distribution system of an affirmative defense to rebut this highway diesel fuel. the low sulfur additive could rebut the presumption. Since today’s rule permits the limited presumption of liability by showing the The prohibition against causing non- use in nonroad diesel fuel of additives following: (1) Additive distributors will compliant diesel fuel to be in the with high sulfur content, the Agency only be required to produce PTDs distribution system will apply, for believes it might be more likely that a stating that the additive complies with example, if a refiner transfers non- diesel fuel sulfur violation could be the 15 ppm sulfur standard; (2) additive compliant diesel fuel to a pipeline. This caused by the use of high sulfur manufacturers are also be required to prohibition could encompass situations additives. This could result from the produce PTDs accurately indicating where evidence shows high sulfur additive manufacturer’s compliance with the regulatory diesel fuel was transferred from an misrepresentation or inaccurate requirements, as well as producing test upstream party in the distribution statement of the additive’s sulfur results, or retained samples on which system, but EPA may not have test content or recommended treat rate on tests could be run, establishing the results to establish that parties the additive’s PTD, or an additive additive’s compliance with the 15 ppm downstream also violated a prohibited distributor’s contamination of low sulfur standard prior to leaving the act with this fuel. sulfur additives with high sulfur manufacturer’s control. Once they meet The Agency expects to enforce the additives during transportation. The their defense to presumptive liability, liability scheme of the NRLM diesel increased probability that parties in the these additive system parties will only sulfur rule in the same manner that we diesel additive distribution system be held responsible for the diesel fuel have enforced the similar liability could cause a violation of the sulfur non-conformity in situations in which schemes in our prior fuels regulations. standard warrants the imposition by the EPA can establish that the party actually As in other fuels programs, we will Agency of increased liability for such caused the violation. attempt to identify the party most parties. Therefore, today’s rule, like the Under today’s rule, parties in the responsible for causing the violation, final highway diesel rule, explicitly diesel fuel distribution system will have makes parties in the diesel additive the typical affirmative defenses of other 199 At downstream locations the violation will distribution system liable for the sale of fuels rules. For parties blending an occur if EPA’s test result show a sulfur content of greater than 17 ppm, which takes into account the nonconforming diesel fuel additives, additive into their diesel fuel, the two ppm adjustment factor for testing even if such additives have not yet been requirement to maintain PTDs showing reproducibility for downstream parties. blended into diesel fuel. In addition, that the product complied with the

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regulatory standards will necessarily volume accounting reconciliation to show either compliance or include PTDs for the additive that was records in lieu of the requirement to noncompliance. Similarly, absent the used, affirming the compliance of the sample and test each batch of fuel existence of sulfur test results using an additive and the fuel. subject to the 15 ppm sulfur standard approved method, commercial after the addition of an additive that documents asserting the sulfur level of c. Liability When the Additive Is exceeds the 15 ppm sulfur standard. diesel fuel or additive could be used as Designated as Having a Possible Sulfur Today’s rule also implements these some evidence of what the sulfur level Content Greater than 15 ppm same alternate defense requirements of the fuel would be if the product Under today’s rule, a nonroad diesel regarding the blending of such additives would have been tested using an fuel additive will be permitted to have into 15 ppm highway diesel fuel. approved method. a maximum sulfur content above 15 The Agency believes that the same ppm if the blended fuel continues to I. How Will Compliance With the Sulfur statutory authority for EPA to adopt the meet the 15 ppm standard and the Standards Be Determined? gasoline sulfur rule’s evidentiary additive is used at a concentration no Today’s rule provides that compliance provisions, Clean Air Act section 211(c), greater than one volume percent of the with the sulfur standards and use provides appropriate authority for the blended fuel. However, if nonroad requirements under today’s rule can be evidentiary provisions of today’s diesel diesel fuel containing that additive is determined by evaluating the designate sulfur rule. For a fuller explanation of found by EPA to have high sulfur and track records (discussed in section this statutory authority, see the gasoline content, then all the parties in both the IV.D.) and other records, such as PTDs; sulfur final rule preamble, 65 FR 6815, additive and the fuel distribution chains by evaluating compliance with the fuel February 10, 2000. will be presumed liable for causing the marker requirements discussed in nonroad diesel fuel violation. section IV.D and V.E; and by sampling VI. Program Costs and Benefits Since this type of high sulfur additive fuel and testing for sulfur content. In this section, we present the presents a much greater probability of Today’s rule includes a requirement for projected cost impacts and cost causing diesel fuel non-compliance, refiners and importers to measure the effectiveness of the nonroad Tier 4 parties in the additive’s distribution sulfur content of every batch of NRLM emission standards and fuel sulfur system will have to satisfy an additional fuel designated under the rule, using a requirements. We also present a benefit- element to establish an affirmative testing methodology approved under the cost analysis and an economic impact defense. In addition to the elements of provisions discussed in section V.H of analysis. The benefit-cost analysis an affirmative defense described above, this preamble. In general, downstream explores the net yearly economic parties in the additive distribution parties must conduct only periodic benefits to society of the reduction in system for such a high sulfur additive sampling and testing as an element of a mobile source emissions likely to be will also be required to establish that defense to presumptive liability achieved by this rulemaking. The they did not cause the violation, an (retailers are exempt from sampling and economic impact analysis explores how element of an affirmative defense that is testing). Today’s rule further provides the costs of the rule will likely be shared typically required in EPA fuel programs that in determining compliance, any across the manufacturers and users of to rebut presumptive liability. evidence from any source or location the engines, equipment and fuel that Parties in the diesel fuel distribution can be used to establish the diesel fuel would be affected by the standards. system will essentially have to establish sulfur level, provided that such We revised our cost and benefit the same affirmative elements as in evidence is relevant to whether the analysis to reflect the comments we other fuels rules, with an addition sulfur level would have met the received on our analysis. The fuel- comparable to the highway diesel rule. applicable standard had compliance related costs have been updated to Blenders of high sulfur additives into 15 been determined using an approved test reflect information received from ppm sulfur nonroad diesel fuel, will methodology. While the use of a non- refiners as part of EPA’s highway diesel have to establish a more rigorous quality approved test method might produce fuel program, comments received on the control program than will exist without results relevant to determining sulfur nonroad NPRM, as well as more recent the addition of such a high sulfur content, this does not remove any information available on future energy additive. For additives other than static liability for failing to conduct required costs and the cost of advanced dissipater additives, to establish a batch testing using an approved test desulfurization technologies. The defense to presumptive liability, the method. This is consistent with the engine and equipment-related costs Agency has adopted the proposal to approach taken under the gasoline were revised to reflect additional R&D require test results establishing that the sulfur rule and the highway diesel costs associated with tailoring R&D to blended fuel was in compliance with sulfur rule. each particular engine line and to the 15 ppm sulfur standard after being For example, the Agency might not accommodate changes in the final blended with the high sulfur additive. have sulfur results derived from an emission control requirements, This additional defense element will be approved test method for diesel fuel particularly with regard to engines required as a safeguard to ensure sold by a terminal, yet the terminal’s above 750 hp. These costs are also now nonroad diesel fuel compliance, since own test results, based on testing using presented in 2002 instead of 2001 the blender has voluntarily chosen to methods other than those approved dollars. With regard to the benefits use an additive which increases the risk under the regulations, could reliably analysis, we have updated our methods of diesel fuel non-compliance. show a violation of the sulfur standard. consistent with Science Advisory Board An exception to this defense element Under today’s rule, evidence from the (SAB) advice as specified in RIA chapter is made for blenders of static dissipater non-approved test method could be 9. Finally, we adjusted the economic additives, that are allowed by today’s used to establish the diesel fuel’s sulfur impact analysis to reflect the revised rule to contribute no more than 0.05 level that would have resulted if an cost inputs and to explicitly model the ppm to the sulfur content of a finished approved test method had been impacts on the locomotive and marine fuel subject to the 15 ppm sulfur conducted. This type of evidence is intermediate market sectors. standard. As discussed in section V.C.5, available for use by either the EPA or The results detailed below show that blenders of such additives may rely on the regulated party, and could be used this rule would be highly beneficial to

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society, with net present value benefits A. Refining and Distribution Costs ppm cap on locomotive and marine fuel through 2036 of $805 billion using a 3 Meeting the 500 and 15 ppm sulfur in 2012, as well as improving our percent discount rate and $352 billion caps will generally require that refiners analysis of the impact of this cap on using a 7 percent discount rate, add hydrotreating equipment and costs incurred in the distribution compared to a net present value of possibly new or expanded hydrogen and system. social cost of about $27 billion using a sulfur plants in their refineries. We have The costs to provide NRLM fuel under 3 percent discount rate and $14 billion estimated the cost of building and the two-step fuel program are using a 7 percent discount rate. The operating this equipment using the same summarized in Table VI.A–1 below. All impact of these costs on society should basic methodology which was described of the following costs estimates are in be minimal, with the prices of goods in the NPRM. We have updated that 2002 dollars. Capital investments have and services produced using equipment analysis with new information obtained been amortized at 7 percent per annum and fuel affected by standards being from the vendors of advanced before taxes. These estimates do not expected to increase about 0.1 percent. desulfurization technology, to better include costs associated with fuel sulfur reflect current crude oil properties and testing, labeling, reporting or record Further information on these and refinery configurations, as well as future keeping, which we believe will be small other aspects of the economic impacts of hydrogen costs. We have also relative to those associated with this emission control program are incorporated information received from refining, distribution and lubricity summarized in the following sections refiners regarding their plans to produce additives. A more detailed description and are presented in more detail in the 15 ppm highway diesel fuel from 2006– of the costs associated with this final Final RIA for this rulemaking. 2010. Finally, we incorporated the 15 rule is presented in the Final RIA.

TABLE VI.A–1.—COST OF PROVIDING NRLM DIESEL FUEL (cents per gallon of affected fuel)

Affected fuel volume (mil- Refining Distribution Total NRLM diesel fuel Years lion gallons (and lubricity) per year) a

500 ppm ...... 2007–2010 ...... 11,860 1.9 0.2 2.1 2010–2012 ...... 3,589 2.7 0.6 3.3 2012–2014 ...... 715 2.9 0.6 3.5 15 ppm ...... 2010–2012 ...... 8,145 5.0 0.8 5.8 2012–2014 ...... 12,068 5.6 0.8 6.4 2014 + ...... 13,399 5.8 1.2 7.0 Notes: a Volumes shown are for first full year in each period (2008, 2011, 2013, and 2015).

The costs shown (and all of the costs our estimated cost of the second step First, we estimate the total volume of described in the rest of this section) significantly in response to comments. NRLM fuel which must be desulfurized apply to the 74 percent of current NRLM These comments and the changes to our during each step of the program, as well fuel that currently contains more than cost estimates are discussed in more as each refinery’s future total 500 ppm sulfur (hereafter referred to as detail in the next two sections. The production of distillate fuel. Current the affected volume). combined cost for both steps is therefore and future demand for all distillate fuels In 2014, the affected volume of NRLM somewhat higher than expected in the except diesel fuel for land-based fuel is 14.6 billion gallons out of total NPRM, but nevertheless consistent with equipment were based on estimates NRLM fuel volume of 19.7 billion projections for the cost of 15 ppm from the Energy Information gallons. The other 5.1 billion gallons of highway diesel fuel. Administration’s (EIA) Fuel Oil and NRLM fuel is currently spillover from We expect that the increased cost of Kerosene Survey (FOKS) for 2001 and fuel certified to the highway diesel fuel refining and distributing 500 ppm the 2003 Annual Energy Outlook (AEO). standards. We expect this to continue NRLM fuel will be completely offset by EPA’s NONROAD emission model was reductions in maintenance costs, while under the 2007 highway diesel fuel used to estimate both current and future those for 15 ppm NRLM fuel will be program. Thus, 26 percent of NRLM fuel fuel consumption by land-based significantly offset. These savings will will already meet at least a 500 ppm nonroad equipment to ensure the apply to all diesel engines in the fleet sulfur cap by 2007 and a 15 ppm cap by due to the reduced fuel sulfur content, consistent treatment of both the costs 2010 and will not be affected by today’s not just new engines. Refer to section and benefits associated with this rule. rule. The costs and benefits of V.B for a more complete discussion on Table VI.A–2 shows our projections of desulfurizing this highway fuel which the projected maintenance savings the volumes of fuel affected by today’s spills over into the non-highway associated with lower sulfur fuels. rule. These volumes exclude NRLM fuel markets was included in our cost expected to be certified to highway estimates for the 2007 highway diesel 1. Refining Costs diesel fuel sulfur caps prior to the fuel rule. Methodology: We followed the same implementation of this rule. They also The estimated cost of the first step of process that we used in the NPRM to exclude distillate fuel meeting a 500 the NRLM fuel program is slightly less project refining costs, though we have ppm cap which is produced during than that projected in the NPRM (cents broken down the description into five distribution from highway diesel fuel, per gallon). However, we have increased steps instead of four. jet fuel, etc.

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TABLE VI.A–2.—VOLUME OF NRLM FUEL AFFECTED BY TODAY’S RULE (billion gallons per year)

Nonroad Locomotive and Total marine 500 15 ppm 500 500 15 ppm ppm ppm 15 ppm ppm

2008 ...... 8,406 0 3,454 0 11,860 0 2011 ...... 614 8,145 2,975 0 3,589 8,145 2013 ...... 468 8,671 247 3,395 715 12,066 2015 ...... 0 10,539 2,860 0 13,399

This marks a change from the which utilized actual refiner production others will need to build an entirely proposal, where all distillate fuel in 2000. The number of refineries new unit. Some refiners will be able to volumes were based on EIA FOKS and needing to produce 500 ppm and 15 expand their production of highway fuel AEO estimates. Commenters pointed out ppm diesel fuel under today’s final rule at little incremental cost, while others that this approach underestimated fuel- was based on the projected diesel fuel will be able to reduce their investment related costs relative to emission and heating oil demand in 2014.200 To substantially by reducing their reductions and monetized benefits, be consistent, the 2002 distillate production volume. Use of refiners’ own since the NONROAD fuel volumes used production volumes of individual projections, as opposed to our own cost to estimate the latter were larger. We in refiners were increased to 2014 levels methodology assumptions, allows us to fact had acknowledged this using EPA projections of growth in total incorporate as much refinery-specific inconsistency in the proposal and had distillate production by domestic information as is currently possible. said we would address it in the final refiners. Third, we estimated the cost to In projecting desulfurization costs, we rule. Our approach to address the updated a number of the inputs to our inconsistency was to utilize the land- desulfurize diesel fuel to both 500 ppm and 15 ppm for each domestic refinery. cost estimation methodology. We based nonroad fuel volumes estimated increased natural gas and utility costs to by the NONROAD model for both the This considered both the volume of reflect those projected in EIA’s 2003 costs and monetized benefits. However, diesel fuel being produced and its AEO. The NPRM analysis utilized we also conducted a sensitivity analysis composition (e.g., percentage of straight projections from 2002 AEO. Forecasted whereby both emissions and costs were run, light cycle oil, etc.). Estimates of natural gas costs in 2003 AEO are estimated using EIA estimates of fuel the volumes of diesel fuel already being considerable higher than in 2002 AEO, demand by land-based nonroad desulfurized to meet the highway diesel though still lower than current market equipment. The results of that analysis fuel standards in 2006–2010 prior to the prices. In response to comments, we are discussed in chapter VII of the Final implementation of this final rule were also increased the factor for off-site RIA. based on refiners’ pre-compliance 201 capital costs to better reflect the cost of We made one other revision to the reports. This marks a change from the sulfur plant expansions. The NPRM volume of diesel fuel affected by this NPRM analysis, where we assumed that analysis utilized an off-site factor rule. In analyzing the impact of the 2007 refiners would continue to produce developed in support of the Tier 2 highway diesel fuel program for the their current mix of highway and high gasoline and 2007 highway diesel fuel NPRM analysis, we estimated that 4.4 sulfur diesel fuel. While many refiners programs, where the amount of sulfur percent of 15 ppm highway diesel fuel indicated that their plans were would be contaminated during preliminary and subject to change, we removed per gallon was a fraction of shipment and not available for sale as consider these projections to be more that occurring here with NRLM fuel. We 15 ppm highway fuel. This increased probable than assuming that current also continued to update our cost the volume of 15 ppm highway fuel producers of diesel fuel will make no estimates for advanced desulfurization which had to be produced at refineries change to their product mix in technologies, as these technologies before accounting for the production of complying with the highway rule. continue their evolution. As discussed additional 500 and 15 ppm NRLM fuel Meeting the 15 ppm highway diesel fuel in Section IV, the latest information in response to the NRLM fuel program. cap will require significant investment, concerning Process Dynamics’s Due to comments made on the NRPM but some refiners will face more than IsoTherming process indicate somewhat (discussed in section VI.A.3. below), we others. Some refiners will be able to higher costs than earlier estimates. We have improved our analysis to track the revamp their current hydrotreater, while also reduced our projection of the disposition of this contaminated 15 ppm penetration of these advanced fuel. Much of this contaminated fuel can 200 The year 2014 represents a mid-point between technologies in 2010 from 80 to 60 the initial year of today’s fuel program and the end percent. be sold as 500 ppm NRLM from 2007– of the expected life of desulfurization equipment 2014 and as L&M fuel thereafter. Thus, (roughly 15 years). Fourth, we estimated which refineries the contaminated 15 ppm fuel reduces 201 Under EPA’s 2007 highway diesel program, will likely find it difficult to stay in the the volume of 500 and 15 ppm NRLM refiners are required to submit their production heating oil market after the fuel which must be produced at plans for highway diesel fuel for 2006–2010. The first of these reports were due during the summer implementation of the NRLM sulfur refineries. of 2003. EPA published a summary of the results standards, due to their location relative Second, total distillate production by this past fall. We consider these reports to provide to major pipelines and the size of the individual refineries were based on a more accurate projection of individual refinery heating oil market in their area. Those plans than our projections made during the their actual production volumes in highway fuel FRM. The latter was based on cost not located in major heating oil markets 2002, as reported to EIA. This represents minimization using our refinery-specific and not connected to pipelines serving a minor revision to the NPRM analysis, desulfurization refinery model. these areas were projected to have to

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meet the 500 and 15 ppm caps in 2007 to imports. Thus, imports of 15 and 500 15 ppm highway diesel fuel; 96 and 2010, respectively. ppm NRLM fuel were only assumed refineries starting in 2006 and 4 in 2010. Fifth, we estimated which of the after all refineries in a PADD were Of these 100 refineries, 96 currently remaining refineries would likely projected to produce either 15 or 500 produce some volume of highway diesel produce NLRM fuel under today’s ppm fuel, respectively. The small fuel, while 4 refineries currently only program. As was done in the proposal, refiner provisions included in today’s produce high sulfur distillate fuel. Also, we assumed that those refineries with NRLM fuel program were considered, as 18 refineries will cease to produce the lowest projected compliance costs these provisions temporarily reduce the highway diesel fuel and shift to would be the most likely to produce the volume of 500 and 15 ppm fuel required producing solely high sulfur distillate required fuel until demand was met. to be produced in 2007 and 2010, fuel. This will leave a total of 92 Inter-PADD transfers of fuel between respectively. This portion of the refineries still producing high sulfur PADD 3 and PADD 1 were not methodology was the same as that used distillate after full implementation of constrained. PADD 3 refineries were in the NRPM analysis. also assumed to supply PADD 2 with 15 Results: Based on EIA data, in 2002 the 2007 highway diesel fuel program. ppm NRLM fuel once all PADD 2 114 refineries produced highway diesel The number of these 92 domestic refineries were producing 15 ppm fuel and 102 refineries produce high refineries expected to produce either 15 distillate fuel. We also assumed that sulfur diesel fuel or heating oil. Based or 500 ppm NRLM diesel fuel in domestic refineries would preferentially on refiners’ pre-compliance reports, we response to today’s rule is summarized supply the lowest sulfur fuels compared project that 100 refineries will produce in Table VI.A–3.

TABLE VI.A–3.—REFINERIES PROJECTED TO PRODUCE NRLM DIESEL FUEL UNDER THIS FINAL RULE

500 ppm NRLM diesel fuel 15 ppm NRLM diesel fuel Year of program Small Small All refineries refineries All refineries refineries

2007–2010 ...... 36 0 0 0 2010–2012 ...... 26 13 32 2 2012–2014 ...... 15 13 47 2 2014+ ...... 0 0 63 15

During the four periods shown in volume of 500 ppm NRLM fuel coming be $2280 million, or $36 million per table VI.A–3, two roughly parallel sets from existing hydrotreaters. This refinery, roughly 5 percent greater than of standards become effective. For non- conclusion is based on the number of that projected in the NPRM. Total small refiners, the 500 ppm NRLM fuel refineries leaving the highway diesel operating costs will be about $8.1 cap starts in 2007, followed by the 15 fuel market according to the refiners’ million per year for the average refinery, ppm nonroad fuel cap in 2010, in turn highway program pre-compliance slightly lower than that projected in the followed by the 15 ppm L&M fuel cap reports. The investment per refinery that NPRM ($8.3 million per year). The total in 2012. For small refiners, the 500 ppm we projected in the NPRM ($9.7 million) refining cost, including the amortized NRLM fuel cap starts in 2010, followed was essentially unchanged. Operating cost of capital, will be 5.0, 5.6 and 5.8 by the 15 ppm nonroad NRLM fuel cap costs will be about $4.9 million per year cents per gallon of new 15 ppm NRLM in 2014. As shown, beginning in 2014, for the average refinery, or slightly fuel in 2010, 2012, and 2014, 63 refineries are projected to be affected greater than that projected in the NPRM respectively. by today’s final rule. After complete (due to higher hydrogen costs and a The 500 pm NRLM fuel being implementation of today’s rule, 29 lower percentage of hydrocrackate in produced in 2010 is projected to cost 2.7 refineries are expected to be able to the NRLM pool). The average cost of cents per gallon. The cost of this 500 produce high sulfur heating oil, some as producing 500 ppm NRLM fuel in 2007 ppm fuel is higher than that projected their entire distillate production, others will be 1.9 cents per gallon, 0.3 cent per in the NPRM, due primarily to a higher along with 15 ppm fuel. The number of gallon lower than that projected in the cost for natural gas in the future. The refineries estimated to be affected by NPRM, due primarily to the reduced 500 pm, small refiner fuel being produced in 2012 is projected to cost 2.9 today’s rule is one more than that capital expenditure. cents per gallon. All of these costs are projected in the NPRM. There, we In 2010, an additional $1170 million relative to the cost of producing high estimated that 62 refineries would have will be invested in revamped and new sulfur fuel today, and includes the cost to produce either 15 or 500 ppm NRLM desulfurization equipment, $1090 of meeting the 500 ppm standard fuel in 2014 and beyond. million to meet the 15 ppm nonroad beginning in 2007. We project that the capital cost fuel cap and $80 million to produce 500 The 15 ppm refining costs are involved to meet the 2007 500 ppm ppm NRLM fuel no longer eligible for a significantly higher than the 4.4 cent per sulfur cap will be $310 million. This small refiner exemption to sell high gallon cost projected in the NPRM for represents about $10 million for each of sulfur NRLM fuel. In 2012, an the option where L&M fuel was the 30 refineries building a new additional $590 million will be invested controlled to 15 ppm in addition to hydrotreater. Six refineries are expected in revamped and new desulfurization nonroad fuel. The increase is due to the to produce 500 ppm NRLM fuel using equipment to meet the 15 ppm L&M cap changes in refining cost methodology existing hydrotreaters no longer being Finally, in 2014 an additional $210 described above, particularly the used to produce 500 ppm highway fuel. million will be invested in additional 15 reduced use of advanced desulfurization The total investment cost is roughly half ppm fuel capacity. Thus, total capital technology, reduced synergies with the that projected in the NPRM ($600 cost of new equipment and revamps highway fuel program and increased million). The decrease is due to a greater related to the NRLM fuel program will natural gas costs.

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The average refining costs by refining small refiner provisions. Combined fuel which is shipped from PADD 3 to region are shown in table VI.A–4 below. costs are shown for PADDs 1 and 3 PADD 1. These costs include consideration of the because of the large volume of diesel

TABLE VI.A–4.—AVERAGE REFINING COSTS BY REGION [Cents per gallon]

500 ppm Cap 15 ppm Cap 2007–2010 2010–2012 2012–2014 2010–2012 2012–2014 2014+

PADDs 1 & 3 ...... 1.6 3.7 2.5 4.6 4.9 5.1 PADD 2 ...... 2.8 2.9 3.7 7.1 7.8 7.8 PADD 4 ...... 3.3 9.0 9.0 11.6 11.7 11.8 PADD 5 ...... 1.2 2.8 3.5 4.3 4.3 5.7 Nationwide ...... 1.8 2.7 2.9 5.0 5.6 5.8

Fuel-Only Control Programs: We used back to refineries and reprocessed to mixture of gasoline and any distillate the same methodology to estimate meet the 15 ppm cap. We designed the fuel, such as jet or diesel fuel. If this refining costs for stand-alone 500 ppm program finalized today to allow the interface was added to the distillate and 15 ppm NRLM fuel programs. The continued sale of 500 ppm fuel into the batch, the gasoline content in the fully phased in refining impacts of a 15 NRLM market until June 1, 2014, and interface would result in a violation of ppm NRLM standard are the same as into the locomotive and marine market the distillate’s flash point specification. those described above for the final rule indefinitely. By doing so, we were able If this interface was added to the in 2014 and beyond. A fully phased in to minimize, though not eliminate, gasoline batch, it would cause the 500 ppm NRLM fuel program is much of the reprocessing and gasoline to violate its end point projected to affect 63 refineries, cost 2.0 distribution cost impacts of concern. We specification. Therefore, this interface cents per gallon and require a capital have evaluated both the production and must be shipped to a transmix processor investment of $480 million. potential sale of distillate interface and to separate the mixture into naphtha (a 2. Distribution Costs estimated the distribution cost impacts sub-octane gasoline) and distillate. The of today’s final rule provisions. The 2007 highway diesel fuel program will Today’s rule is projected to impact details of this analysis are contained in not change this practice. The naphtha distribution costs in four ways. First, we chapter 7 of the Final RIA. produced by transmix processors from project that a slightly greater volume of In our analysis of the 15 ppm highway diesel fuel will have to be distributed, gasoline/distillate mixtures is usually fuel program, we projected that the need blended with premium gasoline to due to the fact that some of the to protect the quality of 15 ppm desulfurization processes reduce the produce regular grade gasoline. The highway diesel fuel would increase the distillate produced is an acceptable high fuel’s volumetric energy density during volume of highway diesel fuel processing. Total energy is not lost sulfur diesel fuel or heating oil, though downgraded to a lower value product, if the feed material was primarily low during processing, as the total volume of such as high sulfur diesel fuel and fuel is increased in the hydrotreater. sulfur distillate and gasoline it will heating oil, from its current level of likely also meet the current 500 ppm However, a greater volume of fuel must approximately 2.2 percent to 4.4 be consumed in the engine to produce highway fuel cap. percent. Under today’s rule, we expect the same amount of power. We project that 15 ppm NRLM fuel will be shipped With the implementation of the that desulfurizing diesel fuel to 500 together with 15 ppm highway. Thus, highway diesel rule, there is another ppm will reduce volumetric energy the size of each batch of 15 ppm fuel incompatible interface, that between jet content by 0.7 percent. The cost of will increase, but the number of batches fuel and 15 ppm diesel fuel. This which is equivalent to 0.08 cent per will not. As the downgrade occurs at the interface can not be cut into jet fuel due gallon of affected NRLM fuel. 202 We interface between batches, the volume to end point and other concerns. project that desulfurizing diesel fuel to being downgraded should not increase. However, it can usually be cut into 500 15 ppm will reduce volumetric energy At the same time, we are not projecting ppm diesel fuel as long as the sulfur content by an additional 0.52 percent. that interface volume will decrease, as level of the jet fuel is not too high. With This will increase the cost of the lowering of the highway standard to distributing fuel by an additional 0.05 high sulfur fuels, such as jet fuel and, in some cases heating oil, will still be 15 ppm, however, this will no longer be cents per gallon, for a total cost of 0.13 possible. We expect that pipelines cents per gallon of affected 15 ppm in the system. The issue here is the market to which minimize this interface by abutting jet NRLM fuel. fuel and high sulfur distillate in the The second impact on distribution this interface volume can be sold. When this interface volume meets the pipeline whenever possible. However, it costs relates to the disposition of 15 will be unavoidable under many ppm fuel contaminated during pipeline specifications of one of the two fuels circumstances. A substantial part of the shipment. We received comments that being shipped next to each other, the pipeline distribution system currently the control of L&M fuel sulfur content, interface is simply added to the batch of does not handle high sulfur distillate, particularly to 15 ppm, would make it that fuel. For example, the interface and we expect that the highway difficult to sell off-specification 15 ppm between regular and premium gasoline program and today’s rule will likely fuel. The comments argued that much of is added to the regular grade batch. Or, cause additional pipeline systems to this material would have to be shipped the interface between jet fuel and heating oil is added to the heating oil discontinue carrying high sulfur distillate. Pipelines that do not carry 202 See chapter 7 of the RIA for further details batch. One interface which is never regarding our estimation of distribution costs. added to either adjacent batch is a high sulfur distillates will generate this

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interface whenever they ship jet fuel.203 the primary NRLM fuel and be widely being produced from 2010–2014 due to The highway rule, and today’s rule distributed. Beyond 2010, we estimate today’s rule, the additional distribution projects that pipeline operators will that terminals will have to add a small cost from 2010–2014 is 0.4 cents per segregate this interface by cutting it into storage tank for this fuel, as 500 ppm gallon. a separate storage tank. Because this highway diesel fuel and the majority of Starting in 2014, this interface fuel interface can be sold as 500 ppm NRLM 500 ppm NRLM disappears from the can no longer be sold to the nonroad fuel or heating oil, and because these distribution system. In many places, this fuel market. Since the interface volume markets exist nationwide, there is little interface will be the primary, if not sole does not change, this increases the impact beyond the need for refiners to source of 500 ppm fuel, so existing volume of fuel that must be sold to the produce more 15 ppm highway diesel tankage to add this interface to will be L&M and heating oil markets. Thus, fuel (compared to the volume of limited. We have also added shipping overall, transportation distances and highway diesel fuel produced prior to costs to transport this fuel to NRLM and costs will likely increase. We expect the implementation of the 15 ppm heating oil users. The volume of this that the transportation cost for fuel sold standard), which was considered as part interface is significant, sometimes a to the L&M market will increase from of the refining costs in the highway sizeable percentage of the combined 1.5 to 3.0 cents per gallon, while that for diesel rule. NRLM fuel and heating oil markets. In heating oil will increase to 5.0 cents per With control of nonroad fuel to 15 the post-2014 period, the volume of this gallon, both including fuel storage. ppm sulfur in 2010 and LM fuel to 15 interface fuel is larger than the However, in PADD 5, the volume of ppm sulfur in 2012, the opportunities to combined L&M fuel and heating oil interface generated exceeds the total downgrade interface to another product markets in certain PADDs. Also, the fuel demand of these two markets. Thus, become increasing limited. Where volume of interface received at each we estimate that some fuel will have to limited this will increase costs due to terminal will vary substantially, be shipped back to refineries and the need to transport the interface to depending on where that terminal is on reprocessed to meet a 15 ppm cap and where it can be marketed or to a facility the pipeline. The advantage of this is shipped out a second time. We estimate for reprocessing. In areas with large that where the interface accumulates it that the cost of this shipping and heating oil markets, such as the may be of sufficient volume to justify reprocessing will cost 10 cents per Northeast and the Gulf Coast, the marketing as a separate grade of fuel. gallon. When spread over all the 15 ppm control of NRLM sulfur content will still Conversely, the potential users of this NRLM fuel being produced after 2014 have little impact on the sale of this 500 ppm interface fuel may not be due to today’s rule, the additional interface. However, in areas lacking a located near the terminals with the fuel distribution cost is 0.8 cent per gallon. large heating oil market, the sale of this necessitating additional transportation The third impact of today’s rule on distillate interface will be more costs. distribution costs is related to the need for additional storage tanks to market restricted. Because this interface will Prior to 2014, 500 ppm fuel can be additional product grades at bulk plants. composed of 15 ppm diesel fuel and jet used as NRLM fuel and heating oil While this final rule minimizes the fuel, we estimate that the distillate outside of the Northeast/Mid-Atlantic segregation of similar fuels, some interface created should nearly always Area. Additional storage tanks will be 204 additional segregation of products in the meet a 500 ppm cap. Thus, this needed in some cases, as this will be the distribution system will still be interface can be added to 500 ppm only source of 500 ppm fuel in the required. The allowance that highway NRLM batches (as well as heating oil, marketplace. Amortizing the cost of a and NRLM diesel fuel meeting the same where it is present at the terminal) range of storage tank sizes over 15 years sulfur specification can be shipped through 2014. After 2014, this 500 ppm of weekly shipments at a seven percent fungibly until it leaves the terminal interface fuel can only be sold as L&M rate of return before taxes costs obviates the need for additional storage fuel or heating oil. An exception to this produced an amortized cost of 0.2–1.6 tanks in this segment of the distribution applies in the Northeast/Mid-Atlantic cents per gallon. These costs include the system except for the limited tankage at Area, where this interface cannot be carrying cost of the fuel stored in the terminals necessary to handle 500 ppm sold into the nonroad fuel market after tank. We estimate that the average sulfur interface fuel discussed above.205 2010, nor into the L&M fuel market after storage cost will be closer to the lower Today’s final rule also allows 500 ppm 2012. end of this range, or 0.5 cent per gallon. NRLM diesel fuel to be mixed with In chapter 7 of the Final RIA, we Nonroad fuel users are fairly ubiquitous. high-sulfur NRLM (though it can no estimate the costs related to handling Thus, increased shipping distances longer be sold as 500 ppm fuel). this interface fuel during the four time should be fairly short. We estimated 45 However, we expect that the periods (2007–2010, 2010–2012, 2012– miles at a cost of roughly 1.5 cents per implementation of the 500 ppm 2014, and 2014 and beyond). We project gallon. The distance to L&M fuel users standard for NRLM diesel fuel in 2007 that there will be no additional costs will likely be longer, roughly 100 miles, will compel some bulk plants in those prior to 2010, as 500 ppm fuel will be but cost the same due to greater parts of the country still distributing efficiencies of rail transport. It will 203 heating oil as a separate fuel grade to We expect that only three types of fuel will likely cost more to deliver interface fuel be carried by such pipeline systems: jet fuel, 15 install a second diesel storage tank to to heating oil users, as many of these ppm diesel fuel, and gasoline (premium and handle this 500 ppm NRLM fuel. These users are smaller, not evenly dispersed regular). Premium and regular gasolines are always bulk plants currently handle only high- shipped next to each other so the interface between geographically, purchase fuel sulfur fuel and hence will need a second premium and regular gasoline can be cut into the seasonally, and lack rail connections. batch of regular gasoline. Thus, whenever jet fuel tank to continue their current practice of We estimate that transport distances is shipped it will abut 15 ppm diesel fuel on one selling fuel into the heating oil market will increase an average of 85 miles and end and gasoline on the other. in the winter and into the nonroad 204 See chapter 7.1.7 of the RIA regarding our cost an additional 3.0 cents per gallon market in the summer. We believe that analysis of the sulfur levels of this interface over today’s costs to deliver this fuel to material. This analysis indicated that although the maximum sulfur specification of jet fuel 3,000 ppm, the end user, in addition to the 0.5 cent 205 Including the refinery, pipeline, terminal, in-use jet fuel sulfur levels are frequently below 500 per gallon storage cost. When spread marine tanker, and barge segments of the ppm. over all the 15 and 500 ppm NRLM fuel distribution system.

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some of these bulk plants will convert trucks, the cost for each bulk plant would be no capital costs associated their existing diesel tank to 500 ppm would be $120,000, and the total one- with the proposed marker requirement. fuel in order to avoid the expense of time capital cost would be We proposed that the marker would be installing an additional tank. However, $120,000,000. To provide a added at the refinery gate, and that the to provide a conservatively high conservatively high estimate of the costs current requirement that non-highway estimate we assumed that 10 percent of to bulk plant operators, we are assuming fuel be dyed red at the refinery gate be the approximately 10,000 bulk plants in that all 1,000 bulk plants will do so. made voluntary. Thus, we believed that the U.S. (1,000) will install a second Amortizing the capital costs over 20 the refiner’s additive injection tank in order to handle both 500 ppm years, results in a estimated cost for equipment that is currently used to NRLM diesel fuel and heating oil. tankage at such bulk plants of 0.1 cents inject red dye into off-highway diesel The cost of an additional storage tank per gallon of affected NRLM diesel fuel fuel could instead be used to inject the at a bulk plant is estimated at $90,000 supplied. Although the impact on the marker as needed. As a result of the and the cost of de-manifolding a overall cost of the program is small, the allowance provided in today’s final rule delivery truck is estimated at cost to those bulk plant operators who that the marker be added at the terminal $10,000.206 In the NPRM, we estimated need to put in a separate storage tank rather than the refinery gate, and our that each bulk plant that needed to may represent a substantial investment. reevaluation of the conditions for dye install a new storage tank would need Thus, we believe many of these bulk injection at the refinery, we are now to de-manifold a single tank truck. Thus, plants will search out other assessing capital costs for terminals and the NPRM estimated the cost per bulk arrangements to continue servicing both refiners related to compliance with the plant would be $100,000. Fuel heating oil and NRLM markets such as fuel marker requirements. distributors stated that the assumptions an exchange agreement between two Except for fuel that is distributed and calculations made by EPA in bulk plants that serve a common area. directly from a refiner’s rack, today’s characterizing costs for bulk plant As a consequence of the end of the final rule allows the marker to be added operators seem reasonable. However, highway program’s temporary at the terminal rather than at the they also stated that our estimate that a compliance option (TCO) in 2010 and refinery as we proposed (see section single tank truck would service a bulk the disappearance of high-sulfur diesel IV.D for a discussion of the fuel marker plant is probably not accurate. No fuel from much of the fuel distribution requirements).209 We expect that except suggestion was offered regarding what system resulting from the for fuel dispensed directly from the might be a more appropriate estimate implementation of today’s rule, we refinery rack, the fuel marker will be other than the number is likely to be expect that storage tanks at many bulk added to at the terminal to avoid the much greater. Part of the reason why we plants that were previously devoted to potential for marked fuel to contaminate estimated that only a single tank truck 500 ppm TCO highway fuel and high- jet fuel during distribution by pipeline. would need to be de-manifolded, is that sulfur fuel will become available for Terminals that need to inject the fuel we expected that due to the seasonal dyed 15 ppm nonroad fuel service. marker will need to purchase a new nature of the demand for heating oil Based on this assessment, we do not injection system, including a marker versus nonroad fuel, it would primarily expect that a significant number of bulk storage tank and a segregated line and only be at the juncture of these two plants will need to install an additional injector for each truck loading station at seasons that both fuels would need to be storage tank in order to provide dyed which fuel that is required to be marked distributed in substantial quantities. We and undyed 15 ppm diesel fuel to their is dispensed. Terminals will still be also expected that the small demand for customers beginning in 2010 (the subject to IRS red dye requirements, and heating oil in the summer and the small implementation date for the 15 ppm thus will not be able to rededicate such demand for nonroad fuel in the winter nonroad standard).208 There could injection equipment to inject the fuel could be serviced using a single de- potentially be some additional costs marker. Due to concerns regarding the manifolded truck. The primary fuel related to the need for new tankage in need to maintain a visible evidence of distributed during a given season would some areas not already carrying 500 the presence of the fuel marker, today’s be distributed by single compartment ppm fuel under the temporary rule also contains a requirement that tank trucks. During the crossover compliance option of the highway nay fuel which contains the fuel marker between seasons, bulk plant operators diesel program and which continue to also contains visible evidence of red would switch the fuel to which such carry high sulfur fuel. However, we dye. Furthermore, there is little chance single compartment tank trucks are used expect them to be minimal relative to to adapt parts of the red dye injection from nonroad to heating oil and back the above 0.1 cent per gallon cost. Thus, system (such as the feed lines and 207 again. Nevertheless, we agree that the we estimate that the total cost of injectors) for the alternate injection of subject bulk plant operators would additional storage tanks at bulk plants red dye and the fuel marker due to likely be compelled to de-manifold that will result from today’s rule will be concerns that NRLM fuel become more that a single tank truck. Lacking 0.1 cent per gallon of affected NRLM contaminated with the marker. additional specific information, we diesel fuel supplied. Terminal operators expressed concern believe that assuming that each bulk The fourth impact on fuel distribution regarding the potential burden on plant operator de-manifolds three tank costs is a result of the requirement that terminal operators from the capital costs trucks will provide a conservatively high sulfur heating oil be marked of adding new additive injection high estimate of the cost to bulk plant beginning June 1, 2007 and that 500 equipment for heating oil. In response to operators due to today’s rule. ppm sulfur LM diesel produced by these comments, today’s rule includes If all 1,000 bulk plants were to install refiners or imported be marked from provisions that exempt terminal a new tank and de-manifold three tank 2010 through 2012 outside of the operators from the fuel marker Northeast/Mid-Atlantic Area and requirements in a geographic 206 This estimated cost includes the addition of a separate delivery system on the tank truck. Alaska. The NPRM projected that there ‘‘Northeast/Mid-Atlantic Area’’ and 207 To avoid sulfur contamination of NRLM fuel, the tank compartment would need to be flushed 208 See Section IV of today’s preamble for 209 A refinery rack functions similar to a terminal with some NRLM fuel prior to switching from additional discussion of our rational for this in that it distributes fuel by truck to wholesale carrying heating oil to NRLM fuel. conclusion. purchaser consumers and retailers.

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Alaska.210 These provisions provide that $4,150,000. 211 The total capital cost to of 0.003 cents per gallon of affected any heating oil or 500 ppm sulfur LM refiners and terminals to install marker NRLM fuel. Adding the amortized cost diesel fuel that would otherwise be injection equipment is estimated to be of the injection equipment necessary to subject to the fuel marker requirements $5,650,000. Thus, the Northeast/Mid- add the marker to heating oil and the which is delivered to a retailer or Atlantic Area provisions in today’s rule cost or the marker results in a total wholesale-purchaser consumer inside minimizes the number of terminals that estimated cost of the marker the Northeast/Mid-Atlantic Area or will need to install additive injection requirement for heating oil in today’s Alaska does not need to contain the equipment and its associated cost to rule of 0.01 cents per gallon of affected marker. The costs of the marker comply with the marker requirement for NRLM fuel. requirements for heating oil beginning heating oil. The final NRLM rule also requires in 2007 and for 500 ppm sulfur LM In the NPRM we estimated that the that 500 ppm L&M fuel produced at diesel fuel from 2010 through 2012 are cost to blenders of the fuel marker in refineries or imported be marked from discussed separately below. bulk quantities would translate to 0.2 mid-2010 through mid-2012 outside of cents per gallon of fuel treated with the The Northeast/Mid-Atlantic Area was the Northeast/Mid-Atlantic Area and marker. This estimate was based on the Alaska. The adoption of a 15 ppm sulfur defined to include the region where the fee charged by a major pipeline to inject majority of heating oil in the country is standard for LM diesel fuel in 2012 in red dye at the IRS concentration into its today’s rule allows us to require that LM projected to continue to be supplied customers diesel fuel. We used this through the bulk distribution system fuel be marked from 2010 through 2012 estimate because we lacked specific cost rather than from 2010 through 2014 as (the Northeast and Mid-Atlantic). The information on the proposed marker, vast majority of heating oil consumption proposed (see section IV.A). In addition, and we believed that it provided a the way in which the program was in the U.S. will be within the Northeast/ conservatively high estimate of marker Mid-Atlantic Area. Outside of the crafted to avoid requiring the fuel cost. Since the proposal, we received marker be added to heating oil in the Northeast/Mid-Atlantic Area, we expect input from a major distributor of fuel that only limited quantities of heating Northeast/Mid-Atlantic Area and Alaska markers and dyes, regarding the cost of allows us to also provide that 500 ppm oil will be supplied, primarily from bulk deliveries of the specified fuel certain refiner’s racks. We estimate that sulfur LM diesel fuel in these areas is marker to terminals which translates to not subject to the marker requirement 30 refineries and transmix processor a cost of 0.03 cents per gallon of fuel facilities outside of the Northeast/Mid- (see section IV.D). We project that only treated with the marker. The volume of a small number of refiners will produce Atlantic Area will distribute heating oil heating oil that we expect will need to from their racks (in limited volumes) on 500 ppm sulfur diesel fuel subject to the be marked has also decreased marker requirements fuel and that it a sufficiently frequent basis to warrant substantially from that estimated in the the installation of a marker injection will not be shipped via pipeline. Thus, NPRM due to the Northeast/Mid- most of this fuel can be marked at the system at a total one time cost of Atlantic Area provisions. We estimate $1,500,000. refinery, limiting the number of that 1.4 billion gallons of heating oil facilities which need to add marking Terminals outside of the Northeast/ will be marked annually, for an annual equipment in response to this Mid-Atlantic Area will mostly be marker cost of $425,000. In the NPRM, requirement. We estimate that 15 located in areas without continued we projected that the cost of marking facilities will have to do so, at a cost of production and/or bulk shipment of heating oil would continue for three $60,000 each, for a total of $900,000. heating oil. Consequently, any high years (2007–2010). Under today’s final Amortizing this over the total volume of sulfur diesel fuel they sell will typically rule, heating oil must be marked affected NRLM fuel produced from mid- be NRLM. Terminals located within the indefinitely beginning in 2007, but only 2010 to mid-2012 at seven percent per Northeast/Mid-Atlantic Area will not outside of the Northeast/Mid-Atlantic year before taxes yields a cost for the need to mark their heating oil, except Area and Alaska. LM marker requirement of 0.004 cent Because heating oil outside of the for those few that choose to ship heating per gallon. Including the cost of the Northeast/Mid-Atlantic Area is being oil outside of the Northeast/Mid- marker (0.03 cent per gallon of marked marked to prevent its use in NRLM Atlantic Area. The terminals most likely fuel) increases this cost to 0.01 cent per engines, for the purposes of estimating to install marker injection equipment gallon of NRLM fuel. the impact of the marker requirement on will therefore be those in states outside We summed these various costs the cost of the NRLM program we have the Northeast/Mid-Atlantic Area with incurred to the distribution system over spread the cost for the marker for modest markets for heating oil after the four different time periods. As shown in heating oil over NRLM diesel fuel. implementation of this program. As table VI.A–5, the total additional Amortizing the capital costs of marker discussed in chapter 7 of the RIA, in distribution cost will be 0.2 cent per injection equipment over 20 years, analyzing the various situations, we gallon of NRLM fuel during the first step results in an estimated cost of 0.006 project that fewer than 60 terminals of the fuel program (from 2007 through cents per gallon of affected NRLM diesel nationwide will choose to install marker 2010), 0.6 cents per gallon of NRLM fuel fuel supplied. Spreading the cost of the injection equipment at a total cost of from 2010 to 2012 and from 2012 to marker over the volume of affected 2014, and increase to 1.0 cent per gallon NRLM fuel results in an estimated cost 210 Small refiner and credit high sulfur NRLM thereafter. A more detailed description will not be permitted to be sold in the area where of the costs associated with downgraded terminals are not required to add the fuel marker 211 The estimated marker injection equipment to heating oil (the ‘‘Northeast/Mid-Atlantic Area’’). costs include the cost of marker storage tanks, lines, jet fuel and 15 ppm diesel fuel is See section IV.D. and injectors. presented in chapter 7 of the Final RIA.

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TABLE VI.A–5.—SUMMARY OF DISTRIBUTION COSTS [Cents per gallon]

Time period over which costs apply Cause of increase in distribution costs 2007–2010 2010–2012 2010–2014 2014+

Distribution of additional NRLM volume ...... 0.08 0.1 0.1 0.1 Distillate interface handling ...... 0 0.4 0.4 0.8 Bulk plant storage tanks ...... 0.1 0.1 0.1 0.1 Heating oil and L&M fuel marker ...... 0.01 0.02 0.01 0.01

Total ...... 0.2 0.6 0.6 1.0

3. Cost of Lubricity Additives diesel properties other than fuel there are at least five significant factors, two of which would tend to decrease Hydrotreating diesel fuel tends to lubricity in such a way as to require the costs and three of which would tend to reduce the natural lubricating quality of use of additives. increase costs. It is not surprising that diesel fuel, which is necessary for the We project that all NRLM fuel these factors could counter-balance each proper functioning of certain fuel meeting a 15 ppm cap will require other, leading to the conclusion that the system components. There are a variety treatment with lubricity additives. Thus, 500 ppm cap could be extended to of fuel additives which can be used to the projected cost will be 0.2 cent per NRLM fuel at roughly the same cost as restore diesel fuel’s lubricating quality. affected gallon of 15 ppm NRLM fuel. for highway diesel fuel. These additives are currently used to 4. How EPA’s Projected Costs Compare The only existing market for 15 ppm some extent in highway diesel fuel. We to Other Available Estimates diesel fuel is a niche market for fleets expect that the need for lubricity Historically, the price of highway and the prices for this fuel likely bear additives that will result from the diesel fuel meeting a 500 ppm sulfur little resemblance to the costs of the 15 proposed 500 ppm sulfur standard for cap has exceeded that of high sulfur ppm highway or NRLM caps. Thus, the NRLM diesel fuel will be similar to that diesel fuel, ranging from 0–5 cents per only cost comparisons which can be for highway diesel fuel meeting the gallon from 1995–99 and averaging 2.2 made are those between engineering current 500 ppm sulfur cap standard.212 cents per gallon over this time period studies. One such study was performed Industry experience indicates that the (see chapter 7 of the Final RIA). Fuel by Mathpro for the Engine Manufactures vast majority of highway diesel fuel prices are often a function of market Association (EMA). Mathpro estimated meeting the current 500 ppm sulfur cap forces which might not reflect the cost the cost of controlling the sulfur content does not need lubricity additives. of producing the fuel. Still, given this is of highway and NRLM fuel to levels Therefore, we expect that the great a five-year average price difference, it is consistent with both 500 ppm and 15 majority of NRLM diesel fuel meeting 213 likely a reasonable indication of the cost ppm cap standards. A detailed the proposed 500 ppm sulfur standard of reducing highway diesel fuel sulfur to evaluation of the Mathpro costs is will also not need lubricity additives. In 500 ppm. Once the small refiner presented in the Final RIA. There are a estimating lubricity additive costs for provisions applicable to 500 ppm fuel number of aspects of the study that 500 ppm diesel fuel, we assumed that expire in 2010, we project that the total make direct comparisons between its fuel suppliers will use the same cost of the 500 ppm NRLM fuel cap will estimates and our cost estimates additives at the same concentration as be 2.4 cents per gallon, well within the difficult. Nonetheless, a crude we projected will be used in 15 ppm range of the historical highway-high comparison of 15 ppm costs indicates highway diesel fuel. Based on our sulfur fuel price difference. This that our average cost range of 5.7–5.9 analysis of this issue for the 2007 similarity exists despite changes in a cent per gallon is quite similar to the highway diesel fuel program, the cost number of factors. One, our projection 5.4–6.6 cents per gallon cost range per gallon of the lubricity additive is of future natural gas costs are estimated by Mathpro. about 0.2 cents. This level of use is significantly higher than those existing The other available study of 15 ppm likely conservative, as the amount of during the above price comparison. fuel costs was performed by Baker and lubricity additive needed increases Two, the refineries producing highway O’Brien for API and submitted in substantially as diesel fuel is diesel fuel historically likely did so response to the nonroad NPRM. Baker desulfurized to lower levels. We also because they faced lower costs than and O’Brien analyzed two NRLM fuel project that only five percent of all 500 those refineries continuing to produce control scenarios, but neither one ppm NRLM diesel fuel will require the high sulfur distillate. Three, matched today’s final NRLM fuel use of a lubricity additive. Thus, we desulfurization catalyst efficiency has program. The scenario closest to today’s project that the cost of additional improved dramatically since the program assumed that a NRLM fuel lubricity additives for the affected 500 highway units were installed and would be capped at 15 ppm in 2008. In ppm NRLM diesel fuel will be 0.01 cent significant operating experience has this case, Baker and O’Brien projected per gallon. See the Final RIA for more been obtained on highway units. Four, that the refinery-specific cost of 15 ppm details on the issue of lubricity inflation since the early 1990’s will have NRLM fuel would range from 4–17 cents additives. We have no reason to expect increased the cost of constructing the per gallon. This is higher than our that the implementation of today’s same hydrotreater. Five, and perhaps projected range of 2–14 cents per gallon. NRLM sulfur standards will impact most importantly, the construction of In addition, as described in the next some new hydrotreaters to produce 15 212 Please refer to section IV in today’s preamble 213 Hirshfeld, David, MathPro, Inc., ‘‘Refining for additional discussion regarding our projections ppm highway diesel fuel will allow the economics of diesel fuel sulfur standards,’’ of the potential impact on fuel lubricity of this existing hydrotreaters to produce 500 performed for the Engine Manufactuers Association, proposed rule. ppm NRLM fuel at no capital cost. Thus, October 5, 1999.

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section, Baker and O’Brien projected steps, providing 8 years of leadtime for shortages could occur under the that the volume of NRLM fuel produced the final step. We are proposing to highway diesel fuel program, even at these costs would not fully satisfy provide flexibility to refiners through without the added challenge of NRLM fuel demand. Presumably, totally the availability of banking and trading producing low sulfur NRLM fuel. The fulfilling NRLM fuel demand with provisions. We have provided relief for primary basis for their comments was a domestic production would have cost small refiners and hardship relief for study they had sponsored by Baker and more. any qualifying refiner. We are also O’Brien, which evaluated the costs and Baker and O’Brien described portions allowing 500 ppm diesel fuel generated likely supply impacts of the proposal. of their cost methodology and indicated in the distribution system to be sold as Baker and O’Brien evaluated two some general assumptions which they L&M fuel indefinitely. NRLM fuel scenarios: (1) A 15 ppm made during the study. However, the In the NPRM, we evaluated four absence of detail prevents any detailed NRLM fuel cap starting in 2008, and (2) possible reasons why refiners might a 500 ppm NRLM fuel cap starting in comparisons of their results to ours. It reduce their production of NRLM fuel: was clear from their report, though, that 2008, followed by a 15 ppm cap only for (1) Chemical processing losses during nonroad fuel in 2010. First, Baker and Baker and O’Brien made a number of the desulfurization process, (2) refiners pessimistic assumptions about refiners’ O’Brien projected that 13 refineries with might leave the NRLM fuel market, (3) a total crude oil capacity of 971,000 willingness to invest in desulfurization refiners might stop operations altogether capacity and that this limited the barrels per day would close in response (i.e., shut down), and (4) refiners might number of refineries which they to the 2007 highway rule, roughly half remove certain blendstocks from the assumed would invest to meet the in 2006 and half in 2010. (Total U.S. fuel pool to reduce desulfurization NRLM sulfur caps. This inevitably led refining capacity is currently 16 million costs. In all four cases, we concluded to higher projected costs (and lower barrels per day.) Then Baker and that the answer was no, that the supply production volumes), than if all O’Brien projected that adding a 15 ppm of NRLM fuel would likely remain refineries had been considered. Thus, it NRLM cap would cause all of the adequate after implementation of the is not surprising that they would derive refineries shutting down in 2010 to proposed fuel program. All of these slightly higher costs for a much smaller close in 2008, plus one additional findings started from the position that volume of fuel. A more detailed refinery (for a total of 14). Delaying the evaluation of the Baker and O’Brien cost there would be adequate supply of 15 ppm cap until 2010 and leaving L&M estimates can be found in the Final RIA diesel fuel after implementation of the fuel at 500 ppm reduced the number of and RTC. 2007 highway diesel fuel program. refineries projected to close in 2008, but Several commenters, namely API and did not change Baker and O’Brien’s 5. Supply of Nonroad, Locomotive and NPRA, took issue with the above four projection that 14 refineries would close Marine Diesel Fuel sets of arguments, as well as with our by 2010. Given the fact that Baker and We have developed today’s NRLM conclusion that refiners would not O’Brien projected the same number of fuel program to minimize its impact on reduce NRLM fuel production. While refinery closures for scenarios #1 and the supply of distillate fuel. For not requesting any changes to the 2007 #2, it is reasonable to assume that they example: We have split the control of highway diesel fuel program, they would project similar results for today’s NRLM fuel to 15 ppm sulfur into two reiterated previous concerns that supply final NRLM fuel program.

TABLE VI.A–6.—PROJECTED REFINERY CLOSURES: API SPONSORED STUDY BY BAKER AND O’BRIEN

No. of refineries Lost crude capacity (1000 bbl/day) 2008 2010 2008 2010

2007 Highway Fuel Program ...... 214 8 13 504 971 Plus One-Step 15 ppm NRLM Program ...... 14 14 1043 1043 Plus Two-Step NRLM Program ...... 12 14 924 1043

As a result of these refinery closures, refiners. The net shortfalls are shown in up the shortfall, with potentially high Baker and O’Brien projected shortfalls table VI.A–7 below. Baker and O’Brien price impacts. in 15 and 500 ppm supply domestic stated that imports would have to make

TABLE VI.A–7.—PROJECTED SHORTFALL IN NEAR-TERM DIESEL FUEL SUPPLY [1000 barrels per day]

15 ppm Fuel 500 ppm Fuel 2008 2010 2008 2010

2007 Highway Fuel Program ...... 359 579 308 22 Plus One-Step 15 ppm NRLM Program ...... 684 930 165 0 Plus Two-Step NRLM Program ...... 351 639 481 82

214 Closure would occur at the beginning of the 15 ppm highway fuel program, or 2006.

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To put these projected shortfalls in desulfurization process will be very have been a number of refinery closures context, Baker and O’Brien projects total small, (2) refiners will be unlikely to over the past decade, though the trend diesel fuel demand to be 3.3 million leave the NRLM fuel market, and (3) has slowed considerably. API pointed barrels per day in this timeframe refiners are unlikely to shut down due towards two specific refineries which (slightly lower than our own projection to this rule. identified EPA’s gasoline and diesel fuel summarized above). Thus, these Regarding point #1, the distillate sulfur controls as prime reasons for their projected shortfalls total roughly 10–20 material lost during desulfurization, our shutting down. A closer look at these percent of total diesel fuel demand, position is that the amount lost is small situations showed that the future capital which if true, would be very significant. (two percent), and most of it is lost in investment related to the sulfur controls We evaluated the Baker and O’Brien the form of naphtha which can be could have been a contributing factor. study and their findings. Baker and blended into gasoline. Refiners can then However, these refineries faced many O’Brien made very pessimistic adjust their mix of gasoline and other challenges and the timing of their assumptions regarding the likelihood distillate production to compensate. API closure (2000 and 2001, respectively) that refiners would invest in claimed that in the winter, refiners were showed that the EPA rules were not the desulfurization capacity. Their already at maximum distillate direct cause. The refiner involved did judgment that a refinery would close production and could not shift any not approach EPA concerning any relief rather than invest also was apparently additional heavy gasoline material into from the rules’ requirements due to based only on what they perceived to be the distillate pool. API did not present economic hardship. Thus, the excessively high desulfurization costs. any evidence that this is in fact the case. connection between their closure and Baker and O’Brien presents no The fact that some refiners actually our sulfur controls appears even more information regarding the location of crack distillate material into gasoline tenuous. these refineries, the competition they makes it difficult to accept their Another example of a refinery closure face, costs related to closing down, nor position. unrelated to desulfurization costs was the profits that they would forego by Regarding point #2, refiners leaving Shell’s recent decision to close their closing. Baker and O’Brien also makes the NRLM fuel market, we argued that refinery in Bakersfield, California. The no mention of EPA’s special provisions the only high sulfur distillate market reason was an insufficient supply of for refiners facing economic hardship, remaining after 2007 was heating oil. crude oil being produced locally. nor the small refiner provisions. Heating oil demand is flat or declining Analogous to a decision to leave the We believe that it is not possible to over time. We project that over 30 NRLM fuel market, shutting down project refinery closures without domestic refiners will still be able to completely involves the total loss of any considering these factors. This is produce heating oil after 2007, while profit being made on the production of supported by comments made in other refiners will be able to produce other fuels. API presented no economic response to our proposal of the 2007 sufficient quantities of NRLM fuel. If calculations or projections showing that highway diesel fuel program by more refiners choose to produce heating it would be in the best interest of any Mathpro and the National Economic oil, this market will be oversupplied refiner to shut down rather than invest Research Associates. While we are and prices will drop significantly. in NRLM fuel desulfurization. aware of a couple of refineries that are Exporting high sulfur distillate is a This leaves point #4, that refiners being offered for sale and whose plans possibility for some refiners, but this might shift NRLM fuel blendstocks to for producing low sulfur fuels are entails both transport costs, as well as other markets. This is really only an uncertain, we have no indications of as relatively low prices overseas. Thus, a issue if the blendstocks are shifted to a many as eight refineries closing in 2006 decision to not invest in NRLM fuel non-distillate market.215 The most likely in response to the highway fuel desulfurization has to be compared to place that NRLM fuel blendstocks might program. In addition, despite the losses involved with the other be shifted is to the residual fuel market. uncertainties at a few refineries, options. API argued that some refiners In particular, heavy (material with high refiners’ pre-compliance reports for the face much higher desulfurization costs densities and high distillation highway fuel program indicate that they than others and this would lead those temperatures) LCO and LCGO could be are planning to produce a sufficient refiners to leave the NRLM fuel market. shifted to residual fuel using existing supply of 15 and 500 ppm highway API did not estimate the losses that refining equipment. The heavy portions diesel fuel from 2006–2010. Therefore, refiners would entail when they left the of these two blendstocks contain the there is ample evidence that Baker and market. Studies performed for the greatest concentrations of sulfur which O’Brien’s projections for the highway highway fuel program indicate that is the most difficult to remove. Shifting diesel fuel program are overly these losses can be quite significant and this material to residual fuel, which pessimistic. It therefore appears likely inappropriate conclusions can be drawn currently does not have a sulfur that their projection that the NRLM fuel if they are ignored. The highway standard, would reduce the size and program will cause an additional program pre-compliance reports also cost of desulfurization equipment refinery to close is also overly indicate that some highway fuel refiners needed to meet a 15 ppm cap. Or, it pessimistic. The reader is referred to the are planning on leaving the highway would increase the volume of 15 ppm RTC for a summary of these comments fuel market in 2006, while others will NRLM fuel which could be produced in enter it for the first time. Decisions to and our detailed response to them. an existing hydrotreater. In their comments, API also stay in or leave the NRLM fuel market To evaluate this possibility, we challenged our findings that refiners are analogous. We have no reason to estimated the cost of processing LCO would maintain sufficient supply under believe refiners would approach this (the worse of the two blendstocks) into the proposed NRLM fuel program. After market any differently than the highway 15 ppm diesel fuel for each domestic a careful review of their comments and market. refinery. On average, desulfurizing LCO Regarding point #3, refineries shutting other information newly available since to 15 ppm sulfur cost 11.4 cents per the NPRM, we do not believe that the down, API again pointed towards the arguments presented by API and NPRA high costs faced by some refineries and 215 Shifting NRLM fuel blendstocks to heating oil justify changing our position that (1) the fact that a number of refineries have is essentially the same as leaving the NRLM market, chemical processing losses during the shut down over the past ten years. There which was discussed under Point #2 above.

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gallon. However, in some cases, this be due to the possibility that some for maintenance and repairs can cost reached 15 cents per gallon. The refiners might decide to limit their significantly affect total fuel production, cost to process heavy LCO could be capital investment in desulfurization inventory levels and resulting fuel twice these amounts, since the capacity by shifting some heavy LCO to prices. concentration of both total sulfur and the residual fuel market. Predicting the impact of any the most difficult to remove sulfur are Fuel-Only Control Programs: The individual factor on fuel price is also concentrated in the heaviest molecules. potential supply impacts of a long-term difficult. The overall volatility in fuel A review of historic fuel prices 500 ppm NRLM cap would necessarily prices limits the ability to determine the showed that residual fuel is usually be less than those of today’s final NRLM effect of a factor which changed at a priced 25–30 cents per gallon less than fuel program. In particular, specific point in time which might have diesel fuel. The highest incremental desulfurizing ‘‘difficult’’ blendstocks, led to the price change, as other factors desulfurization costs for heavy LCO like LCO, to 500 ppm is not technically continue to change over time. could potentially exceed this loss. Thus, challenging and does not have the Occasionally, a fuel quality change, a few refiners could find it economical potential to cost more than would be such as reformulated gasoline or a 500 to shift a portion of their LCO to the lost in shifting LCO or heavy LCO to ppm cap on diesel fuel sulfur content, residual fuel market. The U.S. residual residual fuel. The capital investment to only affects a portion of the fuel pool. fuel market is small relative to the meet a 500 ppm cap is also half of that In this case, an indication of the impact distillate fuel market, flat, and already needed to meet a 15 ppm cap or less. on price can be inferred by comparing being fulfilled. Worldwide, the residual Thus, the likelihood that raising this the prices of the two fuels at the same fuel market is shrinking. Thus, it is capital would prove difficult is much general location over time. However, unlikely that large volumes of LCO less. Given that we expect the final fuel this is still only possible after the fact, program to have a very minimal impact could leave the NRLM fuel market. and cannot be done before the fuel on supply, a 500 ppm NRLM cap would However, we cannot rule out the quality change takes place. be negligible. possibility that some LCO, particularly The potential impact of a long-term 15 Because of these difficulties, EPA has that produced by capital-strapped ppm NRLM cap is the same as that for generally not attempted to project the refiners, could be shifted to residual today’s final fuel program. impact of its rules on fuel prices. fuel. To estimate the upper limit of this However, in response to Executive shift, we estimated the volume of heavy 6. Fuel Prices Order 13211, we are doing so here.216 LCO produced by refineries whose LCO It is well known that it is difficult to To reflect the inherent uncertainty in processing costs exceeded 12 cents per predict fuel prices in absolute terms making such projections, we developed gallon and which were not owned by with any accuracy. The price of crude three projections for the potential large, integrated oil companies or small oil dominates the cost of producing impact of the proposed fuel program on refiners. This costly, heavy LCO gasoline and diesel fuel. Crude oil fuel prices. The range of potential long- represents 0.4 percent of total NRLM prices have varied by more than a factor term price increases are shown in table fuel demand, a very small volume. In of two in the past two years. In addition, VI.A–8. (Due to their similarity, we have this case, we would expect that this loss unexpectedly warm or cold winters can grouped the potential price impacts for could easily be made up by increased significantly affect heating oil similar quality fuels in the 2010–2012 imports of 15 ppm diesel fuel or consumption, which affects the amount and 2012–2014 time periods.) Short- domestic refiners facing lower 15 ppm of gasoline produced and the amount of term price impacts are highly volatile, NRLM fuel costs. distillate material available for diesel as are short-term swings in absolute fuel Overall, we expect that domestic fuel production. Economic growth, or its prices, and much too dependent on refiners will continue to produce lack, affects fuel demand, particularly individual refiners’ decisions, sufficient supplies of NRLM fuel. The for diesel fuel. Finally, both planned unexpected shutdowns, etc. to be greatest potential for near term loss will and unplanned shutdowns of refineries predicted even with broad ranges.

TABLE VI.A–8.—RANGE OF POSSIBLE TOTAL DIESEL FUEL PRICE INCREASES [Cents per gallon] a

Maximum op- Average total Maximum total erating cost cost cost

500 ppm Sulfur Cap: Nonroad, Locomotive and Marine Diesel Fuel (2007–2010)

PADDs 1 and 3 ...... 2.9 1.8 4.5 PADD 2 ...... 3.0 2.5 3.8 PADD 4 ...... 3.7 3.5 6.1 PADD 5 ...... 1.2 1.5 1.5

15 ppm Sulfur Cap: NRLM Fuel (2010–2014)

PADDs 1 and 3 ...... 5.6 5.7 9.4 PADD 2 ...... 7.3 7.4 10.8 PADD 4 ...... 7.9 12.6 13.6 PADD 5 ...... 4.5 5.1 5.2

216 Supply, Distribution, or Use’’ (66 FR 28355, May Executive Order 13211, ‘‘Actions Concerning 22, 2001). Regulations That Significantly Affect Energy

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TABLE VI.A–8.—RANGE OF POSSIBLE TOTAL DIESEL FUEL PRICE INCREASES—Continued [Cents per gallon] a

Maximum op- Average total Maximum total erating cost cost cost

15 ppm Sulfur Cap: NRLM Fuel (fully implemented program: 2014 +)

PADDs 1 and 3 ...... 7.7 6.3 9.8 PADD 2 ...... 7.7 7.9 11.2 PADD 4 ...... 8.3 13.0 13.9 PADD 5 ...... 5.1 6.9 7.3 Notes: a At the current wholesale price of approximately $1.00 per gallon, these values also represent the percentage increase in diesel fuel price.

The lower end of the range assumes depending on the area of the country. In limit price impacts are too high, if the that prices within a PADD increased to 2010, the price of 15 ppm NRLM fuel conditions exist where prices are set reflect the highest operating cost will increase a total of 4–13 cents per based on operating costs alone. increase faced by any refiner in that gallon. In 2014, under this pricing However, these price impacts are PADD (please see the Final RIA for scenario, 15 ppm NRLM fuel prices will sufficiently low that considering even details on this methodology). This increase further to 6–13 cents per lower price impacts was not considered refiner with the highest operating cost gallon. All these potential price impacts critical to estimating the potential will not recover any of his invested for 500 and 15 ppm fuel, relative to economic impact of this rule. capital, but all other refiners will those projected in the NPRM, reflect the Second, we assumed in some cases recover some or all of their investment. differences in cost estimates discussed that a single refinery’s costs could affect In this case, the price of NRLM fuel will above. fuel prices throughout an entire PADD. increase in 2007 by 1–3 cents per gallon, There are a number of assumptions While this is a definite improvement depending on the area of the country. In inherent in all three of the above price over analyses which assume that a 2010, the price of 15 ppm NRLM fuel projections. First, both the lower and single refinery’s costs could affect fuel will increase a total of 3–7 cents per upper limits of the projected price prices throughout the entire nation, it is gallon. In 2014, under this pricing impacts described above assume that still conservative. High cost refineries scenario, 15 ppm NRLM fuel prices will the refinery facing the highest are more likely to have a more limited increase slightly, to 4–7 cents per compliance costs is currently the price geographical impact on market pricing gallon. The increase in 2014 is due to setter in their market. This is a worse than an entire PADD. In many cases, the expiration of the small refiner case assumption which is impossible to high cost refiners continue to operate provisions, as well as the fact that 500 validate. Many factors affect a refinery’s simply because they are in a niche ppm fuel created in the distribution total costs of fuel production. Most of location where transportation costs limit system can no longer be sold to the these factors, such as crude oil cost, competition. land-based nonroad market. labor costs, age of equipment, etc., are Third, by focusing solely on the cost The mid-range estimate of price not considered in projecting the of desulfurizing NRLM diesel fuel, we impacts assumes that prices within a incremental costs associated with lower assume that the production of NRLM PADD increase by the average refining NRLM diesel fuel sulfur levels. Thus, diesel fuel is independent of the and distribution cost within that PADD, current prices may very well be set in production of other refining products, including full recovery of capital (at any specific market by a refinery facing such as gasoline, jet fuel and highway seven percent per annum before taxes). lower incremental compliance costs diesel fuel. However, this is clearly not Lower cost refiners will recover more than other refineries. This point was the case. Refiners have some flexibility than their capital investment, while highlighted in a study by the National to increase the production of one those with higher than average costs Economic Research Associates (NERA) product without significantly affecting recover less. Under this assumption, the for AAM of the potential price impacts the others, but this flexibility is quite of EPA’s 2007 highway diesel fuel price of NRLM fuel will increase in 217 limited. It is possible that the relative 2007 by 1–3 cents per gallon, depending program. In that study, NERA economics of producing other products on the area of the country. In 2010, the criticized the above referenced study could influence a refiner’s decision to price of 15 ppm NRLM fuel will performed by Charles River Associates, increase or decrease the production of increase a total of 4–11 cents per gallon. et al. for API, which projected that NRLM diesel fuel under today’s fuel In 2014, under this pricing scenario, 15 prices will increase nationwide to program. It is this price response that reflect the total cost faced by the U.S. ppm NRLM fuel prices will increase causes fuel supply to match fuel refinery with the maximum total slightly, to 5–11 cents per gallon. demand. And, this response in turn compliance cost of all the refineries in The upper end estimate of price could increase or decrease the price the U.S. producing highway diesel fuel. impacts assumes that prices within a impact relative to those projected above. To reflect the potential that the refinery PADD increase by the maximum total Fourth, all three of the above price with the highest projected compliance refining and distribution cost of any projections are based on the projected costs under the maximum price scenario refinery within that PADD, including cost for U.S. refineries of meeting the is not the current price setter, we full recovery of capital (at seven percent NRLM fuel sulfur caps. Thus, these included the mid-point price impacts per annum before taxes). All other price projections assume that imports of above. It is possible that even the lower refiners will recover more than their NRLM fuel, which are currently capital investment. Under this 217 ‘‘Potential Impacts of Environmental significant in the Northeast, are assumption, the price of NRLM fuel will Regulations on Diesel Fuel Prices,’’ NERA, for available at roughly the same cost as increase in 2007 by 1–4 cents per gallon, AAM, December 2000. those for U.S. refineries in PADDs 1 and

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3. We have not performed any analysis on local, higher sulfur markets. would have been projected had we of the cost of lower sulfur caps on diesel However, many overseas refiners focus projected that 5–10 percent of NRLM fuel produced by foreign refiners. on exports. Both Europe and the U.S. diesel fuel will be imported at However, there are reasons to believe are moving towards highway and competitive prices. that imports of 500 and 15 ppm NRLM nonroad diesel fuel sulfur caps in the Fuel-Only Control Programs: We used diesel fuel will be available at prices in 10–15 ppm range. Europe is currently the same methodology to estimate the the ranges of those projected for U.S. and projected to continue to need to potential price impacts for stand-alone refiners. import large volumes of highway diesel 500 ppm and 15 ppm NRLM fuel One recent study analyzed the relative fuel. Thus, it seems reasonable to expect programs. The potential price impacts of cost of lower sulfur caps for Asian that a number of overseas refiners will long-term 500 ppm and 15 ppm NRLM refiners relative to those in the U.S., invest in the capacity to produce some caps would be the same as those shown Europe and Japan.218 It concluded that or all of their diesel fuel at these levels. in table VI.A–8 above for the 500 ppm costs for Asian refiners will be Many overseas refiners also have the NRLM cap in 2007 and for the 15 ppm comparatively higher, due to the lack of flexibility to produce 10–15 ppm diesel NRLM cap in 2014 and beyond, current hydrotreating capacity at Asian fuel from their cleanest blendstocks, as respectively. refineries. This conclusion is certainly most of their available markets have less valid when evaluating lower sulfur stringent sulfur standards. Thus, there B. Cost Savings to the Existing Fleet levels for highway diesel fuels which are reasons to believe that some capacity From the Use of Low Sulfur Fuel are already at low levels in the U.S., to produce 10–15 ppm diesel fuel will Europe and Japan and for which be available overseas at competitive We estimate that reducing fuel sulfur refineries in these areas have already prices. If these refineries were operating to 500 ppm would reduce engine wear invested in hydrotreating capacity. It well below capacity, they might be and oil degradation to the existing appears to be less valid when assessing willing to supply complying product at nonroad diesel equipment fleet and that the relative cost of meeting lower sulfur prices which only reflect incremental a further reduction to 15 ppm sulfur standards for NRLM fuels and heating operating costs. This could hold prices would result in even greater reductions. oils which are currently at much higher down in areas where importing fuel is This reduction in wear and oil sulfur levels in the U.S., Europe and economical. However, it is unlikely that degradation would provide a dollar Japan. All refineries face additional these refiners could supply sufficient savings to users of nonroad equipment. investments to remove sulfur from these volumes to hold prices down The cost savings would also be realized fuels and so face roughly comparable nationwide. Despite this expectation, to by the owners of future nonroad engines control costs on a per gallon basis. be conservative, in the refining cost that are subject to the standards in this One factor arguing for competitively analysis conducted earlier in this proposal. As discussed below, these priced imports is the fact that refinery chapter, we assumed no imports of 500 maintenance savings have been utilization rates are currently higher in ppm or 15 ppm NRLM diesel fuel. All conservatively estimated to be greater the U.S. and Europe than in the rest of 500 ppm and 15 ppm NRLM fuel was than 3 cents per gallon for the use of 15 the world. The primary issue is whether produced by domestic refineries. This ppm sulfur fuel when compared to the overseas refiners will invest to meet raised the average and maximum costs use of today’s unregulated nonroad tight sulfur standards for U.S., European of 500 ppm and 15 ppm NRLM diesel diesel fuel. A summary of the range of and Japanese markets. Many overseas fuel and increased the potential price benefits from the use of low-sulfur fuel refiners will not invest, instead focusing impacts projected above beyond what is presented in Table VI.B–1.219

TABLE VI.B–1.—ENGINE COMPONENTS POTENTIALLY AFFECTED BY LOWER SULFUR LEVELS IN DIESEL FUELa

Affected components Effect of lower sulfur Potential impact on engine system

Piston Rings ...... Reduced corrosion wear ...... Extended engine life and less frequent re- builds. Cylinder Liners ...... Reduced corrosion wear ...... Extended engine life and less frequent re- builds. Oil Quality ...... Reduced deposits, reduced acid build-up, and Reduce wear on piston ring and cylinder liner less need for alkaline additives. and less frequent oil changes. Exhaust System (tailpipe) ...... Reduced corrosion wear ...... Less frequent part replacement. Exhaust Gas Recirculation System ...... Reduced corrosion wear ...... Less frequent part replacement Notes: a The degree to which all of these benefits may occur for any specific engine will vary. For example, the impact of high sulfur fuel on piston rings, cylinder liners and oil quality are somewhat interdependent. To the extent an end-user lengthens the oil drain interval, the benefit of the low sulfur fuel on piston ring and cylinder liner wear will be lessened (though not eliminated). For users who do not alter oil drain intervals, the benefit of low sulfur fuel on extending piston ring and cylinder liner wear will be greater. The benefit of low sulfur fuel on reducing exhaust system and EGR system corrosion are independent of oil drain intervals.

The monetary value of these benefits maintenance practices and the degree to quite small. However, for equipment over the life of the equipment will which equipment operators change produced in the years immediately depend upon the length of time that the engine maintenance patterns to take preceding the introduction of 500 ppm equipment operates on low-sulfur diesel advantage of these benefits. For sulfur fuel, the savings would be fuel and the degree to which engine and equipment near the end of its life in the substantial. Additional savings would equipment manufacturers specify new 2008 time frame, the benefits will be

219 See Heavy-duty 2007 Highway Final RIA, Diesel Fuel Sulfur Content on Engine Wear,’’ EPA 218 ‘‘Cost of Diesel Fuel Desulfurization In Asian Refineries,’’ Estrada International Ltd., for the Asian Chapter V.C.5, and ‘‘Study of the Effects of Reduced report # 460/3–87–002, June 1987. Development Bank, December 17, 2002.

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be realized in 2010 when the 15 ppm 2010 nonroad equipment users can gallon savings is conservative as it only sulfur fuel would be introduced. realize an operating cost savings of 3.2 accounts for the impact of low sulfur We estimate the single largest savings cents per gallon compared to today’s fuel on oil change intervals. While some would be the impact of lower sulfur fuel engine. This means that the end cost to of these benefits are impacted by on oil change intervals. The RIA the typical user for 15 ppm sulfur fuel changes in oil change interval, a number presents our analysis for the oil change is approximately 3.8 cents per gallon are independent and not included in interval extension which would be (7.0 cent per gallon cost for fuel minus our cost savings estimate. realized by the introduction of 500 ppm 3.2 cent per gallon maintenance C. Engine and Equipment Cost Impacts sulfur fuel in 2007, as well as the savings). For a typical 100 horsepower additional oil extension which would be nonroad engine this represents a net The following sections briefly discuss realized with the introduction of 15 present value lifetime savings, the various engine and equipment cost ppm sulfur nonroad diesel fuel in 2010. excluding the higher fuel costs, of more elements considered for this final rule As explained in the RIA, these estimates than $500. and present the total costs we have are based on our analysis of publically These savings will occur without estimated. The reader is referred to the available information from nonroad additional new cost to the equipment RIA for a complete discussion. engine manufacturers. Due to the wide owner beyond the incremental cost of Estimated engine and equipment costs range of diesel fuel sulfur which today’s the low-sulfur diesel fuel, although depend largely on both the size of the nonroad engines may see around the these savings are dependent on changes piece of equipment and its engine, and world, engine manufacturers specify to existing maintenance schedules. Such on the technology package being added different oil change intervals as a changes seem likely given the to the engine to ensure compliance with function of diesel sulfur levels. We have magnitude of the savings. There are the new Tier 4 standards. The wide size used this data as the basis for our many mechanisms by which end-users variation (e.g., engines under 4 analysis. Taken together, when could become aware of the opportunity horsepower through engines above 2500 compared to today’s relatively high to extend oil drain intervals. First, it is horsepower) and the broad application nonroad diesel fuel sulfur levels, we typical practice for engine and variation (e.g., lawn equipment through estimate the use of 15 ppm sulfur fuel equipment manufacturers to issue large mining trucks) that exists in the will enable an oil change interval service bulletins regarding lubrication nonroad industry makes it difficult to extension of 35 percent from today’s and fueling guidance for end-users.220 present here an estimated cost for every products. Manufacturers provide these service possible engine and/or piece of We received comments on our bulletins to equipment dealerships and equipment. Nonetheless, for illustrative estimated maintenance savings large equipment customers (such as purposes, we present some examples of primarily from a number of end-user rental companies). In addition, the engine and equipment cost impacts groups (e.g., equipment dealers, equipment and end-user industries have throughout this discussion. Note that equipment rental organizations, farming a number of annual conferences which the costs presented here are for those organizations). Several commenters are used to share information, including nonroad engines and equipment that are believed our estimates were too high, information regarding appropriate mobile nonroad equipment and are, and one commenter believed the engine and equipment maintenance therefore, subject to nonroad engine estimate was too low. However, all of practices. The end-user conferences are standards. These costs would not apply the commenters who believed our cost also designed to help specific industries for that equipment that is stationary— savings estimates were too high and business reduce operating costs and some portion of some equipment provided no data to support their maximize profits, which would include segments such as generator sets, pumps, comments, beyond unsubstantiated information on equipment maintenance compressors—and not subject to opinions, nor did they comment on practices. There are trade journals and nonroad engine standards. The analysis EPA’s substantial related technical publications which provide information summarized here is presented in detail analysis. and advice to their users regarding in chapter 6 of the RIA. The commenter who suggested the proper equipment maintenance. Finally, Note that the costs presented here do estimates were too low provided an some nonroad users perform routine oil not reflect any savings that are expected example cost estimate for existing oil sample analysis in order to determine to occur because of the engine ABT change intervals which, if used in our appropriate oil drain intervals, and in program and/or the equipment analysis, would have resulted in an some cases to monitor overall engine manufacturer transition program, which estimated cost savings 4 times EPA’s wear rates in order to determine engine are discussed in sections III.A and B. estimate. We have not changed our rebuild needs.221 We have not estimated These optional programs have the estimate based on the comments we the value of the savings from all of the potential to provide significant savings received. benefits listed in table VI.B–1, and for both engine and equipment We present here a fuel operating cost therefore we believe the 3.2 cents per manufacturers. As a result, we consider savings attributed to the oil change our cost estimates to be conservative, in interval extension in terms of a cents 220 For example, Appendix A of EPA the sense that they likely overstate total per gallon operating cost. We estimate Memorandum ‘‘Estimate of the Impact of Low engine and equipment costs. that an oil change interval extension of Sulfur Fuel on Oil Change Intervals for Nonroad Diesel Equipment’’ contains a service bulletin from In general, the final engine and 31 percent, as would be enabled by the a nonroad diesel engine manufacturer. Copy of equipment cost analysis is the same as use of 500 ppm sulfur fuel in 2007, memo available in EPA Air Docket A–2001–28, that done for our proposal. We have results in a fuel operating costs savings item II–A–194. made the following changes: of 2.9 cents per gallon for the nonroad 221 For example, Appendix C of EPA • In response to a comment, we have Memorandum ‘‘Estimate of the Impact of Low fleet. We estimate an additional cost Sulfur Fuel on Oil Change Intervals for Nonroad increased our engine research and savings of 0.3 cents per gallon for the oil Diesel Equipment’’, which indicates Caterpillar development (R&D) costs. In the change interval extension which would recommends owners use Scheduled Oil Sampling proposal, we estimated the R&D be enabled by the use of 15 ppm sulfur analysis as the best means for users to determine expenditure that each engine appropriate oil change intervals. Copy of memo beginning in 2010. Thus, for the available in EPA Air Docket A–2001–28, item II–A– manufacturer would make to comply nonroad fleet as a whole, beginning in 194. with the Tier 4 standards. In response

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to the comment, we have refined that particulate filter (CDPF). This has no are not attributable to the Tier 4 rule. analysis and increased our estimate of impact on the redesign costs of other Our assessment at proposal is consistent engine R&D by roughly 50 percent. We equipment. Lastly, we have decreased with our projections in the Tier 2/3 did not receive any other comments the equipment variable costs for engines rulemaking where we estimated costs with respect to our estimates for engine above 750 horsepower for the same for electronic fuel injection systems as R&D. reason as was done for engine variable a cost of complying with those • Because the final standards for costs. standards. In the preamble to the engines above 750 horsepower have • We have changed the engine proposed Tier 4 rule, we presented changed from the proposed standards, operating costs for engines above 750 estimates of the penetration of various we have made changes to the engine horsepower to reflect a different fuel engine technologies into several power R&D expenditures attributed to those economy impact than was associated ranges, including 75 to 100 horsepower, engines. For costing purposes, the NOX with the proposed standards and to based on engine manufacturers’ 2001 portion of the engine R&D expenditures reflect the new timing for adding the model year certification data. See 68 FR are no longer shared by engines above CDPF and therefore incurring the 28386, May 23, 2003. Since then, model 750 horsepower. This increases NOX maintenance costs associated with it. year certification data for 2004 are R&D attributed to other engines because • We have included costs for available, and these data substantiate a significant portion of engine R&D costs additional cooling on engines adding our earlier prediction. These model year are costs shared across a wide range of cooled EGR systems (engines of 25 to 50 2004 data represent implementation of products. We have also reduced the horsepower and greater than 750 the Tier 2 standards so these data engine variable costs for engines above horsepower). These costs include the illustrate the technologies engine 750 horsepower since we are no longer larger radiator and/or engine cooling fan manufacturers are using to comply with projecting that NOX adsorbers will be that may be required on engines those standards. These data show that added to them.222 This has no impact on expected to add cooled EGR to meet the nearly 20 percent of the engines that the engine variable costs for other new standards. In the proposal, we had will be produced in this power range engines. We have also reduced the estimated the costs for the EGR system will have electronically controlled fuel equipment redesign costs for engines but not the costs for additional cooling. systems, while the model year 2001 data above 750 horsepower since less • We have expressed all costs in 2002 show no engines in this power range redesign effort is projected to dollars for the final rule rather than the had electronic fuel systems. This accommodate only a catalyzed diesel proposal’s use of 2001 dollars. dramatic increase in electronics as a We received comments on other result of the Tier 2 standards, let alone 222 In order to avoid inconsistencies in the way aspects of the proposed engine and the Tier 3 standards, gives us our emission reductions, and cost-effectiveness equipment cost analysis that are not confidence that our projections estimates are calculated, our cost methodology for reflected in the final analysis. Some of regarding 2012 are reasonable. Section engines and equipment relies on the same the comments were: projections of new nonroad engine growth as those • 4.1.4 of the RIA contains a detailed used in our emissions inventory projections. Our Some commenters claimed that we discussion of this information; see also NONROAD emission inventory model includes had underestimated costs for engines the discussions in sections II.B.4.b.i and estimates of future engine populations that are under 75 horsepower, and in the 75 to II.B.5 above. Thus, we continue to consistent with the future engine sales used in our 100 horsepower range. For the engines cost estimates. The NONROAD model inputs believe that we have properly attributed include an estimate of what percentage of generator under 75 horsepower, one commenter costs of electronic fuel systems to the sets sold in the U.S. are ‘‘mobile’’ and, thus, subject suggested the costs were higher than Tier 3 rule, or, put another way, that the to the nonroad standards, and what percentage are EPA estimated. Please see section 5.4.1 cost of an electronic fuel system is not ‘‘stationary’’ and not subject to the nonroad of the Summary and Analysis of standards. These percentages vary by power a cost attributable to this Tier 4 rule for category and are documented in ‘‘Nonroad Engine Comments for a detailed discussion of engines in the 75 to 100 horsepower Population Estimates,’’ EPA Report 420–P–02–004, the comments and our response. In the category. Since the cost of electronic December 2002. For generator sets above 750 75 to 100 horsepower range, one fuel systems is the essential difference horsepower, NONROAD assumes 100 percent are commenter suggested that we were stationary and, therefore, not subject to the new in the costs we attribute to the Tier 4 nonroad standards. For generator sets under 750 incorrect in our assumption that those rule for these engines versus the costs horsepower, we have assumed other percentages of engines would have electronic fuel the commenter would attribute, we mobile versus stationary. During our discussions systems in the NRT4 baseline case, therefore disagree with the comment with engine manufacturers after the proposal, it maintaining the electronic fuel systems became apparent not only that our estimate for and believe our estimates to be generator sets above 750 horsepower may not be would have to be added to these engines reasonable. See also section II.A.5 correct and many are indeed mobile, but also that to comply with the Tier 4 standards above. some of our estimates for generator sets above 750 and, therefore, are a cost of the Tier 4 • One commenter took exception to horsepower may also not be correct and many more rule. From this premise, the commenter than we estimate may indeed be mobile. If true, this our method of amortizing fixed costs increased percentage of mobile generator sets will argued that the costs for 75 to 100 over a period of years following be subject to the new nonroad standards. horsepower engines will be implementation of the new standards. Unfortunately, we have not received sufficient data disproportionately high. The commenter suggested that we used to make a conclusive change to the NONROAD We disagree. In the proposal, we such a method to imply to the regulated model to include the potentially increased percentages of mobile generator sets and, therefore, estimated that by 2012, engines in this industries that they would not only for the above described purpose of maintaining power range would already have recover their investments but would consistency, we have not included their costs or electronic fuel injection systems. This also make a gain on those investments. their emissions reductions in our official estimates estimate was based on our engineering This is not the case. We use this method for this final rule (costs and emissions reductions for the current percentages in the NONROAD model assessment of what technologies would of amortization, briefly described here are included in our estimates for the final rule). be required to comply with the Tier 2 and more fully in the RIA, only to Instead, we present a sensitivity analysis in Chapter and Tier 3 emission standards, as well reflect the time value of money so that 8 of the RIA that includes both an estimate of the as technical discussions we had with we can get a more accurate estimate of costs and emissions reductions that would result from including a higher percentage of generator sets engine manufacturers regarding future the cost to the companies. as mobile equipment and subject to the new product plans. Therefore, the costs of The Summary and Analysis of standards. these electronic fuel injection systems Comments document contains the

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details of all comments and our engine research laboratories conducting a systems approach. The NOX adsorber responses. relevant R&D. technology in particular is expected to We project the use of several benefit from re-optimization of the 1. Engine Cost Impacts technologies for complying with the engine management system to better Estimated engine costs are broken into Tier 4 emission standards. We are match the NOX adsorber’s performance fixed costs (for research and projecting that NOX adsorbers and characteristics. The majority of the development, retooling, and catalyzed diesel particulate filters dollars we have estimated for research certification), variable costs (for new (CDPFs) will be the most likely is expected to be spent on developing hardware and assembly time), and life- technologies applied by industry to this synergy between the engine and cycle operating costs. Total operating meet our new emissions standards for NOX exhaust emission control systems. costs include the estimated incremental engines above 75 horsepower. The fact Therefore, for engines where we project cost for low-sulfur diesel fuel, any that these technologies are being use of both a CDPF and a NOX adsorber expected increases in maintenance costs developed for implementation in the (i.e., 75 to 750 horsepower), we have associated with new emission control highway market before the Tier 4 attributed two-thirds of the R&D devices, any costs associated with implementation dates, and the fact that expenditures to NOX control, and one- engine manufacturers will have several increased fuel consumption, and any third to PM control. years before implementation of the Tier As we mentioned earlier, we have decreases in operating cost (i.e., 4 standards, ensures that the further refined our estimate of engine maintenance savings) expected due to technologies used to comply with the R&D costs since our proposal. We have low-sulfur fuel. Cost estimates nonroad standards will undergo taken these R&D costs and have broken presented here represent an expected significant development before reaching them into two components. The first of incremental cost of engines in the model production. This ongoing development these components estimates the year of their introduction. Costs in could lead to reduced costs in three corporate R&D applicable across all subsequent years will be reduced by ways. First, we expect research will lead engine lines. The second of these several factors, as described below. All to enhanced effectiveness for individual estimates the engine line by engine line engine and equipment costs are technologies, allowing manufacturers to R&D cost. The estimates of line by line presented in 2002 dollars since use simpler packages of emission R&D correlate to power range—$1 producer price indexes for 2003 were control technologies than we would million for under 75 horsepower engine not available in time for use in this predict given the current state of lines, $3 million for 75 to 750 analysis. development. Similarly, we anticipate horsepower engine lines, and $6 million a. Engine Fixed Costs that the continuing effort to improve the for above 750 horsepower engine lines. emission control technologies will i. Engine and Emission Control Device We estimated these expenditures based include innovations that allow lower- R&D on the confidential information cost production. Finally, we believe that provided by the commenter and our The technologies described in Section manufacturers will focus research analysis of that information. The end II represent those technologies we efforts on any drawbacks, such as fuel result is consistent with the believe will be used to comply with the economy impacts or maintenance costs, commenter’s suggested expenditure Tier 4 emission standards. For many in an effort to minimize or overcome levels. We have applied these engine- manufacturers, these technologies are any potential negative effects. line R&D estimates only where CDPFs We anticipate that, in order to meet part of an ongoing research and and/or CDPF/NOX adsorber systems are development effort geared toward the Tier 4 standards, industry will expected to be implemented (i.e., this compliance with the 2007 heavy-duty introduce a combination of primary R&D is not applied for the under 75 diesel highway emission standards. The technology upgrades. Achieving very horsepower engines in 2008 because the engine manufacturers making R&D low NOX emissions will require basic R&D already estimated for complying research on NO exhaust emission expenditures toward compliance with X with those standards should not require control technologies and improvements highway emission standards will have the same effort to tailor it to each in engine management to take advantage to undergo some additional R&D effort engine). We have also applied these of the new exhaust emission control to transfer emission control technologies estimates only for those engines without system capabilities. The manufacturers to engines they wish to sell into the a highway counterpart (note that only are expected to address the challenge by nonroad market. These R&D efforts will 16 of a total 133 nonroad engine lines optimizing the engine and new exhaust allow engine manufacturers to develop had a highway counterpart). emission control system to realize the and optimize these new technologies for In the 2007 HD highway rule, we best overall performance. This will maximum emission-control estimated that each engine manufacturer entail optimizing the engine and effectiveness with minimum negative would expend $36.1 million for R&D to emission control system for both redesign their engines and apply impacts on engine performance, emissions and fuel economy durability, and fuel consumption. catalyzed diesel particulate filters performance in light of the presence of (CDPF) and NO adsorbers.223 For their Many nonroad engine manufacturers X the new exhaust emission control nonroad R&D efforts on engines where are not part of the ongoing R&D effort devices and their ability to control we project that compliance will require toward compliance with highway pollutants previously controlled only CDPFs and NO adsorbers (i.e., 75 to emissions standards because they do not X via in-cylinder means or with exhaust 750 horsepower) and on greater than sell engines into the highway market. gas recirculation. Since most research to 750 horsepower engines requiring a Nonetheless, these manufacturers are date with exhaust emission control CDPF, engine manufacturers that also expected to benefit from the R&D work technologies for nonroad applications sell into the highway market will incur that has already occurred and will has focused on retrofit programs which some level of R&D effort but not at the continue through the coming years typically add an exhaust emission through their contact with highway control device without making engine 223 In the 2007 rule, we estimated a value of $35 manufacturers, emission control device control changes, there remains room for million in 1999 dollars. Here we have adjusted that manufacturers, and the independent significant improvements by taking such value to express it in 2002 dollars.

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level incurred for the highway rule. In different for each manufacturer—some with the phase-in of the standard. All many cases, the engines used by higher, some lower—depending on R&D expenditures are then recovered by highway manufacturers in nonroad product mix and the number of engine the engine manufacturer over an products are based on the same engine lines in their product line. identical time span following the platform as those used in highway For those engine manufacturers introduction of the technology, with the products. However, horsepower and selling smaller engines that we project exception that expenditures for DOC- torque characteristics are often different will add a CDPF-only (i.e., 25 to 75 only R&D are recovered over a five year so some effort will have to be expended horsepower engines in 2013), we have span rather than a four year span. We to accommodate those differences. For estimated that the average R&D they will assume an opportunity cost of capital of these manufacturers, we have estimated incur will be roughly one-third that seven percent for all R&D. We have that they will incur an average R&D incurred by manufacturers conducting apportioned these R&D costs across all expense of $3.6 million 224 not CDPF/NOX adsorber R&D. We believe engines that are expected to use these including the nonroad engine line R&D this is a good estimate because CDPF technologies, including those sold in noted above. This $3.6 million R&D technology is further along in its other countries or regions that are expense will allow for the transfer of development than is NOX adsorber expected to have similar standards. We R&D knowledge from their highway technology and, therefore, a 50/50 split have estimated the fraction of the U.S. experience to their nonroad engine is not appropriate. Using this estimate, sales to this total sales at 42 percent. product line. For the reasons stated the R&D incurred by manufacturers that Therefore, we have attributed this above, two-thirds of this R&D is already have been selling any engines amount to U.S. sales. Note that all attributed to NOX control and one-third into both the highway and the nonroad engine R&D costs for engines under 25 to PM control for 75 to 750 horsepower markets will be $1.2 million not horsepower have been attributed to U.S. engines; for engines above 750 including their nonroad engine line sales since other countries are not horsepower, all of this R&D is attributed R&D, and the R&D for manufacturers expected to have similar standards on to PM control. selling engines into only the nonroad these engines. For those manufacturers that sell market will be roughly $8.3 million 226 Using this methodology, we have larger engines only into the nonroad not including their nonroad engine line estimated the total R&D expenditures market, and where we project those R&D. All of this R&D is attributed to PM attributable to the new standards at engines will add a CDPF and a NOX control. $323 million with $206 million spent on adsorber (75 to 750 horsepower) or a For those engine manufacturers corporate R&D and $118 million spent CDPF-only (above 750 horsepower), we selling engines that we project will add on engine line R&D. For comparison, believe that they will incur an R&D only a DOC or make some engine-out our proposal estimated $199 million for expense nearing that incurred by modifications (i.e., engines under 75 basic R&D and none for engine line highway manufacturers for the highway horsepower in 2008), we have estimated R&D. The amount for corporate R&D is rule although not quite at the same that the average R&D they will incur higher here solely due to the change to level. Nonroad manufacturers will be will be roughly one-half the amount 2002 dollars. able to learn from the R&D efforts estimated for their CDPF-only R&D. already underway for both the highway Using this estimate, the R&D incurred ii. Engine-Related Tooling Costs rule and for the Tier 2 light-duty by manufacturers selling any engines Once engines are ready for highway rule (65 FR 6698, February 10, into both the highway and nonroad production, new tooling will be 2000). This learning could be done via markets will be roughly $600,000, and required to accommodate the assembly seminars, conferences, and contact with the R&D for manufacturers selling of the new engines. We have indicated highway manufacturers, emission engines into only the nonroad market below where our tooling cost estimates control device manufacturers, and the will be roughly $4.2 million.227 All of have changed from the proposal. In the independent engine research this R&D is attributed to PM control. 2007 highway rule, we estimated laboratories conducting relevant R&D. We have assumed that all R&D approximately $1.65 million per engine Therefore, for these manufacturers, we expenditures occur over a five year span line for tooling costs associated with 228 have estimated an average expenditure preceding the first year any emission CDPF/NOX adsorber systems. For the of $25.3 million 225 not including the control device is introduced into the nonroad Tier 4 standards, we have nonroad engine line R&D noted above. market. There is one exception to this estimated that nonroad-only This lower number—$25.3 million assumption in that the expenditures for manufacturers will incur the same $1.65 versus $36.1 million in the highway DOC-only R&D are assumed to occur million per engine line requiring a rule—reflects the transfer of knowledge over the four year span between the CDPF/NOX adsorber system and that to nonroad manufacturers that will final rule and the 2008 standards. these costs will be split evenly between occur from the many stakeholders in the Where a phase-in exists (e.g., for NOX NOX control and PM control. For those diesel industry. Two-thirds of this R&D standards on 75 to 750 horsepower systems requiring only a CDPF, we have is attributed to NOX control and one- engines), expenditures are assumed to estimated one-half that amount, or third to PM control. occur over the five year span preceding $825,000 per engine line. For those Note that the $3.6 million and $25.3 the first year NOX adsorbers will be systems requiring only a DOC or some million estimates represent our estimate introduced, and then to continue during engine-out modifications, we have of the average R&D expected by the phase-in years. The expenditures applied a one-half factor again, or manufacturers to gain knowledge about will be incurred in a manner consistent $412,500 per engine line. Tooling costs the anticipated emission control for CDPF-only and for DOC engines are devices. These estimates will be 226 In the proposal, we estimated values of $1.2 attributed solely to PM control. None of million and $8 million in 1999 dollars. Here we these estimates have changed since our 224 In the proposal, we estimated a value of $3.5 have adjusted those values to express them in 2002 million in 1999 dollars. Here we have adjusted that dollars. proposal, with the exception of being value to express it in 2002 dollars. 227 In the proposal, we estimated values of 225 In the proposal, we estimated a value of $24.5 $600,000 and $4 million in 1999 dollars. Here we 228 In the 2007 rule, we estimated a value of $1.6 million in 1999 dollars. Here we have adjusted that have adjusted those values to express them in 2002 million in 1999 dollars. Here we have adjusted that value to express it in 2002 dollars. dollars. value to express it in 2002 dollars.

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expressed in 2002 dollars. We received to meet the 2011 standards. We have for engines above 750 horsepower. For no comments on our tooling cost estimated this amount at ten times the the final rule, we have tripled the costs estimates. amount for 25 to 50 horsepower associated with new test procedures. For those manufacturers selling into engines, or $413,000 per engine line. Because we are not finalizing transient both the highway and nonroad markets, This cost was not in the proposal since test procedures for engines above 750 we have estimated one-half the baseline NOX adsorbers were being projected for horsepower, comments about the cost of tooling cost, or $825,000, for those engines above 750 horsepower. We have these engines certifying using the engine lines requiring a CDPF/NOX applied this tooling to all engine lines transient test are now moot. adsorber system. We believe this is above 750 horsepower, regardless of Manufacturers will incur more than reasonable since many nonroad engines what markets into which a manufacturer the normal level of certification costs are produced on the same engine line sells, since such engines clearly have no during the first few years of with their highway counterparts. For highway counterpart. For the purpose of implementation because engines will such lines, we believe very little to no allocating costs, we have attributed this need to be certified to the new emission tooling costs will be incurred. For cost entirely to NOX control. Note that standards using new test procedures (at engine lines without a highway there is a new 2011 PM standard for least in some instances). Consistent with counterpart, something approaching the engines above 750 horsepower. our recent standard setting regulations, $1.65 million tooling cost is applicable. However, we believe that PM standard we have estimated engine certification For this analysis, we have assumed a could be met via engine-out control costs at $60,000 per new engine 50/50 split of engine product lines for which would result in no new tooling certification to cover existing testing highway manufacturers and, therefore, a costs associated with that standard. and administrative costs.229 The 50 percent factor applied to the $1.65 We have applied all the above tooling $60,000 certification cost per engine million baseline. These tooling costs costs to all manufacturers that appear to family was used for 25 to 75 horsepower will be split evenly between NOX actually make engines. We have not engines certifying to the 2008 standards. control and PM control. For engine lines eliminated joint venture manufacturers For 25 to 75 horsepower engines under 75 horsepower and above 750 because these manufacturers will still certifying to the 2013 standards, and for horsepower, we have used the same need to invest in tooling to make the 75 to 750 horsepower engines certifying tooling costs as the nonroad-only engines even if they do not conduct any to their new standards, we have added manufacturers because these engines R&D. We have assumed that all tooling costs to cover the new test procedures tend not to have a highway counterpart. costs are incurred one year in advance for nonroad diesel engines (e.g., the Therefore, for those engine lines of the new standard and are recovered transient test, the NTE); 230 these costs requiring only a CDPF (i.e., those over a five year period following are estimated at $31,500 per engine between 25 and 75 horsepower and implementation of the new standard; all family.231 For engines under 25 those above 750 horsepower), we have tooling costs include a capital horsepower, we have assumed (for cost estimated a tooling cost of $825,000. opportunity cost of seven percent. As purposes) that all engines will certify to Note that this is a change from the done for R&D costs, we have attributed the transient test and the NTE in 2008. proposal for engines above 750 a portion of the tooling costs to U.S. We believe manufacturers may choose horsepower; the proposal used the full sales and a portion to sales in other to do this rather than certifying all $1.65 million since both a CDPF and a countries expected to have similar engines again in 2013 when the NOX adsorber were being projected. The levels of emission control. Note that all transient test and NTE requirements tooling costs for DOC and/or engine-out engine tooling costs for under 25 actually begin for those engines. This engine lines has also been estimated to horsepower engines have been assumption results in higher be $412,500. Tooling costs for CDPF- attributed to U.S. sales since other certification costs in 2008 than if these only and for DOC engines are attributed countries are not expected to have engines certified only to the steady-state solely to PM control. With the exception similar standards on these engines. standard. However, we believe of the greater than 750 horsepower More information is contained in manufacturers may choose to do this change, none of these tooling estimates chapter 6 of the RIA. because it would avoid the need to have changed since our proposal, with Using this methodology, we estimate the exception of being expressed in the total tooling expenditures 229 In the proposal we added a certification fee to 2002 dollars. attributable to the new Tier 4 standards this cost. In the final rule we have not included the We expect engines in the 25 to 50 certification fee because that cost will be accounted at $74 million. For comparison, our for in the certification fees rulemaking (see 67 FR horsepower range to apply EGR systems proposal estimated $67 million. The 51402 for the proposed rule). Including in the to meet the Tier 4 NOX standards for higher value here is a result of: proposal was essentially double counting that fee. 2013. For these engines, we have Expressing values in 2002 dollars rather Similarly, if we were to include it in this final rule, included an additional tooling cost of than 2001 dollars; attributing all under we would be double counting that fee. 230 Note that the transport refrigeration unit (TRU) $41,300 per engine line, consistent with 25 horsepower tooling costs to U.S. test cycle is an optional duty cycle for steady-state the EGR-related tooling cost estimated sales while the proposal attributed 42 certification testing specifically tailored to the for 50–100 horsepower engines in our percent of those costs to U.S. sales; and, operation of TRU engines. Likewise, the ramped Tier 2/3 rulemaking. The EGR tooling modal cycles are available test cycles that can be above 750 horsepower tooling is slightly used to replace existing steady-state test costs are applied equally to all engine higher because of the proposal’s phase- requirements for nonroad constant-speed engines, lines in that horsepower range in (50/50/50/100) of one set of standards generally. Manufacturers of these engines who opt regardless of the markets into which the while the final rule has two sets of to use one of these test cycles would incur no new manufacturer sells. We have applied costs above those estimated here and may incur less standards. cost. this tooling cost equally because engines iii. Engine Certification Costs 231 Note that the proposal incorrectly used a value in this horsepower range tend not to of $10,500 for costs associated with the new test have highway counterparts. Tooling The comments we received with procedures. Here, we have corrected this error by costs for EGR systems are attributed respect to our estimated certification using a value of $31,500. Note also that the proposal erroneously did not include certification costs solely to NOX control. costs noted that we had underestimated associated with transient testing and the NTE for We have also estimated some tooling costs associated with new test engines under 25 horsepower. We have corrected costs for engines above 750 horsepower procedures, especially transient testing that error in the final analysis.

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recertify all engines under 25 program (or the TPEM program) since it technology packages for T2/3, and those horsepower again in 2013. These is so difficult to predict how this packages included the things equipment certification costs—whether it be the program will be used. Furthermore, we manufacturers are claiming will not be $60,000 or the $91,500 per engine must remain consistent throughout our present in the Tier 4 baseline. As a family—apply equally to all engine cost analysis so that, if we estimated result, we have already considered the families for all manufacturers regardless certification costs based on use of the costs associated with reaching our Tier of into what markets the manufacturer ABT program, we should also base 4 baseline engine configurations in the sells. For engines above 750 engine variable costs and equipment context of the T2/3 rule. horsepower, the certification costs used variable costs on use of the ABT We have made changes to engine were $87,000 per family since these program. Doing so, we believe, would variable costs to remain consistent with engines will not be certifying over the decrease engine variable costs since that the final program—i.e., we have new transient test procedure. We have is the primary reason manufacturers changed our greater than 750 applied these certification costs to all choose to make use of the ABT program. horsepower cost estimates since the U.S. sold engine families and then Since engine variable costs, as discussed final standards differ from those that spread the total over U.S. sales. In other below, are a much greater fraction of the were proposed. We have also changed words, we have not presumed that overall program costs, we believe that the costs by expressing them in 2002 certification conducted for U.S. engines we are being conservative by generating dollars rather than 2001 dollars.232 would fulfill the certification our costs based on use of the phase-in. i. NO Adsorber System Costs requirements of other countries and Therefore, we believe that use of the X have, therefore, not spread total costs ABT program (and the TPEM program) The NOX adsorber system that we are over engine sales outside the U.S. will provide substantial net savings to anticipating will be used to comply with Applying these costs to each of the industry even though widespread use of Tier 4 engine standards will be the same 665 engine families as they are certified ABT might cause certification costs to as that used for highway applications. In to a new emissions standard results in be higher. order for the NOX adsorber to function total costs of $91 million expended properly, a systems approach that during implementation of the Tier 4 b. Engine Variable Costs includes a reductant metering system standards. These costs are attributed to This section summarizes the detailed and control of engine A/F ratio is also NOX and PM control consistent with the analysis presented in chapter 6 of the necessary. Many of the new air handling phase-in of the new emissions RIA. For our analysis, we have used the and electronic system technologies standards—where new NOX and PM 2002 annual average costs for platinum developed in order to meet the Tier standards are introduced together, the and rhodium (the two platinum group 2/3 nonroad engine standards can be certification costs are split evenly; metals (PGMs) we expect will be used) applied to accomplish the NOX adsorber where only a new PM standard is because we believe they represent a control functions as well (these costs introduced, the certification costs are better estimate of the cost for PGM than were accounted for in our T2/3 rule). attributed to PM only; where a NOX other metrics. In the RIA, we present a Some additional hardware for exhaust phase-in becomes 100 percent in a year cost sensitivity that estimates the NOX or O2 sensing and for fuel metering after full implementation of a PM recovery value of precious metals will likely be required. The cost standard, the certification costs are returned to the open market upon estimates include a DOC for clean-up of attributed to NOX only. All certification retirement of an aftertreatment device. hydrocarbon emissions that occur costs are assumed to occur one year We present that analysis to gauge the during NOX adsorber regeneration prior to the new emission standard and true social cost of these devices when events. We have also estimated that are then recovered over a five year new. warranty costs will increase due to the period following compliance with the We have not made any changes to our application of this new hardware. new standard; all certification costs engine variable costs as a result of Chapter 6 of the RIA contains the details include a capital opportunity cost of public comments. Some commenters for how we estimated costs associated seven percent. For comparison, our (engine manufacturers) claimed that we with the new NOX control technologies proposal estimated certification costs at had underestimated these costs but did required to meet the Tier 4 emission $72 million. The increase here is a not provide any detailed information standards. These costs are estimated to result of using a higher cost associated about where they believed we had erred increase engine costs by roughly $670 in with the new test procedures than was or what they believed the costs should the near-term for a 150 horsepower used in the proposal. be. Other commenters (emission control engine, and $2,040 in the near-term for We also received comment that we device manufacturers) claimed that we a 500 horsepower engine. In the long- should estimate certification costs based had done a fair job with our estimates. term, we estimate these costs to be $550 on use of the ABT program rather than Some commenters (equipment and $1,650 for the 150 horsepower and based on the phase-in. Doing this would manufacturers) claimed that our 500 horsepower engines, respectively. result in higher certification costs assumptions with respect to baseline These costs may differ slightly from the because all engine families would be engine configurations were not accurate. proposal due to the adjustments to 2002 certified in year one of the phase-in and However, as discussed earlier, based on dollars. Note that we have estimated all families would again be certified in our own engineering judgement and the costs for all engines in all horsepower the final year of the phase-in. In positive comments of the engine contrast, since we have based manufacturers—who we consider a 232 Note that the change to 2002 dollars had certification costs on the phase-in, all better source for such information than different effects on different pieces of hardware. We have used two different PPI adjustments in the engine families are certified in year one equipment manufacturers since engine analysis: one for motor vehicle catalytic converters (PM standards have no phase-in) and manufacturers are the directly affected which was used to adjust costs for DOCs, NOX only half are again certified in the final entities—we have maintained our adsorbers, and CDPFs; and another for motor year (the 50 percent not meeting the original assumptions for baseline engine vehicle parts and accessories which was used for all other pieces of hardware. The former of these new NOX standard in year one). We configurations. Further, our assumed adjustments actually caused costs to decrease have chosen not to estimate certification Tier 4 baseline engine configurations are relative to the proposal while the latter caused costs or any costs based on use of the ABT consistent with our assumed compliant to increase slightly.

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ranges, and these estimates are environment. Such engines are said to in fact, some engines below 75 presented in detail in the RIA. have an open crankcase system. We horsepower currently meet the Tier 4 Throughout this discussion of engine project that this requirement to close the PM standard (for 2008) and will not, and equipment costs, we present costs crankcase on turbo-charged engines will therefore, incur any incremental costs to for a 150 and a 500 horsepower engine force manufacturers to rely on meet it. We have estimated this added for illustrative purposes. engineered closed crankcase ventilation hardware to result in an increased systems that filter oil from the blow-by engine cost of $143 in the near-term and ii. Catalyzed Diesel Particulate Filter gases prior to routing them into either $136 in the long-term for a 30 (CDPF) Costs the engine intake or the exhaust system horsepower engine. These costs may CDPFs can be made from a wide range upstream of the CDPF. We have differ slightly from the proposal due to of filter materials including wire mesh, estimated the initial cost of these the adjustments to 2002 dollars. sintered metals, fibrous media, or systems to be roughly $30 for low We have also projected that some ceramic extrusions. The most common horsepower engines and up to $90 for engines in the 25 to 75 horsepower material used for CDPFs for heavy-duty very high horsepower engines. These range will have to upgrade their fuel diesel engines is cordierite. Here we costs are incurred only by turbo-charged systems to accommodate the CDPF. We have based our cost estimates on the use engines because today’s naturally have estimated the incremental costs for of silicon carbide (SiC) even though it aspirated engines already have CCV these fuel systems at roughly $870 for a is more expensive than other filter systems. These costs may differ slightly three cylinder engine in the 25–50 materials.233 We estimate that the CDPF from the proposal due to the horsepower range, and around $450 for systems will add $760 to engine costs in adjustments to 2002 dollars. a four cylinder engine in the 50–75 the near-team for a 150 horsepower horsepower range. This difference engine and $2,710 in the near-term for v. Variable Costs for Engines Below 75 reflects a different base fuel system, a 500 horsepower engine. In the long- Horsepower and Above 750 Horsepower with the smaller engines assumed to term, we estimate these CDPF system The Tier 4 program includes have mechanical fuel systems and the costs to be $580 and $2,070 for the 150 standards for engines under 25 larger engines assumed to already be horsepower and the 500 horsepower horsepower that begin in 2008, and two electronic. The electronic systems will engines, respectively. These costs may sets of standards for 25 to 75 incur lower costs because they already differ slightly from the proposal due to horsepower engines—one set that begins have the control unit and electronic fuel the adjustments to 2002 dollars. in 2008 and another that begins in pump. Also, we have assumed these 2013.234 The 2008 standards for all iii. CDPF Regeneration System Costs fuel changes will occur for only direct engines under 75 horsepower are of injection (DI) engines; indirect injection Application of CDPFs in nonroad similar stringency and are expected to engines (IDI) are assumed to remain IDI applications may present challenges result in use of similar technologies (i.e., but to add more hardware as part of beyond those of highway applications. the possible addition of a DOC). The their CDPF regeneration system to For this reason, we anticipate that some 2013 standards for 25 to 75 horsepower ensure proper regeneration under all additional hardware beyond the diesel engines are considerably more stringent operating conditions. Such a particulate filter itself may be required than the 2008 standards and are regeneration system, described above, is to ensure that CDPF regeneration expected to force the addition of a CDPF expected to cost roughly twice that occurs. For some engines this may be along with some other engine hardware expected for DI engines, or around $320 new fuel control strategies that force to enable the proper functioning of that for a 30 horsepower IDI engine versus regeneration under some circumstances, new technology. More detail on the mix $160 for a DI engine. These costs may while in other engines it might involve of technologies expected for all engines differ slightly from the proposal due to an exhaust system fuel injector to inject under 75 horsepower is presented in the adjustments to 2002 dollars. fuel upstream of the CDPF to provide section II.B.4 and 5. As discussed there, We have also projected that engines in necessary heat for regeneration under if changes are needed to comply, we the 25–50 horsepower range will add some operating conditions. We estimate expect manufacturers to comply with cooled EGR to comply with their new the near-term costs of a CDPF the 2008 standards through either NOX standard in 2013. Additionally, we regeneration system to be $200 for a 150 engine-out improvements or through the have estimated, for cost purposes, that horsepower engine and $330 for a 500 addition of a DOC. From a cost engines above 750 horsepower will add horsepower engine. In the long-term, we perspective, we have projected that cooled EGR to comply with their new estimate these costs at $150 and $250, engines will add a DOC. Presumably, NOX standard in 2011. This represents respectively. These costs may differ the manufacturer will choose the least a conservative estimate since we do not slightly from the proposal due to the costly approach that provides the necessarily anticipate that cooled EGR adjustments to 2002 dollars. necessary reduction. If engine-out will be applied to all, if any, engines iv. Closed-Crankcase Ventilation System modifications are less costly than a above 750 horsepower. Nonetheless, we (CCV) Costs DOC, our estimate here is conservative. do expect some changes to be made If the DOC proves to be less costly, then (most probably some form of engine-out Today’s final rule eliminates the our estimate is representative of what emission control) and, consistent with exemption that allows turbo-charged most manufacturers will do. Therefore, our approach to costing DOCs for nonroad diesel engines to vent we have assumed that, beginning in engines below 75 horsepower in 2008, crankcase gases directly to the 2008, all engines below 75 horsepower we have conservatively costed cooled add a DOC. Note that this estimate is EGR for engines above 750 horsepower 233 This is particularly true with respect to made more conservative since we have engines above 750 horsepower where we believe in 2011. We have estimated that the that manufacturers may in fact use a wire mesh assumed this cost for all engines when, EGR system will add $100 in the near- substrate rather than the SiC substrate we have term and $70 in the long-term to the costed and, indeed, we have based the level of the 234 We refer here to PM standards. There also is cost of a 30 horsepower engine, and 2015 PM standard on this use of wire mesh a NOX+NMHC standard for 25–50 horsepower $550 and $420, respectively, for engines substrates (see section II.B.3.b). We have chosen to engines that takes effect in 2013 and is equivalent remain conservative in our cost estimates by to the Tier 3 NOX+NMHC standard for 50–75 above 750 horsepower. These costs may assuming use of a SiC substrate for all engines. horsepower engines (see section II.A). differ slightly from the proposal due to

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the adjustments to 2002 dollars. To control technologies and low-sulfur existing nonroad engines and these costs, we have added costs diesel fuel. The technology enabling equipment. We have used a 35 percent associated with additional cooling that benefits of low-sulfur diesel fuel are increase in oil change interval along may be needed to reject the heat described in Section II, and the with costs per oil change of $70 through generated by the cooled EGR system or incremental cost for low-sulfur fuel is $400 to arrive at estimated savings other in-cylinder technologies. These described in section VI.A. The new associated with increased oil change costs were not included in the proposal. emission control technologies are intervals. Such additional cooling might take the themselves expected to introduce These operating costs are expressed as form of a larger radiator and/or a larger additional operating costs in the form of a cent/gallon cost (or savings). As a or more powerful cooling fan. Based on increased fuel consumption and result, operating costs are directly cost estimates from our increased maintenance demands. proportional to the amount of fuel Nonconformance Penalty rule (67 FR Operating costs are estimated in the RIA consumed by the engine. We have 51464), we have estimated that the costs over the life of the engine and are estimated these operating costs—fuel- associated with additional cooling will expressed in terms of cents/gallon of related refining and distribution costs, add $40 in the near-term and $30 in the fuel consumed. In section VI.C.3, we maintenance related costs, and fuel long-term to the cost of a 30 horsepower present these lifetime operating costs as economy impacts—to be 5.4 cents/ engine, and $710 in the near-term and a net present value (NPV) in 2002 gallon for a 150 horsepower engine and $560 in the long-term for engine above dollars for several example pieces of 6.5 cents/gallon for a 500 horsepower 750 horsepower. Note that we are also equipment. engine. More detail on operating costs can be found in Chapter 6 of the RIA. projecting use of a CDPF for engines Total operating cost estimates include The existing fleet will also benefit above 750 horsepower, as was discussed the following elements: the change in from lower maintenance costs due to the above. maintenance costs associated with We believe there are factors that will use of low sulfur diesel fuel. The applying new emission controls to the operating costs for the existing fleet are cause variable hardware costs to engines; the change in maintenance decrease over time, making it discussed in section VI.B. We did costs associated with low sulfur fuel receive comments with respect to our appropriate to distinguish between near- such as extended oil change intervals; term and long-term costs. Research in oil change maintenance savings the change in fuel costs associated with estimates. These comments were the costs of manufacturing has the incrementally higher costs for low consistently shown that as address in section VI.B. We received no sulfur fuel, and the change in fuel costs comments on our CDPF and CCV manufacturers gain experience in due to any fuel consumption impacts production, they are able to apply maintenance costs or our CDPF associated with applying new emission regeneration costs. innovations to simplify machining and controls to the engines. This latter cost assembly operations, use lower cost is attributed to the CDPF and its need 2. Equipment Cost Impacts materials, and reduce the number or for periodic regeneration which we In addition to the costs directly complexity of component parts.235 Our estimate may result in a one percent fuel associated with engines that incorporate analysis, as described in more detail in consumption increase where a NOX new emission controls to meet new the RIA, incorporates the effects of this adsorber is also applied, or a two standards, costs will increase due to the learning curve by projecting that the percent fuel consumption increase need to redesign the nonroad equipment variable costs of producing the low- where no NOX adsorber is applied (refer in which these engines are used. Such emitting engines decreases by 20 to chapter 6, section 6.2.3.3 of the RIA). redesigns will probably be necessary percent starting with the third year of Maintenance costs associated with the due to the expected addition of new production. For this analysis, we have new emission controls on the engines emission control systems, but could also assumed a baseline that represents such are expected to increase since these occur if the engine has a different shape learning already having occurred once devices represent new hardware and, or heat rejection rate, or is no longer due to the 2007 highway rule (i.e., a 20 therefore, new maintenance demands. made available in the configuration percent reduction in emission control For CDPF maintenance, we have used a previously used. We have accounted for device costs is reflected in our near-term maintenance interval of 3,000 hours for these potential changes in establishing costs). We have then applied a single smaller engines and 4,500 hours for the lead time for the Tier 4 emissions learning step from that point in this larger engines and a cost of $65 through standards. The transition flexibility analysis. Additionally, manufacturers $260 for each maintenance event. For provisions for equipment manufacturers are expected to apply ongoing research closed-crankcase ventilation (CCV) that are included in this final rule are to make emission controls more systems, we have used a maintenance an element of that lead time. These effective and to have lower operating interval of 675 hours for all engines and flexibility provisions are described in costs over time. However, because of the a cost per maintenance event of $8 to detail in section III.B. uncertainty involved in forecasting the $48 for small to large engines. Offsetting In assessing the economic impact of results of this research, we these maintenance cost increases will be the new emission standards, EPA has conservatively have not accounted for it a savings due to an expected increase in made a best estimate of the in this analysis. oil change intervals because low sulfur modifications to equipment that relate c. Engine Operating Costs fuel will be far less corrosive than is to packaging (installing engines in equipment engine compartments). The We are projecting that a variety of current nonroad diesel fuel. Less incremental costs for new equipment new technologies will be introduced to corrosion will mean a slower will be comprised of fixed costs (for enable nonroad engines to meet the new acidification rate (i.e., less degradation) redesign to accommodate new emission Tier 4 emissions standards. Primary of the engine lubricating oil and, control devices) and variable costs (for among these are advanced emission therefore, more operating hours between needed oil changes. As discussed in new equipment hardware to affix the 235 For example, see, ‘‘Learning Curves in section VI.B, the use of 15 ppm sulfur new emission control devices and for Manufacturing,’’ Linda Argote and Dennis Epple, fuel can extend oil change intervals by labor to install those emission control Science, February 23, 1990, Vol. 247, pp. 920–924. as much as 35 percent for both new and devices). Note that the fixed costs do not

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include certification costs because the equipment variable costs is not engine manufacturer should have equipment is not certified to emission sustainable in a competitive market, at limited to no impact on the equipment standards. The engine is certified by the least on average, and the commenter design. Nonetheless, we have engine manufacturer; therefore, the provided no data nor study that conservatively estimated their redesign related certification costs are counted as supported the comment. costs at $53,100 per model.237 an engine fixed cost. We have also We have made minor changes to the A number of equipment attributed all changes in operating costs proposed numbers to express them in manufacturers have shared detailed (e.g., additional maintenance) to the cost 2002 dollars and to reflect where the information with us regarding the estimates for engines. Included in program has changed (i.e., greater than investments made for Nonroad Tier 2 section VI.C.3 is a discussion of several 750 horsepower mobile machines). We equipment redesign efforts, as well as example pieces of equipment (e.g., skid/ have also attributed all under 25 redesign estimates for significant steer loader, dozer, etc.) and the costs horsepower redesign costs to U.S. sales changes such as installing a new engine we have estimated for these specific since we do not expect other countries design. These estimates range from example pieces of equipment. Full to have similar emission standards for approximately $53,100 for some lower details of our equipment cost analysis these engines/equipment. Lastly, we powered equipment models to well over can be found in chapter 6 of the RIA. All have corrected some minor errors made $1 million for high horsepower costs are presented in 2002 dollars. in the proposal in determining motive equipment with very challenging design We have made only limited changes versus non-motive models and constraints. We believe that the relative to the proposal with respect to determining the number of unique equipment redesign efforts undertaken our estimated equipment costs, as equipment models needing redesign. for the T2/3 are representative of the discussed below. We did receive We now estimate that a total of over effort that will be required for Tier 4 comment that we underestimated costs 4,500 equipment models will be because the changes needed are the for equipment redesign and for markups redesigned as compared to the same in nature—increasing available on equipment variable costs. The proposal’s estimate of just over 4,100 space within the machine to commenters making these claims equipment models. Further discussion accommodate new hardware. We have relative to equipment redesign costs of these changes can be found in based our Tier 4 estimates, in part, on tended to be those that have relative Chapter 6 of the RIA. that industry input and have estimated high equipment sales volumes. Such a. Equipment Fixed Costs that equipment redesign costs will range manufacturers tend to expend levels from $53,100 per model for 25 higher than we estimated in our As we noted in the proposal, the most horsepower equipment up to $796,500 significant changes anticipated for proposal for equipment redesign per model for 300 horsepower equipment redesign are changes to because they sell into highly equipment and above. For mobile accommodate the physical changes to competitive markets and they can machines greater than 750 horsepower, engines, especially for those engines spread costs over many units. However, we have used a new redesign cost of that add PM traps and NO adsorbers. some equipment manufacturers we have X $106,000 associated with the 2011 The costs for engine development and met with, most notably those with small standards which is consistent in scale the emission control devices are sales volumes, do not appear to expend with the estimate used for 25 to 50 included as costs to the engines, as nearly the level we estimated in the horsepower equipment that add both described above. Equipment proposal. These manufacturers tend to EGR and a CDPF in the 2013 timeframe. manufacturers must still incur the effort sell into markets with few competitors, This estimate was not in the proposal. produce machines by hand, and expend and expense of integrating the engine and emissions control devices into the For this larger equipment, we have less redesign effort relative to a high continued with an estimate of $796,500 236 piece of equipment. Therefore, we have sales volume manufacturer. Our goal associated with the 2015 standards even in the proposal was to estimate the allocated extensive engineering time for this effort. though we project no need to redesign costs spent by industry (i.e., accommodate a NO adsorber. We have the average cost per piece of equipment The costs we have estimated are based X on engine power and whether an attributed only a portion of the multiplied by all equipment resulting in equipment redesign costs to U.S. sales an estimated total industry cost), rather application is non-motive (e.g., a in a manner consistent with that taken than estimating the maximum cost to be generator set) or motive (e.g., a skid for engine R&D costs and engine tooling spent by any particular manufacturer. steer loader). The designs we have costs. In addition, we expect As a result, our equipment redesign considered to be non-motive are those manufacturers to incur some fixed costs estimates per model may be too low for that lack a propulsion system. In to update service and operation manuals some manufacturers, but they are also addition, the new emission standards to address the maintenance demands of too high for others. We believe this cost for engines rated under 25 horsepower new emission control technologies and methodology provides as accurate an and the 2008 standards for 25–75 the new oil service intervals; we estimate as can be made. We have used horsepower engines are projected to estimate these service manual updates the same methodology for the final cost require no significant equipment estimates presented here. redesign beyond that done to to cost between $2,660 and $10,620 per As for the comments with respect to accommodate the Tier 2 standards. As equipment model. equipment variable costs, we did indeed explained earlier, we expect that these These equipment fixed costs (redesign include a markup of 29 percent and engines will comply with the new Tier and manual updates) were then disagree with the commenter that a two- 4 standards through either engine allocated appropriately to each new to-one markup would be more modifications to reduce engine-out model to arrive at a total equipment appropriate. Such a high markup on emissions or through the addition of a fixed cost of $828 million. We have DOC. We have projected that engine assumed that these costs will be 236 ‘‘Meeting between Staff of Eagle Crusher modifications will not affect the outer 237 Company, Inc., and EPA,’’ memorandum from Todd dimensions of the engine and that a Note that the equipment redesign estimates, Sherwood to Air Docket A–2001–28, Docket Item and all other equipment related costs, have been IV–E–40, EDOCKET OAR–2003–0012–0868, March DOC will replace the existing muffler. adjusted from the NPRM to express them in 2002 16, 2004. Therefore, either approach taken by the dollars.

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recovered over a ten year period with a these new pieces of hardware. For have chosen several example pieces of seven percent opportunity cost of engines above 75 horsepower—those equipment and have presented the capital. By comparison, our proposal expected to incorporate CDPF and NOX estimated costs for them. Using these estimated equipment fixed costs at $698 adsorber technology—the amount of examples, we can calculate the costs for million. The costs are higher now sheet metal is based on the size of the a specific piece of equipment in several because of the changes mentioned aftertreatment devices. horsepower ranges and better illustrate above—expressing costs in 2002 dollars; For equipment of 150 horsepower and the cost impacts of the new standards. attributing all under 25 horsepower 500 horsepower, respectively, we have These costs along with information redesign costs to U.S. sales; and, estimated the costs to be roughly $60 to about each example piece of equipment correcting upward the number of $150. Note that we have estimated costs are shown in table VI.C–1. Costs for equipment in all horsepower ranges, equipment models to be redesigned. presented are near-term and long-term and these estimates are presented in b. Equipment Variable Costs costs for the final standards to which detail in the RIA. Throughout this each piece of equipment will comply. Equipment variable cost estimates are discussion of engine and equipment based on costs for additional materials costs, we present costs for a 150 and a Long-term costs are only variable costs to mount the new hardware (i.e., 500 horsepower engine for illustrative and, therefore, represent costs after all brackets and bolts required to secure the purposes. fixed costs have been recovered and all aftertreatment devices) and additional projected learning has taken place. sheet metal assuming that the body 3. Overall Engine and Equipment Cost Included in the table are estimated cladding of a piece of equipment (i.e., Impacts prices for each piece of equipment to the hood) might change to accommodate To illustrate the engine and provide some perspective on how our the aftertreatment system. Variable costs equipment cost impacts we are estimated control costs relate to existing also include the labor required to install estimating for the Tier 4 standards, we equipment prices.

TABLE VI.C–1.—NEAR-TERM AND LONG-TERM COSTS FOR SEVERAL EXAMPLE PIECES OF EQUIPMENT a ($2002, for the final emission standards to which the equipment must comply)

Gen-Set Skid/steer Backhoe Dozer Ag tractor Dozer Off-highway loader truck Horsepower 9 hp 33 hp 76 hp 175 hp 250 hp 503 hp 1000 hp

Incremental Engine & Equipment Cost ...... $120 $790 $1,200 $2,560 $1,970 $4,140 $4,670 Long-Term ...... 180 1,160 1,700 3,770 3,020 6,320 8,610 Near-Term. Estimated Equipment Price when New b ...... 4,000 20,000 49,000 238,000 135,000 618,000 840,000 Incremental Operating Costs c ...... ¥80 70 610 2,480 2,110 7,630 20,670 Baseline Operating Costs (Fuel & Oil only) c ...... 940 2,680 7,960 27,080 23,750 77,850 179,530 Notes: a Near-term costs include both variable costs and fixed costs; long-term costs include only variable costs and represent those costs that remain following recovery of all fixed costs. b ‘‘Price Database for New Nonroad Equipment,’’ memorandum from Zuimdie Guerra to EDOCKET OAR–2003–0012–0960. c Present value of lifetime costs.

More detail and discussion regarding program including those costs incurred control (to 500 ppm and then to 15 what these costs and prices mean from and emissions reductions generated by ppm) for both NR and L&M fuel but an economic impact perspective can be the existing fleet. The baseline for this without any new nonroad engine found in section VI.E. evaluation is the existing set of fuel and standards.238 For the first of these engine standards (i.e., unregulated scenarios, the discussion illustrates the D. Annual Costs and Cost Per Ton NRLM fuel and the Tier 2/Tier 3 costs and relative cost effectiveness of One tool that can be used to assess the program). The 30 year time window the final NRT4 program to other value of the Tier 4 standards for NRLM chosen is meant to capture both the programs. For the second of these fuel and nonroad engines is the costs early period of the program when very scenarios, the discussion illustrates the incurred per ton of emissions reduced. few new engines that meet the new costs and cost effectiveness associated This analysis involves a comparison of standards will be in the fleet, and the with the fuel program as if implemented our new program to other measures that later period when essentially all engines as a stand alone program without new have been or could be implemented. As will meet the new standards. engine standards. summarized in this section and detailed We have analyzed the cost per ton In sections VI.D.1 and 2, we present in the RIA, the program being finalized reduced of several different scenarios. the cost of the full NRLM fuel and today represents a highly cost effective The costs and emissions reductions of nonroad engine program and the cost mobile source control program for each of these scenarios are presented in per ton of PM, NOX+NMHC, and SO2 reducing PM, NOX, and SO2 emissions. detail in chapter 8 of the RIA. Here, we reductions that will be realized. The We have calculated the cost per ton of present information of the cost and cost analysis presented in sections VI.D.1 our Tier 4 program based on the net effectiveness for the following two and 2 represents the total Tier 4 present value of all costs incurred and scenarios: (1) The full NRLM fuel and program for nonroad diesel engines and all emission reductions generated over a nonroad engine program, meaning two NRLM fuel being finalized today. In 30 year time window following steps of fuel control (to 500 ppm and sections VI.D.3 and 4, we summarize the implementation of the program (i.e., then to 15 ppm) for both NR and L&M 238 We are not analyzing a scenario involving just calendar years 2007 through 2036). This fuel and all of the nonroad engine the engine standards because the nonroad engine approach captures all of the costs and standards; and, (2) the NRLM fuel-only standards involving advanced emissions control emissions reductions from our new program, meaning two steps of fuel technologies require the use of the 15ppm fuel.

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cost for the NRLM fuel-only scenario standards for engines less than 75 amortized at seven percent. The figure and the cost per ton of PM and SO2 horsepower, the 2013 standards for 25 shows that total annual costs are reductions that would be realized. to 75 horsepower engines, and costs for estimated to be $50 million in the first the nonroad engine standards for 1. Annual Costs for the Full NRLM Fuel year the new engine standards apply, engines above 75 horsepower. All and Nonroad Engine Program increasing to a peak of $2.2 billion in maintenance and operating costs are 2036 as increasing numbers of engines The costs of the full NRLM fuel and included along with maintenance become subject to the new nonroad nonroad engine program include costs savings realized by both the existing standards and an ever increasing associated with both steps in the NRLM fleet (nonroad, locomotive, and marine) amount of NRLM fuel is consumed. The fuel program—the NR fuel reduction to and the new fleet of engines complying net present value of the annualized 500 ppm sulfur in 2007 and to 15 ppm with the Tier 4 standards. sulfur in 2010 and the L&M fuel Figure VI.D–1 presents these results. costs over the period from 2007 to 2036 reduction to 500 ppm sulfur in 2007 and All capital costs for NRLM fuel is $27 billion using a 3 percent discount to 15 ppm sulfur in 2012. Also included production and nonroad engine and rate and $14 billion using a 7 percent are costs for the 2008 nonroad engine equipment fixed costs have been discount rate.

2. Cost per Ton of Emissions Reduced costs according to the pollutants for PM, with that half split 50/50 between for the Full NRLM Fuel and Nonroad which they are incurred. Where fuel each pollutant). Where fuel changes Engine Program changes occur in conjunction with new occur without new engine standards on engine standards (engine standards which fuel changes are premised (i.e., We have calculated the cost per ton of enabled by those fuel changes), we 500ppm NRLM fuel and 15ppm L&M emissions reduced associated with the allocate one-half of the fuel-related costs fuel), we have allocated costs associated NRT4 engine and NRLM fuel program. to fuel-derived emissions reductions with fuel-derived emissions reductions The resultant cost per ton numbers (PM and SO2, with one-third of that half one-third to PM and two-thirds to SO2. depend on how the costs presented allocated to PM and two-thirds to SO2) We have allocated costs associated with above are allocated to each pollutant. and one-half to engine-derived engine-derived emissions reductions Therefore, we have carefully allocated emissions reductions (NOX+NMHC and (i.e., engine/equipment costs) directly to

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the pollutant for which the cost is annual emission reductions through emission reductions that will occur incurred. These engine and equipment 2036. We have also calculated the cost from the existing fleet (i.e., those pieces cost allocations are noted throughout per ton of emissions reduced in the year of nonroad equipment that were sold the discussion in section VI.C, and are 2030 using the annual costs and into the market prior to the new detailed in full in chapter 8 of the RIA. emissions reductions in that year alone. emission standards). These results are We have calculated the costs per ton This number represents the long-term shown in Table VI.D–1 using both a using the net present value of the cost per ton of emissions reduced. The three percent and a seven percent social annualized costs of the program through cost per ton numbers include costs and discount rate. 2036 and the net present value of the

TABLE VI.D–1.—TOTAL FUEL AND ENGINE PROGRAM 30 YEAR AGGREGATE COST PER TON AND LONG-TERM ANNUAL COST PER TON ($2002)

30 year discounted life- 30 year discounted life- Long-term cost per ton Pollutant time cost per ton at 3% time cost per ton at 7% in 2030

NOX+NMHC ...... $1,010 $1,160 $680 PM ...... 11,200 11,800 9,300 SOX ...... 690 620 810

3. Annual Costs for the NRLM Fuel-only associated with the NRLM fuel-only engines and equipment. The fuel costs Scenario scenario because new engine emissions are largely offset by the maintenance Cent per gallon costs for the new 500 standards are not included in that savings that range from $250 million in ppm NRLM fuel, the new 500 ppm L&M scenario. Figure VI.D–2 shows the 2008 to $500 million in 2036. As a fuel, the new 15 ppm NR fuel, and the annual costs associated with the NRLM whole, the net cost of the program in new 15 ppm NRLM fuel were presented fuel-only program. each year ranges from a small net in section IV.A. Having this fuel will As can be seen in figure VI.D–1, the savings in 2008 to around $780 million result in maintenance savings associated costs for refining and distributing the in 2036. The net present value (i.e., the with increased oil change intervals for fuel range from $250 million in 2008 to value in 2004) of the net costs both the new and the existing fleet of nearly $1.3 billion in 2036. The increase associated with the NRLM fuel-only nonroad, locomotive, and marine in fuel costs in 2010 reflect the change program during the 30 year period from engines. These maintenance savings to higher cost 15 ppm NR fuel. Fuel 2007 to 2036 is estimated at $9.2 billion were discussed in section VI.B. There costs continue to grow as more fuel is using a 3 percent discount rate and $4.6 are no engine and equipment costs consumed by the increasing number of billion using a 7 percent discount rate.

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4. Cost Per Ton of Emissions Reduced two-thirds to SO2 control. This is and PM emission reductions at 462,000 for the NRLM Fuel-Only Scenario consistent with the cost accounting we tons using 3 percent discounting, 3.2 The fuel-borne sulfur reduction under have used throughout our analysis in million tons and 255,000 tons, the NRLM fuel-only scenario will result that costs associated with fuel-derived respectively, using 7 percent emissions reductions are attributed one- discounting. in significant reductions of both SO2 and PM emissions. Since there are no third to PM control and two-thirds to Table VI.D–1 shows the cost per ton new engine standards associated with SO2 control. of emissions reduced as a result of the the NRLM fuel-only scenario, the As discussed above, the 30 year net NRLM fuel-only scenario. The cost per emissions reductions that result are present value of costs associated with ton numbers include costs and entirely fuel-derived. Roughly 98 the fuel-only program are estimated at emissions reductions that will occur percent of fuel-borne sulfur is converted $9.2 billion using 3 percent discounting from both the new and the existing fleet to SO2 in the engine with the remaining and $4.6 billion using 7 percent (i.e., those pieces of nonroad equipment two percent being exhausted as sulfate discounting. We have estimated the 30 that were sold into the market prior to PM. We have allocated one-third of the year net present value of the SO2 the new fuel standards) of nonroad, costs of this program to PM control and emission reductions at 5.7 million tons locomotive, and marine engines.

TABLE VI.D–2.—NRLM FUEL-ONLY SCENARIO—30-YEAR AGGREGATE COST PER TON AND LONG-TERM ANNUAL COST PER TON [$2002]

30 year discounted life- 30 year discounted life- Long-term cost per ton Pollutant time cost per ton at 3% time cost per ton at 7% in 2030

PM ...... $6,600 $6,000 $7,900 SO2 ...... 1,070 970 1,270

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We also considered the cost per ton of TABLE VI.D–4. ‘‘NRT4 COST PER section. Briefly, the analysis projects the NRLM fuel-only scenario without TON COMPARISON TO PREVIOUS major benefits throughout the period including the expected maintenance MOBILE SOURCE PROGRAMS FOR from initial implementation of the rule savings associated with low sulfur fuel. PM over a 30 year period through 2036. As Without the maintenance savings, the described below, thousands of deaths 30 year discounted cost per ton of PM Program $/ton and other serious health effects would reduced would be $11,800 and of SO2 be prevented, yielding a net present reduced would be $1,900 using 3 Tier 4 Nonroad Diesel (full value in 2004 of those benefits we could percent discounting and $11,200 and program) ...... 11,200 monetize of approximately $805 billion Tier 4 NRLM fuel-only (fuel- $1,800, respectively, using 7 percent only scenario) ...... 6,800 dollars using a 3 percent discount rate discounting. More detail on how the Tier 1/Tier 2 Nonroad Diesel 2,390 and $352 billion using a 7 percent costs and cost per ton numbers 2007 Highway HD ...... 14,180 discount rate. These benefits exceed the associated with the NRLM fuel-only Marine CI engines ...... 4,040–5,440 net present value of the social cost of scenario were calculated can be found 1996 urban bus ...... 12,780–20,450 the proposal ($27 billion using a 3 in the RIA. Urban bus retrofit/rebuild ...... 31,530 percent discount rate and $14 billion 1994 highway HD diesel ...... 21,780–25,500 using a 7 percent discount rate) by $780 5. Comparison With Other Means of Note: Costs adjusted to 2002 dollars using billion using a 3 percent discount rate Reducing Emissions the Producer Price Index for Total Manufac- and $340 billion using a 7 percent turing Industries. In comparison with other emissions discount rate. To compare the cost per ton of SO control programs, we believe that the 2 emissions reduced, we looked at the 1. What Were the Results of the Benefit- Tier 4 programs represent a cost cost per ton for the Title IV (acid rain) Cost Analysis? effective strategy for generating SO2 trading programs. This information substantial NOX+NMHC, PM, and SO2 is found in EPA report 430/R–02–004, Table VI.E–1 presents the primary reductions. This can be seen by ‘‘Documentation of EPA Modeling estimate of reduced incidence of PM- comparing the cost per ton of emissions Applications (V.2.1) Using the related health effects for the years 2020 reduced by the NRLM fuel-only scenario Integrated Planning Model’’, in Figure and 2030. In interpreting the results, it (i.e., reducing fuel sulfur to 500 ppm in 9.11 on page 9–14 (www.epa.gov/ is important to keep in mind the limited 2007 and 15 ppm in 2010 without any airmarkets/epa-ipm/ set of effects we are able to monetize. new nonroad engine standards) and the index.html#documentation). The SO2 Specifically, the table lists the PM- cost per ton of emissions reduced by the cost per ton results of the full Tier 4 related benefits associated with the full NRLM fuel and nonroad engine program presented in table VI.D–2 reduction of several health effects. In program (i.e., fuel control and new compare very favorably with the 2030, we estimate that there will be engine standards) with a number of program shown in table VI.D–5. 12,000 fewer fatalities in adults 239 and standards that EPA has adopted in the 20 fewer fatalities in infants per year past. Tables VI.D–3 and VI.D–4 TABLE VI.D–5.—NRT4 COST PER associated with fine PM, and the rule summarize the cost per ton of several TON COMPARISON TO SO2 FROM will result in about 5,600 fewer cases of past EPA actions to reduce emissions of BOTH THE EPA BASE CASE 2000 chronic bronchitis, 8,900 fewer NOX+NMHC and PM from mobile FOR THE TITLE IV SO2 TRADING hospitalizations (for respiratory and sources, all of which were considered PROGRAMS AND THE PROPOSED cardiovascular disease combined), and by EPA to be appropriate. INTERSTATE AIR QUALITY RULE result in 1 million days per year when adults miss work because of their TABLE VI.D–3.—NRT4 COST PER Program $/ton respiratory symptoms and 5.9 million TON COMPARISON TO PREVIOUS days of when adults must restrict their Tier 4 Nonroad Diesel (full $690 MOBILE SOURCE PROGRAMS FOR activity due to respiratory illness. We program). NOX + NMHC Tier 4 Nonroad Diesel (fuel- 1,070 also estimate substantial health only scenario). improvements for children from Program $/ton Title IV SO2 Trading Pro- 490 in 2010 to reduced upper and lower respiratory grams. 610 in 2020 illness, acute bronchitis, and asthma Tier 4 Nonroad Diesel (full Interstate Air Quality Rule 730 in 2010 to program) ...... 1,010 (average cost). 830 in 2015 239 While we did not include separate estimates Tier 2 Nonroad Diesel ...... 630 of the number of premature deaths that would be Tier 3 Nonroad Diesel ...... 430 Note: Costs adjusted to 2002 dollars using the Producer Price Index for Total Manufac- avoided due to reductions in ozone levels, recent Tier 2 vehicle/gasoline sulfur 1,400–2,350 turing Industries. evidence has been found linking short-term ozone 2007 Highway HD ...... 2,240 exposures with premature mortality independent of PM exposures. Recent reports by Thurston and Ito 2004 Highway HD ...... 220–430 As the above comparisons show, both the NRLM fuel-only scenario, when (2001) and the World Health Organization (WHO) Tier 1 vehicle ...... 2,150–2,910 support an independent ozone mortality impact, NLEV ...... 2,020 viewed by itself, and the combination of and the EPA Science Advisory Board has Marine SI engines ...... 1,220–1,930 NRLM fuel and nonroad engine recommended that EPA reevaluate the ozone On-board diagnostics ...... 2,410 standards, are both cost effective mortality literature for possible inclusion in the strategies to achieve the associated estimate of total benefits. Based on these new Marine CI engines ...... 30–190 analyses and recommendations, EPA is sponsoring Large SI Exhaust ...... 80 emissions reductions. three independent meta-analyses of the ozone- Recreational Marine ...... 670 mortality epidemiology literature to inform a E. Do the Benefits Outweigh the Costs determination on inclusion of this important health Note: Costs adjusted to 2002 dollars using of the Standards? endpoint. Upon completion and peer-review of the the Producer Price Index for Total Manufac- Our analysis of the health and meta-analyses, EPA will make its determination on turing Industries. whether and how benefits of reductions in ozone- environmental benefits to be expected related mortality will be included in the benefits from this final rule are presented in this analysis for future rulemakings.

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attacks.240 We were unable to quantify benefits, and EPA believes there is monetized benefits are $42 + B billion the benefits related to ozone and other considerable value to the public of the using a 3 percent discount rate and $41 pollutants for the final rule, although we benefits that could not be monetized. A + B billion using a 7 percent discount do present some preliminary ozone full listing of the benefit categories that rate. These estimates account for growth modeling in Chapter 9 of the RIA. could not be quantified or monetized in in real gross domestic product (GDP) per Table VI.E–2 presents the total our estimate are provided in table VI.E– capita between the present and the years monetized benefits for the years 2020 6. 2020 and 2030. As the table indicates, and 2030. This table also indicates with In summary, EPA’s primary estimate total benefits are driven primarily by the a ‘‘B’’ those additional health and of the benefits of the rule are $83 + B reduction in premature fatalities each environmental effects which we were billion in 2030 using a 3 percent year, which account for over 90 percent unable to quantify or monetize. These discount rate and $78 + B billion using effects are additive to estimate of total a 7 percent discount rate. In 2020, total of total benefits.

TABLE VI.E–1.—REDUCTIONS IN INCIDENCE OF PM-RELATED ADVERSE HEALTH EFFECTS ASSOCIATED WITH THE FINAL NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PROGRAM

Avoided incidence a (cases/year) Endpoint 2020 2030

Premature mortality b: Long-term exposure (adults, 30 and over) ...... 6,500 12,000 Infant mortality (infants under one year) ...... 15 22 Chronic bronchitis (adults, 26 and over) ...... 3,500 5,600 Non-fatal myocardial infarctions (adults, 18 and older) ...... 8,700 15,000 Hospital admissions—Respiratory (adults, 20 and older) c ...... 2,800 5,100 Hospital admissions—Cardiovascular (adults, 20 and older) d ...... 2,300 3,800 Emergency Room Visits for Asthma (18 and younger) ...... 3,800 6,000 Acute bronchitis (children, 8–12) ...... 8,400 13,000 Asthma exacerbations (asthmatic children, 6–18) ...... 120,000 200,000 Lower respiratory symptoms (children, 7–14) ...... 100,000 160,000 Upper respiratory symptoms (asthmatic children, 9–11) ...... 76,000 120,000 Work loss days (adults, 18–65) ...... 670,000 1,000,000 Minor restricted activity days (adults, age 18–65) ...... 4,000,000 5,900,000 Notes: a Incidences are rounded to two significant digits. b Premature mortality associated with ozone is not separately included in this analysis. c Respiratory hospital admissions for PM includes admissions for COPD, pneumonia, and asthma. d Cardiovascular hospital admissions for PM includes total cardiovascular and subcategories for ischemic heart disease, dysrhythmias, and heart failure.

TABLE VI.E–2.—EPA PRIMARY ESTIMATE OF THE ANNUAL QUANTIFIED AND MONETIZED BENEFITS ASSOCIATED WITH IM- PROVED PM AIR QUALITY RESULTING FROM THE FINAL NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PRO- GRAM

Monetary Benefits a, b (millions 2000$, Endpoint Adjusted for Income Growth) 2020 2030

Premature mortality c: (adults, 30 and over) 3% discount rate ...... $41,000 $77,000 7% discount rate ...... 38,000 72,000 Infant mortality (infants under one year) ...... 97 150 Chronic bronchitis (adults, 26 and over) ...... 1,500 2,400 Non-fatal myocardial infarctions d 3% discount rate ...... 750 1,200 7% discount rate ...... 720 1,200 Hospital Admissions from Respiratory Causes e ...... 49 92 Hospital Admissions from Cardiovascular Causes f ...... 51 83 Emergency Room Visits for Asthma ...... 1.1 1.7 Acute bronchitis (children, 8–12) ...... 3.2 5.2 Asthma exacerbations (asthmatic children, 6–18) ...... 5.7 9.2 Lower respiratory symptoms (children, 7–14) ...... 1.7 2.7 Upper respiratory symptoms (asthmatic children, 9–11) ...... 2.0 3.2 Work loss days (adults, 18–65) ...... 92 130 Minor restricted activity days (adults, age 18–65) ...... 210 320 Recreational visibility (86 Class I Areas) ...... 1,000 1,700 Monetized Total g. 3% discount rate ...... 44,000+B 83,000+B

240 Our PM-related estimate in 2030 incorporates asthmatic children each year, and 13,000 fewer exposure to particles. Additional incidents would significant reductions of 160,000 fewer cases of cases of acute bronchitis in children ages 8 to 12 be avoided from reduced ozone exposures. Asthma lower respiratory symptoms in children ages 7 to each year. In addition, we estimate that this rule is the most prevalent chronic disease among 14 each year, 120,000 fewer cases of upper will reduce almost 6,000 emergency room visits for children and currently affects over seven percent of respiratory symptoms (similar to cold symptoms) in asthma attacks in children each year from reduced children under 18 years of age.

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TABLE VI.E–2.—EPA PRIMARY ESTIMATE OF THE ANNUAL QUANTIFIED AND MONETIZED BENEFITS ASSOCIATED WITH IM- PROVED PM AIR QUALITY RESULTING FROM THE FINAL NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PRO- GRAM—Continued

Monetary Benefits a, b (millions 2000$, Endpoint Adjusted for Income Growth) 2020 2030

7% discount rate ...... 42,000+B 78,000+B Notes: a Monetary benefits are rounded to two significant digits. b Monetary benefits are adjusted to account for growth in real GDP per capita between 1990 and the analysis year (2020 or 2030). c Valuation of base estimate assumes discounting over the lag structure described in the RIA Chapter 9. d Estimates assume costs of illness and lost earnings in later life years are discounted using either 3 or 7 percent. e Respiratory hospital admissions for PM includes admissions for COPD, pneumonia, and asthma. f Cardiovascular hospital admissions for PM includes total cardiovascular and subcategories for ischemic heart disease, dysrhythmias, and heart failure. g B represents the monetary value of the unmonetized health and welfare benefits. A detailed listing of unquantified PM, ozone, CO, and NMHC related health effects is provided in Table VI.E–6.

The estimated social cost (measured billion using a 3 percent discount rate Rule from 2007 to 2036 using two as changes in consumer and producer and $41 + B billion using a 7 percent different discount rates. In addition, surplus) in 2030 to implement the final discount rate. Therefore, table VI.E–4 presents the net present rule from table VI.E–3 is $2.0 billion implementation of the final rule is value of the stream of benefits, costs, (2000$). Thus, the net benefit (social expected to provide society with a net and net benefits associated with the rule benefits minus social costs) of the gain in social welfare based on for this 30 year period. The total net program at full implementation is economic efficiency criteria. Table VI.E– present value in 2004 of the stream of approximately $81 + B billion using a 3 3 presents a summary of the benefits, net benefits (benefits minus costs) is percent discount rate and $78 + B costs, and net benefits of the final rule’s $780 billion using a 3 percent discount billion using a 7 percent discount rate. full program. Figure VI–E.1 displays the rate and $340 billion using a 7 percent In 2020, partial implementation of the stream of benefits, costs, and net discount rate. program yields net benefits of $42 + B benefits of the Nonroad Diesel Vehicle

TABLE VI.E–3.—SUMMARY OF BENEFITS, COSTS, AND NET BENEFITS OF THE FINAL NONROAD DIESEL ENGINE AND FUEL STANDARDS FULL PROGRAM

2020 a (Billions of 2000 dollars) 2030 a (Billions of 2000 dollars)

Social Costs b ...... $1.8 ...... $2.0. Social Benefits: bcd CO, VOC, Air Toxic-related benefits ...... Not monetized ...... Not monetized. Ozone-related benefits ...... Not monetized ...... Not monetized. PM-related Welfare benefits ...... $1.0 ...... $1.7. PM-related Health benefits [3% discount] ...... $43 + B ...... $81 + B. PM-related Health benefits [7% discount] ...... $41 + B ...... $78 + B. Net Benefits (Benefits-Costs) [3% discount] c ...... $44 + B ...... $81 + B. Net Benefits (Benefits-Costs) [7% discount] c ...... $42 + B ...... $78 + B. Notes: a All costs and benefits are calculated using 3 and 7 percent discount rates and are rounded to two significant digits. Numbers may ap- pear not to sum due to rounding. b Note that costs are the total costs of reducing all pollutants, including CO, VOCs and air toxics, as well as NOX and PM. Costs were con- verted to 2000$ using the PPI for Total Manufacturing Industries. Benefits in this table are associated only with PM endpoints related to direct PM, NOX and SO2 reductions in 48-states. c Not all possible benefits or disbenefits are quantified and monetized in this analysis. Potential benefit categories that have not been quantified and monetized are listed in table VI.E–6. B is the sum of all unquantified benefits and disbenefits.

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TABLE VI.E–4.—NET PRESENT VALUE are approximately $18 + B billion using TABLE VI.E–5.—NET PRESENT VALUE IN 2004 OF THE STREAM OF 30 a 3 percent discount rate and $16 + B IN 2004 OF THE STREAM OF BENE- YEARS OF BENEFITS, COSTS, AND billion using a 7 percent discount rate. FITS, COSTS, AND NET BENEFITS NET BENEFITS FOR THE FULL These estimates account for growth in FOR THE FUEL-ONLY STANDARDS NONROAD DIESEL ENGINE AND FUEL real gross domestic product (GDP) per [Billions of 2000$] STANDARDS capita between the present and the years 2020 and 2030. We present the [Billions of 2000$] 3% Dis- 7% Dis- engineering costs of implementing the count rate count rate fuel-only components of the rule. 3% dis- 7% dis- Costs ...... $9.2 $4.6 count rate count rate Engineering compliance costs are very Social Benefits ...... 340 160 similar to the total social costs for the Net Benefits ...... 330 160 Social Costs ...... $27 $14 entire program. The net benefit (social Social Benefits ...... 805 352 benefits minus engineering costs) of the Notes: Net Benefits a ...... 780 340 A Results are rounded to two significant dig- fuel-only program at full its. Sums may differ because of rounding. Notes: a Numbers do not add due to round- implementation is approximately $330 B Engineering costs are presented instead of ing. Benefits represent 48-state benefits and + B billion using a 3 percent discount social costs. As discussed in previous chap- exclude home heating oil sulfur reduction ben- ters, total engineering costs include fuel costs efits, whereas costs include 50-state rate and $160 + B billion using a 7 (refining, distribution, lubricity) and other oper- estimates. percent discount rate. Therefore, ating costs (oil change maintenance savings). implementation of the fuel-only C Note that costs are the total costs of re- In addition, we analyzed the social components of the final rule is expected ducing all pollutants, including CO, VOCs and benefits and costs of the fuel-only air toxics, as well as NOX and PM. Benefits in to provide society with a net gain in components of the program, as this table are associated only with PM, NOX discussed in the RIA. EPA’s primary social welfare based on economic and SO2 reductions. The estimates do not in- efficiency criteria. Table VI.E–5 presents clude the benefits of reduced sulfur in home estimate of the benefits of the fuel-only heating oil or benefits in Alaska or Hawaii. component of the final rule are a summary of the social benefits, approximately $28 + B billion in 2030 engineering costs, and net benefits of 2. What Was Our Overall Approach to using a 3 percent discount rate and $25 the final rule’s fuel-only program for a the Benefit-Cost Analysis? + B billion using a 7 percent discount 30 year period. The basic question we sought to rate. In 2020, total monetized benefits answer in the benefit-cost analysis was,

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‘‘What are the net yearly economic emissions reductions between the Agency take a number of steps to benefits to society of the reduction in modeled preliminary control option and improve its benefits analysis. In mobile source emissions likely to be the proposed standards. The sum of the particular, the NAS stated that the achieved by this proposed rulemaking?’’ scaled benefits for the PM, SO2, and Agency should: In designing an analysis to address this NOX emission reductions provide us • Include benefits estimates for a question, we selected two future years with the total benefits of the rule. range of regulatory options; for analysis (2020 and 2030) that are The benefit estimates derived from • Estimate benefits for intervals, such representative of the stream of benefits the modeled preliminary control option as every five years, rather than a single and costs at partial and full- in phase one of our analysis uses an year; implementation of the program. analytical structure and sequence • Clearly state the projected baseline To quantify benefits, we evaluated similar to that used in the benefits statistics used in estimating health PM-related health effects (including analyses for the Heavy Duty Engine/ benefits, including those for air directly emitted PM and sulfate, as well Diesel Fuel final rule and in the emissions, air quality, and health as SO2 and NOX contributions to fine ‘‘section 812 studies’’ to estimate the outcomes; particulate matter). Our approach total benefits and costs of the full Clean • Examine whether implementation 241 requires the estimation of changes in air Air Act. We used many of the same of proposed regulations might cause quality expected from the rule and then models and assumptions used in the unintended impacts on human health or estimating the resulting impact on Heavy Duty Engine/Diesel Fuel analysis the environment; health. In order to characterize the as well as other Regulatory Impact • When appropriate, use data from benefits of today’s action, given the Analyses (RIAs) prepared by the Office non-U.S. studies to broaden age ranges constraints on time and resources of Air and Radiation. By adopting the to which current estimates apply and to available for the analysis, we adopted a major design elements, models, and include more types of relevant health benefits transfer technique that relies on assumptions developed for the section outcomes; and air quality and benefits modeling for a 812 studies and other RIAs, we have • Begin to move the assessment of preliminary control option for nonroad largely relied on methods which have uncertainties from its ancillary analyses diesel engines and fuels. Results from already received extensive review by the into its Base analyses by conducting this modeling conducted for 2020 and independent Science Advisory Board probabilistic, multiple-source 2030 are then scaled and transferred to (SAB), by the public, and by other uncertainty analyses. This assessment the emission reductions expected from federal agencies. In addition, we will be should be based on available data and the final rule. We also transferred working through the next section 812 expert judgment. modeled results by using scaling factors study process to enhance our associated with time to examine the methods. 242 Although the NAS made a number of stream of benefits in years other than The benefits transfer method used in recommendations for improvement in 2020 and 2030. phase two of the analysis is similar to EPA’s approach, it found that the More specifically, our health benefits that used to estimate benefits in the studies selected by EPA for use in its assessment is conducted in two phases. recent analysis of the Nonroad Large benefits analysis were generally Due to the time requirements for Spark-Ignition Engines and Recreational reasonable choices. In particular, the running the sophisticated emissions and Engines standards (67 FR 68241, NAS agreed with EPA’s decision to use air quality models, it is often necessary November 8, 2002). A similar method cohort studies to derive benefits to select an example set of emission has also been used in recent benefits estimates. It also concluded that the reductions to use for the purposes of analyses for the proposed Industrial Agency’s selection of the American emissions and air quality modeling Boilers and Process Heaters NESHAP Cancer Society (ACS) study for the early in the development of the and the Reciprocating Internal evaluation of PM-related premature proposal. In phase one, we evaluate the Combustion Engines NESHAP. mortality was reasonable, although it PM- and ozone-related health effects On September 26, 2002, the National noted the publication of new cohort associated with a modeled preliminary Academy of Sciences (NAS) released a studies that should be evaluated by the control option that was a close report on its review of the Agency’s Agency. approximation of the standards in the methodology for analyzing the health EPA has addressed many of the NAS years 2020 and 2030. Using information benefits of measures taken to reduce air comments in our analysis of the final from the modeled preliminary control pollution. The report focused on EPA’s rule. We provide benefits estimates for option on the changes in ambient approach for estimating the health each year over the rule implementation concentrations of PM and ozone, we benefits of regulations designed to period for a wide range of regulatory then estimate the number of reduced reduce concentrations of airborne PM. alternatives, in addition to our final incidences of illnesses, hospitalizations, In its report, the NAS panel said that emission control program. We use the and premature fatalities associated with EPA has generally used a reasonable estimated time path of benefits and this scenario and estimate the total framework for analyzing the health costs to calculate the net present value economic value of these health benefits. benefits of PM-control measures. It of benefits of the rule. In the RIA, we Based on public comment and other recommended, however, that the provide baseline statistics for air data described in the RIA, the standards emissions, air quality, population, and we are finalizing in this rulemaking are 241 The section 812 studies include: (1) U.S. EPA, health outcomes. We have examined slightly different in the amount of Report to Congress: The Benefits and Costs of the how our benefits estimates might be emission reductions expected to be Clean Air Act, 1970 to 1990, October 1997 (also impacted by expanding the age ranges to known as the ‘‘Section 812 Retrospective Report’’); achieved in 2020 and 2030 relative to and (2) the first in the ongoing series of prospective which epidemiological studies are the modeled scenario. Thus, in phase studies estimating the total costs and benefits of the applied, and we have added several new two of the analysis, we apportion the Clean Air Act (see EPA report number: EPA–410– health endpoints, including non-fatal results of the phase one analysis to the R–99–001, November 1999). See Docket A–99–06, heart attacks, which are supported by Document II–A–21. underlying NOX, SO2, and PM emission 242 Interested parties may want to consult the both U.S. studies and studies conducted reductions and scale the apportioned webpage: http://www.epa.gov/science1 regarding in Europe. We have also improved the benefits to reflect differences in components of our analytical blueprint. documentation of our methods and

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provided additional details about model • The exclusion of potentially the range of ambient concentrations assumptions. significant benefit categories (such as under consideration. Thus, the Several of the NAS recommendations health, odor, and ecological benefits of estimates include health benefits from addressed the issue of uncertainty and reduction in CO, VOCs, air toxics, and reducing fine particles in areas with how the Agency can better analyze and ozone); varied concentrations of PM, including communicate the uncertainties • Errors in measurement and both regions that are in attainment with associated with its benefits assessments. projection for variables such as fine particle standard and those that do In particular, the Committee expressed population growth; not meet the standard. concern about the Agency’s reliance on • Uncertainties in the estimation of (4) The forecasts for future emissions a single value from its analysis and future year emissions inventories and and associated air quality modeling are suggested that EPA develop a air quality; • valid. Although recognizing the probabilistic approach for analyzing the Uncertainties associated with the difficulties, assumptions, and inherent health benefits of proposed regulatory scaling of the results of the modeled uncertainties in the overall enterprise, actions. The Agency agrees with this benefits analysis to the proposed these analyses are based on peer- suggestion and is working to develop standards, especially regarding the reviewed scientific literature and up-to- such an approach for use in future assumption of similarity in geographic date assessment tools, and we believe rulemakings. distribution between emissions and EPA plans to continue to refine its human populations and years of the results are highly useful in assessing plans for addressing uncertainty in its analysis; this rule. • analyses. EPA conducted a pilot study Variability in the estimated We provide sensitivity analyses to to address uncertainty in important relationships of health and welfare illustrate the effects of uncertainty about analytical parameters such as the effects to changes in pollutant key analytical assumptions in the RIA. concentration-response relationship for concentrations; • Uncertainties in exposure In addition, one significant limitation PM-related premature mortality. EPA is to the benefit transfer method applied in also conducting longer-term elements estimation; and • Uncertainties associated with the this analysis is the inability to scale intended to provide scientifically effect of potential future actions to limit ozone-related benefits. Because ozone is sound, peer-reviewed characterizations emissions. a homogeneous gaseous pollutant, it is of the uncertainty surrounding a broader Despite these uncertainties, we not possible to apportion ozone benefits set of analytical parameters and believe the benefit-cost analysis to the precursor emissions of NOX and assumptions, including but not limited provides a reasonable indication of the VOC. Coupled with the potential for to emissions and air quality modeling, expected economic benefits of the final NOX reductions to either increase or demographic projections, population rulemaking in future years under a set decrease ambient ozone levels, this health status, concentration-response of assumptions. Accordingly, we prevents us from scaling the benefits functions, and valuation estimates. present a primary estimate of the total associated with a particular 3. What Are the Significant Limitations benefits, based on our interpretation of combination of VOC and NOX emissions of the Benefit-Cost Analysis? the best available scientific literature reductions to another. Because of our and methods and supported by the Every benefit-cost analysis examining inability to scale ozone benefits, we do SAB–HES and the NAS. not include ozone benefits as part of the the potential effects of a change in Some of the key assumptions environmental protection requirements monetized benefits of the proposed underlying the primary estimate for the standards. For the most part, ozone is limited to some extent by data gaps, premature mortality which accounts for limitations in model capabilities (such benefits contribute substantially less to 90 percent of the total benefits we were the monetized benefits than do benefits as geographic coverage), and able to quantify include the following: uncertainties in the underlying from PM, thus their omission will not (1) Inhalation of fine particles is materially affect the conclusions of the scientific and economic studies used to causally associated with premature configure the benefit and cost models. benefits analysis. Although we expect death at concentrations near those economic benefits to exist, we were Deficiencies in the scientific literature experienced by most Americans on a often result in the inability to estimate unable to quantify or to value specific daily basis. Although biological changes in ozone, CO or air toxics quantitative changes in health and mechanisms for this effect have not yet environmental effects, such as potential because we did not perform additional been definitively established, the weight air quality modeling. increases in premature mortality of the available epidemiological associated with increased exposure to evidence supports an assumption of There are also a number of health and carbon monoxide. Deficiencies in the causality. environmental effects which we were economics literature often result in the (2) All fine particles, regardless of unable to quantify or monetize. A full inability to assign economic values even their chemical composition, are equally appreciation of the overall economic to those health and environmental potent in causing premature mortality. consequences of the proposed rule outcomes which can be quantified. This is an important assumption, requires consideration of all benefits While these general uncertainties in the because PM produced via transported and costs expected to result from the underlying scientific and economics precursors emitted from EGUs may new standards, not just those benefits literatures, which can cause the differ significantly from direct PM and costs which could be expressed valuations to be higher or lower, are released from diesel engines and other here in dollar terms. A complete listing discussed in detail in the Regulatory industrial sources, but no clear of the benefit categories that could not Support Document and its supporting scientific grounds exist for supporting be quantified or monetized in our documents and references, the key differential effects estimates by particle estimate are provided in Table VI.E–6. uncertainties which have a bearing on type. These effects are denoted by ‘‘B’’ in the results of the benefit-cost analysis of (3) The impact function for fine Table VI.E–3 above, and are additive to this final rule include the following: particles is approximately linear within the estimates of benefits.

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TABLE VI.E–6.—ADDITIONAL, NON-MONETIZED BENEFITS OF THE NONROAD DIESEL ENGINE AND FUEL STANDARDS

Pollutant Unquantified effects

Ozone Health ...... Premature mortality a. Respiratory hospital admissions. Minor restricted activity days. Increased airway responsiveness to stimuli. Inflammation in the lung. Chronic respiratory damage. Premature aging of the lungs. Acute inflammation and respiratory cell damage. Increased susceptibility to respiratory infection. Non-asthma respiratory emergency room visits. Increased school absence rates.

Ozone Welfare ...... Decreased yields for commercial forests. Decreased yields for fruits and vegetables. Decreased yields for non-commercial crops. Damage to urban ornamental plants. Impacts on recreational demand from damaged forest aesthetics. Damage to ecosystem functions.

PM Health ...... Low birth weight. Changes in pulmonary function. Chronic respiratory diseases other than chronic bronchitis. Morphological changes. Altered host defense mechanisms. Cancer. Non-asthma respiratory emergency room visits.

PM Welfare ...... Visibility in many Class I areas. Residential and recreational visibility in non-Class I areas. Soiling and materials damage. Damage to ecosystem functions.

Nitrogen and Sulfate Deposi- Impacts of acidic sulfate and nitrate deposition on commercial forests. tion Welfare. Impacts of acidic deposition to commercial freshwater fishing. Impacts of acidic deposition to recreation in terrestrial ecosystems. Reduced existence values for currently healthy ecosystems. Impacts of nitrogen deposition on commercial fishing, agriculture, and forests.

CO Health ...... Premature mortality a. Behavioral effects.

HC Health b ...... Cancer (benzene, 1,3-butadiene, formaldehyde, acetaldehyde). Anemia (benzene). Disruption of production of blood components (benzene). Reduction in the number of blood platelets (benzene). Excessive bone marrow formation (benzene). Depression of lymphocyte counts (benzene). Reproductive and developmental effects (1,3-butadiene). Irritation of eyes and mucus membranes (formaldehyde). Respiratory irritation (formaldehyde). Asthma attacks in asthmatics (formaldehyde). Asthma-like symptoms in non-asthmatics (formaldehyde). Irritation of the eyes, skin, and respiratory tract (acetaldehyde). Upper respiratory tract irritation and congestion (acrolein).

HC Welfare ...... Direct toxic effects to animals. Bioaccumulation in the food chain. Damage to ecosystem function. Odor. Notes: a Premature mortality associated with ozone and carbon monoxide is not separately included in this analysis. In this analysis, we as- sume that the Pope, et al. C-R function for premature mortality captures both PM mortality benefits and any mortality benefits associated with other air pollutants. b Many of the key hydrocarbons related to this rule are also hazardous air pollutants listed in the Clean Air Act.

F. Economic Impact Analysis control program on producers and industries.243 We received comments on consumers of nonroad engines, We prepared a draft Economic Impact equipment, fuel, and related Analysis (EIA) for this rule to estimate 243 This analysis is based on an earlier version of the engineering costs developed for this rule. The the economic impacts of the proposed Continued

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our draft analysis from stakeholders (a) the use of resources to comply with and we apportion the decrease in representing agricultural interests, and implement a regulation and (b) application market surplus between equipment rental and dealer interests, reductions in output. 244 In this analysis, application market producers and and equipment manufacturers. The social costs are explored in two steps. In application market consumers, we do commenters conveyed their concerns the first step, called the market analysis, not estimate how those social costs will about our general analytic approach and we estimate how prices and quantities be shared among specific application some of the model assumptions. As of good directly and indirectly affected market producers and consumers (e.g., explained in our responses to these by the emission control program can be farmers and households). In some cases, comments, which can be found in the expected to change once the emission application market producers may be Summary and Analysis of Comments control program goes into effect. The able to pass most if not all of their document prepared for this final rule, estimated price and quantity changes for increased costs to the ultimate we do not believe these comments engines, equipment, fuel, and goods consumers of their products; in other require us to adjust our EIA produced using these inputs are cases, they may be obliged to absorb a methodology. We did adjust the examined separately. In the second step, portion of these costs. While some methodology, however, to estimate the called the economic welfare analysis, commenters requested that we perform economic impacts of the fuel sulfur we look at the total social costs a sector-by-sector analysis of application content requirements on the locomotive associated with the program and their market producers and consumers, we do and marine sectors. As explained below, distribution across stakeholders. The not believe this is appropriate. The this revision was necessary to correct an analysis is based on compliance cost focus on market-level impacts in this oversight in the draft EIA. We also estimates and baseline market analysis is appropriate because the revised the price and quantity data conditions for prices and quantities of standards in this emission control inputs to the model to make them engines, equipment, and fuel produced program are technical standards that consistent with the revised engine and presented earlier in this section. apply to nonroad engines, equipment, fuel cost analyses described earlier in In this EIA, we look at price and and fuel regardless of how they are used this section. quantity impacts for engine, equipment, and the structure of the program does This section briefly describes the diesel fuel, and goods produced with not suggest that different sectors will be methodology we used to estimate the these inputs. With regard to the goods affected differently by the requirements. economic impacts of this final rule, produced with these inputs, we In addition, the results of our EIA including the model revisions for the distinguish between three application suggest that the overall burden on the marine and locomotive fuel sectors, and markets: agriculture, construction, and application market is expected to be the results of that analysis. A detailed manufacturing. It should be noted from small: approximately 0.1 percent description of the Nonroad Diesel the outset that diesel engines, increase in prices, on average, and less Economic Impact Model (NDEIM) equipment, and fuel represent only a than 0.02 percent decrease in prepared for this analysis, the model small portion of the total production production, on average. Estimated inputs, and several sensitivity analyses costs for each of the three application economic impacts of this size do not can be found in Chapter 10 of Final market sectors (the final users of the warrant performing a sector-by-sector Regulatory Impact Analysis prepared for engines, equipment and fuel affected by analysis to investigate whether some this rule. this rule). Other more significant subsectors may be affected production costs include land, labor, disproportionately. 1. What Is an Economic Impact other capital, raw materials, insurance, Finally, as a market-level model, the Analysis? profits, etc. These other production NDEIM estimates the economic impacts An Economic Impact Analysis is costs are not affected by this emission of the rule on the engine, equipment, prepared to inform decision makers control program. This is important and application markets and the within the Agency about the potential because it means that this rule directly transportation service sector. It is not a economic consequences of a regulatory affects only a small part of total inputs firm-level analysis and therefore the action. The analysis contains estimates for the relevant markets. Therefore, the equipment demand elasticity facing any of the social costs of a regulatory rule is not expected to have a large particular manufacturer may be greater program and explores the distribution of adverse impact on output and prices of than the demand elasticity of the market these costs across stakeholders. These goods produced in the three application as a whole. This difference can be estimated social costs can then be sectors. important, particularly where the rule compared with estimated social benefits It should also be noted that our affects different firms’ costs over (as presented in Section VI.E). As analysis of the impacts on the three different volumes of production. defined in EPA’s Guidelines for application markets is limited to market However, to the extent there are Preparing Economic Analyses, social output. The economic impacts on differential effects, EPA believes that the costs are the value of the goods and particular groups of application market wide array of flexibilities provided in services lost by society resulting from suppliers (e.g., the profitability of farm this rule are adequate to address any production units or manufacturing or cost inequities that are likely to arise. final cost estimates for the engine program are construction firms) or particular groups 2. What Methodology Did EPA Use in slightly higher ($142 million) and the final fuel of consumers (e.g., households and This Economic Impact Analysis? costs are slightly lower ($246 million), resulting in companies that consume agricultural a 30-year net present value of $27.1 billion (30 year EPA used the same methodology in net present values in the year 2004, using a 3 goods, buildings, or durable or percent discount rate, $2002) or $104 million less consumer goods) are not estimated. In this final EIA as was used in the draft than the engineering costs used in this analysis. We other words, while we estimate that the EIA. The model was revised to do not expect that the revised engineering costs application markets will bear most of accommodate analysis of the locomotive would change the overall results of this economic and marine fuel sectors. impact analysis given the small portion of engine, the burden of the regulatory program equipment, and fuel costs to total production costs a. Conceptual Approach for goods and services using these inputs and given 244 EPA Guidelines for Preparing Economic the inelastic value of the estimated demand Analyses, EPA 240–R–00–003, September 2000, p The Nonroad Diesel Economic Impact elasticities for the application markets. 113. Model (NDEIM) uses a multi-market

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analysis framework that considers California fuel volumes that are not The NDEIM is a computer model interactions between regulated markets affected by the program (because they comprised of a series of spreadsheet and other markets to estimate how are covered by separate California modules that define the baseline compliance costs can be expected to nonroad diesel fuel standards) are not characteristics of the supply and ripple through these markets. In the included in the analysis. demand for the relevant markets and the NDEIM, compliance costs are directly • 2 transportation service markets: relationships between them. The model borne by engine manufacturers, locomotive and marine. is constructed based on the market equipment manufacturers, petroleum As noted above, this final EIA also characteristics and inter-connections refiners and fuel distributors. estimates the economic impact on two summarized in this section and Depending on market characteristics, additional markets that were not described in more detail in Chapter 10 some or all of these compliance costs included in the draft analysis: the of the RIA. The model is shocked by will be passed on through the supply locomotive and marine diesel applying the engineering compliance chain in the form of higher input prices transportation service markets. In the cost estimates to the appropriate market for the application markets (in this case, NPRM, we proposed to set fuel sulfur suppliers, and then numerically solved construction, agriculture, and standards for locomotive and distillate using an iterative auctioneer approach manufacturing) which in turn affect marine diesel as well as for nonroad by ‘‘calling out’’ new prices until a new prices and quantities of goods produced diesel fuel. We developed cost estimates equilibrium is reached in all markets in those application markets. Producers for these two types of fuel as well as for simultaneously. The output of the in the application markets adjust their nonroad diesel fuel. In the draft EIA, model is new equilibrium prices and demand for diesel engines, equipment, however, we did not consider the quantities for all affected markets. This and fuel in response to these input price economic impacts of these fuel costs on information is used to estimate the changes and consumer demand for the locomotive and marine sectors social costs of the model and how those application market outputs. This separately. Instead, we applied all of costs are shared among affected markets. information is passed back to the these additional fuel costs to the The NDEIM uses a multi-market suppliers of diesel equipment, engines, manufacturing application market. partial equilibrium approach to track and fuel in the form of purchasing In preparing the final RIA for this changes in price and quantity for the decisions. The NDEIM explicitly models rule, we determined that it would be modeled product markets. As explained these interactions and estimates more appropriate to consider the in the EPA Guidelines for Preparing behavioral responses that lead to new impacts of the fuel program on the Economic Analyses, ‘‘partial’’ equilibrium prices and output for all diesel marine and locomotive sectors equilibrium refers to the fact that the sectors and the resulting distribution of separately. This is because the supply and demand functions are social costs across the modeled sectors. locomotive and marine markets are modeled for just one or a few isolated b. Markets Examined directly affected by the higher diesel markets and that conditions in other markets are assumed either to be The NDEIM uses a multi-market fuel prices associated with the rule. In addition, production and consumption unaffected by a policy or unimportant partial equilibrium approach to track for social cost estimation. Multi-market changes in price and quantity for 62 decisions of downstream end-use markets that use these services are models go beyond partial equilibrium integrated product markets, as follows: analysis by extending the inquiry to • 7 diesel engine markets: less than influenced by the prices of transportation services. At the same more than just a single market. Multi- 25 hp, 26 to 50 hp, 51 to 75 hp, 76 to market analysis attempts to capture at 100 hp, 101 to 175 hp, 176 to 600 hp, time, locomotive and marine diesel transportation services are not used least some of the interactions between and greater than 600 hp. The EIA 246 solely in the three application markets markets. includes more horsepower categories The NDEIM uses an intermediate run than the standards to allow more modeled in the NDEIM. These services are also provided to electric utilities time frame. The use of the intermediate efficient use of the engine compliance run means that some factors of costs estimates. The additional (transporting coal to electric power plants), non-manufacturing service production are fixed and some are categories also allow estimating variable. This modeling period allows economic impacts for a more diverse set industries (public transportation) and governments. We take this into account analysis of the economic effects of the of markets. rule’s compliance costs on current • 42 diesel equipment markets: 7 and report impacts on those sectors separately. producers. The short run, in contrast, horsepower categories within 7 imposes all compliance costs on the application categories: agricultural, c. Model Methodology manufacturers (no pass-through to construction, general industrial, pumps A detailed description of the model consumers), while the long run imposes and compressors, generator and welder all costs on consumers (full cost pass- sets, refrigeration and air conditioning, methodology, inputs, and parameters used in this economic impact analysis is through to consumers). The use of the and lawn and garden. There are 7 intermediate run time frame is horsepower/application categories that provided in Chapter 10 of the Final RIA prepared for this rule. The model consistent with economic practices for did not have sales in 2000 and are not this type of analysis. included in the model, so the total methodology is firmly rooted in applied microeconomic theory and was The NDEIM assumes perfect number of diesel equipment markets is competition in the market sectors. This 42 rather than 49. developed following the OAQPS • Economic Analysis Resource assumption was questioned by one 3 application markets: agricultural, commenter, who noted that the 25 to 75 Document.245 construction, and manufacturing. hp engine category does not appear to • 8 nonroad diesel fuel markets: 2 be competitive based on the number of sulfur content levels (15 ppm and 500 245 U.S. Environmental Protection Agency, Office firms in that subsector. Specifically, one ppm) for each of 4 PADDs. PADDs 1 and of Air Quality Planning and Standards, Innovative Strategies and Economics Group, OAQPS Economic 3 are combined for the purpose of this Analysis Resource Document, April 1999. A copy 246 EPA Guidelines for Preparing Economic analysis. It should be noted that PADD of this document can be found in Docket A–2001– Analyses, EPA 240–R–00–003, September 2000, p. 5 includes Alaska and Hawaii. Also, 28, Document No. II–A–14. 125–6.

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firm has nearly 29 percent of the market (behavioral-response parameters), which equipment market) which depends on and the top nine firms have about 88 measure the price sensitivity of the demand for equipment (the percent. The remaining twelve percent consumers and producers. application markets). Changes in of this market shared among nineteen The supply elasticities for the conditions in one of these markets will other firms. While the commenter is equipment, engine, diesel fuel, and affect the others. By designing the correct in noting the limited number of transportation service markets and the model to derive the engine, equipment, firms in this subsector, we believe it is demand and supply elasticities for the transportation market, and fuel demand still appropriate to rely on the perfect application markets used in the NDEIM elasticities, the NDEIM simulates these competition assumption in this analysis. were obtained from peer-reviewed connections between supply and The perfect competition assumption literature sources or were estimated demand among all the product markets relies not only on the number of firms using econometric methods. These and replicates the economic interactions in a market but also on other market econometric methods are well- between producers and consumers. characteristics. For example, there are documented and are consistent with generally accepted econometric e. Model Inputs—Fixed and Variable no indications of barriers to entry, the Costs firms in these markets are not price practice. Appendix 10H of the RIA setters, and there is no evidence of high contains detailed information on how The EIA treats the fixed costs levels of strategic behavior in the price the elasticities were estimated. expected to be incurred by engine and and quantity decisions of the firms. In The equipment and engine supply equipment manufacturers differently in addition, the products produced within elasticities are elastic, meaning that the market and social costs analyses. each market are somewhat quantities supplied are expected to be This feature of the model is described in homogeneous in that engines from one fairly sensitive to price changes. The greater detail in Section 10.2.3.3 of the firm can be purchased instead of supply elasticities for the fuel, RIA. In the market analysis, estimated engines from another firm. Finally, transportation, and application markets engine and equipment market impacts according to contestable market theory, are inelastic or unit elastic, meaning (changes in prices and quantities) are oligopolies and even monopolies will that the quantity supplied/demanded is based solely on the expected increase in behave very much like firms in a expected to be fairly insensitive to price variable costs associated with the competitive market if it is possible to changes or will vary one-to-one with standards. Fixed costs are not included enter particular markets costlessly (i.e., price changes. The demand elasticities in the market analysis reported in Table there are no sunk costs associated with for the application markets are also VI–F–1 because in an analysis of competitive markets the industry supply market entry or exit). With regard to the inelastic. This is consistent with the curve is based on its marginal cost curve nonroad engine market, production Hicks-Allen derived demand and fixed costs are not reflected in capacity is not fully utilized. This relationship, according to which a low cost-share in production combined with changes in the marginal cost curve. In means that manufacturers could limited substitution yields inelastic addition, the fixed costs associated with potentially switch their product line to demand.248 As noted above, diesel the rule are primarily R&D costs for compete in another segment of the engines, equipment, and fuel represent design and engineering changes. Firms market without a significant investment. only a small portion of the total in the affected industries currently For all these reasons, the number of production costs for each of the three allocate funds for R&D programs and firms in a particular engine submarket application sectors. The limited ability this rule is not expected to lead firms to does not prevent us from relying on the to substitute for these inputs is change the size of their R&D budgets. perfect competition assumption for that discussed below. Therefore, changes in fixed costs for submarket. This is true of other engine In contrast to the above, the demand engine and equipment redesign and equipment subsectors as well. In elasticities for the engine, equipment, associated with this rule are not likely addition, changing the assumption of fuel, and transportation markets are to affect the prices of engines or perfect competition based on the limited internally derived as part of the process equipment. Fixed costs are included in evidence raised by the commenter of running the model. This is an the social cost analysis reported in would break with widely accepted important feature of the NDEIM, which Table VI–F–2, however, as an additional economic practice for this type of allows it to link the separate market cost to producers. This is appropriate 247 analysis. components of the model and simulate because even though firms currently d. Model Inputs—Elasticities how compliance costs can be expected allocated funds to R&D those resources to ripple through the affected economic are intended for other purposes such as The estimated social costs of this sectors. In the real world, for example, increasing engine power, ease of use, or emission control program are a function the quantity of nonroad equipment units comfort. These improvements will of the ways in which producers and produced in a particular period depends therefore be postponed for the length of consumers of the engines, equipment, on the price of engines (the engine the rule-related R&D program. This is a and fuels affected by the standards market) and the demand for equipment cost to society. change their behavior in response to the (the application markets). Similarly, the One commenter recommended that costs incurred in complying with the number of engines produced depends EPA include engine and equipment R&D standards. As the compliance costs on the demand for engines (the (fixed) costs in the market analysis. This ripple through the markets, producers commenter argued that while in the and consumers change their production 248 If the elasticity of demand for a final product long run total costs are not determined and purchasing decisions in response to is less than the elasticity of substitution between an by changes in fixed costs, total costs are changes in prices. In the NDEIM, these input and other inputs to the final product, then the determined initially by both fixed and behavioral changes are modeled by the demand for the input is less elastic the smaller its cost share. Hicks, J.R., 1961. Marshall’s Third Rule: variable costs. This commenter was demand and supply elasticities A Further Comment. Oxford Economic Papers concerned that by not including fixed 13:262–65; Hicks, J.R., 1963. The Theory of Wages. costs, EPA’s analysis underestimates the 247 See, for example, EPA Guidelines for St. Martins Press, NY, pp. 233–247. See Docket A– Preparing Economic Analyses, EPA 240–R–00–003, 2001–28, Document No. IV–B–25 for relevant increase in the average price of goods September 2000, p 126. See also the Final RIA for excerpts. See Docket A–2001–28, Document No. IV– and services produced using engines this rule, Chapter 10, Section 10.2.3.1. B–25 for relevant excerpts. affected by the rule. In fact, we included

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R&D costs in a sensitivity analysis equipment. It should be noted that this equipment is an alternative only for the performed for the draft EIA, which has effect is limited to equipment and does smaller power categories (below 75 hp). been updated and can be found in not extend to nonroad diesel fuel. We Based on discussions with equipment Appendix I to Chapter 10 of the Final believe that equipment pre-buying will manufacturers and users, the dominant RIA. Including fixed costs results in a not be economically viable in most reasons for choosing diesel engines over transfer of economic welfare losses from cases due to the cost of holding capital the substantially less expensive gasoline engine and equipment markets to the (equipment) idle and of maintaining engines include better performance from application markets (engine and unused equipment. Such strategic diesel engines, lower fuel consumption equipment producer surplus losses purchases, if they occur at all, would be from diesel engines, and the ability to decrease; consumer surplus losses limited to a period of a few months use diesel fuel. The use of diesel fuel is increase), but does not change the before the effective date of the preferable for two reasons: it is safer to overall economic welfare losses standards. The NDEIM models market store and dispense, and it is compatible associated with the rule. reactions in the intermediate time with the fuel needed for larger Unlike for engines and equipment, frame, beyond the scope of any potential equipment at the same worksite. Where most of the petroleum refinery fixed pre-buy. For these reasons, we do not these issues are not a concern, gasoline costs are for production hardware. believe it is appropriate to revise the engines already enjoy a substantial Refiners are expected to have to make model to include pre-buy as a means of economic advantage over diesel. We do physical changes to their refineries and substitution in NDEIM. not believe that the incremental increase purchase additional equipment to ‘‘Delayed-buying’’ appears to refer to in new equipment cost associated with produce 500 ppm and then 15 ppm fuel. the possibility that suppliers in the this program would provide the Therefore, fixed costs are included in application market would defer necessary economic incentives for the market analysis for fuel price and purchasing new equipment initially but switching to gasoline equipment. quantity impacts. would eventually make those purchases. Equipment users who can use gasoline- Similarly to pre-buying, this appears to f. Model Inputs—Substitution by fueled equipment already do so, while be a short-term effect and would Application Suppliers those who can’t due to the high costs of therefore be inappropriate to include in storing and dispensing gasoline fuel In modeling the market impacts and an economic model designed to model already use diesel engines. Therefore, social costs of this rule, the NDEIM the intermediate time frame. we have not attempted to model the considers only diesel equipment and Extending the life of a current possibility of substitution to gasoline fuel inputs to the production of goods machine is suggested as another equipment in NDEIM. in the applications markets. It does not alternative to purchasing new explicitly model alternate production equipment. We believe this would also g. Model Inputs—Other inputs that would serve as substitutes be a short term phenomena that is not for new nonroad equipment or nonroad relevant for the intermediate time frame Compliance Costs. The NDEIM uses diesel fuel. In the model, market of the NDEIM. Based on our meetings the estimated engine, equipment, and changes in the final demand for with equipment users and suppliers, we fuel compliance costs described in application goods and services directly do not believe that extending the life of above and presented in Chapters 6 and correspond to changes in the demand nonroad equipment will prove to be an 7 of the RIA. Engine and equipment for nonroad equipment and fuel (i.e., in economically viable substitute in the costs vary over time because fixed costs normalized terms there is a one-to-one near or long term. Most users of nonroad are recovered over five to ten year correspondence between the quantity of equipment already extend the life of periods while total variable costs, the final goods produced and the their equipment to the maximum extent despite learning effects that serve to quantity of nonroad diesel equipment possible and purchase new equipment reduce costs on a per unit basis, and fuel used as inputs to that only when the existing equipment can continue to increase at a rate consistent production). We believe modeling the no longer perform its function, when with new sales increases. Similarly, market in this manner is economically new demand for production requires engine operating costs also vary over sound and reflects the general additional means for production, or time because oil change maintenance experience for the nonroad market. when new equipment offers a cheaper savings, PM filter maintenance, and fuel Some commenters suggested that the means of production than existing economy effects, all of which are NDEIM should consider substitution to equipment. This situation is not calculated on the basis of gallons of fuel alternate means of production such as expected to change as a result of this consumed, change over time consistent pre-buying, delayed buying, extending rule. In addition, even if it were possible with the growth in nationwide fuel the life of a current machine, and to extend equipment life even more, this consumption. Fuel-related compliance substituting with different (e.g., would lower the cost of nonroad costs (costs for refining and distributing gasoline-powered) equipment. These equipment as an input to production regulated fuels) also change over time. commenters did not provide detailed (because it would be less expensive to These changes are more subtle than the explanations for their comments or data maintain old equipment than purchase engine costs, however, as the fuel in support of their substitution new equipment) and thus would reduce provisions are largely implemented in arguments. After considering these the economic impact of the Tier 4 discrete steps instead of phasing in over comments, we conclude that revising program compared to our estimate. For time. Compliance costs were developed the NDEIM to include these effects all of the reasons stated here, we have on a ¢/gallon basis; total compliance would be inappropriate. decided not to attempt to model an costs are determined by multiplying the The term ‘‘pre-buying’’ appears to extended equipment life alternative in ¢/gallon costs by the relevant fuel refer to the possibility that the suppliers the NDEIM. volumes. Therefore, total fuel costs in the application market may choose to Finally, some commenters noted that increase as the demand for fuel buy additional unneeded quantities of equipment users may chose to substitute increases. The variable operating costs nonroad equipment prior to the with different equipment, particularly are based on the natural gas cost of beginning of the Tier 4 program, thus gasoline-powered equipment. We producing hydrogen and for heating avoiding the higher cost for the Tier 4 believe substitution to gasoline-powered diesel fuel for the new desulfurization

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equipment, and thus would fluctuate diesel product line and not just to all engines, equipment, and fuels. It along with the price of natural gas. heating oil. should be noted that, as illustrated in Operating Savings. Operating savings Fuel Spillover. Spillover fuel is Table VI–F–3, aggregate program costs refers to changes in operating costs that highway grade diesel fuel consumed by peak in 2014; increases in costs after are expected to be realized by users of nonroad equipment, stationary diesel that year are due to increases in the both existing and new nonroad diesel engines, boilers, and furnaces. As population of engines over time. The equipment as a result of the reduced described in Section 7.1 of Chapter 7 of other years, 2020, 2030 and 2036, sulfur content of nonroad diesel fuel. the final RIA, refiners are expected to correspond to years analyzed in our These include operating savings (cost produce more 15 ppm fuel than is benefits analysis. Detailed results for all reductions) due to fewer oil changes, required for the highway diesel market. years are included in the appendices to which accrue to nonroad, marine and This excess 15 ppm fuel will be sold Chapter 10 of the RIA. locomotive engines that are already in into markets that allow fuel with a In the following discussion, social use as well as new nonroad engines that higher sulfur level (i.e., nonroad for a costs are computed as the sum of market will comply with the standards (see limited period of time, locomotive, surplus offset by operating savings. Section VI.B). These also include any marine diesel and heating oil). This Market surplus is equal to the aggregate extra operating costs associated with the spillover fuel is affected by the diesel change in consumer and producer new PM emission control technology highway rule and is not affected by this surplus based on the estimated market which may accrue to certain new regulation. Therefore, it is important to impacts associated with the rule. As engines that use this technology. differentiate between spillover and explained above, operating savings are Operating savings are not included in nonspillover fuel to ensure that the not included in the market analysis but the market analysis because some of the compliance costs for that fuel pool are instead are listed as a separate category savings accrue to existing engines and not counted twice. In the NDEIM, this in the social cost results tables. because, as explained in Section is done by incorporating the impact of In considering the results of this VI.C.1.c, these savings are not expected increased fuel costs associated with the analysis, it should be noted that the to affect consumer decisions with highway rule prior to analysis of the estimated output quantities for diesel respect to new engines. Operating final nonroad rule (see RIA Section engines, equipment, and fuel are not savings are included in the social cost 10.3.8). identical to those estimated in the analysis, however, because they accrue Compliance Flexibility Provisions. engineering cost described in above and to society. They are added into the Consistent with the engine and presented in Chapters 6 and 7 of the estimated social costs as an additional equipment cost discussion in Section RIA. The difference is due to the savings to the application and VI.C, the EIA does not include any cost different methodologies used to estimate transportation service markets, since it savings associated with the equipment these costs. As noted above, social costs is the users of these engines and fuels transition flexibility program or the are the value of goods and services lost who will see these savings. A sensitivity nonroad engine ABT program. As a by society resulting from: (a) the use of analysis was performed as part of this result, the results of this EIA can be resources to comply with and EIA that includes the operating savings viewed as somewhat conservative. implement a regulation (i.e., compliance in the market analysis. The results of Locomotive and Marine Fuel Costs. costs); and (b) reductions in output. this sensitivity analysis are presented in The locomotive and marine Thus, the social cost analysis considers Appendix 10.I. transportation sectors are affected by both price and output (quantity) effects Fuel Marker Costs. Fuel marker costs this rule through the sulfur limits on the associated with consumer and producer refers to costs associated with marking diesel fuel used by these engines. These reaction to increased prices associated high sulfur heating oil to distinguish it sectors provide transportation to the with the regulatory compliance costs. from high sulfur diesel fuel produced three application markets as well as to The engineering cost analysis, on the after 2007 through the use of early other markets not considered in the other hand, is based on applying sulfur credits or small refiner NDEIM (e.g., public utilities, additional technology to comply with provisions. Only heating oil sold nonmanufacturing service industries, the new regulations. The engine outside of the Northeast is affected. The government). As explained in Section population in the engineering cost higher sulfur NRLM fuel is not allowed 10.3.1.5 of the RIA, the NDEIM applies analysis does not reflect consumer and to be sold in most of the Northeast, so only a portion of the locomotive and producer reactions to the compliance the marker need not be added in this marine fuel costs to the three costs. Consequently, the estimated large heating oil market. These costs are application markets. The rest of the output quantities from the cost analysis expected to be about $810,000 in 2007, locomotive and marine fuel costs are are slightly larger than the estimated increasing to $1.38 million in 2008, but added as a separate item to the total output quantities from the social cost steadily decreasing thereafter to about social cost estimates (as Application analysis. $940,000 in 2040 (see Chapter 10 of the Markets Not Included in NDEIM). The results of this analysis suggest RIA). Because these costs are relatively that the economic impacts of this rule small, they are incorporated into the 3. What Are the Results of this are likely to be small, on average. Price estimated compliance costs for the fuel Analysis? increases in the application markets are program (see discussion of fuel costs, Using the revised cost data described expected to average about 0.1 percent above). They are therefore not counted earlier in this section and the NDEIM per year. Output decrease in the separately in this economic impact described above and in Chapter 10 of application markets are expected to analysis. This means that the costs of the Final RIA, we estimated the average less than 0.02 percent for all marking heating fuel are allocated to all economic impacts of the nonroad years. The price increases for engines, users of the fuel affected by this rule engine, equipment and fuel control equipment, and fuel are expected to be (nonroad, locomotive, and marine) program. Economic impact results for about 20 percent, 3 percent, and 7 instead of uniquely to heating oil users. 2013, 2020, 2030, and 2036 are percent, respectively (total impact This is a reasonable approach since it is presented in this section. The first of averaged over the relevant years). The likely that refiners will pass the marker these years, 2013, corresponds to the number of engines and equipment costs along their complete nonroad first year in which the standards affect produced is expected to decrease by less

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than 250 units, and the amount of fuel The market impacts of this rule construction, agricultural, or produced annually is expected to suggest that the overall economic manufactured goods). decrease by less than 4 million gallons. impact of the emission control program Equipment Market Results: Estimated With respect to the economic welfare on society is expected to be small, on price changes for the equipment markets analysis, producers and consumers in average. According to this analysis, the reflect both the direct costs of the new the application markets are expected to average prices of goods and services standards on equipment production and bear about 83 percent of the burden in produced using equipment and fuel the indirect cost through increased 2013; this will increase to about 96 affected by the rule are expected to engine prices. In general, the estimated percent in 2030 and beyond. In other increase by about 0.1 percent (as noted percentage price changes for the words, despite the almost total pass- above), despite the almost total pass- equipment are less than that for engines through of costs the average price of through of compliance costs to those because the engine is only one input in goods and services in the application markets. the production of equipment. In 2013, markets is expected to increase by only Engine Market Results: This analysis the average price increase for nonroad 0.1 percent. This outcome reflects the suggests that most of the variable costs diesel equipment is estimated to be 250 fact that diesel engines, equipment, and associated with the rule will be passed about 2.9 percent. This percentage is fuel are only a small part of total costs along in the form of higher prices. The expected to decrease to about 2.5 for the application markets. These average price increase in 2013 for percent for 2020 and beyond. The range results are described in more detail engines is estimated to be about 21.4 of estimated price increases across below and in Chapter 10 of the Final percent. This percentage is expected to equipment types parallels the share of RIA. decrease to about 18.3 percent by 2020. engine costs relative to total equipment price, so the estimated percentage price a. Expected Market Impacts In 2036, the last year considered, the average price increase is expected to be increase among equipment types also The estimated market impacts for about 18.2 percent. This expected price varies. For example, the market price in 2013, 2020, and 2030 are presented in increase varies by engine size because 2013 for agricultural equipment Table VI.F–1. The market-level impacts between 175 and 600 hp is estimated to compliance costs are a larger share of presented in this table represent increase about 1.2 percent, or $1,740 for total production costs for smaller production-weighted averages of the equipment with an average cost of engines. In 2013, the largest expected individual market-level impact $143,700. This compares with an percent price increase is for engines estimates generated by the model: the estimated engine price increase of about between 25 and 50 hp: 29 percent or average expected price increase and $1,700 for engines of that size. The $850; the average price for an engine in quantity decrease across all of the units largest expected price increase in 2013 this category is about $2,900. However, in each of the engine, equipment, fuel, for equipment is $2,290, or 2.6 percent, this price increase is expected to drop and final application markets. For for pumps and compressors over 600 to 22 percent, or about $645, for 2015 example, the model includes seven hp. This compares with an estimated individual engine markets that reflect and later. The smallest expected percent engine price increase of about $2,240 for the seven different horsepower size price increase in 2013 is for engines in engines of that size. The smallest categories. The 21.4 percent price the greater than 600 hp category. These expected price increase in 2013 for change for engines shown in Table engines are expected to see price equipment is $120, or 0.7 percent, for VI.F–1 for 2013 is an average price increases of about 3 percent increase in construction equipment less than 25 hp. change across all engine markets 2013, increasing to about 7.6 percent in This compares with an estimated engine weighted by the number of production 2015 and then decreasing to about 6.6 price increase of about $120 for engines units. Similarly, the equipment impacts percent in 2017 beyond. The expected of that size. presented in Table VI.F–1 are the price increase for these engines is about Again, the market analysis predicts weighted averages of 42 equipment- $2,240 in 2013, increasing to about that even with these increased application markets, such as small $6,150 in 2015 and then decreasing to equipment prices total demand is not (<25hp) agricultural equipment and $5,340 in 2017 and later, for engines expected to change very much. The large (>600hp) industrial equipment. that cost on average about $80,500. expected average change in quantity is Note that price increases and quantity The market impact analysis predicts less than 250 pieces of equipment per decreases for specific types of engines, that even with these increased in engine year, out of a total sales of more than equipment, application sectors, or diesel prices, total demand is not expected to 500,000 units. The average decrease in fuel markets are likely to be different. change very much. The expected the quantity of nonroad diesel The aggregated data presented in this average change in quantity is less than equipment produced as a result of the table provide a broad overview of the 150 engines per year, out of total sales regulation is estimated to be about 0.02 expected market impacts that is useful of more than 500,000 engines. The percent for all years. The largest when considering the impacts of the estimated change in market quantity is expected decrease in quantity in 2013 is rule on the economy as a whole. The small because as compliance costs are 18 units of construction equipment per individual market-level impacts are passed along the supply chain they year for construction equipment presented in Chapter 10 of the Final become a smaller share of total between 100 and 175 hp, out of about RIA.249 production costs. In other words, firms 63,000 units. The smallest expected that use these engines and equipment decrease in quantity in 2013 is less than 249 The NDEIM distinguishes between will continue to purchase them even at ‘‘merchant’’ engines and ‘‘captive’’ engines. the higher cost because the increase in 250 It should be noted that the equipment prices ‘‘Merchant’’ engines are produced for sale to costs will not have a large impact on used in this analysis reflect current market another company and are sold on the open market conditions. An increase in equipment prices to anyone who wants to buy them. ‘‘Captive’’ their total production costs (diesel associated with the nonroad Tier 3 standards would engines are produced by a manufacturer for use in equipment is only one factor of reduce size of the percentage increase in price. In its own nonroad equipment line (this equipment is production for their output of this sense, our Economic Impact Analysis is said to be produced by ‘‘integrated’’ manufacturers). conservative as it is based on the impact of the Tier The market analysis for engines includes 4 program on Tier 1 and Tier 2 equipment prices compliance costs for merchant engines only. The compliance costs plus a portion of the engine and therefore overestimates the market impacts of market analysis for equipment includes equipment compliance costs attributable to captive engines. the Tier 4 program.

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one unit per year in all hp categories of because the absolute change in the integrated engine/equipment pumps and compressors. quantity of engines represents only manufacturers are not reflected in this It should be noted that the absolute engines sold on the market. Reductions number but are captured in the cost change in the number of engines and in engines consumed internally by analysis. equipment does not match. This is

TABLE VI.F–1.—SUMMARY OF MARKET IMPACTS ($2002)

Engineering Change in price Change in quantity cost Market Absolute Per unit ($million) Percent Absolute Percent

2013

Engines ...... $1,052 $821 21.4 a ¥79 ¥0.014 Equipment ...... 1,198 975 2.9 ¥139 ¥0.017 Loco/Marine Transp b ...... 0.009 ...... ¥0.007 Application Markets b ...... 0.097 ...... ¥0.015 No. 2 Distillate Nonroad ...... 0.06 0.07 6.0 c ¥2.75 ¥0.019

2020

Engines ...... 950 761 18.3 a ¥98 ¥0.016 Equipment ...... 1,107 976 2.5 ¥172 ¥0.018 Loco/Marine Transp b ...... 0.001 ...... ¥0.008 Application Markets b ...... 0.105 ...... ¥0.017 No. 2 Distillate Nonroad ...... 0.07 0.07 7.0 c ¥3.00 ¥0.021

2030

Engines ...... 937 751 18.2 a ¥114 ¥0.016 Equipment ...... 968 963 2.5 ¥200 ¥0.018 Loco/Marine Transp b ...... 0.010 ...... ¥0.008 Application Markets b ...... 0.102 ...... ¥0.016 No. 2 Distillate Nonroad ...... 0.07 0.07 7.0 c ¥3.53 ¥0.022

2036

Engines ...... 931 746 18.2 a ¥124 ¥0.016 Equipment ...... 962 956 2.5 ¥216 ¥0.018 Loco/Marine Transp b ...... 0.010 ...... ¥0.008 Application Markets b ...... 0.101 ...... ¥0.016 No. 2 Distillate Nonroad ...... 0.07 0.07 7.0 c ¥3.85 ¥0.022 Notes: a The absolute change in the quantity of engines represents only engines sold on the market. Reductions in engines consumed internally by in- tegrated engine/equipment manufacturers are not reflected in this number but are captured in the cost analysis. For this reason, the absolute change in the number of engines and equipment does not match. b The model uses normalized commodities in the application markets because of the great heterogeneity of products. Thus, only percentage changes are presented. c Units are in million of gallons.

Transportation Market Results: The averages about 0.1 percent for all years. application market to about 0.5 percent estimated price increase associated with In other words, on average, the prices of in the construction market. The the proposed standards in the goods and services produced using the percentage change in output is also locomotive and marine transportation affected engines, equipment, and fuel estimated to be very small and averages markets is negligible, at 0.01 percent for are expected to increase negligibly. This less than 0.02 percent for all years. Note all years. This means that these results from the observation that that these estimated price increases and transportation service providers are compliance costs passed on through quantity decreases are average for these expected to pass along nearly all of their price increases represent a very small sectors and may vary for specific increased costs to the agriculture, share of total production costs in all the subsectors. Also, note that absolute construction, and manufacturing application markets. For example, the changes in price and quantity are not application markets, as well as other construction industry realizes an provided for the application markets in application markets not explicitly increase in production costs of Table VI.F–1 because normalized modeled in the NDEIM. This price approximately $580 million in 2013 commodity values are used in the increases represent a small share of total because of the price increases for diesel market model. Because of the great application market production costs, equipment and fuel. However, this heterogeneity of manufactured or and therefore are not expected to affect represents less than 0.001 percent of the agriculture products, a normalized demand for these services. $820 billion value of shipments in the commodity ($1 unit) is used in the Application Market Results: The construction industry in 2000. The application markets. This has no impact estimated price increase associated with estimated average commodity price on the estimated percentage change the new standards in all three increase in 2013 ranges from 0.08 impacts but makes interpretation of the application markets is very small and percent in the manufacturing absolute changes less informative.

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Fuel Markets Results: The estimated total social costs. Engine manufacturers the engine and equipment populations. average price increase across all and diesel fuel refineries are expected to Producers and consumers in the nonroad diesel fuel is about 7 percent bear 2.8 percent and 0.5 percent, application markets are expected to bear for all years. For 15 ppm fuel, the respectively. The remaining 4.2 percent an even larger portion of the costs, estimated price increase for 2013 ranges of the social costs is expected to be approximately 96 percent. This is from 5.6 percent in the East Coast region borne by the locomotive and marine consistent with economic theory, which (PADD 1&3) to 9.1 percent in the transportation service sector. In this last states that, in the long run, all costs are mountain region (PADD 4). The average sector, about 97 percent of the gross passed on to the consumers of goods national output decrease for all fuel is decrease in market surplus is expected and services. estimated to be about 0.02 percent for to be borne by the application markets The present value of total social costs all years, and is relatively constant that are not included in the NDEIM but across all four regional fuel markets. that use these services (e.g., public through 2036, contained in Table VI.F– utilities, nonmanufacturing service 3, is estimated to be $27.2 billion b. Expected Economic Welfare Impacts industries, government) while about 3 ($2002). This present value is calculated Estimated social costs are presented percent is expected to be borne by using a social discount rate of 3 percent in Table VI.F–2. In 2013, the total social locomotive and marine service from 2004 through 2036. We also costs are projected to be about $1,510 providers. Because of the way the performed an analysis using a 7 percent million ($2002). About 83 percent of the NDEIM is structured, with the fuel social discount rate. Using that discount total social costs is expected to be borne savings added separately, the results rate, the present value of the social costs by producers and consumers in the imply that locomotive and marine through 2036 is estimated to be $13.9 application markets in 2013, indicating service provider would see net benefits billion ($2002). As shown in Table that the majority of the compliance costs from the rule due to the operating VI.F–3, these results suggest that total associated with the rule are expected to savings associated with low sulfur fuel. engineering costs exceed compliance be passed on in the form of higher In fact, they are likely to pass along costs by a small amount. This is due prices. When these estimated impacts some or all of those operating savings to primarily to the fact that the estimated are broken down, about 58.5 percent of the users of their services, reducing the output quantities for diesel engines, the social costs are expected to be borne size of the welfare losses for those users. equipment, and fuel are not identical to by consumers in the application markets Total social costs continue to increase those estimated in the engineering cost and about 41.5 percent are expected to over time and are projected to be about analysis, which is due to the different be borne by producers in the application $2,046 million by 2030 and $2,227 methodologies used to estimate these markets. Equipment manufacturers are million in 2036 ($2002). The increase is costs (see previous discussion in this expected to bear about 9.5 percent of the due to the projected annual growth in Section IV.F.3).

TABLE VI.F–2.—SUMMARY OF SOCIAL COSTS ESTIMATES ASSOCIATED WITH PRIMARY PROGRAM 2015, 2020, 2030, AND 2036 [2002, $Million]a, b

Operating Market sur- savings Total Percent plus ($10 6) ($10 6)

2013

Engine Producers Total ...... $42.0 ...... $42.0 2.8 Equipment Producers Total ...... 143.1 ...... 143.1 9.5 Construction Equipment ...... 64.0 ...... 64.0 ...... Agricultural Equipment ...... 51.8 ...... 51.8 ...... Industrial Equipment ...... 27.2 ...... 27.2 ...... Application Producers & Consumers Total ...... 1,496.7 ($243.2) 1,253.5 83.0 Total Producer ...... 620.9 ...... 41.5 Total Consumer ...... 875.7 ...... 58.5 Construction ...... 584.3 ($115.2) 469.2 ...... Agriculture ...... 430.0 ($78.2) 351.8 Manufacturing ...... 482.4 ($49.8) 432.5 ...... Fuel Producers Total ...... 8.0 ...... 8.0 0.5 PADD I&III ...... 4.1 ...... 4.1 ...... PADD II ...... 3.3 ...... 3.3 ...... PADD IV ...... 0.0 ...... 0.0 ...... PADD V ...... 0.6 ...... 6.0 ...... Transportation Services, Total ...... 104.9 ($41.5) 63.4 4.2 Locomotive ...... 1.6 ($12.4) ($10.8) ...... Marine ...... 0.9 ($9.9) ($9.0) ...... Application markets not included in NDEIM ...... 102.4 ($19.2) $83.2 ......

Total ...... 1,794.7 ($284.7) $1,510.0 100.0%

2020

. Engine Producers Total ...... 0.1 ...... 0.1 0.0 Equipment Producers Total ...... 122.7 ...... 122.7 6.7 Construction Equipment ...... 57.8 ...... 57.8 ...... Agricultural Equipment ...... 39.7 ...... 39.7 ......

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TABLE VI.F–2.—SUMMARY OF SOCIAL COSTS ESTIMATES ASSOCIATED WITH PRIMARY PROGRAM 2015, 2020, 2030, AND 2036—Continued [2002, $Million]a, b

Operating Market sur- savings Total Percent plus ($10 6) ($10 6)

Industrial Equipment ...... 25.2 ...... 25.2 ...... Application Producers & Consumers Total ...... 1,826.1 ($192.3) 1,633.8 89.4 Total Producer ...... 762.2 ...... 41.7 Total Consumer ...... 1,063.8 ...... 58.3 Construction ...... 744.0 ($91.1) 653.0 ...... Agriculture ...... 524.3 ($61.8) 462.5 ...... Manufacturing ...... 557.8 ($39.4) 518.3 ...... Fuel Producers Total ...... 11.2 ...... 11.2 0.6 PADD I&III ...... 5.6 ...... 5.6 ...... PADD II ...... 4.6 ...... 4.6 ...... PADD IV ...... 0.2 ...... 0.2 ...... PADD V ...... 0.8 ...... 0.8 Transportation Services, Total ...... 95.7 ($35.1) 60.6 3.3 Locomotive ...... 2.0 ($7.2) ($5.2) ...... Marine ...... 1.1 ($11.6) ($10.5) ...... Application markets not included in NDEIM ...... 92.6 ($16.3) 76.3 ......

Total ...... 2,055.7 ($227.4) $1,828.3 100.0%

2030

Engine Producers Total ...... 0.1 ...... 0.1 0.0 Equipment Producers Total ...... 5.9 ...... 5.9 0.3 Construction Equipment ...... 4.0 ...... 4.0 ...... Agricultural Equipment ...... 1.9 ...... 1.9 ...... Industrial Equipment ...... 0.1 ...... 0.1 ...... Application Producers & Consumers Total ...... 2,112.3 ($154.2) 1,958.1 95.7 Total Producer ...... 882.2 ...... 41.7 Total Consumer ...... 1,230.1 ...... 58.3 Construction ...... 863.8 ($73.0) 790.8 ...... Agriculture ...... 606.8 ($49.6) 557.2 ...... Manufacturing ...... 641.6 ($31.6) 610.0 ...... Fuel Producers Total ...... 13.2 ...... 13.2 0.6 PADD I&III ...... 6.7 ...... 6.7 ...... PADD II ...... 5.2 ...... 5.2 ...... PADD IV ...... 0.3 ...... 0.3 ...... PADD V ...... 1.0 ...... 1.0 ...... Transportation Services, Total ...... 109.1 ($39.9) 69.2 3.4 Locomotive ...... 2.5 ($7.8) ($5.3) ...... Marine ...... 1.4 ($13.6) ($12.2) ...... Application markets not included in NDEIM ...... 105.2 ($18.5) 86.7 ......

Total ...... 2,240.6 ($194.1) $2,046.4 100.0%

2036

Engine Producers Total ...... 0.2 ...... 0.2 0.0 Equipment Producers Total ...... 6.4 ...... 6.4 0.3 Construction Equipment ...... 4.3 ...... 4.3 ...... Agricultural Equipment ...... 2.0 ...... 2.0 ...... Industrial Equipment ...... 0.1 ...... 0.1 ...... Application Producers & Consumers Total ...... 2,287.4 ($155.7) 2,131.7 95.7 Total Producer ...... 955.5 ...... 41.7 Total Consumer ...... 1,331.9 ...... 58.3 Construction ...... 936.4 ($50.0) 862.7 ...... Agriculture ...... 657.8 ($73.7) 607.8 ...... Manufacturing ...... 693.2 ($31.9) 661.3 ...... Fuel Producers Total ...... 14.5 ...... 14.5 0.7 PADD I&III ...... 7.3 ...... 7.3 ...... PADD II ...... 5.8 ...... 5.8 ...... PADD IV ...... 0.3 ...... 0.3 ...... PADD V ...... 1.0 ...... 1.0 ...... Transportation Services, Total ...... 116.9 ($42.6) 74.3 3.3 Locomotive ...... 2.8 ($8.2) ($5.4) ...... Marine ...... 1.6 ($14.6) ($13.0) ...... Application markets not included in NDEIM ...... 112.5 ($19.8) 92.7 ......

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TABLE VI.F–2.—SUMMARY OF SOCIAL COSTS ESTIMATES ASSOCIATED WITH PRIMARY PROGRAM 2015, 2020, 2030, AND 2036—Continued [2002, $Million]a, b

Operating Market sur- savings Total Percent plus ($10 6) ($10 6)

Total ...... $2,425.3 ($198.4) $2,227.0 100.0 Notes: a Figures are in 2002 dollars. b Operating savings are shown as negative costs.

TABLE VI.F–3.—NATIONAL ENGINEER- standards. This section presents a standard was set first at 500 ppm and ING COMPLIANCE COSTS AND SO- summary of those alternative program then was reduced to 15 ppm. The two- CIAL COSTS ESTIMATES FOR THE options and our reasons for either step alternatives varied from the RULE (2004–2036) adopting or not adopting these options. proposed program in terms of both the timing and levels of the engine A. Summary of Alternatives [$2002; $Million] standards and the timing of the fuel For our Notice of Proposed standards. Option 2a was the same as Engineering Rulemaking (NPRM), we developed Year compliance Total social the proposed program except the 500 costs costs emissions, benefits, and cost analyses ppm fuel standard was introduced a for a number of alternative program year earlier, in 2006. Option 2b was the 2004 0 0 options involving variations in both the same as the proposed program except 2005 0 0 fuel and engine programs. The the 15 ppm fuel standard was 2006 0 0 alternatives we considered can be introduced a year earlier (in 2009) and 2007 ($17) ($18) categorized according to the structure of the trap-based PM standards began 2008 54 54 their fuel requirements: whether the 15 2009 54 54 earlier for all engines. Option 2c was the 2010 328 327 ppm fuel sulfur limit for nonroad diesel same as the proposed program except 2011 923 922 fuel is reached in two steps, like the the 15 ppm fuel standard was 2012 1,305 1,304 program we are finalizing today, or in introduced a year earlier in 2009 and 2013 1,511 1,510 one step. Within each of these two the trap-based PM standards began 2014 1,691 1,690 broad fuel program categories, we earlier for engines 175–750 hp. Option 2015 1,742 1,741 considered a number of different engine 2d was the same as the proposed 2016 1,743 1,743 programs. This section summarizes the program except the NOX standard was 2017 1,763 1,762 alternatives. A more detailed reduced to 0.30 g/bhp-hr for engines of 2018 1,778 1,778 2019 1,795 1,795 description of the alternatives can be 25–75 hp, and this standard was phased 2020 1,829 1,828 found in the NPRM and the draft RIA. in. Finally, Option 2e was the same as 2021 1,816 1,815 One-step alternatives were those in the proposed program except there were 2022 1,819 1,818 which the 15 ppm fuel sulfur standard no new Tier 4 NOX limits. 2023 1,844 1,843 for nonroad diesel fuel is applied in a In the NPRM, option 3 was identical 2024 1,858 1,857 single step. We evaluated three one-step to the proposed program, except that it 2025 1,888 1,887 alternatives, summarized in table VII–1. would have exempted mining 2026 1,921 1,920 Option 1 represented an engine program equipment over 750 hp from the Tier 4 2027 1,954 1,952 that was similar to that in our proposed standards. We explained in detail in 2028 1,985 1,984 2029 2,017 2,016 program, the primary difference being section 12.6.2.2.7 of the draft RIA that 2030 2,047 2,046 the generally earlier phase-in dates for we had very serious reservations 2031 2,078 2,077 the PM standards. We considered the regarding the legality of this option 2032 2,108 2,107 Option 1 engine program as being the given these engines’ high emission rates 2033 2,139 2,137 most stringent one-step program that of PM, NOX and NMHC and the 2034 2,169 2,167 could be considered even potentially availability of further emissions control 2035 2,198 2,197 feasible considering cost, lead-time, and at reasonable cost. We adhere to these 2036 2,228 2,227 other factors. Option 1 also included a conclusions here. We do note, however, NPV at 3% 27,247 27,232 June 2008 start date for the 15 ppm that we are adopting somewhat different NPV at 7% 13,876 13,868 sulfur standard applicable to nonroad provisions for this engine category than diesel fuel and the 500 ppm sulfur we proposed. As explained in sections VII. Alternative Program Options standard applicable to locomotive and II.A. and II.B above, although we have Considered marine fuel. We also considered two adopted aftertreatment-based PM Our final emission control program other one-step alternatives which differ standards for these engines, the for nonroad engines and equipment from Option 1. As described in table standards are slightly higher than those consists of a two-step program to reduce VII–1, Option 1b differed from Option 1 proposed to assure their technical the sulfur content of nonroad diesel fuel regarding the timing of the fuel feasibility. We also have deferred a in conjunction with Tier 4 engine standards, while Option 1a differed decision on whether to adopt standards. The rule also contains limits from Option 1 in terms of the engine aftertreatment-based standards for NOX on sulfur levels in locomotive and standards. Options 1a and 1b also for mobile machines with engines marine diesel fuel. As described in the differed from Option 1 by extending the greater than 750 hp. We also have draft Regulatory Impact Analysis for the 15 ppm fuel sulfur limit to locomotive provided ample lead time for these proposal, we evaluated a number of and marine diesel fuel. engines to comply with the Tier 4 alternative options with regard to the Two-step alternatives were those in standards, both in terms of the rule’s scope, level, and timing of the which the nonroad diesel fuel sulfur compliance dates (which include a 2015

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date for the final Tier 4 standards, one would continue indefinitely. The emissions control from these engines. year later than we proposed) and the Option 5b program was identical to the We thus do not see a basis in law or ABT and equipment manufacturer proposed program except that for policy to adopt either of these options. flexibilities. This lead time takes into engines under 75 hp only the 2008 In response to comments on our account the long design periods, high engine standards would be set, i.e. there NPRM we also investigated a number of cost, and low sales volumes of these would be no additional PM filter-based other variations in the engine standards engines. Thus, although we strongly standard in 2013 for 25–75 hp engines, as we developed our final rule. These disagree with the option of not adopting and no additional NOX + NMHC variations were generally related to the Tier 4 standards for these engines, we standard in 2013 for 25–50 hp engines. phase-in of engine standards in a do recognize their need for unique We are not adopting Options 5a or 5b number of different horsepower standards and compliance dates. in today’s action. As explained at 8.2.3 categories. A discussion of these Option 4 included applying the 15 of the Summary and Analysis of variations is provided in section II as ppm sulfur limit to both locomotive and Comments, and in sections 12.6.2.2.9 well as in various background marine diesel fuel in addition to and 12.6.2.2.10 of chapter 12 of the draft documents. nonroad fuel. On the basis of comments RIA, these options would forego Table VII–1 contains a summary of a received and additional analyses, we substantial PM and NOX + NMHC number of these alternatives. The have determined that a 15ppm sulfur emission reductions (on the order of expected emission reductions, costs, standard for locomotive and marine fuel hundreds of thousands of tons of each and monetized benefits associated with is appropriate, though we have included pollutant) which are feasible at them in comparison to the proposed certain options for utilization of off- reasonable cost. We note further that program were evaluated for the NPRM. specification fuel and transmix not many of these smaller engines operate Those analyses were not revised for this represented in our original Option 4. in populated areas and in equipment final rulemaking to reflect changes in This aspect of our final program is without closed cabs—in mowers, small our empirical models or assumptions. discussed in detail in section IV. construction machines, and the like— We received no new information that Options 5a and 5b were identical to where personal exposures to toxic would cause us to believe that the the proposed program except with emissions (both PM and air toxics relative impacts and differences for respect to standards for engines less which are part of the NMHC fraction) those alternative program options than 75 hp. Option 5a was identical to may be pronounced well beyond what relative to our final program would the proposed program except that no is indicated simply by a comparison of change enough to make an impact on new program requirements would be set nationwide emissions inventory our assessments of the feasibility or in Tier 4 for engines under 75 hp. estimates. We would also emphasize the appropriateness of the options. The Instead, Tier 2 standards and testing remarkable growth in recent sales and remainder of this section will requirements for engines under 50 hp, usage for these smaller diesel machines, summarize some of the comments we and Tier 3 standards and testing and we expect this trend to continue, received on the options and our requirements for 50–75 hp engines, pointing up the need for effective PM responses to those comments.

TABLE VII–1.—SUMMARY OF ALTERNATIVE PROGRAM OPTIONS

Option Fuel Standards Engine Standards a

Final program

• 500 PPM in 2007 for NR, loco/marine ...... • <75 hp: PM standards in 2008 • 15 ppm in 2010 for NR ...... • 25–75 hp: PM AT-based standards in 2013 • 15 ppm in 2012 for loco/marine ...... • 75–175 hp: PM AT-based standards in 2012 • 175–750 hp: PM AT-based standards in 2011 • 75–175 hp: NOX AT-based standards phase-in 2012–2014 • 175–750 hp: NOX AT-based standards phase-in 2011–2014 • >750 hp: PM and NOX AT phased-in 2011 and 2015

1-Step Fuel Options

1 ...... • 15 ppm in 2008 for NR and loco/marine ...... • <50 hp: PM stds only in 2009 • 25–75 hp: PM AT stds and EGR or equivalent NOX technology in 2013; no NOX AT • >75 hp: PM AT stds phasing in beginning in 2009; NOX AT phasing in beginning in 2011 1a ...... • 15 ppm in 2008 for NR, loco/marine ...... • PM AT introduced in 2009–10 • NOX AT introduced in 2011–12 1b ...... • 15 ppm in 2006 for NR, loco/marine ...... Same as 1a

2-Step Fuel Options

2a ...... Same as proposed program except— ...... Same as proposed program • 500 ppm in 2006 for NR, loco/marine. 2b ...... Same as proposed program except— ...... Same as proposed program except— • 15 ppm in 2009 for NR and loco/marine ...... • Move PM AT up 1 year for all engines >25 hp (phase in starts 2010) 2c ...... Same as proposed program except— ...... Same as proposed program except— • 15 ppm in 2009 for NR and loco/marine ...... • Move PM AT up 1 year for all engines 175–750 hp (phase in starts 2010) 2d ...... • Same as proposed program ...... Same as proposed program except—

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TABLE VII–1.—SUMMARY OF ALTERNATIVE PROGRAM OPTIONS—Continued

Option Fuel Standards Engine Standards a

• Phase-in NOX AT for 25–75hp beginning in 2013

Other Options

3 ...... • Same as proposed program ...... Same as proposed program except— • Mining equipment over 750 hp left at Tier 2 4 ...... Same as proposed program except— ...... Same as proposed program • Downgrade flexibilities for loco/marine not included. 5a ...... • Same as proposed program ...... Same as proposed program except— • No Tier 4 standards <75 hp 5b ...... • Same as proposed program ...... Same as proposed program except— • No new <75hp standards after 2008 (i.e., no CDPFs in 2013) Notes: a AT = aftertreatment.

B. Introduction of 15 ppm Nonroad standards and nonroad engine retrofits C. Applying the 15 ppm Sulfur Cap to Diesel Sulfur Fuel in One Step can also be introduced earlier. Locomotive and Marine Diesel Fuel EPA carefully evaluated an alternative The reasons provided in the NPRM In the NPRM, we requested comment which would require that the nonroad for choosing the two step program over on extending the 15 ppm cap to diesel sulfur level be reduced to 15ppm the one-step program still apply and locomotive and marine diesel fuel in in a single step, beginning June 1, 2008. generally address the comments 2010 or some later year as part of this The one-step fuel options, including the received (see section 12.6.2 of the draft rule. The costs and inventory impacts of three variations Option 1, Option 1a, RIA). Although there would be greater this alternative were explored in the and Option 1b, were presented and PM and NOX emission reductions with context of Option 4 in the NPRM. A discussed in detail in the NPRM and in the one-step approach due to earlier 15ppm sulfur cap for locomotive and the draft RIA. introduction of aftertreatment marine fuel would increase the long- Many comments were received about technology enabled by the 15 ppm term PM and SO2 benefits of the rule a one step diesel fuel sulfur control sulfur diesel fuel, the SO2 emission and would reduce the number of fuels approach taking effect in 2008. Refiners benefits for the two-step approach are being carried in the distribution system commented that they did not think that greater due to the earlier adoption of the after 2014, when the small refiner they could reduce both the highway and 500 ppm sulfur standard. Thus, even provisions of this rule expire. It would nonroad diesel fuel pools down to 15 assuming that the one-step approach also allow refiners to plan to comply ppm in the same timeframe while would not jeopardize implementation of with the 15 ppm cap for locomotive and maintaining the supply of these two the highway diesel emission rule, the marine diesel fuel at the same time as diesel fuel pools. The refiners went on emission impacts of these two options they plan to comply with the 500 ppm to say that having a 500 ppm outlet for are mixed. Moreover, the costs for cap for NRLM fuel and the 15 ppm cap off-specification material in the nonroad achieving the second step (15 ppm) of for nonroad fuel. diesel fuel pool is critical in the years the two step approach are likely to be As a result of comments received and after reducing the highway diesel fuel lower than under the one step approach. additional analyses performed since the pool to 15 ppm to ensure supply of This is because advanced NPRM, we are finalizing a 15 ppm highway fuel. The refining industry desulfurization technologies are much sulfur cap for locomotive and marine further commented that the one step more likely to be used in 2010 after fuel in today’s notice. A full discussion program would provide fewer additional testing and demonstration, of the feasibility and benefits of a 15 environmental benefits and also provide while they may hardly be considered at ppm sulfur cap for locomotive and the refining industry less time and all if they would have to be installed for marine fuel can be found in section IV, flexibility to make the transition to the 2008. One advanced desulfurization along with a summary of the comments 15 ppm sulfur level for nonroad diesel technology, Process Dynamics we received and our responses to those fuel compared to a two step approach. Isotherming, is expected to lower the comments. In addition, we are planning While many environmental a separate rule to implement new cost of complying with the 15 ppm step organizations and the Engine emission standards for locomotive and by about one cent per gallon. This cost Manufacturers Association (EMA) marine diesel engines that will build discrepancy is expected to persist since commented that they preferred a 15 upon the 15 ppm sulfur standard it is associated with the investment of ppm standard as soon as possible, EMA applicable to fuel used by these engines. significant capital which cannot be also pointed out that a quick transition We are publishing an Advanced Notice modified or replaced without significant to 500 ppm would provide important of Proposed Rulemaking in another additional expense. Additionally, under fleet-wide emission reductions, reduce section of today’s Federal Register maintenance costs and enable the use of the two step program, refiners will be describing our plans in this area. certain emission control technology able to use their experience in such as exhaust gas recirculation and complying with 15 ppm highway diesel D. Other Alternatives oxidation catalysts. Commenters fuel sulfur standard to better design We also analyzed a number of other generally said little about the engine their nonroad hydrotreaters needed for alternatives in the NPRM, as standards associated with the one-step 2010. summarized in table VII–1. Some of options, other than to point out that After careful consideration of these these focused on control options more earlier introduction of 15 ppm sulfur matters, we have decided to finalize the stringent than our final program while fuel means that aftertreatment-based two-step approach in today’s action. others reflect modified engine

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requirements that result in less stringent 0.02 g/hp-hr PM standard for 50–75 hp responsibility for the review. We have control. In the NPRM we presented our engines in 2012. We assume that not yet worked out process details for assessment of these options in terms of manufacturers would only choose this the review, but will do so at some later the feasibility, emission reductions, option if they had confidence that they date. costs, and other relevant factors. Few could meet the 0.02 g/hp-hr standard in Several commenters strongly stressed comments were received on these other 2012, a year earlier than otherwise the need for EPA to work with alternatives, and no new information required. governmental standards-setting bodies arose to alter what we believe are Numerous commenters expressed in other countries to harmonize future significant concerns with respect to support for the planned technology standards. As discussed in section these Options compared to the final review. MECA and STAPPA/ALAPCO II.A.8, we recognize the importance of program. Hence, with the exception of stressed that the review should not be harmonizing nonroad diesel standards the few alternative program elements limited to considering the need to relax and have worked diligently with our that we did incorporate into our final PM filter-based standards for small colleagues responsible for setting such program as described earlier in this engines, but should also consider standards outside the U.S., thus far with section, we did not include these technology innovations that would good success. The March 2004 Directive options into our final program. Our justify increasing the stringency of small that sets future nonroad diesel standards detailed responses to all the comments engine standards that are not currently in the European Union (EU) will very received on the other alternatives can be aftertreatment-based. This is indeed our closely align the EU program with our 251 found in section 8 of the Summary and intent. Yanmar suggested that the program in the Tier 4 timeframe. Analysis of Comments document. review be deferred to 2010 or later, Further enhancing prospects for close harmonization, the Directive includes VIII. Future Plans because NOX control experience from highway diesels will not be sufficient by plans for a future technical review: The above discussion describes the ‘‘There are still some uncertainties contents of this final rule. This section 2007. On the contrary, based on the rate of technology development progress to regarding the cost effectiveness of using addresses a variety of areas not after-treatment equipment to reduce addressed by this rule. In these several date for highway engines, we believe that there will be a very large amount emissions of particulate matter (PM) and areas, we expect to continue our efforts of oxides of nitrogen (NOX). A technical to improve our compliance programs of pertinent new information available by 2007, even though widespread field review should be carried out before 31 and achieve further reductions in December 2007 and, where appropriate, emissions from nonroad engines. experience may be lacking. Waiting longer to conduct the technology review exemptions or delayed entry into force A. Technology Review would, we believe, provide insufficient dates should be considered.’’ Note that the timing for this review leadtime to the industry should an As we described in sections III.E and coincides with that of our own planned adjustment to the 2013 standards be G of the proposal, there are some review. Among other things, both our found appropriate. Some engine and technology issues that warrant our review and the EU review will consider equipment manufacturers called for planning a future review of emissions the appropriate long-term standards for expanding the technology review to control technology for engines under 75 engines between 25 and 50 hp, engines other power categories. As discussed in hp. Under our implementation schedule for which we have set PM-filter based the proposal, we do not believe that a presented in section II.A, standards standards and for which the EU has not. generalized technology review of the based on the use of PM filter technology Furthermore, in addition to re- sort being conducted for the heavy-duty will take effect in the 2013 model year evaluating the standards, the EU highway engine program is warranted, for 25–75 hp engines (or in the 2012 technical review will consider the need primarily due to the very fact that the model year for manufacturers opting to to introduce standards for engines nonroad standards are modeled on the skip the transitional standards for 50–75 below 25 hp and above 750 hp, the two highway program, and the highway hp engines). However, at this time we categories for which the EU has not yet program does include this have not decided what long-term PM set emission standards, and for which comprehensive review. We also do not standards for engines under 25 hp are harmonization is thus most lacking. We see the specific technical issues for appropriate. No PM filter-based are greatly encouraged by the degree of engines above 75 hp that have been standards are being adopted for these harmonization achieved thus far, and, identified for smaller engines, such as under 25 hp engines in this final rule. given our common interests, issues and might warrant our expanding the review Likewise, we have not decided what the planned timing, expect to work closely at this time. Engine manufacturers also long-term NOX standards for engines with Commission staff in carrying out expressed interest in a consultative under 75 hp should be, and no NOX the 2007 technology review, with an process in the near future that would adsorber-based standards are being set aim of preserving and enhancing establish the scope, outputs, and criteria for these engines in this final rule. As harmonization of standards. for the review, possibly including part of the technology review, we plan In response to comments received on assigning responsibility for the review to thoroughly evaluate progress made the proposal, we wish to clarify that the to an independent entity. Although we toward applying advanced PM and NOX technology review for engines under 75 plan and hope to have the active control technologies to these smaller hp will be a comprehensive undertaking participation of all interested parties in engines. that may result in adjustments to the review process, assigning We plan to conduct the technology standards, implementation dates, or responsibility for the review to groups review in 2007, and to conclude it by other provisions (such as flexibilities) in or individuals outside the Agency the end of that year, to give either direction (that is, toward more or would be inappropriate. As the review manufacturers lead time should an less stringency), depending on would be closely tied to potential adjustment in the program be conclusions reached in the review about considered appropriate. We do not subsequent rulemaking action by the intend to include in the technology Agency, it is essential that it adequately 251 Council of the European Union, ≥Directive of review a reassessment of PM filter cover the relevant issues. To ensure this, the European Parliament and of the Council technology needed to meet the optional it is imperative that we retain overall amending Directive 97/68/EC,≥ March 15, 2004.

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appropriate standards under the Clean adapt the requirements as needed to We are concurrently publishing an Air Act. All relevant factors including appropriately address diagnostic needs Advance Notice of Proposed technical feasibility and commercial for nonroad diesel engines. These Rulemaking that describes the emission- viability of engines and machines programs would likely be very similar, control program we are contemplating designed to meet the standards will be but the diagnostics for nonroad engines for these engines. After consideration of taken into account. my need to differ in some ways, comments submitted on the Advance Notice, we will publish a Notice of B. Test Procedure Issues depending on the technologies used by different types and sizes of engines and Proposed Rulemaking. Our proposal Section III describes two issues on an assessment of an appropriate level will be subject to comment before its related to test procedures that warrant of information and control for engines expected completion in the 2006 time further attention in the future. First, we used in nonroad applications. frame. are adopting transient test procedures The engine emission control program for engines subject to Tier 4 emission E. Future NOX Standards for Engines in to be described in the Advance Notice standards, but we intend to collect data Mobile Machinery Over 750 hp will cover all locomotive engines that would help us adopt a duty cycle In section II.A.4, we explain that we subject to 40 CFR part 92 and all marine that would appropriately test constant- diesel engines with displacement below are not, at this time, setting Tier 4 NOX speed engines. Second, we are adopting standards for mobile machinery over 30 liters per cylinder. Note that the rule cold-start test procedures, but are 750 hp based on the performance of will therefore cover marine diesel interested in collecting additional data high-efficiency aftertreatment, although engines below 37 kW, which are that could be used to revise those currently regulated through Tier 3 with we note that the 2.6 g/bhp-hr NOX procedures if appropriate. standard taking effect for these engines land-based nonroad engines in 40 CFR C. In-Use Testing in 2011 represents a more than 60% part 89. The rule will also address both recreational and commercial marine Although this final rule does not NOX reduction from the 6.9 g/bhp-hr Tier 1 level in effect today, and a more diesel engines with displacement below include an in-use testing program for 30 liters per cylinder. Marine engines at nonroad diesel engines, we expect to than 40% reduction from the 4.8 g/bhp- hr NO +NMHC Tier 2 standard level or above 30 liters per cylinder typically establish such a program for the future X use a different kind of fuel, residual in a separate rulemaking action. The that takes effect in 2006. We are still evaluating the issues involved for these fuel, and will be considered in a goal of this program will be to ensure separate rulemaking to be finalized by engines to achieve a more stringent NO that emissions standards are met X April 27, 2007, pursuant to a regulatory standard, and believe that these issues throughout the useful life of the engines, provision adopted in our recent rule are resolvable. We intend to continue under conditions normally experienced setting standards for those engines (68 evaluating the appropriate long-term in-use. The Agency expects to pattern FR 9783, February 28, 2003). the in-use testing requirements for NOX standard for mobile machinery nonroad diesel engines after a program over 750 hp and expect to announce G. Retrofit Programs that is being developed for heavy-duty further plans regarding these issues, In the proposal, we requested diesel highway vehicles. This program perhaps as early as 2007. comment on setting voluntary new will be funded and conducted by the F. Emission Standards for Locomotive engine emission standards applicable to manufacturer’s of heavy-duty diesel and Marine Diesel Engines the retrofit of nonroad diesel engines. highway engines with our oversight. We As described in section III.A, we are not expect it will incorporate a two-year This final rule adopts limited adopting a retrofit credit program with pilot program. The pilot program will requirements to limit sulfur levels in today’s action. We believe it is allow the Agency and manufacturers to distillate fuels used in locomotive and important to more fully consider the gain the necessary experience with the many marine diesel engines, which will details of a retrofit credit program and in-use testing protocols and generation help reduce PM emissions from these work with interested parties in of in-use test data using portable engines. In an upcoming rulemaking, we determining whether a viable program emission measurement devices prior to will consider an additional tier of NOX can be developed. EPA intends to fully implementing program. A similar and PM standards for marine diesel explore the possibility of a voluntary pilot program is expected to be part of engines less than 30 liters per cylinder nonroad retrofit credit program through any manufacturer-run, in-use NTE test and for locomotive engines. These future action. standards would reflect the application program for nonroad engines. H. Reassess the Marker Specified for The Agency plans to promulgate the of advanced emission-control Heating Oil in-use testing requirements for heavy- technology, including the potential to duty highway vehicles in the December use the high-efficiency catalytic As discussed in sections IV and V, we 2004 time frame. We anticipate emission-control devices like those are requiring that the chemical marker proposing a manufacturer-run, in-use described elsewhere in this preamble. In solvent yellow 124 (SY–124) be added testing program for nonroad diesel developing these new standards, we to heating oil outside of the Northeast/ engines by 2005 or earlier. As will consider the substantial overlap in Mid-Atlantic Area. We received mentioned above, the nonroad diesel engine technology between the comments from the American Society of engine program is expected to be locomotive and marine engines and the Testing and Materials (ASTM), the patterned after the heavy-duty highway nonroad engines covered by this final Coordinating Research Council (CRC), program. rule. We will also take into account the the Department of Defense (DoD), and unique features associated with the Federal Aviation Administration D. Engine Diagnostics locomotive and marine engines (and (FAA) requesting that we delay We are also in the process of defining their respective markets) and the extent finalizing the selection of a specific diagnostic requirements that would to which these differences may marker for use in this final rule due to apply to highway diesel engines. Once constrain the feasibility of applying concerns for jet fuel contamination. we have adopted requirements for advanced emission control technologies ASTM withdrew its request for a highway engines, we would aim to to those engines. postponement in the regulation, given

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that this final rule requires addition of rulemaking process, EPA met with President’s priorities, or the principles the marker at the terminal, rather than stakeholders including representatives set forth in the Executive Order. the refinery gate as proposed. This from the fuel refining and distribution A final Regulatory Impact Analysis eliminates most of the concern industry, engine and equipment has been prepared and is available in regarding jet fuel contamination. manufacturing industries, emission the docket for this rulemaking and at the However, ASTM stated that some control manufacturing industry, internet address listed under ‘‘How Can concern remains regarding jet fuel environmental organizations, states, I Get Copies of This Document and contamination downstream of the agricultural interests, and others. Other Related Information?’’ above. This terminal. Nevertheless, ASTM related A detailed Response to Comments action was submitted to the Office of that these concerns need not delay document was prepared for this Management and Budget for review finalization of the marker requirements rulemaking that describes the comments under Executive Order 12866. Estimated in this rule, since a CRC program to that we received on the proposal along annual costs of this rulemaking are evaluate these concerns is expected to with our response to each of these estimated to be $2 billion per year, thus be completed well before SY–124 must comments. The Response to Comments this proposed rule is considered be added to heating oil. FAA is also document is available in the air docket economically significant. Written undertaking an effort to identify fuel and e-docket for this rule, as well as on comments from OMB and responses markers that would be compatible for the Office of Transportation and Air from EPA to OMB comments are in the use in jet fuel. Quality homepage. In addition, public docket for this rulemaking. We also received comments from the comments and responses for many key B. Paperwork Reduction Act heating oil industry and the Department issues are included throughout this of Defense, which expressed concerns preamble. The information collection regarding the potential health effects requirements in this rule have been and maintenance impacts on heating oil X. Statutory and Executive Order submitted for approval to the Office of equipment from the use of SY–124 in Reviews Management and Budget (OMB) under heating oil. As discussed in section V, A. Executive Order 12866: Regulatory the Paperwork Reduction Act, 44 U.S.C. we believe these concerns have been Planning and Review 3501 et seq. The information collection adequately addressed for us to specify requirements are not enforceable until the use of SY–124 in this final rule. The Under Executive Order 12866 (58 FR OMB approves them. The OMB control EU has required the use of SY–124 in 51735, October 4, 1993), the Agency number for engine-related information heating oil since August 2002. The EU must determine whether the regulatory collection is 2060–0460 (EPA ICR intends to re-evaluate the use of SY–124 action is ‘‘significant’’ and therefore number 1897.07) and for fuel-related after December 2005 or earlier if they subject to review by the Office of information collection is 2060–0308 learn of any health, safety, or Management and Budget (OMB) and the (EPA ICR number 1718.07). environmental concerns from their in- requirements of this Executive Order. We will use the engine-related use experience with SY–124. The Executive Order defines a information to ensure that new nonroad We will keep abreast of the ASTM, ‘‘significant regulatory action’’ as any diesel engines comply with emission CRC, FAA, IRS, and EU activities and regulatory action that is likely to result standards through certification in a rule that may— requirements and various subsequent commit to a review of our use of SY– • 124 under today’s rule based on these Have an annual effect on the compliance provisions. This findings. If alternative markers are economy of $100 million or more or information collection is mandatory identified that do not raise concerns adversely affect in a material way the under the provisions of 42 U.S.C. 7401– regarding the potential contamination of economy, a sector of the economy, 7671(q). We will use the fuel-related jet fuel, we will initiate a rulemaking to productivity, competition, jobs, the information to ensure that diesel fuel evaluate the use of one of these markers environment, public health or safety, or meets the sulfur limits and in place of SY–124. State, Local, or Tribal governments or corresponding requirements related to communities; marking and segregating the different IX. Public Participation • Create a serious inconsistency or types and grades of diesel fuel. This Many interested parties provided otherwise interfere with an action taken information collection is mandatory their input on the proposed rulemaking or planned by another agency; under the provisions of 42 U.S.C. during our public comment period. This • Materially alter the budgetary 7545(c), (g) and (i), and 7625–1. comment period, along with the three impact of entitlements, grants, user fees, In addition, this notice announces public hearings that were held in New or loan programs, or the rights and OMB’s approval of the information York, Chicago, and Los Angeles, obligations of recipients thereof; or collection requirements for other provided ample opportunity for public • Raise novel legal or policy issues programs, as summarized in Table X.B– participation. Throughout the arising out of legal mandates, the 1.

TABLE X.B–1—APPROVED INFORMATION COLLECTION REQUESTS FROM OTHER PROGRAMS

OMB control EPA ICR num- Program Final rule cite number ber OMB approval

Nonroad spark-ignition engines over 19 kW ...... November 8, 2002 (67 FR 2060–0460 1897.04 January 31, 2003. 68242). Recreational vehicles ...... November 8, 2002 (67 FR 2060–0460 1897.04 January 31, 2003. 68242). Rebuilders of various types of engines ...... November 8, 2002 (67 FR 2060–0104 0783.46 June 11, 2003. 68242). Highway motorcycles ...... January 15, 2004 (69 FR 2060–0104 0783.46 March 26, 2004. 2398).

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The estimated annual public reporting agency. This includes the time needed existing ways to comply with any and recordkeeping burden for collecting to review instructions; develop, acquire, previously applicable instructions and information from all these programs is install, and utilize technology and requirements; train personnel to be able shown in Table X.B–2. Burden means systems for the purposes of collecting, to respond to a collection of the total time, effort, or financial validating, and verifying information, information; search data sources; resources expended by persons to processing and maintaining complete and review the collection of generate, maintain, retain, or disclose or information, and disclosing and information; and transmit or otherwise provide information to or for a Federal providing information; adjust the disclose the information.

TABLE X.B–2.—INFORMATION COLLECTION BURDENS

Operating and Hours per re- Hours for all Capital costs maintenance Total costs for Engine type Respondents spondent respondents for all re- costs for all re- all respond- spondents spondents ents

Nonroad diesel engine manufacturers ..... 75 3,304 247,783 $0 $5,894,802 $18,661,614 Diesel fuel suppliers ...... 2,615 75 196,288 1,800,000 1,800,000 18,371,600 Nonroad spark-ignition engine manufac- turers ...... 12 1,832 21,986 174,419 2,507,790 3,617,683 Recreational vehicle manufacturers ...... 39 684 26,669 1,627,907 2,137,115 4,869,253 Highway motorcycles ...... 46 32 1,449 0 23,686 79,428 Importers ...... 40 13 529 0 150,000 169,223 Rebuilders ...... 200 6 1,200 0 0 38,800

An agency may not conduct or Susan Auby, Collection Strategies C. Regulatory Flexibility Act (RFA), as sponsor, and a person is not required to Division, U.S. Environmental Protection Amended by the Small Business respond to a collection of information Agency (2822–T), 1200 Pennsylvania Regulatory Enforcement Fairness Act of unless it displays a currently valid OMB Ave., NW., Washington, DC 20460 or by 1996 (SBREFA), 5 U.S.C. 601 et seq. control number. The OMB control e-mail at [email protected]. EPA has decided to prepare a numbers for EPA’s regulations in 40 To comment on the Agency’s need for Regulatory Flexibility Analysis (RFA) in CFR are listed in 40 CFR part 9. When this information, the accuracy of the connection with this final rule. For this ICR is approved by OMB, the provided burden estimates, and any purposes of assessing the impacts of Agency will publish a technical suggested methods for minimizing today’s rule on small entities, a small amendment to 40 CFR part 9 in the respondent burden, including the use of entity is defined as: (1) A small business Federal Register to display the OMB automated collection techniques, EPA that is primarily engaged in the control number for the approved has a public docket for this rule, which manufacturing of nonroad diesel information collection requirements includes this ICR, under Docket ID engines and equipment that meets the contained in this final rule. EPA number OAR–2003–0012. Submit any definitions based on the Small Business received various comments on the comments related to the ICR for this rule Administration’s (SBA) size standards rulemaking provisions covered by the (see table X.C.–1 below); (2) a small to EPA and OMB. Address comments to ICRs, but no comments on the governmental jurisdiction that is a OMB by e-mail to paperwork burden or other information government of a city, county, town, in the ICRs. All comments that were [email protected] or fax to (202) school district, or special district with a submitted to EPA are considered in the 395–7285. Please do not send comments population of less than 50,000; and (3) relevant Summary and Analysis of to OMB via U.S. Mail. a small organization that is any not-for- Comments, which can be found in the profit enterprise which is independently docket. A copy of any of the submitted owned and operated and is not ICR documents may be obtained from dominant in its field.

TABLE X.C–1.—SMALL BUSINESS ADMINISTRATION SIZE STANDARDS FOR VARIOUS BUSINESS CATEGORIES

Major SIC a Industry Defined as small entity by SBA if: Codes

Engine manufacturers ...... Less than 1,000 employees ...... Major Group 35. Equipment manufacturers: —Construction equipment ...... Less than 750 employees ...... Major Group 35. —Industrial truck manufacturers (i.e. forklifts) ...... Less than 750 employees ...... Major Group 35. —All other nonroad equipment manufacturers ...... Less than 500 employees ...... Major Group 35. Fuel refiners ...... Less than 1500 employees b ...... 2911. Fuel distributors ...... ...... Notes: a Standard Industrial Classification. b EPA has included in past fuels rulemakings a provision that, in order to qualify for the small refiner flexibilities, a refiner must also have a company-wide crude refining capacity of no greater than 155,000 barrels per calendar day. EPA has included this criterion in the small refiner definition for a nonroad diesel sulfur program as well.

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Pursuant to 5 U.S.C. 603, EPA 2. Summary of Significant Public hp range not be based on performance prepared an Initial Regulatory Comments on the IRFA of aftertreatment technologies. Flexibility Analysis (IRFA) for the We received comments from engine Advocacy believed that the proposed proposed rule and convened a Small and equipment manufacturers, fuel flexibilities will not suffice on their own Business Advocacy Review Panel refiners, fuel distributors and marketers, to appropriately minimize the (SBAR Panel, or ‘‘the Panel’’) to obtain and consumers during the public regulatory burdens on small entities; advice and recommendations of comment period following the proposal and Advocacy noted that during the representatives of the regulated small of this rulemaking. All of the following SBREFA process some small equipment entities pursuant to 5 U.S.C. 609(b) (see comments were taken into account in manufacturers stated that although EPA 68 FR 28518–28521, May 23, 2003). A developing today’s final rule. Responses would allow some equipment to be sold detailed discussion of the Panel’s advice to these comments are located in which would not require new emissions and recommendations can be found in subsection 5 below, along with the controls, engine manufacturers would the Panel Report (Docket A–2001–28, description of the provisions that we are not produce or sell such equipment. Document No. II–A–172). See also finalizing to reduce the rule’s impact on Advocacy also commented that we have section III.C above. small businesses. More detailed not shown that substantial numbers of We have also prepared a Regulatory information in response to these small businesses have taken advantage Flexibility Analysis for today’s rule. The comments can be found in sections III.C. of previous small business flexibilities, Regulatory Flexibility Analysis (Engine and Equipment Small Business or that small businesses would be able addresses the issues raised in public Provisions) and IV.B (Hardship Relief to take advantage of the flexibilities comments on the IRFA, which was part Provisions for Qualifying Refiners) of under this rule. Lastly, Advocacy of the proposal of this rule. The this preamble. Additional detail may commented that although full Regulatory Flexibility Analysis is also be found in the Final Regulatory compliance with the more stringent available for review in the docket and is Flexibility Analysis, located in the emissions controls requirements would summarized below. The key elements of Regulatory Impact Analysis, as well as be delayed for small manufacturers, a regulatory flexibility analysis in the Summary and Analysis of small business manufacturers include— Comments for this final rule. eventually will be required to produce equipment meeting the new —The need for, and objectives of, the a. Public Comments Received on Engine requirements. rule; and Equipment Standards —The significant issues raised by public b. Public Comments Received on Fuel One small engine manufacturer comments, a summary of the Agency’s Standards commented that the proposed assessment of those issues, and a provisions for small business engine i. General Comments on Small Refiner statement of any changes made to the manufacturers are appropriate and Flexibility proposed rule as a result of those strongly supported their inclusion in the comments; One small refiner commented that it final rule. The manufacturer raised is not feasible at this time to evaluate —The types and number of small many concerns of why it believes that the impact of the three fuels regulations entities to which the rule will apply; it is necessary to include provisions, on the refining industry (and small —The reporting, recordkeeping and such as: Larger/higher-volume refiners), however it stated that we other compliance requirements of the manufacturers will have priority in should continue to evaluate the impacts rule; and supply of new technologies and will and act quickly to avoid shortages and —The steps taken to minimize the have more R&D time to complete price spikes and we should be prepared, impact of the rule on small entities, development of these systems before if necessary, to act quickly in consistent with the stated objectives they are available to smaller considering changes in the regulations of the applicable statute. manufacturers; smaller manufacturers to avoid these problems. We also 1. Need for and Objectives of the Rule do not command the same amount of received comment that some small attention from potential suppliers of refiners that produce locomotive and Controlling emissions from nonroad critical technologies for Tier 4 controls, marine fuels fear that future sulfur engines and equipment, in conjunction and are thus concerned that they may reductions to these markets could be with controls on sulfur concentrations not be able to attract a manufacturer to very damaging. in diesel fuel, has very significant work with them on the development of public health and welfare benefits, as compliant technologies. This small ii. Comments on the Small Refiner explained in section I of this preamble. manufacturer believes that the Definition We are finalizing new engine standards additional three-year time period A small refiner commented that the and related provisions under sections proposed for small engine proposed redefinition of a small refiner 213(a)(3) and (4) of the Clean Air Act manufacturers in the NPRM is necessary (to not grandfather as small refiners which, among other things, direct us to for the company, and is their estimate those that were small for highway establish (and from time to time revise) of the time that it will take for these diesel) would both negate the benefits emission standards for new nonroad technologies to be available to small afforded under the small refiner diesel engines. Similarly, section engine manufacturers. provisions in the Highway Diesel Sulfur 211(c)(1) authorizes EPA to regulate The Small Business Administration’s rule and disqualify its status as a small fuels if any emission product of the fuel Office of Advocacy (‘‘Advocacy’’) raised refiner. The small refiner is, however, in causes or contributes to air pollution the concern that the rule would impose support of the addition of the capacity that may endanger public health or significant burdens on a substantial limit in the small refiner definition welfare, or that may impair the number of small entities producing which will correct the problem of the performance of emission control engines of 75 hp or less, with little inadvertent loop-hole in the two technology on engines and vehicles. We corresponding environmental benefit. previous fuel rules. Though the refiner are finalizing new fuel standards today Advocacy therefore recommended that is concerned that the wording of the for both of these reasons. PM standards for engines in the 25–75 proposed language may result in small

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refiners such as itself, who grew by believes that it is important that a small concentrated in these states, namely normal business practice, being refiner be able to use Options 1, 2, and Washington and Oregon—states which disqualified as small refiners. The 3 in combination with each other, and are served primarily by refineries that refiner suggested that we clarify the stated that we need to clarify the intent will be allowed to delay compliance language and include provisions for in the final rule. The small refiner also with the ULSD standards until 2014. continuance of small refiner flexibility commented that the provisions in 40 Therefore, the group commented, for refiners who qualified under the CFR 80.553 and 80.554 are not clear and residents of these areas are denied air Highway Diesel Sulfur rule (and have should be revised to clarify their intent. quality benefits equivalent to those not been disqualified as the result of a Specifically, the refiner questioned promised the rest of the country. Those merger or acquisition). whether or not a small refiner who seeking to purchase and use equipment committed to producing ULSD by June in these areas will be subject to the iii. Comments on the Baseline Approach 1, 2006 in exchange for an extension of ULSD standard regardless of fuel supply A coalition of small refiners provided its interim gasoline sulfur standards and availability in their area, would be comments on a few aspects of concern. (under 40 CFR 80.553) could elect to faced with misfueling, deferring The small refiners believe that the fuel exercise the options allowed under 40 purchase of new equipment, or paying segregation, and ensuing marking and CFR 80.554. a premium for a ‘‘boutique’’ fuel. dying, provisions are quite complex. A small refiner raised the concern that One small refiner believes that the small refiner Option 4 only provides vi. Comments on Inclusion of a Crude mandating a minimum volume of NRLM an adjustment to those small refiners Capacity Limit for Small Refiners and production would conflict with the whose small refiner gasoline sulfur Leadtime Afforded for Mergers and purpose of maintaining adequate on- standards were established through the Acquisitions highway volumes of 15 ppm sulfur fuel hardship process of 40 CFR 80.240. The A non-small refiner supported the and unnecessarily restricts small small refiner suggested that we finalize inclusion of the 155,000 bpcd limit, but refiners, and offered suggestions in their a compliance option that allows a 20 suggested that we limit the provision of comments on how to improve the percent increase in small refiner affording a two-year leadtime to small language. In addition, the small refiner gasoline sulfur standards be extended to refiners who lose their small status due believes that mandating a minimum all small refiners, not just those with to merger or acquisition to the case volume of NRLM production would standards established pursuant to 40 where a small refiner merges with conflict with the purpose of maintaining CFR 80.240(a), and offers suggested another small refiner. Further, the adequate on-highway volumes of 15 language in its comments. refiner commented that it would be ppm sulfur fuel and unnecessarily inappropriate to allow such small restricts small refiners, and offered v. Comments on Emission Impacts of refiners to be able to generate credits for suggestions in their comments on how the Small Refiner Provisions ‘‘early’’ production of lower sulfur to improve the language. A state environmental group diesels during this two-year leadtime. commented that the provisions for small Lastly, the refiner commented that a iv. Comments on Small Refiner ‘‘Option refiners raise substantial environmental small refiner which acquires a non- 4’’ concerns. The group is concerned that small refiner, and thus loses its small A coalition of small refiners these provisions will allow small refiner status, should not be eligible for commented that if the final rule is not refiners the ability to produce gasoline hardship provisions. Another issued before January 1, 2004, a with an unknown sulfur content for an commenter stated that if we were to provision should be made to unknown length of time; this fuel may finalize the 155,000 bpcd limit, we accommodate those small refiners then be sold at the refiner’s retail outlet, should not apply it in cases of a merger planning to take advantage of the and may become the primary fuel for between two small refiners. The proposed small refiner ‘‘Option 4’’ (the some vehicles, which alters vehicle fleet commenter further stated that a merger NRLM/Gasoline Compliance option). A emissions performance. This of two small companies in a hardship small refiner echoed the concerns of the environmental group also commented condition does not imply improved small refiner coalition, commenting that that the absence of any process of financial health in the same way that an delayed finalization of the final rule notification regarding small business acquisition would. Another non-small would undermine the benefits of small provisions to notify States of these refiner commented that it supports the refiner flexibility Option 4. The small provisions is troubling. The concern is two-year lead time for refineries that refiner is concerned that a delay in that these deviations from fuel content lose their status as a small refiner; the issuing the rule, and subsequent delay that affects fuels consumed in states that refiner believes that any refiner with the in the opportunity to apply the interim use emissions inventories for air quality financial wherewithal to acquire gasoline flexibility, would negate its planning purposes, and can additional refineries to allow its crude opportunity to take full advantage of the significantly alter inventories. The capacity to exceed 155,000 bpcd should credits the refiner now has, as it would group suggested that in the future there not be able to retain status as a small not be able to comply with the 300 ppm should be greater communication from refiner. cap. The small refiner suggested that we us regarding decisions that impact the allow small refiners to apply for quality of fuels consumed in a state, and vii. Necessity of Small Refiner Program temporary relief and operate under the thus impact the quality of that state’s A non-small refiner provided Option 4 provision. Another small air. comment on the NPRM stating the belief refiner commented that, in the NPRM, it Another state environmental group that the proposed provisions for small was unclear if a small refiner could elect commented on the flexibility provisions refiners are not practical. The refiner is to use any or all of the first three of the for small refiners; the group is concerned that having provisions for small refiner provisions if it did not concerned that the exemption will not small refiners adds a level of elect to use Option 4. Further, the have a minor effect on the nation’s fuel complication, results in emissions refiner understood that if Option 4 was supply, as the state is an intermountain losses, increases the potential for ULSD chosen, a small refiner could not use western state. The group comments that contamination, and create an unfair any of the first three options. The refiner the impact of this exemption is situation in the marketplace. Similarly,

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another non-small refiner and a trade eight percent of the total nonroad engine 4. Reporting, Recordkeeping and Other group representing many refiners and sales for the year 2000. Compliance Requirements others in the fuels industry commented This section describes the expected that they oppose the extension of b. Nonroad Diesel Equipment Manufacturers burden of the compliance requirements compliance deadlines for small refiners, (for all manufacturers and refiners) for as this can result in inequitable We also used the industry profile to the standards being finalized in today’s situations that may affect the refining determine the number of nonroad small action. industry for some time and can put the business equipment manufacturers. EPA a. Nonroad Diesel Engine and distribution system at risk for identified over 700 manufacturers with contamination of lower sulfur fuels. Equipment Manufacturers sales and/or employment data that They further stated that all refiners will could be included in the screening For engine and equipment standards, face challenges in complying with the analysis. These businesses included we must have the assurance that engines upcoming standards and would not manufacturers in the construction, and/or equipment produced by significantly alter the business decisions manufacturers meet the applicable that small refiners would make. They agricultural, mining, and outdoor power equipment (mainly, lawn and garden standard, and will continue to meet this also stated that non-small refiners face standard as the equipment passes equipment) sectors of the nonroad similar issues with their older and/or through to the ultimate end user. We are diesel market. The equipment produced smaller refineries, but will not have the continuing many of the reporting, benefit of being able to postpone making by these manufacturers ranged from recordkeeping, and compliance these decisions as small refiners will. small walk-behind equipment (sub-25 requirements prescribed for nonroad hp engines) to large mining and engines and equipment, as set out in 40 viii. Comments on Fuel Marker construction equipment (using engines CFR part 89. These include, certification in excess of 750 hp). Of the We received comments from terminal requirements and reporting of operators stating that the proposed manufacturers with available sales and production, emissions information, use heating oil marker requirements would employment data (approximately 500 of transition provisions, etc. The types force small terminal operators to install manufacturers), nonroad small business of professional skills required to prepare expensive injection equipment and that equipment manufacturers represent 68 reports and records are also similar to they would not be able to recoup the percent of total nonroad equipment the types of skills that were needed to costs. manufacturers (and these manufacturers meet the regulatory requirements set out accounted for 11 percent of nonroad in 40 CFR part 89. Key differences in the 3. Types and Number of Small Entities diesel equipment industry sales in requirements of today’s rule as related 2000). to 40 CFR part 89 are the additional The small entities directly regulated testing and defect reporting. We are by this final rule are nonroad diesel c. Nonroad Diesel Fuel Refiners finalizing an increase in the number of engine and equipment manufacturers, data points (i.e., transient testing) that nonroad diesel fuel refiners, and Our current assessment is that 26 refiners (collectively owning 33 will be required for reporting emissions nonroad diesel fuel distributors and information. Also, as proposed, we are refineries) meet SBA’s definition of a marketers. These categories are requiring additional defect reporting for small business for the refining industry. described in more detail below, and the Tier 4 and later engines. We are The 33 refineries appear to meet both definitions of small entities in those requiring that manufacturers report to categories are listed in table X.C–1 the employee number and production us if they learn that a substantial above. volume criteria mentioned above. These number of their engines have emission- small refiners currently produce a. Nonroad Diesel Engine Manufacturers related defects. This is generally not a approximately 6 percent of the total requirement to collect information; Before beginning the SBREFA high-sulfur diesel fuel. It should be however if manufacturers learn that process, EPA conducted an industry noted that because of the dynamics in there are or might be a substantial profile for the nonroad diesel sector. We the refining industry (e.g., mergers and number of emission-related defects, have not received any new information acquisitions), the actual number of then they must send us information since that time and we continue to refiners that ultimately qualify for small describing the defects. believe that this is a valid refiner status under the nonroad diesel b. Nonroad Diesel Fuel Refiners, characterization of the industry. Using sulfur program could be different than Distributors, and Marketers information from the industry profile, this assessment. EPA identified a total of 61 engine For any fuel control program, we must manufacturers. The top 10 engine d. Nonroad Diesel Fuel Distributors and have the assurance that fuel produced manufacturers comprise 80 percent of Marketers by refiners meets the applicable standard, and that the fuel continues to the total market, while the other 51 The industry that transports, meet this standard as it passes companies make up the remaining 20 distributes, and markets nonroad diesel 252 downstream through the distribution percent. Of the 61 manufacturers, fuel encompasses a wide range of four fit the SBA definition of a small system to the ultimate end user. This is businesses, including bulk terminals, entity. These four manufacturers were particularly important in the case of bulk plants, fuel oil dealers, and diesel Anadolu Motors, Farymann Diesel diesel fuel, where the aftertreatment GMBH, Lister-Petter Group, and V & L fuel trucking operations, and totals technologies expected to be used to Tools (parent company of Wisconsin thousands of entities that have some meet the engine standards are highly Motors LLC, formerly ‘‘Wis-Con Total role in this activity. Over 90 percent of sensitive to sulfur. Many of the Power’’). These businesses comprised these entities meet small entity criteria. recordkeeping, reporting and Common carrier pipeline companies are compliance provisions of the today’s 252 All sales information used for this analysis also a part of the distribution system; 10 action are fairly consistent with those in was 2000 data. of them are small businesses. place today for other fuel programs,

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253 including the current 15 ppm highway 5. Regulatory Alternatives To Minimize • for NOX diesel regulation. For example, Impact on Small Entities —A three year delay in the program for recordkeeping involves the use of engines in the 25–50 hp and the 75– product transfer documents, which are Below we discuss the Panel 175 hp categories, consistent with the already required under the 15 ppm recommendations, EPA proposals, and one-phase approach recommendation highway diesel sulfur rule (40 CFR final regulatory alternatives to minimize above; the rule’s impact on small entities. More 80.560). Under today’s final rule we are • A small engine manufacturer could detailed information on the provisions adding additional recordkeeping and be afforded up to two years of hardship for these entities can be found in reporting requirements for refiners, (in addition to the transition sections III.C and IV.B of this preamble importers, and fuel distributors to flexibilities) upon demonstrating to EPA (for small business engine and implement the designate and track a significant hardship situation; equipment manufacturers and small provisions. However, interactions with • Small engine manufacturers would entities throughout the fuel distribution parties from all segments of the be able to participate in an averaging, system, respectively). distribution system indicated that the banking, and trading (ABT) program records necessary were analogous to a. Panel Recommendations (which we proposed as part of the records already kept as a normal process overall rulemaking program for all of doing business. Consequently, the During the SBREFA process, the Panel manufacturers); only significant additional burden recommended transition flexibilities • Engines under 25 hp would not be would be associated with the reporting that we considered during the subject to standards based on use of requirement. development of the NPRM. The Panel advanced aftertreatment; and, General requirements for reporting for recommended provisions for both the • No NOX aftertreatment-based refiners and importers include: one-step and two-step options. Since we standards for engines 75 hp and under. registration (only in the case where a are finalizing a two-step approach, only refiner or importer is not registered the recommendations for this approach ii. Panel Recommendations for Small under a previous fuel program), pre- are being discussed here. (A complete Business Equipment Manufacturers compliance reports (on a refiner or discussion of all of the Panel We proposed the following provisions importer’s progress towards meeting the recommendations and our proposals for for nonroad diesel small business nonroad diesel fuel requirements as small entities is located in section X.C. equipment manufacturers: specified in this rule), quarterly of the NPRM.) • Small business nonroad diesel designation reports, and annual reports. Following the SBREFA process, the equipment manufacturers must have All parties from the refiner to the Panel (or some Panel members), reported equipment sales using certified terminal will be required to report recommended the following transition engines in model year 2002 or earlier to volumes of designated fuels received flexibilities and hardship provisions to be eligible for all provisions; and distributed, as well as compliance help mitigate the impacts of the • Essential continuance of the with quarterly and annual limits. All rulemaking on small entities. We transition flexibilities offered for the parties in the distribution system are proposed and requested comment on Tier 1 and Tier 2 nonroad diesel required to keep product transfer these recommendations in the NPRM. emission standards (40 CFR 89.102), documents (PTDs), though refiners and which are available to all nonroad diesel importers are required to initially i. Panel Recommendations for Small equipment manufacturers Business Engine Manufacturers generate and provide information on —‘Percent-of-production allowance’— commercial PTDs that identify the For nonroad diesel small business over seven model-year period diesel fuel with meeting specific needs engine manufacturers, we proposed the manufacturers may install engines not (i.e., 15 ppm highway diesel, 500 ppm following provisions: certified to the new emission highway diesel, etc.). Also, refiners in • standards in an amount of equipment Alaska and small refiner/credit fuel A manufacturer must have certified in model year 2002 or earlier and would equivalent to 80 percent of one year’s users must report end users of their fuel. production, implemented by power These end users must also keep records be limited to 2500 units per year to be eligible for all provisions set out below; category with the average determined of these fuel purchases. Lastly, small over the period in which the • For PM— refiners are required to apply for small flexibility is used (this proposal refiner status and small refiner —Small engine manufacturers could would afford additional flexibility baselines. delay compliance with the standards over the comparable flexibility in Tier In general, we are requiring that all for up to three years for engines under 2/3, however, because of the smaller records be kept for at least five years. 25 hp, and those between 75 and 175 This recordkeeping requirement should number of horsepower categories in hp (as these engines only have one impose little additional burden, as five the Tier 4 rule) standard) —‘Small volume allowance’—a years is the applicable statute of manufacturer may exceed the 80 limitations for current fuel programs. —small engine manufacturers have the See section X.B, above, for a option to delay compliance for one percent allowance in seven years as discussion of the estimated burden year if interim standards are met for described above, provided that the hours and costs of the recordkeeping engines between 50 and 75 hp (for previous Tier engine use does not and reporting that will be required by this power category we are treating exceed 700 total over seven years, and this final rule. Detailed information on the PM standard as a two phase 200 in any given year, limited to one the reporting and recordkeeping standard with the stipulation that family per power category; measures associated with this small manufacturers cannot use PM alternatively, at the manufacturer’s rulemaking are described in the credits to meet the interim standard; choice by horsepower category, a Information Collection Requests (ICRs) also, if a small manufacturer elects the 253 optional approach to the standard There is no change in the NOX standard for for this rulemaking—1897.05 for engines under 25 hp and those between 50 and 75 nonroad diesel engines, and 1718.05 for (elects to skip the interim standard), hp. For these two power bands EPA proposed no fuel-related items. no further relief will be provided) special provisions.

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program that eliminates the ‘‘single • A small refiner would be afforded For engines in the 50 to 75 hp family provision’’ restriction with hardship similar to the provisions category: revised total and annual sales limits established under 40 CFR 80.270 and • PM—A small business engine as shown below: 80.560 (the gasoline sulfur and highway manufacturer may delay compliance ≤175 hp: 525 previous Tier engines diesel fuel sulfur programs, with the 2013 Tier 4 requirement of 0.02 (over 7 years) with an annual cap of respectively), case-by-case approval of g/bhp-hr PM for up to three years 150 units (separate for each hp hardship applications must be sought provided that it complies with the category) based on demonstration of extreme interim Tier 4 requirements that begin >175 hp: 350 previous Tier engines hardship circumstances. in model year 2008 on time, without the (over 7 years) with an annual cap of We did not propose specific use of credits (as manufacturers of 100 units (separate for each hp provisions for nonroad diesel fuel engines in this category still have the category); distributors and marketers in the NPRM. option to comply with the Tier 3 • Small business equipment During the SBREFA process, standard). Alternatively, a manufacturer manufacturers would be allowed to distributors commented that they would may elect to skip the interim standard borrow from the Tier 3/Tier 4 support a one-step approach to completely. Manufacturers choosing flexibilities for use in the Tier 2/Tier 3 eliminate the possibility of having this option will receive only one time frame; and, multiple grades of fuel in the additional year for compliance with the • Small business equipment distribution system and the Panel 0.02 g/bhp-hr standard (i.e. compliance recommended that we further study this in 2013, rather than 2012). manufacturers could be afforded up to • two years of hardship after other issue during the development of the NOX—there is no change in the transition allowances are exhausted, rule. NOX standard for engines in this category, therefore no special provisions similar to that offered small business iv. Additional Panel Recommendations engine manufacturers. are being provided. For engines in the 75 to 175 hp In addition, we proposed the Panel’s Some, but not all, Panel members recommended that the following category: recommendation that the provisions for • PM—a manufacturer may elect to small equipment manufacturers be provisions be included in the NPRM; we requested comment on these items but delay compliance with the standard for extended to all equipment up to three years. manufacturers, regardless of size. We did not propose them: • • NOX—a manufacturer may elect to also sought comment on the total The inclusion of a technological review of the standards in the 2008 time delay compliance with the standard for number of engines and annual cap up to three years. values proposed and on implementing frame • No PM aftertreatment-based In regard to the Office of Advocacy’s the small volume allowance provision concern regarding the technical without a limit on the number of engine standards for engines between 25 and 75 hp feasibility of PM and NOX aftertreatment families. devices, as proposed in the NPRM, we iii. Panel Recommendations for Small b. Discussion of Items Being Finalized are not adopting standards based on Refiners, Distributors, and Marketers in Today’s Action performance of NOX aftertreatment technologies for engines under 75 hp. The following provisions were i. Provisions for Small Business Engine Manufacturers We believe the factual record—as proposed for nonroad diesel small documented in the RIA, the Summary refiners: For nonroad diesel small business • and Analysis of Comments, and this Small refiners would be required to engine manufacturers, we are finalizing preamble—does not support the claim use 500 ppm sulfur fuel beginning June many of the provisions set out above that the PM standards will not be 1, 2010 and 15 ppm fuel beginning June with some significant revisions, as technically feasible in 2013 for the 25– 1, 2014; described below. We are finalizing all of 75 hp engines. As set out at length in • Small refiners may choose one of the hardship provisions that we section 4.1.3 of the RIA, among other the following transition provisions, proposed. We believe these provisions places, performance of PM traps is not which serve to encourage early are an element of providing appropriate dependent on engine size. compliance with the diesel fuel sulfur lead time for this class of engines. We disagree with the statement made standards: For engines under 25 hp: by the Office of Advocacy that, based on • —Credits for Early Desulfurization: PM—a manufacturer may elect to available information, we do not have a would allow small refiners to generate delay compliance with the standard for sufficient basis for engines between 25 and sell credits for nonroad diesel up to three years. and 75 hp to be subject to PM standards • fuel that meets the small refiner NOX—there is no change in the based on use of advanced standards earlier than required in the existing NOX standard for engines in aftertreatment. As we have documented regulation; or, this category, so no special provisions earlier and in the RIA, we believe that —Limited Relief on Small Refiner are being provided. such standards are feasible for these Interim Gasoline Sulfur Standards: a For engines in the 25 to 50 hp engines at reasonable cost,254 and will small refiner producing its entire category: help to improve very important air • nonroad diesel fuel pool at 15 ppm PM—manufacturers must comply quality problems, especially by reducing sulfur by June 1, 2006, and who with the interim standards (the Tier 4 exposure to diesel PM and by aiding in chooses not to generate nonroad requirements that begin in model year attainment of the PM 2.5 National credits for early compliance, would 2008) on time, and may elect to delay receive a 20 percent relaxation in its compliance with the 2013 Tier 4 254 As the cost issues raised in SBA’s comments assigned small refiner interim requirements (0.02 g/bhp-hr PM relate to all manufactures (not just small business gasoline sulfur standards (with the standard) for up to three years. manufacturers), further information on the costs of • this technology as well as the benefits analysis, can maximum per-gallon sulfur cap for NOX—a manufacturer may elect to be found in section VI of this preamble (and also any small refiner remaining at 450 delay compliance with the standard for chapters 6 and 9, respectively, of the Regulatory ppm); and, up to three years. Impact Analysis).

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Ambient Air Quality Standard. See equipment packages, thus saving both 2014.255 This is identical to the relief generally, comment response 8.2.3 of money and strain on limited proposed in the NPRM (which small the Summary and Analysis of engineering staffs. Within limits, small refiners considered sufficient and Comments, and sections 12.6.2.2.9 and business equipment manufacturers supported) with the exception that it 12.6.2.2.10 of chapter 12 of the Draft would be able to continue to use their applies not only to nonroad fuel, but RIA. These standards will also result in current engine/equipment configuration also to locomotive and marine fuel significant reductions of NMHC, which and avoid out-of-cycle equipment given the decision to finalize 15 ppm includes many carcinogenic air toxics. redesign until the allowances are sulfur standards for locomotive and Indeed, given these facts, we are exhausted or the time limit passes. marine diesel fuel. Table X.C–2 below skeptical that an alternative of no We are not finalizing the requirement illustrates the delayed standards in aftertreatment-based PM standards for that small equipment manufacturers and relation to the general program. This these engines would be appropriate importers have reported equipment delay option is not being finalized for under section 213(a)(4) of the Clean Air sales using certified engines in model the Northeast and mid-Atlantic areas Act (see section VII.A above, where we year 2002 or earlier. Please see section due to the removal of the heating oil found that ‘‘[w]e * * * do not see a III.C.2.a.ii above for a detailed marker in these areas. However this is basis in law or policy to adopt either of discussion on our decision to eliminate not expected to impact small refiners, these options’’). We believe that the this requirement from today’s rule. and this will provide significant relief transition and hardship provisions for small terminal operators. Further, being finalized for small business We are also finalizing three additional this provision will be finalized in engine manufacturers in today’s action provisions today. Two of these Alaska only if a refiner gets an approved are reasonable and are a factor in our provisions are being finalized for all compliance plan for segregating their ultimate finding that the PM standards equipment manufacturers, and therefore fuel to the end user. small business equipment for engines in the 25–75 hp range are We also are finalizing transition manufacturers may also take advantage appropriate. provisions to encourage early of them. These are the Technical compliance with the standards being ii. Provisions for Small Business Hardship Provision and the Early Tier 4 Equipment Manufacturers finalized today. These provisions are: Engine Incentive Program, and are • The transition and hardship discussed in greater detail in sections The NRLM credit option—Some provisions that were proposed for small III.B.2.b and e above. The third small refiners have indicated that they business nonroad equipment provision is being finalized for small might need to produce fuel meeting the manufacturers are being finalized today, business equipment manufacturers only, NRLM diesel fuel sulfur standards with some modifications. for the 20–50 hp category. This earlier than required under the small Adopting an alternative on which we provision is discussed in greater detail refiner program described above solicited comment, the final rule allows in section III.C.2.b.ii above. (distribution systems might limit the all equipment manufacturers the number of grades of diesel fuel that will opportunity to choose between two iii. Provisions for Small Refiners be carried, it may be economically options: (a) Manufacturers would be advantageous to make compliant NRLM As previously discussed, we are diesel fuel earlier to prevent losing allowed to exempt 700 pieces of finalizing standards for locomotive and equipment over seven years, with one market share, etc.) This option allows marine diesel fuel today. Below are the small refiners to participate in the engine family; or (b) manufacturers regulatory transition and hardship using the small-volume allowance could NRLM diesel fuel sulfur credit banking provisions that we are finalizing to and trading program discussed in exempt 525 machines over seven years minimize the degree of hardship (with a maximum of 150 in any given section IV. Generating and selling imposed upon small refiners by this credits could provide small refiners year) for each of the three power program. With these provisions we are categories below 175 horsepower, and with funds to help defray the costs of confident about going forward with the early NRLM compliance. 350 machines over seven years (with a 500 ppm sulfur standard for NRLM • The NRLM/Gasoline Compliance maximum of 100 in any given year) for diesel fuel in 2007, and the 15 ppm Option—This option is available to the two power categories above 175 sulfur standard for nonroad diesel fuel small refiners that produce greater than horsepower. Concurrent with the in 2010 and locomotive and marine revised caps, manufacturers could 95 percent of their NRLM diesel fuel at diesel fuel in 2012, for the rest of the exempt engines from more than one the 15 ppm sulfur standard by June 1, industry. Given the small refiner relief engine family under the small-volume 2006 and elect not to use the provision provisions that are being finalized allowance program. Based on sales described above to earn NRLM diesel today, small refiners will be the only information for small businesses, we fuel sulfur credits for this early refiners permitted to continue selling estimated that the alternative small- compliance.256 For small refiners 500 ppm fuel to nonroad, locomotive, volume allowance program to include and marine markets from 2010 until lower caps and allow manufacturers to 255 Since new engines with sulfur sensitive 2014 without the use of credits. exempt more than one engine family emission controls will begin to become widespread We are finalizing delayed compliance during this time, small refiner fuel will need to be would keep the total number of engines segregated and only supplied for use in pre–2011 eligible for the allowance at roughly the for small refiners today (‘‘NRLM Delay’’ nonroad equipment or in locomotives or marine same overall level as the 700-unit option). We are confident with going engines. program. We believe that these forward with these sulfur standards 256 This is down from the 100 percent given the regulatory transition requirement proposed to allow for some provisions will afford small contamination losses in the process of delivering manufacturers the type of transition provisions being offered for small fuel from the refinery. As discussed earlier in this leeway recommended by the Panel. refiners. These delayed standards would section, production volumes in the final rule are Further, these transition provisions allow for the continued production of based upon actual delivered volumes. The 5 percent higher sulfur NRLM fuel until June 1, allowance for greater than 15 ppm fuel should could allow small business equipment provide adequate flexibility for any refiner’s manufacturers to postpone any redesign 2010, and similarly, for the production contamination issues, while not providing any needed on low sales volume or difficult of 500 ppm NRLM fuel until June 1, Continued

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choosing this option the applicable Delay option or the NRLM Credit Further, we are aware of some small small refiner annual average and per- option, since a small refiner must refiners that plan to take advantage of gallon cap gasoline sulfur standards will produce at least 85 percent of its NRLM one of the flexibility provisions that be increased by 20 percent for the diesel fuel at the 15 ppm sulfur standard encourages early compliance with the duration of the interim program; under the NRLM/Gasoline Compliance standards. Absent specific provisions however, in no case may the per-gallon option. for small refiners, we would have to gasoline sulfur cap exceed 450 ppm. Small refiners that choose to make use consider delaying the overall program A small refiner may choose to use the of the delayed nonroad diesel sulfur until the burden of the program on relaxed standards (the NRLM Delay requirements would also delay to some many small refiners was diminished, option), the NRLM Credit option, or extent the emission reductions that which would delay the air quality both in combination. Thus any fuel that would otherwise have been achieved. it produces from crude at or below the However, the overall impact of these benefits of the overall program. By sulfur standards earlier than required postponed emission reductions would providing temporary relief to small will qualify for generating credits. be small in comparison to the overall refiners, we are able to adopt a program However, the NRLM/Gasoline program benefits, as small refiners that expeditiously reduces NRLM diesel Compliance option may not be used in represent only a fraction of national fuel sulfur levels in a feasible manner combination with either the NRLM non-highway diesel production. for the industry as a whole.

TABLE X.C–2.—SULFUR STANDARDS FOR THE NONROAD DIESEL FUEL SMALL REFINER PROGRAM (in parts per million (ppm)) a

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015+

Non-Small—NR ...... 500 500 500 15 15 15 15 15 15 Non-Small—LM ...... 500 500 500 500 500 15 15 15 15 Small—all fuel...... 500 500 500 500 15 15 Notes: a New standards are assumed to take effect June 1 of the applicable year.

iv. Provisions for Small Distributors and companies) of small entities in the costs (for full compliance with the 15 Fuel Marketers engine and equipment manufacturing ppm sulfur standards) for small refiners Though we did not propose any industry would be affected by between on average would be about 7 cents per specific regulatory relief for small one and three percent of sales (i.e., the gallon compared to about 5.7 cents per distributors and marketers of nonroad estimated costs of compliance with the gallon for non-small refiners. (A fuel, we are finalizing provisions to rule would be greater than one percent, complete discussion of the fuel-related avoid the negative impact to small but less than three percent, of their costs as a result of this final rule is terminal operators raised in the public sales). One percent (four companies) of located in Chapter 7 of the Final comments on our NPRM (that heating small entities would be affected by Regulatory Impact Analysis.) However, oil marker requirements would force greater than three percent. In all, 17 of we believe that the regulatory transition small terminal operators to install the 518 potentially affected small engine provisions that we are affording to small expensive injection equipment and that and equipment manufacturers are entities will significantly minimize this they would not be able to recoup the estimated to have compliance costs that impact on these entities. costs). To mitigate the burden on these could exceed one percent of their sales. In addition, as contemplated by operators, terminals in much of PADD 1 (A complete discussion of the costs to section 212 of SBREFA, EPA is also will not have to add the fuel marker to engine and equipment manufacturers as preparing a compliance guide to help home heating oil. No small refiner or a result of this final rule is located in small entities comply with this rule. credit fuel could be sold in this Chapter 6 of the Final Regulatory Impact This guide will be available within 60 exclusion area. The exclusion area Analysis.) days of the effective publication date of covers the vast majority of heating oil Based on our outreach, fact-finding, this rulemaking, and will be available that will be marketed. Further, very and analysis of the potential impacts of on the Office of Transportation and Air little fuel above 500 ppm will be our regulations on small businesses, it Quality Web site. Small entities may marketed outside of the exclusion area was determined that small refiners in also contact our office to obtain copies except directly from the refinery gate. general would likely experience a of the compliance guide. Therefore, we expect that few terminals significant and disproportionate D. Unfunded Mandates Reform Act outside of the exclusion area would financial hardship in reaching the need to put in injection equipment. objectives of the nonroad diesel fuel Title II of the Unfunded Mandates sulfur program. One indication of this Reform Act of 1995 (UMRA), Public 6. Conclusion disproportionate hardship for small Law. 104–4, establishes requirements A cost-to-sales ratio test, a ratio of the refiners is the relatively high cost per for federal agencies to assess the effects estimated annualized compliance costs gallon projected for producing nonroad of their regulatory actions on state, to the value of sales per company, was diesel fuel under the proposed program. local, and tribal governments and the performed for these entities during the Refinery modeling (of all refineries), private sector. Under section 202 of the proposal stage of the rulemaking. 257 indicates significantly higher refining UMRA, EPA generally must prepare a From this cost-to-sales test, we found costs for small refiners. Specifically, written statement, including a cost- that approximately four percent (13 without special provisions, refining benefit analysis, for proposed and final

opportunity to significantly alter their compliance 257 The cost-to-sales ratio test assumes that between manufacturers/producers and consumers plans. control costs are completely absorbed by each entity in a market context. and does not account for or consider interaction

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rules with ‘‘federal mandates’’ that may federalism implications’’ is defined in promote communications between EPA result in expenditures to state, local, the Executive Order to include and State and local governments, EPA and tribal governments, in the aggregate, regulations that have ‘‘substantial direct specifically solicited comment on the or to the private sector, of $100 million effects on the States, on the relationship proposed rule from State and local or more in any one year. Before between the national government and officials, including from the State of promulgating an EPA rule for which a the States, or on the distribution of Alaska. written statement is needed, section 205 power and responsibilities among the F. Executive Order 13175: Consultation of the UMRA generally requires EPA to various levels of government.’’ and Coordination With Indian Tribal identify and consider a reasonable Under section 6 of Executive Order Governments number of regulatory alternatives and 13132, EPA may not issue a regulation adopt the least costly, most cost- that has federalism implications, that Executive Order 13175, entitled effective, or least burdensome imposes substantial direct compliance ‘‘Consultation and Coordination with alternative that achieves the objectives costs, and that is not required by statute, Indian Tribal Governments’’ (65 FR of the rule. The provisions of section unless the Federal government provides 67249, November 6, 2000), requires EPA 205 do not apply when they are the funds necessary to pay the direct to develop an accountable process to inconsistent with applicable law. compliance costs incurred by State and ensure ‘‘meaningful and timely input by Moreover, section 205 allows EPA to local governments, or EPA consults with tribal officials in the development of adopt an alternative other than the least State and local officials early in the regulatory policies that have tribal costly, most cost-effective, or least process of developing the proposed implications.’’ burdensome alternative if the regulation. EPA also may not issue a This final rule does not have tribal Administrator publishes with the final regulation that has federalism implications as specified in Executive rule an explanation of why that implications and that preempts State Order 13175. This rule will be alternative was not adopted. law, unless the Agency consults with implemented at the Federal level and Before EPA establishes any regulatory State and local officials early in the impose compliance costs only on engine requirements that may significantly or process of developing the proposed manufacturers and diesel fuel producers uniquely affect small governments, regulation. and distributors. Tribal governments including tribal governments, it must Section 4 of the Executive Order will be affected only to the extent they have developed under section 203 of the contains additional requirements for purchase and use equipment with UMRA a small government agency plan. rules that preempt State or local law, regulated engines. Thus, Executive The plan must provide for notifying even if those rules do not have Order 13175 does not apply to this rule. potentially affected small governments, federalism implications (i.e., the rules G. Executive Order 13045: Protection of enabling officials of affected small will not have substantial direct effects Children From Environmental Health governments to have meaningful and on the States, on the relationship timely input in the development of EPA between the national government and and Safety Risks regulatory proposals with significant the states, or on the distribution of Executive Order 13045, ‘‘Protection of federal intergovernmental mandates, power and responsibilities among the Children from Environmental Health and informing, educating, and advising various levels of government). Those Risks and Safety Risks’’ (62 FR 19885, small governments on compliance with requirements include providing all April 23, 1997) applies to any rule that the regulatory requirements. affected State and local officials notice (1) is determined to be ‘‘economically This rule contains no federal and an opportunity for appropriate significant’’ as defined under Executive mandates for state, local, or tribal participation in the development of the Order 12866, and (2) concerns an governments as defined by the regulation. If the preemption is not environmental health or safety risk that provisions of Title II of the UMRA. The based on express or implied statutory EPA has reason to believe may have a rule imposes no enforceable duties on authority, EPA also must consult, to the disproportionate effect on children. If any of these governmental entities. extent practicable, with appropriate the regulatory action meets both criteria, Nothing in the rule would significantly State and local officials regarding the Section 5–501 of the Order directs the or uniquely affect small governments. conflict between State law and Agency to evaluate the environmental EPA has determined that this rule Federally protected interests within the health or safety effects of the planned contains federal mandates that may agency’s area of regulatory rule on children, and explain why the result in expenditures of more than responsibility. planned regulation is preferable to other $100 million to the private sector in any This final rule does not have potentially effective and reasonably single year. EPA believes that the final federalism implications. It will not have feasible alternatives considered by the rule represents the least costly, most substantial direct effects on the States, Agency. cost-effective approach to achieve the on the relationship between the national This rule is not subject to the air quality goals of the rule. The costs government and the States, or on the Executive Order because it does not and benefits associated with the final distribution of power and involve decisions on environmental rule are discussed above and in the responsibilities among the various health or safety risks that may Regulatory Impact Analysis, as required levels of government, as specified in disproportionately affect children. The by the UMRA. Executive Order 13132. EPA believes that the emissions Although section 6 of Executive Order reductions from the strategies proposed E. Executive Order 13132: Federalism 13132 does not apply to this rule, EPA in this rulemaking will further improve Executive Order 13132, entitled did consult with representatives of air quality and will further improve ‘‘Federalism’’ (64 FR 43255, August 10, various State and local governments in children’s health. 1999), requires EPA to develop an developing this rule. EPA has also accountable process to ensure consulted representatives from H. Executive Order 13211: Actions That ‘‘meaningful and timely input by State STAPPA/ALAPCO, which represents Significantly Affect Energy Supply, and local officials in the development of state and local air pollution officials. Distribution, or Use regulatory policies that have federalism In the spirit of Executive Order 13132, Executive Order 13211, ‘‘Actions implications.’’ ‘‘Policies that have and consistent with EPA policy to Concerning Regulations That

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Significantly Affect Energy Supply, cents per gallon (in 2002 dollar terms) test nonroad diesel engines. However, Distribution, or Use’’ (66 FR 28355 (May as a result of this rule. This would have the current version of that standard (ISO 22, 2001)), requires EPA to prepare and a very small effect on production 8178) is applicable only for steady-state submit a Statement of Energy Effects to (projected reduction of approximately testing, not for transient testing. As the Administrator of the Office of 0.02 %, or less than 4 million gallons described in the Regulatory Impact Information and Regulatory Affairs, per year by 2036). Analysis, transient testing is an Office of Management and Budget, for The analysis also concludes that we important part of the new emission- certain actions identified as ‘‘significant do not expect this rule to have any control program for these engines. We energy actions.’’ Section 4(b) of adverse effect on the supply or are therefore not adopting the ISO Executive Order 13211 defines distribution of NRLM fuel, nor to result procedures in this rulemaking. ‘‘significant energy actions’’ as ‘‘any in a significant increase in imports of J. Congressional Review Act action by an agency (normally NRLM fuel. Refiners will be unlikely to published in the Federal Register) that leave the NRLM fuel market and are The Congressional Review Act, 5 promulgates or is expected to lead to the unlikely to shut down due to this rule. U.S.C. 801 et seq., as added by the Small promulgation of a final rule or Price impacts will vary regionally in Business Regulatory Enforcement regulation, including notices of inquiry, the U.S., and are difficult to project Fairness Act of 1996, generally provides advance notices of proposed precisely. Analysis of various scenarios that before a rule may take effect, the rulemaking, and notices of proposed in RIA section 7.6 suggests that in agency promulgating the rule must rulemaking: (1)(i) That is a significant PADDs 1 and 3 as well as 2, which submit a rule report, which includes a regulatory action under Executive Order account for the bulk of demand, prices copy of the rule, to each House of the 12866 or any successor order, and (ii) is could increase by almost 11 cents per Congress and to the Comptroller General likely to have a significant adverse effect gallon in the unlikely ‘‘maximum total of the United States. EPA will submit a on the supply, distribution, or use of cost’’ scenario of constrained capacity. report containing this rule and other energy; or (2) that is designated by the In contrast, the ‘‘average total cost’’ required information to the U.S. Senate, Administrator of the Office of scenario predicts a 5 cent per gallon the U.S. House of Representatives, and Information and Regulatory Affairs as a increase in PADDs 1 and 3. the Comptroller General of the United significant energy action.’’ We have We do not believe there are any States before the rule is published in the prepared a Statement of Energy Effects reasonable alternatives to the control of Federal Register. This rule is a ‘‘major for this action as follows: sulfur in nonroad fuel which would rule’’ as defined by 5 U.S.C. 804(2). allow the reduction in NO and PM We have prepared a Statement of X XI. Statutory Provisions and Legal emissions from nonroad equipment Energy Effects for this action as follows. Authority This rule’s potential adverse effects required by today’s rule. There are also on energy supply, distribution, or use no reasonable alternatives to the control Statutory authority for the engine have been analyzed, and are discussed of sulfur in locomotive and marine fuel controls adopted today can be found in in detail within the following which would provide the associated sections 213 (which specifically documents: reductions in sulfur dioxide and sulfate authorizes controls on emissions from 1. Fuel provisions of the rule and PM emissions provided by the 500 and nonroad engines and vehicles), 203– flexibilities, including hardship 15 ppm caps on the sulfur content of 209, 216 and 301 of the Clean Air Act, provisions, are described in this this fuel. 42 U.S.C. 7547, 7522, 7523, 7424, 7525, Preamble, section IV.B. The provision of 7541, 7542, 7543, 7550 and 7601. I. National Technology Transfer Statutory authority for the new fuel sufficient lead time for refiners is Advancement Act discussed in section IV.F. controls is found in sections 211(c) and 2. Potential impacts on fuel supplies Section 12(d) of the National 211(i) of the Clean Air Act, which allow are summarized in Preamble section Technology Transfer and Advancement EPA to regulate fuels that either VI.A.5, RIA section VI.A.5, and within Act of 1995 (‘‘NTTAA’’), Public Law contribute to air pollution which the Summary and Analysis of 104–113, section 12(d) (15 U.S.C. 272 endangers public health or welfare or Comments document, section 4.6.3. note) directs EPA to use voluntary which impair emission control 3. Costs of low-sulfur fuel are consensus standards in its regulatory equipment which is in general use or discussed in Preamble section VI.F, and activities unless doing so would be has been in general use. 42 U.S.C. RIA Chapter 7 (demand and production inconsistent with applicable law or 7545(c) and (i). Additional support for in 7.1, and refining costs in 7.2). otherwise impractical. Voluntary the procedural and enforcement-related 4. Price impacts are summarized in consensus standards are technical aspects of the fuel controls in the final Preamble section VI.A, and RIA section standards (e.g., materials specifications, rule, including the record keeping 7.6, with distribution costs in section test methods, sampling procedures, and requirements, comes from sections 7.4, alternative estimates of costs in 7.2, business practices) that are developed or 114(a) and 301(a) of the CAA. 42 U.S.C. and effects of alternative demand adopted by voluntary consensus 7414(a) and 7601(a). projections in 7.2 as well. Uncertainty standards bodies. The NTTAA directs List of Subjects in fuel demand is also discussed in the EPA to provide Congress, through OMB, Summary and Analysis of Comments explanations when the Agency decides 40 CFR Part 9 section 2.3.2.2. not to use available and applicable Reporting and recordkeeping 5. The need for adequate short-term voluntary consensus standards. requirements. investment in low sulfur refining This rule involves technical capacity is addressed in RIA section 5.9. standards. The following paragraph 40 CFR Part 69 6. The impacts of regulatory describes how we specify testing Environmental protection, Air alternatives that were considered are procedures for engines subject to this pollution controls. discussed in Preamble section VII. proposal. In summary, the cost of No. 2 The International Organization for 40 CFR Part 80 distillate nonroad fuel is projected to Standardization (ISO) has a voluntary Fuel additives, Gasoline, Imports, increase overall by approximately 7 consensus standard that can be used to Incorporation by reference, Labeling,

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Motor vehicle pollution, Penalties, 1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, (2) On each occasion that any person Reporting and recordkeeping 246, 300f, 300g, 300g–1, 300g–2, 300g–3, transfers custody or title to the fuel, requirements. 300g–4, 300g–5, 300g–6, 300j–1, 300j–2, except when it is dispensed at a retail 300j–3, 300j–4, 300j–9, 1857 et seq., 6901– outlet or wholesale purchaser-consumer 40 CFR Part 86 6992k, 7401–7671q, 7542, 9601–9657, 11023, 11048. facility, the transferor must provide to Environmental protection, Labeling, the transferee a product transfer Motor vehicle pollution, Reporting and § 9.1 [Amended] document stating: recordkeeping requirements. I 2. Section 9.1 is amended in the table This diesel fuel is for use only in Alaska. 40 CFR Part 89 by adding the center headings and the It is exempt from the federal low sulfur entries under those center headings in standards applicable to highway diesel fuel Environmental protection, numerical order to read as follows: and red dye requirements applicable to non- Administrative practice and procedure, highway diesel fuel only if it is used in Confidential business information, * * * * * Alaska. Imports, Labeling, Motor vehicle Control of Emissions From New, Large (b) Beginning on the implementation pollution, Reporting and recordkeeping Nonroad Spark-Ignition Engines dates under 40 CFR 80.500, motor requirements, Research, Vessels, 1048.20 2040–0460 vehicle diesel fuel that is designated for Warranties. 1048.201–250 2040–0460 use in Alaska or is used in Alaska, is 40 CFR Part 94 1048.345 2040–0460 subject to the applicable provisions of 1048.350 2040–0460 40 CFR part 80, subpart I, except as Environmental protection, 1048.420 2040–0460 provided under 40 CFR 69.52(c), (d), Administrative practice and procedure, 1048.425 2040–0460 and (e) for commingled motor vehicle Air pollution control, Confidential * * * * * and non-motor vehicle diesel fuel. business information, Imports, (c) The Governor of Alaska may Incorporation by reference, Penalties, Control of Emissions from Recreational submit for EPA approval, by April 1, Reporting and recordkeeping Engines and Vehicles 2002, a plan for implementing the motor requirements, Vessels, Warranties. 1051.201–255 2060–0104 vehicle diesel fuel sulfur standard in 40 CFR Parts 1039, 1048, and 1051 1051.345 2060–0104 Alaska as an alternative to the 1051.350 2060–0104 temporary compliance option provided Environmental protection, 1051.725 2060–0104 under 40 CFR 80.530 through 80.532. If Administrative practice and procedure, 1051.730 2060–0104 EPA approves an alternative plan, the Air pollution control, Confidential * * * * * provisions as approved by EPA under business information, Imports, General Compliance Provisions for that plan shall apply to the diesel fuel Incorporation by reference, Labeling, Nonroad Programs subject to paragraph (b) of this section. Penalties, Reporting and recordkeeping 1068.5 2040–0460 I 5. A new § 69.52 is added to read as requirements, Warranties. 1068.25 2040–0460 follows: 40 CFR Part 1065 1068.27 2040–0460 1068.120 2040–0460 § 69.52 Non-motor vehicle diesel fuel. Environmental protection, 1068.201–260 2040–0460 (a) Definitions. (1) Areas accessible by Administrative practice and procedure, 1068.301–355 2040–0460 the Federal Aid Highway System are the Incorporation by reference, Reporting 1068.450 2040–0460 geographical areas of Alaska designated and recordkeeping requirements, 1068.455 2040–0460 by the State of Alaska as being Research. 1068.501 2040–0460 accessible by the Federal Aid Highway 1068.525 2040–0460 40 CFR Part 1068 System. 1068.530 2040–0460 (2) Areas not accessible by the Federal Environmental protection, * * * * * Aid Highway System are all other Administrative practice and procedure, geographical areas of Alaska. Confidential business information, PART 69—SPECIAL EXEMPTIONS (3) Nonroad, locomotive, or marine Imports, Motor vehicle pollution, FROM THE REQUIREMENTS OF THE diesel fuel (NRLM) has the meaning Penalties, Reporting and recordkeeping CLEAN AIR ACT given in 40 CFR 80.2. requirements, Warranties. (b) Applicability. NRLM diesel fuel I 3. The authority citation for part 69 and heating oil that are used or intended Dated: May 11, 2004. continues to read as follows: Michael O. Leavitt, for use in areas of Alaska accessible by Authority: 42 U.S.C. 7545(c), (g), and (i), Administrator. the Federal Aid Highway System are and 7625–1. subject to the provisions of 40 CFR part I For the reasons set out in the preamble, I 4. Section 69.51 is revised to read as 80, subpart I, except as provided in title 40, chapter I, of the Code of Federal follows: paragraphs (c), (d) and (e) of this Regulations is amended as set forth section. below. § 69.51 Motor vehicle diesel fuel. (c) Dye and marker. (1) NRLM diesel (a) Diesel fuel that is designated for fuel and heating oil referred to in PART 9—OMB APPROVALS UNDER use only in Alaska and is used only in paragraph (b) of this section are exempt THE PAPERWORK REDUCTION ACT Alaska, is exempt from the sulfur from the red dye requirements, and the I 1. The authority citation for part 9 standard of 40 CFR 80.29(a)(1) and the presumptions associated with the red continues to read as follows: dye provisions of 40 CFR 80.29(a)(3) dye requirements, under 40 CFR and 40 CFR 80.29(b) until the Authority: 7 U.S.C. 135 et seq., 136–136y; 80.520(b)(2) and 80.510(d)(5), (e)(5), and 15 U.S.C. 2001, 2003, 2005, 2006, 2601–2671; implementation dates of 40 CFR 80.500, (f)(5). 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 provided that: (2) NRLM diesel fuel and heating oil U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318 (1) The fuel is segregated from referred to in paragraph (b) of this 1321, 1326, 1330, 1342 1344, 1345(d) and (e), nonexempt diesel fuel from the point of section are exempt from the marker 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971– such designation; and solvent yellow 124 requirements, and

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the presumptions associated with the LOW SULFUR DIESEL FUEL (500 ppm I 7. Section 80.2 is amended by adding marker solvent yellow 124 Sulfur Maximum) paragraph (f) and revising paragraphs (j), requirements, under 40 CFR 80.510(d) WARNING (o), (x), (y), and (xx), removing and through (f). Federal Law prohibits use in model year reserving paragraph (nn), adding and (3) Exempt NRLM diesel fuel and 2007 and later highway diesel vehicles and reserving paragraphs (yy), and (zz), and heating oil must be segregated from all engines adding and reserving paragraphs (aaa) non-exempt NRLM diesel fuel and Its use may damage these vehicles and through (rrr) to read as follows: heating oil. engines. (4) Exempt heating oil must be For use in all other diesel vehicles and § 80.2 Definitions. segregated from exempt NRLM diesel engines. * * * * * fuel unless it also meets the standards (ii) 15 ppm sulfur diesel fuel. From (f) Previously designated diesel fuel or of 40 CFR 80.510 applicable to the June 1, 2006 through May 31, 2010. PDD means diesel fuel that has been NRLM diesel fuel. ULTRA-LOW SULFUR DIESEL FUEL (15 previously designated and included by (5) Exempt NRLM diesel fuel and ppm Sulfur Maximum) a refiner or importer in a batch for heating oil must be segregated from purposes of complying with the Required for model year 2007 and later motor vehicle diesel fuel, unless it also highway diesel vehicles and engines. standards and requirements of subpart I meets the standards of 40 CFR 80.520 Recommended for use in all diesel vehicles of this part. applicable to the motor vehicle diesel and engines. * * * * * fuel. (j) Retail outlet means any (d) Product transfer documents. (iii) 15 ppm sulfur diesel fuel. From June 1, 2010, and beyond, establishment at which gasoline, diesel Product Transfer Documents for exempt fuel, methanol, natural gas or liquified NRLM diesel fuel and heating oil shall ULTRA-LOW SULFUR DIESEL FUEL (15 petroleum gas is sold or offered for sale ppm Sulfur Maximum) include the language specified in 40 for use in motor vehicles or nonroad CFR 80.590(a) applicable to undyed Required for use in all highway and engines, including locomotive engines nonroad diesel engines diesel fuel for the appropriate sulfur or marine engines. level, and the following additional Recommended for use in all diesel vehicles and engines. * * * * * language as applicable: (o) Wholesale purchaser-consumer (f) Non-motor vehicle diesel fuel and (1) For exempt NRLM diesel fuel and means any person that is an ultimate heating oil that is used or intended for heating oil, including commingled fuel consumer of gasoline, diesel fuel, use only in areas of Alaska not under paragraph (c)(4) or (c)(5) of this methanol, natural gas, or liquified accessible by the Federal Aid Highway section: ‘‘Exempt from red dye petroleum gas and which purchases or System, are excluded from the requirement applicable to diesel fuel for obtains gasoline, diesel fuel, natural gas applicable provisions of 40 CFR part 80, non-highway purposes if it is used only or liquified petroleum gas from a subpart I, except that— in Alaska.’’ supplier for use in motor vehicles or (2) For exempt heating oil, including (1) All model year 2011 and later nonroad engines, including locomotive commingled fuel under paragraph (c)(4) nonroad diesel engines and equipment engines or marine engines and, in the or (c)(5) of this section: ‘‘Exempt from must be fueled only with diesel fuel that case of gasoline, diesel fuel, methanol or marker solvent yellow 124 requirement meets the specifications of 40 CFR liquified petroleum gas, receives applicable to heating oil if it is used 80.510(b) or (c); delivery of that product into a storage only in Alaska.’’ (2) The following language shall be (3) For exempt 500 ppm sulfur LM added to any product transfer tank of at least 550-gallon capacity diesel fuel, including commingled fuel document: ‘‘This fuel is for use only in substantially under the control of that under paragraph (c)(4) or (c)(5) of this those areas of Alaska not accessible by person. section: ‘‘Exempt from marker solvent the FAHS’’; and * * * * * yellow 124 requirement applicable to (3) Pump labels for such fuel that does (x) Diesel fuel means any fuel sold in 500 ppm sulfur LM diesel fuel if it is not meet the specifications of 40 CFR any State or Territory of the United used only in Alaska.’’ 80.510(b) or (c) shall contain the States and suitable for use in diesel (e) Pump labels. (1) Pump labels for following language: engines, and that is— exempt NRLM diesel fuel and heating HIGH SULFUR DIESEL FUEL (may be greater (1) A distillate fuel commonly or oil shall contain the language specified than 15 Sulfur ppm) commercially known or sold as No. 1 diesel fuel or No. 2 diesel fuel; in 40 CFR 80.570 through 80.574 for the WARNING applicable fuel type and time frame, (2) A non-distillate fuel other than Federal Law prohibits use in model year residual fuel with comparable physical unless the fuel is commingled under 2007 and later highway diesel vehicles and paragraph (c)(4) or (c)(5) of this section. and chemical properties (e.g., biodiesel engines, or in model year 2011 and later fuel); or (2) Pump labels for exempt NRLM nonroad diesel engines and equipment. diesel fuel and heating oil that are Its use may damage these vehicles and (3) A mixture of fuels meeting the commingled shall contain the language engines. criteria of paragraphs (1) and (2) of this specified in 40 CFR 80.570 through definition. (g) Alternative labels to those (y) Motor vehicle diesel fuel means 80.574 for NRLM diesel fuel and the specified in paragraphs (e)(3) and (f)(3) applicable time frame. any diesel fuel or other distillate fuel of this section may be used as approved that is used, intended for use, or made (3) Pump labels for exempt NRLM by the Administrator. diesel fuel and heating oil that are available for use in motor vehicles or commingled with motor vehicle diesel PART 80—REGULATION OF FUELS motor vehicle engines. fuel shall contain the following AND FUEL ADDITIVES * * * * * language for the applicable sulfur level (xx) Diesel fuel additive means any and time frame: I 6. The authority citation for part 80 substance not composed solely of (i) 500 ppm sulfur diesel fuel. From continues to read as follows: carbon and/or hydrogen, or of diesel June 1, 2006 through September 30, Authority: 42 U.S.C. 7414, 7545, and blendstocks, that is added to, intended 2010. 7601(a). to be added to, used in, or offered for

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use in motor vehicle diesel fuel or (hhh)–(jjj) [Reserved] production of diesel fuel from NRLM diesel fuel or in diesel motor (kkk) Nonroad diesel engine means an processing crude oil through refinery vehicle or diesel NRLM engine fuel engine that is designed to operate with processing units, or employ more than systems subsequent to the production of diesel fuel that meets the definition of 1,500 people or exceed the 155,000 diesel fuel by processing crude oil from nonroad engine in 40 CFR 1068.30, bpcd crude oil capacity limit after refinery processing units. including locomotive and marine diesel January 1, 2004 as a result of merger (yy)–(zz) [Reserved] engines. with or acquisition of or by another (aaa) Distillate fuel means diesel fuel (lll) Locomotive engine means an entity, are disqualified as small refiners, and other petroleum fuels that can be engine used in a locomotive as defined except this shall not apply in the case used in engines that are designed for under 40 CFR 92.2. of a merger between two previously diesel fuel. For example, jet fuel, (mmm) Marine engine and Category 3 approved small refiners. If heating oil, kerosene, No. 4 fuel, DMX, have the meanings given under 40 CFR disqualification occurs, the refiner shall DMA, DMB, and DMC are distillate 94.2. notify EPA in writing no later than 20 fuels; and natural gas, LPG, gasoline, (nnn) Nonroad, locomotive, or marine days following this disqualifying event. (NRLM) diesel fuel means any diesel and residual fuel are not distillate fuels. (ii) Except as provided under fuel or other distillate fuel that is used, Blends containing residual fuel may be paragraph (b)(1)(iii) of this section, any intended for use, or made available for distillate fuels. refiner whose status changes under this use, as a fuel in any nonroad diesel (bbb) Residual fuel means a petroleum paragraph shall meet the applicable engines, including locomotive and fuel that can only be used in diesel standards of § 80.195 within a period of marine diesel engines, except the engines if it is preheated before up to 30 months of the disqualifying following: Distillate fuel with a T90 injection. For example, No. 5 fuels, No. event for any of its refineries that were greater than 700 °F that is used only in 6 fuels, and RM grade marine fuels are previously subject to the small refiner Category 2 and 3 marine engines is not residual fuels. Note: Residual fuels do standards of § 80.240(a). However, such not necessarily require heating for NRLM diesel fuel. Use the distillation test method specified in 40 CFR period shall not extend beyond storage or pumping. December 31, 2007, or, for refineries for (ccc) Heating oil means any No. 1 or 1065.1010 to determine the T90 of the which the Administrator has approved No. 2 distillate fuel that is sold for use fuel. NR diesel fuel and LM diesel fuel an extension of the small refiner in furnaces, boilers, stationary diesel are subcategories of NRLM diesel fuel. gasoline sulfur standards under engines, and similar applications and (ooo) Nonroad (NR) diesel fuel means § 80.553(c), December 31, 2010. which is commonly or commercially any NRLM diesel fuel that is not known or sold as heating oil, fuel oil, ‘‘locomotive or marine (LM) diesel (iii) A refiner may apply to EPA for and similar trade names, and that is not fuel.’’ an additional six months to comply jet fuel, kerosene, or MVNRLM diesel (ppp) Locomotive or marine (LM) with the standards of § 80.195 if more fuel. diesel fuel means any diesel fuel or than 30 months will be required for the (ddd) Jet fuel means any distillate fuel other distillate fuel that is used, necessary engineering, permitting, used, intended for use, or made intended for use, or made available for construction, and start-up work to be available for use in aircraft. use, as a fuel in locomotive or marine completed. Such applications must (eee) Kerosene means any No.1 diesel engines, except for the following include detailed technical information distillate fuel commonly or fuels: supporting the need for additional time. commercially sold as kerosene. (1) Fuel that is also used, intended for EPA will base its decision to approve (fff) #1D means the distillate fuel use, or made available for use in motor additional time on the information classification relating to ‘‘No. 1–D’’ vehicle engines or nonroad engines provided by the refiner and on other diesel fuels as described in ASTM D other than locomotive and marine diesel relevant information. In no case will 975–04. The Director of the Federal engines is not LM diesel fuel. EPA extend the compliance date beyond Register approved the incorporation by (2) Distillate fuel with a T90 greater December 31, 2007, or, for refineries for ° reference of ASTM D 975–04, Standard than 700 F that is used only in Category which the Administrator has approved Specification for Diesel Fuel Oils, as 2 and 3 marine engines is not LM diesel an extension of the small refiner prescribed in 5 U.S.C. 552(a) and 1 CFR fuel. Use the distillation test method gasoline sulfur standards under part 51. Anyone may purchase copies of specified in 40 CFR 1065.1010 to § 80.553(c), December 31, 2010. this standard from the American Society determine the T90 of the fuel. (iv) During the period of time up to 30 for Testing and Materials, 100 Barr (qqq) MVNRLM diesel fuel means any months provided under paragraph Harbor Dr., West Conshohocken, PA diesel fuel or other distillate fuel that (b)(1)(ii) of this section, and any 19428. Anyone may inspect copies at meets the definition of motor vehicle extension provided under paragraph the U.S. EPA, Air and Radiation Docket (MV) or nonroad, locomotive, or marine (b)(1)(iii) of this section, the refiner may (NRLM) diesel fuel. Motor vehicle diesel and Information Center, 1301 not generate gasoline sulfur credits fuel, NRLM diesel fuel, NR diesel fuel, Constitution Ave., NW., Room B102, under § 80.310. and LM diesel fuel are subcategories of EPA West Building, Washington, DC (2) Any refiner who qualifies as a MVNRLM diesel fuel. 20460 or at the National Archives and small refiner under § 80.225 may elect (rrr) Solvent yellow 124 means N- to meet the standards under § 80.195 by Records Administration (NARA). For ethyl-N-[2-[1-(2- notifying EPA in writing no later than information on the availability of this methylpropoxy)ethoxyl]-4-phenylazo]- November 15 prior to the year that the material at NARA, call 202–741–6030, benzeneamine. change will occur. Any refiner whose or go to: http://www.archives.gov/ I 8. Section 80.230 is amended by _ status changes under this paragraph federal register/ revising paragraph (b) to read as follows: code_of_federal_regulations/ (b)(2) shall meet the standards under ibr_locations.html. § 80.230 Who is not eligible for the § 80.195 beginning with the first (ggg) #2D means the distillate fuel hardship provisions for small refiners? averaging period subsequent to the classification relating to ‘‘No. 2–D’’ * * * * * status change. diesel fuels as described in ASTM D (b)(1)(i) Refiners who qualify as small I 9. Section 80.240 is amended by 975–04. under § 80.225 and subsequently cease adding paragraph (f) to read as follows:

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§ 80.240 What are the small refiner marine diesel engines, at any import facility is aggregated with other gasoline sulfur standards? downstream location. facilities, then the aggregated facility is * * * * * (b) Excluded fuel. The provisions of treated as a refinery or import facility. (f)(1) In the case of a refiner without this subpart do not apply to distillate (3) Retail outlets or wholesale approved small refiner status who fuel that is designated for export outside purchaser consumers may not be acquires a refinery from a refiner with the United States in accordance with aggregated with any other facility. approved small refiner status under § 80.598, identified for export by a (4) Where an entity maintains custody § 80.235, the applicable small refiner transfer document as required under of diesel fuel in one or more mobile standards under paragraph (a) of this § 80.590, and that is exported. components (e.g., rail, barge, or trucking section will apply to the acquired small I 12. A new § 80.502 is added to read as operations) the mobile components may refinery for a period up to 30 months follows: be aggregated as a single facility. Mobile from the date of acquisition of the components may also be aggregated § 80.502 What definitions apply for refinery, but no later than December 31, purposes of this subpart? with a facility from which they receive 2007, or, for a refinery for which the fuel or a facility to which they deliver The definitions of § 80.2 and the Administrator has approved an fuel. However, mobile components may following additional definitions apply extension of the small refiner gasoline not be aggregated with both a facility to this subpart I: sulfur standards under § 80.553(c), from which they receive fuel and a (a) Entity means any refiner, importer, December 31, 2010, after which time the facility to which they deliver fuel. distributor, retailer or wholesale- standards of § 80.195 shall apply to the (5) An individual refinery or purchaser consumer of any distillate acquired refinery. contiguous pipeline may not be fuel. subdivided into more than one facility. (2) A refiner may apply to EPA for an (b) Facility means any place, or series An individual terminal may not be additional six months to comply with of places, where an entity produces, subdivided into more than one facility the standards of § 80.195 for the imports, or maintains custody of any acquired refinery if more than 30 unless approved by the Administrator. distillate fuel from the time it is (c) Truck loading terminal means any months will be required for the received to the time custody is necessary engineering, permitting, facility that dyes NRLM diesel fuel, pays transferred to another entity, except as taxes on motor vehicle diesel fuel per construction, and start-up work to be described in paragraphs (b)(1) through completed. Such applications must IRS code (26 CFR part 48), or adds a fuel (b)(4) of this section: marker pursuant to § 80.510 to heating include detailed technical information (1) Where an entity maintains custody oil and delivers diesel fuel or heating oil supporting the need for additional time. of a batch of diesel fuel from one place into trucks for delivery to retail or EPA will base its decision to approve in the distribution system to another ultimate consumer locations. additional time on information provided place (e.g., from a pipeline to a by the refiner and on other relevant (d) Batch means a quantity of diesel terminal), all owned by the same entity, fuel or distillate which is homogeneous information. In no case will EPA extend both places combined are considered to the compliance date beyond December with regard to those properties that are be one single aggregated facility, except specified for MVNRLM diesel fuel 31, 2007, or, for a refinery for which the where an entity chooses to treat Administrator has approved an under this subpart I of this part, has the components of such an aggregated same designation under this subpart I (if extension of the small refiner gasoline facility as separate facilities. The choice sulfur standards under § 80.553(c), applicable), and whose custody is made to treat these places as separate transferred from one facility to another December 31, 2010. facilities may not be changed by the I 10. Section 80.500 is amended by facility. entity during any applicable compliance (e) Downstream location means any removing paragraph (f) and revising the period. Except as specified in paragraph section heading to read as follows: point in the diesel fuel distribution (b)(2) of this section, where compliance system that is downstream of refineries 80.500 What are the implementation dates requirements depend upon facility-type, and import facilities, for example, diesel for the motor vehicle diesel fuel sulfur the entire facility must comply with the fuel at facilities of distributors, carriers, control program? requirements that apply to its retailers, kerosene blenders, and I 11. Section 80.501 is revised to read as components as follows: wholesale purchaser-consumers. follows: (i) If an aggregated facility includes a I 13. A new § 80.510 is added to read as refinery, the entire facility must comply follows: § 80.501 What fuel is subject to the with the requirements applicable to provisions of this subpart? refineries. § 80.510 What are the standards and (a) Included fuel and additives. The (ii) If an aggregated facility includes a marker requirements for NRLM diesel fuel? provisions of this subpart apply to the truck loading terminal but not a (a) Beginning June 1, 2007. Except as following fuels and additives except as refinery, the entire facility must comply otherwise specifically provided in this specified in paragraph (b) of this with the requirements applicable to subpart, all NRLM diesel fuel is subject section: truck loading terminals. to the following per-gallon standards: (1) Motor vehicle diesel fuel. (2) A refinery or import facility may (1) Sulfur content. 500 parts per (2) Nonroad, locomotive, or marine not be aggregated with facilities that million (ppm) maximum. diesel fuel. receive fuel from other refineries or (2) Cetane index or aromatic content, (3) Diesel fuel additives. import facilities, either directly or as follows: (4) Heating oil. indirectly. For example, a refinery may (i) A minimum cetane index of 40; or (5) Other distillate fuels. not be aggregated with a terminal that (ii) A maximum aromatic content of (6) Motor oil that is used as or receives any fuel from a common carrier 35 volume percent. intended for use as fuel in diesel motor pipeline. However, a refinery may be (b) Beginning June 1, 2010. Except as vehicles or nonroad diesel engines or is aggregated with a pipeline and terminal otherwise specifically provided in this blended with diesel fuel for use in that are owned by the same entity and subpart, all NR and LM diesel fuel is diesel motor vehicles or nonroad diesel which receive no fuel from any source subject to the following per-gallon engines, including locomotive and other than the refinery. If a refinery or standards:

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(1) Sulfur content. heating oil, as appropriate, and shall be Greene), and the eight eastern-most (i) 15 ppm maximum for NR diesel prohibited from use in any motor counties of West Virginia (Jefferson, fuel. vehicle or nonroad diesel engine (except Berkeley, Morgan, Hampshire, Mineral, (ii) 500 ppm maximum for LM diesel for locomotive or marine diesel Hardy, Grant, and Pendleton). fuel. engines). (2) Alaska. (2) Cetane index or aromatic content, (4) Except as provided for in (h) Pursuant and subject to the as follows: paragraph (i) of this section, any diesel provisions of §§ 80.536, 80.554, 80.560, (i) A minimum cetane index of 40; or fuel, other than jet fuel or kerosene that and 80.561: (ii) A maximum aromatic content of is downstream of a truck loading (1) Except as provided in paragraph (j) 35 volume percent. terminal, that contains less than 0.10 of this section, from June 1, 2007 (c) Beginning June 1, 2012. Except as milligrams per liter of marker solvent through May 31, 2010, NRLM diesel fuel otherwise specifically provided in this yellow 124 shall be considered motor produced or imported in full subpart, all NRLM diesel fuel is subject vehicle diesel fuel or NR diesel fuel, as compliance with the requirements of to the following per-gallon standards: appropriate. §§ 80.536, 80.554, 80.560, and 80.561 is (1) Sulfur content. 15 ppm maximum. (5) Any LM diesel fuel or heating oil exempt from the per-gallon sulfur (2) Cetane index or aromatic content, that is required to contain marker content standard and cetane or as follows: solvent yellow 124 pursuant to the aromatics standard of paragraph (a) of (i) A minimum cetane index of 40; or requirements of this paragraph (e) must this section. (ii) A maximum aromatic content of also contain visible evidence of dye (2) Except as provided in paragraph (j) 35 volume percent. solvent red 164. of this section, from June 1, 2010 (d) Marking provisions. From June 1, (f) Marking provisions. Beginning June through May 31, 2012 for NR diesel fuel 2007 through May 31, 2010: 1, 2012: and from June 1, 2012 through May 31, (1) Except as provided for in (1) Except as provided for in 2014 for NRLM diesel fuel produced or paragraph (i) of this section, prior to paragraph (i) of this section, prior to imported in full compliance with the distribution from a truck loading distribution from a truck loading requirements of §§ 80.536, 80.554, terminal, all heating oil shall contain six terminal, all heating oil shall contain six 80.560, and 80.561 is exempt from the milligrams per liter of marker solvent milligrams per liter of marker solvent per-gallon standards of paragraphs (b) yellow 124. yellow 124. and (c) of this section, but is subject to (2) All motor vehicle and NRLM (2) All motor vehicle and NRLM the per-gallon standards of paragraph (a) diesel fuel shall be free of solvent diesel fuel shall be free of marker of this section. yellow 124. solvent yellow 124. (i) The marking requirements of (3) Any diesel fuel that contains (3) Any diesel fuel that contains paragraphs (d)(1), (d)(4), (e)(1), (e)(4), greater than or equal to 0.10 milligrams greater than or equal to 0.10 milligrams (f)(1), and (f)(4) of this section do not per liter of marker solvent yellow 124 per liter of marker solvent yellow 124 apply to heating oil, or, for paragraphs shall be deemed to be heating oil and shall be deemed to be heating oil and (e)(1) and (e)(4) of this section, diesel shall be prohibited from use in any shall be prohibited from use in any fuel designated as LM diesel fuel that is motor vehicle or nonroad diesel engine motor vehicle or nonroad diesel engine distributed from a truck loading (including locomotive, or marine diesel (including locomotive, or marine diesel terminal located within the areas listed engines). engines). in paragraphs (g)(1) and (g)(2) of this (4) Except as provided for in (4) Except as provided for in section and is for sale or intended for paragraph (i) of this section, any diesel paragraph (i) of this section, any diesel sale within these areas, or that is fuel, other than jet fuel or kerosene that fuel, other than jet fuel or kerosene that distributed from any other truck loading is downstream of a truck loading is downstream of a truck loading terminal and is for sale or intended for terminal, that contains less than 0.10 terminal, that contains less than 0.10 sale within the area listed in (g)(2) of milligrams per liter of marker solvent milligrams per liter of marker solvent this section. yellow 124 shall be considered motor yellow 124 shall be considered motor (j) The provisions of paragraphs (h)(1) vehicle diesel fuel or NRLM diesel fuel, vehicle diesel fuel or NRLM diesel fuel, and (h)(2) of this section do not apply as appropriate. as appropriate. to diesel fuel sold or intended for sale (5) Any heating oil that is required to (5) Any heating oil that is required to in the areas listed in paragraph (g)(1) of contain marker solvent yellow 124 contain marker solvent yellow 124 this section that is produced or pursuant to the requirements of this pursuant to the requirements of this imported in full compliance with the paragraph (d) must also contain visible paragraph (f) must also contain visible requirements of §§ 80.536 and 80.554 or evidence of dye solvent red 164. evidence of dye solvent red 164. to diesel fuel sold or intended for sale (g) Special provisions in this part (e) Marking provisions. From June 1, in the area listed in paragraph (g)(2) of apply to the following areas: 2010 through May 31, 2012: this section that is produced or (1) Except as provided for in (1) Northeast/Mid-Atlantic Area imported in full compliance with the paragraph (i) of this section, prior to which includes the following states and counties: North Carolina, Virginia, requirements of § 80.536. distribution from a truck loading I 14. A new § 80.511 is added to read as Maryland, Delaware, New Jersey, terminal, all heating oil and diesel fuel follows: designated as 500 ppm sulfur LM diesel Connecticut, Rhode Island, fuel shall contain six milligrams per Massachusetts, Vermont, New § 80.511 What are the per-gallon and liter of solvent yellow 124. Hampshire, Maine, Washington D.C., marker requirements that apply to NRLM (2) All motor vehicle and NR diesel New York (except for the counties of diesel fuel and heating oil downstream of fuel shall be free of marker solvent Chautauqua, Cattaraugus, and the refiner or importer? yellow 124. Allegany), Pennsylvania (except for the (a) Applicable dates for marker (3) Any diesel fuel that contains counties of Erie, Warren, Mc Kean, requirements. Beginning June 1, 2006, greater than or equal to 0.10 milligrams Potter, Cameron, Elk, Jefferson, Clarion, all NRLM diesel fuel shall contain less per liter of marker solvent yellow 124 Forest, Venango, Mercer, Crawford, than 0.10 milligrams per liter of the shall be deemed to be LM diesel fuel or Lawrence, Beaver, Washington, and marker solvent yellow 124, except for

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LM diesel fuel subject to the marking for all downstream locations other than including any diesel fuel tank bottoms, requirements of § 80.510(e). retail outlets or wholesale purchaser- prior to the point of blending, sampling (b) Applicable dates for per-gallon consumer facilities, shall apply to all and testing in the importer entity’s standards. (1) Beginning June 1, 2006, NR diesel fuel beginning October 1, refinery operation. The DTAB may, all NRLM diesel fuel must comply with 2010 for retail outlets and wholesale however, be added to a diesel fuel the per-gallon sulfur standard for the purchaser-consumer facilities, and shall blending tank where the diesel fuel tank designation or classification stated on apply to all NR diesel fuel beginning bottom is not included as part of the its PTD, pump label, or other December 1, 2010 for all locations. batch volume for a prior batch. In documentation. Based on the provisions (7) For all NRLM diesel fuel that is addition, the DTAB may be placed into of § 80.510(h) and (j), there is no sold or intended for sale in the areas a storage tank that contains other DTAB uniform downstream sulfur standard listed in § 80.510(g)(1), the per-gallon imported by that importer. The DTAB until the downstream dates identified in sulfur standard of § 80.510(c) shall also may be discharged into a tank paragraphs (b)(3) through (b)(8) of this apply to all NRLM diesel fuel beginning containing finished diesel fuel of the section. August 1, 2012 for all downstream same category as the diesel fuel which (2) Except as provided in paragraphs locations other than retail outlets or will be produced using the DTAB (for (b)(5) and (b)(8) of this section, wholesale purchaser-consumer example, 15 ppm sulfur undyed or 15 beginning December 1, 2010, all NRLM facilities, shall apply to all NRLM diesel ppm sulfur dyed diesel fuel) provided diesel fuel must comply with the cetane fuel beginning October 1, 2012 for retail the blending process is performed in index or aromatics standard of § 80.510. outlets and wholesale purchaser- that same tank. (3) Except as provided in paragraphs consumer facilities, and shall apply to (e) The entity must account for the (b)(5) through (b)(8) of this section, the all NRLM diesel fuel beginning volume of diesel fuel produced using per-gallon sulfur standard of § 80.510(a) December 1, 2012 for all locations. DTAB in a manner that excludes the shall apply to all NRLM diesel fuel (8) The provisions of paragraphs (b)(5) volume of any previously designated beginning August 1, 2010 for all through (b)(7) of this section shall apply diesel fuel. The diesel fuel tank bottom downstream locations other than retail for all NRLM or NR diesel fuel that is may not be included in the company’s outlets or wholesale purchaser- sold or intended for sale in the area refinery compliance calculations for that consumer facilities, shall apply to all listed in § 80.510(g)(2), except for NRLM batch of diesel fuel if the fuel in that NRLM diesel fuel beginning October 1, or NR diesel fuel that is produced in tank bottom has been previously 2010 for retail outlets and wholesale accordance with a compliance plan designated by a refiner or importer. This purchaser-consumer facilities, and shall approved under § 80.554. exclusion of previously designated apply to all NRLM diesel fuel beginning (9) For the purposes of this section, diesel fuel must be accomplished using December 1, 2010 for all locations. distributors that have their own fuel the following approach: (4) Except as provided in paragraphs storage tanks and deliver only to (1) Determine the volume of any tank (b)(5) through (b)(8) of this section, the ultimate consumers shall be treated the bottom that is previously designated per-gallon sulfur standard of § 80.510(c) same as retailers and their facilities diesel fuel before any diesel fuel shall apply to all NRLM diesel fuel treated the same as retail outlets. production begins. beginning August 1, 2014 for all I 15. A new § 80.512 is added to read as (2) Add the DTAB plus any downstream locations other than retail follows: blendstock to the storage tank, and outlets or wholesale purchaser- completely mix the tank. consumer facilities, shall apply to all § 80.512 May an importer treat diesel fuel (3) Determine the volume and sulfur NRLM diesel fuel beginning October 1, as blendstock? content of the diesel fuel contained in 2014 for retail outlets and wholesale An importer may exclude diesel fuel the storage tank after blending is purchaser-consumer facilities, and shall that it imports from the requirements complete. Mathematically subtract the apply to all NRLM diesel fuel beginning under this subpart, and instead may volume of the tank bottom to determine December 1, 2014 for all locations. This designate such diesel fuel as diesel fuel the volume of the DTAB plus paragraph (b)(4) does not apply to LM treated as blendstock (DTAB), if all the blendstock added, and subsequently diesel fuel that is sold or intended for following conditions are met: transferred to another facility. Such fuel sale in areas other than those listed in (a) The DTAB must be included in all is reported to EPA as a batch of diesel § 80.510(g)(1) or (g)(2). applicable designation, credit and fuel under §§ 80.593, 80.601, and (5) For all NRLM diesel fuel that is compliance calculations for diesel fuel 80.604. sold or intended for sale in the areas for a refinery operated by the same (4) If previously designated motor listed in § 80.510(g)(1), the per-gallon entity that is the importer . That entity vehicle diesel fuel having a sulfur sulfur standard and the cetane index or must meet all refiner standards and content of 15 ppm or less is blended aromatics standard of 80.510(a) shall requirements. with DTAB, and the combined product apply to all NRLM diesel fuel beginning (b) The importer entity may not after blending has a sulfur content that August 1, 2007 for all downstream transfer title of the DTAB to another exceeds 15 ppm, the importer entity, in locations other than retail outlets or entity until the DTAB has been used to its capacity as a refiner, must wholesale purchaser-consumer produce diesel fuel and all refiner redesignate all the diesel fuel as 500 facilities, shall apply to all NRLM diesel standards and requirements have been ppm sulfur motor vehicle diesel fuel for fuel beginning October 1, 2007 for retail met for the diesel fuel produced. purposes of the temporary compliance outlets and wholesale purchaser- (c) The refinery at which the DTAB is option under § 80.530, or other consumer facilities, and shall apply to used to produce diesel fuel must be permissible redesignation under all NRLM diesel fuel beginning physically located at either the same § 80.598. If #2D 15 ppm sulfur motor December 1, 2007 for all locations. terminal at which the DTAB first arrives vehicle diesel fuel is redesignated as (6) For all NR diesel fuel that is sold in the U.S., the import facility, or at a #2D 500 ppm sulfur motor vehicle or intended for sale in the areas listed facility to which the DTAB is directly diesel fuel, such entity must apply the in § 80.510(g)(1), the per-gallon sulfur transported from the import facility. volume of previously designated 15 standard of § 80.510(b) shall apply to all (d) The DTAB must be completely ppm sulfur diesel fuel, for purposes of NR diesel fuel beginning August 1, 2010 segregated from any other diesel fuel, its operations as a distributor, to its

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downgrading limitation under § 80.527, (b) Beginning June 1, 2010, motor level less than or equal to 500 ppm, and if applicable, and for volume balancing vehicle diesel fuel produced by a designated as NRLM or LM that has not purposes under § 80.599. transmix processor is subject to the yet been distributed from a truck (5) As an alternative to paragraphs sulfur standard under § 80.520(a)(1). loading terminal or bulk terminal to a (e)(1) through (e)(4) of this section, (c) From June 1, 2007 through May 31, retail outlet, wholesale purchaser- where an importer has a blending tank 2010, NRLM diesel fuel produced by a consumer or ultimate consumer. that is used only to combine DTAB and transmix processor is exempt from the * * * * * blending components, and no standards of § 80.510(a). This paragraph I 18. Section 80.521 is revised to read as previously designated diesel fuel is (c) does not apply to NRLM diesel fuel follows: added to the tank, the importer entity, that is sold or intended for sale in the in its capacity as a refiner, may account areas listed in § 80.510(g)(1) or (g)(2). § 80.521 What are the standards and for the diesel fuel produced in such a (d) From June 1, 2010 through May identification requirements for diesel fuel blending tank by sampling and testing 31, 2014, NRLM diesel fuel produced by additives? for the sulfur content of the batch after a transmix processor is subject to the (a) Except as provided in paragraph DTAB and blendstock are added and standards under § 80.510(a). This (b) of this section, any diesel fuel mixed, and reporting the volume of paragraph (d) does not apply to NRLM additive that is added to, intended for diesel fuel transferred from that tank to diesel fuel that is sold or intended for adding to, used in, or offered for use in a different facility, up to the point sale in the areas listed in § 80.510(g)(1) any MVNRLM diesel fuel subject to the where a new blend is produced by or (g)(2). 15 ppm sulfur content standards of adding new DTAB and blendstock. (e) From June 1, 2014 and beyond, § 80.510(b), § 80.510(c), or § 80.520(a) at (f) The importer must include the NRLM diesel fuel produced by a any downstream location must— volume and sulfur content of each batch transmix processor is subject to the (1) Have a sulfur content less than or of DTAB in the annual importer reports standards of § 80.510(c), except that LM equal to 15 ppm. to EPA, as prescribed under §§ 80.593, diesel fuel is subject to the sulfur (2) Be accompanied by a product 80.601, and 80.604, but with a notation standard of § 80.510(a). This paragraph transfer document pursuant to § 80.591 that the batch is not included in the (e) does not apply to NRLM or LM indicating that the additive complies importer compliance calculations diesel fuel that is sold or intended for with the 15 ppm sulfur standard for because the product is DTAB. Any sale in the areas listed in § 80.510(g)(1) diesel fuel, except for those diesel fuel DTAB that ultimately is not used in the or (g)(2). additives which are only sold in importer’s refinery operation (for I 17. Section 80.520 is amended by containers for use by the ultimate example, a tank bottom of DTAB at the revising paragraph (b) and removing consumer of diesel fuel and which are conclusion of the refinery operation), paragraph (d) to read as follows: subject to the requirements of must be treated as newly imported § 80.591(d). diesel fuel, for which all required § 80.520 What are the standards and dye (b) Any diesel fuel additive that is requirements for motor vehicle diesel fuel? sampling and testing, and recordkeeping added to, intended for adding to, used must be accomplished, and included in * * * * * in, or offered for use in diesel fuel the importer’s compliance calculations (b) Dye requirements. (1) All motor subject to the 15 ppm sulfur content for the averaging period when this vehicle diesel fuel shall be free of standards of § 80.510(b) or (c) or sampling and testing occurs. visible evidence of dye solvent red 164 § 80.520(a) may have a sulfur content (g) The importer must retain records (which has a characteristic red color in exceeding 15 ppm provided that each of that reflect the importation, sampling diesel fuel), except for motor vehicle the following conditions are met: and testing, and physical movement of diesel fuel that is used in a manner that (1) The additive is added to or used any DTAB, and must make these records is tax exempt under section 4082 of the in the diesel fuel in a quantity less than available to EPA on request. Internal Revenue Code. All motor one percent by volume of the resultant I 16. A new § 80.513 is added to read as vehicle diesel fuel shall be free of additive/diesel fuel mixture; follows: yellow solvent 124. (2) The product transfer document (2) Until June 1, 2010, any #1D or #2D complies with the informational § 80.513 What provisions apply to distillate fuel that does not show visible requirements of § 80.591; and transmix processing facilities? evidence of dye solvent red 164 shall be (3) The additive is not used or For purposes of this section, transmix considered to be motor vehicle diesel intended for use by an ultimate means a mixture of finished fuels that fuel and subject to all the requirements consumer in diesel motor vehicles or no longer meets the specifications for a of this subpart for motor vehicle diesel nonroad diesel engines. fuel that can be used or sold without fuel, except for distillate fuel designated I 19. Section 80.522 is revised to read as further processing. This section applies or classified as any of the following: follows: to refineries that produce diesel fuel (i) For use only in the State of Alaska, from transmix by distillation or other as provided under 40 CFR 69.51. § 80.522 May used motor oil be dispensed refining processes but do not produce (ii) For use under a national security into diesel motor vehicles or nonroad diesel diesel fuel by processing crude oil. This exemption under § 80.606 or for use engines? section only applies to the volume of only in a research and development No person may introduce used motor diesel fuel produced by such a transmix testing program exempted under oil, or used motor oil blended with processor using these processes, and § 80.607. diesel fuel, into the fuel system of does not apply to any diesel fuel (iii) For use in the U.S. Territories as model year 2007 or later diesel motor produced by the blending of provided under § 80.608. vehicles or model year 2011 or later blendstocks. (iv) Jet fuel meeting the definition nonroad diesel engines (not including (a) From June 1, 2006 through May 31, under § 80.2. locomotive or marine diesel engines), 2010, motor vehicle diesel fuel (v) Kerosene meeting the definition unless both of the following produced by a transmix processor is under § 80.2. requirements have been met: subject to the 500 ppm sulfur standard (vi) Diesel fuel that is produced (a) The vehicle or engine under § 80.520(c). beginning June 1, 2006, with a sulfur manufacturer has received a Certificate

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of Conformity under 40 CFR part 86, 40 (4) Compliance with the limitation of during a compliance period (V500, as CFR part 89, or 40 CFR part 1039 and paragraph (c)(1) of this section shall be provided in paragraph (a)(5) of this the certification of the vehicle or engine as calculated under § 80.599(e). section, may not exceed the following configuration is explicitly based on (d) Diesel fuel in violation of the 15 volume limit: emissions data with the addition of ppm standard. Where motor vehicle (A) For the compliance periods prior motor oil; and diesel fuel subject to the 15 ppm sulfur to the period from July 1, 2009 through (b) The oil is added in a manner and standard of § 80.520(a)(1) is found to be May 31, 2010, 20 percent of the volume rate consistent with the conditions of in violation of any standard under of motor vehicle diesel fuel that is the Certificate of Conformity. § 80.520(a) and is consequently produced or imported during a I 20. Section 80.523 is removed and downgraded to 500 ppm sulfur motor compliance period (Vt) plus an reserved. vehicle diesel fuel, the person having additional volume of motor vehicle custody of the fuel at the time it is found diesel fuel represented by credits § 80.523 [Removed and Reserved] to be in violation must include the properly generated and used pursuant to I 21. Section 80.527 is revised to read as volume of such downgraded fuel toward the requirements of §§ 80.531 and follows: its 20 percent volume limitation under 80.532. (B) For the compliance period from § 80.527 Under what conditions may motor paragraph (c)(1) of this section, unless the person demonstrates that it did not July 1, 2009 through May 31, 2010, 20 vehicle diesel fuel subject to the 15 ppm percent of the volume of motor vehicle sulfur standard be downgraded to motor cause the violation. vehicle diesel fuel subject to the 500 ppm (e) Special provisions for retail outlets diesel fuel that is produced or imported sulfur standard? and wholesale purchaser-consumer prior to January 1, 2010 during the compliance period (V ), plus an (a) Definitions. As used in this facilities. Notwithstanding the t provisions of paragraph (c)(1) of this additional volume of motor vehicle section, downgrade means changing the diesel fuel represented by credits designation or classification of motor section, retailers and wholesale purchaser-consumers shall comply with properly generated and used pursuant to vehicle diesel fuel subject to the 15 ppm the requirements of §§ 80.531 and sulfur standard under § 80.520(a)(1) to the downgrading limitation as follows: (1) Retailers and wholesale purchaser- 80.532. From January 1, 2010 through motor vehicle diesel fuel subject to the May 31, 2010, the volume of motor 500 ppm sulfur standard under consumers who sell, offer for sale, or dispense motor vehicle diesel fuel that vehicle diesel fuel that is produced or § 80.520(c). A downgrade occurs when imported shall not exceed the volume the change in designation or is subject to the 15 ppm sulfur standard under § 80.520(a)(1) are exempt from the represented by credits used pursuant to classification takes place. Changing the § 80.532. designation or classification of motor volume limitations of paragraph (c)(1) of this section. (ii) The terms V500 and Vt have the vehicle diesel fuel subject to the 15 ppm meaning specified in § 80.531(a)(2). sulfur standard under § 80.520(a)(1) to (2) A retailer or wholesale purchaser- consumer who does not sell, offer for (4) Compliance with the volume limit any designation or classification that is in paragraph (a)(3) of this section must sale, or dispense motor vehicle diesel not a motor vehicle diesel fuel is not a be determined separately for each fuel subject to the 15 ppm sulfur downgrade for purposes of this section. refinery. For an importer, such standard under § 80.520(a)(1) must (b) Who is subject to the downgrade compliance must be determined comply with the downgrading limitation: Any distributor, retailer, or separately for each Credit Trading Area limitations of paragraph (c) of this wholesale purchaser consumer that (as defined in § 80.531) into which section, and compliance shall be takes custody of any diesel fuel motor vehicle diesel fuel is imported. If calculated as specified in § 80.599(e)(2). designated or classified as #2D 15 ppm a party is both a refiner and an importer, sulfur motor vehicle diesel fuel and (f) Termination of downgrading limitations. The provisions of this such compliance shall be determined delivers any diesel fuel designated or separately for the refining and classified as #2D 500 ppm motor vehicle section shall not apply after May 31, 2010. importation activities. diesel fuel. (5) Compliance with the volume limit I 22. Section 80.530 is revised to read as (c) Downgrading limitation. (1) Except in paragraph (a)(3) of this section shall follows: as provided in paragraphs (d) and (e) of be determined on an annual basis, this section, a person described in § 80.530 Under what conditions can 500 where the annual compliance period is paragraph (b) of this section may not ppm motor vehicle diesel fuel be produced from July 1 through June 30. For the downgrade a total of more than 20 or imported after May 31, 2006? year 2006, compliance shall be percent of the #2D motor vehicle diesel (a) Beginning June 1, 2006, a refiner determined for the period June 1, 2006 fuel (by volume) that is subject to the 15 or importer may produce or import through June 30, 2007. For the year ppm sulfur standard of § 80.520(a)(1) to motor vehicle diesel fuel subject to the 2010, compliance shall be determined #2D motor vehicle diesel fuel subject to 500 ppm sulfur content standard of for the period of July 1, 2009 through the sulfur standard of § 80.520(c) while § 80.520(c) if all of the following May 31, 2010. such person has custody of such fuel. requirements are met: (6) Any motor vehicle diesel fuel (2) The limitation of paragraph (c)(1) (1) Each batch of motor vehicle diesel produced or imported above the volume of this section applies separately to each fuel subject to the 500 ppm sulfur limit in paragraph (a)(3) of this section facility as defined under § 80.502 where content standard must be designated by shall be subject to the 15 ppm sulfur there is custody of the fuel when it is the refiner or importer as subject to such content standard. However, for any downgraded. standard, pursuant to § 80.598(a). compliance period prior to the (3) Compliance with the limitation of (2) The refiner or importer must meet compliance period July 1, 2009 through paragraph (c)(1) of this section applies the requirements for product transfer May 31, 2010, a refiner or importer may separately for the compliance periods of documents in § 80.590 for each batch exceed the volume limit in paragraph October 1, 2006 through May 31, 2007; subject to the 500 ppm sulfur content (a)(3) of this section by no more than 5 June 1, 2007 through June 30, 2008; July standard. percent of the volume of diesel fuel 1, 2008 through June 30, 2009; July 1, (3)(i) The volume of motor vehicle produced or imported during the 2009 through May 31, 2010. diesel fuel that is produced or imported compliance period (Vt), provided that

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for the immediately following a sulfur content less than or equal to 500 volume limit of § 80.530(a)(3) provided compliance period: ppm. that: (i) The refiner or importer complies * * * * * (1) The motor vehicle diesel fuel with the volume limit in paragraph (d) * * * credits were generated and reported (a)(3) of this section; and (1) The designation requirements of according to the requirements of this (ii) The refiner or importer produces § 80.598, and all recordkeeping and subpart; and or imports a volume of motor vehicle reporting requirements of §§ 80.592, (2) The conditions of this section are diesel fuel subject to the 15 ppm sulfur 80.593, 80.594, 80.600, and 80.601. met. standard, or obtains credits properly * * * * * (b) Use of credits generated under generated and used pursuant to the (5) In addition to the reporting § 80.531. Motor vehicle diesel fuel requirements of §§ 80.531 and 80.532 requirements under paragraph (d)(1) of credits generated under § 80.531 may be that represent a volume of motor vehicle this section, the refiner or importer must used by a refiner or by an importer to diesel fuel, equal to the volume of the submit a report to the Administrator no comply with § 80.530 by applying one exceedance for the prior compliance later than August 31, 2005 for the period credit for every gallon of motor vehicle period. from June 1, 2004 through May 31, diesel fuel needed to meet compliance (b) After May 31, 2010, no refiner or 2005, or August 31, 2006 for the period with the volume limit of § 80.530(a)(3). importer may produce or import motor from June 1, 2005 through May 31, (c) Credit banking. Motor vehicle vehicle diesel fuel subject to the 500 2006, demonstrating that all the motor diesel fuel credits generated may be ppm sulfur content standard pursuant to vehicle diesel fuel produced or banked for use or transfer in a later this section. imported for which credits were compliance period or may be transferred I 23. Section 80.531 is amended by generated met the applicable to another refiner or importer for use as revising paragraphs (a)(1), (a)(2), (d)(1) requirements of paragraph (b), (c), or provided in paragraph (d) of this (d)(5), (e)(1), and (e)(2)(i) to read as (d)(4) of this section. If the section. follows: Administrator finds that such credits (d) Credit transfers. (1) Motor vehicle did not in fact meet the requirements of diesel fuel credits obtained from another § 80.531 How are motor vehicle diesel fuel refiner or from another importer, credits generated? paragraphs (b)(1) and (c)(1) of this section, as applicable, or if the including early motor vehicle diesel fuel (a) * * * credits and small refiner motor vehicle (1) A refiner or importer may generate Administrator determines that there is insufficient information to determine diesel fuel credits as described in credits during the period June 1, 2006 § 80.531(b) through (e), may be used to through December 31, 2009, for motor the validity of such credits, the Administrator may deny the credits satisfy the volume limit of § 80.530(a)(3) vehicle diesel fuel produced or if all the following conditions are met: imported that is designated as subject to submitted in whole or in part. (e) * * * (i) The motor vehicle diesel fuel the 15 ppm sulfur content standard (1) Notwithstanding the provisions of credits were generated in the same CTA under § 80.520(a)(1). Credits may be paragraph (a) of this section, a small as the CTA in which motor vehicle generated only if the volume of motor refiner that is approved by the EPA as diesel fuel credits are used to achieve vehicle diesel fuel designated under a small refiner under § 80.551(g) may compliance; § 80.598(a) as subject to the 15 ppm generate credits under § 80.552(b). Such (ii) The motor vehicle diesel fuel sulfur standard of § 80.520(a) exceeds 80 a small refiner may generate one credit credits are used in compliance with the percent of the total volume of motor for each gallon of motor vehicle diesel time period limitations for credit use in vehicle diesel fuel produced or fuel produced that is designated under this subpart; imported as described in paragraph § 80.598 as motor vehicle diesel fuel (iii) Any credit transfer takes place no (a)(2) of this section. subject to the 15 ppm sulfur standard later than the August 31 following the (2) The number of motor vehicle under § 80.520(a)(1). compliance period when the motor diesel fuel credits generated shall be (2) * * * vehicle diesel fuel credits are used; calculated for each compliance period (i) Credits may be generated under (iv) No credit may be transferred more (as specified in § 80.530(a)(5)) as this paragraph (e) and § 80.552(b) only than twice, as follows: The first transfer follows: during the compliance periods by the refiner or importer who generated C = V1515¥(0.80 × Vt) beginning June 1, 2006 and ending on the credit may only be made to a refiner Where: May 31, 2010, however diesel fuel or importer who intends to use the C = the positive number of motor vehicle produced after December 31, 2009 shall credit; if the transferee cannot use the diesel fuel credits generated, in gallons. not generate credits. Credits shall be credit, it may make a second and final V15 = the total volume in gallons of diesel transfer only to a refiner or importer fuel produced or imported that is designated separately by refinery, designated under § 80.598 as motor separately by CTA of generation, and who intends to use the credit. In no case vehicle diesel fuel and subject to the separately by annual compliance period. may a credit be transferred more than standards of § 80.520(a) during the The annual compliance period for 2006 twice before being used or terminated; compliance period. shall be June 1, 2006 through June 30, (v) The credit transferor must apply Vt n =15 + V500. 2007. The annual compliance period for any motor vehicle diesel fuel credits V500 = the total volume in gallons of diesel 2010 shall be July 1, 2009 through May necessary to meet the transferor’s fuel produced or imported that is 31, 2010. annual compliance requirements before designated under § 80.598(a) as motor transferring motor vehicle diesel fuel vehicle diesel fuel and subject to the 500 * * * * * I credits to any other refinery or importer; ppm sulfur standard under § 80.520(c) 24. Section 80.532 is revised to read as follows: (vi) No motor vehicle diesel fuel plus the total volume of any other diesel credits may be transferred that would fuel (not including V , diesel fuel that 15 § 80.532 How are motor vehicle diesel fuel is dyed in accordance with § 80.520(b) at result in the transferor having a negative credits used and transferred? the refinery or import facility where the credit balance; and diesel fuel is produced or imported, or (a) Credit use stipulations. Motor (vii) Each transferor must supply to diesel fuel that is designated as NRLM vehicle diesel fuel credits generated the transferee records indicating the under § 80.598(a)) represented as having under § 80.531 may be used to meet the year the motor vehicle diesel fuel

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credits were generated, the identity of section by the dates specified in (6) Other appropriate information as the refiner (and refinery) or importer paragraph (f) of this section. A refiner requested by EPA. who generated the motor vehicle diesel must apply for a motor vehicle baseline (d) Calculation of the Motor vehicle fuel credits, the CTA of credit for each refinery in order to generate Baseline, BMV. (1) Under paragraph generation, and the identity of the credits under § 80.535 and apply for a (c)(2)(i) of this section, BMV equals the transferring entity, if it is not the same non-highway baseline for each refinery average annual volume of motor vehicle entity who generated the motor vehicle to use the provisions of § 80.554 (a), (b), diesel fuel produced or imported from diesel fuel credits. or (d). January 1, 2003 through December 31, (2) In the case of motor vehicle diesel (b) The baseline must be sent to the 2005. fuel credits that have been calculated or following address: U.S. EPA—Attn: (2) Under paragraph (c)(2)(ii) of this created improperly, or are otherwise Nonroad Rule Diesel Fuel Baseline, section, BMV equals the average annual determined to be invalid, the following Transportation and Regional Programs volume of motor vehicle diesel fuel provisions apply: Division (6406J), 1200 Pennsylvania produced during the period from (i) Invalid motor vehicle diesel fuel Avenue, NW., Washington, DC 20460 January 1, 2006 through December 31, credits cannot be used to achieve (regular mail) or U.S. EPA, Attn: 2008. compliance with the transferee’s volume Nonroad Rule Diesel Fuel Baseline, (3) For purposes of this paragraph, requirements regardless of the Transportation and Regional Programs fuel produced for export, jet fuel transferee’s good faith belief that the Division (6406J), 1310 L Street, NW., 6th (kerosene), and fuel specifically motor vehicle diesel fuel credits were floor, Washington, DC 20005 (express produced to meet military specifications valid. mail). (such as JP–4, JP–8, and F–76), shall not (ii) The refiner or importer who used (c) A baseline application must be be included in baseline calculations. the motor vehicle diesel fuel credits, submitted for each refinery or import (e) Calculation of the Non-highway and any transferor of the motor vehicle facility and include the following Baseline, BNRLM. (1) Under paragraph diesel fuel credits, must adjust their information: (c)(2)(i) of this section, BNRLM equals the credit records, reports and compliance (1) A listing of the names and average annual volume of all #2D calculations as necessary to reflect the addresses of all refineries or import distillate produced or imported from proper motor vehicle diesel fuel credits. facilities owned by the company for January 1, 2003 through December 31, (iii) Any properly created motor which the refiner or importer is 2005, less BMV as determined in vehicle diesel fuel credits existing in the applying for a motor vehicle or non- paragraph (d)(1) of this section. transferor’s credit balance after highway baseline. (2) Under paragraph (c)(2)(ii) of this correcting the credit balance, and after (2)(i) For purposes of a motor vehicle section, NRLM equals the average annual the transferor applies motor vehicle baseline volume for use in determining volume of MVNRLM produced or diesel fuel credits as needed to meet the early credits per § 80.535(a) and (b) and imported from January 1, 2006 through compliance requirements at the end of for purposes of a non-highway baseline December 31, 2008, less BMV as the compliance period, must first be volume used in determining compliance determined in paragraph (d)(2) of this applied to correct the invalid transfers with the provisions of § 80.554(a) or (d), section. before the transferor trades or banks the the baseline volume produced during (3) For purposes of this paragraph (e), motor vehicle diesel fuel credits. the three calendar years beginning fuel produced for export, jet fuel, (e) Limitations on credit use. (1) January 1, 2003, 2004, and 2005, as kerosene, and fuel specifically produced Motor vehicle diesel fuel credits may calculated under paragraph (e)(1) of this to meet military specification (such as not be used to achieve compliance with section. JP–4, JP–8, and F–76), shall not be any requirements of this subpart other (ii) For purposes of a motor vehicle included in baseline calculations. than the volume limit of § 80.530(a)(3), baseline volume for use in determining (f)(1) Applications submitted under unless specifically approved by the early credits per § 80.535(c) and for paragraph (c)(2)(i) of this section must Administrator pursuant to a hardship purposes of a non-highway baseline be postmarked by February 28, 2006. relief petition under § 80.560 or 80.561. volume used in determining compliance (2) Applications submitted under (2) A refiner or importer possessing with the provisions of § 80.554(b), the paragraph (c)(2)(ii) of this section must motor vehicle diesel fuel credits must baseline volumes produced during the be postmarked by February 28, 2009. use all motor vehicle diesel fuel credits three calendar years beginning January (g)(1) For applications submitted in its possession prior to applying the 1, 2006, 2007, and 2008, as calculated under paragraph (c)(2)(i) of this section, credit deficit provisions of under paragraph (e)(2) of this section. EPA will notify refiners or importers by § 80.530(a)(6). (3) A letter signed by the president, June 1, 2006 of approval of the baselines (3) No motor vehicle diesel fuel chief operating officer of the company, for each of the refiner’s refineries or credits may be used to meet compliance or his/her delegate, stating that the importer’s import facilities or of any with this subpart subsequent to the information contained in the motor deficiencies in the refiner’s or compliance period ending May 31, vehicle or non-highway baseline importer’s application. 2010. application is true to the best of his/her (2) For applications submitted under I 25. A new § 80.533 is added to read as knowledge. paragraph (c)(2)(ii) of this section, EPA follows: (4) Name, address, phone number, will notify refiners or importers by June facsimile number and e-mail address of 1, 2009 regarding approval of the § 80.533 How does a refiner or importer a corporate contact person. baselines for each of the refiner’s apply for a motor vehicle or non-highway (5) For each batch of diesel fuel refineries or importer’s import facilities baseline? produced or imported during each of any deficiencies in the refiner’s or (a) A refiner or importer wishing to calendar year: importer’s application. generate credits under § 80.535 or use (i) The date that production was (h) If at any time the motor vehicle the small refiner provisions under completed or importation occurred for baseline or non-highway baseline § 80.554 must submit an application to the batch and the batch designation or submitted in accordance with the EPA that includes the information classification. requirements of this section is required under paragraph (c) of this (ii) The batch volume. determined to be incorrect, EPA will

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notify the refiner or importer of the importer for the same motor vehicle did not in fact meet the requirements of corrected baseline and any compliance diesel fuel. paragraphs (a)(1) through (a)(5) of this calculations made on the basis of that (iii) Credits shall not be generated section, as applicable, or if the baseline will have to be adjusted under both § 80.531 and this section for Administrator determines that there is retroactively. the same diesel fuel. insufficient information to determine I 26. A new § 80.535 is added to read as (iv) Any credits generated by a foreign the validity of such credits, the follows. refiner shall be generated as provided in Administrator may deny the credits § 80.620(c) and this section. submitted in whole or in part. § 80.535 How are NRLM diesel fuel credits (4) No credits may be generated under (3) In addition, a foreign refiner that generated? this paragraph (a) after May 31, 2007. is approved by the Administrator to (a) Generation of high sulfur NRLM (5) Any fuel for which a refiner or generate credits under § 80.554 shall credits from June 1, 2006 through May importer wishes to generate credits must comply with the requirements of 31, 2007. (1) During the period June 1, be designated as 500 ppm sulfur NRLM § 80.620. 2006 through May 31, 2007, a refiner or diesel fuel when delivered to the next (c) Generation of 500 ppm sulfur importer may generate credits pursuant entity. The refiner may not designate the NRLM credits from June 1, 2009 through to the provisions of this section if all of fuel as 500 ppm sulfur with the intent May 31, 2010. (1) During the period of the following conditions are met: that it be mixed by the next entity with June 1, 2009 through May 31, 2010, a (i) The refiner or importer notifies a batch of distillate with a higher sulfur refiner or importer may generate credits EPA of its intention to generate credits level to create a fuel with a pursuant to the provisions of this and the period during which it will classification other than 500 ppm sulfur section if all of the following conditions generate credits. This notification must or the classification of the fuel it is are met: be received by EPA at least 120 calendar mixed with (e.g., it cannot mix fuel (i) The refiner or importer notifies days prior to the date it begins designated as 500 ppm sulfur with fuel EPA of its intention to generate credits generating credits under this section. classified as high sulfur to produce a and the period during which it will (ii) Each batch or partial batch of fuel classified as 2000 ppm sulfur to generate credits. This notification must NRLM diesel fuel for which credits are meet state or local sulfur limits). be received by EPA at least 120 calendar claimed shall be subject to all of the (6) The refiner or importer must days prior to the date it begins provisions of this subpart for NRLM submit a report to the Administrator no generating credits under this section. diesel fuel as if it had been produced later than July 31, 2007. The report must (ii) Each batch or partial batch of after June 1, 2007 and before June 1, demonstrate that all the NRLM diesel NRLM diesel fuel for which credits are 2010. fuel produced or imported which claimed shall be subject to all of the (iii) The number of high-sulfur NRLM generated credits met the applicable provisions of this subpart for NRLM credits (HSC) that are generated shall be requirements of paragraphs (a)(1) diesel fuel as if it had been produced a positive number. through (a)(5) of this section. If the after June 1, 2010. (2) The refiner or importer shall Administrator finds that such credits (iii) The number of 500 ppm sulfur choose one of the following methods for did not in fact meet the requirements of NRLM credits in gallons that are calculating credits for each calculation paragraphs (a)(1) through (a)(5) of this generated, C500, shall be a positive period. section, as applicable, or if the number calculated as follows: (i) For fuel that is dyed under the Administrator determines that there is ¥ provisions of § 80.520, HSC equals the insufficient information to determine C500 = V15 BMV volume of fuel in gallons produced or the validity of such credits, the Where: V15 = The total volume in gallons of 15 ppm imported during the period identified in Administrator may deny the credits diesel fuel produced or imported during paragraph (a)(1) of this section that is submitted in whole or in part. the period stated under paragraph designated as NRLM diesel fuel and that (b) Generation of high-sulfur NRLM (c)(1)(i) of this section that is designated is subject to and complies with the credits by small refiners from June 1, as either motor vehicle diesel fuel or provisions of § 80.510(a); or 2006 through May 31, 2010. (1) NRLM diesel fuel. (ii) For dyed or undyed fuel that Notwithstanding the dates specified in BMV = As determined in § 80.533(d)(2). complies with the provisions of § 80.598 paragraph (a) of this section, during the (2) 500 ppm sulfur NRLM credits for a calculation period of June 1, 2006 period from June 1, 2006 through May shall be generated and designated as through May 31, 2007, determine HSC 31, 2010, a refiner that is approved by follows: as follows: the EPA as a small refiner under (i) Credits shall be generated § 80.551 may generate credits under HSC = V510 + V520 ¥ BMV separately for each refiner or importer. paragraph (a) of this section during any Where: (ii) Credits may not be generated by compliance period as specified under both a foreign refiner and by an V510 = The total volume of NRLM diesel fuel § 80.599(a)(2) for diesel fuel produced or produced or imported during the annual importer for the same diesel fuel. calculation period that complies with the imported that is designated as NRLM (iii) Credits shall not be generated standards of § 80.510(a) or (b). diesel fuel and complies with the under both § 80.531 and this section for V520 = The total volume of motor vehicle provisions of § 80.510(a). the same diesel fuel. diesel fuel produced or imported during (2) The small refiner must submit a (iv) Any credits generated by a foreign the annual calculation period that report to the Administrator no later than refiner shall be generated as provided in complies with the standards of August 31 after the end of each § 80.620(c) and this section. § 80.520(a) or (c). calculation period during which credits (3) No credits may be generated under BMV = As calculated in § 80.533(d)(1). were generated. The report must this paragraph (c) after May 31, 2010. (3) High-sulfur NRLM credits shall be demonstrate that all the NRLM diesel (4) The refiner or importer must generated and designated as follows: fuel produced or imported which submit a report to the Administrator no (i) Credits shall be generated generated credits met the applicable later than August 31, 2010. The report separately for each refiner or importer. requirements of paragraphs (a)(1) must demonstrate that all the 15 ppm (ii) Credits may not be generated by through (a)(5) of this section. If the sulfur NRLM diesel fuel produced or both a foreign refiner and by an Administrator finds that such credits imported which generated credits met

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the applicable requirements of (1) The credits were generated and regardless of the transferee’s good faith paragraphs (c)(1) through (c)(3) of this reported according to the requirements belief that the credits were valid. section. If the Administrator finds that of this subpart; and (ii) The refiner or importer that used such credits did not in fact meet the (2) The conditions of this section are the credits, and any transferor of the requirements of paragraphs (c)(1) met. credits, must adjust its credit records, through (c)(3) of this section, as (b) Using credits generated under reports and compliance calculations as applicable, or if the Administrator § 80.535. Credits generated under necessary to reflect the proper credits. determines that there is insufficient § 80.535 may be used by a refiner or an (iii) Any properly created credits information to determine the validity of importer to comply with the diesel fuel existing in the transferor’s credit such credits, the Administrator may standards of § 80.510 (a), (b), and (c) by balance after correcting the credit deny the credits submitted in whole or applying one credit for every gallon of balance, and after the transferor applies in part. diesel fuel that does not comply with credits as needed to meet the compliance requirements at the end of (d) Generation of 500 ppm sulfur the applicable standard. (c) Credit banking. Credits generated the calendar year, must first be applied NRLM credits by small refiners from may be banked for use at a later time or to correct the invalid transfers before the June 1, 2009 through December 31, may be transferred to any other refiner transferor trades or banks the credits. 2013. (1) Notwithstanding the dates or importer nationwide for use as (e) General limitation on credit use. specified in paragraph (c) of this provided in paragraph (d) of this Credits may not be used to achieve section, during the period from June 1, section. compliance with any requirements of 2009 through December 31, 2013, a (d) Credit transfers. (1) Credits this subpart other than the standards of refiner that is approved by the EPA as generated under § 80.535 that are § 80.510(a), (b), and (c), unless a small refiner under § 80.551 may obtained from another refiner or specifically approved by the generate credits under paragraph (c) of importer may be used to comply with Administrator pursuant to a hardship this section during any compliance the diesel fuel sulfur standards of relief petition under § 80.560 or period as specified under § 80.599(a)(2) § 80.510(a), (b), and (c) if all the § 80.561. for diesel fuel produced or imported following conditions are met: (f) Use of high sulfur NRLM credits. that is designated as NR or NRLM diesel (i) The credits are used in compliance (1) High sulfur NRLM credits generated fuel and complies with the provisions of with the time period limitations for under § 80.535(a) or (b) may be used on § 80.510(b) or (c). credit use in this subpart; a one-for-one basis to meet the NRLM (2) The small refiner must submit a (ii) Any credit transfer is completed diesel fuel sulfur standard of § 80.510(a) report to the Administrator no later than no later than August 31 following the from June 1, 2007 through May 31, August 31 after the end of each compliance period when the credits are 2010. For example, one credit generated calculation period during which credits used to comply with a standard under by the production or importation of one were generated. The report must paragraph (a) of this section; gallon of NRLM diesel fuel subject to demonstrate that all the 15 ppm sulfur (iii) No credit is transferred more than the NRLM diesel fuel sulfur standard of NR or NRLM diesel fuel produced or twice, as follows: § 80.510 (a) may be used to produce or imported for which credits were (A) The first transfer by the refiner or import one gallon of NRLM diesel fuel generated met the applicable importer who generated the credit may that is exempt from the sulfur standard requirements of paragraphs (c)(1) only be made to a refiner or importer of § 80.510(a) during the period from through (c)(3) of this section. If the that intends to use the credit; if the June 1, 2007 through May 31, 2010. Administrator finds that such credits transferee cannot use the credit, it may (2) Any high sulfur NRLM diesel fuel did not in fact meet the requirements of make a second and final transfer only to produced after June 1, 2007 through the paragraphs (c)(1) through (c)(3) of this a refiner or importer who intends to use use of credits must— section, as applicable, or if the the credit; and (i) Be dyed red under the provisions Administrator determines that there is (B) In no case may a credit be of § 80.520 at the point of production or insufficient information to determine transferred more than twice before it is importation; the validity of such credits, the used or it expires; (ii) Be associated with a product Administrator may deny the credits (iv) The credit transferor applies any transfer document that bears a unique submitted in whole or in part. credits necessary to meet the transferor’s product code as specified in § 80.590; annual compliance requirements before (3) In addition, a foreign refiner that and transferring credits to any other refinery (iii) Not be used to sell or deliver is approved by the Administrator to or importer; diesel fuel into areas specified in generate credits under § 80.554 shall (v) No credits are transferred that § 80.510(g)(1) or (g)(2). comply with the requirements of would result in the transferor having a (3) No high sulfur NRLM credits may § 80.620. negative credit balance; and be used subsequent to the compliance I 27. A new § 80.536 is added to read as (vi) Each transferor supplies to the period ending May 31, 2010. follows: transferee records indicating the year (4) Any high sulfur NRLM credits not the credits were generated, the identity used under the provisions of paragraph § 80.536 How are NRLM diesel fuel credits used and transferred? of the refiner (and refinery) or importer (f)(1) of this section may be converted that generated the credits, and the into 500 ppm sulfur NRLM credits on a (a) Credit use stipulations. Credits identity of the transferor, if it is not the one-for-one basis for use under generated under § 80.535(a) and (b) may same party that generated the credits. paragraph (g) of this section. be used to meet the NRLM diesel fuel (2) In the case of credits that have (g) Use of 500 ppm sulfur NRLM sulfur standard of § 80.510(a), and been calculated or created improperly, credits. (1) 500 ppm sulfur NRLM credits generated under 80.535(c) and or are otherwise determined to be credits generated under § 80.535(c) or (d) may be used to meet the NR and invalid, the following provisions apply: (d) or converted from high sulfur NRLM NRLM diesel fuel sulfur standard of (i) Invalid credits cannot be used to credits under paragraph (f)(3) of this 80.510(b) and (c), respectively, provided achieve compliance with the section may be used on a one-for-one that: transferee’s volume requirements basis to meet the NR or NRLM diesel

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fuel sulfur standards of § 80.510(b) or (c) (f) Compliance with the volume Corporation organized pursuant to the from June 1, 2010 through May 31, requirements in paragraph (e) of this Alaska Native Claims Settlement Act (43 2014. For example, one credit generated section shall be determined each U.S.C. 1601) is not considered an by the production or importation of one compliance period. Annual compliance affiliate of such entity, or with other gallon of NRLM diesel fuel subject to periods shall be from July 1 through concerns owned by such entity solely the NRLM diesel fuel sulfur standard of June 30. For the year 2006, the because of their common ownership. § 80.510 (c) may be used to produce or compliance period shall be from June 1, (d)(1) Notwithstanding the provisions import one gallon of NR diesel fuel that 2006 through June 30, 2007. of paragraph (a) of this section, a refiner is subject to the sulfur standard of * * * * * that acquires or reactivates a refinery § 80.510(a) during the period from June I 29. Section 80.550 is amended by that was shut down or non-operational 1, 2010 through May 31, 2014. revising the section heading and between January 1, 1999, and January 1, (2) Any 500 ppm sulfur NR or NRLM paragraphs (a), (b), (c), (d), (e) and (f) to 2000, may apply for motor vehicle diesel fuel produced or imported after read as follows: diesel fuel small refiner status in June 1, 2010 through the use of these accordance with the provisions of § 80.550 What is the definition of a motor credits must— vehicle diesel fuel small refiner or a NRLM § 80.551(c)(1)(ii). (i) Bear a unique product code as diesel fuel small refiner under this subpart? (2) Notwithstanding the provisions of specified in § 80.590; and (a) A motor vehicle diesel fuel small paragraph (b) of this section, a refiner (ii) Not be used to sell or deliver refiner is defined as any person, as that acquires or reactivates a refinery diesel fuel into areas specified in defined by 42 U.S.C. 7602(e), who— that was shutdown or non-operational § 80.510(g)(1) or (g)(2). (1) Produces diesel fuel at a refinery between January 1, 2002, and January 1, (3) No 500 ppm sulfur NRLM credits by processing crude oil through refinery 2003, may apply for NRLM diesel fuel may be used after May 31, 2014. processing units; and small refiner status in accordance with I 28. Section 80.540 is amended by (2) Employed an average of no more the provisions of § 80.551(c)(2)(ii). revising paragraphs (b), (d), (e), and (f) to than 1,500 people, based on the average (e) The following are ineligible for the read as follows: number of employees for all pay periods small refiner provisions: from January 1, 1999, to January 1, 2000; (1)(i) For motor vehicle diesel fuel, § 80.540 How may a refiner be approved to and refiners with refineries built or started produce gasoline under the GPA gasoline (3) Had an average crude oil capacity up after January 1, 2000. sulfur standards in 2007 and 2008? less than or equal to 155,000 barrels per (ii) For NRLM diesel fuel, refiners * * * * * calendar day (bpcd) for 1999; or with refineries built or started up after (b) The refiner must submit an (4) Has been approved by EPA as a January 1, 2003. application in accordance with the small refiner under § 80.235 and (2)(i) For motor vehicle diesel fuel, provisions of §§ 80.595 and 80.596. The continues to meet the criteria of a small persons who exceed the employee or application must also include refiner under § 80.225. crude oil capacity criteria under this information, as provided in § 80.594(c), (b) A NRLM diesel fuel small refiner section on January 1, 2000, but who demonstrating that starting no later than is defined as any person, as defined by meet these criteria after that date, June 1, 2006, 95 percent of the motor 42 U.S.C. 7602(e), who— regardless of whether the reduction in vehicle diesel fuel produced by the (1) Produces diesel fuel at a refinery employees or crude oil capacity is due refinery for United States use will by processing crude oil through refinery to operational changes at the refinery or comply with the 15 ppm sulfur standard processing units; a company sale or reorganization. under § 80.520(a)(1), and that the (2) Employed an average of no more (ii) For NRLM diesel fuel, persons volume of motor vehicle diesel fuel than 1,500 people, based on the average who exceed the employee or crude oil produced will comply with the volume number of employees for all pay periods capacity criteria under this section on requirements of paragraph (e) of this from January 1, 2002, to January 1, 2003; January 1, 2003, but who meet these section. and criteria after that date, regardless of (3) Had an average crude oil capacity * * * * * whether the reduction in employees or less than or equal to 155,000 barrels per (d) From June 1, 2006 through crude oil capacity is due to operational calendar day (bpcd) for 2003. December 31, 2008, 95 percent of the (c) Determine the number of changes at the refinery or a company motor vehicle diesel fuel produced by a employees and crude oil capacity under sale or reorganization. refiner that has been approved under paragraphs (a) or (b) of this section, as (3) Importers. paragraph (c) of this section to produce follows: (4) Refiners who produce motor gasoline subject to the GPA gasoline (1) The refiner shall include the vehicle diesel fuel or NRLM diesel fuel sulfur standards in 2007 and 2008, must employees and crude oil capacity of any other than by processing crude oil be accurately designated under § 80.598 subsidiary companies, any parent through refinery processing units. as meeting the 15 ppm sulfur standard company and subsidiaries of the parent (f)(1)(i) Refiners who qualify as motor of § 80.520(a)(1). company in which the parent has 50 vehicle diesel fuel small refiners under (e) The total volume of motor vehicle percent or greater ownership, and any this section and subsequently cease diesel fuel produced for use in the joint venture partners. production of diesel fuel from United States and designated as meeting (2) For any refiner owned by a processing crude oil through refinery the 15 ppm sulfur standard under governmental entity, the number of processing units, or employ more than paragraph (d) of this section must meet employees and total crude oil capacity 1,500 people or exceed the 155,000 or exceed 85 percent of the baseline as specified in paragraph (a) of this bpcd crude oil capacity limit after volume established under paragraph (c) section shall include all employees and January 1, 2004 as a result of merger of this section, except that for the first crude oil production of the government with or acquisition of or by another compliance period from June 1, 2006 to which the governmental entity is a entity, are disqualified as small refiners, through June 30, 2007, the total volume part. except as provided for under paragraph must meet or exceed 92 percent of the (3) Any refiner owned and controlled (f)(4) of this section. If disqualification baseline volume. by an Alaska Regional or Village occurs, the refiner shall notify EPA in

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writing no later than 20 days following this section, and any extension provided between January 1, 1999, and January 1, this disqualifying event. under paragraph (f)(3) of this section, 2000, a listing of the name and address (ii) Except as provided under the refiner may not generate NRLM of each location where any employee of paragraph (f)(3) of this section, any diesel fuel sulfur credits under the refiner worked since the refiner refiner whose status changes under this § 80.535(b) or (d). acquired or reactivated the refinery; the paragraph shall meet the applicable * * * * * average number of employees at any standards of § 80.520 within a period of I 30. Section 80.551 is revised to read as such acquired or reactivated refinery up to 30 months from the disqualifying follows: during each calendar year since the event for any of its refineries that were refiner acquired or reactivated the previously subject to the small refiner § 80.551 How does a refiner obtain refinery; and the type of business standards of § 80.552, but no later than approval as a small refiner under this activities carried out at each location. the May 31, 2010. subpart? (2) For NRLM diesel fuel small (2)(i) Refiners who qualify as NRLM (a)(1)(i) Applications for motor refiners— diesel fuel small refiners under this vehicle diesel fuel small refiner status (i) A listing of the name and address section and subsequently cease must be submitted to EPA by December of each location where any employee production of diesel fuel from crude oil, 31, 2001. worked during the 12 months preceding or employ more than 1,500 people or (ii) Applications for NRLM diesel fuel January 1, 2003; the average number of exceed the 155,000 bpcd crude oil small refiner status must be submitted employees at each location based upon capacity limit after January 1, 2004 as a to EPA by December 31, 2004. the number of employees for each pay result of merger with or acquisition of (2)(i) In the case of a refiner who period for the 12 months preceding or by another entity, are disqualified as acquires or reactivates a refinery that January 1, 2003; and the type of small refiners, except as provided for was shutdown or non-operational business activities carried out at each under paragraph (f)(4) of this section. If between January 1, 1999, and January 1, location; or disqualification occurs, the refiner shall 2000, the application for motor vehicle (ii) In the case of a refiner who notify EPA in writing no later than 20 diesel fuel small refiner status must be acquires or reactivates a refinery that days following this disqualifying event. submitted to EPA by June 1, 2003. was shutdown or non-operational (ii) Except as provided under (ii) In the case of a refiner who between January 1, 2002, and January 1, paragraph (f)(3) of this section, any acquires or reactivates a refinery that 2003, a listing of the name and address refiner whose status changes under this was shutdown or non-operational of each location where any employee of paragraph shall meet the applicable between January 1, 2002, and January 1, the refiner worked since the refiner standards of § 80.510 within a period of 2003, the application for NRLM diesel acquired or reactivated the refinery; the up to 30 months of the disqualifying fuel small refiner status must be average number of employees at any event for any of its refineries that were submitted to EPA by June 1, 2006. such acquired or reactivated refinery previously subject to the small refiner (b) Applications for small refiner during each calendar year since the standards of § 80.552, but no later than status must be sent via certified mail refiner acquired or reactivated the the dates specified in § 80.554(a) or (b), with return receipt or express mail with refinery; and the type of business as applicable. return receipt to: U.S. EPA—Attn: Diesel activities carried out at each location. (3) A refiner may apply to EPA for up Small Refiner Status (6406J), 1200 (3) The total corporate crude oil to an additional six months to comply Pennsylvania Avenue, NW., capacity of each refinery as reported to with the standards of § 80.510 or Washington, DC 20460 (certified mail/ the Energy Information Administration § 80.520 if more than 30 months would return receipt) or Attn: Diesel Small (EIA) of the U.S. Department of Energy be required for the necessary Refiner Status, Transportation and (DOE) for the most recent 12 months of engineering, permitting, construction, Regional Programs Division, 1310 L operation. The information submitted to and start-up work to be completed. Such Street, NW., 6th floor, Washington, DC EIA is presumed to be correct. In cases applications must include detailed 20005 (express mail/return receipt). where a company disagrees with this technical information supporting the (c) The small refiner status information, the company may petition need for additional time. EPA will base application must contain the following EPA with appropriate data to correct the a decision to approve additional time on information for the company seeking record when the company submits its information provided by the refiner and small refiner status, plus any subsidiary application for small refiner status. EPA on other relevant information. In no companies, any parent company and may accept such alternate data at its case will EPA extend the compliance subsidiaries of the parent company in discretion. date beyond May 31, 2010 for a motor which the parent has 50 percent or (4) For motor vehicle diesel fuel, an vehicle diesel fuel small refiner or greater ownership, and any joint venture indication of whether the refiner, for beyond the dates specified in § 80.554(a) partners: each refinery, is applying for— or (b), as applicable, for a NRLM diesel (1) For motor vehicle diesel fuel small (i) The ability to produce motor fuel small refiner. refiners— vehicle diesel fuel subject to the 500 (4) Disqualification under paragraphs (i) A listing of the name and address ppm sulfur standard under § 80.520(c) (f)(1) or (f)(2) of this section shall not of each location where any employee or generate credits under § 80.531, apply in the case of a merger between worked during the 12 months preceding pursuant to the provisions of § 80.552(a) two previously approved small refiners. January 1, 2000; the average number of or (b); or (5) During the period of time up to 30 employees at each location based upon (ii) An extension of the duration of its months provided under paragraph the number of employees for each pay small refiner gasoline sulfur standard (f)(1)(ii) of this section, and any period for the 12 months preceding under § 80.553, pursuant to the extension provided under paragraph January 1, 2000; and the type of provisions of § 80.552(c). (f)(3) of this section, the refiner may not business activities carried out at each (5) For NRLM diesel fuel, an generate motor vehicle diesel fuel sulfur location; or indication of whether the refiner, for credits under § 80.531(e). During the (ii) In the case of a refiner who each refinery, is applying for— period of time up to 30 months acquires or reactivates a refinery that (i) The ability to delay compliance provided under paragraph (f)(2)(ii) of was shutdown or non-operational under § 80.554(a) or (b), or to generate

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NRLM diesel sulfur credits under compliance period that exceeds 105 be from July 1, 2009 through May 31, § 80.535(b) or (d), pursuant to the percent of the baseline volume 2010. provisions of § 80.554(c); or established under § 80.595 (V500). The * * * * * (ii) An adjustment to its small refiner annual compliance period shall be from (k) A refiner may petition the gasoline sulfur standards under July 1 through June 30. For the year Administrator to vacate an extension of § 80.240(a), pursuant to the provisions 2006, the compliance period shall be the small refiner gasoline sulfur content of § 80.554(d). from June 1, 2006 through June 30, standards. EPA may grant such a (6) A letter signed by the president, 2007, and the volume limits shall only petition, effective July 1 of the chief operating or chief executive officer apply to that volume V500 that exceeds compliance period following receipt of of the company, or his/her designee, 113 percent of the baseline volume. such petition (or effective June 1, 2006, stating that the information contained in (b) A refiner that has been approved if applicable). Upon such effective date, the application is true to the best of his/ by EPA as a motor vehicle diesel fuel all gasoline produced by the refiner her knowledge. small refiner under § 80.551(g) may must meet the gasoline sulfur content (7) Name, address, phone number, generate motor vehicle diesel fuel standards under subpart H of this part facsimile number and e-mail address (if credits pursuant to the provisions of as if there had been no extension of the available) of a corporate contact person. § 80.531, except that for purposes of small refiner gasoline sulfur content (d) For joint ventures, the total § 80.531(a), the term ‘‘Credit’’ shall standards under this section. Upon such number of employees includes the equal V15, without further adjustment. effective date, the refiner shall not be combined employee count of all (c) A refiner that has been approved subject to the requirements of this corporate entities in the venture. by EPA as a motor vehicle diesel fuel section. (e) For government-owned refiners, small refiner under § 80.551(g) may * * * * * the total employee count includes all apply for an extension of the duration I 33. A new § 80.554 is added to read as government employees. of its small refiner gasoline sulfur follows: (f) Approval of small refiner status for standards pursuant to § 80.553. refiners who apply under § 80.550(e) § 80.554 What compliance options are will be based on all information * * * * * available to NRLM diesel fuel small submitted under paragraph (c) of this (e) The provisions of this section shall refiners? section, except as provided in apply separately for each refinery (a) Option 1: A refiner that has been § 80.550(e). owned or operated by a motor vehicle approved by EPA as a NRLM diesel fuel (g) EPA will notify a refiner of diesel fuel small refiner. small refiner under § 80.551(g) may approval or disapproval of small refiner I 32. Section 80.553 is amended by produce NRLM diesel fuel from crude status by letter. If disapproved, the revising paragraphs (d), (e), (f), and (k) to oil from June 1, 2007 through May 31, refiner must comply with the sulfur read as follows: 2010, that is exempt from the standards standards in § 80.510 or 80.520, as § 80.553 Under what conditions may the under § 80.510(a), but only for a refinery appropriate, except as otherwise small refiner gasoline sulfur standards be located outside the areas specified provided in this subpart. extended for a small refiner of motor under § 80.510(g)(1). (h) If EPA finds that a refiner vehicle diesel fuel? (1) The volume of NRLM diesel fuel provided false or inaccurate information * * * * * that is exempt from § 80.510(a) must be on its application for small refiner (d) Beginning June 1, 2006, and less than or equal to 105 percent of status, upon notice from EPA the continuing through December 31, 2010, BNRLM as defined under § 80.533, less refiner’s small refiner status will be void all motor vehicle diesel fuel produced any volume of heating oil produced. (2) Any volume of NRLM diesel fuel ab initio. by a refiner that has received an in excess of the volume allowed under (i) Upon notification to EPA, an extension of its small refiner gasoline (a)(1) of this section will be subject to approved small refiner may withdraw sulfur standards under this section must the 500 ppm sulfur standard under its status as a small refiner. Effective on be accurately designated under § 80.598 § 80.510(a). January 1 of the year following such as meeting the 15 ppm sulfur content (3) High-sulfur NRLM produced notification, the small refiner will standard under § 80.520(a)(1). become subject to the sulfur standards under this paragraph must— (e) The total volume of motor vehicle in § 80.510 or 80.520, as appropriate, (i) Be dyed red pursuant to the diesel fuel produced for use in the unless one of the other hardship provisions of § 80.520 at the point of United States and designated as meeting provisions of this subpart apply. production or importation; the 15 ppm sulfur content standard I 31. Section 80.552 is amended by (ii) Be associated with a product under paragraph (d) of this section must revising the section heading and transfer document that bears a unique meet or exceed 85 percent of the paragraphs (a), (b), (c), and (e) to read as product code as specified under baseline volume established under follows: § 80.590; and paragraph (c) of this section, except that (iii) Not be delivered into areas § 80.552 What compliance options are for the first compliance period from specified under § 80.510(g)(1). available to motor vehicle diesel fuel small June 1, 2006 through June 30, 2007, the (4) From June 1, 2007 through May refiners? total volume must meet or exceed 92 31, 2010, a refiner that has been (a) A refiner that has been approved percent of the baseline volume. approved by EPA as a NRLM diesel fuel by EPA as a motor vehicle diesel fuel (f) Compliance with the volume small refiner under § 80.551(g) may small refiner under § 80.551(g) may requirements in paragraph (e) of this produce at a refinery located in produce motor vehicle diesel fuel section shall be determined each 80.510(g)(2) NRLM diesel fuel that is subject to the 500 ppm sulfur standard compliance period. Annual compliance exempt from the standards under pursuant to the provisions of § 80.530, periods shall be from July 1 through § 80.510(a) only if the refiner first except that the volume limits of June 30. For the year 2006, the obtains approval from the Administrator § 80.530(a)(3) shall only apply to that compliance period shall be from June 1, for a compliance plan. The compliance volume of diesel fuel that is produced 2006 through June 30, 2007 and for the plan must detail how the refiner will or imported during an annual year 2009 the compliance period shall segregate any fuel produced that does

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not meet the standards under § 80.510(a) ultimate consumers to whom the refiner (e) Multiple refineries. The provisions from the refinery through to the ultimate supplies the fuel that does not meet the of this section shall apply separately for consumer from fuel having any other standards under § 80.510(a). each refinery owned or operated by a designations and from fuel produced by (c) Option 3: A refiner that has been NRLM diesel fuel small refiner. any other refiner. The compliance plan approved by EPA as a NRLM diesel fuel (f) Other provisions. From June 1, must also identify all ultimate small refiner under § 80.551(g) may 2007 through May 31, 2010, a refiner consumers to whom the refiner supplies generate diesel fuel credits under the who is an approved motor vehicle diesel the fuel that does not meet the standards provisions of § 80.535(b) and (d), except fuel small refiner under § 80.550(a) but under § 80.510(a). as provided in paragraph (d)(1) of this does not qualify as a NRLM diesel fuel (b) Option 2: A refiner that has been section. small refiner under § 80.550(b) may approved by EPA as a NRLM diesel fuel (d) Option 4: (1) In lieu of Options 1, produce NRLM diesel fuel that is small refiner under § 80.551(g) may 2, and 3 of this section, a refiner that has exempt from the per-gallon sulfur produce NR diesel fuel from crude oil been approved by EPA as a NRLM standard and the cetane or aromatics from June 1, 2010, through May 31, diesel fuel small refiner under standard of § 80.510(a). This exemption 2014, and NRLM diesel fuel from crude § 80.551(g) may choose to adjust its does not apply to diesel fuel sold or oil from June 1, 2012 through May 31, small refiner gasoline sulfur standards, intended for sale in the areas listed in 2014 that is subject to the standards subject to the following conditions: § 80.510(g)(1) or (g)(2). From June 1, (i) From June 1, 2006 until the under § 80.510(a), but only for a refinery 2010 through May 31, 2012, NR and LM expiration of the refiner’s small refiner located outside the areas specified diesel fuel produced by such refiners is gasoline sulfur standards (through under § 80.510(g)(1). subject to the standards under (1) The volume of NR diesel fuel that December 31, 2007 or 2010) 95 percent § 80.510(b) and beginning June 1, 2012, may be subject to the 500 ppm sulfur of the NRLM diesel fuel produced by all NRLM diesel fuel is subject to the standard from June 1, 2010 through June the refiner must be accurately standards under § 80.510(c). 30, 2011 must be less than or equal to designated under § 80.598(a) as meeting I 34. A new § 80.555 is added to read as 113 percent of BNRLM, and from July 1, the 15 ppm sulfur standard of 2011 through May 31, 2012 must be less § 80.510(b). follows: than or equal to 96 percent of BNRLM, as (ii) The refiner must produce NRLM § 80.555 What provisions are available to a defined under § 80.533, less any volume diesel fuel each year or partial year large refiner that acquires a small refiner or of locomotive and marine diesel fuel under paragraph (d)(1)(i) of this section one or more of its refineries? at a volume that is equal to or greater produced. (a) In the case of a refiner without (2) The volume of NRLM diesel fuel than 85 percent of BNRLM , as defined in approved small refiner status who that may be subject to the 500 ppm § 80.533, calculated on an annual basis. acquires a refinery from a refiner with sulfur standard from June 1, 2012 (2)(i) For a refiner meeting the approved status as a motor vehicle through June 30, 2013 must be less than conditions of paragraph (d)(1) of this diesel fuel small refiner or a NRLM or equal to 113 percent of BNRLM, and section, beginning January 1, 2004, the applicable small refiner’s annual diesel fuel small refiner under from July 1, 2013 through May 31, 2014 § 80.551(g), the applicable small refiner must be less than or equal to 96 percent average and per-gallon cap gasoline sulfur standards will be the standards of provisions of §§ 80.552 and 80.554 may of BNRLM, as defined under § 80.533. apply to the acquired refinery for a (3) NRLM diesel fuel produced in § 80.240(a) increased by a factor of 1.20 period of up to 30 months from the date excess of the volume allowed under for the duration of the refiner’s small of acquisition of the refinery. In no case paragraph (b)(1) of this section will be refiner gasoline sulfur standards under shall this period extend beyond May 31, subject to the standards under § 80.240(a) or § 80.553 (i.e., through 2010 for a refinery acquired from a § 80.510(b) and (c). calendar years 2007 or 2010). (4) 500 ppm sulfur NRLM diesel fuel (ii) In no case may the per-gallon cap motor vehicle diesel fuel small refiner produced under this paragraph must— exceed 450 ppm. or beyond the dates specified in (i) Bear a unique product code as (3)(i) If the refiner fails to produce the § 80.554(a) or (b), as applicable, for a specified under § 80.590; and necessary volume of 15 ppm sulfur refinery acquired from a NRLM diesel (ii) Not be sold or delivered into areas NRLM diesel fuel by June 1, 2006 and fuel small refiner. specified under § 80.510(g)(1). every year thereafter through the (b) A refiner may apply to EPA for up (5) From June 1, 2010 through May deadlines specified under paragraph to an additional six months to comply 31, 2012, for NR diesel fuel, and from (d)(1)(i) of this section, the refiner must with the standards of § 80.510 or 80.520 June 1, 2012 through May 31, 2014 for report this in its annual report under for the acquired refinery if more than 30 NRLM diesel fuel, a refiner that has § 80.604, and the adjustment of gasoline months would be required for the been approved by EPA as a NRLM sulfur standards under paragraph necessary engineering, permitting, diesel fuel small refiner under (d)(2)(i) of this section will be construction, and start-up work to be § 80.551(g) may produce, at a refinery considered void as of January 1, 2004. completed. Such applications must located in Alaska, NR and NRLM diesel (ii) If such a refiner had produced include detailed technical information fuel, as applicable, from crude oil that gasoline above its interim gasoline supporting the need for additional time. is subject to the standards of § 80.510(a), sulfur standard of § 80.240(a) prior to EPA will base a decision to approve only if the refiner first obtains approval June 1, 2006, such fuel will not be additional time on information provided from the Administrator for a compliance considered in violation of the small by the refiner and on other relevant plan. The compliance plan must detail refiner standards under § 80.240(a), information. In no case will EPA extend how the refiner will segregate any fuel provided the refiner obtains and uses a the compliance date beyond May 31, produced subject to the standards under quantity of gasoline sulfur credits equal 2010 for a refinery acquired from a § 80.510(a) from the refinery through to to the volume of gasoline exceeding the motor vehicle diesel fuel small refiner the ultimate consumer from fuel having small refiner standards multiplied by or beyond the dates specified in any other designations and from fuel the number of parts per million by § 80.554(a) or (b), as applicable, for a produced by any other refiner. The which the gasoline exceeded the small refinery acquired from a NRLM diesel compliance plan must also identify all refiner standards. fuel small refiner.

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(c) Refiners who acquire a refinery impact. Approval to distribute NRLM and wholesale purchaser-consumer from a refiner with approved status as diesel fuel not subject to the 500 ppm pump stands for the presence of the a motor vehicle diesel fuel small refiner sulfur standard may be granted for such labels and warning signs required under or a NRLM diesel fuel small refiner time period as EPA determines is this section. Any violations that are under § 80.551(g), shall notify EPA in appropriate, but shall not extend discovered shall be reported to EPA writing no later than 20 days following beyond May 31, 2010 for NR diesel fuel within 48 hours of discovery. the acquisition. and May 31, 2012 for NRLM diesel fuel. * * * * * I 35. Section 80.560 is amended by Approval to distribute NRLM diesel fuel (h) Refiners who are granted a revising paragraphs (a), (b), (d), (e), (h), not subject to the 15 ppm sulfur hardship relief standard for any refinery (i), (k), and (l) to read as follows: standard may be granted for such time and importers of fuel subject to period as EPA determines is § 80.560 How can a refiner seek temporary temporary foreign refiner relief relief from the requirements of this subpart appropriate, but shall not extend standards, must comply with the in case of extreme hardship beyond May 31, 2014. requirements of § 80.561(f). circumstances? * * * * * (i) EPA may impose any reasonable (a) EPA may, at its discretion, grant a (d) Applicants must provide, at a conditions on waivers under this refiner of crude oil that processes crude minimum, the following information: section, including limitations on the oil through refinery processing units, for (1) Detailed description of efforts to refinery’s volume of motor vehicle one or more of its refineries, temporary obtain capital for refinery investments diesel fuel and NRLM diesel fuel subject relief from some or all of the provisions and efforts made to obtain credits for to temporary refiner relief standards. of this subpart. Such relief shall be no compliance under § 80.531 for motor * * * * * less stringent than the small refiner vehicle diesel fuel or §§ 80.535 through (k) The individual refinery sulfur compliance options specified in 80.536 for NRLM diesel fuel; standard and the compliance plan will § 80.552 for motor vehicle diesel fuel (2) Bond rating of entity that owns the be approved or disapproved by the and § 80.554 for NRLM diesel fuel. EPA refinery (in the case of joint ventures, Administrator, and approval will be may grant such relief provided that the include the bond rating of the joint effective when the refiner receives an refiner demonstrates that— venture entity and the bond ratings of approval letter from EPA. Unless (1) Unusual circumstances exist that all partners; in the case of corporations, approved, the refiner or, where impose extreme hardship and include the bond ratings of any parent applicable, the importer must comply significantly affect the refiner’s ability to or subsidiary corporations); and with the motor vehicle diesel fuel comply by the applicable date; and (3) Estimated capital investment standard under § 80.520(a)(1) by the (2) It has made best efforts to comply needed to comply with the requirements appropriate compliance date specified with the requirements of this subpart. of this subpart by the applicable date. in § 80.500 or the NRLM diesel fuel (b)(1) For motor vehicle diesel fuel, (e) In addition to the application standards and compliance dates under applications must be submitted to EPA requirements of paragraph (b) through § 80.510(a), (b), and (c) as applicable. by June 1, 2002 to the following address: (d) of this section, a refiner’s application (l) If EPA finds that a refiner provided U.S. EPA—Attn: Diesel Hardship, for temporary relief under this false or inaccurate information on its Transportation and Regional Programs paragraph (e) must also include a application for hardship relief, EPA’s Division (6406J), 1200 Pennsylvania compliance plan. Such compliance plan approval of the refiners application will Avenue, NW., Washington, DC 20460 shall demonstrate how the refiner will be void ab initio. (certified mail/return receipt) or Attn: engage in a quality assurance testing I 36. Section 80.561 is amended by Diesel Hardship, Transportation and program, where appropriate, to ensure revising the introductory text and Regional Programs Division, 1310 L that the following conditions are met: paragraphs (c), (d), and (f) to read as Street, NW., 6th floor, Washington, DC (1)(i) Its motor vehicle diesel fuel follows: 20005 (express mail/return receipt). subject solely to the sulfur standards EPA reserves the right to deny under § 80.520(c) has not caused motor § 80.561 How can a refiner or importer applications for appropriate reasons, vehicle diesel fuel subject to the 15 ppm seek temporary relief from the requirements including unacceptable environmental sulfur standard § 80.520(a)(1) to fail to of this subpart in case of extreme unforseen circumstances? impact. Approval to distribute motor comply with that standard; or vehicle diesel fuel not subject to the 15 (ii) Its NRLM diesel fuel subject solely In appropriate extreme, unusual, and ppm sulfur standard may be granted for to the 500 ppm sulfur standard under unforseen circumstances (for example, such time period as EPA determines is § 80.510(a) has not caused NRLM diesel natural disaster or refinery fire) which appropriate, but shall not extend fuel subject to the 15 ppm sulfur are clearly outside the control of the beyond May 31, 2010. standard under § 80.510(b) or (c) to fail refiner or importer and which could not (2) For NRLM diesel fuel, applications to comply with that standard. have been avoided by the exercise of must be submitted to EPA by June 1, (2) The quality assurance program prudence, diligence, and due care, EPA 2005 to the following address: U.S. must at least include periodic sampling may permit a refiner or importer, for a EPA—Attn: Diesel Hardship, and testing at the party’s own facilities brief period, to distribute motor vehicle Transportation and Regional Programs and at downstream facilities in the diesel fuel or NRLM diesel fuel which Division (6406J), 1200 Pennsylvania refiner’s or importer’s diesel fuel does not meet the requirements of this Avenue, NW., Washington, DC 20460 distribution system, to determine subpart if: (certified mail/return receipt) or Attn: compliance with the applicable sulfur * * * * * Diesel Hardship, Transportation and standards for both categories of motor (c) The refiner or importer can show Regional Programs Division, 1310 L vehicle diesel fuel; examination at the how the requirements for motor vehicle Street, NW., 6th floor, Washington, DC party’s own facilities and at applicable diesel fuel or NRLM diesel fuel will be 20005 (express mail/return receipt). downstream facilities, of product expeditiously achieved; EPA reserves the right to deny transfer documents to confirm (d) The refiner or importer agrees to applications for appropriate reasons, appropriate transfers and deliveries of make up any air quality detriment including unacceptable environmental both products; and inspection of retailer associated with the nonconforming

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motor vehicle diesel fuel or NRLM Recommended for use in all diesel vehicles fuel (including nonroad (NR) and diesel fuel, where practicable; and engines. locomotive or marine (LM)), or heating * * * * * (b) From June 1, 2006 through oil, must prominently and (f)(1) In the case of motor vehicle September 30, 2010, any retailer or conspicuously display in the immediate diesel fuel distributed under this section wholesale purchaser-consumer who area of each pump stand from which that does not meet the 15 ppm sulfur sells, dispenses, or offers for sale or non-highway diesel fuel is offered for standard under § 80.520(a)(1), such dispensing, motor vehicle diesel fuel sale or dispensing, one of the following diesel fuel shall not be distributed for subject to the 500 ppm sulfur standard legible labels, as applicable, in block use in model year 2007 or later motor of § 80.520(c), must prominently and letters of no less than 24-point bold vehicles, and must meet all the conspicuously display in the immediate type, printed in a color contrasting with requirements and prohibitions of this area of each pump stand from which the background: subpart applicable to diesel fuel meeting motor vehicle fuel subject to the 500 (a) From June 1, 2007 through May 31, the sulfur standard under § 80.520(c), or ppm sulfur standard is offered for sale 2010, for pumps dispensing NRLM to diesel fuel that is not motor vehicle or dispensing, the following legible diesel fuel meeting the 15 ppm sulfur diesel fuel, as applicable. label, in block letters of no less than 24- standard of § 80.510(b): (2) In the case of NRLM diesel fuel point bold type, printed in a color ULTRA-LOW SULFUR NON-HIGHWAY distributed under this section from June contrasting with the background: DIESEL FUEL (15 ppm Sulfur Maximum) 1, 2007 through May 31, 2010 that does not meet the 500 ppm sulfur standard LOW SULFUR HIGHWAY DIESEL FUEL Required for use in all model year 2011 (500 ppm Sulfur Maximum) and newer nonroad diesel engines. under § 80.510(a), such diesel fuel must Recommended for use in all nonroad, meet the requirements and prohibitions WARNING locomotive, and marine diesel engines. applicable to high sulfur NRLM credit Federal law prohibits use in model year fuel under § 80.536(f)(1)(i) and (ii). 2007 and later highway vehicles and engines. WARNING (3) In the case of NR diesel fuel Its use may damage these vehicles and Federal Law prohibits use in highway distributed under this section after May engines. vehicles or engines. 31, 2010 that does not meet the 15 ppm (c) From June 1, 2006 through May 31, (b) From June 1, 2007 through May sulfur standard under § 80.510(b), such 2007, any retailer or wholesale 31, 2010, for pumps dispensing NRLM diesel fuel shall not be distributed for purchaser-consumer who sells, diesel fuel meeting the 500 ppm sulfur use in model year 2011 or later nonroad dispenses, or offers for sale or standard of § 80.510(a): engines, and must meet all the dispensing, diesel fuel for non-motor requirements and prohibitions of this LOW SULFUR NON-HIGHWAY DIESEL vehicle equipment that does not meet FUEL (500 ppm Sulfur Maximum) subpart applicable to diesel fuel meeting the standards for motor vehicle diesel the sulfur standard under § 80.510(a) for fuel, must affix the following WARNING NRLM diesel fuel. conspicuous and legible label, in block Federal Law prohibits use in highway (4) In the case of NRLM diesel fuel letters of no less than 24-point bold vehicles or engines. distributed under this section after May type, and printed in a color contrasting 31, 2012 that does not meet the 15 ppm (c) From June 1, 2007 through with the background, to each pump September 30, 2010, for pumps sulfur standard under § 80.510(c), such stand: diesel fuel shall not be distributed for dispensing NRLM diesel fuel not use in model year 2011 or later nonroad NON-HIGHWAY DIESEL FUEL (May Exceed meeting, or not offered as meeting, the engines, and must meet all the 500 ppm Sulfur) 500 ppm sulfur standard of § 80.510(a) or the 15 ppm sulfur standard of requirements and prohibitions of this WARNING § 80.510(b): subpart applicable to diesel fuel meeting Federal law prohibits use in highway the sulfur standard under § 80.510(a) for vehicles or engines. HIGH SULFUR NON-HIGHWAY DIESEL NRLM diesel fuel. Its use may damage these vehicles and FUEL (May Exceed 500 ppm Sulfur) I 37. Section 80.570 is revised to read as engines. WARNING follows: (d) The labels required by paragraphs Federal law prohibits use in highway § 80.570 What labeling requirements apply (a) through (c) of this section must be vehicles or engines. to retailers and wholesale purchaser- placed on the vertical surface of each May damage nonroad diesel engines consumers of diesel fuel beginning June 1, pump housing and on each side that has required to use low-sulfur or ultra-low sulfur 2006? gallon and price meters. The labels shall diesel fuel. (a) From June 1, 2006 through May 31, be on the upper two-thirds of the pump, (d) From June 1, 2007 and beyond, for 2010, any retailer or wholesale in a location where they are clearly pumps dispensing non-motor vehicle purchaser-consumer who sells, visible. diesel fuel for use other than in dispenses, or offers for sale or (e) Alternative labels to those nonroad, locomotive or marine engines, dispensing, motor vehicle diesel fuel specified in paragraphs (a) through (c) of such as for use in stationary diesel subject to the 15 ppm sulfur standard of this section may be used as approved by engines or as heating oil: § 80.520(a)(1), must affix the following the Administrator. conspicuous and legible label, in block I 38. A new § 80.571 is added to read as HEATING OIL (May Exceed 500 ppm Sulfur) letters of no less than 24-point bold follows: WARNING type, and printed in a color contrasting § 80.571 What labeling requirements apply Federal law prohibits use in highway with the background, to each pump to retailers and wholesale purchaser- vehicles or engines, or in nonroad, stand: consumers of NRLM diesel fuel or heating locomotive, or marine diesel engines. Its use may damage these diesel engines. ULTRA-LOW SULFUR HIGHWAY DIESEL oil beginning June 1, 2007? FUEL (15 ppm Sulfur Maximum) Any retailer or wholesale purchaser- (e) The labels required by paragraphs Required for use in all model year 2007 consumer who sells, dispenses, or offers (a) through (d) of this section must be and later highway diesel vehicles and for sale or dispensing nonroad, placed on the vertical surface of each engines. locomotive or marine (NRLM) diesel pump housing and on each side that has

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gallon and price meters. The labels shall LOW SULFUR NON-HIGHWAY DIESEL (b) The labels required by paragraph be on the upper two-thirds of the pump, FUEL (500 ppm Sulfur Maximum) (a) of this section must be placed on the in a location where they are clearly WARNING vertical surface of each pump housing visible. Federal law prohibits use in all model year and on each side that has gallon and (f) Alternative labels to those 2011 and newer nonroad engines. price meters. The labels shall be on the specified in paragraphs (a) through (d) May damage model year 2011 and newer upper two-thirds of the pump, in a of this section may be used as approved nonroad engines. location where they are clearly visible. by the Administrator. Federal law prohibits use in highway (c) Alternative labels to those vehicles or engines. specified in paragraph (a) of this section I 39. A new § 80.572 is added to read as may be used as approved by the (d) From June 1, 2010 through follows: Administrator. September 30, 2012, for pumps I § 80.572 What labeling requirements apply 41. A new § 80.574 is added to read as dispensing LM diesel fuel subject to the follows: to retailers and wholesale purchaser- 500 ppm sulfur standard of § 80.510(a): consumers of NR and NRLM diesel fuel and § 80.574 What labeling requirements apply heating oil beginning June 1, 2010? LOW SULFUR LOCOMOTIVE AND MARINE DIESEL FUEL (500 ppm Sulfur to retailers and wholesale purchaser- Any retailer or wholesale purchaser- Maximum) consumers of NRLM diesel fuel, or heating consumer who sells, dispenses, or offers oil beginning June 1, 2014? for sale or dispensing nonroad, WARNING Any retailer or wholesale purchaser- locomotive or marine (NRLM) diesel Federal law prohibits use in nonroad consumer who sells, dispenses, or offers fuel (including nonroad (NR) and engines or in highway vehicles or engines. for sale or dispensing nonroad, locomotive or marine (LM)), or heating (e) The labels required by paragraphs locomotive or marine (NRLM) diesel oil, must prominently and (a) through (d) of this section must be fuel (including nonroad (NR) and conspicuously display in the immediate placed on the vertical surface of each locomotive or marine (LM)), or heating area of each pump stand from which pump housing and on each side that has oil, must prominently and non-highway diesel fuel is offered for gallon and price meters. The labels shall conspicuously display in the immediate sale or dispensing, one of the following be on the upper two-thirds of the pump, area of each pump stand from which legible labels, as applicable, in block in a location where they are clearly non-highway diesel fuel is offered for letters of no less than 24-point bold visible. sale or dispensing, one of the following type, printed in a color contrasting with (f) Alternative labels to those legible labels, as applicable, in block the background: specified in paragraphs (a) through (d) letters of no less than 24-point bold type, printed in a color contrasting with (a) From June 1, 2010 and beyond, of this section may be used as approved by the Administrator. the background: any retailer or wholesale purchaser- (a) From June 1, 2014 and beyond, for I consumer who sells, dispenses, or offers 40. A new § 80.573 is added to read as pumps dispensing NRLM diesel fuel for sale or dispensing, motor vehicle follows: subject to the 15 ppm sulfur standard of diesel fuel subject to the 15 ppm sulfur § 80.510(c): standard of § 80.520(a)(1), must affix the § 80.573 What labeling requirements apply to retailers and wholesale purchaser- following conspicuous and legible label, ULTRA-LOW SULFUR NON-HIGHWAY consumers of NRLM diesel fuel and heating DIESEL FUEL (15 ppm Sulfur Maximum) in block letters of no less than 24-point oil beginning June 1, 2012? bold type, and printed in a color Required for use in all nonroad diesel contrasting with the background, to Any retailer or wholesale purchaser- engines. each pump stand: consumer who sells, dispenses, or offers Recommended for use in all locomotive for sale or dispensing nonroad, and marine diesel engines. ULTRA-LOW SULFUR HIGHWAY DIESEL locomotive or marine (NRLM) diesel WARNING FUEL (15 ppm Sulfur Maximum) fuel (including nonroad (NR) and Required for use in all highway diesel locomotive or marine (LM)), or heating Federal law prohibits use in highway vehicles or engines. vehicles and engines. oil, must prominently and Recommended for use in all diesel vehicles conspicuously display in the immediate (b) From June 1, 2014 and beyond, for and engines. area of each pump stand from which pumps dispensing LM diesel fuel subject to the 500 ppm sulfur standard (b) From June 1, 2010 through May non-highway diesel fuel is offered for of § 80.510(a): 31, 2012, for pumps dispensing NR sale or dispensing, one of the following diesel fuel subject to the 15 ppm sulfur legible labels, as applicable, in block LOW SULFUR LOCOMOTIVE OR MARINE standard of § 80.510(b): letters of no less than 24-point bold DIESEL FUEL (500 ppm Sulfur Maximum) type, printed in a color contrasting with ULTRA-LOW SULFUR NON-HIGHWAY the background: WARNING DIESEL FUEL (15 ppm Sulfur Maximum) (a) From June 1, 2012 through May 31, Federal law prohibits use in nonroad Required for use in all model year 2011 2014, for pumps dispensing NRLM engines or in highway vehicles or engines. Its use may damage these engines. and later nonroad diesel engines. diesel fuel subject to the 15 ppm sulfur Recommended for use in all other non- standard of § 80.510(c): (c) The labels required by paragraphs highway diesel engines. (a) and (b) of this section must be placed ULTRA-LOW SULFUR NON-HIGHWAY WARNING on the vertical surface of each pump DIESEL FUEL (15 ppm Sulfur Maximum) Federal law prohibits use in highway housing and on each side that has gallon Required for use in all model year 2011 vehicles or engines. and price meters. The labels shall be on and later nonroad diesel engines. the upper two-thirds of the pump, in a (c) From June 1, 2010 through Recommended for use in all other non- location where they are clearly visible. highway diesel engines. September 30, 2014, for pumps (d) Alternative labels to those dispensing NRLM diesel fuel subject to WARNING specified in paragraphs (a) and (b) of the 500 ppm sulfur standard of Federal law prohibits use in highway this section may be used as approved by § 80.510(a): vehicles or engines. the Administrator.

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I 42. Section 80.580 is revised to read as (d) Adjustment Factor for downstream sample from each batch of motor vehicle follows: test results. An adjustment factor of or NRLM diesel fuel produced or negative two ppm sulfur shall be imported and subject to the 15 ppm § 80.580 What are the sampling and applied to the test results, to account for sulfur content standard. Batch, for the testing methods for sulfur? test variability, but only for testing of purposes of this section, means batch as The sulfur content of diesel fuel and motor vehicle diesel fuel or NRLM defined under § 80.2 but without the diesel fuel additives is to be determined diesel fuel identified as subject to the 15 reference to transfer of custody from one in accordance with this section. ppm sulfur standard of § 80.510(b) or facility to another facility. (a) Sampling method. The applicable § 80.520(a)(1). (b) Except as provided in paragraph sampling methodology is provided in (e) Materials incorporated by (c) of this section, the refiner or § 80.330(b). reference. The Director of the Federal importer shall test each sample (b) Test method for sulfur. (1) Until Register approved the incorporation by collected pursuant to paragraph (a) of December 27, 2004, for motor vehicle reference of the documents listed in this this section to determine its sulfur diesel fuel and diesel fuel additives section as prescribed in 5 U.S.C. 552(a) content for compliance with the subject to the 15 ppm sulfur standard of and 1 CFR part 51. Anyone may inspect requirements of this subpart prior to the § 80.520(a)(1), sulfur content may be copies at the U.S. EPA, Air and diesel fuel leaving the refinery or import determined using ASTM D 6428–99. Radiation Docket and Information facility, using an appropriate sampling (2) For motor vehicle diesel fuel and Center, 1301 Constitution Ave., NW., and testing method as specified in diesel fuel additives subject to the 500 Room B102, EPA West Building, § 80.580. ppm sulfur standard of § 80.520(c), and Washington, DC 20460 or at the (c)(1) Any refiner who produces NRLM diesel fuel subject to the 500 National Archives and Records motor vehicle or NRLM diesel fuel using ppm sulfur standard of § 80.510(a)(1), Administration (NARA). For computer-controlled in-line blending sulfur content may be determined using information on the availability of this equipment, including the use of an on- ASTM D 2622–03. material at NARA, call 202–741–6030, line analyzer test method that is (3) Beginning August 30, 2004, for or go to: http://www.archives.gov/ approved under the provisions of motor vehicle diesel fuel and diesel fuel federal_register/ § 80.580, and who, subsequent to additives subject to the 15 ppm sulfur code_of_federal_regulations/ production of the diesel fuel batch tests standard of § 80.520(a)(1), sulfur content ibr_locations.html. a composited sample of the batch under may be determined using any test (1) ASTM material. Anyone may the provisions of § 80.580 for purposes method approved under § 80.585. purchase copies of these materials from of designation and reporting, is exempt from the requirement of paragraph (b) of (4) Beginning August 30, 2004, for the American Society for Testing and this section to obtain the test result NRLM diesel fuel and diesel fuel Materials, 100 Barr Harbor Dr., West required under this section prior to the additives subject to the 15 ppm standard Conshohocken, PA 19428. diesel fuel leaving the refinery, of § 80.510(b), sulfur content may be (i) ASTM D 2622–03, Standard Test provided that the refiner obtains determined using any test method Method for Sulfur in Petroleum approval from EPA. approved under § 80.585. Products by Wavelength Dispersive X- ray Fluorescence Spectrometry. (2) To obtain an exemption from (c) Alternative test methods for sulfur. paragraph (b) of this section, the refiner (1) Until December 27, 2004, for motor (ii) ASTM D 3120–03a, Standard Test Method for Trace Quantities of Sulfur in must submit to EPA all the information vehicle diesel fuel and diesel fuel required under § 80.65(f)(4)(i)(A). A additives subject to the 15 ppm standard Light Liquid Petroleum Hydrocarbons by Oxidative Microcoulometry. letter signed by the president, chief of § 80.520(a)(1), sulfur content may be operating or chief executive officer of determined using ASTM D 5453–03a or (iii) ASTM D 4294–03, Standard Test Method for Sulfur in Petroleum and the company, or his/her designee, ASTM D 3120–03a, provided that the stating that the information contained in refiner or importer test result is Petroleum Products by Energy- Dispersive X-ray Fluorescence the submission is true to the best of his/ correlated with the appropriate method her belief must accompany any specified in paragraph (a)(2) of this Spectrometry. (iv) ASTM D 5453–03a, Standard Test submission under this paragraph (c)(2). section. (3) Refiners who seek an exemption (2) Options for testing sulfur content Method for Determination of Total Sulfur in Light Hydrocarbons, Motor under paragraph (c)(2) of this section of 500 ppm diesel fuel. (i) For motor must comply with any request by EPA vehicle diesel fuel and diesel fuel Fuels and Motor Oils by Ultraviolet Fluorescence. for additional information or any other additives subject to the 500 ppm sulfur requirements that EPA includes as part standard of § 80.520(c), and for NRLM (v) ASTM D 6428–99, Test Method for Total Sulfur in Liquid Aromatic of the exemption. diesel fuel subject to the 500 ppm sulfur (4) Within 60 days of EPA’s receipt of standard of § 80.510(a), sulfur content Hydrocarbons and Their Derivatives by Oxidative Combustion and a submission under paragraph (c)(2) of may be determined using ASTM D this section, EPA will notify the refiner 4294–03, ASTM D 5453–03a, or ASTM Electrochemical Detection. (2) [Reserved] if the exemption is not approved or of D 6428–99, provided that the refiner or I 43. A new § 80.581 is added to read as any deficiencies in the refiner’s importer test result is correlated with follows: submission, or if any additional the appropriate method specified in information is required or other paragraph (a)(2)(ii) of this section; or § 80.581 What are the batch testing and requirements are included in the (ii) For motor vehicle diesel fuel and sample retention requirements for motor exemption pursuant to paragraph (c)(3) diesel fuel additives subject to the 500 vehicle and NRLM diesel fuel? of this section. In the absence of such ppm sulfur standard of § 80.520(c), and (a) Beginning on June 1, 2006 or notification from EPA, the effective date for NRLM diesel fuel subject to the 500 earlier pursuant to § 80.531 for motor of an exemption under this paragraph ppm sulfur standard of § 80.510(a), vehicle diesel fuel, and beginning June (c) is 60 days from EPA’s receipt of the sulfur content may be determined using 1, 2010 or earlier pursuant to § 80.535 refiner’s submission. any test method approved under for NRLM diesel fuel, each refiner and (5) EPA reserves the right to modify § 80.585. importer shall collect a representative the requirements of an exemption under

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this paragraph (c), in whole or in part, regulatory specifications and which body may be qualified upon approval by at any time, if EPA determines that the contains the fuel marker at a the Administrator. The following refiner’s operation does not effectively concentration in the range of 0.10 to 8 information must be submitted in the or adequately control, monitor or milligrams per liter. In order to qualify, application for approval by each test document the sulfur content of the the 20 results must be a series of tests facility, for each test method that it refinery’s diesel fuel production, or if on the same material and there must be wishes to have approved: EPA determines that any other a sequential record of the analysis with (i) Full test method documentation, circumstances exist which merit no omissions. A laboratory facility may including a description of the modification of the requirements of an exclude a given sample or test result technology and/or instrumentation that exemption, such as advancements in the only if the exclusion is for a valid makes the method functional. state of the art for in-line blending reason under good laboratory practices (ii) Information demonstrating that measurement which allow for and it maintains records regarding the the test method meets the accuracy and additional control or more accurate sample and test results and the reason precision criteria under paragraph (b) of monitoring or documentation of sulfur for excluding them. this section, including information on content. If EPA finds that a refiner (2) Accuracy. (i) The arithmetic the date and time of each test provided false or inaccurate information average of a continuous series of at least measurement used to demonstrate in any submission required for an 10 tests performed on a commercially precision. exemption under this section, upon available marker solvent yellow 124 (iii) Samples used for precision and notification from EPA, the refiner’s standard in the range of 0.10 to 1 accuracy determination must be exemption will be void ab initio. milligrams per liter shall not differ from retained for 90 days. (d) All test results under this section the ARV of that standard by more than (iv) If requested by the Administrator, shall be retained for five years and must 0.05 milligrams per liter. test results utilizing the method and be provided to EPA upon request. (ii) The arithmetic average of a performed on a sample of commercially (e) Samples collected under this continuous series of at least 10 tests available distillate fuel which meets the performed on a commercially available section must be retained for at least 30 applicable industry consensus and marker solvent yellow 124 standard in days and provided to EPA upon request. federal regulatory specifications and I the range of 4 to 10 milligrams per liter 44. A new § 80.582 is added to read as which contains the fuel marker. shall not differ from the ARV of that follows: (v) Any additional information standard by more than 0.05 milligrams requested by the Administrator and § 80.582 What are the sampling and per liter. testing methods for the fuel marker? (iii) In applying the tests of necessary to render a decision as to For heating oil and NRLM diesel fuel paragraphs (b)(2)(i) and (ii) of this qualification of the test method. subject to the fuel marker requirement section, individual test results shall be (vi) The qualification of a test method in § 80.510(d), (e), or (f), the compensated for any known chemical is limited to the single test facility that identification of the presence and interferences. performed the testing for accuracy and concentration of the fuel marker in (c) What process must a test facility precision and any other required testing. diesel fuel may be determined using the follow in order to qualify a test method (3)(i) Within 90 days of receipt of all test procedures qualified in accordance for determining the fuel marker content materials required to be submitted with the requirements in this section. of distillate fuels and how will EPA under paragraph (c)(1) or (c)(2) of this (a) Sampling and testing for methods qualify or decline to qualify a test section, the Administrator shall for the fuel marker. The sampling, method? (1) Qualification of test determine whether to qualify the test sample preparation, and testing methods approved by voluntary method under this section. The methods qualified for use in accordance consensus-based standards bodies. Any Administrator shall qualify the test with the requirements of this section standard test method developed by a method if all materials required under may involve the use of hazardous Voluntary Consensus-Based Standards this section are received and the test materials, operations and equipment. Body, such as the American Society for method meets the accuracy and This section does not address the Testing and Materials (ASTM) or precision criteria of paragraph (b) of this associated safety problems which may International Standards Organization section. exist. It is the responsibility of the user (ISO), shall be considered a qualified (ii) If the Administrator denies of the procedures specified in this test method for determining the fuel approval of the test method, within 90 section to establish appropriate safety marker content of distillate fuel days of receipt of all materials required and health practices prior to their use. provided that it meets the precision and to be submitted under this section, the It is also the responsibility of the user accuracy criteria under paragraph (b) of Administrator will notify the applicant to dispose of any byproducts which this section. The qualification of a test of the reasons for not approving the might result from conducting these method is limited to the single test method. If the Administrator does not procedures in a manner consistent with facility that performed the testing for notify the applicant within 90 days of applicable safety and health accuracy and precision. The individual receipt of the application, that the test requirements. facility must submit the accuracy and method is not approved, then the test (b) What are the precision and precision results for each method, method shall be deemed approved. accuracy criteria for qualification of fuel including information on the date and (iii) If the Administrator finds that an marker test methods? (1) Precision. A time of each test measurement used to individual test facility has provided standard deviation of less than 0.10 demonstrate precision, following false or inaccurate information under milligrams per liter is required, procedures established by the this section, upon notice from the computed from the results of a Administrator. Administrator, the qualification shall be minimum of 20 repeat tests made over (2) Qualification of test methods that void ab initio. 20 days on samples taken from a have not been approved by a voluntary (iv) The qualification of any test homogeneous commercially available consensus-based standards body. A test method under this paragraph (c) shall be diesel fuel which meets the applicable method that has not been approved by valid for the duration of the period industry consensus and federal a voluntary consensus-based standards during which the fuel marker

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requirements remain applicable under under paragraph (d)(3) of this section for (c) Party required to conduct quality this subpart. five years. assurance testing. The quality assurance (d) Quality control procedures for fuel I 45. A new § 80.583 is added to read as program under paragraph (b) of this marker measurement instrumentation. follows: section shall be conducted by the A test shall not be considered a test importer. In the alternative, this testing using a qualified test method unless the § 80.583 What alternative sampling and may be conducted by an independent following quality control procedures are testing requirements apply to importers who transport motor vehicle diesel fuel or laboratory that meets the criteria under performed separately for each NRLM diesel fuel by truck or rail car? § 80.65(f)(2)(iii), provided the importer instrument used to make measurements: Importers who import diesel fuel receives copies of all results of tests (1) Follow all mandatory provisions of conducted no later than 21 days after ASTM D 6299–02 and construct control subject to the 15 ppm sulfur standard under § 80.510(b) or (c) or 80.520(a) into the sample was taken. charts from the mandatory quality (d) Alternative batch designations. control testing prescribed in paragraph the United States by truck or by rail car may comply with the following For purposes of maintaining batch 7.1 of the reference method, following records under §§ 80.592, 80.600, and guidelines under A 1.5.1 for individual requirements instead of the requirements to sample and test each 80.602, designation of batches under observation charts and A 1.5.2 for § 80.598, and reporting under §§ 80.593, moving range charts. The Director of the batch of fuel designated as subject to the 15 ppm sulfur standard under § 80.581 80.601, and 80.604: Federal Register approved the (1) In lieu of treating each portion of incorporation by reference of ASTM D otherwise applicable to importers: (a) Terminal testing. For purposes of a tank truck compartment delivered to 6299–02, Standard Practice for a different facility as a different batch, Applying Statistical Quality Assurance determining compliance with the 15 ppm sulfur standard, the importer may a truck importer may treat each Techniques to Evaluate Analytical compartment as a batch, if all the fuel Measurement System Performance, as use test results for sulfur content testing conducted by the foreign truck-loading in the compartment is delivered only to prescribed in 5 U.S.C. 552(a) and 1 CFR retail outlets, wholesale purchaser- part 51. Anyone may purchase copies of or rail car-loading terminal operator for consumers or other end users. Where this standard from the American Society diesel fuel contained in the storage tank different compartments contain for Testing and Materials, 100 Barr from which trucks or rail cars used to homogeneous product of identical Harbor Dr., West Conshohocken, PA transport diesel fuel designated as designations, the total volume of those 19428. Anyone may inspect copies at subject to the 15 ppm sulfur content compartments may be treated as a single the U.S. EPA, Air and Radiation Docket standard into the United States are batch, if the entire volume is delivered and Information Center, 1301 loaded, provided the following only to retail outlets, wholesale Constitution Ave., NW., Room B102, conditions are met: purchaser-consumers or other ultimate EPA West Building, Washington, DC (1) The sampling and testing shall be consumers. 20460 or at the National Archives and performed after each receipt of diesel Records Administration (NARA). For fuel into the storage tank, or (2) Each portion of a rail car (or rail information on the availability of this immediately before each transfer of cars) delivery of a different designation material at NARA, call 202–741–6030, diesel fuel to the importer’s truck or rail or each delivery to a different facility is or go to: http://www.archives.gov/ car. considered to be a separate batch. federal_register/ (2) The sampling and testing shall be (e) EPA inspections of terminals. EPA code_of_federal_regulations/ performed according to § 80.580. inspectors or auditors must be given full ibr_locations.html. (3) At the time of each transfer of and immediate access to the truck or rail (2) Follow paragraph 7.3.1 of ASTM D diesel fuel to the importer’s truck or rail car-loading terminal and any laboratory 6299–02 to check standards using a car for import to the U.S., the importer at which samples of diesel fuel collected reference material at least monthly or must obtain a copy of the terminal test at the terminal are analyzed, and must following any major change to the result that indicates the sulfur content be allowed to conduct inspections, laboratory equipment or test procedure. of the truck or rail car load, or truck or review records, collect diesel fuel Any deviation from the accepted rail car compartment load, as samples and perform audits. These reference value of a check standard applicable. inspections or audits may be either greater than 0.10 milligrams per liter (b) Quality assurance program. The announced or unannounced. must be investigated. importer must conduct a quality (f) Certified DFR-Diesel. This section (3) Samples of tested batches must be assurance program, as specified in this does not apply to Certified DFR-Diesel retained for 30 days or the period equal paragraph (b), for each truck or rail car as defined in § 80.620. to the interval between quality control loading terminal. (g) Effect of noncompliance. If any of sample tests, whichever is longer. (1) Quality assurance samples must be the requirements of this section are not (4) Upon discovery of any quality obtained from the truck-loading or rail met, all motor vehicle diesel fuel and control testing violation of paragraph A car loading terminal and tested by the NRLM diesel fuel imported by the truck 1.5.1.3 or A 1.5.2.1 of ASTM D 6299– importer, or by an independent or rail car importer during the time the 02, or any check standard deviation laboratory, and the terminal operator requirements are not met is deemed in greater than 0.10 milligrams per liter, must not know in advance when violation of the 15 ppm sulfur diesel conduct an investigation into the cause samples are to be collected. fuel standards in § 80.510(b) or (c) or of such violation or deviation and, after (2) The sampling and testing must be § 80.520(a), as applicable. Additionally, restoring method performance to performed using the methods specified if any requirement is not met, EPA may statistical control, retest retained in § 80.580. notify the importer of the violation, and, samples from batches originally tested (3) The frequency of the quality if the requirement is not fulfilled within since the last satisfactory quality control assurance sampling and testing must be 10 days of notification, the truck material or check standard testing at least one sample for each 50 of an importer may not in the future use the occasion. importer’s trucks or rail cars that are sampling and testing provisions in this (5) Retain results of quality control loaded at a terminal, or one sample per section in lieu of the provisions in testing and retesting of retained samples month, whichever is more frequent. § 80.581.

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I 46. A new § 80.584 is added to read as from the ARV of that standard by more each test method that it wishes to have follows: than 0.54 ppm sulfur; and approved: (iii) In applying the tests of (1) Full test method documentation, § 80.584 What are the precision and paragraphs (b)(1)(i) and (ii) of this including a description of the accuracy criteria for approval of test technology and/or instrumentation that methods for determining the sulfur content section, individual test results shall be of motor vehicle and NRLM diesel fuel? compensated for any known chemical makes the method functional. interferences. (2) Information demonstrating that the (a) Precision. (1) For motor vehicle (2) For motor vehicle diesel fuel test method meets the applicable diesel fuel and diesel fuel additives subject to the 500 ppm sulfur standard accuracy and precision criteria of subject to the 15 ppm sulfur standard of of § 80.520(c), and for NRLM diesel fuel § 80.584, including information on the § 80.520(a)(1) and NRLM diesel fuel and subject to the 500 ppm sulfur standard date and time of each test measurement diesel fuel additives subject to the 15 of § 80.510(a): used to demonstrate precision. ppm sulfur standard of § 80.510(b) and (i) The arithmetic average of a (3) If requested by the Administrator, (c), a standard deviation less than 0.72 continuous series of at least 10 tests test results from use of the method to ppm, computed from the results of a performed on a commercially available analyze samples of commercially minimum of 20 repeat tests made over gravimetric sulfur standard in the range available fuel provided by EPA. 20 days on samples taken from a single of 100–200 ppm sulfur shall not differ (4) Any additional information homogeneous commercially available from the ARV of that standard by more requested by the Administrator and diesel fuel with a sulfur content in the than 7.26 ppm sulfur; necessary to render a decision as to range of 5–15 ppm. The 20 results must (ii) The arithmetic average of a approval of the test method. be a series of tests with a sequential continuous series of at least 10 tests (c) Sample retention. Samples used record of the analyses and no omissions. performed on a commercially available for precision and accuracy A laboratory facility may exclude a gravimetric sulfur standard in the range determination must be retained for 90 given sample or test result only if the of 400–500 ppm sulfur shall not differ days. exclusion is for a valid reason under from the ARV of that standard by more (d) EPA approval. (1) Within 90 days good laboratory practices and it than 7.26 ppm sulfur; and of receipt of all materials required to be maintains records regarding the sample (iii) In applying the tests of submitted under paragraph (a) or (b) of and test results and the reason for paragraphs (b)(2)(i) and (ii) of this this section, the Administrator shall excluding them. section, individual test results shall be determine whether the test method is (2) For motor vehicle diesel fuel compensated for any known chemical approved under this section. subject to the 500 ppm sulfur standard interferences. (2) If the Administrator denies of § 80.520(c), and for NRLM diesel fuel I 47. A new § 80.585 is added to read as approval of the test method, within 90 subject to the 500 ppm sulfur standard follows: days of receipt of all materials required of § 80.510(a), of a standard deviation to be submitted under paragraph (a) or less than 9.68 ppm, computed from the § 80.585 What is the process for approval (b) of this section, the Administrator results of a minimum of 20 repeat tests of a test method for determining the sulfur will notify the applicant of the reasons made over 20 days on samples taken content of diesel? for not approving the method. If the from a single homogeneous (a) Approval of test methods approved Administrator does not notify the commercially available diesel fuel with by voluntary consensus-based standards applicant within 90 days of receipt of a sulfur content in the range of 200–500 bodies. For such a method to be the application, that the test method is ppm. The 20 results must be a series of approved, the following information not approved, then the test method shall tests with a sequential record of the must be submitted to the Administrator be deemed approved. analyses and no omissions. A laboratory by each test facility for each test method (3) If the Administrator finds that an facility may exclude a given sample or that it wishes to have approved: Any individual test facility has provided test result only if the exclusion is for a test method approved by a voluntary false or inaccurate information under valid reason under good laboratory consensus-based standards body, such this section, upon notice from the practices and it maintains records as the American Society for Testing and Administrator the approval shall be regarding the sample and test results Materials (ASTM) or International void ab initio. and the reason for excluding them. Standards Organization (ISO), shall be (4) The approval of any test method (b) Accuracy. (1) For motor vehicle approved as a test method for under paragraph (b) of this section shall diesel fuel and diesel fuel additives determining the sulfur content of diesel be valid for five years from the date of subject to the 15 ppm sulfur standard of fuel if it meets the applicable accuracy approval by the Administrator and shall § 80.520(a)(1) and NRLM diesel fuel and and precision criteria under § 80.584. not be extended. If the method is later diesel fuel additives subject to the 15 The approval of a test method is limited approved by a voluntary consensus- ppm sulfur standard of § 80.510(b) and to the single test facility that performed based standards body, the approval (c): the testing for accuracy and precision. shall remain valid as long as the (i) The arithmetic average of a The individual facility must submit the conditions of paragraph (a) of this continuous series of at least 10 tests accuracy and precision results for each section are met. performed on a commercially available method, including information on the (e) Quality assurance procedures for gravimetric sulfur standard in the range date and time of each test measurement sulfur measurement instrumentation. A of 1–10 ppm sulfur shall not differ from used to demonstrate precision, test shall not be considered a test using the accepted reference value (ARV) of following procedures established by the an approved test method unless the that standard by more than 0.54 ppm Administrator. following quality control procedures are sulfur; (b) Approval of test methods not performed separately for each (ii) The arithmetic average of a approved by a voluntary consensus- instrument used to make measurements: continuous series of at least 10 tests based standards body. For such a (1) Follow all mandatory provisions of performed on a commercially available method to be approved, the following ASTM D 6299–02 and construct control gravimetric sulfur standard in the range information must be submitted to the charts from the mandatory quality of 10–20 ppm sulfur shall not differ Administrator by each test facility for control testing prescribed in paragraph

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7.1 of the reference method, following values, all test method documentation, sulfur (maximum) Dyed Ultra-Low guidelines under A 1.5.1 for individual and any quality control testing and Sulfur Diesel Fuel. For use in all observation charts and A 1.5.2 for analysis under §§ 80.582, 80.584 and nonroad diesel engines. Not for use in moving range charts. The Director of the 80.585, for five years. highway vehicles or engines except for Federal Register approved the I 49. Section 80.590 is revised to read as tax-exempt use in accordance with incorporation by reference of ASTM D follows: section 4082 of the Internal Revenue 6299–02, Standard Practice for Code.’’ Applying Statistical Quality Assurance § 80.590 What are the product transfer document requirements for motor vehicle (iii) Undyed 500 ppm sulfur diesel Techniques to Evaluate Analytical diesel fuel, NRLM diesel fuel, heating oil fuel. From June 1, 2006 through Measurement System Performance, as and other distillates? September 30, 2010, ‘‘500 ppm sulfur prescribed in 5 U.S.C. 552(a) and 1 CFR (a) On each occasion that any person (maximum) Undyed Low Sulfur Diesel part 51. Anyone may purchase copies of transfers custody or title to MVNRLM Fuel. For use in Model Year 2006 and this standard from the American Society diesel fuel or heating oil, including older diesel highway vehicles and for Testing and Materials, 100 Barr distillates used or intended to be used engines. Also for use in nonroad, Harbor Dr., West Conshohocken, PA as MVNRLM diesel fuel or heating oil, locomotive, and marine diesel engines. 19428. Anyone may inspect copies at except when such fuel is dispensed into Not for use in model year 2007 and the U.S. EPA, Air and Radiation Docket motor vehicles or nonroad, locomotive, newer highway vehicles or engines.’’ and Information Center, 1301 or marine equipment, the transferor (iv) Dyed 500 ppm sulfur diesel fuel. Constitution Ave., NW., Room B102, must provide to the transferee (A) For the period of June 1, 2006 EPA West Building, Washington, DC documents which include the following through September 30, 2010, ‘‘500 ppm 20460 or at the National Archives and information: sulfur (maximum) Dyed Low Sulfur Records Administration (NARA). For (1) The names and addresses of the Nonroad, Locomotive or Marine Diesel information on the availability of this transferor and transferee. Fuel. Not for use in highway vehicles or material at NARA, call 202–741–6030, (2) The volume of diesel fuel or engines except for use in Model Year or go to: http://www.archives.gov/ 2006 and older highway diesel vehicles _ distillate which is being transferred. federal register/ (3) The location of the diesel fuel or or engines for tax-exempt use in code_of_federal_regulations/ accordance with section 4082 of the _ distillate at the time of the transfer. ibr locations.html. (4) The date of the transfer. Internal Revenue Code.’’ (2) Follow paragraph 7.3.1 of ASTM D (5) For transfers of MVNRLM diesel (B) From June 1, 2010 through 6299–02 to check standards using a fuel, the sulfur content standard the September 30, 2014, ‘‘500 ppm sulfur reference material at least monthly or transferor represents the fuel to meet. (maximum) Dyed Low Sulfur Nonroad following any major change to the (6) Beginning June 1, 2006, when an Diesel Fuel. For use in model year 2010 laboratory equipment or test procedure. entity transfers custody of a distillate and older nonroad diesel engines. May Any deviation from the accepted fuel designated under § 80.598, the be used in locomotive and marine diesel reference value of a check standard following information must also be engines. Not for use in highway vehicles greater than 1.44 ppm (for diesel fuel included: and engines or model year 2011 or later subject to the 15 ppm sulfur standard) (i) The facility registration number of nonroad engines other than locomotive or 19.36 ppm (for diesel fuel subject to the transferor issued under § 80.597, if or marine diesel engines. Not for use in the 500 ppm sulfur standard) must be any. the Northeast/Mid-Atlantic Area.’’ investigated. (ii) An accurate and clear statement of (C) For dyed locomotive and marine (3) Samples of tested batches must be the applicable designation and/or diesel fuel beginning June 1, 2010, ‘‘500 retained for 30 days or the period equal classification under § 80.598, for ppm sulfur (maximum) Dyed Low to the interval between quality control example, 500 ppm sulfur NRLM diesel Sulfur Locomotive and Marine diesel sample tests, whichever is longer. fuel; and whether the fuel is dyed or fuel. Not for use in highway or other (4) Upon discovery of any quality undyed, and for heating oil, whether nonroad vehicles and engines.’’ control testing violation of paragraph A marked or unmarked. (v) Dyed High Sulfur NRLM Fuel. 1.5.1.3 or A 1.5.2.1 of ASTM D 6299– (7) For transfers of title or custody From June 1, 2007 through September 02, or any check standard deviation from one facility to another in the 30, 2010, ‘‘High Sulfur Dyed Nonroad, greater than 1.44 ppm (for diesel fuel distribution system where diesel fuel or Locomotive, or Marine Engine Diesel subject to the 15 ppm sulfur standard) distillates are taxed, dyed or marked, fuel—sulfur content may exceed 500 or 19.36 ppm (for diesel fuel subject to and for any subsequent transfers (except ppm sulfur. Not for use in highway the 500 ppm sulfur standard), conduct when such fuel is dispensed into motor vehicles or engines. Not for use in any an investigation into the cause of such vehicles or nonroad, locomotive or nonroad engines requiring Ultra-Low violation or deviation and, after marine equipment), an accurate Sulfur Diesel Fuel. Not for use in the restoring method performance to statement on the product transfer Northeast/Mid-Atlantic Area.’’ statistical control, retest retained document of the applicable fuel uses (vi) Heating oil. For heating oil samples from batches originally tested and classifications, as follows: produced or imported beginning June 1, since the last satisfactory quality control (i) Undyed 15 ppm sulfur diesel fuel. 2007, ‘‘Heating Oil. Not for use in material or check standard testing For the period from June 1, 2006 and highway vehicles or engines or nonroad, occasion. beyond, ‘‘15 ppm sulfur (maximum) locomotive, or marine engines.’’ I 48. A new § 80.586 is added to read as Undyed Ultra-Low Sulfur Diesel Fuel (b) The following may be substituted follows: For use in all diesel vehicles and for the descriptions in paragraph (a) of § 80.586 What are record retention engines.’’ From June 1, 2006 through this section, as appropriate: requirements for test methods approved May 31, 2010, the product transfer (1) ‘‘This is high sulfur diesel fuel for under this subpart? document must also state whether the use only in Guam, American Samoa, or Each individual test facility must diesel fuel is #1D or #2D. the Northern Mariana Islands.’’; retain records related to the (ii) Dyed 15 ppm sulfur diesel fuel. (2) ‘‘This diesel fuel is for export use establishment of accuracy and precision From June 1, 2006 and beyond, ‘‘15 ppm only.’’;

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(3) ‘‘This diesel fuel is for research, § 80.591 What are the product transfer the information required under development, or testing purposes document requirements for additives to be paragraphs (a) and (b) of this section, if only.’’; or used in diesel fuel? such codes are clearly understood by (4) ‘‘This diesel fuel is for use in (a) Except as provided in paragraphs each transferee. Codes used to convey diesel highway vehicles or nonroad (b) and (d) of this section, on each the statement in paragraph (a)(2) of this equipment under an EPA-approved occasion that any person transfers section must contain the number ‘‘15’’ national security exemption only.’’ custody or title to a diesel fuel additive and codes used to convey the statement that is subject to the provisions of (c) If undyed and/or unmarked in paragraph (b)(2) of this section must § 80.521 to a party in the additive distillate fuel is dyed and/or marked not contain such number. distribution system or in the diesel fuel subsequent to the issuance of a product (d) For those diesel fuel additives distribution system for use downstream transfer document, at the time the which are sold in containers for use by of the diesel fuel refiner, the transferor distillate fuel is dyed and/or marked, a the ultimate consumer of diesel fuel, must provide to the transferee new product transfer document must be each transferor must have displayed on documents which identify the additive, prepared with the language under the additive container, in a legible and and— paragraph (a)(7) of this section conspicuous manner, either of the (1) Identify the name and address of applicable to the changed fuel and following statements, as applicable: the transferor and transferee; the date of provided to subsequent transferees. (1) ‘‘This diesel fuel additive complies transfer; the location at which the with the federal low sulfur content (d) Except for transfers to truck transfer took place; the volume of carriers, retailers or wholesale requirements for use in diesel motor additive transferred; and vehicles and nonroad engines.’’; or purchaser-consumers, product codes (2) Indicate compliance with the 15 (2) For those additives sold in may be used to convey the information ppm sulfur standard by inclusion of the containers for use by the ultimate required under this section if such following statement: ‘‘The sulfur consumer, with a sulfur content in codes are clearly understood by each content of this diesel fuel additive does excess of 15 ppm the following transferee. Codes used to convey the not exceed 15 ppm.’’ statement in paragraphs (a)(7)(i) and (ii) (b) On each occasion that any person statement: ‘‘This diesel fuel additive of this section must contain the number transfers custody or title to a diesel fuel does not comply with federal ultra-low ‘‘15’’, and codes used to convey the additive subject to the requirements of sulfur content requirements for use in statement in paragraphs (a)(7)(iii) and § 80.521(b), to a party in the additive model year 2007 and newer diesel (iv) of this section must contain the distribution system or in the diesel fuel motor vehicles or model year 2011 and number ‘‘500’’. Codes used to convey distribution system for use in diesel fuel newer diesel nonroad equipment the statement in paragraph (a)(7)(v) of downstream of the diesel fuel refiner, engines.’’ I this section must contain the statement the transferor must provide to the 51. Section 80.592 is amended by ‘‘greater than 500’’ or ‘‘>500’’. transferee documents which identify the revising the heading and paragraphs (a), (e) From June 1, 2001 through May 31, additive, and do each of the following: (b) introductory text, (b)(4), (b)(7) 2005, any transfer subject to this (1) Identify the name and address of introductory text, (c), (d), and (e) to read section, which is also subject to the the transferor and transferee; the date of as follows: early credit provisions of § 80.531(b), transfer; the location at which the § 80.592 What records must be kept by must comply with all applicable transfer took place; the volume of entities in the motor vehicle diesel fuel and requirements of this section. additive transferred. diesel fuel additive distribution systems? (f) From June 1, 2005 through May 31, (2) Indicate the high sulfur potential (a) Records that must be kept by 2006, any transfer subject to this of the additive by inclusion of the entities in the motor vehicle diesel fuel section, which is also subject to the following statement: and diesel fuel additive distribution early credit requirements of § 80.531(c), This diesel fuel additive may exceed the systems. Beginning June 1, 2006, or for must comply with all applicable federal 15 ppm sulfur standard. Improper use a refiner or importer, the first requirements of this section. of this additive may result in non-complying compliance period in which the refiner (g) Mobile refuelers. The provisions of diesel fuel. or importer is generating early credits this section shall also apply to a mobile (3) If the additive contains a static under § 80.531(b) or (c), whichever is refueler that dispenses fuel from tanker dissipater additive having a sulfur earlier, any person who produces, trucks or other vessels into motor content greater than 15 ppm, include imports, sells, offers for sale, dispenses, vehicles, nonroad diesel engines or the following statement: distributes, supplies, offers for supply, nonroad diesel engine equipment. Each This diesel fuel contains a static dissipater stores, or transports motor vehicle diesel visit by the mobile refueler to a location additive having a sulfur content greater than fuel subject to the provisions of this shall be considered a separate occasion 15 ppm. subpart, must keep all the following for purposes of paragraph (a) of this (4) Include the following information: records: section. The tank trucks used by mobile (i) The additive’s maximum sulfur (1) The applicable product transfer refuelers are not subject to the labeling concentration. documents required under §§ 80.590 requirements in §§ 80.570 through (ii) The maximum recommended and 80.591. 80.574. concentration in volume percent for use (2) For any sampling and testing for (h) Identifications of fuel designations of the additive in diesel fuel. sulfur content for a batch of motor can be limited to a sub-designation that (iii) The contribution to the sulfur vehicle diesel fuel produced or accurately identifies the fuel and do not level of the fuel, in ppm, that would imported and subject to the 15 ppm need to also include the broader result if the additive is used at the sulfur standard or any sampling and designation. For example, NR diesel fuel maximum recommended concentration. testing for sulfur content as part of a does not also need to be designated as (c) Except for transfers of diesel fuel quality assurance testing program, and NRLM or MVNRLM diesel fuel. additives to truck carriers, retailers or any sampling and testing for cetane I 50. Section 80.591 is revised to read as wholesale purchaser-consumers, index, aromatics content, solvent yellow follows: product codes may be used to convey 124 content or dye solvent red 164

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content of motor vehicle diesel fuel or section shall be kept for five years from be provided both for fuel produced from motor vehicle diesel fuel additives: the date they were created, except that crude oil, as well as any fuel produced (i) The location, date, time and storage records relating to credit transfers shall from other sources, and must be tank or truck identification for each be kept by the transferor for 5 years from provided for the periods of June 1, 2006 sample collected; the date the credits were transferred, through December 31, 2006, January 1, (ii) The name and title of the person and shall be kept by the transferee for 2007 through December 31, 2007, who collected the sample and the 5 years from the date the credits were January 1, 2008 through December 31, person who performed the testing; and transferred, used or terminated, 2008, January 1, 2009 through December (iii) The results of the tests for sulfur whichever is later. 31, 2009, and January 1, 2010 through content (including where applicable the (e) Make records available to EPA. On May 31, 2010, for each refinery and test results with and without request by EPA, the records required in import facility; application of the adjustment factor this section must be made available to * * * * * under § 80.580(a)(4)) and for cetane the Administrator or the Administrator’s (5) Information on project schedule by index or aromatics content (as representative. For records that are quarter of known or projected applicable), and the volume of product electronically generated or maintained, completion date by the stage of the in the storage tank or container from the equipment and software necessary project, for example, following the five which the sample was taken. to read the records shall be made (3) The actions the party has taken, if project phases described in EPA’s June available, or if requested by EPA, 2002 Highway Diesel Progress Review any, to stop the sale or distribution of electronic records shall be converted to any motor vehicle diesel fuel found not report (EPA420–R–02–016, http:// paper documents which shall be www.epa.gov/otaq/regs/hd2007/ to be in compliance with the sulfur provided to the Administrator’s standards specified in this subpart, and 420r02016.pdf): Strategic planning, authorized representative. Planning and front-end engineering, the actions the party has taken, if any, I 52. Section 80.593 is amended by to identify the cause of any Detailed engineering and permitting, revising the section heading and Procurement and construction, and noncompliance and prevent future paragraphs (a)(3) and (c)(2) to read as instances of noncompliance. Commissioning and startup; follows: (b) Additional records to be kept by (6) Basic information regarding the refiners and importers of motor vehicle § 80.593 What are the reporting selected technology pathway for diesel fuel subject to hardship requirements for refiners and importers of compliance (e.g., conventional standards, small refiner standards and motor vehicle diesel fuel subject to hydrotreating vs other technologies, early credit provisions. Beginning June temporary refiner relief standards? revamp vs grassroots, etc.); 1, 2006, or for a refiner or importer, the * * * * * (7) Whether capital commitments first compliance period in which the (a) * * * have been made or are projected to be refiner or importer is generating early (3) The percentage of the volume of made; and credits under § 80.531(b) or (c), any motor vehicle diesel fuel produced (8) The pre-compliance reports due refiner producing motor vehicle diesel during the compliance period that met 2004 and 2005 must provide an update fuel subject to the sulfur standard under the 15 ppm sulfur standard and the of the progress in each of these areas. § 80.520(a)(1), for each of its refineries, percentage that met the 500 ppm sulfur (b) Beginning on June 1, 2003, all and any importer importing such motor standard prior to the application of any approved motor vehicle diesel fuel vehicle diesel fuel, shall keep records volume credits. small refiners shall submit the following that include the following information * * * * * additional information to EPA, as for each batch of motor vehicle diesel (c) * * * applicable: fuel produced or imported: * * * (2) Submitted to EPA no later than * * * * * (4) A record designating the batch as August 31 for the prior annual (2) In case of a refinery with an motor vehicle diesel fuel meeting the compliance period. approved application under § 80.552(c), 500 ppm sulfur standard or as motor I 53. Section 80.594 is amended by a demonstration that by June 1, 2006 its vehicle diesel fuel meeting the 15 ppm revising the section heading and motor vehicle diesel fuel will be at 15 sulfur standard. paragraphs (a)(3), (a)(5), (b) introductory ppm sulfur at a volume meeting the * * * * * text, (b)(2), and (c), and adding requirements of § 80.553(e). (7) Information regarding credits, kept paragraphs (a)(6), (a)(7), (a)(8), and (e) to (c) For each refiner and importer separately for each calendar year read as follows: approved under § 80.540, a compliance period, kept separately for demonstration that by June 1, 2006, 95 each refinery and in the case of § 80.594 What are the pre-compliance percent of its motor vehicle diesel fuel importers, kept separately for imports reporting requirements for motor vehicle will be at 15 ppm sulfur at a volume of diesel fuel? into each CTA, and designated as motor meeting the requirements of § 80.540(e). (a) Except as provided in paragraph vehicle diesel fuel credits and kept * * * * * (d) of this section, beginning on June 1, separately from NRLM credits, as (e) The pre-compliance reporting 2003, and on June 1, 2004 and June 1, follows: requirements of this section do not 2005, all refiners and importers * * * * * apply to refineries subject to the planning to produce or import motor (c) Additional records importers must provisions of § 80.513. vehicle diesel fuel subject to the keep. Any importer shall keep records I 54. Section 80.597 is revised to read as provisions of this subpart, shall submit that identify and verify the source of follows: each batch of certified diesel fuel the following information to EPA: program foreign refiner DFR-Diesel and * * * * * § 80.597 What are the registration non-certified DFR-Diesel imported and (3) An estimate of the average daily requirements? demonstrate compliance with the volumes (in gallons) of each sulfur grade The following registration requirements under § 80.620. of motor vehicle diesel fuel produced requirements apply under this subpart: (d) Length of time records must be (or imported) at each refinery (or import (a) Registration for motor vehicle kept. The records required in this facility). These volume estimates must diesel fuel. Refiners having any refinery

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that is subject to a sulfur standard under location of each of the components. If MVNRLM diesel fuel must also be § 80.520(a), and importers importing aggregation is changed for any designated as one of the following: such diesel fuel, must provide EPA the subsequent compliance period, the (A) Motor vehicle diesel fuel; or information under § 80.76, if such entity must provide notice to EPA prior (B) NRLM diesel fuel. information has not been provided to the beginning of such compliance (iii) From June 1, 2010 through May under the provisions of this part. In period. 31, 2012 any batch designated as NRLM addition, for each import facility, the (2) If facility records are kept off-site, must also be designated as one of the same identifying information as list the off-site storage facility name, following: required for each refinery under physical location, contact name, and (A) NR diesel fuel; or § 80.76(c) must be provided. telephone number. (B) LM diesel fuel. (b) Registration for NRLM diesel. (e) Changes to registration (iv) Until June 1, 2014, any batch Refiners and importers that intend to information. Any company or entity designated as MVNRLM diesel fuel produce or supply NRLM diesel fuel by shall submit updated registration must also be designated according to June 1, 2007, must provide EPA the information to the Administrator within one of the following three sulfur level information under § 80.76 no later than 30 days of any occasion when the specifications: December 31, 2005, if such information registration information previously (A) 15 ppm if its sulfur content is less has not been provided under the supplied for an entity, or any of its than or equal to 15 ppm. provisions of this part. In addition, for registered facilities, becomes incomplete (B) 500 ppm if its sulfur content is each import facility, the same or inaccurate. less than or equal to 500 ppm. identifying information as required for (f) Issuance of registration numbers. (C) High Sulfur if its sulfur content is each refinery under § 80.76(c) must be EPA will supply a registration number greater than 500 ppm. provided. to each entity and a facility registration (v) From June 1, 2006 through May (c) Entity registration. (1) Each entity number to each of an entity’s facilities 31, 2010, any batch designated as motor as defined in § 80.502 that intends to that is identified, which shall be used in vehicle diesel fuel must also be deliver or receive custody of any of the all reports to the Administrator. designated according to one of the following fuels from June 1, 2007 I 55. A new § 80.598 is added to read as following two distillation classifications through May 31, 2014 must register with follows: that most accurately represents the fuel: (A) #1D. EPA by December 31, 2005 or six § 80.598 What are the designation months prior to commencement of requirements for refiners, importers, and (B) #2D. producing, importing, or distributing distributors? (3) The following restrictions and clarifications apply: any distillate subject to designation (a) Designation requirements for under § 80.598: (i) Prior to June 1, 2006, any batch of refiners and importers. (1) Any refiner MVNRLM not containing visible (i) Fuel designated as 500 ppm sulfur or importer shall accurately and clearly MVNRLM diesel fuel under § 80.598 on evidence of red dye under § 80.520(b) designate all fuel it produces or imports must be designated as motor vehicle which taxes have not been assessed for use in diesel motor vehicles as either pursuant to IRS code (26 CFR part 48). diesel fuel. motor vehicle diesel fuel meeting the 15 (ii) Any distillate fuel containing (ii) Fuel designated as NRLM diesel ppm sulfur standard under fuel under § 80.598 that is undyed visible evidence of dye may not be § 80.520(a)(1) or as motor vehicle diesel designated as motor vehicle diesel fuel pursuant to § 80.520. fuel meeting the 500 ppm sulfur (iii) Fuel designated as heating oil unless it is further designated as tax standard under § 80.520(c). under § 80.598 that is unmarked exempt motor vehicle diesel fuel. (2) Subject to the restrictions in (iii) Any distillate containing the pursuant to § 80.510(d) through (f). paragraph (a)(3) of this section, (iv) Fuel designated as LM diesel fuel marker required pursuant to the beginning June 1, 2006, any refiner or under § 80.598(a)(2)(iii) that is provisions of § 80.510(d) through (f) importer shall accurately and clearly unmarked pursuant to § 80.510(e). must be designated as heating oil, (2) Registration shall be on forms designate each batch of diesel fuel or except that from June 1, 2010 through prescribed by the Administrator, and distillate fuel for which they transfer May 31, 2012 it may also be designated shall include the name, business custody to another entity, according to as LM diesel fuel, pursuant to address, contact name, telephone the following categories, including § 80.510(e). number, e-mail address, and type of specifying its volume: (iv) Prior to June 1, 2009 all 15 ppm (i) Designate the fuel as one of the production, importation, or distribution sulfur MVNRLM diesel fuel must be following fuel types: activity or activities engaged in by the (A) Motor vehicle, nonroad, designated as motor vehicle diesel fuel. (v) Beginning June 1, 2010 any entity. locomotive or marine (MVNRLM) diesel (3) Registration shall include the distillate fuel having a sulfur content fuel; information required under paragraph (B) Heating oil; greater than 15 ppm may not be (d) of this section for each facility (C) Jet fuel; designated as motor vehicle diesel fuel. owned or operated by the entity that (D) Kerosene; (vi) Beginning June 1, 2014, any delivers or receives custody of a fuel (E) No. 4 fuel; distillate fuel having a sulfur content described in paragraph (c)(1) of this (F) Distillate fuel for export only; or greater than to 15 ppm may not be section. (G) Exempt distillate fuels such as designated as MVNRLM diesel fuel. (d) Facility registration. (1) List for fuels that are covered by a national (vii) Any batch of #1D fuel which is each separate facility of an entity security exemption under § 80.606, fuels suitable for use as MVNRLM and which required to register under paragraph (c) that are used for purposes of research is also suitable for use as kerosene or jet of this section, the facility name, and development pursuant to § 80.607, fuel (i.e., commonly referred to as dual physical location, contact name, and fuels used in the U.S. Territories use kerosene) may be designated as telephone number, e-mail address and pursuant to § 80.608 (including MVNRLM, kerosene, or jet fuel (as type of facility. For facilities that are additional identifying information). applicable). aggregated under § 80.502, provide (ii) From June 1, 2006 through May (viii) Beginning June 1, 2007, any information regarding the nature and 31, 2014 any batch designated as distillate fuel with a sulfur content

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greater than 500 ppm distributed or is in their custody between receipt and (i) 500 ppm sulfur NR diesel fuel; intended for distribution in the area delivery. (ii) 500 ppm sulfur LM diesel fuel; specified in § 80.510(g)(1), may not be (2) From June 1, 2006 through May (iii) Heating oil; or designated as MVNRLM diesel fuel. 31, 2009, whenever custody of a batch (iv) Exempt distillate fuels such as (ix) From June 1, 2010 through May of 15 ppm sulfur motor vehicle diesel fuels that are covered by a national 31, 2012, any distillate fuel with a sulfur fuel is transferred to another facility, the security exemption under § 80.606, fuels content greater than 15 ppm distributed entity transferring custody must that are used for purposes of research or intended for distribution in the area accurately and clearly designate the and development pursuant to § 80.607, specified in § 80.510(g)(1), may not be batch as one of the following and and fuels used in the U.S. Territories designated as NR diesel fuel. specify its volume: pursuant to § 80.608 (including (x) From June 1, 2012 through May (i) #1D 15 ppm sulfur motor vehicle additional identifying information). 31, 2014, any distillate fuel with a sulfur diesel fuel. (7) From June 1, 2012 through May content greater than 15 ppm distributed (ii) #2D 15 ppm sulfur motor vehicle 31, 2014, whenever custody of a batch or intended for distribution in the area diesel fuel. of distillate fuel (other than jet fuel, specified in § 80.510(g)(1), may not be (3) From June 1, 2009 through May kerosene, No. 4 fuel, or fuel for export) designated as NRLM diesel fuel. 31, 2010, whenever custody of a batch having a sulfur content greater than 15 (xi) Beginning June 1, 2007, any of 15 ppm sulfur MVNRLM diesel fuel ppm is transferred to another facility, distillate fuel with a sulfur content is transferred to another facility, the the entity transferring custody must greater than 500 ppm distributed or entity transferring custody must accurately and clearly designate the intended for distribution in the area accurately and clearly designate the batch as one of the following and specified in § 80.510(g)(2) may not be batch as one of the following and specify its volume: designated as NRLM diesel fuel unless specify its volume: (i) 500 ppm sulfur NRLM diesel fuel; EPA has first approved a compliance (i) #1D 15 ppm sulfur motor vehicle (ii) Heating oil; or plan for the refiner for segregating the diesel fuel. (iii) Exempt distillate fuels such as fuel from all other types of NRLM diesel (ii) #2D 15 ppm sulfur motor vehicle fuels that are covered by a national fuel from the refinery gate to the diesel fuel. security exemption under § 80.606, fuels ultimate consumer, as specified under (iii) 15 ppm sulfur NRLM diesel fuel. that are used for purposes of research § 80.554(a)(4). (4) From June 1, 2006 through May and development pursuant to § 80.607, (xii) From June 1, 2010 through May 31, 2010, whenever custody of a batch and fuels used in the U.S. Territories 31, 2012, any distillate fuel with a sulfur of undyed, 500 ppm sulfur MVNRLM is pursuant to § 80.608 (including content greater than 15 ppm distributed transferred to another facility, the entity additional identifying information). or intended for distribution in the area transferring custody must accurately (8) Beginning June 1, 2014, whenever specified in § 80.510(g)(2) may not be and clearly designate the batch as one custody of a batch of distillate fuel designated as NR diesel fuel unless EPA of the following and specify its volume: (other than jet fuel, kerosene, No. 4 fuel, (i) #1D 500 ppm sulfur motor vehicle has first approved a compliance plan for or fuel for export) having a sulfur the refiner for segregating the fuel from diesel fuel; (ii) #2D 500 ppm sulfur motor vehicle content greater than 15 ppm is all other types of NRLM diesel fuel from diesel fuel; or transferred to another facility, the entity the refinery gate to the ultimate (iii) 500 ppm sulfur NRLM diesel fuel. transferring custody must accurately consumer, as specified under (5) From June 1, 2007 through May and clearly designate the batch as one § 80.554(b)(4). 31, 2010, whenever custody of a batch of the following and specify its volume: (xiii) From June 1, 2012 through May of distillate fuel (other than jet fuel, (i) 500 ppm sulfur LM diesel fuel; 31, 2014, any distillate fuel with a sulfur kerosene, No. 4 fuel, or fuel for export) (ii) Heating oil; or content greater than 15 ppm distributed having a sulfur content greater than 500 (iii) Exempt distillate fuels such as or intended for distribution in the area ppm is transferred to another facility, fuels that are covered by a national specified in § 80.510(g)(2) may not be the entity transferring custody must security exemption under § 80.606, fuels designated as NRLM diesel fuel unless, accurately and clearly designate the that are used for purposes of research EPA has first approved a compliance batch as one of the following and and development pursuant to § 80.607, plan for the refiner for segregating the specify its volume: and fuels used in the U.S. Territories fuel from all other types of NRLM diesel (i) High sulfur NRLM diesel fuel pursuant to § 80.608 (including fuel from the refinery gate to the (HSNRLM); additional identifying information). ultimate consumer, as specified under (ii) Heating oil; or (9) The following restrictions and § 80.554(b)(4). (iii) Exempt distillate fuels such as clarifications apply. Subject to the (xiv) Beginning June 1, 2014, any fuels that are covered by a national provisions of this paragraph (b)(9) and distillate fuel with a sulfur content security exemption under § 80.606, fuels subject to the dye and marker provisions greater than 15 ppm may not be that are used for purposes of research of § 80.520(b) and § 80.510(d) through designated as MVNRLM diesel fuel. and development pursuant to § 80.607, (f), when custody of a batch of distillate (b) Designation requirements for fuel and fuels used in the U.S. Territories fuel is transferred, the designation distributors. (1) Pursuant to the pursuant to § 80.608 (including provided by the entity transferring provisions of paragraphs (b)(2) through additional identifying information). custody pursuant to paragraphs (b)(1) (b)(9) of this section, beginning June 1, (6) From June 1, 2010 through May through (b)(8) of this section may be 2006, any distributor shall accurately 31, 2012, whenever custody of a batch different from the designation of the fuel and clearly designate each batch of of distillate fuel (other than jet fuel, when that same entity received custody. diesel fuel or distillate fuel for which kerosene, No. 4 fuel, or fuel for export) (i) Any 500 ppm sulfur diesel fuel they transfer custody to another facility, having a sulfur content greater than 15 designated under this paragraph (b) and including specifying its volume, as ppm is transferred to another facility, containing visible evidence of red dye specified in this paragraph (b). the entity transferring custody must may not be designated as motor vehicle Distributors must also accurately and accurately and clearly designate the diesel fuel. clearly classify such diesel fuel and batch as one of the following and (ii) Any distillate fuel containing distillate fuel by sulfur content, while it specify its volume: greater than or equal to 0.10 milligrams

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per liter of marker solvent yellow 124 the facility is also greater than the (xii) Notwithstanding the provisions required under § 80.510(d), (e), or (f) volume it received by an equal or of paragraphs (b)(7) and (8) of this must be designated as heating oil except greater proportion, as calculated in section, beginning October 1, 2012— that from June 1, 2010 through October § 80.599(c)(2); and (A) No distillate fuel with a sulfur 1, 2012 it may also be designated as LM (B) Beginning June 1, 2010, for any content greater than 15 ppm distributed diesel fuel as specified under compliance period, the volume of fuel or intended for distribution in the areas § 80.510(e). designated as heating oil delivered from specified in § 80.510(g)(1) and (g)(2), (iii) Any batch of #1D fuel which is a facility cannot be less than the volume may be designated as NRLM diesel fuel, suitable for use as MVNRLM diesel fuel of fuel designated as heating oil including LM diesel fuel, except as and which is also suitable for use as received, as calculated in § 80.599(c)(4). provided in paragraph (b)(9)(xv) of this kerosene or jet fuel (i.e., commonly (ix) For facilities in areas other than section; and referred to as dual use kerosene) may be those specified in § 80.510(g)(1) and (B) Distillate fuel with a sulfur designated as either MVNRLM diesel (g)(2), from June 1, 2010 through May content greater than 15 ppm distributed fuel, kerosene, or jet fuel (as applicable). 31, 2012, batches or portions of batches from within the areas specified in (iv) Any MVNRLM diesel fuel with a received designated as 500 ppm LM § 80.510(g)(1) and (g)(2) to areas outside sulfur content of 500 ppm or less in diesel fuel may be redesignated as 500 these areas is subject to the provisions inventory as of June 1, 2007 may be ppm NR diesel fuel only if for any of paragraphs (b)(7) and (8) of this designated as motor vehicle diesel fuel. compliance period the following section. (v) Batches or portions of batches of restrictions are met: (xiii) From June 1, 2007 through September 30, 2010, in the area fuel received designated as 15 ppm (A) The volume of fuel designated as specified in § 80.510(g)(2) only sulfur #2D motor vehicle diesel fuel 500 ppm sulfur NR diesel fuel delivered segregated batches of distillate fuel may be re-designated as 500 ppm sulfur from the facility cannot be greater than received designated as HSNRLM diesel motor vehicle diesel fuel, but only in the volume received as calculated in fuel may be distributed designated as accordance with the limitations of § 80.599(d)(2)(i); or HSNRLM diesel fuel and must remain § 80.527(c). (B) The volume of fuel designated as (vi) Batches or portions of batches segregated from fuel with any other 500 ppm sulfur NR diesel fuel delivered received designated as 500 ppm sulfur designations unless otherwise approved from the facility in relation to the NRLM diesel fuel may be re-designated by EPA in a refiner compliance plan volume received is not a greater as 500 ppm sulfur motor vehicle diesel under § 80.554(a)(4). proportion than the volume of fuel fuel by a truck loading terminal only if (xiv) From June 1, 2010 through designated as 500 ppm sulfur LM diesel the terminal maintains a neutral or September 30, 2012, in the area fuel delivered from the facility in positive balance at the end of each specified in § 80.510(g)(2) only relation to the volume received, as quarterly compliance period on their segregated batches of distillate fuel calculated in § 80.599(d)(2)(ii). motor vehicle diesel fuel volume from received designated as 500 ppm sulfur (x) Notwithstanding the provisions of June 1, 2007 as calculated in NR diesel fuel may be distributed paragraph (b)(5) of this section, § 80.599(b)(4). designated as 500 ppm sulfur NR diesel (vii) Batches or portions of batches beginning October 1, 2007, fuel and must remain segregated from received designated as 500 ppm sulfur (A) No distillate fuel with a sulfur fuel with any other designations and NRLM diesel fuel may be re-designated content greater than 500 ppm from any other 500 ppm sulfur NRLM as 500 ppm sulfur motor vehicle diesel distributed or intended for distribution diesel fuel from any other sources, fuel by a facility other than a truck in the areas specified in § 80.510(g)(1) except as approved by EPA in a refiner loading terminal only if the following and (g)(2), may be designated as NRLM compliance plan under § 80.554(a)(4). restrictions are met: diesel fuel, including LM diesel fuel (xv) From June 1, 2012 through (A) At the end of each annual except as provided in paragraph September 30, 2014, in the area compliance period, the facility has a (b)(9)(xiii) of this section; and specified in § 80.510(g)(2) only neutral or positive balance on its motor (B) Distillate fuel with a sulfur segregated batches of distillate fuel vehicle diesel fuel volume from June 1, content greater than 500 ppm received designated as 500 ppm sulfur 2007 as calculated in § 80.599(b)(4); and distributed from within the areas NRLM diesel fuel may be distributed (B) At the end of each annual specified in § 80.510(g)(1) and (g)(2) to designated as 500 ppm sulfur NRLM compliance period, the facility’s balance areas outside these areas is subject to diesel fuel and must remain segregated for motor vehicle diesel fuel volume, the provisions of paragraph (b)(5) of this from fuel with any other designations from the beginning of the compliance section. and from any other 500 ppm sulfur period must be less than two percent of (xi) Notwithstanding the provisions of NRLM diesel fuel from any other the total volume of motor vehicle diesel paragraphs (b)(6) through (b)(8) of this sources, except as approved by EPA in fuel received during the compliance section, beginning October 1, 2010— a refiner compliance plan under period, as calculated in § 80.599(b)(5). (A) No distillate fuel with a sulfur § 80.554(a)(4). (viii) For facilities in areas other than content greater than 15 ppm distributed (c) Notwithstanding the provisions of those specified in § 80.510(g)(1) and or intended for distribution in the areas paragraph (b) of this section, an entity (g)(2), batches or portions of batches of specified in § 80.510(g)(1) and (g)(2), is not required to designate heating oil unmarked distillate received designated may be designated as NR diesel fuel, that is delivered from a facility that only as heating oil may be re-designated as except as provided in paragraph receives heating oil which is marked NRLM or LM diesel fuel only if the (b)(9)(xiv) of this section; and pursuant to § 80.510(d) through (f). following restrictions are met: (B) Distillate fuel with a sulfur (d) Notwithstanding the provisions of (A) From June 1, 2007 through May content greater than 15 ppm distributed paragraph (b)(4) of this section, an entity 31, 2010, for any compliance period, the from within the areas specified in is not required to designate 500 ppm volume of high sulfur NRLM diesel fuel § 80.510(g)(1) and (g)(2) to areas outside sulfur MVNRLM diesel fuel that is delivered from a facility cannot be these areas is subject to the provisions delivered from a facility that only greater than the volume received, unless of paragraphs (b)(6) through (b)(7) of receives 500 ppm sulfur MVNRLM the volume of heating oil delivered from this section. diesel fuel on which taxes have been

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paid or into which red dye has been diesel fuel volume balance is calculated beginning of the program on June 1, added pursuant to § 80.520(b). as follows: 2007. Any #2D 500 ppm sulfur (e) Notwithstanding the provisions of MVNRLM in inventory at the beginning MVB = MVI¥MVO¥MVINVCHG paragraph (b)(6) of this section, an entity of the program on June 1, 2007 may be Where: designated as motor vehicle diesel fuel. is not required to designate 500 ppm sMVB = the sum of the balances for motor sulfur LM diesel fuel that is delivered MVB = the volume balance for motor vehicle diesel fuel for the compliance period. vehicle diesel fuel for the current from a facility that only receives 500 MVI = the total volume of all batches of fuel compliance period and previous ppm sulfur LM diesel fuel which is designated as motor vehicle diesel fuel compliance periods. marked pursuant to § 80.510(e). received for the compliance period. (5) The volume balance required for (f) Any entity that is both a distributor MVO = the total volume of all batches of fuel purposes of compliance with and a refiner or importer must comply designated as motor vehicle diesel fuel § 80.598(b)(9)(vii)(B) means: with the provisions of paragraph (a) of delivered for the compliance period. ¥ ≤ × this section for all distillate fuel MVINVCHG = the total volume of 15 ppm MVB 0.02 MVI produced or imported, and the sulfur and 500 ppm sulfur motor vehicle (6) Calculations in paragraphs (b)(4) diesel fuel in inventory at the end of the provisions of paragraph (b) of this compliance period minus the total and (b)(5) of this section may be section for all distillate fuel for which volume of 15 ppm sulfur and 500 ppm combined for all facilities wholly owned it acted as distributor but not refiner or sulfur motor vehicle diesel fuel in by an entity. importer. inventory at the beginning of the (7) For purposes of calculations in (g) No refiner, importer, or distributor compliance period, including accounting paragraphs (b)(1) through (b)(5) of this may use the designation provisions of for any corrections in inventory due to section, for batches of fuel received from this section to circumvent the standards volume swell or shrinkage, difference in facilities without an EPA facility ID#, or requirements of § 80.510, 80.511, or measurement calibration between any batches of fuel received on which 80.520. receiving and delivering meters, and taxes have been paid pursuant to IRS I 56. A new § 80.599 is added to read as similar matters, where corrections that increase inventory are defined as code (26 CFR part 48) shall be deemed follows: positive. to be MV15I or MV500I as appropriate for purposes of this paragraph. § 80.599 How do I calculate volume (2) Calculate the motor vehicle diesel balances for designation purposes? (c) Volume balance for high sulfur fuel received, as follows: NRLM diesel fuel and heating oil. (1) A (a) Quarterly compliance periods. The MVI = MV15I + MV500I facility’s high sulfur NRLM balance is quarterly compliance periods are shown Where: calculated as follows: in the following table: MV15I = the total volume of all batches of HSNRLMB = HSNRLMII ¥ HSNRLMO ¥ Beginning date of Ending date of fuel designated as 15 ppm sulfur motor HSNRLMINVCHG quarterly compliance quarterly compliance vehicle diesel fuel received for the Where: period period compliance period. MV500 = the total volume of all batches of HSNRLMB = the balance for high sulfur I NRLM diesel fuel for the compliance June 1, 2007 ...... September 30, 2007. fuel designated as 500 ppm sulfur motor vehicle diesel fuel received for the period. October 1, 2007 ...... December 31, 2007. HSNRLM = the total volume of all batches compliance period. I January 1, 2008 ...... March 31, 2008. of fuel designated as high sulfur NRLM April 1, 2008 ...... June 30, 2008. (3) Calculate the motor vehicle diesel received diesel fuel for the compliance July 1, 2008 ...... September 30, 2008. fuel delivered, as follows: period. October 1, 2008 ...... December 31, 2008. HSNRLMO = the total volume of all batches January 1, 2009 ...... March 31, 2009. MVO = MV15O + MV500O of fuel designated as high sulfur NRLM April 1, 2009 ...... June 30, 2009. Where: diesel fuel delivered for the compliance July 1, 2009 ...... September 30, 2009. MV15 = the total volume of all batches of period. October 1, 2009 ...... December 31, 2009. O fuel designated as 15 ppm sulfur motor HSNRLMINVCHG = the volume of high sulfur January 1, 2010 ...... March 31, 2010. vehicle diesel fuel and delivered during NRLM diesel fuel in inventory at the end April 1, 2010 ...... May 31, 2010. the compliance period. of the compliance period minus the June 1, 2010 ...... September 30, 2010. MV500O = the total volume of all batches of volume of high sulfur NRLM diesel fuel fuel designated as 500 ppm sulfur motor in inventory at the beginning of the (1) Annual compliance periods. The vehicle diesel fuel and delivered during compliance period, including accounting annual compliance periods before the the compliance period. for any corrections in inventory due to period beginning July 1, 2015 are shown volume swell or shrinkage, difference in (4) The neutral or positive volume in the following table: measurement calibration between balance required for purposes of receiving and delivering meters, and Beginning date of Ending date of compliance with § 80.598(b)(9)(vi) and similar matters, where corrections that annual compliance annual compliance (b)(9)(vii)(A) means that the net balance increase inventory are defined as period period of motor vehicle diesel fuel in inventory positive. as of the end of the last day of the (2) The volume balance required for June 1, 2007 ...... June 30, 2008. compliance period (MVNB ) must be July 1, 2008 ...... June 30, 2009. E purposes of compliance with July 1, 2009 ...... May 31, 2010. greater than or equal to zero. MVNBE is § 80.598(b)(9)(viii)(A) means one of the June 1, 2010 ...... June 30, 2011. defined by the following equation: following: July 1, 2011 ...... May 31, 2012. MVNBE = MV15BINV + MV500BINV sMVB (i) HSNRLMB ≥ 0 June 1, 2012 ...... June 30, 2013. Where: (ii) (HSNRLMO + HSNRLMINVCHG) / July 1, 2013 ...... May 31, 2014. HSNRLMI ≤ (HOO + HOINVCHG) / HOI June 1, 2014 ...... June 30, 2015. MV15BINV = the total volume of fuel designated as 15 ppm sulfur motor (3) A facility’s heating oil volume vehicle diesel fuel in inventory at the balance is calculated as follows: (2) The annual compliance periods for beginning of the program on June 1, ¥ ¥ the period beginning July 1, 2015 shall 2007. HOB = HOI HOO HOINVCHG be from July 1, through June 30. MV500BINV = the total volume of fuel Where: (b) Volume balance for motor vehicle designated as 500 ppm sulfur motor HOB = the balance for heating oil for the diesel fuel. (1) A facility’s motor vehicle vehicle diesel fuel in inventory at the compliance period.

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HOI = the total volume of all batches of fuel receiving and delivering meters, and #2MV500O ≤ #2MV500I ¥ #2MV500INVCHG + designated as heating oil received for the similar matters, where corrections that 0.2 × #2MV15I compliance period. increase inventory are defined as Where:

HOO = the total volume of all batches of fuel positive. #2MV500O = the total volume of fuel designated as heating oil delivered to all (2) The volume balance required for delivered during the compliance period downstream entities for the compliance that is designated as #2D 500 ppm sulfur period. purposes of compliance with § 80.598(b)(9)(ix) means one of the motor vehicle diesel fuel. HOINVCHG = the volume of heating oil in #2MV500I = the total volume of fuel received inventory at the end of the compliance following: during the compliance period that is period minus the volume of heating oil (i) NR500B ≥ 0 designated as #2D 500 ppm sulfur motor in inventory at the beginning of the (ii) (NR500O + NR500INVCHG) / NR500I ≤ vehicle diesel fuel. compliance period, including accounting (LM500O + LM500INVCHG) / LM500I. #2MV500INVCHG = the total volume of diesel for any corrections in inventory due to Where: fuel designated as #2D 500 ppm sulfur volume swell or shrinkage, difference in motor vehicle diesel fuel in inventory at measurement calibration between LM500I = the total volume of all batches of fuel designated as 500 ppm sulfur LM the end of the compliance period minus receiving and delivering meters, and the total volume of #2D 500 ppm sulfur similar matters, where corrections that diesel fuel received for the compliance period. motor vehicle diesel fuel in inventory at increase inventory are defined as the beginning of the compliance period, positive. LM500O = the total volume of all batches of fuel designated as 500 ppm sulfur LM and accounting for any corrections in (4) The volume balance required for diesel fuel delivered for the compliance inventory due to volume swell or purposes of compliance with period. shrinkage, difference in measurement calibration between receiving and § 80.598(b)(9)(viii)(B) means: LM500INVCHG = the volume of 500 ppm delivering meters, and similar matters, ≤ sulfur LM diesel fuel in inventory at the HOB 0 end of the compliance period minus the where corrections that increase (5) Calculations in paragraphs (c)(3) volume of 500 ppm sulfur LM diesel fuel inventory are defined as positive. and (c)(4) of this section may be in inventory at the beginning of the (4) The following calculation may be combined for all facilities wholly owned compliance period, and accounting for used to account for wintertime blending any corrections in inventory due to of kerosene: by an entity. volume swell or shrinkage, difference in (6) For purposes of calculations in measurement calibration between #2MV500O ≤ #2MV500I ¥ #2MV500INVCHG + paragraphs (c)(1) through (c)(4) of this receiving and delivering meters, and 0.2 * (#1MV15I + #2MV15I) section, for batches of fuel received from similar matters, where corrections that Where:

facilities without an EPA facility ID#, increase inventory are defined as #1MV15I = the total volume of fuel received any batches of fuel received marked positive. during the compliance period that is pursuant to § 80.510(d) or (f) shall be (e) Anti-downgrading for motor designated as #1D 15 ppm sulfur motor deemed to be HOI, any batches of fuel vehicle diesel fuel. (1) A facility must vehicle diesel fuel. received marked pursuant to § 80.510(e) satisfy the provisions in either (5) The following calculation may be shall be deemed to be HOI or LM500I, paragraphs (e)(2), (e)(3), (e)(4), or (e)(5) used to account for wintertime blending any diesel fuel with less than or equal of this section to comply with the anti- of kerosene and/or changes in the to 500 ppm sulfur that is dyed pursuant downgrading limitation of paragraph facility’s volume balance of motor to § 80.520(b) and not marked pursuant § 80.527(c)(1), for the annual vehicle diesel fuel resulting from a to § 80.510(d) or (f) shall be deemed to compliance periods defined in temporary shift of 500 ppm sulfur be NRLM diesel fuel, and any diesel fuel § 80.527(c)(3). NRLM diesel fuel to 500 ppm sulfur with less than or equal to 500 ppm (2) The volume of #2D 15 ppm sulfur motor vehicle diesel fuel during the sulfur which is dyed pursuant to motor vehicle delivered must meet the compliance period: § 80.520(b) and not marked pursuant to following requirement: #2MV500 < #2MV500 ¥ #2MV500 + § 80.510(e) shall be deemed to be NR O I INVCHG (#2MV15 + #2MV15 ) ≥ 0.8 × #2MV15 0.2 * #2MV15I + #1MV15B + diesel fuel. O INVCHG I Where: #2NRLM500S (d) Volume balance for NR diesel fuel. Where: (1) A facility’s 500 ppm nonroad diesel #2MV15O = the total volume of fuel delivered during the compliance period that is #1MV15B = the total volume of fuel received fuel balance is calculated as follows: designated as #2D 15 ppm sulfur motor during the compliance period that is NR500B = NR500I ¥ NR500O ¥ vehicle diesel fuel. designated as #1D 15 ppm sulfur motor NR500INVCHG #2MV15INVCHG = the total volume of diesel vehicle diesel fuel and that the facility Where: fuel designated as #2D 15 ppm sulfur can demonstrate they blended into #2D motor vehicle diesel fuel in inventory at 500 ppm sulfur motor vehicle diesel fuel. NR500B = the balance for 500 ppm sulfur NR the end of the compliance period minus #2NRLM500S = the total volume of #2D 500 diesel fuel for the compliance period. the total volume of #2D 15 ppm sulfur ppm sulfur NRLM diesel fuel that the NR500 = the total volume of all batches of I motor vehicle diesel fuel in inventory at facility can demonstrate they fuel designated as 500 ppm sulfur NR the beginning of the compliance period, redesignated as #2D 500 ppm sulfur diesel fuel received for the compliance and accounting for any corrections in motor vehicle diesel fuel during the period. inventory due to volume swell or compliance period. NR500O = the total volume of all batches of shrinkage, difference in measurement fuel designated as 500 ppm sulfur NR calibration between receiving and (f) Inventory adjustments. diesel fuel delivered for the compliance delivering meters, and similar matters, Adjustments to inventory under this period. where corrections that increase section must be based on normal NR500INVCHG = the volume of 500 ppm sulfur inventory are defined as positive. business practices for the industry, NR diesel fuel in inventory at the end of #2MV15I = the total volume of fuel received appropriate physical plant operations the compliance period minus the volume during the compliance period that is of 500 ppm sulfur NR diesel fuel in and use of good engineering judgments. designated as #2D 15 ppm sulfur motor (g) Unique circumstances. EPA may, inventory at the beginning of the vehicle diesel fuel. compliance period, and accounting for at its discretion, grant a fuel any corrections in inventory due to (3) The volume of #2D 500 ppm sulfur distributor’s application to modify its volume swell or shrinkage, difference in motor vehicle diesel fuel delivered must inventory of motor vehicle diesel fuel, measurement calibration between meet the following requirement: NRLM diesel fuel, or heating oil for a

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given compliance period. EPA may paragraphs (a)(6) through (a)(10) of this entity and facility to which the fuel was grant an application to address unique section for each batch of heating oil that delivered. circumstances, where appropriate, such it transfers custody of and designates (9) Notwithstanding the provisions of as the start up of a new pipeline or during the time period from June 1, paragraphs (a)(6) and (a)(7) of this pipeline segment. 2014 and later as belonging to the section, records of heating oil batches I 57. The center header ‘‘EXEMPTIONS’’ heating oil category. delivered that have been properly before § 80.600 is removed. (6) The records for each batch with marked pursuant to § 80.510(d) through I 58. Section 80.600 is revised to read as designations identified in paragraphs (f) and records of LM diesel fuel batches follows: (a)(1) through (a)(5) of this section must delivered that have been properly clearly and accurately identify the batch marked pursuant to § 80.510(e) are not § 80.600 What records must be kept for number (including an indication as to required to be maintained separately for purposes of the designate and track whether the batch was received into the provisions? each entity and facility to which the fuel facility or delivered from the facility), was delivered. (a) In addition to the requirements of date and time of day (if multiple batches (10) Any refiner or importer shall § 80.592 and § 80.602, the following are delivered per day) that custody was maintain copies of all product transfer recordkeeping requirements shall apply transferred, the designation, the volume documents required under § 80.590. If to refiners and importers: in gallons of the batch, and the name all information required in paragraph (1) Any refiner or importer shall and the EPA entity and facility (a)(6) of this section is on the product maintain the records specified in registration number of the facility to transfer document for a batch, then the paragraphs (a)(6) through (a)(10) of this whom such batch was transferred. provisions of this paragraph (a)(10) shall section for each batch of distillate fuel (i) For motor vehicle diesel fuel, the satisfy the requirements of paragraph that it transfers custody of and records must also identify whether the (a)(6) of this section for that batch. designates during the time period from batch was received or delivered with or (11) Any refiner or importer shall June 1, 2006 through May 31, 2010, with without taxes paid pursuant to Section maintain records related to annual the following categories: 4082 of the Internal Revenue Code (26 compliance calculations performed (i) #1D 15 ppm sulfur motor vehicle U.S.C. 4082). under § 80.599 and to information diesel fuel; (ii) For NRLM diesel fuel, the records required to be reported to the (ii) #2D 15 ppm sulfur motor vehicle must also identify whether the batch Administrator under § 80.601. diesel fuel; was received or delivered with or (12) Records must be maintained that (iii) 15 ppm sulfur NRLM diesel fuel; without dye added pursuant to Section demonstrate compliance with a refiner’s (iv) #1D 500 ppm sulfur motor vehicle 4082 of the Internal Revenue Code (26 compliance plan required under diesel fuel; U.S.C. 4082). § 80.554, for distillate fuel designated as (v) #2D 500 ppm sulfur motor vehicle (iii) For heating oil, the records must high sulfur NRLM diesel fuel and diesel fuel; or also identify whether the batch was delivered from June 1, 2007 through (vi) 500 ppm sulfur NRLM diesel fuel. received or delivered with or without May 31, 2010, for distillate fuel (2) Any refiner or importer shall the marker added pursuant to designated as 500 ppm sulfur NR diesel maintain the records specified in § 80.510(d) through (f). fuel and delivered from June 1, 2010 paragraphs (a)(6) through (a)(10) of this (iv) For LM diesel, the records must through May 31, 2012, and for distillate section for each batch of distillate fuel also identify whether the batch was fuel designated as 500 ppm sulfur that it transfers custody of and received or delivered with or without NRLM diesel fuel and delivered from designates during the time period from the marker added pursuant to June 1, 2012 through June 1, 2014 in the June 1, 2007 through May 31, 2010 with § 80.510(e). areas specified in § 80.510(g)(2). the following categories: (7) Any refiner or importer shall, for (b) In addition to the requirements of (i) High sulfur NRLM diesel fuel; or each of its facilities, maintain records § 80.592 and § 80.602, the following (ii) Heating oil. that clearly and accurately identify the recordkeeping requirements shall apply (3) Any refiner or importer shall total volume in gallons of designated to distributors: maintain the records specified in fuel identified in paragraphs (a)(1) (1) Any distributor shall maintain the paragraphs (a)(6) through (a)(10) of this through (a)(5) of this section transferred records specified in paragraphs (b)(2) section for each batch of distillate fuel over each compliance period. The through (b)(10) of this section for each that it transfers custody of and records shall be maintained separately batch of distillate fuel with the designates during the time period from for each fuel designated in paragraphs following designations for which June 1, 2010 through May 31, 2012 with (a)(1) through (a)(5) of this section, and custody is received or delivered. the following categories: for each EPA entity and facility Records shall be kept separately for each (i) 500 ppm sulfur NR diesel fuel; registration number to whom custody of of its facilities. (ii) 500 ppm sulfur LM diesel fuel; or the fuel was transferred. (i) For each facility that receives #2D (iii) Heating oil. (8) Notwithstanding the provisions of 15 ppm sulfur motor vehicle diesel fuel (4) Any refiner or importer shall paragraphs (a)(6) and (a)(7) of this and distributes any #2D 500 ppm sulfur maintain the records specified in section, records of batches delivered of motor vehicle diesel fuel, records for paragraphs (a)(6) through (a)(10) of this 500 ppm sulfur motor vehicle diesel each batch of diesel fuel with the section for each batch of distillate fuel fuel on which taxes have been paid per following designations for which that it transfers custody of and Section 4082 of the Internal Revenue custody is received or delivered during designates during the time period from Code (26 U.S.C. 4082) and of 500 ppm the time period from June 1, 2006 June 1, 2012 through May 31, 2014 with sulfur NRLM diesel fuel into which dye through May 31, 2007: the following categories: has been added per Section 4082 of the (A) #1D 15 ppm sulfur motor vehicle (i) 500 ppm sulfur NRLM diesel fuel; Internal Revenue Code (26 U.S.C. 4082), diesel fuel; or and of 500 ppm sulfur LM diesel fuel (B) #2D 15 ppm sulfur motor vehicle (ii) Heating oil. which has been properly marked diesel fuel; (5) Any refiner or importer shall pursuant to § 80.510(e) are not required (C) #2D 500 ppm sulfur motor vehicle maintain the records specified in to be maintained separately for each diesel fuel; or

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(D) 500 ppm sulfur NRLM diesel fuel. (A) 500 ppm sulfur NRLM diesel fuel; under paragraph (b)(1) of this section, (ii) For each facility, records for each or and for each EPA entity and facility batch of diesel fuel with the following (B) Heating oil. registration number from whom the fuel designations for which custody is (2) Records that for each batch clearly was received or to whom it was received or delivered during the time and accurately identify the batch delivered. For batches of fuel received period from June 1, 2007 through May number (including an indication as to from facilities without an EPA facility 31, 2010: whether the batch was received into the registration number, any batches of fuel (A) #1D 15 ppm sulfur motor vehicle facility or delivered from the facility), received marked pursuant to § 80.510(d) diesel fuel; date and time of day (if multiple batches or (f) shall be deemed designated as (B) #2D 15 ppm sulfur motor vehicle are delivered per day) that custody was heating oil, any batches of fuel received diesel fuel; transferred, the designation, the volume marked pursuant to § 80.510(e) shall be (C) #1D 500 ppm sulfur motor vehicle in gallons of each batch of each fuel, deemed designated as heating oil or LM diesel fuel; and the name and the EPA entity and diesel fuel, any batches of fuel received (D) #2D 500 ppm sulfur motor vehicle facility registration number of the on which taxes have been paid pursuant diesel fuel; facility to whom or from whom such to Section 4082 of the Internal Revenue (E) 500 ppm sulfur NRLM diesel fuel; batch was transferred. Code (26 U.S.C. 4082) shall be deemed (F) 15 ppm sulfur NRLM diesel fuel; (i) For motor vehicle diesel fuel the designated as motor vehicle diesel fuel, (G) High sulfur NRLM diesel fuel; or records must also identify whether the any 500 ppm sulfur diesel fuel dyed (H) Heating oil. batch was received or delivered with or pursuant to § 80.520(b) and not marked (iii) For each facility that receives without taxes paid pursuant to section pursuant to § 80.510(d) or (f) shall be unmarked fuel designated as NR diesel 4082 of the Internal Revenue Code (26 deemed designated as NRLM diesel fuel, fuel, LM diesel fuel or heating oil, U.S.C. 4082). and any diesel fuel with less than or records for each batch of diesel fuel (ii) For NRLM diesel fuel, the records equal to 500 ppm sulfur which is dyed with the following designations for must also identify whether it was pursuant to § 80.520(b) and not marked which custody is received or delivered received or delivered with or without pursuant to § 80.510(e) shall be deemed during the time period from June 1, dye added pursuant to Section 4082 of to be NR diesel fuel. 2010 through May 31, 2012: the Internal Revenue Code (26 U.S.C. (4) Notwithstanding the provisions of (A) 500 ppm sulfur NR diesel fuel; 4082). paragraphs (b)(2) and (b)(3) of this (B) 500 ppm sulfur LM diesel fuel; or (iii) For heating oil, the records must section, for batches of 500 ppm sulfur (C) Heating oil. also identify whether it was received or (iv) For each facility that receives motor vehicle diesel fuel delivered on delivered with or without the marker which taxes have been paid per Section unmarked fuel designated as heating oil, added pursuant to § 80.510(d) through records for each batch of diesel fuel 4082 of the Internal Revenue Code (26 (f). U.S.C. 4082) and 500 ppm sulfur NRLM with the following designations for (iv) For LM diesel fuel, the records which custody is received or delivered diesel fuel into which red dye has been must also identify whether it was added per Section 4082 of the Internal during the time period from June 1, received or delivered with or without 2012 through May 31, 2014: Revenue Code (26 U.S.C. 4082), records the marker added pursuant to are not required to be maintained (A) 500 ppm sulfur NRLM diesel fuel; § 80.510(e). or separately for each entity or facility to (v) For batches of fuel received from whom fuel was delivered. (B) Heating oil. facilities without an EPA facility (v) For each facility that receives (5) Notwithstanding the provisions of registration number, any batches of fuel unmarked fuel designated as heating oil, paragraphs (b)(2) and (b)(3) of this received marked pursuant to § 80.510(d) records for each batch of diesel fuel section, for batches of heating oil or (f) shall be deemed designated as with the following designations for delivered that are marked pursuant to heating oil, any batches of fuel received which custody is received or delivered § 80.510(d) through (f), records do not marked pursuant to § 80.510(e) shall be during the time period beginning June 1, need to identify the EPA entity or deemed designated as heating oil or LM 2014: facility registration number to which diesel fuel, any batches of fuel received (A) 500 ppm sulfur LM diesel fuel; or fuel was delivered. (B) Heating oil. on which taxes have been paid pursuant (6) Notwithstanding the provisions of (vi) From June 1, 2007 through May to Section 4082 of the Internal Revenue paragraphs (b)(2) and (b)(3) of this 31, 2010, for those facilities in the areas Code (26 U.S.C. 4082) shall be deemed section, for batches of LM diesel fuel specified in § 80.510(g)(2) that receive designated as motor vehicle diesel fuel, delivered that are marked pursuant to unmarked fuel designated as high sulfur any 500 ppm sulfur diesel fuel dyed § 80.510(e), records do not need to NRLM diesel fuel: pursuant to § 80.520(b) and not marked identify the EPA entity or facility (A) High sulfur NRLM diesel fuel; or pursuant to § 80.510(d) or (f) shall be registration number to which fuel was (B) Heating oil. deemed designated as NRLM diesel fuel, delivered. (vii) From June 1, 2010 through May and any diesel fuel with less than or (7) Records that clearly and accurately 31, 2012, for those facilities in the areas equal to 500 ppm sulfur which is dyed reflect the beginning and ending specified in § 80.510(g)(2) that receive pursuant to § 80.520(b) and not marked inventory volume for each of the fuels unmarked fuel designated as 500 ppm pursuant to § 80.510(e) shall be deemed for which records must be kept under sulfur NR diesel fuel, 500 ppm sulfur to be NR diesel fuel. paragraph (b)(1) of this section. Such LM diesel fuel, or heating oil: (3) Records that clearly and accurately records shall be maintained separately (A) 500 ppm sulfur NR diesel fuel; identify the total volume in gallons of by each entity and facility consistent (B) 500 ppm sulfur LM diesel fuel; or each designated fuel identified under with the compliance periods defined in (C) Heating oil. paragraph (b)(1) of this section §§ 80.598 and 80.599. (viii) From June 1, 2012 through May transferred over each of the compliance (8) (i) If adjustments are made to 31, 2014, for those facilities in the areas periods, and over the periods from June inventory, the records must include specified in § 80.510(g)(2) that receive 1, 2007 to the end of each compliance detailed information related to the unmarked fuel designated as 500 ppm period. The records shall be maintained amount, type of, and reason for such sulfur NRLM diesel fuel or heating oil. separately for each fuel designated adjustment.

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(ii) If adjustments are made because of § 80.554, unless otherwise allowed by marked pursuant to § 80.510(d) or (f) measurement error or variation, the EPA. shall be deemed designated as heating records must include the adjustment (h) For purposes of this section, each oil, any batch of distillate fuel for which made, the meter or gauge or other portion of a shipment of designated custody is received and which is reading(s), and the name of the person distillate fuel under this section that is marked pursuant to § 80.510(e) shall be who took such reading(s) and or applied differently designated from any other deemed designated as heating oil or LM the adjustment. portion, even if shipped as fungible diesel fuel as applicable, and the report (9) For distributors that are required product having the same sulfur content, shall include that information under to keep records under paragraphs (b)(1) shall be a separate batch. that designation. through (b)(8) of this section for truck (i) The records required in this section (ii) Any batch of distillate fuel for loading terminals, records related to must be made available to the which custody is received and for quarterly or annual compliance Administrator or the Administrator’s which taxes have been paid pursuant to calculations, as applicable, performed designated representative upon request. Section 4082 of the Internal Revenue under § 80.599 and to information (j) Notwithstanding the provisions of Code (26 U.S.C. 4082) shall be deemed required to be reported to the this section, product transfer documents designated as motor vehicle diesel fuel Administrator under § 80.601. must be maintained under the and the report shall include it under (10) For distributors that are required provisions of §§ 80.590, 80.592, and that designation. to keep records under paragraphs (b)(1) 80.602. (iii) Any batch of 500 ppm sulfur through (b)(8) of this section for (k) The records required in this diesel fuel dyed pursuant to § 80.520(b) facilities other than truck loading section must be kept for five years after and not marked pursuant to § 80.510(d) terminals, records related to annual they are required to be collected. and (f), and for which custody is compliance calculations performed (l) Identifications of fuel designations received, shall be deemed designated as under § 80.599 and to information can be limited to a sub-designation that NRLM diesel fuel and the report shall required to be reported to the accurately identifies the fuel and do not include it under that designation. Administrator under § 80.601. need to also include the broader (iv) Any batch of 500 ppm sulfur (c) Notwithstanding the provisions of designation. For example, NR diesel fuel diesel fuel dyed pursuant to § 80.520(b) paragraph (b) of this section, records of does not also need to be designated as and not marked pursuant to § 80.510(e), heating oil received are not required to NRLM or MVNRLM diesel fuel. and for which custody is received, shall be maintained for facilities that do not I 59. Section 80.601 is revised to read as be deemed designated as NR diesel fuel receive any heating oil which is follows: and the report shall include it under unmarked pursuant to § 80.510(d) that designation. through (f), or LM diesel fuel which is § 80.601 What are the reporting (4) In the case of truck loading unmarked pursuant to § 80.510(e). requirements for purposes of the designate terminals, the results of all compliance and track provisions? (d) Notwithstanding the provisions of calculations required under § 80.599, paragraph (b) of this section, records of (a) Quarterly reporting. Beginning and including: 500 ppm sulfur MVNRLM diesel fuel November 30, 2007 and continuing (i) The total volumes received of each received are not required to be through August 31, 2010, each entity fuel designation required to be reported maintained for facilities that do not required to maintain records under in paragraphs (a)(1) through (a)(3) of this receive any motor vehicle diesel fuel for § 80.600 must report the following section over the quarterly compliance which taxes have not already been paid information separately for each of its period. pursuant to Section 4082 of the Internal facilities to the Administrator on a (ii) The total volumes delivered of Revenue Code (26 U.S.C. 4082) or quarterly basis, as specified in each fuel designation required to be NRLM diesel fuel which is undyed paragraph (e)(1) of this section: reported in paragraphs (a)(1) through pursuant to § 80.520(b). (1) Separately for each designation (a)(3) of this section over the quarterly (e) The provisions of paragraphs category and separately for each compliance period. (b)(1)(iii) and (iv) of this section do not transferee facility, the total volume in (iii) Beginning and ending inventories apply to facilities located in the areas gallons of distillate fuel designated of each fuel designation required to be specified in § 80.510(g)(1) and (g)(2) under § 80.598 for which custody was reported in paragraphs (a)(1) unless they deliver marked heating oil delivered by the reporting facility to any through(a)(3) of this section over the or LM diesel fuel to areas outside the other entity or facility, and the EPA quarterly compliance period. areas specified in § 80.510(g)(1) and entity and facility registration (iv) The volume balance under (g)(2). number(s), as applicable, of the § 80.599(b)(4) and § 80.598(b)(9)(vi). (f) Ultimate consumers that receive transferee. (v) The volume balance under any batch of high sulfur NRLM diesel (2) Separately for each designation § 80.599(c)(2) and § 80.598(b)(9)(viii)(A). fuel beginning June 1, 2007 in areas category and separately for each (b) Annual reports. Beginning August listed in § 80.510(g)(2) must maintain transferor facility, the total volume in 31, 2007, all entities required to records of each batch of fuel received for gallons of distillate fuel designated maintain records for batches of fuel use in NRLM equipment pursuant to the under § 80.598 for which custody was under § 80.600 must report the compliance plan provisions of § 80.554, received by the reporting facility, and following information separately for unless otherwise allowed by EPA. the EPA entity and facility registration each of its facilities to the Administrator (g) Ultimate consumers that receive number(s), as applicable, of the on an annual basis, as specified in any batch of 500 ppm sulfur NR diesel transferor. paragraph (e)(2) of this section: fuel beginning June 1, 2010 or NRLM (3) Any entity that receives custody of (1) Separately for each designation diesel fuel beginning June 1, 2012 in the distillate fuel from another entity or category for which records are required areas listed in § 80.510(g)(2) must facility that does not have an EPA to be kept under § 80.600 and separately maintain records of each batch of fuel facility identification number must for each transferor facility, the total received for use in NR or NRLM report such batches as follows: volume in gallons of distillate fuel equipment, as appropriate, pursuant to (i) Any batch of distillate fuel for designated under § 80.598 for which the compliance plan provisions of which custody is received and which is custody was received by the reporting

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facility, and the EPA entity and facility balance under § 80.598(b)(9)(ix) and (2) For any sampling and testing for registration number(s), as applicable, of § 80.599(d)(2). sulfur content for a batch of NRLM the transferor. (c) Additional information. The diesel fuel produced or imported and (2) Separately for each designation Administrator may request any subject to the 15 ppm sulfur standard or category for which records are required additional information necessary to any sampling and testing for sulfur to be kept under § 80.600 and separately determine compliance with the content as part of a quality assurance for each transferee facility, the total requirements of §§ 80.598 and 80.599. testing program, and any sampling and volume in gallons of distillate fuel (d) Submission of quarterly and testing for cetane index, aromatics designated under § 80.598 for which annual reports. (1) All quarterly reports content, marker solvent yellow 124 custody was delivered by the reporting shall be submitted to the Administrator content or dye solvent red 164 content facility to any other entity or facility, for the compliance periods defined in of NRLM diesel fuel, NRLM diesel fuel and the EPA entity and facility § 80.599(a)(1) as follows: additives or heating oil: registration number(s), as applicable, of (i) The first quarter report shall be (i) The location, date, time and storage the transferee except as provided under submitted by the following November tank or truck identification for each § 80.600(a)(7), (a)(8), (b)(4), and (b)(5). 30. sample collected; (3) The results of all compliance (ii) The second quarter report shall be (ii) The name and title of the person calculations required under § 80.599, submitted by the following February 28. who collected the sample and the and including: (iii) The third quarter report shall be person who performed the testing; and (i) The total volumes in gallons submitted by the following May 31. (iii) The results of the tests for sulfur received of each fuel designation (iv) The fourth quarter report shall be content (including where applicable the required to be reported in paragraph submitted by the following August 31. test results with and without (b)(1) of this section over the applicable (2) All annual reports shall be application of the adjustment factor annual compliance period. submitted to the Administrator for the under § 80.580(a)(4)), for cetane index or (ii) The total volumes in gallons compliance periods defined in aromatics content, dye solvent red 164, delivered of each fuel designation § 80.599(a)(2) by August 31. marker solvent yellow 124 (as required to be reported in paragraph (3) All reports shall be submitted on applicable), and the volume of product (b)(2) of this section over the applicable forms and following procedures in the storage tank or container from annual compliance period. specified by the Administrator, shall which the sample was taken. (iii) Beginning and ending inventories include a statement that volumes (3) The actions the party has taken, if of each fuel designation required to be reported to the Administrator under this any, to stop the sale or distribution of reported in paragraphs (b)(1) and (b)(2) section are identical to volumes any NRLM diesel fuel found not to be of this section for the annual reported to the Internal Revenue Service in compliance with the sulfur standards compliance period. and shall be signed and certified by a specified in this subpart, and the actions (iv) In the areas specified in responsible corporate officer of the the party has taken, if any, to identify § 80.510(g)(2), for fuel designated as reporting entity. the cause of any noncompliance and high sulfur NRLM diesel fuel delivered (e) Exclusions. Notwithstanding the prevent future instances of from June 1, 2007 through May 31, provisions of this section, an entity is noncompliance. 2010, for fuel designated as 500 ppm NR not required to report under paragraphs (b) Additional records to be kept by diesel fuel delivered from June 1, 2010 (a) or (b) of this section for facilities refiners and importers of NRLM diesel through May 31, 2012, and for fuel whose only recordkeeping requirements fuel. Beginning June 1, 2007, or June 1, designated as 500 ppm sulfur NRLM under § 80.600 are under § 80.600 (f) or 2006, pursuant to the provisions of diesel fuel from June 1, 2012 through (g) or to maintain records solely related § 80.535 or § 80.554(d), any refiner May 31, 2014, the refiner must report all to calculating compliance with the producing diesel fuel subject to a sulfur information required under its downgrading limitation under § 80.527, standard under § 80.510, § 80.513, compliance plan approved pursuant to § 80.599(e) and § 80.600(b)(1)(i) and (ii). § 80.536, § 80.554, § 80.660, or § 80.561, I § 80.554(a)(4) and (b)(4) and including 60. Section 80.602 is revised to read as for each of its refineries, and any the ultimate consumers to whom each follows: importer importing such diesel fuel batch of fuel was delivered and the total § 80.602 What records must be kept by separately for each facility, shall keep delivered to each ultimate consumer for entities in the NRLM diesel fuel and diesel records that include the following the compliance period. fuel additive production, importation, and information for each batch of NRLM (v) Ending with the report due August distribution systems? diesel fuel or heating oil produced or 31, 2010, the volume balance under (a) Records that must be kept by imported: § 80.598(b)(9)(vi) and § 80.599(b)(4). parties in the NRLM diesel fuel and (1) The batch volume. (vi) Ending with the report due diesel fuel additive production, (2) The batch number, assigned under August 31, 2010, the volume balance importation, and distribution systems. the batch numbering procedures under under § 80.598(b)(9)(vii) and Beginning June 1, 2007, or June 1, 2006, § 80.65(d)(3). § 80.599(b)(5), if applicable. if that is the first period credits are (3) The date of production or import. (vii) Ending with the report due generated under § 80.535, any person (4) A record designating the batch as August 31, 2010, the volume balance who produces, imports, sells, offers for one of the following: under § 80.598(b)(9)(viii)(A) and sale, dispenses, distributes, supplies, (i) NRLM diesel fuel, NR diesel fuel, § 80.599(c)(2). offers for supply, stores, or transports LM diesel fuel, or heating oil, as (viii) Beginning with the report due nonroad, locomotive or marine diesel applicable. August 31, 2010, the volume balance fuel subject to the provisions of this (ii) Meeting the 500 ppm sulfur under § 80.598(b)(8)(viii)(B) and subpart, must keep the following standard of § 80.510(a) or the 15 ppm § 80.599(c)(4). records: sulfur standard of § 80.510(b) and (c) or (ix) Beginning with the report due (1) The applicable product transfer other applicable standard. August 1, 2011 and ending with the documents required under §§ 80.590 (iii) Dyed or undyed with visible report due August 1, 2012, the volume and 80.591. evidence of solvent red 164.

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(iv) Marked or unmarked with solvent paper documents which shall be (c) The pre-compliance reporting yellow 124. provided to the Administrator’s requirements of this section do not (5) For foreign refiners and importers authorized representative. apply to refineries subject to the of their fuel, the designations and other I 61. A new § 80.603 is added to read as provisions of § 80.513. records required to be kept under follows: I 62. A new § 80.604 is added to read as § 80.620. follows: (6) All of the following information § 80.603 What are the pre-compliance reporting requirements for NRLM diesel § 80.604 What are the annual reporting regarding credits, kept separately for fuel? each compliance period, kept separately requirements for refiners and importers of (a) Except as provided in paragraph for each refinery and for each importer NRLM diesel fuel? (c) of this section, beginning on June 1, facility, kept separately if converted Beginning with the annual 2005, and for each year until June 1, under § 80.535(a) and (b) or § 80.535(c) compliance period that begins June 1, 2011, or until the entity produces or and (d), and kept separately from motor 2007, or the first period during which imports NR or NRLM diesel fuel credits are generated, transferred or vehicle diesel fuel credits: meeting the 15 ppm sulfur standard of (i) The number of credits in the used, or the first period during which § 80.510(b) or (c), all refiners and refiner’s or importer’s possession at the NRLM diesel fuel or heating oil is importers planning to produce or import beginning of the calendar year. produced under a small refiner NR or NRLM diesel fuel, shall submit (ii) The number of credits generated. compliance option under this subpart, (iii) The number of credits used. the following information to EPA: whichever is earlier, any refiner or (1) Any changes to the information (iv) If any were obtained from or importer who produces or imports transferred to other parties, for each submitted for the company registration; (2) Any changes to the information NRLM diesel fuel must submit annual other party, its name, its EPA refiner or submitted for any refinery or import compliance reports for each refinery and importer registration number consistent facility registration; importer facility that contain the with § 80.597, and the number obtained (3) Any estimate of the average daily following information required, and from, or transferred to, the other party. volumes (in gallons) of each sulfur grade such other information as EPA may (v) The number in the refiner’s or of motor vehicle and NRLM diesel fuel require. importer’s possession that will carry produced (or imported) at each refinery (a) All refiners and importers. (1) The over into the subsequent calendar year (or import facility). These volume refiner or importer’s company name and compliance period. estimates must be provided both for fuel the EPA company and facility (vi) Commercial documents that produced from crude oil, as well as any identification number. establish each transfer of credits from fuel produced from other sources, and (2) If the refiner is a small refiner, a the transferor to the transferee. must be provided for the periods of June statement regarding to which small (7) The calculations used to determine 1, 2010 through December 31, 2010, refiner option it is subject. baselines or compliance with the calendar years 2011 through 2013, (b) Small refiners. (1) For each volume requirements and volume January 1, 2014 through May 31, 2014, refinery of small refiners subject to the percentages, as applicable, under this and June 1, 2014 through December 31, provisions of § 80.551(g) and § 80.554(a) subpart. 2014; for each compliance period from June 1, (8) The calculations used to determine (4) If expecting to participate in the 2007 through May 31, 2010, report the the number of credits generated. credit trading program, estimates of the following: (9) A copy of reports submitted to number of credits to be generated and/ (i) The total volume of diesel fuel EPA under § 80.604. or used each year the program; (c) Additional records importers must produced and designated as NRLM (5) Information on project schedule by diesel fuel. keep. Any importer shall keep records quarter of known or projected that identify and verify the source of (ii) The volume of diesel fuel completion date by the stage of the produced and designated as NRLM each batch of certified DFR-Diesel and project, for example, following the five non-certified DFR-Diesel imported and diesel fuel having a sulfur content less project phases described in EPA’s June than or equal to the 500 ppm sulfur demonstrate compliance with the 2002 Highway Diesel Progress Review requirements under § 80.620. standard under § 80.510(a). report (EPA420-R–02–016, http:// (iii) The total volume of diesel fuel (d) Length of time records must be www.epa.gov/otaq/regs/hd2007/ kept. The records required in this produced and designated as NRLM 420r02016.pdf): Strategic planning, diesel fuel having a sulfur content section shall be kept for five years from Planning and front-end engineering, the date they were created, except that greater than the 500 ppm sulfur Detailed engineering and permitting, standard under § 80.510(a). records relating to credit transfers shall Procurement and construction, and (iv) The total volume of heating oil be kept by the transferor for five years Commissioning and startup; produced. from the date the credits were (6) Basic information regarding the transferred, and shall be kept by the selected technology pathway for (v) The baseline under § 80.554(a)(1). transferee for five years from the date compliance (e.g., conventional (vi) The total volume of diesel fuel the credits were transferred, used or hydrotreating vs. other technologies, produced and designated as NRLM terminated, whichever is later. revamp vs. grassroots, etc.); diesel fuel that is exempt from the 500 (e) Make records available to EPA. On (7) Whether capital commitments ppm sulfur standard of § 80.510(a). request by EPA, the records required in have been made or are projected to be (vii) The total volume, if any, of this section must be made available to made; and NRLM diesel fuel subject to the 500 the Administrator or the Administrator’s (8) The pre-compliance reports due in ppm sulfur standard § 80.510(a) that had representative. For records that are 2006 and later years must provide an a sulfur content exceeding 500 ppm. electronically generated or maintained, update of the progress in each of these (2) For each refinery of small refiners the equipment and software necessary areas. subject to the provisions of § 80.551(g) to read the records shall be made (b) Reports under this section may be and § 80.554(b), for each compliance available, or if requested by EPA, submitted in conjunction with reports period between June 1, 2010 and May electronic records shall be converted to submitted under § 80.594. 31, 2012, report the following:

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(i) The total volume of diesel fuel (iv) The deficit, if any, and the corporate officer of the refiner or produced and designated as NR diesel number of credits purchased, if any, to importer; and fuel. cover any deficit as provided in (3) Except for small refiners subject to (ii) The total volume of diesel fuel § 80.554(d)(3). § 80.554(d), submitted to EPA no later produced and designated as LM diesel (v) A report of the small refiner’s than August 31 each year for the prior fuel. progress toward compliance with the annual compliance period. Small (iii) The total volume of diesel fuel gasoline standards under §§ 80.240 and refiners subject to the provisions of produced and designated as NR diesel 80.255. § 80.554(d), reports must be submitted fuel subject to the 500 ppm sulfur (c) Credit generation and use. August 31 for the previous reporting standard under § 80.510(a). Information regarding the generation, period. (iv) The total volume of diesel fuel use, transfer and retirement of credits, (4) With the exception of reports produced and designated as LM diesel separately by refinery and import required under paragraph (b)(3) of this fuel subject to the 500 ppm sulfur facility, including the following: section, no reports will be required standard under § 80.510(a). (1) The number of credits at the under this section after August 31, 2014. (v) The volume of diesel fuel beginning of the compliance period. I 63. A center heading is added after produced and designated as NR diesel (2) The number of credits generated. § 80.604 to read as follows: fuel having a sulfur content of 15 ppm (3) The number of credits used. Exemptions or less. (4) If any credits were obtained from (vi) The baseline under § 80.554(b)(1). or transferred to other refineries or I 64. A new § 80.606 is added to read as (vii) The total volume of NRLM diesel importers, for each other refinery or follows: fuel produced that is eligible for the importer, the name, address, the EPA § 80.606 What national security exemption sulfur standard under § 80.510(a). (viii) company identification number, and the applies to distillate fuel? The total volume, if any, of NRLM number of credits obtained from or (a) The motor vehicle diesel fuel diesel fuel subject to the 15 ppm sulfur transferred to the other party. standards of § 80.520(a)(1), (a)(2), and standard that had a sulfur content in (5) The number of credits retired. (c) and the nonroad, locomotive or excess of 15 ppm. (6) The credit balance at the beginning marine diesel fuel standards of (3) For each refinery of small refiners and end of the compliance period. § 80.510(a), (b), and (c) do not apply to subject to the provisions of § 80.551(g) (d) Batch reports. For each batch of distillate fuel that is produced, and § 80.554(b), for each compliance NRLM diesel fuel and heating oil (if imported, sold, offered for sale, period between June 1, 2012 and May applicable) produced or imported and supplied, offered for supply, stored, 31, 2014, report the following: delivered during the compliance dispensed, or transported for use in— (i) The total volume of diesel fuel periods under paragraph (b) of this (1) Tactical military motor vehicles or produced and designated as NRLM section, include the following: tactical military nonroad engines, diesel fuel. (1) The batch volume. vehicles or equipment, including (ii) The total volume diesel fuel (2) The batch number assigned using locomotive and marine, having an EPA produced and designated as NRLM the batch numbering conventions under national security exemption from the diesel fuel subject to the 500 ppm sulfur § 80.65(d)(3) and the appropriate motor vehicle emissions standards standard under § 80.510(a). designation under § 80.598. under 40 CFR 85.1708, or from the (iii) The total volume of diesel fuel (3) The date of production or import. nonroad engine emission standards produced and designated as NRLM (4) For each batch provide the under 40 CFR part 89, 40 CFR part 92, diesel fuel having a sulfur content less information specified in paragraph (a)(1) 40 CFR part 94, or 40 CFR part 1068; than or equal to the 15 ppm sulfur of this section. and standard under § 80.510(c). (5) The sulfur content and cetane and (2) Tactical military motor vehicles or (iv) The baseline under § 80.554(b)(1). aromatics content of the fuel. tactical military nonroad engines, (v) The total volume of NRLM diesel (6) Whether the batch was dyed with vehicles or equipment, including fuel produced that is eligible for the 500 visible evidence of dye solvent red 164 locomotive and marine, that are not ppm sulfur standard under § 80.510(a). before leaving the refinery or import subject to a national security exemption (vi) The total volume, if any, of NRLM facility or was undyed. from vehicle or engine emissions diesel fuel subject to the 15 ppm sulfur (7) Whether the batch was marked standards as described in paragraph standard that had a sulfur content in with marker solvent yellow 124 before (a)(1) of this section but, for national excess of 15 ppm. leaving the refinery or import facility or security purposes (for purposes of (4) For each refinery of a small refiner was unmarked. readiness for deployment oversees), that elects to produce NRLM diesel fuel (e) Additional reporting requirements need to be fueled on the same fuel as the subject to the 15 ppm sulfur standard of for importers. Importers of NRLM diesel vehicles, engines, or equipment for § 80.510(c) beginning June 1, 2006 fuel are subject to the following which EPA has granted such a national under § 80.551(g) and § 80.554(d), for additional requirements: security exemption. each compliance period report the (1) The reporting requirements under (b) The exempt fuel must meet the following: § 80.620, if applicable. following conditions: (i) The total volume of diesel fuel (2) Importers must exclude certified (1) It must be accompanied by produced and designated as NRLM DFR–Diesel from calculations under this product transfer documents as required diesel fuel. section. under § 80.590; (ii) The total volume of diesel fuel (f) Report submission. Any report (2) It must be segregated from non- produced and designated as NRLM required by this section must be— exempt MVNRLM diesel fuel at all diesel fuel having a sulfur content less (1) On forms and following points in the distribution system; than or equal to 15 ppm. procedures specified by the (3) It must be dispensed from a fuel (iii) The percentages of NRLM diesel Administrator of EPA; pump stand, fueling truck or tank that fuel produced and designated having a (2) Signed and certified as meeting all is labeled with the appropriate sulfur content less than or equal to 15 the applicable requirements of this designation of the fuel, such as ‘‘JP–5’’ ppm under § 80.554(d)(1)(i) and (ii). subpart by the owner or a responsible or ‘‘JP–8’’; and

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(4) It may not be used in any motor (3) To demonstrate the reasonableness (3) The research and development vehicles or nonroad engines, equipment of the scope of the program: diesel fuel must be kept segregated from or vehicles, including locomotive and (i) An estimate of the program’s non-exempt MVNRLM diesel fuel at all marine, other than the vehicles, engines, duration in time and, if appropriate, points in the distribution system. and equipment referred to in paragraph mileage; (4) The research and development (a) of this section. (ii) An estimate of the maximum diesel fuel must not be sold, distributed, I 65. A new § 80.607 is added to read as number of vehicles or engines involved offered for sale or distribution, follows: in the program; dispensed, supplied, offered for supply, transported to or from, or stored by a § 80.607 What are the requirements for (iii) The manner in which the obtaining an exemption for diesel fuel used information on vehicles and engines diesel fuel retail outlet, or by a for research, development or testing used in the program will be recorded wholesale purchaser-consumer facility, purposes? and made available to the Administrator unless the wholesale purchaser- (a) Written request for a research and upon request; and consumer facility is associated with the development exemption. Any person (iv) The quantity of diesel fuel which research and development program that may receive an exemption from the does not comply with the requirements uses the diesel fuel. provisions of this subpart for diesel fuel of §§ 80.520 and 80.521 for motor (5) At the completion of the program, used for research, development, or vehicle diesel fuel or § 80.510 for NRLM any emission control systems or testing purposes by submitting the diesel fuel. elements of design which are damaged information listed in paragraph (c) of (4) With regard to control, a or rendered inoperative shall be this section to: demonstration that the program affords replaced on vehicles remaining in EPA a monitoring capability, including service, or the responsible person will Director, Transportation and Regional Programs Division (6406J), U.S. the following: be liable for a violation of the Clean Air Environmental Protection Agency, 1200 (i) The site(s) of the program Act section 203(a)(3) (42 U.S.C. 7522 Pennsylvania Avenue, NW., Washington, (including facility name, street address, (a)(3)) unless sufficient evidence is DC 20460 (postal mail); or city, county, state, and zip code); supplied that the emission controls or Director, Transportation and Regional (ii) The manner in which information elements of design were not damaged. Programs Division, U.S. Environmental on vehicles and engines used in the (e) Mechanism for granting of an Protection Agency, 1310 L Street, NW., program will be recorded and made exemption. A request for a research and 6th floor, Washington, DC 20005 available to the Administrator upon development exemption will be deemed (express mail/courier); and request; approved by the earlier of 60 days from Director, Air Enforcement Division (iii) The manner in which information the date on which EPA receives the (2242A), U.S. Environmental Protection on the diesel fuel used in the program request for exemption, (provided that Agency, Ariel Rios Building, 1200 EPA has not notified the applicant of Pennsylvania Avenue, NW., Washington, (including quantity, fuel properties, DC 20460. name, address, telephone number and potential disapproval by that time), or contact person of the supplier, and the the date on which the applicant receives (b) Criteria for a research and date received from the supplier), will be a written approval letter from EPA. development exemption. For a research recorded and made available to the (1) The volume of diesel fuel subject and development exemption to be Administrator upon request; to the approval shall not exceed the granted, the person requesting an (iv) The manner in which the party estimated amount under paragraph exemption must— will ensure that the research and (c)(3)(iv) of this section, unless EPA (1) Demonstrate a purpose that development fuel will be segregated grants a greater amount in writing. constitutes an appropriate basis for from motor vehicle diesel fuel or NRLM (2) Any exemption granted under this exemption; section will expire at the completion of (2) Demonstrate that an exemption is diesel fuel, as applicable, and how fuel the test program or three years from the necessary; pumps will be labeled to ensure proper (3) Design a research and use of the research and development date of approval, whichever occurs first, development program to be reasonable diesel fuel; and may only be extended upon re- in scope; and (v) The name, address, telephone application consistent will all (4) Exercise a degree of control number and title of the person(s) in the requirements of this section. consistent with the purpose of the organization requesting an exemption (3) The passage of 60 days will not program and EPA’s monitoring from whom further information on the signify the acceptance by EPA of the requirements. application may be obtained; and validity of the information in the (c) Information required to be (vi) The name, address, telephone request for an exemption. EPA may elect submitted. To demonstrate each of the number and title of the person(s) in the at any time to review the information elements in paragraphs (b)(1) through organization requesting an exemption contained in the request, and where (4) of this section, the person requesting who is responsible for recording and appropriate may notify the responsible an exemption must include the making available the information person of disapproval of the exemption. following information in the written specified in this paragraph (c), and the (4) In granting an exemption the request required under paragraph (a) of location where such information will be Administrator may include terms and this section: maintained. conditions, including replacement of (1) A concise statement of the purpose (d) Additional requirements. (1) The emission control devices or elements of of the program demonstrating that the product transfer documents associated design, that the Administrator program has an appropriate research with research and development motor determines are necessary for monitoring and development purpose. vehicle diesel fuel must comply with the exemption and for assuring that the (2) An explanation of why the stated requirements of § 80.590(b)(3). purposes of this subpart are met. purpose of the program cannot be (2) The research and development (5) Any violation of a term or achieved in a practicable manner diesel fuel must be designated by the condition of the exemption, or of any without performing one or more of the refiner or supplier, as applicable, as requirement of this section, will cause prohibited acts under this subpart. research and development diesel fuel. the exemption to be void ab initio.

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(6) If any information required under for sale, dispense, supply, offer for vehicle, that does not comply with the paragraph (c) of this section should supply, store or transport motor vehicle standards and dye requirements of change after approval of the exemption, diesel fuel, NRLM diesel fuel, or heating § 80.520(a) and (b); the responsible person must notify EPA oil that does not comply with the (2) Introduce, or permit the in writing immediately. Failure to do so applicable standards, dye, marking or introduction of, fuel into any nonroad may result in disapproval of the any other product requirements under diesel engine (including any locomotive exemption or may make it void ab this subpart I and 40 CFR part 69. or marine diesel engine) that does not initio, and may make the party liable for (2) Beginning June 1, 2007, produce, comply with the applicable standards, a violation of this subpart. import, sell, offer for sale, dispense, dye and marking requirements of (f) Effects of exemption. Motor vehicle supply, offer for supply, store or § 80.510(a), (d), and (e) and § 80.520(b) diesel fuel or NRLM diesel fuel that is transport any diesel fuel for use in beginning on the following dates: subject to a research and development motor vehicle or nonroad engines that (i) This prohibition begins December exemption under this section is exempt contains greater than 0.10 milligrams 1, 2007 in the areas specified in from other provisions of this subpart per liter of solvent yellow 124, except § 80.510(g)(1) and (g)(2), except as provided that the fuel is used in a for 500 ppm sulfur diesel fuel produced specified in paragraph (e)(2)(ii) of this manner that complies with the purpose or imported from June 1, 2010 through section. of the program under paragraph (c) of September 30, 2012 for use only in (ii) This prohibition begins December this section and the requirements of this locomotive or marine diesel engines that 1, 2010 in the area specified in section. is marked under the provisions of § 80.510(g)(2) for NRLM diesel fuel that (g) Notification of completion. The § 80.510(e). is produced in accordance with a party shall notify EPA in writing within (3) Beginning June 1, 2007, produce, compliance plan approved under 30 days after completion of the research import, sell, offer for sale, dispense, § 80.554. and development program. supply, offer for supply, store or (iii) This prohibition begins December I 66. A new § 80.608 is added to read as transport heating oil for use in any 1, 2010 in all other areas. follows: nonroad diesel engine, including any (3) Introduce, or permit the locomotive or marine diesel engine. introduction of, fuel into any nonroad § 80.608 What requirements apply to (b) Designation and volume balance diesel engine (other than locomotive diesel fuel for use in the Territories? violation. Produce, import, sell, offer for and marine diesel engines) that does not The sulfur standards of § 80.520(a)(1) sale, dispense, supply, offer for supply, comply with the applicable standards, and (c) related to motor vehicle diesel store or transport motor vehicle diesel, dye and marking requirements of fuel, and of § 80.510(a), (b), and (c) NRLM diesel fuel, heating oil or other § 80.510(b) and (e) beginning on the related to NRLM diesel fuel, do not distillate that does not comply with the following dates: apply to diesel fuel that is produced, applicable designation or volume (i) This prohibition begins December imported, sold, offered for sale, balance requirements under §§ 80.598 1, 2010 in the areas specified in supplied, offered for supply, stored, and 80.599. § 80.510(g)(1) and (g)(2), except as dispensed, or transported for use in the (c) Additive violation. (1) Produce, specified paragraph (e)(3)(ii) of this Territories of Guam, American Samoa or import, sell, offer for sale, dispense, section. the Commonwealth of the Northern supply, offer for supply, store or (ii) This prohibition begins December Mariana Islands, provided that such transport any motor vehicle diesel fuel 1, 2014 in the area specified in diesel fuel is— additive or NRLM diesel fuel additive § 80.510(g)(2) for NRLM diesel fuel that (a) Designated by the refiner or for use at a downstream location that is produced in accordance with a importer as high sulfur diesel fuel only does not comply with the applicable compliance plan approved under for use in Guam, American Samoa, or requirements of § 80.521. § 80.554. the Commonwealth of the Northern (2) Blend or permit the blending into (iii) This prohibition begins beginning Mariana Islands; motor vehicle diesel fuel or NRLM December 1, 2014 in all other areas. (b) Used only in Guam, American diesel fuel at a downstream location, or (4) Introduce, or permit the Samoa, or the Commonwealth of the use, or permit the use, in motor vehicle introduction of, fuel into any Northern Mariana Islands; diesel fuel or NRLM diesel fuel, of any locomotive and marine diesel engine (c) Accompanied by documentation additive that does not comply with the which does not comply with the that complies with the product transfer applicable requirements of § 80.521. applicable standards, dye and marking document requirements of (d) Used motor oil violation. requirements of § 80.510(c) and § 80.590(b)(1); and Introduce into the fuel system of a § 80.510(f) in the following areas (d) Segregated from non-exempt model year 2007 or later diesel motor beginning on the following dates: MVNRLM diesel fuel at all points in the vehicle or model year 2011 or later (i) This prohibition begins December distribution system from the point the nonroad diesel engine (except for 1, 2012 in the areas specified in diesel fuel is designated as exempt fuel locomotive or marine engines) or other § 80.510(g)(1) and (g)(2), except as only for use in Guam, American Samoa, nonroad diesel engine certified for the specified in paragraph (e)(4)(ii) of this or the Commonwealth of the Northern use of 15 ppm sulfur content fuel, or section. Mariana Islands, while the exempt fuel permit the introduction into the fuel (ii) This prohibition does not apply in is in the United States but outside these system of such vehicle or nonroad the area specified in § 80.510(g)(2) for Territories. engine of used motor oil, or used motor NRLM diesel fuel that is produced in I 67. Section 80.610 is revised to read as oil blended with diesel fuel, that does accordance with a compliance plan follows: not comply with the requirements of approved under § 80.554. § 80.522. (iii) This prohibition does not apply § 80.610 What acts are prohibited under (e) Improper fuel usage violation. (1) in any other areas. the diesel fuel sulfur program? Introduce, or permit the introduction of, (5) Introduce, or permit the No person shall— fuel into model year 2007 or later diesel introduction of, fuel into any model (a) Standard, dye, marker or product motor vehicles, and beginning year 2011 or later nonroad diesel engine violation. (1) Produce, import, sell, offer December 1, 2010 into any diesel motor certified for use on 15 ppm sulfur

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content fuel, diesel fuel which does not subpart, may be based on information facility where a violation of § 80.610(a) comply with the applicable standards, obtained from any source or location. or (b) occurred, is deemed in violation dye and marking requirements of Such information may include, but is of § 80.610(a) or (b), as applicable. § 80.510(b) through (f). not limited to, business records and (4) Carrier causation. In order for a (f) Cause another party to violate. commercial documents. distillate fuel or diesel fuel additive Cause another person to commit an act I 69. Section 80.612 is amended by carrier to be liable under paragraph in violation of paragraphs (a) through (e) revising paragraph (a) to read as follows: (a)(1)(ii), (a)(1)(iii), or (a)(1)(iv) of this of this section. section, as applicable, EPA must (g) Cause violating fuel or additive to § 80.612 Who is liable for violations of this demonstrate, by reasonably specific subpart? be in the distribution system. Cause showing by direct or circumstantial motor vehicle diesel fuel, or NRLM (a) Persons liable for violations of evidence, that the carrier caused the diesel fuel, to be in the diesel fuel prohibited acts. (1) Standard, dye, violation. distribution system which does not marker, additives, used motor oil, (5) Parent corporation. Any parent comply with the applicable standard, heating oil, fuel introduction, and other corporation is liable for any violations dye or marker requirements or the product requirement violations. (i) Any of this subpart that are committed by product segregation requirements of this refiner, importer, distributor, reseller, any subsidiary. Subpart I, or cause any diesel fuel carrier, retailer, wholesale purchaser- (6) Joint venture. Each partner to a additive to be in the diesel fuel additive consumer who owned, leased, operated, joint venture is jointly and severally distribution system which does not controlled or supervised a facility where liable for any violation of this subpart comply with the applicable sulfur a violation of any provision of that occurs at the joint venture facility standards under § 80.521. § 80.610(a) through (e) occurred, or any or is committed by the joint venture I 68. Section 80.611 is revised to read as other person who violates any provision operation. follows: of § 80.610(a) through (e), is deemed * * * * * liable for the applicable violation, I 70. Section 80.613 is amended by § 80.611 What evidence may be used to except that distributors who receive determine compliance with the prohibitions revising the section heading and diesel fuel or distillate from the point paragraphs (a) and (d) to read as follows: and requirements of this subpart and where it is taxed, dyed or marked, and liability for violations of this subpart? retailers and wholesale purchaser- § 80.613 What defenses apply to persons (a) Compliance with sulfur, cetane, consumers are not deemed liable for any deemed liable for a violation of a prohibited and aromatics standards, dye and violation of § 80.610(b). act under this subpart? marker requirements. Compliance with (ii) Any person who causes another (a) Presumptive liability defenses. (1) the standards, dye, and marker person to violate § 80.610(a) through (e) Any person deemed liable for a requirements in §§ 80.510, 80.511, is liable for a violation of § 80.610(f). violation of a prohibition under 80.520, and 80.521 shall be determined (iii) Any refiner, importer, distributor, § 80.612(a)(1)(i), (a)(1)(iii), (a)(2), or based on the level of the applicable reseller, carrier, retailer, or wholesale (a)(3), will not be deemed in violation component or parameter, using the purchaser-consumer who produced, if the person demonstrates the sampling methodologies specified in imported, sold, offered for sale, following: § 80.330(b), as applicable, and an dispensed, supplied, offered to supply, (i) The violation was not caused by approved testing methodology under the stored, transported, or caused the the person or the person’s employee or provisions of §§ 80.580 through 80.586 transportation or storage of, diesel fuel agent; for sulfur; § 80.2(w) for cetane index; or distillate that violates § 80.610(a), is (ii) Product transfer documents § 80.2(z) for aromatic content; and deemed in violation of § 80.610(f). account for fuel or additive found to be § 80.582 for fuel marker. Any evidence (iv) Any person who produced, in violation and indicate that the or information, including the exclusive imported, sold, offered for sale, violating product was in compliance use of such evidence or information, dispensed, supplied, offered to supply, with the applicable requirements when may be used to establish the level of the stored, transported, or caused the it was under the person’s control; applicable component or parameter in transportation or storage of a diesel fuel (iii) The person conducted a quality the diesel fuel or additive, or motor oil additive which is used in motor vehicle assurance sampling and testing to be used in diesel fuel, if the evidence diesel fuel or NRLM diesel fuel that is program, as described in paragraph (d) or information is relevant to whether found to violate § 80.610(a), is deemed of this section, except for those persons that level would have been in in violation of § 80.610(f). subject to the provisions of paragraph compliance with the standard if the (2) Cause violating diesel fuel or (a)(1)(iv), (a)(1)(v), or (a)(1)(vi) of this regulatory sampling and testing additive to be in the distribution system. section or § 80.614. A carrier may rely methodology had been correctly Any refiner, importer, distributor, on the quality assurance program performed. Such evidence may be reseller, carrier, retailer, or wholesale carried out by another party, including obtained from any source or location purchaser-consumer or any other person the party who owns the diesel fuel in and may include, but is not limited to, who owned, leased, operated, controlled question, provided that the quality test results using methods other than the or supervised a facility from which assurance program is carried out compliance methods in this paragraph distillate fuel or additive was released properly. Retailers, wholesale (a), business records, and commercial into the distribution system which does purchaser-consumers, and ultimate documents. not comply with the applicable consumers of diesel fuel are not (b) Compliance with other standards, marking or dye requirements required to conduct quality assurance requirements. Determination of of this Subpart I is deemed in violation programs; compliance with the requirements and of § 80.610(g). (iv) For refiners and importers of prohibitions of this subpart other than (3) Branded refiner/importer liability. diesel fuel subject to the 15 ppm sulfur the standards described in paragraph (a) Any refiner or importer whose standard under § 80.510(b) or (c), or of this section and in §§ 80.510, 80.511, corporate, trade, or brand name, or § 80.520(a)(1), or the 500 ppm sulfur 80.520, and 80.521, and determination whose marketing subsidiary’s corporate, standard under § 80.510(a) or 80.520(c), of liability for any violation of this trade, or brand name appeared at a test results that—

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(A) Were conducted according to an and indicate that the additive was in (1) A periodic sampling and testing appropriate test methodology approved compliance with the applicable program to ensure the diesel fuel or or designated under §§ 80.580 through requirements while it was under the additive the person sold, dispensed, 80.586, 80.2(w), or 80.2(z), as party’s control; and supplied, stored, or transported, meets appropriate; and (ii) For the additive’s manufacturer or the applicable standards and (B) Establish that, when it left the importer, test results which accurately requirements, including the party’s control, the fuel did not violate establish that, when it left the party’s requirements relating to the presence of the sulfur, cetane or aromatics standard, control, the additive in the diesel fuel marker solvent yellow 124. or the dye or marking provisions of determined to be in violation did not (2) For those parties who, at a §§ 80.510 or 80.511, as applicable; have a sulfur content greater than or downstream location, blend diesel fuel (v) For any truck loading terminal or equal to 15 ppm. additives subject to the requirements of any other person who delivers heating (A) Analysis of the additive sulfur § 80.521(b) into fuel trucks at a truck oil for delivery to the ultimate consumer content pursuant to this paragraph (a)(2) loading rack, the periodic sampling and and is subject to the requirement to may be conducted at the time the batch testing program required under this mark heating oil or LM diesel fuel under was manufactured or imported, or on a paragraph (d) must ensure, by taking § 80.510(d) through (f), data which sample of that batch which the into account the greater risk of demonstrates that when it left the truck manufacturer or importer retains for noncompliance created through use of a loading terminal or other facility, the such purpose for a minimum of two high sulfur additive, that the diesel fuel concentration of marker solvent yellow years from the date the batch was into which the additive was blended 124 was equal to or greater than six manufactured or imported. meets the applicable standards milligrams per liter. In lieu of testing for (B) After two years from the date the subsequent to the blending. marker solvent yellow 124 additive batch was manufactured or (3) On each occasion when diesel fuel concentration, evidence may be imported, the additive manufacturer or or additive is found not in compliance presented of an oversight program, importer is no longer required to retain with the applicable standard: including records of marker inventory, samples for the purpose of complying (i) The person immediately ceases purchase and additization, and records with the testing requirements of this selling, offering for sale, dispensing, of periodic inspection and calibration of paragraph (a)(2). supplying, offering for supply, storing or additization equipment that ensures that (C) The analysis of the sulfur content transporting the non-complying marker is added to heating oil or LM of the additive must be conducted product. diesel fuel, as applicable, under pursuant to the requirements of (ii) The person promptly remedies the § 80.510(d) through (f) in the required § 80.580. violation and the factors that caused the concentration; (3) Any person who is deemed liable violation (for example, by removing the (vi) Except as provided in § 80.614, for a violation under § 80.612(a)(1)(iv) non-complying product from the for any person who, at a downstream with regard to a diesel fuel additive distribution system until the applicable location, blends a diesel fuel additive subject to the requirements of standard is achieved and taking steps to subject to the requirements of § 80.521(b), will not be deemed in prevent future violations of a similar § 80.521(b) into motor vehicle diesel violation if the person demonstrates nature from occurring). fuel or NRLM diesel fuel subject to the that— (4) For any carrier who transports 15 ppm sulfur standard under (i) The violation was not caused by diesel fuel or additive in a tank truck, § 80.520(a) or § 80.510(b) or (c), except the party or the party’s employee or the quality assurance program required a person who blends additives into fuel agent; under this paragraph (d) need not tanker trucks at a truck loading rack (ii) Product transfer document(s) include its own periodic sampling and subject to the provisions of paragraph which comply with the additive testing of the diesel fuel or additive in (d)(2) of this section, test results which information requirements under the tank truck, but in lieu of such tank are conducted subsequent to the § 80.591(b), account for the additive in truck sampling and testing, the carrier blending of the additive into the fuel, the fuel found to be in violation, and shall demonstrate evidence of an and which comply with the indicate that the additive was in oversight program for monitoring requirements of paragraphs (a)(1)(iv)(A) compliance with the applicable compliance with the requirements of and (B) of this section; and requirements while it was under the this subpart relating to the transport or (vii) Any person deemed liable for a party’s control; and storage of such product by tank truck, designation or volume balance (iii) For the additive’s manufacturer or such as appropriate guidance to drivers provisions violation under § 80.610(b) importer, test results which accurately regarding compliance with the and 80.612(a) will not be deemed in establish that, when it left the party’s applicable sulfur standard, product violation if the person demonstrates, control, the additive in the diesel fuel segregation and product transfer through product transfer documents, determined to be in violation was in document requirements, and the records, reports and other evidence that conformity with the information on the periodic review of records received in the diesel fuel or distillate was properly additive product transfer document the ordinary course of business designated and volume balance pursuant to the requirements of concerning diesel fuel or additive requirements were met. § 80.591(b). The testing procedures quality and delivery. (2) Any person deemed liable for a applicable under paragraph (a)(2) of this I 71. Section 80.614 is revised to read as violation under § 80.612(a)(1)(iv), in section, also apply under this paragraph follows: (a)(3). regard to a diesel fuel additive subject § 80.614 What are the alternative defense to the requirements of § 80.521(a), will * * * * * requirements in lieu of § 80.613(a)(1)(vi) for not be deemed in violation if the person (d) Quality assurance and testing static dissipater additives exceeding the 15 demonstrates that— program. To demonstrate an acceptable ppm sulfur standard but that contribute less (i) Product transfer document(s) quality assurance program under than 0.05 ppm sulfur when added to account for the additive in the fuel paragraph (a)(1)(iii) of this section, a MVNRLM diesel fuel? found to be in violation, which comply person must present evidence of the Any person who blends a MVNRLM with the requirements under § 80.591(a), following: diesel fuel additive package into

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MVNRLM diesel fuel subject to the 15 or some other measurement system that meter being measured, or other ppm sulfur standards of § 80.510(b) or is able to accurately distinguish its use. comparable metered measurements. The (c) or § 80.520(a) which contains a static (e) Recorded volumes of MVNRLM supporting data may be supplied on the dissipater additive that has a sulfur diesel fuel and static dissipater additive VAR formula record or in the form of content greater than 15 ppm but whose package must be expressed to the computer printouts or other comparable contribution to the sulfur content of the nearest gallon (or smaller units), except VAR supporting documentation. MVNRLM diesel fuel is less than 0.05 that static dissipater additive package (B) For a facility which uses a gauge ppm at its maximum recommended volumes of five gallons or less must be to measure the inventory of the static concentration, and which contains no expressed to the nearest tenth of a dissipater additive package storage tank, other additives with a sulfur content gallon (or smaller units). However, if the the total volume of static dissipater greater than 15 ppm must establish all blender’s equipment cannot accurately additive package shall be calculated the following in order to use this section measure to the nearest tenth of a gallon, from the following equation: as an alternative to the defense element then such volumes must be rounded Static dissipater additive package Volume = under § 80.613(a)(1)(vi): upward to the next higher gallon for (A)¥(B)+(C) ¥ (D) (a)(1) The blender of the static purposes of determining compliance Where: dissipater additive package has a sulfur with this section. A = Initial static dissipater additive package content test result for the MVNRLM (f) Each VAR formula record must inventory of the tank diesel fuel prior to blending of the also contain the following information: B = Final static dissipater additive package additive that indicates that the additive (1) Automated blending facilities. In inventory of the tank package, when added, will not cause the the case of an automated static C = Sum of any additions to static dissipater MVNRLM diesel fuel sulfur content to dissipater additive package blending additive package inventory exceed 15 ppm sulfur. facility, for each VAR period, for each D = Sum of any withdrawals from static (2) In cases where the storage tank static dissipater additive package dissipater additive package inventory for that contains MVNRLM diesel fuel prior storage system, and each static purposes other than the additization of MVNRLM diesel fuel. to additization contains multiple fuel dissipater additive package in that batches, the blender of the static storage system, the following must be (C) The value of each variable in the dissipater additive package must have recorded: equation in paragraph (f)(1)(ii)(B) of this sulfur test results on each batch of (i)(A) The manufacturer and section must be separately recorded on MVNRLM diesel fuel that was added to commercial identifying name of the the VAR formula record. In addition, a the storage tank during the current and static dissipater additive package being list of each static dissipater additive previous VAR periods, which indicates reconciled, the maximum recommended package addition included in variable C that the additive package, when added treatment level, the potential and a list of each static dissipater to the component MVNRLM diesel fuel contribution to the sulfur content of the additive package withdrawal included batch in the storage tank with the finished fuel that might result when the in variable D must be provided, either highest sulfur level would not cause additive package is used at its maximum on the formula record or as VAR that component batch to exceed 15 ppm recommended treatment level, the supporting documentation. sulfur. intended treatment level, and the (iii) The total volume of MVNRLM (b) The volumetric additive contribution to the sulfur content of the diesel fuel to which static dissipater reconciliation (VAR) standard is finished fuel that would result when the additive package has been added, attained as determined under the additive package is used at its intended together with supporting data which provisions of this section. The VAR treatment level. The intended treatment includes one of the following: the reconciliation standard is attained when level is the treatment level that the beginning and ending meter the actual concentration of a static additive injection equipment is set to. measurements for each meter being dissipater additive package used per the (B) The maximum recommended measured, the metered batch volume VAR formula record under paragraph (f) treatment level and the intended measurements for each meter being of this section is less than the treatment level must be expressed in measured, or other comparable metered concentration that would have caused terms of gallons of static dissipater measurements. The supporting data may any batch of MVNRLM diesel fuel to additive package per thousand gallons be supplied on the VAR formula record exceed a sulfur content of 15 ppm given of MVNRLM diesel fuel, and expressed or in the form of computer printouts or the maximum sulfur test result on any to four significant figures. If the static other comparable VAR supporting MVNRLM diesel fuel batch described in dissipater additive package storage documentation. paragraph (a) of this section that is system which is the subject of the VAR (iv) The actual static dissipater additized with the static dissipater formula record is a proprietary system additive package concentration, additive package during the VAR under the control of a customer, this fact calculated as the total volume of static period. must be indicated on the record. dissipater additive package added (c) The product transfer document (ii) The total volume of static (pursuant to paragraph (f)(1)(ii) of this complies with the applicable sulfur dissipater additive package blended into section), divided by the total volume of information requirements of § 80.591. MVNRLM diesel fuel, in accordance MVNRLM diesel fuel (pursuant to (d) If more than one static dissipater with one of the following methods, as paragraph (f)(1)(iii) of this section). The additive package is used during a VAR applicable. concentration must be calculated and period, then a separate VAR formula (A) For a facility which uses in-line recorded to 4 significant figures. record must be created for MVNRLM meters to measure static dissipater (v) A list of each static dissipater diesel fuel additized for each of the additive package usage, the total volume additive package concentration rate set static dissipater additive packages used. of static dissipater additive package for the static dissipater additive package In such cases, the amount of the each measured, together with supporting data that is the subject of the VAR record, static dissipater additive package used which includes one of the following: the together with the date and description must be accurately and separately beginning and ending meter readings for of each adjustment to any initially set measured, either through the use of a each meter being measured, the metered concentration. The concentration separate storage tank, a separate meter, batch volume measurements for each adjustment information may be

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supplied on the VAR formula record or (2) Non-automated facilities. In the paragraphs (f)(1) and (f)(2) of this in the form of computer printouts or case of a facility in which hand section shall contain the following: other comparable VAR supporting blending or any other non-automated (i) The signature of the creator of the documentation. No concentration method is used to blend static dissipater VAR record; setting is permitted above the maximum additive packages, for each static (ii) The date of the creation of the recommended concentration supplied dissipater additive package and for each VAR record; and by the additive manufacturer, except as batch of MVNRLM diesel fuel to which (iii) A certification of correctness by described in paragraph (f)(1)(vii) of this the static dissipater additive package is the creator of the VAR record. section. being added, the following shall be (4) Electronically-generated VAR (vi) The dates of the VAR period, recorded: formula and supporting records. (i) which shall be no longer than thirty-one (i) The manufacturer and commercial Electronically-generated records are days. If the VAR period is identifying name of the static dissipater acceptable for VAR formula records and contemporaneous with a calendar additive package being reconciled, the supporting documentation (including month, then specifying the month will maximum recommended treatment PTDs), provided that they are complete, fulfill this requirement; if not, then the level, the potential contribution to the accessible, and easily readable. VAR beginning and ending dates and times of sulfur content of the finished fuel that formula records must also be stored the VAR period must be listed. The might result when the fuel is used at its with access and audit security, which times may be supplied on the VAR maximum recommended treatment must restrict to a limited number of formula record or in supporting level, the intended treatment level, and specified people those who have the documentation. Any adjustment to any the contribution to the sulfur content of ability to alter or delete the records. In static dissipater additive package the finished fuel that would result when addition, parties maintaining records concentration rate initially set in the the additive package is used at its electronically must make available to VAR period shall terminate that VAR intended treatment level. EPA the hardware and software period and initiate a new VAR period, (A) The maximum recommended necessary to review the records. except as provided in paragraph treatment level and the intended (ii) Electronically-generated VAR (f)(1)(vii) of this section. treatment level must be expressed in formula records may use an electronic (vii) The concentration setting for a terms of gallons of static dissipater user identification code to satisfy the static dissipater additive package additive package per thousand gallons signature requirements of paragraph injector may be changed from the of MVNRLM diesel fuel, and expressed (f)(3)(i) of this section, provided that: concentration initially set in the VAR to four significant figures. (A) The use of the identification is period without terminating that VAR (B) If the static dissipater additive limited to the record creator; and period, provided that: package storage system which is the (B) A paper record is maintained, (A) The purpose of the change is to subject of the VAR formula record is a correct a batch under-additization prior which is signed and dated by the VAR proprietary system under the control of formula record creator, acknowledging to the end of the VAR period and prior a customer, this fact must be indicated to the transfer of the batch to another that the use of that particular user ID on on the record. a VAR formula record is equivalent to party, or to correct an equipment (ii) The date of the additization that his/her signature on the document. malfunction where there has been no is the subject of the VAR formula (5) Calibration requirements for over-additization of the additive; record. (B) The concentration is immediately (iii) The volume of added static automated blending facilities. returned after the correction to a dissipater additive package. Automated static dissipater additive concentration that fulfills the (iv) The volume of the MVNRLM package blenders must calibrate their requirements of this paragraph (f); diesel fuel to which the static dissipater static dissipater additive package (C) The blender creates and maintains additive package has been added. equipment at least once in each documentation establishing the date and (v) The brand (if known) of MVNRLM calendar half year, with the acceptable adjustments of the correction; and diesel fuel. calibrations being no less than one (D) If the correction is initiated only (vi) The actual static dissipater hundred twenty days apart, except that to rectify an equipment malfunction, additive package concentration, calibrations may be closer in time so and the amount of static dissipater calculated as the volume of added static long as at least two calibrations meet the additive package used in this procedure dissipater additive package (pursuant to requirements to be in separate halves of is not added to MVNRLM diesel fuel paragraph (f)(1)(ii)(B) of this section), the calendar year and no less than 120 within the compliance period, then this divided by the volume of MVNRLM days apart. Equipment recalibration is amount is subtracted from the static diesel fuel (pursuant to paragraph also required each time the static dissipater additive package volume (f)(1)(iii) of this section). The dissipater additive package is changed, listed on the VAR formula record. In concentration must be calculated and unless written documentation indicates such a case, the addition of this amount recorded to four significant figures. that the new static dissipater additive of static dissipater additive must be (vii) The measured sulfur level for package has the same viscosity as the reflected in the following VAR period. each batch of MVNRLM diesel fuel to previous static dissipater additive (viii) The measured sulfur level for which a static dissipater additive package. Static dissipater package each batch of MVNRLM diesel fuel to package is added during each VAR change calibrations may be used to which a static dissipater additive period. In cases where the storage tanks satisfy the semiannual requirement package is added during each VAR that contains MVNRLM diesel fuel prior provided that the calibrations occur in period. In cases where the storage tank to additization contains multiple fuel the appropriate half calendar year and that contains MVNRLM diesel fuel prior batches, a measured sulfur level on each are no less than one hundred twenty to additization contains multiple fuel batch added to the storage tank during days apart. batches, a measured sulfur level on each the current and previous VAR periods (6) Additional VAR documentation. batch added to the storage tank during must be recorded. The following VAR supporting the current and previous VAR periods (3) VAR formula records. Every VAR documentation must also be created and must be recorded. formula record created pursuant to maintained:

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(i) For all automated static dissipater business day after the EPA request to (c) Any person liable under additive package blending facilities, supply VAR supporting documentation, § 80.612(b) for failure to meet, or documentation reflecting performance or longer if approved by the Agency. causing a failure to meet, a provision of of the calibrations required by (iv) In this paragraph (f)(7), the term this subpart is liable for a separate day paragraph (f)(5) of this section, and any ‘‘immediately available’’ means that the of violation for each and every day such associated adjustments of the automated records must be provided, electronically provision remains unfulfilled. static dissipater additive package or otherwise, within approximately one I 73. Section 80.620 is amended by injection equipment; hour of EPA’s request, or within a revising the section heading and (ii) For all static dissipater additive longer time frame as approved by EPA. paragraphs (a), (b), (c), (d)(2), (d)(3)(i)(D), package blending facilities, product I 72. A new § 80.615 is added to read as (e)(1), (f)(2)(ii) introductory text, transfer documents for all static follows: (f)(3)(ii), (g), (h) introductory text, (h)(2), dissipater additive packages, and static (i)(1)(v), (i)(1)(vi), (i)(5), (j), (k)(1), (k)(3), dissipater-additized MVNRLM diesel § 80.615 What penalties apply under this (n), (o), (p), (q), (r), and (s) to read as fuel transferred into or out of the subpart? follows: facility; (a) Any person liable for a violation (iii) For all automated static dissipater § 80.620 What are the additional under § 80.612 is subject to civil requirements for diesel fuel or distillates additive package blending facilities, penalties as specified in section 205 of produced by foreign refineries subject to a documentation establishing the brands the Clean Air Act (42 U.S.C. 7524) for temporary refiner compliance option, (if known) of the MVNRLM diesel fuel every day of each such violation and the hardship provisions, or motor vehicle or which is the subject of the VAR formula amount of economic benefit or savings NRLM diesel fuel credit provisions? record; and resulting from each violation. (a) Definitions. (1) A foreign refinery (iv) For all hand blending static (b)(1) Any person liable under is a refinery that is located outside the dissipater additive package blenders, § 80.612(a)(1) for a violation of an United States, the Commonwealth of the documentation, if in the party’s applicable standard or requirement Puerto Rico, the Virgin Islands, Guam, possession, supporting the volumes of under this Subpart I or for causing American Samoa, and the MVNRLM diesel fuel and static another party to violate such standard or Commonwealth of the Northern Mariana dissipater additive package reported on requirement, is subject to a separate day Islands (collectively referred to in this the VAR formula record. of violation for each and every day the section as ‘‘the United States’’). (7) Document retention and non-complying diesel fuel remains any (2) A foreign refiner is a person who availability. All static dissipater place in the distribution system. meets the definition of refiner under additive package blenders shall retain (2) Any person liable under § 80.2(i) for a foreign refinery. the documents required under this (3) A diesel fuel program foreign section for a period of five years from § 80.612(a)(2) for causing motor vehicle diesel fuel, NRLM diesel fuel, heating refiner (‘‘DFR’’) is a foreign refiner that the date the VAR formula records and has been approved by EPA for supporting documentation are created, oil, or other distillate fuel to be in the distribution system which does not participation in any motor vehicle and shall deliver them upon request to diesel fuel or NRLM diesel fuel the EPA Administrator or the comply with an applicable standard or requirement of this Subpart I is subject provision of § 80.530 through 80.533, or Administrator’s authorized §§ 80.535, 80.536, 80.540, 80.552, representative. to a separate day of violation for each and every day that the non-complying 80.553, 80.554, 80.560 or 80.561 (i) Except as provided in paragraph (collectively referred to as ‘‘diesel (f)(7)(iii) of this section, automated diesel fuel remains any place in the diesel fuel distribution system. foreign refiner program’’). static dissipater additive package (4) ‘‘DFR-Diesel’’ means diesel fuel or blender facilities and hand-blender (3) Any person liable under distillate fuel as applicable under facilities which are terminals, which § 80.612(a)(1) for blending into diesel subpart I of this part produced at a DFR physically blend static dissipater fuel an additive violating the applicable refinery that is imported into the United additive packages into MVNRLM diesel sulfur standard pursuant to the States. fuel, must make immediately available requirements of § 80.521(a) or (b), as (5) ‘‘Non-DFR-Diesel’’ means diesel to EPA, upon request, the preceding applicable, or of causing another party fuel or distillate fuel that is produced at twelve months of VAR formula records to so blend such an additive, is subject a foreign refinery that has not been plus the preceding two months of VAR to a separate day of violation for each approved as a DFR foreign refiner, supporting documentation. and every day the motor vehicle diesel diesel fuel produced at a DFR foreign (ii) Except as provided in paragraph fuel or NRLM diesel fuel into which the refinery that is not imported into the (f)(7)(iii) of this section, other hand- noncomplying additive was blended, United States, and diesel fuel produced blending static dissipater additive remains any place in the fuel at a DFR foreign refinery during a period package facilities which physically distribution system. when the foreign refiner has opted to blend static dissipater additive package (4) For purposes of this paragraph (b) not participate in the DFR-Diesel foreign into MVNRLM diesel fuel must make of this section, the length of time the refiner program under paragraph (c)(3) immediately available to EPA, upon motor vehicle diesel fuel, NRLM diesel of this section. request, the preceding two months of fuel, heating oil or other distillate fuel (6) ‘‘Certified DFR-Diesel’’ means VAR formula records and VAR in question remained in the diesel fuel DFR-Diesel the foreign refiner intends to supporting documentation. distribution system is deemed to be 25 include in the foreign refinery’s (iii) Facilities which have centrally days, unless a person subject to liability compliance calculations under any maintained records at other locations, or or EPA demonstrates by reasonably provisions of § 80.530 through 80.533, have customers who maintain their own specific showings, by direct or or §§ 80.535, 80.536, 80.540, 80.552, records at other locations for their circumstantial evidence, that the non- 80.553, 80.554, 80.560 or 80.561 and proprietary static dissipater additive complying motor vehicle, NR or NRLM does include in these compliance package injection systems, and which diesel fuel, heating oil or distillate fuel calculations when reported to EPA. can document this fact to the Agency, remained in the distribution system for (7) ‘‘Non-Certified DFR-Diesel’’ means may have until the start of the next fewer than or more than 25 days. DFR-Diesel fuel that a DFR foreign

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refiner imports to the United States that § 80.530, credits obtained from any (ii) The name and EPA refinery is not Certified DFR-Diesel. other refinery or from any importer registration number (under § 80.597) of (b) Baseline. For any foreign refiner to must have been generated in the same the refinery where the DFR-Diesel was obtain approval under the diesel foreign Credit Trading Area as the Credit produced. refiner program of this subpart for any Trading Area of import of the fuel for (3) * * * refinery, it must apply for approval which credits are needed to achieve (i) * * * under the applicable provisions of this compliance. (D) In the case of Certified DFR- subpart. To obtain approval the refiner (iii) For purposes of generating credits Diesel: is required, as applicable, to under § 80.531, credits shall be (1) The sulfur content as determined demonstrate a volume baseline under generated separately by Credit Trading under paragraph (f) of this section, and subpart I of this part. Area of import and shall be designated the applicable designations stated in (1) The refiner shall follow the by Credit Trading Area of importation paragraph (d)(2)(i) of this section; and procedures, applicable to volume and by port of importation. (2) A declaration that the DFR-Diesel baselines and using diesel fuel, or if (2) In the case of Non-Certified DFR- is being included in the applicable applicable, heating oil, instead of Diesel, the foreign refiner shall meet all compliance calculations required by gasoline, in §§ 80.91 through 80.93 to the following requirements: EPA under this subpart. establish the volume of motor vehicle (i) The designation requirements in * * * * * diesel fuel that was produced at the this section. (e) * * * refinery and imported into the United (ii) The reporting requirements in this (1)(i) The foreign refiner excludes: States during the applicable years for section and in §§ 80.593, 80.594, 80.601, (A) The volume of diesel from the purposes of establishing a baseline and 80.604. refinery’s compliance report under under Subpart I for applicable fuels (iii) The product transfer document § 80.593, § 80.601, or § 80.604; and produced for use in the United States. requirements in this section and in (B) In the case of Certified DFR-Diesel, (2) In making determinations for §§ 80.590 and 80.591. the volume of the diesel fuel from the foreign refinery baselines EPA will (iv) The prohibitions in this section compliance report under § 80.593, consider all information supplied by a and in § 80.610. § 80.601, or § 80.604. (3)(i) Any foreign refiner that has been foreign refiner, and in addition may rely (ii) The exclusions under paragraph approved to produce diesel fuel subject on any and all appropriate assumptions (e)(1)(i) of this section shall be on the to the diesel foreign refiner program for necessary to make such determinations. basis of the designations under § 80.598 a foreign refinery under this subpart (3) Where a foreign refiner submits a and this section, and volumes may elect to classify no diesel fuel petition that is incomplete or determined under paragraph (f) of this imported into the United States as DFR- inadequate to establish an accurate section. baseline, and the refiner fails to correct Diesel provided the foreign refiner * * * * * this deficiency after a request for more notifies EPA of the election no later than 60 calendar days prior to the beginning (f) * * * information, EPA will not assign an (2) * * * individual refinery baseline. of the compliance period. (ii) An election under paragraph (ii) Determine the sulfur content value (c) General requirements for DFR for each compartment, and if applicable, foreign refiners. A foreign refiner of a (c)(3)(i) of this section shall be for a 12 month compliance period and apply to the marker content under § 80.510(d) refinery that is approved under the through (f) using an approved diesel foreign refiner program of this all diesel fuel that is produced by the foreign refinery that is imported into the methodology as specified in §§ 80.580 subpart must designate each batch of through 80.586 by one of the following: diesel fuel produced at the foreign United States, and shall remain in effect refinery that is exported to the United for each succeeding year unless and * * * * * States as either Certified DFR-Diesel or until the foreign refiner notifies EPA of (3) * * * as Non-Certified DFR-Diesel, except as the termination of the election. The (ii) To the Administrator containing provided in paragraph (c)(3) of this change in election shall take effect at the the information required under section. It must further designate all beginning of the next annual paragraphs (f)(1) and (f)(2) of this Certified DFR-Diesel as provided in compliance period. section, within thirty days following the § 80.598, and designate whether the * * * * * date of the independent third party’s diesel fuel is dyed or undyed, and for (d) * * * inspection. This report shall include a heating oil and/or locomotive or marine (2) On each occasion when any description of the method used to diesel fuel whether it is marked or person transfers custody or title to any determine the identity of the refinery at unmarked under § 80.510(d) through (f). DFR-Diesel prior to its being imported which the diesel fuel or distillate was It must further designate any credits into the United States, it must include produced, assurance that the diesel fuel earned as either nonroad diesel credits the following information as part of the or distillate remained segregated as or motor vehicle diesel credits. product transfer document information specified in paragraph (n)(1) of this (1) In the case of Certified DFR-Diesel, in this section: section, and a description of the diesel the foreign refiner must meet all (i) Designation of the diesel fuel or fuel’s movement and storage between requirements that apply to refiners distillate as Certified DFR-Diesel or as production at the source refinery and under this subpart, except that: Non-Certified DFR-Diesel, and if it is vessel loading. (i) For purposes of complying with Certified DFR-Diesel, further designate * * * * * the compliance option requirements of the fuel pursuant to § 80.598, and (g) Comparison of load port and port § 80.530, motor vehicle diesel fuel whether the diesel fuel or distillate is of entry testing. (1)(i) Any foreign refiner produced by a foreign refinery must dyed or undyed, and for heating oil and any United States importer of comply separately for each Credit whether it is marked or unmarked under Certified DFR-Diesel shall compare the Trading Area of import, as defined in § 80.510(d) through (f), and all other results from the load port testing under § 80.531(a)(5). applicable product transfer document paragraph (f) of this section, with the (ii) For purposes of complying with information required under § 80.590; port of entry testing as reported under the compliance option requirements of and paragraph (o) of this section, for the

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volume of diesel fuel and the sulfur content diesel fuel or high sulfur fuel in any diesel foreign refiner program, or content value; except as specified in having a sulfur content greater than 500 to establish an individual refinery motor paragraph (g)(1)(ii) of this section. ppm (and if so, whether the fuel is vehicle diesel fuel volume baseline or (ii) Where a vessel transporting heating oil, small refiner diesel fuel, other baseline under subpart I of this Certified DFR-Diesel off loads this diesel diesel fuel produced through the use of part (if applicable) constitute actions or fuel at more than one United States port credits, or other applicable designation activities that satisfy the provisions of of entry, and the conditions of under § 80.598). Agree the total volume 28 U.S.C. 1605(a)(2), but solely with paragraph (g)(2)(i) of this section are met of tenders from the listings to the diesel respect to actions instituted against the at the first United States port of entry, fuel inventory reconciliation analysis in foreign refiner, its agents and employees the requirements of paragraph (g)(2) of § 80.128(b), and to the volumes in any court or other tribunal in the this section do not apply at subsequent determined by the third party under United States for conduct that violates ports of entry if the United States paragraph (f)(1) of this section. the requirements applicable to the importer obtains a certification from the * * * * * foreign refiner under this subpart, vessel owner that meets the (i) * * * including conduct that violates the requirements of paragraph (s) of this (1) * * * False Statements Accountability Act of section, that the vessel has not loaded (v) Inspections and audits by EPA 1996 (18 U.S.C. 1001) and section any diesel fuel or blendstock between may include review and copying of any 113(c)(2) of the Clean Air Act (42 U.S.C. the first United States port of entry and documents related to: 7413). the subsequent port of entry. (A) Refinery baseline establishment, if * * * * * (2)(i) The requirements of this applicable, including the volume, sulfur (j) Sovereign immunity. By submitting paragraph (g)(2) apply if— content and dye and marker status of a petition for participation in any diesel (A) The temperature-corrected diesel fuel, heating oil and other foreign refiner program under this volumes determined at the port of entry distillates; transfers of title or custody of subpart (and baseline, if applicable) and at the load port differ by more than any diesel fuel, heating oil or under this section, or by producing and one percent; or blendstocks whether DFR-Diesel or exporting diesel fuel to the United (B) The sulfur content value Non-DFR-Diesel, produced at the States under any such program, the determined at the port of entry is higher foreign refinery during the period foreign refiner, and its agents and than the sulfur content value January 1, 1998 through the date of the employees, without exception, become determined at the load port, and the refinery baseline petition or through the subject to the full operation of the amount of this difference is greater than date of the inspection or audit if a administrative and judicial enforcement the reproducibility amount specified for baseline petition has not been approved, powers and provisions of the United the port of entry test result by the and any work papers related to refinery States without limitation based on American Society of Testing and baseline establishment; sovereign immunity, with respect to Materials (ASTM) for a test method used (B) The volume and sulfur content of actions instituted against the foreign for testing the port of entry sample DFR-Diesel; refiner, its agents and employees in any under the provisions §§ 80.580 through (C) The proper classification of diesel court or other tribunal in the United 80.586. fuel as being DFR-Diesel or as not being States for conduct that violates the (ii) The United States importer and DFR-Diesel, or as Certified DFR-Diesel requirements applicable to the foreign the foreign refiner shall treat the diesel or as Non-Certified DFR-Diesel, and all refiner under this subpart including fuel as Non-Certified DFR-Diesel, and other relevant designations under this conduct that violates the False the foreign refiner shall exclude the subpart, including § 80.598 and this Statements Accountability Act of 1996 diesel fuel volume from its diesel fuel section; (18 U.S.C. 1001) and section 113(c)(2) of volumes calculations and sulfur (D) Transfers of title or custody to the Clean Air Act (42 U.S.C. 7413). standard designations under § 80.598. DFR-Diesel; (k) * * * (h) Attest requirements. Refiners, for (E) Sampling and testing of DFR- (1) The foreign refiner shall post a each annual compliance period, must Diesel; bond of the amount calculated using the arrange to have an attest engagement (F) Work performed and reports following equation: performed of the underlying prepared by independent third parties Bond = G × $ 0.01 documentation that forms the basis of and by independent auditors under the Where: any report required under this subpart. requirements of this section, including The attest engagement must comply Bond = amount of the bond in U.S. dollars work papers; and G = the applicable volume baseline under with the procedures and requirements (G) Reports prepared for submission Subpart I for diesel fuel or distillate that apply to refiners under §§ 80.125 to EPA, and any work papers related to produced at the foreign refinery and through 80.130, or other applicable such reports. exported to the United States, in gallons. attest engagement provisions, and must (vi) Inspections and audits by EPA * * * * * be submitted to the Administrator of may include taking samples of diesel (3) Bonds posted under this paragraph EPA by August 31 of each year for the fuel, heating oil, other distillates, diesel (k) shall— prior annual compliance period. The fuel additives or blendstock, dyes and (i) Be used to satisfy any judicial following additional procedures shall be chemical markers and interviewing judgment that results from an carried out for any foreign refiner of employees. administrative or judicial enforcement DFR-Diesel. * * * * * action for conduct in violation of this * * * * * (5) Submitting a petition for subpart, including where such conduct (2) Obtain separate listings of all participation in the diesel foreign violates the False Statements tenders of Certified DFR-Diesel and of refiner program or producing and Accountability Act of 1996 (18 U.S.C. Non-Certified DFR-Diesel, and obtain exporting diesel fuel or heating oil 1001) and section 113(c)(2) of the Clean separate listings of Certified DFR-Diesel under any such program, and all other Air Act (42 U.S.C. 7413); based on whether it is 15 ppm sulfur actions to comply with the requirements (ii) Be provided by a corporate surety content diesel fuel, 500 ppm sulfur of this subpart relating to participation that is listed in the United States

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Department of Treasury Circular 570 number of the foreign refinery that whether it adequately addresses the ‘‘Companies Holding Certificates of produced the DFR-Diesel; following: Authority as Acceptable Sureties on (C) Determine the name and country (i) Provisions for monitoring pipeline Federal Bonds;’’ and of registration of the vessel used to shipments, if applicable, from the (iii) Include a commitment that the transport the DFR-Diesel to the United refinery, that ensure segregation of bond will remain in effect for at least States; and Certified DFR-Diesel from that refinery five years following the end of latest (D) Determine the date and time the from all other diesel fuel; annual reporting period that the foreign vessel arrives at the United States port (ii) Contracts with any terminals and/ refiner produces diesel fuel pursuant to of entry. or pipelines that receive and/or the requirements of this subpart. (ii) In the case of Certified DFR-Diesel, transport Certified DFR-Diesel, that * * * * * have an independent third party: prohibit the commingling of Certified (n) Prohibitions. (1) No person may (A) Collect a representative sample DFR-Diesel with any of the following: combine Certified DFR-Diesel with any from each vessel compartment (A) Other Certified DFR-Diesel from Non-Certified DFR-Diesel or Non–DFR- subsequent to the vessel’s arrival at the other refineries. Diesel, and no person may combine United States port of entry and prior to (B) All Non-Certified DFR-Diesel. Certified DFR-Diesel with any Certified off loading any diesel fuel from the (C) All Non-DFR-Diesel. DFR-Diesel produced at a different vessel; (D) All diesel fuel or heating oil (B) Obtain the compartment samples; refinery, until the importer has met all products required to be segregated and the requirements of paragraph (o) of this under this subpart; (C) Determine the sulfur content section, except as provided in paragraph (iii) Procedures for obtaining and value, and if applicable, the marker (e) of this section. No person may reviewing truck loading records and content, of each compartment sample violate the product segregation United States import documents for using an appropriate methodology as requirements of § 80.511. Certified DFR-Diesel to ensure that such specified in §§ 80.580 through 80.586 by (2) No foreign refiner or other person diesel fuel is only loaded into trucks the third party analyzing the sample or may cause another person to commit an making deliveries to the United States; by the third party observing the action prohibited in paragraph (n)(1) of (iv) Attest procedures to be conducted importer analyze the sample. annually by an independent third party this section, or that otherwise violates (4) Any importer shall submit reports that review loading records and import the requirements of this section. within 30 days following the date any documents based on volume (o) United States importer vessel transporting DFR-Diesel arrives at reconciliation, or other criteria, to requirements. Any United States the United States port of entry: confirm that all Certified DFR-Diesel importer shall meet the following (i) To the Administrator containing remains segregated throughout the requirements: the information determined under distribution system and is only loaded (1) Each batch of imported diesel fuel paragraph (o)(3) of this section; and and heating oil shall be classified by the (ii) To the foreign refiner containing into trucks for import into the United importer as being DFR-Diesel or as Non- the information determined under States. DFR-Diesel, and each batch classified as paragraph (o)(3)(ii) of this section, and (3) The petition required by this DFR-Diesel shall be further classified as including identification of the port and section must be submitted to EPA along Certified DFR-Diesel or as Non-Certified Credit Trading Area at which the with the application for temporary DFR-Diesel, and each batch of Certified product was offloaded. refiner relief individual refinery diesel DFR-Diesel shall be further designated (5) Any United States importer shall sulfur standard under this subpart. pursuant to the designation meet the requirements specified in (q) Withdrawal or suspension of a requirements of § 80.598 and this §§ 80.510 and 80.520 and all other foreign refinery’s temporary refinery section. requirements of this subpart, for any flexibility program approval. EPA may (2) Diesel fuel shall be classified as imported diesel fuel or heating oil that withdraw or suspend a diesel refiner Certified DFR-Diesel or as Non-Certified is not classified as Certified DFR-Diesel baseline or standard approval for a DFR-Diesel according to the designation under paragraph (o)(2) of this section. foreign refinery where— by the foreign refiner if this designation (p) Truck imports of Certified DFR- (1) A foreign refiner fails to meet any is supported by product transfer Diesel produced at a foreign refinery. (1) requirement of this section; documents prepared by the foreign Any refiner whose Certified DFR-Diesel (2) A foreign government fails to refiner as required in paragraph (d) of is transported into the United States by allow EPA inspections as provided in this section, unless the diesel fuel is truck may petition EPA to use paragraph (i)(1) of this section; classified as Non-Certified DFR-Diesel alternative procedures to meet the (3) A foreign refiner asserts a claim of, under paragraph (g) of this section. following requirements: or a right to claim, sovereign immunity Additionally, the importer shall comply (i) Certification under paragraph (d)(5) in an action to enforce the requirements with all requirements of this subpart of this section; in this subpart; or applicable to importers. (ii) Load port and port of entry (4) A foreign refiner fails to pay a civil (3) For each diesel fuel batch sampling and testing under paragraphs or criminal penalty that is not satisfied classified as DFR-Diesel, any United (f) and (g) of this section; using the foreign refiner bond specified States importer shall perform the (iii) Attest under paragraph (h) of this in paragraph (k) of this section. following procedures. section; and (r) Early use of a foreign refiner motor (i) In the case of both Certified and (iv) Importer testing under paragraph vehicle diesel fuel baseline. (1) A foreign Non-Certified DFR-Diesel, have an (o)(3) of this section. refiner may begin using an individual independent third party: (2) These alternative procedures must refinery baseline under subpart I of this (A) Determine the volume of diesel ensure Certified DFR-Diesel remains part before EPA has approved the fuel in the vessel; segregated from Non-Certified DFR- baseline, provided that: (B) Use the foreign refiner’s DFR- Diesel and from Non-DFR-Diesel until it (i) A baseline petition has been Diesel certification to determine the is imported into the United States. The submitted as required in paragraph (b) name and EPA-assigned registration petition will be evaluated based on of this section;

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(ii) EPA has made a provisional name of foreign refiner]. Pursuant to Clean CFR 1068.1; those provisions apply finding that the baseline petition is Air Act section 113(c) and 18 U.S.C. 1001, instead of the provisions of this part 89. complete; the penalty for furnishing false, incomplete I 79. Section 89.2 is amended by adding (iii) The foreign refiner has made the or misleading information in this a definition for ‘‘Sulfur-sensitive commitments required in paragraph (i) certification or submission is a fine of up to $10,000 U.S., and/or imprisonment for up to technology’’ in alphabetical order to read of this section; five years. as follows: (iv) The persons who will meet the independent third party and PART 86—CONTROL OF EMISSIONS § 89.2 Definitions. independent attest requirements for the FROM NEW AND IN-USE HIGHWAY * * * * * foreign refinery have made the VEHICLES AND ENGINES Sulfur-sensitive technology means an commitments required in paragraphs emission-control technology that (f)(3)(iii) and (h)(7)(iii) of this section; I 74. The authority citation for part 86 experiences a significant drop in and continues to read as follows: emission-control performance or (v) The foreign refiner has met the Authority: 42 U.S.C. 7401—7671(q). emission-system durability when an bond requirements of paragraph (k) of I 75. Section 86.007–35 is amended by engine is operated on low-sulfur fuel this section. revising paragraph (c) to read as follows: (i.e., fuel with a sulfur concentration up (2) In any case where a foreign refiner to 500 ppm) as compared to when it is uses an individual refinery baseline § 86.007–35 Labeling. operated on ultra low-sulfur fuel (i.e., before final approval under paragraph * * * * * fuel with a sulfur concentration less (r)(1) of this section, and the foreign (c) Model year 2007 and later diesel- than 15 ppm). Exhaust-gas recirculation refinery baseline values that ultimately fueled vehicles must include permanent is not a sulfur-sensitive technology. are approved by EPA are more stringent readily visible labels on the dashboard * * * * * than the early baseline values used by (or instrument panel) and near all fuel I 80. Section 89.112 is amended by the foreign refiner, the foreign refiner inlets that state ‘‘Use Ultra Low Sulfur revising the introductory text of shall recalculate its compliance, ab Diesel Fuel Only’’ or ‘‘Ultra Low Sulfur paragraph (f)(1) and adding paragraph (g) initio, using the baseline values Diesel Fuel Only’’. to read as follows: approved by the EPA, and the foreign * * * * * refiner shall be liable for any resulting I § 89.112 Oxides of nitrogen, carbon 76. Section 86.007–38 is amended by monoxide, hydrocarbon, and particulate violation of the motor vehicle highway revising paragraph (i) to read as follows: diesel fuel requirements. matter exhaust emission standards. (s) Additional requirements for § 86.007–38 Maintenance instructions. * * * * * petitions, reports and certificates. Any * * * * * (f) * * * petition for approval to produce diesel (i) For each new diesel-fueled engine (1) Voluntary standards. Engines may fuel subject to the diesel foreign refiner subject to the standards prescribed in be designated ‘‘Blue Sky Series’’ engines program, any alternative procedures § 86.007–11, as applicable, the by meeting the voluntary standards under paragraph (p) of this section, any manufacturer shall furnish or cause to listed in Table 3, which apply to all report or other submission required by be furnished to the ultimate purchaser certification and in-use testing, as paragraph (c), (f)(2), or (i) of this section, a statement that ‘‘This engine must be follows: and any certification under paragraph operated only with ultra low-sulfur * * * * * (d)(3) of this section shall be— diesel fuel (meeting EPA specifications (g) Manufacturers of engines at or (1) Submitted in accordance with for highway diesel fuel, including a 15 above 37 kW and below 56 kW from procedures specified by the ppm sulfur cap).’’ model years 2008 through 2012 that are Administrator, including use of any subject to the standards of this section forms that may be specified by the PART 89—CONTROL OF EMISSIONS under 40 CFR 1039.102 must take the Administrator. FROM NEW AND IN-USE NONROAD following additional steps: (2) Be signed by the president or COMPRESSION-IGNITION ENGINES (1) State the applicable PM standard owner of the foreign refiner company, or I on the emission control information by that person’s immediate designee, 77. The authority citation for part 89 label. and shall contain the following continues to read as follows: (2) Add information to the emission- declaration: Authority: 42 U.S.C. 7521, 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7545, 7547, related installation instructions to I hereby certify: (1) That I have actual 7549, 7550, and 7601(a). clarify the equipment manufacturer’s authority to sign on behalf of and to bind I 78. Section 89.1 is amended by adding obligations under 40 CFR 1039.104(f). [insert name of foreign refiner] with regard to I all statements contained herein; (2) that I am paragraph (b)(6) to read as follows: 81. Section 89.114 is amended by adding a new paragraph (b)(3) to read as aware that the information contained herein § 89.1 Applicability. is being certified, or submitted to the United follows: States Environmental Protection Agency, * * * * * § 89.114 Special and alternate test under the requirements of 40 CFR part 80, (b) * * * procedures. subpart I, and that the information is material (6) Tier 4 engines. This part does not for determining compliance under these apply to engines that are subject to * * * * * regulations; and (3) that I have read and emission standards under 40 CFR part (b) * * * understand the information being certified or 1039. See 40 CFR 1039.1 to determine (3) A manufacturer may elect to use submitted, and this information is true, when that part 1039 applies. Note that the test procedures in 40 CFR part 1065 complete and correct to the best of my certain requirements and prohibitions as an alternate test procedure without knowledge and belief after I have taken reasonable and appropriate steps to verify the apply to engines built on or after advance approval by the Administrator. accuracy thereof. January 1, 2006 if they are installed in The manufacturer must identify in its I affirm that I have read and understand the stationary applications or in equipment application for certification that the provisions of 40 CFR part 80, subpart I, that will be used solely for competition, engines were tested using the including 40 CFR 80.620 apply to [insert as described in 40 CFR 1039.1 and 40 procedures in 40 CFR part 1065.

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I 82. Section 89.203 is amended by manufacturer demonstrates that the in- such as the engine block. This label adding a new paragraph (c)(6) to read as use engines will use only fuel with 15 must include at least the following follows: ppm or less of sulfur. items: (5) Instead of the test fuels described § 89.203 General provisions. (1) The label heading ‘‘EMISSION in paragraphs (e)(2) through (4) of this CONTROL INFORMATION’’. * * * * * section, for model years 2008 and later, (c) * * * (2) Your corporate name and manufacturers may use the test fuel trademark. (6) Model year 2008 and 2009 engines described in appendix A of this subpart. rated under 8 kW that are allowed to In such cases, the test fuel described in (3) Engine displacement, engine certify under this part because they appendix A of this subpart shall be the family identification (as applicable), and meet the criteria in 40 CFR 1039.101(c) test fuel for all manufacturer and EPA model year of the engine or whom to may not generate emission credits. testing. contact for further information. I 83. Section 89.330 is amended by I 84. Section 89.908 is amended by (4) The statement ‘‘THIS ENGINE revising paragraph (b)(3) and adding adding paragraph (c) to read as follows: HAS AN EXEMPTION FOR NATIONAL paragraph (e) to read as follows: SECURITY UNDER 40 CFR 94.908.’’. § 89.908 National security exemption. § 89.330 Lubricating oil and test fuels. I 88. A new part 1039 is added to * * * * * * * * * * subchapter U of chapter I, to read as (c) Manufacturers must add a legible follows: (b) * * * label, written in block letters in English, (3) Testing of Tier 1 and Tier 2 to each engine exempted under this SUBCHAPTER U—AIR POLLUTION engines rated under 37 kW and Tier 2 section. The label must be permanently CONTROLS and Tier 3 engines rated at or above 37 secured to a readily visible part of the PART 1039—CONTROL OF EMISSIONS kW that is conducted by the engine needed for normal operation and Administrator shall be performed using FROM NEW AND IN-USE NONROAD not normally requiring replacement, COMPRESSION-IGNITION ENGINES test fuels that meet the specifications in such as the engine block. This label Table 4 in Appendix A of this subpart must include at least the following Subpart A—Overview and Applicability and that have a sulfur content no higher items: than 0.20 weight percent. Sec. (1) The label heading ‘‘EMISSION 1039.1 Does this part apply for my engines? * * * * * CONTROL INFORMATION’’. 1039.5 Which engines are excluded from (e) Low-sulfur test fuel. (1) Upon (2) Your corporate name and this part’s requirements? request, for engines rated at or above 75 trademark. 1039.10 How is this part organized? kW in model years 2006 or 2007, the (3) Engine displacement, engine 1039.15 Do any other regulation parts apply diesel test fuel may be the low-sulfur family identification (as applicable), and to me? diesel test fuel specified in 40 CFR part model year of the engine or whom to 1039.20 What requirements from this part apply to excluded stationary engines? 1065, subject to the provisions of this contact for further information. paragraph (e)(1). (4) The statement ‘‘THIS ENGINE Subpart B—Emission Standards and (i) To use this option, the HAS AN EXEMPTION FOR NATIONAL Related Requirements manufacturer must— SECURITY UNDER 40 CFR 89.908.’’. 1039.101 What exhaust emission standards (A) Ensure that ultimate purchasers of I 85. Section 89.910 is amended by must my engines meet after the 2014 equipment using these engines are adding paragraph (c) to read as follows: model year? informed that the use of fuel meeting 1039.102 What exhaust emission standards the 500 ppm specification is § 89.910 Granting of exemptions. and phase-in allowances apply for my recommended. * * * * * engines in model year 2014 and earlier? (B) Recommend to equipment (c) Manufacturers may ask EPA to 1039.104 Are there interim provisions that manufacturers that a label be applied at apply only for a limited time? apply the provisions of 40 CFR 1039.105 What smoke standards must my the fuel inlet recommending 500 ppm 1068.201(i) to engines exempted or engines meet? fuel. excluded under this subpart. 1039.107 What evaporative emission (ii) None of the engines in the engine standards and requirements apply? family may employ sulfur-sensitive PART 94—CONTROL OF AIR 1039.110 [Reserved] technologies. POLLUTION FROM MARINE 1039.115 What other requirements must my (iii) For engines rated at or above 130 COMPRESSION-IGNITION ENGINES engines meet? kW, this option may be used in 2006 1039.120 What emission-related warranty I and 2007. For engines rated at or above 86. The authority citation for part 94 requirements apply to me? 75 kW and under 130 kW, this option continues to read as follows: 1039.125 What maintenance instructions may be used only in 2007. Authority: 42 U.S.C. 7522, 7523, 7524, must I give to buyers? 1039.130 What installation instructions (2) For model years 2008 through 7525, 7541, 7542, 7543, 7545, 7547, 7549, 7550, and 7601(a). must I give to equipment manufacturers? 2010, except as otherwise provided, the 1039.135 How must I label and identify the diesel test fuel shall be the low-sulfur I 87. Section 94.908 is amended by engines I produce? diesel test fuel specified in 40 CFR part adding paragraph (c) to read as follows: 1039.140 What is my engine’s maximum 1065. engine power? § 94.908 National security exemption. (3) The diesel test fuel shall be the Subpart C—Certifying Engine Families ultra low-sulfur diesel test fuel specified * * * * * in 40 CFR part 1065 for model years (c) Manufacturers must add a legible 1039.201 What are the general requirements 2011 and later. label, written in block letters in English, for obtaining a certificate of conformity? 1039.205 What must I include in my (4) For model years 2007 through to each engine exempted under this application? 2010 engines that use sulfur-sensitive section. The label must be permanently 1039.210 May I get preliminary approval emission-control technology, the diesel secured to a readily visible part of the before I complete my application? test fuel is the ultra low-sulfur fuel engine needed for normal operation and 1039.220 How do I amend the maintenance specified in 40 CFR part 1065 if the not normally requiring replacement, instructions in my application?

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1039.225 How do I amend my application or the Commonwealth of the Northern TABLE 1 OF § 1039.1.—PART 1039 for certification to include new or Mariana Islands? APPLICABILITY BY MODEL YEAR— modified engines? 1039.660 What special provisions apply to 1039.230 How do I select engine families? Independent Commercial Importers? Continued 1039.235 What emission testing must I perform for my application for a Subpart H—Averaging, Banking, and Power category Model year certificate of conformity? Trading for Certification ≤ 1039.240 How do I demonstrate that my 1039.701 General provisions. 56 kW < 130 ...... 2012 ≤ ≤ engine family complies with exhaust 1039.705 How do I generate and calculate 130 kW 560 ...... 2011 emission standards? emission credits? kW > 560 ...... 2011 1039.245 How do I determine deterioration 1039.710 How do I average emission 1 As described in § 1039.102, some engines factors from exhaust durability testing? credits? below 19 kW may not be subject to the emis- 1039.250 What records must I keep and 1039.715 How do I bank emission credits? sion standards in this part until the 2010 what reports must I send to EPA? 1039.720 How do I trade emission credits? model year. 1039.255 What decisions may EPA make 1039.725 What must I include in my 2 As described in § 1039.102, some engines regarding my certificate of conformity? application for certification? in the 19–56 kW power category may not be 1039.260 What provisions apply to engines 1039.730 What ABT reports must I send to subject to the emission standards in this part that are conditionally exempted from EPA? until the 2012 model year. certification? 1039.735 What records must I keep? (2) If you use the provisions of Subpart D—[Reserved] 1039.740 What restrictions apply for using § 1039.104(a) to certify an engine to the emission credits? emission standards of this part before Subpart E—In-use Testing 1039.745 What can happen if I do not the model years shown in Table 1 of this 1039.401 General provisions. comply with the provisions of this subpart? section, all the requirements of this part Subpart F—Test Procedures apply for those engines. Subpart I—Definitions and Other Reference (3) See 40 CFR part 89 for 1039.501 How do I run a valid emission Information test? requirements that apply to engines not 1039.505 How do I test engines using 1039.801 What definitions apply to this yet subject to the requirements of this steady-state duty cycles, including part? part 1039. ramped-modal testing? 1039.805 What symbols, acronyms, and (4) This part 1039 applies for other 1039.510 Which duty cycles do I use for abbreviations does this part use? compression-ignition engines as transient testing? 1039.810 What materials does this part follows: 1039.515 What are the test procedures reference? (i) The provisions of paragraph (c) of related to not-to-exceed standards? 1039.815 What provisions apply to confidential information? this section and § 1039.801 apply for 1039.520 What testing must I perform to stationary engines beginning January 1, establish deterioration factors? 1039.820 How do I request a hearing? 1039.525 How do I adjust emission levels to Appendix I to Part 1039—[Reserved] 2006. account for infrequently regenerating Appendix II to Part 1039—Steady-state Duty (ii) The provisions of § 1039.620 and aftertreatment devices? Cycles for Constant-Speed Engines § 1039.801 apply for engines used solely Appendix III to Part 1039—Steady-state Duty for competition beginning January 1, Subpart G—Special Compliance Provisions Cycles for Variable-Speed Engines with 2006. 1039.601 What compliance provisions Maximum Power below 19 kW (c) The definition of nonroad engine apply to these engines? Appendix IV to Part 1039—Steady-state Duty in 40 CFR 1068.30 excludes certain 1039.605 What provisions apply to engines Cycles for Variable-Speed Engines with engines used in stationary applications. already certified under the motor-vehicle Maximum Power at or above 19 kW program? Appendix V to Part 1039—[Reserved] These engines are not required to 1039.610 What provisions apply to vehicles Appendix VI to Part 1039—Nonroad comply with this part, except for the already certified under the motor-vehicle Compression-ignition Composite requirements in § 1039.20. In addition, program? Transient Cycle the prohibitions in 40 CFR 1068.101 1039.615 What special provisions apply to Authority: 42 U.S.C. 7401–7671(q). restrict the use of stationary engines for engines using noncommercial fuels? nonstationary purposes. 1039.620 What are the provisions for Subpart A—Overview and Applicability (d) In certain cases, the regulations in exempting engines used solely for this part 1039 apply to engines at or competition? § 1039.1 Does this part apply for my above 250 kW that would otherwise be 1039.625 What requirements apply under engines? covered by 40 CFR part 1048. See 40 the program for equipment-manufacturer (a) The regulations in this part 1039 flexibility? CFR 1048.620 for provisions related to 1039.626 What special provisions apply to apply for all new, compression-ignition this allowance. equipment imported under the nonroad engines (defined in § 1039.801), except as provided in § 1039.5 Which engines are excluded from equipment-manufacturer flexibility this part’s requirements? program? § 1039.5. 1039.627 What are the incentives for (b) This part 1039 applies as follows: This part does not apply to the equipment manufacturers to use cleaner (1) This part 1039 applies for all following nonroad engines: engines? engines subject to the emission (a) Locomotive engines. (1) The 1039.630 What are the economic hardship standards specified in subpart B of this following locomotive engines are not provisions for equipment manufacturers? part starting with the model years noted subject to the provisions of this part 1039.635 What are the hardship provisions in the following table: 1039: for engine manufacturers? (i) Engines in locomotives subject to 1039.640 What special provisions apply to TABLE 1 OF § 1039.1.—PART 1039 the standards of 40 CFR part 92. branded engines? (ii) Engines in locomotives that are APPLICABILITY BY MODEL YEAR 1039.645 What special provisions apply to exempt from the standards of 40 CFR engines used for transportation refrigeration units? Power category Model year part 92 pursuant to the provisions of 40 1039.650 [Reserved] CFR part 92 (except for the provisions 1039.655 What special provisions apply to kW < 19 ...... 1 2008 of 40 CFR 92.907). For example, an engines sold in Guam, American Samoa, 19 ≤ kW < 56 ...... 2 2008 engine that is exempt under 40 CFR

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92.906 because it is in a manufacturer- § 1039.102 and § 1039.104 discuss or import that is excluded under owned locomotive is not subject to the certain interim requirements and § 1039.1(c) as a stationary engine. To provisions of this part 1039. compliance provisions that apply only meet labeling requirements, you must (2) The following locomotive engines for a limited time. do the following things: are subject to the provisions of this part (c) Subpart C of this part describes (1) Attach the label or tag in one piece 1039: how to apply for a certificate of so no one can remove it without (i) Engines in locomotives exempt conformity. destroying or defacing it. from 40 CFR part 92 pursuant to the (d) [Reserved] (2) Secure it to a part of the engine provisions of 40 CFR 92.907. (e) Subpart E of this part describes needed for normal operation and not (ii) Locomotive engines excluded general provisions for testing in-use normally requiring replacement. from the definition of locomotive in 40 engines. (3) Make sure it is durable and CFR 92.2. (f) Subpart F of this part describes readable for the engine’s entire life. (b) Marine engines. (1) The following how to test your engines (including (4) Write it in English. marine engines are not subject to the references to other parts of the Code of (5) Follow the requirements in provisions of this part 1039: Federal Regulations). § 1039.135(g) regarding duplicate labels (i) Engines subject to the standards of (g) Subpart G of this part and 40 CFR if the engine label is obscured in the 40 CFR part 94. part 1068 describe requirements, final installation. (ii) Engines not subject to the prohibitions, and other provisions that (b) Engine labels or tags required standards of 40 CFR part 94 only apply to engine manufacturers, under this section must have the because they were produced before the equipment manufacturers, owners, following information: (1) Include the heading ‘‘EMISSION standards of 40 CFR part 94 started to operators, rebuilders, and all others. apply. CONTROL INFORMATION’’. (h) Subpart H of this part describes (2) Include your full corporate name (iii) Engines that are exempt from the how you may generate and use emission standards of 40 CFR part 94 pursuant to and trademark. You may instead credits to certify your engines. include the full corporate name and the provisions of 40 CFR part 94 (except (i) Subpart I of this part contains for the provisions of 40 CFR 94.907). For trademark of another company you definitions and other reference choose to designate. example, an engine that is exempt under information. 40 CFR 94.906 because it is a (3) State the engine displacement (in manufacturer-owned engine is not § 1039.15 Do any other regulation parts liters) and maximum engine power. (4) State: ‘‘THIS ENGINE IS subject to the provisions of this part apply to me? EXCLUDED FROM THE 1039. (a) Part 1065 of this chapter describes REQUIREMENTS OF 40 CFR PART (iv) Engines with rated power below procedures and equipment 1039 AS A ‘‘STATIONARY ENGINE.’’ 37 kW. specifications for testing engines. (v) Engines on foreign vessels. Subpart F of this part 1039 describes INSTALLING OR USING THIS ENGINE (2) Marine engines are subject to the how to apply the provisions of part 1065 IN ANY OTHER APPLICATION MAY provisions of this part 1039 if they are of this chapter to determine whether BE A VIOLATION OF FEDERAL LAW exempt from 40 CFR part 94 based on engines meet the emission standards in SUBJECT TO CIVIL PENALTY.’’. the engine-dressing provisions of 40 this part. Subpart B—Emission Standards and CFR 94.907. (b) The requirements and prohibitions Related Requirements (c) Mining engines. Engines used in of part 1068 of this chapter apply to underground mining or in underground everyone, including anyone who § 1039.101 What exhaust emission mining equipment and regulated by the manufactures, imports, installs, owns, standards must my engines meet after the Mining Safety and Health operates, or rebuilds any of the engines 2014 model year? Administration in 30 CFR parts 7, 31, subject to this part 1039, or equipment The exhaust emission standards of 32, 36, 56, 57, 70, and 75 are not subject containing these engines. Part 1068 of this section apply after the 2014 model to the provisions of this part 1039. this chapter describes general year. Certain of these standards also (d) Hobby engines. Engines with per- provisions, including these seven areas: apply for model year 2014 and earlier. cylinder displacement below 50 cubic (1) Prohibited acts and penalties for This section presents the full set of centimeters are not subject to the engine manufacturers, equipment emission standards that apply after all provisions of this part 1039. manufacturers, and others. the transition and phase-in provisions of (2) Rebuilding and other aftermarket § 1039.102 and § 1039.104 expire. See § 1039.10 How is this part organized? changes. § 1039.102 and 40 CFR 89.112 for The regulations in this part 1039 (3) Exclusions and exemptions for exhaust emission standards that apply contain provisions that affect both certain engines. to 2014 and earlier model years. Section engine manufacturers and others. (4) Importing engines. 1039.105 specifies smoke standards. However, the requirements of this part (5) Selective enforcement audits of (a) Emission standards for transient are generally addressed to the engine your production. testing. Transient exhaust emissions manufacturer. Unless we specifically (6) Defect reporting and recall. from your engines may not exceed the state otherwise, the term ‘‘you’’ means (7) Procedures for hearings. applicable emission standards in Table the engine manufacturer, as defined in (c) Other parts of this chapter apply 1 of this section. Measure emissions § 1039.801. This part 1039 is divided if referenced in this part. using the applicable transient test into the following subparts: procedures described in subpart F of (a) Subpart A of this part defines the § 1039.20 What requirements from this this part. The following engines are not applicability of part 1039 and gives an part apply to excluded stationary engines? subject to the transient standards in this overview of regulatory requirements. The provisions of this section apply paragraph (a): (b) Subpart B of this part describes the for engines built on or after January 1, (1) Engines above 560 kW. emission standards and other 2006. (2) Constant-speed engines. requirements that must be met to certify (a) You must add a permanent label (b) Emission standards for steady- engines under this part. Note that or tag to each new engine you produce state testing. Steady-state exhaust

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emissions from your engines may not standards in Table 1 of this section. steady-state test procedures described in exceed the applicable emission Measure emissions using the applicable subpart F of this part.

TABLE 1 OF § 1039.101.—TIER 4 EXHAUST EMISSION STANDARDS AFTER THE 2014 MODEL YEAR, G/KW-HR 1

Maximum engine power Application PM NOX NMHC NOX+NMHC CO

kW < 19 ...... All ...... 2 0.40 ...... 7.5 3 6.6 19 ≤ kW < 56 ...... All ...... 0.03 ...... 4.7 4 5.0 56 ≤ kW < 130 ...... All ...... 0.02 0.40 0.19 ...... 5.0 130 ≤ kW ≤ 560 ...... All ...... 0.02 0.40 0.19 ...... 3.5 Generator sets ...... 0.03 0.67 0.19 ...... 3.5 kW > 560 ...... All except generator sets ...... 0.04 3.5 0.19 ...... 3.5 1 Note that some of these standards also apply for 2014 and earlier model years. This table presents the full set of emission standards that apply after all the transition and phase-in provisions of § 1039.102 expire. 2 See paragraph (c) of this section for provisions related to an optional PM standard for certain engines below 8 kW. 3 The CO standard is 8.0 g/kW-hr for engines below 8 kW. 4 The CO standard is 5.5 g/kW-hr for engines below 37 kW.

(c) Optional PM standard for engines provisions of subpart H of this part. emission standards for the engine family below 8 kW. You may certify hand- These engines may use PM or with respect to all required testing startable, air-cooled, direct injection NOX+NMHC emission credits, subject to instead of the standards specified in engines below 8 kW to an optional Tier the FEL caps in paragraph (d)(1) of this paragraphs (a) and (b) of this section. 4 PM standard of 0.60 g/kW-hr. The section. The FELs determine the not-to-exceed term hand-startable generally refers to (d) Averaging, banking, and trading. standards for your engine family, as engines that are started using a hand You may generate or use emission specified in paragraph (e) of this crank or pull cord. This PM standard credits under the averaging, banking, section. applies to both steady-state and and trading (ABT) program, as described transient testing, as described in in subpart H of this part. This requires (1) Primary FEL caps. The FEL may paragraphs (a) and (b) of this section. that you specify a family emission limit not be higher than the limits in Table 2 Engines certified under this paragraph (FEL) for each pollutant you include in of this section, except as allowed by (c) may not be used to generate PM or the ABT program for each engine paragraph (d)(2) of this section or by NOX+NMHC emission credits under the family. These FELs serve as the § 1039.102:

TABLE 2 OF § 1039.101.—TIER 4 FEL CAPS AFTER THE 2014 MODEL YEAR, G/KW-HR

Maximum engine power Application PM NOX NOX+NMHC

kW < 19 ...... All ...... 0.80 ...... 1 9.5 19 ≤ kW < 56 ...... All ...... 0.05 ...... 7.5 56 ≤ kW < 130 ...... All ...... 0.04 0.80 ...... 130 ≤ kW ≤ 560 ...... All ...... 0.04 0.80 ...... kW > 560 ...... Generator sets ...... 0.05 1.07 ...... All except generator sets ...... 0.07 6.2 ......

1 For engines below 8 kW, the FEL cap is 10.5 g/kW-hr for NOX+NMHC emissions.

(2) Alternate FEL caps. For a given this section instead of the FEL caps directed production volume in a given power category, you may use the identified in paragraph (d)(1) of this model year. alternate FEL caps shown in Table 3 of section for up to 5 percent of your U.S.-

PM FEL NO FEL Maximum engine power Starting X model year 1 cap cap

19 ≤ kW < 56 ...... 2 2016 0.30 ...... 56 ≤ kW < 130 ...... 2016 3 0.30 3 3.8 130 ≤ kW ≤ 560 ...... 2015 0.20 3.8 kW > 560 ...... 2019 0.10 4 3.5 1 See § 1039.104(g) for alternate FEL caps that apply in earlier model years. 2 For manufacturers certifying engines under Option #1 of Table 3 of § 1039.102, these alternate FEL caps apply starting with the 2017 model year. 3 For engines below 75 kW, the FEL caps are 0.40 g/kW-hr for PM emissions and 4.4 g/kW-hr for NOX emissions. 4 For engines above 560 kW, the provision for alternate NOX FEL caps is limited to generator-set engines. For example, if you produce 1,000 generator-set engines above 560 kW in a given model year, up to 50 of them may be certified to the alternate NOX FEL caps.

(e) Not-to-exceed standards. Exhaust (1) Measure emissions using the rounded to the same number of decimal emissions from your engines may not procedures described in subpart F of places as the applicable standard in exceed the applicable not-to-exceed this part. Table 1 of this section, is determined (NTE) standards in this paragraph (e). (2) Except as noted in paragraph (e)(7) from the following equation: of this section, the NTE standard,

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NTE standard for each pollutant = (STD) × certify without using ABT for that (3) The NTE multiplier for each (M) pollutant; or the FEL for that pollutant if pollutant is 1.25, except in the following Where: you certify using ABT. cases: STD = The standard specified for that M = The NTE multiplier for that pollutant, pollutant in Table 1 of this section (or as defined in paragraph (e)(3) of this paragraph (c) of this section) if you section.

If . . . Or . . . Then . . .

(i) The engine family is certified to a NOX The engine family is certified to a NOX FEL The multiplier for NOX, NMHC, and standard less than 2.50 g/kW-hr without less than 2.50 g/kW-hr or a NOX+NMHC NOX+NMHC is 1.50. using ABT. FEL less than 2.70 g/kW-hr. (ii) The engine family is certified to a PM stand- The engine family is certified to a PM FEL The multiplier for PM is 1.50. ard less than 0.07 g/kW-hr without using less than 0.07 g/kW-hr. ABT.

(4) There are two sets of specifications A = altitude in feet above sea level (A is (f) Fuel types. The exhaust emission of ambient operating regions that will negative for altitudes below sea level). standards in this section apply for apply for all NTE testing of engines in (5) Temperature and humidity ranges engines using the fuel type on which the an engine family. You must choose one for which correction factors are allowed engines in the engine family are set for each engine family and must are specified in 40 CFR 86.1370– designed to operate, except for engines identify your choice of ambient 2007(e). certified under § 1039.615. For engines operating regions in each application for (i) If you choose the ambient certified under § 1039.615, the certification for an engine family. You operating region specified in paragraph standards of this section apply to may choose separately for each engine (e)(4)(i) of this section, the temperature emissions measured using the specified family. Choose one of the following and humidity ranges for which test fuel. You must meet the numerical ambient operating regions: correction factors are allowed are emission standards for NMHC in this (i) All altitudes less than or equal to defined in 40 CFR 86.1370–2007(e)(1). section based on the following types of 5,500 feet above sea level during all (ii) If you choose the ambient hydrocarbon emissions for engines ambient temperature and humidity operating region specified in paragraph powered by the following fuels: conditions. (e)(4)(ii) of this section, the temperature and humidity ranges for which (1) Alcohol-fueled engines: THCE (ii) All altitudes less than or equal to emissions. 5,500 feet above sea level, for correction factors are allowed are temperatures less than or equal to the defined in 40 CFR 86.1370–2007(e)(2). (2) Other engines: NMHC emissions. (6) For engines equipped with temperature determined by the (g) Useful life. Your engines must exhaust-gas recirculation, the NTE following equation at the specified meet the exhaust emission standards in standards of this section do not apply altitude: during the cold operating conditions paragraphs (a) through (e) of this section T = ¥0.00254 × A + 100 specified in 40 CFR 86.1370–2007(f). over their full useful life. Where: (7) For engines certified to a PM FEL (1) The useful life values are shown T = ambient air temperature in degrees less than or equal to 0.01 g/kW-hr, the in the following table, except as allowed Fahrenheit. PM NTE standard is 0.02 g/kW-hr. by paragraph (g)(2) of this section:

TABLE 4 OF § 1039.101—USEFUL LIFE VALUES

If your engine is certified as . . . And its maximum power is . . . And its rated speed is . . . Then its useful life is . . .

(i) Variable speed or constant kW <19 ...... Any Speed ...... 3,000 hours or five years, which- speed. ever comes first. (ii) Constant speed ...... 19 ≤ kW <37 ...... 3,000 rpm or higher ...... 3,000 hours or five years, which- ever comes first. (iii) Constant speed ...... 19 ≤ kW <37 ...... Less than 3,000 rpm ...... 5,000 hours or seven years, whichever comes first. (iv) Variable ...... 19 ≤ kW <37...... Any Speed...... 5,000 hours or seven years, whichever comes first. (v) Variable speed or constant kW ≥37 ...... Any speed ...... 8,000 hours or ten years, which- speed. ever comes first.

(2) You may request in your any overhaul interval that you §§ 1039.505 and 1039.510. The NTE application for certification that we recommend and any mechanical standards of this section apply for those approve a shorter useful life for an warranty that you offer for the engine. tests. We will not direct you to do engine family. We may approve a (h) Applicability for testing. The additional testing under a selective shorter useful life if we determine that emission standards in this subpart apply enforcement audit to show that your these engines will rarely operate longer to all testing, including certification, engines meet the NTE standards. than the alternate useful life. Your selective enforcement audits, and in-use demonstration must include testing. For selective enforcement documentation from in-use engines. audits, we will require you to perform Your demonstration must also include duty-cycle testing as specified in

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§ 1039.102 What exhaust emission (1) The transient standards in this (v) Engines above 560 kW. standards and phase-in allowances apply section do not apply for the following for my engines in model year 2014 and (2) The transient standards in this engines: section for gaseous pollutants do not earlier? (i) Engines below 37 kW for model The exhaust emission standards of apply to phase-out engines that you years before 2013. certify to the same numerical standards this section apply for 2014 and earlier (ii) Engines certified under Option #1 (and FELs if the engines are certified model years. See § 1039.101 for exhaust of Table 3 of this section. These are the using ABT) for gaseous pollutants as emission standards that apply to later small-volume manufacturer engines you certified under the Tier 3 model years. See 40 CFR 89.112 for certified to the Option #1 standards for requirements of 40 CFR part 89. exhaust emission standards that apply model years 2008 through 2015 under However, except as specified by to model years before the standards of § 1039.104(c), and other engines paragraph (a)(1) of this section, the this part 1039 take effect. certified to the Option #1 standards for transient PM emission standards apply (a) Emission standards for transient model years 2008 through 2012. testing. Transient exhaust emissions (iii) Engines certified to an alternate to these engines. from your engines may not exceed the FEL during the first four years of the (b) Emission standards for steady-state applicable emission standards in Tables Tier 4 standards for the applicable testing. Steady-state exhaust emissions 1 through 6 of this section. Measure power category, as allowed in from your engines may not exceed the emissions using the applicable transient § 1039.104(g). However, you may certify applicable emission standards in Tables test procedures described in subpart F these engines to the transient standards 1 through 7 of this section. Measure of this part. See paragraph (c) of this in this section to avoid using temporary emissions using the applicable steady- section for a description of provisions compliance adjustment factors, as state test procedures described in related to the phase-in and phase-out described in § 1039.104(g)(2). Note that subpart F of this part. See paragraph (c) standards shown in Tables 4 through 6 in some cases this four-year period of this section for a description of of this section. The emission standards extends into the time covered by the provisions related to the phase-in and for transient testing are limited for standards in § 1039.101. phase-out standards shown in Tables 4 certain engines, as follows: (iv) Constant-speed engines. through 6 of this section.

TABLE 1 OF § 1039.102.—TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): KW < 19

NOX + Maximum engine power Model years PM NMHC CO

kW < 8 ...... 2008–2014 1 0.40 7.5 8.0 8 ≤ kW < 19 ...... 2008–2014 0.40 7.5 6.6 1 For engines that qualify for the special provisions in § 1039.101(c), you may delay certifying to the standards in this part 1039 until 2010. In 2009 and earlier model years, these engines must instead meet the applicable Tier 2 standards and other requirements from 40 CFR part 89. Starting in 2010, these engines must meet a PM standard of 0.60 g/kW-hr, as described in § 1039.101(c). Engines certified to the 0.60 g/kWhr PM standard may not generate ABT credits.

TABLE 2 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 19 ≤ KW < 37

NOX + Model years PM NMHC CO

2008–2012 ...... 0.30 7.5 5.5 2013–2014 ...... 0.03 4.7 5.5

TABLE 3 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 37 ≤ KW < 56

1 NOX + Option Model years PM NMHC CO

#1 ...... 2008–2012 0.30 4.7 5.0 #2 ...... 2012 0.03 4.7 5.0 All ...... 2013–2014 0.03 4.7 5.0 1You may certify engines to the Option #1 or Option #2 standards starting in the listed model year. Under Option #1, all engines at or above 37 kW and below 56 kW produced before the 2013 model year must meet the applicable Option #1 standards in this table. These engines are considered to be ‘‘Option #1 engines.’’ Under Option #2, all these engines produced before the 2012 model year must meet the applicable stand- ards under 40 CFR part 89. Engines certified to the Option #2 standards in model year 2012 are considered to be ‘‘Option #2 engines.’’

TABLE 4 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 56 ≤ KW < 75

1 NOX + Model years Phase-in option PM NOX NMHC NMHC CO

Phase-in ...... 0.02 0.40 0.19 ...... 5.0 2012–2013 ...... Phase-out ...... 0.02 ...... 4.7 5.0 2014 ...... All engines ...... 0.02 0.40 0.19 ...... 5.0 1 See paragraph (d)(2) of this section for provisions that allow for a different phase-in schedule than that specified in paragraph (c)(1) of this section.

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TABLE 5 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 75 ≤ KW < 130

1 NOX + Model years Phase-in option PM NOX NMHC NMHC CO

Phase-in ...... 0.02 0.40 0.19 ...... 5.0 2012–2013 ...... Phase-out ...... 0.02 ...... 4.0 5.0 2014 ...... All engines ...... 0.02 0.40 0.19 ...... 5.0 1 See paragraph (d)(2) of this section for provisions that allow for a different phase-in schedule than that specified in paragraph (c)(1) of this section.

TABLE 6 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): 130 ≤ KW < 560

1 NOX + Model years Phase-in option PM NOX NMHC NMHC CO

Phase-in ...... 0.02 0.40 0.19 ...... 3.5 2011–2013 ...... Phase-out ...... 0.02 ...... 4.0 3.5 2014 ...... All engines ...... 0.02 0.40 0.19 ...... 3.5

TABLE 7 OF § 1039.102.—INTERIM TIER 4 EXHAUST EMISSION STANDARDS (G/KW-HR): KW > 560

Model years Maximum engine power Application PM NOX NMHC CO

560 < kW ≤ 900 ...... All ...... 0.10 3.5 0.40 3.5 Generator sets ...... 0.10 0.67 0.40 3.5 2011–2014 ...... kW > 900 ...... All except generator sets .. 0.10 3.5 0.40 3.5

(c) Phase-in requirements. The engines of an actual 10,000 engines, you standard that is identified in this section following phase-in provisions apply for must produce 500 engines in model year as a phase-in standard and the term engines in 56–560 kW power categories 2013 (i.e., the final year of the phase-in ‘‘phase-out’’ means relating to a meeting the interim Tier 4 standards in for this power category) that meet the standard that is identified in this section paragraphs (a) and (b) of this section: Tier 4 phase-in standards above and as a phase-out standard. For example, a (1) For each model year before 2014 beyond the production otherwise 200–kW engine from the 2012 model noted in Tables 4 through 6 of this needed to meet the 50-percent phase-in year that is certified to the 4.0 g/kW-hr section, you must certify engine families requirement for model year 2013. If any NOX+NMHC standard in Table 6 of representing at least 50 percent of your shortfall exceeds the applicable limit of § 1039.102 is a phase-out engine. U.S.-directed production volume for paragraph (c)(3)(i) or (ii) of this section, (d) Banked credits and alternate each power category to the applicable that number of phase-out engines will phase-in for 56–130 kW engines. For phase-in standards, except as allowed be considered not covered by a engines in the 56–130 kW power by paragraph (c)(3), (d)(2), or (e) of this certificate of conformity and in violation category, you may use only one of the section. Any engines not certified to the of § 1068.101(a)(1). The shortfall following additional provisions: phase-in standards must be certified to allowed by this paragraph (c)(3) may not (1) For model years 2012 through the corresponding phase-out standards. exceed a certain number of engines, as 2014, you may use banked NOX+NMHC (2) Engines certified to the phase-out follows: credits from any Tier 2 engine at or standards in Tables 4 through 6 of this (i) For engine families certified above 37 kW certified under 40 CFR section must comply with all other according to the alternate phase-in part 89 to meet the NOX phase-in requirements that apply to Tier 4 schedule described in paragraph (d)(2) standards or the NOX+NMHC phase-out engines, except as otherwise specified of this section, for model years prior to standards under paragraphs (b) and (c) in this section. the final year of the phase-in, 5 percent of this section, subject to the additional (3) At the time of certification, show of your actual U.S.-directed production ABT provisions in § 1039.740. how you intend to meet the phase-in volume for that power category in that (2) Instead of meeting the phase-in requirements of this paragraph (c) based model year. requirements of paragraph (c)(1) of this on projected U.S.-directed production (ii) For all other engine families, for section, you may certify engine families volumes. If your actual U.S.-directed model years prior to the final year of the representing at least 25 percent of your production volume fails to meet the phase-in, 25 percent of your actual U.S.- U.S.-directed production volume for phase-in requirements for a given model directed production volume for that each model year from 2012 through year, you must make up the shortfall (in power category in that model year. 2014 to the applicable phase-in terms of number of engines) by the end (iii) No shortfall is allowed in the standards in Tables 4 and 5 of this of the model year representing the final final year of the phase-in. section, except as allowed by paragraph year of the phase-in period. For (4) Engines you introduce into (c)(3) or (e) of this section. Any engines example, if you plan in good faith to commerce beyond the limits described not certified to the phase-in standards produce 50 percent of a projected in paragraphs (c)(3) of this section will must be certified to the corresponding 10,000 engines in the 56–130 kW power be considered not covered by a phase-out standards. Engines certified category (i.e., 5,000 engines) in 2012 in certificate of conformity and in violation under this paragraph (d)(2) may compliance with the Tier 4 phase-in of § 1068.101(a)(1). generate NOX emission credits only for standards for NOX and NMHC in Table (5) For the purposes of this part, the averaging within the same power 4 of this section, but produce 4,500 such term ‘‘phase-in’’ means relating to a category during the same model year.

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For engines certified under this power categories during the phase-in of credits relative to the 4.0 g/kW-hr paragraph (d)(2), the 2014 model year Tier 4 standards, you may split an NOX+NMHC standard. may not extend beyond December 30, engine family into two subfamilies (for (g) Other provisions. The provisions 2014. example, one that uses credits and one of § 1039.101(d) through (h) apply with (e) Alternate NOX standards. For that generates credits for the same respect to the standards of this section, engines in 56–560 kW power categories pollutant). with the following exceptions and during the phase-in of Tier 4 standards, (1) Identify any split engine families special provisions: you may certify engine families to the in your application for certification. (1) NTE standards. Use the provisions alternate NO standards in this X Your engines must comply with all the of § 1039.101(e)(3) to calculate and paragraph (e) instead of the phase-in standards and requirements applicable apply the NTE standards, but base these and phase-out NOX and NOX+NMHC calculated values on the applicable standards described in Tables 4 through to Tier 4 engines, except as noted in this standards in this section or the 6 of this section. Engines certified under paragraph (f). You may calculate applicable FEL, instead of the standards this section must be certified to an emission credits relative to different in Table 1 of § 1039.101. All other NMHC standard of 0.19 g/kW-hr. Do not emission standards (i.e., phase-in and provisions of § 1039.101(e) apply under include engine families certified under phase-out standards) for different sets of this paragraph (g)(1). The NTE standards this paragraph (e) in determining engines within the engine family, but do not apply for certain engines and whether you comply with the the engine family must be certified to a certain pollutants, as follows: percentage phase-in requirements of single set of standards and FELs. To paragraphs (c) and (d)(2) of this section. calculate NOX+NMHC emission credits, (i) All engines below 37 kW for model Except for the provisions for alternate add the NOX FEL to the NMHC phase- years before 2013. FEL caps in § 1039.104(g), the NOX in standard for comparison with the (ii) All engines certified under Option standards and FEL caps under this applicable NOX+NMHC phase-out #1 of Table 3 of this section. These are paragraph (e) are as follows: standard. Any engine family certified small-volume manufacturer engines (1) For engines in the 56–130 kW under this paragraph (f) must meet the certified to the Option #1 standards for power category, apply the following applicable phase-in standard for NMHC. model years 2008 through 2015 under alternate NOX standards and FEL caps: You may assign the number and § 1039.104(c), and other engines (i) If you use the provisions of configurations of engines within the certified to the Option #1 standards for paragraph (d)(1) of this section, your respective subfamilies any time before model years 2008 through 2012. alternate NOX standard for any engine the due date for the final report required (iii) All engines less than or equal to family in the 56–130 kW power category in § 1039.730. Apply the same label to 560 kW that are certified to an FEL is 2.3 g/kW-hr for model years 2012 and each engine in the family, including the under the alternate FEL program during 2013. Engines certified to this standard NOX FEL to which it is certified. the first four years of the Tier 4 may not exceed a NO FEL cap of 3.0 X (2) For example, a 10,000-unit engine standards for the applicable power g/kW-hr. family in the 75–130 kW power category category, as described in § 1039.104(g). (ii) If you use the provisions of However, if you apply to meet transient paragraph (d)(2) of this section, your may be certified to meet the standards for PM, NMHC, and CO that apply to emission standards for these engines alternate NOX standard for any engine under § 1039.102(a)(1)(iii), you must family in the 56–130 kW power category phase-in engines, with a 0.8 g/kW-hr FEL for NOX. When compared to the also meet the NTE standards in this is 3.4 g/kW-hr for model years 2012 paragraph (g)(1). through 2014. Engines below 75 kW phase-out NOX+NMHC standard, this (iv) Gaseous pollutants for phase-out certified to this standard may not engine family would generate positive engines that you certify to the same exceed a NO FEL cap of 4.4 g/kW-hr; NOX+NMHC emission credits. When X numerical standards and FELs for engines at or above 75 kW certified to compared to the phase-in NOX standard, this engine family would generate gaseous pollutants to which you this standard may not exceed a NOX FEL cap of 3.8 g/kW-hr. negative NOX emission credits. You certified under the Tier 3 requirements (iii) If you do not use the provisions could create a subfamily with 2,500 of 40 CFR part 89. However, the NTE of paragraph (d) of this section, you may engines (one-quarter of the 10,000 standards for PM apply to these engines. apply the alternate NOX standard and engines) and identify them as phase-in (2) Interim FEL caps. As described in the appropriate FEL cap from either engines. You would count these 2,500, 1039.101(d), you may participate in the paragraph (e)(1)(i) or (ii) of this section. with their negative NOX credits, in ABT program in subpart H of this part (2) For engines in the 130–560 kW determining compliance with the 50- by certifying engines to FELs for PM, power category, the alternate NOX percent phase-in requirement in NOX, or NOX+NMHC instead of the standard is 2.0 g/kW-hr for model years paragraph (c)(1) of this section. You standards in Tables 1 through 7 of this 2011 through 2013. Engines certified to would calculate negative credits relative section for the model years shown. The this standard may not exceed a NOX to the 0.40 g/kW-hr NOX standard for FEL caps listed in the following table FEL cap of 2.7 g/kW-hr. these 2,500 engines. You would identify apply instead of the FEL caps (f) Split families. For generating or the other 7,500 engines in the family as in§ 1039.101(d)(1), except as allowed by using credits for engines in 56–560 kW phase-out engines and calculate positive § 1039.104(g):

TABLE 8 OF § 1039.102.—INTERIM TIER 4 FEL CAPS, G/KW-HR

Maximum Phase-in 1 engine power option Model years PM NOX NOX+NMHC

kW < 19 ...... 2008–2014 0.80 ...... 29.5 19 ≤ kW < 37 ...... 2008–2012 0.60 ...... 9.5 37 ≤ kW < 56 ...... 32008–2012 0.40 ...... 7.5 56 ≤ kW < 130 ...... Phase-in ...... 2012–2013 0.04 0.80 ...... 56 ≤ kW < 130 ...... Phase-out ...... 2012–2013 0.04 ...... 4 6.6

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TABLE 8 OF § 1039.102.—INTERIM TIER 4 FEL CAPS, G/KW-HR—Continued

Maximum Phase-in 1 PM NO NO +NMHC engine power option Model years X X

130 ≤ kW ≤ 560 ...... Phase-in ...... 2011–2013 0.04 0.80 ...... 130 ≤ kW ≤ 560 ...... Phase-out ...... 2011–2013 0.04 ...... 5 6.4 kW > 560 ...... 2011–2014 0.20 6.2 ...... 1 For model years before 2015 where this table does not specify FEL caps, apply the FEL caps shown in § 1039.101. 2 For engines below 8 kW, the FEL cap is 10.5 g/kW-hr for NOX+NMHC emissions. 3 For manufacturers certifying engines to the standards of this part 1039 in 2012 under Option #2 of Table 3 of § 1039.102, the FEL caps of § 1039.101 apply for model year 2012 and later; see 40 CFR part 89 for provisions that apply to earlier model years. 4 For engines below 75 kW, the FEL cap is 7.5 g/kW-hr for NOX+NMHC emissions. 5 For engines below 225 kW, the FEL cap is 6.6 g/kW-hr for NOX+NMHC emissions.

(3) Crankcase emissions. The applicable standards in § 1039.101 or (B) For engines at or above 37 kW and crankcase emission requirements of § 1039.102, when some of your engines below 56 kW: September 1, 2012 if you § 1039.115(a) do not apply to engines are certified to the specified levels choose Option #1 in Table 3 of using charge-air compression that are earlier than otherwise required. The § 1039.102, or September 1, 2011 if you certified to an FEL under the alternate engines that are certified early are do not choose Option #1 in Table 3 of FEL program in § 1039.104(g) during the considered offset-generating engines. § 1039.102. first four years of the Tier 4 standards The provisions of this paragraph (a), (C) For engines in the 56–130 kW for the applicable power category. which describe the requirements power category: September 1, 2011. (4) Special provisions for 37–56 kW applicable to offset-generating engines, (D) For engines in the 130–560 kW engines. For engines at or above 37 kW apply beginning in model year 2007. power category: September 1, 2010. and below 56 kW from model years These offset generating engines may (E) For engines above 560 kW: 2008 through 2012, you must take the generate additional allowances for September 1, 2014. following additional steps: equipment manufacturers under the (iii) Engines you produce after (i) State the applicable PM standard incentive program described in December 31 of the year shown in on the emission control information § 1039.627; you may instead use these paragraph (a)(1)(ii) of this section may label. offsets under paragraph (a)(2) of this not generate offsets. (ii) Add information to the emission- section in some cases. (iv) You may not use ABT credits to related installation instructions to (1) For early-compliant engines to certify offset-generating engines. clarify the equipment manufacturer’s generate offsets for use either under this (v) Offset-generating engines must be obligations under § 1039.104(f). paragraph (a) or under § 1039.627, you certified to the Tier 4 standards and § 1039.104 Are there interim provisions must meet the following general requirements under this part 1039. that apply only for a limited time? provisions: (2) If equipment manufacturers The provisions in this section apply (i) You may not generate offsets from decline offsets for your offset-generating instead of other provisions in this part. engines below 19 kW. engines under § 1039.627, you may not This section describes when these (ii) You must begin actual production generate ABT credits with these interim provisions apply. of engines covered by the corresponding engines, but you may reduce the (a) Incentives for early introduction. certificate by the following dates: number of engines that are required to This paragraph (a) allows you to reduce (A) For engines at or above 19 kW and meet the standards in § 1039.101 or the number of engines subject to the below 37 kW: September 1, 2012. 1039.102 as follows:

That are certified to the You may reduce the number of engines in For every . . . With maximum engine applicable standards in the same power category that are required In later model power ...... to meet the . . . years by . . .

(i) 2 engines ...... 19 ≤ kW < 37 ...... Table 2 of § 1039.102 1 .... PM standard in Table 2 of § 1039.102 ap- 3 engines. plicable to model year 2013 or 2014 en- gines or the PM standard in Table 1 of § 1039.101. (ii) 2 engines ...... 56 ≤ kW ≤ 560 ...... Table 4, 5, or 6 of Phase-out standards in Tables 4 through 6 3 engines. § 1039.102 for Phase- of § 1039.102. out engines. (iii) 2 engines ...... kW ≥ 19 ...... Table 1 of § 1039.101 ...... Standards in Tables 2 through 7 of 3 engines.2 § 1039.102 or standards in Table 1 of § 1039.101. (iv) 1 engine ...... kW ≥ 19 ...... Table 1 of § 1039.101 + Standards in Tables 2 through 7 of 2 engines.2 0.20 g/kW-hr NOX § 1039.102 or standards in Table 1 of standard. § 1039.101.

1 The engine must be certified to the PM standard applicable to model year 2013 engines, and to the NOX+NMHC and CO standards applica- ble to model year 2012 engines. 2 For engines above 560 kW, offsets from generator-set engines may be used only for generator-set engines. Offsets from engines for other applications may be used only for other applications besides generator sets.

(3) Example: If you produce 100 category in model year 2008 that are listed in § 1039.101, and you produced engines in the 56–130 kW power certified to the 56–130 kW standards 10,000 engines in this power category in

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model year 2015, then only 9,850 of engines in the 130–560 kW power (6) You may include engines used to these model year 2015 engines would category, or in model year 2014 for generate offsets under this paragraph (a) need to comply with the standards engines above 560 kW. Show that and engines used to generate offsets listed in § 1039.101. The 100 offset- engines meet these emission standards under § 1039.627 in the same engine generating engines in model year 2008 by meeting all the requirements of family, subject to the provisions of could not use or generate ABT credits. § 1039.260. You must meet the labeling § 1039.230. The engine must be certified (4) Offset-using engines (that is, those requirements in § 1039.135, but add the to FELs, as specified in paragraph not required to certify to the standards following statement instead of the (a)(5)(i) of this section. The FELs must of § 1039.101 or § 1039.102 under compliance statement in be below the standard levels specified paragraph (a)(2) of this section) are § 1039.135(c)(12): ‘‘THIS ENGINE in paragraph (a)(2) of this section and subject to the following provisions: MEETS U.S. EPA EMISSION those specified in § 1039.627. In the (i) If the offset is being used under STANDARDS UNDER 40 CFR reports required in § 1039.730, include paragraph (a)(2)(i) of this section for an 1039.104(a).’’ For power categories with the following information for each engine that would otherwise be certified a percentage phase-in, these engines model year: to the model year 2013 or 2014 should be treated as phase-in engines (i) The total number of engines that standards in Table 2 of § 1039.102 or the for purposes of determining compliance generate offsets under this paragraph (a). standards in Table 1 of § 1039.101, this with phase-in requirements. (ii) The number of engines used to engine must be certified to the standards (5) If an equipment manufacturer generate offsets under paragraph (a)(2) and requirements of this part 1039, claims offsets from your engine for use of this section. except that the only PM standard that under § 1039.627, the engine generating applies is the steady-state PM standard the offset must comply with the (iii) The names of equipment that applies for model year 2012. Such requirements of paragraph (a)(1) of this manufacturers that intend to use your an engine may not generate ABT credits. section. You may not generate offsets for offsets under § 1039.627 and the number (ii) If the offset is being used under use under paragraphs (a)(2) and (5) of of offsets involved for each equipment paragraph (a)(2)(ii) of this section for an this section for these engines. You may manufacturer. engine that would otherwise be certified generate ABT credits from these engines (b) In-use compliance limits. For to the phase-out standards in Tables 4 as follows: purposes of determining compliance through 6 of § 1039.102, this engine (i) To generate emission credits for after title or custody has transferred to must be certified to the standards and NOX, NOX+NMHC, and PM, the engine the ultimate purchaser, calculate the requirements of this part 1039, except must be certified to FELs at or below the applicable in-use compliance limits by that the PM standard is the Tier 3 PM standards in paragraph (a)(2) of this adjusting the applicable standards or standard that applies for this engine’s section. FELs. This applies only for engines at or maximum power. Such an engine will (ii) Calculate credits according to above 19 kW. The NOX adjustment be treated as a phase-out engine for § 1039.705 but use as the applicable applies only for engines with a NOX FEL purposes of determining compliance standard the numerical value of the no higher than 2.1 g/kW-hr The PM with percentage phase-in requirements. standard to which the engine would adjustment applies only for engines Such an engine may not generate ABT have otherwise been subject if it had not with a PM FEL no higher than the PM credits. been certified under this paragraph (a). standard in § 1039.101 for the (iii) All other offset-using engines (iii) For the production volume, use appropriate power category. Add the must meet the standards and other the number of engines certified under following adjustments to the otherwise provisions that apply in model year this paragraph (a) for which you do not applicable standards or FELs (steady- 2011 for engines in the 19–130 kW claim offsets under paragraph (a)(2) of state, transient, and NTE) for NOX and power categories, in model year 2010 for this section. PM:

The PM If your engine’s maximum power is adjustment in In model years ...... The NOX adjustment in g/kW-hr is . . . g/kW-hr is ...

2013–2014 ...... 19 ≤ kW < 56 ...... not allowed ...... 0.01 2012–2016 ...... 56 ≤ kW < 130 ...... 0.16 for operating hours ≤ 2000 ...... 0.01 0.25 for operating hours 2001 to 3400 ...... 0.34 for operating hours > 3400 ...... 2011–2015 ...... 130 ≤ kW < 560 ...... 0.16 for operating hours ≤ 2000 ...... 0.01 0.25 for operating hours 2001 to 3400 ...... 0.34 for operating hours > 3400 ...... 2011–2016 ...... kW > 560 ...... 0.16 for operating hours ≤ 2000 ...... 0.01 0.25 for operating hours 2001 to 3400 ...... 0.34 for operating hours > 3400 ......

(c) Provisions for small-volume requirements of this part. You must (1) You may delay complying with manufacturers. Special provisions apply notify us in writing before January 1, certain otherwise applicable Tier 4 if you are a small-volume engine 2008 if you intend to use these emission standards and requirements as manufacturer subject to the provisions. described in the following table:

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If your engine’s maximum Until model Before that model year the engine power is . . . You may delay meeting . . . year . . . must comply with . . .

kW < 19 ...... The standards and requirements of this part ...... 2011 The standards and requirements in 40 CFR part 89. 19 ≤ kW < 37 ...... The Tier 4 standards and requirements of this part that 2016 The Tier 4 standards and require- would otherwise be applicable in model year 2013. ments that apply for model year 2008. 37 ≤ kW < 56 ...... See paragraph (c)(2) of this section for special provisions that apply for engines in this power category. 56 ≤ kW < 130 ...... The standards and requirements of this part ...... 2015 The standards and requirements in 40 CFR part 89.

(2) To use the provisions of this for the model years when you are out of engines. We may consider other paragraph (c) for engines at or above 37 delaying compliance with the otherwise relevant factors. kW and below 56 kW, choose one of the applicable standards: (3) Our approval applies only for a following: (i) Produce engines in those model single model year and may be limited to (i) If you comply with the 0.30 g/kW- years that meet all the emission specific engine configurations. We may hr PM standard in § 1039.102 in all standards and other requirements that approve your request for the same model years from 2008 through 2012 applied for your model year 2008 deficiency in the following model year without using PM credits, you may engines in the same power category. if correcting the deficiency would continue meeting that standard through (ii) Meet the labeling requirements in require unreasonable hardware or 2015. § 1039.135, but use the following software modifications and we (ii) If you do not choose to comply compliance statement instead of the determine that you have demonstrated with paragraph (c)(2)(i) of this section, compliance statement in § 1039.135: an acceptable level of effort toward you may continue to comply with the ‘‘THIS ENGINE COMPLIES WITH U.S. complying. standards and requirements in 40 CFR EPA REGULATIONS FOR [CURRENT (4) You may ask for any number of part 89 for model years through 2012, MODEL YEAR] NONROAD deficiencies in the first three model but you must begin complying in 2013 COMPRESSION-IGNITION ENGINES years during which NTE standards with Tier 4 standards and requirements UNDER 40 CFR 1039.104(c).’’. apply for your engines. For the next four specified in Table 3 of § 1039.102 for (iii) Notify the equipment model years, we may approve up to model years 2013 and later. manufacturer that the engines you three deficiencies per engine family. (3) After the delays indicated in produce under this section are excluded Deficiencies of the same type that apply paragraph (c)(1) and (2) of this section, from the production volumes associated similarly to different power ratings you must comply with the same Tier 4 with the equipment-manufacturer within a family count as one deficiency standards and requirements as all other allowance program in § 1039.625. per family. We may condition approval manufacturers. (6) The provisions of this paragraph of any such additional deficiencies (4) For engines not in the 19–56 kW (c) may not be used to circumvent the during these four years on any power category, if you delay compliance requirements of this part. additional conditions we determine to with any standards under this paragraph (d) Deficiencies for NTE standards. be appropriate. We will not approve (c), you must do all the following things You may ask us to accept as compliant deficiencies after the seven-year period for the model years when you are an engine that does not fully meet specified in this paragraph (d)(4). delaying compliance with the otherwise specific requirements under the (e) Diesel test fuels and corresponding applicable standards: applicable NTE standards. Such labeling requirements. For diesel-fueled (i) Produce engines that meet all the deficiencies are intended to allow for engines in 2011 and later model years, emission standards and other minor deviations from the NTE the diesel test fuel is ultra low-sulfur requirements under 40 CFR part 89 standards under limited conditions. We diesel fuel specified in 40 CFR part applicable for that model year, except as expect your engines to have functioning 1065. For diesel-fueled engines in 2010 noted in this paragraph (c). emission-control hardware that allows and earlier model years, use test fuels (ii) Meet the labeling requirements in you to comply with the NTE standards. and meet labeling requirements as 40 CFR 89.110, but use the following (1) Request our approval for specific follows: compliance statement instead of the deficiencies in your application for (1) Use the following test fuels in compliance statement in 40 CFR certification, or before you submit your 2010 and earlier model years: 89.110(b)(10): ‘‘THIS ENGINE application. We will not approve (i) Unless otherwise specified, the COMPLIES WITH U.S. EPA deficiencies retroactively to cover diesel test fuel is low-sulfur diesel fuel REGULATIONS FOR [CURRENT engines already certified. In your specified in 40 CFR part 1065. MODEL YEAR] NONROAD request, identify the scope of each (ii) In model years 2007 through 2010, COMPRESSION-IGNITION ENGINES deficiency and describe any auxiliary you may use ultra low-sulfur diesel fuel UNDER 40 CFR 1039.104(c).’’. emission-control devices you will use to as the test fuel for any engine family (iii) Notify the equipment control emissions to the lowest practical that employs sulfur-sensitive technology manufacturer that the engines you level, considering the deficiency you are if you can demonstrate that in-use produce under this section are excluded requesting. engines in the family will use diesel fuel from the production volumes associated (2) We will approve a deficiency only with a sulfur concentration no greater with the equipment-manufacturer if compliance would be infeasible or than 15 ppm. allowance program in § 1039.625. unreasonable considering such factors (iii) You may use ultra low-sulfur (5) For engines in the 19–56 kW as the technical feasibility of the given diesel fuel as the test fuel for engine power category, if you delay compliance hardware and the applicable lead time families in any power category below 56 with any standards under this paragraph and production cycles—including kW, as long as none of the engines in (c), you must do all the following things schedules related to phase-in or phase- your engine family employ sulfur-

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sensitive technologies, you ensure that (1) For equipment you produce with under Option #1 of Table 3 of ultimate purchasers of equipment using 2012 model year engines at or above 37 § 1039.102 (or certified to less stringent these engines are informed that ultra kW and below 56 kW, determine the standards) in such equipment violates low-sulfur diesel fuel is recommended, minimum number of these engines that the prohibitions in § 1068.101(a)(1). and you recommend to equipment must be certified to the Option #2 (g) Alternate FEL caps. You may manufacturers that a label be applied at standards in Table 3 of § 1039.102 as certify a limited number of engines from the fuel inlet recommending 15 ppm follows: your U.S.-directed production volume fuel. (i) If all the equipment you produce to the FEL caps in Table 1 of this section (iv) For the engines described in using 2008 through 2011 model year instead of the otherwise applicable FEL § 1039.101(c) that are certified to the engines use engines certified to Tier 3 caps in § 1039.101(d)(1), § 1039.102(e), 0.60 g/kW-hr PM standard in Table 1 of standards under Option #2 of Table 3 of or § 1039.102(g)(2), subject to the § 1039.102 in the 2010 model year, you § 1039.102, then all the 2012 model year following provisions: may test with the ultra low-sulfur fuel engines you install must be certified to (1) The provisions of this paragraph specified in 40 CFR part 1065. the Option #2 standards of Table 3 of (g) apply during the model years shown (2) Meet the labeling requirements of § 1039.102. in Table 1 of this section. During this this paragraph (e)(2) (or other labeling (ii) If you produce equipment using period, the number of engines certified requirements we approve) to identify 2008 through 2011 model year engines to the FEL caps in Table 1 of this section the applicable test fuels specified in with some engines certified to Option must not exceed 20 percent in any paragraph (e)(1) of this section. Provide #1 standards of Table 3 of § 1039.102 single model year in each power instructions to equipment and some engines certified to Tier 3 category. The sum of percentages over manufacturers to ensure that they are standards under Option #2 standards of the four-year period must not exceed a aware of these labeling requirements. Table 3 of § 1039.102, calculate the total of 40 percent in each power (i) For engines certified under the minimum number of 2012 model year category. If you certify an engine under provisions of paragraph (e)(1)(i) of this engines you must install that are an alternate FEL cap in this paragraph section, include the following statement certified to the Option #2 standards of (g) for any pollutant, count it toward the on the emission control information Table 3 of § 1039.102 from the following allowed percentage of engines certified label and the fuel-inlet label specified in equation: to the alternate FEL caps. § 1039.135: ‘‘LOW SULFUR FUEL OR ¥ × Minimum number = [(T-O1-F)/(T–F) 0.05] (2) If your engine is not certified to ULTRA LOW SULFUR FUEL ONLY’’. P (ii) For engines certified under the transient emission standards under the Where: provisions of § 1039.102(a)(1)(iii), you provisions of paragraph (e)(1)(ii) of this T = The total number of 2008–2010 model section, include the following statement must adjust your FEL upward by a year engines at or above 37 kW and temporary compliance adjustment factor on the emission control information below 56 kW that you use in equipment label and the fuel-inlet label specified in you produce. (TCAF) before calculating your negative emission credits under § 1039.705, as § 1039.135: ‘‘ULTRA LOW SULFUR O1 = The number of engines from the 2008– FUEL ONLY’’. 2010 model years certified under Option follows: (iii) For engines certified under the #1 of Table 3 of § 1039.102 that you use (i) The temporary compliance in equipment you produce. provisions of paragraph (e)(1)(iii) of this adjustment factor for NOX is 1.1. F = The number of 2008–2010 model year (ii) The temporary compliance section, include the following statement engines at or above 37 kW and below 56 on the emission control information kW that you use in equipment you adjustment factor for PM is 1.5. label specified in § 1039.135: ‘‘ULTRA produce under the flexibility provisions (iii) The adjusted FEL (FELadj) for LOW SULFUR FUEL of § 1039.625. calculating emission credits is RECOMMENDED’’. P = The total number of 2012 model year determined from the steady-state FEL (3) For model years 2010 and earlier, engines at or above 37 kW and below 56 (FELss) using the following equation: kW that you use in equipment you we will use the test fuel that you use FELadj = (FELss) × (TCAF) under paragraph (e)(1) of this section, produce. subject to the conditions of paragraph (2) As needed for the calculation (iv) The unadjusted FEL (FELss) (e)(1) of this section. required by this paragraph (f), keep applies for all purposes other than (f) Requirements for equipment records of all equipment you produce credit calculation. manufacturers. If you produce using 2008–2012 model year engines at (3) These alternate FEL caps may not equipment with engines certified to Tier or above 37 kW and below 56 kW. If you be used for phase-in engines. 3 standards under Option #2 of Table 3 fail to keep these records, you may not (4) Do not apply TCAFs to gaseous of § 1039.102 during model years from use any 2012 model year engines emissions for phase-out engines that 2008 through 2011, then a minimum certified to Option #1 standards in your you certify to the same numerical number of pieces of equipment you equipment. standards (and FELs if the engines are produce using 2012 model year engines (3) If you fail to comply with the certified using ABT) for gaseous must have engines certified to the provisions of this paragraph (f), then pollutants as you certified under the Option #2 standards, as follows: using 2012 model year engines certified Tier 3 requirements of 40 CFR part 89.

TABLE 1 OF § 1039.104.—ALTERNATE FEL CAPS

Model years Model years Maximum engine power PM FEL cap, for the alter- NOX FEL cap, for the alter- g/kW-hr nate PM FEL g/kW-hr nate NOX FEL cap cap

19 ≤ kW < 56 ...... 0.30 1 2012–2015 ...... 56 ≤ kW < 130 2 ...... 0.30 3 2012–2015 3.8 3 2014–2015 130 ≤ kW ≤ 560 ...... 0.20 2011–2014 3.8 2014

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TABLE 1 OF § 1039.104.—ALTERNATE FEL CAPS—Continued

Model years Model years FEL cap, for the alter- Maximum engine power PM FEL cap, for the alter- NOX g/kW-hr nate PM FEL g/kW-hr nate NOX FEL cap cap

kW > 560 4 ...... 0.10 2015–2018 3.5 2015–2018 1 For manufacturers certifying engines under Option #1 of Table 3 of § 1039.102, these alternate FEL caps apply for model years from 2013 through 2016. 2 For engines below 75 kW, the FEL caps are 0.40 g/kW-hr for PM emissions and 4.4 g/kW-hr for NOX emissions. 3 For engines certified under the provisions of § 1039.102(d)(2) or (e)(1)(ii), the alternate NOX FEL cap in the table applies only for the 2015 model year. 4 For engines above 560 kW, the provision for alternate NOX FEL caps is limited to generator-set engines. For example, if you produce 1,000 generator-set engines above 560 kW in 2015, up to 200 of them may be certified to the alternate NOX FEL caps.

§ 1039.105 What smoke standards must (a) Crankcase emissions. Crankcase defeat device is an auxiliary emission- my engines meet? emissions may not be discharged control device that reduces the (a) The smoke standards in this directly into the ambient atmosphere effectiveness of emission controls under section apply to all engines subject to from any engine, except as follows: conditions that the engine may emission standards under this part, (1) Engines may discharge crankcase reasonably be expected to encounter except for the following engines: emissions to the ambient atmosphere if during normal operation and use. This (1) Single-cylinder engines. the emissions are added to the exhaust does not apply to auxiliary-emission (2) Constant-speed engines. emissions (either physically or control devices you identify in your (3) Engines certified to a PM emission mathematically) during all emission certification application if any of the standard or FEL of 0.07 g/kW-hr or testing. following is true: lower. (2) If you take advantage of this (1) The conditions of concern were (b) Measure smoke as specified in exception, you must do the following substantially included in the applicable § 1039.501(c). Smoke from your engines things: test procedures described in subpart F may not exceed the following standards: (i) Manufacture the engines so that all of this part. (1) 20 percent during the acceleration crankcase emissions can be routed into (2) You show your design is necessary mode. the applicable sampling systems to prevent engine (or equipment) (2) 15 percent during the lugging specified in 40 CFR part 1065. mode. (ii) Account for deterioration in damage or accidents. (3) 50 percent during the peaks in crankcase emissions when determining (3) The reduced effectiveness applies either the acceleration or lugging modes. exhaust deterioration factors. only to starting the engine. (3) For purposes of this paragraph (a), § 1039.120 What emission-related warranty § 1039.107 What evaporative emission crankcase emissions that are routed to standards and requirements apply? requirements apply to me? the exhaust upstream of exhaust (a) General requirements. You must There are no evaporative emission aftertreatment during all operation are warrant to the ultimate purchaser and standards for diesel-fueled engines, or not considered to be discharged directly each subsequent purchaser that the new engines using other nonvolatile or into the ambient atmosphere. nonliquid fuels (for example, natural (b)–(d) [Reserved] nonroad engine, including all parts of gas). If your engine uses a volatile liquid (e) Adjustable parameters. Engines its emission-control system, meets two fuel, such as methanol, you must meet that have adjustable parameters must conditions: the evaporative emission requirements meet all the requirements of this part for (1) It is designed, built, and equipped of 40 CFR part 1048 that apply to spark- any adjustment in the physically so it conforms at the time of sale to the ignition engines, as follows: adjustable range. An operating ultimate purchaser with the (a) Follow the steps in 40 CFR parameter is not considered adjustable if requirements of this part. 1048.245 to show that you meet the you permanently seal it or if it is not (2) It is free from defects in materials requirements of 40 CFR 1048.105. normally accessible using ordinary and workmanship that may keep it from (b) Do the following things in your tools. We may require that you set meeting these requirements. application for certification: adjustable parameters to any (b) Warranty period. Your emission- (1) Describe how your engines control specification within the adjustable range related warranty must be valid for at evaporative emissions. during any testing, including least as long as the minimum warranty (2) Present test data to show that certification testing, selective periods listed in this paragraph (b) in equipment using your engines meets the enforcement auditing, or in-use testing. hours of operation and years, whichever evaporative emission standards we (f) Prohibited controls. You may not comes first. You may offer an emission- specify in this section if you do not use design your engines with emission- related warranty more generous than we design-based certification under 40 CFR control devices, systems, or elements of require. The emission-related warranty 1048.245. Show these figures before and design that cause or contribute to an for the engine may not be shorter than after applying deterioration factors, unreasonable risk to public health, any published warranty you offer where applicable. welfare, or safety while operating. For without charge for the engine. Similarly, § 1039.110 [Reserved] example, this would apply if the engine the emission-related warranty for any emits a noxious or toxic substance it component may not be shorter than any § 1039.115 What other requirements must would otherwise not emit that published warranty you offer without my engines meet? contributes to such an unreasonable charge for that component. If you Engines subject to this part must meet risk. provide an extended warranty to the following requirements, except as (g) Defeat devices. You may not equip individual owners for any components noted elsewhere in this part: your engines with a defeat device. A covered in paragraph

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(c) of this section for an additional has no hour meter, we base the warranty into service. The minimum warranty charge, your emission-related warranty periods in this paragraph (b) only on the periods are shown in the following must cover those components for those engine’s age (in years). The warranty table: owners to the same degree. If an engine period begins when the engine is placed

If your engine is certified as And its maximum power is ...... And its rated speed is . . . Then its warranty period is . . .

Variable speed or constant kW < 19 ...... Any speed ...... 1,500 hours or two years, whichever comes speed. first. Constant speed ...... 19 ≤ kW < 37 ...... 3,000 rpm or higher ...... 1,500 hours or two years, whichever comes first. Constant speed ...... 19 ≤ kW < 37 ...... Less than 3,000 rpm ...... 3,000 hours or five years, whichever comes first. Variable speed ...... 19 ≤ kW < 37 ...... Any speed ...... 3,000 hours or five years, whichever comes first. Variable speed or constant kW ≥ 37 ...... Any speed ...... 3,000 hours or five years, whichever comes speed. first.

(c) Components covered. The done at the recommended intervals on (i) For EGR-related filters and coolers, emission-related warranty covers all in-use engines. We will accept PCV valves, and fuel injector tips components whose failure would scheduled maintenance as reasonably (cleaning only), the minimum interval is increase an engine’s emissions of any likely to occur if you satisfy any of the 1,500 hours. pollutant. This includes components following conditions: (ii) For the following components, listed in 40 CFR part 1068, Appendix I, (i) You present data showing that, if including associated sensors and and components from any other system a lack of maintenance increases actuators, the minimum interval is 4500 you develop to control emissions. The emissions, it also unacceptably degrades hours: fuel injectors, turbochargers, emission-related warranty covers these the engine’s performance. catalytic converters, electronic control components even if another company (ii) You present survey data showing units, particulate traps, trap oxidizers, produces the component. Your that at least 80 percent of engines in the components related to particulate traps emission-related warranty does not field get the maintenance you specify at and trap oxidizers, EGR systems cover components whose failure would the recommended intervals. (including related components, but not increase an engine’s emissions of (iii) You provide the maintenance free excluding filters and coolers), and other any pollutant. of charge and clearly say so in add-on components. For particulate (d) Limited applicability. You may maintenance instructions for the traps, trap oxidizers, and components deny warranty claims under this section customer. related to either of these, maintenance is if the operator caused the problem (iv) You otherwise show us that the limited to cleaning and repair only. through improper maintenance or use, maintenance is reasonably likely to be (4) If your engine family has an as described in 40 CFR 1068.115. done at the recommended intervals. alternate useful life under § 1039.101(g) (e) Owners manual. Describe in the (2) For engines below 130 kW, you that is shorter than the period specified owners manual the emission-related may not schedule critical emission- in paragraph (a)(2) or (a)(3) of this warranty provisions from this section related maintenance more frequently section, you may not schedule critical that apply to the engine. than the following minimum intervals, emission-related maintenance more except as specified in paragraphs (a)(4), frequently than the alternate useful life, § 1039.125 What maintenance instructions (b), and (c) of this section: except as specified in paragraph (c) of must I give to buyers? (i) For EGR-related filters and coolers, this section. Give the ultimate purchaser of each PCV valves, and fuel injector tips (b) Recommended additional new nonroad engine written (cleaning only), the minimum interval is maintenance. You may recommend any instructions for properly maintaining 1,500 hours. additional amount of maintenance on and using the engine, including the (ii) For the following components, the components listed in paragraph (a) emission-control system. The including associated sensors and of this section, as long as you state maintenance instructions also apply to actuators, the minimum interval is 3000 clearly that these maintenance steps are service accumulation on your emission- hours: fuel injectors, turbochargers, not necessary to keep the emission- data engines, as described in § 1039.245 catalytic converters, electronic control related warranty valid. If operators do and in 40 CFR part 1065. units, particulate traps, trap oxidizers, the maintenance specified in paragraph (a) Critical emission-related components related to particulate traps (a) of this section, but not the maintenance. Critical emission-related and trap oxidizers, EGR systems recommended additional maintenance, maintenance includes any adjustment, (including related components, but this does not allow you to disqualify cleaning, repair, or replacement of excluding filters and coolers), and other those engines from in-use testing or critical emission-related components. add-on components. For particulate deny a warranty claim. Do not take This may also include additional traps, trap oxidizers, and components these maintenance steps during service emission-related maintenance that you related to either of these, maintenance is accumulation on your emission-data determine is critical if we approve it in limited to cleaning and repair only. engines. advance. You may schedule critical (3) For engines at or above 130 kW, (c) Special maintenance. You may emission-related maintenance on these you may not schedule critical emission- specify more frequent maintenance to components if you meet the following related maintenance more frequently address problems related to special conditions: than the following minimum intervals, situations, such as atypical engine (1) You demonstrate that the except as specified in paragraphs (a)(4), operation. You must clearly state that maintenance is reasonably likely to be (b), and (c) of this section: this additional maintenance is

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associated with the special situation you maintenance if it meets all the following equipment, as described in 40 CFR are addressing. criteria: 1068.105.’’. (d) Noncritical emission-related (1) Each affected component was not (8) Describe equipment-labeling maintenance. You may schedule any in general use on similar engines before requirements consistent with amount of emission-related inspection the applicable dates shown in paragraph § 1039.135. State whether you are or maintenance that is not covered by (6) of the definition of new nonroad providing the label for the fuel inlet or paragraph (a) of this section, as long as engine in § 1039.801. the equipment manufacturer must you state in the owners manual that (2) The primary function of each provide the label. these steps are not necessary to keep the affected component is to reduce (c) You do not need installation emission-related warranty valid. If emissions. instructions for engines you install in operators fail to do this maintenance, (3) The cost of the scheduled your own equipment. this does not allow you to disqualify maintenance is more than 2 percent of (d) Provide instructions in writing or those engines from in-use testing or the price of the engine. in an equivalent format. For example, deny a warranty claim. Do not take (4) Failure to perform the you may post instructions on a publicly these inspection or maintenance steps maintenance would not cause clear available website for downloading or during service accumulation on your problems that would significantly printing. If you do not provide the emission-data engines. degrade the engine’s performance. instructions in writing, explain in your (e) Maintenance that is not emission- (h) Owners manual. Explain the application for certification how you related. For maintenance unrelated to owner’s responsibility for proper will ensure that each installer is emission controls, you may schedule maintenance in the owners manual. informed of the installation any amount of inspection or requirements. maintenance. You may also take these § 1039.130 What installation instructions must I give to equipment manufacturers? § 1039.135 How must I label and identify inspection or maintenance steps during the engines I produce? service accumulation on your emission- (a) If you sell an engine for someone data engines, as long as they are else to install in a piece of nonroad (a) Assign each engine a unique reasonable and technologically equipment, give the engine installer identification number and permanently necessary. This might include adding instructions for installing it consistent affix, engrave, or stamp it on the engine engine oil, changing air, fuel, or oil with the requirements of this part. in a legible way. (b) At the time of manufacture, affix filters, servicing engine-cooling systems, Include all information necessary to a permanent and legible label and adjusting idle speed, governor, ensure that an engine will be installed identifying each engine. The label must engine bolt torque, valve lash, or in its certified configuration. (b) Make sure these instructions have be— injector lash. You may perform this (1) Attached in one piece so it is not nonemission-related maintenance on the following information: removable without being destroyed or emission-data engines at the least (1) Include the heading: ‘‘Emission- defaced. However, you may use two- frequent intervals that you recommend related installation instructions’’. piece labels for engines below 19 kW if to the ultimate purchaser (but not the (2) State: ‘‘Failing to follow these there is not enough space on the engine intervals recommended for severe instructions when installing a certified engine in a piece of nonroad equipment to apply a one-piece label. service). (2) Secured to a part of the engine (f) Source of parts and repairs. State violates federal law (40 CFR needed for normal operation and not clearly on the first page of your written 1068.105(b)), subject to fines or other penalties as described in the Clean Air normally requiring replacement. maintenance instructions that a repair (3) Durable and readable for the Act.’’. shop or person of the owner’s choosing engine’s entire life. may maintain, replace, or repair (3) Describe the instructions needed (4) Written in English. emission-control devices and systems. to properly install the exhaust system (c) The label must— Your instructions may not require and any other components consistent (1) Include the heading ‘‘EMISSION components or service identified by with the requirements of § 1039.205(u). CONTROL INFORMATION’’. brand, trade, or corporate name. Also, (4) [Reserved] (2) Include your full corporate name do not directly or indirectly condition (5) Describe any limits on the range of and trademark. You may identify your warranty on a requirement that the applications needed to ensure that the another company and use its trademark equipment be serviced by your engine operates consistently with your instead of yours if you comply with the franchised dealers or any other service application for certification. For provisions of § 1039.640. establishments with which you have a example, if your engines are certified (3) Include EPA’s standardized commercial relationship. You may only for constant-speed operation, tell designation for the engine family (and disregard the requirements in this equipment manufacturers not to install subfamily, where applicable). paragraph (f) if you do one of two the engines in variable-speed (4) State the power category or things: applications. subcategory from § 1039.101 or (1) Provide a component or service (6) Describe any other instructions to § 1039.102 that determines the without charge under the purchase make sure the installed engine will applicable emission standards for the agreement. operate according to design engine family. (2) Get us to waive this prohibition in specifications in your application for (5) State the engine’s displacement (in the public’s interest by convincing us certification. This may include, for liters); however, you may omit this from the engine will work properly only with example, instructions for installing the label if all the engines in the engine the identified component or service. aftertreatment devices when installing family have the same per-cylinder (g) Payment for scheduled the engines. displacement and total displacement. maintenance. Owners are responsible (7) State: ‘‘If you install the engine in (6) State the date of manufacture for properly maintaining their engines. a way that makes the engine’s emission [MONTH and YEAR]. You may omit This generally includes paying for control information label hard to read this from the label if you keep a record scheduled maintenance. However, during normal engine maintenance, you of the engine-manufacture dates and manufacturers must pay for scheduled must place a duplicate label on the provide it to us upon request.

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(7) State the FELs to which the (f) You may ask us to approve Subpart C—Certifying Engine Families engines are certified if certification modified labeling requirements in this depends on the ABT provisions of part 1039 if you show that it is § 1039.201 What are the general subpart H of this part. requirements for obtaining a certificate of necessary or appropriate. We will conformity? (8) Identify the emission-control approve your request if your alternate (a) You must send us a separate system. Use terms and abbreviations label is consistent with the requirements application for a certificate of consistent with SAE J1930 (incorporated of this part. by reference in § 1039.810). You may conformity for each engine family. A (g) If you obscure the engine label omit this information from the label if certificate of conformity is valid from there is not enough room for it and you while installing the engine in the the indicated effective date until put it in the owners manual instead. equipment, you must place a duplicate December 31 of the model year for (9) For diesel-fueled engines, unless label on the equipment. If others install which it is issued. otherwise specified in § 1039.104(e)(2), your engine in their equipment in a way (b) The application must contain all state: ‘‘ULTRA LOW SULFUR FUEL that obscures the engine label, we the information required by this part ONLY’. require them to add a duplicate label on and must not include false or (10) Identify any additional the equipment (see 40 CFR 1068.105); in incomplete statements or information requirements for fuel and lubricants that that case, give them the number of (see § 1039.255). do not involve fuel-sulfur levels. You duplicate labels they request and keep (c) We may ask you to include less may omit this information from the the following records for at least five information than we specify in this label if there is not enough room for it years: subpart, as long as you maintain all the information required by § 1039.250. and you put it in the owners manual (1) Written documentation of the instead. (d) You must use good engineering request from the equipment judgment for all decisions related to (11) State the useful life for your manufacturer. your application (see 40 CFR 1068.5). engine family if we approve a shortened (e) An authorized representative of useful life under § 1039.101(g)(2). (2) The number of duplicate labels your company must approve and sign (12) State: ‘‘THIS ENGINE COMPLIES you send and the date you sent them. the application. WITH U.S. EPA REGULATIONS FOR § 1039.140 What is my engine’s maximum (f) See § 1039.255 for provisions [MODEL YEAR] NONROAD DIESEL engine power? describing how we will process your ENGINES.’’. (a) An engine configuration’s application. (13) For engines above 560 kW, (g) We may require you to deliver include the following things: maximum engine power is the maximum brake power point on the your test engines to a facility we (i) For engines certified to the designate for our testing (see nominal power curve for the engine emission standards for generator-set § 1039.235(c)). engines, add the phrase ‘‘FOR configuration, as defined in this section. GENERATOR SETS AND OTHER Round the power value to the nearest § 1039.205 What must I include in my APPLICATIONS’’. whole kilowatt. application? (ii) For all other engines, add the (b) The nominal power curve of an This section specifies the information phrase ‘‘NOT FOR USE IN A engine configuration is the relationship that must be in your application, unless GENERATOR SET’’. between maximum available engine we ask you to include less information (14) If your engines are certified only brake power and engine speed for an under § 1039.201(c). We may require for constant-speed operation, state ‘‘USE engine, using the mapping procedures you to provide additional information to IN CONSTANT-SPEED APPLICATIONS of 40 CFR part 1065, based on the evaluate your application. ONLY’’. (a) Describe the engine family’s manufacturer’s design and production (d) You may add information to the specifications and other basic specifications for the engine. This emission control information label to parameters of the engine’s design and identify other emission standards that information may also be expressed by a emission controls. List the fuel type on the engine meets or does not meet (such torque curve that relates maximum which your engines are designed to as European standards). You may also available engine torque with engine operate (for example, ultra low-sulfur add other information to ensure that the speed. diesel fuel). List each distinguishable engine will be properly maintained and (c) The nominal power curve must be engine configuration in the engine used. within the range of the actual power family. For each engine configuration, (e) Except as specified in curves of production engines list the maximum engine power and the § 1039.104(e)(2), create a separate label considering normal production range of values for maximum engine with the statement: ‘‘ULTRA LOW variability. If after production begins it power resulting from production SULFUR FUEL ONLY’’. Permanently is determined that your nominal power tolerances, as described in § 1039.140. attach this label to the equipment near curve does not represent production (b) Explain how the emission-control the fuel inlet or, if you do not engines, we may require you to amend system operates. Describe in detail all manufacture the equipment, take one of your application for certification under system components for controlling the following steps to ensure that the § 1039.225. exhaust emissions, including all equipment will be properly labeled: auxiliary-emission control devices (1) Provide the label to the equipment (d) Throughout this part, references to (AECDs) and all fuel-system manufacturer and include the a specific power value or a range of components you will install on any appropriate information in the power values for an engine are based on production or test engine. Identify the emission-related installation maximum engine power. For example, part number of each component you instructions. the group of engines with maximum describe. For this paragraph (b), treat as (2) Confirm that the equipment engine power above 560 kW may be separate AECDs any devices that manufacturers install their own referred to as engines above 560 kW. modulate or activate differently from complying labels. each other. Include all the following:

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(1) Give a general overview of the how the AECD calculates the estimated Present emission data to show that you engine, the emission-control strategies, value, if applicable. meet any applicable smoke standards and all AECDs. (vi) Describe how you calibrate the we specify in § 1039.105. If we specify (2) Describe each AECD’s general AECD modulation to activate only more than one grade of any fuel type purpose and function. during conditions related to the stated (for example, high-sulfur and low-sulfur (3) Identify the parameters that each need to protect components and only as diesel fuel), you need to submit test data AECD senses (including measuring, needed to sufficiently protect those only for one grade, unless the estimating, calculating, or empirically components in a way that minimizes the regulations of this part specify deriving the values). Include emission impact. otherwise for your engine. Note that equipment-based parameters and state (c) [Reserved] § 1039.235 allows you to submit an whether you simulate them during (d) Describe the engines you selected application in certain cases without new testing with the applicable procedures. for testing and the reasons for selecting emission data. (4) Describe the purpose for sensing them. (p) State that all the engines in the each parameter. (e) Describe the test equipment and engine family comply with the not-to- (5) Identify the location of each sensor procedures that you used, including any exceed emission standards we specify in the AECD uses. special or alternate test procedures you subpart B of this part for all normal (6) Identify the threshold values for used (see § 1039.501). operation and use when tested as the sensed parameters that activate the (f) Describe how you operated the specified in § 1039.515. Describe any AECD. emission-data engine before testing, relevant testing, engineering analysis, or (7) Describe the parameters that the including the duty cycle and the other information in sufficient detail to AECD modulates (controls) in response number of engine operating hours used support your statement. to any sensed parameters, including the to stabilize emission levels. Explain (q) For engines above 560 kW, include range of modulation for each parameter, why you selected the method of service information showing how your emission the relationship between the sensed accumulation. Describe any scheduled controls will function during normal in- parameters and the controlled maintenance you did. use transient operation. For example, parameters and how the modulation (g) List the specifications of the test this might include the following: achieves the AECD’s stated purpose. fuel to show that it falls within the (1) Emission data from transient Use graphs and tables, as necessary. required ranges we specify in 40 CFR testing of engines using measurement (8) Describe each AECD’s specific part 1065. systems designed for measuring in-use calibration details. This may be in the (h) Identify the engine family’s useful emissions. form of data tables, graphical life. (2) Comparison of the engine design representations, or some other (i) Include the maintenance for controlling transient emissions with description. instructions you will give to the that from engines for which you have (9) Describe the hierarchy among the ultimate purchaser of each new nonroad emission data over the transient duty AECDs when multiple AECDs sense or engine (see § 1039.125). cycle for certification. modulate the same parameter. Describe (j) Include the emission-related (3) Detailed descriptions of control whether the strategies interact in a installation instructions you will algorithms and other design parameters comparative or additive manner and provide if someone else installs your for controlling transient emissions. identify which AECD takes precedence engines in a piece of nonroad (r) Report all test results, including in responding, if applicable. equipment (see § 1039.130). those from invalid tests or from any (10) Explain the extent to which the (k) Describe your emission control other tests, whether or not they were AECD is included in the applicable test information label (see § 1039.135). conducted according to the test procedures specified in subpart F of this (l) Identify the emission standards or procedures of subpart F of this part. If part. FELs to which you are certifying you measure CO2, report those emission (11) Do the following additional engines in the engine family. Identify levels. We may ask you to send other things for AECDs designed to protect the ambient operating regions that will information to confirm that your tests engines or equipment: apply for NTE testing under were valid under the requirements of (i) Identify the engine and/or § 1039.101(e)(4). this part and 40 CFR part 1065. equipment design limits that make (m) Identify the engine family’s (s) Describe all adjustable operating protection necessary and describe any deterioration factors and describe how parameters (see § 1039.115(e)), damage that would occur without the you developed them (see § 1039.245). including production tolerances. AECD. Present any emission test data you used Include the following in your (ii) Describe how each sensed for this. description of each parameter: parameter relates to the protected (n) State that you operated your (1) The nominal or recommended components’ design limits or those emission-data engines as described in setting. operating conditions that cause the need the application (including the test (2) The intended physically adjustable for protection. procedures, test parameters, and test range. (iii) Describe the relationship between fuels) to show you meet the (3) The limits or stops used to the design limits/parameters being requirements of this part. establish adjustable ranges. protected and the parameters sensed or (o) Present emission data for (4) Information showing why the calculated as surrogates for those design hydrocarbons (such as NMHC or THCE, limits, stops, or other means of limits/parameters, if applicable. as applicable), NOX, PM, and CO on an inhibiting adjustment are effective in (iv) Describe how the modulation by emission-data engine to show your preventing adjustment of parameters on the AECD prevents engines and/or engines meet the applicable duty-cycle in-use engines to settings outside your equipment from exceeding design emission standards we specify in intended physically adjustable ranges. limits. § 1039.101. Show emission data figures (t) Provide the information to read, (v) Explain why it is necessary to before and after applying adjustment record, and interpret all the information estimate any parameters instead of factors for regeneration and broadcast by an engine’s onboard measuring them directly and describe deterioration factors for each engine. computers and electronic control units.

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State that, upon request, you will give final review and approval. If you request You must amend your application if any us any hardware, software, or tools we preliminary approval related to the changes occur with respect to any would need to do this. If you broadcast upcoming model year or the model year information included in your a surrogate parameter for torque values, after that, we will make best-efforts to application. you must provide us what we need to make the appropriate determinations as (a) You must amend your application convert these into torque units. You soon as practicable. We will generally before you take either of the following may reference any appropriate publicly not provide preliminary approval actions: released standards that define related to a future model year more than (1) Add an engine (that is, an conventions for these messages and two years ahead of time. additional engine configuration) to an parameters. Format your information engine family. In this case, the engine consistent with publicly released § 1039.220 How do I amend the added must be consistent with other maintenance instructions in my engines in the engine family with standards. application? (u) Confirm that your emission-related respect to the criteria listed in installation instructions specify how to You may amend your emission- § 1039.230. ensure that sampling of exhaust related maintenance instructions after (2) Change an engine already included emissions will be possible after engines you submit your application for in an engine family in a way that may are installed in equipment and placed in certification, as long as the amended affect emissions, or change any of the service. If this cannot be done by simply instructions remain consistent with the components you described in your adding a 20-centimeter extension to the provisions of § 1039.125. You must send application for certification. This exhaust pipe, show how to sample the Designated Compliance Officer a includes production and design changes exhaust emissions in a way that request to amend your application for that may affect emissions any time prevents diluting the exhaust sample certification for an engine family if you during the engine’s lifetime. with ambient air. want to change the emission-related (b) To amend your application for (v) State whether your certification is maintenance instructions in a way that certification, send the Designated limited for certain engines. If this is the could affect emissions. In your request, Compliance Officer the following case, describe how you will prevent use describe the proposed changes to the information: of these engines in applications for maintenance instructions. We will (1) Describe in detail the addition or which they are not certified. This disapprove your request if we determine change in the engine model or applies for engines such as the that the amended instructions are configuration you intend to make. following: inconsistent with maintenance you (2) Include engineering evaluations or (1) Constant-speed engines. performed on emission-data engines. data showing that the amended engine (2) Engines used for transportation (a) If you are decreasing the specified family complies with all applicable refrigeration units that you certify under maintenance, you may distribute the requirements. You may do this by the provisions of § 1039.645. new maintenance instructions to your showing that the original emission-data (3) Hand-startable engines certified customers 30 days after we receive your engine is still appropriate with respect under the provisions of § 1039.101(c). request, unless we disapprove your to showing compliance of the amended (4) Engines above 560 kW that are not request. We may approve a shorter time family with all applicable requirements. certified to emission standards for or waive this requirement. (3) If the original emission-data generator-set engines. (b) If your requested change would engine for the engine family is not (w) Unconditionally certify that all not decrease the specified maintenance, appropriate to show compliance for the the engines in the engine family comply you may distribute the new new or modified nonroad engine, with the requirements of this part, other maintenance instructions anytime after include new test data showing that the referenced parts of the CFR, and the you send your request. For example, new or modified nonroad engine meets Clean Air Act. this paragraph (b) would cover adding the requirements of this part. (x) Include estimates of U.S.-directed instructions to increase the frequency of (c) We may ask for more test data or production volumes. a maintenance step for engines in engineering evaluations. You must give (y) Include the information required severe-duty applications. us these within 30 days after we request by other subparts of this part. For (c) You need not request approval if them. example, include the information you are making only minor corrections (d) For engine families already required by § 1039.725 if you participate (such as correcting typographical covered by a certificate of conformity, in the ABT program. mistakes), clarifying your maintenance we will determine whether the existing (z) Include other applicable instructions, or changing instructions certificate of conformity covers your information, such as information for maintenance unrelated to emission new or modified nonroad engine. You specified in this part or 40 CFR part control. may ask for a hearing if we deny your 1068 related to requests for exemptions. request (see § 1039.820). § 1039.225 How do I amend my application (e) For engine families already § 1039.210 May I get preliminary approval for certification to include new or modified covered by a certificate of conformity, before I complete my application? engines? you may start producing the new or If you send us information before you Before we issue you a certificate of modified nonroad engine anytime after finish the application, we will review it conformity, you may amend your you send us your amended application, and make any appropriate application to include new or modified before we make a decision under determinations, especially for questions engine configurations, subject to the paragraph (d) of this section. However, related to engine family definitions, provisions of this section. After we have if we determine that the affected engines auxiliary emission-control devices, issued your certificate of conformity, do not meet applicable requirements, deterioration factors, testing for service you may send us an amended we will notify you to cease production accumulation, maintenance, and NTE application requesting that we include of the engines and may require you to deficiencies and carve-outs. Decisions new or modified engine configurations recall the engines at no expense to the made under this section are considered within the scope of the certificate, owner. Choosing to produce engines to be preliminary approval, subject to subject to the provisions of this section. under this paragraph (e) is deemed to be

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consent to recall all engines that we standards. See § 1039.240, § 1039.245, appropriate emission-data engine under determine do not meet applicable and 40 CFR part 1065, subpart E, paragraph (b) of this section. emission standards or other regarding service accumulation before (3) The data show that the emission- requirements and to remedy the emission testing. data engine would meet all the nonconformity at no expense to the (a) Test your emission-data engines requirements that apply to the engine owner. If you do not provide using the procedures and equipment family covered by the application for information required under paragraph specified in subpart F of this part. certification. (c) of this section within 30 days, you (b) Select an emission-data engine (e) We may require you to test a must stop producing the new or from each engine family for testing. second engine of the same or different modified nonroad engines. Select the engine configuration with the configuration in addition to the engine highest volume of fuel injected per tested under paragraph (b) of this § 1039.230 How do I select engine cylinder per combustion cycle at the section. families? point of maximum torque—unless good (f) If you use an alternate test (a) Divide your product line into engineering judgment indicates that a procedure under 40 CFR 1065.10 and families of engines that are expected to different engine configuration is more later testing shows that such testing have similar emission characteristics likely to exceed (or have emissions does not produce results that are throughout the useful life. Your engine nearer to) an applicable emission equivalent to the procedures specified family is limited to a single model year. standard or FEL. If two or more engines in subpart F of this part, we may reject (b) Group engines in the same engine have the same fueling rate at maximum data you generated using the alternate family if they are the same in all the torque, select the one with the highest procedure. following aspects: fueling rate at rated speed. In making (1) The combustion cycle and fuel. this selection, consider all factors § 1039.240 How do I demonstrate that my (2) The cooling system (water-cooled engine family complies with exhaust expected to affect emission-control emission standards? vs. air-cooled). performance and compliance with the (a) For purposes of certification, your (3) Method of air aspiration. standards, including emission levels of engine family is considered in (4) Method of exhaust aftertreatment all exhaust constituents, especially NO X compliance with the applicable (for example, catalytic converter or and PM. particulate trap). (c) We may measure emissions from numerical emission standards in (5) Combustion chamber design. any of your test engines or other engines § 1039.101(a) and (b) or in § 1039.102(a) (6) Bore and stroke. from the engine family, as follows: and (b) if all emission-data engines (7) Number of cylinders (for engines (1) We may decide to do the testing representing that family have test results with aftertreatment devices only). at your plant or any other facility. If we showing deteriorated emission levels at (8) Cylinder arrangement (for engines do this, you must deliver the test engine or below these standards. (Note: if you with aftertreatment devices only). to a test facility we designate. The test participate in the ABT program in (9) Method of control for engine engine you provide must include subpart H of this part, your FELs are operation other than governing (i.e., appropriate manifolds, aftertreatment considered to be the applicable mechanical or electronic). devices, electronic control units, and emission standards with which you (10) Power category. other emission-related components not must comply.) (11) Numerical level of the emission normally attached directly to the engine (b) Your engine family is deemed not standards that apply to the engine. block. If we do the testing at your plant, to comply if any emission-data engine (c) You may subdivide a group of you must schedule it as soon as possible representing that family has test results engines that is identical under and make available the instruments, showing a deteriorated emission level paragraph (b) of this section into personnel, and equipment we need. above an applicable FEL or emission different engine families if you show the (2) If we measure emissions on one of standard from § 1039.101 for any expected emission characteristics are your test engines, the results of that pollutant. different during the useful life. testing become the official emission (c) To compare emission levels from (d) You may group engines that are results for the engine. Unless we later the emission-data engine with the not identical with respect to the things invalidate these data, we may decide applicable emission standards, apply listed in paragraph (b) of this section in not to consider your data in determining deterioration factors to the measured the same engine family if you show that if your engine family meets applicable emission levels for each pollutant. their emission characteristics during the requirements. Section 1039.245 specifies how to test useful life will be similar. (3) Before we test one of your engines, your engine to develop deterioration (e) If you combine engines from we may set its adjustable parameters to factors that represent the deterioration different power categories into a single any point within the physically expected in emissions over your engine family under paragraph (d) of adjustable ranges (see § 1039.115(e)). engines’ full useful life. Your this section, you must certify the engine (4) Before we test one of your engines, deterioration factors must take into family to the more stringent set of we may calibrate it within normal account any available data from in-use standards from the two power categories production tolerances for anything we testing with similar engines. Small- in that model year. do not consider an adjustable parameter. volume engine manufacturers may use (d) You may ask to use emission data assigned deterioration factors that we § 1039.235 What emission testing must I from a previous model year instead of establish. Apply deterioration factors as perform for my application for a certificate doing new tests, but only if all the follows: of conformity? following are true: (1) Additive deterioration factor for This section describes the emission (1) The engine family from the exhaust emissions. Except as specified testing you must perform to show previous model year differs from the in paragraph (c)(2) of this section, use compliance with the emission standards current engine family only with respect an additive deterioration factor for in § 1039.101(a) and (b) or § 1039.102(a) to model year. exhaust emissions. An additive and (b). See § 1039.205(p) regarding (2) The emission-data engine from the deterioration factor for a pollutant is the emission testing related to the NTE previous model year remains the difference between exhaust emissions at

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the end of the useful life and exhaust total hydrocarbon (THC) emissions. the emission-data engine at least three emissions at the low-hour test point. In Indicate in your application for times with evenly spaced intervals of these cases, adjust the official emission certification if you are using this option. service accumulation. You may use results for each tested engine at the If you do, measure THC emissions and extrapolation to determine deterioration selected test point by adding the factor calculate NMHC emissions as 98 factors once you have established a to the measured emissions. If the factor percent of THC emissions, as shown in trend of changing emissions with age for is less than zero, use zero. Additive the following equation: each pollutant. You may use an engine deterioration factors must be specified NMHC = (0.98) × (THC). installed in nonroad equipment to to one more decimal place than the accumulate service hours instead of applicable standard. § 1039.245 How do I determine running the engine only in the (2) Multiplicative deterioration factor deterioration factors from exhaust laboratory. You may perform for exhaust emissions. Use a durability testing? maintenance on emission-data engines multiplicative deterioration factor if Establish deterioration factors to as described in § 1039.125 and 40 CFR good engineering judgment calls for the determine whether your engines will part 1065, subpart E. Use good deterioration factor for a pollutant to be meet emission standards for each engineering judgment for all aspects of the ratio of exhaust emissions at the end pollutant throughout the useful life, as the effort to establish deterioration of the useful life to exhaust emissions at described in §§ 1039.101 and 1039.240. factors under this paragraph (c). the low-hour test point. For example, if This section describes how to determine (d) Include the following information you use aftertreatment technology that deterioration factors, either with an in your application for certification: controls emissions of a pollutant engineering analysis, with pre-existing (1) If you use test data from a different proportionally to engine-out emissions, test data, or with new emission engine family, explain why this is it is often appropriate to use a measurements. If you are required to appropriate and include all the emission multiplicative deterioration factor. perform durability testing, see measurements on which you base the Adjust the official emission results for § 1039.125 for limitations on the deterioration factor. each tested engine at the selected test maintenance that you may perform on (2) If you determine your point by multiplying the measured your emission-data engine. deterioration factors based on emissions by the deterioration factor. If (a) You may ask us to approve engineering analysis, explain why this the factor is less than one, use one. A deterioration factors for an engine is appropriate and include a statement multiplicative deterioration factor may family with established technology that all data, analyses, evaluations, and not be appropriate in cases where based on engineering analysis instead of other information you used are available testing variability is significantly greater testing. Engines certified to a for our review upon request. than engine-to-engine variability. NOX+NMHC standard or FEL greater (3) If you do testing to determine Multiplicative deterioration factors must than the Tier 3 NOX+NMHC standard deterioration factors, describe the form be specified to one more significant described in 40 CFR 89.112 are and extent of service accumulation, figure than the applicable standard. considered to rely on established including a rationale for selecting the (3) Deterioration factor for smoke. technology for gaseous emission control, service-accumulation period and the Deterioration factors for smoke are except that this does not include any method you use to accumulate hours. always additive, as described in engines that use exhaust-gas paragraph (c)(1) of this section. recirculation or aftertreatment. In most § 1039.250 What records must I keep and (4) Deterioration factor for crankcase cases, technologies used to meet the what reports must I send to EPA? emissions. If your engine vents Tier 1 and Tier 2 emission standards (a) Within 30 days after the end of the crankcase emissions to the exhaust or to would be considered to be established model year, send the Designated the atmosphere, you must account for technology. Compliance Officer a report describing crankcase emission deterioration, using (b) You may ask us to approve the following information about engines good engineering judgment. You may deterioration factors for an engine you produced during the model year: use separate deterioration factors for family based on emission measurements (1) Report the total number of engines crankcase emissions of each pollutant from similar highway or nonroad you produced in each engine family by (either multiplicative or additive) or engines if you have already given us maximum engine power, total include the effects in combined these data for certifying the other displacement, and the type of fuel deterioration factors that include engines in the same or earlier model system. exhaust and crankcase emissions years. Use good engineering judgment to (2) If you produced exempted engines together for each pollutant. decide whether the two engines are under the provisions of § 1039.625, (d) Collect emission data using similar. We will approve your request if report the number of exempted engines measurements to one more decimal you show us that the emission you produced for each engine model place than the applicable standard. measurements from other engines and identify the buyer or shipping Apply the deterioration factor to the reasonably represent in-use destination for each exempted engine. official emission result, as described in deterioration for the engine family for (b) Organize and maintain the paragraph (c) of this section, then round which you have not yet determined following records: the adjusted figure to the same number deterioration factors. (1) A copy of all applications and any of decimal places as the emission (c) If you are unable to determine summary information you send us. standard. Compare the rounded deterioration factors for an engine (2) Any of the information we specify emission levels to the emission standard family under paragraph (a) or (b) of this in § 1039.205 that you were not required for each emission-data engine. In the section, select engines, subsystems, or to include in your application. case of NOX+NMHC standards, apply components for testing. Determine (3) A detailed history of each the deterioration factor to each pollutant deterioration factors based on service emission-data engine. For each engine, and then add the results before accumulation and related testing to describe all of the following: rounding. represent the deterioration expected (i) The emission-data engine’s (e) For engines subject to NMHC from in-use engines over the full useful construction, including its origin and standards, you may base compliance on life. You must measure emissions from buildup, steps you took to ensure that

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it represents production engines, any (1) Refuse to comply with any testing 1068, you must meet the labeling components you built specially for it, or reporting requirements. requirements in § 1039.135, with the and all the components you include in (2) Submit false or incomplete following exceptions: your application for certification. information (paragraph (e) of this (1) Instead of the engine family (ii) How you accumulated engine section applies if this is fraudulent). designation specified in operating hours (service accumulation), (3) Render inaccurate any test data. § 1039.135(c)(3), use a modified including the dates and the number of (4) Deny us from completing designation to identify the group of hours accumulated. authorized activities despite our engines that would otherwise be (iii) All maintenance, including presenting a warrant or court order (see included in the same engine family. modifications, parts changes, and other 40 CFR 1068.20). This includes a failure (2) Instead of the compliance service, and the dates and reasons for to provide reasonable assistance. statement in § 1039.135(c)(12), add the the maintenance. (5) Produce engines for importation following statement: ‘‘THIS ENGINE (iv) All your emission tests, including into the United States at a location MEETS U.S. EPA EMISSION documentation on routine and standard where local law prohibits us from STANDARDS UNDER 40 CFR tests, as specified in part 40 CFR part carrying out authorized activities. 1039.260.’’. 1065, and the date and purpose of each (6) Fail to supply requested (e) You may not generate ABT credits test. information or amend your application with engines meeting requirements (v) All tests to diagnose engine or to include all engines being produced. under the provisions of this section. emission-control performance, giving (7) Take any action that otherwise (f) Keep records to show that you circumvents the intent of the Act or this the date and time of each and the meet the alternate standards, as follows: part. reasons for the test. (1) If your exempted engines are (d) We may void your certificate if (vi) Any other significant events. identical to previously certified engines, you do not keep the records we require (4) Production figures for each engine keep your most recent application for or do not give us information when we family divided by assembly plant. certification for the certified engine ask for it. (5) Keep a list of engine identification family. (e) We may void your certificate if we numbers for all the engines you produce (2) If you previously certified a find that you intentionally submitted similar engine family, but have under each certificate of conformity. false or incomplete information. (c) Keep data from routine emission modified the exempted engine in a way (f) If we deny your application or that changes it from its previously tests (such as test cell temperatures and suspend, revoke, or void your relative humidity readings) for one year certified configuration, keep your most certificate, you may ask for a hearing recent application for certification for after we issue the associated certificate (see § 1039.820). of conformity. Keep all other the certified engine family, a description information specified in paragraph (a) of § 1039.260 What provisions apply to of the relevant changes, and any test this section for eight years after we issue engines that are conditionally exempted data or engineering evaluations that your certificate. from certification? support your conclusions. (d) Store these records in any format As specified elsewhere in this part or (3) If you have not previously certified and on any media, as long as you can in 40 CFR part 1068, you may in some a similar engine family, keep all the promptly send us organized, written cases introduce engines into commerce records we specify for the application records in English if we ask for them. that are exempt from the requirement to for certification and the additional You must keep these records readily certify engines to the otherwise records we specify in § 1039.250(b)(3). available. We may review them at any applicable standards. If we specify (g) We may require you to send us an time. alternate standards as a condition of the annual report of the engines you (e) Send us copies of any engine exemption, all the following provisions produce under this section. maintenance instructions or apply: Subpart D—[Reserved] explanations if we ask for them. (a) Your engines must meet the alternate standards we specify in the § 1039.255 What decisions may EPA make exemption section, and all other Subpart E—In-Use Testing regarding my certificate of conformity? requirements applicable to engines that § 1039.401 General provisions. (a) If we determine your application is are subject to such standards. We may perform in-use testing of any complete and shows that the engine (b) You need not apply for and receive engine subject to the standards of this family meets all the requirements of this a certificate for the exempt engines. part. However, we will limit recall part and the Act, we will issue a However, you must comply with all the testing to the first 75 percent of each certificate of conformity for your engine requirements and obligations that would engine’s useful life as specified in family for that model year. We may apply to the engines if you had received § 1039.101(g). make the approval subject to additional a certificate of conformity for them, conditions. unless we specifically waive certain Subpart F—Test Procedures (b) We may deny your application for requirements. certification if we determine that your (c) You must have emission data from § 1039.501 How do I run a valid emission engine family fails to comply with testing engines using the appropriate test? emission standards or other procedures that demonstrate (a) Use the equipment and procedures requirements of this part or the Act. Our compliance with the alternate for compression-ignition engines in 40 decision may be based on a review of all standards, unless the engines are CFR part 1065 to determine whether information available to us. If we deny identical in all material respects to engines meet the duty-cycle emission your application, we will explain why engines that you have previously standards in § 1039.101(a) and (b). in writing. certified to standards that are the same Measure the emissions of all the (c) In addition, we may deny your as, or more stringent than, the alternate pollutants we regulate in § 1039.101 as application or suspend or revoke your standards. specified in 40 CFR part 1065. Note that certificate if you do any of the (d) Unless we specify otherwise we do not allow partial-flow sampling following: elsewhere in this part or in 40 CFR part for measuring PM emissions on a

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laboratory dynamometer for transient (1) For discrete-mode testing, sample (c) During idle mode, operate the testing. Use the applicable duty cycles emissions separately for each mode, engine with the following parameters: specified in §§ 1039.505 and 1039.510. then calculate an average emission level (1) Hold the speed within your (b) Section 1039.515 describes the for the whole cycle using the weighting specifications. supplemental procedures for evaluating factors specified for each mode. (2) Set the engine to operate at its whether engines meet the not-to-exceed Calculate cycle statistics for the minimum fueling rate. emission standards in § 1039.101(e). sequence of modes and compare with (3) Keep engine torque under 5 (c) Measure smoke using the the specified values in 40 CFR part 1065 percent of maximum test torque. procedures in 40 CFR part 86, subpart to confirm that the test is valid. Operate (d) For full-load operating modes, I, for evaluating whether engines meet the engine and sampling system as operate the engine at its maximum the smoke standards in § 1039.105, follows: fueling rate. However, for constant- speed engines whose design prevents except that you may test two-cylinder (i) Engines with NOX aftertreatment. engines with an exhaust muffler like For engines that depend on full-load operation for extended periods, you may ask for approval under 40 CFR those installed on in-use engines. aftertreatment to meet the NOX emission 1065.10(c) to replace full-load operation (d) Use the fuels specified in standard, operate the engine for 5–6 with the maximum load for which the § 1039.104(e) and 40 CFR part 1065 to minutes, then sample emissions for 1– engine is designed to operate for perform valid tests. 3 minutes in each mode. You may extend the sampling time to improve extended periods. (1) For service accumulation, use the (e) See 40 CFR part 1065 for detailed test fuel or any commercially available measurement accuracy of PM emissions, using good engineering judgment. If you specifications of tolerances and fuel that is representative of the fuel that calculations. in-use engines will use. have a longer sampling time for PM emissions, calculate and validate cycle (f) For those cases where transient (2) For diesel-fueled engines, use the testing is not necessary, perform the appropriate diesel fuel specified in 40 statistics separately for the gaseous and PM sampling periods. steady-state test according to this CFR part 1065 for emission testing. section after an appropriate warm-up Unless we specify otherwise, the (ii) Engines without NOX aftertreatment. For other engines, period, consistent with 40 CFR part appropriate diesel test fuel is the ultra 1065, subpart F. low-sulfur diesel fuel. If we allow you operate the engine for at least 5 minutes, to use a test fuel with higher sulfur then sample emissions for at least 1 § 1039.510 Which duty cycles do I use for levels, identify the test fuel in your minute in each mode. Calculate cycle transient testing? application for certification and ensure statistics for the sequence of modes and (a) Measure emissions by testing the that the emission control information compare with the specified values in 40 engine on a dynamometer with one of label is consistent with your selection of CFR part 1065 to confirm that the test the following transient duty cycles to the test fuel (see § 1039.135(c)(9)). For is valid. determine whether it meets the transient example, do not test with ultra low- (2) For ramped-modal testing, start emission standards in § 1039.101(a): sulfur diesel fuel if you intend to label sampling at the beginning of the first (1) For variable-speed engines, use the your engines to allow use of diesel fuel mode and continue sampling until the transient duty cycle described in with sulfur concentrations up to 500 end of the last mode. Calculate Appendix VI of this part. ppm. emissions and cycle statistics the same (2) [Reserved] (e) You may use special or alternate as for transient testing. (b) The transient test sequence procedures to the extent we allow them (b) Measure emissions by testing the consists of an initial run through the under 40 CFR 1065.10. engine on a dynamometer with one of transient duty cycle from a cold start, 20 (f) This subpart is addressed to you as the following duty cycles to determine minutes with no engine operation, then a manufacturer, but it applies equally to whether it meets the steady-state a final run through the same transient anyone who does testing for you, and to emission standards in § 1039.101(b): duty cycle. Start sampling emissions us when we perform testing to (1) Use the 5-mode duty cycle or the immediately after you start the engine. determine if your engines meet emission corresponding ramped-modal cycle Calculate the official transient emission standards. described in Appendix II of this part for result from the following equation: constant-speed engines. Note that these Official transient emission result = 0.05 × § 1039.505 How do I test engines using cycles do not apply to all engines used cold-start emission rate + 0.95 × hot-start steady-state duty cycles, including ramped- in constant-speed applications, as emission rate. modal testing? described in § 1039.801. (c) Cool the engine down between This section describes how to test (2) Use the 6-mode duty cycle or the tests as described in 40 CFR 86.1335–90. engines under steady-state conditions. corresponding ramped-modal cycle (d) For validating cycle statistics, you In some cases, we allow you to choose described in Appendix III of this part for may delete from your regression the appropriate steady-state duty cycle variable-speed engines below 19 kW. analysis speed, torque, and power for an engine. In these cases, you must You may instead use the 8-mode duty points for the first 23 seconds and the use the duty cycle you select in your cycle or the corresponding ramped- last 25 seconds of the transient duty application for certification for all modal cycle described in Appendix IV cycle. testing you perform for that engine of this part if some engines from your family. If we test your engines to engine family will be used in § 1039.515 What are the test procedures confirm that they meet emission applications that do not involve related to not-to-exceed standards? standards, we will use the duty cycles governing to maintain engine operation (a) General provisions. The provisions you select for your own testing. We may around rated speed. in 40 CFR 86.1370–2007 apply for also perform other testing as allowed by (3) Use the 8-mode duty cycle or the determining whether an engine meets the Clean Air Act. corresponding ramped-modal cycle the not-to-exceed emission standards in (a) You may perform steady-state described in Appendix IV of this part § 1039.101(e). Interpret references to testing with either discrete-mode or for variable-speed engines at or above 19 vehicles and vehicle operation to mean ramped-modal cycles, as follows: kW. equipment and equipment operation.

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(b) Special PM zone. For engines refers to regeneration events that are (c) Applying adjustment factors. certified to a PM standard or FEL above expected to occur on average less than Apply adjustment factors based on 0.07 g/kW-hr, a modified NTE control once over the applicable transient duty whether regeneration occurs during the area applies for PM emissions only. The cycle or ramped-modal cycle, or on test run. You must be able to identify speeds and loads to be excluded are average less than once per typical mode regeneration in a way that is readily determined based on speeds B and C, in a discrete-mode test. apparent during all testing. determined according to the provisions (a) Developing adjustment factors. (1) If regeneration does not occur of 40 CFR 86.1360–2007(c). One of the Develop an upward adjustment factor during a test segment, add an upward following provisions applies: and a downward adjustment factor for adjustment factor to the measured (1) If the C speed is below 2400 rpm, each pollutant based on measured emission rate. Determine the upward exclude the speed and load points to the emission data and observed adjustment factor (UAF) using the right of or below the line formed by regeneration frequency. Adjustment following equation: factors should generally apply to an connecting the following two points on UAF = EFA ¥ EFL a plot of speed-vs.-power: entire engine family, but you may (i) 30% of maximum power at the B develop separate adjustment factors for (2) If regeneration occurs or starts to speed; however, use the power value different engine configurations within occur during a test segment, subtract a corresponding to the engine operation at an engine family. If you use adjustment downward adjustment factor from the 30% of maximum torque at the B speed factors for certification, you must measured emission rate. Determine the if this is greater than 30% of maximum identify the frequency factor, F, from downward adjustment factor (DAF) power at the B speed. paragraph (b) of this section in your using the following equation: ¥ (ii) 70% of maximum power at 100% application for certification and use the DAF = EFH EFA

speed. adjustment factors in all testing for that (d) Sample calculation. If EFL is 0.10 (2) If the C speed is at or above 2400 engine family. You may use carryover or g/kW-hr, EFH is 0.50 g/kW-hr, and F is rpm, exclude the speed and load points carry-across data to establish adjustment 0.1 (the regeneration occurs once for to the right of the line formed by factors for an engine family, as each ten tests), then: connecting the two points in paragraphs described in § 1039.235(d), consistent EFA = (0.1)(0.5 g/kW-hr) + (1.0 ¥ 0.1)(0.1 g/ (b)(2)(i) and (ii) of this section (the 30% with good engineering judgment. All kW-hr) = 0.14 g/kW-hr. and 50% torque/power points) and adjustment factors for regeneration are UAF = 0.14 g/kW-hr ¥ 0.10 g/kW-hr = 0.04 below the line formed by connecting the additive. Determine adjustment factors g/kW-hr. two points in paragraphs (b)(2)(ii) and separately for different test segments. DAF = 0.50 g/kW-hr ¥ 0.14 g/kW-hr = 0.36 (iii) of this section (the 50% and 70% For example, determine separate g/kW-hr. torque/power points). The 30%, 50%, adjustment factors for hot-start and and 70% torque/power points are cold-start test segments and for different Subpart G—Special Compliance defined as follows: modes of a discrete-mode steady-state Provisions (i) 30% of maximum power at the B test. You may use either of the following speed; however, use the power value different approaches for engines that use § 1039.601 What compliance provisions corresponding to the engine operation at aftertreatment with infrequent apply to these engines? 30% of maximum torque at the B speed regeneration events: Engine and equipment manufacturers, if this is greater than 30% of maximum (1) You may disregard this section if as well as owners, operators, and power at the B speed. regeneration does not significantly affect rebuilders of engines subject to the (ii) 50% of maximum power at 2400 emission levels for an engine family (or requirements of this part, and all other rpm. configuration) or if it is not practical to persons, must observe the provisions of (iii) 70% of maximum power at 100% identify when regeneration occurs. If this part, the requirements and speed. you do not use adjustment factors under prohibitions in 40 CFR part 1068, and this section, your engines must meet the provisions of the Act. § 1039.520 What testing must I perform to emission standards for all testing, § 1039.605 What provisions apply to establish deterioration factors? without regard to regeneration. Sections 1039.240 and 1039.245 engines already certified under the motor- (2) If your engines use aftertreatment vehicle program? describe the method for testing that technology with extremely infrequent (a) General provisions. If you are an must be performed to establish regeneration and you are unable to engine manufacturer, this section allows deterioration factors for an engine apply the provisions of this section, you you to introduce new nonroad engines family. may ask us to approve an alternate into commerce if they are already methodology to account for regeneration § 1039.525 How do I adjust emission levels certified to the requirements that apply events. to account for infrequently regenerating to compression-ignition engines under aftertreatment devices? (b) Calculating average adjustment factors. Calculate the average 40 CFR parts 85 and 86. If you comply This section describes how to adjust adjustment factor (EF ) based on the with all the provisions of this section, emission results from engines using A following equation: we consider the certificate issued under aftertreatment technology with 40 CFR part 86 for each engine to also infrequent regeneration events. For this EFA = (F)(EFH) + (1-F)(EFL) be a valid certificate of conformity section, ‘‘regeneration’’ means an Where: under this part 1039 for its model year, intended event during which emission F = the frequency of the regeneration event without a separate application for levels change while the system restores in terms of the fraction of tests during certification under the requirements of which the regeneration occurs. aftertreatment performance. For this part 1039. See § 1039.610 for EFH = measured emissions from a test example, exhaust gas temperatures may segment in which the regeneration similar provisions that apply to engines increase temporarily to remove sulfur occurs. certified to chassis-based standards for from adsorbers or to oxidize EFL = measured emissions from a test motor vehicles. accumulated particulate matter in a segment in which the regeneration does (b) Equipment-manufacturer trap. For this section, ‘‘infrequent’’ not occur. provisions. If you are not an engine

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manufacturer, you may produce (iii) Modify or design the engine (iii) State: ‘‘We produce each listed nonroad equipment using motor-vehicle cooling system so that temperatures or engine model for nonroad application engines under this section as long as the heat rejection rates are outside the without making any changes that could engine has been properly labeled as original engine manufacturer’s specified increase its certified emission levels, as specified in paragraph (d)(5) of this ranges. described in 40 CFR 1039.605.’’. section and you do not make any of the (3) You must show that fewer than 50 (e) Failure to comply. If your engines changes described in paragraph (d)(2) of percent of the engine model’s total sales do not meet the criteria listed in this section. You must also add the fuel- for the model year, from all companies, paragraph (d) of this section, they will inlet label we specify in § 1039.135(e). are used in nonroad applications, as be subject to the standards, If you modify the motor-vehicle engine follows: requirements, and prohibitions of this in any of the ways described in (i) If you are the original manufacturer part 1039 and the certificate issued paragraph (d)(2) of this section, we will of the engine, base this showing on your under 40 CFR part 86 will not be consider you a manufacturer of a new sales information. deemed to also be a certificate issued nonroad engine. Such engine (ii) In all other cases, you must get the under this part 1039. Introducing these modifications prevent you from using original manufacturer of the engine to engines into commerce without a valid the provisions of this section. confirm this based on its sales exemption or certificate of conformity (c) Liability. Engines for which you information. under this part violates the prohibitions meet the requirements of this section are (4) You must ensure that the engine in 40 CFR 1068.101(a)(1). exempt from all the requirements and has the label we require under 40 CFR (f) Data submission. We may require prohibitions of this part, except for part 86. you to send us emission test data on any those specified in this section. Engines (5) You must add a permanent applicable nonroad duty cycles. supplemental label to the engine in a exempted under this section must meet § 1039.610 What provisions apply to all the applicable requirements from 40 position where it will remain clearly visible after installation in the vehicles already certified under the motor- CFR parts 85 and 86. This paragraph (c) vehicle program? applies to engine manufacturers, equipment. In the supplemental label, do the following: (a) General provisions. If you are a equipment manufacturers who use these motor-vehicle manufacturer, this section engines, and all other persons as if these (i) Include the heading: ‘‘NONROAD ENGINE EMISSION CONTROL allows you to introduce new nonroad engines were used in a motor vehicle. engines or equipment into commerce if The prohibited acts of § 1068.101(a)(1) INFORMATION’’. (ii) Include your full corporate name the vehicle is already certified to the apply to these new engines and and trademark. You may instead requirements that apply under 40 CFR equipment; however, we consider the include the full corporate name and parts 85 and 86. If you comply with all certificate issued under 40 CFR part 86 trademark of another company you of the provisions of this section, we for each engine to also be a valid choose to designate. consider the certificate issued under 40 certificate of conformity under this part (iii) State: ‘‘THIS ENGINE WAS CFR part 86 for each motor vehicle to 1039 for its model year. If we make a ADAPTED FOR NONROAD USE also be a valid certificate of conformity determination that these engines do not WITHOUT AFFECTING ITS EMISSION for the engine under this part 1039 for conform to the regulations during their CONTROLS. THE EMISSION- its model year, without a separate useful life, we may require you to recall CONTROL SYSTEM DEPENDS ON THE application for certification under the them under 40 CFR part 85 or 40 CFR USE OF FUEL MEETING requirements of this part 1039. See 1068.505. SPECIFICATIONS THAT APPLY FOR § 1039.605 for similar provisions that (d) Specific requirements. If you are MOTOR-VEHICLE APPLICATIONS. apply to motor-vehicle engines an engine manufacturer and meet all the OPERATING THE ENGINE ON OTHER produced for nonroad equipment. following criteria and requirements FUELS MAY BE A VIOLATION OF (b) Equipment-manufacturer regarding your new nonroad engine, the FEDERAL LAW.’’. provisions. If you are not an engine engine is eligible for an exemption (iv) State the date you finished manufacturer, you may produce under this section: modifying the engine (month and year), nonroad equipment from motor vehicles (1) Your engine must be covered by a if applicable. under this section as long as the valid certificate of conformity issued (6) The original and supplemental equipment has the labels specified in under 40 CFR part 86. labels must be readily visible after the paragraph (d)(5) of this section and you (2) You must not make any changes to engine is installed in the equipment or, do not make any of the changes the certified engine that could if the equipment obscures the engine’s described in paragraph (d)(2) of this reasonably be expected to increase its emission control information label, the section. You must also add the fuel-inlet exhaust emissions for any pollutant, or equipment manufacturer must attach label we specify in § 1039.135(e). If you its evaporative emissions if it is subject duplicate labels, as described in 40 CFR modify the motor vehicle or its engine to evaporative-emission standards. For 1068.105. in any of the ways described in example, if you make any of the (7) You must make sure that nonroad paragraph (d)(2) of this section, we will following changes to one of these equipment produced under this section consider you a manufacturer of a new engines, you do not qualify for this will have the fueling label we specify in nonroad engine. Such modifications exemption: § 1039.135(c)(9)(i). prevent you from using the provisions (i) Change any fuel system parameters (8) Send the Designated Compliance of this section. from the certified configuration. Officer a signed letter by the end of each (c) Liability. Engines, vehicles, and (ii) Change, remove, or fail to properly calendar year (or less often if we tell equipment for which you meet the install any other component, element of you) with all the following information: requirements of this section are exempt design, or calibration specified in the (i) Identify your full corporate name, from all the requirements and engine manufacturer’s application for address, and telephone number. prohibitions of this part, except for certification. This includes (ii) List the engine models you expect those specified in this section. Engines aftertreatment devices and all related to produce under this exemption in the exempted under this section must meet components. coming year. all the applicable requirements from 40

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CFR parts 85 and 86. This applies to (4) The equipment must have the § 1039.615 What special provisions apply engine manufacturers, equipment vehicle emission control information to engines using noncommercial fuels? manufacturers, and all other persons as and fuel labels we require under 40 CFR In § 1039.115(e), we generally require if the nonroad equipment were motor 86.007–35. that engines meet emission standards vehicles. The prohibited acts of (5) You must add a permanent for any adjustment within the full range § 1068.101(a)(1) apply to these new supplemental label to the equipment in of any adjustable parameters. For pieces of equipment; however, we a position where it will remain clearly engines that use noncommercial fuels consider the certificate issued under 40 visible. In the supplemental label, do significantly different than the specified CFR part 86 for each motor vehicle to the following: test fuel of the same type, you may ask also be a valid certificate of conformity (i) Include the heading: ‘‘NONROAD to use the parameter-adjustment for the engine under this part 1039 for ENGINE EMISSION CONTROL provisions of this section instead of its model year. If we make a INFORMATION’’. those in § 1039.115(e). Engines certified determination that these engines, under this section must be in a separate vehicles, or equipment do not conform (ii) Include your full corporate name engine family. to the regulations during their useful and trademark. You may instead (a) If we approve your request, the life, we may require you to recall them include the full corporate name and following provisions apply: under 40 CFR part 86 or 40 CFR trademark of another company you (1) You must certify the engine using 1068.505. choose to designate. the test fuel specified in § 1039.501. (d) Specific requirements. If you are a (iii) State: ‘‘THIS VEHICLE WAS (2) You may produce the engine motor-vehicle manufacturer and meet ADAPTED FOR NONROAD USE without limits or stops that keep the all the following criteria and WITHOUT AFFECTING ITS EMISSION engine adjusted within the certified requirements regarding your new CONTROLS. THE EMISSION- range. nonroad equipment and its engine, the CONTROL SYSTEM DEPENDS ON THE (3) You must specify in-use engine is eligible for an exemption USE OF FUEL MEETING adjustments different than the under this section: SPECIFICATIONS THAT APPLY FOR adjustable settings appropriate for the (1) Your equipment must be covered MOTOR-VEHICLE APPLICATIONS. specified test fuel, consistent with the by a valid certificate of conformity as a OPERATING THE ENGINE ON OTHER provisions of paragraph (b)(1) of this motor vehicle issued under 40 CFR part FUELS MAY BE A VIOLATION OF section. 86. FEDERAL LAW.’’. (b) To produce engines under this (2) You must not make any changes to (iv) State the date you finished section, you must do the following: the certified vehicle that we could modifying the vehicle (month and year), (1) Specify in-use adjustments needed reasonably expect to increase its exhaust if applicable. so the engine’s level of emission control emissions for any pollutant, or its (6) The original and supplemental for each regulated pollutant is evaporative emissions if it is subject to labels must be readily visible in the equivalent to that from the certified evaporative-emission standards. For fully assembled equipment. configuration. (2) Add the following information to example, if you make any of the (7) Send the Designated Compliance the emission control information label following changes, you do not qualify Officer a signed letter by the end of each for this exemption: specified in § 1039.135: calendar year (or less often if we tell (i) Include instructions describing (i) Change any fuel system parameters you) with all the following information: from the certified configuration. how to adjust the engine to operate in (i) Identify your full corporate name, a way that maintains the effectiveness of (ii) Change, remove, or fail to properly address, and telephone number. install any other component, element of the emission-control system. design, or calibration specified in the (ii) List the equipment models you (ii) State: ‘‘THIS ENGINE IS vehicle manufacturer’s application for expect to produce under this exemption CERTIFIED TO OPERATE IN certification. This includes in the coming year. APPLICATIONS USING aftertreatment devices and all related (iii) State: ‘‘We produce each listed NONCOMMERCIAL FUEL. components. engine or equipment model for nonroad MALADJUSTMENT OF THE ENGINE IS (iii) Modify or design the engine application without making any changes A VIOLATION OF FEDERAL LAW cooling system so that temperatures or that could increase its certified emission SUBJECT TO CIVIL PENALTY.’’. heat rejection rates are outside the levels, as described in 40 CFR (3) Keep records to document the original vehicle manufacturer’s 1039.610.’’. destinations and quantities of engines specified ranges. (e) Failure to comply. If your engines, produced under this section. (iv) Add more than 500 pounds to the vehicles, or equipment do not meet the § 1039.620 What are the provisions for curb weight of the originally certified criteria listed in paragraph (d) of this exempting engines used solely for motor vehicle. section, the engines will be subject to competition? (3) You must show that fewer than 50 the standards, requirements, and The provisions of this section apply percent of the total sales as a motor prohibitions of this part 1039, and the for new engines built on or after January vehicle or a piece of nonroad certificate issued under 40 CFR part 86 1, 2006. equipment, from all companies, are will not be deemed to also be a (a) Equipment manufacturers may use used in nonroad applications, as certificate issued under this part 1039. uncertified engines if the vehicles or follows: Introducing these engines into equipment in which they are installed (i) If you are the original manufacturer commerce without a valid exemption or will be used solely for competition. of the vehicle, base this showing on certificate of conformity under this part (b) The definition of nonroad engine your sales information. violates the prohibitions in 40 CFR in 40 CFR 1068.30 excludes engines (ii) In all other cases, you must get the 1068.101(a)(1). used solely for competition. These original manufacturer of the vehicle to (f) Data submission. We may require engines are not required to comply with confirm this based on their sales you to send us emission test data on any this part 1039 or 40 CFR part 89, but 40 information. applicable nonroad duty cycles. CFR 1068.101 prohibits the use of

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competition engines for noncompetition engine separately. These provisions are (ii) For engines below 130 kW, you purposes. available over the following periods: may produce up to 525 units with (c) We consider a vehicle or piece of (1) These provisions are available for exempted engines within a power equipment to be one that will be used the years shown in the following table, category during the seven-year period solely for competition if it has features except as provided in paragraph (a)(2) of specified in paragraph (a) of this that are not easily removed that would this section: section, with no more than 150 units in make its use other than in competition any single year within a power category, unsafe, impractical, or highly unlikely. TABLE 1 OF § 1039.625.—GENERAL except as provided in paragraph (m) of (d) As an engine manufacturer, your AVAILABILITY OF ALLOWANCES this section. For engines at or above 130 engine is exempt without our prior kW, you may produce up to 350 units approval if you have a written request Power category Calendar years with exempted engines within a power for an exempted engine from the category during the seven-year period, equipment manufacturer showing the kW < 19 ...... 2008–2014 with no more than 100 units in any 19 ≤ kW < 56 ...... 2008–2014 basis for believing that the equipment ≤ single year within a power category. will be used solely for competition. You 56 kW < 130 ...... 2012–2018 Exemptions under this paragraph 130 ≤ kW ≤ 560 ...... 2011–2017 must permanently label engines kW < 560 ...... 2011–2017 (b)(2)(ii) may apply to engines from exempted under this section to clearly multiple engine families in a given year. indicate that they are to be used solely (2) If you do not use any allowances (c) Percentage calculation. Calculate for competition. Failure to properly in a power category before the earliest for each calendar year the percentage of label an engine will void the exemption. dates shown in the following table, you equipment with exempted engines from (e) We may discontinue an exemption may delay the start of the seven-year your total U.S.-directed production under this section if we find that period for using allowances under this within a power category if you need to engines are not used solely for section as follows: show that you meet the percent-of- competition. production allowances in paragraph TABLE 2 OF § 1039.625.—AVAIL- (b)(1) of this section. § 1039.625 What requirements apply under (d) Inclusion of engines not subject to the program for equipment-manufacturer ABILITY OF DELAYED ALLOWANCES Tier 4 standards. The following flexibility? provisions apply to engines that are not Power category Calendar years The provisions of this section allow subject to Tier 4 standards: equipment manufacturers to produce kW < 19 ...... (1) If you use the provisions of equipment with engines that are subject 19 ≤ kW < 56 ...... 2012–2018 § 1068.105(a) to use up your inventories to less stringent emission standards after 56 ≤ kW < 130 ...... 2014–2020 of engines not certified to new emission the Tier 4 emission standards begin to 130 ≤ kW ≤ 560 ...... 2014–2020 standards, do not include these units in apply. To be eligible to use these kW > 560 ...... 2015–2021 your count of equipment with exempted provisions, you must follow all the engines under paragraph (b) of this instructions in this section. See 40 CFR (b) Allowances. You may choose one section. However, you may include 89.102(d) and (e) for provisions that of the following options for each power these units in your count of total apply to equipment produced while category to produce equipment with equipment you produce for the given Tier 1, Tier 2, or Tier 3 standards apply. exempted engines under this section, year for the percentage calculation in See § 1039.626 for requirements that except as allowed under § 1039.627: paragraph (b)(1) of this section. apply specifically to companies that (1) Percent-of-production allowances. (2) If you install engines that are manufacture equipment outside the You may produce a certain number of exempted from the Tier 4 standards for United States and to companies that units with exempted engines calculated any reason, other than for equipment- import such equipment without using a percentage of your total sales manufacturer allowances under this manufacturing it. Engines and within a power category relative to your section, do not include these units in equipment you produce under this total U.S.-directed production volume. your count of exempted engines under section are exempt from the The sum of these percentages within a paragraph (b) of this section. However, prohibitions in 40 CFR 1068.101(a)(1), power category during the seven-year you may include these units in your subject to the provisions of this section. period specified in paragraph (a) of this count of total equipment you produce (a) General. If you are an equipment section may not exceed 80 percent, for the given year for the percentage manufacturer, you may introduce into except as allowed under paragraph calculation in paragraph (b)(1) of this commerce in the United States limited (b)(2) or (m) of this section. section. For example, if we grant a numbers of nonroad equipment with (2) Small-volume allowances. You hardship exemption for the engine engines exempted under this section. may determine an alternate allowance manufacturer, you may count these as You may use the exemptions in this for a specific number of exempted compliant engines under this section. section only if you have primary engines under this section using one of This paragraph (d)(2) applies only if the responsibility for designing and the following approaches for your U.S.- engine has a permanent label describing manufacturing equipment and your directed production volumes: why it is exempted from the Tier 4 manufacturing procedures include (i) You may produce up to 700 units standards. installing some engines in this with exempted engines within a power (3) Do not include equipment using equipment. Consider all U.S.-directed category during the seven-year period model year 2008 or 2009 engines equipment sales in showing that you specified in paragraph (a) of this certified under the provisions of meet the requirements of this section, section, with no more than 200 units in § 1039.101(c) in your count of including those from any parent or any single year within a power category, equipment using exempted engines. subsidiary companies and those from except as provided in paragraph (m) of However, you may include these units any other companies you license to this section. Engines within a power in your count of total equipment you produce equipment for you. If you category that are exempted under this produce for the given year for the produce a type of equipment that has section must be from a single engine percentage calculation in paragraph more than one engine, count each family within a given year. (b)(1) of this section.

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(4) You may start using the Must meet all you intend to comply under paragraph allowances under this section for standards and (b)(1) or (b)(2) of this section. engines that are not yet subject to Tier Engines in the following requirements that (vi) The number of units in each power category... applied in the fol- power category you have sold in 4 standards, as long as the seven-year lowing model period for using allowances under the year... previous calendar years under 40 CFR Tier 2 or Tier 3 program has expired 89.102(d). (see 40 CFR 89.102(d)). Table 3 of this (i) 19 ≤ kW < 56 ...... 2008 (2) For each year that you use the section shows the years for which this (ii) 56 ≤ kW < 130 ...... 2012 provisions of this section, send the applies. To use these early allowances, (iii) 130 ≤ kW ≤ 560 ...... 2011 Designated Compliance Officer and the you must use engines that meet the (iv) kW > 560 ...... 2011 Designated Enforcement Officer a emission standards described in written report by March 31 of the paragraph (e) of this section. You must (3) In all other cases, engines at or following year. Include in your report also count these units or calculate these above 37 kW and at or below 560 kW the total number of engines you sold in percentages as described in paragraph must meet the appropriate Tier 3 the preceding year for each power (c) of this section and apply them standards described in § 89.112. Engines category, based on actual U.S.-directed toward the total number or percentage below 37 kW and engines above 560 kW production information. Also identify of equipment with exempted engines we must meet the appropriate Tier 2 the percentages of U.S.-directed allow for the Tier 4 standards as standards described in § 89.112. production that correspond to the described in paragraph (b) of this (f) Equipment labeling. You must add number of units in each power category section. The maximum number of a permanent label, written legibly in and the cumulative numbers and cumulative early allowances under this English, to the engine or another readily percentages of units for all the units you paragraph (d)(4) is 10 percent under the visible part of each piece of equipment have sold under this section for each percent-of-production allowance or 100 you produce with exempted engines power category. You may omit the units under the small-volume under this section. This label, which percentage figures if you include in the allowance. For example, if you produce supplements the engine manufacturer’s report a statement that you will not be 5 percent of your equipment with emission control information label, using the percent-of-production engines between 130 and 560 kW that must include at least the following allowances in paragraph (b)(1) of this use allowances under this paragraph items: section. (d)(4) in 2009, you may use up to an (1) The label heading ‘‘EMISSION (h) Recordkeeping. Keep the following additional 5 percent of your allowances CONTROL INFORMATION’’. records of all equipment with exempted in 2010. If you use allowances for 5 (2) Your corporate name and engines you produce under this section percent of your equipment in both 2009 trademark. for at least five full years after the final (3) The calendar year in which the and 2010, your 80 percent allowance for year in which allowances are available equipment is manufactured. 2011–2017 in the 130–560 kW power for each power category: (4) The name, e-mail address, and category decreases to 70 percent. (1) The model number, serial number, phone number of a person to contact for Manufacturers using allowances under and the date of manufacture for each further information. engine and piece of equipment. this paragraph (d)(4) must comply with (5) The following statement: the notification and reporting (2) The maximum power of each requirements specified in paragraph (g) THIS EQUIPMENT [or identify the type of engine. of this section. equipment] HAS AN ENGINE THAT MEETS (3) The total number or percentage of U.S. EPA EMISSION STANDARDS UNDER equipment with exempted engines, as 40 CFR 1039.625. TABLE 3 OF § 1039.625.—YEARS FOR described in paragraph (b) of this EARLY ALLOWANCES (g) Notification and reporting. You section and all documentation must notify us of your intent to use the supporting your calculation. Maximum engine power Calendar years provisions of this section and send us (4) The notifications and reports we an annual report to verify that you are require under paragraph (g) of this kW < 19 ...... 2007 not exceeding the allowances, as section. 19 ≤ kW < 37 ...... 2006–2011 follows: (i) Enforcement. Producing more ≤ 37 kW < 56 ...... 2011 (1) Before January 1 of the first year exempted engines or equipment than we 56 ≤ kW < 75 ...... 2011 allow under this section or installing ≤ you intend to use the provisions of this 75 kW < 130 ...... 2010–2011 engines that do not meet the emission 130 ≤ kW < 225 ...... 2010 section, send the Designated 225 ≤ kW < 450 ...... 2008–2010 Compliance Officer and the Designated standards of paragraph (e) of this section 450 ≤ kW ≤ 560 ...... 2009–2010 Enforcement Officer a written notice of violates the prohibitions in 40 CFR KW > 560 ...... your intent, including: 1068.101(a)(1). You must give us the (i) Your company’s name and address, records we require under this section if (e) Standards. If you produce and your parent company’s name and we ask for them (see 40 CFR equipment with exempted engines address, if applicable. 1068.101(a)(2)). under this section, the engines must (ii) Whom to contact for more (j) Provisions for engine meet emission standards at least as information. manufacturers. As an engine stringent as the following: (iii) The calendar years in which you manufacturer, you may produce (1) If you are using the provisions of expect to use the exemption provisions exempted engines as needed under this paragraph (d)(4) of this section, engines of this section. section. You do not have to request this must meet the applicable Tier 1 (iv) The name and address of the exemption for your engines, but you emission standards described in company that produces the engines you must have written assurance from § 89.112. will be using for the equipment equipment manufacturers that they need (2) If you are using the provisions of exempted under this section. a certain number of exempted engines paragraph (a)(2) of this section, engines (v) Your best estimate of the number under this section. Send us an annual must be certified under this part 1039 as of units in each power category you will report of the engines you produce under follows: produce under this section and whether this section, as described in

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§ 1039.250(a). For engines produced (2) To apply for exemptions under only for the specific equipment models under the provisions of paragraph (a)(2) this paragraph (m), send the Designated covered by your request. of this section, you must certify the Compliance Officer and the Designated (4) We may approve your request to engines under this part 1039. For all Enforcement Officer a written request as increase the allowances for the 19–56 other exempt engines, the engines must soon as possible before you are in kW power category under paragraph meet the emission standards in violation. In your request, include the (b)(2) of this section, subject to the paragraph (e) of this section and you following information: following limitations: must meet all the requirements of (i) Describe your process for designing (i) You are eligible for additional § 1039.260. If you show under equipment. allowances under this paragraph (m)(4) § 1039.260(c) that the engines are (ii) Describe how you normally work only if you are a small equipment identical in all material respects to cooperatively or concurrently with your manufacturer and you do not use the engines that you have previously engine supplier to design products. provisions of paragraph (m)(3) of this certified to one or more FELs above the (iii) Describe the engineering or section to obtain additional allowances standards specified in paragraph (e) of technical problems causing you to for the 19–56 kW power category. this section, you must supply sufficient request the exemption and explain why (ii) You must use up all the available credits for these engines. Calculate these you have not been able to solve them. allowances for the 19–56 kW power credits under subpart H of this part Describe the extreme and unusual category under paragraph (b)(2) of this using the previously certified FELs and circumstances that led to these section in a given year before using any the alternate standards. You must meet problems and explain how they were additional allowances under this the labeling requirements in 40 CFR unavoidable. paragraph (m)(4). 89.110, but add the following statement (iv) Describe any information or (iii) Base your request only on instead of the compliance statement in products you received from your engine equipment you produce with engines at 40 CFR 89.110(b)(10): supplier related to equipment design— or above 19 kW and below 37 kW. You may use any additional allowances only THIS ENGINE MEETS U.S. EPA EMISSION such as written specifications, STANDARDS UNDER 40 CFR 1039.625. performance data, or prototype for equipment you produce with SELLING OR INSTALLING THIS ENGINE engines—and when you received it. engines at or above 19 kW and below 37 FOR ANY PURPOSE OTHER THAN FOR (v) Compare the design processes of kW. THE EQUIPMENT FLEXIBILITY the equipment model for which you (iv) The total allowances under either PROVISIONS OF 40 CFR 1039.625 MAY BE need additional exemptions and that for paragraph (b)(2)(i) or (ii) of this section A VIOLATION OF FEDERAL LAW SUBJECT other models for which you do not need for the 19–56 kW power category will TO CIVIL PENALTY. additional exemptions. Explain the not exceed 1,100 units. (k) Other exemptions. See 40 CFR technical differences that justify your (v) Any allowances we approve under 1068.255 for exemptions based on request. this paragraph (m)(4) expire 36 months hardship for equipment manufacturers (vi) Describe your efforts to find and after the provisions of this section start and secondary engine manufacturers. use other compliant engines, or for this power category, as described in (l) [Reserved] otherwise explain why none is paragraph (a) of this section. These (m) Additional exemptions for available. additional allowances are not subject to technical or engineering hardship. You (vii) Describe the steps you have taken the annual limits specified in paragraph may request additional engine to minimize the scope of your request. (b)(2) of this section. You may use these allowances under paragraph (b)(1) of (viii) Include other relevant allowances only for the specific this section for 19–560 kW power information. You must give us other equipment models covered by your categories or, if you are a small relevant information if we ask for it. request. equipment manufacturer, under (ix) Estimate the increased percent of (5) For purposes of this paragraph (m), paragraph (b)(2) of this section for production you need for each small equipment manufacturer means a engines at or above 19 and below 37 equipment model covered by your small-business equipment manufacturer kW. However, you may use these extra request, as described in paragraph that had annual U.S.-directed allowances only for those equipment (m)(3) of this section. Estimate the production volume of equipment using models for which you, or an affiliated increased number of allowances you nonroad diesel engines between 19 and company, do not also produce the need for each equipment model covered 56 kW of no more than 3,000 units in engine. After considering the by your request, as described in 2002 and all earlier calendar years, and circumstances, we may permit you to paragraph (m)(4) of this section. has 750 or fewer employees (500 or introduce into commerce equipment (3) We may approve your request to fewer employees for nonroad equipment with such engines that do not comply increase the allowances under manufacturers that produce no with Tier 4 emission standards, as paragraph (b)(1) of this section, subject construction equipment or industrial follows: to the following limitations: trucks). For manufacturers owned by a parent company, the production limit (1) We may approve additional (i) The additional allowances will not applies to the production of the parent exemptions if extreme and unusual exceed 70 percent for each power company and all its subsidiaries and the circumstances that are clearly outside category. employee limit applies to the total your control and that could not have (ii) You must use up the allowances number of employees of the parent been avoided with reasonable discretion under paragraph (b)(1) of this section company and all its subsidiaries. have resulted in technical or before using any additional allowance engineering problems that prevent you under this paragraph (m). § 1039.626 What special provisions apply from meeting the requirements of this (iii) Any allowances we approve to equipment imported under the part. You must show that you exercised under this paragraph (m)(3) expire 24 equipment-manufacturer flexibility prudent planning and have taken all months after the provisions of this program? reasonable steps to minimize the scope section start for a given power category, This section describes requirements of your request for additional as described in paragraph (a) of this that apply to equipment manufacturers allowances. section. You may use these allowances using the provisions of § 1039.625 for

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equipment produced outside the United promulgated thereunder shall be appropriate bond amount is $180,000. If States. Note that § 1039.625 limits these governed by the Clean Air Act. your estimated or actual engine imports provisions to equipment manufacturers (4) The substantive and procedural increase beyond the level appropriate that install some engines and have laws of the United States shall apply to for your current bond payment, you primary responsibility for designing and any civil or criminal enforcement action must post additional bond to reflect the manufacturing equipment. Companies against you or any of your officers or increased sales within 90 days after you that import equipment into the United employees related to the provisions of change your estimate or determine the States without meeting these criteria are this section. actual sales. You may not decrease your not eligible for these allowances. Such (5) Provide the notification required bond. importers may import equipment with by § 1039.625(g). Include in the notice (ii) You may meet the bond exempted engines only as described in of intent in § 1039.625(g)(1) a requirements of this section with any of paragraph (b) of this section. commitment to comply with the the following methods: (a) As a foreign equipment requirements and obligations of (A) Get a bond from a third-party manufacturer, you or someone else may § 1039.625 and this section. This surety that is cited in the U.S. import equipment with exempted commitment must be signed by the Department of Treasury Circular 570, engines under this section if you owner or president. ‘‘Companies Holding Certificates of comply with the provisions in (6) You, your agents, officers, and Authority as Acceptable Sureties on § 1039.625 and commit to the following: employees must not seek to detain or to Federal Bonds and as Acceptable (1) Give any EPA inspector or auditor impose civil or criminal remedies Reinsuring Companies.’’ Maintain this complete and immediate access to against EPA inspectors or auditors, bond for five years after the applicable inspect and audit, as follows: whether EPA employees or EPA allowance period expires, or five years (i) Inspections and audits may be contractors, for actions performed after you use up all the available announced or unannounced. within the scope of EPA employment allowances under § 1039.625, whichever (ii) Inspections and audits may be by related to the provisions of this section. comes first. EPA employees or EPA contractors. (7) By submitting notification of your (B) Get the Designated Enforcement (iii) You must provide access to any intent to use the provisions of Officer to approve a waiver from the location where— § 1039.625, producing and exporting for bonding requirement, as long as you can (A) Any nonroad engine, equipment, resale to the United States nonroad show that you have assets of an or vehicle is produced or stored. equipment under this section, or taking appropriate liquidity and value readily (B) Documents related to other actions to comply with the available in the United States. manufacturer operations are kept. requirements of this part, you, your (iii) If you forfeit some or all of your (C) Equipment, engines, or vehicles agents, officers, and employees, without bond in an enforcement action, you are tested or stored for testing. exception, become subject to the full must post any appropriate bond for (iv) You must provide any documents operation of the administrative and continuing importation within 90 days requested by an EPA inspector or judicial enforcement powers and after you forfeit the bond amount. auditor that are related to matters provisions of the United States as covered by the inspections or audit. described in 28 U.S.C. 1605(a)(2), TABLE 1 OF § 1039.626.—PER- (v) EPA inspections and audits may without limitation based on sovereign ENGINE BOND VALUES include review and copying of any immunity, for conduct that violates the documents related to demonstrating requirements applicable to you under For engines with maximum The per-en- compliance with the exemptions in this part 1039—including such conduct engine power falling in the gine bond § 1039.625. that violates 18 U.S.C. 1001, 42 U.S.C. following ranges . . . value is . . . (vi) EPA inspections and audits may 7413(c)(2), or other applicable kW < 19 ...... $150 include inspection and evaluation of provisions of the Clean Air Act’with 19 ≤ kW < 56 ...... 300 complete or incomplete equipment, respect to actions instituted against you 56 ≤ kW < 130 ...... 500 engines, or vehicles, and interviewing and your agents, officers, and employees 130 ≤ kW < 225 ...... 1,000 employees. in any court or other tribunal in the 225 ≤ kW < 450 ...... 3,000 (vii) You must make any of your United States. kW ≥ 450 ...... 8,000 employees available for interview by the (8) Any report or other document you EPA inspector or auditor, on request, submit to us must be in the English (iv) You will forfeit the proceeds of within a reasonable time period. language, or include a complete the bond posted under this paragraph (viii) You must provide English translation in English. (a)(9) if you need to satisfy any United language translations of any documents (9) You must post a bond to cover any States administrative final order or to an EPA inspector or auditor, on potential enforcement actions under the judicial judgment against you arising request, within 10 working days. Clean Air Act before you or anyone else from your conduct in violation of this (ix) You must provide English- imports your equipment under this part 1039, including such conduct that language interpreters to accompany EPA section, as follows: violates 18 U.S.C. 1001, 42 U.S.C. inspectors and auditors, on request. (i) The value of the bond is based on 7413(c)(2), or other applicable (2) Name an agent for service of the per-engine bond values shown in provisions of the Clean Air Act. process located in the District of Table 1 of this section and on the (b) The provisions of this paragraph Columbia. Service on this agent highest number of engines in each (b) apply to importers that do not install constitutes service on you or any of your power category you produce in any engines into equipment and do not have officers or employees for any action by single calendar year under the primary responsibility for designing and EPA or otherwise by the United States provisions of § 1039.625. For example, if manufacturing equipment. Such related to the requirements of this part. you have projected U.S.-directed importers may import equipment with (3) The forum for any civil or criminal production volumes of 100 exempt engines exempted under § 1039.625 enforcement action related to the engines in the 19–56 kW power category only if each engine is exempted under provisions of this section for violations and 300 exempt engines in the 56–130 an allowance provided to an equipment of the Clean Air Act or regulations kW power category in 2013, the manufacturer meeting the requirements

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of § 1039.625 and this section. You must (iv) The number of units in each using engines at or above 19 kW notify us of your intent to use the power category you have imported in certified to specified levels earlier than provisions of this section and send us previous calendar years under 40 CFR otherwise required. an annual report, as follows: 89.102(d). (a) For early-compliant engines to (1) Before January 1 of the first year (2) For each year that you use the generate offsets for use under this you intend to use the provisions of this provisions of this section, send the section, the following general provisions section, send the Designated Designated Compliance Officer and the apply: Compliance Officer and the Designated Designated Enforcement Officer a Enforcement Officer a written notice of written report by March 31 of the (1) The engine manufacturer must your intent, including: following year. Include in your report comply with the provisions of (i) Your company’s name and address, the total number of engines you § 1039.104(a)(1) for the offset-generating and your parent company’s name and imported under this section in the engines. address, if applicable. preceding calendar year, broken down (2) Engines you install in your (ii) The name and address of the by engine manufacturer and by equipment after December 31 of the companies that produce the equipment equipment manufacturer. years specified in § 1039.104(a)(1) do and engines you will be importing not generate allowances under this under this section. § 1039.627 What are the incentives for (iii) Your best estimate of the number equipment manufacturers to use cleaner section, even if the engine manufacturer of units in each power category you will engines? generated offsets for that engine under import under this section in the This section allows equipment § 1039.104(a). upcoming calendar year, broken down manufacturers to generate additional (3) Offset-generating engines must be by equipment manufacturer and power allowances under the provisions of certified to the following standards category. § 1039.625 by producing equipment under this part 1039:

You may reduce the number of en- If the engine’s max- And you install . . . Certified early to the . . . gines in the same power category In later model imum power is . . . that are required to meet the . . . years by . . .

(i) kW ≥ 19 ...... One engine ...... Emissions standards in § 1039.101 .. Standards in Tables 2 through 7 of One engine. § 1039.102 or in § 1039.101. (ii) 56 ≤ kW < 130 ..... Two engines ...... NOX standards in § 1039.102(d)(1), Standards in Tables 2 through 7 of One engine. and NMHC standard of 0.19 g/kW- § 1039.102 or in § 1039.101. hr, a PM standard of 0.02 g/kW-hr, and a CO standard of 5.0 g/kW-hr. (iii) 130 ≤ kW < 560 .. Two engines ...... NOX standards in § 1039.102(d)(2), Standards in Tables 2 through 7 of One engine. an NMHC standard of 0.19 g/kW- § 1039.102 or in § 1039.101. hr, a PM standard of 0.02 g/kW-hr, and a CO standard of 3.5 g/kW-hr.

(b) Using engine offsets. (1) You may combination that totals 37,500 kW- (4) For engines above 560 kW, use engine offsets generated under engines. whether you use engines certified to the paragraph (a) of this section to generate (2) You may decline to use the offsets. standards for generator-set engines. additional allowances under § 1039.625, If you decline, the engine manufacturer (e) In-use fuel. If the engine as follows: may use the provisions of manufacturer certifies using ultra low- (i) For each engine offset, you may § 1039.104(a)(1). sulfur diesel fuel, you must take steps increase the number of available (c) Limitation on offsets for engines to ensure that the in-use engines in the allowances under § 1039.625(b) for that above 560 kW. For engines above 560 family will use diesel fuel with a sulfur power category by one engine for the kW, you must track how many engines concentration no greater than 15 ppm. years indicated. you install in generator sets and how For example, selling equipment only many you install in other applications into applications where the operator (ii) For engines in 56–560 kW power under the provisions of this section. commits to a central-fueling facility categories, you may transfer engine Offsets from generator-set engines may with ultra low-sulfur diesel fuel offsets across power categories within be used only for generator-set engines. throughout its lifetime would meet this this power range. Calculate the number Offsets from engines for other requirement. of additional allowances by scaling the applications may be used only for other § 1039.630 What are the economic number of generated engine offsets applications besides generator sets. according to the ratio of engine power hardship provisions for equipment for offset and allowance engines. Make (d) Reporting. When you submit your manufacturers? this calculation for all your offset first annual report under § 1039.625(g), If you qualify for the economic engines for which you will transfer include the following additional hardship provisions specified in 40 CFR offsets under this paragraph (b)(1)(ii), information related to the engines you 1068.255, we may approve your then round the result to determine the use to generate offsets under this hardship application subject to the section: total number of available power- following additional conditions: weighted allowances. For example, if (1) The name of each engine family (a) You must show that you have used you generate engine offsets for 75 500- involved. up the allowances to produce kW engines, you may generate up to (2) The number of engines from each equipment with exempted engines 37,500 kW-engines of power-weighted power category. under § 1039.625. allowances. You may apply this to 375 (3) The maximum engine power of (b) You may produce equipment 100-kW engines or any other each engine. under this section for up to 12 months

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total (or 24 months total for small- obligates that company to take the units (TRUs). The operating restrictions volume manufacturers). following steps: and characteristics in paragraph (f) of (1) Meet the emission warranty this section define engines that are not § 1039.635 What are the hardship requirements that apply under used in TRUs. All provisions of this part provisions for engine manufacturers? § 1039.120. This may involve a separate apply for TRU engines, except as If you qualify for the hardship agreement involving reimbursement of specified in this section. provisions specified in 40 CFR warranty-related expenses. (a) You may certify engines under this 1068.245, we may approve a period of (2) Report all warranty-related section with the following special delayed compliance for up to one model information to the certificate holder. provisions: year total (or two model years total for (b) In your application for (1) The engines are not subject to the small-volume manufacturers). If you certification, identify the company transient emission standards of subpart qualify for the hardship provisions whose trademark you will use and B of this part. specified in 40 CFR 1068.250 for small- describe the arrangements you have (2) The steady-state emission volume manufacturers, we may approve made to meet your requirements under standards in subpart B of this part apply a period of delayed compliance for up this section. for emissions measured over the steady- to two model years total. (c) You remain responsible for state test cycle described in paragraph meeting all the requirements of this § 1039.640 What special provisions apply (b) of this section instead of the to branded engines? chapter, including warranty and defect- otherwise applicable duty cycle reporting provisions. The following provisions apply if you described in § 1039.505. identify the name and trademark of § 1039.645 What special provisions apply (b) Measure steady-state emissions another company instead of your own to engines used for transportation using the procedures specified in on your emission control information refrigeration units? § 1039.505, except for the duty cycles, label, as provided by § 1039.135(c)(2): Manufacturers may choose to use the as follows: (a) You must have a contractual provisions of this section for engines (1) The following duty cycle applies agreement with the other company that used in transportation refrigeration for discrete-mode testing:

TABLE 1 OF § 1039.645.—DISCRETE-MODE CYCLE FOR TRU ENGINES

Observed Weighting Mode number Engine speed 1 torque 2 factors

1 ...... Maximum test speed ...... 75 0.25 2 ...... Maximum test speed ...... 50 0.25 3 ...... Intermediate test speed ...... 75 0.25 4 ...... Intermediate test speed ...... 50 0.25 1 Speed terms are defined in 40 CFR part 1065. 2 The percent torque is relative to the maximum torque at the given engine speed.

(2) The following duty cycle applies for ramped-modal testing:

TABLE 2 OF § 1039.645.—RAMPED-MODAL CYCLE FOR TRU ENGINES

RMC Time in mode Torque Engine speed 1 mode (seconds) (percent) 23

1a Steady-state ...... 290 Intermediate Speed ...... 75. 1b Transition ...... 20 Intermediate Speed ...... Linear Transition. 2a Steady-state ...... 280 Intermediate Speed ...... 50. 2b Transition ...... 20 Linear Transition ...... Linear Transition. 3a Steady-state ...... 280 Maximum Test Speed ...... 75. 3b Transition ...... 20 Maximum Test Speed ...... Linear Transition. 4 Steady-state ...... 290 Maximum Test Speed ...... 50 1 Speed terms are defined in 40 CFR part 1065. 2 The percent torque is relative to the maximum torque at the commanded engine speed. 3 Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the torque setting of the current mode to the torque setting of the next mode, and simultaneously command a similar linear progression for engine speed if there is a change in speed setting.

(c) Engines certified under this UNITS. INSTALLING OR USING THIS (3) Keep records to document the section must be certified in a separate ENGINE IN ANY OTHER destinations and quantities of engines engine family that contains only TRU APPLICATION MAY BE A VIOLATION produced under this section. engines. OF FEDERAL LAW SUBJECT TO CIVIL (e) All engines certified under this (d) You must do the following for PENALTY.’’. section must comply with NTE each engine certified under this section: (2) State in the emission-related standards, as described in § 1039.101 or (1) State on the emission control installation instructions all steps § 1039.102 for the applicable model information label: ‘‘THIS ENGINE IS necessary to ensure that the engine will year, except that the NTE standards are CERTIFIED TO OPERATE ONLY IN operate only in the modes covered by not limited with respect to operating TRANSPORTATION REFRIGERATION the test cycle described in this section. speeds and loads. In your application

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for certification, certify that all the (b) If you introduce an engine into (4) Buyer means the entity that engines in the engine family comply commerce in the United States under receives emission credits as a result of with the not-to-exceed emission this section, you must meet the labeling a trade. standards for all normal operation and requirements in 40 CFR 89.110, but add (5) Reserved emission credits means use. The deficiency provisions of the following statement instead of the emission credits you have generated § 1039.104(d) do not apply to these compliance statement in 40 CFR that we have not yet verified by engines. This paragraph (e) applies 89.110(b)(10): reviewing your final report. whether or not the engine would THIS ENGINE DOES NOT COMPLY WITH (6) Seller means the entity that otherwise be subject to NTE standards. U.S. EPA TIER 4 EMISSION provides emission credits during a (f) An engine is not considered to be REQUIREMENTS. IMPORTING THIS trade. used in a TRU if any of the following ENGINE INTO THE UNITED STATES OR (7) Standard means the emission is true: ANY TERRITORY OF THE UNITED STATES standard that applies under subpart B of (1) The engine is installed in any EXCEPT GUAM, AMERICAN SAMOA, OR this part for engines not participating in equipment other than refrigeration units THE COMMONWEALTH OF THE the ABT program of this subpart. for railcars, truck trailers, or other NORTHERN MARIANA ISLANDS MAY BE (8) Trade means to exchange emission A VIOLATION OF FEDERAL LAW SUBJECT credits, either as a buyer or seller. freight vehicles. TO CIVIL PENALTY. (2) The engine operates in any mode (d) You may not use emission credits not covered by the test cycle described (c) Introducing into commerce an generated under this subpart to offset in this section, except as follows: engine exempted under this section in any emissions that exceed an FEL or (i) The engine may operate briefly at any state or territory of the United States standard. This applies for all testing, idle. Note, however, that TRU engines other than Guam, American Samoa, or including certification testing, in-use must meet NTE emission standards the Commonwealth of the Northern testing, selective enforcement audits, under any type of operation, including Mariana Islands, throughout its lifetime, and other production-line testing. idle, as described in paragraph (e) of violates the prohibitions in 40 CFR However, if emissions from an engine this section. 1068.101(a)(1), unless it is exempt exceed an FEL or standard (for example, (ii) The engine may have a minimal under a different provision. during a selective enforcement audit), amount of transitional operation you may use emission credits to § 1039.660 What special provisions apply recertify the engine family with a higher between two allowable modes. As an to Independent Commercial Importers? example, a thirty-second transition FEL that applies only to future period would clearly not be considered Under § 1039.801, certain engines are production. minimal. considered to be new engines when they (e) Engine families that use emission (iii) The engine as installed may are imported into the United States, credits for one or more pollutants may experience up to a 2-percent decrease in even if they have previously been used not generate positive emission credits load at a given setpoint over any 10- outside the country. Independent for another pollutant. minute period, and up to a 15-percent Commercial Importers may use the (f) Emission credits may be used in decrease in load at a given setpoint over provisions of 40 CFR part 89, subpart G, the model year they are generated or in any 60-minute period. and 40 CFR 89.906(b) to receive a future model years. Emission credits (3) The engine is sold in a certificate of conformity for engines may not be used for past model years. configuration that allows the engine to meeting all the requirements of this part (g) You may increase or decrease an operate in any mode not covered by the 1039. FEL during the model year by amending test cycle described in this section. For your application for certification under Subpart H—Averaging, Banking, and example, this section does not apply to § 1039.225. The new FEL may apply Trading for Certification an engine sold without a governor only to engines you have not already introduced into commerce. Each limiting operation only to those modes § 1039.701 General provisions. covered by the test cycle described in engine’s emission control information (a) You may average, bank, and trade this section. label must include the applicable FELs. (ABT) emission credits for purposes of (4) The engine is subject to Tier 3 or certification as described in this subpart § 1039.705 How do I generate and earlier standards, or phase-out Tier 4 to show compliance with the standards calculate emission credits? standards. of this part. Participation in this The provisions of this section apply § 1039.650 [Reserved] program is voluntary. separately for calculating emission (b) Section 1039.740 restricts the use credits for NOX, NOX+NMHC, or PM. § 1039.655 What special provisions apply of emission credits to certain averaging (a) Calculate positive emission credits to engines sold in Guam, American Samoa, sets. for an engine family that has an FEL or the Commonwealth of the Northern below the otherwise applicable Mariana Islands? (c) The definitions of Subpart I of this standard. Calculate negative emission (a) The prohibitions in part apply to this subpart. The following credits for an engine family that has an § 1068.101(a)(1) do not apply to an definitions also apply: FEL above the otherwise applicable engine if the following conditions are (1) Actual emission credits means standard. met: emission credits you have generated (b) For each participating engine (1) The engine is intended for use and that we have verified by reviewing your family, calculate positive or negative will be used in Guam, American Samoa, final report. emission credits relative to the or the Commonwealth of the Northern (2) Averaging set means a set of otherwise applicable emission standard. Mariana Islands. engines in which emission credits may Round calculated emission credits to (2) The engine meets the latest be exchanged only with other engines in the nearest kilogram (kg), using applicable emission standards in 40 the same averaging set. consistent units throughout the CFR 89.112. (3) Broker means any entity that following equation: (3) You meet all the requirements of facilitates a trade of emission credits Emission credits (kg) = (Std ¥ FEL) × § 1039.260. between a buyer and seller. (Volume) × (AvgPR) × (UL) × (10¥3)

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Where: emission credits in the same model declare the FELs you select for the Std = the emission standard, in grams per year, from emission credits you have engine family for each pollutant for kilowatt-hour, that applies under subpart banked, or from emission credits you which you are using the ABT program. B of this part for engines not obtain through trading. Your FELs must comply with the participating in the ABT program of this specifications of subpart B of this part, § 1039.715 How do I bank emission subpart (the ‘‘otherwise applicable including the FEL caps. FELs must be standard’’). credits? expressed to the same number of FEL = the family emission limit for the (a) Banking is the retention of engine family, in grams per kilowatt- decimal places as the applicable emission credits by the manufacturer standards. hour. generating the emission credits for use Volume = the number of engines eligible to (b) Include the following in your in averaging or trading in future model participate in the averaging, banking, application for certification: and trading program within the given years. You may use banked emission credits only within the averaging set in (1) A statement that, to the best of engine family during the model year, as your belief, you will not have a negative described in paragraph (c) of this section. which they were generated. AvgPR = the average maximum engine power (b) In your application for balance of emission credits for any of all the engine configurations within an certification, designate any emission averaging set when all emission credits engine family, calculated on a sales- credits you intend to bank. These are calculated at the end of the year. weighted basis, in kilowatts. emission credits will be considered (2) Detailed calculations of projected UL = the useful life for the given engine reserved credits. During the model year emission credits (positive or negative) family, in hours. and before the due date for the final based on projected production volumes. (c) In your application for report, you may redesignate these If your engine family will generate certification, base your showing of emission credits for averaging or positive emission credits, state compliance on projected production trading. specifically where the emission credits volumes for engines whose point of first (c) You may use banked emission will be applied (for example, to which retail sale is in the United States. As credits from the previous model year for engine family they will be applied in described in § 1039.730, compliance averaging or trading before we verify averaging, whether they will be traded, with the requirements of this subpart is them, but we may revoke these emission or whether they will be reserved for determined at the end of the model year credits if we are unable to verify them banking). If you have projected negative based on actual production volumes for after reviewing your reports or auditing emission credits for an engine family, engines whose point of first retail sale your records. state the source of positive emission is in the United States. Do not include (d) Reserved credits become actual credits to offset the negative emission any of the following engines to calculate emission credits only when we verify credits. Describe whether the emission emission credits: them in reviewing your final report. credits are actual or reserved and (1) Engines exempted under subpart G whether they will come from averaging, of this part or under 40 CFR part 1068. § 1039.720 How do I trade emission credits? banking, trading, or a combination of (2) Exported engines. these. Identify from which of your (3) Engines not subject to the (a) Trading is the exchange of engine families or from which requirements of this part, such as those emission credits between manufacturer the emission credits will excluded under § 1039.5. manufacturers. You may use traded come. (4) [Reserved] emission credits for averaging, banking, (5) Any other engines, where we or further trading transactions. Traded § 1039.730 What ABT reports must I send indicate elsewhere in this part 1039 that emission credits may be used only to EPA? they are not to be included in the within the averaging set in which they (a) If any of your engine families are calculations of this subpart. were generated. certified using the ABT provisions of (b) You may trade actual emission this subpart, you must send an end-of- § 1039.710 How do I average emission credits as described in this subpart. You credits? year report within 90 days after the end may also trade reserved emission (a) Averaging is the exchange of of the model year and a final report credits, but we may revoke these within 270 days after the end of the emission credits among your engine emission credits based on our review of families. You may average emission model year. We may waive the your records or reports or those of the requirement to send the end-of year credits only within the same averaging company with which you traded set. report, as long as you send the final emission credits. report on time. (b) You may certify one or more (c) If a negative emission credit engine families to an FEL above the (b) Your end-of-year and final reports balance results from a transaction, both must include the following information applicable standard, subject to the FEL the buyer and seller are liable, except in caps and other provisions in subpart B for each engine family participating in cases we deem to involve fraud. See the ABT program: of this part, if you show in your § 1039.255(e) for cases involving fraud. (1) Engine-family designation. application for certification that your We may void the certificates of all (2) The emission standards that would projected balance of all emission-credit engine families participating in a trade otherwise apply to the engine family. transactions in that model year is greater that results in a manufacturer having a than or equal to zero. negative balance of emission credits. (3) The FEL for each pollutant. If you (c) If you certify an engine family to See § 1039.745. changed an FEL during the model year, an FEL that exceeds the otherwise identify each FEL you used and applicable standard, you must obtain § 1039.725 What must I include in my calculate the positive or negative enough emission credits to offset the application for certification? emission credits under each FEL. Also, engine family’s deficit by the due date (a) You must declare in your describe how the applicable FEL can be for the final report required in application for certification your intent identified for each engine you § 1039.730. The emission credits used to to use the provisions of this subpart for produced. For example, you might keep address the deficit may come from your each engine family that will be certified a list of engine identification numbers other engine families that generate using the ABT program. You must also that correspond with certain FEL values.

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(4) The projected and actual (i) The corporate names of the seller section. We may review your records at production volumes for the model year and any brokers. any time. with a point of retail sale in the United (ii) A copy of any contracts related to (b) Keep the records required by this States. If you changed an FEL during the the trade. section for eight years after the due date model year, identify the actual (iii) How you intend to use the for the end-of-year report. You may use production volume associated with each emission credits, including the number any appropriate storage formats or FEL. of emission credits you intend to apply media, including paper, microfilm, or (5) Maximum engine power for each to each engine family (if known). computer diskettes. engine configuration, and the sales- (e) Send your reports electronically to (c) Keep a copy of the reports we weighted average engine power for the the Designated Compliance Officer require in § 1039.725 and § 1039.730. engine family. (d) Keep the following additional (6) Useful life. using an approved information format. (7) Calculated positive or negative If you want to use a different format, records for each engine you produce emission credits for the whole engine send us a written request with that generates or uses emission credits family. Identify any emission credits justification for a waiver. under the ABT program: that you traded, as described in (f) Correct errors in your end-of-year (1) Engine family designation. paragraph (d)(1) of this section. report or final report as follows: (2) Engine identification number. (c) Your end-of-year and final reports (1) You may correct any errors in your (3) FEL and useful life. must include the following additional end-of-year report when you prepare the (4) Maximum engine power. information: final report, as long as you send us the (5) Build date and assembly plant. (1) Show that your net balance of final report by the time it is due. (6) Purchaser and destination. emission credits from all your engine (2) If you or we determine within 270 (e) We may require you to keep families in each averaging set in the days after the end of the model year that additional records or to send us relevant applicable model year is not negative. errors mistakenly decrease your balance information not required by this section. (2) State whether you will reserve any of emission credits, you may correct the emission credits for banking. errors and recalculate the balance of § 1039.740 What restrictions apply for (3) State that the report’s contents are using emission credits? emission credits. You may not make accurate. these corrections for errors that are The following restrictions apply for (d) If you trade emission credits, you using emission credits: must send us a report within 90 days determined more than 270 days after the (a) Averaging sets. Emission credits after the transaction, as follows: end of the model year. If you report a (1) As the seller, you must include the negative balance of emission credits, we may be exchanged only within an following information in your report: may disallow corrections under this averaging set. For Tier 4 engines, there (i) The corporate names of the buyer paragraph (f)(2). are two averaging sets—one for engines and any brokers. (3) If you or we determine anytime at or below 560 kW and another for (ii) A copy of any contracts related to that errors mistakenly increase your engines above 560 kW. the trade. balance of emission credits, you must (b) Emission credits from earlier tiers (iii) The engine families that correct the errors and recalculate the of standards. (1) For purposes of ABT generated emission credits for the trade, balance of emission credits. under this subpart, you may not use including the number of emission emission credits generated from engines credits from each family. § 1039.735 What records must I keep? subject to emission standards under 40 (2) As the buyer, you must include the (a) You must organize and maintain CFR part 89, except as specified in following information in your report: your records as described in this § 1039.102(d)(1) or the following table:

Then you may use those banked If the maximum power of the credit-generating engine is . . . And it was certified to the following standards under 40 CFR credits for the part 89 . . . following Tier 4 engines ...

(i) kW < 19 ...... Tier 2 ...... kW < 19 (ii) 19 ≤ kW < 37 ...... Tier 2 ...... kW ≥ 19 (iii) 37 ≤ kW ≤ 560 ...... Tier 3 ...... kW ≥ 19 (iv) kW > 560 ...... Tier 2 ...... kW ≥ 19

(2) Emission credits generated from emission credits to show compliance § 1039.745 What can happen if I do not marine engines certified under the with NOX standards, but you must comply with the provisions of this subpart? provisions of 40 CFR part 89 may not be adjust the NOX+NMHC emission credits (a) For each engine family used under this part. downward by twenty percent when you participating in the ABT program, the (3) See 40 CFR part 89 for other use them, as shown in the following certificate of conformity is conditional restrictions that may apply for using equation: upon full compliance with the emission credits generated under that × NOX emission credits = (0.8) (NOX+NMHC provisions of this subpart during and part. emission credits). after the model year. You are (c) NOX and NOX+NMHC emission responsible to establish to our credits. You may use NOX emission (d) Other restrictions. Other sections credits without adjustment to show of this part specify additional satisfaction that you fully comply with applicable requirements. We may void compliance with NOX+NMHC restrictions for using emission credits the certificate of conformity for an standards. You may use NOX+NMHC under certain special provisions.

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engine family if you fail to comply with the operation of any part of the (2) Any other component whose any provisions of this subpart. emission-control system. primary purpose is to reduce emissions. (b) You may certify your engine Brake power means the usable power Designated Compliance Officer means family to an FEL above an applicable output of the engine, not including the Manager, Engine Programs Group standard based on a projection that you power required to fuel, lubricate, heat, (6405–J), U.S. Environmental Protection will have enough emission credits to or cool the engine or to operate Agency, 1200 Pennsylvania Ave., NW., offset the deficit for the engine family. aftertreatment devices. Washington, DC 20460. However, we may void the certificate of Calibration means the set of Designated Enforcement Officer conformity if you cannot show in your specifications and tolerances specific to means the Director, Air Enforcement final report that you have enough actual a particular design, version, or Division (2242A), U.S. Environmental emission credits to offset a deficit for application of a component or assembly Protection Agency, 1200 Pennsylvania any pollutant in an engine family. capable of functionally describing its Ave., NW.,Washington, DC 20460. (c) We may void the certificate of operation over its working range. Deteriorated emission level means the conformity for an engine family if you Certification means obtaining a emission level that results from fail to keep records, send reports, or give certificate of conformity for an engine applying the appropriate deterioration us information we request. family that complies with the emission factor to the official emission result of (d) You may ask for a hearing if we standards and requirements in this part. the emission-data engine. void your certificate under this section Certified emission level means the Deterioration factor means the (see § 1039.820). highest deteriorated emission level in an relationship between emissions at the engine family for a given pollutant from end of useful life and emissions at the Subpart I—Definitions and Other either transient or steady-state testing. low-hour test point, expressed in one of Reference Information Compression-ignition means relating the following ways: to a type of reciprocating, internal- (1) For multiplicative deterioration § 1039.801 What definitions apply to this factors, the ratio of emissions at the end part? combustion engine that is not a spark- of useful life to emissions at the low- The following definitions apply to ignition engine. Constant-speed engine means an hour test point. this part. The definitions apply to all (2) For additive deterioration factors, engine whose certification is limited to subparts unless we note otherwise. All the difference between emissions at the constant-speed operation. Engines undefined terms have the meaning the end of useful life and emissions at the whose constant-speed governor function Act gives to them. The definitions low-hour test point. is removed or disabled are no longer follow: Discrete-mode means relating to the constant-speed engines. Act means the Clean Air Act, as discrete-mode type of steady-state test Constant-speed operation means amended, 42 U.S.C. 7401–7671q. described in § 1039.505. Adjustable parameter means any engine operation with a governor that Emission-control system means any device, system, or element of design that controls engine speed to a reference device, system, or element of design that someone can adjust (including those speed. There are two kinds of constant- controls or reduces the regulated which are difficult to access) and that, speed governors. An isochronous emissions from an engine. if adjusted, may affect emissions or governor changes reference speed Emission-data engine means an engine performance during emission temporarily during a load change, then engine that is tested for certification. testing or normal in-use operation. This returns it to the original reference speed This includes engines tested to establish includes, but is not limited to, after the engine stabilizes. Isochronous deterioration factors. parameters related to injection timing governors typically allow speed changes Emission-related maintenance means and fueling rate. You may ask us to up to 1.0 percent. A speed-droop maintenance that substantially affects exclude a parameter that is difficult to governor has a fixed reference speed at emissions or is likely to substantially access if it cannot be adjusted to affect zero load and allows the reference speed affect emission deterioration. emissions without significantly to decrease as load increases. With Engine configuration means a unique degrading engine performance, or if you speed-droop governors, speed typically combination of engine hardware and otherwise show us that it will not be decreases 3 to 10 percent below the calibration within an engine family. adjusted in a way that affects emissions reference speed at zero load, such that Engines within a single engine during in-use operation. the minimum reference speed occurs configuration differ only with respect to Aftertreatment means relating to a near the engine’s point of maximum normal production variability. catalytic converter, particulate filter, or power. Engine family has the meaning given any other system, component, or Crankcase emissions means airborne in § 1039.230. technology mounted downstream of the substances emitted to the atmosphere Engine manufacturer means the exhaust valve (or exhaust port) whose from any part of the engine crankcase’s manufacturer of the engine. See the design function is to reduce emissions ventilation or lubrication systems. The definition of ‘‘manufacturer’’ in this in the engine exhaust before it is crankcase is the housing for the section. exhausted to the environment. Exhaust- crankshaft and other related internal Engine used in a locomotive means gas recirculation (EGR) is not parts. either an engine placed in the aftertreatment. Critical emission-related component locomotive to move other equipment, Aircraft means any vehicle capable of means any of the following components: freight, or passenger traffic; or an engine sustained air travel above treetop (1) Electronic control units, mounted on the locomotive to provide heights. aftertreatment devices, fuel-metering auxiliary power. Auxiliary emission-control device components, EGR-system components, Equipment manufacturer means a means any element of design that senses crankcase-ventilation valves, all manufacturer of nonroad equipment. All temperature, motive speed, engine RPM, components related to charge-air nonroad equipment manufacturing transmission gear, or any other compression and cooling, and all entities under the control of the same parameter for the purpose of activating, sensors and actuators associated with person are considered to be a single modulating, delaying, or deactivating any of these components. nonroad equipment manufacturer.

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(Note: In § 1039.626, the term Generator-set engine means an engine not include portable auxiliary engines ‘‘equipment manufacturer’’ has a used primarily to operate an electrical for which the fueling, cooling and narrower meaning, which applies only generator or alternator to produce exhaust systems are not integral parts of to that section.) electric power for other applications. the vessel. There are two kinds of Excluded means relating to an engine Good engineering judgment means marine engines: that either: judgments made consistent with (1) Propulsion marine engine means a (1) Has been determined not to be a generally accepted scientific and marine engine that moves a vessel nonroad engine, as specified in 40 CFR engineering principles and all available through the water or directs the vessel’s 1068.30; or relevant information. See 40 CFR 1068.5 movement. (2) Is a nonroad engine that, according for the administrative process we use to (2) Auxiliary marine engine means a to § 1039.5, is not subject to this part evaluate good engineering judgment. marine engine not used for propulsion. 1039. High-sulfur diesel fuel means one of Marine vessel has the meaning given in 1 U.S.C. 3, which generally includes Exempted means relating to an engine the following: all nonroad equipment used as a means that is not required to meet otherwise (1) For in-use fuels, high-sulfur diesel of transportation on water. applicable standards. Exempted engines fuel means a diesel fuel with a maximum sulfur concentration greater Maximum engine power has the must conform to regulatory conditions meaning given in § 1039.140. Note that specified for an exemption in this part than 500 parts per million. (2) For testing, high-sulfur diesel fuel § 1039.230 generally disallows grouping 1039 or in 40 CFR part 1068. Exempted engines from different power categories engines are deemed to be ‘‘subject to’’ has the meaning we give in 40 CFR part 1065. in the same engine family. the standards of this part, even though Maximum test speed has the meaning they are not required to comply with the Hydrocarbon (HC) means the hydrocarbon group on which the we give in 40 CFR 1065.515. otherwise applicable requirements. Maximum test torque has the meaning Engines exempted with respect to a emission standards are based for each fuel type. For alcohol-fueled engines, we give in 40 CFR 1065.1001. certain tier of standards may be required Model year means one of the to comply with an earlier tier of HC means total hydrocarbon equivalent (THCE). For all other engines, HC means following things: standards as a condition of the (1) For freshly manufactured nonmethane hydrocarbon (NMHC). exemption; for example, engines equipment and engines (see definition Identification number means a unique exempted with respect to Tier 4 of ‘‘new nonroad engine,’’ paragraph specification (for example, a model standards may be required to comply (1)), model year means one of the number/serial number combination) with Tier 3 standards. following: that allows someone to distinguish a Exhaust-gas recirculation means a (i) Calendar year. particular engine from other similar technology that reduces emissions by (ii) Your annual new model engines. routing exhaust gases that had been production period if it is different than Intermediate test speed has the the calendar year. This must include exhausted from the combustion meaning we give in 40 CFR 1065.515. chamber(s) back into the engine to be January 1 of the calendar year for which Low-hour means relating to an engine the model year is named. It may not mixed with incoming air before or with stabilized emissions and represents during combustion. The use of valve begin before January 2 of the previous the undeteriorated emission level. This calendar year and it must end by timing to increase the amount of would generally involve less than 300 residual exhaust gas in the combustion December 31 of the named calendar hours of operation. year. chamber(s) that is mixed with incoming Low-sulfur diesel fuel means one of air before or during combustion is not (2) For an engine that is converted to the following: a nonroad engine after being placed into considered exhaust-gas recirculation for (1) For in-use fuels, low-sulfur diesel the purposes of this part. service as a motor-vehicle engine or a fuel means a diesel fuel with a stationary engine, model year means the Family emission limit (FEL) means an maximum sulfur concentration of 500 emission level declared by the calendar year in which the engine was parts per million. originally produced (see definition of manufacturer to serve in place of an (2) For testing, low-sulfur diesel fuel otherwise applicable emission standard ‘‘new nonroad engine,’’ paragraph (2)). has the meaning we give in 40 CFR part (3) For a nonroad engine excluded under the ABT program in subpart H of 1065. under § 1039.5 that is later converted to this part. The family emission limit Manufacture means the physical and operate in an application that is not must be expressed to the same number engineering process of designing, excluded, model year means the of decimal places as the emission constructing, and assembling a nonroad calendar year in which the engine was standard it replaces. The family engine or a piece of nonroad equipment. originally produced (see definition of emission limit serves as the emission Manufacturer has the meaning given ‘‘new nonroad engine,’’ paragraph (3)). standard for the engine family with in section 216(1) of the Act. In general, (4) For engines that are not freshly respect to all required testing. this term includes any person who manufactured but are installed in new Fuel system means all components manufactures an engine, vehicle, or nonroad equipment, model year means involved in transporting, metering, and piece of equipment for sale in the the calendar year in which the engine is mixing the fuel from the fuel tank to the United States or otherwise introduces a installed in the new nonroad equipment combustion chamber(s), including the new nonroad engine into commerce in (see definition of ‘‘new nonroad fuel tank, fuel tank cap, fuel pump, fuel the United States. This includes engine,’’ paragraph (4)). filters, fuel lines, carburetor or fuel- importers who import engines, (5) For imported engines: injection components, and all fuel- equipment, or vehicles for resale. (Note: (i) For imported engines described in system vents. In § 1039.626, the term ‘‘equipment paragraph (5)(i) of the definition of Fuel type means a general category of manufacturer’’ has a narrower meaning, ‘‘new nonroad engine,’’ model year has fuels such as diesel fuel or natural gas. which applies only to that section.) the meaning given in paragraphs (1) There can be multiple grades within a Marine engine means a nonroad through (4) of this definition. single fuel type, such as high-sulfur or engine that someone installs or intends (ii) For imported engines described in low-sulfur diesel fuel. to install on a marine vessel. This does paragraph (5)(ii) of the definition of

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‘‘new nonroad engine,’’ model year has is imported. It is no longer new when Nonmethane hydrocarbon means the the meaning given in 40 CFR 89.602 for the ultimate purchaser receives a title difference between the emitted mass of independent commercial importers. for the engine or it is placed into total hydrocarbons and the emitted mass Motor vehicle has the meaning we service, whichever comes first. of methane. give in 40 CFR 85.1703(a). In general, (iii) An imported nonroad engine that Nonroad means relating to nonroad motor vehicle means any vehicle that is not covered by a certificate of engines or equipment that includes EPA deems to be capable of safe and conformity issued under this part at the nonroad engines. practical use on streets or highways. time of importation is new, but only if Nonroad engine has the meaning we New nonroad engine means any of the it was produced on or after the dates give in 40 CFR 1068.30. In general this following things: shown in the following table. This means all internal-combustion engines (1) A freshly manufactured nonroad addresses uncertified engines and except motor vehicle engines, stationary engine for which the ultimate purchaser equipment initially placed into service engines, engines used solely for has never received the equitable or legal that someone seeks to import into the competition, or engines used in aircraft. title. This kind of engine might United States. Importation of this kind This part does not apply to all nonroad commonly be thought of as ‘‘brand of new nonroad engine (or equipment engines (see § 1039.5). new.’’ In the case of this paragraph (1), containing such an engine) is generally Nonroad equipment means a piece of the engine becomes new when it is fully prohibited by 40 CFR part 1068. equipment that is powered by one or assembled for the first time. The engine more nonroad engines. is no longer new when the ultimate APPLICABILITY OF EMISSION STAND- Official emission result means the purchaser receives the title or the ARDS FOR NONROAD DIESEL EN- measured emission rate for an emission- product is placed into service, GINES data engine on a given duty cycle before whichever comes first. the application of any deterioration (2) An engine originally manufactured Initial date of emis- factor, but after the applicability of as a motor-vehicle engine or a stationary Maximum engine power sion standards regeneration adjustment factors. engine that is later intended to be used Opacity means the fraction of a beam in a piece of nonroad equipment. In this kW < 19 ...... January 1, 2000. ≤ of light, expressed in percent, which case, the engine is no longer a motor- 19 kW < 37 ...... January 1, 1999. 37 ≤ kW < 75 ...... January 1, 1998. fails to penetrate a plume of smoke, as vehicle or stationary engine and 75 ≤ kW < 130 ...... January 1, 1997. measured by the procedure specified in becomes a ‘‘new nonroad engine’’. The 130 ≤ kW ≤ 560 ...... January 1, 1996. § 1039.501. engine is no longer new when it is kW > 560 ...... January 1, 2000. Oxides of nitrogen has the meaning placed into nonroad service. we give in 40 CFR part 1065. (3) A nonroad engine that has been New nonroad equipment means either Particulate trap means a filtering previously placed into service in an of the following things: application we exclude under § 1039.5, (1) A nonroad piece of equipment for device that is designed to physically where that engine is installed in a piece which the ultimate purchaser has never trap all particulate matter above a of equipment that is covered by this part received the equitable or legal title. The certain size. 1039. The engine is no longer new when product is no longer new when the Piece of equipment means any it is placed into nonroad service covered ultimate purchaser receives this title or vehicle, vessel, or other type of by this part 1039. For example, this the product is placed into service, equipment using engines to which this would apply to a marine diesel engine whichever comes first. part applies. that is no longer used in a marine (2) An imported nonroad piece of Placed into service means put into vessel. equipment with an engine not covered initial use for its intended purpose. (4) An engine not covered by by a certificate of conformity issued Point of first retail sale means the paragraphs (1) through (3) of this under this part at the time of location at which the initial retail sale definition that is intended to be importation and manufactured after the occurs. This generally means an installed in new nonroad equipment. requirements of this part start to apply equipment dealership, but may also The engine is no longer new when the (see § 1039.1). include an engine seller or distributor in ultimate purchaser receives a title for Noncommercial fuel means a cases where loose engines are sold to the equipment or the product is placed combustible product that is not the general public for uses such as into service, whichever comes first. This marketed as a commercial fuel, but is replacement engines. generally includes installation of used used as a fuel for nonroad engines. For Power category means a specific range engines in new equipment. example, this includes methane that is of maximum engine power that defines (5) An imported nonroad engine, produced and released from landfills or the applicability of standards. For subject to the following provisions: oil wells, or similar unprocessed fuels example, references to the 56–130 kW (i) An imported nonroad engine that are not intended to meet any power category and 56 ≤ kW covered by a certificate of conformity otherwise applicable fuel specifications. < 130 include all engines with issued under this part that meets the See § 1039.615 for provisions related to maximum engine power at or above 56 criteria of one or more of paragraphs (1) engines designed to burn kW but below 130 kW. Also references through (4) of this definition, where the noncommercial fuels. to 56–560 kW power categories or 56 ≤ original engine manufacturer holds the Noncompliant engine means an kW ≤ 560 include all engines with certificate, is new as defined by those engine that was originally covered by a maximum engine power at or above 56 applicable paragraphs. certificate of conformity, but is not in kW but at or below 560 kW, even (ii) An imported nonroad engine the certified configuration or otherwise though these engines span multiple covered by a certificate of conformity does not comply with the conditions of power categories. Note that in some issued under this part, where someone the certificate. cases, FEL caps are based on a subset of other than the original engine Nonconforming engine means an a power category. The power categories manufacturer holds the certificate (such engine not covered by a certificate of are defined as follows: as when the engine is modified after its conformity that would otherwise be (1) Engines with maximum power initial assembly), becomes new when it subject to emission standards. below 19 kW.

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(2) Engines with maximum power at tests are either discrete-mode tests or or new nonroad engine, the first person or above 19 kW but below 56 kW. ramped-modal tests. who in good faith purchases such new (3) Engines with maximum power at Sulfur-sensitive technology means an nonroad equipment or new nonroad or above 56 kW but below 130 kW. emission-control technology that engine for purposes other than resale. (4) Engines with maximum power at experiences a significant drop in Ultra low-sulfur diesel fuel means one or above 130 kW but at or below 560 emission-control performance or of the following: kW. emission-system durability when an (1) For in-use fuels, ultra low-sulfur (5) Engines with maximum power engine is operated on low-sulfur fuel diesel fuel means a diesel fuel with a above 560 kW. (i.e., fuel with a sulfur concentration of maximum sulfur concentration of 15 Ramped-modal means relating to the 300 to 500 ppm) as compared to when parts per million. ramped-modal type of steady-state test it is operated on ultra low-sulfur fuel (2) For testing, ultra low-sulfur diesel described in § 1039.505. (i.e., fuel with a sulfur concentration fuel has the meaning we give in 40 CFR Rated speed means the maximum less than 15 ppm). Exhaust-gas part 1065. full-load governed speed for governed recirculation is not a sulfur-sensitive United States means the States, the engines and the speed of maximum technology. District of Columbia, the power for ungoverned engines. Suspend means to temporarily Commonwealth of Puerto Rico, the Revoke means to terminate the discontinue the certificate or an Commonwealth of the Northern Mariana certificate or an exemption for an engine exemption for an engine family. If we Islands, Guam, American Samoa, and family. If we revoke a certificate or suspend a certificate, you may not the U.S. Virgin Islands. exemption, you must apply for a new introduce into commerce engines from Upcoming model year means for an certificate or exemption before that engine family unless we reinstate engine family the model year after the continuing to introduce the affected the certificate or approve a new one. If one currently in production. engines into commerce. This does not we suspend an exemption, you may not U.S.-directed production volume apply to engines you no longer possess. introduce into commerce engines that means the number of engine units, Round means to round numbers were previously covered by the subject to the requirements of this part, according to NIST Special Publication exemption unless we reinstate the produced by a manufacturer for which 811(incorporated by reference in exemption. the manufacturer has a reasonable § 1039.810), unless otherwise specified. Test engine means an engine in a test assurance that sale was or will be made Scheduled maintenance means sample. to ultimate purchasers in the United adjusting, repairing, removing, Test sample means the collection of States. disassembling, cleaning, or replacing engines selected from the population of Useful life means the period during components or systems periodically to an engine family for emission testing. which the engine is designed to keep a part or system from failing, This may include testing for properly function in terms of reliability malfunctioning, or wearing prematurely. certification, production-line testing, or and fuel consumption, without being It also may mean actions you expect are in-use testing. remanufactured, specified as a number necessary to correct an overt indication Tier 1 means relating to the Tier 1 of hours of operation or calendar years, of failure or malfunction for which emission standards, as shown in 40 CFR whichever comes first. It is the period periodic maintenance is not 89.112. during which a new nonroad engine is appropriate. Tier 2 means relating to the Tier 2 required to comply with all applicable Small-volume engine manufacturer emission standards, as shown in 40 CFR emission standards. See § 1039.101(g). means a small business engine 89.112. Variable-speed engine means an manufacturer that had engine families Tier 3 means relating to the Tier 3 engine that is not a constant-speed certified to meet the requirements of 40 emission standards, as shown in 40 CFR engine. CFR part 89 before 2003 (40 CFR part 89.112. Void means to invalidate a certificate 89, revised as of July 1, 2002), had Tier 4 means relating to the Tier 4 or an exemption ab initio. If we void a annual U.S.-directed production of no emission standards, as shown in certificate, all the engines introduced more than 2,500 units in 2002 and all § 1039.101 and § 1039.102. This into commerce under that engine family earlier calendar years, and has 1000 or includes the emission standards that are for that model year are considered fewer employees. For manufacturers shown in § 1039.101 and § 1039.102 that noncompliant, and you are liable for owned by a parent company, the are unchanged from Tier 2 or Tier 3 each engine introduced into commerce production limit applies to the emission standards. under the certificate and may face civil production of the parent company and Total hydrocarbon means the or criminal penalties or both. This all its subsidiaries and the employee combined mass of organic compounds applies equally to all engines in the limit applies to the total number of measured by the specified procedure for engine family, including engines employees of the parent company and measuring total hydrocarbon, expressed introduced into commerce before we all its subsidiaries. as a hydrocarbon with a hydrogen-to- voided the certificate. If we void an Spark-ignition means relating to a carbon mass ratio of 1.85:1. exemption, all the engines introduced gasoline-fueled engine or any other type Total hydrocarbon equivalent means into commerce under that exemption of engine with a spark plug (or other the sum of the carbon mass are considered uncertified (or sparking device) and with operating contributions of non-oxygenated nonconforming), and you are liable for characteristics significantly similar to hydrocarbons, alcohols and aldehydes, each engine introduced into commerce the theoretical Otto combustion cycle. or other organic compounds that are under the exemption and may face civil Spark-ignition engines usually use a measured separately as contained in a or criminal penalties or both. You may throttle to regulate intake air flow to gas sample, expressed as exhaust not introduce into commerce any control power during normal operation. hydrocarbon from petroleum-fueled additional engines using the voided Steady-state means relating to engines. The hydrogen-to-carbon ratio of exemption. emission tests in which engine speed the equivalent hydrocarbon is 1.85:1. Volatile liquid fuel means any fuel and load are held at a finite set of Ultimate purchaser means, with other than diesel or biodiesel that is a essentially constant values. Steady-state respect to any new nonroad equipment liquid at atmospheric pressure and has

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a Reid Vapor Pressure higher than 2.0 (a) NIST material. Table 1 of this § 1039.815 What provisions apply to pounds per square inch. section lists material from the National confidential information? We (us, our) means the Administrator Institute of Standards and Technology (a) Clearly show what you consider of the Environmental Protection Agency that we have incorporated by reference. confidential by marking, circling, and any authorized representatives. The first column lists the number and bracketing, stamping, or some other § 1039.805 What symbols, acronyms, and name of the material. The second method. abbreviations does this part use? column lists the sections of this part where we reference it. Anyone may (b) We will store your confidential The following symbols, acronyms, information as described in 40 CFR part and abbreviations apply to this part: purchase copies of these materials from the Government Printing Office, 2. Also, we will disclose it only as CFR Code of Federal Regulations. Washington, DC 20402 or download specified in 40 CFR part 2. This applies CO carbon monoxide. them from the Internet at http:// both to any information you send us and CO2 carbon dioxide. physics.nist.gov/Pubs/SP811/. Table 1 to any information we collect from EPA Environmental Protection Agency. inspections, audits, or other site visits. FEL Family Emission Limit. follows: g/kW-hr grams per kilowatt-hour. (c) If you send us a second copy HC hydrocarbon. TABLE 1 OF § 1039.810.—NIST without the confidential information, kW kilowatts. MATERIALS we will assume it contains nothing NIST National Institute of Standards and confidential whenever we need to Technology. Part 1039 release information from it. NMHC nonmethane hydrocarbons. Document number and name reference NOX oxides of nitrogen (NO and NO2). (d) If you send us information without NTE not-to-exceed NIST Special Publication claiming it is confidential, we may make PM particulate matter. 811, Guide for the Use of it available to the public without further rpm revolutions per minute. SAE Society of Automotive Engineers. the International System of notice to you, as described in 40 CFR SEA Selective enforcement audit. Units (SI), 1995 Edition ..... 1039.801 2.204. THC total hydrocarbon. § 1039.820 How do I request a hearing? THCE total hydrocarbon equivalent. (b) SAE material. Table 2 of this TRU transportation refrigeration unit. section lists material from the Society of (a) You may request a hearing under U.S.C. United States Code. Automotive Engineering that we have certain circumstances, as described § 1039.810 What materials does this part incorporated by reference. The first elsewhere in this part. To do this, you reference? column lists the number and name of must file a written request, including a Documents listed in this section have the material. The second column lists description of your objection and any been incorporated by reference into this the sections of this part where we supporting data, within 30 days after we part. The Director of the Federal reference it. Anyone may purchase make a decision. copies of these materials from the Register approved the incorporation by (b) For a hearing you request under Society of Automotive Engineers, 400 reference as prescribed in 5 U.S.C. the provisions of this part, we will Commonwealth Drive, Warrendale, PA 552(a) and 1 CFR part 51. Anyone may approve your request if we find that 15096. Table 2 follows: inspect copies at the U.S. EPA, Air and your request raises a substantial factual Radiation Docket and Information issue. Center, 1301 Constitution Ave., NW., TABLE 2 OF § 1039.810.—SAE Room B102, EPA West Building, MATERIALS (c) If we agree to hold a hearing, we Washington, DC 20460 or at the will use the procedures specified in 40 National Archives and Records Part 1039 CFR part 1068, subpart G. Document number and name reference Administration (NARA). For Appendix I to Part 1039—[Reserved] information on the availability of this material at NARA, call 202–741–6030, SAE J1930, Electrical/Elec- Appendix II to Part 1039—Steady-State Duty or go to: http://www.archives.gov/ tronic Systems Diagnostic Cycles for Constant-Speed Engines Terms, Definitions, Abbre- federal_register/ (a) The following duty cycle applies for _ _ _ viations, and Acronyms, code of federal regulations/ revised May 1998 ...... 1039.135 discrete-mode testing of constant-speed ibr_locations.html. engines:

D2 mode Torque Weighting Engine speed 1 number (percent) 2 factors

1 ...... Maximum test speed ...... 100 0.05 2 ...... Maximum test speed ...... 75 0.25 3 ...... Maximum test speed ...... 50 0.30 4 ...... Maximum test speed ...... 25 0.30 5 ...... Maximum test speed ...... 10 0.10 1 Maximum test speed is defined in 40 CFR part 1065. 2 Except as noted in § 1039.505, the percent torque is relative to maximum test torque.

(b) The following duty cycle applies for ramped-modal testing of constant-speed engines:

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Time in Torque RMC mode mode Engine speed 12 (seconds) (percent)

1a Steady-state ...... 53 Engine Governed ...... 100. 1b Transition ...... 20 Engine Governed ...... Linear transition. 2a Steady-state ...... 101 Engine Governed ...... 10. 2b Transition ...... 20 Engine Governed ...... Linear transition. 3a Steady-state ...... 277 Engine Governed ...... 75. 3b Transition ...... 20 Engine Governed ...... Linear transition. 4a Steady-state ...... 339 Engine Governed ...... 25. 4b Transition ...... 20 Engine Governed ...... Linear transition. 5 Steady-state ...... 350 Engine Governed ...... 50. 1 The percent torque is relative to maximum test torque. 2 Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the torque setting of the current mode to the torque setting of the next mode.

Appendix III to Part 1039—Steady-State Duty Cycles for Variable-Speed Engines With Maximum Power Below 19 kW (a) The following duty cycle applies for discrete-mode testing of variable-speed engines with maximum power below 19 kW:

G2 mode Observed Weighting Engine speed 1 number torque factors (percent) 2

1 ...... Maximum test speed ...... 100 0.09 2 ...... Maximum test speed ...... 75 0.20 3 ...... Maximum test speed ...... 50 0.29 4 ...... Maximum test speed ...... 25 0.30 5 ...... Maximum test speed ...... 10 0.07 6 ...... Idle ...... 0 0.05 1 Speed terms are defined in 40 CFR part 1065. 2 The percent torque is relative to the maximum torque at the commanded test speed.

(b) The following duty cycle applies for ramped-modal testing of variable-speed engines with maximum power below 19 kW:

RMC Time in Torque mode Engine speed 13 (percent) 23 mode (seconds)

1a Steady-state ...... 41 Warm Idle ...... 0. 1b Transition ...... 20 Linear transition ...... Linear transition. 2a Steady-state ...... 135 Maximum Test Speed ...... 100. 2b Transition ...... 20 Maximum Test Speed ...... Linear transition. 3a Steady-state ...... 112 Maximum Test Speed ...... 10. 3b Transition ...... 20 Maximum Test Speed ...... Linear transition. 4a Steady-state ...... 337 Maximum Test Speed ...... 75. 4b Transition ...... 20 Maximum Test Speed ...... Linear transition. 5a Steady-state ...... 518 Maximum Test Speed ...... 25. 5b Transition ...... 20 Maximum Test Speed ...... Linear transition. 6a Steady-state ...... 494 Maximum Test Speed ...... 50. 6b Transition ...... 20 Linear transition ...... Linear transition. 7 Steady-state ...... 43 Warm Idle ...... 0. 1 Speed terms are defined in 40 CFR part 1065. 2 The percent torque is relative to the maximum torque at the commanded engine speed. 3 Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the torque setting of the current mode to the torque setting of the next mode, and simultaneously command a similar linear progression for engine speed if there is a change in speed setting.

Appendix IV to Part 1039—Steady-State engines with maximum power at or above 19 Duty Cycles for Variable-Speed Engines With kW: Maximum Power at or Above 19 kW (a) The following duty cycle applies for discrete-mode testing of variable-speed

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Observed C1 mode 1 Weighting number Engine speed torque factors (percent) 2

1 ...... Maximum test speed ...... 100 0.15 2 ...... Maximum test speed ...... 75 0.15 3 ...... Maximum test speed ...... 50 0.15 4 ...... Maximum test speed ...... 10 0.10 5 ...... Intermediate test speed ...... 100 0.10 6 ...... Intermediate test speed ...... 75 0.10 7 ...... Intermediate test speed ...... 50 0.10 8 ...... Idle ...... 0 0.15 1 Speed terms are defined in 40 CFR part 1065. 2 The percent torque is relative to the maximum torque at the commanded test speed.

(b) The following duty cycle applies for engines with maximum power at or above 19 ramped-modal testing of variable-speed kW:

Time in Engine Torque RMC Mode mode 13 23 (seconds) speed (percent)

1a Steady-state ...... 126 Warm Idle ...... 0. 1b Transition ...... 20 Linear Transition 2 ...... Linear Transition. 2a Steady-state ...... 159 Intermediate Speed ...... 100. 2b Transition ...... 20 Intermediate Speed ...... Linear Transition. 3a Steady-state ...... 160 Intermediate Speed ...... 50. 3b Transition ...... 20 Intermediate Speed ...... Linear Transition. 4a Steady-state ...... 162 Intermediate Speed ...... 75. 4b Transition ...... 20 Linear Transition ...... Linear Transition. 5a Steady-state ...... 246 Maximum Test Speed ...... 100. 5b Transition ...... 20 Maximum Test Speed ...... Linear Transition. 6a Steady-state ...... 164 Maximum Test Speed ...... 10. 6b Transition ...... 20 Maximum Test Speed ...... Linear Transition. 7a Steady-state ...... 248 Maximum Test Speed ...... 75. 7b Transition ...... 20 Maximum Test Speed ...... Linear Transition. 8a Steady-state ...... 247 Maximum Test Speed ...... 50. 8b Transition ...... 20 Linear Transition ...... Linear Transition. 9 Steady-state ...... 128 Warm Idle ...... 0. 1 Speed terms are defined in 40 CFR part 1065. 2 The percent torque is relative to the maximum torque at the commanded engine speed. 3 Advance from one mode to the next within a 20-second transition phase. During the transition phase, command a linear progression from the torque setting of the current mode to the torque setting of the next mode, and simultaneously command a similar linear progression for engine speed if there is a change in speed setting.

Appendix V to Part 1039 [Reserved] Normalized Normalized Normalized Normalized Appendix VI to Part 1039—Nonroad Time(s) speed torque Time(s) speed torque (percent) (percent) (percent) (percent) Compression-ignition Composite Transient Cycle 20 ...... 0 0 44 ...... 105 47 21 ...... 0 0 45 ...... 98 70 Normalized Normalized 22 ...... 0 0 46 ...... 104 36 Time(s) speed torque (percent) (percent) 23 ...... 0 0 47 ...... 104 65 24 ...... 1 3 48 ...... 96 71 1 ...... 0 0 25 ...... 1 3 49 ...... 101 62 2 ...... 0 0 26 ...... 1 3 50 ...... 102 51 3 ...... 0 0 27 ...... 1 3 51 ...... 102 50 4 ...... 0 0 28 ...... 1 3 52 ...... 102 46 5 ...... 0 0 29 ...... 1 3 53 ...... 102 41 6 ...... 0 0 30 ...... 1 6 54 ...... 102 31 7 ...... 0 0 31 ...... 1 6 55 ...... 89 2 8 ...... 0 0 32 ...... 2 1 56 ...... 82 0 9 ...... 0 0 33 ...... 4 13 57 ...... 47 1 10 ...... 0 0 34 ...... 7 18 58 ...... 23 1 11 ...... 0 0 35 ...... 9 21 59 ...... 1 3 12 ...... 0 0 36 ...... 17 20 60 ...... 1 8 13 ...... 0 0 37 ...... 33 42 61 ...... 1 3 14 ...... 0 0 38 ...... 57 46 62 ...... 1 5 15 ...... 0 0 39 ...... 44 33 63 ...... 1 6 16 ...... 0 0 40 ...... 31 0 64 ...... 1 4 17 ...... 0 0 41 ...... 22 27 65 ...... 1 4 18 ...... 0 0 42 ...... 33 43 66 ...... 0 6 19 ...... 0 0 43 ...... 80 49 67 ...... 1 4

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Normalized Normalized Normalized Normalized Normalized Normalized Time(s) speed torque Time(s) speed torque Time(s) speed torque (percent) (percent) (percent) (percent) (percent) (percent)

68 ...... 9 21 140 ...... 104 44 212 ...... 18 29 69 ...... 25 56 141 ...... 103 44 213 ...... 14 51 70 ...... 64 26 142 ...... 104 33 214 ...... 13 11 71 ...... 60 31 143 ...... 102 27 215 ...... 12 9 72 ...... 63 20 144 ...... 103 26 216 ...... 15 33 73 ...... 62 24 145 ...... 79 53 217 ...... 20 25 74 ...... 64 8 146 ...... 51 37 218 ...... 25 17 75 ...... 58 44 147 ...... 24 23 219 ...... 31 29 76 ...... 65 10 148 ...... 13 33 220 ...... 36 66 77 ...... 65 12 149 ...... 19 55 221 ...... 66 40 78 ...... 68 23 150 ...... 45 30 222 ...... 50 13 79 ...... 69 30 151 ...... 34 7 223 ...... 16 24 80 ...... 71 30 152 ...... 14 4 224 ...... 26 50 81 ...... 74 15 153 ...... 8 16 225 ...... 64 23 82 ...... 71 23 154 ...... 15 6 226 ...... 81 20 83 ...... 73 20 155 ...... 39 47 227 ...... 83 11 84 ...... 73 21 156 ...... 39 4 228 ...... 79 23 85 ...... 73 19 157 ...... 35 26 229 ...... 76 31 86 ...... 70 33 158 ...... 27 38 230 ...... 68 24 87 ...... 70 34 159 ...... 43 40 231 ...... 59 33 88 ...... 65 47 160 ...... 14 23 232 ...... 59 3 89 ...... 66 47 161 ...... 10 10 233 ...... 25 7 90 ...... 64 53 162 ...... 15 33 234 ...... 21 10 91 ...... 65 45 163 ...... 35 72 235 ...... 20 19 92 ...... 66 38 164 ...... 60 39 236 ...... 4 10 93 ...... 67 49 165 ...... 55 31 237 ...... 5 7 94 ...... 69 39 166 ...... 47 30 238 ...... 4 5 95 ...... 69 39 167 ...... 16 7 239 ...... 4 6 96 ...... 66 42 168 ...... 0 6 240 ...... 4 6 97 ...... 71 29 169 ...... 0 8 241 ...... 4 5 98 ...... 75 29 170 ...... 0 8 242 ...... 7 5 99 ...... 72 23 171 ...... 0 2 243 ...... 16 28 100 ...... 74 22 172 ...... 2 17 244 ...... 28 25 101 ...... 75 24 173 ...... 10 28 245 ...... 52 53 102 ...... 73 30 174 ...... 28 31 246 ...... 50 8 103 ...... 74 24 175 ...... 33 30 247 ...... 26 40 104 ...... 77 6 176 ...... 36 0 248 ...... 48 29 105 ...... 76 12 177 ...... 19 10 249 ...... 54 39 106 ...... 74 39 178 ...... 1 18 250 ...... 60 42 107 ...... 72 30 179 ...... 0 16 251 ...... 48 18 108 ...... 75 22 180 ...... 1 3 252 ...... 54 51 109 ...... 78 64 181 ...... 1 4 253 ...... 88 90 110 ...... 102 34 182 ...... 1 5 254 ...... 103 84 111 ...... 103 28 183 ...... 1 6 255 ...... 103 85 112 ...... 103 28 184 ...... 1 5 256 ...... 102 84 113 ...... 103 19 185 ...... 1 3 257 ...... 58 66 114 ...... 103 32 186 ...... 1 4 258 ...... 64 97 115 ...... 104 25 187 ...... 1 4 259 ...... 56 80 116 ...... 103 38 188 ...... 1 6 260 ...... 51 67 117 ...... 103 39 189 ...... 8 18 261 ...... 52 96 118 ...... 103 34 190 ...... 20 51 262 ...... 63 62 119 ...... 102 44 191 ...... 49 19 263 ...... 71 6 120 ...... 103 38 192 ...... 41 13 264 ...... 33 16 121 ...... 102 43 193 ...... 31 16 265 ...... 47 45 122 ...... 103 34 194 ...... 28 21 266 ...... 43 56 123 ...... 102 41 195 ...... 21 17 267 ...... 42 27 124 ...... 103 44 196 ...... 31 21 268 ...... 42 64 125 ...... 103 37 197 ...... 21 8 269 ...... 75 74 126 ...... 103 27 198 ...... 0 14 270 ...... 68 96 127 ...... 104 13 199 ...... 0 12 271 ...... 86 61 128 ...... 104 30 200 ...... 3 8 272 ...... 66 0 129 ...... 104 19 201 ...... 3 22 273 ...... 37 0 130 ...... 103 28 202 ...... 12 20 274 ...... 45 37 131 ...... 104 40 203 ...... 14 20 275 ...... 68 96 132 ...... 104 32 204 ...... 16 17 276 ...... 80 97 133 ...... 101 63 205 ...... 20 18 277 ...... 92 96 134 ...... 102 54 206 ...... 27 34 278 ...... 90 97 135 ...... 102 52 207 ...... 32 33 279 ...... 82 96 136 ...... 102 51 208 ...... 41 31 280 ...... 94 81 137 ...... 103 40 209 ...... 43 31 281 ...... 90 85 138 ...... 104 34 210 ...... 37 33 282 ...... 96 65 139 ...... 102 36 211 ...... 26 18 283 ...... 70 96

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Normalized Normalized Normalized Normalized Normalized Normalized Time(s) speed torque Time(s) speed torque Time(s) speed torque (percent) (percent) (percent) (percent) (percent) (percent)

284 ...... 55 95 356 ...... 72 49 428 ...... 76 57 285 ...... 70 96 357 ...... 56 27 429 ...... 76 72 286 ...... 79 96 358 ...... 29 0 430 ...... 85 72 287 ...... 81 71 359 ...... 18 13 431 ...... 84 60 288 ...... 71 60 360 ...... 25 11 432 ...... 83 72 289 ...... 92 65 361 ...... 28 24 433 ...... 83 72 290 ...... 82 63 362 ...... 34 53 434 ...... 86 72 291 ...... 61 47 363 ...... 65 83 435 ...... 89 72 292 ...... 52 37 364 ...... 80 44 436 ...... 86 72 293 ...... 24 0 365 ...... 77 46 437 ...... 87 72 294 ...... 20 7 366 ...... 76 50 438 ...... 88 72 295 ...... 39 48 367 ...... 45 52 439 ...... 88 71 296 ...... 39 54 368 ...... 61 98 440 ...... 87 72 297 ...... 63 58 369 ...... 61 69 441 ...... 85 71 298 ...... 53 31 370 ...... 63 49 442 ...... 88 72 299 ...... 51 24 371 ...... 32 0 443 ...... 88 72 300 ...... 48 40 372 ...... 10 8 444 ...... 84 72 301 ...... 39 0 373 ...... 17 7 445 ...... 83 73 302 ...... 35 18 374 ...... 16 13 446 ...... 77 73 303 ...... 36 16 375 ...... 11 6 447 ...... 74 73 304 ...... 29 17 376 ...... 9 5 448 ...... 76 72 305 ...... 28 21 377 ...... 9 12 449 ...... 46 77 306 ...... 31 15 378 ...... 12 46 450 ...... 78 62 307 ...... 31 10 379 ...... 15 30 451 ...... 79 35 308 ...... 43 19 380 ...... 26 28 452 ...... 82 38 309 ...... 49 63 381 ...... 13 9 453 ...... 81 41 310 ...... 78 61 382 ...... 16 21 454 ...... 79 37 311 ...... 78 46 383 ...... 24 4 455 ...... 78 35 312 ...... 66 65 384 ...... 36 43 456 ...... 78 38 313 ...... 78 97 385 ...... 65 85 457 ...... 78 46 314 ...... 84 63 386 ...... 78 66 458 ...... 75 49 315 ...... 57 26 387 ...... 63 39 459 ...... 73 50 316 ...... 36 22 388 ...... 32 34 460 ...... 79 58 317 ...... 20 34 389 ...... 46 55 461 ...... 79 71 318 ...... 19 8 390 ...... 47 42 462 ...... 83 44 319 ...... 9 10 391 ...... 42 39 463 ...... 53 48 320 ...... 5 5 392 ...... 27 0 464 ...... 40 48 321 ...... 7 11 393 ...... 14 5 465 ...... 51 75 322 ...... 15 15 394 ...... 14 14 466 ...... 75 72 323 ...... 12 9 395 ...... 24 54 467 ...... 89 67 324 ...... 13 27 396 ...... 60 90 468 ...... 93 60 325 ...... 15 28 397 ...... 53 66 469 ...... 89 73 326 ...... 16 28 398 ...... 70 48 470 ...... 86 73 327 ...... 16 31 399 ...... 77 93 471 ...... 81 73 328 ...... 15 20 400 ...... 79 67 472 ...... 78 73 329 ...... 17 0 401 ...... 46 65 473 ...... 78 73 330 ...... 20 34 402 ...... 69 98 474 ...... 76 73 331 ...... 21 25 403 ...... 80 97 475 ...... 79 73 332 ...... 20 0 404 ...... 74 97 476 ...... 82 73 333 ...... 23 25 405 ...... 75 98 477 ...... 86 73 334 ...... 30 58 406 ...... 56 61 478 ...... 88 72 335 ...... 63 96 407 ...... 42 0 479 ...... 92 71 336 ...... 83 60 408 ...... 36 32 480 ...... 97 54 337 ...... 61 0 409 ...... 34 43 481 ...... 73 43 338 ...... 26 0 410 ...... 68 83 482 ...... 36 64 339 ...... 29 44 411 ...... 102 48 483 ...... 63 31 340 ...... 68 97 412 ...... 62 0 484 ...... 78 1 341 ...... 80 97 413 ...... 41 39 485 ...... 69 27 342 ...... 88 97 414 ...... 71 86 486 ...... 67 28 343 ...... 99 88 415 ...... 91 52 487 ...... 72 9 344 ...... 102 86 416 ...... 89 55 488 ...... 71 9 345 ...... 100 82 417 ...... 89 56 489 ...... 78 36 346 ...... 74 79 418 ...... 88 58 490 ...... 81 56 347 ...... 57 79 419 ...... 78 69 491 ...... 75 53 348 ...... 76 97 420 ...... 98 39 492 ...... 60 45 349 ...... 84 97 421 ...... 64 61 493 ...... 50 37 350 ...... 86 97 422 ...... 90 34 494 ...... 66 41 351 ...... 81 98 423 ...... 88 38 495 ...... 51 61 352 ...... 83 83 424 ...... 97 62 496 ...... 68 47 353 ...... 65 96 425 ...... 100 53 497 ...... 29 42 354 ...... 93 72 426 ...... 81 58 498 ...... 24 73 355 ...... 63 60 427 ...... 74 51 499 ...... 64 71

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500 ...... 90 71 572 ...... 83 57 644 ...... 79 72 501 ...... 100 61 573 ...... 86 52 645 ...... 78 70 502 ...... 94 73 574 ...... 85 51 646 ...... 80 70 503 ...... 84 73 575 ...... 70 39 647 ...... 82 71 504 ...... 79 73 576 ...... 50 5 648 ...... 84 71 505 ...... 75 72 577 ...... 38 36 649 ...... 83 71 506 ...... 78 73 578 ...... 30 71 650 ...... 83 73 507 ...... 80 73 579 ...... 75 53 651 ...... 81 70 508 ...... 81 73 580 ...... 84 40 652 ...... 80 71 509 ...... 81 73 581 ...... 85 42 653 ...... 78 71 510 ...... 83 73 582 ...... 86 49 654 ...... 76 70 511 ...... 85 73 583 ...... 86 57 655 ...... 76 70 512 ...... 84 73 584 ...... 89 68 656 ...... 76 71 513 ...... 85 73 585 ...... 99 61 657 ...... 79 71 514 ...... 86 73 586 ...... 77 29 658 ...... 78 71 515 ...... 85 73 587 ...... 81 72 659 ...... 81 70 516 ...... 85 73 588 ...... 89 69 660 ...... 83 72 517 ...... 85 72 589 ...... 49 56 661 ...... 84 71 518 ...... 85 73 590 ...... 79 70 662 ...... 86 71 519 ...... 83 73 591 ...... 104 59 663 ...... 87 71 520 ...... 79 73 592 ...... 103 54 664 ...... 92 72 521 ...... 78 73 593 ...... 102 56 665 ...... 91 72 522 ...... 81 73 594 ...... 102 56 666 ...... 90 71 523 ...... 82 72 595 ...... 103 61 667 ...... 90 71 524 ...... 94 56 596 ...... 102 64 668 ...... 91 71 525 ...... 66 48 597 ...... 103 60 669 ...... 90 70 526 ...... 35 71 598 ...... 93 72 670 ...... 90 72 527 ...... 51 44 599 ...... 86 73 671 ...... 91 71 528 ...... 60 23 600 ...... 76 73 672 ...... 90 71 529 ...... 64 10 601 ...... 59 49 673 ...... 90 71 530 ...... 63 14 602 ...... 46 22 674 ...... 92 72 531 ...... 70 37 603 ...... 40 65 675 ...... 93 69 532 ...... 76 45 604 ...... 72 31 676 ...... 90 70 533 ...... 78 18 605 ...... 72 27 677 ...... 93 72 534 ...... 76 51 606 ...... 67 44 678 ...... 91 70 535 ...... 75 33 607 ...... 68 37 679 ...... 89 71 536 ...... 81 17 608 ...... 67 42 680 ...... 91 71 537 ...... 76 45 609 ...... 68 50 681 ...... 90 71 538 ...... 76 30 610 ...... 77 43 682 ...... 90 71 539 ...... 80 14 611 ...... 58 4 683 ...... 92 71 540 ...... 71 18 612 ...... 22 37 684 ...... 91 71 541 ...... 71 14 613 ...... 57 69 685 ...... 93 71 542 ...... 71 11 614 ...... 68 38 686 ...... 93 68 543 ...... 65 2 615 ...... 73 2 687 ...... 98 68 544 ...... 31 26 616 ...... 40 14 688 ...... 98 67 545 ...... 24 72 617 ...... 42 38 689 ...... 100 69 546 ...... 64 70 618 ...... 64 69 690 ...... 99 68 547 ...... 77 62 619 ...... 64 74 691 ...... 100 71 548 ...... 80 68 620 ...... 67 73 692 ...... 99 68 549 ...... 83 53 621 ...... 65 73 693 ...... 100 69 550 ...... 83 50 622 ...... 68 73 694 ...... 102 72 551 ...... 83 50 623 ...... 65 49 695 ...... 101 69 552 ...... 85 43 624 ...... 81 0 696 ...... 100 69 553 ...... 86 45 625 ...... 37 25 697 ...... 102 71 554 ...... 89 35 626 ...... 24 69 698 ...... 102 71 555 ...... 82 61 627 ...... 68 71 699 ...... 102 69 556 ...... 87 50 628 ...... 70 71 700 ...... 102 71 557 ...... 85 55 629 ...... 76 70 701 ...... 102 68 558 ...... 89 49 630 ...... 71 72 702 ...... 100 69 559 ...... 87 70 631 ...... 73 69 703 ...... 102 70 560 ...... 91 39 632 ...... 76 70 704 ...... 102 68 561 ...... 72 3 633 ...... 77 72 705 ...... 102 70 562 ...... 43 25 634 ...... 77 72 706 ...... 102 72 563 ...... 30 60 635 ...... 77 72 707 ...... 102 68 564 ...... 40 45 636 ...... 77 70 708 ...... 102 69 565 ...... 37 32 637 ...... 76 71 709 ...... 100 68 566 ...... 37 32 638 ...... 76 71 710 ...... 102 71 567 ...... 43 70 639 ...... 77 71 711 ...... 101 64 568 ...... 70 54 640 ...... 77 71 712 ...... 102 69 569 ...... 77 47 641 ...... 78 70 713 ...... 102 69 570 ...... 79 66 642 ...... 77 70 714 ...... 101 69 571 ...... 85 53 643 ...... 77 71 715 ...... 102 64

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716 ...... 102 69 788 ...... 105 66 860 ...... 49 8 717 ...... 102 68 789 ...... 105 62 861 ...... 51 7 718 ...... 102 70 790 ...... 105 66 862 ...... 51 20 719 ...... 102 69 791 ...... 89 41 863 ...... 78 52 720 ...... 102 70 792 ...... 52 5 864 ...... 80 38 721 ...... 102 70 793 ...... 48 5 865 ...... 81 33 722 ...... 102 62 794 ...... 48 7 866 ...... 83 29 723 ...... 104 38 795 ...... 48 5 867 ...... 83 22 724 ...... 104 15 796 ...... 48 6 868 ...... 83 16 725 ...... 102 24 797 ...... 48 4 869 ...... 83 12 726 ...... 102 45 798 ...... 52 6 870 ...... 83 9 727 ...... 102 47 799 ...... 51 5 871 ...... 83 8 728 ...... 104 40 800 ...... 51 6 872 ...... 83 7 729 ...... 101 52 801 ...... 51 6 873 ...... 83 6 730 ...... 103 32 802 ...... 52 5 874 ...... 83 6 731 ...... 102 50 803 ...... 52 5 875 ...... 83 6 732 ...... 103 30 804 ...... 57 44 876 ...... 83 6 733 ...... 103 44 805 ...... 98 90 877 ...... 83 6 734 ...... 102 40 806 ...... 105 94 878 ...... 59 4 735 ...... 103 43 807 ...... 105 100 879 ...... 50 5 736 ...... 103 41 808 ...... 105 98 880 ...... 51 5 737 ...... 102 46 809 ...... 105 95 881 ...... 51 5 738 ...... 103 39 810 ...... 105 96 882 ...... 51 5 739 ...... 102 41 811 ...... 105 92 883 ...... 50 5 740 ...... 103 41 812 ...... 104 97 884 ...... 50 5 741 ...... 102 38 813 ...... 100 85 885 ...... 50 5 742 ...... 103 39 814 ...... 94 74 886 ...... 50 5 743 ...... 102 46 815 ...... 87 62 887 ...... 50 5 744 ...... 104 46 816 ...... 81 50 888 ...... 51 5 745 ...... 103 49 817 ...... 81 46 889 ...... 51 5 746 ...... 102 45 818 ...... 80 39 890 ...... 51 5 747 ...... 103 42 819 ...... 80 32 891 ...... 63 50 748 ...... 103 46 820 ...... 81 28 892 ...... 81 34 749 ...... 103 38 821 ...... 80 26 893 ...... 81 25 750 ...... 102 48 822 ...... 80 23 894 ...... 81 29 751 ...... 103 35 823 ...... 80 23 895 ...... 81 23 752 ...... 102 48 824 ...... 80 20 896 ...... 80 24 753 ...... 103 49 825 ...... 81 19 897 ...... 81 24 754 ...... 102 48 826 ...... 80 18 898 ...... 81 28 755 ...... 102 46 827 ...... 81 17 899 ...... 81 27 756 ...... 103 47 828 ...... 80 20 900 ...... 81 22 757 ...... 102 49 829 ...... 81 24 901 ...... 81 19 758 ...... 102 42 830 ...... 81 21 902 ...... 81 17 759 ...... 102 52 831 ...... 80 26 903 ...... 81 17 760 ...... 102 57 832 ...... 80 24 904 ...... 81 17 761 ...... 102 55 833 ...... 80 23 905 ...... 81 15 762 ...... 102 61 834 ...... 80 22 906 ...... 80 15 763 ...... 102 61 835 ...... 81 21 907 ...... 80 28 764 ...... 102 58 836 ...... 81 24 908 ...... 81 22 765 ...... 103 58 837 ...... 81 24 909 ...... 81 24 766 ...... 102 59 838 ...... 81 22 910 ...... 81 19 767 ...... 102 54 839 ...... 81 22 911 ...... 81 21 768 ...... 102 63 840 ...... 81 21 912 ...... 81 20 769 ...... 102 61 841 ...... 81 31 913 ...... 83 26 770 ...... 103 55 842 ...... 81 27 914 ...... 80 63 771 ...... 102 60 843 ...... 80 26 915 ...... 80 59 772 ...... 102 72 844 ...... 80 26 916 ...... 83 100 773 ...... 103 56 845 ...... 81 25 917 ...... 81 73 774 ...... 102 55 846 ...... 80 21 918 ...... 83 53 775 ...... 102 67 847 ...... 81 20 919 ...... 80 76 776 ...... 103 56 848 ...... 83 21 920 ...... 81 61 777 ...... 84 42 849 ...... 83 15 921 ...... 80 50 778 ...... 48 7 850 ...... 83 12 922 ...... 81 37 779 ...... 48 6 851 ...... 83 9 923 ...... 82 49 780 ...... 48 6 852 ...... 83 8 924 ...... 83 37 781 ...... 48 7 853 ...... 83 7 925 ...... 83 25 782 ...... 48 6 854 ...... 83 6 926 ...... 83 17 783 ...... 48 7 855 ...... 83 6 927 ...... 83 13 784 ...... 67 21 856 ...... 83 6 928 ...... 83 10 785 ...... 105 59 857 ...... 83 6 929 ...... 83 8 786 ...... 105 96 858 ...... 83 6 930 ...... 83 7 787 ...... 105 74 859 ...... 76 5 931 ...... 83 7

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Normalized Normalized Normalized Normalized Normalized Normalized Time(s) speed torque Time(s) speed torque Time(s) speed torque (percent) (percent) (percent) (percent) (percent) (percent)

932 ...... 83 6 1004 ...... 81 29 1076 ...... 103 11 933 ...... 83 6 1005 ...... 81 28 1077 ...... 103 19 934 ...... 83 6 1006 ...... 81 24 1078 ...... 103 7 935 ...... 71 5 1007 ...... 81 19 1079 ...... 103 13 936 ...... 49 24 1008 ...... 81 16 1080 ...... 103 10 937 ...... 69 64 1009 ...... 80 16 1081 ...... 102 13 938 ...... 81 50 1010 ...... 83 23 1082 ...... 101 29 939 ...... 81 43 1011 ...... 83 17 1083 ...... 102 25 940 ...... 81 42 1012 ...... 83 13 1084 ...... 102 20 941 ...... 81 31 1013 ...... 83 27 1085 ...... 96 60 942 ...... 81 30 1014 ...... 81 58 1086 ...... 99 38 943 ...... 81 35 1015 ...... 81 60 1087 ...... 102 24 944 ...... 81 28 1016 ...... 81 46 1088 ...... 100 31 945 ...... 81 27 1017 ...... 80 41 1089 ...... 100 28 946 ...... 80 27 1018 ...... 80 36 1090 ...... 98 3 947 ...... 81 31 1019 ...... 81 26 1091 ...... 102 26 948 ...... 81 41 1020 ...... 86 18 1092 ...... 95 64 949 ...... 81 41 1021 ...... 82 35 1093 ...... 102 23 950 ...... 81 37 1022 ...... 79 53 1094 ...... 102 25 951 ...... 81 43 1023 ...... 82 30 1095 ...... 98 42 952 ...... 81 34 1024 ...... 83 29 1096 ...... 93 68 953 ...... 81 31 1025 ...... 83 32 1097 ...... 101 25 954 ...... 81 26 1026 ...... 83 28 1098 ...... 95 64 955 ...... 81 23 1027 ...... 76 60 1099 ...... 101 35 956 ...... 81 27 1028 ...... 79 51 1100 ...... 94 59 957 ...... 81 38 1029 ...... 86 26 1101 ...... 97 37 958 ...... 81 40 1030 ...... 82 34 1102 ...... 97 60 959 ...... 81 39 1031 ...... 84 25 1103 ...... 93 98 960 ...... 81 27 1032 ...... 86 23 1104 ...... 98 53 961 ...... 81 33 1033 ...... 85 22 1105 ...... 103 13 962 ...... 80 28 1034 ...... 83 26 1106 ...... 103 11 963 ...... 81 34 1035 ...... 83 25 1107 ...... 103 11 964 ...... 83 72 1036 ...... 83 37 1108 ...... 103 13 965 ...... 81 49 1037 ...... 84 14 1109 ...... 103 10 966 ...... 81 51 1038 ...... 83 39 1110 ...... 103 10 967 ...... 80 55 1039 ...... 76 70 1111 ...... 103 11 968 ...... 81 48 1040 ...... 78 81 1112 ...... 103 10 969 ...... 81 36 1041 ...... 75 71 1113 ...... 103 10 970 ...... 81 39 1042 ...... 86 47 1114 ...... 102 18 971 ...... 81 38 1043 ...... 83 35 1115 ...... 102 31 972 ...... 80 41 1044 ...... 81 43 1116 ...... 101 24 973 ...... 81 30 1045 ...... 81 41 1117 ...... 102 19 974 ...... 81 23 1046 ...... 79 46 1118 ...... 103 10 975 ...... 81 19 1047 ...... 80 44 1119 ...... 102 12 976 ...... 81 25 1048 ...... 84 20 1120 ...... 99 56 977 ...... 81 29 1049 ...... 79 31 1121 ...... 96 59 978 ...... 83 47 1050 ...... 87 29 1122 ...... 74 28 979 ...... 81 90 1051 ...... 82 49 1123 ...... 66 62 980 ...... 81 75 1052 ...... 84 21 1124 ...... 74 29 981 ...... 80 60 1053 ...... 82 56 1125 ...... 64 74 982 ...... 81 48 1054 ...... 81 30 1126 ...... 69 40 983 ...... 81 41 1055 ...... 85 21 1127 ...... 76 2 984 ...... 81 30 1056 ...... 86 16 1128 ...... 72 29 985 ...... 80 24 1057 ...... 79 52 1129 ...... 66 65 986 ...... 81 20 1058 ...... 78 60 1130 ...... 54 69 987 ...... 81 21 1059 ...... 74 55 1131 ...... 69 56 988 ...... 81 29 1060 ...... 78 84 1132 ...... 69 40 989 ...... 81 29 1061 ...... 80 54 1133 ...... 73 54 990 ...... 81 27 1062 ...... 80 35 1134 ...... 63 92 991 ...... 81 23 1063 ...... 82 24 1135 ...... 61 67 992 ...... 81 25 1064 ...... 83 43 1136 ...... 72 42 993 ...... 81 26 1065 ...... 79 49 1137 ...... 78 2 994 ...... 81 22 1066 ...... 83 50 1138 ...... 76 34 995 ...... 81 20 1067 ...... 86 12 1139 ...... 67 80 996 ...... 81 17 1068 ...... 64 14 1140 ...... 70 67 997 ...... 81 23 1069 ...... 24 14 1141 ...... 53 70 998 ...... 83 65 1070 ...... 49 21 1142 ...... 72 65 999 ...... 81 54 1071 ...... 77 48 1143 ...... 60 57 1000 ...... 81 50 1072 ...... 103 11 1144 ...... 74 29 1001 ...... 81 41 1073 ...... 98 48 1145 ...... 69 31 1002 ...... 81 35 1074 ...... 101 34 1146 ...... 76 1 1003 ...... 81 37 1075 ...... 99 39 1147 ...... 74 22

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Normalized Normalized Normalized Normalized § 1048.801 What definitions apply to this Time(s) speed torque Time(s) speed torque part? (percent) (percent) (percent) (percent) * * * * * Critical emission-related component 1148 ...... 72 52 1220 ...... 0 0 means any of the following components: 1149 ...... 62 96 1221 ...... 0 0 1150 ...... 54 72 1222 ...... 0 0 (1) Electronic control units, 1151 ...... 72 28 1223 ...... 0 0 aftertreatment devices, fuel-metering 1152 ...... 72 35 1224 ...... 0 0 components, EGR-system components, 1153 ...... 64 68 1225 ...... 0 0 crankcase-ventilation valves, all 1154 ...... 74 27 1226 ...... 0 0 components related to charge-air 1155 ...... 76 14 1227 ...... 0 0 compression and cooling, and all 1156 ...... 69 38 1228 ...... 0 0 sensors and actuators associated with 1157 ...... 66 59 1229 ...... 0 0 any of these components. 1158 ...... 64 99 1230 ...... 0 0 (2) Any other component whose 1159 ...... 51 86 1231 ...... 0 0 primary purpose is to reduce emissions. 1160 ...... 70 53 1232 ...... 0 0 1161 ...... 72 36 1233 ...... 0 0 * * * * * 1162 ...... 71 47 1234 ...... 0 0 1163 ...... 70 42 1235 ...... 0 0 PART 1051—CONTROL OF EMISSIONS 1164 ...... 67 34 1236 ...... 0 0 FROM RECREATIONAL ENGINES AND 1165 ...... 74 2 1237 ...... 0 0 VEHICLES 1166 ...... 75 21 1238 ...... 0 0 1167 ...... 74 15 I 92. The authority citation for part 1051 1168 ...... 75 13 continues to read as follows: PART 1048—CONTROL OF EMISSIONS 1169 ...... 76 10 Authority: 42 U.S.C. 7401–7671(q). 1170 ...... 75 13 FROM NEW, LARGE NONROAD 1171 ...... 75 10 SPARK-IGNITION ENGINES I 93. Section 1051.125 is amended by 1172 ...... 75 7 revising paragraph (a) introductory text 1173 ...... 75 13 I 89. The authority citation for part 1048 and paragraph (d) to read as follows: 1174 ...... 76 8 continues to read as follows: § 1051.125 What maintenance instructions 1175 ...... 76 7 Authority: 42 U.S.C. 7401–7671(q). 1176 ...... 67 45 must I give to buyers? 1177 ...... 75 13 I 90. Section 1048.125 is amended by (a) Critical emission-related 1178 ...... 75 12 revising paragraph (a) introductory text maintenance. Critical emission-related 1179 ...... 73 21 and paragraph (d) to read as follows: maintenance includes any adjustment, 1180 ...... 68 46 cleaning, repair, or replacement of 1181 ...... 74 8 § 1048.125 What maintenance instructions 1182 ...... 76 11 must I give to buyers? critical emission-related components. This may also include additional 1183 ...... 76 14 (a) Critical emission-related emission-related maintenance that you 1184 ...... 74 11 maintenance. Critical emission-related determine is critical if we approve it in 1185 ...... 74 18 maintenance includes any adjustment, 1186 ...... 73 22 advance. You may schedule critical cleaning, repair, or replacement of 1187 ...... 74 20 emission-related maintenance on these critical emission-related components. 1188 ...... 74 19 components if you meet the following This may also include additional 1189 ...... 70 22 conditions: 1190 ...... 71 23 emission-related maintenance that you 1191 ...... 73 19 determine is critical if we approve it in * * * * * 1192 ...... 73 19 advance. You may schedule critical (d) Noncritical emission-related 1193 ...... 72 20 emission-related maintenance on these maintenance. You may schedule any 1194 ...... 64 60 components if you meet the following amount of emission-related inspection 1195 ...... 70 39 conditions: or maintenance that is not covered by 1196 ...... 66 56 paragraph (a) of this section, as long as 1197 ...... 68 64 * * * * * you state in the owners manual that (d) Noncritical emission-related 1198 ...... 30 68 these steps are not necessary to keep the maintenance. You may schedule any 1199 ...... 70 38 emission-related warranty valid. If 1200 ...... 66 47 amount of emission-related inspection operators fail to do this maintenance, 1201 ...... 76 14 or maintenance that is not covered by this does not allow you to disqualify 1202 ...... 74 18 paragraph (a) of this section, as long as those engines from in-use testing or 1203 ...... 69 46 you state in the owners manual that deny a warranty claim. Do not take 1204 ...... 68 62 these steps are not necessary to keep the 1205 ...... 68 62 these inspection or maintenance steps emission-related warranty valid. If 1206 ...... 68 62 during service accumulation on your operators fail to do this maintenance, 1207 ...... 68 62 emission-data engines. 1208 ...... 68 62 this does not allow you to disqualify those engines from in-use testing or * * * * * 1209 ...... 68 62 I 1210 ...... 54 50 deny a warranty claim. Do not take 94. Section 1051.801 is amended by 1211 ...... 41 37 these inspection or maintenance steps adding a definition for ‘‘Critical 1212 ...... 27 25 during service accumulation on your emission-related component’’ in 1213 ...... 14 12 emission-data engines. alphabetical order to read as follows: 1214 ...... 0 0 1215 ...... 0 0 * * * * * § 1051.801 What definitions apply to this I 1216 ...... 0 0 91. Section 1048.801 is amended by part? 1217 ...... 0 0 adding a definition for ‘‘Critical * * * * * 1218 ...... 0 0 emission-related component’’ in Critical emission-related component 1219 ...... 0 0 alphabetical order to read as follows: means any of the following components:

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(1) Electronic control units, (1) Large nonroad spark-ignition procedure until we approve them, either aftertreatment devices, fuel-metering engines we regulate under 40 CFR part by: telling you directly that you may use components, EGR-system components, 1048. this procedure; or issuing guidance to crankcase-ventilation valves, all (2) Vehicles that we regulate under 40 all manufacturers, which allows you to components related to charge-air CFR part 1051 (i.e., recreational SI use the alternate procedure without compression and cooling, and all vehicles) that are regulated based on additional approval. You may use the sensors and actuators associated with engine testing. See 40 CFR part 1051 to statistical procedures specified in 40 any of these components. determine which vehicles may be CFR 86.1306–07(d) to demonstrate (2) Any other component whose certified based on engine test data. equivalence, except that you test for primary purpose is to reduce emissions. (3) Land-based nonroad compression- equal variances by performing the F-test * * * * * ignition engines we regulate under 40 as follows, instead of the method CFR part 1039. specified in § 86.1306–07(d)(5)(iv)(C): PART 1065—TEST PROCEDURES AND * * * * * (i) Form the F ratio: F = (Asd/Rsd) 2. EQUIPMENT I 97. Section 1065.10 is amended by Where: I 95. The authority citation for part 1065 revising paragraph (c)(3) to read as Asd = the standard deviation of continues to read as follows: follows: measurements with the alternate system. Authority: 42 U.S.C. 7401–7671(q). § 1065.10 Other test procedures. Rsd = the standard deviation of I 96. Section 1065.1 is amended by * * * * * measurements with the reference system. revising paragraph (a) and removing and (c) * * * (ii) F must be less than the critical t value, reserving paragraph (b)(6) to read as (3) You may ask to use alternate Fcrit, at a 90% confidence interval for follows: procedures that produce measurements ‘‘n-1’’ degrees of freedom. equivalent to those from the specified (iii) The following table lists 90% § 1065.1 Applicability. procedures. If you send us a written confidence-interval Fcrit values for n–1 (a) This part describes the procedures request showing your procedures are degrees of freedom. Note that nA that apply to testing that we require for equivalent, and we agree that they are represents the number of alternate the following engines or for equipment equivalent, we will allow you to use system samples, while nR represents the using the following engines: them. You may not use an alternate number of reference system samples:

nR-1 nA-1 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

6 ...... 3.055 3.014 2.983 2.958 2.937 2.92 2.905 2.892 2.881 2.871 2.863 2.855 2.848 2.842 2.836 7 ...... 2.827 2.785 2.752 2.725 2.703 2.684 2.668 2.654 2.643 2.632 2.623 2.615 2.607 2.601 2.595 8 ...... 2.668 2.624 2.589 2.561 2.538 2.519 2.502 2.488 2.475 2.464 2.455 2.446 2.438 2.431 2.425 9 ...... 2.551 2.505 2.469 2.440 2.416 2.396 2.379 2.364 2.351 2.340 2.329 2.320 2.312 2.305 2.298 10 ...... 2.461 2.414 2.377 2.347 2.323 2.302 2.284 2.269 2.255 2.244 2.233 2.224 2.215 2.208 2.201 11 ...... 2.389 2.342 2.304 2.274 2.248 2.227 2.209 2.193 2.179 2.167 2.156 2.147 2.138 2.13 2.123 12 ...... 2.331 2.283 2.245 2.214 2.188 2.166 2.147 2.131 2.117 2.105 2.094 2.084 2.075 2.067 2.06 13 ...... 2.283 2.234 2.195 2.164 2.138 2.116 2.097 2.080 2.066 2.053 2.042 2.032 2.023 2.014 2.007 14 ...... 2.243 2.193 2.154 2.122 2.095 2.073 2.054 2.037 2.022 2.010 1.998 1.988 1.978 1.97 1.962 15 ...... 2.208 2.158 2.119 2.086 2.059 2.037 2.017 2.000 1.985 1.972 1.961 1.950 1.941 1.932 1.924 16 ...... 2.178 2.128 2.088 2.055 2.028 2.005 1.985 1.968 1.953 1.940 1.928 1.917 1.908 1.899 1.891 17 ...... 2.152 2.102 2.061 2.028 2.001 1.978 1.958 1.940 1.925 1.912 1.900 1.889 1.879 1.87 1.862 18 ...... 2.130 2.079 2.038 2.005 1.977 1.954 1.933 1.916 1.900 1.887 1.875 1.864 1.854 1.845 1.837 19 ...... 2.109 2.058 2.017 1.984 1.956 1.932 1.912 1.894 1.878 1.865 1.852 1.841 1.831 1.822 1.814 20 ...... 2.091 2.040 1.999 1.965 1.937 1.913 1.892 1.875 1.859 1.845 1.833 1.821 1.811 1.802 1.794

* * * * * (b) Raw-gas sampling during steady- § 1065.205 Test fuel specifications for distillate diesel fuel. I 98. In § 1065.115, text is added to read state tests as specified in 40 CFR 89.412 as follows: through 89.418. (a)(1) There are three grades of #2 (c) Partial-flow sampling for diesel fuel specified for use as a test § 1065.115 Exhaust gas sampling system; measuring gaseous emission fuel. See the standard-setting part to compression-ignition engines. determine which grade to use. If the constituents during steady-state tests as standard-setting part does not specify Use one of the following systems and specified in 40 CFR 89.112(c). which grade to use, use good procedures to measure emissions from I 99. In § 1065.205, text is added to read engineering judgment to select the grade compression-ignition engines: as follows: that represents the fuel on which the (a) Full-flow dilution sampling as engines will operate in use. The three specified in 40 CFR 86.1310. grades are specified as follows:

ASTM test Item Ultra low Low sulfur High sulfur method No.1 sulfur

(i) Cetane Number ...... D 613 40–50 40–50 40–50 (ii) Cetane Index ...... D 976 40–50 40–50 40–50 (iii) Distillation range: (A) IBP ...... °C ...... D 86 171–204 171–204 171–204 (B) 10 pct. point ...... °C ...... D 86 204–238 204–238 204–238 (C) 50 pct. point ...... °C ...... D 86 243–282 243–282 243–282 (D) 90 pct. point ...... °C ...... D 86 293–332 293–332 293–332

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ASTM test Item Ultra low Low sulfur High sulfur method No.1 sulfur

(E) EP ...... °C ...... D 86 321–366 321–366 321–366 (iv) Gravity ...... °API ...... D 287 32–37 32–37 32–37 (v) Total sulfur ...... ppm ...... D 2622 7–15 300–500 2000–4000 (vi) Hydrocarbon composition: Aromatics, minimum. (Remainder shall be paraffins, pct ...... D 5186 10 10 10 naphthenes, and olefins). (vii) Flashpoint, min ...... °C ...... D 93 54 54 54 (viii) Viscosity ...... centistokes ...... D 445 2.0–3.2 2.0–3.2 2.0–3.2 1 All ASTM standards are incorporated by reference in § 1065.1010.

(2) [Reserved] (b) Run the test engine, with all § 1065.530 Test cycle validation criteria. (b) There are no specifications for #1 emission-control systems operating, * * * * * diesel fuel. See § 1065.201(d) if your long enough to stabilize emission levels. (b) * * * engines are designed to operate only on (1) For SI engines, if you accumulate (3) * * * #1 diesel fuel. 50 hours of operation, you may consider (iii) For a valid test, make sure the I 100. In § 1065.310, text is added to emission levels stable without feedback cycle’s integrated brake read as follows: measurement. kilowatt-hour is within 5 percent of the § 1065.310 CVS calibration. (2) For CI engines, if you accumulate reference cycle’s integrated brake Use the procedures of 40 CFR 125 hours of operation, you may kilowatt-hour. Also, ensure that the 86.1319–90 to calibrate the CVS. consider emission levels stable without slope, intercept, standard error, and I 101. Section 1065.405 is amended by measurement. coefficient of determination meet the revising paragraph (b) to read as follows: criteria in the following tables (you may * * * * * delete individual points from the § 1065.405 Preparing and servicing a test I 102. Section 1065.530 is amended by regression analyses, consistent with engine. revising paragraph (b)(3)(iii) and adding paragraph (e) of this section and good * * * * * paragraphs (d) and (e) to read as follows: engineering judgment):

TABLE 1 OF § 1065.530.—STATISTICAL CRITERIA FOR VALIDATING TEST CYCLES FOR SPARK-IGNITION ENGINES

Speed Torque Power

1. Slope of the regression line (m) ...... 0.950 to 1.030 ...... 0.830 to 1.030 ...... 0.880 to 1.030. 2. Y intercept of the regression line (b) |b| ≤ 50 rpm ...... |b| ≤ 5.0 percent of maximum torque |b| ≤ 3.0 percent of maximum torque from power map. from power map. 3. Standard error of the estimate of Y 100 rpm ...... 15 percent of maximum torque from 10 percent of maximum power from on X (SE). power map. power map. 4. Coefficient of determination (r 2) ...... r 2 ≥ 0.970 ...... r 2 ≥ 0.880 ...... r 2 ≥ 0.900.

TABLE 2 OF § 1065.530.—STATISTICAL CRITERIA FOR VALIDATING TEST CYCLES FOR COMPRESSION-IGNITION ENGINES

Speed Torque Power

1. Slope of the regression line (m) ...... 0.950 to 1.030 ...... 0.830 to 1.030 (hot); 0.77 to 1.03 0.890 to 1.030 (hot); 0.870 to 1.030 (cold). (cold). 2. Y intercept of the regression line (b) |b| ≤ 50 rpm ...... |b| ≤ 20 Nm or |b| ≤ 2.0 percent of |b| ≤ 4.0 kW or |b| ≤ 3.0 percent of maximum torque from power map, maximum torque from power map, whichever is greater. whichever is greater. 3. Standard error of the estimate of Y 100 rpm ...... 13 percent of maximum torque from 8 percent of maximum power from on X (SE). power map. power map. 4. Coefficient of determination (r 2) ...... r 2 ≥ 0.970 ...... r 2 ≥ 0.880 (hot); r 2 ≥ 0.850 (cold); ... r 2 ≥ 0.910 (hot); r 2 ≥ 0.850 (cold).

* * * * * (2) Feedback speed and power during approaching maximum demand, if all (d) Transient testing with constant- idle-speed oscillations, if all the the following are true: speed engines. For constant-speed following are true: (i) Operator demand (i.e., throttle) is engines with installed governor (i) Reference command is 0% speed at its maximum. operating over a transient duty cycle, and 0% torque. the test cycle validation criteria in this (ii) Either feedback speed is less than (ii) Operator demand (i.e., throttle) is section apply to engine-torque values reference speed or feedback torque is at its minimum. but not engine-speed values. less than reference torque, but both are (e) Omissions. You may omit the (iii) Absolute value of feedback torque not less than their respective reference following points from duty cycle is less than the sum of the reference values. statistics calculations: torque plus 2% of the maximum (4) Feedback power and either speed (1) Feedback torque and power during mapped torque. or torque for a given point, when motoring reference commands when (3) Feedback power and either speed approaching minimum demand, if all operator demand is at its minimum. or torque for a given point when the following are true:

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(i) Operator demand (i.e., throttle) is comparable to those of dynamometer it must demonstrate that the alternate at its minimum. testing. Measurement systems that system passes a two-sided, paired t-test. (ii) Either feedback speed is greater conform to the provisions of If the test is unpaired, it must than 105% of reference speed or §§ 1065.915 through 1065.950 are demonstrate that the alternate system feedback torque is greater than 105% of deemed to be in compliance with the passes a two-sided, unpaired t-test. The reference torque, but both are not greater accuracy and precision requirements of average of these tests for the reference than these values. paragraph of this section. If you use system must return results less than or I 103. Section 1065.615 is amended by other field testing measurement systems equal to the applicable emissions revising paragraphs (c), (d), and (e) to you need to have documentation standard. The t-test is performed as read as follows: indicating that it is comparable to a follows, where ‘‘n’’ equals the number § 1065.615 Bag sample calculations. dynamometer system. of tests: (a) The two systems must be * * * * * (1) Calculate the average of the in-use calibrated independently to NIST system results; this is Iavg. (c) Calculate total brake work (kW-hr) traceable standards or equivalent (2) Calculate the average of the results done during the emissions sampling national standards for this comparison. period of each segment or mode and of the system to which the in-use system We may approve the use of other then weight it by the applicable test was Referenced; this is Ravg. standards. Calculations of emissions cycle weighting factors. (3) Calculate the ‘‘n-1’’ standard (d) Calculate emissions in g/kW-hr by results for this test should be consistent with the field testing data reduction deviations for the in-use and reference dividing the total weighted mass averages; these are Isd and Rsd emission rate (g/test) by the total cycle- scheme for both the in-use equipment and the dynamometer equipment, and respectively. Form the F ratio: F = (Isd/ weighted brake work for the test. Rsd) 2. F must be less than the critical (e) Apply deterioration factors or each complete test cycle will be considered one ‘‘summing interval’’, Si F value, Fcrit at a 95% confidence other adjustment factors to the brake- interval for ‘‘n-1’’ degrees of freedom. specific emission rate in paragraph (d) as defined in the field-testing data Table 1 of this section lists 95% of this section, as specified in the reduction scheme. confidence interval Fcrit values for n-1 standard-setting part. (b) While other statistical analyses I 104. Section 1065.620 is added to may be acceptable, we recommend that degrees of freedom. Note that nA subpart G to read as follows: the comparison be based on a minimum represents the number of alternate of seven (7) repeats of colocated and system samples, while nR represents the § 1065.620 Continuous sample analysis simultaneous tests. Perform this number of reference system samples. and calculations. comparison over the applicable steady- (4) For an unpaired comparison, Use the sample analysis procedures state and transient test cycles using an calculate the t-value: and calculations of 40 CFR part 86, engine that is fully warmed up such that 2 2 1 tunpaired = (Iavg ¥ Ravg)/((Isd +Rsd )/n) ⁄2 subpart N, for continuous samples. its coolant temperature is I 105. Section 1065.701 is added to thermostatically controlled. If there is (5) For a paired comparison, calculate subpart H to read as follows: no applicable transient test cycle, use the ‘‘n-1’’ standard deviation (squared) § 1065.701 Particulate measurements. the applicable steady-state cycle. of the differences, di, between the paired Anyone who intends to submit an results, where ‘‘i’’ represents the ith test Use the particulate sampling system alternative comparison is encouraged to of n number of tests: and procedures specified in 40 CFR part first contact EPA Office of 2 2 ¥ 2 86, subpart N, to measure particulate SD = (Sdi ((Sdi) /n))/(n-1) emissions from compression-ignition Transportation and Air Quality, (6) For a paired comparison, calculate nonroad engines. Assessment and Standards Division to I 106. Section 1065.910 is revised to discuss the applicant’s intended the t-value: statistical analysis. The Division may 2 1 read as follows: tpaired = (Iavg ¥ Ravg)/(SD /n) ⁄2 provide further guidance specific to the § 1065.910 Measurement accuracy and appropriate statistical analysis for the (d) The absolute value of t must be precision. respective application. less than the critical t value, tcrit at a Measurement systems used for field (c) The following statistical tests are 95% confidence interval for ‘‘n-1’’ testing have accuracy and precision suggested. If the comparison is paired, degrees of freedom.

TABLE 1 OF § 1065.910—95% CONFIDENCE INTERVAL CRITICAL F VALUES FOR F-TEST

nR–1 nI–1 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

6 ...... 4.284 4.207 4.147 4.099 4.06 4.027 4 3.976 3.956 3.938 3.922 3.908 3.896 3.884 3.874 7 ...... 3.866 3.787 3.726 3.677 3.637 3.603 3.575 3.55 3.529 3.511 3.494 3.48 3.467 3.455 3.445 8 ...... 3.581 3.5 3.438 3.388 3.347 3.313 3.284 3.259 3.237 3.218 3.202 3.187 3.173 3.161 3.15 9 ...... 3.374 3.293 3.23 3.179 3.137 3.102 3.073 3.048 3.025 3.006 2.989 2.974 2.96 2.948 2.936 10 ...... 3.217 3.135 3.072 3.02 2.978 2.943 2.913 2.887 2.865 2.845 2.828 2.812 2.798 2.785 2.774 11 ...... 3.095 3.012 2.948 2.896 2.854 2.818 2.788 2.761 2.739 2.719 2.701 2.685 2.671 2.658 2.646 12 ...... 2.996 2.913 2.849 2.796 2.753 2.717 2.687 2.66 2.637 2.617 2.599 2.583 2.568 2.555 2.544 13 ...... 2.915 2.832 2.767 2.714 2.671 2.635 2.604 2.577 2.554 2.533 2.515 2.499 2.484 2.471 2.459 14 ...... 2.848 2.764 2.699 2.646 2.602 2.565 2.534 2.507 2.484 2.463 2.445 2.428 2.413 2.4 2.388 15 ...... 2.79 2.707 2.641 2.588 2.544 2.507 2.475 2.448 2.424 2.403 2.385 2.368 2.353 2.34 2.328 16 ...... 2.741 2.657 2.591 2.538 2.494 2.456 2.425 2.397 2.373 2.352 2.333 2.317 2.302 2.288 2.276 17 ...... 2.699 2.614 2.548 2.494 2.45 2.413 2.381 2.353 2.329 2.308 2.289 2.272 2.257 2.243 2.23 18 ...... 2.661 2.577 2.51 2.456 2.412 2.374 2.342 2.314 2.29 2.269 2.25 2.233 2.217 2.203 2.191 19 ...... 2.628 2.544 2.477 2.423 2.378 2.34 2.308 2.28 2.256 2.234 2.215 2.198 2.182 2.168 2.155 20 ...... 2.599 2.514 2.447 2.393 2.348 2.31 2.278 2.25 2.225 2.203 2.184 2.167 2.151 2.137 2.124

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TABLE 2 OF § 1065.910.—95% CON- TABLE 2 OF § 1065.910.—95% CON- mechanically or electronically signals FIDENCE INTERVAL CRITICAL T VAL- FIDENCE INTERVAL CRITICAL T VAL- an input that demands engine output. UES FOR T-TEST UES FOR T-TEST—Continued Input may be an accelerator pedal or signal, a throttle-control lever or signal,

n-1 tcrit n-1 tcrit a fuel lever or signal, a speed lever or signal, or a governor setpoint or signal. 6 ...... 2.45 20 ...... 2.09 Output means engine power, P, which 7 ...... 2.36 is the product of engine speed, ’’, and 8 ...... 2.31 I 107. Section 1065.1001 is amended by engine torque, T. 9 ...... 2.26 adding the definition for ‘‘Operator * * * * * 10 ...... 2.23 demand’’ in alphabetical order to read as 11 ...... 2.20 follows: I 108. Section 1065.1010 is amended by 12 ...... 2.18 revising the entry for ASTM D 86–01 and 13 ...... 2.16 § 1065.1001 Definitions. by adding the following entries to Table 14 ...... 2.14 15 ...... 2.13 * * * * * 1 in alphanumeric order to read as 16 ...... 2.12 Operator demand means an engine follows: operator’s input to control engine 17 ...... 2.11 § 1065.1010 Reference materials. 18 ...... 2.10 output. The operator may be a person, 19 ...... 2.09 a governor, or other controller that (a) * * *

TABLE 1 OF § 1065.1010.—ASTM MATERIALS

Part 1065 Document number and name reference

ASTM D 86–01, Standard Test Method for Distillation of Petroleum Products at Atmospheric Pressure ...... 1065.205, 1065.210

******* ASTM D 93–02a, Standard Test Methods for Flash Point by Pensky-Martens Closed Cup Tester ...... 1065.205 ASTM D 287–92, (Reapproved 2000), Standard Test Method for API Gravity of Crude Petroleum and Petroleum Prod- ucts (Hydrometer Method) ...... 1065.205

******* ASTM D 445–03, Standard Test Method for Kinematic Viscosity of Transparent and Opaque Liquids (and the Calcula- tion of Dynamic Viscosity) ...... 1065.205 ASTM D 613–03b, Standard Test Method for Cetane Number of Diesel Fuel Oil ...... 1065.205 ASTM D 976–91 (Reapproved 2000), Standard Test Methods for Calculated Cetane Index of Distillate Fuels ...... 1065.205

******* ASTM D 2622–03, Standard Test Method for Sulfur in Petroleum Products by Wavelength Dispersive X-ray Fluores- cence Spectrometry ...... 1065.205

******* ASTM D 5186–03, Standard Test Method for Determination of the Aromatic Content and Polynuclear Aromatic Content of Diesel Fuels and Aviation Turbine Fuels By Supercritical Fluid Chromatography ...... 1065.205

* * * * * (2) Recreational SI engines and (e)(1) The provisions of §§ 1068.30, vehicles that we regulate under 40 CFR 1068.310, and 1068.320 apply for PART 1068—GENERAL COMPLIANCE part 1051 (such as snowmobiles and off- stationary spark-ignition engines built PROVISIONS FOR NONROAD highway motorcycles). on or after January 1, 2004, and for PROGRAMS (3) Land-based nonroad diesel engines stationary compression-ignition engines that we regulate under 40 CFR part I 109. The authority citation for part 86 built on or after January 1, 2006. 1039. continues to read as follows: (2) The provisions of §§ 1068.30 and (b) * * * 1068.235 apply for the types of engines Authority: 42 U.S.C. 7401–7671(q). (5) Land-based nonroad diesel engines listed in paragraph (a) of this section I 110. Section 1068.1 is amended by that we regulate under 40 CFR part 89. beginning January 1, 2004, where they revising paragraphs (a), (b)(5), and (d) * * * * * are used solely for competition. and adding paragraph (e) to read as (d) Paragraph (a)(1) of this section I 111. Section 1068.5 is amended by follows: identifies the parts of the CFR that revising paragraphs (a) and (e) to read as define emission standards and other follows: § 1068.1 Does this part apply to me? requirements for particular types of (a) The provisions of this part apply engines and vehicles. This part 1068 § 1068.5 How must manufacturers apply to everyone with respect to the refers to each of these other parts good engineering judgment? following engines and to equipment generically as the ‘‘standard-setting (a) You must use good engineering using the following engines (including part.’’ For example, 40 CFR part 1051 is judgment for decisions related to any owners, operators, parts manufacturers, always the standard-setting part for requirements under this chapter. This and persons performing maintenance). snowmobiles. Follow the provisions of includes your applications for (1) Large nonroad spark-ignition the standard-setting part if they are certification, any testing you do to show engines we regulate under 40 CFR part different than any of the provisions in that your certification, production-line, 1048. this part. and in-use engines comply with

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requirements that apply to them, and exhausted to the environment. Exhaust- purpose by both propelling itself and how you select, categorize, determine, gas recirculation (EGR) is not performing another function (such as and apply these requirements. aftertreatment. garden tractors, off-highway mobile * * * * * * * * * * cranes and bulldozers); or (e) If you disagree with our Certificate holder means a (ii) In or on a piece of equipment that conclusions, you may file a request for manufacturer (including importers) with is intended to be propelled while a hearing with the Designated Officer as a currently valid certificate of performing its function (such as described in subpart G of this part. In conformity for at least one engine family lawnmowers and string trimmers); or your request, specify your objections, in a given model year. (iii) That, by itself or in or on a piece include data or supporting analysis, and * * * * * of equipment, is portable or get your authorized representative’s Emission-related defect means a transportable, meaning designed to be signature. If we agree that your request defect in design, materials, or and capable of being carried or moved raises a substantial factual issue, we will workmanship (in an emission-control from one location to another. Indicia of hold the hearing according to subpart F device or vehicle component or system) transportability include, but are not of this part. that affects an emission-related limited to, wheels, skids, carrying I 112. Section 1068.10 is amended by component, parameter, or specification handles, dolly, trailer, or platform. revising the section heading to read as that is identified in Appendix I or (2) An internal combustion engine is follows: Appendix II of this part. Using an not a nonroad engine if: (i) The engine is used to propel a § 1068.10 What provisions apply to incorrect emission-related component is confidential information? an emission-related defect. motor vehicle, an aircraft, or equipment used solely for competition, or is subject I * * * * * 113. Section 1068.25 is amended by to standards promulgated under section revising paragraph (b) to read as follows: Engine-based means having emission standards in units of grams of pollutant 202 of the Act (42 U.S.C. 7521); or § 1068.25 What information must I give to per kilowatt-hour, and which apply to (ii) The engine is regulated by a EPA? the engine. Emission standards are federal New Source Performance * * * * * either engine-based or equipment-based. Standard promulgated under section (b) You must establish and maintain Engine manufacturer means the 111 of the Act (42 U.S.C. 7411); or records, perform tests, make reports and manufacturer that is subject to the (iii) The engine otherwise included in provide additional information that we certification requirements of the paragraph (1)(iii) of this definition may reasonably require under section standard-setting part. For vehicles and remains or will remain at a location for 208 of the Act (42 U.S.C. 7542). This equipment subject to this part and more than 12 consecutive months or a also applies to engines we exempt from regulated under vehicle-based or shorter period of time for an engine emission standards or prohibited acts. equipment-based standards, the term located at a seasonal source. A location I 114. A new § 1068.27 is added to read engine manufacturer in this part is any single site at a building, structure, as follows: includes vehicle and equipment facility, or installation. Any engine (or manufacturers. engines) that replaces an engine at a § 1068.27 May EPA conduct testing with location and that is intended to perform my production engines? Equipment-based means having emission standards that apply to the the same or similar function as the If we request it, you must make a equipment in which an engine is used, engine replaced will be included in reasonable number of production-line without regard to how the emissions are calculating the consecutive time period. engines available for a reasonable time measured. Where equipment-based An engine located at a seasonal source so we can test or inspect them for standards apply, we require that the is an engine that remains at a seasonal compliance with the requirements of equipment be certified, rather than just source during the full annual operating this chapter. period of the seasonal source. A I 115. Section 1068.30 is amended by the engine. Emission standards are either engine-based or equipment-based. seasonal source is a stationary source revising the definitions for ‘‘Act’’, that remains in a single location on a ‘‘Certificate holder’’, ‘‘Emission-related Equipment manufacturer means any company manufacturing a piece of permanent basis (i.e., at least two years) defect’’, ‘‘Engine-based’’, ‘‘Engine and that operates at that single location manufacturer’’, ‘‘Equipment-based’’, equipment (such as a vehicle). Manufacturer has the meaning given approximately three months (or more) ‘‘Equipment manufacturer’’, in section 216(1) of the Act (42 U.S.C. each year. This paragraph (2)(iii) does ‘‘Manufacturer’’, ‘‘Nonroad engine’’, 7550(1)). In general, this term includes not apply to an engine after the engine ‘‘Operating hours’’, and ‘‘Ultimate any person who manufactures an engine is removed from the location. purchaser’’, and ‘‘U.S.-directed or vehicle for sale in the United States Operating hours means: production volume’’ and adding or otherwise introduces a new engine or (1) For engine storage areas or definitions for ‘‘Aftertreatment’’ and in vehicle into commerce in the United facilities, times during which people alphabetical order to read as follows: States. This includes importers that other than custodians and security § 1068.30 What definitions apply to this import new engines or new equipment personnel are at work near, and can part? into the United States for resale. It also access, a storage area or facility. * * * * * includes secondary engine (2) For other areas or facilities, times Act means the Clean Air Act, as manufacturers, as described in during which an assembly line operates amended, 42 U.S.C. 7401–7671q. § 1068.255. or any of the following activities occurs: Aftertreatment means relating to a * * * * * (i) Testing, maintenance, or service catalytic converter, particulate filter, or Nonroad engine means: accumulation. any other system, component, or (1) Except as discussed in paragraph (ii) Production or compilation of technology mounted downstream of the (2) of this definition, a nonroad engine records. exhaust valve (or exhaust port) whose is any internal combustion engine: (iii) Certification testing. design function is to reduce emissions (i) In or on a piece of equipment that (iv) Translation of designs from the in the engine exhaust before it is is self-propelled or serves a dual test stage to the production stage.

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(v) Engine manufacture or assembly. with these requirements to make and time requirements of paragraph (2)(iii) * * * * * maintain required records (including of the nonroad engine definition in Ultimate purchaser means the first those described in § 1068.501). You may § 1068.30. We may assess a civil penalty person who in good faith purchases a not deny us access to your records or up to $31,500 for each day you are in new nonroad engine or new piece of the ability to copy your records if we violation. equipment for purposes other than have the authority to see or copy them. (4) Competition engines. For an resale. Also, you must give us the required uncertified engine or piece of reports or information without delay. equipment that is excluded or exempted * * * * * U.S.-directed production volume Failure to comply with the requirements from any requirements of this chapter of this paragraph is prohibited. We may means the number of engine units, because it is to be used solely for assess a civil penalty up to $31,500 for subject to the requirements of this part, competition, you may not use it in a each day you are in violation. manner that is inconsistent with use produced by a manufacturer for which (3) Testing and access to facilities. the manufacturer has a reasonable solely for competition. We may assess a You may not keep us from entering your civil penalty up to $31,500 for each day assurance that sale was or will be made facility to test engines or inspect if we to ultimate purchasers in the United you are in violation. are authorized to do so. Also, you must (5) Importation. You may not import States. perform the tests we require (or have the an uncertified engine or piece of * * * * * tests done for you). Failure to perform equipment if it is defined to be new in I 116. Section 1068.101 is amended by this testing is prohibited. We may assess the standard-setting part and it is built revising paragraphs (a) and (b) to read as a civil penalty up to $31,500 for each after emission standards start to apply follows: day you are in violation. in the United States. We may assess a § 1068.101 What general actions does this (b) The following prohibitions apply civil penalty up to $31,500 for each day regulation prohibit? to everyone with respect to the engines you are in violation. Note the following: to which this part applies: (i) The definition of new is broad for * * * * * (1) Tampering. You may not remove imported engines; uncertified engines (a) The following prohibitions and or disable a device or element of design and equipment (including used engines requirements apply to manufacturers of that may affect an engine’s emission and equipment) are generally new engines and manufacturers of levels. This restriction applies before considered to be new when imported. equipment containing these engines, and after the engine is placed in service. (ii) Engines that were originally except as described in subparts C and D Section 1068.120 describes how this manufactured before applicable EPA of this part: applies to rebuilding engines. For a standards were in effect are generally (1) Introduction into commerce. You manufacturer or dealer, we may assess not subject to emission standards. may not sell, offer for sale, or introduce a civil penalty up to $31,500 for each (6) Warranty. You must meet your or deliver into commerce in the United engine in violation. For anyone else, we obligation to honor your emission- States or import into the United States may assess a civil penalty up to $3,150 related warranty under § 1068.115 and any new engine or equipment after for each engine in violation. This to fulfill any applicable responsibilities emission standards take effect for that prohibition does not apply in any of the to recall engines under § 1068.505. engine or equipment, unless it has a following situations: Failure to meet these obligations is valid certificate of conformity for its (i) You need to repair an engine and prohibited. We may assess a civil model year and the required label or tag. you restore it to proper functioning penalty up to $31,500 for each engine in You also may not take any of the actions when the repair is complete. violation. listed in the previous sentence with (ii) You need to modify an engine to respect to any equipment containing an * * * * * respond to a temporary emergency and I 117. Section 1068.105 is amended by engine subject to this part’s provisions, you restore it to proper functioning as revising paragraph (c) and adding unless the engine has a valid and soon as possible. introductory text to read as follows: appropriate certificate of conformity and (iii) You modify a new engine that the required engine label or tag. For another manufacturer has already § 1068.105 What other provisions apply to purposes of this paragraph (a)(1), an certified to meet emission standards and me specifically if I manufacture equipment appropriate certificate of conformity is recertify it under your own engine needing certified engines? one that applies for the same model year family. In this case you must tell the This section describes general as the model year of the equipment original manufacturer not to include the provisions that apply to equipment (except as allowed by § 1068.105(a)), modified engines in the original engine manufacturers. See the standard-setting covers the appropriate category of family. part for any requirements that apply for engines (such as locomotive or CI (2) Defeat devices. You may not certain applications. marine), and conforms to all knowingly manufacture, sell, offer to * * * * * requirements specified for equipment in sell, or install, an engine part if it (c) Attaching a duplicate label. If you the standard-setting part. The bypasses, impairs, defeats, or disables obscure the engine’s label, you must do requirements of this paragraph (a)(1) the engine’s control the emissions of four things to avoid violating also cover new engines you produce to any pollutant. We may assess a civil § 1068.101(a)(1): replace an older engine in a piece of penalty up to $3,150 for each part in (1) Send a request for duplicate labels equipment, unless the engine qualifies violation. in writing with your company’s for the replacement-engine exemption (3) Stationary engines. For an engine letterhead to the engine manufacturer. in § 1068.240. We may assess a civil that is excluded from any requirements Include the following information in penalty up to $31,500 for each engine in of this chapter because it is a stationary your request: violation. engine, you may not move it or install (i) Identify the type of equipment and (2) Reporting and recordkeeping. This it in any mobile equipment, except as the specific engine and equipment chapter requires you to record certain allowed by the provisions of this models needing duplicate labels. types of information to show that you chapter. You may not circumvent or (ii) Identify the engine family (from meet our standards. You must comply attempt to circumvent the residence- the original engine label).

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(iii) State the reason that you need a owners may make warranty claims according to the original manufacturer’s duplicate label for each equipment against the manufacturer for emission- recommended practice. In particular, model. related parts, as described in § 1068.115. replace oxygen sensors, replace the (iii) Identify the number of duplicate The warranty period begins when the catalyst if there is evidence of labels you will need. engine is first placed into service. See malfunction, clean gaseous fuel system (2) Permanently attach the duplicate the standard-setting part for specific components, and replace fuel injectors label to your equipment by securing it requirements. It is a violation of the Act (if applicable), unless you have a to a part needed for normal operation for anyone to disable emission controls; reasonable technical basis for believing and not normally requiring replacement. see § 1068.101(b)(1) and the standard- any of these components do not need Make sure an average person can easily setting part. replacement. I read it. 119. Section 1068.120 is amended by * * * * * (3) Destroy any unused duplicate revising paragraphs (b)(2), (c), (d), (f), I 120. Section 1068.125 is amended by labels if you find that you will not need and (h) to read as follows: revising paragraphs (a)(1)(iv), (b)(3), and them. (e)(2) to read as follows: (4) Keep the following records for at § 1068.120 What requirements must I follow to rebuild engines? least eight years after the end of the § 1068.125 What happens if I violate the model year identified on the engine * * * * * regulations? label: (b) * * * (2) Unscheduled maintenance that (a) * * * (i) Keep a copy of your written (1) * * * request. occurs commonly within the useful life period. For example, replacing a water (iv) Your history of compliance with (ii) Keep drawings or descriptions that Title II of the Act (42 U.S.C. 7401–7590). show how you apply the duplicate pump is not rebuilding an engine. * * * * * labels to your equipment. (c) For maintenance or service that is (b) * * * (iii) Maintain a count of those not rebuilding, you may not make (3) We will not pursue an duplicate labels you use and those you changes that might increase emissions administrative penalty for a particular destroy. of any pollutant, but you do not need to keep any records. violation if either of the following two * * * * * conditions is true: I (d) If you rebuild an engine or engine 118. Section 1068.110 is amended by system, you must have a reasonable (i) We are separately prosecuting the revising paragraphs (b), (c), (d), and (e) technical basis for knowing that the violation under this subpart. to read as follows: rebuilt engine’s emission-control system (ii) We have issued a final order for § 1068.110 What other provisions apply to performs as well as, or better than, it a violation, no longer subject to judicial engines in service? performs in its certified configuration. review, for which you have already paid * * * * * Identify the model year of the resulting a penalty. (b) Certifying aftermarket parts. As engine configuration. You have a * * * * * the manufacturer or rebuilder of an reasonable basis if you meet two main (e) * * * aftermarket engine part, you may—but conditions: (2) In addition, if you do not pay the are not required to—certify according to (1) Install parts—new, used, or full amount of a penalty on time, you § 85.2114 of this chapter that using the rebuilt—so a person familiar with must then pay more to cover interest, part will not cause engines to fail to engine design and function would enforcement expenses (including meet emission standards. Whether you reasonably believe that the engine with attorney’s fees and costs for collection), certify or not, you must keep any those parts will control emissions of all and a quarterly nonpayment penalty for information showing how your parts or pollutants at least to the same degree as each quarter you do not pay. The service affect emissions. with the original parts. For example, it quarterly nonpayment penalty is 10 (c) Compliance with standards. We would be reasonable to believe that percent of your total penalties plus any may test engines and equipment to parts performing the same function as unpaid nonpayment penalties from investigate compliance with emission the original parts (and to the same previous quarters. standards and other requirements. We degree) would control emissions to the I 121. Section 1068.201 is amended by may also require the manufacturer to do same degree as the original parts. revising the introductory text and this testing. (2) Adjust parameters or change paragraph (i) to read as follows: (d) Defeat devices. We may test design elements only according to the engines and equipment to investigate original engine manufacturer’s § 1068.201 Does EPA exempt or exclude any engines from the prohibited acts? potential defeat devices. We may also instructions. Or, if you differ from these require the manufacturer to do this instructions, you must have data or We may exempt new engines from testing. If we choose to investigate one some other technical basis to show you some or all of the prohibited acts or of your designs, we may require you to should not expect in-use emissions to requirements of this part under show us that it does not have a defeat increase. provisions described in this subpart. We device. To do this, you may have to * * * * * may exempt an engine already placed in share with us information regarding test (f) If the rebuilt engine replaces service in the United States from the programs, engineering evaluations, another certified engine in a piece of prohibition in § 1068.101(b)(1) if the design specifications, calibrations, on- equipment, you must rebuild it to a exemption for engines used solely for board computer algorithms, and design certified configuration of the same competition applies (see § 1068.235). In strategies. It is a violation of the Act for model year as, or a later model year addition, see § 1068.1 and the standard- anyone to make, install or use defeat than, the engine you are replacing. setting parts to determine if other devices. See § 1068.101(b)(2) and the * * * * * engines are excluded from some or all standard-setting part. (h) When you rebuild an engine, of the regulations in this chapter. (e) Warranty and maintenance. check, clean, adjust, repair, or replace * * * * * Owners are responsible for properly all emission-related components (listed (i) If you want to take an action with maintaining their engines; however, in Appendix I of this part) as needed respect to an exempted or excluded

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engine that is prohibited by the (b) A nonconforming display engine you loan, lease, sell, or give one of these exemption or exclusion, such as selling will be exempted if it is used only for engines to someone else, you must tell it, you need to certify the engine. We displays in the interest of a business or the new owner (or operator, if will issue a certificate of conformity if the general public. This exemption does applicable) in writing that it may be you send us an application for not apply to engines displayed for used only for competition. certification showing that you meet all private use, private collections, or any I 128. Section 1068.240 is revised to the applicable requirements from the other purpose we determine is read as follows: standard-setting part. Also, in some inappropriate for a display exemption. § 1068.240 What are the provisions for cases, we may allow manufacturers to * * * * * exempting new replacement engines? modify the engine as needed to make it (e) * * * (a) You are eligible for the exemption identical to engines already covered by (3) Engine displacement, engine for new replacement engines only if you a certificate. We would base such an family identification (as applicable), and are a certificate holder. approval on our review of any model year of the engine or whom to (b) The prohibitions in appropriate documentation. These contact for further information. § 1068.101(a)(1) do not apply to an engines must have emission control * * * * * engine if all the following conditions information labels that accurately I 125. Section 1068.225 is amended by apply: describe their status. adding paragraph (d) to read as follows: (1) You produce a new engine to I 122. Section 1068.210 is amended by replace an engine already placed in revising paragraphs (d)(5)(iv) and § 1068.225 What are the provisions for service in a piece of equipment. (e)(3)(iv) to read as follows: exempting engines for national security? (2) The engine being replaced was * * * * * § 1068.210 What are the provisions for manufactured before the emission exempting test engines? (d) Add a legible label, written in standards that would otherwise apply to block letters in English, to each engine the new engine took effect. * * * * * exempted under this section. The label (3) You determine that you do not (d) * * * (5) * * * must be permanently secured to a produce an engine certified to meet (iv) Ownership and control of the readily visible part of the engine needed current requirements that has the engines involved in the test. for normal operation and not normally appropriate physical or performance (e) * * * requiring replacement, such as the characteristics to repower the (3) * * * engine block. This label must include at equipment. If the engine being replaced (iv) The statement ‘‘THIS ENGINE IS least the following items: was made by a different company, you EXEMPT UNDER 40 CFR 1068.210 OR (1) The label heading ‘‘EMISSION must make this determination also for 1068.215 FROM EMISSION CONTROL INFORMATION’’. engines produced by this other STANDARDS AND RELATED (2) Your corporate name and company. REQUIREMENTS.’’. trademark. (4) You or your agent takes possession * * * * * (3) Engine displacement, engine of the old engine or confirms that the I 123. Section 1068.215 is amended by family identification (as applicable), and engine has been destroyed. revising paragraphs (b), (c)(3)(iii), and model year of the engine or whom to (5) You make the replacement engine (c)(3)(iv) to read as follows: contact for further information. in a configuration identical in all (4) The statement ‘‘THIS ENGINE material respects to the engine being § 1068.215 What are the provisions for HAS AN EXEMPTION FOR NATIONAL replaced (or that of another certified exempting manufacturer-owned engines? SECURITY UNDER 40 CFR 1068.225.’’. engine of the same or later model year). * * * * * I 126. Section 1068.230 is amended by This requirement applies only if the old (b) An engine may be exempt without revising paragraph (c) to read as follows: engine was certified to emission a request if it is a nonconforming engine standards less stringent than those in under your ownership and control and § 1068.230 What are the provisions for effect when you produce the exempting engines for export? you operate it to develop products, replacement engine. assess production methods, or promote * * * * * (c) If the engine being replaced was your engines in the marketplace. You (c) Label each exempted engine and not certified to any emission standards may not loan, lease, sell, or use the shipping container with a label or tag under this chapter, add a permanent engine to generate revenue, either by showing the engine is not certified for label with your corporate name and itself or in a piece of equipment. sale or use in the United States. These trademark and the following language: labels need not be permanently attached (c) * * * THIS ENGINE DOES NOT COMPLY WITH (3) * * * to the engines. The label must include U.S. EPA NONROAD EMISSION (iii) Engine displacement, engine at least the statement ‘‘THIS ENGINE IS REQUIREMENTS. SELLING OR family identification (as applicable), and SOLELY FOR EXPORT AND IS INSTALLING THIS ENGINE FOR ANY model year of the engine or whom to THEREFORE EXEMPT UNDER 40 CFR PURPOSE OTHER THAN TO REPLACE A contact for further information. 1068.230 FROM U.S. EMISSION NONROAD ENGINE BUILT BEFORE (iv) The statement ‘‘THIS ENGINE IS STANDARDS AND RELATED JANUARY 1, [Insert appropriate year EXEMPT UNDER 40 CFR 1068.210 OR REQUIREMENTS.’’. reflecting when the earliest tier of standards 1068.215 FROM EMISSION I began to apply to engines of that size and 127. Section 1068.235 is amended by type] MAY BE A VIOLATION OF FEDERAL STANDARDS AND RELATED revising paragraph (c) to read as follows: LAW SUBJECT TO CIVIL PENALTY. REQUIREMENTS.’’. I 124. Section 1068.220 is amended by § 1068.235 What are the provisions for (d) If the engine being replaced was revising paragraphs (b) and (e)(3) to read exempting engines used solely for certified to emission standards less competition? as follows: stringent than those in effect when you * * * * * produce the replacement engine, add a § 1068.220 What are the provisions for (c) If you modify an engine under permanent label with your corporate exempting display engines? paragraph (b) of this section, you must name and trademark and the following * * * * * destroy the original emission label. If language:

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THIS ENGINE DOES NOT COMPLY WITH § 1068.255 What are the provisions for each engine they purchase from you, U.S. EPA NONROAD EMISSION exempting engines for hardship for your distributors, or your dealers under REQUIREMENTS. SELLING OR equipment manufacturers and secondary this section. INSTALLING THIS ENGINE FOR ANY engine manufacturers? (ii) If you sell more than 50 engines PURPOSE OTHER THAN TO REPLACE A * * * * * NONROAD ENGINE BUILT BEFORE per model year under this section, you JANUARY 1, [Insert appropriate year (c) Secondary engine manufacturers. must annually audit four equipment reflecting when the next tier of emission As a secondary engine manufacturer, manufacturers to whom you sell engines standards began to apply] MAY BE A you may ask for approval to produce under this section. To select individual VIOLATION OF FEDERAL LAW SUBJECT exempted engines under this section for equipment manufacturers, divide all the TO CIVIL PENALTY. up to 12 months. We may require you affected equipment manufacturers into (e) The provisions of this section may to certify your engines to compliance quartiles based on the number of not be used to circumvent emission levels above the emission standards that engines they buy from you; select a standards that apply to new engines apply. For example, the in the case of single equipment manufacturer from under the standard-setting part. multiple tiers of emission standards, we each quartile each model year. Vary the I 129. Section 1068.245 is amended by may require you to meet the standards equipment manufacturers you audit revising paragraphs (a) introductory text from the previous tier. from year to year, though you may and (e) to read as follows: * * * * * repeat an audit in a later model year if I 132. A new § 1068.260 is added to § 1068.245 What temporary provisions you find or suspect that a particular address hardship due to unusual subpart C to read as follows: equipment manufacturer is not properly installing aftertreatment devices. If you circumstances? § 1068.260 What are the provisions for (a) After considering the temporarily exempting engines for sell engines to fewer than 16 equipment circumstances, we may permit you to delegated final assembly? manufacturers under the provisions of this section, you may instead set up a introduce into commerce engines or (a) Shipping an engine separately plan to audit each equipment equipment that do not comply with from an aftertreatment component that manufacturer on average once every emission-related requirements for a you have specified as part of its certified four model years. Audits must involve limited time if all the following configuration will not be a violation of the assembling companies’ facilities, conditions apply: the prohibitions in § 1068.101(a)(1), if procedures, and production records to * * * * * you do all the following: (e) We may include reasonable (1) Apply for and receive a certificate monitor their compliance with your additional conditions on an approval of conformity for the engine and its instructions, must include investigation granted under this section, including emission-control system before of some assembled engines, and must provisions to recover or otherwise shipment. confirm that the number of address the lost environmental benefit (2) Provide installation instructions in aftertreatment devices shipped were or paying fees to offset any economic enough detail to ensure that the engine sufficient for the number of engines gain resulting from the exemption. For will be in its certified configuration if produced. Where an equipment example, in the case of multiple tiers of someone follows these instructions. manufacturer is not located in the emission standards, we may require that (3) Have a contractual agreement with United States, you may conduct the you meet the standards from the an equipment manufacturer obligating audit at a distribution or port facility in previous tier. the equipment manufacturer to the United States. You must keep complete the final assembly of the records of these audits and provide a * * * * * report describing any uninstalled or I 130. Section 1068.250 is amended by engine so it is in its certified improperly installed aftertreatment revising paragraphs (d)(2), (d)(4), and (j) configuration when installed in the components to us within 90 days of the to read as follows: equipment. This agreement must also obligate the equipment manufacturer to audit. § 1068.250 What are the provisions for provide the affidavits and cooperate (iii) If you sell up to 50 engines per extending compliance deadlines for small- with the audits required under model year under this section, you must volume manufacturers under hardship? paragraph (a)(6) of this section. conduct audits as described in * * * * * (4) Include the cost of all paragraph (a)(6)(ii) of this section or (d) * * * aftertreatment components in the cost of propose an alternative plan for ensuring (2) Describe your current and the engine. that equipment manufacturers properly projected financial status, with and (5) Ship the aftertreatment install aftertreatment devices. without the burden of complying fully components directly to the equipment (7) Describe the following things in with the applicable regulations in this manufacturer, or arrange for separate your application for certification: chapter. shipment by the component (i) How you plan to use the provisions * * * * * manufacturer directly to the equipment of this section. (4) Identify the engineering and manufacturer. (ii) A detailed plan for auditing technical steps you have taken or those (6) Take appropriate additional steps equipment manufacturers, as described you plan to take to comply with to ensure that all engines will be in their in paragraph (a)(6) of this section. regulations in this chapter. certified configuration when installed (iii) All other steps you plan to take * * * * * by the equipment manufacturer. At a under paragraph (a)(6) of this section. (j) We will approve extensions of up minimum do the following: (8) Keep records to document how to one model year. We may review and (i) Obtain annual affidavits from every many engines you produce under this revise an extension as reasonable under equipment manufacturer to whom you, exemption. Also, keep records to the circumstances. your distributors, or your dealers sell document your contractual agreements * * * * * engines under this section. The under paragraph (a)(3) of this section. I 131. Section 1068.255 is amended by affidavits must list the part numbers of Keep all these records for five years after revising paragraph (c) introductory text the aftertreatment devices that the end of the model year and make to read as follows: equipment manufacturers install on them available to us upon request.

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(9) Make sure the engine has the § 1068.305 How do I get an exemption or imports under § 1039.301(b) under the emission control information label we exclusion for imported engines? following conditions: require under the standard-setting part. (a) Complete the appropriate EPA (a) National security exemption. You Apply an additional temporary label or declaration form before importing any may import an engine under the tag in a way that makes it unlikely that nonconforming engine. These forms are national security exemption in the engine will be installed in available on the Internet at http:// § 1068.225, but only if it is properly equipment other than in its certified www.epa.gov/OTAQ/imports/ or by labeled. configuration. The label or tag must phone at 202–564–9660. * * * * * identify the engine as incomplete and * * * * * (f) * * * include a clear statement that failing to (e) Meet the requirements specified (1) * * * install the aftertreatment device, or for the appropriate exemption in this (iii) Land-based nonroad diesel otherwise bring the engine into its part or the standard-setting part, engines (see part 1039 of this chapter). certified configuration, is a violation of including any labeling requirements * * * * * federal law subject to civil penalty. that apply. I 136. Section 1068.320 is amended by revising the section heading and (b) An engine you produce under this I 134. Section 1068.310 is revised to paragraphs (a) introductory text and (b) section becomes new when it is fully read as follows: to read as follows: assembled, except for aftertreatment § 1068.310 What are the exclusions for devices, for the first time. Use this date imported engines? § 1068.320 How must I label an imported to determine the engine’s model year. engine with an exclusion or a permanent If you show us that your engines exemption? (c) Once the equipment manufacturer qualify under one of the paragraphs of (a) For engines imported under takes possession of an engine exempted this section, we will approve your under this section, the exemption § 1068.310(a) or (b), you must place a request to import such excluded permanent label or tag on each engine. expires and the engine is subject to all engines. You must have our approval to the prohibitions in 40 CFR 1068.101. If no specific label requirements in the import an engine under paragraph (a) of standard-setting part apply for these (d) You must notify us within 15 days this section. You may, but are not engines, you must meet the following if you find from an audit or another required to request our approval to requirements: source that an equipment manufacturer import the engines under paragraph (b) or (c) of this section. The following * * * * * has failed to meet its obligations under (b) On the engine label or tag, do the engines are excluded: this section. following: (e) We may suspend, revoke, or void (a) Engines used solely for (1) Include the heading ‘‘EMISSION an exemption under this section, as competition. Engines that you CONTROL INFORMATION’’. follows: demonstrate will be used solely for (2) Include your full corporate name competition are excluded from the (1) We may suspend or revoke your and trademark. restrictions on imports in § 1068.301(b), (3) State the engine displacement (in exemption for the entire engine family but only if they are properly labeled. liters) and rated power. If the engine’s if we determine that any of the engines See the standard-setting part for rated power is not established, state the are not in their certified configuration provisions related to this demonstration. approximate power rating accurately after installation in the equipment, or if Section 1068.101(b)(4) prohibits anyone enough to allow a determination of you fail to comply with the from using these excluded engines for which standards would otherwise requirements of this section. If we purposes other than competition. apply. suspend or revoke the exemption for (b) Stationary engines. The definition (4) State: ‘‘THIS ENGINE IS EXEMPT any of your engine families under this of nonroad engine in 40 CFR 1068.30 FROM THE REQUIREMENTS OF paragraph (d), this exemption will not does not include certain engines used in [identify the part referenced in 40 CFR apply for future certificates unless you stationary applications. Such engines 1068.1(a) that would otherwise apply], demonstrate that the factors causing the are not subject to the restrictions on AS PROVIDED IN [identify the nonconformity do not apply to the other imports in § 1068.301(b), but only if paragraph authorizing the exemption engine families. We may suspend or they are properly labeled. Section (for example, ‘‘40 CFR 1068.315(a)’’)]. revoke the exemption for shipments to 1068.101 restricts the use of stationary INSTALLING THIS ENGINE IN ANY a single facility where final assembly engines for non-stationary purposes. DIFFERENT APPLICATION MAY BE A occurs. (c) Other engines. The standard- VIOLATION OF FEDERAL LAW (2) We may void your exemption for setting parts may exclude engines used SUBJECT TO CIVIL PENALTY.’’. the entire engine family if you in certain applications. For example, * * * * * intentionally submit false or incomplete engines used in aircraft and very small I 137. Section 1068.325 is amended by information or fail to keep and provide engines used in hobby vehicles are revising the introductory text and to EPA the records required by this generally excluded. Engines used in paragraphs (a) and (b) and adding section. underground mining are excluded if paragraph (f) to read as follows: they are regulated by the Mine Safety (f) You are liable for the in-use § 1068.325 What are the temporary compliance of any engine that is exempt and Health Administration. I exemptions for imported engines? under this section. It is also a violation 135. Section 1068.315 is amended by revising the introductory text and If we approve a temporary exemption of § 1068.101(b)(1) for any person to from the restrictions on importing an complete assembly of the exempted paragraph (a) and adding paragraph (f)(1)(iii) to read as follows: engine under § 1039.301(b), you may engine without complying fully with the import it under the conditions in this installation instructions. § 1068.315 What are the permanent section. We may ask the U.S. Customs I 133. Section 1068.305 is amended by exemptions for imported engines? Service to require a specific bond revising paragraphs (a) and (e) to read as We may approve a permanent amount to make sure you comply with follows: exemption from the restrictions on the requirements of this subpart. You

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may not sell or lease one of these (c) If we select one or more of your holidays. You may ask us to approve a engines while it is in the United States. engine families for a selective lower service accumulation rate. Plan You must eventually export the engine enforcement audit, we will send the test your service accumulation to allow as we describe in this section unless you order to the person who signed the testing at the rate specified in paragraph get a certificate of conformity for it or application for certification or we will (c) of this section. Select engine it qualifies for one of the permanent deliver it in person. operation for accumulating operating exemptions in § 1068.315. Section (d) If we do not select a testing hours on your test engines to represent 1068.330 specifies an additional facility, notify the Designated Officer normal in-use engine operation for the temporary exemption allowing you to within one working day of receiving the engine family. import certain engines you intend to sell test order where you will test your (e) Test engines in the same order you or lease. engines. select them. (a) Exemption for repairs or (e) You must do everything we require I 142. Section 1068.445 is amended by alterations. You may temporarily import in the audit without delay. revising paragraph (a)(1) to read as a nonconforming engine under bond I 140. Section 1068.410 is amended by follows: solely to repair or alter it or the revising paragraphs (e)(1), (g), and (i) to equipment in which it is installed. You read as follows: § 1068.445 When may EPA revoke my may operate the engine and equipment certificate under this subpart and how may § 1068.410 How must I select and prepare I sell these engines again? in the United States only as necessary my engines? to repair it, alter it, or ship it to or from (a) * * * * * * * * the service location. Export the engine (1) You do not meet the reporting (e) * * * requirements under this subpart. directly after servicing is complete. (1) We may adjust or require you to (b) Testing exemption. You may * * * * * adjust idle speed outside the physically temporarily import a nonconforming I 143. Section 1068.450 is amended by adjustable range as needed until the engine under bond for testing if you revising paragraph (e) to read as follows: engine has stabilized emission levels follow the requirements of § 1068.210. (see paragraph (f) of this section). We § 1068.450 What records must I send to You may operate the engine in the may ask you for information needed to EPA? United States only to allow testing. This establish an alternate minimum idle exemption expires one year after you * * * * * speed. import the engine, unless we approve an (e) We may post test results on extension. The engine must be exported * * * * * publicly accessible databases and we before the exemption expires. (g) Damage during shipment. If will send copies of your reports to shipping an engine to a remote facility anyone from the public who asks for * * * * * for testing under a selective enforcement them. We will not release information (f) Delegated assembly exemption. audit makes necessary an adjustment or about your sales or production volumes, You may import a nonconforming repair, you must wait until after the which is all we will consider engine for final assembly, as described initial emission test to do this work. We confidential. in § 1068.260. may waive this requirement if the test I I 138. Section 1068.335 is amended by 144. Section 1068.501 is revised to would be impossible or unsafe, or if it revising paragraph (a) to read as follows: read as follows: would permanently damage the engine. § 1068.335 What are the penalties for Report to us, in your written report § 1068.501 How do I report engine violations? under § 1068.450, all adjustments or defects? (a) All imported engines. Unless you repairs you make on test engines before This section addresses your comply with the provisions of this each test. responsibility to investigate and report subpart, importation of nonconforming * * * * * emission-related defects in design, engines violates sections 203 and 213(d) (i) Retesting after invalid tests. You materials, or workmanship. The of the Act (42 U.S.C. 7522 and 7547(d)). may retest an engine if you determine provisions of this section do not limit You may then have to export the an emission test is invalid under the your liability under this part or the engines, or pay civil penalties, or both. standard-setting part. Explain in your Clean Air Act. For example, selling an The U.S. Customs Service may seize written report reasons for invalidating engine that does not conform to your unlawfully imported engines. any test and the emission results from application for certification is a violation of § 1068.101(a)(1), * * * * * all tests. If you retest an engine and, I 139. Section 1068.401 is revised to within ten days after testing, ask to independent of the requirements of this read as follows: substitute results of the new tests for the section. original ones, we will answer within ten (a) General provisions. As an engine § 1068.401 What is a selective days after we receive your information. manufacturer, you must investigate in enforcement audit? I 141. Section 1068.415 is amended by certain circumstances whether engines (a) We may conduct or require you to revising paragraphs (d) and (e) to read as that have been introduced into conduct emission tests on your follows: commerce in the United States have production engines in a selective incorrect, improperly installed, or enforcement audit. This requirement is § 1068.415 How do I test my engines? otherwise defective emission-related independent of any requirement for you * * * * * components or systems. You must also to routinely test production-line (d) Accumulate service on test send us reports as specified by this engines. engines at a minimum rate of 6 hours section. (b) If we send you a signed test order, per engine during each 24-hour period. (1) This section addresses defects for you must follow its directions and the The first 24-hour period for service any of the following emission-related provisions of this subpart. We may tell accumulation begins when you finish components, or systems containing the you where to test the engines. This may preparing an engine for testing. The following components: be where you produce the engines or minimum service accumulation rate (i) Electronic control units, any other emission testing facility. does not apply on weekends or aftertreatment devices, fuel-metering

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components, EGR-system components, (7) If we determine that emission- that there is no emission-related defect crankcase-ventilation valves, all related defects result in a substantial or you obtain all the information components related to charge-air number of properly maintained and specified for a defect report in compression and cooling, and all used engines not conforming to the paragraph (d) of this section. Send us an sensors associated with any of these regulations of this chapter during their updated defect report anytime you have components. useful life, we may order you to conduct significant additional information. (ii) Any other component whose a recall of your engines (see § 1068.505). (6) If a component with a possible primary purpose is to reduce emissions. (8) Send all reports required by this defect is used in additional engine (iii) Any other component whose section to the Designated Officer. families or model years, you must failure might increase emissions of any (9) This section distinguishes between investigate whether the component may pollutant without significantly defects and possible defects. A possible be defective when used in these degrading engine performance. defect exists anytime there is an additional engine families or model (2) The requirements of this section indication that an emission-related years, and include these results in any relate to defects in any of the component or system might have a defect report you send under paragraph components or systems identified in defect, as described in paragraph (b)(1) (c) of this section. paragraph (a)(1) of this section if the of this section. (7) If your initial investigation defects might affect any of the (b) Investigation of possible defects. concludes that the number of engines parameters or specifications in Investigate possible defects as follows: with a defect is fewer than any of the Appendix II of this part or might (1) If the number of engines that have thresholds specified in paragraph (f) of otherwise affect an engine’s emissions a possible defect, as defined by this this section, but other information later of any pollutant. paragraph (b)(1), exceeds a threshold becomes available that may show that (3) For the purposes of this section, specified in paragraph (e) of this the number of engines with a defect defects do not include damage to section, you must conduct an exceeds a threshold, then you must emission-related components or systems investigation to determine if an resume your investigation. If you (or maladjustment of parameters) caused emission-related component or system resume an investigation, you must by owners improperly maintaining or is actually defective. You must classify include the information from the earlier abusing their engines. an engine component or system as investigation to determine whether to having a possible defect if any of the (4) The requirements of this section send a defect report. following sources of information shows do not apply to emission control (c) Reporting defects. You must send there is a significant possibility that a information labels. Note however, that us a defect report in either of the defect exists: § 1068.101(a)(1) prohibits the sale of following cases: (i) A warranty claim is submitted for (1) Your investigation shows that the engines without proper labels, which the component, whether this is under number of engines with a defect exceeds also applies to misprinted labels. your emission-related warranty or any a threshold specified in paragraph (f) of (5) You must track the information other warranty. this section. Send the defect report specified in paragraph (b)(1) of this (ii) Your quality-assurance procedures within 21 days after the date you section. You must assess this data at suggest that a defect may exist. identify this number of defective least every three months to evaluate (iii) You receive any other engines. See paragraph (h) of this whether you exceed the thresholds information for which good engineering section for reporting requirements that specified in paragraphs (e) and (f) of this judgment would indicate the apply if the number of engines with a section. Where thresholds are based on component or system may be defective, defect does not exceed any of the a percentage of engines in the engine such as information from dealers, field- thresholds in paragraph (f) of this family, use actual sales figures for the service personnel, hotline complaints, section. whole model year when they become or engine diagnostic systems. (2) You know there are emission- available. Use projected sales figures (2) If the number of shipped related defects for a component or until the actual sales figures become replacement parts for any individual system in a number of engines that available. You are not required to collect component is high enough that good exceeds a threshold specified in additional information other than that engineering judgment would indicate a paragraph (f) of this section, regardless specified in paragraph (b)(1) of this significant possibility that a defect of how you obtain this information. section before reaching a threshold for exists, you must conduct an Send the defect report within 21 days an investigation specified in paragraph investigation to determine if it is after you learn that the number of (e) of this section. actually defective. Note that this defects exceeds a threshold. (6) You may ask us to allow you to paragraph (b)(2) does not require data- (d) Contents of a defect report. use alternate methods for tracking, tracking or recording provisions related Include the following information in a investigating, reporting, and correcting to shipment of replacement parts. defect report: emission-related defects. In your (3) Your investigation must be (1) Your corporate name and a person request, explain and demonstrate why prompt, thorough, consider all relevant to contact regarding this defect. you believe your alternate system will information, follow accepted scientific (2) A description of the defect, be at least as effective in the aggregate and engineering principles, and be including a summary of any engineering in tracking, identifying, investigating, designed to obtain all the information analyses and associated data, if evaluating, reporting, and correcting specified in paragraph (d) of this available. potential and actual emissions-related section. (3) A description of the engines that defects as the requirements in this (4) Your investigation needs to have the defect, including engine section. In this case, provide all consider possible defects that occur families, models, and range of available data necessary to demonstrate only within the useful life period, or production dates. why an alternate system is appropriate within five years after the end of the (4) An estimate of the number and for your engines and how it will result model year, whichever is longer. percentage of each class or category of in a system at least as effective as that (5) You must continue your affected engines that have the defect, required under this section. investigation until you are able to show and an explanation of how you

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determined this number. Describe any and engine family as much as possible. the status of the investigation. Send statistical methods you used under If information is not identifiable by these status reports no later than June 30 paragraph (g)(6) of this section. model year or engine family, use good and December 31 of each year. (5) An estimate of the defect’s impact engineering judgment to evaluate (2) If you find that the number of on emissions, with an explanation of whether you exceed a threshold in components or systems with an how you calculated this estimate and a paragraph (e) or (f) of this section. emission-related defect exceeds a summary of any emission data Consider only your U.S.-directed threshold specified in paragraph (f) of demonstrating the impact of the defect, production volume. this section, send us a report describing if available. (2) Within an engine family, track your findings within 21 days after the (6) A description of your plan for defects together for all components or date you reach this conclusion. addressing the defect or an explanation systems that are the same in all material (3) If you find that the number of of your reasons for not believing the respects. If multiple companies components or systems with an defects must be addressed. separately supply a particular emission-related defect does not exceed (e) Thresholds for conducting a defect component or system, treat each any of the thresholds specified in investigation. You must begin a defect company’s component or system as paragraph (f) of this section, send us a investigation based on the following unique. final report supporting this conclusion. number of engines that may have the (3) If a possible defect is not attributed For example, you may exclude warranty defect: to any specific part of the engine, claims that resulted from misdiagnosis (1) For engines with maximum engine consider the complete engine a distinct and you may exclude defects caused by power at or below 560 kW: component for evaluating whether you improper maintenance, improper use, or (i) For engine families with annual exceed a threshold in paragraph (e) of misfueling. Send this report within 21 sales below 500 units: 50 or more this section. days after the date you reach this engines. (4) If you correct defects before they conclusion. (ii) For engine families with annual reach the ultimate purchaser as a result (i) Future production. If you identify sales from 500 to 50,000 units: more of your quality-assurance procedures, a design or manufacturing defect that than 10.0 percent of the total number of count these against the investigation prevents engines from meeting the engines in the engine family. thresholds in paragraph (e) of this requirements of this part, you must (iii) For engine families with annual section unless you routinely check correct the defect as soon as possible for sales above 50,000 units: 5,000 or more every engine in the engine family. Do future production of engines in every engines. not count any corrected defects as actual family affected by the defect. This (2) For engines with maximum engine defects under paragraph (f) of this applies without regard to whether you power greater than 560 kW: section. are required to conduct a defect (i) For engine families with annual (5) Use aggregated data from all the investigation or submit a defect report sales below 250 units: 25 or more different sources identified in paragraph under this section. engines. (b)(1) of this section to determine I 145. Section 1068.505 is amended by (ii) For engine families with annual whether you exceed a threshold in revising paragraphs (a) and (e) and sales at or above 250 units: more than paragraphs (e) and (f) of this section. adding paragraph (f) to read as follows: 10.0 percent of the total number of (6) If information is readily available to conclude that the possible defects § 1068.505 How does the recall program engines in the engine family. work? (f) Thresholds for filing a defect identified in paragraph (b)(1) of this report. You must send a defect report section are actual defects, count these (a) If we make a determination that a based on the following number of toward the reporting thresholds in substantial number of properly engines that have the defect: paragraph (f) of this section. maintained and used engines do not (1) For engines with maximum engine (7) During an investigation, use conform to the regulations of this power at or below 560 kW: appropriate statistical methods to chapter during their useful life, you (i) For engine families with annual project defect rates for engines that you must submit a plan to remedy the sales below 1,000 units: 20 or more are not otherwise able to evaluate. For nonconformity of your engines. We will engines. example, if 75 percent of the notify you of our determination in (ii) For engine families with annual components replaced under warranty writing. Our notice will identify the sales from 1,000 to 50,000 units: more are available for evaluation, it would be class or category of engines affected and than 2.0 percent of the total number of appropriate to extrapolate known describe how we reached our engines in the engine family. information on failure rates to the conclusion. If this happens, you must (iii) For engine families with annual components that are unavailable for meet the requirements and follow the sales above 50,000 units: 1,000 or more evaluation. Take steps as necessary to instructions in this subpart. You must engines. prevent bias in sampled data. Make remedy at your expense noncompliant (2) For engines with maximum engine adjusted calculations to take into engines that have been properly power greater than 560 kW: account any bias that may remain. maintained and used, as described in (i) For engine families with annual (h) Investigation reports. Once you § 1068.510(a)(7). You may not transfer sales below 150 units: 10 or more trigger an investigation threshold under this expense to a dealer or equipment engines. paragraph (e) of this section, you must manufacturer through a franchise or (ii) For engine families with annual report your progress and conclusions. In other agreement. sales from 150 to 750 units: 15 or more your reports, include the information * * * * * engines. specified in paragraph (d) of this (e) You may ask us to allow you to (iii) For engine families with annual section, or explain why the information conduct your recall differently than sales above 750 units: more than 2.0 is not relevant. Send us the following specified in this subpart, consistent percent of the total number of engines reports: with section 207(c) of the Act (42 U.S.C. in the engine family. (1) While you are investigating, send 7541(c)). (g) How to count defects. (1) Track us mid-year and end-of-year reports to (f) You may do a voluntary recall defects separately for each model year describe the methods you are using and under § 1068.535, unless we have made

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the determination described in I 147. Section 1068.530 is amended by revising the introductory text to read as § 1068.535(a). revising the introductory text to read as follows: I 146. Section 1068.510 is amended by follows: revising paragraph (a)(7) to read as Appendix I to Part 1068—Emission- follows: § 1068.530 What records must I keep? Related Components § 1068.510 How do I prepare and apply my We may review your records at any This appendix specifies emission- remedial plan? time, so it is important that you keep related components that we refer to for (a) * * * required information readily available. describing such things as emission- (7) The proper maintenance or use Keep records associated with your recall related warranty or requirements related campaign for three years after you send you will specify, if any, as a condition to rebuilding engines. to be eligible for repair under the the last report we require under remedial plan. Describe how these § 1068.525(b). Organize and maintain [FR Doc. 04–11293 Filed 6–28–04; 8:45 am] specifications meet the provisions of your records as described in this BILLING CODE 6560–50–P paragraph (e) of this section. Describe section. how the owners should show they meet * * * * * your conditions. I 148. Appendix I to part 1068 is * * * * * amended by removing paragraph IV and

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Part III

Environmental Protection Agency 40 CFR Parts 92 and 94 Control of Emissions of Air Pollution From New Locomotive Engines and New Marine Compression-Ignition Engines Less than 30 Liters per Cylinder; Proposed Rule

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ENVIRONMENTAL PROTECTION existing asthma, acute respiratory edocket, including any personal AGENCY symptoms, chronic bronchitis, and information provided, unless the decreased lung function. We believe comment includes information claimed 40 CFR Parts 92 and 94 that diesel exhaust is likely to be to be Confidential Business Information [OAR–2003–0190; FRL–7662–8] carcinogenic to humans by inhalation. (CBI) or other information whose Locomotive and marine diesel disclosure is restricted by statute. Do RIN 2060–AM06 emissions reductions would particularly not submit information that you benefit those who live, work or recreate consider to be CBI or otherwise Control of Emissions of Air Pollution in and along our nation’s coastal areas, protected through EDOCKET, From New Locomotive Engines and rivers, ports, and rail lines. Such regulations.gov, or e-mail. The EPA New Marine Compression-Ignition reductions would also have beneficial EDOCKET and the federal Engines Less Than 30 Liters per impacts on visibility impairment and regulations.gov Web sites are Cylinder regional haze. We received a substantial ‘‘anonymous access’’ systems, which AGENCY: Environmental Protection number of comments from state and means EPA will not know your identity Agency (EPA). local governments following our or contact information unless you proposal last year to set new controls for provide it in the body of your comment. ACTION: Advance notice of proposed nonroad diesel emissions, pressing the If you send an e-mail comment directly rulemaking. Agency to adopt similar controls for to EPA without going through SUMMARY: EPA is issuing this Advance locomotive and marine diesel engines as EDOCKET or regulations.gov, your e- Notice of Proposed Rulemaking quickly as possible. mail address will be automatically (ANPRM) to invite comment from all DATES: Send written comments on this captured and included as part of the interested parties on our plan to propose advance notice of proposed rulemaking comment that is placed in the public new emission standards and other by August 30, 2004. See ADDRESSES, docket and made available on the related provisions for new compression- below, for more information about Internet. If you submit an electronic ignition marine engines with per written comments. There will also be comment, EPA recommends that you cylinder displacement less than 30 liters opportunity for oral and written include your name and other contact and locomotive engines. We are comment when we publish our Notice information in the body of your considering standards modeled after our of Proposed Rulemaking for this action. comment and with any disk or CD-ROM 2007/2010 highway and Tier 4 nonroad We expect to publish a Notice of you submit. If EPA cannot read your diesel engine programs, with an Proposed Rulemaking for this rule by comment due to technical difficulties emphasis on achieving large reductions mid-2005 and a Final Rule by mid-2006. and cannot contact you for clarification, in emissions of particulate matter (PM) ADDRESSES: Submit your comments, EPA may not be able to consider your and air toxics as early as possible identified by Docket ID No. OAR–2003– comment. Electronic files should avoid through the use of advanced emission 0190, by one of the following methods: the use of special characters, any form control technology starting as early as • Federal Rulemaking Portal: http:// of encryption, and be free of any defects 2011. This technology, based on high- www.regulations.gov. Follow the on-line or viruses. For additional information efficiency catalytic aftertreatment, is instructions for submitting comments. about EPA’s public docket visit enabled by the availability of clean • Agency Web site: http:// EDOCKET on-line or see the Federal diesel fuel with sulfur content capped at www.epa.gov/edocket. EDOCKET, EPA’s Register of May 31, 2002 (67 FR 38102). 15 parts per million. This fuel is already electronic public docket and comment For additional instructions on being produced in some U.S. markets, system, is EPA’s preferred method for submitting comments, go to the and its availability is expected to receiving comments. Follow the on-line SUPPLEMENTARY INFORMATION section of become widespread in coming years in instructions for submitting comments. this document. response to EPA regulations that require • E-mail: [email protected]. Docket: All documents in the docket it for an increasingly larger portion of Specify docket number OAR–2003–0190 are listed in the EDOCKET index at the overall diesel fuel pool, starting with in the body of the message. http://www.epa.gov/edocket. Although highway fuel in 2006. We are well • Fax: (202) 260–4400. listed in the index, some information is aware that migrating advanced control • Mail: Environmental Protection not publicly available, i.e., CBI or other technologies to locomotives and marine Agency, Air Docket, Mailcode 6102T, information whose disclosure is diesel engines would bring with it a 1200 Pennsylvania Ave., NW, restricted by statute. Certain other unique set of challenges, but we are Washington, DC 20460. Please include a material, such as copyrighted material, hopeful that these can be resolved in a total of 2 two copies. is not placed on the Internet and will be collaborative manner as was done in our • Hand Delivery: Environmental publicly available only in hard copy highway and nonroad diesel Protection Agency, Air Docket, form. Publicly available docket rulemakings. Mailcode 6102T, 1200 Pennsylvania materials are available either A program like the one under Ave., NW., Washington, DC 20460. Such electronically in EDOCKET or in hard consideration could result in substantial deliveries are only accepted during the copy at the EPA Air Docket, EPA/DC, benefits to public health and welfare Docket’s normal hours of operation, and EPA West, Room B102, 1301 through significant reductions in special arrangements should be made Constitution Ave., NW., Washington, emissions of oxides of nitrogen (NOX) for deliveries of boxed information. DC. The Public Reading Room is open and particulate matter (PM), as well as Instructions: Direct your comments to from 8:30 a.m. to 4:30 p.m., Monday hydrocarbons (HC) and air toxics. These Docket ID No. OAR–2003–0190. EPA’s through Friday, excluding legal pollutants contribute to health problems policy is that all comments received holidays. The telephone number for the that include premature mortality, will be included in the public docket Public Reading Room is (202) 566–1744, aggravation of respiratory and without change and may be made and the telephone number for the Air cardiovascular disease, aggravation of available online at http://www.epa.gov/ Docket is (202) 566–1742.

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FOR FURTHER INFORMATION CONTACT: I. General Information remanufacture and/or import Carol Connell, AANC, U.S. EPA, locomotives and/or locomotive engines; A. Does this Action Apply to Me? National Vehicle and Fuels Emission and those which own and operate Laboratory, 2565 Plymouth Road, Ann Locomotive locomotives. Regulated categories and Arbor, MI 48105, (734) 214–4349, Fax: entities include: (734)214–4816, [email protected]. Entities potentially regulated by this SUPPLEMENTARY INFORMATION: action are those which manufacture,

Category NAICS code a Examples of potentially affected entities

Industry ...... 333618, 336510 ...... Manufacturers, remanufacturers and importers of loco- motives and locomotive engines. Industry ...... 482110, 482111, 482112 ...... Railroad owners and operators. Industry ...... 488210 ...... Engine repair and maintenance. a North American Industry Classification System (NAICS).

This table is not intended to be applicability criteria in 40 CFR 92.1, manufacture, sell, or import into the exhaustive, but rather provides a guide 92.801, 92.901 and 92.1001, as well as United States new marine compression- for readers regarding entities likely to be 40 CFR 85.1601 and 89.1. If you have ignition engines; companies and regulated by this action. This table lists questions regarding the applicability of persons that make vessels that use such the types of entities that EPA is now this regulation to a particular entity, engines; and the owners/operators of aware could potentially be regulated by consult the person listed in the such vessels. Further requirements this action. Other types of entities not preceding FOR FURTHER INFORMATION apply to companies and persons that listed in the table could also be CONTACT section. rebuild or maintain these engines. regulated. To determine whether your Marine Affected categories and entities include: company is regulated by this action, you This proposed action would affect should carefully examine the companies and persons that

Category NAICS code a Examples of potentially affected entities

Industry ...... 333618 ...... Manufacturers of new marine diesel engines. Industry ...... 33661 and 346611 ...... Ship and boat building; ship building and repairing. Industry ...... 811310 ...... Engine repair and maintenance. Industry ...... 483 ...... Water transportation, freight and passenger. Industry ...... 336612 ...... Boat building (watercraft not built in shipyards and typically of the type suitable or intended for personal use). a North American Industry Classification System (NAICS).

This table is not intended to be the part or all of the information that Regulations (CFR) part or section exhaustive, but rather provides a guide you claim to be CBI. For CBI number. for readers regarding entities likely to be information in a disk or CD–ROM that iii. Explain why you agree or disagree; regulated by this action. This table lists you mail to EPA, mark the outside of the suggest alternatives and substitute the types of entities that EPA is now disk or CD–ROM as CBI and then language for your requested changes. aware could potentially be regulated by identify electronically within the disk or iv. Describe any assumptions and this action. Other types of entities not CD–ROM the specific information that provide any technical information and/ listed in the table could also be is claimed as CBI. In addition to one or data that you used. regulated. To determine whether your complete version of the comment that v. If you estimate potential costs or company is regulated by this action, you includes information claimed as CBI, a burdens, explain how you arrived at should carefully examine the copy of the comment that does not your estimate in sufficient detail to applicability criteria in 40 CFR 94.1, as contain the information claimed as CBI allow for it to be reproduced. well as the future proposed regulations. must be submitted for inclusion in the vi. Provide specific examples to Note that in addition to the marine public docket. Information so marked illustrate your concerns, and suggest diesel engines currently regulated under will not be disclosed except in alternatives. vii. Explain your views as clearly as 40 CFR 94, this rule also applies to accordance with procedures set forth in possible, avoiding the use of profanity marine diesel engines below 37 kW. If 40 CFR part 2. or personal threats. you have questions regarding the 2. Tips for Preparing Your Comments. viii. Make sure to submit your applicability of this regulation to a When submitting comments, remember comments by the comment period particular entity, consult the person to: deadline identified. listed in the preceding FOR FURTHER i. Identify the rulemaking by docket INFORMATION CONTACT section. number and other identifying II. Additional Information About This Rulemaking B. What Should I Consider As I Prepare information (subject heading, Federal My Comments for EPA? Register date and page number). Locomotive. The current emission ii. Follow directions—The agency standards for new locomotive engines 1. Submitting CBI. Do not submit this may ask you to respond to specific were adopted by EPA in 1998 (see 63 FR information to EPA through EDOCKET, questions or organize comments by 18978, April 16, 1998). This advance regulations.gov or e-mail. Clearly mark referencing a Code of Federal notice of proposed rulemaking relies in

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part on information that was obtained G. Federalism (Executive Order 13132) ozone national ambient air quality for that rule, which can be found in H. Energy Effects (Executive Order 13211) standards (NAAQS). Public Docket A–94–31. That docket is I. Plain Language Locomotive and marine diesel engines are currently subject to emission incorporated by reference into the I. Overview docket for this action, OAR–2003–0190. standards that rely on engine-based Marine. The current emission In recent years, EPA has adopted technologies to reduce emissions.6 The standards for new marine diesel engines major new programs designed to reduce opportunity to gain large additional were adopted in 1999 and 2003 (see 64 emissions from diesel engines. When public health benefits, as well as the FR 73300, December 29, 1999 and 66 FR fully phased in, these new programs for similarities between these engines and 9746, February 28, 2003). This advance highway and nonroad diesel engines highway and general nonroad engines, notice of proposed rulemaking relies in will lead to the elimination of over 90% lead us to consider additional emission controls based on the same advanced part on information that was obtained of harmful pollutants from these emission control technologies on which for those rules, which can be found in sources.2 The public health and welfare our 2007/2010 highway and Tier 4 Public Dockets A–97–50 and A–2000– benefits of these actions are very nonroad diesel engine programs are 01. Those dockets are incorporated by significant, projected at over $70 billion based. The use of these technologies on reference into the docket for this action, and $83 billion for our highway and OAR–2003–0190. locomotive and marine diesel engines nonroad diesel programs, respectively, Other Dockets. This advance notice of will be enabled by the ultra low sulfur proposed rulemaking relies in part on in 2030. In contrast, the corresponding diesel (ULSD) requirements established information that was obtained for our annual cost of these programs will be a in our recently adopted nonroad diesel recent highway diesel and nonroad small fraction of this amount. We have rule, which sets a 15 parts per million diesel rulemakings, which can be found estimated the annual cost at $4.2 billion (ppm) sulfur limit for locomotive and in Public Dockets A–99–06 and A– and $2 billion, respectively in 2030. marine diesel fuel beginning in 2012. 2001–28 (see also OAR 2003–0012).1 These programs are being implemented In this Advance Notice of Proposed 3 Those dockets are incorporated by over the next decade. Rulemaking (ANPRM), we describe the reference into the docket for this action, Marine diesel engines less than 30 emission controls we are considering for OAR–2003–0190. liters per cylinder (marine diesel locomotive and marine diesel engines. The remainder of this Introduction Table of Contents engines) and locomotives are significant contributors to our national mobile provides a summary of the controls we I. Overview source emissions inventory.4, 5 Even are considering and a brief description A. What New Controls Is EPA Considering? of the impacts of these emissions on B. Why Is EPA Considering New Controls? with recent emission standards for these C. Basis for Action Under the Clean Air Act sectors, the contribution of these human health and welfare. Sections II II. Controlling Locomotive Emissions engines is expected to grow. Without and III describe the emission controls A. Background new controls, we estimate that their we are considering for our locomotive B. Scope respective contributions to mobile and marine diesel engine programs, C. Tier 3 Standards and Effective Dates source NOX and fine diesel particulate respectively. In Section IV, we describe D. Testing matter (PM ) emissions will increase to the contribution of these engines to E. Certification and compliance 2.5 27 percent and 45 percent by 2030. mobile source NOX and diesel PM2.5 III. Controlling Marine Diesel Engine inventories and our plans for our future Emissions Reducing emissions from these two A. Background engine categories can lead to significant cost analysis. Section V contains our B. Scope public health benefits such as reduced plan to solicit the input from small C. Tier 3 Standards and Effective Dates premature mortalities and decreased businesses in these sectors. Finally, D. Testing incidences of heart attacks and asthma sections VI and VII contain information E. Certification and compliance exacerbations. It will help states and about public participation and statutory IV. Potential Environmental Impacts and localities attain and maintain PM and and executive order review. We are Costs interested in comments covering all A. Estimated Inventory Contribution 2 As used in this ANPRM, ‘‘nonroad diesel aspects of this ANPRM. B. Potential Costs We are planning to issue a Notice of V. Small Business Concerns/Regulatory engines’’ refers to the off-highway engines regulated Flexibility under 40 CFR Part 89 (Tier 1, 2, and 3 standards) Proposed Rulemaking addressing engine VI. Public Participation and Part 1039 (Tier 4). This generally covers a wide standards for locomotive and marine variety of land-based engines, including those used diesel engines by mid-2005, with a final A. How Do I Submit Comments? in farm, construction, industrial, and mining B. Will There Be a Public Hearing? applications. rule targeted for mid-2006. VII. Statutory and Executive Order Reviews 3 See 66 FR 5001 (January 18, 2001), and the A. What New Controls Is EPA A. Administrative Designation and Nonroad final rule published elsewhere in this Regulatory Analysis (Executive Order issue of the Federal Register for the final rules Considering? 12866) regarding highway diesel, and nonroad diesel EPA currently has emission standards B. Regulatory Flexibility Act programs, respectively. for locomotives and marine diesel 4 As used in this ANPRM, ‘‘marine diesel engine’’ C. Paperwork Reduction Act engines. The standards for new D. Intergovernmental Relations refers to compression-ignition marine engines E. National Technology Transfer and below 30 liters per cylinder displacement unless locomotives, adopted in 1998, phase in Advancement Act otherwise indicated. from 2000 through 2005. That program 5 F. Protection of Children (Executive Order This rule will address emissions from all marine includes emission limits (that apply diesel engines below 30 liters used for commercial, 13045) recreational, or auxiliary applications. Marine upon remanufacturing) for existing diesel engines at or above 30 liters per cylinder are locomotives that were originally 1 Control of air pollution from new motor not part of this rulemaking. These large engines, manufactured after 1973. The standards vehicles: Heavy-duty engine and vehicle standards which are used for propulsion on ocean-going for marine diesel engines were adopted and highway diesel fuel sulfur control vessels, are the largest mobile source diesel engines requirements, 66 FR 5001 (January 18, 2001); regulated by EPA. They will be addressed in a rule in 1999 for commercial marine engines Control of Emissions of Air Pollution from Nonroad to be finalized by April 27, 2007. See 68 FR 9746 Diesel Engines and Fuel, published elsewhere in (February 28, 2003) for more information about that 6 See the ‘‘Additional Information about this this issue of the Federal Register. future rule. Rulemaking’’ section above for the specific cites.

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and in 2002 for recreational marine sulfur diesel fuel throughout the the curvature of the rails. On the other engines. They phase in from 2004 country even before this date makes it hand, we believe the use of through 2009, depending on engine size viable to consider locomotive and aftertreatment may make it possible to and application. These locomotive and marine engine programs as early as 2011 reduce the need for the additional marine diesel engine standards are that are based at least in some part on radiator space that is currently being similar in stringency to our nonroad the use of this fuel. applied to locomotives to increase Tier 2 standards that were set in 1998 In ways relevant to the use of aftercooling capacity. We request and began phasing in starting in 2001. advanced emissions control comment on the significance of any The technologies needed to meet our technologies, marine diesel engines and space constraints regarding the use of nonroad diesel Tier 2 standards in turn locomotives are similar to highway and aftertreatment on locomotives, as well are derived from highway diesel engine nonroad diesel engines. In fact, many as potential ways of dealing with such technologies that have been in marine diesel engines are derivatives of constraints. widespread use since the early 1990’s, land-based nonroad engines, and both Exhaust temperature may also be a which achieve emissions reductions marine and locomotive engines share key factor in the proper design of through judicious in-cylinder control of important design features with highway emission control technologies for ignition timing and fuel injection and nonroad diesel engines. The locomotive and marine applications. For pressure. The significant lag in leadtime nonroad diesel standards cover engines most catalytic emission control between application of this technology of all sizes, including small engines technologies there is a minimum to land-based and marine nonroad similar in size to the smallest auxiliary temperature below which the rate of engines compared to highway engines is marine engines and large engines on the chemical reactions necessary for more reflective of the challenges scale of locomotive and large marine emissions control falls off. In general, involved in regulating markets just propulsion engines. The new catalyst exhaust temperature increases with starting to focus on emissions control based emission control technologies, engine power and can vary dramatically programs (including development of which are expected to be applied for as engine power demands vary. testing lab capability and production highway and nonroad diesel engines, Prolonged low-power operation can line quality assurance measures, and the can be similarly effective at controlling hamper the overall effectiveness of like), than of the challenges involved in emissions from locomotive and marine catalyst-based aftertreatment devices, adapting the technology itself to the engines. Therefore, we believe it is unless steps are taken in designing them differing engine applications. appropriate to consider applying to compensate. An example of an Emission control technologies for advanced aftertreatment standards to application with a lot of low-power diesel engines have advanced locomotives and marine engines as well. operation would be a tug boat that substantially since these rules were Despite the fundamental similarities primarily idles or operates at low light issued, especially with regard to high- involved, we recognize that there are loads moving around the harbor and efficiency catalytic exhaust emission also some differences between the only at high loads for a short time when control systems. Our 2007 highway and highway/nonroad engines for which the pushing ships. We believe it may be Tier 4 nonroad diesel engine emission technologies were initially designed and necessary for advanced exhaust standards are predicated on these new the locomotive/marine engines to which emission controls in at least some technologies enabling NOX, HC and PM we are considering applying this locomotive and marine applications to emission reductions of 90 percent or technology, and this may present some use active regeneration mechanisms, more. These new standards apply to special challenges. We discuss these in such as the post-injection of diesel fuel engines ranging up to several thousand this section I.A below. However, we do into the exhaust stream to initiate horsepower. PM and HC emissions can not believe that these challenges are so thermal transients. This would be be controlled to these levels through the significant as to pose a barrier to setting similar to the design measures we are use of catalyzed diesel particulate filters standards based on implementing these projecting for robust operation of (CDPFs). CDPFs are a well proven technologies in the future. We do nonroad diesel engines in our Tier 4 technology and have been used in recognize that in order to address program. We request comment on numerous retrofit applications potential issues, we may need to exhaust temperature profiles for including retrofits of locomotive consider flexibility in how the standards locomotive and marine diesel engines switcher engines. NOX emissions can be are implemented, and we request and their impact on aftertreatment controlled through the use of NOX comment on the technology issues listed design strategies. adsorbers or selective catalytic here and on any other technology issues One special consideration for marine reduction (SCR), both of which are that we should consider in setting new engines derives from the fact that their capable of large NOX reductions. SCR standards. exhaust systems are typically designed technology has already been Potential issues unique to locomotives to operate with surface temperatures implemented on a number of marine include available space for the below 100°C. This is intended to engines.7 To operate reliably and at high technology and scaling up of minimize the risk of fires in response to efficiencies, these technologies require aftertreatment systems to large Coast Guard safety requirements. For very low sulfur levels in diesel fuel. We horsepower sizes. When scaled to most commercial marine engines, the have already put programs in place that locomotive-sized engines, the kinds of exhaust piping is insulated and the will reduce sulfur to 15 ppm for aftertreatment systems being developed exhaust is routed either through a highway and nonroad diesel fuel. Our for highway diesel engines would muffler or under water. Typically, for nonroad diesel fuel program applies the logically be larger, though not larger vessels, the exhaust exits above 15 ppm fuel sulfur cap to refiners and necessarily much larger than systems the top of the vessel. However, in many importers of locomotive and marine that will be applied to large nonroad recreational and light-duty commercial diesel fuel beginning in 2012. However, diesels. Total locomotive size is applications, the exhaust is water- the widespread availability of 15 ppm constrained by the existing jacketed and leaves the vessel below the infrastructure. Height and width are water surface. In some cases, the 7 See EPA docket items OAR–2003–0190–0002, constrained by tunnel and bridge jacketing-water and exhaust are mixed 0003, 0004, and 0005. clearances, and length is constrained by in the exhaust system before exiting the

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vessel. This is especially common in also cause significant public welfare empowered to regulate locomotives and sterndrive applications where the harm such as damage to crops, that these vehicles are a growing source jacket-water mixes with exhaust within eutrophication, regional haze, and of emissions, we would encourage EPA feet of the cylinder exhaust port and soiling of building materials.8 to regulate them.’’ 11 Many other exits through the lower drive unit. Millions of Americans continue to commenters encouraged the Agency to Exhaust systems that rely on live in areas with unhealthy air quality adopt further emission controls for these insulation to control surface that may endanger public health and engines as quickly as possible. See temperature are likely to prove to be welfare. Part or all of 474 counties section 8.3.3 of the Summary and very well matched to the new emission nationwide are in nonattainment for Analysis of Comments document for the control technologies which can benefit either failing to meet the 8-hour ozone nonroad diesel final rule, available in from such a thermal management standard or for contributing to poor air EPA docket A–2001–28. technique. However, the use of water- quality in a nearby area. There are Even with the control measures jacketing may raise additional issues to approximately 159 million people living already in place for locomotives and be addressed. The first issue is the effect in these non-attainment areas. In marine diesel engines, the combination of the water jacketing on the exhaust gas addition, approximately 65 million of expected future growth and the temperature. Where an insulated people live in counties where air quality dramatic emission reductions expected exhaust helps keep the heat in the measurements violate the PM2.5 from our recently established highway exhaust, water-jacketing removes heat National Ambient Air Quality Standards and nonroad diesel engine control thus lowering average exhaust (NAAQS). These numbers do not programs will make the relative temperatures and potentially reducing include the tens of millions of people emission contribution from locomotives catalyst system effectiveness. We living in areas where there is a and marine diesel engines grow quite believe that there are a number of significant future risk of failing to large over time. We estimate that they solutions to this issue including close- maintain or achieve the ozone or PM2.5 will contribute about 27 percent and 45 coupling of the catalyst system and the NAAQS. Federal, state, and local percent of national mobile source NOX use of an insulating gap between the governments are working to bring ozone and diesel PM2.5 emissions, exhaust flow and the water jacket and PM levels into compliance with the respectively, by 2030. Additionally, the similar to the approach used to insulate NAAQS attainment and maintenance contribution of these engines can be the exhaust system. For sterndrive plans and the reductions we are significantly higher in ports, in rail applications or other applications where considering in this ANPRM will play a centers, and along coasts and railways. the exhaust is mixed with the water, we critical part in these actions. In the Many of these areas are highly believe it may be necessary to redesign comments submitted on our recent populated and suffer from poor air the exhaust system to ensure there is nonroad diesel rule, several states quality. Because locomotives and enough room in the dry part of the requested EPA take action to control marine diesel engines contribute greatly exhaust system to package the these emissions. For example, Illinois to these air quality problems, further aftertreatment system. We request Lieutenant Governor Pat Quinn controls in this source category will comment on packaging constraints for commented that ‘‘in Illinois locomotives likely be needed to resolve them. marine diesel engine applications that are quite prevalent especially in the Commenters are encouraged to provide would affect the feasibility of applying urban area in and around Chicago. It is any information they may have that exhaust aftertreatment or other emission in urban areas that the risk of cancer would help us to further assess the control strategies. We also request and asthma is highest. Incorporating contributions of locomotive and marine comments describing methods to marine vessels and locomotives into the engines to the nation’s air quality address potential issues related to regulations will create an incentive to problems, especially in regard to future system packaging. aggressively advance technology.’’ 9 growth in these markets. We believe that, given adequate Marianne L. Horinko, Acting We expect that our proposal for new development lead time and appropriate Administrator, California Air Resources control measures will focus on PM and structuring of phase-in provisions, Board, commented that ‘‘in 2000, air toxics reductions as early as feasible, locomotive and marine diesel engines locomotives and commercial marine consistent with our 2007/2010 highway could be designed to successfully engines were responsible for 15 percent and Tier 4 nonroad rules. However, we employ the same high-efficiency of the PM emissions inventory for diesel recognize that these engines are also exhaust emission control technologies mobile sources in California * * * ARB significant contributors of NOX now being developed for highway and strongly recommends that U.S. EPA emissions and that high-efficiency NOX nonroad engine use. proceed as rapidly as possible * * * to controls may well be feasible for these B. Why Is EPA Considering New establish aftertreatement-based engines in the timeframes under Controls? emissions standards for locomotive and consideration. We request comment, 10 therefore, on all aspects of potential Marine diesel engines and marine engines.’’ Dr. Pamela M. emissions control measures that might locomotives contribute to a number of Berger, Director of Environmental be taken to improve air quality. serious air pollution problems and will Policy, Office of the Mayor, City of continue to do so in the future absent Houston commented that ‘‘given that C. Basis for Action Under the Clean Air further emission reduction measures. municipalities and states are not Act Their emissions lead to adverse health 8 For a full discussion of the human health and Section 213 of the Clean Air Act (the and welfare effects associated with environmental problems that diesel engine Act) gives us the authority to establish ozone, PM, NOX, and volatile organic emissions contribute to, see Chapter 2 of the emissions standards for nonroad compounds, including toxic Regulatory Impact Analysis for our nonroad diesel engines and vehicles. Section 213(a)(3) compounds. In addition, diesel exhaust rule, available on our Web site: http://www.epa.gov/ authorizes the Administrator to set (and is of specific concern because it is likely otaq. 9 Air Docket OAR 2003–0012, Comment OAR– from time to time revise) standards for carcinogenic for humans as well as 2003–0012–0781. posing a hazard from noncancer 10 Air Docket OAR 2003–0012, Comment OAR– 11 Air Docket OAR 2003–0012, Comment OAR– respiratory effects. Ozone, NOX, and PM 2003–0012–0644. 2003–0012–0630.

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NOX, VOCs, or carbon monoxide Locomotives are typically When fully phased in, these emission emissions from nonroad engines, to remanufactured to ‘‘as new’’ condition standards will reduce NOX emissions reduce ambient levels of ozone and every five to seven years throughout from locomotives by nearly two-thirds, carbon monoxide. That section specifies their services lives, and they typically and HC and PM emissions by half. that the ‘‘standards shall achieve the remain in service for 30 to 40 years or Nevertheless, even with these standards greatest degree of emission reduction more before being scrapped. Under our in place, serious concerns about achievable through the application of current regulations, these emissions from locomotives remain, as technology which the Administrator remanufactured engines are considered discussed in section I.B. determines will be available for the ‘‘new’’ for the purposes of applying B. Scope engines or vehicles.’’ As part of this emissions standards. As might be determination, the Administrator must expected, there is a thriving market in Because of the potential for give appropriate consideration to cost, both aftermarket parts and locomotives to remain in service for 40 lead time, noise, energy, and safety remanufacturing services. While some years or more as discussed in section factors associated with the application railroads remanufacture their own II.A.1, we are considering additional of such technology. Section 213(a)(4) locomotives, other railroads contract to requirements for all 1973 and later authorizes the Administrator to have this work performed for them. The locomotives. We are considering an establish standards to control emissions two largest locomotive manufacturers approach similar to our existing of pollutants, such as PM, which ‘‘may (GE and EMD) both have unit exchange program, in which we would set new reasonably be anticipated to endanger programs where a railroad can trade in standards for in-use and new engines, public health and welfare.’’ In setting a locomotive engine in need of grouped into three categories: appropriate standards, EPA is instructed remanufacture for one that has just been • Locomotives freshly manufactured to take into account costs, noise, safety, remanufactured. There are also a after the effective date of new Tier 3 and energy factors. Section 213(a)(5) number of independent companies that standards. contains similar provisions that offer engine remanufacturing services. • Locomotives currently subject to authorize the Administrator to set the Tier 2 standards. standards for new locomotive engines. 2. What Are the Existing Standards for • Locomotives currently subject to As part of the development of our Locomotives? the Tier 0 and Tier 1 standards. Notice of Proposed Rulemaking, we will Three separate sets of emission For the first group of engines, those analyze whether the emission control standards have been adopted, with that would be freshly manufactured program under consideration for applicability of the standards dependent after the new standards begin to take locomotive and marine diesel engines is on the date a locomotive is freshly effect (as early as 2011), we are technologically feasible and reflects the manufactured.13 considering standards that reflect the greatest degree of emission reduction • Tier 0 standards apply to use of advanced emission controls and achievable in the model years to which locomotives and locomotive engines aftertreatment devices. These potential it would apply, giving appropriate that were freshly manufactured from standards are discussed in Section II.C. consideration to costs and the other 1973 through 2001; the standards apply Regarding the second group of engines, factors listed in the statute. We will also any time the engines are manufactured we note that manufacturers have already perform an analysis of the impacts of or remanufactured. finished the primary design process for locomotive and marine diesel emissions • Tier 1 standards apply to their Tier 2 locomotives and are on human health and welfare and the locomotives and locomotive engines currently testing these designs to ensure anticipated benefits of the standards. that are freshly manufactured from 2002 that they will be ready for production by II. Controlling Locomotive Emissions through 2004. These locomotives and 2005, and this will be taken into account in evaluating ideas for further A. Background locomotive engines will be required to meet the Tier 1 standards at the time of control measures for these engines. 1. What Is the Nature of the Locomotive original manufacture and at each We are also considering new Market? subsequent remanufacture. requirements for locomotives freshly manufactured in model years 1973 There are currently three • Tier 2 standards apply to through 2004, currently subject to Tier manufacturers of locomotive engines for locomotives and locomotive engines 0 or Tier 1 standards. In addition to the U.S. market: General Electric (GE), that are freshly manufactured in 2005 potential new standards for some or all the Electromotive Division of General and later. These locomotives and of these engines upon remanufacture, Motors (EMD), and Caterpillar. Total locomotive engines will be required to we are interested in ideas for voluntary sales of freshly manufactured meet the applicable Tier 2 standards at provisions and initiatives that could locomotives in the U.S. can vary the time of original manufacture and at encourage cleaner engines, and in how dramatically from year to year. Since each subsequent remanufacture. these might be coordinated with new 1997 sales have been between 600 and We also have opacity standards for standards for new and remanufactured 900 units per year. All freshly these locomotives and locomotive engines through emissions trading, manufactured locomotives are engines. Electric locomotives, historic fleetwide average standards, or similar essentially built to order for the major steam-powered locomotives, and approaches. Also, we request comment Class I railroads. Class II and III locomotives freshly manufactured on the applicability of technologies railroads typically purchase used before 1973 are not currently covered by being developed for Tier 2 locomotives locomotives rather than purchasing emission regulations. to these earlier engines upon new.12 remanufacture. revenue of at least $20 million but less than $250 12 In the United States, freight railroads are million ($1991), and as a Class III railroad with C. Tier 3 Standards and Effective Dates subdivided into three classes by the Federal Surface revenues below $20 million (1991). Surface Transportation Board (STB), based on annual Transportation Board 1996/1997 Annual Report, 1. Tier 3 Standards for New Engines revenue. In 1994 a railroad was classified as a Class accessed at http://www.stb.dot.gov/stb/docs/ I railroad if annual revenue was $250 million or ActivityReport1996–1997.pdf on April 6, 2004. We are considering emission greater ($1991), as a Class II railroad with annual 13 63 FR 18977 (April 16, 1998). standards for new locomotives built as

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early as 2011, based on the application engines concurrent with a NOX Emissions are measured at each of these of advanced emission control requirement that is phased in over three steady state points, and compliance technologies. These technologies are years, starting as early as 2011? with the applicable emission standards currently being developed for use in • Would it be more appropriate for is determined by weighting the highway and nonroad applications and locomotive manufacturers to focus their emissions at each point according to the will begin to see widespread use in technology development efforts on a applicable weighting factors to arrive at these applications starting in 2007. In single, final tier of standards with the a composite emissions level. These those programs, we estimated that NOX possibility of getting to aftertreatment- weighting factors were derived through and PM emissions could be reduced by based emission levels sooner than the analysis of in-use operating data 90 percent or more from emission levels would likely be the case under the two- from a number of locomotives, and we in the exhaust leaving the engine phase approach? believe they accurately represent in-use • through the use of NOX aftertreatment Are there phase-in options that we locomotive operations. and PM filter technologies. We would could adopt to encourage the early Because of this, we do not expect it expect that similar levels of NOX and introduction of aftertreatment will be necessary to adopt PM reductions could be achieved by technology? comprehensive ‘‘not-to-exceed’’ applying these technologies to • How should aftertreatment-based standards provisions for locomotives as locomotives as well. particulate matter controls be we have in our highway and nonroad Although for the most part these coordinated with those for NOX? diesel engine programs. However, the highway and nonroad engines are 2. Idling Emissions Control possible inclusion of exhaust smaller than locomotive engines, much aftertreatment technology on future of the fundamental diesel engine and Locomotives typically spend locomotives leads us to request emission control technology involved is significant amounts of time idling. This comment on whether the simple the same, such as PM filtering matrix is especially the case in switchyards, approach of weighting the steady state designs, catalyst formulations to which tend to be located in urban areas. modes according to the duty cycle optimize exhaust stream chemical Our current test procedure reflects this would still accurately represent in-use reactions, and mechanisms for active reality, with idling operation operation. Exhaust temperatures tend to regeneration of filter and adsorber beds. representing 38 percent of the line-haul be lower at the lower power notches and Furthermore, some nonroad diesel duty cycle and almost 60 percent of the idle modes, raising questions regarding engines subject to our nonroad Tier 4 switch duty cycle. Although the fact the effectiveness of aftertreatment regulations starting in 2011 are of that idling emissions per unit time may technology in those modes of the test similar size to locomotive engines, 1000 be relatively low considering that they procedure versus those modes in actual to 3000 horsepower or more. Although occur at low power and fuel operation, given that the test procedure they are not typically made by the same consumption levels, the high percentage requires operating parameters to manufacturers, locomotive engines have of total time locomotives spend idling in stabilize in each mode before emissions substantial design and operating urban areas, some of which are hot-spot sampling begins. similarities to large mobile generator set air quality problem areas, may warrant The test duty cycle weightings are engines that will allow the locomotive our addressing these emissions, and we based on the average amount of time engines to benefit from emission control request comment on our doing so. that a locomotive spends in each power technology being developed for (and in We note that locomotive operators notch over a period of time. However, limited applications already applied to) already recognize that there is some it does not address whether the time these generator sets. We note too that public demand to reduce the idling of spent in lower power notches happens the largest generator sets, those over locomotives. For this reason some in fewer, longer segments or many 1200 hp, are subject to the earliest railroads are beginning to employ idle shorter ones. If the actual in-use stringent NOX control requirements of shutdown technology on locomotives. operation in low power notches any engines in the Tier 4 program, 0.50 This technology simply shuts down a happens in fewer, longer segments, the g/bhp-hr in 2011, and to stringent PM locomotive after a certain length of time test cycle would be more representative standards in that year as well. at idle conditions. Clearly this of actual in-use operation from an Given that other technologies, such as technology is feasible and available for exhaust temperature perspective than if exhaust gas recirculation (EGR) and use, and we are considering what steps the low power notch operation occurred optimized fuel injection, could also be we might take to encourage or require in a higher number of shorter segments, applied in tandem with exhaust its widespread use. Thus, we request with operation at higher power notches aftertreatment, we expect that similar comment on whether we should mixed in. In this latter case, the higher final emission levels to those achievable consider the mandatory use of idle power notch operation may serve to from highway and nonroad engines may shutdown technology or whether a keep exhaust temperatures higher in the be feasible. The availability of EGR and voluntary program would be more low power notches than might be the other engine-based means of achieving appropriate, both for new and in-use case if the low power notch operation some degree of emissions control also locomotives. In the case of a voluntary took place in fewer, longer segments. introduces the potential for Tier 3 program, we request comment on any We request comment on whether this is control in multiple phases, as we do not incentives we might offer to encourage a concern and, if so, what modifications expect locomotive manufacturers will participation in such a program. could be made to the test procedures need to use EGR to meet the Tier 2 without impacting its viability or D. Testing standards in 2005. As a result, we representativeness, or the stringency of request comment on the different forms In use, locomotive engines are the standards. these future standards could take, operated at a series of discrete load and including the following: speed points, called notches. Our E. Certification and Compliance • Should we adopt the approach current test procedure involves running Our current locomotive compliance taken in the heavy-duty highway and a locomotive or locomotive engine program contains provisions for engine nonroad diesel programs involving a PM through all of its different power family certification, production line control requirement on 100% of the notches, as well as its idle settings. testing and in-use testing of both freshly

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manufactured and remanufactured locomotive diagnostic program in light standards for all of these marine diesel locomotives. The in-use testing program of our current in-use testing programs, engines except Category 3 engines. contains requirements for locomotive and specifically request comment on Category 3 marine diesel engines, which manufacturers and remanufacturers, as what types of parameters would be are used for propulsion on ocean-going well as for locomotive operators. We are monitored under such a diagnostic vessels, will be covered in a separate requesting comment on whether we program. We are particularly interested rule to be issued by April 27, 2007.15 should consider any changes or in comments on how our existing OBD All of the marine diesel engines that additions to our current certification programs for other source categories are included in this rule operate on and compliance programs. In addition could be adapted for use on distillate diesel fuel. Some Category 2 to possible modifications to our current locomotives. marine diesel engines, however, may programs, we are asking for comment on III. Controlling Marine Diesel Engine operate on a blend of distillate and whether an onboard diagnostic (OBD) Emissions residual fuel or even on residual fuel program would be needed for (for example, fuels commonly known as A. Background locomotives, especially for locomotives DMB, DMC, RMA, and RMB).16 equipped with advanced exhaust 1. What Is the Nature of the Marine Operation on these higher sulfur fuels aftertreatment devices. Diesel Engine Market? may require engine modifications. We currently have OBD requirements Our current marine diesel engine We request comment on the extent to in place or under development for a emission control program distinguishes which Category 2 marine diesel engines number of mobile source programs, between five kinds of marine diesel on vessels in the U.S. fleet use residual including light-duty highway, heavy- engines, defined in terms of fuel or residual fuel blends and how we duty highway, and nonroad diesel displacement per cylinder.14 These five should take this into account as we engines. We request comment on the types are set out in Table III–1. In this design the emission control program for appropriateness and need for a rulemaking we will consider new those engines.

TABLE III–1.—MARINE DIESEL ENGINE CATEGORIES

Final rule Category Rated power Displacement per cylinder publication

Small ...... ≤37 kW ...... any ...... 1998 Commercial C1 ...... >37 kW ...... < 5 liters ...... 1999 Commercial C2 ...... >37 kW ...... ≥ 5 liters and < 30 liters ...... 1999 Commercial C3 ...... >37 kW ...... ≥ 30 liters ...... 2003 Recreational ...... >37 kW ...... < 5 liters ...... 2002

The same engine manufacturers that 2. What Are the Existing Standards for MARPOL Annex VI NOX limits and a 26 dominate the land-based nonroad Marine Diesel Engines? percent reduction in PM emissions in engine market are also active in the 2020. marine diesel engine market. These Our 1999 rule for commercial marine Recreational marine diesel engines manufacturers often make recreational diesel engines set two tiers of emission were included in our 2002 recreational as well as commercial marine diesel limits for Category 1 and Category 2 vehicle rule (see 40 CFR 94.9). These engines. Annual sales are different for marine diesel engines (see 40 CFR 94.9). engines are subject to standards that are each of the categories addressed in this The Tier 1 standards were initially equivalent to our commercial marine rule but are smaller than for their land- adopted as voluntary standards and are diesel engine standards, but two years based counterparts. According to equivalent to the MARPOL Annex VI later.18 We estimated that these 17 analysis performed for our 1999 rule, NOX limits. These standards were standards would yield a 21 percent there are about 5,000 commercial C1 made mandatory for engines above 2.5 reduction in NOX emissions and an18 engines produced annually, about 100 liters per cylinder in our 2003 rule, percent reduction in PM emissions in commercial C2 engines, and about beginning in 2004. The Tier 2 2020. 10,000 recreational diesel engines. In commercial marine diesel engine Marine diesel engines below 37 kW addition, there are about 6,000 marine standards we adopted in 1999 address were included in our 1998 nonroad diesel engines less than 37 kW NOX, PM, HC, and carbon monoxide diesel rule and are subject to the same produced annually. Like locomotives, emissions, and go into effect from 2004 Tier 1 and Tier 2 standards as their certain marine diesel engines can have through 2007, depending on engine size. land-based counterparts (see 40 CFR long service periods, with some of the At the time, we estimated that these 89.112).19 They were not included in engines remaining in service for as long standards would yield a 27 percent our most recent diesel nonroad rule, as 20 or even 30 years. reduction in NOX emissions from the however, and are therefore not subject

14 This approach was used because per-cylinder 16 The final rule setting limits on the sulfur consensus standards will go into effect when the displacement is an engine characteristic that is not content of marine diesel fuel does not apply to Annex has been ratified by 15 countries ° easily changed and is constant for a given engine distillate fuel with a T90 greater than 700 F that is representing no less than 50 percent of the world’s model or series of engine models. It therefore avoids used only in Category 2 or Category 3 marine diesel merchant shipping tonnage. To date, the Annex has the problem that can arise when a higher power engines. This would include marine DMB and DMC been ratified by 13 countries representing about engine is made by joining together more cylinders: fuels used in these engines. 17 54.5 percent. For more information on MARPOL the larger version of the engine could be subject to The MARPOL Annex VI NOX limits are the a different numerical standard than an engine engine standards adopted by the International Annex VI, see our 2003 rule. formed from a smaller number of cylinders. Maritime Organization in Annex VI to the 18 67 FR 68242 (November 8, 2002). 15 See 68 FR 9746 (February 28, 2003) for more International Convention on the Prevention of 19 63 FR 56967 (October 23, 1998). information about the future rule for Category 3 Pollution from Ships, 1973, as Amended by the marine diesel engines. 1978 Protocol Relating Thereto. These international

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to the subsequent tier of standards that C. Tier 3 Standards and Effective Dates ppm maximum sulfur requirement and will apply to their land-based Substantial progress has been made in the required amount of development counterparts. Instead, additional recent years in controlling diesel lead time. controls for small marine diesel engines exhaust emissions through the use of We request comment on emission were deferred to this rulemaking. robust, high-efficiency catalytic devices standards for marine diesel engines that would be based on the transfer of B. Scope placed in the exhaust system. 20, 21 Similar to the discussion above exhaust emission control technology The emission control program regarding technologies for PM, HC, and from land-based diesel engines. This contemplated by today’s action is NO control for locomotives, we believe approach would be consistent with the intended to cover all new marine diesel X PM filters and NO adsorbers can be current marine Tier 2 emission engines up to 30 liters per cylinder, X applied to marine diesel engines for standards which were based on including those used in commercial, emission reductions of 90% or more. technology transfer from land-based recreational, and auxiliary applications. Tier 2 engines. We are considering EPA’s existing standards for new For more specific information on these technologies, the regulatory impact applying such emission standards to marine diesel engines do not apply to new marine diesel engines built as early engines that were built prior to the analyses for our 2007 highway diesel program and most recent nonroad rule as 2011. Similar to the locomotive effective date of those standards. In our standards described in Section II above, 1998 proposal, we requested comment contains extensive discussions of how these devices work, how effective they we request comment on the following: on whether we should apply the • Whether we should adopt the are at reducing emissions, and what standards to engines when they are approach taken in the heavy-duty their limitations are, particularly their remanufactured, using the locomotive highway and nonroad diesel programs dependence on very-low sulfur diesel approach, given the long useful lives of 22, 23 involving a PM control requirement on marine diesel engines. Under the fuel to function properly. Although there are important 100% of the engines concurrent with a locomotive approach, an engine built in differences between land-based and NOX requirement that is phased in over 1973 or later but prior to entry into force marine diesel engines, they are three years; of the Tier 1 standards is considered to • Whether it would be more fundamentally similar. The majority of be ‘‘new’’ when each of its power appropriate for marine engine marine diesel engine designs are assemblies is replaced or is inspected manufacturers to focus their technology derived from highway and nonroad and qualified. This approach was used development efforts on a single, final engine platforms. In addition, engines in to address the long periods of service tier of standards with the possibility of some nonroad diesel applications, such commonly found for locomotives (30 to as underground mining, have water- getting to aftertreatment-based emission 40 years). Certain commercial marine cooled exhaust systems similar to those levels sooner; diesel engines also have long periods of • Whether there are phase-in options used in many marine applications. service (20 to 30 years) that retard the that we could adopt to encourage the Manufacturers of underground mining turnover to the new standards. early introduction of aftertreatment equipment have pioneered the use of However, several characteristics of the technology; and advanced aftertreatment technologies marine industry make a direct • How aftertreatment-based for many years. We request comment on application of this approach to marine particulate matter controls should be the similarities and differences between diesel engines more difficult. Unlike the coordinated with those for NOX. land-based and marine diesel engines railroad industry, there are many The technologies used to meet the with respect to emission control. We companies that operate marine diesel Tier 2 standards are primarily in- also request comment on whether engines, and these companies do not cylinder engine controls such as fuel marine diesel engines can be designed rely on a small number of engine and air management improvements, to successfully employ the same high- remanufacturers to work on their consistent with the approach taken for efficiency exhaust emission control engines. In fact, many of these operators heavy-duty highway diesel engines in technologies now being developed for employ their own mechanics to do all the 1990’s and subsequently for the highway and nonroad use. Commenters maintenance and remanufacturing work. nonroad diesel engine Tier 2 standards. should consider the anticipated There is accordingly little uniformity in Due to differences in engine design and availability of diesel fuel meeting the 15 remanufacturing practices across the application, the marine Tier 2 standards industry. In addition, setting emission for HC+NO are slightly higher than 20 ‘‘Highway Diesel Progress Review,’’ U.S. EPA, X limits for remanufactured in-use marine June 2002. EPA420–R–02–016. (www.epa.gov/air/ those in the nonroad Tier 2 standards. diesel engines may be disruptive to a caaac/dieselreview.pdf) and ‘‘Highway Diesel We request comment of whether these large number of small businesses that Progress Review Report 2,’’ U.S. EPA, March 2004, differences in design and application EPA420–R–04–004 (http://www.epa.gov/otaq/regs/ own and operate these vessels. hd2007/420r04004.pdf). could have an effect on the levels of We are interested in exploring this 21 ‘‘Meeting Technology Challenges For the 2007 aftertreatment-based standards. issue, especially with regard to other Heavy-Duty Highway Diesel Rule’’, Final Report of We recognize that marine diesel mechanisms that could be used to the Clean Diesel Independent Review engines generally have a much wider achieve additional reductions from in- Subcommittee, Clean Air Act Advisory Committee, band of power ratings for a given per- October 30, 2002. (www.epa.gov/air/caaac/diesel/ use engines. In particular, we request finalcdirpreport103002.pdf). cylinder displacement, however, we comment on how we could design such 22 ‘‘Regulatory Impact Analysis: Heavy-Duty request comment on whether or not we a program in the context of the Engine and Vehicle Standards and Highway Diesel should continue to catagorize the remanufacturers’ specific market Fuel Sulfur Control Requirements,’’ U.S. engines based on specific displacement Environmental Protection Agency, EPA420–R–00– characteristics to provide incentives that 026, December 2000. This document is available on rather than by rated power. The new encourage retrofits or that accelerate our Web site at http://www.epa.gov/otaq/ nonroad Tier 4 standards established turnover. We request comment on the diesel.htm. key aftertreatment-based emission feasibility and potential costs and 23 ‘‘Regulatory Impact Analysis: Control of control standard divisions at 19 kW and benefits of both voluntary and Emissions from Nonroad Diesel Engines,’’ U.S. 56 kW engine power ratings. We request Environmental Protection Agency, EPA 420-R–04– mandatory remanufacturing provisions 007, May 2004. This document is available on our comment on whether these (or for in-use marine diesel engines. Web site, www.epa.gov/otaq. equivalent per-cylinder displacement

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categories) would be appropriate for throughout their useful lives. One request comment on what types of marine engines as well. program that would help achieve this engine characteristics and components goal is manufacturer-run in-use testing. should be monitored under such a D. Testing EPA requests comment on the concepts program. For example, should we 1. NTE Zone discussed below. consider actual onboard emissions The Agency plans to promulgate the The emission standards for marine measurement, which would require new in-use testing requirements for heavy- diesel engines include not-to-exceed hardware, or should we simply require duty highway vehicles in the December requirements in which engines must that the existing sensors be utilized to 2004 time frame and plans to propose a meet specified emission limits within a better monitor for potential problems manufacturer-run in-use testing program zone of engine operation. This NTE related to emission controls? for nonroad land-based diesel engines zone is supplementary to primary by 2005 or earlier. The nonroad diesel IV. Potential Environmental Impacts emission standards which are based on engine program is expected to be and Costs the weighted average of emissions patterned after the heavy-duty highway A. Estimated Inventory Contribution measured over a modal duty cycle. The program. The Agency expects to pattern purpose of the NTE requirements is to the in-use testing requirements for Locomotives and marine diesel provide robust control of emissions over nonroad diesel engines after a program engines contribute to the formation of a broad range of in-use speed and load that is being developed for heavy-duty ground level ozone and fine particles. combinations (and ambient conditions) diesel highway vehicles. The highway Based on our current inventory analysis, that a marine engine may experience in- diesel vehicle program will be funded we estimate that these engines use. and conducted by the manufacturers of contributed 12 percent and 10 percent One issue that has been raised with heavy-duty diesel highway engines with of mobile source NO and diesel PM the use of aftertreatment is its X 2.5 our oversight. We expect it will emissions in 1996. We estimate that effectiveness at light loads where incorporate a two-year pilot program. their contribution will increase to 27 exhaust temperatures are low. The The pilot program will allow the and 45 percent of mobile source NO modal duty cycle for commercial marine X Agency and manufacturers to gain the and diesel PM emission by 2030, after engines stresses high load operation, 2.5 necessary experience with the in-use phase-in of our existing locomotive and while the duty cycle for recreational testing protocols and generation of in- marine diesel engine emission control marine engines is weighted more use test data using portable emission programs. Our current estimates for towards lighter loads. However, even for measurement devices prior to fully NO and diesel PM inventories are set commercial marine engines, a large X 2.5 implementing the program. out in Tables IV.A–1 and IV.A–2. The portion of the engine operation for The goal of an in-use testing program inventory projections include the newly vessels operating in harbors or near would be to ensure that emissions adopted nonroad diesel engine ports may be at light load. This standards are met throughout the useful standards and sulfur reductions for operation is important because it is in life of the engines, under conditions marine and locomotive diesel fuel. Also, harbors and ports that the emissions normally experienced in-use. We diesel PM and SO emissions for from marine engines may affect the most 2.5 2 request comment on implementing an locomotives and marine diesel engines people. Therefore, an emission control in-use testing program for marine diesel were adjusted downward to account for strategy that works well at high loads, engines. In addition, we request the recent fuel sulfur limits on diesel but poorly at light loads, may appear comment on creating a similar pilot marine and locomotive fuel. While we effective over the current test program as is anticipated for highway do not provide estimates for other procedures without providing vehicles and nonroad land-based pollutants in this ANPRM, it should be significant in-use emission benefits. engines. We also request comment on noted that these engines also contribute We request comment on whether and any unique issues related to marine to national HC, carbon monoxide, and how the marine diesel engine emissions engines that may require modifications air toxics inventories. We will estimate standards and test procedures should be to this approach. It should be noted that those inventories as part of the modified to better consider light load such an in-use testing program would be development of our NPRM. conditions. For instance, we request in addition to our normal compliance comment on whether the modal duty and enforcement provisions. Our current inventories for marine cycles should be modified or if the NTE diesel engines are based on inventory zone would need to be expanded to E. Certification and Compliance work done in connection with our 1999 capture more light load operation. If the Our current marine compliance and 2003 marine diesel engine rules. NTE zone were adjusted, we request program contains provisions for engine The inventory for Category 1 marine comment on how the emission caps family certification, production-line diesel engines, which includes would need to be adjusted to better testing and in-use testing. We request recreational, commercial, and auxiliary reflect the capabilities of aftertreatment comment on whether we should applications, is estimated using a technology. We also solicit comment on consider any changes or additions to our methodology based on engine alternative approaches that would help current certification and compliance population, hours of use, average engine ensure the effectiveness of emission programs. In addition to possible loads, and in-use emission factors. The control technology over the wide range modifications to our current programs, inventory for Category 2 marine diesel of operation and ambient conditions we are asking for comment on whether engines is based on a combination of that a marine engine may experience in- an engine-diagnostic requirement would two approaches, one using ship registry use. be beneficial for marine diesel engines. data, engine rated power, operation, fuel We currently have diagnostic programs consumption, and fuel specific emission 2. In-Use Compliance in place for some other mobile sources. factors, and the other using a cargo To sustain the emission benefits over We request comment on the value of movement approach. Our inventory the broadest range of in-use operating diagnostic requirements for marine estimates assume that all these conditions, marine diesel engines must diesel engines in light of our current in- emissions occur within the U.S. airshed. meet the applicable emission standards use testing programs, and specifically Finally, the emissions for marine diesel

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engines less than 37 kW are estimated Category 1 and Category 2 marine diesel our locomotive and marine Web sites using the draft NONROAD2004 model. engines and locomotives. We will also that describes our plans and solicits As part of the development of our be investigating the localized effects of input on several aspects of our NPRM, we will be re-evaluating our these emissions in and around ports and inventory research. marine diesel inventory with respect to rail yards. We will be posting a note on

a TABLE IV.A–1.—ANNUAL NOX BASELINE EMISSION LEVELS FOR MOBILE AND OTHER SOURCE CATEGORIES

1996 2030 Category Percent of Percent of NOX short Percent of NOX short Percent of mobile tons mobile total tons source total source

Marine Diesel except C3 b ...... 673,309 5.2 2.8 655,052 15.6 4.5 Locomotives ...... 934,070 7.2 3.8 481,077 11.5 3.3 Subtotal of Affected Categories ...... 1,607,379 12.4 6.6 1,136,128 27.1 7.8 Land-based Nonroad Diesel ...... 1,564,904 12.1 6.4 458,649 11.0 3.2 Recreational Marine SI ...... 33,304 0.2 0.1 67,893 1.6 0.5 Nonroad SI ≤25 hp ...... 63,120 0.5 0.3 114,447 2.7 0.8 Nonroad SI >25 hp ...... 273,082 2.1 1.1 43,527 1.0 0.3 Recreational SI ...... 4,297 0.0 0.0 19,389 0.5 0.1 Commercial Marine Diesel C3 ...... 184,275 1.4 0.8 514,881 12.3 3.5 Commercial Marine Other c ...... 5,979 0.0 0.0 4,020 0.1 0.0 Aircraft ...... 165,018 1.3 0.7 258,102 6.2 1.8

Total Nonroad ...... 3,901,357 30 16 2,617,036 62.5 18 Total Highway ...... 9,060,923 70 37 1,566,902 37.5 11

Total Mobile Sources ...... 12,962,279 100 53 4,183,938 100 29 Stationary Point and Area Sources d ...... 11,449,752 ...... 47 10,320,361 ...... 71

Total Man-Made Sources ...... 24,412,031 ...... 14,504,300 ...... Mobile Source Percent of Total ...... 53 ...... 29 ...... Notes: a These are 48-state inventories. They do not include Alaska and Hawaii. b Marine diesel includes commercial C1, commercial C2, recreational up to 30 liters per cylinder displacement; it also includes marine diesel engines <37 kW that were included in the Tier 1 and Tier 2 standards for land-based nonroad engines. c Steam and coal-powered marine vessels. d Does not include the effects of the Proposed Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone (Interstate Air Quality Rule). 69 FR 4566, January 30, 2004. See http://www.epa.gov/interstateairquality/rule.html.

ab TABLE IV.A–2.—ANNUAL DIESEL PM2.5 BASELINE EMISSION LEVELS FOR MOBILE AND OTHER SOURCE CATEGORIES

1996 2030 Category Percent of Percent of Short tons mobile Percent of Short tons mobile Percent of source total source total

Diesel Marine c ...... 18,705 4.7 4.6 17,526 27.0 25.4 Locomotives ...... 22,266 5.6 5.5 11,599 17.9 16.8

Subtotal of Affected Categories d ...... 40,971 10.3 10.1 29,125 44.9 42.2 Land-Based Nonroad Diesel ...... 186,507 47.2 45.8 21,698 33.5 31.4

Total Nonroad Diesel ...... 227,478 58 56 50,823 78 74 Total Highway Diesel ...... 167,384 42 41 13,948 22 20

Total Mobile Source Diesel ...... 394,862 100 97 64,771 100 94 Stationary Point and Area Source Diesel e ...... 12,199 ...... 3 4,231 ...... 6

Total Man-Made Diesel Sources ...... 407,061 ...... 69,002 ......

Mobile Source Percent of Total ...... f 97 ...... f 94 ...... Notes: a These are 48-state inventories. They do not include Alaska and Hawaii. b Excludes natural and miscellaneous sources. c Marine diesel includes commercial C1, commercial C2, recreational up to 30 liters per cylinder displacement; it also includes marine diesel engines <37 kW that were included in the Tier 1 and Tier 2 standards for land-based nonroad engines. It does not include commercial C3 ves- sels using residual fuel. d When total PM2.5 is considered, marine diesel engines and locomotives contributed 7.2% of mobile source PM2.5 in 1996. The contribution of these sources expected to be 10.4% of mobile source PM2.5 in 2030. e This category includes point sources burning either diesel, distillate oil (diesel), or diesel/kerosene fuel. f Percent.

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B. Potential Costs and nonroad diesel engine program obtain advice and recommendations regulatory impact analyses, and to from representatives of the small The emission-control technologies we provide comments on cost-related issues entities that would likely be directly are considering for marine diesel that differentiate locomotives and engines and locomotives are already affected by a proposed rule. We marine engines from highway and land- anticipate beginning this outreach effort under development or in commercial based nonroad diesel engines. In use for highway and nonroad diesel in Summer 2004. We may contact some addition, we are interested in cost stakeholders prior to that time to gain as engines. To estimate the costs of this information associated with potential prospective emission control program, much information as possible about retrofitting concepts, and in information these entities to assist us in creating we expect to start with the cost about any unique costs associated with useful provisions for small businesses to estimates we have established in equipment redesign for the marine utilize. previous rulemakings for highway and market. nonroad diesel engines. We will modify We intend to offer similar regulatory those estimates as needed to take into V. Small Business Concerns/Regulatory flexibility provisions for small entities account the unique aspects of Flexibility that were offered in previous locomotive and marine applications. Pursuant to the Regulatory Flexibility locomotive, marine, and other nonroad These include different usage Act (RFA, as amended by the Small rules to help decrease the burden on characteristics, engine lifetimes and Business Regulatory Enforcement small entities while still meeting the rebuild schedules, and sales volumes. Fairness Act (SBREFA) of 1996 5 U.S.C. environmental goals of the Agency. We Additional adjustment will be made to 601 et seq.), we will perform an also invite recommendations on account for the physical and operating assessment of the impacts of the additions and/or modifications of prior characteristics of locomotive engines emission control program we are flexibility provisions for this rule. and marine diesel engines, such as size, considering on small entities and will packaging, maintenance, duty cycle, and convene a Small Business Advocacy The following is a list of the entities idling patterns. We encourage Review (SBAR) panel if the assessment that we believe will be regulated by this commenters to review the extensive indicates this is appropriate. rule, and their corresponding size information covering all aspects of We are also planning outreach efforts standards, as set out by the Small engine costs contained in the highway independent of the SBAR panel to Business Administration (SBA):

Size standards Category/industry (number of NAICS a code employees)

Engine manufacturers (including engine marinizers, rebuilders, and remanufacturers) ...... 1,000 b 333618 Locomotive manufacturers and rebuilders ...... 1,000 c 336510 Ship builders and repairers ...... 1,000 336611 Boat builders ...... 500 336612 a NAICS is the North American Industry Classification System. b Diesel engine manufacturers, specifically locomotive engines, are classified in the NAICS system as ‘‘Other Equipment Manufacturing’’. c Locomotive manufacturers and rebuilders are classified in the NAICS system as ‘‘Railroad Rolling Stock Manufacturers’’.

VI. Public Participation labeling proprietary information hearing for the issues raised in our We are committed to a full and open ‘‘Confidential Business Information’’ future Notice of Proposed Rulemaking, regulatory process with input from a and (2) sending proprietary information and will provide information about that wide range of interested parties and directly to the contact person listed (see hearing when we publish the NPRM. FOR FURTHER INFORMATION CONTACT) and request comment on all aspects of this VII. Statutory and Executive Order not to the public docket. This will help Advance Notice of proposal. Reviews Opportunities for input include a public ensure that proprietary information is comment period on this ANPRM. This not inadvertently placed in the docket. A. Administrative Designation and section describes how you can If you want us to use a submission of Regulatory Analysis (Executive Order participate in this process. confidential information as part of the 12866) basis for a proposal, then a A. How Do I Submit Comments? nonconfidential version of the Under Executive Order 12866 (58 FR With today’s action, we open a document that summarizes the key data 51735, October 4, 1993), the Agency comment period for this advance notice. or information should be sent to the must determine whether the regulatory We will accept comments until by docket. We will disclose information action is ‘‘significant’’ and therefore August 30, 2004. We encourage covered by a claim of confidentiality subject to review by the Office of comment on all issues raised here, and only to the extent allowed and in Management and Budget (OMB) and the on any other issues you consider accordance with the procedures set requirements of this Executive Order. relevant. The most useful comments are forth in 40 CFR part 2. If you don’t The Executive Order defines a those supported by appropriate and identify information as confidential ‘‘significant regulatory action’’ as any detailed rationales, data, and analyses. when we receive it, we may make it regulatory action that is likely to result All comments, with the exception of available to the public without notifying in a rule that may: proprietary information, should be you. • Have an annual effect on the directed to the docket (see ADDRESSES). economy of $100 million or more or If you wish to submit proprietary B. Will There Be a Public Hearing? adversely affect in a material way the information for consideration, you We will not hold a public hearing for economy, a sector of the economy, should clearly separate such the issues raised in this Advance Notice productivity, competition, jobs, the information from other comments by (1) of proposal. However, we will hold a environment, public health or safety, or

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State, Local, or Tribal governments or approval to the Office of Management 67249, November 6, 2000), requires EPA communities; and Budget (OMB) under the Paperwork to develop an accountable process to • Create a serious inconsistency or Reduction Act, 44 U.S.C. 3501 et seq. ensure ‘‘meaningful and timely input by otherwise interfere with an action taken tribal officials in the development of D. Intergovernmental Relations or planned by another agency; regulatory policies that have tribal • Materially alter the budgetary 1. Unfunded Mandates Reform Act implications.’’ ‘‘Policies that have tribal impact of entitlements, grants, user fees, Title II of the Unfunded Mandates implications’’ is defined in the or loan programs, or the rights and Reform Act of 1995 (UMRA), Pub. L. Executive Order to include regulations obligations of recipients thereof; or that have ‘‘substantial direct effects on 104–4, establishes requirements for • Raise novel legal or policy issues one or more Indian tribes, on the federal agencies to assess the effects of arising out of legal mandates, the relationship between the Federal their regulatory actions on state, local, President’s priorities, or the principles government and the Indian tribes, or on and tribal governments and the private set forth in the Executive Order. the distribution of power and sector. Under section 202 of the UMRA, This Advance Notice was submitted responsibilities between the Federal EPA generally must prepare a written to OMB for review. Any written government and Indian tribes.’’ comments from OMB and any EPA statement, including a cost-benefit As part of the development of our response to OMB comments are in the analysis, for proposed and final rules Notice of Proposed Rulemaking, we will public docket for this Notice. with ‘‘federal mandates’’ that may result examine the impacts of our proposal in expenditures to state, local, and tribal with respect to tribal implications. B. Regulatory Flexibility Act governments, in the aggregate, or to the Section 605 of the Regulatory private sector, of $100 million or more E. National Technology Transfer and Flexibility Act (RFA), 5 U.S.C. 601 et in any one year. Before promulgating an Advancement Act seq. requires the Administrator to assess EPA rule for which a written statement Section 12(d) of the National the economic impact of proposed rules is needed, section 205 of the UMRA Technology Transfer and Advancement on small entities. The Small Business generally requires EPA to identify and Act of 1995 (‘‘NTTAA’’), Public Law Regulatory Enforcement Fairness Act consider a reasonable number of 104–113, section 12(d) (15 U.S.C. 272 (SBREFA) of 1996, Public Law 104–121, regulatory alternatives and adopt the note) directs EPA to use voluntary amended the RFA to strengthen its least costly, most cost-effective, or least consensus standards in its regulatory analytical and procedural requirements burdensome alternative that achieves activities unless doing so would be and to ensure that small entities are the objectives of the rule. The inconsistent with applicable law or adequately considered during rule provisions of section 205 do not apply otherwise impractical. Voluntary development. The Agency accordingly when they are inconsistent with consensus standards are technical requests comment on the potential applicable law. Moreover, section 205 standards (e.g., materials specifications, impacts on a small business of the allows EPA to adopt an alternative other test methods, sampling procedures, and program described in this notice. These than the least costly, most cost-effective, business practices) that are developed or comments will help the Agency meet its or least burdensome alternative if the adopted by voluntary consensus obligations under SBREFA and will Administrator publishes with the final standards bodies. NTTAA directs EPA suggest how EPA can minimize the rule an explanation of why that to provide Congress, through OMB, impacts of this rule for small companies alternative was not adopted. explanations when the Agency decides that may be adversely affected. Before EPA establishes any regulatory not to use available and applicable Depending on the number of small requirements that may significantly or voluntary consensus standards. entities identified prior to the proposal uniquely affect small governments, As part of the development of our and the level of any contemplated including tribal governments, it must Notice of Proposed Rulemaking, we will regulatory action, we may convene a have developed under section 203 of the examine the availability and use of Small Business Advocacy Review Panel UMRA a small government agency plan. voluntary consensus standards. under section 609(b) of the Regulatory The plan must provide for notifying F. Protection of Children (Executive Flexibility Act as amended by SBREFA. potentially affected small governments, Order 13045) The purpose of the Panel (or multiple enabling officials of affected small Panels, as necessary) would be to collect governments to have meaningful and Executive Order 13045, ‘‘Protection of the advice and recommendations of timely input in the development of EPA Children from Environmental Health representatives of small entities that regulatory proposals with significant Risks and Safety Risks’’ (62 F.R. 19885, could be affected by the eventual rule. federal intergovernmental mandates, April 23, 1997) applies to any rule that If we determine that a panel is not and informing, educating, and advising (1) is determined to be ‘‘economically warranted, we would intend to work on small governments on compliance with significant’’ as defined under Executive a less formal basis with those small the regulatory requirements. Order 12866, and (2) concerns an entities identified. As part of the development of our environmental health or safety risk that We request information on small Notice of Proposed Rulemaking, we will EPA has reason to believe may have a entities potentially affected by this examine the impacts of our proposal disproportionate effect on children. If rulemaking. Information on company with respect to expected expenditures the regulatory action meets both criteria, size, number of employees, annual by state, local, and tribal governments, Section 5–501 of the Order directs the revenues and product lines would be in the aggregate, or by the private sector, Agency to evaluate the environmental especially useful. Confidential business of $100 million or more in any one year. health or safety effects of the planned rule on children, and explain why the information may be submitted as 2. Executive Order 13175 (Consultation planned regulation is preferable to other described in Section VI. and Coordination With Indian Tribal potentially effective and reasonably Governments) C. Paperwork Reduction Act feasible alternatives considered by the We will prepare information Executive Order 13175, entitled Agency. collection requirements as part of our ‘‘Consultation and Coordination with As part of the development of our proposed rule and submit them for Indian Tribal Governments’’ (65 FR Notice of Proposed Rulemaking, we will

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examine the impacts of our proposal State and local officials regarding the 1000 to 1299, where we intend to with respect to whether it concerns an conflict between State law and place regulations for air programs in environmental health or safety risk that Federally protected interests within the future rulemakings. we have reason to believe may have a agency’s area of regulatory Part 1045—Control of Emissions from disproportionate effect on children. responsibility. Marine Spark-ignition Engines and As part of the development of our G. Federalism (Executive Order 13132) Vessels. Notice of Proposed Rulemaking, we will Part 1068—General Compliance Executive Order 13132, entitled examine the impacts of our proposal Provisions for Engine Programs. ‘‘Federalism’’ (64 FR 43255, August 10, with respect to the relationship between Provisions of this part apply to 1999), requires EPA to develop an the national government and the States, everyone. accountable process to ensure or on the distribution of power and ‘‘meaningful and timely input by State Each part in the CFR has several responsibilities among the various subparts, sections, and paragraphs. The and local officials in the development of levels of government, as specified in regulatory policies that have federalism following illustration shows how these Executive Order 13132. fit together. implications.’’ ‘‘Policies that have In the spirit of Executive Order 13132, federalism implications’’ is defined in and consistent with EPA policy to Part 1045 the Executive Order to include promote communications between EPA Subpart A regulations that have ‘‘substantial direct and State and local governments, EPA Section 1045.1 effects on the States, on the relationship specifically solicits comment on this (a) between the national government and proposed rule from State and local (b) the States, or on the distribution of officials. (1) power and responsibilities among the H. Energy Effects (Executive Order (2) various levels of government.’’ (I) Under Section 6 of Executive Order 13211) (ii) 13132, EPA may not issue a regulation We anticipate that our proposal will (A) that has federalism implications, that not be a ‘‘significant energy action’’ as (B) imposes substantial direct compliance defined in Executive Order 13211, costs, and that is not required by statute, ‘‘Actions Concerning Regulations That A cross reference to § 1045.1(b) in this unless the Federal government provides Significantly Affect Energy Supply, illustration would refer to the parent the funds necessary to pay the direct Distribution, or Use’’ (66 FR 28355 (May paragraph (b) and all its subordinate compliance costs incurred by State and 22, 2001)) because it is not likely to paragraphs. A reference to ‘‘§ 1045.1(b) local governments, or EPA consults with have a significant adverse effect on the introductory text’’ would refer only to State and local officials early in the supply, distribution or use of energy. the single, parent paragraph (b). process of developing the proposed The proposed standards will have for List of Subjects regulation. EPA also may not issue a their aim the reduction of emission from regulation that has federalism certain nonroad engines, and have no 40 CFR Part 92 implications and that preempts State effect on fuel formulation, distribution, Environmental protection, law, unless the Agency consults with or use. Administrative practice and procedure, State and local officials early in the I. Plain Language Air pollution control, Confidential process of developing the proposed business information, Imports, regulation. This document follows established Incorporation by reference, Labeling, Section 4 of the Executive Order EPA practices regarding the use of plain Penalties, Railroads, Reporting and contains additional requirements for language in government writing. To read recordkeeping requirements, rules that preempt State or local law, the text of the regulations, it is also Warranties. even if those rules do not have important to understand the federalism implications (i.e., the rules organization of the Code of Federal 40 CFR Part 94 will not have substantial direct effects Regulations (CFR). The CFR uses the Environmental protection, on the States, on the relationship following organizational names and Administrative practice and procedure, between the national government and conventions. Air pollution control, Confidential the states, or on the distribution of Title 40—Protection of the Environment business information, Imports, power and responsibilities among the Chapter I—Environmental Protection Incorporation by reference, Labeling, various levels of government). Those Agency Penalties, Vessels, Reporting and requirements include providing all Subchapter C—Air Programs. This recordkeeping requirements, affected State and local officials notice contains parts 50 to 99, where the Warranties. and an opportunity for appropriate Office of Air and Radiation has participation in the development of the usually placed emission standards Dated: May 11, 2004. regulation. If the preemption is not for motor vehicle and nonroad Michael O. Leavitt, based on express or implied statutory engines. Administrator. authority, EPA also must consult, to the Subchapter U—Air Programs [FR Doc. 04–11294 Filed 6–28–04; 8:45 am] extent practicable, with appropriate Supplement. This contains parts BILLING CODE 6560–50–P

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Part IV

Department of Transportation Federal Aviation Administration

14 CFR Parts 121 and 135 Aircraft Assembly Placard Requirements; Final Rule

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DEPARTMENT OF TRANSPORTATION number, or amendment number of this printed cards the next time the cards are rulemaking. printed for any reason. Federal Aviation Administration This document is a final rule because Small Business Regulatory Enforcement there is limited time to comply with this 14 CFR Parts 121 and 135 Fairness Act Congressional direction, and the intent The Small Business Regulatory [Docket No. FAA–2004–18477] of Congress is clear. Congress has Enforcement Fairness Act (SBREFA) of determined that providing the required RIN 2120–AI24 1996 requires the FAA to comply with information is beneficial to the public. small entity requests for information or The economic summary will provide Aircraft Assembly Placard advice about compliance with statutes the anticipated compliance costs. Requirements and regulations within its jurisdiction. Paperwork Reduction Act AGENCY: Federal Aviation Therefore, any small entity that has a This rule contains new information Administration (FAA), DOT. question regarding this document may contact its local FAA official, or the collection requirements. As required by ACTION: Final rule. person listed under FOR FURTHER the Paperwork Reduction Act of 1995 SUMMARY: This action amends the INFORMATION CONTACT. You can find out (44 U.S.C. 3507(d)), the FAA has passenger information rules for more about SBREFA on the Internet at submitted the information requirements scheduled air carriers. It requires a http://www.faa.gov/avr/arm/sbrefa.htm, associated with this final rule to the notice or placard informing passengers or by e-mailing us at 9-AWA- Office of Management and Budget for its of the name of the country in which the [email protected]. review. Employees of the affected entities will likely be required to apply aircraft was finally assembled. These Background changes are necessary to respond to an the required information to each seat In Section 810 of the FAA Act of Congress requiring the notice or back pocket card. Affected entities will Reauthorization Act (December 11, placard be available to passengers no also likely have to purchase stickers for 2003), the Congress directed the later than June 12, 2005. each card. The hours worked and cost Secretary of Transportation to require of stickers contribute to the burden. The DATES: This final rule is effective upon that each air carrier providing total paperwork burden is 13,313.4 OMB approval of the information scheduled passenger air transportation hours, costing $521,957. collection. When OMB approves, we display, by June 12, 2005, a notice that will publish a document in the Federal informs passengers of the country in International Compatibility Register announcing the effective date. which the aircraft they are aboard was In keeping with U.S. obligations ADDRESSES: Docket: To read background finally assembled. This information is to under the Convention on International documents or comments received, go to be provided on a notice or placard Civil Aviation, it is FAA policy to http://dms.dot.gov at any time or to available to each passenger on the comply with International Civil Room PL–401 on the plaza level of the aircraft. Aviation Organization (ICAO) Standards Nassif Building, 400 Seventh Street, The conference committee report and Recommended Practices to the SW., Washington, DC, between 9 a.m. accompanying the legislation interprets maximum extent practicable. The FAA and 5 p.m., Monday through Friday, the statutory requirement, explaining has determined that there are no ICAO except Federal holidays. that it calls for the information on Standards and Recommended Practices FOR FURTHER INFORMATION CONTACT: Gary country of final assembly to be available that correspond to this regulation. Davis, Flight Standards Service, Air ‘‘on the placard in the seat back pocket’’ Economic Evaluation Transportation Division, AFS–201A, on the aircraft. Therefore, this new Federal Aviation Administration, 800 statement will be included on the seat- Proposed changes to Federal Independence Avenue SW., pocket cards that are already required to regulations must undergo several Washington, DC 20591; telephone (202) provide information on emergency economic analyses. First, Executive 267–8166; facsimile (202) 267–5229, procedures for the type and model of Order 12866 directs each Federal agency e-mail [email protected]. the aircraft. to propose or adopt a regulation only SUPPLEMENTARY INFORMATION: Sections 121.571 and 135.117 require upon a reasoned determination that the that each certificate holder provide benefits of the intended regulation Availability of Final Rule cards that supplement the oral briefing justify its costs. Second, the Regulatory You can get an electronic copy using given to passengers before takeoff. These Flexibility Act of 1980 requires agencies the Internet by: cards contain diagrams and operating to analyze the economic impact of (1) Searching the Department of methods for emergency exit of the regulatory changes on small entities. Transportation’s electronic Docket aircraft. This rule requires that these Third, the Trade Agreements Act (19 Management System (DMS) Web page cards also inform each passenger of the U.S.C. section 2531–2533) prohibits (http://dms.dot.gov/search); country in which the aircraft was finally agencies from setting standards that (2) Visiting the Office of Rulemaking’s assembled. Congressional guidance create unnecessary obstacles to the Web page at http://www.faa.gov/avr/ made clear that this is the proper place foreign commerce of the United States. arm/index.cfm; or to include the new information. In developing U.S. standards, this Trade (3) Accessing the Government We understand that the statutorily Act also requires agencies to consider Printing Office’s Web page at http:// required June 12, 2005, deadline may international standards and, where www.gpoaccess.gov/fr/index.html. not provide enough time for each airline appropriate, use them as the basis of You can also get a copy by submitting to replace every card. We will interpret U.S. standards. Fourth, the Unfunded a request to the Federal Aviation our rule such that each airline can meet Mandates Reform Act of 1995 (Pub. L. Administration, Office of Rulemaking, the new requirement by temporarily 104–4) requires agencies to prepare a ARM–1, 800 Independence Avenue providing the requested information in written assessment of the costs, benefits, SW., Washington, DC 20591, or by the form of a sticker attached to each and other effects of proposed or final calling (202) 267–9680. Make sure to seat-pocket card. However, the required rules that include a Federal mandate identify the docket number, notice information must be added to the likely to result in the expenditure by

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State, local, or tribal governments, in the businesses, not-for-profit organizations Unfunded Mandates Assessment aggregate, or by the private sector, of and small governmental jurisdictions. The Unfunded Mandates Reform Act $100 million or more annually (adjusted Agencies must perform a review to of 1995 (the Act), is intended, among for inflation). determine whether a proposed or final other things, to curb the practice of The FAA has determined this rule (1) rule will have a significant economic imposing unfunded Federal mandates as mandated by Congress, is deemed to impact on a substantial number of small on State, local, and tribal governments. be in the public interest; (2) is not a entities. If the agency determines that it Title II of the Act requires each Federal ‘‘significant regulatory action’’ as will, the agency must prepare a agency to prepare a written statement defined in section 3(f) of Executive regulatory flexibility analysis as assessing the effects of any Federal Order 12866 and is not ‘‘significant’’ as described in the Act. mandate in a proposed or final agency defined in DOT’s Regulatory Policies However, if an agency determines that rule that may result in a $100 million or and Procedures; (3) will not have a a proposed or final rule is not expected more expenditure (adjusted annually for significant impact on a substantial to have a significant economic impact inflation) in any one year by State, local, number of small entities; (4) will have on a substantial number of small and tribal governments, in the aggregate, no effect on international trade; and (5) entities, section 605(b) of the 1980 RFA or by the private sector; such a mandate does not impose an unfunded mandate provides that the head of the agency is deemed to be a ‘‘significant regulatory on State, local, or tribal governments, or may so certify and a regulatory action.’’ on the private sector. flexibility analysis is not required. The This final rule does not contain such Costs certification must include a statement a mandate. Therefore, the requirements providing the factual basis for this of Title II of the Unfunded Mandates Each of the part 121 and 135 air determination, and the reasoning should Reform Act of 1995 do not apply. carriers may put a sticker on the seat- be clear. pocket card; an aircraft cleaner may do Executive Order 13132, Federalism this during routine cleaning. For this rule, the small entity groups The FAA has analyzed this final rule Application of each sticker takes one are considered to be part 121 and part under the principles and criteria of minute and each sticker costs $0.50; 135 air carriers. As shown above, the Executive Order 13132, Federalism. We there are a total of 750,000 passenger cost to all part 121 air carriers is determined that this action will not seats used for part 121 scheduled $494,100. Given 69 air carriers, the have a substantial direct effect on the passenger air transportation and 3,800 average cost per carrier is $7,160. This States, or the relationship between the seats used for part 135 scheduled cost is less than 1% of the annual national Government and the States, or passenger air transportation. A manager median revenue for an average part 121 on the distribution of power and from each air carrier would spend 5 air carrier. Not all part 121 air carriers responsibilities among the various hours to ensure that the program is are small businesses, but for those that levels of government, and therefore does carried out successfully. The total one- are small businesses, their annual not have federalism implications. time cost for part 121 air carriers is revenue far exceeds $716,100. The cost $494,100 and for part 135 air carriers is to all part 135 air carriers is $27,800. Environmental Analysis $27,800; total costs for this program sum Given 81 air carriers, the average cost FAA Order 1050.1D defines FAA to $522,000. All costs are one-time costs per carrier is $344. This cost is less than actions that may be categorically in 2004; the FAA anticipates that the 1% of the annual median revenue for an excluded from preparation of a National information on these stickers will be average part 135 air carrier. Not all part Environmental Policy Act (NEPA) incorporated directly onto the seat- 135 air carriers are small businesses, but environmental impact statement. In pocket cards when the old cards are for those that are small businesses, their accordance with FAA Order 1050.1D, replaced. annual revenue far exceeds $34,400. appendix 4, paragraph 4(j), this Thus, the FAA certifies that this action Comparison of Costs and Benefits rulemaking action qualifies for a will not have a significant economic categorical exclusion. The final rule will cost $522,000. impact on a substantial number of small Congress, which reflects the will of the entities. Regulations that Significantly Affect Energy Supply, Distribution, or Use American people, has determined that Trade Impact Assessment this final rule is in the best interest of The FAA has analyzed this final rule the nation and therefore provides a The Trade Agreement Act of 1979 under Executive Order 13211, Actions benefit. prohibits Federal agencies from Concerning Regulations that establishing any standards or engaging Regulatory Flexibility Determination Significantly Affect Energy Supply, in related activities that create Distribution, or Use (66 FR 28355, May The Regulatory Flexibility Act of 1980 unnecessary obstacles to the foreign 18, 2001). We have determined that it is (RFA) establishes ‘‘as a principle of commerce of the United States. The not a ‘‘significant energy action’’ under regulatory issuance that agencies shall statute also requires consideration of the executive order because it is not a endeavor, consistent with the objective international standards and, where ‘‘significant regulatory action’’ under of the rule and of applicable statutes, to appropriate, that they be the basis for Executive Order 12866, and it is not fit regulatory and informational U.S. standards. The FAA has assessed likely to have a significant adverse effect requirements to the scale of the the potential effect of this rulemaking on the supply, distribution, or use of business, organizations, and and has determined that it will impose energy. governmental jurisdictions subject to the same costs on part 121 and 135 regulation.’’ To achieve that principle, operators whether they use aircraft List of Subjects in 14 CFR Parts 121 and the RFA requires agencies to solicit and assembled in the United States or 135 consider flexible regulatory proposals aircraft assembled in some other Air carriers, Air Taxis, Aircraft, and to explain the rationale for their country. Therefore, it will impose no Airmen, Aviation safety, Reporting and actions. The RFA covers a wide-range of unnecessary obstacles in foreign recordkeeping requirements, Safety, small entities, including small commerce. Transportation.

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The Amendment and model of airplane used for that (e) The oral briefing required by flight, including— paragraph (a) of this section must be I In consideration of the foregoing, the (1) Diagrams of, and methods of supplemented by printed cards which Federal Aviation Administration operating, the emergency exits; must be carried in the aircraft in amends parts 121 and 135 of Chapter I (2) Other instructions necessary for locations convenient for the use of each of Title 14, Code of Federal Regulations use of emergency equipment; and passenger. The cards must— as follows: (3) No later than June 12, 2005, for Domestic and Flag scheduled passenger- (1) Be appropriate for the aircraft on PART 121—OPERATING carrying flights, the sentence, ‘‘Final which they are to be used; REQUIREMENTS: DOMESTIC, FLAG, assembly of this airplane was completed (2) Contain a diagram of, and method AND SUPPLEMENTAL OPERATIONS in [INSERT NAME OF COUNTRY].’’ of operating, the emergency exits; * * * * * I 1. The authority citation for part 121 (3) Contain other instructions continues to read as follows: PART 135—OPERATING necessary for the use of emergency equipment on board the aircraft; and Authority: 49 U.S.C. 106(g), 40113, 40119, REQUIREMENTS: COMMUTER AND 41706, 44101, 44701–44702, 44705, 44709– ON DEMAND OPERATIONS AND (4) No later than June 12, 2005, for 44711, 44713, 44716–44717, 44722, 46105. RULES GOVERNING PERSONS ON scheduled Commuter passenger- BOARD SUCH AIRCRAFT I 2. Section 121.571(b) is revised to read carrying flights, include the sentence, ‘‘Final assembly of this aircraft was as follows: I 3. The authority citation for part 135 completed in [INSERT NAME OF continues to read as follows: § 121.571 Briefing passengers before COUNTRY].’’ takeoff. Authority: 49 U.S.C. 106(g), 41706, 44113, * * * * * * * * * * 44101, 44701–44702, 44705, 44709, 44711– 44713, 44715–44717, 44722. Issued in Washington, DC, on June 21, (b) Each certificate holder must carry I 4. Section 135.117(e) is revised to read 2004. on each passenger-carrying airplane, in as follows: convenient locations for use of each Marion C. Blakey, passenger, printed cards supplementing § 135.117 Briefing Of Passengers Before Administrator. the oral briefing. Each card must contain Flight [FR Doc. 04–14630 Filed 6–28–04; 8:45 am] information pertinent only to the type * * * * * BILLING CODE 4910–13–P

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Part V

Department of the Treasury 31 CFR Part 50 Terrorism Risk Insurance Program; Claims Procedures; Final Rule

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DEPARTMENT OF THE TREASURY insured commercial property and terrorism. On June 18, 2004, the casualty losses resulting from an act of Secretary of the Treasury announced his 31 CFR Part 50 terrorism, which as defined in the Act decision to extend the make available RIN 1505–AB07 is certified by the Secretary of the requirements through Program Year 3. Treasury, in concurrence with the As conditions for Federal payment Terrorism Risk Insurance Program; Secretary of State and the Attorney under the Program, insurers must Claims Procedures General. The Act authorizes Treasury to provide clear and conspicuous administer and implement the disclosure to the policyholders of the AGENCY: Departmental Offices, Treasury. Terrorism Risk Insurance Program, premium charged for insured losses ACTION: Final rule. including the issuance of regulations covered by the Program and of the and procedures. The Program will end Federal share of compensation for SUMMARY: The Department of the on December 31, 2005. Thereafter, the insured losses under the Program. In Treasury (Treasury) is issuing this final Act provides Treasury with certain addition, the Act requires that insurers rule as part of its implementation of title continuing authority to take actions as make certain certifications to Treasury I of the Terrorism Risk Insurance Act of necessary to ensure payment, and process and submit claims for the 2002 (Act). The Act established a recoupment, adjustments of insured loss in accordance with temporary Terrorism Insurance Program compensation and reimbursement for appropriate business practices and any (Program) under which the Federal insured losses arising out of any act of reasonable procedures Treasury may Government will share the risk of terrorism (as defined under the Act) prescribe. insured loss from certified acts of occurring during the period between The Act also contains specific terrorism with commercial property and November 26, 2002, and December 31, provisions designed to manage litigation casualty insurers until the Program ends 2005. arising out of or resulting from a on December 31, 2005. This rule was Each entity that meets the definition certified act of terrorism. Among other published in proposed form on of ‘‘insurer’’ (well over 2000 firms) must provisions, section 107 creates, upon December 1, 2003, for public comment. participate in the Program. The amount certification of an act of terrorism by the The final rule contains certain of Federal payment for an insured loss Secretary, an exclusive Federal cause of definitions, requirements, and resulting from an act of terrorism is to action and remedy for property damage, procedures for insurers filing claims be determined based upon insurance personal injury, or death arising out of with Treasury for payment of the company deductibles and excess loss or relating to an act of terrorism; Federal share of compensation for sharing with the Federal Government, as preempts certain State causes of action; insured losses under the Program. In specified by the Act and the provides for consolidation of all civil particular, the final rule addresses implementing regulations. An insurer’s actions in Federal court for any claim requirements for Federal payment, deductible increases each year of the (including any claim for loss of initial notice of insured loss, loss Program, thereby reducing the Federal property, personal injury, or death) certifications, the timing and process for Government’s share prior to expiration relating to or arising out of an act of payment, associated recordkeeping of the Program. An insurer’s deductible terrorism; and provides that amounts requirements, and Treasury’s audit and is calculated based on a percentage of awarded in actions for property damage, investigation authority. the value of direct earned premiums personal injury, or death that are DATES: This final rule is effective July collected over certain statutory periods. attributable to punitive damages are not 29, 2004. Once an insurer has met its deductible, to be counted as ‘‘insured losses’’ and FOR FURTHER INFORMATION CONTACT: the Federal payments cover 90 percent not paid under the Program. The Act Howard Leikin, Senior Insurance of insured losses above the deductible, also provides the United States with the Advisor, David Brummond, Legal subject to an annual industry-aggregate right of subrogation with respect to any Counsel, or C. Christopher Ledoux, limit of $100 billion. payment or claim paid by the United Senior Attorney, Terrorism Risk The Program provides a Federal States under the Program. Insurance Program, (202) 622–6770 (not reinsurance backstop for three years. In implementing the Program, a toll-free number). The Act provides Treasury with Treasury is guided by several goals. authority to recoup Federal payments First, Treasury strives to implement the SUPPLEMENTARY INFORMATION: made under the Program through Act in a transparent and effective I. Background policyholder surcharges, up to a manner that treats comparably those maximum annual limit. The Act also insurers required to participate in the A. Terrorism Risk Insurance Act of 2002 prohibits duplicate payments for Program and provides necessary On November 26, 2002, the President insured losses that have been covered information to policyholders in a useful signed into law the Terrorism Risk under other Federal programs. and efficient manner. Second, in accord Insurance Act of 2002 (Pub. L. 107–297, The mandatory availability or ‘‘make with the Act’s stated purposes, Treasury 116 Stat. 2322). The Act was effective available’’ provisions in section 103(c) seeks to rely as much as possible on the immediately. The Act’s purposes are to of the Act require that, for Program Year State insurance regulatory structure. In address market disruptions, ensure the 1, Program Year 2, and, if so determined that regard, Treasury has coordinated continued widespread availability and by the Secretary of the Treasury, for the implementation of all aspects of the affordability of commercial property Program Year 3, all entities that meet Program with the National Association and casualty insurance for terrorism the definition of insurer under the of Insurance Commissioners (NAIC). risk, and to allow for a transition period Program must make available in all of Third, to the extent possible within for the private markets to stabilize and their commercial property and casualty statutory constraints, Treasury seeks to build capacity while preserving State insurance policies coverage for insured allow insurers to participate in the insurance regulation and consumer losses resulting from an act of terrorism. Program in a manner consistent with protections. This coverage cannot differ materially procedures used in their normal course Title I of the Act establishes a from the terms, amounts and other of business. Finally, given the temporary Federal program of shared coverage limitations applicable to losses temporary and transitional nature of the public and private compensation for arising from events other than acts of Program, Treasury is guided by the Act’s

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goal that insurers develop their own 68 FR 48280 (Aug. 13, 2003)) and made several revisions and a number of capacity, resources, and mechanisms for created subpart A of part 50 in title 31 clarifications based on the comments terrorism insurance coverage when the of the Code of Federal Regulations. received. Program expires. Treasury’s second interim final Treasury received comments on the regulation created subparts B and C of B. Previously Issued Interim Guidance proposed rule from four national part 50 and addressed disclosures that and Regulations insurance industry trade associations, insurers must make to policyholders as collectively, as well as individually, a To assist insurers, policyholders, and a condition for Federal payment under national risk retention trade association, other interested parties in complying the Act, and requirements that insurers a national lender trade association, a with immediately applicable make available, in their commercial national surety trade association, a requirements of the Act prior to the property and casualty insurance national agent and broker association, a issuance of regulations, Treasury policies, terrorism risk coverage for captive insurers association, three promptly issued interim guidance. The insured losses under the Program. It was insurance companies, a group of interim guidance addressed certain published in the Federal Register at 68 London-based insurers, a consulting immediately applicable provisions that FR 19301 (Apr. 18, 2003). After review actuarial firm, a vendor of insurance required clarification and was to be of comments, this interim final rule was services, and a legal firm representing relied upon by insurers until finalized and published at 68 FR 59720 captive insurers. As described in detail superseded by regulations or a (Oct. 17, 2003). below, commenters generally agreed subsequent notice. Treasury has also issued a regulation with the proposed rule. However, Treasury’s first notice of Interim applying the Act to State residual Treasury received many requests to add Guidance was published in the Federal market insurance entities and State a process for advance payments and for Register at 67 FR 76206 on December workers’ compensation funds. In this clarification of specific payment 11, 2002, and addressed, among other regard, Treasury created a subpart D to requirements and processes. In matters, statutory disclosure obligations part 50 of title 31, which was first response, Treasury has revised the proposed and published in the Federal of insurers as conditions for Federal proposed rule to allow advance Register at 68 FR 19309 (Apr. 18, 2003). payment under the Program; the payments under certain conditions. In After review of comments Treasury requirement that an insurer ‘‘make addition, Treasury has clarified finalized and published this rule at 68 available’’ terrorism insurance; and how provisions in the proposed rule that FR 59715 (Oct. 17, 2003). insurers were to calculate the ‘‘direct pertain to loss certifications earned premium’’ received from C. The Proposed Rule (Claims requirements, payments to affiliated commercial lines of property and Procedures) groups, prohibitions on duplicative casualty insurance as well as their The proposed rule on which this final compensation from other Federal ‘‘insurer deductibles’’ for purposes of programs, and the adjustment and the Program. The second notice of rule is based was published in the Federal Register at 68 FR 67100 on suspension or denial of payments. interim guidance was published at 67 Several commenters also requested that FR 78864 on December 26, 2002, and December 1, 2003. In subpart F to part 50 of title 31, Treasury’s proposed rule Treasury add specific references in the provided guidance concerning which claims rule for State residual market insurance companies were ‘‘insurers’’ contained requirements and procedures for insurers that file claims for payment insurance entities and Treasury has for purposes of the Program, including done so in the final rule. The comments their ‘‘affiliates.’’ It also addressed the of the Federal share of compensation for insured losses resulting from a certified received and Treasury’s revisions to the scope of insured losses covered by the proposed rule are summarized below. Program and calculation of insurer act of terrorism under the Act. In deductibles. Treasury’s third notice of particular, the proposed rule revised the A. Definition of Insured Loss (Section interim guidance was published at 68 regulatory definition of ‘‘insured loss,’’ 50.5) FR 4544 on January 29, 2003. It clarified provided for an initial notice of insured The final rule amends the previously certain disclosure and certification loss and loss certifications, set forth issued definition of ‘‘insured loss’’ at requirements, and addressed issues general requirements for Federal § 50.5(e) to clarify that certain loss concerning non-U.S. insurers, and the payment under the Program and adjustment expenses allocable to a scope of the term ‘‘insured loss’’ under addressed the timing and process of specific underlying loss are part of an the Act.1 These interim guidance such payment. Subpart G addressed insurer’s insured losses and will be notices have now been superceded by a information to be retained related to the included in the Federal share of series of interim final and final handling and settlement of claims to compensation under the Program. This regulations issued by Treasury. enable Treasury to perform financial clarification follows customary practices On February 28, 2003 (68 FR 9804) and claim audits. of the insurance industry with regard to Treasury published an interim final rule II. Summary of Comments and Final reinsured losses. The definition has also that laid the groundwork for Program Rule been amended by the final rule to clarify implementation, including the scope of In the event that it had been necessary that an insurer’s payments in excess of the Program and key definitions. This to activate the Program’s claims policy limits or payments due to an interim final rule was finalized and procedures prior to the issuance of this insurer’s extra-contractual obligations published in the Federal Register at 68 final rule, Treasury was prepared to do will not be considered as an insurer’s FR 41250 (July 11, 2003) (as amended at so on an expedited basis. Such action, insured loss. In addition, because 1 Treasury’s fourth interim guidance, published at however, was not necessary and section 107(a)(5) of the Act explicitly 68 FR 15039 on March 27, 2003, provided insurers Treasury is now issuing this final rule states that punitive damages are not to a procedure by which they could seek to rebut a after careful consideration of all be considered as insured losses, the presumption of control established in Treasury’s comments received on the proposed definition has been further amended to interim final regulations. The Interim Guidance has subsequently been superseded by a provision in the rule and after consultation with the exclude compensation to an insurer for final rule for subpart A of part 50, title 31 published NAIC. While this final rule largely any payments attributable to punitive at 68 FR 41250 (July 11, 2003). reflects the proposed rule, Treasury has damages.

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1. Allocated Loss Adjustment Expense the reinsurance industry and with the liability of the insured to a third party In § 50.5(e)(3) of the proposed rule, broader objectives for the Act. However, is in excess of that policy limit but Treasury proposed to revise the for added clarity, Treasury has modified otherwise within the scope of the definition of the term ‘‘insured loss’’ to § 50.5(e)(3) in the final rule to insurance coverage. Under certain include certain loss adjustment specifically exclude ‘‘staff salaries, circumstances, an insurer will pay XPL expenses incurred by an insurer in overhead, and other insurer expenses losses to or on behalf of its insured (e.g., connection with insured losses, that would have been incurred when an insurer fails to accept a specifically those expenses ‘‘that are notwithstanding the insured loss’’ from settlement offer within policy limits and allocated and identified by claim file in the definition of insured loss. Consistent a jury later finds the policyholder liable insurer records, including expenses with this approach, reasonable, in an amount in excess of policy limits). allocated expenses for travel to In the preamble to the proposed rule, incurred in the investigation, investigate the site of a loss, attend an Treasury specifically invited comments adjustment and defense of claims, but examination, or perform some other on whether Treasury should include excluding staff adjuster salaries and any function related to the investigation, XPL losses within the definition of allocations of other internal insurer adjustment and defense of a specific ‘‘insured loss.’’ expenses.’’ In the preamble to the claim, even if incurred by insurer staff One commenter who addressed the proposed rule, Treasury noted that this adjusters, are included in the definition issue of XPL losses pointed out that was consistent with customary of insured loss. excess of loss reinsurance treaties insurance industry business practices. usually include clauses providing Three comments addressed the 2. Extra-Contractual Obligations reinsurance coverage for XPL claims. proposed rule’s treatment of these The proposed rule also revised the Treasury recognizes that such clauses allocated loss adjustment expenses definition of ‘‘insured loss’’ to clarify are sometimes negotiated into (commonly known in the insurance that the Federal Government would not reinsurance treaties. However, Treasury industry as ALAE) within the definition share in an insurer’s payment of extra- had determined not to include such of insured loss. An insurance industry contractual damages. Extra-contractual losses in the definition of ‘‘insured loss’’ trade association commended Treasury obligations describe an insurer’s because such excess losses are not part noting that, ‘‘this is consistent with liability to pay damages to its insured or of ‘‘insured loss’’ or directly associated industry practices and certainly a third party due to the insurer’s breach with adjusting the loss. Given the lack appropriate.’’ However, an individual of the insurance policy and/or negligent of additional reasons to include XPL, insurance company commented that or bad-faith claims-handling conduct, the final rule adopts Treasury’s this description of ALAE would not including liability for punitive, proposed language, with a technical provide equal indemnification to exemplary, or special damages awarded correction at § 50.5(e)(4)(iii). insurers employing staff adjusters or paid as a result of such conduct. versus those using outside, or Several insurance industry trade 4. Losses by State Residual Market independent, adjustors. Another insurer groups commented that Treasury’s Mechanisms expressed concern that certain expenses proposed rule should be revised to Three comments were received from would be excluded under § 50.5(e)(3) of allow for the federal payment of extra- insurance trade associations, submitted the proposed rule. Expenses cited were, contractual obligations paid by an individually and collectively, ‘‘traveling to investigate the site of a insurer. Extra-contractual obligations concerning the proposed rule not loss, attend an examination, or perform paid by an insurer are the result of an specifically addressing losses by State some other function related to a specific insurer’s conduct and are not part of residual market insurance entities and claim’’ if incurred by insurer staff ‘‘insured loss’’ or directly associated State workers’ compensation funds adjusters. with adjusting the loss as is the case (hereafter referenced as State residual Treasury has considered the with ALAE. Accordingly, such losses market mechanisms). The commenters comments presented and believes that are not to be paid under the Program. offered language to explicitly include, in the proposed rule generally reflected its The final rule adopts § 50.5(4) of the the definition of insured losses, those intention to follow the Act’s objectives rule as proposed, with some minor losses allocated on a proportionate share of a system of shared public and private modifications to the language. basis from a State residual market compensation for insured losses, In commenting on extra-contractual mechanism to a participating insurer. including the unpredictable adjustment obligations, one trade group stated that Treasury has determined that it is not expenses directly associated with such in the light of unique situations necessary to amend the definition of losses. In particular, Treasury believes following an act of terrorism, insurers insured loss for this purpose, but has that the treatment of staff salaries in the ‘‘may go beyond the contract language addressed this issue through proposed rule remains consistent with to indemnify an insured.’’ Such clarifications to §§ 50.50 and 50.53 the Congressional findings and purposes payments by an insurer would not be an regarding the treatment of residual of the Act and treats insurers ‘‘insured loss’’ because the paid loss is market losses. These changes are participating in the Program not covered by the terms and conditions discussed below. comparably. Expenses such as staff of the insurance policy. Treasury B. Federal Share of Compensation salaries and other internal insurer considered the comment and has (Section 50.50) expenses that are known and incurred determined to adopt § 50.50(a)(6) of the regardless of the occurrence of any proposed rule without change in the The final rule provides that the certified act of terrorism are not suitable final rule. Federal share of compensation under to be shared with the general taxpayers the Program is 90 percent of that portion and thus are not included in the 3. Excess Policy Limits Payments of the insurer’s insured losses that definition of insured loss. The definition of ‘‘insured loss’’ in the exceed its insurer deductible during a The specific approach taken toward proposed rule did not include losses in Program Year, subject to specified staff adjuster and other expenses in excess of policy limits (known adjustments and the annual industry § 50.5(e)(3) of the proposed rule is commonly in the insurance industry as aggregate limit of $100 billion as consistent with accepted practices in XPL). XPL losses occur when the provided in the Act. This section also

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addresses requirements for federal participating insurers as their share of compensation may be made based on payment and situations under which residual market losses. Treasury concurs estimates of insured losses. In the final Treasury may deny or suspend with the need to clarify the treatment of rule, Treasury has revised § 50.50 of the payment. losses paid as a share of residual market proposed rule to permit insurers to losses. Section 50.50(a)(2) has been include on their bordereau requests for 1. General Clarifications revised to make clear that the insurer’s payment of the Federal share of In § 50.50(a), Treasury has revised the insured losses include ‘‘the allocated compensation for both (1) claim proposed rule to clarify that the Federal dollar value of the insurer’s payments already made, and (2) claim share of compensation will be paid once proportionate share of losses from a payments about to be made. This a Certification of Loss required by State residual market entity or State applies to partial as well as final § 50.53 of the final rule is deemed workers’ compensation fund.’’ settlements of underlying claims that sufficient. Section 50.50(a)(1) was comprise an insurer’s insured losses. changed slightly to make clear that the 3. Advance Payments Under the final rule, insurers are insurer, including all affiliates of the Section 50.50(a) of the proposed rule required to certify that any advances for insurer, must meet the requirements of provided that the amount of payment of underlying insured losses that have § 50.5(f). Also, § 50.50(a)(4) has been the Federal share of compensation been requested will be paid within five revised to clarify that Treasury will pay would be based, in part, upon a business days of receipt of funds from so long as the underlying insured loss— Treasury determination that, the Treasury. In addition, any interest as well as the insurer’s claim for Federal ‘‘insurer has made payment of an earned on such funds will be remitted payment—is not fraudulent, collusive, underlying insured loss to a person who to the Treasury. Treasury believes that made in bad faith, or dishonest. In had suffered the insured loss, or to a this provides an appropriate balance addition, under § 50.50(4) of the final person acting on behalf of such person between meeting the cash flow needs of rule, neither the underlying claim for ***.’’ This proposed an approach participating insurers and the proper insured loss nor the insurer’s claim will whereby Treasury would pay the stewardship over public funds. be paid if Treasury determines that the Federal share of compensation strictly To permit advanced payments, claim is designed to circumvent the as a reimbursement for amounts actually § 50.50(a)(3) of the proposed rule has purposes of the Act and regulations. paid by insurers for underlying insured been revised in the final rule to This is intended to discourage those losses, whether fully or partially settled. recognize that an insurer ‘‘has paid or is who may attempt to ‘‘game’’ the This approach was also followed in prepared to pay an underlying insured Program. § 50.53 of the proposed rule (Loss loss.’’ Section 50.53(b)(2)(i) also has Section 50.50(a) of the proposed rule Certifications), which required, in part, been revised to provide that underlying provided that payment of the Federal a certification that the insurer had paid losses on the insurer’s bordereau share of compensation would occur all underlying claims comprising the ‘‘either: Have been paid by the insurer; upon Treasury making a determination insured losses submitted for payment, or will be paid by the insurer upon as to the factors listed therein. This as listed in the bordereau provided receipt of an advance payment of the section of the proposed rule provided pursuant to § 50.53(b)(1). Federal share of compensation as soon that Treasury may make a payment Treasury received six comments on as possible, consistent with the insurer’s without this determination, subject to a the timing of Federal payments. With normal business practices, but not ‘‘reservation of rights.’’ As that term is some variation, the common theme was longer than five business days after commonly understood in the insurance the issue of whether an insurer would receipt of the Federal share of industry, payment subject to a receive the Federal share of compensation.’’ Also, a new subsection ‘‘reservation of rights’’ facilitates prompt compensation before or after the (d) has been added to § 50.54 Payment payment because the payment is not insurer’s payment of underlying insured of the Federal Share of Compensation, construed as a waiver by the payee of losses. The commenters, one insurer, that requires insurers seeking advanced any preconditions to payment. Although three trade associations and one law payments to establish segregated Treasury has eliminated the firm on behalf of a trade association, interest-bearing accounts for the receipt ‘‘reservation of rights’’ language in the contended that adherence to the pure of such payments and for the final rule, Federal payment is still reimbursement approach is not required disbursement of those payments to subject to Treasury’s statutory authority by the Act. It was asserted that insurers insureds and claimants. as administrator of the Program to may need to receive the Federal share of examine, or re-examine the factors listed compensation for an insured loss in 4. Full Payment for All Insured Losses in § 50.50(a) as part of a claims review advance of their actual payment because One comment was received from a or audit. This is now reflected in of liquidity problems, particularly in the trade association that understood the § 50.50(b) of the final rule. Treasury has financial environment following a proposed rule as requiring insurers to statutory authority to subsequently certified act of terrorism. The make payment in full of all insured adjust, or require repayment of any commenters explained that reinsurance losses before becoming eligible for the federal payment under the Act. industry practice permits advance or Federal share of compensation. This is simultaneous payments subject to a misreading of the proposed rule and 2. State Residual Market Mechanisms certain controls. no change to the rule is required. As previously noted in the discussion Treasury carefully considered these of § 50.5, Treasury received comments comments and determined that there 5. Denial or Suspension of Payment with regard to the distribution of losses may be some circumstances in which it Section 50.62 of the proposed rule to participating insurers from State would be appropriate for Treasury to provided generally that an insurer may residual market mechanisms described advance payment for the Federal share be ineligible to receive payment of the in section 103(d)(2)(B) of the Act. A of compensation for insured losses. Federal share of compensation for comment jointly provided by four Section 104(b)(2) of the Act authorizes insured losses upon a determination by insurance industry trade associations the issuance of rules or procedures Treasury that the insurer intentionally suggested that the proposed rule be specifying the manner in which concealed or misrepresented any revised to recognize losses paid by payments of the Federal share of material fact or circumstance, engaged

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in fraudulent conduct, or made false rule provides that, should the amount of salvage and subrogation recoveries statements relating to participation an insurer’s Federal share of independent of one another and sought under the Act. compensation from the Program and the relaxed reporting requirements. A national insurance trade association amount of recoveries from other sources Treasury prefers to receive this commented on § 50.62. This commenter exceed the aggregate amount of its information separately, but in the noted that section 103(b) of the Act sets insured losses in a Program Year, then interest of minimizing changes to forth the grounds under which an any excess recovery must be returned to insurers’ existing processes Treasury insurer may be ineligible to receive Treasury. Excluded from this will accept reports with salvage and Federal payments and that section requirement are recoveries from a subrogation recoveries combined or 104(e) of the Act provides Treasury with reinsurer pursuant to an agreement separate. This accommodation will be civil money penalty authority. If any of whereby an insurer’s obligation to repay accomplished in the bordereau format the conditions for payment of the its reinsurer takes priority over its and instructions which are soon to be Federal share in section 103(b) have not obligation to repay Treasury. Third, the published (along with other forms) for been met with respect to a particular rule in § 50.51 follows the Act’s public comment. insured loss, the commenter suggested requirement that the Federal share of 2. No Excess Recoveries that the appropriate response of compensation for insured losses be Treasury would be to deny payment for reduced by any duplicate amount of Section 50.51(b)(1) of the proposed that insured loss. Similarly, the compensation otherwise provided by rule provided that in any Program Year commenter suggested that if there is the Federal government for those the sum of the Federal share of wrongdoing, such as fraud or insured losses. compensation paid to an insurer and the misrepresentation, Treasury could insurer’s recoveries for insured losses assess civil money penalties under 1. Salvage and Subrogation from other sources shall not be greater section 104(e) of the Act. The Treasury received three comments on than the insurer’s aggregate losses for commenter concluded that these the salvage and subrogation provisions acts of terrorism in that Program Year. provisions ‘‘cover the landscape of of 50.51(a). One commenter, an insurer, This is consistent with section 103(g)(2) potential offenses’’ and thus viewed the noted that the preamble to the proposed of the Act. provisions of § 50.62 to be overbroad. rule expressed Treasury’s expectation One commenter suggested that ceding The commenter recommended that that, ‘‘as normal good business practice, commissions received by an insurer in § 50.62 be deleted or revised. insurers will pursue salvage and reinsuring its deductible and retentions Treasury concurs that sections 103(b) subrogation.’’ The commenter was under the Act could be considered part and 104(e) provide Treasury with broad concerned that this language and the of an insurer’s recovery. Ceding authority to deny or suspend payment proposed rule did not explicitly address commissions are compensation from a and/or to assess civil money penalties in the flexibility of the insurer to use its reinsurer to a ceding insurer for the connection with insurer requests for own business discretion to pursue, costs of writing underlying policies and payment of the Federal share of abandon or forego salvage and/or are paid regardless of whether claims compensation under the Act. Treasury subrogation efforts. Treasury believes are ever submitted. It is Treasury’s view has determined to delete § 50.62 as the that normal business practice requires that ceding commissions are not commenter requested and to address the use of discretion in determining recoveries from other sources for certain issues through revisions to salvage and/or subrogation efforts. insured losses and, therefore, the § 50.50. Treasury does not believe a change to Federal share of compensation shall not Treasury believes there may be the proposed rule is required and be reduced by such commissions. No circumstances where failure to meet one expects insurers to use the appropriate change has been made to the proposed of the requirements for payment of the discretion in pursuing salvage and/or rule in this regard. Federal share of compensation with subrogation opportunities. Section 50.51(b)(1) of the proposed respect to one insured loss may be an This same commenter requested rule also provided that amounts indication of a broader pattern or clarification regarding the cost of recovered for insured losses in excess of practice of malfeasance or wrongdoing pursuing salvage and/or subrogation. an insurer’s aggregate amount of insured on the part of the insurer with regard to The rule states that the insurer’s losses in a Program Year be repaid to its other claims for insured losses. To aggregate insured losses used to Treasury within 45 days after the end of address this, Treasury has added a new calculate the Federal share of the month when such amounts are subsection (c) to § 50.50 that provides, compensation shall be reduced by any received by the insurer. A trade in Treasury’s discretion, for suspension salvage or subrogation recoveries. association commented that it may take of payment for other insured losses of Treasury agrees that insurers should be a long time after actual receipt of an insurer if the insurer fails to meet able to recover the costs of pursuing recoveries before an insurer is able to one of the requirements in § 50.50(a). In salvage and subrogation actions. It is determine whether a recovery is excess. such cases, Treasury may decide to expected that these expenses will be The commenter suggested that conduct additional review and included by insurers in Allocated Loss repayment be required 45 days after the investigation of the insurer’s Loss Adjustment Expenses. Because such insurer becomes aware that the recovery Certification submissions before paying reasonable expenses are included in the is excess. the Federal share of compensation. definition of insured loss, Treasury sees Treasury recognizes that the no need to further change the rule to determination of a recovery being excess C. Adjustments to the Federal Share of resolve this issue. Additional guidance may occur some time after the actual Compensation (Section 50.51) on the treatment and netting of expenses receipt of that recovery. However, The final rule specifies several will be included in the definitions for Treasury believes that the commenter’s adjustments in calculating the Federal the fields reported on the bordereau alternative, based on when the insurer share of compensation. First, the rule form submitted with the Certifications becomes ‘‘aware’’ of any excess reduces aggregate insured losses by of Loss. recovery, is too vague to establish a amounts recovered by insurers for A trade association commented that definitive schedule for the repayment of salvage and subrogation. Second, the some insurers do not currently capture funds. The final rule has been clarified

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in § 50.51(b)(1) so that amounts programs for insured losses. Section conditions of their insurance policies. recovered for insured losses in excess of 50.51(b)(2)(i) of the Final Rule provides This was pointed out by several an insurer’s aggregate amount of insured that compensation provided by other commenters. Nevertheless, Treasury losses in a Program Year are to be repaid Federal programs for insured losses must follow the Act. to Treasury based on when total means compensation that is provided by Based upon a review of how several recoveries of the insurer, from all Federal programs established for the other Federal programs would likely sources, become excess. purpose of compensating persons for treat proceeds from ‘‘property and losses in the event of emergencies, 3. Compensation From Other Federal casualty insurance,’’ under the Act or disasters, acts of terrorism, or similar Programs otherwise, Treasury expects that events. Compensation provided by other duplicative compensation situations Section 103(e)(1)(B) of the Act states, Federal programs that could be will be rare. This is because the most ‘‘The Federal share of compensation for considered duplicate compensation likely Federal programs identified by insured losses under the Program shall include, but are not limited to, Treasury as potential sources of be reduced by the amount of compensation provided under Federal duplicate payments already guard compensation provided by the Federal programs such as: against duplicate compensation. Government to any person under any • Federal Emergency Management For example, HUD and FEMA other Federal program for those insured Agency (FEMA) disaster relief and programs offset their payments by losses.’’ To implement this statutory emergency assistance; insurance proceeds received or expected provision, § 50.51(b)(2) of the proposed • Department of Housing and Urban to be received by their applicants. These rule stated, ‘‘The Federal share of Development block grant assistance; and programs also have procedures to compensation due an insurer for • Federal programs specially recoup their payments from recipients insured losses shall be reduced by any established to compensate victims for of assistance to the extent those amounts received by the insurer or an losses resulting from the certified act of recipients later receive insurance insured or a third party suffering the terrorism (similar to the September 11th proceeds. Further, it is expected that underlying loss from any other Federal Victim Compensation Fund of 2001 programs as compensation for those (Pub. L. 107–42, 115 Stat. 237, § 401 et Congress will include mechanisms to insured losses, including, but not seq.)). prevent double Federal recovery in limited to, insurance, assistance, grants However, it is Treasury’s view that programs designed to help victims of or disaster relief from the Federal Congress did not intend to reduce the future acts of terrorism, much in the Government.’’ Nine comments Federal share of compensation due to same way the September 11th addressed § 50.51(b)(2). After receipt of Social Security disability Compensation Fund of 2001 treats consideration of the comments and payments and other similar benefits. collateral source payments. Moreover, upon further analysis, Treasury has Accordingly, § 50.51(b)(2)(i) of the final any payments from other Federal made several revisions in the final rule rule provides that compensation insurance programs should be offset by and is providing additional explanation provided by Federal programs for operation of the ‘‘other insurance’’ in this preamble for greater guidance. insured losses excludes benefit or clauses in insurers’ standard policy As a preliminary matter, Treasury has entitlement payments such as those forms for commercial property and made a few technical corrections to the made under the Social Security Act, casualty insurance. Finally, insurers final rule. The proposed rule explained those made under laws administered by themselves can discount settlement that any reduction would be based on the Secretary of Veteran Affairs, railroad offers to reflect payments received from the amount of compensation received by retirement benefit payments, and other other Federal programs and in that way the insurer or an insured or a third party types of similar benefit payments. These avoid the problem of compensation suffering the underlying loss. This types of Federal entitlement or benefit being duplicative. For claims that do not provision in the final rule no longer payments to individuals are the result of settle and proceed to award, some states makes reference to amounts received or services performed and are paid allow or require reductions based on compensation provided to insurers. This irrespective of whether the loss occurs collateral source payments. is because amounts received by insurers as a result of an act of terrorism. Under One commenter acknowledged that are covered in § 50.51(b)(1), which the final rule they are not treated as the proposed rule generally follows addresses recoveries by insurers from all duplicate compensation for insured section 103 of the Act, but nevertheless other sources, including compensation losses arising from an act of terrorism concluded that section presents a received by the Federal Government. and shall not be used by Treasury to ‘‘serious contractual problem’’ for Second, the language of 50.51(b) is reduce the Federal share of insurers because insurance contracts do being revised from ‘‘any amounts compensation due an insurer. not allow for any reduction of amounts received by’’ to ‘‘compensation b. Statutory Requirement That the paid to insureds, other than for provided by other Federal programs to’’ Federal Share Be Reduced. Several payments made under other insurance an insured or a third party to parallel commenters criticized the Act’s policies. Also, the commenter explained the statutory language found in section requirement that the Federal share of that because insurers’ cannot forecast 103(e)(1)(B) of the Act. compensation be reduced by the amount by which their payment will a. Types of Compensation Used To compensation provided by the Federal be reduced, insurers cannot factor the Reduce the Federal Share. In its Government under other Federal reduction into the price of their proposed rule, Treasury described the programs for insured losses. Several premiums. The commenter suggested type of compensation provided by other commenters acknowledged that it is a that § 50.53(b)(1) of the proposed rule be Federal programs in reducing the legitimate goal that no one should revised by deleting the words ‘‘or Federal share of compensation to receive a double recovery for a loss. In insured or third party suffering the insurers as ‘‘insurance, assistance, developing this rule, Treasury underlying loss’’ or if that is not grants, or disaster relief.’’ In its final understands that its reduction of the possible, that the Federal Government rule, Treasury is providing clearer Federal share of compensation does not, require that the insured reduce the guidance on what constitutes in turn, reduce the amount insurers are amount of its claim presented to the compensation provided by other Federal obligated to pay under the terms and insurer.

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Treasury has considered the comment recoveries when appropriate. The ‘‘Each insurer shall inquire of each of its but has determined not to accept either responsibility to pursue recoveries claimants whether or not duplicate suggestion. The language in section 103 though subrogation lies with the insurer payments for insured losses have been requires that Treasury reduce its in the first instance. The United States paid from other Federal sources. Such payment to insurers by the amount of retains the ability to pursue such amounts shall be reported with each compensation provided ‘‘to any person’’ recoveries in the event the insurer does underlying claim on the bordereau for those insured losses. Insureds or not. specified in § 50.53(b)(1) and the total third party claimants who suffer the c. Other Federal Compensation amount subtracted from the aggregate underlying insured loss are included in Already Offset in the Underlying Claim amount claimed as the Federal share of the definition of ‘‘person[s],’’ in section for Insured Loss. A trade association compensation for insured losses.’’ 102 of the Act. However, nothing in the commented that the Federal share of Generally, all of the commenters viewed Act or Treasury’s regulations would compensation should not be reduced if this information collection requirement prevent an insurer from pursuing in fact the payments by the other as reasonable. Three commenters changes to its policies (including Federal program are already offset in the addressed the information insurers obtaining any necessary State regulatory insurance claim to the insurer. If the would need to obtain from claimants approval) in order to address this insurance claim is already reduced, and suggested various approaches and reduction and allow for possible offset. there is no duplicate compensation. The forms to be used by insurers to collect Another commenter asserted that the commenter is concerned that the information about duplicate proposed rule ‘‘is neither logical nor proposed rule could be read to require compensation from other Federal equitable, and does not serve the the reduction of the payment to the sources. Treasury will be issuing a underlying purpose of 103(e)(1)(B).’’ insurer even though the insured or third notice and publishing forms for public According to the commenter, it was not party did not claim, and the insurer did comment at a later date. the intent of Congress to transfer the risk not pay, for that part of the insured loss. Another commenter pointed out that of double recovery to insurers. The To address this, the association the proposed rule did not address the commenter does not believe there recommended that Treasury clarify the situation where an insurer pays a claim should be any reduction of the insurer’s proposed rule to make clear that there before the person receives compensation Federal payment but that insurers are will be no reduction in Federal from another Federal program. This may willing to assist Treasury in identifying payments if the losses compensated for occur when the person has not yet those persons that have received double by the other Federal program are not applied for such compensation from the Federal recovery for insured losses. also paid by the insurer. Based on the other program despite being eligible or Treasury does not share the commenter’s suggestion, language has the person later becomes entitled to commenter’s view. The statutory been added to the final rule that clarifies compensation (e.g., a program set up at language requires Treasury to reduce the the Federal share of compensation shall a later date). Having considered this Federal share of compensation by the be reduced only ‘‘to the extent such comment, Treasury has modified the amount of compensation provided by other compensation duplicates the rule to require insurers to inquire of the Federal Government to any person insurance indemnification for those their policyholders, insureds, and under any other Federal program for insured losses.’’ When the insurer’s claimants not only whether the person insured losses. payment has not been offset, the Federal receiving the insurance proceeds has This same commenter also suggested share shall only be reduced by the received compensation from another that the subrogation provisions of the amount, if any, that the aggregate of the Federal program but also whether it Act are available to prevent double insurer’s payment and the expects to receive, or is entitled to recoveries. Section 107(c) of the Act compensation from the other Federal receive compensation from another provides that the United States shall program exceed the total loss. This is Federal program for the insured loss, have the right of subrogation with because the other compensation is not and if so, the source and amount of the respect to any payment or claims paid duplicating the payment for insured compensation received or expected. An by the United States under title I of the losses until there is an excess recovery. insurer will be expected to collect this Act. Upon payment to an insurer, the The commenter also questioned what information at the time of claims United States becomes subrogated to the would happen in the situation where settlement. Consistent with the rights of the insurer (to the extent of the other Federal programs require their insurance industry’s business practice, payment). Yet, as many of the claimants to pursue other recoveries Treasury will not require the insurer to commenters pointed out, the terms and (such as insurance proceeds) and then re-open its closed claim file simply to conditions of standard commercial to repay the other program. Would the collect this information, which can be property and casualty policies do not insurer be credited for any repayment to obtained from the other Federal provide the insurer with any right of the other Federal program? In such a programs. offset or recoupment of amounts paid by situation, the Federal share of Although § 50.51(b)(2)(ii) of the final other Federal programs. Therefore, compensation would be reduced rule requires insurers to inquire about section 107(c) may not be effective in pending the claimant’s repayment to the duplicate compensation—expected, as guarding against double Federal other Federal program. Once the well as received—the Federal share of payment. Furthermore, even if the claimant repays the other Federal compensation will be reduced only by exercise of the United States’ program, presumably out of the those amounts actually provided by the subrogation rights could avoid the insurance proceeds, the Program will other Federal program. If a person Federal Government paying twice for pay the insurer the amount of the informs an insurer that it has not yet the same loss, the commenter’s reduction. This will occur after the received but expects to, or is entitled to approach shifts the responsibility to other Federal program notifies Treasury receive compensation for another pursue subrogation to the United States. that the recipient of the insurance Federal program for the insured losses, Under § 50.50(a)(6), insurers are to proceeds has repaid the other Federal Treasury will notify the other Program. process claims in a manner consistent program. Another commenter, a ‘‘federally with appropriate business practices, d. Insurer Due Diligence. Section approved’’ insurer, commented that it which include pursuing subrogation 50.51(b)(2) of the proposed rule stated, would not have to inquire about

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duplicate Federal compensation because insurer obtains information indicating One revision to the proposed rule has awards under the Longshore and Harbor its insured losses will exceed 50 percent been made to this section solely to add Workers’ Compensation Act of its insurer deductible as defined by clarity. The definition of a bordereau, (‘‘LHWCA’’) (33 U.S.C. 901, et seq.) the Act. At that time, the insurer is formerly § 50.53(e), has now been already take such payments into required to submit, on a form prescribed included in § 50.53(b)(1). account. In such a situation, however, by Treasury, estimates of aggregate 1. Timing of Submission of Initial the final rule will still require the losses for the Program Year, its insurer Certification of Loss insurer to inquire about possible deductible and the Federal share of duplicate compensation since there may aggregate losses, as well as the name of In § 50.53(b) of the proposed rule, be sources of Federal payments for the person designated to make required Treasury proposed that an insurer ‘‘use LHWCA claimants that are not taken certifications and receive Federal its best efforts to file the Initial into account under that Act. payments. Such information will assist Certification of Loss with Treasury e. False Information Submitted to the in estimating funding levels for certified within 45 days following the last Insurer. Another commenter asserted acts of terrorism and otherwise facilitate calendar day of the month when an that insurers have no way of ensuring operations of the Program. Because the insurer’s aggregate insured losses that its policyholders, insureds, or insurer deductible applies collectively exceed its insurer deductible.’’ One claimants will reveal information to all insurers in an affiliated group, the insurer trade organization commented concerning duplicative payments. The notice must include the designation of that an insurer may not be able to file comment suggested that Treasury add a single insurance entity to coordinate the initial certification of loss within penalties or warn persons attempting to the submission of required reports and that time period and that a time collect twice. The final rule only documentation (including the Initial requirement is not really necessary. requires that insurers inquire Notice of Insured Loss), make required Alternatively, it suggested that Treasury concerning duplicate compensation and certifications and receive Federal modify the rule to allow insurers to report the response received. If Treasury payments on behalf of the affiliated request an extension of time to submit learns that a person who has received an group. the Initial Certification of Loss. insurance payment shared by the The proposed rule provided for No comments were received specific Program has also received compensation insurers to use their ‘‘best efforts’’ to to this section of the proposed for those insured losses from another submit the Initial Certification of Loss regulation. However, as a result of Federal program, the insurer’s Federal within 45 days. The proposed rule did changes made to § 50.54 in response to share of compensation shall be reduced. not establish a fixed deadline that comments regarding the designated would serve as the basis to deny a claim 4. Claims Handling single payee in an affiliated group, this for federal payment. Thus, a special A commenter referenced § 50.51(b)(2) section has also been revised. The Initial request for an extension of time is not as well as § 50.51(a) and asserted that Notice of Insured Loss is to include a necessary so long as the insurer has the regulations should ‘‘make it clear ‘‘designated insurer’’ as a single point of used its best efforts to meet the that the Treasury does not wish to contact in an affiliated group for requirement. Treasury believes this is exercise any authority over claims ‘‘receiving, disbursing, and distributing’’ reasonable. The objective of the rule is handling.’’ The commenter’s payments of the Federal share. This to encourage timely reporting of losses observation is incorrect. Treasury is issue is more fully addressed in the so that Treasury remains as current as responsible for the financial integrity of discussion of § 50.54 below. possible with its potential liabilities. the Program. Section 50.50, which E. Loss Certifications (Section 50.53) Generally, it will be in the insurer’s provides the basis for Treasury to interest to report losses as soon as determine the amount of the Federal The final rule specifies the type of possible. Accordingly, Treasury has share of compensation to insurers, is loss information that an insurer is made no change to the proposed rule. designed to allow Treasury to review required to submit in documenting The trade group also recommended the insurer’s handling of underlying insured losses eligible for payment of that the loss certification process should claims for insured losses. For example, the Federal share of compensation. An specifically recognize special § 50.50(a)(6) provides that Treasury will Initial Certification of Loss, on a form circumstances associated with large examine whether the insurer took all prescribed by Treasury, is required deductible policies. The commenter steps reasonably necessary to properly when insured losses first exceed the noted that with large deductible and carefully investigate the underlying insurer’s deductible. If the insurer policies, particularly in workers insured loss and otherwise processed sustains ongoing, additional insured compensation, insurers will typically the underlying loss using appropriate losses, periodic Supplementary first pay the entire claim to the insured insurance business practices. Section Certifications of Loss, on a form worker and then recover the deductible 50.50(a)(7) indicates that Treasury will prescribed by Treasury, must be from the insured employer. Treasury review whether the insured losses submitted. These Certifications of Loss agrees that this comment regarding large submitted for payment are within the will be used by Treasury to assess deductible policies merits attention and scope of coverage issued by the insurer. payment eligibility for the Federal share will address the concern in the In order for it to properly carry out its of compensation and compliance with development of the actual loss financial responsibilities, Treasury will, the Act’s prerequisites for payment. The certification reporting forms. as needed, audit insurer requests for rule also addresses various written 2. Certification Language compensation, including the handling certifications the Act requires as a of underlying claims, as provided in condition for payment of the Federal Two insurance trade associations and subpart G of the rule. share. Specific statements certifying an insurer commented on the actions by the insurer as required by the certification required in proposed rule D. Initial Notice of Insured Loss (Section Act, and by Treasury in administering § 50.53(b)(2)(iv) dealing with the clear 50.52) and implementing the Act, are to be and conspicuous disclosures that The final rule includes an early included as part of each Certification of insurers are required to provide to notification requirement when an Loss. policyholders. The commenters noted

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that the certification requirement in § 50.35 (those that share profit and the certifications required by appeared to impose a more stringent losses) are treated as the insured losses §§ 50.53(b)(2) and 50.53(c)(2). To standard than was promulgated in of the individual insurer participants of facilitate any needed review or audit previously issued regulations, in that those State residual market pursuant to §§ 50.60 and 50.61, State insurers are required to certify they have mechanisms. Joint comments from the residual market mechanisms and their ‘‘complied with the disclosure four insurer trade associations also individual participating insurers are requirements * * * for each underlying raised issues regarding the certification both required to maintain insured loss loss.’’ They suggested the use of less of loss requirements for these entities in information they received or provided, demanding certification language that § 50.53(b)(2) of the proposed rule. The as well as any supporting would allow insurers to rely on joint comments observed that the flow documentation for certifications. ‘‘systems and normal business practices of information pertaining to insured F. Payment of Federal Share of that demonstrate a practice of losses of State residual market Compensation (Section 50.54) compliance’’ with the mandatory mechanisms was different than that of disclosure requirement as referenced in individual insurers. For example, The final rule establishes the process § 50.12(e). commenters noted that knowledge about for making payment as provided by the Treasury does not believe that the processing claims in accordance with Act. It also addresses the making of compliance language of § 50.53(b)(2)(iv) ‘‘appropriate business practices’’ as payments before the total amount of is inconsistent or more stringent than required by section 103(b)(3) of the Act insured losses are known, providing for the ‘‘normal business practices’’ lies with State residual market later adjustment based on any approach in § 50.12(e). The compliance mechanism servicing carriers and overpayment or underpayment. The rule language of § 50.53(b)(2)(iv) means that administrators, not the participating specifies the types of insurer accounts for each underlying loss an insurer insurers who are assessed a required for Treasury to electronically would be able to demonstrate it made an proportionate share of insured losses of transfer funds in making payments of individual disclosure because it had a the State residual market mechanism. the Federal share of compensation and, reliable system in its normal business Consequently, the joint trade association in the case of advance payments of the practice that generated disclosures. For comment recommended special Federal share, establishes that interest this reason, Treasury has decided to not treatment for the loss certification earned on those funds must be remitted change the certification language of requirements of § 50.53(b)(2) for State to Treasury. Because the Act requires § 50.53(b)(2)(iv). residual market insurance entities and insurance entities within an affiliated One insurance trade association State workers’ compensation funds. group to be treated as a single entity in suggested deletion of the requirement in After considering the joint comments, determining the insurer deductible, the § 50.53(b)(2)(v) of the proposed rule to as well as its own concerns with the rule requires that all payments be made certify compliance with the Act’s mechanisms of information flow and to a single insurance entity within an mandatory availability requirements content in connection with reconciling affiliated group. This entity is to be because, in the commenter’s view, there and auditing insured loss information of identified by the affiliated group and is no specific statutory requirement for State residual market mechanisms, designated on the Initial Notice of the certification as a condition for Treasury has added a new § 50.53(e) to Insured Loss. Applicable payment payment. The mandatory availability or the final rule to deal with loss process procedures are to be posted at ‘‘make available’’ provisions in section certifications of State residual market www.treasury.gov/trip or otherwise 103(c) of the Act require that, for mechanisms. Essentially, Treasury has made publicly available. Program Years 1 and 2, and if so sought to accommodate the special 1. Prompt Payment determined by Treasury for Program circumstances of State residual market Year 3, all insurers must make available mechanisms by separating the entity Section 50.54(a) of the proposed rule in all of their property and casualty receiving payment (insurers provided that Treasury would insurance policies coverage for insured participating in a residual market ‘‘promptly’’ pay to an insurer the losses resulting from an act of terrorism. mechanism) from the entity with Federal share of compensation due the This coverage cannot differ materially responsibility for providing insurer for its insured losses and that from the terms, amounts, and other certifications under section 103(b) of the any overpayments by Treasury of the coverage limitations applicable to losses Act (the residual market mechanism Federal share will be offset from future arising from events other than acts of based on its own servicing or that of a payments to the insurer or returned to terrorism. Under its authority in section servicing carrier). Treasury within 45 days. Three 104(a)(2) of the Act to effectively In order to receive payment of the comments were received on the issue of administer and implement the Program, Federal share of compensation for prompt payment. One commenter was Treasury believes it is appropriate to residual market losses, an insurer pleased with the rule as written. Two include the certification requirement in participating in a State residual market commenters asked that prompt payment § 50.53(b)(2)(iv). The ‘‘make available’’ mechanism will submit to Treasury, as be better defined. One of these requirement is, as the commenter also an underlying loss on its bordereau, the commenters suggested that Treasury set acknowledged, an ‘‘important predicate amount of losses allocated to it by the a goal of processing and paying claims to the proper functioning of [the Act].’’ State residual market mechanism. The within 45 days of receipt of an Initial For this reason, Treasury has made no State residual market mechanism will Certification of Loss or any change in making the rule final. provide to its participating insurers the Supplemental Certification if the losses detailed underlying loss information being claimed are not in dispute. After 3. State Residual Market Mechanisms that supports the total amount of considering these comments, Treasury As described earlier, Treasury revised insured losses from which the does not believe a regulatory time limit § 50.50(a)(2) of the proposed rule to proportionate share of insured losses for payment is necessary. Treasury clarify that the proportionate share of was calculated for each participating intends to pay the Federal share of insured losses from State residual insurer. The State residual market compensation due insurers as promptly market insurance entities or State mechanism will also provide to its as possible and believes this workers’ compensation funds described participating insurers and to Treasury commitment in the provision of public

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funds is sufficient. In seeking contractor to a single insurance entity within an assign their rights to be paid under the support for the management of Program affiliated group. The proposed rule Program to the single insurance entity in claims, Treasury has made this required this entity to be identified by their affiliated group. Treasury has intention clear. Treasury has also the affiliated group and designated on concluded that the proposed clarified this section to specify that the the Initial Notice of Insured Loss. The requirement of an assignment of rights payment process incorporates the use of proposed rule further required insurers may be an overly restrictive approach electronic funds transfer through the within an affiliated group to assign their and that different mechanisms may be Automated Clearinghouse (ACH) rights to receive payments of their used among affiliate groups to assure network. This provides a mechanism for Federal share of compensation to this proper distribution of the Federal share the prompt disbursement of funds from designated single insurance entity, of compensation. Treasury to an insurer. while requiring the single insurance In addition, in § 50.54 of the final rule entity to distribute such payments ‘‘as Treasury has clarified that the 2. Advance Payments appropriate’’ among affiliated insurers designated insurer receiving payments As stated in the discussion of § 50.50, in the group. of the Federal share of compensation on Treasury has revised this section in Four commenters addressed issues behalf of an affiliated group must order to permit advance payments of the involving Treasury’s payment of the distribute payments in a manner that Federal share. Section 50.54 of the final Federal share of compensation to a assures that other insurers in the group rule describes the types of accounts single insurance entity on behalf of an are compensated for their insured losses required to be established by insurers to affiliated group of insurers. One taking into account a reasonable and fair receive the Federal share of commenter expressed the view that it allocation of the group’s insurer compensation. Treasury’s control over preferred that Federal payments go to deductible. Because the insurer the payment process is facilitated by the individual insurer making the deductible for a group is an aggregate having only one account per insurer underlying claim payment. In the calculation based on the collective into which payments will be made. If an alternative, the commenter property and casualty insurance insurer is only seeking reimbursement recommended that, in order to prevent premium of all insurers in the group, for insured losses it has already paid, a designated insurer from withholding Treasury recognizes there may be then the only requirement for the distribution to affiliates, at a minimum, complexities and difficulties in account is the capability to receive the rule be revised to require the single determining individual insurer electronic funds transfers over the ACH insurance entity to distribute payments deductibles within the group. Treasury network. If an insurer seeks advance of the Federal share of compensation to has thus provided guidance in requiring payments of the Federal share, or a affiliated insurers in the group or to that the group deductible be allocated in combination of advance payments and hold those funds in trust for distribution a ‘‘reasonable and fair’’ manner among reimbursement, then the account must to affiliated insurers in the group. This affiliated insurers. If necessary, Treasury be segregated from other insurer suggestion was echoed by a second will review the deductible allocation of accounts. A ‘‘segregated account’’ is commenter. an affiliated group, looking to the defined in section 50.54(d) of the final Another commenter criticized the totality of the circumstances in rule as an interest bearing, separate assignment requirement in § 50.54(c) of determining what is ‘‘reasonable’’ and account at an institution eligible to the proposed rule. Because of the ‘‘fair.’’ The final rule also clarifies that receive payments through the ACH potential shift in statutory rights or Treasury’s obligation to pay the Federal network and limited to the purposes of corporate asset values resulting from share of compensation to affiliated (i) receiving payments of the Federal this ‘‘compulsory assignment of rights,’’ insurers in a group is discharged upon share of compensation (ii) disbursing the commenter suggested a better its payment to the designated insurer, to payments to insureds and claimants and approach would be to require each the extent of the payment for insured (iii) transferring payments to the insurer entity within an affiliated group to losses of the group as reported on the or affiliated insurers for insured losses appoint a common agent within the group’s bordereau. This provision does reported on the bordereau as already group for submission of claims while not prevent Treasury from subsequently paid. retaining legal title in its own name to adjusting payments, for example, as a Payments to insureds and claimants all proceeds. The commenter further result of an audit. that are made using funds advanced by suggested that the common agent be Treasury are to be made directly from required to act in a fiduciary capacity on G. Audit Authority and Recordkeeping the segregated account. All interest behalf of other affiliates. (Sections 50.60 and 50.61) earned on these advanced funds is to A fourth commenter noted that the Sections 50.60 and 50.61 of the final accrue through such time that payments execution of assignment agreements will rule require insurers to retain all records from the account clear and is to be trigger holding company filing and files pertaining to the processing, entirely remitted to Treasury. If it is requirements pursuant to state handling, and settlement of insured determined that an insurer has not insurance laws. The commenter losses, including electronic documents properly disbursed advances of the observed that such filing requirements and data, and allow Treasury access in Federal share or otherwise not complied have been brought to the attention of the order to conduct subsequent financial, with these regulatory claims procedures, NAIC and expressed interest in working claims, and performance reviews and then Treasury may deny or withhold with both NAIC and Treasury ‘‘to craft audits. Treasury and/or its appointed making advance payments of the an appropriate solution that will be designee(s) will need access to pertinent Federal share of compensation. convenient for all parties.’’ As a result books, files, agreements and records that of this comment, Treasury consulted support the insurer’s Certifications of 3. Affiliated Group with the NAIC and devised a more Loss previously submitted. Because the Act requires insurance flexible approach to the single payee/ Three comments were received entities within an affiliated group to be affiliated group provision than what was regarding the proposed §§ 50.60 Audit treated as a single entity in determining proposed. authority and 50.61 Recordkeeping. One the insurer deductible, the proposed In the final rule, Treasury has deleted commenter recommended that § 50.60 rule required that all payments be made the requirement that affiliated insurers explicitly require the retention of

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reinsurance and other relevant supplementary rulemaking. Treasury insured. Accordingly, any economic agreements and that they be available will consider all the comments that impact associated with the rule flows during audit. Treasury believes that the have already been submitted in its from the Act and not the rule. A proposed language already required development of pertinent future regulatory flexibility analysis is thus not such information to be maintained and regulations. required. accessible. Thus, no change to the 2. Confidential or Privileged Paperwork Reduction Act. The proposed rule was required. A second Information collection of information (recordkeeping commenter requested that access to the requirement) contained in this rule has records be provided ‘‘upon reasonable A trade association commented that been approved by the OMB in notice’’ to the insurer by Treasury. the proposed rule did not protect accordance with the requirements of the Treasury has added this language to the confidential or privileged information Paperwork Reduction Act, 44 U.S.C. final rule. This commenter also submitted to Treasury as part of the 3507(d) and assigned OMB Control recommended that the audit authority of TRIA claim process. Any issues relating Number 1505–0197. The forms to be § 50.60 be expressly limited to the to the disclosure of confidential or prescribed by Treasury will be the records required to be kept under privileged information will be subject of a separate submission to OMB § 50.61. Treasury disagrees and declines addressed through the procedures and on which the public will be provided an to limit the records it may need to exceptions applicable under the opportunity to comment. An agency access during investigation, audit and Freedom of Information Act, 5 U.S.C. may not conduct or sponsor, and a examination. 552. person is not required to respond to, a A third commenter was concerned 3. Longshore and Harbor Workers’ collection of information unless it with the type and form of claims records Compensation Act Assessments displays a valid control number to be maintained. The commenter assigned by OMB. A comment, received from an insurer, observed that § 50.61 of the proposed The collection of information is the rule only required that ‘‘records’’ of dealt specifically with the insurer’s situation regarding assessments under recordkeeping requirement in § 50.61. material matters pertinent to insured The information will be used by losses be retained, not actual claim files the Longshore and Harbor Workers’ Compensation Act. This comment was Treasury (or its designees) to audit or containing activities relative to the examine claims for Federal payments handling and adjustment of claims. The not pertinent to the proposed rule and therefore has not been addressed. submitted by insurers. The commenter further suggested that any recordkeeping requirement is records required to be retained beyond Insurers can request interpretations from Treasury pursuant to 31 CFR 50.9. mandatory for any insurer that seeks actual claim files be permitted to be payment of a Federal share of stored in a limited form such as III. Procedural Requirements compensation. electronic data storage Treasury is Executive Order 12866, ‘‘Regulatory The estimated number of record concerned with the availability of Planning and Review.’’ This rule is a keepers is 100 insurers sustaining information needed for investigation, significant regulatory action for insured losses. The estimated average confirmation, audit and examination for purposes of Executive Order 12866, annual burden per recordkeeper is 8.33 the time periods specified in § 50.61, ‘‘Regulatory Planning and Review,’’ and hours. The estimated total annual not the medium in which information is has been reviewed by the Office of recordkeeping burden is 833 hours. retained. Information that is material Management and Budget (OMB). Comments regarding the accuracy of needs to be retained in whatever form Regulatory Flexibility Act. Pursuant to this burden estimate should be directed that can provide reasonable access by the Regulatory Flexibility Act, 5 U.S.C. to the Terrorism Risk Insurance Treasury. Treasury believes that 601 et seq., it is hereby certified that this Program, Suite 2100, Department of the insurers’ normal claims and other rule will not have a significant Treasury, 1425 New York Ave., NW., record keeping methods, technology, economic impact on a substantial Washington, DC 20220 and to the Office and systems can be used to meet this number of small entities. Treasury is of Management and Budget, Attn: Desk requirement and the proposed rule does required to pay the Federal share of Officer for the Department of the not need to be changed. compensation to insurers for insured Treasury, Office of Information and H. Other Issues losses in accordance with the Act. A Regulatory Affairs, New Executive condition of Federal payment is that the Office Building, Room 3208, 1. Future Issues insurer must submit to Treasury, in Washington, DC 20503. As Treasury explained in the accordance with procedures established List of Subjects in 31 CFR Part 50 preamble to the proposed rule, its by Treasury, a claim for payment and strategy has been to give priority to certain certifications. The rule seeks to Terrorism risk insurance. regulations needed in the event of an act emulate loss reporting practices in the I For the reasons stated above, 31 CFR of terrorism. In addition to comments on reinsurance industry, which insurers part 50 is amended as follows: the proposed claims rule, Treasury already follow in order to get payment received several comments regarding for reinsurance, thus minimizing the PART 50—TERRORISM RISK aspects of insured losses resulting from impact on all insurers. The Act itself INSURANCE PROGRAM certified acts of terrorism that were not requires all insurers receiving direct I 1. The authority citation for part 50 included in the proposed rule. earned premium for any type of continues to read as follows: Comments were received concerning property and casualty insurance, as insurer insolvency, dispute resolution, defined in the Act, to participate in the Authority: 5 U.S.C. 301; 31 U.S.C. 321; title commutation of losses, and the impact Program. This includes all insurers I, Pub. L. 107–297, 116 Stat. 2322 (15 U.S.C of losses exceeding the annual aggregate regardless of size or sophistication. The 6701 note). cap of $100 billion specified by the Act. Act also defines property and casualty I 2. Revise § 50.5(e) to read as follows: These are the types of secondary issues insurance to mean commercial lines that Treasury intends to address as insurance without any reference to the § 50.5 Definitions. necessary through guidance or size or scope of the insurer or the * * * * *

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(e) Insured loss. (1) The term insured 50.50 Federal share of compensation. meet any of the requirements for loss means any loss resulting from an 50.51 Adjustments to the Federal share of payment specified in paragraph (a) of act of terrorism (including an act of war, compensation. this section for a particular insured loss, in the case of workers’ compensation) 50.52 Initial Notice of Insured Loss. Treasury may suspend payment of the 50.53 Loss certifications. that is covered by primary or excess 50.54 Payment of Federal share of Federal share of compensation for all property and casualty insurance issued compensation. other insured losses of the insurer by an insurer if the loss: pending investigation and audit of the (i) Occurs within the United States; Subpart F—Claims Procedures insurer’s insured losses. (ii) Occurs to an air carrier (as defined (d) Amount payable. The Federal in 49 U.S.C. 40102), to a United States § 50.50 Federal share of compensation. share of compensation under the flag vessel (or a vessel based principally (a) General. The Treasury will pay the Program shall be 90 percent of that in the United States, on which United Federal share of compensation for portion of the insurer’s aggregate States income tax is paid and whose insured losses as provided in section insured losses that exceed its insurer insurance coverage is subject to 103 of the Act once a Certification of deductible during a Program Year, regulation in the United States), Loss required by § 50.53 is deemed subject to any adjustments in § 50.51 regardless of where the loss occurs; or sufficient. Subject to paragraph (b) of and the cap of $100 billion as provided (iii) Occurs at the premises of any this section, Treasury shall pay the in section 103(e)(2) of the Act. United States mission. appropriate amount of the Federal share (2)(i) A loss that occurs to an air of compensation upon a determination § 50.51 Adjustments to the Federal share carrier (as defined in 49 U.S.C. 40102), that: of compensation. to a United States flag vessel, or a vessel (1) The insurer is an entity, including (a) Aggregate amount of insured based principally in the United States, an affiliate thereof, that meets the losses. The aggregate amount of insured on which United States income tax is requirements of § 50.5(f); losses of an insurer in a Program Year paid and whose insurance coverage is (2) The insurer’s insured losses as used to calculate the Federal share of subject to regulation in the United defined in § 50.5(e), including the compensation shall be reduced by any States, is not an insured loss under allocated dollar value of the insurer’s amounts recovered by the insurer as section 102(5)(B) of the Act unless it is proportionate share of insured losses salvage or subrogation for its insured incurred by the air carrier or vessel from a State residual market insurance losses in the Program Year. outside the United States. entity or State workers’ compensation (b) Amount of Federal share of (ii) An insured loss to an air carrier or fund as described in § 50.35, have compensation. The Federal share of vessel outside the United States under exceeded its insurer deductible as compensation shall be adjusted as section 102(5)(B) of the Act does not defined in § 50.5(g); follows: include losses covered by third party (3) The insurer has paid or is prepared (1) No excess recoveries. For any insurance contracts that are separate to pay an underlying insured loss, based Program Year, the sum of the Federal from the insurance coverage provided to on a filed claim for the insured loss; share of compensation paid by Treasury the air carrier or vessel. (4) Neither the insurer’s claim for to an insurer and the insurer’s (3) The term insured loss includes Federal payment nor any underlying recoveries for insured losses from other reasonable loss adjustment expenses, claim for an insured loss is fraudulent, sources shall not be greater than the incurred by an insurer in connection collusive, made in bad faith, dishonest insurer’s aggregate amount of insured with insured losses, that are allocated or otherwise designed to circumvent the losses for acts of terrorism in that and identified by claim file in insurer purposes of the Act and regulations; Program Year. Amounts recovered for records, including expenses incurred in (5) The insurer had provided a clear insured losses in excess of an insurer’s the investigation, adjustment and and conspicuous disclosure as required aggregate amount of insured losses in a defense of claims, but excluding staff by §§ 50.10 through 50.19; Program Year shall be repaid to salaries, overhead, and other insurer (6) The insurer took all steps Treasury within 45 days after the end of expenses that would have been incurred reasonably necessary to properly and the month in which total recoveries of notwithstanding the insured loss. carefully investigate the underlying the insurer, from all sources, become (4) The term insured loss does not insured loss and otherwise processed excess. For purposes of this paragraph, include: the underlying insured loss using amounts recovered from a reinsurer (i) Punitive or exemplary damages appropriate insurance business pursuant to an agreement whereby the awarded or paid in connection with the practices; reinsurer’s right to any excess recovery Federal cause of action specified in (7) The insured losses submitted for has priority over the rights of Treasury section 107(a)(1) of the Act. The term payment are within the scope of shall not be considered a recovery ‘‘punitive or exemplary damages’’ coverage issued by the insurer under the subject to repayment to Treasury. means damages that are not terms and conditions of the policies for (2) Reduction of amount payable. The compensatory but are an award of commercial property and casualty Federal share of compensation for money made to a claimant solely to insurance as defined in § 50.5(l); and insured losses under the Program shall punish or deter; or (8) The procedures specified in this be reduced by the amount of other (ii) Extra contractual damages Subpart have been followed and all compensation provided by other Federal awarded against, or paid by, an insurer; conditions to payment have been met. programs to an insured or a third party or (b) Adjustments. Treasury may to the extent such other compensation (iii) Payments by an insurer in excess subsequently adjust, including requiring duplicates the insurance of policy limits. repayment of, any payment made under indemnification for those insured * * * * * paragraph (a) of this section in losses. I 3. New Subparts F and G of Part 50 are accordance with its authority under the (i) Other Federal program added as follows: Act. compensation. For purposes of this (c) Suspension of payment for other section, compensation provided by Subpart F—Claims Procedures insured losses. Upon a determination by other Federal programs for insured Sec. Treasury that an insurer has failed to losses means compensation that is

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provided by Federal programs insurer shall file an Initial Certification (v) The insurer has complied with the established for the purpose of of Loss, on a form prescribed by mandatory availability requirements of compensating persons for losses in the Treasury, and thereafter such §§ 50.20 through 50.24. event of emergencies, disasters, acts of Supplementary Certifications of Loss, (3) A certification of the amount of the terrorism, or similar events. on a form prescribed by Treasury, as insurer’s ‘‘direct earned premium’’ as Compensation provided by Federal may be necessary to receive payment for defined in § 50.5(d), together with the programs for insured losses excludes the Federal share of compensation for calculation of its ‘‘insurer deductible’’ benefit or entitlement payments, such as its insured losses. as defined in § 50.5(g) (provided this those made under the Social Security (b) Initial Certification of Loss. An certification was not submitted Act, under laws administered by the insurer shall use its best efforts to file previously with the Initial Notice of Secretary of Veteran Affairs, railroad with the Program the Initial Insured Loss specified in § 50.52). retirement benefit payments, and other Certification of Loss within 45 days (4) A certification that the insurer will similar types of benefit payments. following the last calendar day of the disburse payment of the Federal share of (ii) Insurer due diligence. Each insurer month when an insurer has paid compensation in accordance with this shall inquire of each of its aggregate insured losses that exceed its subpart. policyholders, insureds, and claimants insurer deductible. The Initial whether the person receiving insurance Certification of Loss will include the (c) Supplementary Certification of proceeds for an insured loss has following: Loss. If the total amount of the Federal received, expects to receive, or is (1) A bordereau, on a form prescribed share of compensation due an insurer entitled to receive compensation from by Treasury, that includes basic for insured losses under the Act has not another Federal program for the insured information about each underlying been determined at the time an Initial loss, and if so, the source and the insured loss. For purposes of this Certification of Loss has been filed, the amount of the compensation received or section, a ‘‘bordereau’’ is a report of insurer shall file monthly, or on a expected. The response, source, and basic information about an insurer’s schedule otherwise determined by such amounts shall be reported with underlying claims that, in the aggregate, Treasury, Supplementary Certifications each underlying claim on the bordereau constitute the insured losses of the of Loss updating the amount of the specified in § 50.53(b)(1). insurer. The bordereau will include, but Federal share of compensation owed for may not be limited to: the insurer’s insured losses. § 50.52 Initial Notice of Insured Loss. (i) A listing of each underlying Supplementary Certifications of Loss Each insurer shall submit to Treasury insured loss by catastrophe code and will include the following: an Initial Notice of Insured Loss, on a line of business; (1) A bordereau described in form prescribed by Treasury, whenever (ii) The total amount of reinsurance § 50.53(b)(1); and the insurer’s aggregate insured losses recovered from other sources; (2) A certification as described in (including reserves for ‘‘incurred but not (iii) A calculation of the aggregate § 50.53(b)(2). reported’’ losses) within a Program Year insured losses sustained by the insurer (d) Supplementary information. In exceed an amount equal to 50 percent above its insurer deductible for the addition to the information required in of the insurer’s deductible as specified Program Year; and paragraphs (b) and (c) of this section, in § 50.5(g). Insurers are advised the (iv) The amount the insurer claims as Treasury may require such additional form for the Initial Notice of Insured the Federal share of compensation for supporting documentation as required Loss will include an initial estimate of its aggregate insured losses. to ascertain the Federal share of aggregate losses for the Program Year, (2) A certification that the insurer is compensation for the insured losses of the amount of the insurer deductible in compliance with the provisions of any insurer. and an estimate of the Federal share of section 103(b) of the Act and this part, compensation for the insurer’s aggregate including certifications that: (e) State Residual Market Insurance insured losses. In the case of an (i) The underlying insured losses Entities and State Workers’ affiliated group of insurers, the form for listed on the bordereau filed pursuant to Compensation Funds. A State residual the Initial Notice of Insured Loss will § 50.53(b)(1) either: Have been paid by market insurance entity or State include the name and address of a the insurer; or will be paid by the workers’ compensation fund described single designated insurer within the insurer upon receipt of an advance in § 50.35 shall provide the affiliated group that will serve as the payment of the Federal share of Certifications of Loss described in single point of contact for the purpose compensation as soon as possible, §§ 50.53(b) and 50.53(c) for all its of providing loss and compliance consistent with the insurer’s normal insured losses to each participating certifications as required in § 50.53 and business practices, but not longer than insurer at the time it provides the for receiving, disbursing, and five business days after receipt of the allocated dollar value of the distributing payments of the Federal Federal share of compensation; participating insurer’s proportionate share of compensation in accordance (ii) The underlying claims for insured share of insured losses. In addition, at with § 50.54. An insurer, at its option, losses were filed by persons who such time the State residual market may elect to include with its Initial suffered an insured loss, or by persons insurance entity or State workers’ Notice of Insured Loss the certification acting on behalf of such persons; compensation fund shall provide the of direct earned premium required by (iii) The underlying claims for insured certification described in § 50.53(b)(2) to § 50.53(b)(3). losses were processed in accordance Treasury. Participating insurers shall with appropriate business practices and treat the allocated dollar value of their § 50.53 Loss certifications. the procedures specified in this subpart; proportionate share of insured losses (a) General. When an insurer has paid (iv) The insurer has complied with from a State residual market insurance aggregate insured losses that exceed its the disclosure requirements of §§ 50.10 entity or State workers’ compensation insurer deductible, the insurer may through 50.19 for each underlying fund as an insured loss for the purpose make claim upon Treasury for the insured loss that is included in the of their own reporting to Treasury in payment of the Federal share of amount of the insurer’s aggregate seeking the Federal share of compensation for its insured losses. The insured losses; and compensation.

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§ 50.54 Payment of Federal share of segregated account is an interest-bearing covered on the applicable bordereau is compensation. separate account established by an discharged to the extent of the payment. (a) Timing. Treasury will promptly insurer at a financial institution eligible pay to an insurer the Federal share of to receive payments through the ACH Subpart G—Audit and Investigative compensation due the insurer for its network. Such an account is limited to Procedures insured losses. Payment shall be made the purposes of: § 50.60 Audit authority. in such installments and on such (i) Receiving payments of the Federal conditions as determined by the share of compensation; The Secretary of the Treasury, or an Treasury to be appropriate. Any (ii) Disbursing payments to insureds authorized representative, shall have, overpayments by Treasury of the and claimants; and upon reasonable notice, access to all Federal share of compensation will be (iii) Transferring payments to the books, documents, papers and records offset from future payments to the insurer or affiliated insurers for insured of an insurer that are pertinent to insurer or returned to Treasury within losses reported on the bordereau as amounts paid to the insurer as the 45 days. already paid. Federal share of compensation for (b) Payment process. Payment of the (2) Remittance of interest. All interest insured losses for the purpose of Federal share of compensation for earned on advance payments in the investigation, confirmation, audit and insured losses will be made to the segregated account must be remitted at examination. insurer designated on the Initial Notice least quarterly to Treasury’s Office of of Loss required by § 50.52. An insurer Financial Management or as otherwise § 50.61 Recordkeeping. that requests payment of the Federal prescribed in applicable procedures. Each insurer that seeks payment of a share of compensation for insured losses (e) Denial or withholding of advance must receive payment through Federal share of compensation under payment. Treasury may deny or electronic funds transfer. The insurer subpart F of this part shall retain such withhold advance payments of the must establish either an account for records as are necessary to fully disclose Federal share of compensation to an reimbursement as described in all material matters pertinent to insured insurer if Treasury determines that the paragraph (c) of this section (if the losses and the Federal share of insurer has not properly disbursed insurer only seeks reimbursement) or a compensation sought under the previous advances of the Federal share segregated account as described in Program, including, but not limited to, of compensation or otherwise has not paragraph (d) of this section (if the records regarding premiums and complied with the requirements for insurer seeks advance payments or a insured losses for all commercial advance payment as provided in this combination of advance payments and property and casualty insurance issued reimbursement). Applicable procedures subpart. by the insurer and information relating will be posted at www.treasury.gov/trip (f) Affiliated group. In the case of an to any adjustment in the amount of the or otherwise will be made publicly affiliated group of insurers, Treasury Federal share of compensation payable. available. will make payment of the Federal share Insurers shall maintain detailed records (c) Account for reimbursement. An of compensation for the insured losses for not less than 5 years from the insurer shall designate an account for of the affiliated group to the insurer termination dates of all reinsurance the receipt of reimbursement of the designated in the Initial Notice of agreements involving commercial Federal share of compensation at an Insured Loss to receive payment on property and casualty insurance subject institution eligible to receive payments behalf of the affiliated group. The to the Act. Records relating to premiums through the Automated Clearing House designated insurer receiving payment shall be retained and available for (ACH) network. from Treasury must distribute payment review for not less than 3 years (d) Segregated account for advance to affiliated insurers in a manner that following the conclusion of the policy payments. An insurer that seeks ensures that each insurer in the year. Records relating to underlying advance payments of the Federal share affiliated group is compensated for its claims shall be retained for not less than of compensation as certified according share of insured losses, taking into 5 years following the final adjustment of to § 50.53(b)(2)(i)(B) shall establish an account a reasonable and fair allocation the claim. of the group deductible among affiliated interest-bearing segregated account into Dated: June 21, 2004. which Treasury will make advance insurers. Upon payment of the Federal Wayne A. Abernathy, payments as well as reimbursements to share of compensation to the designated the insurer. insurer, Treasury’s payment obligation Assistant Secretary of the Treasury. (1) Definition of segregated account. to the insurers in the affiliated group [FR Doc. 04–14588 Filed 6–28–04; 8:45 am] For purposes of this section, a with respect to any insured losses BILLING CODE 4811–15–P

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Reader Aids Federal Register Vol. 69, No. 124 Tuesday, June 29, 2004

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING JUNE

Federal Register/Code of Federal Regulations At the end of each month, the Office of the Federal Register General Information, indexes and other finding 202–741–6000 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since Laws 741–6000 the revision date of each title. Presidential Documents 3 CFR 7 CFR Executive orders and proclamations 741–6000 Proclamations: 2...... 34251 The United States Government Manual 741–6000 7792...... 32239 301 ...... 30815, 31722, 31723 Other Services 7793...... 32241 930...... 34549 Electronic and on-line services (voice) 741–6020 7794...... 32243 996...... 31725 Privacy Act Compilation 741–6064 7795...... 32427 1033...... 34554 Public Laws Update Service (numbers, dates, etc.) 741–6043 7796...... 33831 1124...... 34912 TTY for the deaf-and-hard-of-hearing 741–6086 7797...... 35227 1280...... 31731 7798...... 35503 1469...... 34502 1792...... 35229 Executive Orders: ELECTRONIC RESEARCH 1910...... 30997 11582 (See EO World Wide Web 1941...... 30997 13343) ...... 32245 1965...... 30997 Full text of the daily Federal Register, CFR and other publications 13159 (see Notice of 4290...... 32200 is located at: http://www.gpoaccess.gov/nara/index.html June 16, 2004)...... 34047 Federal Register information and research tools, including Public 13219 (see Notice of Proposed Rules: Inspection List, indexes, and links to GPO Access are located at: June 24, 2004)...... 36005 56...... 31039 http://www.archives.gov/federallregister/ 13304 (see Notice of 319...... 33584 929...... 31537 E-mail June 24, 2004)...... 36005 981...... 33584 FEDREGTOC-L (Federal Register Table of Contents LISTSERV) is 13342...... 31509 13343...... 32245 1030...... 34963 an open e-mail service that provides subscribers with a digital 1464...... 34615 Administrative Orders: form of the Federal Register Table of Contents. The digital form 1486...... 34616 of the Federal Register Table of Contents includes HTML and Memorandums: PDF links to the full text of each document. Memorandum of June 8 CFR 3, 2004...... 32235, 32833 To join or leave, go to http://listserv.access.gpo.gov and select Memorandum of June 103...... 35229 Online mailing list archives, FEDREGTOC-L, Join or leave the list 14, 2004 ...... 34043 274a...... 34913 (orchange settings); then follow the instructions. Notices: 1274a...... 34913 PENS (Public Law Electronic Notification Service) is an e-mail Notice of June 15, 9 CFR service that notifies subscribers of recently enacted laws. 2004 ...... 34045 Notice of June 16, 1...... 31513 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 319...... 34913 and select Join or leave the list (or change settings); then follow 2004 ...... 34047 Proposed Rules: the instructions. Notice of June 24, 2004 ...... 36005 2...... 31537 FEDREGTOC-L and PENS are mailing lists only. We cannot Presidential 3...... 31537 respond to specific inquiries. Determinations: 10 CFR Reference questions. Send questions and comments about the No. 2004–31 of May Federal Register system to: [email protected] 25, 2004 ...... 31511 2...... 32836 The Federal Register staff cannot interpret specific documents or No. 2004–32 of June 50...... 33536 3, 2004 ...... 32429 regulations. 12 CFR No. 2004–33 of June FEDERAL REGISTER PAGES AND DATE, JUNE 3, 2004 ...... 32431 32...... 32435 No. 2004–34 of June 222...... 33281 30815–30996...... 1 3, 2004 ...... 32433 229...... 35505 30997–31286...... 2 No. 2004–35 of June 900...... 38799 31287–31510...... 3 3, 2004 ...... 34049 998...... 38799 31511–31720...... 4 No. 2004–36 of June Proposed Rules: 31721–31866...... 7 15, 2004 ...... 38795 30...... 31913 31867–32246...... 8 No. 2004–37 of June 41...... 31913 32247–32434...... 9 16, 2004 ...... 38797 202...... 35541 32435–32834...... 10 205...... 35541 32835–33270...... 14 5 CFR 208...... 31913 33271–33534...... 15 110...... 33535 210...... 34086 33535–33832...... 16 230...... 33271, 34911 211...... 31913 33833–34042...... 17 301...... 33271, 34911 213...... 35541 34043–34250...... 18 316...... 33271, 34911 222...... 31913 34251–34548...... 21 337...... 33271, 34911 225...... 31913 34549–34910...... 22 410...... 33271, 34911 226...... 35541 34911–35228...... 23 575...... 33536 230...... 31760, 35541 35229–35502...... 24 831...... 33277 261a...... 31767 35503–36006...... 25 842...... 33277 327...... 31922 36007–38794...... 28 890...... 31721 334...... 31913 38795–39310...... 29 930...... 32835 364...... 31913

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568...... 31913 16 CFR 312...... 32467 100 ...... 31293, 31294, 32273 570...... 31913 101...... 33574, 34923 610...... 35468 23 CFR 571...... 31913 698...... 35468 104...... 33574, 34923 611...... 31541 Proposed Rules: 110...... 32444 Proposed Rules: 117 ...... 30826, 30827, 31005, 612...... 31541 680...... 33324 650...... 34314 614...... 31541 31735, 32446, 33854, 34568, 615...... 31541 17 CFR 24 CFR 34570, 34571, 35244, 35245, 620...... 31541, 32905 36011 200...... 34428, 34472 35...... 34262 621...... 32905 118...... 34923 239...... 33262 200...... 34262 650...... 32905 127...... 34923 240...... 34428, 34472 203...... 33524 651...... 32905 140...... 34923 274...... 33262 291...... 34262 652...... 32905 147...... 33856 403...... 33258 570...... 32774 653...... 32905 598...... 34262 151...... 32864 Proposed Rules: 654...... 32905 891...... 34262 154...... 34923 150...... 33874 655...... 32905 982...... 34262 161...... 34923 228...... 35982 983...... 34262 164...... 34064, 34923 229...... 35982 14 CFR 1000...... 34020 165 ...... 30828, 30831, 30833, 232...... 34860 25 ...... 32849, 32851, 32853, Proposed Rules: 31294, 31737, 32448, 33304, 240 ...... 32784, 34860, 35982 34072, 34276, 34278, 34280, 33551, 33553 249...... 34860 954...... 34544 36...... 31226 990...... 31055 34573, 34575, 34576, 34926, 39 ...... 30999, 31000, 31002, 18 CFR 1003...... 34544 34928, 34930, 35247, 35249, 31287, 31514, 31518, 31519, 35250, 36012, 36014 1b...... 32436 26 CFR 31520, 31867, 31870, 31872, 169...... 34923 4...... 32436 174...... 34923 31874, 31876, 32247, 32249, 11...... 32436 1 ...... 33288, 33571, 33840, 32250, 32251, 32855, 32857, 35513 181...... 33858, 34923 12...... 32436 183...... 34923 33285, 33555, 33557, 33558, 33...... 32436 Proposed Rules: 33561, 33833, 33834, 33836, 1 ...... 34322, 34323, 35543, 326...... 35515 34...... 32436 334...... 35518 33837, 34051, 34257, 34258, 35...... 32436 35544 Proposed Rules: 34556, 34557, 34559, 34560, 36...... 32436 27 CFR 117...... 34099, 34100 34563, 35235, 35237, 35239, 141...... 32440, 34568 165...... 36032 35243, 35506, 35508, 35511, 154...... 32436 4...... 33572 36007, 38812, 38813, 38815, 5...... 33572 157...... 32436 34 CFR 38816, 38818, 38819, 38821, 260...... 32440 7...... 33572 38823, 38824, 38826, 38827 292...... 32436 9...... 38831, 38834 74...... 31708 71 ...... 30818, 30819, 31291, 300...... 32436 75...... 31708 28 CFR 31865, 32252, 32253, 32254, 357...... 32440 76...... 31708 32255, 32257, 32258, 32859, 365...... 32436 522...... 34063 80...... 31708 32860, 32861, 32862, 33565, 375...... 32436 Proposed Rules: Proposed Rules: 33566, 34053, 34054, 34055, 385...... 32436 75...... 35547 200...... 35462 34056, 34057, 34058, 34059, 388...... 32436 34060, 34061, 34916, 36007, 29 CFR 36 CFR 36164 19 CFR 1910...... 31880 7...... 32871, 35519 73...... 32258, 34425 24...... 35229 1926...... 31880 242...... 33307, 36016 91...... 31518 2590...... 34920 1253...... 32876 95...... 38829 20 CFR 4022...... 33302 Proposed Rules: 97 ...... 30820, 33287, 36008 321...... 32259 4044...... 33302 13...... 31778 121...... 31522, 39292 404...... 32260 Proposed Rules: 135...... 39292 37 CFR Proposed Rules: 1910...... 31927 139...... 31522 345...... 32927 1926...... 31777, 34098 1...... 34283, 35428 Proposed Rules: 2200...... 33878 10...... 35428 39 ...... 31045, 31047, 31049, 21 CFR 11...... 35428 31051, 31053, 31325, 31327, 1...... 31660 30 CFR 201...... 34578 31658, 32285, 32287, 32922, 10...... 31660 56...... 38837 38 CFR 32924, 33587, 33590, 33592, 16...... 31660 57...... 38837 33595, 33597, 33599, 33872, 110...... 32863 915...... 30821 3...... 31882 34091, 34094, 34096, 34312, 510...... 31878 920...... 33848 4...... 32449, 34585 34966, 34969, 34971, 34974, 520 ...... 31733, 31878, 32272, 948...... 33851 17...... 33575, 34074 35273 522 ...... 31734, 31878, 33839, Proposed Rules: 20...... 31523 71 ...... 32288, 32289, 32290, 35512 75...... 35992 61...... 31883 32291, 32293, 32294, 32295, 558...... 31879 250...... 34625 36030 868...... 34917 39 CFR 73...... 32296, 36031 870...... 34917 31 CFR 211...... 36018 158...... 32298 882...... 34917 50...... 39296 265...... 34932 1301...... 34568 515...... 33768 266...... 34932 15 CFR Proposed Rules: 601...... 36018 270...... 33567 1...... 30842 32 CFR Proposed Rules: 738...... 36009 2...... 33602 18...... 31291 111...... 33341 740...... 34565 3...... 35277 57...... 32662 742...... 36009 201...... 31773 282...... 38843 40 CFR 746...... 34565 202...... 31773 9...... 38958 772...... 36009 205...... 31773 33 CFR 50...... 35526 774...... 36009 208...... 31773 4...... 34923 51...... 35526 902...... 35194 209...... 31773 19...... 34923 52 ...... 31498, 31739, 31889, Proposed Rules: 211...... 31773 67...... 30826 31891, 31893, 32273, 32277, 801...... 31771 226...... 31773 84...... 34923 32450, 32454, 33860, 33862,

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34285, 34935, 35253, 36023, Proposed Rules: 34632, 34986, 35560, 35561, 542...... 34612 38848 403...... 35920 35562, 35563, 35564 543...... 34612 61...... 33865 405...... 35716 76...... 34986 567...... 31306 63 ...... 31008, 31742, 33474 412...... 35920 48 CFR 571...... 31034, 31306 69...... 38958 413...... 35716, 35920 573...... 34954 70...... 31498, 34301 417...... 35716 Ch. 1...... 34224, 34244 574...... 31306 71...... 31498 418...... 35920 1...... 30835 575...... 31306 2...... 34226, 34228 80...... 38958 460...... 35920 577...... 34954 81 ...... 34076, 34080, 34935, 480...... 35920 4...... 34226 597...... 31306 35526 482...... 35920 8 ...... 34229, 34231, 34244 1507...... 35536 82...... 34024 483...... 35920 9...... 34230 86...... 38958 484...... 31248 11...... 34244 Proposed Rules: 89...... 38958 485...... 35920 12...... 34226, 38955 171...... 34724 94...... 38958 489...... 35920 22...... 34239 172...... 34724 141...... 31008, 38850 25...... 34239, 34241 173...... 34724 142...... 38850 43 CFR 31...... 34241, 34242 175...... 34724 180 ...... 31013, 31297, 32281, Proposed Rules: 36...... 30835 176...... 34724 32457, 33576, 33578, 34937, 4100...... 34425 37...... 34226 178...... 34724 34945 38...... 34231 180...... 34724 282...... 33309, 33312 44 CFR 52 ...... 34226, 34228, 34229, 192...... 35279 300...... 31022, 35256 64...... 31022 34239 195...... 35279 1039...... 38958 65 ...... 31024, 31026, 34585 53 ...... 30835, 34231, 34244 227...... 35146 1048...... 38958 67...... 31028, 34588 206...... 31907 229...... 35146 1051...... 38958 Proposed Rules: 212...... 35532 555...... 36038 1065...... 38958 67...... 31070 219...... 31909 563...... 32932 1068...... 38958 225...... 31910 567...... 36038 45 CFR Proposed Rules: 227...... 31911 568...... 36038 51...... 32684 61...... 33866 237...... 35532 571 ...... 31330, 32954, 34633, 52 ...... 30845, 30847, 31056, 239...... 35533 46 CFR 36038 31778, 31780, 31782, 31930, 242...... 31912 573...... 36038 32311, 32475, 32476, 32928, 10...... 32465 252 ...... 31910, 31911, 35533, 578...... 32963 34323, 34976, 35278, 36035, 12...... 32465 35535 579...... 38860 15...... 32465 1827...... 35270 38860 588...... 32954 25...... 34064 1828...... 35270 55...... 34981 594...... 32312 63...... 31783 27...... 34064 1829...... 35270 70...... 33343 221...... 34309 1830...... 35270 72...... 32684 310...... 31897 1831...... 35270 50 CFR 73...... 32684 315...... 34309 1832...... 35270 17...... 31460, 31523 74...... 32684 355...... 34309 1833...... 35270 100...... 33307, 36016 77...... 32684 1834...... 35271 216...... 31321 47 CFR 1835...... 35271 78...... 32684 222...... 32898 0...... 33580 1836...... 35271 82...... 34034 223...... 31035, 32898 2...... 31904, 32877 1837...... 35271 86...... 32804, 34326 300...... 31531 92...... 39276 25 ...... 31301, 31745, 34950 1839...... 35271 36...... 34590 1841...... 35271 600...... 31531 94...... 39276 622...... 33315 54...... 34590, 34601 Proposed Rules: 96...... 32684 635 ...... 30837, 33321, 34960 112...... 34014 61...... 35258 204...... 35564 648 ...... 30839, 30840, 32900, 141...... 31068 64...... 34950 212...... 31939 33580, 35194 261...... 35554 73 ...... 31904, 32282, 32283, 219...... 35566 660 ...... 31751, 31758, 38857 282...... 33343, 33344 34602, 34603, 34950, 35531 225...... 31939, 35567 679 ...... 32283, 32284, 32901, 300...... 35279 74...... 31904, 33869 236...... 35568 33581, 34613 1620...... 33879 76...... 34950 252...... 31939, 35564 87...... 32877 509...... 34248 Proposed Rules: 41 CFR 90...... 31904 17 ...... 31073, 31552, 31569, 101-37...... 34302 95...... 32877 49 CFR 32966, 35768, 38863 301-10...... 34302 101...... 31745 171...... 34604 18...... 31582 301-70...... 34302 Proposed Rules: 172...... 34604 20...... 32418 303-3...... 34302 2...... 33698 173...... 34604 21...... 31074 15...... 34103 178...... 34604 216...... 38873 42 CFR 25...... 33698 191...... 32886 223...... 33102 405...... 35527 36...... 34629 192...... 32886, 36024 224...... 30857, 33102 409...... 35529 54...... 31930, 34629 195...... 32886 300...... 35569 411...... 35529 73 ...... 30853, 30854, 30855, 199...... 32886 648...... 34335 412...... 34585 30856, 30857, 33698, 34112, 393...... 31302 660 ...... 34116, 34988, 35570 414...... 35527 34113, 34114, 34115, 34116, 541...... 34612 679...... 31085

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REMINDERS AGRICULTURE Service-Disabled Veteran- Coastal nonpoint pollution The items in this list were DEPARTMENT Owned Small Business control program— editorially compiled as an aid Farm Service Agency Concerns Procurement Minnesota and Texas; to Federal Register users. Program regulations: Program; comments due Open for comments Inclusion or exclusion from by 7-6-04; published 5-5- until further notice; Guaranteed farm ownership 04 [FR 04-09752] this list has no legal and operating loan published 10-16-03 [FR significance. requirements; comments ENERGY DEPARTMENT 03-26087] due by 7-6-04; published Energy Efficiency and Pesticides; tolerances in food, 5-4-04 [FR 04-10068] Renewable Energy Office animal feeds, and raw RULES GOING INTO agricultural commodities: AGRICULTURE Consumer products; energy EFFECT JUNE 29, 2004 DEPARTMENT conservation program: Harpin protein; comments due by 7-6-04; published Food Safety and Inspection Appliance standards 5-5-04 [FR 04-10212] COMMERCE DEPARTMENT Service program; possible Water pollution; effluent National Oceanic and Meat and poultry inspection: expansion to include Atmospheric Administration additional consumer guidelines for point source Food labeling— products and commercial categories: Fishery conservation and Uniform compliance dates; management: and industrial equipment; Meat and poultry products comments due by 7-6- meeting; comments due processing facilities; Open West Coast States and 04; published 5-4-04 by 7-9-04; published 4-30- for comments until further Western Pacific [FR 04-09931] 04 [FR 04-09830] notice; published 12-30-99 fisheries— AGRICULTURE [FR 04-12017] Pacific Coast groundfish; ENERGY DEPARTMENT DEPARTMENT Water programs: published 6-29-04 Federal Energy Regulatory Rural Business-Cooperative Commission Oil pollution prevention and LABOR DEPARTMENT Service Electric rate and corporate response; non- Mine Safety and Health Rural Business Investment regulation filings: transportation-related Administration Program; administrative onshore and offshore Virginia Electric & Power Coal mine safety and health: provisions; comments due facilities; comments due Co. et al.; Open for Surface and underground by 7-8-04; published 6-8-04 by 7-7-04; published 6-17- [FR 04-12731] comments until further 04 [FR 04-13684] mines— notice; published 10-1-03 Definitions; technical AGRICULTURE [FR 03-24818] FEDERAL amendments; published DEPARTMENT COMMUNICATIONS ENVIRONMENTAL 6-29-04 COMMISSION Rural Utilities Service PROTECTION AGENCY Common carrier services: TRANSPORTATION Rural Business Investment Air pollutants, hazardous; N11 codes and other DEPARTMENT Program; administrative national emission standards: provisions; comments due abbreviated dialing Federal Aviation Hazardous waste Administration by 7-8-04; published 6-8-04 arrangements; use; [FR 04-12731] combustors; comments comments due by 7-8-04; Airworthiness directives: due by 7-6-04; published RUS Telecommunications published 6-8-04 [FR 04- Eurocopter France; 4-20-04 [FR 04-07858] Borrowers; accounting 12830] published 6-14-04 requirements; comments Air programs; State authority Digital television stations; table due by 7-9-04; published 5- delegations: of assignments: COMMENTS DUE NEXT 10-04 [FR 04-10512] Nevada; comments due by Connecticut; comments due 7-7-04; published 6-7-04 WEEK COMMERCE DEPARTMENT by 7-6-04; published 6-1- [FR 04-12773] National Oceanic and 04 [FR 04-12278] Air quality implementation AGRICULTURE Atmospheric Administration Montana; comments due by plans: DEPARTMENT Fishery conservation and 7-6-04; published 6-1-04 Preparation, adoption, and Agricultural Marketing management: [FR 04-12277] submittal— Service Northeastern United States FEDERAL RESERVE Regional haze standards; Cotton classing, testing and fisheries— SYSTEM best available retrofit standards: Multispecies fishery; Privacy Act; implementation; technology comments due by 7-7-04; Classification services to comments due by 7-6- determinations; growers; 2004 user fees; 04; published 6-21-04 published 6-7-04 [FR 04- implementation 12727] Open for comments until [FR 04-13941] guidelines; comments further notice; published West Coast States and due by 7-6-04; GENERAL SERVICES 5-28-04 [FR 04-12138] Western Pacific published 5-5-04 [FR ADMINISTRATION AGRICULTURE fisheries— 04-09863] Federal Acquisition Regulation DEPARTMENT Pacific Coast groundfish; Air quality implementation (FAR): Animal and Plant Health comments due by 7-7- plans; approval and Service-Disabled Veteran- Inspection Service 04; published 6-7-04 promulgation; various Owned Small Business Livestock and poultry disease [FR 04-12707] States: Concerns Procurement control: COURT SERVICES AND California; comments due by Program; comments due OFFENDER SUPERVISION 7-7-04; published 6-7-04 by 7-6-04; published 5-5- Highly pathogenic avian 04 [FR 04-09752] influenza; additional AGENCY FOR THE [FR 04-12767] restrictions; comments DISTRICT OF COLUMBIA Idaho; comments due by 7- HEALTH AND HUMAN due by 7-9-04; published Semi-annual agenda; Open for 7-04; published 6-7-04 SERVICES DEPARTMENT 5-10-04 [FR 04-10524] comments until further [FR 04-12700] Food and Drug Plant-related quarantine, notice; published 12-22-03 Virginia; comments due by Administration domestic: [FR 03-25121] 7-7-04; published 6-7-04 Food for human consumption: Karnal bunt; comments due DEFENSE DEPARTMENT [FR 04-12775] Food labeling— by 7-6-04; published 5-5- Federal Acquisition Regulation Environmental statements; Dietary guidance; 04 [FR 04-10195] (FAR): availability, etc.: comments due by 7-6-

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04; published 5-4-04 further notice; published Litigation management; located at 304 West Michigan [FR 04-10126] 5-10-04 [FR 04-10516] comments due by 7-6-04; Street in Stuttgart, Arkansas, Product jurisdiction: PENSION BENEFIT published 5-6-04 [FR 04- as the ‘‘Lloyd L. Burke Post 10205] Office’’. (June 25, 2004; 118 Mode of action and primary GUARANTY CORPORATION Stat. 677) mode of action of Penalties assessment and H.R. 3068/P.L. 108–244 combination products; relief; participant notices; LIST OF PUBLIC LAWS definitions; comments due policy statement; comments To designate the facility of the by 7-6-04; published 5-7- due by 7-6-04; published 5- United States Postal Service This is a continuing list of 04 [FR 04-10447] 7-04 [FR 04-10407] located at 2055 Siesta Drive public bills from the current in Sarasota, Florida, as the Reports and guidance POSTAL SERVICE session of Congress which ‘‘Brigadier General (AUS-Ret.) documents; availability, etc.: Postage meters: have become Federal laws. It John H. McLain Post Office’’. Evaluating safety of Manufacture and distribution; may be used in conjunction (June 25, 2004; 118 Stat. antimicrobial new animal authorization; comments with ‘‘PLUS’’ (Public Laws 678) drugs with regard to their due by 7-9-04; published Update Service) on 202–741– H.R. 3234/P.L. 108–245 microbiological effects on 5-10-04 [FR 04-10497] 6043. This list is also To designate the facility of the bacteria of human health available online at http:// United States Postal Service concern; Open for SECURITIES AND www.archives.gov/ located at 14 Chestnut Street comments until further EXCHANGE COMMISSION federal—register/public—laws/ in Liberty, New York, as the notice; published 10-27-03 Investment advisers: public—laws.html. ‘‘Ben R. Gerow Post Office [FR 03-27113] Thrift institutions deemed Building’’. (June 25, 2004; 118 not to be investment The text of laws is not HOMELAND SECURITY published in the Federal Stat. 679) DEPARTMENT advisers; comments due by 7-9-04; published 5-7- Register but may be ordered H.R. 3300/P.L. 108–246 Coast Guard 04 [FR 04-10392] in ‘‘slip law’’ (individual To designate the facility of the Anchorage regulations: pamphlet) form from the United States Postal Service SMALL BUSINESS Superintendent of Documents, located at 15500 Pearl Road Maryland; Open for ADMINISTRATION U.S. Government Printing in Strongsville, Ohio, as the comments until further Disaster loan areas: notice; published 1-14-04 Office, Washington, DC 20402 ‘‘Walter F. Ehrnfelt, Jr. Post [FR 04-00749] Maine; Open for comments (phone, 202–512–1808). The Office Building’’. (June 25, until further notice; text will also be made 2004; 118 Stat. 680) Deepwater ports: published 2-17-04 [FR 04- available on the Internet from H.R. 3353/P.L. 108–247 Regulations; revision; 03374] GPO Access at http:// To designate the facility of the comments due by 7-5-04; Government contracting www.gpoaccess.gov/plaws/ United States Postal Service published 1-6-04 [FR 03- programs: index.html. Some laws may located at 525 Main Street in 32204] Service-disabled veteran- not yet be available. Tarboro, North Carolina, as Drawbridge operations: owned small business the ‘‘George Henry White Post H.R. 1822/P.L. 108–239 Massachusetts; comments concerns; comments due Office Building’’. (June 25, due by 7-8-04; published by 7-6-04; published 5-5- To designate the facility of the 2004; 118 Stat. 681) 6-18-04 [FR 04-13819] 04 [FR 04-09727] United States Postal Service H.R. 3536/P.L. 108–248 Maritime security: located at 3751 West 6th To designate the facility of the TRANSPORTATION Street in Los Angeles, International voyage for DEPARTMENT United States Postal Service California, as the ‘‘Dosan Ahn located at 210 Main Street in security regulations; Federal Aviation Chang Ho Post Office’’. (June interpretation; comments Administration Malden, Illinois, as the ‘‘Army 25, 2004; 118 Stat. 673) Staff Sgt. Lincoln Hollinsaid due by 7-6-04; published Airworthiness directives: 4-6-04 [FR 04-07792] H.R. 2130/P.L. 108–240 Malden Post Office’’. (June Boeing; comments due by To redesignate the facility of 25, 2004; 118 Stat. 682) INTERIOR DEPARTMENT 7-6-04; published 5-7-04 the United States Postal H.R. 3537/P.L. 108–249 National Park Service [FR 04-10240] Service located at 121 To designate the facility of the Special regulations: DG Flugzeugbau GmbH; Kinderkamack Road in River United States Postal Service Bighorn Canyon National comments due by 7-9-04; Edge, New Jersey, as the located at 185 State Street in Recreation Area, MT and published 5-20-04 [FR 04- ‘‘New Bridge Landing Post Manhattan, Illinois, as the WY; personal watercraft 11371] Office’’. (June 25, 2004; 118 ‘‘Army Pvt. Shawn Pahnke use; comments due by 7- Hamilton Sundstrand Power Stat. 674) Manhattan Post Office’’. (June 6-04; published 5-5-04 Systems; comments due H.R. 2438/P.L. 108–241 25, 2004; 118 Stat. 683) by 7-6-04; published 5-7- [FR 04-10140] To designate the facility of the H.R. 3538/P.L. 108–250 04 [FR 04-10430] NATIONAL AERONAUTICS United States Postal Service To designate the facility of the AND SPACE Rolls-Royce Corp.; located at 115 West Pine United States Postal Service ADMINISTRATION comments due by 7-6-04; Street in Hattiesburg, located at 201 South Chicago Federal Acquisition Regulation published 5-7-04 [FR 04- Mississippi, as the ‘‘Major Avenue in Saint Anne, Illinois, (FAR): 10385] Henry A. Commiskey, Sr. Post as the ‘‘Marine Capt. Ryan Beaupre Saint Anne Post Service-Disabled Veteran- TRANSPORTATION Office Building’’. (June 25, DEPARTMENT 2004; 118 Stat. 675) Office’’. (June 25, 2004; 118 Owned Small Business Stat. 684) Concerns Procurement National Highway Traffic H.R. 3029/P.L. 108–242 H.R. 3690/P.L. 108–251 Program; comments due Safety Administration To designate the facility of the To designate the facility of the by 7-6-04; published 5-5- Motor vehicle safety United States Postal Service United States Postal Service 04 [FR 04-09752] standards: located at 255 North Main located at 2 West Main Street NUCLEAR REGULATORY Occupant crash protection; Street in Jonesboro, Georgia, in Batavia, New York, as the COMMISSION comments due by 7-5-04; as the ‘‘S. Truett Cathy Post ‘‘Barber Conable Post Office Environmental statements; published 4-6-04 [FR 04- Office Building’’. (June 25, Building’’. (June 25, 2004; 118 availability, etc.: 07795] 2004; 118 Stat. 676) Stat. 685) Fort Wayne State TREASURY DEPARTMENT H.R. 3059/P.L. 108–243 H.R. 3733/P.L. 108–252 Developmental Center; Terrorism Risk Insurance To designate the facility of the To designate the facility of the Open for comments until Program: United States Postal Service United States Postal Service

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located at 410 Huston Street in Laclede, Missouri, as the Middletown, Rhode Island, as the ‘‘Dr. Miguel A. Nevarez in Altamont, Kansas, as the ‘‘General John J. Pershing the ‘‘Rhode Island Veterans Post Office Building’’. (June ‘‘Myron V. George Post Post Office’’. (June 25, 2004; Post Office Building’’. (June 25, 2004; 118 Stat. 695) Office’’. (June 25, 2004; 118 118 Stat. 689) 25, 2004; 118 Stat. 692) Last List June 24, 2004 Stat. 686) H.R. 3917/P.L. 108–256 H.R. 4037/P.L. 108–259 H.R. 3740/P.L. 108–253 To designate the facility of the To designate the facility of the To designate the facility of the United States Postal Service United States Postal Service United States Postal Service located at 695 Marconi located at 475 Kell Farm located at 223 South Main Boulevard in Copiague, New Drive in Cape Girardeau, Public Laws Electronic Street in Roxboro, North York, as the ‘‘Maxine S. Missouri, as the ‘‘Richard G. Notification Service Carolina, as the ‘‘Oscar Scott Postal United States Post Wilson Processing and (PENS) Woody Post Office Building’’. Office’’. (June 25, 2004; 118 Distribution Facility’’. (June 25, (June 25, 2004; 118 Stat. Stat. 690) 2004; 118 Stat. 693) 687) H.R. 3939/P.L. 108–257 H.R. 4176/P.L. 108–260 PENS is a free electronic mail H.R. 3769/P.L. 108–254 To redesignate the facility of To designate the facility of the notification service of newly To designate the facility of the the United States Postal United States Postal Service enacted public laws. To United States Postal Service Service located at 14-24 located at 122 West Elwood subscribe, go to http:// located at 137 East Young Abbott Road in Fair Lawn, Avenue in Raeford, North listserv.gsa.gov/archives/ High Pike in Knoxville, New Jersey, as the ‘‘Mary Carolina, as the ‘‘Bobby publaws-l.html Tennessee, as the ‘‘Ben Ann Collura Post Office Marshall Gentry Post Office Atchley Post Office Building’’. Building’’. (June 25, 2004; 118 Building’’. (June 25, 2004; 118 Note: This service is strictly (June 25, 2004; 118 Stat. Stat. 691) Stat. 694) for E-mail notification of new 688) H.R. 3942/P.L. 108–258 H.R. 4299/P.L. 108–261 laws. The text of laws is not H.R. 3855/P.L. 108–255 To redesignate the facility of To designate the facility of the available through this service. To designate the facility of the the United States Postal United States Postal Service PENS cannot respond to United States Postal Service Service located at 7 located at 410 South Jackson specific inquiries sent to this located at 607 Pershing Drive Commercial Boulevard in Road in Edinburg, Texas, as address.

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