[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6669]
[[Page Unknown]]
[Federal Register: March 22, 1994]
_______________________________________________________________________
Part VII
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 80
State of Alaska Petition for Exemption From Diesel Fuel Sulfur
Requirement; Final Rule
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-4853-2]
State of Alaska Petition for Exemption From Diesel Fuel Sulfur
Requirement
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of final decision.
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SUMMARY: On February 12, 1993, the Governor of Alaska submitted a
petition requesting that the State of Alaska be considered for certain
exemptions from the diesel fuel sulfur requirements of section 211(i)
of the Clean Air Act, as amended. Alaska did not request an exemption
from the minimum cetane requirement for motor vehicle diesel fuel as
set forth in section 211(i) of the Act.
Today's final decision grants the exemptions requested by the State
of Alaska from the diesel fuel sulfur content requirement of section
211(i) of the Act and related provisions in section 211(g). The
exemptions are based on the finding that it is unreasonable to require
persons in Alaska who are located in remote communities not served by
the Federal Aid Highway System (FAHS), and, at this time, for persons
served by the FAHS in Alaska, to comply with the sulfur requirement of
section 211(i) and those related portions of EPA's motor vehicle diesel
fuel regulations, 40 CFR part 80, due to Alaska's unique geographical,
meteorological and economic factors, as well as significant local
factors.
DATES: The exemptions are effective on March 22, 1994, pursuant to 5
U.S.C. 553(d)(1), which allows publication of a rule less than 30 days
before its effective date, where, as here, such rule grants or
recognizes an exemption or relieves a restriction.
ADDRESSES: Copies of information relevant to this final decision notice
are available for inspection in public docket A-93-14 at the Air Docket
(LE-131) of the EPA, room M-1500, 401 M Street SW., Washington, DC
20460, (202) 260-7548, between the hours of 8:30 a.m. to noon and 1:30
p.m. to 3:30 p.m. on Monday through Friday. A duplicate public docket,
AK1-1993-1, has been established at U.S. EPA Region X, 1200 Sixth
Avenue (AT-082), Seattle, WA 98101, (206) 553-0180, and is available
between the hours of 8 a.m. to 11:30 a.m. and 12:30 p.m. to 4:30 p.m.
on Monday through Friday. As provided in 40 CFR part 2, a reasonable
fee may be charged for copying services.
FOR FURTHER INFORMATION CONTACT: Ms. Whitney Trulove-Cranor,
Environmental Protection Specialist, Field Operations and Support
Division (6406J), 401 M Street SW., Washington, DC 20460, (202) 233-
9036.
SUPPLEMENTARY INFORMATION:
I. Background
Section 211(i)(1) of the Act makes it unlawful, effective October
1, 1993, for any person to manufacture, sell, supply, offer for sale or
supply, dispense, transport, or introduce into commerce motor vehicle
diesel fuel which contains a concentration of sulfur in excess of 0.05
percent (by weight), or which fails to meet a cetane index minimum of
40. Section 211(i)(3) establishes the sulfur content for fuel used in
the certification of heavy-duty diesel vehicles and engines. Section
211(i)(4) provides that the States of Alaska and Hawaii may seek
exemption from the requirements of this subsection in the same manner
as provided in section 3251 of the Act, and requires the
Administrator to take final action on any petition filed under this
section, which seeks exemption from the requirements of section 211(i),
within 12 months of the date of such petition.
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\1\Section 211(i)(4) mistakenly refers to exemptions under
section 324 of the Act (``Vapor Recovery for Small Business
Marketers of Petroleum Products''), while the proper reference is to
section 325. Congress clearly intended to refer to section 325, as
shown by the language used in section 211(i)(4), and the United
States Code citation used in section 806 of the Clean Air Act
Amendments of 1990, Public Law No. 101-549. Section 806 of the
Amendments, which added paragraph i to section 211 of the Act, used
42 U.S.C. 7625-1 as the United States Code designation for section
324. This is the proper designation for section 325 of the Act. Also
see 136 Cong. Rec. S17236 (daily ed. October 26, 1990) (statement of
Sen. Murkowski).
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Section 325 of the Act provides that upon application by the
Governor of Guam, American Samoa, the Virgin Islands, or the
Commonwealth of the Northern Mariana Islands, the Administrator may
exempt any person or source in such territory from various requirements
of the Act, including section 211(i). An exemption may be granted if
the Administrator finds that compliance with such requirements is not
feasible or is unreasonable due to unique geographical, meteorological,
or economic factors of such territory, or other local factors as the
Administrator deems significant.
II. Petition for Exemption
On February 12, 1993, the Honorable Walter J. Hickel, Governor of
the State of Alaska, submitted a petition to exempt motor vehicle
diesel fuel in Alaska from all of the requirements of section 211(i)
except the minimum cetane index requirement of 40. The petition
requested a short-term exemption for areas accessible by the FAHS and a
permanent exemption for areas not accessible by the FAHS. The short-
term exemption would exempt motor vehicle diesel fuel manufactured for
sale, sold, supplied, or transported within the FAHS from meeting the
sulfur content requirement specified in section 211(i) until October 1,
1996. Those areas of Alaska not reachable by the FAHS would be
permanently exempt from the sulfur content requirement of section
211(i). The petition was based on geographical, meteorological, air
quality, and economic factors unique to the State of Alaska.
The following discussion summarizes the contents of the petition.
A. Geography and Location of the State of Alaska
At 586,000 square miles in area, Alaska is about one-fifth as large
as the combined area of the lower 48 states. Because of its extreme
northern location, rugged terrain and sparse population, no other state
relies on barges to deliver petroleum products to the extent Alaska
does. Only 35% of Alaska's communities are served by the FAHS which is
a combination of road and marine highways. Communities accessible by
the FAHS account for 69% of the total State population. The remaining
65% of Alaska's communities are served by barge lines and are referred
to as ``remote'' communities. Although barge lines can directly access
some remote communities, those communities that are not located on a
navigable river are served by a two-stage delivery system: over water
by barge line and then over land to reach the community. Remote
communities with populations over 100 account for 13% of the total
State population. The remaining 18% of the population consists of
remote communities with populations less than 100 persons. In 1990, the
State's total population was only 550,043.
Because of the State's high latitude, it experiences seasonal
extremes in the amount of daily sunlight, which in turn affects the
cost of construction in Alaska. For example, the city of Anchorage,
located at 61 deg. latitude, receives approximately 19 hours of
sunlight on a summer day, and approximately 5.5 hours of sunlight on a
winter day; whereas, the community of Point Barrow, located at 71 deg.
latitude, receives approximately 24 hours of sunlight on a summer day,
and approximately zero hours of sunlight on a winter day. Alaska's
petition states that this limitation on the amount of winter-time
daylight is one reason why construction costs in the State are high
compared to the lower 48 states.
According to the petition, Alaska's extreme northern location
places it in a unique position to fuel transcontinental cargo flights
between Europe, Asia, and North America. Roughly 75% of all air transit
freight between Europe and Asia lands in Anchorage, as does that
between Asia and the United States. The result is a large market for
jet-A fuel produced by local refiners, which decreases the importance
of highway diesel fuel to these refiners. Based on State tax revenue
receipts and estimates by Alaska's refiners, diesel fuel consumption
for highway use represents roughly 5% of total distillate fuel
consumption.
B. Climate, Meteorology and Air Quality
Alaska's climate is colder than that of the other 48 states. The
extremely low temperatures experienced in Alaska during the winter
impose a unique fuel composition requirement for diesel fuel in Alaska,
known as a ``cloud point'' specification.2 Although all highway
diesel fuels, which are governed by the American Society of Testing and
Materials (ASTM) product specifications, are required to meet a cloud
point specification, the cloud point varies from one area to another
since it is based on the tenth percentile minimum ambient temperature
for the area in which the fuel will be used.3 Alaska has the most
severe cloud point specification for diesel fuel in the U.S. at -56
deg.F. For this reason, all diesel fuel used in the State of Alaska is
produced by refiners located in Alaska. Jet-A kerosene meets the same
cloud point specification as No. 1 diesel fuel (which is marketed
primarily during the winter as opposed to No. 2 diesel fuel which is
marketed primarily in the summer) and is commonly mixed with or used as
a substitute for No. 1 diesel fuel. However, because jet-A kerosene is
allowed a maximum sulfur content of 0.3%, the new diesel fuel sulfur
requirement of 0.05% would prohibit using jet-A and No. 1 diesel fuel
interchangeably.
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\2\The cloud point defines the temperature at which a cloud or
haze of wax crystals appears in the oil. Its purpose is to ensure a
minimum temperature above which fuel lines and other engine parts
are not plugged by solids that form in the fuel.
\3\Annual Book of ASTM Standards, Designation D975-89 ``Standard
Specification for Diesel Fuel Oils,'' Current edition approved March
31, 1989.
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Ice formation during the winter months restricts fuel delivery to
remote areas served by barge lines. Therefore, fuel is generally only
delivered to these areas between the months of May and October. This
further restricts the ability of fuel distributors in Alaska to supply
multiple grades of petroleum products to remote communities.
The only violations of ambient air quality standards in Alaska are
for carbon monoxide (CO) and particulate matter (PM10). CO
violations have only been recorded in the State's two largest
communities: Anchorage and Fairbanks. PM10 violations have only
been recorded in two rural communities, Mendenhall Valley of Juneau and
Eagle River, a community within the boundaries of Anchorage. The most
recent PM10 inventories for these two communities show that these
violations are the result of fugitive dust from paved and unpaved
roads, and that motor vehicle exhaust is responsible for less than one
percent of the overall PM10 being emitted within the borders of
each of these areas.4 Moreover, Eagle River has not had a
violation of the PM10 standard since 1986 and plans to apply for a
change in its attainment status. Mendenhall Valley has plans for
extensive road paving to be implemented to control road dust. The
sulfur content of diesel fuel is not expected to have any significant
impact on ambient PM10 or CO levels in any of these areas because
of the minimal contribution by motor vehicles to PM10 in these
areas and because diesel fuel sulfur content has no direct effect on
vehicle CO emissions.5
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\4\``PM10 Emission Inventories for the Mendenhall Valley
and Eagle River Areas,'' prepared for the U.S. Environmental
Protection Agency, Region X, by Engineering-Science, February 1988.
\5\Some reduction of vehicle CO and hydrocarbon (HC) emissions
may occur as an indirect result of the use of aftertreatment devices
which may be used by engine manufacturers to comply with the more
stringent 1994 particulate standards (55 FR 34121, August 21, 1990).
Although it is possible that the use of high-sulfur diesel fuel will
have an adverse effect on the function of such aftertreatment
devices, negating the benefit of CO reduction, engine out emissions
of CO will not be affected by the use of high-sulfur diesel.
Furthermore, diesel powered vehicles are inherently low CO emitters
and do not contribute significantly to ambient CO levels.
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C. Economic Factors
Alaska states in its petition that local refineries have limited
refining capabilities. Demand for jet-A kerosene, which is sold as No.
1 diesel fuel because it meets Alaska's winter cloud point
specification, accounts for almost fifty percent (50%) of distillate
consumption and dominates refiner planning. A survey of the refiners in
Alaska, conducted by the State, revealed that it would cost over
$100,000,000 in construction and process modifications to refine Alaska
North Slope (ANS) crude into 0.05% sulfur diesel fuel to meet the
demand for highway diesel fuel. Among the reasons for the high cost
include the construction costs in Alaska, which range from 25% to 65%
higher than costs in the lower 48 states, and the cost of modifying the
fuel production process itself. The petition states that because there
is such a small demand for highway diesel fuel in Alaska, the costs
that would be incurred to comply with section 211(i)'s sulfur
requirement are excessive; and without an exemption from having to meet
this requirement, most refiners would choose to exit the market for
highway diesel fuel. Although one refiner has discovered a low-cost
approach to producing 0.05% sulfur diesel fuel, information provided to
EPA subsequent to the receipt of this petition revealed that this fuel
is a custom Arctic Heating Fuel that has its own unique specifications
and does not meet all ASTM standards for highway diesel fuels such as
No. 1 and No. 2 diesel. Therefore, this low-sulfur diesel fuel would
not be marketed for commercial use, but only for internal use in fleet
vehicles on the North Slope.6
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\6\Letter from Robert G. Kratsas, Manager, Environment, Health
and Safety, ARCO Alaska, Inc. to Commissioner John A. Sandor of the
Alaska Department of Environmental Conservation (DEC), March 10,
1992, and letter from George R. Snodgrass, Staff Engineer, Air
Sciences, ARCO Alaska, Inc. to Ronald G. King of the Alaska DEC,
April 9, 1993.
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Currently, barge shipments of diesel fuel to remote communities do
not require segregation of diesel fuel used in motor vehicles from
diesel fuel used for off-highway purposes. It would be costly to create
separate storage facilities and tankage for transportation of low-
sulfur highway diesel fuel to remote communities, where motor vehicle
diesel fuel consumption represents less than 5% of total distillate
consumption. Since the majority of diesel fuel consumption in these
communities is for off-highway purposes (generation of electricity,
heat, non-road vehicles) the cost associated with converting the entire
diesel fuel supply to low-sulfur diesel would be prohibitive,
increasing the overall cost of living in these communities. Currently,
it is not uncommon for the cost of electricity to exceed 50 cents/kwh
in remote communities, as opposed to the cost of electricity for
communities on the FAHS, which ranges from 6.6 cents/kwh to 11.25
cents/kwh. In comparison, the national average cost of electricity in
1992 was 6.8 cents/kwh for all sources (i.e., residential, commercial,
industrial, and other).7
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\7\``Monthly Energy Review,'' Energy Information Administration,
U.S. Department of Energy, March 1993.
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The Alaska Department of Environmental Conservation (ADEC) has
estimated that refiners would have to charge an additional 28 to 46
cents per gallon of highway diesel fuel to recover the cost of the
investment to produce low-sulfur diesel fuel, compared to an estimated
3 to 5 cents per gallon increase for the lower 48 states. Currently,
the price of diesel fuel marketed on the FAHS in Alaska ranges from
$1.09 to $1.21 per gallon. Prices of diesel fuel in remote communities
currently range from $1.45 to $2.65 per gallon.
D. Environmental Factors
Information provided to EPA by the State of Alaska subsequent to
receipt of the petition indicates that the current sulfur content for
diesel fuel in Alaska averages approximately 0.1% by weight for nine
months of the year, and 0.25% by weight for the remaining three months
of the year. Thus, the current level of sulfur in motor vehicle diesel
fuel used in Alaska is well below the current ASTM sulfur specification
of 0.5% (by weight).8
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\8\American Society for Testing and Materials Standard D975.
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III. Public Participation
Following the August 27, 1993 publication of EPA's proposed
decision to grant the exemptions requested by Alaska, there was a
thirty day comment period, during which interested parties could
request a hearing or submit comments on the proposal. The Agency
received no request for a hearing. Comments in support of EPA's
proposal to grant the exemptions were received from Kodiak Oil Sales,
Inc., BP Exploration (Alaska), Inc., and BP Pipeline (Alaska), Inc. The
Engine Manufacturers Association (EMA) submitted comments expressing
concern about engine manufacturer's warranty and recall liability for
diesel vehicles in Alaska fueled with high sulfur diesel fuel. The
Alaska Department of Environmental Conservation (DEC) submitted a
request to the Agency that this final decision notice address the issue
of dyeing diesel fuel not intended for use in motor vehicles. In light
of their petition for exemption from the diesel sulfur requirements,
the Alaska DEC requested a waiver from having to dye noncomplying
diesel fuel.
Manufacturer's Emissions Warranty
The Agency acknowledges that vehicles which were certified with low
sulfur diesel fuel may be unable to meet federal emissions standards if
they are fueled with high sulfur diesel fuel. However, EPA believes
that waiving engine manufacturers' liability from the general warranty
provisions of section 207 is not necessary to protect manufacturers
from unreasonable warranty recoveries by purchasers. The emission
defect warranty requirements under section 207(a) of the Act require an
engine manufacturer to warrant that the engine shall conform at the
time of sale to applicable emission regulations and that the engine is
free from defects which cause the engine to fail to conform with
applicable regulations for its useful life. In practice, this warranty
is applicable to a specific list of emissions and emissions related
engine components.
It has been consistent EPA policy that misuse and/or improper
maintenance of a vehicle or engine by the purchaser, including
misfueling, may create a reasonable basis for denying warranty coverage
for the specific emissions and emissions related engine components
affected by this misuse. In this case, while use of fuel exempted from
the sulfur content limitation cannot be considered ``misfueling,'' it
will have the same adverse effect on emissions control components.
Thus, EPA believes that where the use of high sulfur diesel fuel will
have an adverse impact on the emissions durability of specific engine
parts or systems, such as a trap oxidizer or other aftertreatment
devices, the manufacturer will have a reasonable basis for denying
warranty coverage on that part or other related parts. However, as has
consistently been EPA's policy, those components not adversely affected
by the use of high sulfur diesel should continue to receive full
emissions warranty coverage.
Recall Liability
Heavy-duty engine manufacturers are responsible for recalling and
repairing engines that do not comply with emission requirements for
their useful lives. EPA tests engine classes to determine whether
engines comply with applicable emission standards when properly used
and maintained. Under section 207(c), if a substantial number of
engines in a specific engine class do not comply when tested, that
entire class can be recalled. If a situation arose in which an engine
fueled with exempted diesel fuel were included in an EPA in-use
compliance test program, EPA would determine, on a case-by-case basis,
if the noncompliance were the result of the use of the exempted diesel
fuel. If it were determined that the exempted fuel was the cause of the
engine's failure to meet the applicable emission standards, that fact
would be considered before seeking a recall of the class. Given the
fact that high sulfur diesel fuel will be used in vehicles in Alaska
until at least October 1, 1996, the Agency does not intend to use test
results (emissions levels) from these vehicles to show noncompliance by
those engines for the purpose of recalling an engine class.9 In
cases in which it was determined that the overall class was subject to
recall, however, individual engines would not be excluded from repair
on the basis of the fuel used. Manufacturers are responsible for
repairing any engine in the recalled class regardless of its history of
tampering or malmaintenance. The situation that would occur in Alaska
is no different and, thus, the manufacturers should remain liable for
performing recall repairs on these engines when required.
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\9\If the Agency determines that areas on the highway system
will have to comply with the low sulfur diesel fuel requirements
beginning October 1, 1996, any motor vehicle introduced into
commerce on or after that date, which is registered in an area
located on the highway system, would be subject to using low sulfur
diesel fuel. These vehicles would also be subject to EPA's in-use
compliance test program. If such vehicles are found to be in
noncompliance with emissions standards, EPA may use the test results
as a basis for determining the recall of an engine class.
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Dyeing Noncomplying Diesel Fuel
The motor vehicle diesel fuel regulations, codified at 40 CFR
80.29, provide that any diesel fuel which does not show visible
evidence of the dye 1,4 dialkylamino-anthraquinone shall be considered
to be available for use in motor vehicles, and subject to the sulfur
and cetane index requirements. Although today's action exempts diesel
fuel in Alaska from the sulfur requirement until at least October 1,
1996, it does not exempt diesel fuel in Alaska from the minimum cetane
requirement.
The Alaska DEC and various refiners in Alaska have indicated to EPA
that all diesel fuel manufactured for sale and marketed in Alaska, for
use in both motor vehicle and nonroad applications, meets the minimum
cetane requirement for motor vehicle diesel fuel. Therefore, dyeing
diesel fuel to be used in nonroad vehicles will be unnecessary in
Alaska as long as it has a minimum cetane index of 40.10 However,
in the event that high sulfur diesel fuel is exported from Alaska to
the lower-48 states, it would be necessary for the importer facility to
add dye to the noncomplying fuel before it is introduced into commerce.
At this time, EPA will not require high-sulfur diesel fuel to be dyed
if it is being exported from the lower-48 states to Alaska. However,
the product must be clearly marked as diesel fuel for export only that
does not comply with the sulfur standard for motor vehicle diesel fuel,
and supporting documentation substantiates that it is for export to
Alaska only.
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\1\0If EPA determines that areas located on the highway system
will be required to use low sulfur diesel fuel beginning October 1,
1996, diesel fuel manufactured for sale and marketed on the highway
system that does not have visible evidence of the dye will be
presumed to be intended for use in motor vehicles and must be in
compliance with the maximum 0.05% sulfur standard, as well as the
minimum cetane standard of 40.
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IV. Final Decision
Presently, refiners in the State of Alaska are the only source of
highway diesel fuels meeting the arctic cloud point specification. Such
fuels are not currently available in the lower 48 states. Given the
petroleum refining, storage and distribution infrastructure in the
State of Alaska, in-state refiners and residents of remote communities
would be most affected if required to comply with the section 211(i)
diesel fuel sulfur content requirement.
In complying with the section 211(i) sulfur requirement, refiners
have the option to invest in the process modifications necessary to
produce low-sulfur diesel fuel for use in motor vehicles, or not invest
in the process modifications and only supply diesel fuel for off-
highway purposes (e.g., heating, generation of electricity, fuel for
non-road vehicles). Most of Alaska's refiners indicated that given the
minuscule size of the highway diesel fuel market in Alaska, they could
not justify the investments required to produce low-sulfur diesel fuel
and would choose to exit the market for highway diesel fuel if this
exemption is not granted. Although one refiner appears to have
discovered a low-cost approach to producing a diesel fuel that meets
the section 211(i) sulfur requirement, this fuel does not meet ASTM
viscosity specifications for No. 1 diesel. Another limitation to this
low-cost approach is that the process modifications involved in
producing low-sulfur diesel fuel would result in a substantial decrease
in yield. The refiner indicated to EPA that even if it could produce a
commercial grade low-sulfur diesel fuel, it would primarily be for
internal use only, as the refiner does not have the capacity to supply
Alaska's highway diesel fuel market. In addition, the cost and
logistics of distribution to areas on the highway system would also be
prohibitive due to the location of the refineries.11
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\1\1Letter from George R. Snodgrass, Staff Engineer, Air
Sciences, ARCO Alaska, Inc., to Ronald G. King of the Alaska DEC,
April 9, 1993.
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Because compliance with the low-sulfur requirement would, at this
time, create a severe economic burden for refiners, distributors and
consumers of diesel fuel in the State of Alaska, EPA grants a three
year exemption from this requirement to communities served by the
Federal Aid Highway System until October 1, 1996.12 This economic
burden is created by unique meteorological conditions in Alaska and
unique distillate product demands as outlined above. As a result of
these conditions, low-sulfur diesel fuel was not available for
commercial use in Alaska by October 1, 1993, when the section 211(i)
requirement went into effect.
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\1\2EPA will consider a community to be served by the Federal
Aid Highway System if it can be reached by an on-road vehicle from
the contiguous road system or by barge on the marine highway system.
All other communities not accessible by the contiguous road or
marine highway system will be considered remote communities.
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EPA believes that a three year exemption from the diesel fuel
sulfur content requirement is a reasonable time period for areas served
by the FAHS. During the exemption period, the State of Alaska plans to
establish a Task Force (in which an EPA representative will
participate) to evaluate further the availability of arctic-grade, low-
sulfur diesel fuel from out-of-state refiners, the costs associated
with importing the fuel, and the costs of storing and distributing the
fuel to areas on the highway system. If the Task Force's evaluation
provides adequate proof that it is not economically feasible to produce
or import an arctic-grade diesel fuel that meets the 0.05% sulfur
requirement, and that it would not be feasible for EPA to impose an
intermediate sulfur content standard for motor vehicle diesel fuel used
in areas served by the highway system, and no other alternatives are
discovered, the State will have adequate time to prepare and submit
another exemption request. If a new exemption request is submitted, EPA
will publish another notice in the Federal Register and re-examine the
issue of an exemption.
Although the State's largest communities, Fairbanks and Anchorage,
are CO nonattainment areas, granting this exemption is not expected to
have any significant impact on ambient CO levels because the sulfur
content in diesel fuels does not directly affect CO emissions as
explained above. Two rural communities are designated nonattainment
areas with respect to PM10; however, motor vehicle exhaust is
responsible for less than one percent of the overall PM10 being
emitted within the borders of these two areas, where the PM10
violations are attributable to fugitive dust. Consequently, EPA
believes that granting a three year exemption to communities served by
the highway system will not have any significant impact on the
attainment prospects of either of these communities.
Whether low-sulfur diesel fuel is produced in Alaska or imported
from the lower 48 states or Canada,\13\ there remains the problem of
segregating the two fuels for transport to communities located off the
highway system and storage of the fuels thereafter. Fuel is delivered
to these communities by barge lines and off-road transport only between
the months of May and October due to ice formation which blocks
waterways leading to these communities for much of the remainder of the
year. The fuel supplied to these communities during the summer months
must last through the winter and spring months until the ice has melted
and resupply can occur. Additionally, the existing fuel storage
facilities limit the number of fuel types that can be stored for use in
these communities. The cost of constructing separate storage facilities
and providing separate tanks for transport of low-sulfur diesel fuel to
remote communities is prohibitive. This is largely due to the high cost
of construction in Alaska and the constraints inherent in distributing
fuel to Alaska's remote communities as outlined above. One alternative
to constructing separate storage facilities is to supply only low-
sulfur diesel fuel to these communities. However, the result would
require use of the higher cost, low-sulfur diesel fuel for all diesel
fuel needs. This would greatly increase the already high cost of living
in these communities since approximately 95% of distillate consumption
in these communities is for nonroad uses, such as operating diesel
powered electrical generators.
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\13\Although low-sulfur diesel fuel is not currently available
in Canada, Environment Canada is working with diesel fuel refiners
in Canada and manufacturers of diesel vehicles to create Memoranda
of Understanding, whereby 0.05% sulfur diesel fuel, which also meets
the cetane index requirement of 40, is expected to be available in
some parts of Canada by October 1, 1994. The availability and cost
of low-sulfur diesel fuel from Canada will be a consideration in
future exemption requests, if any, from Alaska for areas served by
the FAHS.
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Given that highway diesel fuel consumption represents less than 5%
of total distillate consumption in remote communities, that many
villages have a total of only one or two vehicles, and that these
communities are currently in attainment with all air quality standards,
EPA believes that the cost of using low-sulfur diesel fuel in remote
communities far outweighs the benefits. Because the Agency believes
that requiring remote communities to comply with the section 211(i)
sulfur requirement would create a severe economic burden on
distributors of diesel fuel to these communities and the residents of
these communities themselves, and because the Agency believes the
unique conditions faced by remote communities are not likely to change
in the future, the Agency has decided to permanently exempt communities
that are not served by the contiguous road or marine highway system
from the 0.05% (by weight) sulfur requirement of section 211(i) of the
Act.
For the same reasons, the Agency is also exempting Alaska from
those provisions of section 211(g)(2) of the Act that prohibit the
fueling of motor vehicles with high-sulfur diesel fuel.\14\ Although
Alaska did not explicitly request an exemption from this provision in
its petition, it is reasonable to read the petition as including such a
request. Sections 211(g) and 211(i) both restrict the use of high-
sulfur motor vehicle diesel fuel, and exempting Alaska from section
211(i)'s sulfur content requirement but not from section 211(g)'s
related prohibition would provide no relief from the problems Alaska
presented in their petition. Therefore, areas in Alaska served by the
FAHS are exempt from the related 211(g)(2) provisions until October 1,
1996, and remote areas, not accessible by the FAHS, are permanently
exempt from these related provisions.
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\14\This subsection makes it unlawful for any person to
introduce or cause or allow the introduction into any motor vehicle
of diesel fuel which they know or should know contains a
concentration of sulfur in excess of 0.05 percent (by weight). It
would clearly be impossible to hold persons liable for misfueling
with diesel fuel with a sulfur content higher than 0.05%, when such
fuel is permitted to be sold or dispensed for use in motor vehicles.
The exemptions granted today would include exemptions from this
prohibition, but not include the prohibitions in Sec. 211(g)(2)
relating to the minimum cetane index or alternative aromatic levels.
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The exemptions granted today will apply to all persons in Alaska
subject to the prohibitions of sections 211(i) and (g) of the Act and
the diesel fuel requirements in 40 CFR part 80. The exemptions will
apply to all persons who manufacture, sell, supply, offer for sale or
supply, dispense, transport, or introduce into commerce motor vehicle
diesel fuel, or who introduce diesel fuel into motor vehicles, in
Alaska. However, today's action does not exempt Alaska from the minimum
cetane or alternative aromatic content requirement for motor vehicle
diesel fuel. Consequently, diesel fuel intended for use in motor
vehicles remains subject to the cetane or alternative aromatic content
requirement as explained in the ``Public Participation'' section above.
EPA recognizes that the primary purpose of reducing the sulfur
content of diesel fuel is to reduce vehicle particulate emissions.
Additional benefits cited in the diesel final rule (55 FR 34120, August
21, 1990) include a reduction in sulfur dioxide (SO2) emissions
and the ability to use exhaust aftertreatment devices on diesel fueled
vehicles, which would result in some reduction of HC and CO exhaust
emissions. Despite the possibility that the use of high-sulfur diesel
fuel may have an adverse effect on the function of aftertreatment
devices, or cause an increase in particulate sulfate emissions in
diesel vehicles equipped with such devices, any increase in sulfate
particulate emissions would likely be insignificant in Alaska since
current motor vehicle contributions to PM10 emissions are minimal,
as previously discussed in section II, part B. Also, the lower sulfur
requirement for motor vehicle diesel fuel will have no impact on the
attainment prospects of Fairbanks and Anchorage with respect to CO,
since reducing sulfur content has no direct affect on CO emissions,
also discussed in section II, part B. Since Alaska is currently in
attainment with HC and SO2 air quality standards, there is
currently no concern for reducing HC or SO2 emissions.
Additionally, the extent to which exhaust aftertreatment devices will
be used on diesel vehicles, and the extent to which damage would occur
to these devices as a result of using high-sulfur diesel fuel, is
relatively uncertain at this time. Given the limited number of vehicles
that may be affected, EPA plans to handle warranty and recall liability
issues on a case-by-case basis.
The Agency recognizes that granting these exemptions means Alaska
will forego the potential benefits to its air quality resulting from
the use of low-sulfur diesel fuel. The Agency believes that the
potential benefits to Alaska's air quality are minimal and far
outweighed by the increased costs to remote communities, and at this
time, to communities served by the highway system. For this reason, EPA
grants the requested exemptions.
V. Statutory Authority
Authority for the final action in this notice is in sections
211(i)(4) (42 U.S.C. 7545(i)(4)) and 325(a)(1) (42 U.S.C. 7625-1(a)(1))
of the Clean Air Act, as amended.
VI. Administrative Designation and Regulatory Analysis
Under Executive Order (E.O.) 12866, the Agency must judge whether a
regulation is a ``significant regulatory action'' and thus subject to
OMB review and the requirements of the Executive Order. The decision
announced today alleviates any potential adverse economic impacts in
Alaska and is not a significant regulatory action as defined in E.O.
12866.
VII. Impact on Small Entities
Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), the
Administrator certifies that this rule will not have significant
economic impact on a substantial number of small entities. Today's
final decision will not have an adverse economic impact on small
business entities, as the action eases requirements otherwise
applicable to affected entities. Thus, it will not result in a
significant adverse impact on a substantial number of small business
entities.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq., and
implementing regulations, 5 CFR part 1320, do not apply to this action
as it does not involve the collection of information as defined
therein.
Dated: March 14, 1994.
Carol M. Browner,
Administrator.
[FR Doc. 94-6669 Filed 3-21-94; 8:45 am]
BILLING CODE 6560-50-P
