[Federal Register Volume 73, Number 134 (Friday, July 11, 2008)]
[Rules and Regulations]
[Pages 40154-40165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-15245]



[[Page 40153]]

-----------------------------------------------------------------------

Part VI





Federal Trade Commission





-----------------------------------------------------------------------



16 CFR Part 306



Automotive Fuel Ratings, Certification and Posting; Final Rule

  Federal Register / Vol. 73, No. 134 / Friday, July 11, 2008 / Rules 
and Regulations  

[[Page 40154]]


-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

16 CFR Part 306

RIN 3084-AA45


Automotive Fuel Ratings, Certification and Posting

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Section 205 of the Energy Independence and Security Act of 
2007 requires the Commission to promulgate biodiesel and biomass-based 
diesel labeling requirements. In accordance with this directive, the 
Commission has completed the required rulemaking and is publishing 
final amendments to its rule for ``Automotive Fuel Ratings, 
Certification and Posting'' (``Fuel Rating Rule'' or ``Rule'') (16 CFR 
Part 306).

DATES: The amendments published in this final rule will become 
effective December 16, 2008. The incorporation by reference of certain 
publications listed in the rule is approved by the Director of the 
Federal Register as of December 16, 2008.

ADDRESSES: Requests for copies of this document should be sent to: 
Public Reference Branch, Room 130, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, D.C. 20580. The complete record of 
this proceeding is also available at that address. Relevant portions of 
the proceeding, including this document, are available at http://www.ftc.gov.

FOR FURTHER INFORMATION CONTACT: Matthew Wilshire, (202) 326-2976, or 
Hampton Newsome, (202) 326-2889, Attorneys, Division of Enforcement, 
Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Avenue, N.W., Washington, D.C. 20580.

SUPPLEMENTARY INFORMATION: Section 205 of the Energy Independence and 
Security Act of 2007 (``EISA'' or the ``Act'') (Pub. L. 110-140) 
requires the Commission to promulgate biodiesel and biomass-based 
diesel labeling requirements within 180 days of the law's passage. The 
Act addresses three categories of biodiesel and biomass-based diesel 
blends and specifies labeling requirements for two of them. The Act 
also contains definitions for the terms ``biomass-based diesel,'' 
``biodiesel,'' and ``biomass-based diesel and biodiesel blends'' 
(hereinafter referred to collectively as ``biodiesel fuels''). 
Following enactment on December 19, 2007, the Commission published a 
Notice of Proposed Rulemaking (``NPRM'') on March 11, 2008.
    Based on comments received in response to the NPRM, the Commission 
now publishes final amendments to the Fuel Rating Rule (16 CFR Part 
306) that incorporate EISA's labeling requirements. Under the final 
amendments, the rating and certification requirements of the existing 
Rule apply to fuels containing more than five percent biodiesel or more 
than five percent biomass-based diesel. This notice provides background 
on the Fuel Rating Rule, a short description of biodiesel and biomass-
based diesel fuels, information about the new statutory labeling 
requirements for biodiesel fuels, a discussion of the comments 
submitted along with an explanation of the changes made in response to 
those comments, and a detailed description of the Commission's final 
amendments.

I. The Fuel Rating Rule

    The Commission first promulgated the Fuel Rating Rule (then titled 
the ``Octane Certification and Posting Rule'') in 1979 in accordance 
with the Petroleum Marketing Practices Act (``PMPA'') (15 U.S.C. 2821 
et seq.). In response to amendments to the PMPA, the Commission 
expanded the scope of the Rule in 1993 to cover liquid alternative 
fuels (58 FR 41356 (Aug. 3, 1993)). The Fuel Rating Rule, therefore, 
covers any alternative liquid fuel distributed for use in any motor 
vehicle including, but ``not limited to,'' methanol, denatured ethanol, 
liquefied natural gas, and coal-derived liquid fuels.\1\ PMPA gives the 
Commission authority to designate methods for fuel rating, fuel 
certification, and posting for these fuels at the point of sale. See 15 
U.S.C. 2822.
---------------------------------------------------------------------------

    \1\ In 1993, the Commission explained that ``[t]he Fuel Rating 
Rule . . . applies to all present and future alternative liquid 
automotive fuels.'' 58 FR 41355, 41358 (Aug. 3, 1993).
---------------------------------------------------------------------------

II. Biodiesel Fuels

    EISA contains labeling requirements for ``biomass-based diesel'' 
and ``biodiesel.'' It defines biomass-based diesel as any fuel 
substitute that is produced from certain renewable resources and that 
meets the registration requirements for fuels and fuel additives 
established by the Environmental Protection Agency (``EPA'') under 42 
U.S.C. 7545,\2\ but not necessarily the requirements of the ASTM 
International\3\ (``ASTM'') standard D6751.\4\
---------------------------------------------------------------------------

    \2\ The EPA has issued registration requirements for fuels and 
fuel additives (40 CFR Part 79 ``Registration of Fuels and Fuel 
Additives'') pursuant to 42 U.S.C. 7545. Those requirements 
constitute EPA's regulatory program for the registration of motor 
vehicle diesel fuel (including biomass-based diesel and biodiesel), 
motor vehicle gasoline, and their additives.
    \3\ ASTM International was formerly known as, and is referred to 
in the Fuel Rating Rule as, the American Society for Testing and 
Materials.
    \4\ ASTM D6751 is titled: ``Standard Specification for Biodiesel 
Fuel Blend Stock (B100) for Middle Distillate Fuels.'' EISA defines 
``biomass-based diesel'' by referencing the definition of the term 
``biodiesel'' provided in Section 312(f) of the Energy Policy Act of 
1992 (42 U.S.C. 13220(f)). The definition reads: ``a diesel fuel 
substitute produced from nonpetroleum renewable resources that meets 
the registration requirements for fuels and fuel additives 
established by the Environmental Protection Agency under [42 U.S.C. 
7545],'' and includes fuel derived from ``(i) animal wastes, 
including poultry fats and poultry wastes, and other waste 
materials; or (ii) municipal solid waste and sludges and oils 
derived from wastewater and the treatment of wastewater.'' 42 U.S.C. 
13220(f)(1)(A) and (B).
---------------------------------------------------------------------------

    ``Biodiesel,'' as defined by EISA, is a diesel fuel produced using 
alcohol to transform animal fat or vegetable oil. Specifically, EISA 
(Sec. 205(c)) defines ``biodiesel'' to mean ``the monoalkyl esters of 
long chain fatty acids derived from plant or animal matter that meet: 
(A) the registration requirements for fuels and fuel additives under 
this section [42 U.S.C. 7545];\5\ and (B) the requirements of ASTM 
standard D6751.''\6\ Biodiesel serves as a substitute for diesel fuel 
for some diesel vehicles and is usually blended with diesel for sale at 
retail pumps. According to the Department of Energy, biodiesel in the 
United States is usually made from soybean oil or recycled restaurant 
grease. Some estimates suggest that biodiesel sales increased from 15 
million gallons in 2002 to 250 million gallons in 2006.\7\
---------------------------------------------------------------------------

    \5\ EISA's definition of ``biodiesel'' specifically refers to 
the registration requirements for fuels and fuel additives under 
``this section.'' However, there are no such registration 
requirements in Section 205 of EISA nor are there any in the FTC's 
Fuel Rating Rule (16 CFR Part 306). Accordingly, we assume the 
phrase ``this section'' refers to the EPA's registration 
requirements for fuels and fuel additives (40 CFR Part 79 
``Registration of Fuels and Fuel Additives'') issued pursuant to 42 
U.S.C. 7545. Therefore, the definition of ``biodiesel'' in the final 
amendments references the requirements of 40 CFR Part 79.
    \6\ Because biodiesel, as defined by EISA, meets EPA's fuel 
registration requirements and is derived from renewable resources, 
biodiesel also meets the definition of biomass-based diesel, 
effectively making biodiesel a subset of biomass-based diesel.
    \7\ See (http://www1.eere.energy.gov/biomass/renewable_diesel.html) (2002 estimate) and (http://www.biodiesel.org/pdf_files/fuelfactsheets/Biodiesel_Sales_Graph.pdf) (2006 estimate).
---------------------------------------------------------------------------

    Finally, EISA (Sec. 205(c)(4)) defines ``biomass-based diesel and 
biodiesel blends'' as fuels consisting of ```biomass-based diesel' or 
`biodiesel' . . . blended with petroleum-based diesel fuel.''
    Although the FTC has never specifically addressed fuel labeling 
requirements for biodiesel fuels, the broad authority under PMPA allows 
the Commission to include these fuels

[[Page 40155]]

under the rating, certification, and posting requirements of the Fuel 
Rating Rule. In light of Congress's specific directive in EISA to 
promulgate biodiesel fuel labeling requirements, the Commission now 
amends the Fuel Rating Rule to include biodiesel fuels in accordance 
with that directive.\8\
---------------------------------------------------------------------------

    \8\ The Fuel Rating Rule currently does not specify labeling 
requirements for petroleum-based diesel. See 58 FR 41356, 41368 
(Aug. 3, 1993). The Commission, therefore, is not amending the Rule 
to include such requirements for diesel fuel as part of this 
proceeding.
---------------------------------------------------------------------------

III. EISA's Directive

    Section 205(a) of EISA provides that ``[e]ach retail diesel fuel 
pump shall be labeled in a manner that informs consumers of the percent 
of biomass-based diesel or biodiesel that is contained in the biomass-
based diesel blend or biodiesel blend that is offered for sale, as 
determined by the Federal Trade Commission.'' EISA also specifically 
addresses three categories of biodiesel fuel blends, requiring labels 
with precise wording for two. First, fuel blends containing no more 
than five percent biodiesel and no more than five percent biomass-based 
diesel, and that meet ASTM D975 (``Standard Specification for Diesel 
Fuel Oils''), need not be labeled.\9\ Second, fuel blends containing 
more than five but no more than twenty percent biomass-based diesel or 
biodiesel ``shall be labeled `contains biomass-based diesel or 
biodiesel in quantities between 5 percent and 20 percent.''' EISA, Sec. 
205(b)(2) (emphasis added). Finally, blends containing more than twenty 
percent biodiesel or biomass-based diesel ``shall be labeled `contains 
more than 20 percent biomass-based diesel or biodiesel.''' EISA, Sec. 
205(b)(3) (emphasis added). Significantly, although Section 205 of EISA 
furnishes precise, mandatory label language, the Act leaves the FTC 
with discretion to determine the specific size, layout, and color of 
the required label, as well as to require any additional wording 
necessary to ``inform[] consumers of the percent of biomass-based 
diesel or biodiesel that is contained in the biomass-based diesel blend 
or biodiesel blend that is offered for sale.'' EISA, Sec. 205(a).
---------------------------------------------------------------------------

    \9\ Specifically, EISA states that these fuels ``shall not 
require any additional labels.'' EISA, Sec. 205(b)(1). We understand 
this language to mean that although EISA does not require labeling 
of biodiesel and biomass-based diesel blends at concentrations of 
five percent or less, any label requirements otherwise applicable to 
such diesel fuel will continue to apply.
---------------------------------------------------------------------------

IV. Procedural History

    On March 11, 2008, the Commission published an NPRM requesting 
comment on proposed amendments to the Rule. (73 FR 12916). The 
Commission designed the proposed amendments to: (1) explicitly include 
fuels containing more than five percent biodiesel or more than five 
percent biomass-based diesel as alternative fuels subject to the 
rating, certification, and posting requirements of the Fuel Rating 
Rule; and (2) promulgate labeling requirements for those fuels 
consistent with EISA's requirements. The NPRM also raised specific 
questions for comment.

V. Comments Received and the Commission's Response

    The Commission received twelve comments.\10\ Generally, the 
comments supported the FTC's proposed amendments. However, several 
commenters raised issues. This section addresses these issues in the 
following order: separate labeling for fuels containing biodiesel and 
for fuels containing biomass-based diesel; the appropriateness of the 
labeling scheme generally; the appropriate background color for the 
labels; modifications to the labels proposed by the commenters to 
benefit consumers; and whether to require specific percentage 
designations only for biodiesel fuel blends over twenty percent.
---------------------------------------------------------------------------

    \10\ Comments are available at: (http://www.ftc.gov/os/comments/biodiesel/index.shtm.)
---------------------------------------------------------------------------

A. Separate Labeling for Fuels Containing Biodiesel and Biomass-Based 
Diesel

COMMENTS:

    Several commenters noted that biomass-based diesel and biodiesel 
have significantly different qualities and, therefore, urged their 
separate treatment for the purposes of rating, certification, and 
labeling. Commenters further asserted that labeling both of them as 
``biodiesel blends,'' as proposed in the NPRM, would lead to consumer 
confusion. They therefore proposed various revisions to eliminate that 
confusion.
    Biomass-Based Diesel as Distinct from Biodiesel
    Almost all of the comments expressed the view that biodiesel 
differs significantly from biomass-based diesel. For example, the 
Illinois Soybean Association (``ISA'') stated that
 there is a significant difference between biodiesel and biomass-based 
diesel fuel; consequently they should be labeled separately. Biodiesel 
is a defined fuel with a specific ASTM standard--D6751. . . . Biomass-
based diesel fuel is a category of fuels, and could contain a number of 
different feedstocks and products, none of which currently have an ASTM 
specification.
In addition, the National Biodiesel Board (``NBB'') noted that several 
types of fuels conceivably could qualify as biomass-based diesel. Most 
significantly, ConocoPhillips, a producer of a type of biomass-based 
diesel known as renewable diesel, explained that, unlike biodiesel 
blends, its fuel is ``essentially indistinguishable from ASTM D 975 
defined diesel fuel.'' ConocoPhillips noted that biodiesel blends 
contain methyl ester and that engine manufacturers generally recommend 
using fuels containing no more than a certain amount of methyl ester. 
By contrast, ConocoPhillip's renewable diesel blends do not currently 
contain methyl ester.
    In addition, the American Trucking Associations, Inc. (``ATA'') 
agreed with ConocoPhillips' assertion that manufacturer warranties 
generally require a consumer to use fuels containing no more than a 
specific percentage of biodiesel. ATA stated that heavy duty diesel 
engines sold in America ``are designed and warranted to operate on 
diesel fuel formulated to meet [the ASTM] D-975 fuel standard.'' Thus, 
use of any fuel, including renewable diesel, that meets ASTM D975 will 
satisfy engine warranty standards for heavy duty diesel engines.
    Archer Daniels Midland Company (``ADM''), however, asserted that 
``biomass-based diesel and Biodiesel [sic] mean the same thing'' for 
purposes of labeling because EISA defines biomass-based diesel to mean 
``biodiesel'' as defined in Section 312(f) of the Energy Policy Act of 
1992.

    Possible Consumer Harm from Confusion of Biodiesel and Biomass-
Based Diesel

    Because biomass-based diesel and biodiesel may have different 
properties, commenters expressed concerns that treating them as the 
same fuel for purposes of rating, certification, and labeling would 
cause consumer harm. NBB explained that some vehicle manufacturers' 
warranties require use of only biodiesel that meets the requirements of 
ASTM D6751 or diesel fuel that meets ASTM D975, and that different 
types of biomass-based diesel fuels would not necessarily meet this 
standard. NBB further asserted that using the designation ``B-XX'' for 
both fuels, as proposed in the NPRM, would confuse consumers regarding 
what fuel they are purchasing because consumers associate that 
designation solely with biodiesel blends. ADM and ISA likewise asserted 
that the proposed labels would

[[Page 40156]]

cause consumer confusion regarding the content and properties of the 
biodiesel and biomass-based diesel blends. Finally, ConocoPhillips 
observed that, under the proposed amendments, fuel blends containing 
five percent or less renewable diesel and five percent or less 
biodiesel, but with a combined concentration of biodiesel and biomass-
based diesel of over five percent, would be labeled ``contains biomass-
based diesel or biodiesel in quantities between 5 percent and 20 
percent.'' Those blends, however, would not differ in terms of 
suitability for various engines from diesel fuel containing five 
percent or less combined biodiesel and biomass-based diesel, for which 
there is no label requirement.

    Proposed Solutions

    Commenters suggested several changes to distinguish biodiesel from 
biomass-based diesel. NBB proposed that ``a separate designation be 
required for a `biodiesel blend''' and that the FTC ``create a system 
that allows each type of fuel within the biomass-based diesel pool to 
have its own label.'' NBB further urged reserving the designation ``B-
XX'' for only biodiesel blends. Similarly, ConocoPhillips recommended 
that ``[r]ather than having headers read `B-100 Biodiesel' and `B-20 
Biodiesel Blend,' [the headers should] be changed to `B-100 Biomass 
Diesel' and `B-20 Biomass Diesel Blend.''' ISA suggested prohibiting 
the use of the term ``biodiesel'' altogether on a label unless the fuel 
actually contains biodiesel. Finally, as an alternative to changing the 
label, the Alliance of Automobile Manufacturers (``AAM'') recommended 
altering the definition of ``biomass-based diesel'' in the Fuel Rating 
Rule to define it explicitly as ``biodiesel as defined in section 
312(f) of the Energy Policy Act of 1992.''

DISCUSSION:

    Based on the comments, it appears that fuel containing biomass-
based diesel can differ significantly from fuel containing biodiesel 
and that these differences are significant for purposes of engine 
warranties. As the commenters explained, consumers may lose warranty 
coverage if they use fuels containing biodiesel in too high a 
concentration, whereas the use of the only biomass-based diesel 
currently on the market would not affect warranty coverage at any 
concentration. Furthermore, as the Commission noted in the NPRM, many 
original equipment manufacturers and customer service departments set 
biodiesel warranty thresholds at five or twenty percent.\11\ In order 
to make these thresholds meaningful, it is critical that consumers 
understand whether a fuel contains biodiesel or biomass-based diesel. 
However, the label proposed in the NPRM makes no distinction between 
fuels containing biodiesel and biomass-based diesel. Therefore, it 
might lead consumers to mistake a biodiesel blend for a biomass-based 
diesel blend and, thus, wrongly conclude that they can properly use a 
biodiesel blend without voiding their warranty.
---------------------------------------------------------------------------

    \11\ See, e.g., ``OEM Warranty Statements and Use of Biodiesel 
Blends over 5% (B5),'' National Biodiesel Board, available at: 
(http://www.biodiesel.org/pdf_files/B5_warranty_statement_32206.pdf.)
---------------------------------------------------------------------------

    The Commission's proposed label also could cause a related problem. 
If a fuel contained both biodiesel and biomass-based diesel, the 
proposed amendments would require retailers to combine the percentage 
of biodiesel and biomass-based diesel present in the fuel for labeling 
purposes, thereby potentially confusing consumers regarding whether the 
fuel is suitable for their engines.\12\
---------------------------------------------------------------------------

    \12\ For example, the proposed label for fuel containing 
eighteen percent biodiesel and three percent biomass-based diesel 
would be ``B-21 Biodiesel Blend,'' wrongly implying that the amount 
of biodiesel in the fuel exceeds the significant threshold of twenty 
percent.
---------------------------------------------------------------------------

    Accordingly, as described in detail below, the Commission is 
altering the proposed amendments in four ways. First, the final 
amendments revise the definition of biomass-based diesel to make clear 
that biodiesel does not fall within the definition of biomass-based 
diesel for the purposes of the Fuel Rating Rule. Clarifying that the 
two fuels are distinct allows the Commission to require different 
labels for each.
    Second, the final amendments require separate labels to disclose 
the presence of biodiesel and biomass-based diesel in a fuel blend.\13\ 
The proposed amendments contained certain font, formatting, and heading 
requirements for biodiesel fuel labels. The final amendments retain 
these provisions. However, to distinguish between the two fuels, they 
also require biomass-based diesel labels to display headers that differ 
from those for biodiesel. Specifically, headers for biomass-based 
diesel labels will read ``Biomass-Based Diesel Blend,'' instead of 
``Biodiesel Blend.'' In addition, while the headers for biomass-based 
diesel blends, like those for biodiesel blends, must contain a specific 
disclosure of the exact percentage of biomass-based diesel in blends 
over twenty percent (and may contain such a disclosure for blends below 
that level), the labels will not use the ``B-XX'' designation. Instead, 
they will display the numerical representation of the volume followed 
by the percentage sign (e.g. ``25%''). The final amendments limit the 
use of the ``B-XX'' designation to fuels containing biodiesel because, 
according to the commenters, consumers associate that designation 
solely with biodiesel blends.
---------------------------------------------------------------------------

    \13\ As required by EISA, the Commission does not require 
retailers to disclose the presence of five percent or less biomass-
based diesel in a fuel blend. However, if a blend contains more than 
five percent of biomass-based diesel and more than five percent 
biodiesel, the final amendments require both a biodiesel label and a 
biomass-based diesel label on the pump.
---------------------------------------------------------------------------

    Similarly, the final amendments provide separate labels for 100 
percent (or ``neat'') biodiesel and biomass-based diesel. Neat biomass-
based diesel labels will have a header reading ``100% Biomass-Based 
Diesel,'' with language underneath the header reading ``contains 100 
percent biomass-based diesel.'' The label for neat biodiesel will 
remain the same as proposed in the NPRM (i.e. ``B-100 Biodiesel''), 
except that the language underneath the header will read: ``contains 
100 percent biodiesel.'' The Commission is changing the text beneath 
the header to assist consumers in distinguishing neat biodiesel and 
neat biomass-based diesel.\14\
---------------------------------------------------------------------------

    \14\ As discussed below, the Commission is not altering the text 
below the header for biodiesel and biomass-based diesel blends. 
However, because EISA only provides specific labeling requirements 
for biodiesel and biomass-based diesel blends--and neat biodiesel 
and biomass-based diesel are not blends--the Commission has 
discretion to omit the term ``biomass-based diesel'' from neat 
biodiesel labels and vice versa.
---------------------------------------------------------------------------

    Third, to distinguish the fuels further, the final amendments 
change the background color for fuels containing biomass-based diesel 
to orange, rather than the blue required for biodiesel labels.\15\ The 
Commission institutes this change for two reasons. First, the orange 
biomass-based diesel label will contrast with the blue biodiesel label, 
making it easier for consumers to distinguish between the two fuels. 
Second, biomass-based diesel, at least as it is currently sold, does 
not appear to pose engine warranty problems, or other unique concerns, 
for consumers. It is, therefore, appropriate to use the same background 
color as that used for all other previously covered alternative fuels.
---------------------------------------------------------------------------

    \15\ In the NPRM, the Commission proposed biodiesel fuel labels 
with a background color of purple. For reasons explained in Section 
V.C below, the Commission is now changing the required color for 
biodiesel to blue.
---------------------------------------------------------------------------

    Finally, the Commission is revising the amendments to make clear 
that, for purposes of determining whether and how to disclose the 
presence of

[[Page 40157]]

biodiesel or biomass-based diesel in fuels, their concentrations should 
be counted separately. Thus, the final amendments define the term 
``biodiesel blend'' as a blend containing more than five percent 
biodiesel, and it defines a new term, ``biomass-based diesel blend,'' 
as a blend containing more than five percent biomass-based diesel. The 
final amendments also explicitly do not cover blends that ``contain 
less than or equal to 5 percent biodiesel by volume and less than or 
equal to 5 percent biomass-based diesel by volume.'' These changes are 
consistent with EISA's provision that retailers need not disclose 
biodiesel and biomass-based diesel in concentrations of five percent or 
less.
    Furthermore, the Commission is incorporating these new terms into 
the rating and certification requirements. Therefore, covered entities 
must rate and certify the percentage of biodiesel and/or biomass-based 
diesel in a fuel blend independently. As noted above, because biodiesel 
and biomass-based diesel must be separately rated and disclosed on 
separate labels, it is theoretically possible that a single fuel blend 
could contain more than five percent of each and, therefore, would 
require two separate labels. However, the Commission has no evidence 
that there is any substantial market for such dual blends at this time. 
If this requirement becomes unwieldy at some future date, any affected 
party may petition for revisions to the Rule.
    Although the final amendments require separate labeling of 
biodiesel and biomass-based diesel fuels, they do not change the text 
below the label's black band for either biodiesel or biomass-based 
diesel blends, notwithstanding several commenters' views that the text 
could confuse consumers. As explained above, EISA requires that this 
specific language appear on the label. Section 205(b) explicitly states 
that blends at concentrations of more than five percent and no more 
than twenty percent ``shall be labeled `contains biomass-based diesel 
or biodiesel in quantities between 5 and 20 percent''' and that blends 
at concentrations above twenty percent ``shall be labeled `contains 
more than 20 percent biomass-based diesel or biodiesel.''' EISA, Sec. 
205(b) (emphasis added). The Commission, therefore, does not have 
discretion to allow different language.

    Examples

    To illustrate the application of the revised labeling requirements, 
the Commission provides the following examples:
    1) A fuel blend containing five percent biomass-based diesel and 
five percent biodiesel does not require any additional labeling because 
the Rule only applies to diesel blends containing more than five 
percent biodiesel and/or more than five percent biomass-based diesel.
    2) A blend containing six percent biodiesel and five percent 
biomass-based diesel requires a blue label with either ``B-6 Biodiesel 
Blend'' or ``Biodiesel Blend'' in the header and with the text 
``contains biomass-based diesel or biodiesel in quantities between 5 
and 20 percent'' below the header. The header of the label does not 
disclose the presence of biomass-based diesel because it comprises only 
five percent of the fuel.
    3) A blend containing twenty-one percent biodiesel and five percent 
biomass-based diesel requires a blue label with ``B-21 Biodiesel 
Blend'' in the header and with the text ``contains more than 20 percent 
biomass-based diesel or biodiesel'' below the header. The header of the 
label does not disclose the presence of biomass-based diesel because it 
comprises only five percent of the fuel by volume. Furthermore, because 
the fuel contains only five percent biomass-based diesel, retailers 
should not include it for the purposes of determining the specific 
blend designation.

B. General Appropriateness of Label

COMMENTS:

    None of the commenters objected to the Commission's explicit 
inclusion of fuels containing more than five percent biodiesel or 
biomass-based diesel within the scope of the Fuel Rating Rule, nor did 
commenters object to the size or format of the labels. For example, ATA 
supported the labels as ``distinctive and not likely to confuse 
consumers.'' The commenters also concurred with the general categories 
of information disclosed on the labels. For example, the American 
Petroleum Institute (``API'') expressed the view that the labels 
``provide[] the consumer with the information necessary to fuel 
properly his/her vehicle.''

DISCUSSION:

    Because the size, format, and general layout requirements of the 
biodiesel and biomass-based diesel blend labels are consistent with 
requirements for other fuels, and because none of the commenters 
objected to those requirements, the Commission retains those aspects of 
the proposed labels.

C. Appropriateness of Background Color

    The NPRM proposed a background color of purple, PMS 2562, for 
biodiesel and biomass-based diesel labels. The Commission requested 
comment on whether purple, blue, or another color was most appropriate.

COMMENTS:

    API supported purple as the background color, noting that it 
``provides an appropriate contrast between regular diesel labels (often 
green), gasoline-octane labels (yellow) and E85 labels (orange).'' Most 
commenters, however, believed a different color would be more 
appropriate for biodiesel. Significantly, both ISA and ADM favored a 
blue background because it would be consistent with state biodiesel 
labeling requirements already in place.

DISCUSSION:

    The Commission agrees with ISA and ADM that biodiesel labels should 
have a blue background. A blue label is consistent with pre-existing 
state requirements, and blue will sufficiently contrast with colors 
used for other fuel labels, reducing the risk of consumers mistaking 
biodiesel for biomass-based diesel.\16\
---------------------------------------------------------------------------

    \16\ Some commenters suggested green as an appropriate 
background color for biodiesel. However, as noted by API, the color 
green is associated with diesel fuel, and biodiesel labels should 
present a significant contrast to 100 percent petroleum-based diesel 
to avoid the risk of confusion.
---------------------------------------------------------------------------

    The final amendments, however, require biomass-based diesel labels 
to have an orange background. As explained above, the use of currently 
available biomass-based diesel blends does not raise the same engine 
warranty concerns as biodiesel, and, therefore, it is appropriate to 
use the same orange background as that used for all other previously 
covered alternative fuels.

D. Proposed Modifications to Increase Benefits to Consumers

COMMENTS:

    Five commenters proposed modifications to the labels to increase 
the benefit to consumers. AAM proposed adding the text: ``Consult 
manufacturer fuel recommendations.'' ATA suggested requiring a similar 
warning on labels for blends of more than twenty percent biodiesel. API 
suggested adding the word ``MAXIMUM'' in all capital letters to precede 
the specific blend disclosure for blends above B-20. Similarly, BP 
Products North America (``BP'') urged altering proposed Part 306.5(b) 
to

[[Page 40158]]

require that the labels display the maximum volume of biodiesel and/or 
biomass-based diesel in a blend. Finally, the Engine Manufacturers 
Association (``EMA'') proposed requiring the label for neat biodiesel 
to state whether the fuel meets the standards of ASTM D6751.

DISCUSSION:

    The final amendments do not incorporate these suggestions. 
Requiring a ``consult manufacturer fuel recommendations'' warning is 
inconsistent with the Fuel Rating Rule's treatment of other alternative 
fuels. The Commission notes, however, that nothing in the regulations 
prohibits a retailer from disclosing the warnings proposed by AMA and 
ATA. In addition, the Commission does not agree with API's and BP's 
suggestion that the term ``maximum'' appear on biodiesel fuel labels. 
The final amendments already require ratings and posting of a specific 
percentage designation for biodiesel fuels at concentrations of over 
twenty percent and, therefore, such a designation would be confusing. 
Finally, the Commission declines to adopt EMA's proposed language for 
neat biodiesel. In light of the final amendments, which now require 
different labels for neat biodiesel and neat biomass-based diesel, 
retailers may only label a fuel as ``Biodiesel'' if it meets the 
definition of ``biodiesel'' in Part 306.0, which specifically 
incorporates ASTM D6751 by reference.

E. Allowing Nonspecific Percentage Designations (``Biodiesel Blend'') 
for Blends at Concentrations of Up to Twenty Percent and Requiring 
Specific Designations (``B-XX'') for Concentrations Exceeding Twenty 
Percent

    In the NPRM, the Commission sought comment on whether it should 
revise the Fuel Rating Rule to require a specific designation (e.g., 
``B-15'') of the percentage of biodiesel and/or biomass-based diesel in 
a blend. As proposed in the NPRM, the amendments would have required 
specific designations for concentrations in excess of twenty percent, 
and allowed, but not required, the designations for concentrations up 
to twenty percent.

COMMENTS:

    Concentrations of Twenty Percent or Less
    All commenters agreed that the final amendments should not require 
a specific percentage disclosure at concentrations of twenty percent or 
less. Several noted that compliance with such a requirement would be 
impractical. ATA, for example, asserted that retailers often mix 
different biodiesel fuels with concentration levels ranging from five 
to twenty percent at the point of sale, making it extremely difficult 
to know the exact concentration of a biodiesel fuel blend sold from a 
given dispenser. Similarly, the Petroleum Marketers Association of 
America (``PMAA'') noted that ``[a] label with a generic range would 
give retailers the flexibility to increase or decrease biodiesel blends 
to meet supply without changing the label.'' In addition, EMA explained 
that ``many manufacturers approve the use of biodiesel blends up to 
20%. Consequently, there is no quality reason or rationale to make a 
specific delineation among blends less than 20%. A single designation 
is sufficient to assure the quality of a blended fuel.''
    However, while not advocating for an exact percentage designation, 
ATA and individual commenter Johnas Carson suggested requiring 
disclosure of the percentage of biodiesel and biomass-based diesel in a 
fuel using blend increments of five percentage points (e.g., ``contains 
biodiesel in amounts between B-10 and B-15'').
    Concentrations of More than Twenty Percent
    Commenters generally supported the Commission's proposal to require 
a specific designation when disclosing the presence of more than twenty 
percent biodiesel and/or biomass-based diesel in a blend. NBB explained 
that for blends exceeding twenty percent,
 performance varies based on climate, raw materials, and equipment, 
which means consumers need to be more aware of the specific blend level 
they are purchasing. Further, the impact on equipment of higher blends 
has not been thoroughly tested and there is a higher likelihood of 
known problems or issues with high blends that are not present or are 
of lesser importance when using blends of B20 or lower. Blends higher 
than 20% can not be considered a direct replacement for petroleum 
diesel fuel and may require significant additional precautions, 
handling and maintenance considerations as well as potential fuel 
system and engine modification.
Comments from AAM, EMA, ADM, and BP all concurred with NBB's position. 
The only objection to a specific designation came from ATA, which 
argued for disclosure of concentration levels using five percentage 
point increments for blends at all concentrations.

DISCUSSION:

    The Commission agrees with the majority of commenters that it 
should retain the requirements of nonspecific designations of biodiesel 
or biomass-based diesel in concentrations of over five, but not over 
twenty, percent and continue to require specific designations for 
blends over twenty percent. The Commission understands that 
manufacturers' warranties generally allow use of biodiesel blends at 
concentrations of either no more than five or no more than twenty 
percent. Thus, there is less benefit to consumers from disclosure of a 
specific percentage in this range. Indeed, EISA implicitly recognizes 
this fact by prescribing the same labeling language for blends in the 
range. Furthermore, based on ATA's comment, retailers apparently would 
have difficulty determining the precise percentage of biodiesel or 
biomass-based diesel in blends up to twenty percent. Thus, requiring a 
specific designation for these blends would impose costs on industry 
members without significantly benefitting consumers. The seller, 
however, would have discretion to disclose the percentage of biodiesel 
or biomass-based diesel in blends up to twenty percent.\17\
---------------------------------------------------------------------------

    \17\ See note 23, infra, and accompanying text.
---------------------------------------------------------------------------

    By contrast, as noted in NBB's comment, the performance of blends 
containing more than twenty percent biodiesel is uncertain and can vary 
significantly. In addition, we understand that there are no biomass-
based diesel fuels currently marketed at concentrations above twenty 
percent, and the properties of any such fuels that may be marketed in 
the future are unknown. Moreover, the commenters did not object to a 
specific designation for biomass-based diesel blends above twenty 
percent. Therefore, the Commission is retaining the specific percentage 
designation requirement for biodiesel and biomass-based diesel blends 
of more than twenty percent. The Commission further notes that this 
requirement will provide information of interest to those consumers who 
favor a fuel blend with a high percentage of nonpetroleum 
components.\18\
---------------------------------------------------------------------------

    \18\ Commenters raised two additional topics that went beyond 
the scope of EISA or the Fuel Rating Rule. First, API asserted that 
biodiesel may not be compatible with ``the existing retail-diesel 
infrastructure'' and states that ``[t]his is an area that we believe 
should be addressed.'' Second, individual commenter Jeff Cohan 
inquired about accuracy of media reports concerning the interaction 
of biodiesel fuels and fuel efficiency requirements. As these 
comments involve matters beyond the scope of this rulemaking, the 
Commission does not address them.

---------------------------------------------------------------------------

[[Page 40159]]

VI. Final Amendments to the Fuel Rating Rule

    In light of the comments described above, and pursuant to EISA's 
directive, the Commission is amending the Fuel Rating Rule to: 1) 
incorporate the definitions for the terms ``biomass-based diesel,'' 
``biodiesel,'' and ``biomass-based diesel and biodiesel blends'' 
contained in Section 205 of EISA; 2) revise the definition of 
``automotive fuel'' to make clear that those fuels are subject to the 
rating, certification, and posting requirements of the Fuel Rating 
Rule; and 3) require labeling of fuels containing more than five 
percent biomass-based diesel and/or more than five percent biodiesel, 
consistent with the language in Section 205 of EISA and state model 
rules proposed by the National Conference on Weights and Measures 
(``NCWM'').

A. Definitions

    As noted above, Section 205 of EISA requires the Commission to 
promulgate labeling requirements for ``biomass-based diesel,'' 
``biodiesel,'' and ``biomass-based diesel and biodiesel blends,'' as 
those terms are defined in the Section 205(c) of the statute. The 
Commission, therefore, adds the statutorily required terms to Part 
306.0 of the Fuel Rating Rule. Additionally, the Commission adds 
``biomass-based diesel blend'' and ``biodiesel blend'' as separate 
terms to allow for separate rating, certification, and labeling 
requirements.

B. Alternative Fuels, Automotive Fuel Rating, and Certification

    Part 306.0(i)(2) of the Rule currently lists examples of 
alternative fuels, but specifically states that alternative fuels are 
``not limited to'' those listed. The final amendments expressly add 
biomass-based diesel and biodiesel, as well as blends containing more 
than five percent biodiesel and/or five percent biomass-based diesel, 
to this nonexclusive list. By specifically including these terms, the 
final amendments clarify that these fuels are covered by the rating and 
certification requirements of Part 306 of the Rule.\19\
---------------------------------------------------------------------------

    \19\ Consistent with EISA (Sec. 205(b)(1)), the final amendments 
to Part 306.0 indicate that biodiesel blends and biomass-based 
diesel blends that contain less than or equal to five percent 
biomass-based diesel and less than or equal to five percent 
biodiesel by volume, and that meet ASTM D975, are not automotive 
fuels covered by the requirements of this Rule.
---------------------------------------------------------------------------

    Incorporating biodiesel fuels into the Fuel Rating Rule and 
subjecting them to these rating and certification requirements should 
help ensure the accuracy of the information on biodiesel fuel labels. 
The current rating requirements in Part 306.5 and the certification 
procedures in Part 306.6 provide the means to substantiate fuel ratings 
throughout the chain of sale. Specifically, under the current Rule, 
refiners, importers, producers, and distributors of alternative liquid 
automotive fuels must have ``competent and reliable evidence'' 
supporting their advertised fuel rating (Sec. 306.5(b) and Sec. 
306.8(b)). In addition, sellers must certify that percentage when they 
transfer the fuel to anyone other than a consumer (Sec. 306.6 and Sec. 
306.8(c)).\20\
---------------------------------------------------------------------------

    \20\ As the Commission explained in the NPRM, an entity blending 
biodiesel fuels is responsible for determining the amount of 
biodiesel and/or biomass-based diesel in the fuel it sells. This 
includes the need to account for biodiesel and/or biomass-based 
diesel in any diesel fuel (e.g., diesel fuel containing biodiesel at 
five percent or less) it uses to create blends that must be rated, 
certified, or labeled under the Rule.
---------------------------------------------------------------------------

    Finally, to comply with EISA's labeling requirements, the final 
amendments make minor changes to the rating and certification 
provisions of the Rule for biodiesel fuel blends. First, the final 
amendments modify language in the Rule's certification provision 
(306.5(b)) to clarify that biodiesel and biomass-based diesel blends 
should be rated by the percentage of biodiesel and/or biomass-based 
diesel fuel in the blend, not necessarily by the percentage of the 
principal component of the fuel like other alternative fuels.\21\ 
Second, the certification requirements in Part 306.6(b) currently allow 
transferors of alternative automotive fuels to certify fuel ratings 
with a letter of certification, which remains valid so long as the fuel 
transferred contains the same or a greater rating of the principal 
component. However, a change in the concentration of biodiesel or 
biomass-based diesel in an automotive fuel may trigger different 
labeling requirements under EISA even if the concentration of the 
principal fuel increases (e.g., a change from B-25 to B-20). Therefore, 
the final amendment to Part 306.6(b) states that if transferors of 
biodiesel fuels choose to use a letter of certification, that letter 
will be valid only as long as the fuel transferred contains the same 
percentage of biodiesel or biomass-based diesel as previous fuel 
transfers covered by the letter.
---------------------------------------------------------------------------

    \21\ For example, a twenty-five percent biodiesel/diesel blend 
should be rated as twenty-five percent biodiesel, not seventy-five 
percent diesel.
---------------------------------------------------------------------------

C. Labeling

    The labeling requirements in the final amendments employ the 
language mandated by EISA. In accordance with Section 205 of the Act, 
and consistent with the FTC's authority under PMPA, the final 
amendments address labeling for fuels containing biodiesel and/or 
biomass-based diesel at four different concentration levels.\22\ First, 
retailers do not have to disclose the presence of five percent or less 
biodiesel and/or five percent or less biomass-based diesel in a fuel, 
provided that the fuel meets the specifications contained in ASTM D975. 
Second, for fuel blends containing more than five percent but no more 
than twenty percent biomass-based diesel or biodiesel, the label 
contains the language required by Section 205(b)(2) of EISA. Third, for 
fuels containing biodiesel or biomass-based diesel at concentrations of 
more than twenty percent but less than 100 percent, the label contains 
the language required by Section 205(b)(3) of EISA. Finally, pursuant 
to the Commission's authority under PMPA and consistent with EISA's 
direction, the final amendments require labels for neat (i.e., 100 
percent) biodiesel and biomass-based diesel.
---------------------------------------------------------------------------

    \22\ Appendix (``App.'') A summarizes the labeling requirements 
for biodiesel fuels at each of these concentrations.
---------------------------------------------------------------------------

    In addition to the specific disclosures required by EISA, the 
labels contain fuel terms on their headings that are consistent with 
both the draft model rules proposed by the NCWM and the Fuel Rating 
Rule's treatment of other alternative fuels. Specifically, as proposed 
in the NPRM, the heading in a label for a biodiesel blend containing 
more than five but no more than twenty percent biodiesel must display 
either: 1) the capital letter ``B'' followed first by a numeric 
representation of the percentage of biodiesel and then by the term 
``Biodiesel Blend,'' such as ``B-20 Biodiesel Blend''; or 2) the term 
``Biodiesel Blend.''\23\ Similarly, as discussed above, the Commission 
has revised the proposed labels so that the heading for biomass-based 
diesel blends in the same more than five but no more than twenty 
percent concentration category must display either: 1) a numeric 
representation of the percentage of biomass-based diesel followed first 
by the percent symbol (%) and then by the term ``Biomass-Based Diesel 
Blend,'' such as ``20% Biomass-Based Diesel Blend''; or 2) the term 
``Biomass-Based Diesel Blend.''
---------------------------------------------------------------------------

    \23\ The choice of designation (e.g., ``B-15 Biodiesel Blend'' 
or ``Biodiesel Blend'') is at the discretion of the seller. Giving 
sellers this choice is consistent with the model rules under 
consideration by the NCWM and with Section 205 of EISA, which 
require disclosing only that the fuel contains between five and 
twenty percent biodiesel or biomass-based diesel, rather than a 
specific amount.
---------------------------------------------------------------------------

    For biodiesel and biomass-based diesel blends containing more than

[[Page 40160]]

twenty percent, the final amendments require a specific blend 
designation (e.g., ``B-80'' for biodiesel and ``80%'' for biomass-based 
diesel) in the heading. The Commission has slightly revised the 
proposed requirements so that the designation is followed by either the 
term ``Biodiesel Blend'' or ``Biomass-Based Diesel Blend,'' as 
appropriate. Finally, as explained above, the final amendments provide 
for neat biodiesel and biomass-based diesel labels. The heading for 
these fuels must display either ``B-100 Biodiesel'' or ``100% Biomass-
Based Diesel,'' along with the explanatory text of either ``contains 
100 percent biodiesel'' or ``contains 100 percent biomass-based 
diesel.'' Inclusion of these terms on the label is consistent with 
draft model rules currently under consideration by the NCWM,\24\ and 
with the Fuel Rating Rule's labels for other alternative fuels, which 
must disclose the type of alternative fuel on the heading of the label 
(e.g., ``E-85'' for eighty-five percent ethanol blends).
---------------------------------------------------------------------------

    \24\ See ``National Conference on Weights and Measures Laws and 
Regulations Committee & Petroleum Subcommittee Interim Meeting for 
the 93rd NCWM Annual Conference; Supplement to NCWM Publication 15'' 
(Section 3.15).
---------------------------------------------------------------------------

    The final amendments also specify the size, font, and format 
requirements for the draft labels. These requirements are consistent 
with those in place for other alternative liquid fuels in the Rule (see 
Sec. 306.12). The Rule requires a blue (PMS\25\ 277 or its equivalent) 
background for labels disclosing the presence of biodiesel and an 
orange background (PMS 1495 or its equivalent) for biomass-based 
diesel. The blue background for biodiesel will allow retail consumers 
easily to distinguish biodiesel blends from biomass-based diesel, as 
well as other fuels sold at retail pumps (e.g., the yellow octane 
label), and will help minimize the likelihood that consumers will use 
the wrong fuel in their vehicle. In addition, the final amendments 
require, as for other alternative fuels, the text to be in Helvetica 
black type and centered on the label. The Commission is amending Part 
306.12(f) to provide sample illustrations of biodiesel and biomass-
based diesel labels.
---------------------------------------------------------------------------

    \25\ Pantone Matching System. We are also amending the Rule to 
allow the use of non-Pantone equivalents for all alternative fuels 
to prevent unnecessarily favoring the Pantone system over other 
suitable color schemes.
---------------------------------------------------------------------------

VII. Paperwork Reduction Act

    The certification and labeling requirements announced in this 
notice constitute a ``collection of information'' under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520) (``PRA''). Consistent with 
the Fuel Rating Rule's requirements for other alternative fuels, the 
final amendments require refiners, producers, importers, distributors, 
and retailers of biodiesel fuels to retain, for one year, records of 
any delivery tickets, letters of certification, or tests upon which 
they based the automotive fuel ratings that they certify or post. The 
covered parties also must make these records available for inspection 
by Commission and EPA staff as well as by persons authorized by the 
Commission or EPA. Finally, retailers must produce, distribute, and 
post fuel rating labels on fuel pumps.
    In its NPRM, the Commission provided estimated recordkeeping and 
disclosure burdens for entities covered under the Rule and sought 
comment on the accuracy of those estimates. Commenters have not 
disputed those estimates, and the Office of Management and Budget 
(``OMB'') has approved the collections of information required by the 
amendments.
    The Commission believes that the minor changes made since the NPRM 
do not affect the previous burden estimate. In the following sections, 
the Commission discusses comments regarding burden estimates in more 
detail, explains why it believes those estimates are not affected by 
the revisions, and restates those estimates.

A. Comments on Burden to Covered Entities

    Significantly, the commenters did not dispute the Commission's 
estimates of burden, nor did they identify a burden that the Commission 
did not discuss in the NPRM. Indeed, individual commenter Johnas Carson 
affirmed that ``the costs of the decals and installation quoted in this 
notice are accurate.'' NBB described these costs as ``minor.'' 
Similarly, PMAA, an association of independent fuel retailers, stated 
that ``[c]osts associated with the rulemaking are minimal so long as 
the requirements are written in a flexible manner that would not 
require dispenser owners to affix new labels every time there is a 
change in the biodiesel blend concentration.'' The final amendments 
announced in this notice retain such flexibility by not requiring a 
specific percentage designation for fuel blends containing twenty 
percent or less biodiesel or biomass-based diesel.\26\
---------------------------------------------------------------------------

    \26\ While not commenting on the burden estimate, ATA urged that 
``[c]entrally fueled fleets should not be subject to the labeling 
requirements, as they do not sell fuel to the public . . . .'' As 
amended, the labeling requirements of the Fuel Rating Rule apply 
only to retailers that sell to the ``general public.'' 16 CFR 
306.0(f).
---------------------------------------------------------------------------

B. Changes to the Proposed Labeling Requirements

    As explained in detail above, the Commission has revised its 
labeling requirements to provide for separate labeling of biodiesel and 
biomass-based diesel. As amended, the label requirements make clear 
that retailers need not disclose the presence of five percent or less 
biodiesel or biomass-based diesel in a fuel blend. This final amendment 
reduces the burden on covered entities because it makes clear that 
retailers need not label fuels that cumulatively contain more than five 
percent biodiesel and biomass-based diesel, but less than five percent 
of each. However, the final amendments also could conceivably require a 
retailer to use two labels for a fuel blend that contained more than 
five percent biodiesel and more than five percent biomass-based diesel.
    Notwithstanding this possibility, the Commission is not changing 
its burden estimates. Specifically, there is no evidence that retailers 
are selling any fuel blends containing more than five percent biomass-
based diesel and, therefore, no evidence that any retailer will incur 
the burden of posting two labels on a fuel dispenser. In the NPRM, the 
Commission specifically sought comments on the market for biomass-based 
diesel. Other than ConocoPhillip's acknowledgment that it markets 
renewable diesel blends at an unspecified concentration, the Commission 
received no comments in response to this request. Based on this record, 
and the lack of any objection to the Commission's burden analysis in 
the NPRM, the Commission assumes that there is no significant burden 
impact from the revisions.\27\
---------------------------------------------------------------------------

    \27\ The Commission has also revised its labeling requirements 
to substitute blue for purple as the background color and to require 
different headers for biomass-based diesel blends and pure biomass-
based diesel fuel. These changes are cosmetic and do not impact the 
recordkeeping or disclosure burdens.
---------------------------------------------------------------------------

C. The Recordkeeping and Disclosure Burdens

    The Commission previously estimated the burden associated with the 
Fuel Rating Rule's recordkeeping requirements to be no more than five 
minutes per year per industry member, and it previously estimated the 
burden associated with the Rule's disclosure requirements to affect no 
more than 1/8th of industry members in any given year at one hour per 
member affected-or, averaged across all industry members, 1/8th hour 
per year. These estimated burdens do not include recordkeeping in which 
covered

[[Page 40161]]

industry members already engage in their normal course of business.\28\
---------------------------------------------------------------------------

    \28\ For OMB purposes, ``burden'' does not include efforts to 
comply with a collection of information that a covered party would 
expend in any event. 5 CFR 1320.3(b)(2).
---------------------------------------------------------------------------

    Because the procedures for distributing and selling biodiesel fuels 
are no different from those for other automotive fuels, the Commission 
expects that, consistent with practices in the fuel industry generally, 
the covered parties in the biodiesel fuel industry will record the fuel 
rating certification on documents (e.g., shipping receipts) already in 
use, or will employ a one-time letter of certification. Furthermore, 
the Commission expects that labeling of biodiesel fuel pumps will be 
consistent with practices in the fuel industry generally. The 
information collection burden, therefore, will be the same as for other 
automotive fuels: five minutes per year for recordkeeping and 1/8th 
hour per year for disclosure.
    Based on statistics provided by NBB, the Commission estimates that 
there are approximately 200 producers, 1500 retailers, and 2000 
distributors of biodiesel.\29\ Conservatively assuming that each 
producer, distributor, and retailer of biodiesel is a distinct entity, 
and that each seller of biodiesel will spend five minutes (or 1/12th 
hour) per year complying with the recordkeeping requirements, and 
assuming that each retailer will spend 1/8th hour per year complying 
with the disclosure requirements, the Commission estimates an 
incremental annual burden of 308 hours for recordkeeping (1/12th hour 
per year x 3700 entities) and 188 hours for disclosure (1/8th hour per 
year x 1,500 retailers).
---------------------------------------------------------------------------

    \29\ Because the biodiesel industry is young, estimates of its 
size may not be as accurate as estimates of the size of more mature 
industries. Therefore, we have conservatively rounded up from the 
actual statistics provided by the NBB. In a document dated January 
25, 2008, the NBB estimated a total of 171 producers of biodiesel 
and biodiesel blends. See (http://www.biodiesel.org/pdf_files/fuelfactsheets/Production_Capacity.pdf.) In addition, the NBB's 
website lists all known distributors (http://www.biodiesel.org/buyingbiodiesel/distributors/showall.asp) and retailers (http://www.biodiesel.org/buyingbiodiesel/retailfuelingsites/showall.asp) of 
biodiesel. As of February 4, 2008, the site listed approximately 
1250 retailers and 1775 distributors of biodiesel and biodiesel 
blends.
---------------------------------------------------------------------------

D. Approval by OMB

    Pursuant to the PRA, 44 U.S.C. 3501-3521, the FTC submitted to OMB 
for review and approval the collections of information contained in the 
Rule. On May 23, 2008, under OMB Control No. 3084-0068, OMB granted 
approval through May 31, 2011.

VIII. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612, 
requires an agency to provide a Final Regulatory Flexibility Analysis 
with a final rule, unless the agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities. See 5 U.S.C. 603-605.
    In light of the comments submitted in response to the NPRM, the FTC 
reaffirms its belief that the final amendments will not have a 
significant economic impact on a substantial number of small entities. 
As explained in Section VII above, each entity in the biodiesel 
industry will spend, at most, five minutes per year complying with the 
recordkeeping requirements and 1/8th hour per year complying with the 
disclosure requirements. Staff estimates the mean hourly wage for 
employees of producers, importers, and distributors of biodiesel fuels 
to be $21.39,\30\ and the mean hourly wage for employees of biodiesel 
retailers to be $14.35.\31\ Conservatively assuming that all biodiesel 
producers, distributors, and retailers are small entities, compliance 
with the recordkeeping requirements will cost producers and 
distributors $1.78 per year ($21.39 x 1/12th hour) and retailers $1.20 
($14.35 x 1/12th hour). In addition, under the same conservative 
assumptions, compliance with the disclosure requirements will cost 
retailers $1.79 ($14.35 x 1/8th hour).
---------------------------------------------------------------------------

    \30\ Bureau of Labor Statistics, 2006 Employment Statistics 
Survey, Annual Average Hourly Earnings for Oil and Gas Extraction 
Production workers.
    \31\ Bureau of Labor Statistics, May 2006 Occupational 
Employment Statistics Survey, ``Correspondence Clerks,'' Table 1.
---------------------------------------------------------------------------

    Retailers will also incur the cost of procuring and replacing fuel 
dispenser labels to comply with the disclosure requirements of the 
Rule. The Commission has previously estimated that the price per 
automotive fuel label is approximately fifty cents and that the average 
automotive fuel retailer has six dispensers. Applying those estimates 
to the biodiesel fuel industry results in an initial cost to retailers 
of $3.00 (6 pumps x $0.50). In addition, the Commission has previously 
estimated the useful life of dispenser labels to range from six to ten 
years. Assuming a useful life of eight years, the mean of that range, 
and distributing the costs on a per-year basis, staff estimates the 
total annual replacement labeling cost to be $0.06 (1/8 x $0.50).
    This document serves as notice to the Small Business Administration 
of the agency's certification of no effect. Nonetheless, the Commission 
is providing a final analysis in order to inquire into the impact of 
the final amendments on small entities. Therefore, the Commission has 
prepared the following analysis.

A. Statement of the need for, and objectives of, the final amendments

    Section 205 of EISA requires the Commission to promulgate biodiesel 
fuel labeling requirements that inform consumers of the percent of 
biomass-based diesel or biodiesel contained in a fuel sold at a retail 
pump. The Commission is publishing these final amendments in compliance 
with that congressional requirement.

B. Issues raised by comments in response to the initial regulatory 
flexibility analysis

    Commenters did not raise any specific issues with respect to the 
regulatory flexibility analysis in the NPRM. As noted above, 
commenters, including an association of independent fuel retailers, 
supported adding biodiesel fuels to the coverage of the Fuel Rating 
Rule. Furthermore, the commenters agreed that the recordkeeping and 
disclosure burdens of the final amendments are ``minimal.''

C. Estimate of the number of small entities to which the final 
amendments will apply

    As discussed above, the biodiesel fuel industry is young and still 
developing. Although the Commission has evidence of the size of the 
industry generally, it does not have any evidence regarding the number 
of small businesses within that industry. In the NPRM, the Commission 
assumed that all industry members are small businesses, and none of the 
commenters disagreed with that assumption. Accordingly, the Commission 
reaffirms its assumption for the purposes of this regulatory 
flexibility analysis that the 200 producers, 1500 retailers, and 2000 
distributors of biodiesel are all small businesses.

D. Projected reporting, recordkeeping, and other compliance 
requirements

    The final amendments make clear that the recordkeeping and 
certification requirements of the Fuel Rating Rule apply to biodiesel 
fuels. Small entities potentially affected are producers, distributors, 
and retailers of biodiesel fuels. The Commission expects that the 
recordkeeping and certification tasks are done by industry members in 
the normal course of their business. Accordingly, we do not expect the 
final amendments to require any professional skills beyond those of 
persons already

[[Page 40162]]

employed by industry members, namely, administrative.

E. Alternatives Considered

    Section 205 of EISA requires that ``[e]ach retail diesel fuel pump 
be labeled in a manner that informs consumers of the percent of 
biomass-based diesel or biodiesel that is contained in the biomass-
based diesel or biodiesel blend that is offered for sale, as determined 
by the Federal Trade Commission.'' The Commission, therefore, must 
require covered entities to accurately rate, certify, and label 
biodiesel fuels.
    The Commission has amended the Fuel Rating Rule in a manner that 
minimizes the economic impact, if any, from Section 205's labeling 
requirements. As explained above, the Commission has designed the 
rating, certification, and labeling requirements so that industry 
members may use documents already in use to certify a biodiesel fuel's 
rating. Furthermore, the Commission is promulgating labeling provisions 
requiring only language specifically provided by Section 205 or 
necessary to inform consumers of the percentage of biodiesel or 
biomass-based diesel contained in a fuel. Moreover, the commenters have 
not identified any alternative requirements that would reduce this 
burden. Accordingly, the Commission concludes that there are no 
alternative requirements that would reduce the burden on industry 
members and satisfy EISA's mandate.

IX. Final Rule Language

List of Subjects in 16 CFR Part 306

    Energy conservation, Gasoline, Incorporation by reference, 
Labeling, Reporting and recordkeeping requirements.

0
For the reasons set out above, the Commission amends 16 CFR Part 306 as 
follows:

PART 306--AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING

0
1. The authority citation for part 306 continues to read as follows:

    AUTHORITY: 15 U.S.C. 2801 et seq.; Pub. L. 110-140.

0
2. Section 306.0 is amended as follows:
0
a. Paragraph (i)(2) is revised.
0
b. Paragraph (i)(3) is added.
0
c. Paragraph (j)(2) is revised.
0
d. Paragraph (j)(3) is added.
0
e. Paragraphs (k), (l), (m), and (n) are added.


Sec.  306.0  Definitions.

* * * * *
    (i) * * *
    (2) Alternative liquid automotive fuels, including, but not limited 
to:
    (i) Methanol, denatured ethanol, and other alcohols;
    (ii) Mixtures containing 85 percent or more by volume of methanol, 
denatured ethanol, and/or other alcohols (or such other percentage, but 
not less than 70 percent, as determined by the Secretary of the United 
States Department of Energy, by rule, to provide for requirements 
relating to cold start, safety, or vehicle functions), with gasoline or 
other fuels;
    (iii) Liquefied natural gas;
    (iv) Liquefied petroleum gas;
    (v) Coal-derived liquid fuels;
    (vi) Biodiesel;
    (vii) Biomass-based diesel;
    (viii) Biodiesel blends containing more than 5 percent biodiesel by 
volume; and
    (ix) Biomass-based diesel blends containing more than 5 percent 
biomass-based diesel by volume.
    (3) Biodiesel blends and biomass-based diesel blends that contain 
less than or equal to 5 percent biodiesel by volume and less than or 
equal to 5 percent biomass-based diesel by volume, and that meet 
American Society for Testing and Materials (``ASTM'') standard D975-07b 
(``Standard Specification for Diesel Fuel Oils''), are not automotive 
fuels covered by the requirements of this Part. The incorporation of 
ASTM D975-07b by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR Part 51. Copies 
of ASTM D975-07b may be obtained from ASTM International, 1916 Race 
Street, Philadelphia, PA, 19103, or may be inspected at the Federal 
Trade Commission, Public Reference Room, Room 130, 600 Pennsylvania 
Avenue, N.W., Washington, D.C., or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: (http://www.archives.gov/federal_register/cfr/ibr_locations.html.)
    (j) * * *
    (2) For an alternative liquid automotive fuel other than biodiesel, 
biomass-based diesel, biodiesel blend, or biomass-based diesel blend, 
the commonly used name of the fuel with a disclosure of the amount, 
expressed as a minimum percentage by volume, of the principal component 
of the fuel. A disclosure of other components, expressed as a minimum 
percentage by volume, may be included, if desired.
    (3) For biomass-based diesel, biodiesel, biomass-based diesel 
blends with more than five percent biomass-based diesel, and biodiesel 
blends with more than five percent biodiesel, a disclosure of the 
biomass-based diesel or biodiesel component, expressed as the 
percentage by volume.
    (k) Biomass-based diesel means a diesel fuel substitute produced 
from nonpetroleum renewable resources that meets the registration 
requirements for fuels and fuel additives established by the 
Environmental Protection Agency under 42 U.S.C. 7545, and includes fuel 
derived from animal wastes, including poultry fats and poultry wastes, 
and other waste materials, or from municipal solid waste and sludges 
and oils derived from wastewater and the treatment of wastewater, 
except that the term does not include biodiesel as defined in this 
Part.
    (l) Biodiesel means the monoalkyl esters of long chain fatty acids 
derived from plant or animal matter that meet: the registration 
requirements for fuels and fuel additives under 40 CFR Part 79; and the 
requirements of the American Society for Testing and Materials standard 
D6751-07b (``Standard Specification for Biodiesel Fuel Blend Stock 
(B100) for Middle Distillate Fuels''). The incorporation of ASTM D6751-
07b by reference was approved by the Director of the Federal Register 
in accordance with 5 U.S.C. 552(a) and 1 CFR Part 51. Copies of ASTM 
D6751-07b may be obtained from ASTM International, 1916 Race Street, 
Philadelphia, PA, 19103, or may be inspected at the Federal Trade 
Commission, Public Reference Room, Room 130, 600 Pennsylvania Avenue, 
N.W., Washington, D.C., or at NARA. For information on the availability 
of this material at NARA, call 202-741-6030, or go to: (http://www.archives.gov/federal_register/cfr/ibr_locations.html).
    (m) Biodiesel blend means a blend of petroleum-based diesel fuel 
with biodiesel.
    (n) Biomass-based diesel blend means a blend of petroleum-based 
diesel fuel with biomass-based diesel.

0
3. Section 306.5(b) is revised to read as follows:


Sec.  306.5  Automotive fuel rating.

* * * * *
    (b) To determine automotive fuel ratings for alternative liquid 
automotive fuels other than biodiesel blends and biomass-based diesel 
blends, you must possess a reasonable basis, consisting of competent 
and reliable evidence, for the percentage by volume of the principal 
component of the alternative liquid automotive fuel that you must 
disclose.

[[Page 40163]]

In the case of biodiesel blends, you must possess a reasonable basis, 
consisting of competent and reliable evidence, for the percentage of 
biodiesel contained in the fuel, and in the case of biomass-based 
diesel blends, you must possess a reasonable basis, consisting of 
competent and reliable evidence, for the percentage of biomass-based 
diesel contained in the fuel. You also must have a reasonable basis, 
consisting of competent and reliable evidence, for the minimum 
percentages by volume of other components that you choose to disclose.

0
4. Section 306.6(b) is revised to read as follows:


Sec.  306.6  Certification.

* * * * *
    (b) Give the person a letter or other written statement. This 
letter must include the date, your name, the other person's name, and 
the automotive fuel rating of any automotive fuel you will transfer to 
that person from the date of the letter onwards. Octane rating numbers 
may be rounded to a whole or half number equal to or less than the 
number determined by you. This letter of certification will be good 
until you transfer automotive fuel with a lower automotive fuel rating, 
except that a letter certifying the fuel rating of biomass-based 
diesel, biodiesel, biomass-based diesel blend, and/or biodiesel blend 
will be good only until you transfer those fuels with a different 
automotive fuel rating, whether the rating is higher or lower. When 
this happens, you must certify the automotive fuel rating of the new 
automotive fuel either with a delivery ticket or by sending a new 
letter of certification.
* * * * *

0
5. Section 306.10(f) is revised to read as follows:


Sec.  306.10  Automotive fuel rating posting.

* * * * *
    (f) The following examples of automotive fuel rating disclosures 
for some presently available alternative liquid automotive fuels are 
meant to serve as illustrations of compliance with this part, but do 
not limit the Rule's coverage to only the mentioned fuels:
    (1) ``Methanol/Minimum ------% Methanol''
    (2) ``Ethanol/Minimum ------% Ethanol''
    (3) ``M--85/Minimum ------% Methanol''
    (4) ``E--85/Minimum ------% Ethanol''
    (5) ``LPG/Minimum ------% Propane'' or
    ``LPG/Minimum ------% Propane and ------% Butane''
    (6) ``LNG/Minimum ------% Methane''
    (7) ``B-20 Biodiesel Blend/contains biomass-based diesel or 
biodiesel in quantities between 5 percent and 20 percent''
    (8) ``20% Biomass-Based Diesel Blend/contains biomass-based diesel 
or biodiesel in quantities between 5 percent and 20 percent''
    (9) ``B-100 Biodiesel/contains 100 percent biodiesel''
    (10) ``100% Biomass-Based Diesel/contains 100 percent biomass-based 
diesel''

0
6. Section 306.12 is amended as follows:
0
a. Paragraph (a)(2) is revised.
0
b. Paragraphs (a)(4) through (a)(9) are added.
0
c. Paragraph (c)(2) is revised and paragraph (c)(3) is added.
0
d. Graphics are added at the end of the section.


Sec.  306.12  Labels.

* * * * *
    (a) * * *
    (2) For alternative liquid automotive fuel labels (one principal 
component) other than biodiesel, biomass-based diesel, biodiesel 
blends, and biomass-based diesel blends. The label is 3 inches (7.62 
cm) wide x 2\1/2\ inches (6.35 cm) long. ``Helvetica black'' type is 
used throughout. All type is centered. The band at the top of the label 
contains the name of the fuel. This band should measure 1 inch (2.54 
cm) deep. Spacing of the fuel name is 1/4 inch (.64 cm) from the top of 
the label and 3/16 inch (.48 cm) from the bottom of the black band, 
centered horizontally within the black band. The first line of type 
beneath the black band is 1/8 inch (.32 cm) from the bottom of the 
black band. All type below the black band is centered horizontally, 
with 1/8 inch (.32 cm) between each line. The bottom line of type is 3/
16 inch (.48 cm) from the bottom of the label. All type should fall no 
closer than 3/16 inch (.48 cm) from the side edges of the label. If you 
wish to change the dimensions of this single component label to 
accommodate a fuel descriptor that is longer than shown in the sample 
labels, you must petition the Federal Trade Commission. You can do this 
by writing to the Secretary of the Federal Trade Commission, 
Washington, D.C. 20580. You must state the size and contents of the 
label that you wish to use, and the reasons that you want to use it.
* * * * *
    (4) For biodiesel blends containing more than 5 percent and no 
greater than 20 percent biodiesel by volume. (i) The label is 3 inches 
(7.62 cm) wide x 2\1/2\ inches (6.35 cm) long. ``Helvetica black'' type 
is used throughout. All type is centered. The band at the top of the 
label contains either:
    (A) The capital letter ``B'' followed immediately by the numerical 
value representing the volume percentage of biodiesel in the fuel (e. 
g., ``B-20'') and then by the term ``Biodiesel Blend''; or
    (B) The term ``Biodiesel Blend.''
    (ii) The band should measure 1 inch (2.54 cm) deep. Spacing of the 
text in the band is 1/4 inch (.64 cm) from the top of the label and 3/
16 inch (.48 cm) from the bottom of the black band, centered 
horizontally within the black band. Directly underneath the black band, 
the label shall read ``contains biomass-based diesel or biodiesel in 
quantities between 5 percent and 20 percent.'' The script underneath 
the black band must be centered horizontally, with 1/8 inch (.32 cm) 
between each line. The bottom line of type is 1/4 inch (.64 cm) from 
the bottom of the label. All type should fall no closer than 3/16 inch 
(.48 cm) from the side edges of the label.
    (5) For biomass-based diesel blends containing more than 5 percent 
and no greater than 20 percent biomass-based diesel by volume. (i) The 
label is 3 inches (7.62 cm) wide x 2\1/2\ inches (6.35 cm) long. 
``Helvetica black'' type is used throughout. All type is centered. The 
band at the top of the label contains either:
    (A) The numerical value representing the volume percentage of 
biomass-based diesel in the fuel followed immediately by the percentage 
symbol (e.g., ``20%'') and then by the term ``Biomass-Based Diesel 
Blend''; or
    (B) The term ``Biomass-Based Diesel Blend.''
    (ii) The band should measure 1 inch (2.54 cm) deep. Spacing of the 
text in the band is 1/4 inch (.64 cm) from the top of the label and 3/
16 inch (.48 cm) from the bottom of the black band, centered 
horizontally within the black band. Directly underneath the black band, 
the label shall read ``contains biomass-based diesel or biodiesel in 
quantities between 5 percent and 20 percent.'' The script underneath 
the black band must be centered horizontally, with 1/8 inch (.32 cm) 
between each line. The bottom line of type is 1/4 inch (.64 cm) from 
the bottom of the label. All type should fall no closer than 3/16 inch 
(.48 cm) from the side edges of the label.
    (6) For biodiesel blends containing more than 20 percent biodiesel 
by volume. The requirements are the same as in paragraph (a)(4) of this 
section, except that the black band at the top of the label shall 
contain the capital letter

[[Page 40164]]

``B'' followed immediately by the numerical value representing the 
volume percentage of biodiesel in the fuel (e.g., ``B-70'') and then 
the term ``Biodiesel Blend.'' In addition, the words directly 
underneath the black band shall read ``contains more than 20 percent 
biomass-based diesel or biodiesel.''
    (7) For biomass-based diesel blends containing more than 20 percent 
biomass-based diesel by volume. The requirements are the same as in 
paragraph (a)(5) of this section, except that the black band at the top 
of the label shall contain the numerical value representing the volume 
percentage of biomass-based diesel in the fuel followed immediately by 
the percentage symbol (e.g., ``70%'') and then the term ``Biomass-Based 
Diesel Blend.'' In addition, the words directly underneath the black 
band shall read ``contains more than 20 percent biomass-based diesel or 
biodiesel.''
    (8) For 100% biodiesel. The requirements are the same as in 
paragraph (a)(4) of this section, except that the black band at the top 
of the label shall contain the phrase ``B-100 Biodiesel.'' In addition, 
the words directly underneath the black band shall read ``contains 100 
percent biodiesel.''
    (9) For 100% biomass-based diesel. The requirements are the same as 
in paragraph (a)(5) of this section, except that the black band at the 
top of the label shall contain the phrase ``100% Biomass-Based 
Diesel.'' In addition, the words directly underneath the black band 
shall read ``contains 100 percent biomass-based diesel.''
* * * * *
    (c) * * * *
    (2) For alternative liquid automotive fuel labels other than 
biodiesel and biodiesel blends. The background color on all the labels 
is Orange: PMS 1495 or its equivalent. The knock-out type within the 
black band is Orange: PMS 1495 or its equivalent. All other type is 
process black. All borders are process black. All colors must be non-
fade.
    (3) For biodiesel and biodiesel blends. The background color on all 
the labels is Blue: PMS 277 or its equivalent. The knock-out type 
within the black band is Blue: PMS 277 or its equivalent. All other 
type is process black. All borders are process black. All colors must 
be non-fade.
* * * * *
    (f)* * *
    [GRAPHIC] [TIFF OMITTED] TR11JY08.025
    

0
7. Appendix A to Part 306 is added to read as follows:

[[Page 40165]]



 APPENDIX A TO PART 306 - SUMMARY OF LABELING REQUIREMENTS FOR BIODIESEL
                                  FUELS
                              (Part 1 of 2)
------------------------------------------------------------------------
                                 Blends of more than 5 but not more than
                    Blends of 5                 20 percent
    Fuel type       percent or  ----------------------------------------
                       less         Header         Text         Color
------------------------------------------------------------------------
Biodiesel          No label      Either ``B-   contains      Blue
                    required      XX            biomass-
                                  Biodiesel     based
                                  Blend'' or    diesel or
                                  ``Biodiesel   biodiesel
                                  Blend''       in
                                                quantities
                                                between 5
                                                percent and
                                                20 percent
------------------------------------------------------------------------
Biomass-Based      No label      Either ``XX%  contains      Orange
 Diesel             required      Biomass-      biomass-
                                  Based         based
                                  Diesel        diesel or
                                  Blend'' or    biodiesel
                                  ``Biomass-    in
                                  Based         quantities
                                  Diesel        between 5
                                  Blend''       percent and
                                                20 percent
------------------------------------------------------------------------


 APPENDIX A TO PART 306 - SUMMARY OF LABELING REQUIREMENTS FOR BIODIESEL
                                  FUELS
                              (Part 2 of 2)
------------------------------------------------------------------------
                 Blends of more than 20       Pure (100%) Biodiesel or
                         percent                Biomass-Based diesel
  Fuel type  -----------------------------------------------------------
               Header     Text      Color    Header     Text      Color
------------------------------------------------------------------------
Biodiesel     B-XX      contains  Blue      B-100     contains  Blue
               Biodies   more                Biodies   100
               el        than 20             el        percent
               Blend     percent                       biodies
                         biomass-                      el
                         based
                         diesel
                         or
                         biodies
                         el
------------------------------------------------------------------------
Biomass-      XX%       contains  Orange    100%      contains  Orange
 Based         Biomass-  more                Biomass-  100
 Diesel        Based     than 20             Based     percent
               Diesel    percent             Diesel    biomass-
               Blend     biomass-                      based
                         based                         diesel
                         diesel
                         or
                         biodies
                         el
------------------------------------------------------------------------

    By direction of the Commission.

Richard C. Donohue,
Acting Secretary.
[FR Doc. E8-15245 Filed 7-10-08: 8:45 am]
BILLING CODE 6751-01-S