[Federal Register Volume 60, Number 54 (Tuesday, March 21, 1995)]
[Notices]
[Pages 14936-14937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6924]



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ENVIRONMENTAL PROTECTION AGENCY

[FRL-5175-7]


Acid Rain Provisions

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: EPA announces extension of the April 1, 1994 and April 1, 1995 
deadlines for small diesel refineries to request allowances under the 
Acid Rain Program. These deadlines are extended to May 15, 1995. This 
extension is warranted by confusion regarding small diesel refinery 
eligibility for allowance allocations.

[[Page 14937]] FOR FURTHER INFORMATION CONTACT: Kathy Barylski, EPA 
Acid Rain Division (6204J), 401 M Street., SW., Washington DC 20460; 
telephone (202) 233-9074.

SUPPLEMENTARY INFORMATION:

1. Background

    Title IV of the Clean Air Act Amendments of 1990 (CAAA) established 
the Acid Rain Program to reduce acid rain in the United States. The 
Acid Rain Program will achieve a 50 percent reduction in sulfur dioxide 
(SO2) emissions from utility units. The SO2 reduction program 
is a flexible market-based approach to environmental management. As 
part of this approach, EPA allocates ``allowances'' to affected utility 
units. Each allowance is a limited authorization to emit up to one ton 
of SO2. At the end of each calendar year, each unit must hold 
allowances in an amount equal to or greater than its SO2 emissions 
for the year. Allowances may be bought, sold, or transferred between 
utilities and other interested parties.
    Section 410(h) of the Clean Air Act provides allowances for small 
diesel refineries that produce diesel fuel that meets the requirements 
of section 211(i) (that ``desulfurize'' diesel fuel) during the period 
from October 1, 1993 through December 31, 1999. Section 410(h) limits 
the annual allocations to small diesel refineries to 35,000, as 
compared to the 8.95 million allowances for Phase II utilities. Also, 
each eligible small diesel refinery is limited to 1500 allowances per 
year. Small diesel refineries are not otherwise affected by the Acid 
Rain Program and do not need the allowances to comply with any 
provision of the Clean Air Act. Thus, the allowances serve as a 
financial benefit to small diesel refineries desulfurizing diesel fuel.

2. Clarification of Eligibility

    The preamble to both the proposed (56 FR 29940, July 7, 1992) and 
final rules (57 FR 15645, March 23, 1993) concerning the allocation of 
acid rain allowances to small refineries stated that only small diesel 
refineries that desulfurized both on-road and off-road diesel fuels 
would be eligible for allowances. However, the text of the rule allowed 
all small refineries desulfurizing diesel fuel eligible to receive 
allowances. 40 CFR 73.90.
    The purpose of today's notice is to remedy any confusion caused by 
the language in both preambles and to provide all eligible small 
refiners with an opportunity to participate in the allowance program. 
This notice clarifies that small refineries do not have to desulfurize 
all diesel fuel to be eligible for allowances and supersedes the 
preamble language.
    Contrary to assertions EPA made in the preamble to the final rule, 
nothing in section 410(h) clearly requires a small refiner to 
desulfurize all of its on-road diesel fuel as well as all of its off-
road diesel fuel to obtain allowances. In particular, the declaration 
in the preamble that the section 410(h)(6) certification provision is 
``insistent'' on both on-road and off-road diesel fuel being 
desulfurized ignores alternative interpretations of the certification 
language that would simply read it to require that allowances could be 
claimed only for the fuel that meets the section 211(i) standard. 
Rather than reading the certification to impose a substantive 
requirement not expressed elsewhere in section 410(h), the better 
reading of the subsection as a whole is that allowances may be claimed 
for all motor diesel fuel meeting section 211(i) that is produced at 
the small refinery. This interpretation is consistent with the statute 
and the text of the regulation and has been EPA policy in applying the 
regulation to the requests for allowances for 1993 fuel 
desulfurization.
    EPA will consider a small diesel refinery eligible for allocation 
of allowances based solely on the requirements in the definition of 
``small diesel refinery'' at 40 CFR 72.2. A small diesel refinery does 
not have to certify that it desulfurizes both on-road and off-road 
diesel fuel.

3. Extension of 1994 and 1995 Filing Deadlines

    EPA acknowledges that the preamble to the final rule, when compared 
to the rule itself, created confusion as to the criteria for 
eligibility. In implementing this program, EPA has followed the 
statutory criteria, as implemented at 40 CFR 73.90 and 72.2.
    After EPA provided notice of the allowances allocated to small 
diesel refineries in 1994 (59 FR 34811, July 7, 1994), several small 
refineries notified EPA that some refineries that had not desulfurized 
100 percent of their diesel throughput were allocated allowances. The 
commenting refineries argued that these refineries, based on the 
criteria stated in the preamble to the rule, should not be eligible for 
allowances. The small refineries that notified EPA sought to be deemed 
eligible for allowances, in addition to the group listed in the Federal 
Register notice.
    In order to be fair to all small diesel refineries, EPA is 
extending the April 1, 1994 deadline until May 15, 1995. Refineries 
that did not apply for certification of eligibility or request 
allowances for 1993 desulfurization because they thought they were not 
eligible should apply for certification of eligibility and request 
allocations no later than May 15, 1995. All refineries that wish to be 
allocated allowances for 1994 desulfurization must request allocations 
no later than May 15, 1995. For each year in the future, the date for 
requests remains April 1.

    Dated: March 15, 1995.
Mary D. Nichols,
Assistant Administrator for Air and Radiation.
[FR Doc. 95-6924 Filed 3-20-95; 8:45 am]
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