[Federal Register Volume 59, Number 96 (Thursday, May 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12144]


[[Page Unknown]]

[Federal Register: May 19, 1994]


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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80

[FRL-4885-9]

 

Commonwealth of the Northern Mariana Islands; Petition for 
Exemption from the Diesel Fuel Sulfur Requirement

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of direct final decision.

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SUMMARY: On August 31, 1993, the Governor of the Commonwealth of the 
Northern Mariana Islands (CNMI) submitted a petition requesting that 
the Northern Mariana Islands, a commonwealth of the United States, be 
considered for an exemption from the sulfur content requirement for 
motor vehicle diesel fuel, as specified in section 211(i) of the Clean 
Air Act, as amended (Act). This action is a direct final decision that 
grants an exemption to CNMI from the diesel fuel sulfur content 
requirement of section 211(i) and related provisions in section 211(g). 
The exemption is based on EPA's finding that it is unreasonable to 
require persons in CNMI to comply with the sulfur content requirement 
due to the islands' unique geographical, meteorological and economic 
factors, as well as other significant local factors. CNMI did not 
request an exemption from the minimum cetane index of 40.
    This action is being taken without prior proposal because EPA 
believes that this final decision is noncontroversial and because the 
effect of this rulemaking is limited to CNMI.
DATES: This action will be effective on July 18, 1994 unless notice is 
received by June 20, 1994 that someone wishes to submit adverse or 
critical comments. If notice of intent to submit adverse comments is 
received, EPA will publish in the Federal Register timely notice 
withdrawing this action and a subsequent action requesting comment on 
CNMI's petition. Please direct all correspondence to the addresses 
shown below.

ADDRESSES: Comments or notice of intent to submit adverse or critical 
comments should be submitted (in duplicate if possible) to both dockets 
with a copy forwarded to:

    Ms. Mary T. Smith, Director, Field Operations and Support Division 
(6406J), U.S. Environmental Protection Agency, 401 M Street SW., 
Washington, DC 20460. As provided in 40 CFR part 2, a reasonable fee 
may be charged for copying services.
    Copies of information relevant to this petition are available for 
inspection in public docket A-93-41 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, R9-NM-93-1, has 
been established at USEPA Region IX, 75 Hawthorne Street, San 
Francisco, CA 94105, (415) 744-1224, and is available between the hours 
of 8 a.m. to 12 p.m. and 1 p.m. to 5 p.m. on Monday through Friday.

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. Introduction

    This document describes EPA's action to approve as a direct final 
decision CNMI's request for exemption from the diesel sulfur content 
requirement of section 211 of the Act and those related sections of 
EPA's motor vehicle diesel fuel regulations (40 CFR part 80). The 
remainder of this document is divided into eight parts. Section II 
provides the background for this action. Section III summarizes the 
contents of the petition by the Governor of CNMI. Section IV discusses 
other relevant issues regarding this decision. Section V presents EPA's 
proposed final action and underlying rationale. Finally, sections VI 
through IX address EPA's statutory authority, regulatory designation 
and the economic impacts of this decision.

II. 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 (or, alternatively, contains more than 35 percent aromatics). 
Section 211(g)(2) makes it unlawful, effective October 1, 1993, for any 
person to introduce or cause or allow the introduction into any motor 
vehicle of diesel fuel which such person knows or should know contains 
a concentration of sulfur in excess of the standard or fails to meet 
the cetane index minimum. Although CNMI's petition did not specifically 
request an exemption from section 211(g)(2) it is reasonable to read 
the petition as including such a request. 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) requires the 
Administrator to take final action on any petition filed under section 
3251, 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 sections 211(i) and (g). 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.

III. Petition for Exemption

    On August 31, 1993, the Honorable Lorenzo I. DeLeon Guerrero, 
Governor of the Commonwealth of the Northern Mariana Islands (CNMI), 
submitted a petition to exempt motor vehicle diesel fuel in CNMI from 
the sulfur content requirement of section 211(i)(1) of the Act, and the 
EPA regulations promulgated at 40 CFR part 80. The petition is based on 
geographical, meteorological, air quality, and economic factors unique 
to CNMI.
    The exemptions granted today will apply to all persons in CNMI 
subject to the prohibitions of section 211(i)(1) and related provisions 
of section 211(g)(2) 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 CNMI. CNMI is not requesting an 
exemption from the minimum cetane requirement for motor vehicle diesel 
fuel as set forth in sections 211(i)(1) and 211(g)(2).
    The following discussion summarizes the contents of the petition.

A. Geography and Location of the Northern Mariana Islands

    The Commonwealth of the Northern Mariana Islands consists of 14 
islands of volcanic origin that extend in a general north-south 
direction for 388 nautical miles, with a dry land area of 176.5 square 
miles. CNMI lies in the western part of the Pacific Ocean and is 
located 1150 miles south of Tokyo; 1440 miles east of Manila; 108 miles 
north of Guam; and 5280 miles from the U.S. mainland.
    The population centers of CNMI exist on Saipan (38,896 pop.), 
Tinian (2,118 pop.), and Rota (2,295 pop.). The Northern Islands of the 
Commonwealth have populations estimated at 36 people.
    CNMI has approximately 200 miles of roads, of which approximately 
50 percent are paved. It is estimated that CNMI has less than 500 
diesel vehicles, of which approximately 60 are the property of the CNMI 
government.

B. Climate, Meteorology and Air Quality

    CNMI has a tropical climate with consistently warm and humid 
weather. Prevailing trade winds are westward. Development and the 
population of Saipan, the most populated island, are predominately on 
the western side. This meteorology combined with the geographic 
development of the islands and the lack of heavy industry, have a 
beneficial impact on CNMI's air quality.
    At the present time, CNMI is in attainment with all primary 
national ambient air quality standards (NAAQS). Given the small number 
of diesel fueled vehicles on CNMI and the westward nature of the trade 
winds, granting an exemption from the low-sulfur diesel standard is not 
expected to have any significant impact on the ambient air quality of 
CNMI.

C. Economic Factors

    CNMI must rely totally on the costly importation of fuels 
exclusively from refineries in Singapore. Oil companies in Singapore 
are presently not capable of refining diesel fuel that meets the 0.05% 
sulfur requirement. Consequently, in order to comply with the diesel 
regulations, low-sulfur fuel would have to be imported from the U.S. 
mainland at an estimated cost increase of 10 to 20 cents per 
gallon.2 Because of the added costs of shipping materials to CNMI 
for construction projects, construction costs on CNMI are generally 20 
to 40 percent higher than the U.S. mainland. Consequently, a fuel 
supplier on CNMI estimated that in order to comply with the low-sulfur 
diesel fuel standard, four new storage tanks would need to be built for 
the three islands, resulting in $2,000,000 in tank construction costs.
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    \2\Cost estimate provided by CNMI's fuel suppliers.
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    Currently, the cost of diesel fuel on Saipan is approximately 20 
cents per gallon higher than the U.S. mainland, and even higher on the 
islands of Rota and Tinian. The increased costs of using low-sulfur 
fuel would be passed on to diesel fuel consumers on CNMI, which has an 
average annual per capita income of under $7,200.
    Unlike the U.S. mainland, CNMI relies on diesel fuel exclusively to 
provide electrical power. Saipan has two bulk storage facilities for 
diesel fuel, and Rota and Tinian each have one. The main use of this 
diesel fuel is for electrical power generation with an insignificant 
amount used for motor vehicles.

D. Environmental Factors

    Any sulfur dioxide emitted from the diesel-powered vehicles on CNMI 
is dispersed by the islands' trade winds and presents no health risk, 
nor would it cause any air quality standards to be exceeded.

IV. Other Issues

    EPA addressed several other issues in the American Samoa and Guam 
decisions3 and is addressing them here in a manner consistent with 
these earlier decisions.
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    \3\The Agency granted American Samoa's petition for an exemption 
from the diesel sulfur requirements on July 20, 1992, (57 FR 32010), 
and exempted Guam from these same requirements on September 21, 
1993, (58 FR 48968).
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Issue: Sale of Certified Engines

    EPA believes that the prohibition against the sale of uncertified 
engines in the Northern Mariana Islands (as in American Samoa and Guam) 
should continue to apply. Beginning with model year 1994, some heavy-
duty diesel engines may be equipped with devices which will be 
adversely impacted by the level of sulfur in diesel fuel allowed by the 
exemption being granted today, but it is possible that some emissions 
benefits can still be accrued. If the use of high-sulfur diesel fuel 
causes vehicles equipped with aftertreatment devices to emit certain 
pollutants at higher levels than would be emitted from such engines 
without the aftertreatment devices, the Agency may consider, among 
other things, allowing the sale of certified engines without the 
affected devices. As expressed in the American Samoa and Guam 
exemptions, the Agency believes such decisions should be made on a 
case-by-case basis upon receipt of evidence to support those decisions.

Issue: Exemption from Tampering

    EPA believes that a blanket waiver from the tampering prohibition 
for model year 1994 and later heavy-duty engines would allow tampering 
in situations where such tampering may result in an increase in 
emissions. For example, removal of an emissions related device that is 
not affected by the high-sulfur fuel or is rendered less effective but 
not inoperative by the high-sulfur fuel would increase emissions over 
what would have occurred in the absence of tampering.
    Nevertheless, some model year 1994 and later heavy-duty engines may 
be equipped with aftertreatment devices that may be rendered 
inoperative by the use of diesel fuel with a sulfur content exceeding 
0.05% (by weight). The exercise of enforcement discretion may be 
appropriate to allow the removal of such aftertreatment devices. 
However, EPA shall not allow tampering with an emissions control device 
that has been or is likely to be rendered less effective, but not 
rendered inoperative, as a result of the use of higher sulfur fuel 
unless there is evidence that it may actually cause an increase in 
certain pollutants as discussed above.

Issue: Warranty Exemption

    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 on high-sulfur diesel fuel. However, EPA believes an 
exemption 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. In any event, the number of engines likely 
to be covered on CNMI, and the potential for excessive costs or 
disputes, are extremely small. EPA will expeditiously consider 
manufacturers' suggestions for remedies to these situations on a case-
by-case basis as they occur.

Issue: Recall Liability

    Heavy-duty engine manufacturers are responsible for recalling and 
repairing engines that do not comply with emission requirements for 
their useful lives. The 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 exempted diesel 
fuel. If it were determined that the exempted diesel 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 only high-sulfur diesel fuel (over 0.05% by weight) will 
be used in vehicles on CNMI, just as in American Samoa and Guam, the 
Agency does not intend to use test results (emissions levels) from 
those vehicles to show noncompliance by those engines for the purpose 
of recalling an engine class. 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 on CNMI is no different and, thus, the 
manufacturers should remain liable for performing recall repairs on 
these engines when required.

V. Final Action

    Because of its remote location and lack of internal petroleum 
supplies, CNMI must rely totally on the importation of diesel fuel and 
other petroleum products. The Asian refineries currently supplying 
CNMI's diesel fuel needs do not have the capability to produce diesel 
fuel that meets the sulfur requirement of section 211(i) of the Act. 
Given that CNMI has such a small market for motor vehicle diesel fuel, 
those refineries are not likely to invest in the substantial 
modifications necessary to produce low- sulfur diesel fuel. 
Consequently, CNMI would have to import low-sulfur fuel from the U.S. 
mainland at an increased cost of 10-20 cents per gallon, not including 
the additional estimated capital expenditure of $2,000,000 to construct 
separate storage facilities. Since the vast majority of diesel fuel 
used on CNMI is for power generation, it would be economically 
unreasonable for CNMI to use low-sulfur diesel for all of its diesel 
fuel needs.
    By requiring CNMI to comply with the sulfur requirement of section 
211(i), a major economic burden would be placed on the citizens of CNMI 
with little or no environmental benefit. Despite the possibility that 
the use of high- sulfur diesel fuel may cause increased particulate 
sulfate emissions in diesel vehicles equipped with trap systems or 
oxidation catalysts, any increase in sulfate particulates emitted by 
such vehicles would be dispersed by the islands' trade winds and would 
present a minimal threat to public health or the environment. Because 
of the small number of diesel vehicles on CNMI, granting this exemption 
will not likely lead to future problems in maintaining compliance with 
any National Ambient Air Quality Standards.
    The Environmental Protection Agency has decided to exempt the 
Commonwealth of the Northern Mariana Islands from compliance with the 
sulfur content requirements for diesel fuel under sections 211(i)(1) 
and (g)(2) of the Act, and EPA's motor vehicle diesel fuel regulations 
at 40 CFR part 80. The Agency believes that compliance with the sulfur 
requirement is unreasonable given the substantial increased costs to 
persons on CNMI and the minimal benefits to the islands' air quality. 
These cost increases are the direct result of geographical, 
meteorological and economic factors unique to CNMI.
    Although CNMI did not explicitly request an exemption from section 
211(g)(2), 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 CNMI from section 
211(i)'s sulfur requirement but not from section 211(g)'s related 
prohibition would provide no relief from the problems CNMI presented in 
their petition. However, this action does not exempt CNMI from the 
minimum cetane index requirement or the alternative aromatic level 
requirement in these sections of the Act or EPA regulations.4 
Thus, diesel fuel on CNMI that does not contain visible evidence of the 
dye 1,4 dialkylamino-anthraquinone shall be presumed to be in 
compliance with the cetane or alternative aromatic standard for motor 
vehicle diesel fuel.
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    \4\Information provided to the EPA subsequent to the petition 
indicates that the current cetane index of diesel fuel used on CNMI 
is generally near 50. Hence, CNMI will not have any difficulty 
meeting the minimum cetane requirement of section 211(i)(1) of the 
Act.
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    This action is being taken without prior proposal because EPA 
believes that the decision to exempt CNMI from the diesel fuel sulfur 
requirements is noncontroversial and anticipates no significant adverse 
comments on this action. In petitions involving very similar factors, 
EPA exempted American Samoa and Guam from these same diesel fuel 
requirements. Consistent with this decision, EPA has decided to approve 
the exemptions requested by the Governor of the Commonwealth of the 
Northern Mariana Islands as a direct final decision.
    The public should be advised that this action will be effective 
July 18, 1994, unless EPA receives notice by June 20, 1994 that someone 
wishes to submit adverse or critical comments. If such notice is 
received, this action will be withdrawn. If it is withdrawn, EPA will 
publish a document announcing its withdrawal before the effective date 
provided in today's document. A second document will then request 
comments on a proposed decision regarding CNMI's petition.
    This procedure allows the opportunity for public comment and for 
oral presentation of data as required under section 307(d) of the Act. 
This procedure also provides an expedited procedure for final action 
where a decision is not expected to be controversial and no adverse 
comment is expected. Since the October 1, 1993 effective date for the 
low-sulfur fuel requirements has passed, EPA will regard CNMI as a low 
priority for enforcement of the diesel sulfur requirement, pending the 
final decision on CNMI's petition.

VI. Statutory Authority

    Authority for the action described in this document is in section 
325(a)(1) (42 U.S.C. 7625-1(a)(1)) of the Clean Air Act, as amended.

VII. Administrative Designation and Regulatory Analysis

Executive Order 12866

    Under Executive Order 12866, (58 FR 51,735 (October 4, 1993)) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:

    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements,grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order.
    The decision announced today alleviates any potential adverse 
economic impacts on CNMI and is not a significant regulatory action as 
defined in E.O. 12866. OMB has exempted this regulatory action from 
E.O. 12866 review.

VIII. Impact on Small Entities

    Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 601 through 
612, whenever an agency is required to publish a general notice of 
rulemaking for any proposed or final rule, it is required to certify 
that a regulation will not have asignificant adverse economic impact on 
a substantial numberof small business 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. Pursuant to section 605(b) of the Regulatory Flexibility Act, 
5 U.S.C. 605(b), the Administrator certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities.

IX. 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: May 11, 1994.
Carol M. Browner,
Administrator.
[FR Doc. 94-12144 Filed 5-18-94; 8:45 am]
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